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How Much Money Do You Need to Buy a House?

By in DIY, Personal Finance Tag , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Understanding how much money you need to buy a house can give you an idea of how much you should expect to save.

You’re probably excited about the thought of buying your first home? If so, you have every right to be.

But how much money do you need to buy a house? A calculator can help you determine that. But the average cost of buying a $300,000 is typically around $17,000.

In this article, we’ll go over the main costs of buying a house including the down payment, inspection cost, appraisal cost, closing cost, etc.

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How much money do you need to buy a house?

Out of Pocket Cost of buying a house

The five main out of pocket costs of buying a house are 1) the down payment; 2) inspection cost; 3) the appraisal cost; 4) earnest money and 5) closing costs. These out of pocket costs or upfront costs are money yo need to pay before you become the owner of the property.

In addition, some lenders also require you have some cash reserves to cover 2 to 3 months of the mortgage repayments.

Determining how much cash needed to buy a house depends on the type of loan you’re using.

Let’s suppose you’re buying a $300,000 house with an FHA loan.

An FHA loan requires a 3.5% of the home purchase price as a down payment as long as you have a 580 credit score. So, for the down payment alone, you will need $10,500.

Here’s a quick breakdown for how much cash needed to buy a $300,000 house:

  • Down payment: $10,500
  • Inspection cost: $300
  • Appraisal cost: $300
  • Closing cost: $6000

So, $ 17,100 is how much money you need to buy a house.

Whether you’re buying a house with a 20% down payment or 3.5% down payment, you can certainly find a loan with both the price and features to suit your needs as a first time home buyer. You can compare First Time Home Buyer home loans on the LendingTree website.

The down payment

The biggest cost of buying a house is obviously your down payment. But that depends on the type of loan you are looking for.

For example, a conventional loan requires a 20% down payment. You can pay less than that, but you will have to pay for a private mortgage insurance – which covers the lender in case you default on your loan.

A 20% down payment however can also mean that you’ll get a better interest rate, which also means you’ll save money on interest.

For an FHA loan, you only need 3.5% down payment as long as your credit score is 580.

FHA loans are very popular these days. Not only it’s easier to get qualified (low down payment and low credit score), but also your down payment can come from a friend, a relative or your employer.

Using our example above, you only need $10,500 for a down payment for a $300,000 house.

If you’re using a VA loan then you pay $0 down payment.

Check to see if you’re eligible for an FHA loan or VA loan

How much money do you need to buy a house also depends on other factors, such as whether you are a first time home buyer or not. Your state may have a range of programs that may contribute toward your down payment.

So visit your local government office to find out if you are eligible for any down payment assistance for first time home buyers.

Inspection cost

Another upfront cost of buying a home is the inspection cost.

It is highly recommended to perform inspection for your home for any defects so there are no surprises later on.

Inspections typically cost between $300 to $500, but it depends on the property and your local rates.

Compare home loans for first time home buyers with LendingTree

Appraisal cost

Before a lender can give you a loan to finance a house, they will want to know how much the house is worth. So appraisal means an estimate of the home’s value. A home’s appraisal usually costs between $300 to $500. A home appraisal will also determine what your property tax will likely be.

If you’re pay the home appraisal, it will be deducted from the closing cost. (see below).

Earnest money

Earnest money is a deposit you will have to pay upfront as soon as an offer is accepted, while you working on other aspects such as getting the home inspected, etc…

This deposit is part of the down payment, and it is usually between 1% to 3% of the final sale price. It is held by an escrow firm or attorney until the closing process is completed.

So if the sale is successful, that money is applied to your down payment. If it’s not, you get 100% of your money back.

Closing costs

The closing costs are fees by the lenders. They typically cost 2% to 5% of the final price. The costs include fees for homeowner’s insurance, title insurance, title insurance, property tax, HOA dues, private mortgage insurance.

It’s possible to lower these costs by comparing mortgage options.

