Health Questions And Answers | Disease Information | Prescription Drug Answers

Category: Personal Finance

How Much Money Do You Need to Buy a House?

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.

Check Current Mortgage Rate

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

7 Money Steps to Take Before 2021

With the end of the year rapidly approaching, it’s a good time to take stock of your financial situation as you head into 2021. 2020 has been a strange year, and a difficult year for many people. With many people’s health and/or economic livelihoods affected by COVID-19, many people’s situation looks very different than it did back in January. As we head into a new year, here are a few things that you can do to improve your finances before the end of 2020.

#1 Put at least $1000 into an emergency fund

If you don’t have an emergency fund set up to handle unexpected expenses, that is a good first step to putting yourself on a solid financial footing. $1000 may not be enough to handle every possible thing that could go wrong, but it can be enough to handle your car breaking down or an unexpected home expense. If you don’t have at least a minimal emergency fund in place, make a plan for how you can start one before the end of the year.

#2 Fully fund your retirement accounts

401k, IRAs, and other retirement accounts have an annual contribution limit that caps the amount that you’re able to contribute each year. Before the end of the year, set aside some time to go through each of your accounts that have an annual contribution limit. Decide for which of those accounts it makes sense to fund before the end of the year.

#3 Consider donating to charity

With the increased standard deduction available in recent tax years, not as many people itemize their deductions. But if you do itemize your deductions, then remember that your charitable contribution may be tax-deductible. If you make that charitable contribution before the end of the year, you may be able to deduct it in this tax year — otherwise, you’ll have to wait an entire year before you’re able to deduct it.

READ MORE: 5 Best Credit Cards When You Make Charitable Donations

If you’ve already made charitable contributions in 2020, make sure that you have them documented and ready to include on your tax return.

#4 Make sure you have a financial security plan in place

Still, using the same username and password on every internet site? It may be time to get a financial security plan in place. With data breaches always a possibility now’s as good a time as any to take some steps to minimize your risk in case of a data breach or a hacker accessing your financial information. One thing that you can do before the end of the year is to set up a password manager to put some variety into your passwords. Another thing is to set up two-factor authentication (2FA) on your important financial accounts.

#5 Review your credit report

Each year you are entitled to a free three-bureau credit report once a year from annualcreditreport.com, and the end of the year can be a good time to do that. If you already have a Mint account, you have access to your credit score at any time, but reviewing your actual credit report can make a big difference to your credit report. Between 10 and 21 percent of people have errors on their credit report, and clearing up incorrect or inaccurate information can raise your credit score.

#6 Use up any money in your FSA

Flexible spending accounts can be a great way to save money on health expenses. An FSA is typically set up through your employer and allows you to make pre-tax contributions. Any money that you contribute to your FSA is not subject to tax, and you can use that money to get reimbursed for many different types of health expenses. The only downside is that most FSA plans are use-it or lose-it plans. So any money that is left in the FSA at the end of the year is forfeited. Check the details of your plan, and make sure that you use all the money in your FSA before the end of the year.

#7 Set your financial goals for 2021

Finally, the end of the year can be a great time to set up your financial goals for 2021. You don’t have to wait until January to start up a new resolution. Meet and talk with your spouse, family, or trusted friends and advisors. Decide where you want to be in one year, in five years and beyond, and start taking the steps to get yourself there.

The post 7 Money Steps to Take Before 2021 appeared first on MintLife Blog.

Source: mint.intuit.com

What Is A Consumer Loan?

A consumer loan is a loan or line of credit that you receive from a lender.

Consumer loans can be auto loans, home mortgages, student loans, credit cards, equity loans, refinance loans, and personal loans.

This article will address each type of consumer loans.

Get Approved for personal loan today.

Types of consumer loans:

Consumer loans are divided into several kinds of categories. They include auto loans, student loans, home loans, personal loans and credit cards. Regardless of type, consumer loans have one thing in common: you have to repay the loan at some period of time. 

Auto loans

Most people who are thinking of buying a car will apply for an auto loan. That is because buying a car is expensive.

In fact, it is the second largest expense you will ever make besides buying a house. And unless you intend to buy it with all cash, you will need a car loan.

So, car loans allow consumers to purchase a vehicle where they may not have the money upfront. With an auto loan, your payment is broken into smaller repayments that you will make over time every month.

