TagBuying a Home

Mortgage Escrow Fraud: What Homebuyers Need to Know

When you’re buying a home, there are tons of steps you have to complete. One of the more important ones is making your down payment and closing on your home, which occurs when you’re in the final stretch of the homebuying process. This step in the homebuying process is one of the most — if […]

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What This Military Family Faced—and Fought—To Buy Its First House

first time home buyerNatalie Johnson

First-time home buyers today face a tough road, shopping for homes during a pandemic, high housing prices, and deep economic uncertainty. For military families deployed overseas, it’s all even trickier to figure out.

In this second story in our new series “First-Time Home Buyer Confessions,” we talked with husband and wife Kyle LaVallee and Natalie Johnson. They were renting an apartment in Fayetteville, NC, when they decided to start shopping for their own home in the area in April.

At the time, LaVallee was stationed in the Middle East as a sergeant in the U.S. Army. Yet even though he was thousands of miles away, he managed to attend every home tour with Johnson via FaceTime. In July, they closed on a brick, ranch-style three-bedroom that LaVallee would not see in person until a long-awaited trip home in October.

Here’s the couple’s home-buying story, the hardest challenges they faced, and what LaVallee thought of his new house once he home managed to lay eyes on it for the first time.

Location: Fayetteville, NC

House specs: 1,166 square feet, 3 bedrooms, 2 bathrooms
List price: $111,900
Price paid: $115,000

A pandemic plus deployment seems like a tough time to buy your first house. What convinced you to forge ahead?

Johnson: Kyle was deployed in October 2019 while we were renting a one-bedroom apartment in Fayetteville. Kyle wasn’t fond of renewing the apartment lease—we had been there for two years and were running out of space. We wanted to get a dog; we wanted a yard, and our own property where we can do anything we wanted.

We started educating ourselves on the process. We knew a mortgage was going to be significantly less than what we were paying in rent. Kyle thought it would be smart to buy because [nearby] Fort Bragg is one of the biggest military bases in the world. If we ever leave or get stationed somewhere else, we’re not going to have a problem finding anyone to rent it. And we could always come back.

Kyle LaVallee and Natalie Johnson at one of their favorite hangouts in Fayetteville, where they’ve decided to put down roots

Natalie Johnson

LaVallee: I was interested in gaining equity and ownership, rather than just paying to rent something I’d never own in the end.

Johnson: We started looking at houses back in January. In April, we kept seeing information about lowering interest rates. That’s why we got serious about the process in the middle of the pandemic, and when we connected with our real estate agent, Justin Kirk with Century 21.

How much did you put down on the house—and how’d you save for it?

Johnson: We put 20% down.

LaVallee: I was making a lot of money while I was deployed, and I had no expenses really. I was just saving everything I had, knowing I wanted to invest it in a house.

Johnson: I cut spending. I didn’t buy things I wanted, just what I needed. The pandemic helped a lot, honestly because we obviously couldn’t go out.

LaVallee: We qualified for a VA loan, but we just wound up using a conventional loan. Most people in the military will use a VA loan where you don’t put any money down, but [since we had enough saved] we wanted the lowest monthly mortgage payments.

first time home buyer
LaVallee and Johnson on LaVallee’s first morning in the new house after coming home from deployment

Natalie Johnson

What were you looking for in a house?

LaVallee: We knew we might [eventually] be moving, so it wasn’t like it had to be a house we would stay in forever, more of an investment property.

Johnson: We were looking for things that would be attractive to future renters. We had a military family in mind because Fayetteville’s got more than 50,000 active-duty. We looked for a location close to a Fort Bragg entrance. We thought three bedrooms was perfect for us because our families are close with each other, so they’ll all come down at the same time so we’ll have two extra bedrooms for them. Kyle really wanted a garage, so that was a huge thing.

LaVallee: Garages aren’t very common down here, so that limited a lot of options for us. A lot of houses have carports, or they finish the garage and turn it into a bonus room.

Johnson: We wanted something that needed a bit of fixing up, because we like to be handy and put our personal touch on everything, and we ultimately knew that would be a lower-cost house.

Johnson and LaVallee’s new kitchen

realtor.com

How many homes did you see in person, and how did Kyle participate from overseas?

Johnson: It was 10 or 12 homes. We were out three to four times a week looking at places with our real estate agent. We wore our masks for the tours, and I used hand sanitizer since I was opening and closing drawers and closets. Most were vacant, but we did tour one house that still had people living in it, although they were gone during the tour, so we avoided touching a lot of things.

