Smart Money: Renting Out Your Home
The current housing market has created some challenges for those looking to sell their homes. This has led to some homeowners renting their current home and purchasing a new one, but you should be wary of renting your home until you consider all of the details.
It can be difficult to find trustworthy renters and you should take into consideration potential property damage which could occur while your home is being rented. Carefully consider factors such as the amount of a deposit as well as a pet policy to limit your out of pocket expenses. Also take into consideration that you will still be responsible for ongoing maintenance to your property, which your tenants will expect you to complete in a quick manner.
Once you have decided to rent out your home, there is no difference in the qualifications you will need for your new mortgage. Your existing mortgage will still impact your debt to income ratio however, which may limit the amount of home you can afford to purchase. Remember that you will still need to meet both financial obligations, whether you have a renter for your first property, or not.
If you can meet the financial obligations, renting your home and purchasing a new home can be a very lucrative opportunity. With an excellent buyers’ market, buying a new home now and selling your current home when the market recovers could save you thousands of dollars.
Smart Money: Planning for Your Retirement
In today’s economy, people are struggling with their retirement plans. Investing in your retirement can be a challenge when you have other financial obstacles to overcome. However, staying committed to your retirement goals is essential throughout your life.
Starting your retirement investment early and staying consistent with it are important factors for accumulating the most wealth. An individual saving $500 per month with a 6% return would earn over $1,000,000 by saving from age 25 to 65. Saving from 35 to 65 however, would reduce the total savings to $504,000. Additionally, withdrawing funds from an IRA or 401k would result in a 10% penalty and be subject to taxation.
Building your investments and allowing them to grow tax-free will allow you to save considerably more money. Contributing $2,000 per year to a tax-deferred investment at a 6% growth rate would result in $167,603 after 30 years. The same investment non tax-deferred would earn only $88,899.
By starting early and remaining consistent in your savings, you will ensure that you have the money you need to fund your retirement.
Smart Money: Tips for First Time Homebuyers
With today’s low rates, it has become possible to pay less in monthly mortgage payments than in rent. The current market is certainly a buyer’s market, and for those looking to purchase their first home, the combination of low rates and low home prices create excellent opportunity.
The biggest obstacle for many first time homebuyers is their down payment. Creating a plan to save for your down payment can help you have peace of mind when you begin shopping for a first home; a larger down payment may help you secure better terms on your loan. However there are still options for those without a substantial down payment. FHA loans only require 3.5% down payment and for veterans who qualify, VA loans can offer programs with 0% down payment.
Getting pre-approved for a loan is essential to having leverage while negotiating with sellers as well as knowing how much you can afford before you start house shopping. Take into account other costs you could have once you buy such as furnishings for the home. Homeowners association dues, increased utility bills and property taxes could also be additional expenses over what you may pay in rent.
Purchasing a home is an investment for your financial future. As a homeowner, you are able to continue to build equity in your home over time. Take advantage of today’s market conditions and contact a licensed Mortgage Consultant today!