If you’re in the market for a new home, now is the perfect time to buy.  Not only did the government extend the tax credit until April 30, 2009, but they also opened it up to current home owners who are looking to purchase a new house. Home prices are low and buyers have thousands of houses in their area from which to choose. With the downturn in the economy, many of the houses available are foreclosures or short-sales. So how do you know how much and what type of house you should buy?

How Much House Can You Afford?

Buying your dream home will only be a dream unless you can actually afford it. While your affordable price range depends on many different factors, one way to get in the ballpark is estimating two to two and a half times your annual gross salary. If you make $38,000 a year, you may be limited to borrowing only $80,000. While you may be able to borrow $80,000, a good conservative rule of thumb is to make sure your house payment (including loan payment, property taxes, and insurance) does not exceed 28 percent of your gross monthly salary. If you make $38,000 a year, technically you could afford a monthly house payment of $886.

There are also free online tools to help you estimate how much home you can afford, like the Home Affordability Calculator at Quizzle.com.

Keep in mind, lenders take into consideration a variety of factors when making a decision whether to lend you money, such as your income, assets, credit history and debt-to-income ratio. While there are several good guides to help you when shopping for your dream home, you should always consult with a trusted mortgage professional to know exactly how much you’re qualified to borrow.

What Type of House Should You Buy?

If you’re unsure about what kind of house to buy, HGTV has a short 10 question quiz to help you figure out what sort of house fits you.  Things to consider when buying a home are: How long do you plan to live in the home? Will you be having a baby in the near future? Do you mind the up keep of the outside of the home? Do you have pets that need a backyard? Do you enjoy entertaining large groups of people in your home?  Types of housing include single family homes, townhouses/condos and manufactured housing.

What is The Best Way to Purchase a Home?

With the downturn of the economy, thousands of homes are available for you to purchase. But, how do you know what kind of sale you should work with? Many homes in your areas will be sold as a short-sale, foreclosure or an REO (Real Estate Owned Property). Of these three options, buying a foreclosure tends to come with the most risk, whereas REO often carries the least risk. So what exactly do these types of sales mean for you?

Short Sale

A short sale occurs when a lender agrees to take less than the full loan payoff for an owner’s property. Homeowners will often sell their house for less than what they owe to avoid foreclosure. Short sales are very complicated and the outcome is not guaranteed. Many buyers, who start the short sale purchase process, wait three months or more for a decision from the lender. In some cases the lender will not accept the short sale offer and the seller is unable to sell the home. Short Sales are a great way to get a house for less than its true value. You can view Short Sale homes at HomePath.

Foreclosure

A foreclosed home is the process where the lender takes possession of a property due to non-payment. These properties are sold at auctions, most likely at your nearest court house. Most foreclosed home must be paid for in full and often involve various problems. While the price of the house may seem like a great deal, the title to the house could have a lien on it, the house may have back taxes that are due or the house may need to be renovated due to structural problems. While a foreclosure is very risky, it’s one of the best options to get a great deal.  You can view foreclosed homes at In House Realty or MCB Real Estate.

REO (Real Estate Owned Property)

After the property has gone into foreclosure and no one purchased the property at an auction, the home will then become an REO property. The bank that owns the property will hire a Realtor to sell it. To sell the house as quickly as possible, the lender will likely clear all issues on the property, such as back taxes and liens on the title. This is one of the best opportunities to get a good deal.  Fannie Mae, a government-sponsored enterprise owns most of the REO homes currently listed. You can view REO homes at the HomePath website.

Choosing a new home will depend on how much money, risk and time you want to invest. If you’re looking for a safe option, you can purchase a home that’s not listed as a risk, however you may pay more than you’d like. If you’re in the market for a good deal and don’t mind a fixer-upper, then a bank-owned property might be the perfect option.

For more helpful home buying tips, check out the Quizzle Blog:

• How to Save for a Down Payment on a Home
• Senate and House Approve Home Buyers Credit
• 55 Money Saving Tips (Your Wallet Will Thank You)
• Protect Your Credit during the Holidays with these 7 Tips

For other free tools and information about your home, money and credit, visit Quizzle.com. You’ll get a free credit report and free credit score, home value estimate, home loan recommendations, personal budget tool and more.

Photo credit:http://www.flickr.com/photos/thetruthabout/

If you’re in the market for a new house or recently unemployed, some good news hit home this week. The Senate voted Wednesday on measures to extend the first-time home buyers tax credit as well as unemployment benefits; the bill passed by a vote of 98 to 0. On Thursday, the House of Representative passed the bill by a vote of 403-12. The bills are now making their way to President Barack Obama to sign. President Obama has made it very clear that he WILL sign them into law. So how does this work for you?

