Best Home Loans For Single Mothers

Affording to buy a house can be hard enough even as a couple. And for single mothers, unless they earn a high income, getting home loans is even harder.

Fortunately, there are home loans for single mothers out there. FHA loan, for example, is a good option for a single parent on a low income due to its low down payment and low score requirements.

If you are a single parent looking home loans, click here to get pre-approved.

The Down Payment: the hurdle for single mothers to get home loans

What makes it difficult for single mothers on a low income to get qualified for home loans is the down payment. The down payment for a conventional loan is 20% of the home purchase price.

For example, if you want to buy a house for $450,000, you will need to come up with $90,000. That is simply the down payment. Adding another 5% for closing cost brings you to $112,500.

Coming up with that kind of money is hard, if not impossible, considering the fact that you’re probably have other monthly expenses. Granted, you can get a conventional loan with smaller down payments (as low as 10 percent).

But the problem is you will have to pay much higher interest rates, including private mortgage insurance (PMI), which is an insurance that protects the lender in case you default on your loan.

Get started by comparing FHA loan rates, to find the best rates and terms that suit you.


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Fortunately, the government has created programs to help single mothers get home loans. For instance, FHA loans only require 3.5% down payment of the home purchase price.

To illustrate, suppose you’re looking to purchase a modest house for $100,000. For a 3.5% down payment, you will only need to come up with $3,500. This low down payment is indeed flexible for low income single mothers seeking home loans.

Best Home Loans For Single Mothers

1) FHA loans

Despite having a single source of income, there are home loans for single mothers out there. Indeed, FHA home loans are a popular choice for single mothers first time home buyers.

An FHA loan is a government loan insured by the Federal Housing Administration (hence, the acronym “FHA”).

The FHA down payment can be as low as 3.5% and the credit score can be at least 580 or higher. If your credit score falls between 500 to 579, then you will need to put at least 10% down.

To know if your credit score is at least 580, get a free credit score at CreditSesame.

Program assistance for the down payment

Even if the FHA down payment is this low, single mothers seeking home loans and those who are living paycheck to paycheck can still have a hard time to come up with that money. Fortunately there are solutions.

The Department of Housing and Urban Development (HUD), which manages the FHA loan program, has recently allowed the 3.5% down payment to come from a third party.

They can be a friend, a family member, or a employer. This is good news for a single parent, as it means that they don’t have to use their own money to get a home loan.

2) VA Loans

If you’re convinced that FHA loan is a good idea, then you’d love VA loans. VA loans help homebuyers to buy home with $0 down. In addition, there is no private insurance mortgage (PMI) and has a very low interest rate.

Check to see if you’re eligible with a VA Lender.

So if you’re a veteran or service members, you may be eligible. If you were or are in the army, marine corps, navy, Air force, Coast guard, or you are a spouse of a service member, you may be eligible.

Don’t meet these requirements? You may still be eligible; talk with a home loan specialist now.

The $0 down payment is what makes VA home loans attractive among single mothers. With VA home loans, qualified single mothers can finance 100 percent of the home’s purchase price with absolutely no money down.

The other benefit of a VA loan is that there is no PMI. That is because the government backs the loan and assumes the risk.

Looking for a VA loan quote? Speak with a VA Lender today.

The Bottom line…

Being a single mother on a low income can be tough. But that should not prevent you from buying a home you have always dreamed of. The good new is there are programs that help single mothers buy a home. And those programs are the FHA and VA loans.

Additional tips for single mothers seeking home loans:

  • The first step in securing a home loan is to shop and compare multiple mortgage rates to choose the best one.
  • The second step is to get pre-approved by a lender. This is known as the pre-qualification process. The loan officer will assess your situation and determine what you qualify for. Once you have an idea of how much you can afford, you can submit your application.

Related articles:

  • FHA Loan Requirements – Guidelines and Limits
  • 3 Things No One Ever Tells You About Buying a Home With a FHA Loan
  • How to Buy A Home With A Low Credit Score

Not All Mortgage Lenders Are Created Equally

When it comes to getting a mortgage, rates and fees vary. LendingTree allows you to view and compare multiple mortgage rates from multiple mortgage lenders all in one place and at the same time, so you can choose the best rates for your needs. LendingTree makes getting a loan faster, simpler, and better. Get started today >>>

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Source: growthrapidly.com

How Much Money Do You Need to Buy a House?

