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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

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

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



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



Spending Plan Methods

  • Online:
  • Get personal help at USU Family Life Center
    • (435) 797-7224
    • $15 per 2 hour session



Emergency Savings

  • 3-6 months of living expenses
  • Used for emergencies ONLY!
  • NOT part of your down payment



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?
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


  • 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

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