7 Resources When Caring for an Elderly Parent

Caring for an aging parent can be hard. These resources can help, financially and emotionally.

No parent wants to be a burden to their children—emotionally, physically or financially. As time passes, each generation faces the same caregiving issues. By using new technology and services available today, the caregiver and the person/people receiving the care can efficiently manage senior care costs.

The daily cost of caregiving

According to Forbes.com, taking care of aging parents can take a toll on the caregiver’s quality of life and future:

Grandparents spending time with their young grandchildren outdoors

“Many caregivers are so stressed that they do not realize how these out-of-pocket costs of caregiving add up,” says Cindy Hounsell, President of the Women’s Institute for a Secure Retirement (WISER). Common out-of-pocket senior care costs include:

  • Transportation: Doctor visits, errands and other activities to remain socially connected.
  • Food and household goods: Meal preparation, grocery shopping, as well as a wide range of household goods, clothing and personal items.
  • Medical: Pharmaceuticals, doctors’ consultations, medical procedures and rehabilitation.
  • Lost time: Most doctor appointments and trips to the bank must take place during working hours, which could mean taking time off from work. While some jobs are flexible, many aren’t.

Balancing senior care costs

According to the Center for Retirement Research at Boston College, the average time spent caring for elderly parents is more than 77 hours a month. This is like having a second job, which is why balancing your own financial and emotional needs can be challenging.

If you are caring for an elderly parent, consider these seven resources to help manage senior care costs:

1. Available benefits

Depending on where you live, government programs like Medicaid can help in taking care of aging parents. Some states have waiver programs to help manage everyday senior care costs. “Make sure the older person you’re assisting is getting every benefit to which they are entitled,” says Catherine Roper of Caring.com. She recommends the National Council on Aging’s BenefitsCheckUp®, a free service to help determine which programs are available to both you and your loved ones.

Woman and her elderly mother enjoying an afternoon at the park

2. Caregiving services

When taking care of aging parents, in-home care can be expensive and involve a mountain of forms. Today, there are many independent, qualified caregivers available. For example, you may be able to find websites where retired nurses offer their paid services. Also, most seniors living alone at home have empty bedrooms and, “often a young person is looking for ways to save on housing costs,” Roper says. “Swapping some caregiving tasks for low-cost (or even free) housing can be a great option, in addition to being an enjoyable experience for both the older and younger person.”

The elderly may also have vehicles at their home that are rarely utilized, Roper says. “They’d be happy to offer it to a young person in exchange for driving them where they need to go. This can be a great way for a young person to save on car payments,” she says.

to get an hourly wage for the caregiving tasks a young person would be doing anyway,” Roper says.

4. Home monitoring

If full-time assistance isn’t required, installing a home monitoring system can aid in making sure your loved one is still supervised in case of an accident. There are also self-monitoring devices that can be worn and will automatically detect if an elderly parent takes a fall.

5. Meal services

Local outreach programs provide hot meals to homebound individuals and can help keep senior care costs down. Such services can also help in caring for elderly parents with regulated, controlled diets.

6. Support groups

Always remember you are not alone. So many caregivers run into similar emotional and financial struggles when taking care of aging parents. Reach out locally and through online forums. Someone may have solutions you haven’t considered.

7. Family

Everyone can help out when caring for elderly parents. Split up care duties with other family members when possible. Even long-distance family can help with managing bills, visits (which means a break for the primary caregiver) and companionship via the phone or video calling. Just knowing people care can ease anxiety or brighten a day.

Recognizing the heavy burdens of caring for elderly parents is the first step to maintaining balance during a tough time. A bit of research and planning ahead could help guide new caregivers toward making better decisions. But most importantly, cherish the quality time with your loved ones—these moments make it possible to embrace the good days and look forward to the future.

Source: discover.com

You Can Buy More House If You Put More Money Down

I was reading through the latest quarterly home price report from the National Association of Realtors yesterday and stumbled upon an interesting nugget.

It might seem obvious, but it’s worth pointing out to prospective home buyers who might be lacking in the income department.

Simply put, if you are able to come to the table with more money for a down payment, you’ll be able to buy more house.

Allow me to explain, using the NAR’s latest Metropolitan Median Area Prices and Affordability and Housing Affordability Index release (Q2 2020).

National Median Home Price Rises to $291,300

  • Expect home prices to keep rising throughout the year and next
  • This should continue to hurt purchasing power despite low mortgage rates
  • But if you’re able to come in with a larger down payment
  • You can keep your loan amount at a reasonable level and boost affordability

In the report, they noted that the national median existing single-family home price rose to $291,300 in the second quarter of 2020, up 4.2% from a year earlier ($279,560).

For the record, the pace slowed a bit as the median price in the first quarter of 2020 was 7.7% higher than it was during the first quarter of 2019.

Still, we continue to see healthy (maybe too healthy) home price growth and it’s probably going to keep rising, which should make it more difficult for some would-be buyers to purchase homes due to DTI restrictions.

Yes, mortgage lenders limit what you can afford based on your income, but there’s a way around this if you happen to have money in the bank (or a relative willing to gift you money for a down payment).

Ultimately, the more you put down, the smaller your loan amount will be. And the smaller your loan amount, the less income you’ll need to qualify for a mortgage.

In the report, NAR highlighted the fact that affordability improved in the second quarter compared to the second quarter of 2019 because of lower mortgage rates.

But that might not continue to be the case if home prices keep surging higher and interest rates stay relatively flat.

What It Takes to Buy a Median Priced Home Today

  • Let’s consider the income you need to buy a median-priced home
  • Which varies based on the down payment you’re able to come up with
  • As you can see, the more you put down, the less you need to make
  • Of course you’ll have to save more of your money along the way or rely on a gift

This is what is now needed in the way of income to purchase a single-family home at the national median price:

If 5% down payment: income of $58,613
If 10% down payment: income of $55,528
If 20% down payment: income of $49,358

Assuming you’re a frugal person who actually socks away savings, unlike most Americans, you’ll be able to buy the median priced home despite having significantly lower income than other individuals.

In fact, if you’re able to come in with a 20% down payment, you can buy that $291,300 median home price with less than $50,000 in annual household income.

Meanwhile, someone only able to muster a 5% down payment will need to be making nearly $60,000 per year.

NAR assumes a mortgage rate of 3.29% and a monthly principal and interest payment limited to 25% of gross income.

You might be thinking that the person with a lower income probably has more difficulty saving, but that’s not always the case.

There are plenty of folks who simply live beyond their means, despite making more money, and wind up with nothing in the way of savings.

The point here is that you don’t need to make a ton of money in order to buy a house. You’ll just need more money for the down payment.