A blue and white house sits on a green lawn, surrounded by trees.

According to the U.S. Census Bureau, the median sales price of new homes in May 2020 was around $317,000. Even if you’re purchasing a home that falls well below that average, chances are it’s one of the most expensive things you’ll ever buy. With such a big expense, you might be wondering—how much do you need to save for a house?

The good news? You don’t have to save for the entire purchase price. But the amount you might need on hand to buy a home can be significant. Get some idea of how much money you might need to buy a house below.

How Much Should You Save for a House Down Payment?

It all depends on the price of the home you want to buy and what type of loan program you qualify for. Down payments are usually a percentage of the home cost.

You might have heard that you need 20% down to buy a home. That’s actually not entirely true. Although the Consumer Financial Protection Bureau makes a case for the benefits of 20% down, it also notes that this number doesn’t work for everyone.

So, where does the 20% figure come from? It’s part of the guidelines set by Fannie Mae and Freddie Mac, government sponsored, mortgage guarantee companies. You either have to pay 20% down or pay private mortgage insurance, because analysis indicates that loans without 20% down are riskier for the lenders.

Here’s a look at some common mortgage options and how much you might need to have for a down payment:

  • The CFPB notes that conventional loans with PMI can require 5 to 15% down on average. If the home price is $300,000, that’s $15,000 to $45,000.
  • Loans through the Federal Housing Administration require down payments of at least 3.5%. That’s $10,500 on a $300,000 home.
  • Some loan programs, such as those for rural borrowers through the USDA, or those who qualify for loans through the VA, don’t require a down payment at all.

Other Expenses to Save for

Down payments aren’t the only thing you need to save for when buying a home. Closing costs can be thousands of dollars, and you may need to foot the bill for inspections, home repairs or even fun things, like new furniture. To make the home-buying process less stressful, it’s a good idea to save more than you expect to need for closing costs.

How Long Will It Take to Save for a House?

Saving 20% of your income could catapult you into purchasing a home in the next one to three years, depending on your market. For example, if you’re earning $96,000 per year, that’s $19,200 saved after one year. It’s $38,400 after two years and $57,600 after three. Even if you need 20% down, these amounts are roughly enough to help you buy homes worth between $100,000 and $300,000 within three years.

How Much of Your Savings Should You Spend on a House?

It’s tempting to empty out your savings or cash in your 401(k) to buy your dream home. Even if the house is just your first step into home ownership and isn’t perfect, it’s tempting to do what it takes to get those keys.

But spending 100% of your savings leaves no safety net if something happens. What if something breaks in your new home or there’s a medical emergency? Having some savings on hand to cover these issues helps protect your home, because you’re more likely to be able to continue to pay the mortgage.

Planning to Purchase a Home

If you’re planning on buying a home in the future, it’s important to start saving today. Every little bit you can do to save for a home helps make it happen.

If you want to buy a home for around $300,000 and you can’t qualify for a loan program that requires no down payment, you’ll need at least $10,500 to $15,000. You’ll also need closing costs and other fees, which typically run between 2 and 5% of the purchase price. Assuming $10,000 in closing costs, you need $25,000 minimum to position yourself for home ownership.

A Short-Term Plan

If you’re looking to buy a home within the next year or two, you’d need to save $12,500 to $25,000 a year. Saving 20% of your income can help you save the bulk of that in one or two years if you make more than $50,000 annually. To do that, though, you’ll need to set an aggressive personal budget and be willing to cut out some extras, such as cable or eating out.

A Long-Term Plan

By starting your journey to home ownership as early as possible, you can stretch your plan to five years or more. If you save over the course of five years, that’s only $5,000 a year. That’s $416 a month or just under $100 a week. You really could save for a house this way simply by cutting out a few expensive coffees, pizza nights, dinners, etc.

Start Saving Today

How much should you save before you try to buy a home? It depends on so many factors that there’s not a one-size-fits-all answer. So, do your research early, make a plan and stick with it. And, as you get close to being ready to buy a home, don’t forget to shop around to find the best mortgage rates. Because those mortgage rates, along with your home price, determine how much you’ll pay for your home.