During tours we FaceTimed Kyle in. We figured that was probably the most convenient way to do it since he could see every single house and room in detail.

The large living room in Johnson and LaVallee’s new house

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LaVallee: Well, I couldn’t really see all the details.

Johnson: He got to know our real estate agent really well via FaceTime. Our agent would say, “Let me know if you need me to hold Kyle while you go look in this room.” I felt so bad, though, because I work full time, so I’d tour homes around 5:30 in the evening, which for Kyle was 2:30 in the morning. But he stayed up for every single tour.

LaVallee: I was sometimes frustrated not being able to be there. I left it all up to her. I had to trust the feelings and vibes she got from each house.

The big backyard where Johnson and LaVallee hope a dog will someday run around

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How many offers did you make before you had one accepted?

Johnson: We put three earlier offers in.

LaVallee: They would be listed and the next day would be sold. The first three offers we put in were asking price, and I’m pretty sure everybody else offered more, and ours were never even considered.

Johnson: It was ridiculous. It was definitely a seller’s market, so you had to act really fast and you had to be really competitive. On our fourth offer, we ended up at $3,100 over asking. I felt like we had to fight for this house.

Johnson had to move into the new home without LaVallee’s help.

Natalie Johnson

Were you competing with other offers for the house you bought?

LaVallee: There were multiple offers.

Johnson: Our real estate agent told us, “You should definitely write a letter and talk about how Kyle’s gone right now and you’re first-time home buyers and this one really clicked with you,” which it did. The second I walked in, it’s this adorable brick house, it’s super homey, it has a great yard. In the letter, we just talked about how all of that was so attractive to us as first-time home buyers, and we were really excited and could see ourselves in this home.

Our real estate agent suggested going in higher than asking, so we just rounded up to $115,000. He also suggested doing a higher due diligence payment—we usually did $200, but this time around we did $500. And the earnest fee we put in was $500 or $600.

After our offer was accepted, we knew it was going to be kind of difficult with the home inspection. They were already redoing the roof, which was a huge cost on their part, so asking for more was definitely going to be a challenge. So we didn’t ask for much.

LaVallee and Johnson are happy they stuck it out in a competitive seller’s market and landed this home.

Natalie Johnson

What surprised you about the home-buying process?

Johnson: How fast it went, for me at least. Our first home tour was in April and then by June, we had found our house and the contracts were written up. I guess I was expecting it maybe to be double the time that it actually was, but houses were just turning over so fast, we had to act fast.

LaVallee: From my side, I thought it happened very slowly! I felt like so much was happening in between each step in the process. I had to be patient because I had so little control of the situation, other than just trying to stay involved and be a part of it.

Johnson: You never really think that when you’re married, you’re going to buy your first house while your husband is on the other side of the world. But we got through it.

Johnson and LaVallee (pictured on the right) on the day LaVallee returned from deployment

Natalie Johnson

So Natalie, you were living in the house for a few months before Kyle returned from deployment in October to see it. What was that homecoming like?

Johnson: He came home a few days shy of the 365-day mark. We were anxious and excited. Several other families and I waited outside of a hangar on base, and soon after hearing their plane landing, we saw the group walking toward us and everyone start cheering and crying.

Because it was dark when we got home, Kyle couldn’t see the outside of the house much, or the “Welcome Home” decorations I hung up! But the moment he set foot in the front door, he just stood there and looked around with the biggest smile on his face.

I gave him the grand tour the next morning. He said it looked much bigger than what he saw on FaceTime. We celebrated with a home-cooked meal and the wine our agent gave us when we closed. It was really special.

LaVallee: I came home to a nice house. Natalie was worried I would come back to culture shock. But I’ve felt at home ever since I’ve been here.

Johnson decorated the house for LaVallee’s return from deployment.

Natalie Johnson

first time home buyer
After LaVallee came home, the two finally got to toast their first home with a bottle of wine, courtesy of their real estate agent.

Natalie Johnson

What’s your advice for aspiring first-time home buyers?

Johnson: I would say to go with your gut. Some of the houses you’ll tour are really logical to buy, but if they have a bad vibe or they’re just not really welcoming, then look at others. A healthy balance between logic and feeling is important.

