Whether you’re an aspiring first-time homebuyer and about to make your first offer or you have just purchased your second or third home, you’re probably excited to enjoy your new space. But wait, is that a little critter by the backdoor? Maybe itâs just an ant⦠nothing to worry about, right? Just to be sure there arenât any other pests lurking about your new house, you might want to consider getting a pest and termite inspection. Here are five reasons you should schedule a termite and pest inspection before any unwanted visitors wreak havoc on your dream home.
Why should you get a pest and termite inspection?
As a new homeowner, itâs always a good idea to cover all your bases and have a pest and termite inspection performed. Homes in more humid climates – think homes in Miami, FL or houses in Houston, TX – are more susceptible to termite infestations due to the increased moisture in the surrounding environment. If youâve seen any signs of a termite infestation, it might be a good idea to have a termite inspection. These signs can include buckling floorboards, creaky floors, or damaged wood.
For those still in the homebuying process, if you see signs of termite damage in the house, you should consider adding a termite contingency when making an offer on a home. A termite contingency may give you the option to back out of the sale if thereâs been significant damage found. Otherwise, you can try to negotiate with the seller to pay for the repairs.Â
What if youâre planning on just getting a regular home inspection? Your home inspector likely wonât look for specific types of pest or termite damage. However, if your home inspector does find damage, contacting a pest or termite inspector should be your next step. A pest or termite control specialist can help you determine what the best course of action is, likely scheduling an inspection to determine the extent of the damage.
Is a pest and termite inspection required before closing on a home?
If youâve already purchased your home, then you didnât miss out on any required inspections. For most homebuyers, termite and pest inspections are not required before closing on a home. However, certain types of loans such as FHA and VA loans may require you to pay for a pest inspection before your mortgage approval, so itâs best to check with your mortgage lender or real estate agent. Your real estate agent will also know if your particular state or county requires a pest inspection before purchasing a home.
5 benefits of having a termite or pest inspection
There are several benefits of having your home inspected for termites or pests.
1) Negotiating power. If the home youâre looking to buy ends up having damage from termites or pests, youâll likely have better negotiating power. Your real estate agent can help you decide what negotiations to make. These negotiations may include asking the seller to reduce the price so you can pay for pest control services or asking the seller to pay for any repairs or fumigation services before you close on the home.
2) Peace of mind. These inspections will be able to tell you if thereâs any structural damage from pests or termites. Your inspector will disclose any issues they find. Then youâll have an idea of what kind of maintenance you might need as the homeâs future owner.Â
3) Save money. Moving into a new home can feel like the dream, but itâs always a good idea to know what youâre getting yourself into. Without a pest or termite inspection, you may be foregoing a critical type of home inspection that may end up costing you more money down the road if a problem is left untreated.
4) Prepare for future expenses. If your pest or termite inspector finds certain types of pests in the home youâll have a better idea of what to look out for as a homeowner. That way, you will know if your new home or the area youâve moved to is susceptible to specific pests. It will also help you to plan ahead for any costs associated with keeping these pests away.
5) Find a local pest control company. Say your home is more susceptible to termites because youâre buying a house in a more humid area, or that spiders or mice are more common in your county. The good news is you’ve found a local pest control company to help you schedule regular maintenance. You’ll know just who to call for help if any critters start appearing in your house.
What to expect during a pest inspection
The inspection will take roughly 30 minutes but can vary based on the size of the home and whether thereâs a basement, crawl space, or any extra areas. The inspector will examine the interior and exterior of the home for any signs of damage, infestation, or specific areas that might be more susceptible to pests. Theyâll check for any signs of moisture. Damaged wood or buckled paint indicate the presence of wood-destroying insects like termites. They are more likely to be found in these areas vulnerable areas.
The inspector will check for a variety of different bugs such as carpenter ants, fleas, mosquitos, and moths, among others. Where you are located may also play a role in the types of pests your inspector will look for. Some pests are more likely to be found in certain areas or are local to your region. If these types of local pests are found during the inspection, your pest inspector may recommend regular pest control to keep these critters at bay.Â
The post Should You Schedule a Pest and Termite Inspection for the Home Youâre Buying? appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.
Hello! Today, I have a great guest post from Mama Bear Finance. She bought a house at 25, and just 8 years later, it is now fully paid off. She will share with you a
Chase Credit Journey is one of the many credit monitoring services that gives you a credit score for free. Launched by Chase, Credit Journey also monitors your score and gives you advice on to improve it.
One of the best ways to get approved for a loan or a credit card is to have a good credit score. Think of this 3-digit number as a representation of your credit worthiness and credibility.
In fact, lenders use your credit score to see how risky it is for them to let you borrow. The higher your score, the better.
So, it is very important to use a free tool like Chase Credit Journey, to know your credit score before applying for a loan, a credit card, or an apartment.
Doing so will give you an idea whether or not you will be approved or denied.
One way to get a credit score for free and monitor it is through Chase Credit Journey. If your credit score is excellent, then you are all good.
All you have to do is maintaining it. If it’s bad, then you can take steps to raise your credit score.
In this article, we will address what Chase Credit Journey is, why you should use it, and some of its limitations.
What is Chase Credit Journey?
Chase Credit Journey is a free online service offered by Chase that gives consumers a credit score and credit report for free. You don’t have to be a Chase customer to use the service.
You’ll need to register by entering personal information, including your credit cards information, existing loans, etc.
Checking your credit on Chase Credit Journey does not hurt your credit score, because it counts as a soft credit inquiry. Soft inquiries, as opposed to hard inquiries, leave your credit score untouched.
In addition to getting a credit score from Chase Credit Journey, you can get one from the following credit monitoring services all for free:
Credit Karma
Credit Sesame
Credit.com
Lendingtree
NerdWallet
WalletHub
Creditcards.com
How Does Credit Journey Work?
Chase Credit Journey uses Experian, one of the three credit bureaus, to give you a credit score and report.
Chase Credit Journey uses the VantageScore 3.0 model, which is a collaboration from the three credit bureaus.
Your score is updated weekly but you can access it as much as you can and anytime you want.
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Also, you can sign up for credit alerts through Credit Journey which can notify you if your score changes or if something suspicious is happening on your credit file.
If there are errors, Chase Credit Journey will guide you on how to file a dispute with the credit bureaus. You can’t get your FICO score via Chase Credit Journey.
In addition to getting a free credit score, you also get an analysis of your score and advice on how to raise it and other free resources. This way you can take steps to improve your credit score.
If you’re ready to give Chase Credit Journey a shot, go online to the homepage to see how Credit Journey works.
