The idea of buying a new home for the first time can be overwhelming for most people. It is probably the largest investment they have ever made, and the process itself seems downright intimidating. Here are answers to a few questions about homeownership from http://www.casanuevahouston.com/ and http://www.casanuevasanantonio.com/. Much more information is offered online at these websites.

How do I know how much I can afford?

Most people like to think of it in terms of their monthly payment. A good rule-of-thumb is that your total monthly payment will be about 1% of the purchase price. If a new home costs $100,000, the total monthly payment will be about $1,000.

What kind of down payment is needed? How much money is needed for closing costs?

With 100% financing, which is often available, you typically need about 3% out of your own pocket for various closing cost such as taxes and insurance. So, for a $100,000 loan that is 100% financed, you would need about $3,000 total cash. There are also home buyer assistance programs that can provide down payment grants to qualified applicants.

How much income do I need?

Lenders look at the overall debt-to-income ratio. They like to see that your monthly housing payment, plus everything on your credit report (including car payment, credit cards, etc.), is not more than 50% of your total gross monthly income (before taxes).

If you want to buy a $100,000 home, the monthly payment will be $1,000. Suppose you also pay another $500 each month in other bills that are on your credit report. That’s a monthly debt of $1,500. You would need to earn about twice that, or $3,000 a month, to qualify for the home loan, typically.

What type of credit do I need to have?

For an FHA loan, which is very popular, buyers generally need to have clean credit for the past 12 months, meaning that payments have been made on time. Many lenders don’t worry about credit problems that took place in the past, as long as the past year is good and clean.
What if I don’t have other loans or credit cards?

The FHA and other lenders are very willing to consider what they call “alternate lines of credit.” That is, any type of payment history that shows that the buyer is able to make regular payments on time. These can include items such as rent, utilities, telephone, car insurance and child-care payments. If a buyer can show clean, 12-month payment histories for at least 3 of these types of alternate lines of credit, that is generally good enough.

About The Author: Damon Thomas is a contributor to http://www.casanuevahouston.com/, a Houston-based company providing information for new home buyers.

I almost never talk about distillates, which are hydrocarbons that are heavier than gasoline and are used to make diesel and heating oil. I don’t use heating oil or diesel, so I don’t think about this market too much, but I know that a lot of people do. And for those who do, it’s shaping up to be at a minimum an expensive winter. I had seen this story earlier in the week:

Heating oil prices soar, elderly panic

A warm, summer-like day did nothing to ease the fears of the elderly women who walked into the Brockton senior center earlier this week seeking fuel assistance.

“They are panicking,” said Anne McCormack, the city’s director of elderly affairs.

And, they have reason to panic, say fuel oil dealers who are paying record-high prices and therefore charging record-high prices even before the winter cold sets in. The problem is even worse for those who rely on government fuel assistance programs, administrators say.

“Never in my lifetime,” veteran oil dealer Charlie Dyer of Raynham said about today’s prices. “It’s going to be a very difficult winter for customers, no doubt about it.”

And consumers will get no relief, as today the EIA announced a very large surprise drop in distillate inventories:

Oil rebounds to go above $80

In its weekly inventory report, the Energy Information Administration (EIA) said crude stocks gained by 1.2 million barrels last week. Analysts were looking for a decline of 400,000 barrels according to Dow Jones.

Gas inventories eased by 100,000 barrels, compared to the 400,000 gain predicted by analysts. Distillates, used to make heating oil and diesel fuel, fell by 1.2 million barrels. Analysts were looking for an increase of 700,000 barrels in distillate supplies.

In the inventory report, EIA said refineries operated at 87.5 percent capacity, falling just shy of expectations.

Some analysts predict crude is set to drop $10 to $15 a barrel over the next couple of months as the fundamentals aren’t there to support $80 oil. Others say $100 a barrel is just around the corner, especially in the event of a surprise disruption in supplies.

So, here’s the score heading into the 4th quarter: Gasoline inventories remain at record-low levels. Distillate inventories, at 134 million barrels, are 16 million barrels lower than at this time last year (but not terribly low by historical standards). But distillate prices are $0.65/gallon higher than they were a year ago, meaning fuel oil bills are going to be much higher than normal. Crude oil inventories have fallen over the past couple of months, but are still historically high. I think the big story remains gasoline, and whether we can dig our way out of this hole over the fall and winter. If not, something’s got to give next spring.