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  • 9 Easy, Fast, Pain-Free Ways To Save Up for a House

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    9 Easy, Fast, Pain-Free Ways To Save Up for a House

    By Janet Siroto
    Feb 17, 2022

    Buying a house typically requires some serious savings. After all, with the median home price hovering at $375,000, a 20% down payment amounts to $75,000. Yes, you can put down less. (The national average is 12%, although some loans allow as little as 3%.) However, in today's competitive market, more cash upfront can give you an edge and help make your offer stand out.

    It's no surprise that among younger homebuyers, 30% say that pulling together the down payment is the most challenging step in buying a home, according to the National Association of Realtors®.

    Yet as daunting as it may be to amass this pile of cash, there are plenty of tactics that can help you get there faster—and with fewer sacrifices than you might think.

    Some of the advice that follows is tried and true, while other tips are fairly new, in the form of nifty apps that'll line your pockets with extra cash with little effort. See which ones fit, so you're armed and ready once you get out there to make an offer.

    1. Start a house fund—and pay it first
    Regardless of how much money you're trying to save, you probably know that the funds in your checking account can have a way of disappearing. To keep this from happening, it's smart to set up a separate savings account for your down payment.

    "Automatic recurring transfers into a dedicated savings account [are] a great, simple strategy for systematically building a down payment," says Tanza Loudenback, a certified financial planner and journalist.

    While you can transfer money from your checking account to your house fund, an easier move is to automate these payments regularly, for example, every two weeks, if that's when you get paid by your employer.

    "If you get paid regularly and can set it up so that part of your direct deposit goes into a [house fund] without you even feeling the loss, even better," adds Loudenback.

    2. Keep your house fund in a safe, low-interest-bearing account
    Once you have a house fund going, you might be wondering how to make it grow, while it's sitting around waiting for you to find the right house. After all, inflation is at a 39-year high, at 7%.

    So does that mean you should invest your house fund in stocks to keep up? As logical as that may seem, no. Stocks do go up, but they can also go down—and what if that downturn happens right as you're ready to make an offer?

    "Anytime you want access to your money in the short term—one to two years or less—you should consider a high-yield savings account," or HYSA, says Jay Zigmont, a certified financial planner and founder of the financial planning firm Live, Learn, Plan. "Shop around online, and there are some great options."

    You won't make much interest on your savings, he notes, but the money will be there when you need it.

    If your savings time frame is three to five years or more, Zigmont says you can consider investing your money in stocks, but then you take on market risk. Certificates of deposit are another option, but keep in mind that if you spot your dream home earlier than anticipated, CDs come with early withdrawal penalties.

    "Your money needs a job, and if its job is to be there for a house down payment, it is doing its job in an HYSA," he says. "The past few years have seen wide swings in stock returns, and the challenge is that if you need the money in a downswing, you could be hurt."

    3. Crowdfund your down payment
    You could have loved ones who are happy to pitch in on your homeownership goal. If you put the word out to friends and family, they might contribute to your down payment rather than, say, taking you out for dinner on your birthday.

    HomeFundIt is one option designed to help you crowdfund your down payment. Created by the mortgage banking firm CMG Financial, it works by having you pre-qualify for a mortgage online and then building and promoting your money-raising campaign. (Note: You have only one year after your first contribution to close on a home, and you must borrow from CMG Financial for your home purchase.)

    Another option not tied to a particular lender is Feather The Nest, which allows you to spread the word to your social network, as with a GoFundMe campaign—with a target amount, deadline, and updates on how close you are to your goal.

    4. Look for cash incentives
    Friends and family aren't the only ones who'll pitch in on your homebuying efforts. Some companies will also pony up cash incentives.

    One example is Lower, which has an HYSA insured by the Federal Deposit Insurance Corp. It's called HomeFund and has a 0.75% annual yield. When you sign up, it will gift you $500 to put toward closing costs when buying a home. From there, this app also allows you to shop around for various lenders to find a mortgage that's right for you.

    5. Save your spare change
    More and more aspiring homebuyers are using apps to help save for a down payment, and they're cleverly designed to minimize feeling the pinch. For instance, Acorns rounds up your credit card payments to the nearest dollar and funnels this spare change into a designated account you can earmark for a house. Over time, it adds up!

    "Whether it's the gains from rounding-up apps or even the money earned on Rakutan—which pays you back to shop through their site—people are making a game out of it," says Tami Bonnell, co-chair of EXIT Realty Corp. International.