You can also access the Chase Credit Journey through the Chase mobile app as well. If you’re not convinced yet, keep reading.
Chase Credit Journey helps you understand the 6 factors to come up with your VantageScore credit score. They are:
1) Payment history (or late payments): payment history accounts for 35% of your total credit score. In fact, it is the most important factor in your total credit score. Late or missed payments can negatively affect your credit score.
2) Credit utilization ratio (or credit usage): Credit utilization is how much of your credit limit youâre using versus your balance. Credit card utilization accounts for 30% of your total credit score. So keeping it low is ideal. Keeping your credit card balance under 30% is the way to go. For example, letâs suppose your credit card has a credit limit of $5000. You have used $2500 of that credit. Then your credit utilization is 50%. To keep it below 30%, you should only use $1500 of that credit.
3) Credit age: The third most important factor of your total credit score is your credit age. That means how long you have had credit. Lenders like to see a longer credit age. In your credit report, youâll be able to see your average credit age.
4) Hard Inquiry: The higher your credit inquiries, the lower your credit score can become. Anytime you apply for a loan or a credit card or when a landlord checks your credit, it can cause a small dip in your credit score. So multiple credit inquiries can hurt your credit score rather than improving it.
5) Total Balances: total balances refer to the amount owed over all of your credits, including your mortgage, student loans, credit cards, personal loans, etc.
6) Available credit: This factor represents the current amount of unused credit you have over your accounts.
Chase Credit Journey best feature: the score simulator
In addition to providing you a free credit score and report, a credit alert, and credit resources, Chase Credit Journey has an invaluable feature called the score simulator.
The score simulator gives you an estimate of how certain changes in your credit behavior can affect your credit score. Those changes include missing a payment, card balance transfer, and closing an old account, etc.
The importance of checking your score via a free credit service like Chase Credit Journey
Your credit score is perhaps the first thing lenders look at to decide whether to approve you for a loan or credit card. The better your score, the higher is your chance of getting that loan.
On the other hand, if you have a bad credit score, getting a loan or a credit card not only can prove very difficult, but applying for it puts a hard inquiry that can actually lower your already bad credit score.
So knowing your score before you actually apply will give you an idea whether lenders will approve you. It will also allows you to apply for credit with confidence. That’s why is important to use a free credit service.
Additionally, checking your credit score and credit report on a regular basis will help you identify what is on your credit report. Outstanding debts and a history of late payments can directly impact your credit score.
You can get your credit report for free by logging on AnnualCreditReport.com from each of the three credit bureaus. But these credit reports do not give you a credit score. Moreover, you get these reports only once every year.
While there are several options, Chase Credit Journey is just another option. It’s never a bad idea to have several options to choose from.
In other words, it’s better to get your score from more than one source. However, there are some limitations to using Chase Credit Journey.
Chase Credit Journey Limitations
One of the limitations Chase Credit Journey has is that it only uses one of the three major credit bureaus, which is Experian. When you get your score from only one credit bureau, you might not see the whole picture.
So, your credit score might not be entirely accurate.
For example, letâs say you transfer a credit card balance to a new credit card. If Transunion and Equifax are the only credit bureaus that recorded the card was closed during the transfer, you credit score might drop, because Experian recorded you opened a new card.
Another disadvantage of Chase Credit Journey is that the VantageScore’s scoring model is not the industry standard. Most companies use FICO scores to decide whether to approve or decline you for a loan or credit.
And while VantageScore and FICO scores range from 300 to 850, the two models use different criteria in coming up with your credit score. In other words, each model weighs the factors differently in calculating your credit score.
So your Chase Credit Journey credit score might be different than a FICO score. So, if you are ready to apply for a loan, find out which actual credit score your lender will use to improve your chance of approval.
The Bottom Line
Chase Credit Journey provides free credit scores and reports from Experian. The scores are updated weekly. The free credit score is based on the VantageScore 3.0 model.
However, while VantageScore’s system is accurate, it is not what most companies use. But one important thing about Chase Credit Journey is that it one other free tool that allows you stay proactive and monitor your credit on a regular basis. In turn, it allows you to know your score before applying for credit.
Speak 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). Find one who meets your needs with SmartAssetâs 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 Chase Credit Journey: Check Your Credit Score For Free appeared first on GrowthRapidly.
Kelley Libby lives in an apartment with a view of the Richmond, VA skyline from her balcony. She rides her bike downtown regularly for dinner and a show, or sometimes to take a cool dip in the river.
A top-of-the-millennial-pile 34 years old, she is among the 15 percent of millennials who live alone in Richmond, the metro area where a greater share of millennials live solo than anywhere else in the country. Others in the top 10 are Pittsburgh; Buffalo; Columbus, OH; Virginia Beach; Cleveland; New Orleans; Austin; Kansas City and Oklahoma City.
“With home prices and rents rising as fast as they are, it’s a common assumption that young adults in many cases cannot afford to live alone,” said Zillow Chief Economist Svenja Gudell. “Though that may be true in some markets, there’s still a large number of amazing places across the U.S. that are prime for millennials to thrive independently. These are places where young adults can easily find jobs at a competitive salary, and where housing expenses won’t eat up the majority of their income, enabling them to save more.”
Low rents help
Rents are relatively easy on the budget in many of the metros where millennials live alone. In Richmond, people of all ages typically spend 26 percent of their incomes on rent, compared to 30 percent nationally, according to Zillow Research. In a place where millennials living solo make a healthy $49,500 a year (median) and employment is up 3.6 percent since a year ago, that makes for an attractive package.
“It’s a good place for young, single people, because there’s lots to do as far as cultural activities and outdoor stuff,” said Libby, who’s a public media producer working on a national project called Finding America. She pays $960 a month for her 1-bedroom, which is in a new apartment complex and has that sweet balcony.
It’s also a great place to settle down, and many of her friends are snapping up real estate. “I have so much more of a chance to buy a place here than I would in big, popular cities,” she said.
She lived for several years in nearby Charlottesville, where “I couldn’t dream of buying a house.” The median home value there is $232,700, well above Richmond’s $193,200, according to Zillow data.
‘I don’t need 100 channels on cable’
With 21 percent of millennials still living with their mothers, and 32 percent of all working-age adults living with someone else, it can be a big deal when millennials step out on their own.
Often they do it in places where rents are more affordable — areas like Pittsburgh, Kansas City and Oklahoma City, where rents take up around 25 percent of people’s incomes. They also go solo in metros like Virginia Beach where they can afford to buy homes, and places like Austin with strong employment growth.
Malory Berschet has lived on her own in Columbus for a year, following stints with her parents and with a college roommate. She enjoys it, but she’s had to cut back to make her $1,125 monthly rent.
