How to Save for a Down Payment While You’re Renting

 

Rent prices continue to rise throughout the U.S., which creates a disheartening and discouraging scenario for many people.

As of  January 1st, median rents for one- and two-bedroom units are up 13% and 16%, respectively, since 2019.

One-bedroom rentals are at an all-time median high right now.

High rental prices coincide with a housing market that’s overheated. Demand, inflation, and reductions in home construction have led to record-setting home prices. Potential homebuyers are being priced out, requiring them to stay in the rental market, putting pressure on rent prices.

For renters, it can seem like a difficult cycle to break—how can you save for a down payment when such a large chunk of your income is going toward rent? Homeownership feels unattainable for a large portion of the population.

It’s decidedly not an easy issue to work your way out of, but it is possible.

Figure Out What You Need

The first thing you can do is start to crunch the numbers. If you have a concrete number for the down payment you need, it will be easier to work toward your goals. If you don’t have a plan in mind or a set number to work toward, you’re going to feel scattered, and it will be much harder to get out of the rent cycle.

The down payment will depend on the type of loan you hope to get and where you plan to buy.

There are mortgages with a down payment as low as 3%, giving you opportunities to save up in a shorter period of time.

You may have to pay for private mortgage insurance if you don’t put down 20%, however.

You have to think about other costs that you’ll need upfront money for to buy a home. These costs include closing fees and the costs of moving.

Open a Dedicated Down Payment Savings Account

Once you have a concrete number in mind and have explored the mortgage options available to you, and know which you’d like to ultimately get, you can create a savings account. This account will only be for your down payment and nothing else.

It should be liquid but separate from anything else so that you aren’t tempted to spend the money in it.

Deal with Debt

You’re going to need to find ways to cut costs if you want to put more money aside to buy a house. Cutting your debt is going to be one way to do that.

If you have a balance on a credit card with a high interest rate, you might try to do a balance transfer. You can transfer the expensive debt to a card with a zero-percent interest period.

If buying a house is your goal, try not to add any more debt during this time.

To qualify to get a mortgage, you’ll have to meet the debt-to-income requirement.

Find Ways to Cut Back

It’s hard to give things up, but if you’re putting a fair amount of money into your rent, there’s not a lot you can do about that unless you’re willing to move.

You’ll have to find other ways you can cut your costs. That might mean skipping meals out or delivery food or going through your subscriptions to see what you can eliminate.

Think About Moving

We mentioned moving above, and you may not be willing or able to do it, but if you can, cutting down on what you’re paying for rent is one of the best ways to have more money to put toward a down payment.

If you can’t move to a smaller or less expensive home, you might try to renegotiate your lease with your landlord, or you could get a roommate. If you can move, along with getting a smaller place, another option is to move outside of the center city area, if you live there currently. Typically, the further out you move from the central area of your town or city, the lower the rent.

Explore Assistance Programs

Finally, many mortgage lenders have programs and loans for first-time homebuyers that cover part or all of a down payment. There are also grants, which require you to complete a homebuyer education course before you get the financial assistance.

If you work in certain fields, like as a first responder or teacher, homebuying assistance programs are often available.

A lot of lenders are looking to reach out to underserved communities to help them make homeownership a reality, so make sure to explore everything that’s out there.

The Pros and Cons of An Adjustable-Rate Mortgage

 With mortgage rates rising rapidly and coming off years of record lows, many potential

homebuyers are looking for ways to beat the situation. One available option is an adjustable-rate mortgage. An adjustable-rate mortgage has pros and cons, and both have to be carefully weighed before making a decision.

An adjustable-rate mortgage is also known as an ARM. These home loans have an interest rate that adjusts over time based on what’s happening with the market. These loans will often begin with a lower interest rate than a comparable fixed-rate mortgage, and the interest rate doesn’t stay the same forever.

Your monthly payment can fluctuate after your initial period.

A fixed-rate mortgage offers predictability and certainty because, for the life of the loan, the interest rate stays the same, regardless of what’s happening with the market.

An ARM, by contrast, can become more expensive or less expensive.

There are two periods with an ARM. There’s a fixed period, usually the first 5, 7, or perhaps ten years of the loan. During this set period, your interest rate doesn’t change. Then, there’s an adjustment period. Your interest rate during the adjustment period can go up or down based on changes in the benchmark.