Other costs of buying a home:

In addition to upfront costs, there are other recurring costs associated with buying a home. They include moving fees, repair costs, furniture, remodeling, etc. So consider these costs when making your budget to buy a house.

So how much money do you need to buy a house? The answer is it depends on the type of loans you’ re using. But if you’re buying a $300,000 house with an FHA loan, which requires a 3.5% down payment, $ 17,100 is how much money you need.

For more information about upfront costs of buying a house, check out this guide.

Read more cost of buying a house:

  • How Much House Can I Afford?
  • How Long Does It Take to Buy a House?
  • Buying a House for the First Time? Avoid these Mistakes
  • 5 Signs You’re Not Ready to Buy a House

Work with the Right Financial Advisor

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 Much Money Do You Need to Buy a House? appeared first on GrowthRapidly.

Source: growthrapidly.com

How to Teach Your Teen to Budget Like a Pro

By in Careers, Student Finances Tag , , , , , , , , , , , , , , , , , , , , , ,

It amazes us how quickly our girls are growing up. Next month when school starts up again, we’ll have a fourth-grader and a kindergartener.

Even though we have some time before they are ready to move out of the house, we want to spend time now prepare them for the big transition. As a parent, you probably feel the same way too. 

One crucial piece of a financial foundation kids and in particular, teens, need to master is learning to budget (and sticking with it),

While they’re home now, you have a fantastic opportunity to get them comfortable with handling their money.

If you’re not sure where to start, here are some tips from fellow parents and experts in the personal finance space to make teaching this life skill a bit easier less stressful for you and your teen!

Teach Your Teen to Budget for Real Life

Teens or not, whenever most people hear the word budget, they also hear the word ‘no’. To them, budgets feel like a strict diet. Just as fad diets fail, an unrealistic or extreme budget will more than likely discourage your teen and they will quit.

The first step before you even talk about the numbers is to discuss exactly what a successful and sustainable budget should be. When done right, a budget is something that helps you move your money towards your goals. Explain to them that at its root, budget is simply a plan about what they’d like to do.

You want a budget that can cover:

  •     Essential bills
  •     Future goals
  •     Discretionary expenses

When your teen’s budget covers those goals, they’re not only putting their finances in a good spot, but they’re moving closer to their specific long term dreams.

Creating a Doable Budget (They’ll Actually Enjoy!)

Once your teen(s) understands how a budget works, it’s important for them to create a budget that they can use in the real world. You can honestly budget however you want, but an easy budget to get your teen started is the 50/20/30.

Quite simplify, the 50/20/30 budget puts money into those three main buckets:

  •     50%  goes towards essentials
  •     20% towards savings (or investing)
  •     30% for fun and discretionary expenses

I appreciate how easy and flexible this budget can be. You can adjust the percentages for your teen’s needs, but it gives them some ballpark idea of how to portion their finances when they are out on their own.

How do you start them out on this budget?

With teens, you may have expenses like clothing or their cellphone bill count as essentials, or you may want to give your child the experience of being responsible for a small, shared family bill while they are still at home.

For older teens, you could even charge them a nominal ‘rent’ to offset their portion of the bills. In some cases, parents give that money back to their child as a gift to help with moving expenses (like for their security deposit) or use as additional savings. 

However you decide, talk it over so your teen understands why you’re doing it this way.

Share Your Family Budget

Creating a budget isn’t complicated, but it can difficult if your teen has no idea what to expect. Knowledge can be empowering.

While we may take it for granted since have to deal with the numbers, but your teen may not be aware of how much it takes to keep the lights on and roof over their heads. If you haven’t already shared your own budget already, now is the time.

Not knowing also puts them at a disadvantage when they start searching for a place or are comparing prices on expenses. Being armed with the numbers makes your teenager a more informed consumer.

When Your Teen Breaks Their Budget

Will there be times where your teenager will mess up with their budget? Probably so. However, that’s not necessarily a bad thing. As parents, we tend to want to protect our kids, but we also have to prepare them for the real world. As Ron Lieber, author of The Opposite of Spoiled, pointed out we should let our kids make financial mistakes. 