“My biggest thing was spending money like I was made of money,” said Berschet, who’s 25. “I would eat out all the time or buy lunch rather than pack it. And I don’t need 100 channels on cable.”
Millennials living alone make $38,800 a year (median) in Columbus, where people spend 26 percent of their incomes on rent.
Berschet knows coworkers at Cardinal Health, where she’s a market manager, who save money by living in Dublin, the suburb where the company is headquartered. They pay less in rent and have better commutes, Berschet said, but “they’re a good 20 minutes from downtown.” She likes being close in, where she can easily walk or Uber to visit friends and eat out.
Less solo-friendly cities
At the other end of the spectrum, she has a friend who’s moving to San Francisco and said the rent is $3,500 for an apartment smaller than Berschet’s 1-bedroom — which makes her place seem like a steal.
Only 9.4 percent of millennials live alone in the San Francisco area. It’s not the smallest share of independent millennials in the country — that’s Riverside, CA, with 6.1 percent. They make good money — $66,000 for millennials living alone in San Francisco and $72,000 in Riverside (medians) — but people who live in those places spend 46 percent and 36 percent of their incomes, respectively, on rent.
Prices like that can make roommates — and even Mom’s basement — look mighty appealing.
Related:
Space for One: Rentals in Cities Where the Most Millennials Live Alone
Would You Rather: Rent in the City or the Suburbs?
When you buy a house, a big part of a lender’s decision whether to approve your mortgage rests on whether or not you can afford it.If you have a lot of debt, the monthly payments on those obligations chip away at the total amount you can pay each month on a mortgage.
But that doesn’t mean it’s impossible to buy a house if you’re in debt. It’s just a bit more challenging. If you want to stop paying rent and enter the exciting world of homeownership, here’s how you can pay off debt to buy a house.
1. Calculate Your Debt to Income Ratio
Your debt-to-income ratio, often called DTI ratio, is a measurement that compares the amount of debt you have to your income. It helps determine how much you can actually afford when it comes to mortgage payments.
How Much Debt Can You Have and Still Qualify for a Mortgage?
Most lenders won’t approve you if your DTI is higher than around 43%.
For example, let’s say you make $52,000 a year. This means your gross income each month is around $4,333. If half your paycheck is devoted to paying off debts, then about $2,166 of your income goes towards paying off your various debts.
By these numbers, your DTI would be 50%. The bank would probably not approve you for a mortgage since your DTI is higher than the maximum 43%. To fix this problem, you can do one of two things: start making more money and/or lower your monthly recurring debt payments.
2. Find Ways to Decrease Your Debt
Consolidate Loans
Qualifying for a mortgage partially depends on what part of your monthly gross income is paid towards the minimum amount due on recurring bills. These might include credit card bills, student loan payments, car loans and other payments. Consolidating can be a way to reduce that amount.
What does consolidating mean? Consider an example where you have five credit card payments each month. Consolidating them means that instead of making five separate payments to individual lenders, you make onepayment each month.
If your credit is good enough, you may be able to get a consolidation loan with better terms. That means your one consolidated payment may be lower than the five payments combined. You can consolidate student loans, too, and get the same potential benefits.
After you’ve consolidated, you can re-calculate your DTI ratio. If it’s lower, you may fall below the DTI threshold required to be approved for a mortgage.
Pay Off or Pay Down Some Debt
If you make an effort to pay off or pay down some of your existing debt, this can help decrease your DTI ratio and make your financial picture look more favorable to lenders. It may be best to concentrate on paying off recurring debts, such as credit cards, to help your chances.
Is It Best to Pay Off Debt Before Buying a House?
There’s no one right answer to this question. It can depend on your mortgage lender. Your mortgage lender may want you to pay off debt before making a down payment while others may be okay with your DTI and want a larger down payment. If you’re under the 43% DTI and have a good credit history, you might consider working with a mortgage lender to find out what your options are.
Credit Repair
If any debts listed on your credit report aren’t yours, this could be hurting your overall financial health. Make sure to closely examine the details of your credit report and make sure the accounts listed are actually ones you’re responsible for. If you do notice errors on your credit report, you can work to repair your credit by disputing the entries.
3. Find Ways to Increase Your Income
One of the ways to make your DTI more favorable is to increase your income. You can usually do this by either getting a better paying job or by getting a second job if you have the means. If you’re married and are applying for a mortgage with your joint income, perhaps your spouse can get a job to help increase their income. One drawback to this solution is that it’s a long-term solution and not a short-term one. Getting a new job, whether primary or secondary, takes time and effort.
4. Consider Making a Down Payment
Contrary to popular belief, a 20% down payment on a home isn’t required in many cases. FHA loans, for instance, only require 3.5% down, and some mortgage lenders may only ask for 5% down on a conventional loan.
However, keep in mind that the more you put down upfront, the less your monthly payments are and the lower your interest rate is likely to be. If you can put more money down, it makes the mortgage more affordable. If you’re hovering at the higher end of an acceptable DTI ratio, that may make a difference.
Looking at the Big Picture
When you’re ready to buy a house, it’s important to consider your level of debt, how much money you have coming in and your job security. If you’re able to consolidate your debt and get lower monthly payments as a result, your job is well-paying and seems secure and your credit is excellent, you can probably buy a home even if you have other debts.
Assess the Risks
Remember that just because you might qualify for a home loan doesn’t mean you should buy a house. Stretching your limits to meet that 43% DTI ratio can be risky unless you foresee your income continuing to rise oryou know any debt obligations you have are set to be paid off in the future.
Can Paying Off Debt Hurt My Credit Score?
Most of the time, paying off debt has a neutral or positive impact to your credit score. First, you decrease your credit utilization, which accounts for 30% of your credit score. A lower credit utilization can bring up your score. Second, you show the lender that you have the means to pay off debts, which can be a positive factor in whether you’re approved.
However, in a few cases, paying off debt could lower your score. If you pay off old accounts, you could change the age of your credit. How old your accounts are play a role in your score. You could also reduce your credit mix, which also factors into your score.
Neither of these factors plays as large a role as credit utilization, though. And if your mortgage company wants to see you with less outstanding debt, a tiny and temporary hit to your credit score may be worth getting approved for a loan.
To find out more about your credit score and where you stand with financial health, sign up for a free Credit Report Card today. You’ll get feedback about the five major areas that impact your score and how you can improve them before applying for a mortgage.
The post Paying Off Debt to Buy a House appeared first on Credit.com.