LaVallee: We didn’t even know what we wanted until we saw five or six houses, so it’s definitely important to shop around and see what’s out there.

Johnson: We really didn’t know much. I told our real estate agent, “Hey, listen, we’re really going to need some guidance. We don’t know what things mean, we need you to break it down for us. You have to be patient with us.” I reached out to three different real estate agents, and Justin was the one who not only answered all my questions but was giving a ton of positive feedback. It was nice to have that encouragement, and it definitely made us more confident. You learn a lot by looking at houses, you learn a ton about yourself.

Johnson and LaVallee met in elementary school.

Natalie Johnson

The post What This Military Family Faced—and Fought—To Buy Its First House appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

How to Prepare For Closing Day [Free Downloadable PDF]

After you’ve successfully put in an offer for your dream home and set a date for closing, you’ve come to the final steps of your home buying journey. However aside from getting the keys, you’ll want to be prepared for the additional costs, and steps that will be required for a successful home purchase.

The Preparing For Closing Day guide contains information, tips, and more about what to expect on the big day. The guide will also include a checklist of what to prepare and an example of how to calculate the funds needed for closing.

To learn more about how you can best prepare for closing day, get our free buyer’s guide here.

Pre-Closing Day Checklist

To ensure a smooth process for your home transaction, you’ll still have a few steps to go through before you get your keys. Here are 6 steps to check off your list before closing day:

  1. Review your contract
  2. Complete a final walkthrough
  3. Meet with your lawyer
  4. Purchase home insurance
  5. Know how much cash is required at closing
  6. Secure cash required for closing

Cash Required At Closing

Understanding the costs that will be required at closing day is important to know even before you start your home search. Not only will you be prepared for what to expect, but this can help you with budgeting your costs.

Some examples of costs to include in your calculation:

  • Down payment
  • Title insurance
  • Legal fees
  • Land transfer tax

Statement of Adjustments

Another important document is your statement of adjustments, which will display any credits to both the buyer or seller as well as the final amount payable by the buyer on closing day. You can expect the following to be listed in the statement:

  • Purchase price
  • Your deposit
  • Prepaid property taxes, utilities or fuel
  • Prepaid rents 
  • Appraisal fee
  • Land survey fee

For a sample calculation of cash required at closing, download our Preparing For Closing Day guide here.

The post How to Prepare For Closing Day [Free Downloadable PDF] appeared first on Zoocasa Blog.

Source: zoocasa.com

Second Home vs. Investment Property: What’s the Difference?

skynesher / Getty Images

You hear these terms thrown around all the time: Second home, investment property, vacation home, rental property. But is there any real difference among them? And does it even matter what you call it?

As it turns out, there are some very big differences between second homes and investment properties, especially if you are financing it.

“Both are fantastic ways to build wealth over time by capturing the appreciation of a real asset,” says Tony Julianelle, CEO of Atlas Real Estate in Denver. However, “both come with inherent risks and expenses that should be carefully considered when making a purchase.”

As with any real estate transaction, you’ll want to do your homework and make a smart choice for your wallet, no matter which path you go down. We chatted with experts to get the scoop.

What is a second home?

A second home is just that: a second property where you and your family spend time, away from your primary home. You might also hear a second home referred to as a vacation property. You may rent it out for a few days each year on Airbnb or VRBO, but you primarily use it yourself.

Buying a second home makes financial sense if there’s one particular vacation spot you visit regularly. Why spend a fortune on hotels or Airbnb when you can own your own piece of paradise that will hopefully appreciate in value over time?

“Let’s say you live in San Francisco, but you are an avid skier in the winter and like to hike in the summer,” says Rachel Olsen, a real estate agent in California. “If you spend many weekends and vacations in Lake Tahoe, it may make sense to purchase a second home there.”

What is an investment property?

An investment property, on the other hand, is one that you purchase with the explicit intention of generating income. The investment property could be right next door to your own home, or it could be in another state—it doesn’t really matter. You’ll be playing the role of landlord, with long-term or short-term renters paying cash to stay in the home.

“Never forget that an investment property is all about the Benjamins,” says Lamar Brabham, CEO and founder of financial services firm Noel Taylor Agency. “The entire point is to turn a profit. No emotions, no affection.”

Before making an offer on an investment property, you’ll want to crunch the numbers to make sure it’s a solid investment. Similarly, consider what factors will be important to prospective tenants (e.g., access to public transportation, good schools, parking, and low crime rates).

