Real Estate and Housing http://www.wisebread.com/taxonomy/term/4810/all en-US Is it Safe to Re-Finance Your Home Close to Retirement? http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-it-safe-to-re-finance-your-home-close-to-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/house_payments_money_000007934078.jpg" alt="Learning if it&#039;s safe to refinance your home close to retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Lower mortgage rates can save you hundreds of dollars on your monthly payments. Refinancing your mortgage to a new one with a lower rate would then seem to make sense.</p> <p>But what if you're approaching retirement? Is refinancing a smart move when you're planning to leave the workforce in five years or less?</p> <p>Not surprisingly, the answer depends on your unique financial situation and your goal from a refinance. (See also: <a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">4 Mortgage Secrets Only Your Broker Knows</a>)</p> <h2>Consider the Time Factor</h2> <p>If your main goal is to reduce your monthly costs, refinancing might make sense. But if you plan on moving from your home shortly &mdash; in, say, less than five years &mdash; then a refinance might not be the best option. That's because refinancing a home loan isn't free. The typical refinance costs thousands of dollars &mdash; money that you'll usually roll into your new loan amount and pay off over time when you make your regular monthly payments.</p> <p>It might take you several years to save enough money each month to recover the closing costs. If you're moving too soon (and retirees often move from their homes sooner than they originally planned), you might not generate enough monthly savings to even pay back those initial closing costs.</p> <p>Then there's the time factor. A refinance, unless you are reducing the term of your loan at the same time, means that you'll be paying off your mortgage for a longer number of years. As a retiree, you might instead prefer to pay off your current mortgage in a shorter amount of time.</p> <p>&quot;One consideration is the length of the term on the new loan,&quot; said Arvin Sahakian, co-founder and vice president of BeSmartee, a start-up designed to help consumers search for mortgage loans online. &quot;When people refinance their mortgage, they are re-setting the loan term and essentially starting over again.&quot;</p> <p>As an example, if you are paying off a 30-year fixed-rate mortgage that you have been making payments on for 15 years, you'll have an additional 15 years left to pay off that loan. If you refinance that loan to a new 30-year one, you've just increased the lifespan of your mortgage by another 15 years. Do you want that monthly payment hovering over you for another 15 years, even if refinancing will result in immediate monthly savings?</p> <p>That's not an easy question to answer, especially when you consider how much of your payments on a new mortgage loan, even one with a lower interest rate, will go toward interest instead of principal.</p> <p>&quot;The first few years of mortgage payments on a new loan are designed to go toward the interest, and less towards the principal,&quot; Sahakian said. &quot;As the years go by, more of the monthly payments go toward the principal, and less toward the interest, so this is another important consideration.&quot;</p> <h2>What the Numbers Say</h2> <p>It's important for every homeowner to crunch some numbers before deciding to refinance. But it's <em>especially</em> important for those nearing retirement who might need to recover their refinancing closing costs in as few months as possible.</p> <p>Say you owe $150,000 on a 30-year fixed-rate mortgage with an interest rate of 5%. Your monthly payment, not including insurance and taxes, will be about $805. If you refinance that same amount to a 30-year fixed-rate loan with an interest rate of 3.95%, your monthly payment will drop to about $711 a month &mdash; a savings of about $94 a month, or $1,128 a year.</p> <p>That sounds good, right? But remember, refinancing can be expensive. Say refinancing that $150,000 costs $4,500 in closing fees. It will take you almost four years to save enough from your refinance to pay back these closings costs. Is that worth it? If you stay in your home for eight years or more, it might be. If you end up moving in five years, it might not be.</p> <p>But say you owe $200,000 on a 30-year fixed-rate loan with an interest rate of 5%. Then your monthly payment, again not counting taxes and insurance, would be about $1,073. If you refinance that $200,000 to a new 30-year fixed-rate loan but at an interest rate of 3.95%, your monthly payment would fall to about $949 a month. That's a savings of $124 a month, or $1,488 a year. If your loan closing cost that same $4,500, it would take you just a bit more than three years to generate enough savings to pay for your closing costs. That shorter time frame might make it more worthwhile for homeowners nearing retirement.</p> <p>There is another factor to consider, though. If you'll absolutely need to reduce your monthly living expenses after you retire, then refinancing might make sense, even if it will take you longer to recover the costs of closing.</p> <p>&quot;Many Americans who retire typically see their retirement income fall to nearly half of what they earned while they worked full time,&quot; Sahakian said. &quot;This is one of the considerations borrowers should account for when making a decision about refinancing. Will they be able to afford the monthly payments associated with the mortgage, insurance, and property taxes on their retirement income?&quot;</p> <p><em>Are you considering a home refinance?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/is-it-safe-to-re-finance-your-home-close-to-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-mortgage-secrets-only-your-broker-knows">4 Mortgage Secrets Only Your Broker Knows</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/quicken-loans-review-competitive-rates-and-good-customer-service">Quicken Loans Review: Competitive Rates and Good Customer Service</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-should-consider-an-adjustable-rate-mortgage">Why You Should Consider an Adjustable-Rate Mortgage</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-hidden-dangers-of-refinancing-your-mortgage">3 Hidden Dangers of Refinancing Your Mortgage</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/choosing-the-right-mortgage-loan-15-or-30-years">Choosing the Right Mortgage Loan: 15 or 30 Years?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Retirement closing costs home loans interest rates mortgages refinancing Mon, 08 Feb 2016 14:00:06 +0000 Dan Rafter 1649872 at http://www.wisebread.com Be a Smarter Home Buyer by Avoiding These 12 House Hunter Cliches http://www.wisebread.com/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_dream_home_000044030686.jpg" alt="Couple being smarter than people on HGTV&#039;s House Hunters" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>HGTV is like brain candy for anyone who's thinking about buying a house, and no show is as riveting at this stage of life as <em>House Hunters</em>. Too bad the people featured on <em>House Hunters</em> usually appear clueless about how to select the right home.</p> <p>Go ahead and enjoy the virtual tours of homes in different parts of the country &mdash; just don't use the featured families as role models for your own house hunt. Too many of the comments uttered on the program are shortsighted, severely unimaginative, or simply ridiculous.</p> <h2>1. &quot;I could live with any commute for this house.&quot;</h2> <p>The biggest misconception <em>House Hunters</em> creates is that searching for a house is all about the house itself, not about the neighborhood, the schools, or the distance from your job. Those other things might not make good TV, but there's a reason the phrase &quot;location, location, location&quot; has never disappeared from the real estate conversation. For one thing, a long commute can <a href="http://www.wisebread.com/3-ways-your-commute-is-killing-you-and-what-to-do-about-it">literally kill you</a>. For another, if you have children and the local public school doesn't work for you, you'll end up spending as much or more as your mortgage payments on private school tuition.</p> <h2>2. &quot;The appliances/wall colors/bathroom fixtures are deal breakers.&quot;</h2> <p>When you view a house, focus on the features that would be very expensive or impossible to change, such as the number of bathrooms or the square footage. You can change a room's color for a few hundred dollars &mdash; less if you paint it yourself. It's not a factor.</p> <h2>3. &quot;We absolutely need a master suite.&quot;</h2> <p>Although a large bedroom with its own bathroom and living area has become <em>de rigeur</em> in high-end and even mid-range houses, <a href="http://newsroom.ucla.edu/releases/trouble-in-paradise-new-ucla-book">these spaces are hardly used</a>, according to UCLA's Center on Everyday Lives of Families. Researchers recorded where family members really spent their time, and found that people spend the most time in the kitchen and family room. So a spacious kitchen should be a higher priority when house hunting than a master suite.</p> <h2>4. &quot;How can we both get ready in the morning without his-and-hers sinks?&quot;</h2> <p>An unscientific survey of couples I know revealed that barely any of their schedules have them both brushing their teeth at the same time in the morning. While I can see the attraction of not having to use a sink that someone else left toothpaste gobs in, it's not as if a partner who doesn't wash a shared sink is going to wash a private sink.</p> <p>One realistic friend put it like this: &quot;Who needs to clean toothpaste off of two sinks?&quot;</p> <h2>5. &quot;I don't want to do any work on the house at all.&quot;</h2> <p>It's true that remodeling is a pain. But keep in mind that a home with a brand new kitchen and other up-to-the-minute updates will all be done with someone else's taste in mind &mdash; and you won't want to spend money changing a perfectly good kitchen just because you would have preferred a different style of sink or a different countertop.</p> <p>There is no time more convenient to make changes than before moving in, so why not keep an open mind and look at houses that need some updating?</p> <h2>6. &quot;We need a big yard for the dog/kids.&quot;</h2> <p>There's no doubting that a lot of outdoor space can be a plus, but don't ever imagine that pets and children can't live without it. In the city of San Francisco, where most residents don't have yards, <a href="http://www.sfgate.com/news/article/S-F-S-BEST-FRIEND-Where-pooches-outnumber-2555688.php">there are 120,000 dogs</a> (more dogs than kids, as a matter of fact). These dogs seem perfectly happy taking advantage of dog parks and city strolls.</p> <p>As for children, the Center on Everyday Lives of Families found that even in temperate LA, neither kids nor their parents spent much time in the yard &mdash; even those that had been expensively upgraded.</p> <h2>7. &quot;We really want a private pool!&quot;</h2> <p>When the target is a vacation home, shoppers favor houses with their own swimming areas over those with shared community pools. But private pools come with responsibilities and risks. You rarely hear families on the show include the cost of pool cleaning, replacing parts, or liability insurance in their cost comparisons.</p> <h2>8. &quot;I want vintage charm and an open floor plan.&quot;</h2> <p>Whether they are naive or just inventing conflicts to make the show interesting, the many <em>House Hunters</em> families who wish for these two things together are living in a fantasy world. Older homes weren't built with kitchens that open up into family rooms; the kitchen was the domain of servants. Sure, you may find a vintage home that has been remodeled to feature an open floor plan, but chances are that plenty of those charming details were lost in the process.</p> <h2>9. &quot;It doesn't have enough storage space for all our stuff.&quot;</h2> <p>If your possessions take precedence over your family's needs in choosing living space, isn't it time to pare down?</p> <h2>10. &quot;We can (or can't) afford this house based on the listing price.&quot;</h2> <p>It's so silly that couples on the show pretend to have serious financial discussions based on the asking price, a number that in many markets bears little relation to what the house will actually sell for. This reality is revealed at the end of many episodes, when the realtor is able to negotiate a supposedly unaffordable house into the buyer's price range. On the other hand, where I live in the San Francisco Bay area, everyone knows that a home's final price will be as much as $100,000 above asking.</p> <h2>11. &quot;The washing machine is in the kitchen? Weird!