Being a homeowner comes with all kinds of pros and cons that donât come with renting. You have a yard, but you have to care for the yard. You have a payment, but you get to deduct your mortgage interest on your tax return! And while the Tax Cuts and Jobs Act (TCJA) reduced or eliminated many of the benefits homeowners used to enjoy, there are a few tax deductions you, as a homeowner, can still claim on your 2018 income taxes, including:
Home mortgage points
Property tax expenses
Mortgage insurance costs
American homeownership has long been subsidized by tax savings, and if your real estate agent didnât tell you about them, we cover some here or an accountant or tax preparer can tell you more.
âThe path to owning a home has a great deal of tax benefits, and a discussion with your tax professional will help to clarify the details,â says William Slade, a certified financial planner in California and enrolled agent licensed by the IRS.
Slade says he is regularly asked if home improvements, such as adding rooms, remodeling and landscaping help reduce taxes. âThey donât when theyâre first done, but they may help when the property is sold by increasing the cost basis and lowering the gains tax on the sale,â he says.
Changes for the 2018 Tax Year
New homeowners should know that things have shifted a bit for the 2018 tax year. The standard home mortgage interest point deduction has been modified by the TCJA. More on that lower down.
What hasnât shifted is that you still have to itemize income tax deductions in Schedule A in order to claim a deduction on home mortgage interest. Schedule A is more complicated than the standard deduction, which you may have taken in previous years. But the savings can make it worth doing.
Itemized deductions for new homeowners include more than just mortgage interest though. Property taxes, private mortgage insurance costs and even charitable contributions can be deducted. To get your mortgage interest deduction, you have to itemize with Schedule A. You can add up these other deductions there and get a bigger overall tax reduction.
Sadly, the previous moving expenses deduction is gone for all but those on active military duty. So, if you just moved in this past year and arenât serving your country, too bad. No added deduction for you.
Tax Deductions Available for Homeowners
Tax breaks help cushion the impact of mortgage payments. So, take full advantage of those available to you.
The Mortgage Loan Interest Deduction
Mortgage points are prepaid interest on home mortgages. Under the home mortgage points deduction, mortgage loan interest is tax deductible if you itemize. The TCJA capped the deduction on interest paid on up to $750,000 for a qualified home loan taken out after December 15, 2017. Loans taken out before that date still qualify for up to $1,000,000 of deductible interestâthe previous cap. Note:Â if you use the Married Filing Separately status, you can only claim half of that amount on your own return.
When you itemize your deductions, you can add your mortgage loan interest to the list if you purchased the home before December 15, 2017. The deduction applies for up to $1 million for loans that you used to improve the home or buy a new home. Purchases made after this date can only deduct interest on $750,000 of the home acquisition debt. This is down $250,000 from previous years. These new tax laws are set to expire in 2025, and after that point, the $1 million limit may return.
Property Tax Deduction
State and local property taxes are still deductible on your federal tax return under the state and local taxes deductions, known as the SALT deduction. TCJA modified this one. For the 2018 tax year, the amount you can claim for your property taxes is limited to $10,000. For many taxpayers, that still covers you well. For those in states with high property taxes, it could dampen deductions considerably.
Mortgage Insurance Tax Deduction
Private mortgage insurance (PMI) is deductible still. There are changes here too though. PMI is used by people whose home loan or refinance loan is 80% or more of the purchase price, AKA their down payment lower than 20%.
To deduct your PMI for the 2018 tax year:
Your loan had to be taken out in 2007 or later
The home has to be your primary residence or a second home that youâre renting out
Your adjusted gross income (AGI) has been less than $109,000 for any deduction and lower than $100,000 for the full deductionâyou can use Schedule A to calculate your deduction amount
Energy Credits
Another lesser-known credit for a homeowner is the energy tax credit, called the Nonbusiness Energy Property Credit. This deduction is getting reduced through 2021 but can be claimed using Form 5695. This tax credit is limited to 10% of the cost of your qualifying energy. Items that qualify under this credit include skylights, insulation systems, and certain qualifying appliances like water heaters and central air conditioners. Some restrictions apply.
You can also take advantage of the Residential Renewable Energy Tax Credit. This one is a credit for using solar, wind, fuel-cell and geothermal energy sources, including solar water heaters.
The Residential Energy Efficiency Property Credit can be used to deduct 30% of the cost of solar, wind, fuel-cell and geothermal equipment at your main home or wind, solar and geothermal equipment at a second home. The deduction is unlimited for all but fuel-cells, which are capped at $500 per each half-kilowatt of capacity or $1,000 per kilowatt.
How Much Can Homeowners Really Save?
The amount of money you can save on your annual income taxes depends on a number of factors including filing status, standard deduction amount, the other itemized deductions youâre claiming and total taxable income. Total savings are a mystery until you itemize while doing your tax forms.
There are also things you canât deduct when filing your taxes too. These items include any dues you pay to your homeowner’s association, the home ownerâs insurance on your home, the appraisal fees you paid when buying your home and the cost of nonenergy-related improvements. Some home improvements can reduce your taxes when you sell your home, but you’ll need to keep good records of everything and hold onto the receipts.
This article was originally published February 23, 2013, and has since been updated by another author.
Image: iStockphoto
The post Homeowners Get a Tax Credit for Buying a House appeared first on Credit.com.
If you’re wondering how much you need to put as a down payment on a FHA loan, then you have come to the right place.
The FHA down payment is 3.5% of the home purchase price. This low down payment is very flexible and reasonable for the first time home buyer. To put another way, you’re more likely to save up 3.5% to attain your goal of buying a house than to save for a conventional loan. The down payment for a conventional loan is 20% of the home price.
Check out: 5 Signs You’re Not Ready to Buy a House.
For example, if you see a house that you’d like to buy and it costs $350,000, then a 3.5% down payment is $12,250. That’s the amount you will put down. Also note that you can use other people’s money for that down payment as well (more on this below).
But there are some rules you need to know. In addition to this low FHA down payment, among other things, you need to have a certain credit score.
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What is an FHA loan?
An FHA loan is a loan insured by the Federal Housing Administration (hence, the acronym “FHA”), so a lender can offer you a great deal. Your down payment can be as low as 3.5% of the home purchase price, and your credit score can be as low as 580.
Note that the FHA itself does not provide any direct loan. To start a FHA loan application, contact any FHA approved lender. To find an approved FHA lender in your are, click here.
Nor does the FHA set interest rates. Again FHA approved mortgage lenders do that as well. However, FHA loans have better interest rates because the government insure the loans. Click here to compare FHA loan rates with LendingTree.