The post How Much Money Do You Need to Buy a House? appeared first on Credit.com.

Source: credit.com

Is Now a Good Time to Buy a House?

So you’re at the point in your life where buying a home is not a question of if, but when. You’re scrimping. You’re saving. You’re dreaming of walking through the front door of your very own home.

But as the decision draws near, you start questioning everything. Is now a good time to buy a house? Or is this the worst time? Is it more financially responsible to buy a house right now or wait? And what if you mistime the market, buying too soon or too late, and miss out on lower home prices?

Ultimately, the experts say the answer is less about economies, markets and pandemics and more about you.

So, how do you think through this decision? You’ll want to take time to thoroughly review your personal financial situation and life goals. At the same time, you’ll need to gain some understanding of the market dynamics that impact home costs.

External factors can make buying a house right now intimidating, but your personal finances are an important factor.

This process will take some time, but it’s well worth the effort. With a firm grasp on your personal situation and some context on the housing market, you’ll be able to confidently go forth knowing you’re making a fiscally informed decision about whether to buy a house right now.

Honestly assess these aspects of your finances

Financial security is always important if you’re trying to determine when you’re ready to buy a home. To decide if now is a good time to buy a house, ask yourself the following questions about your finances:

How secure is your income?

Job or income stability is an important factor if you are buying a home in a rocky economy, such as the one triggered by the coronavirus pandemic, says real estate economist Gay Cororaton. Even in a robust economy, your income security should be top of mind when you’re thinking of buying a house right now.

If you have any inkling that your position may be eliminated or that you’ll be making a career change, you may want to delay buying a home. Even a recent break in employment that caused you to draw down some of your savings may raise a red flag with lenders, says Kate Ziegler, a real estate agent with Arborview Realty in the Boston area.

If you’re considering buying a house right now, you should avoid opening any new lines of credit right before purchasing a home.

– Jeff Tucker, senior economist at Zillow

Do you have enough money saved?

After income stability, savings is the next-most-important financial factor you’ll want to consider to determine if now is a good time to buy a house, Ziegler says. The old rule of thumb was to save 20% of the price of the home for your down payment. While that is ideal, it’s not necessary—far from it, Ziegler says. In fact, it has become more common for first-time buyers to put down much less than 20%.

How much house can you afford?

The down payment is one side of the affordability coin. Your monthly mortgage payment is the other side. You need to know how much you can spend on both to determine if you can afford to buy a house right now, says Jeff Tucker, a senior economist at Zillow. Aim for a monthly mortgage payment that doesn’t stretch you too thin—experts typically put this at around 28% of your monthly gross income, according to Bankrate.

With those guidelines, you can determine what you can afford. For example, if you make $4,000 a month, you should typically spend no more than $1,120 on your monthly mortgage payment in total.

How much house that buys you depends on multiple factors: mortgage rates, property tax rates, homeowners insurance and—if you don’t have the savings to put down 20%—primary mortgage insurance, or PMI. To get a rough estimate, plug your income details into an online calculator. For a more specific figure, talk to a local lender and get pre-approved for a mortgage, Ziegler says.

If you're buying a house right now, aim for mortgage payments around 28% of your monthly gross income.

Once you know your price range, you can determine how much savings you need in the bank to buy a house right now. You’ll also need to have money saved for closing costs, which vary but typically run 2% to 5% of the loan amount, according to Bankrate.

Again, Ziegler recommends talking to a lender to really understand what your individual down payment and closing costs would be. Finally, be sure to add a line item in your budget for home maintenance that will inevitably pop up after you move in. Whether it’s a dishwasher on the fritz or a leaky roof, you don’t want to be caught off guard, so be sure to save money for emergency home repairs.

How is your credit?

Your credit profile is also important to lenders, and it will likely be a factor in what interest rate you’re offered. Given that, you should be checking your credit report and know your credit score before investing in a home. If you’re considering buying a house right now, you should avoid opening any new lines of credit right before purchasing a home, Tucker says.

What is your debt-to-income ratio?

