Saving for a down payment can be a challenge. But itâs not impossible.
While a 20 percent down payment isnât necessarily the norm anymore, most loans require some money down from buyers.
Coming up with these funds can be a sticking point on the path to homeownership, especially when you consider that a 10 percent down payment on a $230,000 home requires having $23,000 in cash.
If a home purchase is on the horizon, here are a few ways you can begin saving for a down payment before crunch time sets in.
While you may already be doing this for your retirement account, a college savings account for your child, or any other savings account for a long-term goal, set up a separate automatic savings account at your bank specifically for a down payment. This will ensure that money is automatically transferred from your checking account on a regular basis.
If youâre buying a home with your spouse, be sure to put the new account in both of your namesâand require that both of you need to approve any withdrawals. Alternatively, you could set up a brokerage or investment account and buy low-risk investments for a year or so to truly make your money work for you.
This may be an obvious move that youâre already taking advantage of, but it canât hurt to double check what youâve done and see if you can cut anything else out of the picture.
To get started, take a look at your finances and see what you can cut back onâor eliminate entirely. Also, work on paying off high-interest credit cards first.
Borrowing From Relatives, Retirement
If youâre still struggling to save, you may want to consider asking relatives for help.
Whether your parents are willing to gift you money so that you have enough to cover the down payment on your dream home, or relatives offer to step in and provide a zero-interest loan that you can pay back over the course of a few years, be sure to understand everything that borrowing from the family entails.
Another option includes borrowing against your retirement plan. Some 401(k) retirement plans have penalty-free withdrawals, while others allow employees to borrow against their savings to purchase a home. Youâre basically repaying yourself for the loan, but itâs critical to pay it back in a timely manner, as waiting too long could hurt the balance of your retirement account.
These options can be tricky, so donât commit to them unless youâre 100-percent comfortable with everything that comes along with them.
This article is intended for informational purposes only and should not be construed as professional or legal advice.
If you need money for an important project, you might be able to finance it by accessing the equity you’ve built up by paying your mortgage. A home equity loan and a home equity line of credit (HELOC) are two options. Before you decide to use either, make sure you understand the key differences between the two—and when it makes sense to utilize one over the other.
What Equity Is and When to Use It
Your home’s equity is the current value of your house minus the balance owed on the mortgage. The amount you can borrow through a home equity loan or HELOC will depend on the lender and the amount of equity you have.
Before you decide to access your home equity, make sure you want to use the money for a legitimate purpose. Repairs or renovations that will increase your home’s value can be a wise investment, but you shouldn’t use your home as collateral to finance a vacation or to pay off a credit card bill from a shopping spree.
You also shouldn’t borrow the total amount that a lender will allow just because you can. Using your home as collateral is risky. If you borrow more than you can pay back, you may lose your home to foreclosure.
Home Equity Loan vs. HELOC
With a home equity loan, you’ll receive a lump sum up to the amount the lender will allow. And you’ll have to pay the money back with monthly payments. The interest rate on a home equity loan is typically fixed, so your payments will remain stable, which can help with budgeting. The downside of a home equity loan is that if you borrow a large portion of your home’s equity all at once and then the housing market suffers and your home loses value, you may wind up with little or no equity left.
A HELOC is more like a credit card. You’ll have a line of credit up to the amount determined by the lender, and you can use that credit to make several purchases in various amounts at different times. A HELOC often has an adjustable interest rate, and you only pay interest on the amount of credit you use. Your monthly payments may vary significantly depending on the interest rate and the amount of money you spend. You might be able to apply a fixed rate to part of the balance and make payments that are only used to cover interest.
Should You Borrow Against Your Home’s Equity?
A home equity loan or HELOC can help you use the equity you’ve accumulated to finance long-term goals, but they should be used responsibly. Before you tap into your home’s equity, make sure you’re doing it for the right reasons. Only borrow what you need, and be sure that you understand the terms and will be able to afford the monthly payments.
This article is intended for informational purposes only and should not be construed as professional or legal advice.
