3 Ways to Get Government Help with Buying a New Home

by Virginia McGuire 12. March 2015

Shopping for Homes

Many people think government assistance is only for the lower income borrower. But there are several ways average Americans can get help buying a home – if they meet the requirements.

If you qualify for a government-backed mortgage because of your military service, your geographic location or your income, you might get surprisingly good terms. In many cases it’s a better deal than taking out a conventional mortgage, which isn’t backed by the federal government.

Let’s look at some of the options.

Federal Housing Administration loans

FHA loans are designed to help first-time homebuyers, including those with higher incomes, and people without significant funds available for a down payment. Borrowers must meet certain criteria, like having enough income to cover payments on their debts as well as presumed daily expenses.

FHA loans provide many benefits, but there is a catch. Borrowers buying single-family homes must pay costly mortgage insurance with FHA loans, although the initial premium can be included in the loan amount. Denise DeCarolis, Operations Manager at VAMortgage.com, a division of 1st Mariner Bank, says there’s an upfront mortgage insurance premium of 1.75% of the base loan amount. An additional .80 to .85% of what you still owe each year is paid in monthly installments for the life of a 30-year loan. For loans of as much as $625,500, FHA’s current ceiling in most areas, annual fees can be as high as 1.05%.

In spite of insurance costs, FHA loans can be a good choice. For one thing, the agency is "a lot more lenient" in terms of borrower requirements than those that must be met to qualify for most conventional loans, according to DeCarolis.

Department of Veterans Affairs loans

Veterans and some spouses and widows can qualify for a VA loan. No down payment is required if the mortgage is below the loan limits for the county. If the seller pays closing costs, DeCarolis says, it’s possible for a veteran to become a homeowner without putting a single dollar into the transaction. In addition, borrowers don’t have to pay mortgage insurance the way they would with an FHA loan.

“If you’re a veteran, this is the best loan,” says DeCarolis. “The VA is truly looking out for the borrower, the veteran.”

U.S. Department of Agriculture loans

USDA loans are designed to help people with lower incomes buy property in rural areas, and DeCarolis says many borrowers are surprised that their geographic location is classified that way. Buyers must meet income requirements, which vary based on location. Like VA loans, USDA loans don’t require a down payment. “It’s really a good deal,” DeCarolis says.

USDA loans require mortgage insurance. The upfront insurance premium is 2% of the loan amount when you buy the house, but the monthly insurance premiums add up to only 0.5% of what’s owed on the loan over the course of a year. That’s less than a third of similar costs for an FHA loan.

For many buyers, government-backed loans let them purchase homes much more quickly than they would be able to if they had to come up with the larger down payments required for most conventional loans. For borrowers who qualify, it’s worth asking a lender if a mortgage backed by the FHA, VA or USDA is your best bet.

Virginia C. McGuire is a Philadelphia-based writer who covers banking and health for NerdWallet.

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Quick Tips for Staging Your Home to Sell

by Sara Seeger 10. March 2015

Staging Your Home

There are a number of attributes that can help a house sell, such as location, updates, size, and proximity to renowned schools, just to name a few. However, you have little to no control over many of these things when you go to sell your home. What you can control is how your house looks when it's on the market. Once you place your house on the market, you are ultimately selling a product, so it is important that your product looks and feels as appealing and comfortable as possible. Here are five quick staging tips when selling your house.

1. Make It Comfortable

Forget about sterile white walls and bare rooms, an empty house can make it hard for someone to visualize themselves living there. It also doesn’t help for pictures on an online listing when trying to draw buyers to your property. Empty rooms can appear “cold” and smaller than their actual size. Paint your walls a warm, neutral color and add furniture that makes the home feel comfortable.

2. Enhance Unique Attributes

Remember the saying, “less is more.” Try not to crowd furniture in corners of the rooms or in places that don’t make sense. Instead, accentuate your home's characteristics by decorating around them. You can even arrange furniture to downplay negative characteristics of the home.

3. Let the Sun Shine

Natural light can greatly improve the look and feel of your home. When staging your home, open your blinds and pull back your curtains.

4. Remove Personal Items

The easiest thing to do when staging a home is to remove all personal items. This includes family photos, personal items in the bathroom or bedroom, papers, etc. These can be distracting to a buyer and may not allow them to connect with the house. If you are still living in the house, consider placing your personal items in a decorative basket or cabinet while showings are happening.

5. Clean Up

No one wants to walk through a dirty or cluttered house. Remove any clutter (ahem, garages anyone?) by consolidating and putting storage bins in cabinets or on shelves. If you have a lot of storage items, consider renting a storage unit. They are fairly inexpensive and if they will allow your home to be less cluttered and potentially sell faster, it may be worth it. Also, make an effort to clean the house before staging photos are taken and always tidy up before a showing.

These are just a few quick and inexpensive ways to stage your home to sell. There are many other things a seller can do to make their home shine. Have you ever staged a house to sell? How did you prepare to get your home ready to sell?

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When You Should Consider a Certificate of Deposit

by Roberta Pescow 4. March 2015

Grow Your Money

Looking for safe investments that grow faster than traditional savings accounts? Take a look at certificates of deposit, or CDs, and find out when these accounts make sense and how to make the most of them.

What’s a CD?

CDs are deposits that offer guaranteed interest in return for keeping an amount of money in the certificate for a fixed time period. A CD is among the safest investments available at a bank insured by the Federal Deposit Insurance Corp., because that agency backs them just like other deposits, up to $250,000 per depositor. Financial institutions such as 1st Mariner Bank generally offer higher returns on CDs than on regular savings accounts. And typically, the longer the term of the CD, the higher the annual percentage yield, or APY. Be aware though, that most CDs have heavy penalties for withdrawing funds early.

Great uses for CDs

Although CD investors are typically higher-income earners, certificates can help people in almost any income bracket achieve their financial goals because you don’t need much cash to get started. Certificates of deposit function particularly well to prepare for:

  • Vacations: Invest six months to a year ahead.
  • Weddings: Purchase CDs a year or two in advance.
  • Home purchase: Begin buying CDs three to five years before you need the down payment.
  • College education: Parents and grandparents might want to start investing in CDs 10 to 15 years before a child’s high school graduation, or even right after birth.
  • Retirement: CDs can be used to invest retirement funds for added tax advantages.

Make your CDs work harder

A little planning and strategy on your part squeezes even more from an already sound investment. When rates are low but expected to rise, choose short-term CDs so your cash will be available again sooner to purchase new certificates at better rates. On the other hand, when rates peak, it makes sense to buy long-term certificates to lock in high interest for as long as possible.

A classic CD strategy that works well in all market conditions is called laddering. It involves buying multiple CDs with staggered maturity dates rather than a single certificate. Here’s how it works:

  • An initial investment of $5,000 could be divided into five CDs of $1,000 each that mature in one, two, three, four and five years.
  • When the first certificate matures at the end of the first year, reinvest the money in a new five-year CD.
  • Each time a certificate matures, reinvest in a new five-year CD. This creates an annual stream of available cash.

CD investing is easy. No matter what your goal, CDs can help you achieve it. With the odds so clearly in your favor, almost any time can be the right time to open a CD.

Roberta Pescow writes about personal finance, insurance and banking for NerdWallet. She previously was a home and garden writer for IdealHomeGarden.com and has articles syndicated on over 200 websites nationwide.

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