Not Just a First-Time Home Buyers Tax Credit

So do you want to buy a house but you’re not ready to buy one this year? If so, I have some good news! According to Fox Business the Senate voted unanimously Wednesday to extend the $8000 first-time home buyer’s tax credit.  The current tax credit will be extended to April 30, 2010. This means that you as a first-time buyer can take advantage of the credit as long as you have a contract in place by April 30, 2010 and close on the mortgage before July 1, 2010.

Have you owned a house for at least five years out of the past eight years and are looking to move into something bigger? If so, I have good news for you too! In addition to the extension of the original credit, the Senate has also introduced a new home buyer’s tax credit for those who already own a home and are looking to move. Those who have owned a home for at least five years out of the past eight years would also be eligible for a tax credit of $6500 if they move.

The tax credit for first-time home buyers currently allows first-time home buyers to claim a tax credit equal to 10 percent of the home’s purchase price up to the maximum of $8,000. The credit, which is set to expire on November 30, 2009, has allowed the housing market to come back from its recent fall. Many bankers, financial analysts, and realtors feel that the housing market could decline once more if the tax credit is not extended. Many have spoken and the Senate listened. However, the Senate has assured consumers that the tax credit will NOT be extended beyond April 30, 2010.

In addition to introduction of the new tax credit, the Senate has also raised the maximum income earnings that qualify an individual for the tax credit. Currently any single buyer who earns over $75,000 or a couple who earns over $150,000 a year is not eligible for the current credit. However, under the new law, a single buyer can earn up to $125,000 and a couple up to $225,000 a year and still be eligible for the tax credit.

When you’re ready to purchase a house, check out Quizzle to calculate how much home you can afford.

Unemployment Benefits Don’t Have to End Now

Currently unemployment stands at 9.8% and is expected to rise another .10% when the latest figures are released November 6, 2009.  Even though some analysts feel that the economy is slowly rising, many of those unemployed still can’t find work. If your unemployment benefits are coming to an end there is no need to worry, as your benefits will be extended up to an additional 20 weeks.

The Senate has passed a bill that will extend unemployment benefits for an additional 20 weeks in states that have an unemployment rate of 8.5% or higher, while all other states will receive a 14 week extension. To see how many weeks you may qualify for check out the Bureau of Labor Statistics.

Here at Quizzle we want to keep you posted with the latest news. Check back often to find out the latest scoop on the two major economic bills.

Hi! My name is Angela and I am the Web Project Manager intern here at Quizzle.

This next year is going to be a big one for me. Not only do I graduate from college, but I am also hoping to buy a house in June and am getting married in October.

In addition to saving for the wedding, my fiancé and I have begun to save for a down payment on our first house. We would like to put down at least 10% (~$10,000). In saving for such a big purchase, we’ve learned a few things that work and a few that don’t. Here are our six best tips for saving money for a down payment:

1. Check your credit report

The first step to buying a house is to understand what other expenses you will incur in addition to the down payment, for example, closing costs.

Check your credit report (you can get a free credit report at Quizzle.com) when you first decide that you are ready for a house, as well as periodically throughout the process.

Get an understanding of what is on your credit report and make a list of the items, if any, that must be taken care of to ensure you will be approved for a home loan. Knowing what items are on your credit report ahead of time can help you manage your money,  know what debt you need to pay off and ultimately, save for that down payment.

2. Know your income schedule

Check which weeks of the month have more bills than others so you know when you are able to put money aside for the down payment. Some weeks of the month may not have any bills allowing you to set aside an entire week’s pay.  If you get paid on a weekly basis, keep in mind that some months will have 5 paychecks as opposed to 4 paychecks. In these months you can set aside that entire paycheck as most budgets are based on 4 paychecks a month.

3. Create a budget and set goals

Creating a budget will show you how much money you have coming in on a monthly basis compared to how much money you are spending on debt and living expenses. You can create a simple budget using free personal budgeting software from sites like Quizzle.com.

Once your budget is created, look for areas in which you can cut down expenses. For example, my credit cards add an extra $500 to my expenses each month simply because I am carrying balances on them.  If I can spend a few months paying off those balances, in the long run I can save $500 a month. Imagine what kind of house you can afford if you have an extra $500 each month for a monthly payment!