Maintaining Your Laminate Flooring
As durable as laminate flooring can be, it does require some know-how to keep it in top shape.
Here are some tips for caring for your laminate flooring.
Avoid Moisture Build-Up
Laminate flooring does not handle moisture build-up well. Spills must be addressed quickly, spot cleaning is ideal and traditional wet mop methods can cause warping or swelling.
Clean With the Right Tools
Laminate floors can be irreparably damaged with the wrong tools or chemicals. Avoid high-heat steam mops and acidic cleaners. Instead, clean with a microfiber cloth or dry mop.
Look Out for Whiteners
Some chemical products can wear away at the protective coat and cause bleaching or discoloration to your flooring. Be sure to use laminate-safe cleaners.
Deep Clean With Minimal Water
Mopping with Castille soap and water will keep your floors free of grime without damaging them. Follow up after mopping by drying your floors with a microfiber cloth.
The future is now. Many homeowners across the country have embraced technological advances and incorporated them into their everyday lives. Thermostats, lighting, locks, security cameras, washing machines and more all come available as internet-connected devices and can be combined in a house to create what’s been dubbed a “smart” home.
The added convenience of these devices, however, has also created new opportunities for cybercriminals. To help protect your smart home, the security experts at Norton offer the following tips:
1. Name your router. Your WiFi router is like the front door to your smart home, so don’t stick with the name the manufacturer gave it, which might identify the make or model. Give it an unusual name not associated with you or your address. You don’t want your router name to give away any personal identifiers.
2. Use strong WiFi encryption. In your router settings, it’s a good idea to use a strong encryption method, like WPA2, when you set up WiFi network access. This will help keep your network and communications secure.
3. Change default usernames and passwords. Cybercriminals probably already know the default passwords that come with many smart products. That makes it easy for them to access the devices and, potentially, the information on them.
4. Use solid passwords for WiFi networks and device accounts. Avoid common words or passwords that are easy to guess, such as “password” or “123456.” Instead, use unique, complex passwords made up of letters, numbers and symbols.
5. Check the device settings. Your smart devices might come with default privacy and security settings. You might want to consider changing them, as some default settings could benefit the manufacturer more than they benefit you.
6. Disable features you might not need. Smart devices come with a variety of services such as remote access, often enabled by default. If you don’t need a feature, be sure to disable it.
7. Keep your software up to date. When your smartphone manufacturer sends you a software update, don’t put off installing it. It might be a patch for a security flaw. Mobile security is important, since you may connect to your smart home through mobile devices. Your home device makers may also send you updates, or you might need to visit their websites to check for them. Be sure to download device updates to help stay safe.
8. Audit devices already on your home network. It could be time to upgrade that old security camera. Take time to check if newer models might offer stronger security.
9. Use authentication. Two-factor authentication, such as a one-time code sent to your cellphone, can keep the bad guys out of your accounts. If your smart-device apps offer two-factor authentication, or 2FA, use it.
10. Avoid public WiFi. When managing your smart home remotely, it’s not a good idea to use public WiFi networks, as they can be very vulnerable. If you choose to use public WiFi, consider subscribing to a virtual private network (VPN) for additional security.
If you own a house, homeowners insurance is a necessity. A storm might damage your home, your belongings might be stolen, or someone might be injured. Without homeowners insurance, you would be responsible for paying those bills, which could easily total thousands of dollars. Homeowners insurance can protect you in many instances, but not always. It’s important to understand what a policy does and doesn’t cover.
What Homeowners Insurance Covers
A homeowners insurance policy provides coverage for specific perils, or things that could cause damage, injuries or losses. A typical policy will cover damage to your house caused by a storm or fire. A policy covers the house itself, as well as a garage, deck, porch or shed. If your home is damaged by a covered peril and you’re not able to live there while it’s being repaired, your homeowners insurance policy should cover your living expenses in the interim.
A homeowners insurance policy also covers personal property. It will pay to replace your belongings if they’re stolen, damaged or destroyed by a covered peril. If you own expensive items, such as jewelry or furs, you may need to purchase additional coverage with higher limits to cover the value of those items.
