How to be Frugal with these Frugal Life Hacks

You want to learn how to be frugal but not cheap… then, you are in the right place. Simply put… frugal living is saving money at it finest. To be honest, though, learning how to be frugal can come with spending more money than you planned in the name of frugality. The truth can hurt. … Read more

Read More… How to be Frugal with these Frugal Life Hacks

Source: moneybliss.org

Bible Verses About Wealth

These Bible verses about wealth talk about how God has promised to provide for us, and why the desires for wealth can be so deceiving and easily become a false idol in our lives.

The post Bible Verses About Wealth appeared first on Bible Money Matters and was written by Peter Anderson. Copyright © Bible Money Matters – please visit biblemoneymatters.com for more great content.

Source: biblemoneymatters.com

Ready for Homeownership? 8 Steps to Prepare Your Finances

Buying a home is a huge, expensive decision, no matter if you're a first-time homebuyer or have been buying and selling real estate for decades. Homeownership comes with financial upsides and risks, and for many people, it's an emotional transaction as well.

So how do you get fully prepared to buy a home? Getting ready should begin long before you start scrolling through online listings, going to open houses, or working with a real estate agent.

Today, I'll help you understand if homeownership is right for you, how much you can afford, ways to save for a down payment, and tips to get the most affordable mortgage possible. The more you know about the home buying process and prepare for it, the cheaper and less stressful it will be.

Here's more about each step you can use to prepare your finances to buy a home.

1. Evaluate renting versus buying

Before you start obsessively searching for your dream home, the first step is to make sure owning a home is the right move for you. There's no financial rule that says you must buy a home. In some cases, you're better off not becoming a homeowner.

In general, it's not wise to buy a home unless you're confident you will live in it for at least three years.

Whether you should own or rent depends on various factors, including:

  • Where you want to live. If you're in a large city, renting can be much less expensive than buying a home. 
     
  • How long you plan to live somewhere. In general, it's not wise to buy a home unless you're confident you will live in it for at least three years. That gives you enough time to recuperate your buying costs and prepare to sell the property.
     
  • What lifestyle you enjoy. For many people, being a homeowner allows them to enjoy hobbies, such as gardening or home remodeling, which they couldn't do as a renter. But renting may be more appealing to those who travel frequently or don't want to be responsible for the upkeep and ongoing maintenance of a home.

2. Check your credit

If you decide to explore homeownership, the next step should be doing a deep dive into your credit reports and scores. Staying on top of your credit is always important, but it's critical before buying a home because it's a primary factor that mortgage lenders use to evaluate you.

Not only does repairing and building credit help you get approved for a mortgage, but it's a critical way to qualify for a low-rate loan, which saves a massive amount of interest. 

For example, if you have excellent credit and get a $200,000 fixed-rate mortgage, you pay about $145,000 just in interest over the life of a 30-year loan. But if you have average credit, you'll pay close to $190,000 in interest, or $45,000 more, for the same loan!

Your credit scores get calculated using data in your credit reports, which frequently changes as new information gets added and old data falls off. Check your credit reports and get any errors, such as incorrect account balances, payment dates, or personal information, corrected as quickly as possible. 

You can access your information directly from the national credit bureaus: Equifax, Experian, and TransUnion. There are also many free credit sites, such as AnnualCreditReport.com, Credit Karma, and Credit Sesame.

3. Repair your credit

If you have black marks on your credit, such as late payments or accounts in collections, start making repair efforts at least six months to a year before applying for a mortgage. You can't remove accurate negative information, which stays on your credit reports for seven years, even if you pay off an overdue balance. However, the older a delinquent account gets, the less it hurts your credit scores.

Before submitting a mortgage application, consider paying off any past due balances or negotiating settlements with creditors. Getting caught up on late payments helps clean up your report, making you look less risky to a lender.

One word of caution is that if you have old past-due accounts, making a payment can restart the statute of limitations, resulting in legal risks. So, if you have a large amount of delinquent debt, consult with an attorney before you speak to your creditors or send a payment. 