Another benefit of a higher down payment, specifically of 20% or more, is that you can avoid mortgage insurance entirely.

Additionally, you’ll be able to obtain a lower mortgage rate because pricing adjustments are lower when your loan-to-value ratio (LTV) is 80% or less.

You’ll also have a decent chunk of equity in your home, which will give you the ability to sell it if need be, or refinance in the future.

And overall, you’ll have more lending options when you put more money down, along with fewer close calls if the numbers don’t quite add up while in underwriting.

Avoid Other Debt and Your Income Goes Further

  • If your income is constrained and not expected to increase
  • There’s another way you can further your purchasing power
  • Simply by paying off debt and not accumulating new debt prior to home purchase
  • This means more of the income you have can go toward a monthly mortgage payment

Another way to boost your home buying power is simply to avoid other debt.

If you don’t have any outstanding credit card debt, auto loans, student loans, etc., your income will go further when it comes to the mortgage.

When lenders determine how much you can afford, they combine all your monthly liabilities from your credit report and use your income to offset them.

If you have a ton of liabilities, your income won’t go as far since it will already be swallowed up by car payments, credit card payments, etc.

Conversely, if you’ve paid off your car and carry no other debt, that full amount of income will be available to offset your housing costs, boosting what you can afford.

Read more: What you can afford isn’t necessarily what you should spend.

Source: thetruthaboutmortgage.com

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

A happy woman who struck it rich throws cash around
ViDI Studio / Shutterstock.com

If you’ve looked over your budget and think you can’t cut it down anymore, maybe you need to look a little harder.

There are probably some expenses you still could reduce — or drop altogether — to save thousands of dollars a year.

We found some examples of these costs. Here’s how to slash them if you are really determined. If you eliminated all of these expenses, you’d save a whopping amount — around $31,665 per year, based on averages.

But even by shaving off just 10% of these expenditures, you’d be around $3,167 richer by this time next year.

1. Rent

Nikodash / Shutterstock.com

The national average rent was $1,392 per month as of January, according to real estate research company Yardi Matrix. That’s $16,704 per year.

If you were to move somewhere the cost of living is lower, or bring in a roommate, you could cut your housing costs significantly.

And if you moved in with accommodating family members, you might be able to go rent-free, at least for a time.

If your home has an extra room, another option to offset housing costs is to rent that room to travelers. Try listing your spare space — or the entire home — on a vacation rental website like Airbnb, Homestay or Vrbo (short for “Vacation Rentals by Owner”). Read more in “Do This a Few Days Each Month and Watch Your Mortgage Disappear.”

Total annual savings if you could:

  • Give up the expense: $16,704 (based on the national average rent)
  • Reduce the expense by 10%: $1,670

2. Car payment

szefei / Shutterstock.com

The average monthly new-car loan payment was $568 as of last year, according to Edmunds. That’s $6,816 per year.

If you can, don’t buy a new car. Instead, opt for used vehicles. Cars are one of the first things cited in “You Should Never Buy These 12 Things New.”

Ideally, you would save enough money to buy a car outright instead of financing it, to avoid paying interest on the loan. If that’s not possible, at least try making a bigger down payment to lower your monthly car payment.

Getting rid of a personal vehicle and taking public transportation, walking or biking instead would be a major money-saving shift.

Or, depending on how much you drive, a ride-share service like Lyft or Uber might help you save money. You’d stand to also save on a car payment, insurance, gas and on the biggest auto expense of all, depreciation.

Total annual savings if you could:

  • Give up the expense: $6,816 (based on the average new-car loan payment)
  • Reduce the expense by 10%: $682

3. Cellphone

Man stares at cellphone
chainarong06 / Shutterstock.com

American households spent an average of $1,218 per year on cellular phone services as of 2019, the latest calendar year for which the Bureau of Labor Statistics has released consumer expenditure data.

You could cut costs by adding a few friends or family members to your plan, or by changing your plan.

Also see what you can save by comparison shopping among carriers using Money Talks News’ cellphone plan comparison tool.

If you don’t use your mobile phone a lot or are home enough to justify a landline, consider ditching your mobile service, or get a prepaid plan.

Total annual savings if you could:

  • Give up the expense: $1,218 (based on average household spending)
  • Reduce the expense by 10%: $122

4. Dining out

grocery shopper
mavo / Shutterstock.com

Sometimes you don’t feel like cooking, and that’s allowed. But let it be a habit, and it can cost a couple hundred bucks a month.

The average household in the U.S. spends $3,526 per year dining out, according to the Bureau of Labor Statistics. Cooking at home is much cheaper.

Reducing your restaurant spending can make a noticeable difference to your budget. Here are tips and tricks to help you shave costs: “12 Ways to Slice Your Next Restaurant Check in Half.”

Total annual savings if you could:

  • Give up the expense: $3,526 (based on average household spending)
  • Reduce the expense by 10%: $353

5. Cable

Minerva Studio / Shutterstock.com

If you haven’t cut the cord yet, you might want to consider it. The average household cable package costs about $217 per month as of 2020, according to DecisionData.org. That’s $2,604 per year.

Cutting the cord could cut that cost dramatically, with the many free and affordable alternatives to cable and satellite TV. “The 8 Best Money-Saving Cable Alternatives” gives pricing for some of the best TV alternatives.

Lowering your costs is great. Free is even better. For no-cost options, read about “15 Free Streaming Services to Watch While Stuck at Home.”

Total annual savings if you could:

  • Give up the expense: $2,604 (based on the average cable package)
  • Reduce the expense by 10%: $260

6. Gym membership

Daxiao Productions / Shutterstock.com

If you’re a committed gym rat who gets your money’s worth from a monthly gym membership, more power to you.

But many of us sign gym contracts in a burst of enthusiasm and quit after a few months. The gym membership contract, however, can keep you making monthly payments, whether you use the facility or not.

While membership programs and costs vary, Healthline says memberships average $58 per month, or $696 per year.

Maybe the COVID-19 pandemic already has got you exercising on your own for free. If not, give it a try. Running or walking regularly and doing a strength-training program at home, for example, lets you eliminate gym fees entirely.

We have other ways to trim costs in “8 Smart Ways to Save on a Gym Membership.”

Total annual savings if you could:

  • Give up the expense: $696 (based on the average monthly gym fee)
  • Reduce the expense by 10%: $70

7. Movie tickets

Multiethnic movie happy audience clapping
Dean Drobot / Shutterstock.com

The cost of a movie ticket averaged $9.16 in 2019, according to the latest data from the National Association of Theater Owners. Prices have been creeping steadily up at least since 1969, when a movie ticket cost $1.42, on average.

Hoping to treat the family when the pandemic has passed? Ka-ching.

