Buying a home has been known as the American Dream. But once you’ve bought it, how long should you hold onto it becomes the big question. Well the truth is, most of the time its not your decision to make anyways. Or at least the decision is so painful you hesitate indefinetly to make the next move. Fluctuating interest rates and home values, job changes or layoffs, a growing comfortablity with the location, realization of new Real Estate fees and closing costs, etc. inevitably effect your decision to make that new home transition.

Most new home buyers say they will stay in the home for a few years then upgrade to a bigger one with all the equity they gain. Others say they will move to a bigger home once they have kids or when their salaries increase. All of these reasons sound reasonable, however much of the time they are not reality.

In regards to home equity, the unfortunately reality is that home values in the same location rise proportionaly to each other. As a result whatever equity you have gained in your starter home, by itself does not increase your purchasing power to buy a larger home. Yes, it may give you the opportunity to fiance a larger home, but in the end you also have a much bigger monthly mortgage payment. The next question is, can you afford the new mortage payments.

Before making the decision to upgrade to a new home, you next have to figure out what your net proceeds will be from the sale of you existing home and what your future mortgage will be and whether or not you can afford it. Too frequently we forget that a good portion of our home equity is lost to the real estate commisions and the closing and moving costs to transistion to the new home. Only after the net proceeds are calculated from the sale of an existing home can we understand how much additional funds we can put towards a deposit on another home. The key point to remember; it costs to move and it usually costs big.

Unfortunately home prices have far outpaced salary increases. Quite frankly that chasm seems to continue to grow. As a result, waiting for growth in your salary to buy the next bigger home is sometimes a poor reason to hold off from buying the bigger home in the first place, particularly if interest rates are low.

Once the kids arrive the decision to upgrade to a new home can become even more complex. Particularly when the kids get older and even if you are planning to live in the same general community.

The bottom line: You will probably be in a home much longer than you originally plan. Consequently, it is sometimes wiser to buy more home on your first home purchase rather than less. This is particularly true if interest rates are un-naturally low. So before you buy that first home think longer term and buy what you could be happy living in for 20 years, because you just might!

Over the past 20+ years Mark Donovan has been involved with building homes and additions to homes and is a licensed real estate agent. His projects have included: building a vacation home, building additions and garages on to existing homes, and finishing unfinished homes. For more home improvement information visit http://www.homeadditionplus.com and http://www.homeaddition.blogspot.com

Understanding real estate and mortgage terminology is of utmost importance when buying a home. The vocabulary will become second nature the more you are involved in real estate transactions. For the pros and loan officers, it’s daily language.

This is a quick reference of mortgage dictionary words. Sit down and read each description and become familiar with the words. Then, in a few weeks, you can “talk the talk” and be familiar with the meaning of each word.

Escrow Account: A financial account, separate from an operating account, maintained by a title company for the benefit of the parties to a real estate transaction.

Federal National Mortgage Association (FNMA): Also know as “Fannie Mae,” a tax-paying corporation created by Congress that purchases and sells conventional residential mortgages, as well as those insured by FHA or guaranteed by VA. This institution, which provides funds for one in seven mortgages, makes money more available and more affordable.

Fixed Rate Mortgage: Interest rate is constant for the entire term of the loan.

Floating Rate: An interest rate that is not guaranteed. One that can change as the “market” changes. You can choose to float your rate, instead of lock your rate.

Foreclosure: A legal procedure in which property securing the debt is sold by the lender to pay the defaulting borrower’s debt.

Housing Expenses-To-Income Ratio: The ratio, expressed as a percentage, which results when a borrower’s housing expenses are divided by his/her net effective income (FHA/VA loans) or gross monthly income (conventional loans).

Index: the interest rate to which changes in an adjustable-rate mortgage are pegged.

Impound: The portion of a borrower’s monthly payments held by the lender to pay taxes, hazard insurance and mortgage insurance.

Interest Rate: The percentage a borrower pays to borrow money. On adjustable-rate loans, index plus margin equals adjusted interest rate.

Lien: A monetary claim against a property, which usually needs to be settled before the buyer can take title.

Loan Application Fee: A lender’s fee, usually ranging from $75 to $300, which the buyer must pay when applying for a mortgage.

Lock-In: A lender’s promise to guarantee an interest rate or points for a set period during the qualifying process.

Margin: The amount added to an index to determine future interest rates on adjustable-rate mortgages.

Market Rate: The average rate charged by lenders for conventional, fixed-rate loans.

Mortgage: A legal document that pledges a property to the lender as security for payment of debt.

Mortgage Insurance: Money paid to insure the mortgage when the down payment is less than 20 percent.

Negative amortization: An increase in the outstanding balance of a loan created when the payment isn’t large enough to cover the interest charged.

