Best strategies to buy a home when interest rates are high

Author and financial coach Lynn Richardson shares tips and considerations on buying a home while interest rates are on the rise.
2:16 | 09/27/22

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Transcript for Best strategies to buy a home when interest rates are high
WHERE IT ORIGINALLY CAME FROM. >> THANKS VERY MUCH. >>> OUR MONEY SMART SERIES LOOKING AT HOME OWNERSHIP WITH MORTGAGE RATES DOUBLING SINCE THE START OF THE YEAR ABOVE 6% AND A LOT ARE WONDERING IF THEY CAN AFFORD THEIR DREAM HOME. LYNN RICHARDSON AUTHOR OF "YES, YOU'RE APPROVED" JOINS US. HOW SHOULD POTENTIAL HOMEOWNERS THINK ABOUT IT? >> HOME OWNERSHIP IS THE FOUNDATION FOR BUILDING WEALTH AND IT'S STILL THE AMERICAN DREAM. ONE STRATEGY IS TO GET A MORTGAGE PAYMENT THAT'S LESS THAN OR EQUAL TO YOUR RENT NO MATTER WHAT THE INTEREST RATE IS. IF YOU'RE SPENDING $1500 A MONTH ON A RENT PAYMENT THAT'S $18,000 A YEAR THAT'S $90,000 OVER FIVE YEARS FOR SOMETHING THAT WILL NEVER BELONG TO YOU. YOU'RE PAYING YOUR LANDLORD'S MORTGAGE SO YOU MAY AS WELL PAY YOUR OWN. >> FIRST YOU HAVE TO COME UP WITH THE DOWN PAYMENT. >> YEAH, WELL, THE IDEA THAT YOU NEED 20% DOWN IS A MYTH. ON IF YOU HAVE 20% TO PUT DOWN, I DON'T RECOMMEND THAT YOU USE IT ALL BECAUSE IN THESE TIMES YOU NEED SOME OF THAT MONEY FOR YOUR RESERVES AND YOUR REPAIRS. FOR EVERY THOUSAND DOLLARS YOU PUT DOWN EXTRA, IT'S ABOUT A $6 TO $7 DIFFERENCE IN YOUR MORTGAGE PAYMENT SO $10,000 DOWN MORE WILL SAVE YOU $60 TO $70 A MONTH. IS IT BETTER TO SAVE THAT OR BETTER TO HAVE THAT $10,000 IN YOUR RESERVES? >> THOUGH ZERO DOWN PAYMENT OPTIONS SOUND ATTRACTIVE. WHAT ABOUT THE FINE PRINT? >> HERE'S THE DEAL. 0% AND LOW DOWN PAYMENT MORTGAGES HAVE BEEN HERE FOREVER. THEY ARE NOT NEW. THEY WERE HERE BEFORE INSTAGRAM, TWITTER AND EVEN EMAIL, RIGHT, BUT NO MONEY DOWN DOESN'T MEAN NO MONEY AT ALL. YOU STILL HAVE UP FRONT EXPENSES LIKE YOUR APPRAISAL AND YOUR HOME INSPECTION. A ZERO PERCENT DOWN MEANS YOU WILL GET REIMBURSED FOR THOSE AT THE CLOSING. ASK YOUR MORTGAGE PROFESSIONAL FOR A SIDE-BY-SIDE COMPARISON, DON'T ACCEPT THE FIRST THING AND THEN MAKE THE DECISION THAT'S RIGHT FOR YOU. >> WHAT'S THE CHECKLIST? >> FIRST GET A BUDGET. GO TO MY WEBSITE AT ASKLYNN.ORG AND FOLLOW THE 10/10/30 WORK SHEET AND GET RID OF EXTRA EXPENSES AND PUT THEM IN YOUR DREAM HOME SAVINGS FUND AND GET PRE-APPROVED SO YOU KNOW HOW MUCH MONEY YOU HAVE TO SPEND AND, THREE, DON'T GIVE UP. YOU CAN OVERCOME FORECLOSURE, BANKRUPTCY, JOB LOSS OR ANY ISSUE IF

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