Buying your first home is a stressful experience. When the initial excitement of deciding on the perfect neighborhood, finding the best house for your budget, and signing on the dotted line begins to fade, you’re left with coming up with a down payment, signing loan documents, handling inspections, escrow, and the anxiety that comes with packing and moving all of your belongings. It’s easily one of the most stressful times in anyone’s life.

With that said, my husband and I moved into our first home just last summer, and I can honestly say that it was one of the most frustrating and anxiety-inducing experiences that I’ve ever experienced. Now, from this awful experience, I was able to gain some knowledge on the entire process, and I can say that there are things that I would do differently if we had it all to do over again. That’s what I want to share with you today. I want to give you some advice that I wish someone had given me before we went through this entire process.

Ensure you’re working with quality people

Our first real estate agent was a nightmare to work with. She recommended a loan officer who couldn’t get us approved with favorable terms, she didn’t answer phone calls (or return the call in a timely fashion), and she was quick to show us properties that didn’t contain the items on our wish list, or were too far above our agreed upon budget.

It didn’t last long. We ultimately hired a real estate agent who put us in touch with a loan officer who we loved (and would highly recommend), was more than thoughtful about returning calls, and showed us just what we wanted to see without pressuring us to view properties in a separate part of town, or that were above our price range. It was slow going, but she found us the house of our dreams, and for that we’re highly appreciative.

Anticipate hiccups

Nothing goes right when buying a house. Anticipate these issues before they happen, and you’ll find that you’re much more likely to laugh when they do as opposed to stressing out. Oh, and in anticipating thing going wrong, don’t buy a house without hiring (and listening to) a home inspector.

Accept that you can’t have it all

You might not find everything on your wish list in your budget, or you might learn that living just outside of the area that you had initially chose actually makes more financial sense. Unless you have a budge that supports it, you have to understand that — at some point in the process — you’re going to have to compromise. We didn’t get it all, but it’s better than renting.

Hire movers

I wish I had. We looked up the cost of hiring movers to move us out of our condo and into our new home, but ultimately decided that we’d just take a few days off and do it ourselves.

Big mistake. The cost of the movers was only slightly more than the cost of us both taking off work, and we managed to damage more than a few items in the process. In addition, it seems like the entire thing was one big fight. Next time, I’m going to overrule my husband and hire movers to complete the job.

Buying a home is exciting, and although it can be an unimaginably stressful experience, it’s one that I believe we go through for a reason. This new home is where future memories are going to come from, and you don’t get to experience these amazing things, without a little hard work first. Enjoy your new home, and the lessons you learned in obtaining it.

Eliminating Stress When Purchasing Your First Home is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The 20 percent mortgage down payment rule is all but dead. Still, many home buyers think they need that much or near it to qualify for a home loan.

The average down payment on a home with a mortgage was 11 percent in 2016, according to a report by the National Association of Realtors. For borrowers under age 35, the average down payment was just under 8 percent.

Coming up with any down payment — whether it’s $20,000 for a 10 percent down payment on a $200,000 loan, or less, — can be difficult.

Some home buyers may consider getting the money from a source where they may have a lot of money stashed away — their 401(k) retirement plan. Borrowing against the balance of an employer-sponsored retirement account is an option in 53 percent of 401(k) plans, according to the Employee Benefits Research Institute.

Up to half of an account balance or $50,000, whichever is smaller, can be borrowed in a 401(k) loan. A credit check isn’t needed for approval. Interest rates are usually low, about two points above the prime rate.

Borrowing from yourself for down payment

The loan must be repaid, with interest, in monthly or quarterly installments. The full loan must typically be repaid within five years, though it can be extended if used for a down payment on a primary residence. You’re essentially paying yourself in principal and interest, instead of a bank.

If a payment isn’t made within 90 days, the amount borrowed is considered a distribution from the retirement account and is taxed as income. If you’re under age 59-1/2, you’ll also pay a 10 percent early withdrawal penalty.