Wouldn’t it be better for your child to break the clothing budget while they’re still at home allowing you to help guide them through rather than having break their monthly budget while they are on their own and have bills to pay?

Mistakes will happen, they’re a part of life so giving your teen time to work those them and adjust their budget is a blessing for their future selves.

Essential Accounts for Your Teen  to Have

Since we’re talking about budgets, we should also mention some essential accounts you’d want your kid to have so they can practice managing their money.

Opening up student checking and savings accounts (usually free low on fees as well as not having minimum balance requirements) are good foundational accounts for your teen. They can deal with real-world situations pending charges, automatic transfers, and direct deposits.

As Family Balance Sheet founder Kristia Ludwick pointed out, teens should have the skill of balancing a checkbook even if they decide to go all-digital with their banking.

If they work, talk it over together and see if they can open up an IRA and start contributing. It doesn’t have to be much. The idea is to get them familiar and comfortable with the basics of investing.

Even if they put in $25 a paycheck, having them practice setting aside money in their budget for both long and short term goals is an invaluable lesson. You can also encourage them to contribute by offering a match for what they put in.

How Teens Can Easily Stay on Top of Their Money

With several accounts to keep tabs on, your teen is going to need an easy system to track their budget and goals.

With Mint, they can link up their accounts in one secure spot. They can also add their budget along with any savings goals they want to hit and make sure they stick with them.

Hopefully, these ideas and tips will make it easier to help your teen transition into a self-sufficient adult.

The post How to Teach Your Teen to Budget Like a Pro appeared first on MintLife Blog.

Source: mint.intuit.com

What Is a Nuncupative Will?

By in Business, Estate Planning Tag , , , , , , , , , , , , , , , , , , , , , , ,

Elderly woman near deathMaking a last will and testament is an important part of your estate plan and there are different types of wills to choose from. A nuncupative will, meaning a will that’s oral rather than written, may be an option in certain circumstances. While state will laws typically require that a will be written, signed and witnessed to be considered legal, there are scenarios in which an oral will could be upheld as valid. Understanding how a nuncupative will works, as well as the pros and cons, can help with shaping your will-making plans if you have yet to create one.

A financial professional can offer advice on investing, retirement planning, financial planning and various other areas of finance. Find a financial advisor today. 

Nuncupative Will, Defined

A nuncupative will simply means a will that isn’t written. Instead, it’s delivered verbally by the person who intends to make the will.

Nuncupative wills are sometimes called deathbed wills since they’re often created in end-of-life situations where a person is too ill or injured to physically draft a will. The person making the will, known as a testator, expresses wishes about the distribution of property and other assets to witnesses.

How Does an Oral Will Work?

Ordinarily, when creating a will you’d draft a written document identifying yourself as the will maker and spelling out how you want your assets to be distributed after you pass away. You could also use a will to name legal guardians for minor children if necessary and name an executor for your estate.

An oral will sidesteps all that and simply involves the person making the will expressing his or her wishes verbally to witnesses. There would be no written document unless one of the witnesses or someone else who is present chooses to copy down what’s being said. The person making the will would have nothing to sign and neither would the witnesses.

There’s a reason oral wills are no longer used in most states: Without a written document that’s been signed by the person making the will and properly witnessed, it can be very difficult to prove the will maker’s intentions about how assets should be distributed or who should be beneficiaries.

Are Nuncupative Wills Valid?

Elderly man near death

This type of will is no longer considered valid in most states. Instead, you’ll need to draft a written will that follows your state’s will-making guidelines. For example, most states require that the person making a will be at least 18 and of sound mind. The will also has to be witnessed by the required number of people who don’t have a direct interest in the will’s contents. Depending on where you live, you may or may not need to have your will notarized.

There are a handful of states that still allow oral or verbal wills, however. But they’re only considered valid under certain circumstances.