&quot;</h2> <p>This is said on almost every episode of <em>House Hunters International</em>. It's not weird. It's the norm in most parts of the world. If you're going to live abroad, accept that your washing machine may well be in your kitchen and move on.</p> <h2>12. &quot;I want to soak up the culture of Italy with the amenities we had in Texas.&quot;</h2> <p>Another gem from the international version of the show. If you are not willing to let go of having an &quot;American-sized fridge&quot; or a big yard, you're probably not going to end up steps from a piazza with a charming cafè. And if maintaining your American lifestyle is the most important thing, tell me again why you're moving abroad?</p> <p><em>What comments on House Hunters have irked you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-kirby">Carrie Kirby</a> of <a href="http://www.wisebread.com/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-pros-and-cons-of-paying-cash-for-a-house">The Pros and Cons of Paying Cash for a House</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/growin-home-how-much-house-do-you-really-need">Growin&#039; Home: How Much House Do You Really Need?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-the-affordable-home-really-isnt">Why the Affordable Home Really Isn&#039;t</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-prepare-for-a-home-purchase-in-2010">How to Prepare for a Home Purchase in 2010</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Clueless deal breakers hgtv home buying homeowners house hunters Fri, 29 Jan 2016 16:00:04 +0000 Carrie Kirby 1646403 at http://www.wisebread.com Home Equity Loan or HELOC: Which Is Right for You? http://www.wisebread.com/home-equity-loan-or-heloc-which-is-right-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/home-equity-loan-or-heloc-which-is-right-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/money_home_loan_000078750729.jpg" alt="Learning if home equity loan or HELOC is right for you" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You'd like to renovate your 1970s-era kitchen. Or maybe it's time to build that master bedroom suite you've long desired. But where to get the money?</p> <p>If you have equity in your home, a home equity loan or home equity line of credit &mdash; better known as a HELOC &mdash; might be the right choice. With both of these loan products, you'll be using the equity in your home to receive an influx of cash that you can then use on anything you want, such as home improvements, your children's college-tuition fund, paying off high interest rate credit card debt, or even taking a cruise around the world.</p> <p>But you do have to pay back the money, of course. And you should also understand the differences between a HELOC and a home equity loan. Despite the similar names, these products are different. And one might be the better choice for you. (See also:&nbsp;<a href="http://www.wisebread.com/real-estate-terms?ref=seealso">21 Real Estate Terms Every Home Buyer Should Understand</a>)</p> <h2>Home Equity Loans</h2> <p>A home equity loan is similar to your primary mortgage loan, only smaller. You can borrow a certain amount as long as it does not exceed the equity in your home. For example, if you owe $150,000 on your mortgage loan and your home is worth $200,000, you have $50,000 of equity in your home.</p> <p>Most lenders won't lend you that full $50,000. But you might be able to take out a loan for, say, $35,000. You'd then receive those dollars in one lump sum that you'd pay back with regular monthly payments, much like you do with your primary mortgage loan.</p> <p>Your home equity loan will come with its own interest rate, which is usually fixed. You will also have a set number of years, perhaps 10, to pay it back, and a monthly payment that remains the same until you do pay off your debt.</p> <h2>HELOCs</h2> <p>A HELOC acts more like a credit card with a maximum spending limit tied to your home's equity. If you have $50,000 of equity, your lender might approve you for a HELOC with a maximum borrowing limit of $40,000. You can then borrow as much or as little as you need to cover home repairs or other expenses.</p> <p>Here's an example: Say you want to spend $20,000 to renovate your home's kitchen. If you have a HELOC with a spending limit of $40,000, you'd be able to borrow that $20,000 and still have $20,000 more to borrow in the future.</p> <p>You can't borrow off a HELOC forever. Most come with what is known as a &quot;draw period&quot; that lasts from five to 10 years. This is the period during which you can borrow off your HELOC. You'll also make monthly payments depending on how much you've borrowed, but you'll only have to pay the interest on the money you borrowed, not the principal.</p> <p>After this period ends, your HELOC will enter its repayment period. During this time, you'll pay back whatever you borrowed in monthly installments. Your monthly installments will be larger or smaller depending upon how much you borrowed, just like with a credit card. If you only borrowed $10,000 during the life of your HELOC, your monthly payments will be smaller than if you borrowed $40,000.</p> <h2>What's Right for You?</h2> <p>So, should you go with a home equity line of credit or a HELOC? That largely depends upon your personality.</p> <p>If you prefer monthly payments that never change along with an interest rate that remains fixed, then a home equity loan is your better choice. These loans are also a smart move if you have a specific project that you want to fund. If you know you need $15,000 to cover the costs of a second-floor addition to your home, you can borrow exactly that amount with a home equity loan and then know exactly how much that loan will cost you each month.</p> <p>A HELOC comes with more uncertainty. The interest rates attached to HELOCs are usually adjustable, meaning that they can rise or fall. This also means that your payments during the repayment period might increase.</p> <p>But HELOCs are a good choice if you want some flexibility with your money. Say you're taking on a long-term home renovation. If you take out a HELOC, you can withdraw money whenever you need to pay your contractors. This gives you access to a pool of funds without having to pay interest on that money until you actually borrow it.</p> <p>&quot;People should simply consider whether they are comfortable with an adjustable rate, because a line of credit will be adjustable,&quot; said Matt Hackett, operations manager with New York City-based direct mortgage lender Equity Now. &quot;If they are, then they should consider whether they are likely to draw the entire portion up front, or whether they want to have access to the funds, but don't need to draw it all at one time. If they do not need it all at once, the line may be a better option as they will only pay interest on the funds they draw.&quot;</p> <p>Lenders also tend to charge lower fees to start a HELOC than to originate a home equity loan, and home equity loans often come with interest rates that are higher than the starting rates for HELOCs. With a home equity loan, you have to pay interest on all the money you borrow all at once, whether you use that money or not. With HELOCs, you only pay interest on the money that you end up borrowing, even if you have access to more funds.</p> <p>Just be careful: Having that big line of credit that comes with a HELOC is tempting. You might spend it recklessly, borrowing, say, $5,000 for a last-minute family vacation instead of saving up the funds in advance to take such a trip. Home equity loans are often better choices for consumers who don't trust themselves to make the smartest money decisions.</p> <p><em>Have you borrowed on the equity in your home? Which form did your loan take?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/home-equity-loan-or-heloc-which-is-right-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-you-should-be-saving-big-with-bi-weekly-mortgage-payments">Why You Should Be Saving Big With Bi-Weekly Mortgage Payments</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/2-things-you-must-know-about-the-new-mortgage-rules">2 Things You Must Know About the New Mortgage Rules</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/87-of-homebuyers-think-they-know-how-much-home-they-can-afford-but-they-really-dont">87% of Homebuyers Think They Know How Much Home They Can Afford (But They Really Don&#039;t)</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-the-affordable-home-really-isnt">Why the Affordable Home Really Isn&#039;t</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing borrowing money equity HELOC home equity loans mortgages Wed, 27 Jan 2016 14:00:03 +0000 Dan Rafter 1643289 at http://www.wisebread.com 8 Smart and Fun Things You Could Do if You Paid Less Rent http://www.wisebread.com/8-smart-and-fun-things-you-could-do-if-you-paid-less-rent <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-smart-and-fun-things-you-could-do-if-you-paid-less-rent" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock_000075723379_Large.jpg" alt="Woman enjoying life by paying less rent" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Paying rent is one of life's necessary evils. And you have to toil away to cover the cost of your too-small dwelling that seems to <em>always</em> need the Super to fix <em>something</em>. But let's think happy thoughts. What would you do, in a perfect world, if you paid less rent? Here are eight smart and fun things to do with all that extra cash in your pocket at the end of the month.</p> <h2>1. Take Classes to Learn a New Skill</h2> <p>A few years ago, my husband spent an incredible amount of money on helicopter lessons, because learning how to fly an aircraft has been a pursuit of his since his Navy days. Okay, I get it, people have dreams and all, but I also think that if you're not rich, like we aren't, those lessons should somehow pay for themselves or earn income down the road. But they didn't, and still haven't.</p> <p>Thus, let my disdain be a lesson in and of itself: If you want to use your leftover rent money to take a class, I highly recommend it, but you should have a purpose, an endgame. For instance, if you'd like to take a pottery class, that's all well and good, but are you doing it so you can make everybody ashtrays and vases for Christmas, or are you visualizing the potential of becoming proficient enough to sell the items or market yourself as a potter? The choice certainly is yours, but you'd be doing yourself a solid by trying to <em>monetize </em>your new skill, whatever it may be.</p> <h2>2. Upgrade Your Vehicle to Something You Want</h2> <p>There are upsides and downsides to buying a car brand new or used, which should be considered when deciding on a vehicle. But many times we get so lost in the details that we don't end up with the vehicle we actually <em>want</em>. If you're in this situation &mdash; driving a car or truck that gets you from A to B without much joie de vivre &mdash; maybe it's time to upgrade. It'd be a real possibility if you paid less rent.</p> <h2>3. Enhance Your Work Wardrobe</h2> <p>No matter where you work, somebody is judging you on your professional attire. And whether or not you want to believe it, the way you look plays a part in your income potential. It's not fair, no, because dressing &quot;well&quot; is a relative concept, but it behooves you to be on the trendier, more fitted side of the spectrum. If you're not feeling as confident as you'd like when you walk into the office, use your rent surplus to upgrade and enhance your wardrobe. Just a few key pieces &mdash; a fitted suit and shinier shoes &mdash; can do the trick.</p> <h2>4. Pursue a Healthier Lifestyle</h2> <p>It's true that nobody really needs to pay for exercise. You can do that on your own, without a trainer or even a gym. However, having the ability to work out by your own motivation and <em>wanting</em> to do it are two different things. I'm a self-motivator in all other aspects of my life, but when it comes to exercise, I need help. Which is why I don't feel bad paying for my gym membership or my personal trainer because I'm using these services to their full potential and seeing results (which is necessary for these expenditures to make sense).</p> <p>If you're like me, there's no harm in using what you would have paid in rent to better your health and your body by getting help along the way.</p> <h2>5. Save for That Always-Out-of-Reach Vacation</h2> <p>If you find yourself with the good fortune of paying less rent, you probably won't be able to pack your bags and jet off on your dream vacation right away. With about a half a year of saving &mdash; depending on how much you were able to shave off your rent &mdash; that always out-of-reach vacation will be much easier to grasp.</p> <h2>6. Establish a New Side Gig or Small Business</h2> <p>With the sharing economy in full effect &mdash; thanks to services like Airbnb, DogVacay, and Uber &mdash; you can start earning income with little to no investment. But not all side gigs or small businesses are that easy. If you have an idea in mind that requires start-up capital, use your rent surplus to fund this endeavor.