FHA down payment rules
The down payment can come from any of these sources:
In 2019, the Department of Housing and Urban Development (HUD), which manages the FHA loan program allowed the 3.5% down payment to come from a third party.
They can be a family member, a friend, a charitable organization or an employer as a gift. So this is good news! That means you don’t have to use your own money, which can significantly reduce your costs.
But if you’re going to use a third party money as your FHA down payment, you must provide a crucial document. The mortgage lender who is going to offer you the FHA loan must obtain a gift letter from the 3rd party who is going to give you the down payment.
The letter must say that the 3rd party does not expect any repayment of the down payment. And finally, the letter must describe the relationship between you and the third party.
Find out if you’re eligible for an FHA loan at LendingTree.com.
Your credit score must be at least 580 for an FHA loan
In other to be qualified to this low FHA down payment of 3.5%, your credit score needs to be at least 580 or higher. If your credit score is between 500 and 579, then you will need to put at least 10% down. To know where you stand, get a free credit score at CreditSesame.
Overcoming the FHA down payment limitations.
Even if the FHA down payment is low, some people can still have a hard time to come with it, especially if they live paycheck to paycheck. If you’re in this situation, and no one else can help you out, don’t panic just yet — your dream of owning a home can still be a reality.
Here are some of the things you can do if you can’t come up with the 3.5% FHA down payment right away:
Postpone your purchase. If you have difficulty coming up with the 3.5% FHA down payment, you’re most likely going to have difficulty with the extra cost associated with owning a home. So if you don’t want to have any headache, a good option is to delay your purchase and start saving more money.
Evaluate your spending by cutting back on unnecessary costs. And start saving money regularly from your paycheck, no matter how small. While saving money, don’t forget to put it into a high-interest savings account, where you will earn a higher interest payment as high as 2.20%.
Increase your income. If your paycheck is not enough to allow you to save up for the FHA down payment, a good option is to make more money. You can do this by asking for a raise at work, pursue another career, obtain a part time job, or get a side hustle.
In summary:
Do you need a down payment for a FHA loan? Yes you do. FHA offers a low down payment and is a good option for first time home buyers with little money. The minimum is 3.5% of the home purchase price. The only loan where no down payment is required is a Veteran loan. But to be qualified, you would to be a veteran or an active military member.
Frequently asked questions:
What is the FHA down payment percentage? As mentioned above, the FHA down payment percentage is 3.5 of the purchase price, provided that your credit score is at least 580. If your credit score falls between 500 and 579, then you will need to put down 10% of the home purchase price. Get your credit score in order by getting a free credit report at CreditSesame.
Can I get FHA down payment assistance? The answer is yes, you can definitely receive FHA down payment assistance through a third party. If you can’t come up with that low 3.5% FHA down payment on your own, a family member, an employer, or a charitable organization can provide you with that fund for the down payment.
What is the conventional loan down payment percentage? The conventional loan down payment is 20% of the purchase price. That’s a lot of money comparing to the low 3.5% FHA down payment. Plus your credit score needs to be at least in 650-750 range to be receive a competitive mortgage interest rate. Click here to compare FHA loan rates with conventional loan rates to find one that suits you.
Related Articles about FHA down payment:
FHA Loan Requirements& Guidelines
3 Things No One Ever Tells You About Buying a Home with an FHA Loan
FHA Approved Condos: Where to Find Them
Not All Mortgage Lenders Are Created Equally
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If you’re busy and want to invest your money in the long term, you will love the best vanguard funds. They are cheaper.
They are high quality funds, well diversified, and professionally managed.
Thus, vanguard funds are a favorite for long-term investments and for retirement.
*TOP CIT BANK PROMOTIONS*
PROMOTIONAL LINK
OFFER
REVIEW
CIT Bank Money Market
1.00% APY
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CIT Bank Savings Builder
0.95% APY
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CIT Bank CDs
0.75% APY 1 Year CD Term
Review
CIT Bank No Penalty CD
0.75% APY
Review
Vanguard mutual funds, like any mutual funds, are money invested by investors. They are pooled together in a single investment portfolio. The mutual fund is then managed by a professional manager who then use the money to buy a bunch of stocks, bonds or other assets.
With Vanguard index funds, they are passively managed. That is, they are managed by a computer with its only job is to track an index, such as the S&P 500.
Nonetheless, both mutual funds and index funds are cost-efficient and a huge time saver for a busy investor. And because of that, the best vanguard funds are superior investment vehicles for long term-investment.
In this article, we will discuss the 8 best vanguard funds that offer a high-quality, cost and time-efficient way to invest in the stock market.
Understanding the Advantages of the Best Vanguard Funds
Before jumping into the best vanguard funds, it’s important to go over the main reasons for investing in mutual or index funds rather than individual stocks, bonds, or other securities.
Diversification. You have probably heard of the popular saying “don’t put all your eggs in one basket.” Well, if so, it applies well to mutual and index funds. Diversification is when you have a mix of investment to help control the total risk of your investment portfolio.
Unless you have a lot of money, buying individual stocks yourself can be costly. But with a mutual or index fund, you’re able to buy dozens of stocks and invest in different types of stocks in a variety of industries, thus diversifying your portfolio.
Because you invest in multiple stocks across various industries, you are spreading your risk. If one stock plummets, the others can balance it out. Most Vanguard funds, if not all, are diversified.
Low minimum investment. Another benefit of Vanguard funds is that they require a reasonable investment minimum. Some Vanguard mutual funds require a minimum of $3000 to invest. They also offer a monthly investment plan, so you can start with as little as $20 per month.
Cost efficiency. The charges that you pay to buy or sell a fund can be significant. However Vanguard funds are known to cost way less than the average mutual fund.
Professional management. Even if you have a lot and you are an expert in investing, investing your money in a Vanguard mutual fund is a huge time saver. That means once you buy your fund and contribute to it monthly (however you chose), you can just forget about it.
A Vanguard professional manager takes care of it for you. Plus, vanguard fund managers are experienced, well educated. So you don’t have to worry about an inexperienced manager running your money.
These are the reasons why investing in the best vanguard funds is better than investing in individual stocks and/or bonds.
However, one of the drawbacks with vanguard funds, as with all mutual or index funds, is that you don’t have control over your investment portfolio. Leaving your money to someone who decides when and what to invest in can be difficult for you if you’re someone who likes to be in control.
So, if you like to be in control and things yourself, you may want to develop your own investment portfolio and not relying on these Vanguard funds.
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Are you a long-term investor?
Think about yourself and your goals before choosing these best Vanguard funds.
What are your investment goals? Do you plan on holding these funds in the long term?
A long term investor is someone who puts money into an investment product for a long period of time.