In North Carolina, for example, oral wills are only recognized if:

  • The person making the will believes death is imminent
  • The witnesses are asked to testify to the will
  • Both witnesses are present with the testator when the will is dictated
  • The testator states that what he or she is saying is intended to be a will
  • An oral statement is made to at least two competent witnesses
  • The testator then passes away

Even if those conditions are met, the heirs to the will would still have to bring a legal action to have it admitted to probate court. The witnesses would have to testify to what was said and even then, North Carolina still doesn’t allow for the transfer of real estate through an oral will.

In New York, the guidelines are even narrower. New York State only allows nuncupative wills to be recognized as legal and valid when made by a member of the armed services during a time of war or armed conflict. The intentions of the person making the will has to be stated in front of two witnesses. State law automatically invalidates them one year after the person leaves military service if they don’t pass away at the time the will was made.

How to Prepare a Will

Having a written will in place can help your loved ones avoid problematic scenarios about how to divide your property after you pass away. If you don’t have a will in place yet, you risk dying intestate. There are a couple of ways you can create one.

The first is using an online will-making software. These programs can guide you through the will-making process and they’re designed to be easy enough for anyone to use, even if you’re not an attorney. If you have a fairly simple estate then using an online will-making software could help you create a will at a reasonable cost.

On the other hand, if you have a more complex estate then you may want to get help with making a will from an estate planning attorney. An attorney can help ensure that your will is valid and that you’re distributing assets the way you want to without running into any legal snags.

Generally, when making a will you should be prepared to:

  • Name an executor for your estate
  • Name a guardian for children if necessary
  • Specify who or which organizations you want to inherit your assets

When making a will, it’s important to remember that some assets can’t be included. For example, if you have any assets that already have a named beneficiary, such as a 401(k), individual retirement account or life insurance policy, those would go to the person you’ve named.

And it’s also important to note that a will is just one part of the estate planning puzzle. If you have a more complex estate then you may also need to consider setting up a living trust. A trust allows you to transfer assets to the control of a trustee, who manages them on behalf of the trust’s beneficiaries. Trusts can be useful for minimizing estate taxes and creating a legacy of giving or wealth if that’s part of your financial plan.

The Bottom Line

Dying person holds hands with a loved oneNuncupative wills are rare and while some states do recognize them, they generally aren’t valid in most circumstances. If you don’t have a will in place, then creating one is something you may want to add to your financial to-do list. Even if you don’t have a large estate or you’re unmarried with no children, having a will can still provide some reassurance about what will happen to your assets once you pass away.

Tips for Estate Planning

  • Consider talking to a financial advisor about will making and estate planning. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool can help. By answering a few brief questions online you can get personalized recommendations for professional advisors in your local area. If you’re ready, get started now.
  • Along with a will and trust, there are other legal documents you might incorporate into your estate plan. An advance healthcare directive, for instance, can be used to spell out your wishes in case you become incapacitated. Power of attorney documents allow you to name someone who can make medical or financial decisions on your behalf when you’re unable to.

Photo credit: ©iStock.com/FatCamera, ©iStock.com/Sean_Warren, ©iStock.com/LPETTET

The post What Is a Nuncupative Will? appeared first on SmartAsset Blog.

Source: smartasset.com

Why Set Impossible Goals for 2021? [The Ultimate New Year’s Savings Hack]

By in Early Career Tag , , , , , , , , , , , , , , , , , , , , , ,

In the 1980s, self-driving cars and smartphones without antennas were only things you’d see in movies — unimaginable futuristic goals. Now, these “impossible” inventions are part of people’s everyday lives. These innovative ideas were thought to be outlandish years ago until creators like Elon Musk and IBM’s team put their impossible goals to the test.

Impossible goals are things you want to achieve that seem out of the ordinary — ones that feel as if you may never reach them, even in your wildest dreams. These goals could be turning your dream side hustle into a full-time job or building your savings from zero in the next year to buy your dream home.