</p> <p>In fact, I would say that this opportunity trumps everything else on this list so far. Adding another source of income can help you get to those other things faster, but establishing a new revenue generator should always be a priority. (See also: <a href="http://www.wisebread.com/10-things-you-must-know-about-money-before-you-take-a-side-job?ref=seealso">10 Money Moves You Need to Make Before You Take a Side Job</a>)</p> <h2>7. Funnel Cash Into Your Home-Buying Fund</h2> <p>Nobody will ever convince me that <a href="http://www.wsj.com/articles/SB10001424052702303948104579534230618539424">renting is better than owning</a> your own home &mdash; not even the <em>Wall Street Journal</em>. Because why pay someone else to live in their house when you can pay yourself to live in your own house? Get out of that rental prison quicker by establishing a down-payment savings account and sending your rental savings there every month. Stick to it, and you'll have enough for a down payment before you know it.</p> <h2>8. Invest in Yourself</h2> <p>Go back to school, pursue a higher paying job, learn a new language &mdash; do something that will make you a better person <em>and</em> a more attractive employee. The best investment you can make is in yourself. Unless, of course, you have a hot tip on stocks; then I'll stand corrected.</p> <p><em>What are some of the smart and fun things you would do if you paid less rent? Let me know in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/8-smart-and-fun-things-you-could-do-if-you-paid-less-rent">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-8"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-resist-a-splurge">6 Ways to Resist a Splurge</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-simple-ways-to-live-rent-free">5 Simple Ways to Live Rent-Free</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/oprah-asks-a-great-question-what-can-you-live-without">Oprah Asks A Great Question; What Can You Live Without?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/in-times-like-these-separate-the-want-from-the-need">In times like these, separate the want from the need.</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/do-not-buy-something-just-because-you-can-afford-it">Do not buy something just because you can afford it</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Real Estate and Housing budget frugal fun activities rent rent money Spending Money Mon, 25 Jan 2016 16:00:03 +0000 Mikey Rox 1643601 at http://www.wisebread.com 6 Important Things You Need to Know About the Housing Market in 2016 http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-important-things-you-need-to-know-about-the-housing-market-in-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/housing_market_000074855705.jpg" alt="Learning important changes coming to housing market in 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying a home is still part of the American dream.</p> <p>According to a survey from Trulia, 75% of Americans dream of owning a home, up 1% from 2015. This dream is even more pressing among Millennials because 80% of those surveyed would like to buy a home &mdash; and 31% would like to do so by 2018.</p> <p>Whether you're looking to buy a home this year or already own one, there are important factors that will affect your investment. Here are the six important things you need to know about the housing market in 2016.</p> <h2>1. Mortgage Rates Are Staying Low (For Now!)</h2> <p>The Fed's December 2015 interest rate hike had many consumers worried that rock-bottom mortgage rates would finally come to an end. However, the economic events of the first two weeks of 2016 show that low mortgage rates will stick around for a bit longer.</p> <p>Given the lackluster performance of the stock market, many investors are buying bonds and driving down the yields of these investment vehicles. This is great news for those looking for a home loan, because the interest rates on 30-year mortgage loans are highly correlated with the yield of the U.S. Treasury 10-year bond. According to data from the Federal Reserve Bank of St. Louis, the average 30-year fixed rate mortgage average in the U.S. was <a href="https://research.stlouisfed.org/fred2/series/MORTGAGE30US">3.97% on January 7, 2016</a>, down from 4.1% in December 31, 2015.</p> <h2>2. HARP Refinance Deadline Receives Extension</h2> <p>Many experts expect mortgage interest rates to increase further down the road. Those mortgage holders that haven't been able to refinance to a lower rate yet should think about doing so this year &mdash; especially homeowners that are underwater on their mortgages.</p> <p>As of January 2015, about 700,000 borrowers who owed more than their homes were worth were <a href="http://www.nytimes.com/2015/01/24/your-money/700000-homeowners-could-still-benefit-from-us-harp-refinancing-program.html?_r=0">still eligible to refinance</a> their loans through the HARP program from the Federal Housing Finance Agency (FHFA). HARP was originally set to expire at the end of 2015, but it was extended for an additional year, until the end of 2016.</p> <p>Nearly 3.3 million Americans have benefited from a HARP refinance to lower their monthly payments on their mortgages. The five basic requirements to qualify for a HARP refinance are:</p> <ul> <li>Loan was originated on or before May 31, 2009.<br /> &nbsp;</li> <li>Property is a primary residence, one-unit second home, or one- to four-unit investment property.<br /> &nbsp;</li> <li>Loan is owned by Freddie Mac or Fannie Mae.<br /> &nbsp;</li> <li>Current loan-to-value ratio must be greater than 80%.<br /> &nbsp;</li> <li>Borrower is current on the mortgage, with no over-30-day late payments in the last six months and no more than one in the past 12 months.</li> </ul> <p>There are still close to 430,000 HARP-eligible loans out there and you can check the <a href="http://harp.gov/Default.aspx?Page=363">eligibility of loans</a> by zip code.</p> <h2>3. Home Prices Are Rising Less Than in Previous Years</h2> <p>One of the <a href="http://www.wisebread.com/8-necessities-that-will-be-cheaper-in-2016">necessities that will be cheaper in 2016</a> is the single-family home. In 2016, the national average price for a single-family home is expected to be 3% higher than last year, a much slower rate of growth than 2015's 5% increase.</p> <p>However, some markets will experience bigger price bumps, such as Sacramento, California with an expected 15% increase, and other markets will experience smaller price bumps, such as Houston, Texas with an expected 1.1% increase.</p> <h2>4. Rent Prices Are Increasing Faster</h2> <p>On the other hand, rent prices are expected to increase sharply. In the third quarter of 2015, U.S. home buyers were spending <a href="http://www.zillow.com/research/q3-2015-mortgage-rent-affordability-11197/">15% of their monthly income</a> on the mortgage payment of a typical home, while U.S. renters were spending 30% of their monthly income on the rent payment of a median-valued property.</p> <p>Higher rent prices will continue to be norm in 2016. According to a survey of more than 500 large U.S. property managers, <a href="http://www.rent.com/blog/2015-rental-market-report/">rental inventory</a> is at the lowest level in over 20 years.</p> <p>A smaller inventory of available units for rent enables landlords to demand higher prices from renters. Of the surveyed property managers, 55% reported to be &quot;less likely to offer concessions or lower rents to fill vacancies&quot; and 68% of them expected to continue raising their rental rates in 2016 by an average of 8%.</p> <h2>5. New FHA Loan Limits Take Effect</h2> <p>On December 9, 2015, the Federal Housing Administration (FHA) announced its new schedule of <a href="http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2015/HUDNo_15-156">loan limits for 2016</a>. FHA home loans allow homebuyers to access financing with a minimum 3.5% down payment of the market value of the property, among other requirements.</p> <p>Given the changes to median house prices in certain metropolitan areas, in 2016 the maximum FHA loan limit is higher in <a href="http://portal.hud.gov/hudportal/documents/huddoc?id=limitsincreasedcy15_cy16.pdf">188 counties</a>. However, the maximum nationwide FHA loan limit remains at $625,500 (here is a <a href="http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/lender/origination/mortgage_limits">list of areas</a> that are at the ceiling or that are considered &quot;high cost.&quot;)</p> <p>On the other hand, in 2016 the minimum FHA loan limit doesn't decrease for any areas in the country.</p> <h2>6. Fannie Mae Loosens Some Requirements</h2> <p>The Federal National Mortgage Association (FNMA), better known as Fannie Mae, is giving Americans a break in 2016. Through its new <a href="https://www.fanniemae.com/singlefamily/homeready">HomeReady mortgage program</a>, Fannie Mae aims to broaden access to home financing to credit-worthy low-to-moderate income borrowers.</p> <p>Some of the <a href="https://www.fanniemae.com/content/fact_sheet/homeready-overview.pdf">loosened requirements</a> from Fannie Mae include:</p> <ul> <li>Borrower isn't required to be a first-time homebuyer;<br /> &nbsp;</li> <li>Down payment can be as low as 3% of property's market value;<br /> &nbsp;</li> <li>Gifts, grants, and cash-on-hand are acceptable funds to cover downpayment and closing costs;<br /> &nbsp;</li> <li>Nontraditional credit is allowed;<br /> &nbsp;</li> <li>Income from non-borrower household members can be counted as part of the debt-to-income ratio of the borrower; and<br /> &nbsp;</li> <li>Underwriting process includes additional flexibilities.</li> </ul> <p>To learn more details about the HomeReady program, call 1-800-7FANNIE (1-800-732-6643) or visit <a href="http://www.fanniemae.com">FannieMae.com</a>.</p> <p><em>Do you expect 2016 to be better for the housing market &mdash; and your plans of owning a home?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-15"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-7-things-when-living-with-roommates">Avoid These 7 Things When Living With Roommates</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-smart-and-fun-things-you-could-do-if-you-paid-less-rent">8 Smart and Fun Things You Could Do if You Paid Less Rent</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-faster-for-mortgage-payoff-100-month-extra-or-1-payment-year-extra">What&#039;s Faster for Mortgage Payoff: $100/Month Extra or 1 Payment/Year Extra?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-haggle-your-way-to-cheaper-rent">6 Ways to Haggle Your Way to Cheaper Rent</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-move-to-a-new-city-to-reduce-lifestyle-costs">Should You Move to a New City to Reduce Lifestyle Costs?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing fannie mae FHA HARP housing market loans mortgage rates rent Thu, 21 Jan 2016 14:00:03 +0000 Damian Davila 1642416 at http://www.wisebread.com Should You Move to a New City to Reduce Lifestyle Costs? http://www.wisebread.com/should-you-move-to-a-new-city-to-reduce-lifestyle-costs <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/should-you-move-to-a-new-city-to-reduce-lifestyle-costs" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_city_view_000064735719.jpg" alt="Man deciding if he should move to a new city to reduce costs" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Moving to a big or popular city is often associated with higher housing costs. But even so, it may be worth it when you're able to change your lifestyle for the better &mdash; while reducing overall costs elsewhere.</p> <p>This is the exact decision that my husband and I faced a few months ago when we decided to move across the country to be closer to family.</p> <p>If you're considering whether or not you should move to pursue a better career or lifestyle, here's why you may want to move to a new city <em>even</em> if rent or housing costs more. (See also:&nbsp;<a href="http://www.wisebread.com/the-5-best-mid-sized-cities-for-millennials">The 5 Best Mid-Sized Cities for Millennials</a>)</p> <h2>Why I Chose to Pay Double the Cost of Rent</h2> <p>Compared to our previous apartment near Dallas, TX our Boulder, CO rent is nearly double the price. Basically, the <a href="http://www.numbeo.com/cost-of-living/compare_cities.jsp?country1=United+States&amp;country2=United+States&amp;city1=Boulder%2C+CO&amp;city2=Tyler%2C+TX&amp;tracking=getDispatchComparison">average price per square foot</a>&nbsp;to buy an apartment in Texas is $100, while Colorado is as much as $383 per square foot.</p> <p>Our one bedroom rented apartment in Texas only cost $900, whereas here in Boulder it's $1,660 &mdash; not including utilities. But we looked at our budget and took <em>all</em> our lifestyle costs into account before deciding that moving was the best option. Here are four reasons we decided to move to a new city despite the higher housing costs.