Homeowners insurance can also protect you from financial liability for injuries to others. For example, if a guest falls on your property and is injured, your homeowners insurance policy will pay for related medical bills and legal expenses.
What Insurance Doesn’t Cover
A typical homeowners insurance policy doesn’t cover all types of natural disasters. Most policies do not cover flooding or earthquakes, although you might be able to purchase additional coverage to protect yourself from those perils. These types of coverage are not available in all locations.
A homeowners insurance policy might cover damage caused by a burst water pipe, but a claim could be rejected if the pipe bursts because of a lack of maintenance or insulation. Some policies cover mold, but the company may only pay if the mold was caused by a burst pipe. Policies typically do not cover sewer backups, although it may be possible to purchase additional coverage for this peril. Injuries caused by dog bites may or may not be covered, depending on the breed.
When you file a homeowners insurance claim, you will typically need to pay a deductible. This is an amount set by the policy that the policyholder needs to pay before the insurance company will pay the remainder of the value of the claim.
Talk to Your Insurance Agent
Damage, accidents and injuries can occur at any time, and they can be expensive to address. Homeowners insurance can protect you in many, but not all, circumstances. It’s important to ask your insurance agent exactly what is and is not covered and whether you should pay extra for additional protection.
Houseplants for a Healthier Home
Studies show that plants canâ¦
Most plants release oxygen throughout the day, but some varieties, like orchids and Gerbera daisies, release oxygen at night, too.
They might help you sleep better.
Improve air quality
Plants help remove toxins that can cause headaches, nausea and certain respiratory issues.
Children are more attentive in classrooms and people are more productive in computer tasks with plants in the room.Â
Place several plants together to add moisture and humidity to your home.
Reduce stress and fatigue
Plants can help us unwind and relax.
Remember, plants are not just for the home – put them to work in your office, too.
With about 56.7 million people living with a disability in the United States, according to Census Bureau data, there are plenty of disabled people who may need help buying a home.
The good news is, help is available. Here are some laws and programs designed to make homeownership more possible for the disabled:
Federal law: The Fair Housing Act prohibits lenders, sellers and real estate agents, among other housing providers, from discriminating against the disabled in the home-buying process.
They also can’t be discriminated against by preventing them from making reasonable modifications to the property, such as accessibility ramps. The act requires that builders of multifamily residences meet certain accessibility standards, such as wide doors for wheelchairs.
Housing counselors from the Department of Housing and Urban Development, or HUD, are available to help the disabled buy a home or deal with other housing issues.
Another HUD program — the Section 8 Homeownership Voucher Program — helps low-income people to rent or buy a house by subsidizing their monthly mortgage payments.
High debt-to-income ratio: Homebuyers with a low income can have difficulty getting a home loan, and people with disabilities earn less on average than most Americans.
Less income can lead to higher debt, and a high debt-to-income ratio of 43 percent can prevent borrowers from being approved for a home loan.
A disabled homebuyer with a ratio as high as 50 percent can get help through the Fannie Mae HomeReady program, which allows the income of someone else who is living in the home with the borrower to be considered household income to help them qualify for the loan.
Financial aid: Down payment assistance, such as Individual Development Accounts, or IDAs, help low-income families buy homes by giving them grants for a down payment. Programs differ by state.
Help for vets: Disabled veterans can get a Specially Adapted Housing Grant from the U.S. Department of Veterans Affairs to build or remodel a home for disabled access, or to use toward an existing mortgage that’s adapted for disabilities.
Buying a home for the first time can be daunting. Whether you’re disabled or not, seeking help from a trusted real estate professional will make the process easier.
Aaron Crowe is a freelance journalist who specializes in personal finance topics.
If youâre buying a house with cash only, you may have gotten a lower price for it and you certainly wonât have to deal with a bank to get a mortgage loan. Another advantage is that you donât have to buy title insurance to protect your lender.
