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Get Your Financial House in Order Before House Hunting Erica Abbott, Family Finance Student Dr. Jean Lown, FCHD Dept. . Financial Planning for Women June 2013. Welcome to FPW. Personal Finance Action Plan Make a commitment to yourself to take specific action by a specific date

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Financial Planning for Women June 2013

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Financial planning for women june 2013

Get Your Financial House in Order Before House Hunting

Erica Abbott, Family Finance Student

Dr. Jean Lown, FCHD Dept.

Financial Planning for Women June 2013

Welcome to fpw

Welcome to FPW

  • Personal Finance Action Plan

    • Make a commitment to yourself to take specific action by a specific date

  • Please sign “attendance” sheet with name & email address

    • (print clearly)

  • First time attendee?

  • PF magazine give-away



  • Is now the time to buy?

    • Employment & family plans

  • Rates are low but be realistic re: affordability

  • Spending plan

  • Emergency fund

  • Pay down debts: don’t take on more debt

  • Save for down payment & closing costs

  • Check credit reports

  • Improve credit score

How much can you afford

How much can you afford?

  • Set firm limits to house payment

  • Don’t rely on real estate agent or mortgage broker to tell you what you can afford

  • Payment no more than 25% of take home pay

  • Down payment at least 10% of loan amount

    • Utah Housing FTHB: 3 ½%

  • Don’t deplete emergency fund

Consider the cost

Consider the cost

  • Property taxes

    • *Cache County estimate $8.21 for $1000 borrowed.

    • $100,000 home = $821 annual property tax!

  • Insurance

    • PMI insurance if you don’t have 20% down

      • Estimate $40-$50 a month for $100,000 borrowed

    • Homeowners insurance

      • Varies

  • * estimator

Consider the cost1

Consider the cost

  • Moving expenses

  • Closing costs: Ave. 3 – 6% home price

  • Home inspection

  • Title insurance

  • Utilities

    • Bigger home = higher bill

    • Required deposits for utilities

  • Yard care/snow removal equipment

  • Remodeling or updating

Financial planning for women june 2013

Set Goals before you Buy


Financial planning for women june 2013

What Kind of Goals?

  • Spending plan that works

  • Emergency Savings

  • Paying down debt

  • Credit in order

  • Saving for closing costs, misc. costs, and down payment

  • Make your goal specific and manageable


Financial planning for women june 2013

Monthly Spending Plan

  • Create a ZERO budget. Every dollar has a name! -Dave Ramsey

    • Spreadsheet on computer

    • Spreadsheet on paper

    • Envelope

    • Computer Programs

      • Quicken, Quickbooks,, etc.

    • Combination


Financial planning for women june 2013

Spending Plan Methods

  • Online:

  • Get personal help at USU Family Life Center

    • (435) 797-7224

    • $15 per 2 hour session


Financial planning for women june 2013

Emergency Savings

  • 3-6 months of living expenses

  • Used for emergencies ONLY!

  • NOT part of your down payment


Financial planning for women june 2013

Saving for a Down Payment

& Closing Costs

  • It's great to have 10% down.

  • 20% is better

  • Utah Housing first time home buyer:

    • Avoid cost of private mortgage insurance

    • Closings costs UT Housing: 2.5 - 3%

    • More is better


Paying down debt

Paying Down Debt

  • Set specific goals to pay off debt.

    • program (Debt Snowball)

    • Pay off debt smallest to largest to build up momentum or

    • Pay off debt highest interest rate first to save $

Are you ready to be a homeowner

Are you ready to be a homeowner?

  • In addition to building savings & boosting your credit score…

    • How long do you plan to stay in the community?

      • Plan at least 5 years in house (otherwise rent)

    • Consider your job security (Spouse/partner?)

    • Planning on having (more) kids?

    • Planning to cut back from 2 incomes?

Rent vs buy

Rent Vs. Buy

Pro Rent


Sense of pride, accomplishment, belonging

POSSIBLE tax deduction

Not likely due to low rates & high standard deduction

Make changes you want

Potential to build equity

American Dream

  • No big up-front costs

    • 1-3 mo. Rent

  • Cheaper than buying

    • Big transaction costs

  • Flexible: Move easily for new job or if income drops

  • Less risky

  • LL does repairs

  • More $ for other goals



  • Ideas or experiences to share?

Financial planning for women june 2013

Mortgages 101

Types of mortgages

Types of Mortgages

  • Fixed rate mortgage: the interest rate doesn’t change throughout the life of the loan

  • Adjustable rate mortgage: Interest rate can go up or down depending on current interest rates

Types of mortgages1

Types of Mortgages

  • Balloon loan: A short-term mortgage in which small periodic payments are made until the completion of the term, at which time the balance is due as a single lump-sum payment


Types of mortgages2

Types of Mortgages

  • Veteran Administration Loans (VA Loan):

    • Requires nothing down

    • No PMI insurance

    • Sometimes higher interest rates than you can get with an FHA or conventional loan.