Set new goals each month to eliminate certain expenses so you have room in your budget to save for your down payment and later on for our home loan payment. I’ve found that it helps to make a game out of it to see how many expenses I can eliminate each month.

4. Only carry cash

I know it’s sometimes tough to make time to stop at the ATM to get cash, but include it on your way to other errands such as getting gas. If you happen to use your bank card, use it as a debit card and get cash back when you are making other purchases.

By only carrying cash you are less inclined to use your credit cards, allowing you to pay down your debt even faster because you’re not constantly adding to your balance. Set a weekly budget amount – I like to call it my “Miscellaneous Fund” – and take out that much from the ATM each week.  If you budget yourself, say, $40 each week and only carry the $40 and no credit/debit cards, you will be more likely to stick within those limits. Any money that I have left over, I add it into the next week’s miscellaneous fund. Some weeks you might have enough money for extras, like going out for dinner.

5. Avoid going out for lunch and dinner

Even though it is really tempting to go out for lunch, it can become costly. Consider this: If you eat out each day at work, 5 days a week, you may be spending an average of $50 a week just on lunch! By simply bringing your lunch, you might only spend $10 each week.

Buy items in bulk such as snacks and water that will last you the entire month. If you always have that urge to eat out, then make it a once a week thing. Treat yourself to a Monday “get the week going” lunch or a Friday “we made it through the week” lunch. This lunch should come out of your miscellaneous fund that I talked about above.

I know that some restaurants are just too good to give up. I love eating out myself and some days I just don’t feel like cooking. But by eating out for dinner, you are more than likely to spend more than you’ve budgeted.  What you think might be a $25 dinner, will turn into a $40 dinner after an appetizer and dessert.

By eating dinner at home, the average household can save about $400 per month. If you must eat out then nix an appetizer, order water because it’s FREE, and eat dessert at home.

6. Cut out late night shopping trips

I’ll admit that when I am bored I love to go shopping. It’s probably one of my worst habits. By simply not going to the store unless you need too and skipping the mall all together, you’re less inclined to spend your hard earned dollars. If there is something that you must have, take a look at the budget and see what can be eliminated to help you make your purchase. See shopping as a reward if you eliminate something from your budget; reward yourself for meeting your ultimate goal.

Bonus Tip:

7. Use one bank account

If you are living with your significant other or married, you may want to consider using only one bank account. I have always said that I would never combine my money with my partner, however it just makes sense to do so. My fiancé and I only use one bank account; he has his paychecks direct deposited into my account and we pay all of the bills from my account. Because he is limited to spending what money I give him and I am less inclined to spend money that isn’t really mine, we have seen our money grow faster together than it would have separately. By using one account, it is easier to pay your bills and keep track of your budget.

Budgeting for a down payment isn’t that easy. I know there are times when you must spend that $30 to get your oil changed or $25 on a birthday present; those are occasional purchases. Even if you occasionally spend money you can still watch your bank account grow with the tips listed. I personally don’t see a reason to budget everything I buy, just as long as I keep those occasional purchases to… “occasional.”

Keep in mind these are just 6 tips of many that I have for budgeting and saving. There are a lot of other ways to save money, whether it be for a down payment on a home or some other goal. The key is to always remember your end goal. If you constantly remind yourself of what you are trying to accomplish, you will save money faster than you ever have before.

The Federal Open Market Committee (FOMC) – a bunch of smartypants from the Federal Reserve Board and Federal Reserve Bank – meet eight times a year to talk about money issues, one of them being the federal, or “fed,” funds rate.

The fed funds rate is the rate at which banks lend money to one another and may affect the interest rates on your credit cards, savings and short-term loans like adjustable rate mortgages (ARMs).

Here’s how it works:

Credit Cards If you have a credit card, chances are it’s tied to the prime rate. Prime is simply three percentage points greater than the fed funds rate. So, for example, if the fed funds rate is 1%, then prime rate is 4% (1% + 3% = 4%). A lower fed funds rate means a lower prime rate and a happier credit card holder.

Short-Term Loans The fed funds rate also affects short-term interest rates such as those on adjustable rate mortgages. As is the case with your credit cards, a lower fed funds rate means lower short-term rates and happier homeowners.

Savings So we’re always crossing our fingers for a lower fed funds rate, right? Not quite. The fed funds rate also affects the interest rates on savings accounts, money market accounts and CDs. The lower the fed funds rate, the lower the savings rate, which makes for an unhappy saver since you’re making less on your money.

