Jlbota
I have a modicum of experience in these matters having been a bank president for 30 years as well as a "financial advisor" after my retirement. Now, I just play on my farm. I only mention this background so you have some idea of my experience.
Most all of the information offered to you thus far on this board is good advice but advice needs to be taken in its proper context. Believe me, you do need a "financial plan." Some plans are informal understandings and some are very formal written documents. The form is not important. What is important is that you are thinking about your future and your family's future. Most of us only consider the immediate, short-term effect of our financial decisions because they usually satisfy a current need or desire. A plan forces you to consider the long-term cost or benefit and helps you make a more wise decision.
My advice is to find someone that can help you with these decisions and form some sort of a plan that will consider things like death, retirement, college expenses, disability, loss of job, etc. Unfortunately, many so called advisors are in that position to sell some financial products to collect a commission. That is not necessarily bad, but you must understand and recognize that motive. There are good advisors and those that just want a way to get into your pocket (I have seen them all). Don't grab onto the first person you find with a financial advisor name tag. Talk to several. Many advisors are found through friends that will recommend someone who helped them. Remember, you are not looking for some financial guru that will "make you rich". You are looking for someone with experience who will help you decide on a plan and help you make good decisions to implement that plan.
If you have access to a local banker, talk to him/her. If they are not willing to help you, they can usually give you a name. But remember, just because someone works in a bank or sells insurance or stocks and bonds does not make him/her an expert. You have got to find someone who has experience and someone who will care about what happens to you. Good luck, but they are out there.
That said, and without knowing more about your background, I will offer some cheap advice FWIW.
I prefer to deal with a local financial institution that is small enough and has the main office in your home town so that you can go right into the President's office if you have any problems. Usually, the smaller banks (commercial or savings) will be more flexible than the larger conglomerates that look primarily for vanilla loans that meet national standards for sale to the secondary market.
For most of us, buying a home is the largest financial investment we will make in our lives and its importance is treated too casually. In buying a home, the realtor and loan officer both play important roles but you must consider that the realtor's motivation is to find the quickest way to make the deal and the loan officer's motivation is to qualify you for a loan. Neither wants to waste time if there is not a commission at the end. I don't mean to suggest that they will not be helpful but they are concerned with the immediate results not your long term plan.
Well, I guess this is pretty philosophical and not very specific.
Here are a few general comments I have concerning some of the posts so far:
1) Stay away from "creative financing" because they are usually gimmiks and not good for you in the long run. There is a plethora of lenders out there that have all kinds of loan products for all kinds of situations. If you have good credit and good collateral, you don't need any special financing. I prefer the local lender over some large mortgage banker or broker.
2) In Ohio, Land Contracts are not the best option. They benefit the seller more than the purchasor. Use conventional mortgage if available. If the deal will be financed by the seller have him give you a deed and take a mortgage for the balance.
3) Yes, usually the best loan terms (interest rate) are available with 20% down. However, using too much of your savings to gain an advantage in building home equity is not always the smartest thing to do. If your goal is to have your home free and clear in the shortest period of time then that's a different story. Generally, the interest rate on a home loan is the lowest rate you will pay and sometimes it is better to carry the most debt you can afford on your home (biggest asset) and use your cash for other things (but not always). The interest on a home loan is tax deductible and the deduction is usually large enough to enable you to itemize your other deductible expenses on Schedule A and save some tax $. You should have enough savings for contingencies and believe me there are many times that home ownership results in unforseen expenses (repairs, etc.). <font color="blue"> </font>
If you have any specific questions you would like for me to address, send me a private email.
Briarwood