</p> <h3>1. Lower Utility Charges</h3> <p>One of the biggest factors to your budget, aside from rent and housing costs, are your utility costs. This can include your water, electricity, gas, Internet, TV, and other small things like trash and sewer maintenance.</p> <p>Depending on whether you live inside or outside the city limits, these costs could be quite high. Added together, my husband and I used to pay close to $400 per month towards our utility bills. But now that we live in a more cost efficient city, we're able to save nearly <em>half </em>of that each month.</p> <p>Check your utility costs against those of your potential new city by making a list of your current bills. Compare those utility costs to your potential new place. (You can compare the costs online via the utility company's website, or calling the local phone number.) Be sure to check:</p> <ul> <li>Internet</li> <li>Phone</li> <li>TV/Cable</li> <li>Electricity</li> <li>Gas</li> <li>Water/Sewer</li> <li>Trash/Recycling</li> </ul> <p>Even though we may pay a lot more in rent, the amount we save every month by having low-flow faucets and more cost effective heating/cooling is definitely worth the move to us.</p> <h3>2. Food Costs and Waste</h3> <p>Groceries are a non-fixed expense that can eat into your budget if you're not careful. In our previous city, we had limited options of grocery stores to choose from, which left us little choice of saving money on food. We could either spend a fortune at a small boutique grocery store, or sacrifice the quality by going to a big chain store. We chose to spend a bit more for organic food and had a grocery bill upwards of $800+ per month &mdash; just for the two of us!</p> <p>Since moving to Colorado, we have access to 10 different grocery stores (seriously, we counted!) and can find what we need at a <em>much</em> lower price. In the past several months we've knocked an average of $230 off our grocery bill, and it keeps declining.</p> <p>Better quality organic food at one-fourth the cost has been well worth the move to a new city. In addition, we're able to buy less food and avoid so much going to waste. Having more options has allowed us to save money while still getting the organic and healthy food we want.</p> <h3>3. Environmental Impact</h3> <p>One of the main reasons my husband and I wanted to move from Texas to Colorado was to be more environmentally aware of the impact we were making. This city has a built-in recycling program so we no longer have to take weekend trips to the recycling center.</p> <p>And because of the climate, there's no air conditioning unit in our apartment. During the cold months, we simply use a gas-powered furnace. When you compare the cost of a electric heater versus a gas furnace, prices for gas <a href="https://www.mge.com/images/PDF/Brochures/residential/RentersGasVsElec.pdf">typically cost much less</a> to operate than electric ones.</p> <p>According to the EPA, the fuel from a gas furnace comes from natural gas production, which burns much cleaner and poses less of an environmental threat. It's important to evaluate your impact on the environment, as well as your overall lifestyle costs. Consider how this change could save you money and help better the local community.</p> <h3>4. Transportation Costs</h3> <p>Since settling into our life here in Boulder, my husband and I have only filled up the car with gas twice in the past three months. Our gas and car maintenance budget used to be $250 per month, but now it's down to around $40&ndash;$50 for all our transportation costs.</p> <p>Because this new city has <a href="https://bouldercolorado.gov/goboulder/other-great-options">several different transportation choices</a>, including a bus system, carpooling, and car sharing options, we've stopped using our car as much. We now bike or walk to work or while running errands.</p> <p>This allows us to save <em>over $200 a month</em> on gas and maintenance costs for our car. In addition it allows us to put less emissions into the environment.</p> <p>All-in-all, we increased our housing costs by $760 but are currently saving $610+ in lower utility, transportation, and food costs. For us, this was definitely worth it.</p> <p><em>Are you thinking of moving to reduce lifestyle costs? What are some other things that impact your decision?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/carrie-smith">Carrie Smith</a> of <a href="http://www.wisebread.com/should-you-move-to-a-new-city-to-reduce-lifestyle-costs">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-16"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/avoid-these-7-things-when-living-with-roommates">Avoid These 7 Things When Living With Roommates</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/book-review-off-the-grid">Book Review: Off the Grid</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">6 Important Things You Need to Know About the Housing Market in 2016</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-smart-and-fun-things-you-could-do-if-you-paid-less-rent">8 Smart and Fun Things You Could Do if You Paid Less Rent</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-try-to-reduce-your-rent">Should you try to reduce your rent?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle Real Estate and Housing environmental impact food costs housing costs rent transportation utilities Thu, 21 Jan 2016 12:01:03 +0000 Carrie Smith 1642415 at http://www.wisebread.com 5 Downsides of a Reverse Mortgage http://www.wisebread.com/5-downsides-of-a-reverse-mortgage <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-downsides-of-a-reverse-mortgage" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/new_house_drawing_000024284350.jpg" alt="Learning about the downsides of a reverse mortgage" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>A Home Equity Conversion Reverse Mortgage (HECM), more commonly known as a <em>reverse mortgage</em>, is often used as a means of income for retirees. For those age 62 or older, these loans can provide guaranteed income during retirement (See also: <a href="http://www.wisebread.com/6-ways-to-guarantee-income-in-retirement?ref=seealso">6 Ways to Guarantee Income in Retirement</a>).</p> <p>Though there are some similarities, reverse mortgages are not to be confused with home equity loans. Here, borrowers have to meet a minimum age restriction, hold the deed to their home, or have a relatively low balance that can be paid-off with a new loan. The home is then used as collateral for a new mortgage loan, up to $625,500 (or the lesser of the appraised value). But, instead of making monthly payments to the lender, the lender makes monthly payments to <em>you</em>, drawing on your home equity. It's a bit like purchasing an annuity using your home's value.</p> <p>Sounds good, right? Not so fast. Reverse mortgages come with some significant drawbacks for certain borrowers. Consider these negatives before taking out a reverse mortgage.</p> <h2>Downsides&nbsp;of Reverse Mortgages</h2> <p>On the surface, reverse mortgages probably sound like a pretty decent idea since the bank pays you, right? Well, in a report published by the Consumer Financial Protection Bureau (CFPB), between December 2011 to December 2014, the agency processed approximately <a href="http://files.consumerfinance.gov/f/201502_cfpb_report_snapshot-reverse-mortgage-complaints-december-2011-2014.pdf">1,200 consumer complaints</a> arising from reverse mortgages. Borrowers reported &quot;confusion and frustration over the terms&quot; and &quot;problems with loans servicing&quot; as culprits causing them to face foreclosure.</p> <h3>1. Unable to Refinance and Misleading Terms</h3> <p>It appears many borrowers enter into loan agreements without fully understanding the terms of the loan. Among the complaints received by the CFPB from borrowers and their family members was not being able to renegotiate. Borrowers felt they were paying a high interest rate and were being overcharged. Others said they did not realize their adjustable interest rate would increase so quickly.</p> <h3>2. High Upfront Costs and Interest Rates</h3> <p>In comparison to the costs for obtaining a regular home loan, reverse mortgage costs are higher due to the way loans are structured. They also have higher interest charges. Interest rates on reverse mortgages tend to be 1.5% higher than regular home loans. Final costs include closing costs, lender fees, mortgage insurance premiums, and finance charges.</p> <h3>3. A Burden on Heirs</h3> <p>Home equity loans aren't a great choice if you intend on leaving your home as part of an inheritance. That's because these loans not only draw on the value of your home equity, but they're also due immediately upon your death. If your plan is to leave the property to your heirs, they will have the option of paying the loan in full or paying 95% of the balance (if they wish for it to remain in the family). If they're unable to settle the debt with their own funds, the asset must be sold in order to repay the lender. Once the debt is settled, any remaining proceeds will go to the estate.</p> <p>But reverse mortgages are also due whenever you decide to sell the home &mdash; so if your retirement plans involve living anywhere other than your current residence, you'll have to fork over the balance of the loan as soon as you sell.</p> <h3>4. Facing Foreclosure When an Older Spouse Dies</h3> <p>When determining a borrower's eligibility for a reverse mortgage, age is crucial for two reasons:</p> <ol> <li>The borrower must be 62 or older, and<br /> &nbsp;</li> <li>The older a borrower is, the greater the loan amount he or she qualifies for.</li> </ol> <p>For this reason, many couples agree to only include the name of the older spouse on closing documents, not aware that the surviving spouse could face foreclosure if the other dies. According to CFPB, consumers reported that loan originators falsely assured them they would be able to add the younger spouse to the loan at a future date. Make sure you read the fine print and clarify this concern before signing on the dotted line.</p> <h3>5. Difficulty Qualifying for Other Loan Types</h3> <p>Borrowers cannot refinance a reverse mortgage. Reverse mortgages may also have a negative impact on a borrower's ability to qualify for other types of loans. Over time, the accrued interest on reverse mortgages drain any remaining equity in your home. Worse, some homeowners complained that they were unaware of the terms of these types of loans. Before entering into an agreement, seek the counsel of a trusted third-party reverse mortgage professional. Hud.gov offers a directory of HECM counseling agencies, however turning to members of your community to find a referral is recommended.</p> <p>Additionally, the CFPB report mentioned consumer concerns of encountering difficulty when attempting to repay loans. This included lenders failing to keep accurate records, and obstacles when attempting to prevent foreclosure &mdash; such as slow response times (critical during foreclosure), unresponsiveness, and receiving erroneous information or instructions.</p> <p>While a reverse mortgage can be a good source of cash flow during retirement, it nonetheless requires careful consideration for the critical reasons listed above. If you're still interested in a reverse mortgage, do your homework, and understand the resources at your disposal. (For example, on March 2, 2015, The Federal Housing Authority implemented <a href="http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_FHA_INFO_14-66.pdf">new policies to its HECM</a> Financial Assessment to address consumer complaints.)</p> <p><em>Have you considered a reverse mortgage? Why or why not?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-downsides-of-a-reverse-mortgage">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tips-for-avoiding-a-foreclosure-prevention-or-loan-modification-scam">Tips for Avoiding a Foreclosure Prevention or Loan Modification Scam</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/reverse-mortgages-the-best-way-to-eat-your-home">Reverse Mortgages: The Best Way to &quot;Eat Your Home&quot;?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-we-all-just-stop-paying-the-mortgage">Should We All Just Stop Paying the Mortgage?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-can-renters-do-if-their-landlords-are-in-foreclosure">What can renters do if their landlords are in foreclosure?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-are-the-8-most-common-homebuying-mistakes-foreclosure-experts-see">These Are the 8 Most Common Homebuying Mistakes Foreclosure Experts See</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing downsides foreclosure HECM retirees reverse mortgages Fri, 15 Jan 2016 14:00:03 +0000 Qiana Chavaia 1638136 at http://www.wisebread.com Avoid These 7 Things When Living With Roommates http://www.wisebread.com/avoid-these-7-things-when-living-with-roommates <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/avoid-these-7-things-when-living-with-roommates" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/disagreeing_roomates.jpg" alt="disagreeing roommates who can&#039;t get along" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Until very recently, I've never lived alone. I went from my parents' house to a college dorm room to a fraternity house to various apartments, to a condo of my own &mdash; all of which were occupied by at least one other person. Considering that I'm OCD about everything &mdash; which is perhaps why I find myself currently living alone &mdash; and that I've lived with a couple crap-bag human beings in the past, I'm a bona fide expert in all the things you should never do when cohabitating with someone else.