Mortgage lenders usually require buyers to purchase a title insurance policy, usually for about $1,000, to protect the lenderâs interest in the property. The home is the collateral for the loan, so the lender wants to make sure there arenât any problems with the title of a property.
While a cash purchase of a home wonât require title insurance for a lender, called a loan policy, homebuyers may still want to buy it for themselves. An ownerâs policy protects the new titleholdersâ ownership rights. The policy is in effect for as long as the owners or their heirs own the property.
Before issuing an ownerâs policy, a title insurance company will search and examine public records to determine the state of the propertyâs title. Any issues found will be fixed, and if there are challenges, then youâll be alerted to the issue so you can determine if you want to proceed with the transaction.
You wonât be required to buy an ownerâs policy when buying a home with cash, but it may be a smart purchase anyway. Title insurance can protect you financially from any prior liens on the property, restrictions on the use of the property or forgeries in public records.
A missing heir to a former property owner, for example, could be found. Or a deed could have been forged in the past. Title insurance not only helps uncover such issues, but protects you against any undiscovered issues that could arise in the future.
How likely are cash purchases of homes? In January 2017, 23 percent of home sales were cash, according to the National Association of REALTORSÂ®.
Only 6 percent of first-time buyers paid all cash for homes. The most likely buyers to pay all cash were investors, followed by international buyers, distressed sales and second-homebuyers. As investment and distress sales have declined, so do cash sales.
Buying a lenderâs policy for title insurance is a relatively small cost when purchasing a house. Still, the savings when paying cash for a home can be a little bit of a boost to your bottom line. At the very least, the savings could be put toward buying an ownerâs policy for title insurance for yourself to give you some peace of mind during the buying process.
Stress-Relieving Tips for First-Time Homebuyers
Planning to buy your first house?
Be prepared and avoid excess stress with these tipsâ¦
Get Help Hire a real estate pro to help you find the right property and close a deal.
Be Open to Concessions You might not be able to afford to check off every item on your wish list.
Define Your Finances Get a loan pre-approval, budget for closing costs and donât spend beyond your means.
Take Your Time Weigh the pros and cons of each house you view, and fight the urge to rush your decision.
Buying your first home can be a challenge. But it should be exciting, not overwhelming.
Choosing a real estate professional you’re comfortable with is an important piece of the puzzle when it comes to putting your home on the market, but anyone going through the buying or selling process needs to be aware of the different types of listing contracts available—and which suits them best.
Exclusive Right to Sell
Most commonly used, this type of listing gives the listing agent complete control of the transaction, no matter who finds the buyer. In this type of situation, even if you have a friend who wants to purchase the home, the listing agent will earn the sales commission. If a second cooperating agent is involved in the deal, the commission is normally divided between the two. A normal contract runs 90 or 120 days, but if the house doesn’t sell and you’re happy with your agent, you can always re-up for additional time.
Often used by sellers who are trying to sell the home themselves, an open listing allows a real estate professional to be involved in the showing process. Multiple agents can be involved; however, the real estate professional that brings the buyer gets the commission. An agent who accepts an open listing isn’t going to do much other than show the home. For instance, they won’t market it or put it in the MLS, but if the home fits the criteria for one of their clients, and it’s convenient, they may be willing to bring someone around.
Very similar to an open listing, a one-time show is most often used by real estate agents who are showing a FSBO (for sale by owner) to one of their clients. The seller signs the agreement, which identifies the potential buyer and guarantees the agent a commission should that buyer purchase the home, preventing the buyer and seller from negotiating later and trying to avoid paying the agent’s commission. As with an open listing, agents will not be spending money marketing the home, and it will not be placed in the MLS.
A multiple listing service will send listing information and photos to members who are working with appropriate buyers, and many listings are available elsewhere on the internet, allowing prospective buyers to research what’s for sale on their own. MLS members can submit exclusive agency and exclusive right to sell listings to the local MLS.
