Max's Center for Kids Who Can't Read Good and Want to Do Other Stuff Good Too: Sites Worth Visiting Before Purchasing a Home

I'm a teacher by trade, so naturally I look to educate myself on anything I do not completely understand. Before I proposed to my fiancee, I understood the basics of buying a home: you search for a home with a realtor, look at houses, make an offer, get the home appraised, get the home inspected, finally attend closing and cry a little as you sign your life away. However, I never actually understood the entire process anymore than your average 4th grader understands where babies come from.

Searching the Internet I came across a few sites that were helpful and others that were not so helpful. I have included three of them below and explain what I learned about the home buying process from each site.

Investopedia: Think wikipedia for investments specifically. I started using this site when I started to invest in stocks a few years back. I like using this site for looking up terms that I don't completely understand. Take for example amortization. This refers to the monthly installments of the loan. They also include clever animated videos that explain basic info like "What's a Mortgage?"

If you're interested in learning how to invest, investopedia has a really great simulator where you can invest $100,000 in fictitious cash and practice your investment strategy.

Mint.com: If you don't use Mint.com, you really should. It is an excellent tool to look at things like gross income, net income, and gain/loss ratio based on your actual accounts. When I first started using this site in 2010, I moved from using credit cards to cash only. The net income trend graph showed me that my finances clearly were not in accord as my net income was in the red for the first three months of 2010 because I was over spending on my credit cards. Even though I paid my credit cards off in full each month, I realized if I lost my job I would be at least a month behind my cash-flow.

I will admit, I was a bit skeptical at first because the website asks for you financial account numbers and passwords. However, Mint is quite reputable and the New York Times published an article in 2010 that describes their security process. At the end of the day, it's up to you. If you're proficient at Excel and have a bunch of free time on your hand, you can do it yourself too.

Bankrate.com: I recently discovered this site and find it immensely helpful. The site breaks down each part of the home buying process into "chapters" found in this link. You can learn about things like PMI (Private Mortgage Insurance). This is what you will pay if you can not float the 20% down on a home. Once you accumulate 20% equity (pay off 20% of the home purchase price, not including interest payment), PMI is terminated (PMI varies based on the price of your home and protects the lender in case the buyer (you) defaults.  
Edit: PMI does not self terminate, you need to contact you lender to make this happen.

I also learned about the 80-10-10 plan. This is a good idea if you cannot secure a 20% down payment, but can drop 10%. If you can swing 10%, you can make an attempt at this plan. Discuss this with your loan officer for further details, but you will need to apply for two loans (one 10% loan and one 80% loan). If you do this, you will avoid PMI. The advantage here is that your loan interest is tax deductible, while the monthly PMI payments are NOT tax deductible.

I hope these sites help you and look for my third post about the loan process next week! Thanks for reading!

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