During the ONE course, couples will have an opportunity to learn more about finances, as well as setting a budget. Couples will also be able to learn more about finances during the ONE mentorship program.

"Where's the Money Honey?"

Finances will play a huge role in your marriage, whether you like it or not. Learning key financial concepts is vital to the health of your marriage. We've provided some basic financial information for you. This is by no means an exhaustive concordance of everything to do with money, but it will be a great start.

 BUYING A HOME

Monthly housing costs shouldn't exceed 29% of your monthly income, according to the National Housing Administration.  If you have less debt, this percentage can go up a bit.  A key principle that applies here and throughout this section is this: Live within your means! Look at what a monthly mortgage payment would cost you and make sure you could make those payments.  Keep in mind too, that you will have closing costs (legal fees, appraisal fees, property tax, title insurance, etc) on the purchase of a home.  Many people think a house is a great investment, so they are always upgrading to bigger and bigger houses, stretching their skin-tight budget as far as they can. In reality, a house can be a liability if it sucks up any "opportunity money" you would have had for other worthwhile investments.  

You don't have to put 20% down on a house, as many will tell you.  In fact, you can get a down payment for as little as 3%.  Also, with discounts out there (such as First Time Home-owner with an FHA loan), you can significantly decrease the financial obstacle of buying a home.  Purchasing a house is usually a better financial decision than renting, because your monthly mortgage is actually going toward your equity.

LOANS

Getting a loan doesn't have to be intimidating or confusing. To get a loan for a mortgage, several things will come into play. First, use this Profit and Loss Sheet to figure where you are at financially. How much cash flow do you have on a monthly basis? What are your assets?  Your liabilities? On top of a mortgage, you will also need to factor in utilities, state and local taxes, mortgage insurance, and possibly a homeowner's association fee if you live in a covenant community. Next, what's your credit history?  Decide if you want a 30-year mortgage, and if the rate should be fixed or variable? 

The longer your term, the more interest you will have, but you will have slightly smaller monthly payments.  Some things that will determine your decision are: Do you plan on living in the house for awhile, like over 5 years? Are the rates currently high or low? Use our Loan Calculator to determine your monthly payments.

All lending agencies want your business, and there are many different types of loans each has to offer. Make sure you shop around for the best deal. Once you find the loan you feel comfortable with, get approved. Being pre-approved puts you ahead of other home buyers, and in today's frenzy for new homes, every second counts.

GETTING OUT OF DEBT             

Do you know where you're at financially? Have you filled out a Profit and Loss sheet to determine your financial position?

What kinds of interest are you paying on current loans?  If you are paying high rates, you might want to consider transferring high interest credit cards to a lower rate card. Many don't know you can even negotiate with your credit card company to see if they'll reduce your rate to keep your business.  You can consolidate your loans under one loan with a reasonable rate, or get a home equity loan at 10% or so and pay off that 18.5% APR credit card. In any case, always pay off as much as you can on a monthly basis.  Credit card companies want you to pay the minimum balance because they know it will take you a long time to pay it off, while in the meantime, they make a ton of money off of your high interest payment!  Again, LIVE WITHIN YOUR MEANS!

FINANCIAL TERMS DEFINED:

Profit and Loss Sheet – Download your interactive P&L Spreadsheet 

Pre-Approval – By going to the bank and getting approved before
looking for a house, you increase your chances of getting the offer
on the house accepted by the seller. You have shown the seller that
 you have the money, and you don't have to go through the loan
approval process before submitting a contract. In addition, being pre-approved  helps narrow your search since you already know
how much of a monthly payment you can afford. 

Fixed and Variable Rates – Depending on what type of loan you get, you will either have a fixed interest rate to your loan or a variable rate.  Fixed rates stay the same throughout the life of the loan, usually 15 or 30 years. Usually, a fixed rate is higher than a variable rate. A mortgage having a variable rate is known as an Adjustable Rate Mortgage, or ARM. These variable interest rates usually vary from year to year, or every six months. A select few ARM's will vary more frequently.  The interest rate of an ARM is set to the current interest rate, so always be knowledgeable of where the economy is and where it's heading.  Lock in when you feel you have a good rate. If you get locked into a high fixed interest rate, refinancing is available but will sometimes be associated with a fee. If rates drop, you might want to consider this option. 

Credit History – Your credit history is kept on a credit report, which is available through companies such as Quicken and TransUnion.  On this report, you will find your credit rating, which determines your ability to buy a car, home and furniture, your eligibility for credit cards, leasing an apartment, or your limit on a loan.  There are many things that affect your credit rating, such as your punctuality in paying off bills, the frequency of missed payments, or if whether or not you've established credit throughout your lifetime. Keep in mind that negative marks against your credit history can show for as long as seven years, even if you've cleared your debt. 

Mortgage – A mortgage is a loan you get from a bank for the sale price of your home minus the down payment.  Unless you can pay for your house in cash, or rent, you will have a mortgage.  Each month, you will make a payment toward your mortgage, with part of it going toward the interest rate on your loan and part of it going toward the actual cost on the home, or the principal.  As time goes on, your principal will go down.  This will allow you to have more of your monthly payment go directly toward your principal as opposed to the interest. This is also referred to as amortization.  

Asset – Simply put, anything that puts money into your pocket; things that you own, such as investments or real estate could be considered an asset. 

Liability – Anything that takes money out of your pocket; debt or money that you owe to somebody else, such as mortgages and credit card debt. 

Equity – Assets minus liabilities. Think of it as the value of what you own minus what you owe on it.  For example, you may own a house and have part of it paid off. The part that's paid off is the equity on that home.