If you won’t give up the movie theater entirely, there are cheaper options. For example:

  • Attend matinees.
  • Take advantage of senior discounts.
  • Look into independent cinemas that charge less for films that were released earlier in the year.

Total annual savings if you could:

  • Give up the expense: $109.92 (based on the average movie ticket cost and assuming you’re seeing one movie in theaters per month)
  • Reduce the expense by 10%: $11

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Could You Give Up These 7 Expenses to Save Thousands of Dollars a Year?

A happy woman who struck it rich throws cash around
ViDI Studio / Shutterstock.com

If you’ve looked over your budget and think you can’t cut it down anymore, maybe you need to look a little harder.

There are probably some expenses you still could reduce — or drop altogether — to save thousands of dollars a year.

We found some examples of these costs. Here’s how to slash them if you are really determined. If you eliminated all of these expenses, you’d save a whopping amount — around $31,665 per year, based on averages.

But even by shaving off just 10% of these expenditures, you’d be around $3,167 richer by this time next year.

1. Rent

Nikodash / Shutterstock.com

The national average rent was $1,392 per month as of January, according to real estate research company Yardi Matrix. That’s $16,704 per year.

If you were to move somewhere the cost of living is lower, or bring in a roommate, you could cut your housing costs significantly.

And if you moved in with accommodating family members, you might be able to go rent-free, at least for a time.

If your home has an extra room, another option to offset housing costs is to rent that room to travelers. Try listing your spare space — or the entire home — on a vacation rental website like Airbnb, Homestay or Vrbo (short for “Vacation Rentals by Owner”). Read more in “Do This a Few Days Each Month and Watch Your Mortgage Disappear.”

Total annual savings if you could:

  • Give up the expense: $16,704 (based on the national average rent)
  • Reduce the expense by 10%: $1,670

2. Car payment

szefei / Shutterstock.com

The average monthly new-car loan payment was $568 as of last year, according to Edmunds. That’s $6,816 per year.

If you can, don’t buy a new car. Instead, opt for used vehicles. Cars are one of the first things cited in “You Should Never Buy These 12 Things New.”

Ideally, you would save enough money to buy a car outright instead of financing it, to avoid paying interest on the loan. If that’s not possible, at least try making a bigger down payment to lower your monthly car payment.

Getting rid of a personal vehicle and taking public transportation, walking or biking instead would be a major money-saving shift.

Or, depending on how much you drive, a ride-share service like Lyft or Uber might help you save money. You’d stand to also save on a car payment, insurance, gas and on the biggest auto expense of all, depreciation.

Total annual savings if you could:

  • Give up the expense: $6,816 (based on the average new-car loan payment)
  • Reduce the expense by 10%: $682

3. Cellphone

Man stares at cellphone
chainarong06 / Shutterstock.com

American households spent an average of $1,218 per year on cellular phone services as of 2019, the latest calendar year for which the Bureau of Labor Statistics has released consumer expenditure data.

You could cut costs by adding a few friends or family members to your plan, or by changing your plan.

Also see what you can save by comparison shopping among carriers using Money Talks News’ cellphone plan comparison tool.

If you don’t use your mobile phone a lot or are home enough to justify a landline, consider ditching your mobile service, or get a prepaid plan.

Total annual savings if you could:

  • Give up the expense: $1,218 (based on average household spending)
  • Reduce the expense by 10%: $122

4. Dining out

grocery shopper
mavo / Shutterstock.com

Sometimes you don’t feel like cooking, and that’s allowed. But let it be a habit, and it can cost a couple hundred bucks a month.

The average household in the U.S. spends $3,526 per year dining out, according to the Bureau of Labor Statistics. Cooking at home is much cheaper.

Reducing your restaurant spending can make a noticeable difference to your budget. Here are tips and tricks to help you shave costs: “12 Ways to Slice Your Next Restaurant Check in Half.”

Total annual savings if you could:

  • Give up the expense: $3,526 (based on average household spending)
  • Reduce the expense by 10%: $353

5. Cable

Minerva Studio / Shutterstock.com

If you haven’t cut the cord yet, you might want to consider it. The average household cable package costs about $217 per month as of 2020, according to DecisionData.org. That’s $2,604 per year.

Cutting the cord could cut that cost dramatically, with the many free and affordable alternatives to cable and satellite TV. “The 8 Best Money-Saving Cable Alternatives” gives pricing for some of the best TV alternatives.

Lowering your costs is great. Free is even better. For no-cost options, read about “15 Free Streaming Services to Watch While Stuck at Home.”

Total annual savings if you could:

  • Give up the expense: $2,604 (based on the average cable package)
  • Reduce the expense by 10%: $260

6. Gym membership

Daxiao Productions / Shutterstock.com

If you’re a committed gym rat who gets your money’s worth from a monthly gym membership, more power to you.

But many of us sign gym contracts in a burst of enthusiasm and quit after a few months. The gym membership contract, however, can keep you making monthly payments, whether you use the facility or not.

While membership programs and costs vary, Healthline says memberships average $58 per month, or $696 per year.

Maybe the COVID-19 pandemic already has got you exercising on your own for free. If not, give it a try. Running or walking regularly and doing a strength-training program at home, for example, lets you eliminate gym fees entirely.

We have other ways to trim costs in “8 Smart Ways to Save on a Gym Membership.”

Total annual savings if you could:

  • Give up the expense: $696 (based on the average monthly gym fee)
  • Reduce the expense by 10%: $70

7. Movie tickets

Multiethnic movie happy audience clapping
Dean Drobot / Shutterstock.com

The cost of a movie ticket averaged $9.16 in 2019, according to the latest data from the National Association of Theater Owners. Prices have been creeping steadily up at least since 1969, when a movie ticket cost $1.42, on average.

Hoping to treat the family when the pandemic has passed? Ka-ching.

If you won’t give up the movie theater entirely, there are cheaper options. For example:

  • Attend matinees.
  • Take advantage of senior discounts.
  • Look into independent cinemas that charge less for films that were released earlier in the year.

Total annual savings if you could:

  • Give up the expense: $109.92 (based on the average movie ticket cost and assuming you’re seeing one movie in theaters per month)
  • Reduce the expense by 10%: $11

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Source: moneytalksnews.com

Can you use a 203k loan for an investment property?

203k loans for investors: A special use case

The FHA 203k rehab loan can be an affordable way to buy or refinance a home and refurbish it with a single loan. 

This might make the 203k loan attractive to investors and fix-and-flippers. But there’s a catch.

These mortgages are limited to ‘primary residences,’ meaning the borrower has to live in the home full time. So they’ll only work for specific types of investment properties. 

But there are ways to legally and ethically use a 203k loan for rentals and investments. Here’s how.