Mortgage rates are influenced by a range of factors, including personal factors like your credit score and broad factors such as economic conditions. You might get a teaser rate upfront that’s much lower than the rate you could pay later on in the life of the home loan.

The benchmark in your ARM loan would be the basis of your rate. The contract may name the rate benchmark the U.S. Treasury or the secured overnight finance rate (SOFR). The named benchmark will, at some point in the life of your loan, be the starting point to calculate resets.

The benchmark is used, and the loan is priced at a markup or margin. The margin applied to your ARM will depend on your credit history. A rate cap may be in place with an ARM, which would be the maximum interest rate adjustment your loan would allow at any particular time.

The Pros of Adjustable-Rate Mortgages

Adjustable-rate mortgages can be a good option if your initial goal when buying a home and getting a loan is the lowest interest rate. Your teaser rate isn’t forever, but you’ll get lower initial payments, so you’ll improve your cash flow. You might also be able to put more toward your principal balance every month.

If you’re planning to move fairly soon after buying a home, you might not have to worry about the adjusting interest rate. An ARM can be a good option for someone buying a starter home. You may have plans to upgrade, so you can sell your home before the fluctuation of the interest rates, which keeps your risks pretty low with this type of loan.

When you’re paying less monthly, you have more flexibility in your budget to meet other financial goals.

If you think you’re moving somewhere that you won’t stay for more than five years, an ARM is often the best option.

The Cons of an Adjustable-Rate Mortgage

The biggest downside of this type of mortgage is that you’re taking a risk that your interest rate will go up. That’s highly likely, meaning eventually, your monthly payments will increase. It’s hard to predict what your financial situation will be in the future, and you might at some point find it’s a struggle to make your monthly payments if they’re higher.

There’s also an inherent sense of uncertainty that can cause anxiety for some buyers.

Finally, you also have to consider the risk that if you are planning to stay in your home for five years or fewer, you may not be able to sell it before your rate adjustment. If you’re in an ARM situation and can’t sell it, an alternative would be to refinance to a fixed-rate loan or maybe a  new adjustable-rate mortgage.

How To Prepare For A Bidding War

With the housing market being a seller's market on steroids, due to lack of homes are the market, you need to be prepared to have to fight multiple buyers competing for the same home.  Here is how to prepare for a bidding war.

 

What The New FICO Credit Score Changes Mean

Fair Isaac, the giant credit score company, recently announced the biggest change since 2014 in how it determines its FICO credit scores. This new FICO 10 system — expected to go into effect by year’s end — could affect your home buying and credit borrowing in big ways, possibly for the worse and possibly for the better.

But there are a few things you can do to help prevent it from lowering your credit score.

Having good credit is especially important in retirement. It can save you thousands of dollars — with a lower interest rate on a mortgage, car loan or credit card — at a time of life when every penny really counts. And a high credit score could help you get a rewards credit card or a better interest rate with one, making travel in retirement less expensive. Insurance premiums, utility bills and apartment rents may also be more affordable when your credit is in good shape.

Conversely, having a poor credit score could keep you from getting a mortgage on a retirement home or raise your monthly expenses due to higher borrowing costs.


What the New FICO Credit Score Changes Will Do
According to FICO, about 40 million people could see their credit scores rise 20 points or more with the new system. But another 40 million could see their scores drop 20 points or more. And about 110 million people could see their credit scores go up or down by under 20 points.

What’s behind FICO 10? Something known as credit score inflation.

A few years ago, due to a legal settlement, the three major credit reporting agencies (Equifax, Experian and TransUnion) agreed to remove tax liens and judgments from credit reports. That caused millions of Americans to see a boost in their credit scores. The average FICO score climbed to an all-time high of 706 in 2019; scores typically range from 300 to 850.

But lenders weren’t thrilled with this development. Some argued the credit score increases weren’t deserved and could lead some people to get loans and credit cards they wouldn’t be able to pay on time.

According to FICO, a credit card issuer might be able to lower its number of defaults by up to 10% under the new scoring model, though. One reason: FICO 10 will put more weight on a borrower’s rising debt levels. So, if you switched from paying off your cards in full each month to carrying growing balances, you may well see a lower credit score.