</p> <p>You've been warned.</p> <h2>1. Eat Other People's Food Without Permission</h2> <p>It's important for me to establish that while I've had many roommates over the years who have all done something I didn't like (as I'm sure I did for them, too), most of them weren't particularly offensive. A little annoyance here and there, yeah, but that's par for the course. And we're still friends. But there was one roommate who was so vile, so rude, so throw-up-in-my-mouth disgusting that most of the following anecdotes will be based on my short, six-month experience with him. Like the time he ate my food without permission.</p> <p>But he didn't <em>just</em> eat my food without permission. It's not like a pack of ramen was missing and I lost my ish. Oh, no. This dude and three of his drunken friends ravaged $50 worth of the groceries and snacks I had just purchased the night before. Straight-up murdered the fridge and cabinets. My cheese popcorn never stood a chance. Of course, the next day when I confronted him, he was all apologetic and offered to pay for the pilfered goods. But he never did. Because that's the kind of person he was &mdash; Satan's Spawn (SS), who, admittedly, I should've known was up to no good when he suspiciously smelled like both sweat and Cool Ranch Doritos simultaneously.</p> <h2>2. Fail to Pitch In on Common Household Items</h2> <p>There were three of us living in the Baltimore row house in which SS kept his lair, but only two of us pitched in on household items. Personally, I didn't mind buying cleaning products. I accept that not everyone lives as extreme-clean as I do, and they don't have to. But, when you don't throw in a few bucks for paper towels and toilet paper, and then use half the rolls yourself, you're some special kind of evil. As a result, my other roommate and I started rationing the paper products amongst ourselves and kept them in our respective bedrooms for our own use.</p> <p>And, nope, I'm not even a little bit remorseful about the first time SS discovered our new tactic right after doing his business. Bet he found the cleaning products that day.</p> <h2>3. Bring in a Revolving Door of Randos for Overnight Stays</h2> <p>Surprisingly, SS didn't bring in a bunch of randos. Frankly, we were shocked when anybody at all would stay the night in his bedroom &mdash; because Godspeed to that brave warrior princess and her penicillin prescription.</p> <p>Still, it's never cool to have strangers in and out of the house all hours of the night. Be respectful of your roommates and recognize that perhaps they don't appreciate Tinder &quot;dates&quot; staying over all the time. My personal rule is that non-roommate stays should be limited to no more than 1/3 of the month, which applies to significant others just as much as it does bar-to-bedroom buddies, friends, and family. I didn't sign a lease with those people, so why are they here all the time?</p> <h2>4. Being Consistently Late on Rent and Other Payments</h2> <p>If SS didn't pay me back for the $50 worth of food he scarfed down, then it's probably not hard to believe that he rarely paid his rent. We lived in an equal-payment situation, and our landlord wanted us to help make up the difference. Pfft. Nerp. Hold up, bub. That's not my friend over there drinking top-of-the-line tequila, but who's too house-poor to buy toilet paper. I'm not picking up his slack. Likewise, nobody in your place should be covering for you if you can't make ends meet. In that case, you got to go. Don't let the door hit ya where the good lord split ya. (See also: <a href="http://www.wisebread.com/10-money-moments-that-are-awkward-for-everyone?ref=seealso">10 Money Moments That Are Awkward for Everyone</a>)</p> <h2>5. Keep Untidy Spaces</h2> <p>This dude didn't pick up a broom the whole time he lived with us. Couldn't find the Ajax to scrub the tub, or replace the shower curtain when it got grimy. Nary a bottle of Windex or 409 ever touched his hands, and God forbid he wipe down the stove after his Spaghetti-Os splattered everywhere. But while he left his indelible mark on the common areas, it was his bedroom that should have been quarantined. After months of my dishes consistently disappearing, rarely to be seen again, I opened SS's bedroom door one day to take back what was mine. Except they were now science projects, like that time Stephen King touched a meteorite in <a href="http://amzn.to/1Rm7LwC">Creepshow</a> and starting growing alien vegetation all over himself. Thus, they became <em>his</em> dishes, that jerk.</p> <p>Of course everybody has a right to keep their room how they want it. Some people aren't as tidy as others, and that's okay, in your own personal area. But if you're downright filthy, it becomes a household issue, especially as pests and rodents can be problematic. Keep common areas tidy and at least try to keep your bedroom somewhat clean, as well.</p> <h2>6. Partake in &quot;Recreational Activities&quot; Indoors</h2> <p>I use to be a cigarette smoker, but I never smoked indoors in a roommate situation if they didn't like it. I also recognize that some people like to smoke weed, and since that was never my thing, I appreciated when my roommates would smoke elsewhere.</p> <p>If you drink or smoke and your roommate isn't cool with it, then you need to respect that and keep your recreational activities far away from them.</p> <h2>7. Borrow Clothing Without Asking</h2> <p>I didn't have to worry about SS borrowing my clothing without asking, but when I was in college I had a roommate &mdash; one of my fraternity brothers &mdash; who would borrow my clothes on the regular. In all fairness, we borrowed each other's clothing, since we were essentially the same size and build, but I didn't like when he would go into my closet without asking first. It's cool when you're both in the room getting ready for a party and can swap closets in person, but it's a little invasive if you're going through your roomie's wardrobe when they're not there. If this is something you enjoy with your roommates, just remember boundaries. If the other person doesn't know about it, it's stealing. And you better hope you don't get a stain on my shirt... lest you want to be buried in it.</p> <p><em>Tell me: What are some other things to never do when living with a roommate? I'd love to hear some of your roommate horror stories in the comments below.</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/avoid-these-7-things-when-living-with-roommates">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-move-to-a-new-city-to-reduce-lifestyle-costs">Should You Move to a New City to Reduce Lifestyle Costs?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-score-cheap-rent-without-annoying-roommates">5 Ways to Score Cheap Rent — Without Annoying Roommates</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-benefits-of-having-a-roommate-besides-saving-on-rent">The Benefits of Having a Roommate (Besides Saving on Rent)</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">6 Important Things You Need to Know About the Housing Market in 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-simple-rules-of-excellent-houseguest-etiquette">11 Simple Rules of Excellent Houseguest Etiquette</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle Real Estate and Housing apartment living etiquette life hacks living with roommates rent roommates Fri, 15 Jan 2016 12:00:02 +0000 Mikey Rox 1638028 at http://www.wisebread.com Can Tiny House Living Actually Save You Money? http://www.wisebread.com/can-tiny-house-living-actually-save-you-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/can-tiny-house-living-actually-save-you-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/tiny_house_beach_000009394133.jpg" alt="Finding out if tiny house living can actually save you money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The hottest housing trend out there right now is the tiny home. No doubt, you've heard of it. From mini barns to micro-apartments, whole communities of folks living large in small spaces are sprouting up everywhere.</p> <p>But can tiny house living actually save you money? Read on for our roundup of the financial pros and cons of the ultra-downsizing revolution.</p> <h2>Smaller Means Cheaper &mdash; Well, Sort Of</h2> <p>Let's state the obvious: A small home is generally less expensive than a McMansion. But when it comes to <em>tiny</em> homes, that's only partially true.</p> <p>The average do-it-yourself tiny home costs about $23,000, while the average U.S. home price is up around $273,000. But square foot for square foot, tiny homes are actually tremendously expensive. They generally cost between <a href="http://www.forbes.com/sites/erincarlyle/2014/04/28/12-tricked-out-tiny-houses-and-why-they-cost-so-much/">$200&ndash;$400 per square foot</a>, which is far more than the <a href="http://www.census.gov/const/C25Ann/soldmedavgppsf.pdf">$77 average</a> for a normal-sized home. And, notably, normal-sized homes include land while tiny homes generally do not. Tiny homeowners have the added burden of negotiating and calculating a land purchase or lease into their overhead cost.</p> <p>All in all, a tiny home can save you heaps of money on a mortgage, but you'll pay a comparatively high price for the small square footage you've got.</p> <h2>Buying in Bulk Is No Longer Appealing</h2> <p>Costco, Sam's Club, and BJ's Wholesale Club members know you can save a slew of money through bulk shopping. But buying in bulk isn't very feasible when you're living in a tiny home. The obvious lack of storage pretty much throws a wrench in that plan. You'll probably also need to make more frequent trips to the grocery store &mdash; a burden on your time and car mileage &mdash; since your pantry and refrigerator size will be smaller. (See also: <a href="http://www.wisebread.com/9-ways-you-are-sabotaging-your-weekly-grocery-budget">9 Ways You Are Sabotaging Your Weekly Grocery Budget</a>)</p> <h2>You Can Bank on It</h2> <p>Tiny house living is a proven way to bulk up your savings. That's because 68% of those who own a tiny home don't have a mortgage. All told, 55% of tiny house owners <a href="http://thetinylife.com/tiny-house-infographic/#!prettyPhoto">have more savings</a> than the average American, with a median of $10,972 in the bank. And 89% of tiny house owners have less credit card debt.</p> <h2>The Laundromat Will Cost You</h2> <p>The typical tiny home doesn't have room for a washing machine. That likely means you'll be paying frequent visits to the laundromat, spending your time as well as your money to feed the machines and, if you own a car, drive yourself there.</p> <h2>Low Energy Expenses</h2> <p>Tiny homes are big on efficiencies of all sorts, and that includes energy. The very nature of living in a small space is economical in terms of heating and cooling. And the upside of not having enough room for a washing machine is that you're saving on energy expenses.</p> <h2>No Dinner Parties</h2> <p>You can't comfortably host a dinner party in your tiny home &mdash; there's simply not enough space. You probably won't have folks over for coffee very often for that same reason. Without an in-home gathering space, you'll likely be inclined to go out more than you otherwise might. And that means you'll be spending more money. When you live in a tiny home, coffee dates and cafe lunches as a means of catching up with friends are pretty darn appealing.</p> <h2>Add It All Up...</h2> <p>Tiny house living will undoubtedly save you money, but it will also cost you in small ways. Some of the tried and true tricks for saving simply won't work after you downsize. To reap the maximum cost-efficient benefits of tiny house living, you've got to be willing to shed and adjust some of your frugal behaviors.</p> <p><em>Have you tried living in a tiny home? How'd it add up?