Preparing to buy your first home is both exciting and stressful. Before you start down the road of home ownership, it is vital that you have all of your finances in order and that you fully understand what is in store for your budget. Here are three things to know financially when buying your first home.

Mortgage and Down Payments

The world of mortgages and down payments can be confusing for the first-time homebuyer. Understanding the differences between a fixed-rate and an adjustable mortgage will help you to make a more informed decision. You also need to plan how much money you want to put down on the home. There are several advantages of placing a 5 percent down payment, but it’s important to consider what works best for you and your financial situation. Keep in mind that if you put less than 20 percent down, it is likely you will be charged a monthly fee for private mortgage insurance (PMI). Consider the pros and cons as you're weighing the offsetting advantages of placing a 5 percent down payment.

Set a Price Range

Picking the right price range is an imperative step in finding the right house for your personal needs and your budget. When it comes to real estate, timing is everything. If you are shopping in a buyer's market, you are going to get more for your dollar. There are a host of online tools to help you figure out how much home you can afford. A lot of times, a real estate agent can also help you to figure out how much you can afford. You also need to examine your current and projected lifestyle to determine how much you can spend. For example, if you plan on having children in the future, you need to add these costs to your overall budget, especially if one parent plans on staying home with the kids.

Budget for Extra Expenses

The costs of purchasing a house go well beyond the basic outlay for the down payment and insurance. Chances are that if this is your first home, you will be upgrading to a significant amount of additional space. This will likely necessitate that you set aside extra money for new furnishings. If you are moving into a newly constructed home, it is also probable that you will need a budget for landscaping. Depending on the condition of the home, you will want to have some cash on hand for repairs and renovations.

Equipping yourself with the right tools and knowledge will help the process of buying your first home go more smoothly. All of the stress will be worth it once you are relaxing in a place you own.

Related: Real Estate in the Digital Age: Why you still want an agent by your side

(BPT) - The new year is just around the corner and it’s never too early to think about your 2020 goals — and for many, this means prioritizing finances. Taking the time to focus on your goals and determine what’s important to you financially is the best way to set yourself up for success, but actually following through can be difficult. These easy financial exercises from Vanderbilt Mortgage will help you reach your goals in the new decade.

1. Outline your plan

If you don’t already have one, establish your plan. Write down short-term financial goals, such as creating a monthly budget, and long-term goals, such as paying off a debt or buying a home. Defining these goals will help as you set your budget for the next year.

2. Create a monthly budget

Gather pay statements, bills and bank statements to get started. You can write down all this information or use a budget tool. Start by calculating your monthly income, which includes not only the amount you may get from a regular paycheck, but also any money you get in government aid, child support or pensions. The next step is to look at your bills and bank statements to find out exactly what you spend in various categories of expenses such as utilities, auto, medical, personal, insurance, etc. This accurate information will empower you to take control of your spending.

3. Set a savings goal

Saving is another important aspect of financial health. Whether you’re using a general savings account, adding to an emergency fund, or setting aside funds for a new home, saving for larger financial goals helps you prepare and gives you peace of mind no matter where life takes you. If you’re new to saving, start small. Simply skipping your daily latte from the coffee shop a few times a week can add up quickly.

4. Stick to it

The statistics on how many people actually follow through and keep their New Year’s resolutions are rather bleak, but sticking with your financial goals will pay off. Stay on track by monitoring your progress each week. As you get closer to your goals, excitement will build and you’ll be motivated to keep budgeting and saving.

Vanderbilt Mortgage offers helpful online resources whether you are looking to purchase a new home or keep your current home in great shape. “Here at Vanderbilt, we want to use our years of experience to help current and future homeowners.” Said Eric Hamilton, President of Vanderbilt Mortgage, “Providing educational materials for every step of homeownership is one of the ways Vanderbilt is with customers every step of the way.”

Vanderbilt Mortgage and Finance, Inc., 500 Alcoa Trail, Maryville, TN 37804, 865-380-3000, NMLS #1561, (http://www.nmlsconsumeraccess.org/), AZ Lic. #BK-0902616, Loans made or arranged pursuant to a California Finance Lenders Law license, GA Residential Mortgage (Lic. #6911), MT Lic. #1561, Licensed by PA Dept. of Banking. Sponsored ad content from Vanderbilt Mortgage and Finance, Inc.

5 Financial Tips for Teens

(Family Features) When it comes to economics, many teens’ mouths write checks their knowledge can’t cash.

