One of the biggest questions millennials have today is: should I own a home, or should I just rent?
If you buy, you get a return on your money and an opportunity to build real wealth. If you rent, you are just throwing that away or financing your landlord's funds to put their kids through college.
On the other hand, renting means more freedom, more flexibility. It means you can move across the world in an instant (okay - as long as it takes you to sublet your apartment on Gypsy Housing). There's a lot of appeal to that.
If you know you want to buy a house, there's a bigger challenge: "Do I even make enough money to own my own home?" It's probably the most important question you will ask yourself in the process of becoming a homeowner. However, the results of what this really looks like can be astounding.
According to Forbes, the cost of living in some of the fastest growing cities in America can range from $42,161 (Detroit, MI) and $53,384 (Albuquerque, NM) to $58,504 (San Antonio, TX) and $58,973 in Columbus, OH. These figures include not only your mortgage payment, but enough financial resources to live comfortably, make your mortgage, pay your utilities, and maybe even save a little to put away for retirement.
The median cost of homes in areas such as San Antonio is about $172,400, according to Zillow. This means if you put down a $25,000 deposit and financed $152,400, you would be looking at around $800 per month for the mortgage payment, at 5% interest for a 30-year fixed rate mortgage. This rate assumes you have a credit score in the range of 680-700. Plus, you may need to add escrow fees, which include homeowners insurance and real estate taxes if your loan terms require it.
So owning a home can actually be pretty affordable. The first step is to start saving up for a down payment. It's usually recommended to put down about 20% of the purchase price. This will also reduce the size of the loan you need to borrow from a lender. There are also certain mortgage programs–like the FHA loan program–that allow qualifying buyers to make small down payments in exchange for agreeing to pay for private mortgage insurance.
Another important factor in obtaining financing is your credit score, according to Tyler Frist from Citizens Bank. This is why credit is so important. It's how banks assess the likelihood that you'll be able to pay back your loan. This will also impact the interest rate you qualify for and the terms of your loan.
If you're applying for a mortgage with a significant other, it's also important to note that they'll take the lower score between the two of you. So when you are working on building your credit, you may find it more strategic to pay off one person's debt sooner than the other.
When it comes to your credit score, don't blame the bank. They're just trying to protect their investment. We are talking hundreds of thousands of dollars. Instead, get ahead and work on your credit before it comes time to make major purchases and life-altering decisions.
Keep an eye on your credit score with apps like Credit Karma. Smart moves like paying credit card debt and submitting bill payments on time will help you to maximize your score.
Another great way to build wealth when saving for a home is to automate your savings, so that when you get paid through direct deposit, like most of us, money is automatically put aside into a housing fund. Create a plan to tackle debt and reduce spending on frivolous items so that you can save in the long run.
Owning your own home means owning equity. This gives you leverage when making financial decisions and taking on debt. We often think of debt as a bad thing, but it can be a good thing, even necessary, such as when you're taking a line of credit to start your own business or obtaining a mortgage to finance a home purchase. And even if you're not ready to commit to a mortgage, you'll have the resources to make an educated home purchase in the future.
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As anyone who has ever sold a house will tell you, you must prioritize curb appeal. Before a potential buyer even considers looking inside your house, they notice the outside first. Does it attract the right kind of attention? Does it take away from the feel you're going for? If you plan to sell sometime soon, you must think about these things. Here are some landscaping options to increase your home's curb appeal, so you can get the best price on your home.
Extensive Plants and Greenery
A barren front yard won't get you the price you want on your home. So, invest in at least a little bit of greenery to keep the surrounding area from looking too dead. Shrubs and bushes tie the house to the lawn that precedes it, and flower beds bring a pop of color to an otherwise drab structure. You can also strategically plant some trees to improve the overall feel of your home's exterior.
As we mentioned, your lawn is one of the most prominent features of your home's exterior. A patchy, dried-up lawn will quickly drive your home's price way down. Some of the best landscaping options for your home's curb appeal involve improving your lawn for the next inhabitant. Overall fertilization, ground aeration, underbrush removal, proper mowing—all of these lawn care tasks contribute to a greener and more lively area that invites people to see your house, rather than stay away from it.
There's nothing like a broken and disheveled pathway to make someone think twice about buying a property. Just as you want the entryway in your house to be welcoming, so too should the pathway leading up to the house be inviting. The pathway from the street to your front door provides plenty of real estate to get creative with. You don't have to settle for a boring concrete pathway. Consider something more eye catching, like a cobblestone path or intermittent brick patterns, as a way to better welcome potential buyers.
