The sooner you and your spouse can agree on where the family money goes, the better. The best time to figure out finances is before you’re married when both of your money is separate.

I’m getting married in November. The shared finances discussion has begun. It will continue for the next few months until we’ve covered all of the ground rules. These premarital financial discussions should minimize the fights while we’re married.

[Photo Credit]

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With some items, there’s a clear-cut answer in the rent vs. own debate. For example, unless you’re in the moving business, it just doesn’t make sense to buy your own moving truck. A moving truck is definitely something you’d be better off renting. With other items, you’re better off just out-right buying them. Underwear, for example, comes to mind. But what about your residence. Financially speaking, are you better off buying a house or renting an apartment?

Owning a home is part of the American Dream. It’s just something that people are expected to do once they have the financial means (if not sooner). As far as renting an apartment goes, I’ve always heard it referred to as “throwing money away.” You pay money every month, but in the end, you have nothing to show for it. Owning a home is definitely the way to go, right?

Not so fast, says Jack Hough of SmartMoney. He argues that over the long term, the value of houses won’t appreciate more than the level of inflation, so you’re better off renting and investing your money in stocks, which average a 7% return per year over the long term. Hough also goes into a great deal of detail about real estate trends, home ownership costs, tax considerations, etc. It’s a good read, and definitely something to think about before you think about purchasing a home.

Article [via MSN Money]

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If you’re buying a home, don’t use a home inspector referred by the home seller’s agent. The inspector and the agent are probably business partners. Their interests are aligned with the seller’s interests. Not yours. A seller’s home inspector might not point out the flaws in the house.

It’s probably safe to use a buyer’s broker home inspector recommendation. Be sure to get references from the inspector just to make sure he’s got sufficient training and experience.

[Photo Credit]

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Contrary to popular belief: Pre-approval letters don’t come with a red-stamped “Approved” on it.

Pre-approval for a mortgage gives you a stronger position when it’s time to negotiate purchase price of a home. A pre-approval letter shows that you’re serious about buying.

The letter tells you the maximum amount of money the lender is willing to give you based on your income and credit report. It’s good to know what your new home’s maximum price can be. You don’t want to shop for houses above the price that you’re pre-approved for unless you have a significant stash of cash saved away.

Don’t mistake a pre-approval letter for a pre-qualification letter. A pre-qualification letter doesn’t contain an in-depth look into your income or credit report. It’s a general estimation. A pre-qualification letter doesn’t hold any water when negotiating a home’s purchase price since it’s less formal than a pre-approval letter.

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The above video is of twin brothers John (who passed away a couple years ago) and Greg Rice. If you’ve stayed up late watching TV before, you’ve probably come across one of their informercials for their no-money-down real estate program. In this particular video, they are doing a commercial for a pest control company that they own a stake in.

Now I can’t vouch for their real estate program or their pest control business, but I seriously have a lot of respect for these guys. They took something that could be looked upon as a huge disadvantage and they turned it into a big positive. Sure, you might think that their methods were a bit cheesy, but you can’t argue with the results. They made millions in the real estate business and they turned a struggling pest control business into a thriving one. These guys are a testament to the fact that working hard and making the most of your situation can yield some pretty impressive results. Rock on, little guys.

Video [Hat Tip: Brohans]

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[Update: Arkansas Business responds to this article. Verdict? Don’t knock it till you’ve been there. -HENRY]

I am currently contemplating a career move and a possible relocation, so when I saw an article titled “10 low cost areas where jobs are plenty” I was quite intrigued. That is, until I actually looked at the list.

Topping the list were cities in Arkansas, Missouri, Idaho, and Utah. Um, no thanks, I think I’ll try my luck in the Ukraine first.

Now admittedly I haven’t visited any of the places on this list, but I think that’s with good reason. If those places were actually fun enough to warrant my interest, then I probably would’ve checked them out by now.

I just thought it was funny that this list contained some of the most stereotypically boring places to live in the United States. Anyways, if you’re looking for a cheap place to live and you don’t care about having fun, check out the article.

Article [via MSN Real Estate]

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I was told by my fiance that we’re buying a house THIS fall sometime. Oh yeah, she also told me that the date she wants to get married is also this fall. Last but not least: We’re going to Hawaii for our honeymoon.

If it were up to me, I would buy the smallest, dirt cheap house available. I would get married at city hall. And I would honeymoon at White Castle. Not going to happen.

I’ve never priced out the price of a wedding (nor do I want to). I’ve also never bought a house before. It’s time to do some major research. There’s going to be more home-buying articles in the upcoming months (up from zero).

I talked to one of my home-owner friends yesterday. She told me she financed her home with a Federal Housing Administration (FHA) loan. An FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally qualified lenders.

FHA primarily serves people who cannot afford a conventional down payment. Typically, these are popular among first-time homebuyers (aka me).

I did some research and here are some advantages and disadvantages that I found to FHA loans.

Advantages of an FHA Loan

You only need 3% down payment.

First time home buyers usually don’t have a large chunk of downpayment to throw down on a house. You only need 3% down with an FHA loan. A $200,000 dollar house only requires a $6,000 dollar down payment. Horray!

They allow a higher debt-to-income ratio.

Lenders have a limit on how much debt you hold versus how much income you bring in. Obviously, more income and less debt is the most ideal situation. Word to the wise: Pay off your high-interest debt before buying a house.

Your credit doesn’t have to be as good as it would for a conventional loan.

A lender has a lesser risk loaning money to someone with a lower credit score since the loan is insured by the government. But your credit is great, right? Right.

Rates for an FHA loan are typically the same as a conventional loan given the same credit score.

This means that if I have a FICO credit score of 650, then both the conventional and FHA loan should offer the same interest rate. My credit score is higher than that but it’s nice to know that the FHA loan doesn’t penalize you.

The loan is assumable by someone else.

A mortgage loan that allows a new home purchaser to undertake the obligation of the existing loan with no change in loan terms.

Disadvantages of an FHA Loan

You essentially pay 2 mortgage insurance premiums (aka PMI).

There’s a one-time chunk of PMI that you need to pay. There’s also an additional monthly PMI that you have to pay which could add up to a huge chunk to your monthly payment.

The property needs to meet certain requirements.

FHA-insured loans are available in urban and rural areas for single family homes, for 2-unit, 3-unit, and 4-unit properties, and for condominiums. Also, the property can’t be worth more than a certain value.

There’s a maximum amount of money you can borrow depending on your area.

There’s a calculator here that will tell you the limit of what you can borrow in your area.

You could face a recapture tax on the property if you sell too soon.

Recapture is a Federal income tax that borrowers may have to pay if they sell or transfer their CHFA-financed home within 9 years.

For more information on FHA loans, visit the official website (http://www.hud.gov/).

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