How to finance a second home or investment property

If you’re paying cash, you can skip this section. But if you need a mortgage for your new property, you should know that financing a second home or investment property is very different from financing a primary residence. And, while mortgages on second homes and investment properties have some similarities, there are also some key differences.

  • Interest rate: You can expect to see a higher interest rate for both second homes or investment properties than for primary homes. Why? Because lenders view those transactions as riskier. If you get into a tight spot with money, you’re far more likely to stop paying the mortgage for your second/investment property than for your primary home.
  • Qualifying: Whether you’re buying a second home or an investment property, you might need to do some extra legwork in order to qualify for that second loan. Your bank may require you to prove that you have healthy cash reserves (so it knows you can afford both mortgages). It’ll take a long, hard look at your overall financial situation, so be sure everything is on the up and up before you apply.
  • Down payment: Depending on your situation and the lender, you might also need to bring a larger down payment to the table for an investment property or second home, typically 15% to 25%. Again, this is because the bank wants a bigger cushion to fall back on in case you default.
  • Rental income: If you’re buying an investment property, your lender might allow you to show that anticipated rental income will help cover the mortgage payments. However, proving how much rental income the home will generate can be complicated. Prepare to pay for a specialized appraisal that takes into account comparable rents in your area.
  • Location: Your lender may require a second home to be 50 to 100 miles away from your primary home. An investment property, however, can be anywhere in comparison to your primary home, even next door.
  • Taxes: Federal income tax rules are different for vacation homes and investment properties. Generally, you’ll treat your second home just as you would your first home when it comes to taxes—if you itemize, you can deduct the mortgage interest you paid up to a certain limit. (The rules vary if you rent out your second home for part of the year.) If you own an investment property, you get to deduct the mortgage interest, plus many of the expenses that come with operating a rental business, but you also have to report your rental income, too.

Why it’s important to not confuse the two

It’s important that you’re totally clear about the difference and not use the terms “second home” and “investment property” interchangeably. Some people try to pass off their investment property as a second home to get more favorable financing, but you should never do this.

If you lie on your loan application, you could be committing mortgage fraud, which is a federal offense.

Your lender’s underwriting team is aware of this possibility, so don’t try to pull the wool over their eyes. They’ll take the big picture into account when deciding what loan terms to offer you, says real estate attorney David Reischer.

“A single-family residence by a lake that is located in a completely different state from the borrower’s primary residence is much more acceptable to be categorized as a second home by a bank underwriter,” he says. “A multifamily-unit property with rental income in an urban area is likely to be treated as an investment property.”

Bottom line: Keep everything aboveboard, and you won’t have to worry about a thing.

The post Second Home vs. Investment Property: What’s the Difference? appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com

So You Want to Buy a Fixer-Upper: Here’s What You Need to Know

Stephen and David St. Russell, self-taught renovation and fixer-upper experts, are sharing their advice for homebuyers who are looking to explore buying a home that needs some extra TLC.

The post So You Want to Buy a Fixer-Upper: Here’s What You Need to Know appeared first on Homes.com.

Source: homes.com

A Guide To Everything You Need To Know About Home Ownership Costs [Free Download]

Along with the excitement of purchasing a new home, comes the additional costs that you will be expected to pay as a homeowner. Apart from covering the mortgage of your home, you’ll have additional expenses – such as home insurance – that you will be expected to cover. If you’re looking to budget for a home purchase, it’s important that you consider these costs as they can add up to thousands of dollars each year.

To help you make educated decisions when budgeting, we’ve compiled a list of the major home ownership costs in one free, downloadable guide. Get the Home Ownership Costs to Consider guide here.

Home Insurance

Home insurance policies help protect against serious damage and destruction, like fires, leaks, floods, or break-ins. It also protects a homeowner from personal liability. Some banks may offer home insurance products, although you can typically purchase a home insurance policy through a home insurance agent or broker. 

Tip: You may get better rates if you use a broker or agent. It’s also important to keep in mind that policies typically renew on an annual basis.

Condo Fees

The cost of maintenance fees should be taken into account when you’re buying a condo. This recurring cost is in addition to your mortgage and impacts how much home you can afford. 