Read The Statute of Limitations and 4 Options for Old Debt for more information about dealing with old debts wisely.

4. Check your debt-to-income (DTI) ratio

Before applying for a mortgage, figure your DTI and see what changes you may need to make. Mortgage lenders evaluate a few debt-to-income ratios to know how your expenses stack up against your income. It's a good indicator of how comfortably you could take on additional debt.

Most home lenders require your future mortgage payment to add up to less than 30% of your income. And for all your debts, including the new mortgage, a typical acceptable ratio is no more than 40%.

Most home lenders require the payment on the mortgage you're applying for to add up to less than 30% of your income. And for all your debts, including the new mortgage, a typical acceptable ratio is no more than 40%. If you exceed these lending limits, you may need to pay down debt balances. But every lender has different underwriting guidelines, and they may adjust DTI ratios based on your financial situation.

When you're preparing to buy a home, be sure to pay your bills on time, reduce your debt as much as possible, and avoid applying for new credit accounts, such as a credit card or auto loan. Those actions boost your credit and help lower your DTI.

5. Calculate how much you can afford.

The next step is to consider all the home-buying costs you'll have to cover. Check out Bankrate's How Much House Can I Afford? Calculator, which allows you to input your monthly income and estimated home expenses.

In addition to a mortgage payment, here are some additional expenses to keep in mind:

  • Property taxes are owed to the local government and vary depending on where you live. An average amount could be in the range of $3,000 to $4,000 per year.
     
  • Home insurance is required by mortgage lenders to protect the property from various disasters, such as fire, windstorms, and vandalism. The price depends on many factors, including the home's value, location, and amenities. An average premium could be in the range of $800 to $1,500 per year.
     
  • Private mortgage insurance (PMI) is another requirement when you pay less than a 20% down payment. The premium depends on your home's value but could add a range of $50 to $150 to your monthly mortgage payment until you have sufficient equity for your lender to cancel it.
     
  • Homeowner association (HOA) fees may be required in some neighborhoods or communities to pay for communal amenities such as a pool, boat dock, or landscaping. The cost could be $50 per month or much more.
     
  • Home maintenance should always be expected. A good rule of thumb is to save at least 1% of your home's value each year for upkeep. For example, if you have a $300,000 home, budget $3,000 per year to pay for potential repairs such as an HVAC system or a water heater that quits working.

6. Save a healthy down payment

If your goal is to buy a home, you've probably been thinking about how to save money for a down payment. To qualify for a mortgage, you must prove to a potential lender that you have enough savings to fund a down payment. 

Since lenders don't finance 100% of a home's price, the down payment affects the balance you owe, in addition to the proceeds from a mortgage. The more you can pay, the less risky you are to a lender. And the larger your down payment, the smaller your mortgage and monthly payments will be. 

While a down payment could be in the range of 5% to 20% of a home's purchase price, you may have additional upfront expenses to pay at the closing table, including:

  • Credit check 
  • Loan origination or underwriting fee 
  • Appraisal
  • Home inspections 
  • Mortgage discount points (which allow you to get a lower interest rate)  
  • Property survey 
  • Title insurance 
  • Deed recording

When you make a purchase offer on a home, one tip is to request that the seller pay some of your closing costs. You can also haggle with your mortgage lender not to charge specific upfront fees. In real estate, just about everything is negotiable, so don't be shy about asking for concessions. 

If you're a first-time homebuyer, a veteran, have a low income, or want to buy property in a rural area, it's possible to qualify for down payment assistance through these programs:

  • Department of Housing and Urban Development (HUD)
  • Federal Housing Administration (FHA)
  • Department of Veterans Affairs (VA)
  • Department of Agriculture and Rural Development
  • Local homeowner programs database

The benefits of down payment assistance programs vary depending on their rules and your circumstances, but they offer low or no down payment, making it much easier to become a homeowner. 