If you plan on investing money to achieve some goals in 2 years, such as buying a car or going on a vacation, you should not use these Vanguard Funds.
That is because stocks and bonds can rise and fall significantly over a short period of time. That makes it possible to lose some or all of your money. Moreover, if you need cash in a hurry, a Vanguard fund is definitely not the right investment for you.
So you’re better off using short-term investments for these kind of goals.
But if you want to build wealth for the long term or your goal is to retire in 20 or 40 years, these Vanguard funds are for you.
Likewise, what is your appetite for risk?
A long-term investor should be aware of the risks involved in investing in the stock market. They should know their own risk tolerance. Some investors are more cautious than others. Some can take risks and are able to sleep well at night.
These vanguard funds carry different level of risks. Some are more conservative than the others.
Therefore, before you start buying Vanguard funds, figure out whether you are a long term investor. In other words, don’t keep money in funds unless you plan on holding them for at least 5 years.
The 8 Best Vanguard Funds to Buy Now for Long-Term Investments
Now that you have a pretty good idea of why a Vanguard fund is a good long-term investment, and you are aware of your risk tolerance, below is 8 of the top and best Vanguard funds to buy now for the long term. If you have questions beyond Vanguard funds, it may make sense to work with a financial planner or financial advisor near you.
Vanguard Total Stock Market Admiral (VTSAX)
Minimum initial investment:$3000
Expenses:0.04%
The biggest and perhaps one of the best Vanguard funds is the Vanguard Total Stock Market. The fund was created in 1992. It gives long term investors a broad exposure to the entire US equity market, including large, mid, and small cap growth stocks. Some of the largest stocks include Apple, Facebook, Johnson And Johnson, Alphabet, Berkshire Hathaway, etc…
This Vanguard fund has all of the attributes mentioned above, i.e., diversification and low costs. Note this fund invests exclusively in stock. So it’s the most aggressive Vanguard fund around.You need a minimum of $3000 to invest in this fund. The expenses are 0.04%, which is extremely low. Note this is also available as an ETF, with an expense ratio of 0.03%.
Vanguard 500 Index (VFIAX)
Minimum initial investment:$3,000
Expenses: 0.04%
If you want to have your money invested only in American assets, this Vanguard fund is the right one for you. The Vanguard 500 Index, as the name suggests tracks the S&P 500 index.
This index funds gives you exposure to 500 of the largest U.S. companies, spreading across different industries, making it one of the best Vanguard funds to have. Some of the largest companies you might already know include Microsoft, Apple, Visa, JP Morgan Chase, Facebook, etc. It has a minimum investment of $3,000 with an expense ratio of 0.04&, making it one of the best Vanguard funds to have.
Vanguard Wellington Income Investor Share (VWINX)
Minimum initial investment:
Expenses:
If you’re aware of risks involved in investing in stocks and you have a low tolerance for risk, the Vanguard wellington Income is for you. This fund allocates about one third to stocks and two thirds to bonds, making it very conservative.
Another good thing about this Vanguard fund is that it invests in stocks that have a strong track record of providing dividend income to its investors. So, if you are one of those long term investors who has a low appetite for risks and who likes to receive a steady dividend payment without a lot of volatility in the share price, you should consider this fund.
Vanguard Star (VGSTX)
Minimum initial investment: $1,000
Expenses: 0.31%
The great thing about this Vanguard fund is that the minimum investment is relatively low ($1000), making it a good choice among new investors. Plus, it’s well balanced.
It is invested 60% in stocks and 40% in bonds. For those investors looking for a broad diversification in both domestic and international stocks and bonds, this fund should not be overlooked.
Vanguard Dividend Growth (VDIGX)
Minimum initial investment:$3000
Expenses:0.22%
Vanguard Dividend Growth, as the name suggests, focuses on companies that pay dividends and have the ability to grow their dividends over time.
If you’re an investor with a long term focus and likes to receive a steady dividend income, you may want to consider this fund. The minimum investment is $3000 with an expense ratio of 0.22%.
Vanguard Health Care (VGHCX)
Minimum initial investment: $3,000
Expenses: 0.34%
As the name suggests, Vanguard Health Care only invests in the Health Care Section. That’s the only downside. Apart from that, it gives investors a great exposure to various domestic and international companies within the health care sector, such as pharmaceutical firms, research firms, and medical supply and equipment companies.
If you’re considering this Vanguard fund, you should also have another and more diversified fund to reduce your risk.
Vanguard International Growth (VWIGX)
Minimum initial investment: $3000
Expenses: 0.43%
If you’re looking to build a complete investment portfolio and want to have more exposure to foreign stocks, the Vanguard International Growth is the one of the best Vanguard Funds to accomplish that goal. The fund focuses on non-U.S. stocks in developed and emerging markets with a high growth potential.
However, one thing to consider is the high volatility of this fund. Because it also invests in developed countries, the share price can rise and fall significantly. So you should consider this fund if you want more exposure to foreign stocks. But you also want to have another fund as well to balance it out. The minimum initial investment is $3,000 with an expense ratio of 0.43%.
Vanguard Total Bond Market Index (VTBLX)
Minimum initial investment: $3000
Expenses: 0.05%
Bond funds may be appropriate and advantageous for long term investors who want a bond fund that invests US and Corporate bonds. If that’s your goal then the Vanguard Total Bond Market Index is the right one for you.
Just as any Vanguard funds, it’s cost efficient, safe and high quality. It has a minimum initial investment of $3,000 and an expense ration of 0.05%. Also note that this fund is also available as an ETF.
The Bottom Line
If you’re looking to invest in mutual or index funds, those are the best Vanguard funds to buy now and hold for the long term. They are high quality, low-cost, and are safe.
Related:
How to Save 100k?
5 Mistakes People Make When Hiring a Financial Advisor
IRA vs. 401k: What Are the Key Differences?
Can I Retire at 60 with 500k? Is It Enough?
Speak with the Right Financial Advisor
If you have questions beyond knowing which of the best Vanguard funds to invest, 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 SmartAssetâs 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.
*TOP CIT BANK PROMOTIONS*
PROMOTIONAL LINK
OFFER
REVIEW
CIT Bank Money Market
1.00% APY
Review
CIT Bank Savings Builder
0.95% APY
Review
CIT Bank CDs
0.75% APY 1 Year CD Term
Review
CIT Bank No Penalty CD
0.75% APY
Review
The post The 8 Best Vanguard Funds for Long-Term Investments appeared first on GrowthRapidly.
Should I refinance my student loans?It depends on your situation. Buta common reason for people to refinance their student loans is that they want to pay less interest. Even a small decrease in the rate could save you a lot of money over the life of the loan and ultimately help you pay off your student loans faster.