Your mandatory monthly fee will vary by your building and square footage. It typically covers:

  • Utilities (such as water and garbage collection)
  • Building insurance
  • Maintenance of common areas (such as the gym, pool, front desk, hallways, landscaping)
  • Building reserve fund (covers emergencies and long-term maintenance projects such as a new roof or elevators repairs)

What Are Status Certificates?

If you’re looking to purchase a condo, you’ll want to look into obtaining a status certificate so that you have as much information about the building and your unit as possible before buying. A status certificate provides valuable information about the condo corporation and its financial

situation. It includes details on the budget, legal issues, the reserve fund, maintenance fees, and any fee increases expected in the future. 

Tip: You’ll want to carefully review your status certificate with your lawyer before making a purchase.

Property Tax

Property taxes are paid annually by homeowners to their municipality. These taxes are ongoing and are separate from your mortgage. Your annual property tax can often be paid in installments.

Tip: It’s important to remember that this cost is not due at closing, but is a recurring cost.

How Are Property Taxes Calculated?

Your property tax rate will vary depending on the value of your property as assessed by your provincial assessment authority. This is then multiplied by a rate that falls between 0.5% to 2.5%.

How Do You Pay Property Taxes?

You can pay your property taxes either through your mortgage provider or directly to your municipality. 

Your Utility Bills

When you purchase a home, you’ll have to set up or transfer your utility bills to your new home. If you live in a condo, these costs may be included in your monthly maintenance fee. Your utility bill will include:

  • Hydro (electricity)
  • Heat
  • Water and Garbage
  • Internet, Phone, Cable

For the full details on the home buyer’s journey including examples, advice, pictures and sample calculations, download a copy of our free Home Ownership Costs to Consider Guide here.

The post A Guide To Everything You Need To Know About Home Ownership Costs [Free Download] appeared first on Zoocasa Blog.

Source: zoocasa.com

3 Strategies for Homebuyers to Reduce Expenses and Build Wealth

This story originally appeared on The Penny Hoarder. Buying a home is a visceral experience. Every house you walk into or click through online brings visions: future meals cooked in the kitchen, friends in the living room, kids playing in the backyard. These feelings are so strong that they can easily cloud your judgment when it’s time to put in an offer. So how should you view your first home…

Source: moneytalksnews.com

How to Set Financial Goals: A Simple, Step-By-Step Guide

Saving money is all well and good in theory.

It’s pretty hard to argue against having more money in the bank.

But what are you saving for? If you don’t have solid financial goals, all those hoarded pennies might end up in limbo when they could be put to good use.

Figuring out where your money should go might seem daunting, but it’s actually a lot of fun.

You get to analyze your own priorities and decide exactly what to do with your hard-earned cash.

But to make the most of your money, follow a few best practices while setting your goals.

After all, even if something seems like exactly what you want right now, it might not be in future-you’s best interest. And you’re playing the long game… that’s why they’re called goals!

What to Do Before You Start Writing Your Financial Goals

To help keep you from financial goals like “buy the coolest toys and cars,” which could easily get you deeply into debt while you watch your credit score plummet, we’ve compiled this guide.

It’ll help you set goals and create smart priorities for your money. That way, however you decide to spend your truly discretionary income, you won’t leave the 10-years-from-now version of you in the lurch.

First Thing’s First: How Much Money Do You Have?

You can’t decide on your short- or long-term financial goals if you don’t know how much money you have or where it’s going.

And if you’re operating without a budget, it can be easy to run out of money well before you run out of expenses — even if you know exactly how much is in your paycheck.

So sit down and take a good, hard look at all of your financial info.

A ton of great digital apps can help you do this — here are our favorite budgeting apps — but it can be as simple as a spreadsheet or even a good, old-fashioned piece of paper. It just takes two steps:

  1. Figure out how much money you have. It might be in checking or savings accounts, including long-term accounts like IRAs. Or, it might be wrapped up in investments or physical assets, like your paid-off car.
  2. Assess any debts you have. Do you keep a revolving credit card balance? Do you pay a mortgage each month? Are your student loans still hanging around?

Take the full amount of money you owe and subtract it from the total amount you have, which you discovered in step one. The difference between the two is your net worth. That’s the total amount of money you have to your name.

If it seems like a lot, cool. Hang tight and don’t let it burn a hole in your pocket. We’re not done yet.

If it seems like… not a lot, well, you can fix that. Keep reading.

A woman creates a monthly budget while sitting on her bed. The sheets are white with a floral pattern on them. This story is about how to set up financial goals.