The money for a down payment can come from your savings or gifts from your family. And if you're already a homeowner, your down payment can come from the money you make when you sell your current home.

Here are some ways to save a down payment quickly:

  • Downsize your housing by moving into a less expensive place so you can save money for your down payment fund. 
  • Automate your savings by having a portion of your paycheck deposited into a dedicated savings account or setting up a recurring monthly transfer.
  • Bundle services to pay less for utilities such as cable, internet, and wireless plans. 
  • Shop your insurance if it's been a while since you compared prices for auto or renters insurance.
  • Save all extra money such as raises or bonuses at work, gifts, and tax refunds. 
  • Start a side hustle to create additional income to squirrel away for a new home. 

7. Tap retirement accounts cautiously

Another way to come up with a down payment on a home is to tap a retirement account, such as IRA or 401(k). While I don't recommend this option, some provisions allow it.

Another way to come up with a down payment on a home is to tap a retirement account, such as IRA or 401(k). While I don't recommend this option, some provisions allow it.

For a traditional IRA, you're allowed to withdraw up to $10,000 for a down payment if you're a first-time homebuyer. You must pay taxes on the withdrawal—but even if you're younger than 59½, you won't get hit with the 10% early withdrawal penalty.  

If you have a Roth IRA, you can withdraw your original contributions without owing taxes or a penalty, no matter your age. However, tapping the earnings portion of the account before age 59½ means that taxes and the early withdrawal penalty would apply. 

If you have a workplace 401(k) or 403(b), they typically allow "hardship" withdrawals, which include buying or repairing a primary home. However, making a distribution means paying income taxes and a withdrawal penalty if you're younger than 59½. Plus, you may get restricted from making contributions to your retirement account for six months.

Some workplace retirement accounts allow loans. You may be permitted to borrow half of your vested balance, up to $50,000. You must repay it with interest to your account within five years. However, the term may be longer for a home purchase. If you repay a loan on time, you don't have to pay income tax or a penalty on the borrowed funds. 

One of the biggest problems with taking a loan from your 401(k) or 403(b) is that if you don't repay it on time, the outstanding balance becomes an early withdrawal. That means you must pay income tax plus an additional 10% penalty if you're younger than age 59½.

While taking a loan or withdrawal from a retirement account may make sense for some home buyers, the best scenario is to have plenty of savings, so you don't need to touch your retirement nest egg in the first place.

If you leave your job or get fired, you'll probably have to come up with the entire outstanding loan amount within a short period, such as 60 days. So be sure to read your retirement plan document or ask your benefits administrator for all the details on taking a loan before signing up. 

To sum up, if you need to tap a retirement account to buy a home, taking a modest withdrawal from your Roth IRA is the best possible option. However, in general, I don't recommend draining a retirement account for any reason. It comes with too many downsides, including not being allowed to make new contributions for a period, missing employer matching, being left with a depleted retirement account, giving up the opportunity to build wealth. 

While taking a loan or withdrawal from a retirement account may make sense for some home buyers, the best scenario is to have plenty of savings, so you don't need to touch your retirement nest egg in the first place. Always speak with a financial adviser to carefully weigh the pros and cons of dipping into your retirement account for any reason. 

8. Get a mortgage preapproval

Once you've reviewed your credit, calculated how much you can afford, and have enough of a down payment, it's time to get pre-approved for a mortgage. You might apply with several potential lenders and compare quotes.

In a preapproval, a lender checks your credit, verifies your income, and approves various documentation. They offer a maximum loan amount and interest rate for a period, such as 30 or 60 days, while you find potential homes.

Remember that just because you qualify for a mortgage doesn't mean you should take out the maximum amount. It's a big commitment that has to fit in with your overall financial goals. For some, spending the full amount may be a wise decision. However, if it would leave you "house poor" with an exceptionally tight budget, consider spending less or delaying your home purchase until you've saved up a larger down payment.