Another reason could be that you want to change the loan type (i.e., switching from a fixed rate to a variable rate or vice versa).
Whatever your reasons for wanting to refinance your student loans may be, you should always compare your student loan rate with other rates on the market. Some lenders always update their rates to make sure they are competitive on the market. So the chance is high that you could get a better deal with another lender.
The best way to compare student loan rates is through LendKey. LendKey’s rate starts as low as at 1.9%. And they have 5, 7, 10, 15 & 20 year loan terms. The great thing about LendKey is that checking your rates will NOT affect your credit score.
CHECK YOUR RATE
What does refinancing your student loans mean?
In simple terms, when you refinance your student loans, you’re essentially taking out a brand new loan in order to pay off your existing student loan. This can get you a better deal and save you money in the long term. The trick is to figure out if it makes sense to refinance.
Should I refinance my student loans? Does it make sense to do so?
When it makes sense to refinance your student loans:
Lower interest rates are available.
You have other large debts, such as credit card debts and personal loans, and you want to consolidate all of your loans.
A major change in your life has happened recently.
You want to switch to a fixed rate.
When it doesn’t make sense to refinance your student loans
Your credit score is low and you are less likely to get a good rate.
You’re no longer have a stable job, and your income is not reliable.
Your current loan is at a fixed rate.
To decide whether you should refinance your student loans, you should have a reason why you want to refinance. Is it because you want to pay a lower interest rate? Do you want to consolidate all of your loans?
Wanting a lower interest rate on your student loans should not be your only consideration when wanting to refinance. The life of the loan should also be considered, and not just the interest rate. That means, will it be variable interest rate or fixed interest rate. This is important as it can impact your long term financial obligations.
You should also consider the cost of switching to another lender. There are fees, such as application fees and ongoing charges associated with switching to another lender.
Is now the right time to refinance your student loans?
A better interest rate is not the only factor to consider when thinking of refinancing your student loans.
The stability of your job should also be considered. How stable is your job? Can you manage to make monthly payments on your income? If you’ve recently gone part-time, or gone freelancing, now is probably not a good time to refinance your student loans.
Likewise, if you have just switched to a more stable, full time job, you may need to wait for like 6 months or even a year before a bank can consider your loan application.
This is where a financial advisor can be handy, as they can help you make the right financial decision.
It’s also a good idea to talk to existing student loans provider when considering refinancing. Some lenders, in order to keep your business, might try to lower your interest rates or waive some fees for you. They’d be very willing to do that especially if you always make your payments on time and have been with them for a long time.
If you decide to go with another lender, make sure your financial situation is in shape. That means that you don’t have that much outstanding debts such as credit card debts, and that you have always paid your bills on time. This is important not only to get qualified, but also to get a better rate.
When refinancing your student loans make sense
There can be several reasons to refinance your student loans. Perhaps you have a better job, making more money. Or perhaps your current student loan rate is not competitive anymore.
Even if you don’t have any specific reason, it’s always a good idea to know what’s available to you. There might be great deals out there.
Every once in a while, you might want to reassess your student loan rate and compare it to other student loan rate on the market.
One easy way to reassess your options is with LendKey. LendKey is an online platform that allows you to browse multiple low-interest loans from almost 300 community banks and credit unions, instead of big banks.
LendKey allows for more flexibility and lower interest rates. It can help you find the right student loan for you without visiting dozen bank branches.
Plus applying to a dozen of student loans will not HURT your credit score. LendKey does a soft check on you, so you can compare student loans from multiple lenders before you actually apply for one.
Click here to check your rates through LendKey.
Indeed, a lower interest rate and lower repayments are some of the more common reasons to refinance your student loans. Even a slight decrease on your interest rate might make a big difference on your monthly student loan payments.
Indeed any student loan refinance calculator out there can tell you how much you can save.
Another common reason to refinance your student loans might be to consolidate all of your debts and have one monthly repayment. Debt consolidation is when you combine all of your debts so you have one big repayment, instead of several.
If you have other debts such as personal loans, car loan, credit card debts, home loan, then it makes sense to roll these debts together with your student loan. The advantage is that your student loan rate is typically lower.
When refinancing your student loans doesn’t make sense.
There are times when refinancing doesn’t make sense.
For example, if you have built a good relationship with your lender, it might not be a good idea to switch to another lender simply to get a lower interest rate. The new lender might raise your rate once you switch, but you’ve just ruined your good relationship with your old lender.
Another reason you should not refinance your student loans is if you you have been paying for a long time already. Refinancing to a longer term might reduce your monthly payments, but will cost you many more years and more money. So if your current balance is already low, it’s not very beneficial to refinance.
You should also not refinance your student loans if your interest rate on your current student loan is low. There is no real benefit to be had from refinancing an already low interest rate. In fact, you may end up incurring more costs and fees when switching.
Your credit score is low
Refinancing your student loans may not be a good idea if your credit score is low.
While you can apply with a co-signer if you have a low credit score, but it can be hard to find someone to co-sign for you.
So, at a minimum, make sure your credit score is at least 650. If it’s not where is supposed to be, take steps to raise your credit score.
Don’t know your credit score, get a free credit score with Credit Sesame.
Bottom line
If you’re asking yourself: “should I refinance my student loans?” The answer is: it depends on your unique situation. But there are great benefits to refinancing your student loans. To reiterate, it can save you thousands of dollars over the life of the loan; it can reduce your loan payments significantly. However, before deciding to take the plunge you have to make sure you’re getting a better deal.
After you have checked your rates,you should definitely refinance your student loans. Not only will you get a reduced interest rate, you will also get a lower monthly payment and pay less over the life of your loan.
Plus when you’re approved for a loan you applied through Lendkey, you’ll get a $100 bonus after the loan is disbursed.
Read More:
5 Tips To Pay Off Your Student Loans Faster
How Much Should You Save A Month?
Buying A Home For The First Time? Avoid These Mistakes
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 SmartAssetâs 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 Should I Refinance My Student Loans? appeared first on GrowthRapidly.
6-month CD rates can be a smart strategy for your short-term saving goals.
If you’re saving for a house, you may be wondering where you can park your hard-earned cash safely and earn interest at the same time.
If so, you should consider a 6-month CD, because the rates can still be very competitive.
In fact, 6-month CD rates can range from 0.50% APY to 1.00% APY, which produce higher yields than bank savings accounts.
Also, a six-month CD comes with FDIC insurance that protects your money up to $250,000.
Why shouldn’t you take advantage of a higher yield and safety?