Note: A legal document obligating a borrower to repay a loan at a stated interest rate during a specified period of time. The mortgage note is secured by a mortgage.

Owner’s Title Insurance Policy: Insurance to protect the buyer against loss arising from dispute over ownership of property. The owner’s guarantee that the property is free and clear of any unknown defects. You will receive a copy of this policy before closing, and again at closing.

Pre-Qualification: A determination of how much money a prospective home buyer will be eligible to borrow before a loan application is made. Many real estate professionals will ask buyers for a pre-qualification or pre-approval letter to accompany an offer.

Understanding these terms will give you an advantage when applying for a loan. Just study them and you’ll understand the lingo.

Helena Biasatti Hill is a Dallas real estate broker and a contributor to the Flower Mound Home Showcase.

Many people believe that having few, if any, credit cards and not having any debt is good for their credit…and they’re all wrong!

Credit scores do not improve unless you have credit accounts with some debt accumulated, with all of the required monthly payments paid on time. While it is true that you may not want to pay interest on any debts you may have, it is far better for your overall credit to have some debt instead of no debt.

The best credit scores come from consumers with established credit accounts, with a small portion of the available credit line in use. Your credit report is updated monthly with payment information on these accounts. If you make all your required minimum monthly payments on time, your credit score will rise.

The shorter the amount of time you’ve had accounts open, the larger the balances are on open accounts and any late payments can combine to negatively impact your credit score. If your total debt-to-income ratio is more than one-third of your monthly income, you may not even qualify for a mortgage loan

Never having used any credit may result in a loan disqualification also, simply because there is no repayment information to base your creditworthiness on.

Your credit score will directly influence the availability of mortgage loans with acceptable rate. The closer your credit score slips toward subprime territory, the more interest and fees you’ll likely end up paying for your loan. The difference between a standard mortgage and a subprime mortgage can make the difference in hundreds of dollars a month tacked onto a mortgage payment.

How you use your credit today will determine the mortgage opportunities that are present tomorrow. Use your credit wisely and the sky’s the limit. Use it poorly and mortgage opportunities will pass you by.

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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information, and active link are included.

If a mortgage could be paid off in five years or less, without it costing homeowners an extra cent, why wouldn’t every homeowner in America be doing it? Because they don’t know, or because they’re too wise? Although the former may be the case for many, I certainly hope the latter is the answer for most.

A real estate finance consultant company, who shall remain nameless here, claims it has the secret to paying off your mortgage in five years or less, without you paying any more on your monthly payment or adding to the principal mortgage of your real estate loan. They call it an inverse mortgage.

Now, this company, which is not a mortgage brokerage or a bank, claims that all you have to do is pay your mortgage payment every three weeks, instead of every four. In addition to this one tiny change, you’ll need to go to work for the company, recruiting other people to do the same. Of course, they say this is not a pyramid structure, although the way you cut into your mortgage and build wealth is by banking some of each payment that comes in for everyone you recruit, after the initial three. Incidentally, this company will take one of your payments at the end of the year for hiring you to recruit more people into their program.

Hmm, not a pyramid scheme or multi-level marketing? I don’t claim to be an expert in these areas, but I certainly know the basic structure, and you probably do too. Doesn’t a program requiring you to get others to buy something with the idea of you receiving a residual benefit from each recruit sound a lot like multi-level marketing? It does to me.

I may be a skeptic, but there are a few basic problems with the inverse mortgage and with this real estate finance program.

1. This company has been around for less than one year, and after some exhaustive research, I can’t find one person who has ever actually made money or cut into their mortgage as quickly as the company says one can.

2. In the last 20 years, there hasn’t been a revolutionary idea for reducing your mortgage, without paying more or without doing something like a bi-weekly mortgage (a completely legitimate, if unnecessary, approach to mortgage reduction). Why is it that this new company - not even mortgage people - has suddenly come up with something that true experts with 50 or more years of experience in the industry have not?

3. This one is the most alarming reason to be skeptical. In addition to the strange notion of recruiting people to take part in this program, the sponsoring company wants you to turn over your bank account information, so it can debit your account monthly to supposedly pay your mortgage.

So, is the inverse mortgage a scam? I can’t say unequivocally that it is, because I don’t have any true evidence to say so. The many years of experience in mortgage and investment real estate that I do have, though, tell me to beware of any program that looks too good to be true. This one does.

Mark Barnes is an investment real estate and real estate finance expert. Get his free mortgage finance course at http://www.winningthemortgagegame.com. Mark is also the author of the new novel, The League, a shocking, sports-related conspiracy. Learn more about his suspense thriller at http://www.sportsnovels.com.