    6. Turn your rent into a down payment
    Another option geared for renters is Bilt Rewards. This app, the first of its kind, turns paying rent on time into "points" that can then be turned into cash you put toward a down payment. (There's also a Bilt Mastercard.)

    Bonus: This service can help you build your credit score, which lenders will check to see how reliably you pay rent. This serves as evidence that you'd responsibly pay a monthly mortgage bill, too.

    7. Search for local down payment assistance programs
    Many local governments offer down payment assistance programs and grants. Often these are income-based, but some provide forgivable loans for improving run-down properties. Some also offer financial assistance for teachers, firefighters, health care workers, and other professions.

    "I normally advise families to search their local housing department's website for these programs," says Jason J. Krueger, a certified financial planner and an adviser with Ameriprise Financial Services in Madison, WI. "For example, I live in Dane County, so I would search 'Dane County down payment assistance' to see what comes up."

    8. Check your withholding taxes
    If you get a tax refund every year, consider lowering your exemptions and taking home more cash. Sure, you won't get that fun refund in the spring, but the extra money coming your way can go toward your down payment. Siphon off that amount via the automatic deduction mentioned earlier.

    9. Consider a last-ditch retirement-plan payout
    You'll want to tread carefully here. Most financial pros don't recommend raiding retirement funds for a down payment. That said, some IRA and 401(k) plans have a one-time provision to tap into a retirement account for a down payment without a penalty.

    These funds, once withdrawn and spent, will be hard to replace. This could jeopardize your financial future, so consider this option only after serious thought. Meeting with a certified financial planner can be a good idea before making this move, to see if you have any alternatives.


  • 5 Reasons You Need Title Insurance

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  • Let True North Title Services Guide You Home

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    How to Prepare to Buy a Home: First, Use This Checklist
    By Cathie Ericson | Apr 7, 2017

    As everyone knows, a house is not an impulse purchase; you can't just waltz in and declare "I'll take it!" Long before you get to making that offer (on paper, through your real estate agent)—and even before going to your first open house—there are a ton of things to do and to prepare. Overwhelmed? Here's a checklist of everything you need to do to get ready to buy a home.
    Check your credit score
    Do not pass "Go," do not start browsing homes until you have checked your credit score. This is the number that mortgage lenders will look at to determine whether you are "creditworthy," and thus dictates the rates you will get. The higher your credit score, the lower your interest rate—and that's what you're going for. Get a free copy of yours at AnnualCreditReport.com to see where you stand.
    Clean up any credit blemishes you can
    Any surprises on that report? Credit errors are more common than you might think, so contact the credit bureau to correct any erroneous information. Got credit that's less than stellar? Check out these (totally legit!) tricks to boost your score fast and nab great rates.

    Next, make sure you are clear on how much home you can afford. Check out our calculator that lets you determine your monthly mortgage payment, adjusting for variables such as the size of your down payment, your mortgage type, and current interest rates. You can also get an official estimate by following our next tip...
    Shop for a mortgage lender
    "A prospective home buyer should make one of their earliest stops with a mortgage originator to see if they can qualify for a mortgage and confirm how much of a mortgage they can afford," says Realtor® Steve Ujvagi with Keller Williams Realty Atlanta Partners. Different mortgage shops offer a wide variety of rates and programs, so shop around to find the best rate and mortgage option for you.
    Secure mortgage pre-approval
    Once you've found the mortgage that's right for you, you'll want to show sellers that you have what it takes to buy their home. In hot markets, a pre-approval is almost required for a seller to take your offer seriously. That's because it spells out exactly how much a lender has agreed to loan you, thus assuring the seller that you're both willing and able.
    Save up for a down payment
    Find homes for sale on