Get Matched With 3 Fiduciary Financial Advisors
Answer a quick question to start your matching process with advisors in your area.
When would you like to retire?
Select an answer

You can choose between a fixed or variable interest rate loan. But the most important thing is, whether you’re buying a new or used car, it’s important to compare loans to help you find the right auto loan for your needs.

Start comparing auto loans now!

Home loans

Another, and most common, type of consumer loans are home loans. A home loan or mortgage is a loan a consumer receives for the purpose of buying a house.

Buying a house is, undoubtedly, the biggest expense you’ll ever make in your life. So, for the majority of consumers who want to purchase a house, they will need to borrow the money from a lender.

Home loans are paid back over a period of time. Those mortgages term are typically 15 to 30 years. They can be variable rate or fixed rate. A fixed rate means that your repayments are locked in for a fixed term.

Whereas a variable rate means that your repayments depend on the interest rate going up or down when the Federal Reserve changes the rate.

Over the loan’s term, you will pay back the principle amount of the loan plus interest. This makes it very important to compare home loans. Doing so allows you to save thousands of dollars on interest and fees.

Personal Loans

The most common types of consumer loans are personal loans. That is because a personal loan can be used for a lot of things.

A personal loan allows a consumer to borrow a sum of money. The borrower agrees to repay the loan (plus interest) in installments over a period of time.

A personal loan is usually for a lower amount than a home loan or even an auto loan. People usually ask for $500 to $20,000 or more.

A personal loan can be secured (the consumer backs it with his or her personal assets) or unsecured (the consumer does not have to use his or her personal asset).

But most of them are unsecured, so getting approved for one will depend on your credit score, income and other factors.

But consumers use personal loans for different purposes. People take out personal loans to consolidate debts, such as credit card debts. You can use personal loans for a wedding, a holiday, to renovate your home, to buy a flt screen TV, etc…

Student Loans

Consumers use these types of loans to finance their education. There are two types of student loans: federal and private. The federal government funds a federal student loan.

Whereas, a private entity funds a private student loan. Generally, federal student loans are better because they come at a lower interest rate.

Credit Cards

Believe it or not credit cards is a type of consumer loans and they are very common. Consumers use this type of loan to finance every day expenses with the promise of paying back the money with interest.

Unlike other loans, however, every time your pay with your credit card, you take a personal loan.

Credit cards usually carry a higher interest rate than the other loans. But you can avoid these interests if you pay your balance in full immediately.

Small Business Loans

Another type of consumer loans are small business loans. These loans are used specifically to create a business or to expand an already established business.

Banks and the Small Business Administration (SBA) usually provide these loans. Small Business Loans are different than personal loans, because you usually have to provide a collateral to get the loan.

The collateral serves as a way to protect the lender in case you default on the loan. In addition, you will also need to provide a business plan for the lenders to review.

Home Equity Loans

If you have your own home, you can borrow money against it. These types of consumer loans are called home equity loans. If you’ve paid off the mortgage on the home, you can borrow up to the full value of the home.

Vice versa, if you’ve paid half of the mortgage on the home, you can borrow half of the value of the house. You can use a home equity loan for several purposes like you would with a personal loan.

But most consumers use this type of loan to renovate their house.  One disadvantage of this type of loan, however, is that you can lose your house in case of a default, because your house is used as a collateral for the loan.

Refinance loan

Loan refinancing is a basically taking a new loan to replace an existing one. But you get this loan specifically either to refinance your existing mortgage or to refinance your student loans or a personal loan.

Consumers usually refinance in order to receive a lower interest rate or to reduce the amount of monthly payments they are making on their existing loans.

However, reducing to a lower payment will lengthen the time to pay off the loan and you will accrue interest as a result.

Consumers also use this type of loan to pay their existing loans off faster. However, some mortgage refinancing loans come with prepayment penalties. So do you research in order to avoid that extra charge.

The bottom line is consumer loans can help you with your goals. However, understanding different loan types is important so that you can choose the best one that fits your particular situation.

So do you need a consumer loan?

Get Approved for personal loan today.

Speak with the Right Financial Advisor

If you have questions about your finances, 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). 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 What Is A Consumer Loan? appeared first on GrowthRapidly.

Source: growthrapidly.com

Powered by WordPress & Theme by Anders Norén