Verify your 203k loan eligibility (Feb 23rd, 2021)


In this article (Skip to…)


FHA 203k loan for investment properties

There’s only one legitimate way to use a 203k loan for an investment property. You can buy and renovate — or construct or convert — a multifamily (2-4 unit) building and live in one of the units.

FHA allows borrowers to purchase 2-, 3-, and 4-unit properties and renovate them using the 203k loan.

To fulfill FHA’s residency condition, you’ll need to occupy one of the units yourself as your primary residence for at least 12 months.

You can rent out the other unit(s), and even use the rental income to cover your monthly mortgage payments.

Benefits of the FHA 203k loan for investors

While this might not be your first idea of an investment property, it can be a foot in the door for first-time investors who want to test out owning and renting properties.

It’s also worth noting that since you’d be buying the property as a primary residence, you get access to lower interest rates.

This means you’d have lower monthly payments and pay less interest overall compared to someone with a ‘true’ investment property mortgage.

Drawbacks

The main downside to this strategy is that you yourself need to occupy one of the units for at least one year.

After 12 months, you could rent out the unit that you live in and move on to purchase other real estate.

But FHA is not for serial investors. Once you use one FHA loan, you likely can’t get another one. You’ll have to secure other financing if you move out and buy again.

Also, keep in mind that you will be living side by side with your future tenants for those 12 months — some may consider this a downside while others won’t mind.

Another downside: FHA loans come with pricey mortgage insurance premiums (MIP) which borrowers are normally stuck with until they sell or refinance into a different loan program.

So there’s a lot to consider before going the 203k investment property route.

But for the right borrower, this could be a great strategy to finance and renovate their own home and a few rental units at the same time.

Verify your 203k loan eligibility (Feb 23rd, 2021)

Can I use a 203k loan if I already own the home?

If you already bought your home, you can use a 203k rehab loan to refinance your current mortgage. This opens up another back door for investors.

You could potentially use the 203k loan to refinance your current home, make renovations, then move after one year and rent the house out as an investment property.

FHA allows you to rent out a home you still own with an FHA loan, as long as:

  • You fulfilled the one-year occupancy requirement
  • You moved for a legitimate reason, like a work relocation or upsizing to a bigger house for a growing family

This would only work for refinancing a home you currently live in and plan to keep occupying for at least a year after the loan closes.

If you already moved and kept your previous home as a rental property, you would not be able to use the 203k rehab loan since the home is no longer your primary residence.

How does the lender know if it’s my primary residence?

Some people make good livings by buying fixer-uppers and then selling them after rehab — aka “flipping” them.

A few might be tempted to take advantage of the 203k program by lying about their intention to live in the home. After all, how can the FHA prove in court what your intentions were when you made the application?

The main argument against this strategy is that lying on a mortgage application can be a felony that could see you in federal court.

Even an email to a contractor mentioning that you don’t intend to live there or other indication of your plans could show up in the court case.

And, repeat FHA buying would not be a viable long-term strategy.

FHA only allows borrowers to have one active FHA loan at a time, except in rare circumstances (for instance, if your work required you to relocate and you needed to buy another home near your new job).

In other words, borrowers cannot move once a year and continue financing new homes with FHA loans.

If you see yourself as an entrepreneur with a rosy future in real estate investing, set yourself up for success by choosing a legitimate financing option that keeps your options open in the long run.

Check your investment property loan options (Feb 23rd, 2021)

About the FHA 203k rehab loan

The 203k rehabilitation loan is backed by the Federal Housing Administration (FHA), an arm of the U.S. Department of Housing and Urban Development.

This mortgage program lets you buy a rundown home — a fixer-upper — and then renovate it using a single loan that covers the purchase price and cost of repairs.

If that involves demolishing the existing structure down to the foundations and rebuilding, that’s fine under 203k loan rules, too.

203k renovation loans are only for necessary repairs to improve the structure or livability of the home. So the funds can’t be used to add luxuries like tennis courts or swimming pools.

And there’s one more important rule: You cannot do the construction or remodeling work yourself. The 203k loan requires you to hire a reputable, licensed contractor, unless you are one yourself and you work full-time as a contractor.

Limited vs. Standard 203k mortgage

There are two flavors of the 203k program: the “Limited 203k mortgage” and the “Standard 203k.”

The Limited 203k used to be called the “Streamline 203k.” As its new name implies, this version is more restrictive about the amount you can spend and the types of work you can do. But it’s also less complicated, hence its former “streamline” moniker.

The maximum repair budget for a Limited 203k loan is around $31,000 ($35,000 officially, but there are mandatory reserve accounts that eat into that sum). And you can’t make any structural renovations to the home.

On the plus side, these loans require much less paperwork and hassle.

The Limited 203k loan is typically best for current homeowners who want to make cosmetic repairs or renovations. It works a bit like a cash-out refinance, except you must spend the money on the home improvements you’ve listed.

A “Standard 203k loan,” by contrast, allows much higher budgets and would be better for home buyers purchasing serious fixer-uppers that need structural repairs.

FHA loan requirements

The basic requirements for 203k loans are similar to those for other FHA mortgages:

  • A 3.5% down payment — Based on your purchase price and rehab budget combined, subject to an independent appraisal
  • Minimum 580 credit score — It may be possible to dip below 580 if you have a 10% or higher down payment
  • Debt-to-income ratio of 43% or less — No more than 43% of your gross monthly income can normally be eaten up by housing costs, existing debt payments, and other inescapable monthly obligations such as child support

Although the FHA sets these minimum requirements, you’ll be borrowing from a private lender. And they’re free to impose their own standards.

For example, some mortgage lenders require a credit score of 620 or 640 for an FHA loan. If one lender has set the bar too high for you, shop around for other, more lenient ones.

Verify your FHA 203k loan eligibility (Feb 23rd, 2021)

What repairs can you do with a 203k loan?

The FHA is putting up taxpayers’ money to guarantee part of your mortgage. So it’s not in the business of writing loans for luxury upgrades.

There are strict rules about the types of home renovations you can do and the amount of money you can borrow.

In fact, the total amount you can borrow for your home purchase and renovation costs is governed by current FHA loan limits, which vary depending on local home prices.

You can find the loan limit where you wish to buy using this lookup tool.

Maximum rehabilitation loan budgets

We already mentioned that a Limited 203k loan gives you a cap of around $31,000 on your rehab budget.

A Standard 203k lets you have as big a rehab budget as you want, capped only by your local loan limit minus the home’s purchase price.

Your total loan amount can be up to 110% of the property’s future value when complete.

But an appraiser will pore over your plans to make sure the final value of the home — after your projects are completed — will match the amount FHA is lending you.