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/can-tiny-house-living-actually-save-you-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/mind-blowing-tiny-houses-with-huge-design-inspiration">Mind-Blowing Tiny Houses With Huge Design Inspiration</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/big-lessons-from-the-tiny-house-movement">Big Lessons From the Tiny House Movement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/mcmansion-to-mccottage-why-smaller-houses-are-smarter">McMansion to McCottage: Why Smaller Houses Are Smarter</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/be-a-smarter-home-buyer-by-avoiding-these-12-house-hunter-cliches">Be a Smarter Home Buyer by Avoiding These 12 House Hunter Cliches</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">6 Important Things You Need to Know About the Housing Market in 2016</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing compact downsizing micro homes small spaces tiny homes trendy Thu, 14 Jan 2016 16:00:05 +0000 Brittany Lyte 1635540 at http://www.wisebread.com Ask Yourself These 5 Questions Before Buying a Home http://www.wisebread.com/ask-yourself-these-5-questions-before-buying-a-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/ask-yourself-these-5-questions-before-buying-a-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/family_new_house_000064268645.jpg" alt="Asking yourself 5 questions before buying a home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Buying a home is a major financial decision. The National Association of Realtors reported that in November 2015, the median sales price of existing homes hit $220,300, or 6.3% higher than in the same month one year earlier.</p> <p>As housing prices continue to climb, you need to make sure you're ready to make such a major investment. Here are five questions to ask to make sure that you are financially prepared for owning a home.</p> <h2>1. How Much Money Do You Spend and Earn Each Month?</h2> <p>Real estate professionals say that your total monthly housing expenses, including your estimated new mortgage payment, should never equal more than 28% of your gross monthly income. To know if you can afford your new home's mortgage payment, you'll have to first list what you're already spending each month on such items as car loans, student loans, groceries, and entertainment. (See also:&nbsp;<a href="http://www.wisebread.com/4-easy-ways-to-start-saving-for-a-down-payment-on-a-home">4 Easy Ways to Start Saving for a Down Payment on a Home</a>)</p> <p>&quot;Do I really know my current income and all expenses?&quot; asked Glenn Phillips, chief executive officer with Pelham, Alabama's Lake Homes Realty. &quot;If you know this for each month, you'll have a realistic understanding of how much money is available for both the purchase and monthly expenses of owning a home.&quot;</p> <p>Those monthly expenses are important, and can add up. And Phillips reminds homeowners that they'll need to budget money each month for additional expenses such as homeowners insurance, water, sewer, garbage pick-up, and of course, home maintenance.</p> <h2>2. How Handy Are You?</h2> <p>If you're handy enough to handle minor &mdash; or some major &mdash; home repairs and renovations on your own, you might be able to land a home in a desirable neighborhood for a cheaper price. Homes that need updates and renovations usually sell for less, which can be a positive for the handy homebuyer with a limited budget.</p> <p>But be careful: Home renovations might cost more than you think. If you're not able to do at least some of these renovations on your own, you might end up paying far more to update your home than you planned.</p> <p>&quot;Should I buy a home that needs no remodeling and is ready to move in at a higher price, rather than buying the same size home &mdash; but one that needs updating at perhaps a lower price?&quot; asked John Bodrozic, co-founder of digital home management site HomeZada. &quot;If I buy a home that needs some remodeling, how many projects are desired, and what is a realistic budget and time frame to get these projects done?&quot;</p> <h2>3. Can You Afford the Monthly Maintenance?</h2> <p>Having enough money to cover your mortgage, utility bills, property taxes, and homeowners insurance is one thing, but do you have enough dollars to cover the monthly upkeep involved with owning a home?</p> <p>A lot can go wrong with a home &mdash; even a new one. Your water heater might burst. Your roof might start leaking. Even smaller projects like maintaining your yard and landscaping can drain your dollars. It's important that new homeowners have enough financial slush in their accounts to handle the monthly cost of keeping a home running, said Melanie McShane, a real estate broker with Arcadia, California's BrokerInTrust Real Estate.</p> <p>&quot;Buying a home is just the beginning,&quot; McShane said. &quot;Once it is yours, you need to maintain and improve it. Replacing a roof or an AC unit are costly fixes. It is imperative that people have a small savings for the upkeep of the home.&quot;</p> <h2>4. How Strong Is Your Credit?</h2> <p>Your three-digit FICO credit score is an important number. Mortgage lenders will look at it to determine how likely you are to repay your mortgage loan. If your score is low &mdash; say under 640 &mdash; your lender will consider you a risk, and will charge you higher interest rates. If your score is in the excellent range &mdash; usually over 740 &mdash; your lenders will charge you far lower rates, making paying for a home more affordable.</p> <p>Remember that a lower credit score can make the entire process of buying a home more costly.</p> <p>&quot;Your credit is extremely important,&quot; said Michelle Richards, a real estate agent with RE/MAX Gold Coast Realty in Hoboken, New Jersey. &quot;The lower your credit score, the higher the down payment you'll need.&quot;</p> <h2>5. How Long Will You Live in Your Home?</h2> <p>If you don't plan on living in an area for at least five years, buying a home might not be a sound financial decision. Your home's value might not appreciate enough in such a short period of time to allow you to sell it for a high enough cost to cover your selling fees and make a profit, said Bill Golden, a real estate agent with RE/MAX Atlanta Cityside.</p> <p>&quot;Except in rare cases when you'd be buying into a rapidly appreciating market, or you're renovating a total fixer-upper, if you don't plan on staying more than a minimum of two to three years, it probably makes more sense for you to rent,&quot; Golden said. &quot;If you know that your job is going to move you again in two years, buying a home might not be the best solution for you.&quot;</p> <p><em>What questions did you ask before buying your home?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/ask-yourself-these-5-questions-before-buying-a-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/2-things-you-must-know-about-the-new-mortgage-rules">2 Things You Must Know About the New Mortgage Rules</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-ways-to-finance-a-tiny-house">3 Ways to Finance a Tiny House</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-reasons-why-2015-is-the-year-to-buy-a-house">5 Reasons Why 2015 is the Year to Buy a House</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-important-things-you-need-to-know-about-the-housing-market-in-2016">6 Important Things You Need to Know About the Housing Market in 2016</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/home-equity-loan-or-heloc-which-is-right-for-you">Home Equity Loan or HELOC: Which Is Right for You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing homeownership housing market mortgages new home Thu, 14 Jan 2016 14:00:03 +0000 Dan Rafter 1635471 at http://www.wisebread.com Is an FHA Home Loan Right for You? http://www.wisebread.com/is-an-fha-home-loan-right-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-an-fha-home-loan-right-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/married_couple_house_000023047862.jpg" alt="Couple learning if an FHA home loan is right for them" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You're ready to buy a home, and you know that you can afford the monthly payments that come with a mortgage loan. But there's one challenge: You don't have enough money for a large down payment.</p> <p>Don't despair: An FHA loan can help. These mortgages insured by the U.S. Department of Housing and Urban Development's Federal Housing Administration require more affordable down payments, which could make getting the home of your dreams an easier financial task. And borrowers can qualify for FHA loans even with lower credit scores. FHA loans, though, do come with some additional fees, which might impact the overall cost of the mortgage. (See also:&nbsp;<a href="http://www.wisebread.com/heres-why-your-parents-could-buy-a-home-while-you-still-rent">Here's Why Your Parents Could Buy a Home While You Still Rent</a>)</p> <p>Still interested? Read on to learn whether an FHA loan is for you.</p> <h2>When FHA Loans Make Sense</h2> <p>You can technically qualify for an FHA loan even if your FICO credit score is as low as 500. However, that doesn't mean that you won't struggle to find a lender to work with you. The FHA doesn't actually originate loans &mdash; it only insures them &mdash; so, you'll still have to work with a private lender to get an FHA mortgage. And many of these lenders (despite the willingness of the FHA to insure borrowers with such low scores) won't provide mortgage money to borrowers whose scores are too close to 500.</p> <p>Still, FHA loans are a good option for borrowers with credit scores that are below, say, 700. Today's lenders consider FICO scores of 740 or higher to be ideal. They'll reserve their lowest interest rates for borrowers with strong credit. And if your score is below 640, you'll find that only a smaller number of lenders will be willing to work with you. These lenders might recommend that you apply for an FHA loan if your score is too low.</p> <p>FHA loans aren't just a good option for borrowers with weak credit, though. They're also a good choice for borrowers who don't have a lot of money for a down payment. If your FICO credit score is at least 580, you can qualify for an FHA loan that requires a down payment of just 3.5% of your home's purchase price.</p> <p>For a home costing $180,000, that 3.5% down payment comes out to a manageable $6,300.</p> <p>If your FICO credit score is at least 500, you can technically qualify for an FHA loan that requires a down payment of 10% of your home's final purchase price, which is still better than the 20% down payment that some conventional lenders will require.</p> <h2>The Downsides of an FHA Loan</h2> <p>There is a downside to FHA loans: They come with higher fees than conventional loans.</p> <h3>Extra Up Front Costs</h3> <p>If you take out an FHA loan, you'll have to pay two types of mortgage-insurance premiums. The first is an upfront premium of 1.75% of your total mortgage loan. If you take out a loan for $175,000, that comes out to $3,062.75 (you'll have to pay this premium when you take out the mortgage). You can either do this in one lump sum as a closing cost, or you can include it in your loan amount &mdash; turning, say, that $175,000 loan into $178,062.75 &mdash; and pay it off with each of your monthly payments.</p> <h3>Mortgage Insurance</h3> <p>An FHA loan also comes with an annual mortgage insurance premium that you'll have to pay each year. This annual fee depends on the length of your loan and the size of your down payment.</p> <p>If you are taking out a 15-year loan and you put down less than 10% of your home's purchase price, your annual mortgage insurance premium will be 0.7% of your outstanding loan balance. If you put down 10% or more on a 15-year loan, your annual premium will be 0.45% of your loan balance.</p> <p>If you take out a 30-year loan with a down payment of less than 5%, your annual mortgage insurance premium will be 0.85% of your loan's balance. If you put down more than 5% on a 30-year mortgage, that premium will be 0.8% of your balance.</p> <p>So, if you put down 3.5% initially on a 30-year FHA loan and your loan's outstanding balance is $180,000, you'd pay $1,530 that year in mortgage insurance premiums. Again, you would pay that amount off in small amounts with each monthly mortgage payment.</p> <p>Unlike conventional loans, you'll never be able to cancel the mortgage insurance premium. With conventional mortgages, you can cancel your mortgage insurance payments once your loan's balance is 80% or less than your home's market value.</p> <p>So when you're deciding whether an FHA loan is right for you, you'll have to weigh whether the extra yearly fees are worth the convenience of those low down payments and looser credit requirements. For many borrowers who otherwise can't afford the dream of homeownership, the answer may be yes. But if saving a larger down payment for a traditional mortgage <em>is</em> feasible, it's likely to result in lower overall costs.</p> <p><em>Did you buy a home with an FHA loan? What was the process like for you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/is-an-fha-home-loan-right-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-money-moves-to-make-for-tomorrows-mortgage">6 Money Moves to Make for Tomorrow&#039;s Mortgage</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-qualify-for-a-mortgage-with-a-small-downpayment">5 Ways to Qualify for a Mortgage With a Small Downpayment</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/when-it-makes-sense-to-apply-for-a-mortgage-loan-without-your-spouse">When It Makes Sense to Apply for a Mortgage Loan Without Your Spouse</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/home-equity-loan-or-heloc-which-is-right-for-you">Home Equity Loan or HELOC: Which Is Right for You?