3 Ways FICO 10 Could Hurt Your Credit Score
Here are three ways the FICO 10 changes could hurt your credit score:

1. Late payments could trigger a bigger credit score drop than before.

2. If you have a history of not paying off your credit card debt in full every month, your credit score may decline.

3. Personal loans might damage your credit score, especially if you use them to consolidate credit card debt, but then run up credit card balances.

That said, many of the general rules you’ve learned about earning a good credit score still apply under FICO 10. For example, it will still help to pay your bills on time, keep credit cards open and review your credit reports for errors often.

How to Change Your Credit Habits Due to FICO 10
But you may want to tweak your approach to credit management in light of the new scoring changes to come. Here’s how:

Be sure not to be late on your loan and credit card payments. Even the occasional late payment might be a bigger issue under FICO 10.

Make paying off credit cards a bigger priority. FICO 10T (an alternative version of the new scoring system) will look back at how you’ve managed your credit cards over the last 24 months. If you have a history of paying off card balances every month, this good habit should work in your favor.

Be careful how you use personal loans. Using a low-rate personal loan to consolidate credit card debt may still be a smart financial move. However, it will be more important than ever to avoid getting back into credit card debt because a personal loan consolidates your debt.

If you start following the good habits and steering clear of bad ones, you may be able to avoid potential credit score problems in retirement.

Easy Curb Appeal Updates For 2020

Does curb appeal matter if you are trying to flip a house? Yes it does! Research claims that buyers can decide if they would be willing to buy a house within the first eight seconds of seeing the property. What will potential homebuyers see in the first eight seconds after driving up to your property? If you’re listing a house soon and want to see immediate interest, give the below tips a try in order to update your curb appeal and get your home sold fast.

Tidy Up The Yard
You may not have the time or the money to invest in brand new landscaping, but that doesn’t mean that you can’t make the yard look clean. You can buy mulch in bulk at Home

Depot for cheap. Having mulch is the easiest way to transform your yard and make it look neat and fresh. Plant some new flowers in pots placed near your front door, and add a new welcome mat. Finally, Mow the lawn and trim branches.

Clear The Pathways

It's simple enough to get out the hose and spray away all leaves from sidewalks and walkways. Large piles of leaves in the backyard and front can be a turnoff to potential homebuyers because it may make them think that the yard is hard to take care of or that the home is unkempt.

Paint or Power Wash?
Take a walk around your home and inspect the exterior. Do you notice any peeling or chipped paint? It may be time to consider repainting the exterior. Check the walkways, windows, and smaller details that are looking drab. A fast power wash can help transform these areas without costing a fortune. You can easily rent a power washer if you don’t have one.

Add Color

Consider updating your front door for a fresh, new look. Add a pop of color by painting your front door if you don’t have the funds to update the whole house with a fresh paint. A new entry can return between 75–100% of your investment. Follow the above tips for some easy curb appeal fixes to sell your home quickly in 2020. Good luck!

How to Make Your Valentine’s Flowers Last Longer

There is nothing quite like a floral display to add a touch of love and warmth to a room. Receiving a glorious bouquet of

flowers definitely puts a smile on our face and since it’s February, our thoughts turn to Valentine’s Day, romance and that special someone in our life. 

So when that special someone in your life gives you a big bunch of fabulous red roses this weekend and has that silly grin on their face that asks – "Did I do good?", you can give them a winsome smile and let them know how much you love and care for them. 

Try These Tips to Help Your Flowers Stay Fresh
The love that you receive on Valentine's Day can indeed last a lifetime. Don't you wish those romantic roses you receive did too? So when you receive your Valentine’s Day flowers, here are a few tips to keep them looking fresh and beautiful for as long as possible:

Before you start, make sure that your vase is clean. Then remove any leaves from the lower part of the stems that will be submerged in the water.

Trim about 1cm from the end of each stem, at a 45o angle and do this under water. This stops air getting into the stem and makes it easier for the flowers to draw fresh water into their stems.

Re-trim the ends of the stems every day or so, to keep the ends fresh.

Give your flowers the right nutrients to keep them fresh and healthy for longer. Some florists include little packets of flower food with each bouquet. Make sure to use it. Add one packet of flower food every time you refresh the water – either daily or every second day.

Lastly, add a few drops of bleach to the water to help keep the water clean. Remember, only a couple of drops or you will damage the flowers.

