Home Buying and Selling

If you are looking for a house, try to find the cheapest one you can fit into. A less expensive home gives you more latitude to make good financial decisions.

When it comes to buying a house, the conventional wisdom is that you should select the most expensive one you can afford. You might want one that provides extra growing room, in hopes that your income and financial resources grow into the house as time goes on.

It’s hardly time to party like it’s 2004, 2005 or 2006, but there is a lot to be excited about in residential real estate. Once again, homeownership is a good investment. And unlike a lot of good investments you hear about too late, this one is rising, affordable and stable (finally).

For residents of places like the Black Hills, where the first day of spring usually brings a snowstorm, timeshares for resorts in Florida or Mexico have a lot of appeal. They seem like a fun idea for a vacation in the sunshine, as well as a good deal financially. They are neither.

Over the past 30 years, I researched hundreds of timeshare offers. I've never bought one. When you take a close look at the numbers and the restrictions, they simply don't add up to a good value.

What will the impact of the sequester be on the economy – and on your investments? We won’t know right away, but given all the other crosscurrents out there, this $85 billion reduction in federal spending (only some of it hitting this year) shouldn’t be a major factor.

The housing market finally hit bottom and the long-awaited recovery is already under way. This means that record-low refinancing rates won’t stay low for long. If you are thinking about refinancing your home, now is the time to do it, but don’t rush in. The devil is always in the details when it comes to money.

Reverse mortgages may be a good idea for the elderly if they want to stay in their home and receive cash to pay for their retirement. But there are significant downsides: It is hard to keep the home in the family once Mom and Dad leave the place, the house’s equity value disappears and the debt owed can balloon.

There’s a new scam. Lenders ask homeowners to convert to biweekly mortgage payments, instead of monthly. They say owners will save a heap of interest and retire the loan several years early.
 
The math does work, up to a point: Paying half your monthly mortgage every two weeks does pay off your mortgage much faster and does save a substantial amount of interest. It is also convenient since most people are paid biweekly. 
 

Consider refinancing to take advantage of low interest rates and reduce your monthly payments, even if you have already refinanced in recent years.
 
As I said in an earlier post, homes are not always the wisest investment. But today, interest rates on home mortgages are at historic lows. While housing prices in most markets have also declined, subtle signs of price stability abound.
 

Unlike credit cards and auto loans, which have high interest rates and little tax benefit, it isn’t always best to pay off your mortgage as soon as possible.
 
You can retire the mortgage early and avoid paying years of interest to a lender by making extra payments, increasing your payment over the minimum or paying it off with one lump sum.
 
Here are a few things to consider when deciding whether to pay off your mortgage ahead of schedule or to just make the minimum payments.
 
Why Not to Do It: Opportunity Cost
 

 
If you are buying a home, one of the biggest decisions is whether to go for an adjustable or fixed-rate mortgage. The first is usually cheaper at the outset but may get a lot more expensive in the future. The second gives you the assurance of an unchanging rate.
 
Many factors go into deciding which is best for you. Here are some important things to know before you pick:
 
Adjustable-Rate Mortgage