Usable Outdoor Furniture
Landscaping doesn't just involve the ground you walk on; also included are the items you use as extras to the overall look. Outdoor furniture is one such extra that you don't necessarily need but can look quite attractive if done correctly. Staging is important with outdoor furniture. Old, broken-down pieces will only look like more work to the potential buyer. A few comfortable chairs, a bench, or a table with an umbrella really go a long way to improving your outdoor aesthetics.
A good tip for deciding on curb appeal items is to decide what you personally would want to see as a part of a welcoming home's exterior. You don't need to go overboard, but a little bit of forethought could net you quite a lot of extra cash in the sale.
Many people strive to support their community by donating their time or their money. When you find a meaningful cause, you might be quick to cut a donation check. Though it's admirable to be quick to act charitably, you should be wary of several common mistakes made when giving to charity. Being mindful of these mistakes and learning tips for making informed charitable choices can help you make the most out of your generous check.
Acting Quickly Out of Emotion
Mission statements are meant to be compelling. If you're an emotionally driven individual, it's natural to pull out your wallet at the sight of a sad puppy on TV or when informed about food insecurity over the phone. Unfortunately, not all charities are as effective or official as they may seem.
Take your passion for helping others one step further by making sure your chosen charity is legit. Speaking with a representative, reviewing their website and social media accounts, and looking at testaments online can give you a better idea of whether the organization is worth your donation.
Forgetting to Keep Record of the Donation
Don't forget that you can reap some financial perks from giving back! With the proper documentation of your donation, you can acquire a better tax deductible.
If you donate more than $12,400 as a single filer or $24,800 as one of two joint filers, you're eligible to deduct that amount from your taxes. So, when a charity asks if you'd like a receipt of donation, always answer yes.
Donating Unusable Materials
Most charities can utilize a monetary donation—it's the physical donations that usually cause some issues. Providing a local nonprofit with irrelevant materials or gifting them with unusable products are surprisingly common mistakes made when giving to charity.
Always check your intended charity's website for a list of things they do and do not accept. The majority of places will provide a guideline to donating or offer contact information to clarify any questions.
Strictly Giving at Year's End
As more and more people get into the holiday spirit at the end of the year, nonprofit organizations see an influx of donations. While it's great to spread holiday cheer via a monetary donation, it's important to keep that spirit going year-round.
With regular donations, charities can more effectively allocate their annual budget. Setting up an automatic monthly donation with the charity of your choosing can maximize your impact. You can account for a monthly donation by foregoing a costly coffee every once in a while.
Knowing how much you should spend on home maintenance each year is hard to figure out and may be preventing you from buying your first home. The types of costs you'll incur depend on the house you buy and its location. The one certainty is that you should start saving now. Read on to figure out how much to start setting aside based on the home you own.
The Age of Your House
Consider several factors when budgeting for home repairs. If you've purchased a new home, your house likely won't require as much maintenance for a few years. Homes built 20 or more years ago are likely to require more maintenance, including replacing and keeping your windows clean. Further, depending on your home's location, weather can cause additional strain over time, so you may need to budget for more repairs.
The One-Percent Rule
An easy way to budget for home repairs is to follow the one-percent rule. Set aside one percent of your home's purchase price each year to cover maintenance costs. For instance, if you paid $200,000 for your home, you would set aside $2,000 each year. This plan is not foolproof. If you bought your home for a good deal during a buyer's market, your home could require more repairs than you've budgeted for.
The Square-Foot Rule
Easy to calculate, you can also budget for home maintenance by saving one dollar for every square foot of your home. This pricing method is more consistent than pricing it by how much you paid because the rate relies on the objective size of your home. Unfortunately, it does not consider inflation for the area where you live, so make sure you also budget for increased taxes and labor costs if you live in or near a city.
The Mix and Match Method
Since there is no infallible rule for how much you should spend on home maintenance, you can combine both methods to get an idea for a budget. Average your results from the square-foot rule and the one-percent rule to arrive at a budget that works for you. You should also increase your savings by 10 percent for each risk factor that affects your home, such as weather and age.
Holding on to savings is easier in theory than practice. Once you know how much you should spend on home maintenance, you'll know what to aim for and be more prepared for an emergency. If you are having trouble securing funds for home repairs, consider taking out a home equity loan, borrowing money from friends or family, or applying for funds through a home repair program through your local government for low-income individuals.