More Pro Tricks to Keep Valentine's Day Flowers Blooming

Fresh Flowers need just the right temperature to remain vibrant and blooming. Avoid placing your Valentine's day roses directly under the air conditioner, in direct sunlight, or near a heat source. Natural indoor lighting works just fine for your flowers as long as you're following the tips we've listed above.

Most important of all, make sure to wash the vase clean with soapy and dry it thoroughly each time you want to replace the water. This will help get rid of the bacterial growth and help your flowers stay fresh longer.

That’s the secret to keeping your Valentine’s Day flowers in tip top shape for as long as possible. Happy Valentine’s Day everyone!

U.S. Citizens Will Need to Register to Travel to Europe Starting in 2021

Do you like to travel?  Do you travel to Europe?  If so, you need to read this article...

Here’s what you need to know about the new ETIAS travel authorization requirements.

Europe is the most-visited region in the world, with countries like France, Spain, Italy, and Germany each welcoming more than 37 million international visitors in 2017 alone. In addition to offering some of the world’s best cuisine, museums, and architecture, Europe is a popular destination for U.S. travelers, who don’t need a tourist visa to visit most countries.

But the rules are about to change. Starting on January 1, 2021, all U.S. citizens who want to travel to the 26 members of Europe’s Schengen Zone will need to register with the European Travel Information and Authorization System (ETIAS) or risk being turned away at the border.

Here’s everything you need to know about the new process:

Why is the process changing?
With ongoing terrorism threats, the European Union decided to implement this new travel authorization program to protect and strengthen its borders. By requiring visitors to register, the EU will be able to identify any possible threats or risks associated with travelers coming into these countries before they arrive. U.S. citizens will still be able to enter Europe without registering until January 1, 2021.

Does this mean I need a visa to travel to Europe?
This isn't a visa. European Commission and U.S. State Department officials confirmed to the Washington Post that ETIAS is a travel authorization for visa-free visitors, similar to the U.S. Electronic System for Travel Authorization (ESTA).

According to a fact sheet the European Commission released in July 2018, “The ETIAS authorization is not a visa. Nationals of visa liberalization countries will continue to travel the EU without a visa but will simply be required to obtain a travel authorization via ETIAS prior to their travel.”

“An ETIAS travel authorization does not reintroduce visa-like obligations,” it continues. “There is no need to go to a consulate to make an application, no biometric data is collected and significantly less information is gathered than during a visa application procedure.”


Which European nations will require ETIAS authorization to visit?
The new travel authorization applies to those entering any member country of Europe’s Schengen Zone. Currently, that includes 22 countries that are also members of the EU, four non-EU countries, plus three European micro-states. That means that you’ll need to register starting in 2021 to enter Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, and Switzerland. The micro-states of San Marino, Vatican City, and Monaco will also require the registering.

While Romania, Bulgaria, Croatia, and Cyprus aren’t currently Schengen countries, they are in the process of joining and will be subject to the same requirements once they do.

However, there are still many European nations that aren’t part of the Schengen Zone, mostly in Eastern Europe. That means you’ll still be able to travel to Albania, Andorra, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Kosovo, Macedonia, Moldova, Montenegro, Serbia, Turkey, and Ukraine without an ETIAS.

How long will an ETIAS take to process?
Once the ETIAS application is available online, it should only take about 10 minutes to fill out, according to schengenvisainfo.com. To apply, you’ll need a valid passport, an email address, and a debit or credit card to pay the nonrefundable €7 application fee (there are no other fees associated with the program). After you fill out your application online with the personal information on your passport, and answer a series of security and health-related questions, it should be approved and sent to your email address within a few hours after it is checked across security databases like Interpol and Europol. While children under the age of 18 will be required to have an ETIAS, they will not be charged the application fee.

Will you have to reapply for each trip to Europe?
No. After you apply for the first time, your ETIAS will be valid for three years—or until your passport expires, whichever comes first. Because the ETIAS is valid for short-term stays of up to 90 days for both leisure and business travelers, you’ll be able to re-enter Europe multiple times within that three-year period without renewing it, as long as your stay doesn’t exceed 90 days within a 180-day period. Those who want to study or work in Europe will need to apply for a proper visa.

Who else will need ETIAS authorization?
This new program isn’t limited to U.S. citizens. In fact, there are 62 countries whose citizens will be required to have an ETIAS when visiting countries in the Schengen Zone. The list of ETIAS-eligible countries includes Canada, Mexico, Australia, and many more.