Another factor lenders check is your debt-to-income ratio, or DTI, Tucker says. This is the percentage of your gross monthly income that goes to paying monthly debt payments, plus your new mortgage. Lenders typically require this ratio to be 45% or less but prefer it even lower—in the 33% to 36% range.

Have you considered the opportunity cost?

Another financial consideration when deciding if now is a good time to buy a house is the opportunity cost of delaying a home purchase, Ziegler says. If you’re renting in a market where the rent is higher than your would-be monthly mortgage payment, you may be spending a lot more money each month than if you were to purchase a home. And of course, with a mortgage, your monthly payment increases your equity.

After taking a clear-eyed look at your income, savings and these other financial factors, you will have a better sense of when you’re ready to buy a home and whether now’s the time for you to dip into the market.

Consider key market factors

Next, take a look at factors that are outside of your control, but still influence your purchase: prices, interest rates and national employment trends.

Where are housing prices?

As you’re looking at the market, one of the biggest considerations when you are ready to buy a home will be housing prices and availability. Research your local market by talking to real estate agents who work specifically in the area where you want to buy and asking them about market trends, Ziegler says.

Track current listings and recently sold prices to get a sense of how prices look today. Generally, the tighter the inventory—meaning the fewer houses available—the higher prices will be, Tucker says.

If you're trying to determine when you are ready to buy a home, track current listings to get a sense of how prices look today.

What’s going on with interest rates?

When you’re ready to buy a home could also depend on another major economic factor: interest rates. When interest rates are low, your housing budget is effectively supercharged, Tucker says, and you can afford a more expensive house because you’re spending less on interest. When they are high, the opposite is true.

This is what compels people to buy when interest rates are low—you get more for your money. If you get a 30- or 15-year fixed-rate mortgage, you lock in that rate for the entire life of the loan, which could save you money now and into the future, Tucker says.

How does employment look nationally?

Finally, if you want to get a general idea of where the housing market may be headed—if prices will drop or rise soon—check out the national employment trends, Cororaton says. Low unemployment means prices will generally trend upward because more people can afford houses, boosting competition and prices, she says.

But if unemployment is inching up, then people are losing jobs and will be more likely to remain in their current homes. As a result, there tends to be less competition for them, lowering prices.

You don’t need to be an expert in the market to determine if now is a good time to buy a house, but a baseline understanding of these big-picture forces can give you the confidence you need to embark on your home-buying journey.

So when are you ready to buy a home? Paying attention to big-picture economic forces can help you decide.

Think about your future plans

After reviewing your savings and income and assessing the market conditions, take a step back and think about your life plans over the next few years. Your lifestyle and goals will help determine whether now is a good time to buy a house.

“For buyers who are not certain whether they will still be living in the same place in three or five years, I would caution against locking themselves into a certain location,” Ziegler says. “If they’re just not sure what the future holds, it may be better to have that flexibility.”

It’s unlikely in many markets that you will see substantial financial gain from homeownership if you move within five years, Ziegler says. Your equity gains will likely be offset by the transaction costs of buying and selling your home.

That goes for remote workers, too. Are you working from a home office these days? While widespread remote work may allow buyers to consider homes farther from their offices, ask yourself: Is my company going to permanently allow employees to work from home? Do I think there will be other remote opportunities in the future?

Is now a good time to buy a house? That depends on your lifestyle and long-term goals.

While you’re thinking about the next three to five years of your career, also consider the next three to five years of your personal life. Will you have a family? Will that family grow?

These can be weighty topics, so be sure to think them through on your own schedule. Buying a house is a big decision, and it’s not one to be rushed. By taking the time to assess your life, from your job security to your financial health to your lifestyle, and considering the impact of market factors, you’ll have a clearer sense of when you are ready to buy a home.

If you’ve decided that buying a house right now is the best decision for you, it’s time to learn more about how it will impact your budget. Get started by reading up on these eight unexpected expenses when buying a home.

Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.

The post Is Now a Good Time to Buy a House? appeared first on Discover Bank – Banking Topics Blog.

Source: discover.com

How to Buy a HUD Home at the Hudhomestore Website?

Using the Hudhomestore to buy a HUD home is easy.