What you can spend your rehab budget on

The Limited 203k is mostly intended for refreshing a home that’s a bit tired. So you can do things like:

  • Replacing flooring and carpeting
  • Installing or replacing an HVAC system
  • Remodeling a kitchen or bathroom
  • Fixing anything that’s unsafe
  • Making the home more energy-efficient

But you can’t use the money to do structural work, such as moving loadbearing walls or adding rooms.

The Standard 203k is very different.

You can do all the above and almost everything else, including serious construction work. Heck, you can even move the house to a different site if you get the FHA to approve your plans.

The 203k loan process

Limited 203k loans are pretty straightforward. Indeed, they’re easier than most to qualify for and set up.

But a Standard 203k isn’t like that. It may be your best path to your dream home. But there will be some extra hoops to jump through compared to a traditional mortgage.

Here’s the basic process to apply for and close an FHA 203k loan.

  1. Find your best lender — You can save thousands just by comparison shopping among multiple lenders. They aren’t all the same! Make sure the ones you consider offer FHA 203k loans and are experienced in delivering them. You’ll want a lender familiar with the specifics of 203k loans to make sure the process goes smoothly
  2. Get pre-approved — Pre-approval shows you your exact budget as well as your future interest rate. And you’ll get a chance to resolve any issues that arise in your application
  3. Find the home you want — This is the fun bit. But download the Maximum Mortgage Worksheet PDF from HUD’s website because that will help you assess whether your plans are affordable
  4. Find a 203k consultant — A 203k loan consultant will visit the home site, inspect the building, and then prepare a document outlining the project’s scope and specifications, along with a detailed cost breakdown for each of the repair tasks. He or she also prepares lender packages and contractor bid packages, along with draw request forms for stage payments
  5. Find a licensed contractor — Some lenders maintain lists of approved contractors. And your consultant may help you find a reputable one. Make sure candidates have proven records for projects similar to yours and are familiar with FHA 203k jobs. Many contractors add serious delays to 203k approval because they can’t seem to complete the paperwork correctly
  6. Have the home and project appraised — The lender will set this up for you
  7. Begin work — Once the appraisal is approved, the lender should let you close. And your contractor can then begin work, drawing on funds in an escrow account

Limited 203k loans require the borrower to live in the home while repairs are completed. So if it’s a new home purchase, you’ll have to move in within 60 days, which is the norm for FHA loans.

Standard 203k loans, on the other hand, might include structural repairs that render the home unlivable while construction is going on. In this case, the home buyer is not required to move in right away.

Rehab loan alternatives for investment properties

FHA 203k loans aren’t the only way to buy and renovate a home with one loan. Fannie Mae’s HomeStyle Renovation and Freddie Mac’s CHOICERenovation products can do much the same thing.

Since the HomeStyle and CHOICERenovation loans are conventional mortgage loans, they won’t charge for private mortgage insurance (PMI) if you put at least 20% down. This can save home buyers a lot of money on their monthly mortgage payments.

However, like the 203k loan, these programs are only available for primary residences.

If you’re buying a ‘true’ investment property — meaning you won’t live in one of the units yourself — these loans aren’t an option.

But investors have other renovation loans to choose from.

Traditionally, you would buy a home with a mortgage and then borrow separately — perhaps with a home equity line of credit or home equity loan — to make improvements. Then you could potentially refinance both loans into one later on.

Another option is using a cash-out refinance on your investment property or primary residence and putting the cashed-out funds toward repairs or upgrades.

Of course, all these types of loans require you to have enough equity built up to cover the cost of repairs.

And if you choose to draw from the equity in an existing investment property, you’ll pay higher interest rates.

But the upside is that there are no rules about how the funds can be spent. So if luxury upgrades are on your agenda, this could be the way to go.

Explore all your options

FHA 203k loans are only available to a select group of investors: Those who will buy a multi-unit property and live in one unit themselves.

For real estate investors looking to fix-and-flip or build a large portfolio of investment properties, an FHA loan isn’t the right answer. But there are plenty of other financing options out there.

Be sure to explore all your loan options before buying or renovating a home. Choosing the right program and lender can help you achieve your goals and save money on your project.

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Source: themortgagereports.com

Wismo Review – An App to Organize & Share What You Spend Money On

Wismo Budget is a lightweight mobile budgeting app that takes two forms: a free version and a paid version that more than justifies its modest price. We’ll dive into the differences between the two in the Key Features section.

Getting Started With Wismo Budget

To get started with Wismo Budget, you’ll need to provide your name, email address, and phone number. You’ll then create a username that doesn’t contain personally identifiable information, such as your first and last name or your home address.

Next, you’ll answer some basic questions about your personal finances, covering your monthly income, housing costs, and transportation costs.

Once you’ve done that, you’ll land on your app’s dashboard, which lays out:

  • Your initial Personal Spending Index (more on that below)
  • Your recurring spending based on your answers to the initial questions
  • Your daily budget based on the information you’ve provided so far
  • Your daily spend, which starts at $0 and increases as you enter transactions

Adding Income & Expenses

Now, you’re ready to begin tracking your spending for real.

Daily Spend

On the main dashboard, use the “+” button to add a new one-time transaction. Snap a picture of the transaction receipt, if one exists, then enter the amount and spending category. Or, simply enter the amount of the transaction and its category.

Use “custom” for debit and credit card transactions that don’t neatly fit into preset categories such as “getting around” and “services.” For more detail, you can add the payee’s name and notes about the expense.

When you’ve entered all of your expenses, click “Close the Books” to get your final spend tally for the day and see how it compares with your daily budget. Your daily budget is your monthly income minus recurring expenses, divided by the number of days in the month.

An important word of warning: Wismo shares what you spend money on (your debit and credit card transaction amounts and categories) with other users. In other words, your fellow Wismo users will see that you spent $50 on “fun.” However, this information is anonymized and doesn’t include payee details. Other users will only see your username, not your real name.

Recurring Transactions

You can also enter recurring expenses in about a dozen categories, including housing and transportation, utilities, insurance, subscriptions, health, loans/debt, and savings goals.

Add subcategories for more granular tracking. For instance, your “transportation” category might include fuel, your parking pass, rideshare fares, and public transportation expenses. You can organize expenses however you see fit. If it makes more sense to you to add your car loan under “transportation” rather than “loans/debt,” go for it.

Monthly Income

You can add new income buckets under the monthly income tab. This space gets pretty granular, with categories such as “other jobs,” “support,” “investments,” and “retirement.” Add subcategories to put an even finer point on things – for instance, to track your various streams of freelance income.

Finding Friends & Peers

Use the “Friends” tab to find other Wismo Budget users. You can filter by age, annual income, sex, and occupation to zero in on folks who more or less resemble you. Once you’ve found some users to follow, you can compare your spending habits to theirs as revealed in their public feeds (more on that below).