Create a Budget

Once you’ve learned your net worth, you need to start thinking about a working budget.

This will essentially be a document with your total monthly income at the top and a list of all the expenses you need to pay for every month.

And I do mean all of the expenses — even that $4.99 recurring monthly payment for your student-discounted Spotify account definitely counts.

Your expenses probably include rent, electricity, cable or internet, a cell phone plan, various insurance policies, groceries, gas and transportation. It also includes categories like charitable giving, entertainment and travel.

Pro Tip

Print out the last two or three months of statements from your credit and debit cards and categorize every expense. You can often find ways to save by discovering patterns in your spending habits.

It’ll depend on your individual case — for instance, I totally have “wine” as a budget line item.

See? It’s all about priorities.

Need to go back to basics? Here’s our guide on how to budget.

Start by listing how much you actually spent in each category last month. Subtract your total expenses from your total income. The difference should be equal to the amount of money left sitting in your bank account at month’s end.

It’s also the money you can use toward your long-term financial goals.

Want the number to be bigger? Go back through your budget and figure out where you can afford to make cuts. Maybe you can ditch the cable bill and decide between Netflix or Hulu, or replace a takeout lunch with a packed one.

You don’t need to abandon the idea of having a life (and enjoying it), but there are ways to make budgetary adjustments that work for you.

Set the numbers you’re willing to spend in each category, and stick to them.

Congratulations. You’re in control of your money.

Now you can figure out exactly what you want to do with it.

Setting Financial Goals

Before you run off to the cool-expensive-stuff store, hold on a second.

Your financial goals should be (mostly) in this order:

  1. Build an emergency fund.
  2. Pay down debt.
  3. Plan for retirement.
  4. Set short-term and long-term financial goals.

We say “mostly” because it’s ultimately up to you to decide in which order you want to accomplish them.

Many experts suggest making sure you have an emergency fund in place before aggressively going after your debt.

But if you’re hemorrhaging money on sky-high interest charges, you might not have much expendable cash to put toward savings.

That means you’ll pay the interest for a lot longer — and pay a lot more of it — if you wait to pay it down until you have a solid emergency fund saved up.

1. Build an Emergency Fund

Finding money to sock away each month can be tough, but just starting with $10 or $25 of each paycheck can help.

You can make the process a lot easier by automating your savings. Or you can have money from each paycheck automatically sent to a separate account you won’t touch.

You also get to decide the size of your emergency fund, but a good rule of thumb is to accumulate three to six times the total of your monthly living expenses. Good thing your budget is already set up so you know exactly what that number is, right?

You might try to get away with a smaller emergency fund — even $1,000 is a better cushion than nothing. But if you lose your job, you still need to be able to eat and make rent.

2. Pay Down Debt

Now, let’s move on to repaying debt. Why’s it so important, anyway?

Because you’re wasting money on interest charges you could be applying toward your goals instead.

So even though becoming debt-free seems like a big sacrifice right now, you’re doing yourself a huge financial favor in the long run.

There’s lots of great information out there about how to pay off debt, but it’s really a pretty simple operation: You need to put every single penny you can spare toward your debts until they disappear.

One method is known as the debt avalanche method, which involves paying off debt with the highest interest rates first, thereby reducing the overall amount you’ll shell out for interest.

For example, if you have a $1,500 revolving balance on a credit card with a 20% APR, it gets priority over your $14,000, 5%-interest car loan — even though the second number is so much bigger.

Pro Tip

If you’re motivated by quick wins, the debt snowball method may be a good fit for you. It involves paying off one loan balance at a time, starting with the smallest balance first.

Make a list of your debts and (ideally) don’t spend any of your spare money on anything but paying them off until the number after every account reads “$0.” Trust me, the day when you become debt-free will be well worth the effort.

As a bonus, if your credit score could be better, repaying revolving debt will also help you repair it — just in case some of your goals (like buying a home) depend upon your credit report not sucking.

A retired woman floats in a circular floating device in a swimming pool.

3. Plan for Retirement

All right, you’re all set in case of an emergency and you’re living debt-free.

Congratulations! We’re almost done with the hard part, I promise.

But there’s one more very important long-term financial goal you most definitely want to keep in mind: retirement.

Did you know almost half of Americans have absolutely nothing saved so they can one day clock out for the very last time?

And the trouble isn’t brand-new: We’ve been bad enough at saving for retirement over the past few decades that millions of today’s seniors can’t afford to retire.

