With a plan and a dose of flexibility you can find the right house for now and the future

Even if it doesn’t have everything you want now, good financial planning will help

Is now the right time to buy your first or next home? With interest rates low, prices at a fair level and many choices out there, the temptation is to jump into the real estate market. The question is how to decide what you can afford, what features are a must, and what would be great but not a necessity.

Affordability
Even before you make a list of what you want and where you want it, the first consideration is: can you afford it? That’s non-negotiable. Consider long-term expenses, not just the up-front incentives that can dazzle a buyer. Over extending a budget for a few glitzy perks is a disaster in the making. The standard in financial planning is to spend no more than 35% of your pretax income on the mortgage, insurance and home insurance. You’ll also want to pay at least 20 percent down on the property and get a fixed-rate loan so you know exactly what your monthly payments will be.

The list
Here’s where you will detail, on paper, the type of home you want and the location. Be realistic about the positive and negative features and consider the long-term consequences of each feature. Think ahead. Don’t just buy a home for now, but consider the future. Resale value is an important factor, style can be an issue, plus room for children (and schools) and physical needs for aging parents who may move in.

Flexibility
Consider your purchase as a long-term investment, not a short-term gain. Now you have time to choose what you absolutely cannot do without, and what features are flexible. Most buyers won’t find everything they want at a price they can pay. So, if a swimming pool is on your list but the property you like doesn’t have one, putting a pool in is a goal for the future. Ditto for cosmetic things like countertops, bathroom spas and landscaping. While you may not have these up front by choosing a home with a mortgage you can manage, you’ll have the financial flexibility in the future.

With an organized home buying plan, you can minimize a great deal of the emotional impact. By determining your buying power, your wants and needs, and having an organized search plan, your chances of a stress-free experience are much better.

Is Country Living Right For You?

For decades homeowners have been lured by big city lights, leaving small towns and rural areas for a more urban experience. The tide may be turning again, and if you are interested in country living, the United States Department of Agriculture (USDA) has a deal for you. The terms are extraordinary–no down payment, 100% financing and very low interest rates.

To revitalize rural areas, the USDA started the Rural Development program in 1991. Since then the program has grown to helping 265,000 homeowners and guaranteeing more than $24 billion in loans.

Considering the difficulties in the current housing/lending market, this program has become a very popular method to purchase a house and make a contribution to small town communities.

While the program is aimed at rural development, those areas can be quite close to urban centers. For instance, properties in some parts of St. Charles County and Jefferson County are eligible for this program. Also look to Warren and Lincoln Counties and many other counties from the eastern to western Missouri borders, excluding large urban areas.

Here are the details:

• Properties must be located in a rural community with less than 20,000 population, or in open country not closely associated with an urban area.
• There is no down payment.
• The property is financed for 100% through traditional, qualified lenders, and the loan is guaranteed by the UDSA program. There is also the possibility of adding closing costs to the loan.
• Mortgages are issued for a 30-year fixed rate with low interest rates.
• The program requires moderate income levels with a credit history that shows a reasonable willingness to meet the loan obligations.

These days potential buyers are challenged to think creatively if they want to own a home. Going outside the normal process can bring a homeowner to a new lifestyle, a sense of pride in home ownership and the satisfaction of succeeding despite the odds.

During the past year, more than 3,000 Missouri households have turned to the USDA Rural Development program, to the tune of $277 million in guaranteed loans. (St. Louis Post-Dispatch 2-22-09) How about you? Explore the possibilities and find out if country living is in your future.