Getting Ready to Buy
By: Nathalia N. Cruz-Edmonds
With Daylight Savings starting on March 8 and the first day of Spring being on March 20th, thoughts of a new beginning start to really take shape. Thoughts of moving is probably the first one specially because it is easier to move in warm weather than cold and it is easier to change school districts once the school year is over. But, are you financially ready to complete this desire?
In the United States, having large amounts of cash stacked under the mattress only works in the movies like Scarface. The reality is that cash needs to be in the bank not only because it is secured from being stolen(*) but because the Government demands it for tax purposes. If your income is predominantly cash, you must start by opening a checking account and a savings account. If you have an ITIN number, you are still able to open a bank account. Usually to open a checking account, you need a government issued ID, and proof of residency whether is a copy of your lease agreement or a bill for cable, phone or utility. Call your bank for more details.
Another big obstacle that you might be facing is lack of credit. By definition credit is an arrangement for deferred payment of a loan or purchase. This loan needs to be paid back, usually in monthly installments, until the balance is paid in full and sometimes you need to pay interest. In the United States, credit is the second most important item in your financial health. The easiest way to get credit is with a Secured Credit Card. This credit card borrows money from an initial deposit you make when opening the account. You can open this particular credit card with just $300.00, all banks have individual restrictions, therefore, you must call them directly to learn more about their product. The purpose of this card is for you to use it no more than 15% of your available balance every month. Meaning, if your available balance is $300.00 you cannot exceed $45.00 in purchases every month and then paid this used balance in full on the day your payment is due. After a year the bank will return your initial deposit and the secure credit will convert into a regular credit. The bank will be able to increase your credit and it will be easier to access more credit such as a mortgage!
Other ways of obtaining credit is by buying furniture, opening a credit card a major store like BestBuy, WalMart, Target, Macy’s or buy a car. Please, do not go crazy. Too much open credit will lower your credit score and if you do not pay your debts on time as agreed in the contract it will harm your financial credibility for SEVEN YEARS! This means that once you start making late payments, have too many credits cards with high balances you will not be able to buy a home for SEVEN YEARS even if you paid your until your balances in full.
Finally, the first most important item of your financial health is a savings account! You will need up to two months rent in order to move to a new place or minimum of $5,000.00 deposit if you are buying a home. These amounts do not include the cost of moving from one home to the other. When opening an checking account, make sure you are able to open a savings account. Every time you get paid you should apply the 80/20 rule. Ten (10) percent to save, Ten (10) percent to give to charity and Eighty (80) percent to pay your expenses Having savings will also help you in a time of need such as losing a job due to weather, your car breaking down, or God forbid, paying a medical bill for yourself or a loved one.
Financial freedom is the ultimate goal which can be achieved by buying your home but in order to buy your home you must must have good financial health by having savings and good credit. There is no better time than now to start!
Coming Soon! PS International Team of Berkshire Hathaway Homesale Service will be representing the owners of newly remodelled houses in Essex (11 Helena Ave, Essex MD 21221) and in Dundalk. Information will be soon available on www.pitinastucky.com. If this is your first time buying a home, you must register to attend the First Time Homeowner Seminar at Southeast CDC on Eastern Avenue. Visit http://goo.gl/28veRx to learn the next available date and register to attend the seminar.
Nathalia Cruz-Edmonds is a REALTOR with PS International Team of Berkshire Hathaway Homesale Realty and she is also the owner of Clearview Real Estate Management LLC. To speak to her you can email her at nathaliaedmonds@gmail.com or call her directly at (410) 350-5848 or the office (410) 583-0400. Visit her website at www.clearviewrem.com.
(*)To learn more about how banks in United States guarantee to secure your money please visit https://www.fdic.gov/deposit/deposits/