While the end result seems unreachable, a mix of motivation, determination, and hard work can get you further than you think. To see the strategic process of setting and achieving your biggest life goals, keep reading our jump to our infographic below.

What’s an Impossible Goal?

An impossible goal is a goal you think you could never achieve. Becoming a millionaire, buying your dream home, or starting a business may be your life goal, but one too big that you never set out to achieve. Instead, you may stick to your current routine and believe you should live life in the comfort zone.

Becoming a millionaire usually requires investing time, confidence, and a lot of hard work — things that may challenge you. But when you think about the highest achievers, most of them had to put in the effort and believe in themselves when nobody else did.

Flashback to 1995 when nobody believed in the “internet store” that came to be Amazon. While that was considered impossible years ago, Amazon’s now made over $280 billion dollars.

In other words, when you make your impossible goals a priority, you may be pleasantly surprised by your progress. We share how to set hard financial goals, why you should set them, and how these goals could transform your financial portfolio this year.

Impossible Goals Set by the Rich and Famous

4 Reasons to Reach for the “Impossible”

Impossible goals challenge you to shift your way of thinking — getting comfortable out of the safety zone. They help fine-tune your focus for daunting tasks you’re willing to put in the time and work for. Whether you’re looking to become a millionaire, buy your dream house, or pay down your debts, here’s why you should set goals for things you think you could never achieve.

1. You May Be Pleasantly Surprised

Everything seems impossible until you do it. When you’re in elementary school, maybe you thought getting a four-year college degree would be out of reach. Regardless, you put in the time and hard work to become a college grad years later. The same goes for your potential goal to write a book. You may think it’s hopeless to write a few hundred pages in the next year, but you may find it attainable once you hit the halfway point.

2. You Check Off Micro-Goals Along the Way

It’s hard to set your goals too low when you’re trying to reach for the stars. In the past, you may have set small goals like being more mindful with your money. While mindfulness practices are extremely beneficial for your budget, you may need more of a push to save for your dream home. By setting impossible goals, you may find it easier to reach your savings goal this year. You may have no idea how to do it, but your goal is to figure it out. Side hustles, a new job, or starting a business are all potential starting points.

3. It May Not Be as Hard as You Think

It can be uncomfortable to try something for the first time, so to avoid the doubts of reaching your goals, create a strategic plan. Download and print out our printable to breakdown each impossible goal. Start with your big goals and break them down into mini-goals. For example, if you want to start an online ecommerce store, researching the perfect website platform is a good starting point.

4. What Do You Have to Lose?

If you already live a comfortable life, you may only have experiences to gain and nothing to lose. When embarking on this journey, check in with yourself every month. Note all the lessons you learned and how far you’ve come. You most likely will face failures, but you’ll be failing forward rather than backwards. Your first ecommerce product launch may not have gone smoothly, but you may know how to improve for the next time around.

Impossible Goals Roadmap

Impossible Goals Download Button

How To Set Impossible Budgeting Goals in 6 Steps

If your impossible goal is related to finances, your mindfulness, time, and dedication will be required to put you on a path towards your dream life. To get started, follow our step-by-step guide below.

Step 1: Map Out Your Dream Lifestyle

  • Get out a journal and map out your dream life. Some starter questions may be:
  • Do you want to afford that house you’ve always dreamt about?
  • Do you want to have a certain amount of money in your savings?
  • Are you hoping to turn your side hustle into a full-time job?
  • What do you find yourself daydreaming about?

Track all these daydreams in a notebook and curate the perfect action plan to achieve each goal.

Step 2: Outline Micro-goals to Reach Your Financial Goals

Now, list out mini-goals to achieve your desires. Start with the big “unachievable” goal and break it down into medium and small goals, then assign each mini-goal a due date. For example, saving $10,000 this year may take more than your current monthly earnings. To achieve this, you may create passive income streams. If that side hustle is to start a money-making blog, you may need to research steps to successfully launch your website.