If you’re looking to buy a HUD home, the Hudhomestore website is the best place to do it. It can be found here at hudhomestore.com. HUD homes are listed for sale at the site.

While anyone can buy a HUD home, you will need to get approved for a loan first.

Just like buying a house through the conventional route, all financing options are available for HUD homes. That includes conventional loans, FHA loans, VA loans, etc.

However, most people used an FHA loan to buy a HUD home due to its low down payment and credit score requirements.

If you have questions beyond buying a HUD home at the hudhomestore website, consult a financial advisor.

What is the Hudhomestore?

The hudhomestore is a website operated by the U.S Department of Housing and Urban Development (HUD). The website can be found here at hudhomestore.com.

Homes are listed there for sale after they have gone through foreclosures. Real estate agents and/or brokers can place bids on your behalf to buy a house.

What is a HUD home?

A HUD home (usually a 1 to 4 unit) is a property owned by HUD. Before a home became a HUD home, it was owned by a homebuyer who had purchased the home with an FHA loan.

Once the borrower stopped paying his or her FHA loan, the home went to foreclosures. Then the home goes to HUD and becomes a HUD home.

Why you should buy a HUD home at the Hudhomestore?

The benefits of buying a HUD home are huge. The main benefit is that most of these homes are priced below market value.

In addition, if you’re an EMS personnel, police officer, firefighter, or teachers, and live in revitalized areas and plan to live there for at least 36 months, HUD’s Good Neighbor Program offers HUD homes at a 50% discount.

This program is listed at the hudhomestore website.

In addition, HUD offers other perks such as low down payment and sales allowances you can use to pay for moving, repair and closing costs. The low down payment, that is on top of the FHA financing that you may be qualified for.

Another huge benefit of buying a HUD home is that HUD gives preferences to buyers who intend to live in the home for at least one year. So this puts you ahead of investors.

Are you qualified to finance a HUD Home?

All financing options, including conventional loans, VA, and FHA loans, are available when it comes to buying a HUD home.

But FHA loans are very popular among first time home buyers, due to its low requirements. But before you start searching for HUD homes through the Hudhomestore website, you should compare multiple loan offers so you can the best mortgage rates.

FHA loan requirements:

  • 580 Minimum score
  • 3.5% down payment

If your credit score is below 580, you can still be qualified but you’ll have to pay at least 10% down. Or, you can always take time to raise your credit score.

Don’t know what your credit score is, visit CreditSesame.

Our Review of Credit Sesame.

Steps to buy a HUD Home at the HUDhomestore website:

HUD homes can be hard to find if you don’t know where to look. In other words, they are not listed on conventional real estate websites such as Zillow or Redfin.

Instead, they are listed at the HUDhomestore webiste, which can be found at hudhomestore.com. They also have HUD Homestore Mobile Apps.

Knowing these steps is important to mastering one of the best strategies to buy a house at below market or wholesale prices.

Step 1: Shop and compare home loans

Before you start searching your house through the hudhomestore site, it’s a good idea to

The worst thing that can happen is to find a house that you like to then realize that you cannot secure a home loan.

To get the best mortgage rates, you need to compare multiple loan offers. Buying a home is major expense, and getting the best rates could save you a lot of money. I can spend a lot of time talking about why it is a bad idea to only speak with one mortgage lender.

But when it comes to having multiple loan offers, I highly suggest LendingTree.

LendingTree is an online platform that connects you to several mortgage lenders without visiting a dozen bank branches.

LendingTree will provide you up to 5 loan offers from multiple lenders for free, so you can compare and make sure you get the best deal.

So if you’re at this step right now, go and compare current mortgage rates for free at LendingTree, and come back to this article.

Our LendingTree Review.

Step 2: Finding a HUD Home at the HUDhomestore website.

To find a HUD home, simply go to the hudhomestore website. It can be found at hudhomestore.com.

There are three ways to find HUD homes on the hudhomestore website. The first way is through a map.

Once you on the website, you will see a map to the right with all of the states listed there. You simply look for your state and click on it to see all of the available HUD homes.

The hudhomestore site will show you a list of all of the HUD homes available for that particular state. It will include the photo of the HUD home, the address, the asking price, etc.

If you click on the photo of the house, you will be able to see more information of the property, including more photos, street views and information of the property.