If you quit or lose your job before the loan is repaid, you must pay the outstanding balance within 60 days.

Down payment can lower compounding interest

In the long term, a 401(k) loan leaves you losing out on compounding interest on the money you’ve borrowed. Also, people with such loans have been found to decrease or stop contributing to their retirement account during the years they’re repaying it. All of this can hurt your retirement fund balance.

A 401(k) loan should probably be your last option for coming up with a down payment for a home. Even if your retirement plan allows it, there are other options such as grants and other financial assistance programs through various housing agencies that are better alternatives.

But if a 401(k) loan is something you think you can repay within a few years, and you don’t have better options, then it may be worth exploring.

Why You Don’t Want to Borrow From 401(k) for Home Down Payment is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

If you aren’t sure what this means, flipping a house is basically investing in a house, fixing it up as quickly as possible, and selling it to reap a profit. But, can you start flipping houses as a side hustle?

Research Flipping Houses

First things first, know what you are getting yourself into. Flipping houses can be a lot of work. While it can make a great side hustle, sometimes it’s going to take working long hours on the weekends and after your full-time job.

You’ll have to understand the ins and outs of real estate, understanding the costs and how things can add up, negotiation strategies, and more. Flipping houses isn’t for the faint of heart, but knowing what you’re getting yourself into can save headaches down the road.

Have Cash (or Know Someone Who Does)

If you’re struggling to pay your bills or save money, flipping houses is not for you. In fact, I only recommend this side hustle if you can put some money upfront for a house and the repairs, or if you can find an investor willing to work with you.

If you choose the latter, make sure you have a contract in place and that everyone understands their roles and duties. Remember to talk profit percentages. Who gets what, and when? Whos job is it to sell the home? Asking questions like these will make sure everyone is on the same page.

If you choose to buy the homes yourself, understand that trying to finance a home for the purpose to flip requires jumping through a lot of hoops. It may be easier to pay for the home in cash and then getting a loan for the repairs (if needed).

Have Help

If you’re flipping houses a side hustle, it’s important to hire help. It will be hard buying, renovating, and trying to sell a home all by yourself. Outsourcing certain jobs, like landscaping, roofing, etc can save you time and energy. Many people who flip homes as a side hustle generally work with a contractor, but that’s a whole other story.

Once the home is ready to be sold, you can hire a real estate agent, or at least have someone come in and give you the renovated home’s value and comps in the area.

Understand Taxes on Flipping Houses

A lot of house flippers talk about taxes, and you should be wary of them and understand them if you want to flip houses as a side hustle. Sometimes, you can get away with being taxed less. For example, if you work a full-time job, flipping a home may not be considered as part of your regular income. Also, after doing some research, I’ve found that some people “hold” their flipped properties to save on taxes.

It’s important to know the local, state, and federal laws in your area when flipping houses. Take the time to read through each piece of info. Ask lawyers and tax professionals the questions you need to. Take the time to understand the tax information now, so you aren’t regretting it later.

Know Your Timeframes

You have to understand that being a part-time house flipper isn’t going to be as quick and easy as doing it full time. You won’t be able to flip a home in 3 weeks, no matter how hard you try. Instead, set reasonable deadlines. If you are working with a contractor or any hired help, make sure they have reasonable deadlines as well.

If you have to, set up a schedule based on when things need to be accomplished. But, don’t beat yourself up if things don’t go according to plan. Renovating a home takes time. A lot of time. Even the most experienced flippers come across things that take longer than expected. So just be aware of what’s going on.

Don’t Base Changes On Emotions

Always remember that if you are flipping a home to sell, you are NOT the homeowner. You’re an investor. Don’t choose a paint color because it makes you feel good. Choose a neutral color that will suck in possible buyers. Don’t renovate the bathroom to look like yours. Renovate the bathroom to fit what a buyer would want.

By taking your emotions out of the equation, you’ll be able to flip houses much more quickly and easily, plus you’ll save yourself some headache on trying to reason with a buyer on why you choose hot pink carpet.