    • Max 41% of gross income


Types of mortgages3

Types of Mortgages

  • Federal Housing Administrations (FHA)

    • Low down payment (1 to 3%)

    • Low closing fees

    • Works with people with lower credit scores

    • Conventional might be better if you have more than a 5% down payment

    • Max 31% of gross income


Types of mortgages4

Types of Mortgages

  • Conventional mortgage

    • Most require between 5 and 20% down

    • 620 credit score or better

    • Buyer will pay

      • Origination fees

      • Down payment

      • Mortgage insurance etc.

    • Max 28% of gross income unless non-conforming loan


Financial planning for women june 2013

Building a Positive Credit Report



  • Credit Report

    • How & why to get your free reports

  • Credit Reporting Agencies: The big 3

  • Credit Score(s)

    • What it is

    • How it is used

    • What’s a ‘good’ score?

What is a credit report

What is a credit report?

  • A continuing record of a borrower’s debt commitments and how well they have been honored.

  • Married couples each have their own report

  • Find yours by going to

How to build a credit history

How to build a credit history?

Time and good behavior

Start with a low limit credit card

“You don’t have to carry over a balance, but you do need to use it.” –Rod Griffin, Experian

Pay on time

Sign up for automatic payments

Use less than 50% of your credit limit

What s in a credit report

What’s in a Credit Report?

Identifying information

Name, current & past addresses, SS#

Credit use information

Active and inactive accounts

Payment history

Public record information

Criminal convictions, foreclosures, lawsuits


by creditors & your applications for credit

What to look for

What to look for

Potentially negative items

Open accounts

Status of accounts

open/never late is good

closed, past due, maxed out limit, etc.

Duplicates (account appears twice but is only one loan)

Clear this up

Find wrong information

Find wrong information?

Contact CRA (credit bureau)

Report explains how to correct mistakes

Is it your mistake?

Spouse could have taken on debt

Unfamiliar company name

Bought electronics, etc; store provides credit through finance company

Lender changed names; was bought out, etc.

Negative information

Negative Information?

  • Write 100 word explanation that goes with credit report

    • Explain reason for problem

  • Negative Information should be removed after 7 years

    • 10 years for bankruptcy

Close accounts you aren t using

Close accounts you aren’t using?

  • Consider impact on credit score if your credit utilization ratioincreases

  • Wait to close unused accounts until you get your mortgage

    • Unused accounts: ID theft potential

Cras do not decide if you get credit

CRAs do NOT decide if you get credit!

  • Each lender makes own decision

  • Lenders offer range of mortgage rates based on credit score

Free annual credit report

Free Annual Credit Report

Get a free credit report once/year/ CRA: Experian, TransUnion, Equifax:


Reports are likely to differ

Order all 3

Q on c redit report

Q on Credit Report?

Credit score

Credit Score

  • Number (300-850) that reflects information in your credit report

  • Determines how much you pay for credit

    • Higher score = lower cost credit


    • Table shows $ impact of credit score

Credit score1

Credit Score

Retrieved from May 17th 2013

Who determines your score

Who Determines your Score?

FICO=Fair Isaac Company

The 1st, most common, most important score

Average is 692; range:300-850

Average changes with time

Each CRA also calculates & sells own score

Fico score

FICO Score

Based on:

Payment history (35%)

Outstanding loan balances (30%)

Credit utilization ratio

Length of credit history (15%)

Inquiries (10%)

Types of credit (10%)

Variety is good: credit cards, vehicle loan, mortgage

Avoid finance companies

Credit score costs

Credit Score Costs

  • FICO score: $19.95

  • Experian: $7.95Equifax: $15.95Transunion: $9.95

  • Costs as of June 2012

Estimate your fico score

Estimate your FICO Score

  • Range: 300-850


    • Answer 10 Q to estimate your score

  • About FICO Scores

    • Map shows average score by state

    • What is a FICO score?

    • Understanding credit

Beware of scams

Beware of Scams

  • Debt relief companies

  • Credit repair scams

    • Claims to repair your credit are just not true.

    • Only time, effort and repayment will improve credit report & score

      • Focus on paying current bills on time



  • Order free credit report today

  • Build a strong credit history

  • Use credit cards prudently

    • 2 cards are enough

    • Pay in full at end of month or be a debt slave for life



  • Federal Trade Commission: credit & loans


  • Housing & Financial Counseling @ USU Family Life Center

First time homebuyer workshops

First time homebuyer workshops

  • USU Family Life Center Housing & Financial Counseling

  • 435-797-7224 to register

  • 8:30 am. to 4:30 pm first Saturday

  • July 13th

  • August 3rd

  • September 7th

  • October 5th

  • November 2nd

  • December 7th

Upcoming fpw

Upcoming FPW

  • July 10th: Saving for college with 529 college savings plans

  • August: No Meeting! Enjoy your Summer Break

  • September 11th: “Social Security and Retirement Timing,” with guest speaker and financial planner Suzanne Dalebout

    • Evening program will be at the Logan City library in the Bonneville Room.

  • October 9thand November 13th: TBA

Where to find fpw

Where to Find FPW

  • Login