Another way to find a house through the hudhomestore website is by clicking on the HUD Special program links.

The hudhomestore site specifically lists three HUD Special Programs: Good Neighbor Next Door; Nonprofits; $1 Homes-Government Sales. It specifically states on the hudhomestore website that if you click on any of these special programs, you will see available properties.

The third way to find a HUD home via the hudhomestore site is through the Search Properties. At the middle of the homepage, you will see a Search Properties where you can enter more detailed criteria.

Step 3: Buy your HUD home

Once you have found your desired HUD Home at the hudhomestore, it’s time to buy your HUD home.

But note that HUD homes are sold through an auction process. When you’re searching for the property through the hudhomestore site, it will tell you a deadline by which to submit your offer.

So if the deadline has not passed, submit your bid. Once it has passed, HUD reviews all offers. Just like any auction, the highest bid wins. If all of the offers are too low, HUD will extend the offer period and/or lower the asking price.

Note that you will not be able to place the bid yourself. Only real estate agents need to register to place bids on the hudhomestore website. You will need to find a real estate agent or you can specifically search for HUD registered agents at hudhomestore.com.

For more information on buying a home through the hudhomestore website, visit www.hudhomestore.com.

More on Buying a Home:

  • How to Buy a House: A Complete Guide
  • How Long Does It Take To Buy A House?
  • Buying a Home for the First Time? Avoid These Mistakes.
  • 10 First Time Home Buyer Mistakes to Avoid.

Work with the Right Financial Advisor

If you have additional questions beyond buying a HUD home at the Hudhomestore, you can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning for retirement, saving, etc).

So, find one who meets your needs with SmartAsset’s free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.

The post How to Buy a HUD Home at the Hudhomestore Website? appeared first on GrowthRapidly.

Source: growthrapidly.com

Mint Money Audit: Affording Life After Grad School

With a brand new PhD under her belt, our latest Mint audit recruit, Renee, is ready to take on the real world with gusto. The 34-year-old is eager to buy a home and ramp up her retirement savings. She currently lives in San Francisco and has just started a full-time earning $87,000 a year (before taxes).

Renee also received a sizeable inheritance, totaling about $200,000 of which she used $30,000 to pay off her student loans.

So, why does Renee want an audit, exactly? Her finances seem perfectly in order, it seems.

As Renee explains, she wants advice around the best ways to plan for big goals like home ownership and retirement. “I’m especially eager to buy my own apartment, but it is extremely daunting (and expensive) in the Bay area,” she says. As a result, she’s leaning to move to New York City (Brooklyn, specifically, where she thinks may offer more bang for her buck in some neighborhoods.)

She wants to know how much of a down payment she can reasonably afford and how to budget for monthly housing costs.

First, though, I wanted to learn more about Renee’s finances. Here’s what the quick audit revealed:

  • Retirement savings: $40,000 in a 403(b) and Roth IRA. She allocates $200 month from her paycheck to the 403(b).
  • Rent: $1,850 per month
  • Groceries: $400 per month
  • Where is all that savings parked? $100,000 in index and mutual funds, another $50,000 in an 11-month CD earning 1.5%, and remaining $20,000 in checking.

My Advice…

Play Retirement Catch-Up

For a 35-year-old worker, one rule of thumb is that you should have an amount equal to your salary in retirement savings. For Renee, who is nearing age 35, that means $80,000 to $90,000. She’s only about halfway there, so my recommendation is to play some retirement catch up. While it’s not realistic to think that she can invest another $40,000 this year, she can do better.

For starters, what about taking advantage of her company’s 403(b) match? She believes her company offers one, but wasn’t sure about the details. I suggested she learn the specifics and try to capitalize on that offer by contributing at least enough to earn the full match. Allocating closer to 10% of her salary would be ideal. (And PS. that contribution is tax deductible!)

Worried that this would stretch her paycheck too thin, I reminded Renee that she can always adjust her retirement contributions each month, but urged her to give it a try. (My bet is that it won’t be as painful as she suspects.)

Pad the Rainy Day Account?