    To get the best rates, you'll need to make at least a 20% down payment on a home. With the current median home price of $306,700, that comes to $61,340. That's a lot of money! Check out these smart ideas to help you save for a down payment. But if that amount is out of reach, don't worry—most people put down less.
    Sit tight!
    Once you're ramping up to buy a home, it's wise to not make any—we repeat, any—major changes in your life or, most important, your finances.
    "Do not switch jobs. Do not buy a new car. Do not even buy furniture or apply for a new credit card, which could affect your credit," says Ujvagi. "Just a credit pull alone from a car dealership or a furniture store is enough to affect your credit score and could cause you to lose your dream home."
    Find a real estate agent
    There's no reason to go it alone—having an agent helping you can make the whole process much easier.
    "In times like these, with a limited number of homes on the market, a buyer needs a great Realtor to make sure they find their dream home," says Ujvagi.
    Referrals are often a good place to start; check with family and friends, or find out the go-to gal or guy in your preferred neighborhood.
    Make a wish list
    Of course, this list may be a very long one, but you need to be realistic about what elements are truly "wishes" and which ones are nonnegotiable—such as number of bedrooms, a fenced yard for a pet, a specific school district, walking distance to the bus stop, etc. Sometimes it's helpful to divide your list into three categories: Those nonnegotiable elements, followed by items that would be nice to have (e.g., a bonus room or home office) and your dream features (e.g., in-ground swimming pool).
    Browse listings online
    If we do say so ourselves, realtor.com® is a great place to start to figure out what properties are available in your area in your price range. Search by price, number of bedrooms, location, and other variables to start narrowing down your options.
    Visit open houses
    Poring over online listings is one thing; seeing the properties in person is quite another. Take advantage of open houses as a low-stress way to visit several homes in one day. Map your strategy in advance, and while you're in each home, take photos and notes so they don't all run together in your mind. (Now, which one had the in-room fireplace again?)
    Check out the hood
    You've undoubtedly heard the adage "location, location, location." What that essentially means is that you're not just buying the property you're looking at; you're also buying into the whole neighborhood. That's why you have to be certain that it has the vibe you want. Savvy home buyers know that the best way to find out more about the neighborhood is to meet the neighbors and then visit at various times of the day and night to see what it's really like.
    Cathie Ericson is a journalist who writes about real estate, finance, and health. She lives in Portland, OR. Follow @CathieEricson

  • Interest Rates: What You Need To Know

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    Interest rates: What you need to know
    Russell Price, Senior Economist, Ameriprise Financial

    Key Points
    The Federal Reserve appears headed for multiple interest rate hikes this year
    Investors often exercise caution during periods of rising interest rates
    The Fed's actions reflect a strong economy

    The Federal Reserve is widely expected to raise its ultra-short (overnight) interest rate target two more times in 2017, by +0.25% each time. If this projection holds true, it would leave the Fed's overnight lending rate at a mid-point of 1.375% by year-end, versus its 2016 year-end rate of 0.625%. Think of this as the interest rate banks charge when lending funds to other banks; but, more importantly, it greatly influences the broader interest rate environment.
    If you are an income-oriented investor, the prospect of higher interest rates may be music to your ears. The benefits to savers, however, often lag the Fed's interest rate hikes. Banks need to make sure they can pass along higher rates to prospective borrowers before they can offer higher yields on savings and other interest-bearing accounts.
    Higher rates could rattle equity markets
    Of course, higher borrowing costs can be a headwind for economic growth, and it's not uncommon for financial markets to see heightened volatility as the Fed raises rates. The very cautious attitude Fed officials have taken toward interest rates in the current recovery, however, should temper fears of rates rising too soon or too fast, in our view.
    We also note that many consumer and corporate borrowing costs have already moved higher, partially in anticipation of Federal Reserve action. The yield on the benchmark 10-year Treasury note, which is the basis for many consumer borrowing costs – particularly mortgages, ended the month of March at 2.40%, as compared to 1.78% a year earlier.
    A signal of economic strength
    Investors may worry about the impact of higher interest rates on the economy and corporate profits, but higher rates themselves are a consequence of strong economic conditions. Recently, inflation measures have been rising as demand improves and the labor market continues to tighten.
    With a dual mandate from Congress, the responsibilities of the Federal Reserve require it to seek full employment in the labor market within the context of stable prices. Maintaining a balance between these objectives is certainly difficult, but if a balance is achieved, it could enable a sound and prolonged period of economic expansion.
    Over the last few months stock prices have registered solid gains based on signs of:
    Improved economic momentum
    Stronger corporate profit trends
    Optimistic predictions for lower taxes and higher infrastructure spending tied to the federal government
    At the time of this writing, the outlook for fiscal policy remains uncertain, but we believe economic improvements are sustainable – even if interest rates edge higher.
    The time is right
    We believe the time is right for the Federal Reserve to continue raising interest rates at a moderate pace. The labor market is finally close to full health, and there have been signs that inflation is beginning to percolate.
    We note that interest rates are still exceptionally low by historical standards, and rate hikes are likely to come at a slow and economically manageable pace in the quarters ahead.
    Nevertheless, turning points in Federal Reserve interest rate policy should be a fundamental consideration for long-term investment portfolios. Although we are optimistic regarding the economy's ability to tolerate higher rates, this policy change has many implications.
    We recommend discussing these potential changes with your financial advisor to make sure your portfolio is properly positioned for an environment with modestly higher interest rates.