While 93% of American teens say they know how the economy works, 29% have had no economic schooling, according to a survey of 1,000 U.S. teens ages 13-18 by Wakefield Research on behalf of Junior Achievement and the Charles Koch Foundation. Even in light of their false confidence, teens are aware of the importance of financial education.

Although the study identified numerous gaps in economic and financial knowledge, it also showed teens do know where to look for credible information. Two-thirds (67%) recognize they should use their school as a resource.

“One of the things we hear often is that some textbooks are written too academically for most students to understand the concepts,” said Jack E. Kosakowski, president and CEO of Junior Achievement USA. “Our programs, which work as a complement to the school curriculum, are written from the perspective of today’s teens and use digital content to help bring economic concepts to life for students.”

Beyond the classroom, another 63% of students believe they should use their parents as resources for economics education. Help influence the financial literacy of a teen in your life with these practical money-management tips adapted from the curriculum.

Set goals. Managing your money is more meaningful when you’re doing it with purpose. This might mean budgeting to ensure you have enough money to maintain your auto insurance and keep gas in your car, or you may be saving for a big senior trip. Knowing what you want to achieve with your money can help you plan how you spend it more wisely.

Weigh needs vs. wants. When you begin making your own money, it’s easier to indulge your own wishes and spend money on things you don’t necessarily need. To some extent, that’s not a bad thing; rewarding yourself is fine when you do so within reason. That means not exceeding your available funds, and not forsaking things you truly need, like gas money to get to and from a job or school.

Get a debit card. Most people find that having cash on hand makes it easier to spend. If you use a debit card instead, you’re an extra step away from spending so you have a little more time to consider your purchase. Another benefit of a debit card is it helps track your purchases in real time so you can keep constant tabs on your balance and ensure you don’t overdraft your account.

Start a savings habit. Even if your income doesn’t allow for much, it’s a good idea to get in the habit of setting aside a portion of each check. It may only be $10, but over time each $10 deposit can build your account toward a long-range goal.

Protect your privacy. Teens who’ve grown up in the digital age tend to be less skeptical and cautious about privacy matters than their elder counterparts. It’s important that young people understand the potential impact of failing to protect their privacy when it comes to financial matters, including the possibility that their identities could be stolen and all of their money siphoned away. Teaching kids about security is an essential lesson in economics.

Visit ja.org for more tips and information to help raise your teen’s financial literacy.

Photo courtesy of Getty Images

(BPT) - For many Americans, the biggest hurdle in buying a home is the down payment. According to a recent report, 49% of non-homeowners stated that not having enough money for a down payment and closing costs was a major obstacle to purchasing a home. Many people also mistakenly believe lenders require a 20% down payment to qualify for mortgage financing.

Data shows that by using private mortgage insurance (MI), millions of homebuyers with down payments as low as 3% or 5% have been approved for affordable and well-underwritten mortgages.

In the past year alone, MI has helped more than 1.1 million borrowers purchase or refinance a mortgage. Nearly 60% were first-time homebuyers, and more than 40% had annual incomes below $75,000.

How MI works

In addition to the other elements of the mortgage underwriting process — such as verifying employment and determining the borrower’s ability to afford the monthly payment — lenders require borrowers to commit some of their own money before approving their mortgage loan. This is where MI entered the system more than 60 years ago, to bridge the down payment gap and help creditworthy borrowers qualify for a mortgage without large down payments.

Benefits of MI

• It helps you buy a home sooner. On average it could take 20 years for a household earning the national median income of $61,372 to save 20%, plus closing costs, for a $262,250 home, the median sales price for a single-family home. MI helps borrowers qualify with as little as 3% down.

• It is temporary, leading to lower monthly payments down the road. MI can be cancelled once 20% equity is established, either through payments or home price appreciation. Borrowers typically can cancel MI within the first five to seven years. This is not the case for the vast majority of mortgages insured by the Federal Housing Administration. FHA mortgage insurance premiums stay on the loan for the life of the loan.
• It provides several flexible payment options. Your lender can offer several MI product options for MI payment; the most common is paid monthly along with your mortgage until the MI cancels.

MI is a stable, cost-effective way to obtain a low down payment mortgage, and offers distinct benefits to borrowers. It’s been a cornerstone of the U.S. housing market since 1957, providing more than 30 million families with the opportunity to own homes despite financial barriers. If you are considering purchasing a home, it is important to understand your options, including your low down payment options. To learn more, visit LowDownPaymentFacts.org.