Long-Term Loans It’s a common misconception that the fed funds rate directly affects long-term interest rates, like what you might pay on a 30-year fixed rate mortgage. Long-term interest rates are actually determined by the people who buy and sell bonds in the bond market everyday. And bond yields are affected by the health of the economy and inflation. So while the fed funds rate may indirectly impact long-term interest rates, it’s not a as strong of a relationship as some might think.

In sum, when the fed funds rate is low, that’s good news for your credit cards and short-term loans, but bad news for your savings.

You heard on the news that rates are at historical lows. Or maybe a friend just got a fantastic deal on a refinance. Whatever the motivation, you’re back in the market for a mortgage. Only, with all the turmoil in the markets and financial industry in the past couple of years, you’re not sure where to begin. Fed to the rescue!

(Aside: Don’t you think it would be way more fun if Federal Reserve Chairman Ben Bernanke — at right — wore a superhero costume?!)

Those super smart money guys who run our central banking system, also known as the Federal Reserve Board, have come up with 5 tips for shopping for a mortgage. (The tips are the Fed’s, the commentary is mine.)

5 Tips for Shopping for a Home Loan

1. Know what you can afford. Take a look at your monthly budget and determine how much you can afford to shell out for a monthly mortgage payment, property taxes, insurance, monthly maintenance and utilities. Don’t have a budget? Don’t worry, Quizzle’s got you covered. We’ve put together a simple personal budget worksheet so you can easily figure out how much money is coming in each month and how much money <sigh> is going out. Click here to get started with your very own personal budgeting tool.

When figuring out how much you can afford, you should plan ahead to make sure you’ll be able to afford your monthly payments for several years. No one knows for sure what their situation will be in, say, three to five years, but make a best guess and protect yourself against the unknown with an emergency savings fund. In Quizzle, we recommend you have at least four months of income in your Rainy Day Fund. Let Quizzle keep track of your emergency savings for you.

Another important part of determining how much you can afford is checking your credit report and making sure everything’s accurate. A high credit score will help you qualify for the best interest rate and terms. And, ahem, it just so happens that Quizzle will give you a totally free credit report and free credit score so you can find out where you stand.

2. Shop around — compare loans from lenders and brokers. It’s important to know your options. Different lenders offer different home loan programs, so call around so you know what’s out there.

It’s also important to know the difference between a direct lender and a mortgage broker. A direct lender does exactly what the name implies, lends you money directly. Direct lenders are typically licensed to lend funds in all 50 states. A broker, on the other hand, may do some of the leg-work for you and puts together a variety of home loan options from different direct lenders. A broker may only be licensed in a handful of states.

Whether you opt to do business with a direct lender, like Quicken Loans, or a mortgage broker, it’s up to you to do the appropriate research and shopping.

3. Understand loan prices and fees. Pricing and fees may vary among lenders and brokers, even on the same exact loan program. Make sure you understand what you’re being charged for and what expenses to expect at closing.

Also keep in mind that a broker’s fees may cost more than a direct lender’s fees because you’re paying for the broker’s leg-work on top of the lender’s fees.

4. Know the risks and benefits of loan options. Home loans have different features – as well as different risks and benefits. Some mortgages have a fixed rate, in which the interest rate remains the same for the life of the loan. Other mortgages have adjustable rates, in which the rate adjusts (maybe up, maybe down) after a set period of time. Still other mortgages may include a penalty if you pay off your loan early. Whatever loan you opt for, make sure you understand all its features, including the APR (annual percentage rate) and the settlement costs.

Need a little guidance? Ask your mortgage banker to calculate how much your monthly payments could be a year from now, five years from now and 10 years from now. And if possible, avoid pre-payment penalties – fees you incur if you pay off your mortgage early.

5. Get advice from trusted sources. Getting a home loan is an important financial transaction and maybe even the largest financial transaction you’ll ever make. Ask questions. Do your homework. Have a real estate attorney that you hire review your documents before you sign them. You may also want to consult with a housing counselor.

Ultimately, understanding your options — and the home loan you choose — is the most important thing you can do in the mortgage shopping process. Consult with a trusted home loan expert and don’t be afraid to ask questions.

Still not sure? We can connect you with a Quicken Loans Home Loan Expert who will be happy to walk you through the process, offer you home loan options that are right for your personal situation and goals, and continue to follow up with you for the life of the loan so you can be sure you’re always in the right mortgage situation. Call 1-800-QUIZZLE (1-800-784-9953) or click “Contact an Expert” when logged into Quizzle.