If you ever want to stop working, you need to save up the money you’ll use for your living expenses.

And you need to start now, while compound interest is still on your side. The younger you are, the more time you have to watch those pennies grow, but don’t fret if you got a late start — here’s how to save for retirement in your 20s, 30s, 40s and 50s.

If your job offers a 401(k) plan, take advantage of it — especially if your employer will match your contributions! Trust me, the sting of losing a percentage of your paycheck will hurt way less than having to work into your golden years.

Ideally, you’ll want to find other ways to save for retirement, too. Look into individual retirement arrangements (IRAs) and figure out how much you need to contribute to meet your retirement goals.

Future you will thank you. Heartily. From a hammock.

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4. Set Short-Term and Long-Term Financial Goals (the Fun Part!)

Is everything in order? Amazing!

You’re in awesome financial shape — and you’ve made it to the fun part of this post.

Consider the funds you have left — and those you’ll continue to earn — after taking care of all the financial goals above. Now think: What do you want to do with your money?

What experiences or things can your money buy to significantly increase your quality of life and happiness?

You might plan to travel more, take time off work to spend with family or drive the hottest new Porsche.

Maybe you want to have a six-course meal at the finest restaurant in the world or work your way through an extensive list of exotic and expensive wines. (OK, I’ll stop projecting.)

No matter your goals, it’s helpful to categorize them by how long they’ll take to save for.

Make a list of the goals you want to achieve with your money and which category they fall into. Then you can figure out how to prioritize your savings for each objective.

For example, some of my goals have included:

  • Short-term financial goal: Save spending money for a trip overseas.
  • Medium-term financial goal: Pay off my car within a year, or sell it — and its onerous loan — and buy an older car I can own free and clear.
  • Long-term financial goal: Buy a house I can use as a home base and increase my income by renting it out while I travel. This will probably take me through the rest of my 20s.

By writing down my short- and long-term financial goals and approximately how long I expect it will take to achieve each, I can figure out what to research and how aggressively I need to plan for each goal.

It also offers me the opportunity to see what I prioritize — and to revise those priorities if I see fit.

Jamie Cattanach (@jamiecattanach) is a contributor to The Penny Hoarder.

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com

How Does Love Affect Homebuying?

When buying a home, what’s love got to do with it? As it turns out, more than we thought! Just in time for Valentine’s Day, we surveyed almost 800 people to find out how love shapes different attitudes and experiences of homebuying. (Don’t worry, we included singles, too!) Here’s what our survey found out.

The post How Does Love Affect Homebuying? appeared first on Homes.com.

Source: homes.com

‘I Lost My Job—and My Dream House’: How This First-Time Home Buyer Bounced Back

houseKaterina Rieckel

Imagine finding your dream home, then, a week before closing the deal, losing your job—and the house. House hunting during the coronavirus pandemic is no picnic.

COVID-19 has caused seismic changes not only to real estate markets, but also to the lives of home buyers hit with layoffs, furloughs, and other financial challenges. Just ask Katerina Rieckel, a digital strategist, knitwear designer, and first-time home buyer who, with her husband, was set to close on a glorious farmhouse in upstate New York in March.

But about a week before sealing the deal, Rieckel was laid off, which meant that she and her husband, a claims adjuster, could no longer afford the place.

As a part of our new series, “First-Time Home Buyer Confessions,” we asked Rieckel to share her story, and the hard-won lessons she wants to share with other first-timers.

Let her experiences show that even unemployment doesn’t need to spell the end of a house hunt—although it may require you to dust yourself off after a loss and try, try again.

home
Katerina Rieckel’s farmhouse in upstate New York

Katerina Rieckel

Location: Troy, NY
House specs: 1,544 square feet, 3 bedrooms, 2 bathrooms
List price: $249,900
Price paid: $245,500

2020 has been a wild one. How did you end up buying a home in the middle of a pandemic?

We started looking for a house a year ago, about halfway through the summer. At the time, both my husband and I had recently got new jobs, so the first issue we ran into was getting pre-qualified for the mortgage without a long track record at those companies. We also both felt pressure, as our jobs were very new.

What were you looking for in a house, and what was your budget?

We were looking for a house in the country that was move-in ready, private with at least 5 acres. We started off with a small budget, max $200,000, which made our choices more narrow.