Step 3: Believe and Act Like Your Future Self

Think of yourself as the future self you want to be. You may picture yourself with a certain home, financial portfolio, and lifestyle, but your current actions may not reflect your future self. Your future self may invest, but your current self is too intimidated to start. To act like your future self, consider doing the research and finding low-risk investments that suit you and your budget.

Step 4: If You Fail, Learn from Your Mistakes

When working towards your dream life, you may hit roadblocks and experience failures. As Oprah explains it, “there is no such thing as failure. Failure is just life trying to move us in another direction.” While failure may happen, you’re able to learn from it and pivot. Every mistake you make, analyze it in your journal. Note what worked, what didn’t, and what you want to do better tomorrow to surpass this roadblock.

Step 5: Track Your Results Consistently

Host monthly meetings with yourself to see how far you’ve come. Consider creating a goal tracking system that suits you best. That may include checking your budgeting goals off in our app month after month. Find a system that works for you and note your growth at the end of each month. If you’re putting in the time and hard work, you’ll get closer to your goals in no time.

Step 6: Be Patient With Your Budget Goals

Throughout this journey, practice patience. Setting goals may be exciting and motivating, but when you’re faced with failures, you may feel hints of disappointment. To avoid a failure slump, be patient and open to learn from your mistakes. If you didn’t make what you wanted from your side hustle the first year, you’re that much closer than you were last year.

Why set your sights on hard goals? Everything feels out of reach until you do it. All it takes is motivation and determination to achieve the impossible. To boost your lifestyle, budget, and drive this New Year, consider setting goals that feel out of reach. Keep reading to see why these goals may be perfect for you. Why Set Impossible Goals for 2021? [The Ultimate New Year’s Savings Hack] appeared first on MintLife Blog.

Source: mint.intuit.com

How to Copy Warren Buffet’s Biggest Investment of 2020

By in Find An Apartment, Investing Tag , , , , , , , , , , , , , ,
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Warren Buffett is notoriously a good investor. Sure, he’s made some mistakes along the way (who hasn’t?), but whatever move he makes, you can bet he’s thought it through, and it will pay off — big time.

Which is why when Mr. Buffett made his biggest stock purchase of the year into Apple, we thought, “Isn’t it too late to do that?” Apple is already trading at the highest price it ever has. It feels out of reach for us non-billionaires.

But it turns out, that’s not the case. While we don’t have the ability to own $111 billion (yes, billion with a B) in AAPL shares, we can still get our hands on some — and reap the rewards as the market goes up.

One of our favorite ways to get into the stock market and be a part of infamous big-tech returns, without risking billions is through a free app called Stash.

It lets you be a part of something that’s normally exclusive to the richest of the rich — on Stash you can buy pieces of other companies — including Buffett’s choices — for as little as $1.

That’s right — you can invest in pieces of well-known companies, such as Amazon, Google, Apple and more for as little as $1. The best part? If these companies profit, so can you. Some companies even send you a check every quarter for your share of the profits, called dividends.1

It takes two minutes to sign up, and it’s totally secure. With Stash, all your investments are protected by the Securities Investor Protection Corporation (SIPC) — that’s industry talk for, “Your money’s safe.”2

Plus, when you use the link above, Stash will give you a $5 sign-up bonus once you deposit $5 into your account.*

Kari Faber is a staff writer at The Penny Hoarder.

1Not all stocks pay out dividends, and there is no guarantee that dividends will be paid each year.

2To note, SIPC coverage does not insure against the potential loss of market value.

For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

*Offer is subject to Promotion Terms and Conditions. To be eligible to participate in this Promotion and receive the bonus, you must successfully open an individual brokerage account in good standing, link a funding account to your Invest account AND deposit $5.00 into your Invest account.

The Penny Hoarder is a Paid Affiliate/partner of Stash. 

Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk. 

This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.

Source: thepennyhoarder.com