Of note, if you are looking for higher yields, consider investing in Vanguard index funds.
In the meantime, here’s a table listing the best 6-month CD rates.
6-Month CD Rate
APY
Minimum Balance
EmigrantDirect CD
1.00%
$1,000
MySavingsDirect
1.00%
$1,000
Limelight Bank CD
0.95%
$1,000
Sallie Mae Bank CD
0.90%
$2,500
BMO Harris Bank CD
0.80%
$5,000
Live Oak Bank CD
0.80%
$2,500
Bank5 Connect CD
0.75%
$500
HSBC CD
0.75%
$1,000
TIAA Bank CD
0.75%
$5,000
Ally Bank CD
0.65%
$0
PurePoint Financial CD
0.50%
$10,000
Best 6-month CD rates to help you achieve short-term saving goals.
*TOP CIT BANK PROMOTIONS*
PROMOTIONAL LINK
OFFER
REVIEW
CIT Bank Money Market
1.00% APY
Review
CIT Bank Savings Builder
0.95% APY
Review
CIT Bank CDs
0.75% APY 1 Year CD Term
Review
CIT Bank No Penalty CD
0.75% APY
Review
What is a CD?
A certificate of deposit or CD is a type of short-term investment where you agree to keep your money for a certain period of time, usually for three months to several years.
You usually open a CD with a traditional bank, credit union or even an investment company. For example, investment company such as Vanguard offers brokered CDs.
Once the CD “matures” or becomes “due,” you receive the principal money invested, plus interest.
If you withdraw your money before the stated period of time, an early withdrawal penalty will apply.
However, there are some banks that offer CDs with no penalty. Banks such as CIT Bank has an 11-month, no penalty CDs. However, those CDs usually have lower APY.
CDs are very safe. That’s because they are insured by the federal government for up to $250,000.
So, if you’re looking for safety, a CD is a good choice.
Is a six-month CD right for you?
Before you start shopping for the best 6-month CD rates, you need to ask yourself these questions:
How much interest will you earn?
Are 6-month CD rates better than interests from a savings account, money market funds, etc?
With a 6-month CD, you can expect to earn good money. But not a lot when comparing to longer CD terms. It is because the longer the length of the CD, the more money you will make.
But one thing for sure is that you will earn more money on a 6-month CD than on a savings account (more on this later).
Here’s how much you can earn with a 6-month CD rate.
Overview of the best 6-Month CD Rates: how much should you expect to earn.
The minimum balance requirement and the rates for these 6-month CDs vary depending on the bank. The rates range from 0.50% to 1.00%.
EmigrantDirect 6-month CD rate
The applicable rate for a six-month CD from Emigrant Direct is 1.00% . This six-month CD has a $1000 minimum deposit requirement. This is one of the highest interest rates out there.
MySavingsDirect 6-month CD rate
This 6-month CD also has a 1.00% APY and requires a $1000 minimum deposit.
Limelight Bank 6-month CD rate
The applicable yield for a six-month CD from Limelight Bank is 0.95%. It also has a $1000 minimum balance requirement.
BMO Harris 6-month CD rate
For a BMO Harris six-month CD, it is 0.80% APY and $5,000 minimum deposit.
Live Oak Bank 6-month CD rate
You can expect a 0.80% APY, But the minimum deposit can be high, $2,500.
Sallie Mae Bank 6-month CD rate
Sallie Mae’s 6-month CD offers a 0.90% APY and requires a $2,500 minimum deposit.
TIAA Bank 6-month CD rate
The minimum deposit can be steep for a six-month CD from TIAA Bank, which is $5,000. But a rate of 0.75% is still competitive.
Ally Bank 6-month CD rate
For an Ally Bank six-month CD, the rate is 0.65%. And there is no minimum deposit.
Bank5 Connect 6-month CD rate
The Bank5 Connect 6-month CD has the lowest minimum deposit requirement ($500) with a rate of 0.75%.
HSBC Direct 6-month CD rate
For a 6-month CD from HSBC, the yield is 0.75% and the minimum deposit requirement is $1,000.
PurePoint 6-month CD rate
The yield for this six-month CD is 0.50%Â and the minimum deposit is $10,000. This deposit requirement can be too much for most people.
Why should you invest in a 6-month CD?
Given that these banks’ 6-month CD offer competitive rates, they may be a good option for you.
So, you may want to consider them for the following reasons:
Emergency fund. A 6-month CD is a good place for your emergency fund. However, if an emergency occurs before the CD matures and you withdraw the money, a penalty will apply.
Saving for a down payment. A 6-month CD is a good option if you’re thinking of buying a house in the next six months.
It’s a good place to accumulate and grow the down payment. You certainly don’t want to risk your money investing it in the stock market, because the market can plunge in a relatively short of time.
Wedding. If you have an upcoming wedding, a six-month CD is a good place to keep your cash.
Vacation. If you’re planning of taking a vacation in 6 months or so, a 6-month CD makes the most sense. Your money is safe and you’ll earn interest at the same time.
CDs vs. savings accounts vs. money market funds
While a 6-month CD can be a good option for your money, it may not be the best options in all situations.
If you need your money before the stated period and withdraw it, you will get hit with a penalty.
So, it makes sense to see what other options are available to you. And the best way to do so is to compare a 6-month CD rate with other saving vehicles.
6-month CD vs. savings account
There is no doubt you’ll receive a higher return on your money with a CD than with a savings account.
However, a savings account is more liquid than a CD. You can withdraw money in your savings account with no fear that you’ll get hit with a penalty.
With a CD, however, an early withdrawal penalty will apply if you need access to your money before the CD becomes “due.”
6-month CD vs. money market fund
It’s likely that you will earn more interest on your money with a CD than with a money market fund.
However, just like a savings account, you can easily access your funds in your money market fund at any time without the early withdrawal penalty that comes with taking money out of your 6-month CD before it matures.
You can write a check or you can call the fund company and ask them to transfer your money to your bank.
The bottom line
6-month CD rates are competitive. A six-month CD can be a good choice if you’re saving for a short-term goals. You’ll earn a higher rate on a 6-month CD than on a savings account.
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 SmartAssetâs 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.
*TOP CIT BANK PROMOTIONS*
PROMOTIONAL LINK
OFFER
REVIEW
CIT Bank Money Market
1.00% APY
Review
CIT Bank Savings Builder
0.95% APY
Review
CIT Bank CDs
0.75% APY 1 Year CD Term
Review
CIT Bank No Penalty CD
0.75% APY
Review
The post 6-Month CD Rates: Earn More Money appeared first on GrowthRapidly.