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-that-offer-free-credit-scores">The 5 Best Credit Cards That Offer Free Credit Scores</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing credit scores fha loans fico insurance lenders mortgages Mon, 11 Jan 2016 14:00:03 +0000 Dan Rafter 1634308 at http://www.wisebread.com The 5 Best Mid-Sized Cities for Millennials http://www.wisebread.com/the-5-best-mid-sized-cities-for-millennials <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-5-best-mid-sized-cities-for-millennials" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_drinking_coffee_000052117826.jpg" alt="Woman finding best mid-sized cities for millennials" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Want an urban lifestyle without spending a fortune on rent? These cities &mdash; and several other mid-size metropolises &mdash; are attracting a <a href="http://www.wisebread.com/7-ways-millennials-are-better-with-money-than-you-are">growing number of 20-somethings</a> who want the benefits of city living without the high rental prices that come with larger urban oases like Chicago, San Francisco, or New York City.</p> <p>If you're looking for a more affordable version of the Big Apple or the Windy City, why not try these five moderately sized cities?</p> <h2>1. Cambridge, Massachusetts</h2> <p>When Niche &mdash; which annually publishes Best Cities lists &mdash; released its 2015 ranking of the best U.S. cities for young professionals, Cambridge, in the Boston area, held the top spot.</p> <p>Niche said that a high 27.7% percent of the Cambridge population is between the ages of 25 to 34 years old, which makes it easier for Millennials to find other like-minded adults. It also gets an A+ from Niche for the ease of its average commute. The unemployment rate in Cambridge is a mere 4.4%, while the city gets A or A+ ratings for its bar, restaurant, and coffee shop offerings.</p> <p>On the downside, it's not exactly cheap to rent here. Niche reported that the median rent for an apartment in Cambridge was $1,612.</p> <h2>2. Denver, Colorado</h2> <p>Colorado's biggest city is attracting a steady stream of Millennials, too. City Observatory says that the percentage of 25 to 34-year-olds with college degrees increased here by 46.6% from 2000 through 2012.</p> <p>In a 2015 report, The Urban Land Institute listed Denver as one of the new top destinations for Millennials. The institute cited numbers from ApartmentList.com saying that the median cost of renting a two-bedroom apartment in Denver stood at $1,380 in 2015. That's not a rock-bottom price. But it's far lower than the average two-bedroom rental price in San Francisco ($4,350) or New York City ($3,260).</p> <p>There's plenty for Millennials to like about Denver. The city's light rail system is a top one, with 48 miles of track. Recently, Denver businesses and cycling fans ran a successful crowdfunding campaign to cover the $155,000 cost of a new protected bike lane that will run along Arapahoe Street downtown. Denver also has the great outdoors. Yes, Denver has all the restaurants, bars, and theaters that you'd expect from a big city. But its location means that Millennials also have easy access to hiking, rock climbing, and skiing.</p> <h2>3. Pittsburgh, Pennsylvania</h2> <p>The Urban Land Institute also cited Pittsburgh as a top mid-size city for Millennials. This is because Pittsburgh has steadily transformed from a city focused on steel and manufacturing to one that is becoming a hub for technology, finance, and healthcare jobs.</p> <p>Pittsburgh also has plenty of affordable apartments. Walkable neighborhoods are common, and Millennials who live here can find plenty of boutique shops, gourmet restaurants, and trendy bars.</p> <p>How popular is Pittsburgh today with young adults? The Atlantic recently ran a story with the headline &quot;What Millennials Love About Pittsburgh.&quot;</p> <h2>4. San Antonio, Texas</h2> <p>Think San Antonio is home to the Alamo, a nice river walk, and little else? Think again. The Texas city is seeing a boom in aerospace, information technology, biosciences, and advanced manufacturing jobs. And these are the jobs that Millennials increasingly want.</p> <p>It's little surprise that last year, Forbes reported that San Antonio saw the largest increase in its Millennial population of any U.S. city from 2010 through 2013. According to Forbes, which relied on data from the U.S. Census Bureau, the number of residents from the ages of 20 to 29 increased by 9.2% during this time. As of 2013, San Antonio had 339,540 residents in this age range.</p> <p>You can join these Millennials for a relatively affordable price. Rent Jungle reported that as of August of this year, the average monthly rent within the San Antonio market stood at $1,035 for a two-bedroom unit and $847 for a one-bedroom apartment.</p> <h2>5. Indianapolis, Indiana</h2> <p>Indianapolis doesn't get a ton of attention from hip young adults. But if you want to spend a smaller percentage of your monthly income on rent &mdash; and you'd like to live in the Midwest &mdash; you could do worse than moving to Indianapolis. Apartment site RentLingo reports that the median one-bedroom apartment rent in this city consumes just 11.7% of the average household's income. According to RentLingo, this makes Indianapolis the most affordable mid-size city in the country for renters.</p> <p>Indianapolis isn't just affordable, either. Indiana's capital city boasts several top-ranked attractions that will appeal to Millennials. Lucas Oil Stadium is considered one of the best venues in the National Football League, while the still-newish Bankers Life Fieldhouse, home to the Pacers, ranks as one of the top stadiums in the NBA. For the non-sports fan, Indianapolis offers the Indianapolis Museum of Art, Indiana Repertory Theatre, and the Kurt Vonnegut Memorial Library.</p> <p><em>What's your favorite mid-sized American city?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/the-5-best-mid-sized-cities-for-millennials">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-best-cities-for-frugal-lovers-of-the-outdoors">8 Best Cities for Frugal Lovers of the Outdoors</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-7-best-affordable-cities-to-start-a-family">The 7 Best Affordable Cities to Start a Family</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-cities-the-most-billionaires-call-home">The 5 Cities the Most Billionaires Call Home</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-thousands-by-buying-a-timeshare-on-the-secondary-market">Save Thousands by Buying a Timeshare on the Secondary Market</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/got-extra-space-make-money-and-meet-travelers-with-short-term-rentals">Got Extra Space? Make Money and Meet Travelers With Short-Term Rentals</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Travel cities city living cost of living millennials urban lifestyle Thu, 31 Dec 2015 12:00:02 +0000 Dan Rafter 1629242 at http://www.wisebread.com Here's Why Your Parents Could Buy a Home While You Still Rent http://www.wisebread.com/heres-why-your-parents-could-buy-a-home-while-you-still-rent <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-why-your-parents-could-buy-a-home-while-you-still-rent" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/older_married_couple_000014305685.jpg" alt="Learning why our parents can buy a home and we still rent" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You pinch your pennies. You look for extra income. You're disciplined. And yet you can't get close to saving enough for a decent down payment on a house. It's especially frustrating because you know your parents somehow managed to buy their first home with very little trouble. Were the Baby Boomers just better than you? Or are there reasons why they could save up and you can't?</p> <p>It turns out there are some valid reasons why your folks could buy a home while you're still renting. Here's a look.</p> <h2>1. Houses Just Cost More</h2> <p>Even when you adjust for inflation, houses are more expensive than they used to be. The House-Price Index maintained by the Federal Housing Finance Agency is a tool that measures affordability, mortgage defaults, and mortgage prepayments, and it has more than tripled since 1980. The average home price, when adjusted for inflation, was $157,000 in 1980. Today, it's $180,000. (It peaked at nearly $230,000 in 2006.) Affordability is a truly, truly serious problem in many metropolitan areas, including San Francisco and New York.</p> <h2>2. There Are No New &quot;Levittowns&quot;</h2> <p>One key reason that homes cost more is because there hasn't been as much development of affordable and middle class housing. After World War II, there were many new housing developments with acres of simple, affordable homes designed for veterans and their families. Developments in Pennsylvania, New Jersey, and New York were named &quot;Levittown&quot; after developer William Levitt, and sold quickly. Many of today's Baby Boomers grew up in these homes or purchased them in the 1950s and 60s. These days, affordable housing is more scarce and new developments of simple homes aren't as plentiful.</p> <h2>3. You Have More &quot;Necessities&quot;</h2> <p>Think of all the things that you pay for that did not even exist 40 years ago, or that might have been viewed as luxuries. A computer. Internet access. A cell phone with monthly plan. Cable TV and/or a streaming service. You <em>could</em> live without these things, but they are increasingly seen as necessities that could add up to hundreds of dollars in expenses each month.</p> <h2>4. Student Loan Debt</h2> <p>Rest assured, your Baby Boomer parents did not come out of college with tens of thousands of dollars in student loan debt. But that's the reality for many young people today. College costs have been rising above the rate of inflation for years, and the Wall Street Journal reported that the average member of the Class of 2015 will have to pay back $35,000. That's money that you might still be paying back when you probably would prefer to be saving for a good down payment on a home. (See also: <a href="http://www.wisebread.com/should-you-refinance-your-student-loan?ref=seealso">Should You Refinance Your Student Loan?</a>)</p> <h2>5. Young People Can't Find Good Jobs</h2> <p>The Bureau of Labor Statistics reports that more than 12% of people between age 16 and 24 are unemployed. Among African-Americans, it's even worse, with one out of every five young people seeking work. If you can't find steady work at a young age, you can't begin saving. Combine that with student loan debt, and it's no wonder so many young people are behind the financial eight ball.</p> <h2>6. You Have to Save for Retirement</h2> <p>There's a good chance that your parents never put money into a 401K or Individual Retirement Account. That's because their employers were far more likely to offer a pension, or defined benefit retirement plan. The Social Security Administration reports that participation in pensions by workers in the private sector fell from 38% to 20% between 1980 and 2008. Baby Boomers are also more likely than Millennials to believe that Social Security payments will be around when they retire. If you feel like you need to set aside money for your own retirement, that's money that can't go toward saving for a home.</p> <h2>7. Incomes Haven't Been Growing</h2> <p>One of the more troubling signs in the economy in recent years is that people aren't being paid more as years go by. The Economic Policy Institute reports that the economy should be producing wage growth of between 3.5% and 4%, but that growth has been stuck at about 2.3% for almost a decade. Fortunately, inflation has been quite low, but there's no question that people aren't getting the type of salary and wage increases Baby Boomers became accustomed to.</p> <p><em>Sound familiar? What's keeping you from purchasing a home?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/heres-why-your-parents-could-buy-a-home-while-you-still-rent">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/20-tips-for-getting-your-security-deposit-back">20 Tips for Getting Your Security Deposit Back</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-your-boomer-parents-could-afford-that-you-cant">8 Things Your Boomer Parents Could Afford That You Can&#039;t</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-decide-how-much-rent-you-can-really-afford">The Simple Way to Decide How Much Rent You Can Really Afford</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/so-you-want-to-be-a-landlord-part-i">So You Want to be a Landlord? Part I</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-become-a-landlord-instead-of-selling-your-home">Should You Become a Landlord Instead of Selling Your Home?