I wasn’t sure how far her $20,000 in checking would last her. She said it would be about a 6-month reserve, which I feel is adequate. No need to make adjustments there. One thought: She may want to move that $20,000 to a savings account that’s a little less accessible (like an online account without a debit card), so that she isn’t tempted to cash it out on a whim.

Protect Your Down Payment

Renee has $100,000 in a brokerage account, which she plans to use towards a down payment in the near future. But here’s something to consider: What if the market plunges six months before you want to make a bid for a home? And you suddenly lose 15 or 20% of your investments? It would take time to recover, more time than you want.

I would personally never risk money in the stock market if I anticipated needing that money in the next five years. And according to Renee, she hopes to buy a home in the next two years. My advice: Protect the down payment from market fluctuations by moving 50% of that money over to a short-term CD and with the other $50,000 she’s got saved in an 11-month CD, use all that savings towards a future down payment.

Know How Much House You Can Really Afford

To buy in NYC or San Francisco, a 20% down payment is standard. With $100,000 to put down, that means that she’s looking at homes valued at around $500,000. With today’s current mortgage rates nearing 4% for a 30-year fixed-rate mortgage, she’s looking at close to $2,000 a month in payments. But we’ve yet to get to taxes, maintenance and home insurance.

Instead, consider a starter apartment, a studio or junior one-bedroom closer to $400,000. A 20% down payment would be $80,000, leaving her with another $20,000 for closing costs. Her monthly payments would come to around $1,500 per month, close to 30% of her take-home pay, which is a smart cap for housing payments.

 

Have a question for Farnoosh? You can submit your questions via Twitter @Farnoosh, Facebook or email at farnoosh@farnoosh.tv (please note “Mint Blog” in the subject line).

Farnoosh Torabi is America’s leading personal finance authority hooked on helping Americans live their richest, happiest lives. From her early days reporting for Money Magazine to now hosting a primetime series on CNBC and writing monthly for O, The Oprah Magazine, she’s become our favorite go-to money expert and friend.

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Mortgage Rate vs. APR: What to Watch For

It’s time for another mortgage match-up: “Mortgage rate vs. APR.” If you’re shopping for real estate or looking to refinance, and you’ve seen a certain mortgage rate advertised, you may have noticed a second, similar percentage adjacent to or below that interest rate, possibly in smaller, fine print. But why? Well, one is the mortgage [&hellip

The post Mortgage Rate vs. APR: What to Watch For first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

Fannie Mae and Freddie Mac Mortgage Refinances Just Got More Expensive

Way to rain on our parade, Fannie Mae and Freddie Mac. Just when mortgage rates were hitting record lows, the pair decided to add a new fee to mortgage refinances in light of the ongoing pandemic. Simply put, they expect more losses related to a higher rate of loan defaults, and are adjusting their pricing [&hellip

The post Fannie Mae and Freddie Mac Mortgage Refinances Just Got More Expensive first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

10 Mortgage Lenders to Consider for the Best Mortgage Rates (and Fees!)

Everyone likes a discount, right, even if it’s on a small one-time purchase that equates to a nominal amount. For one reason or another, it just feels like a win. It’s obviously even sweeter if you get a discount on a big-ticket item, as the savings will be much larger. Better yet, how about a [&hellip

The post 10 Mortgage Lenders to Consider for the Best Mortgage Rates (and Fees!) first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

Why Are Mortgage Rates Different?

Mortgage rate Q&A: “Why are mortgage rates different?” Why is the sky blue? Why are clouds white? Why won’t your neighbor trim their tree branches? These are all good questions, and ones that often puzzle even the most savvy of human beings. First things first, take a look at how mortgage rates are determined to [&hellip

The post Why Are Mortgage Rates Different? first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com

United Wholesale Mortgage Now Offering FHA Loans with Rates Below 2%

The leading wholesale mortgage lender in the nation has brought the heat once again, this time offering 30-year fixed mortgage rates below 2% on FHA loans. United Wholesale Mortgage announced that borrowers can now lock in interest rates as low as 1.99% on FHA-backed loans via its popular Conquest program. The new Conquest for FHA [&hellip

The post United Wholesale Mortgage Now Offering FHA Loans with Rates Below 2% first appeared on The Truth About Mortgage.

Source: thetruthaboutmortgage.com