Our search continued well into the winter, and around January 2020, we finally saw a house that was all we ever dreamed of and more. It was over our budget, at $229,000, but it had been listed for over a year, so we felt there was a good chance we could get it for less than the asking price.

What did you love about this house?

It was a beautiful, slate-blue farmhouse sitting on top of a hill, surrounded by woods. The house was warm and inviting, with chickens running around, as well as a big diving pool, and a workshop in the basement connected with a two-car garage. We got along with the owners really well, and we were going to keep the chickens. Everything went very smoothly, until just over a week before closing.

house
Rieckel and her husband almost bought this house, but it wasn’t in the cards.

Global MLS

So what went wrong?

It was March, and COVID-19 hit hard. The digital marketing agency I worked for had clients pause their work for unknown time. I was laid off, which meant we couldn’t afford the house anymore, and had to back out of the deal.

I was crushed. We didn’t know what was going to happen, and the country was under a lockdown. We had plans for my parents to come visit us in our new house, but instead, I ended up with no job, no house, and I couldn’t see my family, since they live in Europe.

In the summer, I was very fortunate to get my job back. So we resumed our house hunt and began to search for a new contender.

When you started the search again, how had COVID-19 changed the market?

The housing market in upstate New York got totally crazy. I heard there were houses being sold within hours. The market was just incredibly competitive, and not many houses were being listed, as a lot of people didn’t want to let strangers in their house during the pandemic.

We saw about seven to 10 houses in person, but they usually ended up disappointing us, with some strange arrangements. For example, one house had around 25 acres, but half of that acreage was on the other side of the road, behind other people’s houses, which made it almost impossible to use.

home
The couple’s pet cat has settled into their new digs, too.

Katerina Rieckel

With such a competitive market, how did you end up finding the right house?

Finally, around halfway through the summer, I saw a house listed that I hadn’t noticed before. I called on it right away and set up a showing that evening.

The real estate agent told me we were really fast, as he had just relisted this house. Someone had been buying it, but backed out of the process because of personal reasons.

porch
Their house has tons of privacy and a great view.

Katarina Rieckel

How did you know this house was the one?

The house had over 10 acres, it was in the country, and about 35 minutes to Troy. It was move-in ready, but definitely needed upgrades, as it looked like it got stuck in the ’80s.

Even though we didn’t like the style that much, we felt instantly comfortable and decided to put in an offer that same evening. It was partly due to the pressure of the market, but in the end, we are really happy we made this decision.

house
This house was totally 1980s, but Rieckel has been slowly updating it.

Katerina Rieckel

What surprised you most about the home-buying process?

Nothing prepares you for the amount of aggravation you have to go through. Buying a house is like getting a second job for about three months.

living room
After a little work, Rieckel’s home looks lovely.

Katerina Rieckel

What’s your advice for aspiring first-time home buyers?

Don’t trust the photos! The photos got me a few times. For example, a lot of times, the photos of the house are taken so that you can’t see the neighboring houses.

You think, “Wow, that looks so private!” Then you drive there, and you realize there’s a house sitting right next to it. Since privacy was very important to us, we got disappointed a few times by this. We started doing drive-bys first, before going in with a real estate agent, whenever possible.

Christmas decorations
Rieckel moved in in time to enjoy her new home for the holidays.

Katerina Rieckel

Anything else home buyers should look out for?

Call the real estate agent and ask a lot of questions before you even go see the house, like what the property and school taxes are—very important around here.

You also want to know what kind of heating the house has, as electric bills can really add up over the winter.

The driveway can also be a huge issue, which is why I think the first house we were buying was for sale for such a long time. It had a pretty steep driveway, which was definitely an all-wheel drive kind of thing in the winter.

We also changed who we were financing with while we were going through closing. We needed someone well-informed about the economy, who knew what they were doing and was ready to act fast.

Our first mortgage broker didn’t tell us as soon as interest rates started to go up—and basically sat on the information for a while. This is when we stopped trusting this person and went to work with a bank instead.

Maybe the best advice is not to fall in love with a house too quickly, since there can be so many setbacks that you will not see coming.

Katerina Rieckel
It took a little longer than expected, but this family is finally happy in their new home.

Katerina Rieckel

The post ‘I Lost My Job—and My Dream House’: How This First-Time Home Buyer Bounced Back appeared first on Real Estate News & Insights | realtor.com®.

Source: realtor.com