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing baby boomers buying renting saving Wed, 30 Dec 2015 12:00:03 +0000 Tim Lemke 1626818 at http://www.wisebread.com The 5 Cities the Most Billionaires Call Home http://www.wisebread.com/the-5-cities-the-most-billionaires-call-home <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-5-cities-the-most-billionaires-call-home" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/rich_couple_boat_000063821551.jpg" alt="Finding cities that the most billionaires call home" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Lured by favorable tax laws and fantastic views, the richest of the rich choose their backyards with precision. Read on for our roundup of some of the most popular locales for the luxe &mdash; and why so many of the globe's elite choose to call them home.&nbsp;(See also: <a href="http://www.wisebread.com/8-jaw-dropping-tax-havens-of-the-filthy-rich" target="_blank">8 Jaw-Dropping Tax Havens of the Filthy Rich</a>)</p> <h2>1. Moscow</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/moscow_000019576792.jpg" width="605" height="340" alt="" /></p> <p>More than 80% of Russia's 68 billionaires reside in the sprawling country's capital, making Moscow a mecca of wealth. The city center is dominated by gold-domed architecture, pricey eateries, and luxe hotels. Home of the Kremlin and some of the world's most exquisite ballet, Moscow offers impressive city parks, unique urban promenades, and a nightlife scene that rivals that of New York. Moscow is also full of culinary treats. Consider your visit incomplete until you've sampled the perogies and borscht.</p> <h2>2. Zurich</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/zurich_000028993338.jpg" width="605" height="340" alt="" /></p> <p>The average price of a pair of blue jeans in this Swiss banking hub is a staggering $156. Need we say more? Millionaires account for an astounding 27% of the population, pushing the price of everyday items like jeans nearly out of reach for everyone else. The city itself is concentrated on a fairly small footprint surrounded by mountains, rolling hills, and other feats of nature. It's entirely possible to spend the morning exploring city streets and art galleries, and then enjoy an afternoon hike alongside a serene lake or river.</p> <h2>3. Monaco</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/monaco_beach_000032484536.jpg" width="605" height="340" alt="" /></p> <p>This city-state on the sea is the most likely place you'll bump into a millionaire. And with its posh casinos, glamorous hotels, and yacht-lined harbors, it's really no surprise. Monaco is a major center of banking as well as tourism, but it is most widely associated with being the ultimate playground for the rich and famous. With nearly 38,000 residents stuffed into soaring high rises and regal estates along a small area of the French Riviera, it is the world's second smallest and most densely populated country &mdash; and one of its most legendary tax havens. Monaco does not charge its elite residents income taxes.</p> <h2>4. New York</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/new_york_city_000045975658.jpg" width="605" height="340" alt="" /></p> <p>One in every 22 New Yorkers is a millionaire. And with 78 billionaires, the Big Apple has more uber-rich residents than any other city in the world. Home of the Statue of Liberty, Wall Street, and the best pizza on the planet, New York is chock full of iconic people and places just waiting to be explored. New York is also the global center of industries ranging from fashion to finance. Luckily, there are lots of frugal ways to enjoy the City That Never Sleeps.</p> <h2>5. Stamford</h2> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/stamford_connecticut_000060481318.jpg" width="605" height="340" alt="" /></p> <p>This waterfront enclave in yankee Connecticut is called &quot;the city that works.&quot; Clearly, you've got to work pretty hard to afford living here. Stamford has one of the highest concentrations of millionaire households in the nation, with housing costs at more than double the national average. But with its easy access to NYC, views of Long Island Sound, and a bustling downtown, Stamford is one of Connecticut's jewels. This city of 126,000 people boasts a lively bar scene, small theaters, and several live recording studios where episodes of legendary television shows are filmed. Brimming with hedge fund types, Stamford is also home of the largest trading floor in the world.</p> <p><em>Have you visited any of these hangouts of the mega-wealthy?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/the-5-cities-the-most-billionaires-call-home">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-mid-sized-cities-for-millennials">The 5 Best Mid-Sized Cities for Millennials</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-millionaire-next-door-riches-de-mystified">The Millionaire Next Door: Riches De-mystified</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/save-thousands-by-buying-a-timeshare-on-the-secondary-market">Save Thousands by Buying a Timeshare on the Secondary Market</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/got-extra-space-make-money-and-meet-travelers-with-short-term-rentals">Got Extra Space? Make Money and Meet Travelers With Short-Term Rentals</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/if-you-won-the-lottery-you-would">If You Won The Lottery, You Would...</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing Travel billionaires millionaires rich tax laws wealthy world cities Thu, 24 Dec 2015 12:00:03 +0000 Brittany Lyte 1625936 at http://www.wisebread.com When Location Isn't King: How to Choose Income Rental Property http://www.wisebread.com/when-location-isnt-king-how-to-choose-income-rental-property <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/when-location-isnt-king-how-to-choose-income-rental-property" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_moving_house_000057031510.jpg" alt="Woman learning how to choose an income rental property" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We've all heard the expression many times: &quot;When it comes to making a home-buying decision, the three most important considerations are location, location, location.&quot; But does that same rule apply to <a href="http://www.wisebread.com/turn-your-home-into-a-rental-in-9-easy-steps">rental properties as an investment</a>? Not necessarily. To illustrate, I'll provide an example from my storied past &mdash; in this case, the recent past.</p> <p>About five years ago I spent time looking at rental properties along the New Jersey shore. Over time I narrowed my focus to two neighboring towns &mdash; let's call them &quot;Poshtown&quot; and &quot;Middleville.&quot; Poshtown is a beautiful upscale community with quaint shops, large lots, and manicured lawns. Next door, Middleville is more of a mixed bag, with some very attractive sections, but also other areas crowded with seasonal rental properties often in need of some TLC.</p> <p>Next, I crunched the numbers. I gathered estimates of rental income and expenses for dozens of multi-family units listed for sale in both towns. Then I ranked each property from best to worst based on its monthly cash flow. Properties with the most positive monthly cash flow after all expenses rose to the top of the list. The following chart shows the highest ranked property in each town based on its estimated monthly cash flow:</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202015-12-18%20at%204.57.15%20PM_1.png" width="605" height="451" alt="" />&nbsp;</p> <h2>Why Cash Flow Is King</h2> <p>As you can see, the winner by far was a Middleville property with<em> positive</em> cash flow of $640 per month. By contrast, estimated cash flow for the highest ranked property in Poshtown was negative $1,365 per month. Adding to the rout, there were eight additional properties in Middleville with higher rankings (more positive monthly cash flow) than the highest ranked property in Poshtown.</p> <p>Why were the numbers stacked so heavily against Poshtown? The town's exclusivity added such a high premium to its home prices that rents couldn't make up the difference. Poshtown was a better location, but Middleville was a better investment.</p> <p>The lesson? For rental properties it's all about cash flow, cash flow, cash flow!</p> <h2>Other Factors Worth Considering</h2> <p>Alright, but surely &quot;location&quot; must be the second most important consideration, right? Sorry to disappoint, but in my experience the answer is still no. That honor goes to&hellip;condition, condition, condition. Here's why: If two properties have the same monthly cash flow at the time of purchase, but one requires tens of thousands of dollars in repairs while the other doesn't, then repair costs for the run-down property translate to more negative cash flow. Again, it gets back to the cash flow.</p> <p>Of course, there are other factors to seriously consider when looking into rental properties, and some of them aren't financial. For example, are you handy with repairs and making sure they're done in a timely manner? Are you willing to interrupt your evenings and weekends, even vacations, in order to address property issues? Perhaps most importantly, do you think you could effectively choose tenants and deal with them on a regular basis? If not, then becoming a landlord might not work for you.</p> <p>Before leaving this topic, I'd like to make one more point to illustrate the value of crunching the numbers prior to making a rental property purchase decision. This will require taking a look at two other properties, a $250,000 two-family house and a $150,000 condominium. I learned this lesson years ago when we purchased our first condo rental.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5171/Screen%20Shot%202015-12-18%20at%204.56.49%20PM_0.png" width="605" height="448" alt="" /></p> <p>In the example above, monthly cash flow at the time of purchase for the two-family is slightly negative and would flip to a positive $1,000 after paying off the mortgage. But notice how negative the condo's cash flow is. It loses $650 per month. Even after paying off the mortgage, which would free up $645, the best you could hope for is break-even cash flow. That's a red flag. I wouldn't buy it.</p> <p>This comparison illustrates the importance of two &quot;all other things equal&quot; factors in determining the attractiveness of rental properties. First, all other things equal, properties with fixed monthly association and/or maintenance fees are more challenging to turn into positive cash flow than those without. Condos, townhomes, and other properties governed by an association typically charge homeowners in the community such fees. These often add up to hundreds of dollars a month,<em> every</em> month.</p> <p>The second factor is, all other things equal, more rental units in a property is better than fewer. You are more likely to achieve positive monthly cash flow with a two-family than a one-family. And a three-family will usually do better than a two-family. Why? Because each additional unit brings in additional income, but not proportionately higher expenses. For example, the price of a three-family (and therefore its monthly mortgage payment) is rarely three times higher than that of a single family on the same lot. Also, property taxes and insurance won't be three times higher for a three-family than a one-family. Nor would monthly maintenance and repair costs.</p> <p>As you can see, rental properties have a different set of rules than those for a single family property used as your primary residence. And the most important of these rules is &mdash; you guessed it: cash flow, cash flow, cash flow!</p> <p><em>Have you considered investing in rental property?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/keith-whelan">Keith Whelan</a> of <a href="http://www.wisebread.com/when-location-isnt-king-how-to-choose-income-rental-property">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-decide-how-much-rent-you-can-really-afford">The Simple Way to Decide How Much Rent You Can Really Afford</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-100s-on-your-next-move">How to Save $100s on Your Next Move</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-times-you-shouldnt-rush-to-pay-off-your-mortgage">5 Times You Shouldn&#039;t Rush to Pay Off Your Mortgage</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-mistake-could-delay-your-retirement-by-10-years">This One Mistake Could Delay Your Retirement by 10 Years</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-forget-to-budget-for-these-unexpected-moving-expenses">Don&#039;t Forget to Budget for These Unexpected Moving Expenses</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Real Estate and Housing cash flow expenses investments location rental properties Tue, 22 Dec 2015 14:00:07 +0000 Keith Whelan 1623601 at http://www.wisebread.com