Source: quickanddirtytips.com

5 Ways To Grow Your Savings Fast

The following is a sponsored partnership with Capital One Shopping. Capital One Shopping compensates us when you get the browser extension using the links we provided.

ways to grow your savings fast

Are you looking to learn how to grow your savings fast?

Today, I’m going to talk about some of the best ways to save money, and they can be quite easy as well.

Some will be a no-brainer and extremely easy (such as adding an easy browser extension), whereas others may take more time (such as finding ways to make extra money), but they can all help you to grow your savings so that you can change your life.

Growing your savings fast may allow you to:

  • Pay off your debt quicker
  • Save for something big, such as a vacation
  • Build an emergency fund
  • Save for retirement

And so much more!

 

how to grow your savings fast

Use Capital One Shopping

Capital One Shopping helped users find more than $160 million in savings and coupon codes in the last year, and they can help you do the same.

Capital One Shopping is a really simple and free way to help you save more money when shopping online. You simply add their browser extension, and it will instantly search for coupons and apply the discount to your shopping cart for you automatically.

This is great because you don’t have to worry about finding coupon codes anymore.

Or, forgetting to use a coupon code to begin with!

Capital One Shopping makes it easy and is a no-brainer to use.

To get started, all you have to do is:

  1. Add the browser extension by clicking here
  2. Simply shop as you normally would. Capital One Shopping works in the background.
  3. Capital One Shopping will then help you get better pricing while you shop, find and apply coupon codes, get credit back on purchases, and/or you can get notified when prices drop.

Capital One Shopping also compares prices for items on Amazon, Target, and more. So, while you are shopping, Capital One Shopping will tell you if a better deal is found, so that you can save the most amount of money.

You do not have to be a Capital One customer in order to use Capital One Shopping. There are no ads either, and it is completely free!

Capital One Shopping is available on Google Chrome, Mozilla Firefox, Microsoft Edge, and Safari.

Please click here to start saving now.

 

Save money when grocery shopping

Grocery expenses are usually one of the biggest bills for a family each month.

To save money when grocery shopping, I recommend:

  • Meal planning so that you know exactly which ingredients you need to purchase. This will help you cut back on food waste as you will be shopping with a specific grocery list.
  • Only grocery shop when you’ve had a meal beforehand. Shopping when you are hungry will lead to many additional purchases!
  • Get a grocery store’s loyalty card so that you can get additional savings.
  • Shop the sales, and if there’s a good sale – stock up!

 

Build a budget

Budgets can help you grow your savings fast, and that is because you will know where your money is coming from and going to all the time.

There will be fewer surprises, as you’ll know exactly how much money you are working with.

Whether you create a budget with a pen and paper, or online with something such as a spreadsheet, there are many options for you.

But, the key here is to properly track your income and expenses.

 

Find a cable TV alternative

So many people overspend on cable TV each month and every single year. In fact, the average person spends around $100 to $200 a month on their TV bill.

Perhaps you’re even paying for cable TV, plus a bunch of subscription services such as Netflix, Hulu, and more?

I recommend sitting down and seeing how much you spend on TV each month, and cutting your bill down.

You can read more about this at 16 Alternatives To Cable TV To Save You Money.

 

Make extra money

There are many different ways to make extra money, and this is a great way to grow your savings lightning fast.

You could start your own business on the side, find a part-time job, sell items for profit, and more.

This option will take more time than the rest of the list above, but it can definitely be well worth it.

One thing I always like to point out is that the average person watches around 35 hours of TV each week. Even if you could only make extra money for half of that time (around 17 hours per week), that could be a nice chunk of money to earn with your free time.

 

How can I increase my savings fast?

I hope you enjoyed this list of 5 ways to quickly grow your savings. As a recap, these include:

  1. Using Capital One Shopping
  2. Finding a cable TV alternative
  3. Creating a budget
  4. Grocery shopping tips
  5. Ways to make extra money

What are you currently doing to quickly grow your savings?

The post 5 Ways To Grow Your Savings Fast appeared first on Making Sense Of Cents.

Source: makingsenseofcents.com