Key Features

Here’s a closer look at the key features of the Wismo Budget app.

Personal Spending Index (PSI)

Wismo is built around the Personal Spending Index (PSI), a numeric distillation of your cash flow based on your self-reported or verified income and expenses.

The formula is simple:

(Spend ÷ Income) x 100 = PSI

A PSI of 100 indicates that you’re spending exactly as much as you earn. A PSI under 100 indicates surplus income that you can – and probably should – put toward savings, while a PSI over 100 indicates negative cash flow.

For obvious reasons, Wismo recommends keeping your PSI under 100. As long as you’re diligently and comprehensively tracking your income and spending, the app makes that a whole lot easier.

Reports

Wismo Budget isn’t as big on reports as more robust budgeting apps, but it does have some user-friendly visualizations for users who like that sort of thing. Use the Reports tab to visualize:

  • Your total expenses for the month
  • Your daily spending for the month
  • Your recurring expenses for the month
  • Your PSI by month

Public Feed

Your public feed displays other Wismo users’ spending activities in near-real time. The “Everyone” bar is a comprehensive roundup of all non-private users’ spending; the “Friends” bar covers just those you’ve followed. Users are identified by their usernames and avatars.

Remember, if you’re using Wismo’s free version, your spending is visible in other users’ feeds. There’s no way to turn off this feature without upgrading to Premium. Wismo is transparent about its information-sharing practices, advising users to omit obvious clues to their identities from their Wismo usernames. But if you’d still prefer to keep your personal spending under wraps, you may want to consider the Premium version.

Premium Features

When you upgrade to Wismo’s Premium plan, you’ll enjoy these enhanced features.

  • Linked Accounts. Premium users can link financial accounts to Wismo, eliminating the need to enter non-cash transactions manually. Wismo uses bank-grade, 256-bit encryption for security and peace of mind.
  • Privacy Mode. Premium users can set their accounts to Privacy Mode, bypassing Wismo’s social feed feature and rendering their accounts invisible to other users. If you’re leery of sharing financial information, even anonymously, it’s a strong argument for upgrading.
  • Family Plan. Premium users can add up to four family members to track and share expenses together. That’s great for couples who’ve merged their finances and families with income-earning teens and young adults.
  • Ad-Free Experience. Wismo’s Premium version has no ads, reducing the interface’s clutter. As personal finance apps go, Wismo doesn’t feel particularly commercial, but it’s nice to have the option to go completely ad-free.

Wismo’s Premium plan costs less per year than most full-service budgeting apps. That said, it includes features such as Privacy Mode that come standard in some free budgeting apps, such as Mint and its top alternatives.


Advantages of Wismo Budget

Wismo Budget has some notable advantages:

  1. The Free Version Is Totally Free. Wismo Budget’s free version is truly free, with no hidden fees or upsells buried in the interface. As long as you’re willing to tolerate advertising and consent to anonymized data sharing, you’ll never pay a dime out of pocket to use Wismo.
  2. PSI Makes Cash Flow Easy to Understand. Wismo Budget’s Personal Spending Index is a shockingly simple cash flow conceptualization that’s easy for even the most math-challenged to understand. A PSI under 100 means you’re spending less than you earn; a PSI over 100 means it’s time for some strategic spending cuts to get back on track. It’s as close to black-and-white as you can get in the world of money management.
  3. No Need to Disclose Sensitive Personal Information. Wismo doesn’t require users to disclose sensitive personal information, such as Social Security numbers or home addresses, as a condition of use. Indeed, any information you provide to Wismo is anonymized, and linked financial account numbers are protected via bank-grade, 256-bit encryption. Avoid including obvious clues to your identity, such as your first and last name, in your Wismo handle, and no one will ever be the wiser.
  4. No Obligation to Link Bank Accounts or Transfer Funds. Wismo’s Premium users can link bank accounts to the app for a more seamless, hands-off money management experience, but they’re under no obligation to do so. That’s a big advantage over budgeting apps that require – or aggressively nudge – users to take this step. Even with Wismo’s top-shelf encryption, it’s reasonable for users not to want to give yet another third-party app access to their financial accounts. Wismo clearly respects that.

Disadvantages of Wismo Budget

Consider these potential drawbacks carefully before using Wismo – and certainly before upgrading to Premium.

  1. The Free Version Contains Advertising. Wismo’s free version contains ads. In practice, these ads don’t adversely affect the user experience, but they’re still present and unavoidable unless you switch to the paid plan. If you’re not too interested in the paid plan’s other perks, you may not want to upgrade solely to eliminate ads.
  2. Not As Robust As Some Other Budgeting and Spending Apps. Wismo is a pretty lightweight app. That’s great for consumers interested mainly in tracking and controlling spending, but not so great for serious budgeters seeking deep insights into their spending patterns and personal finances.
  3. No Desktop Version. Wismo is a mobile-only app. It’s not compatible with large-screen devices, such as laptops and desktops. If you don’t own a smartphone or prefer to manage your personal finances on a device with an actual keyboard, Wismo isn’t for you.
  4. Other Wismo Users Can See Your Financial Details in the Free Version. To use Wismo’s free version, you must permit the app to share all the financial information you enter with fellow Wismo users. Wismo only shares information anonymously and uses bank-grade encryption to keep account numbers from falling into the wrong hands. Still, Wismo’s open-source approach is sure to give some prospective users pause. Don’t feel bad if you’re among them.

Final Word

Not everyone enjoys budgeting. Managing a traditional household budget is a labor-intensive task involving lengthy spreadsheets with categories galore and cells for every transaction. Modern budgeting apps streamline the process a bit, but they still require time and effort to maintain with any accuracy.

Fortunately, having a formal household budget isn’t a prerequisite of fiscal responsibility. I know a few financially savvy folks who’ve sworn off budgeting yet still manage to spend less than they earn and save for the future.

Wismo Budget is different enough from other budgeting apps to attract folks who can’t be bothered with traditional budgets. Wismo is lightweight, intuitive, and fun to use – perfect for those with no patience for graphs, spreadsheets, and the other trappings of hardcore budgeting apps.

Whether you’ve attempted budgeting or know you don’t enjoy it, give Wismo a try. You might be surprised by the experience.

Source: moneycrashers.com

How to Calculate Your Debt-to-Income Ratio

Lenders use your DTI ratio to determine how much of a loan you qualify for.

This article shows you how to calculate your DTI ratio and provides tips on how you can lower it to increase the loan amount you can get.

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What is the Debt-To-Income Ratio?