Utility bills seem to go up every yearâand every year we hear the call to save our nation’s natural resources. Financial management site Quicken.com suggests seven savvy ways to save on electric, gas, and water bills while helping to save our planet in the bargain:
- Pull the plug. Appliances that have a clock or operate by remote, as well as chargers, suck electricity even when not in use. In fact, of the energy used to run home electronics, 40 percent is consumed when the appliances are offâso pull the plug when not in use.
- Insulate the water heater. The newest models have plenty of insulation, but if yours is vintage 2004 or earlier, wrap it in an insulating jacket and save 10 percentâabout $30 a yearâon your water heating bill.
- Set the washer to cold. Use cold water to wash clothes and save 50 percent of the energy you would use for hot water. Also, set your dryer on the moisture sensor, not the timer, and cut energy use by 15 percent.
- Go low-flow. Older shower heads send as many as 5.5 gallons per minute (gpm) down the drain. The new fixtures go as low as 1.5 gpm, saving 7,300 gallons and $30 – $100 a year.
- Run full loads. Run full loads of clothes and dishes. Most of the energy used is to heat a set amount of water, so running smaller loads wastes both energy and water. Also, air-dry dishes for added energy savings.
- Retrofit your faucets. Consider faucet aerators, which screw into your faucet threading and cut the water flow from 3 – 4 gallons per minute. Aerators blend water and air, reducing the flow without sacrificing pressure. At $0.50 – $3 apiece, the devices are some of the cheapest green gadgets available.
- Go drip. For gardens, consider installing a drip irrigation system, which maintains moisture in the soil. Drip irrigation can reduce water loss by 50 – 60 percent when compared with hand-watering or sprinkler systems.
Interested in more real estate tips? Feel free to contact me directly.
Selling Your Home If You Have a Reverse Mortgage
Reverse mortgages allow seniors to access their home equity to cover living expenses.
However, some seniors might later decide to move closer to family or need to go to a nursing home.
Selling your house with a reverse mortgage is similar to selling a home with a standard mortgage.
The money from a sale would need to pay off the loan balance, and any remaining money would be yours to keep.
Before listing your house, contact your lender to find out your payoff amount, and make sure selling in the current market would make financial sense.
A real estate agent can inform your decision and walk you through the process.
The higher a down payment is on a house, the cheaper the mortgage will be. Itâs simple math.
The traditional down payment of 20 percent for a house is just that â traditional. There are all types of loans that can range from zero down to 3, 5 or 10 percent of a homeâs purchase price required upfront as a down payment.
Saving big â such as 20 percent â is a smart way to prepare to buy a house because the more money thatâs put down, the more favorable the loan terms can be. Whatever amount you want to come up with for a down payment, there are different ways to save for it. Here are a few:
Divide it into increments
Letâs say youâre planning to save for five years before you buy a house. If you want to save $50,000 for a down payment, youâll need to save $10,000 per year. Divide that by 12 and your monthly savings goal is $833.
However you accomplish it, thatâs your monthly goal â saving $833 per month. Itâs a big number, but itâs a lot smaller than seeing the ultimate goal of $50,000, and is easier to comprehend than an annual $10,000 goal. With that goal in mind, your next step is to figure out how to get there each month.
Save money everywhere you can
Any expenses you can save can add up to monthly savings â as long as you put that savings aside in a savings account for your down payment fund.
Look at cutting cable TV, cell phone service, gardening and housecleaning bills, and any other expenses that can either be cut back or eliminated. Put the difference in your savings account.
Work extra and sell your extra stuff
Two people can save for a house by working an extra two hours per day. There are all kinds of jobs in the âgig economy,â from dog walking to house sitting, driving Uber, tutoring and selling a service or product online.
If you have extra stuff that youâre not using anymore, sell it online. If your old bike is collecting dust and is in good shape or can be repaired inexpensively, chances are someone will buy it.
Whatever extra money you make, invest it and let it work for you for the next five years. Compound interest from a mutual fund that you contribute to monthly can grow a lot faster than a savings account can.
Before investing, know that you can lose some or possibly all of your investment. So only invest as much money as youâre willing to risk losing. The longer you invest, the more likely you are to ride out market volatility and meet your financial goals.