Save Your Way to Lower Home Insurance

(Family Features) If your homeowner insurance rates are creeping up even though you haven’t filed any claims, it may be time to take a look at how you can bring those prices back down.

Research, smart shopping and even some home upgrades can make a noticeable difference in your insurance premiums. Explore the cost-savings potential with these tips from the experts at CertainTeed, a leading manufacturer of exterior and interior building products:

Shop for the best rates. It’s easy to be complacent when you’ve used the same insurance company for years, but if getting the best rate is your objective, it’s a good idea to shop around. To do effective comparison shopping, have a copy of your current policy ready and contact a handful of competitors. Provide them the exact same coverage details so you can compare like rates, but also be ready to listen to information about additional coverage options that may suit your needs.

Combine homeowner insurance with other policies. Most insurance carriers offer multiple policy discounts, which they apply when you insure more than one item. For example, if your homeowner insurance carrier also insures your cars, you’re likely to save money on the rates for protecting both your home and automobiles.

Update your home’s first line of defense. Many homeowners focus on aesthetics when it’s time to make upgrades, but there are some important functional improvements that can make a difference when it comes to your insurance premiums. For example, as extreme weather becomes more commonplace, the first line of defense is often the type of roofing material chosen. Many insurance companies even offer discounts for using impact-resistant shingles. Check with your insurance provider before making a final selection, but in general, look for products that include “impact-resistant” in their name and specs, and “Class IV Impact Resistance,” the highest rating available for roofing materials.

For example, NorthGate Class IV impact-resistant shingles from CertainTeed are engineered to have a higher probability of resisting hail. These shingles are made using rubber-like polymers that offer flexibility and impact resistance, as well as crack and shrink resistance, even in cold weather. So when severe weather strikes, your home can be protected and stay looking good. 

Install a home security system. An intruder alarm can provide more than peace of mind. Insurance companies often reward homeowners who take steps to minimize the chances of burglary or vandalism. After all, a well-protected home is less likely to result in a claim for losses. Some companies offer varying degrees of discounts on insurance rates depending on the type of system you install, so be sure to thoroughly research the options. For example, a system that simply emits a loud noise when triggered may generate one level of discount, while a system that dispatches emergency personnel when activated can lead to an even better rate.

Insurance rates are one place to save money on your home costs. Learn more about impact-resistant shingles and how they can save your home and wallet at certainteed.com.

5 Ways to Step Up Date Night Without Breaking the Bank

(Family Features) Most relationship experts agree that making time for date night is important, whether it’s the early days of a blossoming romance or decades into a comfortable marriage. Spending that valuable time together doesn’t have to be expensive as long as you take the time to make it special.

Plan your next date with these ideas for low-cost experiences with the one you love:

Share time outdoors. Except in the most extreme conditions, there’s always something to do outside and most of those activities are either free or relatively inexpensive. Whether it’s taking a stroll hand-in-hand or planning a picnic at a scenic location, the exercise and fresh air can be good for your body and mind, for both you and your beloved.

Dine on a dime. Although the days of a nickel burger are long gone, there are ways to curb your spending when you eat out. For example, many restaurants offer menus with smaller portions as well as promotional nights with discounts geared toward certain audiences. Some restaurants even offer daily discounts, as high as 10 percent off your total bill for AARP members. If you are not a member, it’s simple to sign up online. Membership is just $16 a year, so it can practically pay for itself with the use of just one of the dining offers.

Simply stay in. When you’re conflicted between going out on a date or settling for a night on the couch, it’s possible to have both. Order takeout from a favorite spot and bring it to the comfort of your home for the best of both worlds. It allows you to avoid kitchen cleanup and simply commit to enjoying one another’s company without interruption.

Master the movie schedule. Prime time at the theater can be pricey, but if your calendar is flexible, you can catch a show earlier in the day for a steep discount. Some theaters also offer special discounts for ordering tickets online. An added bonus: taking in an early movie with a snack may help save money on dinner later.

Enjoy special engagements. Whether it’s a local sporting event or a musical performance by a group visiting your town, sharing a pastime that you’re passionate about is a good way to share a piece of your life and interests to help establish a deeper connection with a loved one. Conversely, if it’s a new experience for you both, it may establish a newfound bond that you can explore together over time. Don’t let ticket prices dissuade you. Take advantage of offers that may be available to you, special showings or even a ticket discount with your AARP membership.

Explore more tips and ideas to make the most of your relationships and everyday life, too, at AARPAdvantages.com.

Photo courtesy of Getty Images