Your debt-to-income ratio (DTI ratio) is the amount of your income that goes towards your monthly debt obligations. There are two types of DTI ratios lenders look at when determining the loan amount a borrower qualifies for. The back-end and front-end debt-to-income ratio. 

  • Front-end DTI Ratio – The front-end ratio is your debt-to-income ratio looking at just the monthly housing expenses. The principal and interest payments, property taxes, mortgage insurance, and homeowners insurance.
  • Back-end DTI Ratio – Your back-end debt-to-income ratio factors in total monthly debt obligations such as auto loans, credit card payments, and housing costs.

How to Calculate your DTI Ratio?

“total monthly debt payments” divided by “monthly income” = debt-to-income ratio

1. Take your annual income and divide it by 12 to get your monthly income.

2. Add up your reoccurring monthly expenses such as:

  • Minimum monthly payments on credit cards
  • Auto loans
  • Student loans
  • Personal loans

Note: To find your back-end DTI ratio add your monthly mortgage payment

3. Divide your monthly debt obligations by your monthly income to get your DTI ratio

For example: If your yearly income is $60,000 and your total monthly debt payments come to $1,000

$60,000 divided by 12 = $5,000

$1,000 divided by $5,000 = .2

= 20% debt-to-income ratio

Debt-to-Income Ratio Needed for a Mortgage

The maximum debt-to-income ratio lenders require depends on the type of mortgage loan you’re applying for. For a conventional loan, the maximum DTI ratio is 43%. Government home loans such as FHA and USDA loans allow for DTI ratios as high as 50%.

Maximum DTI Ratio by Loan Type

  • Conventional loans – 43%
  • FHA loans – 50%
  • VA loans – 50%
  • USDA loans 50%
  • 203k loans – 45%

How to Reduce Your Debt-to-Income Ratio

If your DTI ratio is too high to get approved for the loan amount you’re looking for, you need to take some steps to lower it. Such as choosing a longer loan term that will lower your monthly payment by stretching out your payments over a longer timeframe.

Ways to Lower Your Debt-to-Income Ratio

  • Get a 40-year fixed-rate mortgage
  • Get a second job
  • Refinance your loans
  • Pay off credit card debt

Source: thelendersnetwork.com

How to Decide Where to Live If You Work Remotely From Home

When you no longer need to physically report to work, it detaches where you live from where you work. Suddenly you can live anywhere in the world, rather than being restricted to a single city.

It’s an incredibly freeing feeling. But it also leaves remote workers, freelancers, and other digital nomads with an overwhelming abundance of options. How do you choose a place to live when you can live anywhere on the planet?

As you review the following checklist, sort it by your priorities. For some, living near their parents or children is nonnegotiable. Others feel perfectly happy living in another state or even another country.

Most of all, look to design your perfect life starting from the ground up, in the most literal sense.

Choosing a Country & State

It never occurs to most Americans that they might enjoy living in another country. Most never even move to another state; North American Moving Services reports that 72% of Americans live in or near the town where they grew up.

Yet as an expat myself, I can tell you firsthand how many advantages you can find living in another country. I’ve also lived in multiple U.S. states, some of which I liked far more than my home state.

Consider the following as you choose a country and state to live in, and don’t get caught up in the details of “how” when you first consider places to live. Focus on the “why” first, and when you’ve chosen a country or state based on your ideal lifestyle, you can then figure out the “how.”

Time Zone

As an international school counselor, my wife gets job offers all the time in Asia and the Middle East. But my business is located in the U.S., and I refuse to do any more 3am conference calls.

Just because you can work remotely doesn’t mean you can necessarily set your own hours. And even when you can set your own hours, you still have to communicate and collaborate with others. That could mean coworkers and supervisors, or it could mean partners, suppliers, or clients. Sometimes you need to hop on a phone call with people in real time, and if they work in a time zone on the opposite side of the world, that means working inconvenient hours.

Know your work, and set your own limits on time zones.

Proximity to Family

If you can’t stand the idea of living more than an hour away from your family members, you have a clear radius you must live within. It makes your decision easier, if more limited.

But if you have a little more leeway, such as a living “within a few hours from family, it frees you up to explore travel by air and rail rather than just road travel.

For example, if you want to be able to reach your family within three hours, that gives you 150 to 200 miles of driving radius but over a thousand miles of flying radius. You can then start looking at cities with cheap direct flight routes (more on that shortly), rather than simply drawing a circle around the town where your family lives and shackling yourself to it.

Tax Policies

Different countries tax in vastly different ways. As a remote worker, you have the luxury of choosing a low-tax country or state.

My wife and I spent four years living in the United Arab Emirates, where they don’t charge income tax at all. That saved us tens of thousands of dollars in taxes every year, allowing us to save and invest that money to build wealth faster.

Even within the U.S., some states charge vastly higher taxes than others. Look at total tax burden, combining income tax, property taxes, and sales and excise taxes to compare states and countries, and start with these states with the lowest tax burden.

The difference can easily amount to thousands of dollars a year — a sum that can dramatically change your quality of life and wealth over time.

Connectivity & Communication Infrastructure

Becoming a digital nomad requires a strong digital Wi-Fi connection. In today’s world, most cities around the globe offer reliable, fast Internet connectivity. But smaller towns in developing countries may not meet your needs.

Ask around among residents, especially knowledge workers and expats, before moving to a smaller city in a developing country. If the connectivity and communication infrastructure can’t meet your needs, look elsewhere.

Climate

Not everyone wants to spend half the year bundled up in coats and scarves to weather the frozen tundra. I certainly don’t.

Consider climate as you choose a country and state to live in. Whether you enjoy having four distinct seasons or would just as soon hike and swim all year round, find a place where you actually enjoy the weather most of the year.


Choosing a City

Many countries and even states are sprawling, with an enormous diversity of big cities, small towns, and everything in between.

As you consider the best cities for remote workers, keep the following factors in mind to choose the right fit.

Airport Routes

Not all airports are created equal. Depending on your penchant for travel, you may want easy access to a major international airport with hundreds of flight routes.

Smaller regional airports often only offer a few routes to nearby hubs. It adds hours to each trip, and usually costs more to boot.

If proximity to family matters to you, then air routes can play a major role in where you feel comfortable living. You can cross a thousand miles in two hours of direct flight time, or you can waste 10 hours on multiple flight legs, layovers, and driving gaps.

Natural Amenities

There’s an old trope that all people fall into one of two camps: seaside people or mountain people. Whether you buy into it or not, the fact remains that you can’t have every natural amenity you want, so you have to choose based on your priorities.

Few cities sit nestled between tropical beaches and mountains with pristine skiing. You can find cities with beautiful shorelines and beaches, cities up in the mountains near great hiking and skiing, cities near wine country, and everything in between, but it’s hard to find cities with everything. Prioritize what you want because it’s hard to get it all.

The few cities with easy access to many natural amenities — such as San Francisco and Santa Barbara — tend to come with outrageously high living expenses.

Cost of Living

The median home in San Francisco ($1,405,199) costs nearly 20 times the price of a median home in Cleveland ($73,686), according to Zillow. Twenty times!

Put another way, you could buy your own home in Cleveland plus 19 rental properties, all generating passive income, for the same price you’d spend on only your residence in San Francisco. The rental income from those 19 properties would likely cover your living expenses, allowing you to reach your financial goals faster.

Cost of living matters. It doesn’t just mean the difference between affording a three-bedroom and a four-bedroom house — it often means the difference between becoming wealthy and living a middle-class lifestyle. Between being able to pay for your kids’ college education or not. Between retiring at 45 and retiring at 70. Between an acceptable quality of life and a great one.

If you can earn a New York City salary without paying New York City rents, find somewhere fun and affordable to laugh all the way to the bank.

Keep in mind that cost of living doesn’t just include lower housing costs. Low cost of living can include low food and grocery costs, cheap restaurants and nightlife, low utility costs, affordable health care, and other discounts that help you save money across the board.

As a final thought, take a second look at living overseas. Start with these countries where you can live a luxurious lifestyle for $2,000 a month.

Cultural Amenities & Local Culture

For many people, the local culture matters, both in terms of amenities and the people themselves.

That could mean access to museums, sports teams, art galleries, and performing arts. Most smaller towns only offer these cultural amenities sparsely, although exceptions certainly exist. Larger cities tend to offer more of these amenities, though they still vary greatly.

Beyond amenities, most people also prefer to surround themselves with those culturally similar to them — politically, socioeconomically, and linguistically. If this kind of similarity is important to you, consider moving somewhere where you feel you’d fit right in and where the local values reflect your own.


Choosing a Neighborhood

As someone who hails from Baltimore, I can assure you that different neighborhoods within a city can feel like completely different cities. So choose your neighborhood with care.

Safety

When you can live anywhere, there’s no reason to live somewhere unsafe.

People feel comfortable with what they know, but you don’t have to play that game anymore. Choose a city and neighborhood with extremely low crime rates. With the world at your fingertips, you have infinite options.

And bear in mind that your impressions of a place might not match the reality. I still laugh when I think of my friends’ and family’s reactions when I told them I was moving to Abu Dhabi: “What?! Is it safe?!” Not only is it one of the safest cities in the world, but I was moving there from one of the most dangerous of the U.S. cities. Yet my family in Baltimore couldn’t wrap their heads around that notion.

Try NeighborhoodScout or AreaVibes to research any city’s, zip code’s, or neighborhood’s crime statistics.

Quality of Public Schools

In some cities and neighborhoods, the public schools are so bad that middle-class parents are forced to budget the money to send their children to private schools. It severely restricts their budget and savings rate.

Again, when you can telecommute, you don’t have to play by those rules anymore. You can pick a school district with outstanding public schools and actually cash in on those tax dollars you have to pay regardless.

Alternatively, you could home-school your children. But that requires far more effort and time on your part, both in educating them and in making sure they get plenty of social interaction with other kids.

Try GreatSchools.org to look up school quality measures for any given district.

Walkability

When my wife and I lived in the U.S., we each had a car, as many Americans do. Then we moved overseas, and our home sat in a somewhat walkable neighborhood. We shared one car there, which worked out well.

The next time we moved, we intentionally chose a city and neighborhood that was extremely walkable. It lay within walking distance of my wife’s work, a coworking space for me to work from, and dozens of restaurants, bars, retail stores, and other amenities. We no longer own a car at all, and I don’t miss it in the slightest.

When you can walk, bike, or Uber everywhere, it forces you to be more active. Physical activity aside, living without a car also saves you a phenomenal amount of money. The average American spends $9,282 per car every single year, according to AAA, between maintenance, repairs, gas, parking, insurance, and car payments.

Public Transportation

Similarly, an extensive public transportation system can also help you ditch your car while still letting you reach every amenity you need.

A city with excellent public transportation can reduce your transportation costs and save money far faster.


Choosing a Home

Found the perfect corner of the world to live in?

With the hard part behind you, you can focus on the easier business of finding a hospitable home.

Before even deciding whether to rent or buy a home, start by deciding how long you plan to live there. When you buy a home, you take an initial loss based on the closing costs, both those incurred to buy the home and the second round of closing costs you owe when selling it. It takes time to recover these expenses by building equity.

If you don’t know how long you plan to stay or plan on just a year or two, renting is definitely your best option. Beyond two years, sometimes it makes sense to buy. You have to calculate the costs both ways. Be sure to include all ownership costs, including maintenance, repairs, insurance, property taxes, and both rounds of closing costs. Far too many people just assume they should buy without actually running these numbers.

Bear in mind your changing needs in the years to come. For example, if you plan to have a family, you may need another bedroom or two soon. You may want to rent rather than buy if your needs may change shortly.

Many telecommuters prefer to work from home rather than from a coworking space or coffee shop. You can avoid distractions and boost productivity by choosing a home with a dedicated home office, rather than working from the sofa or dining room table.

Whether you have children or not, many people love having their own outdoor space. It proved a consistent trend during the COVID-19 pandemic. Suburban and rural areas saw a spike in demand as people clambered for outdoor space to call their own.

When you move to a new city, rent for a few months or a year before buying. It takes time to get to know a new city, and giving yourself the luxury of time helps you discover exactly what you want for the long term before you commit.


Visit Before Moving

Word to the wise: Don’t uproot yourself and move across the country or world without visiting your destination first.

It’s all too easy to fall in love with the idea of a place. But your vision of a city and the reality of living there will inevitably clash, so take the time to discover those differences firsthand before you move.

A long weekend spent visiting is better than nothing. A week gives you a better sense, and a month better still.

Walk the streets, talk to the locals, test the Internet speed. Get a sense of the local culture, eat the local food, attend the kind of social and cultural events you would if you lived there. You may find you love it just like you imagined — or you might discover it’s nothing like you envisioned.


Final Word

No one says you have to stay in the first place you move.

Remote work offers endless possibilities and lets you live anywhere in the world. I’ve lived in six U.S. states and five countries, some of which I enjoyed far more than others.

As you design your perfect life, bear in mind it will always be a work in progress. You don’t have to get it exactly right the first time around, and even if you do, your needs and wants will continue to evolve.

Stretch yourself and your comfort zone as you explore ideas for the ideal place to live. Otherwise, you’ll limit yourself to what you already know and remain one of the 72% of Americans who live where they grew up rather than choosing a home that fits the life they truly want.

Source: moneycrashers.com