Flipping homes can be a lucrative, time-consuming, and even fun side hustle. These are just a few tips to start you off on what may because one of the best side hustles you’ve ever done.

Flipping Houses as a Side Hustle is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

While many people choose to rent instead, you can still afford a house when you’re broke. Here are a few steps to take if you want to own your own home.

Weigh Your Options

If you live in an area that buying a house is cheaper than renting (even factoring in insurance and repairs), it may be your best option to buy a home instead of rent. When trying to afford a house when you’re broke, you may think that moving is expensive, but it doesn’t have to be.

Some expenses may come up in your first few months of owning a home, but that is to be expected. Think about it this way: If you typically rent for $1,500 a month and you buy a home that only costs $800 a month, you are already saving $700 every single month. If something breaks down, and it costs $500 to fix, you still get ahead by $200 by having your own home.

Now, owning a home isn’t always cheaper, so it’s best to weigh your options. However, in many areas, including my own, owning a home tends to fare better than renting.

Look Into Assistance to Afford a House

Every state has home buying programs that can help you afford a house when you’re broke. While the assistance varies from state to state, it’s still worth it to look into what yours offers. Some will help you secure a loan as a first-time home buyer, even if you are low-income.

Some states even offer grants to move into less desirable areas or moving into more deserted places. It’s best to look into these programs to see what you qualify for, you may be able to get your home for a lot cheaper than you first thought.

Choose The Right Loan

All conventional mortgages require a 20% down payment. But other loans such as VA (military) loans and FHA loans require no money down or as little as 3.5%. If you don’t have a 20% down payment, there is still hope to afford a house when you’re broke.

In some cases, an FHA loan may not be the best option. With an FHA loan, you will be paying at least .85% of your loan in mortgage insurance every single year. That only goes away when you refinance or:

1. Have at least 20% of equity in our home; or
2. Paid at least 20% of mortgage payments

While conventional loans may have higher interest rates, you can avoid PMI fees.

Location Can Make A Difference

If you are looking for a home in an affluent neighborhood, chances are that it’s going to cost you. You may have to settle for less or pay hefty fees. Instead, try looking in neighborhoods that have fixer uppers, or are a little more affordable.

This doesn’t mean you have to sacrifice your safety, but it does give you a little more flexibility and opportunity to afford a house when you’re broke.

Lower Your Loan

Even with the economy and recession, many Americans are still qualifying for loans way above their means. While this may seem like a great thing at first, instead you will be getting a home that you can’t afford.

To make sure that you can afford a house when you’re broke, try using an online calculator to see what payments would work best for you, and keep your loan in that amount. And remember, you don’t have to take all of the money that the bank offers you.

Cut Unnecessary Spending

If you can’t afford a 20% down payment on your home, and won’t have extra cash in your budget to prepare for emergencies, it’s time to cut back on your expenses.

Try living frugally, like making your own food at home vs. going out to eat, or cutting down on expenses like your phone bill. To be able to afford a house when you’re broke, you’ll have to make a few sacrifices in other areas.

Be Happy With Your New Home

When you are trying to afford a house when you’re broke, you may have to make a few sacrifices on your first home. You may not get all that you wanted on your wish list, but that’s okay.

Everyone starts somewhere, and you can always get a bigger and better home later down the road. But for now, be satisfied with what you have.

It’s not impossible to afford a house when you’re broke. It just takes some careful planning, research, and savings. A home is a great thing to have.

How To Afford A House When You’re Broke is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

But, if you think you are ready to buy a house, don’t forget about these important considerations first.

Saving Up a Down Payment

Sure, you can sometimes get a 100% loan for the purchase of a house but the market has moved away from these in past years since the housing market crashed, and the first homes to be foreclosed were the ones financed at 100%. Usually a down payment is about 20% of the homes’ value and you finance the remaining 80% with a mortgage loan.

20% may not sound like a lot, but depending on the cost of the house you want to buy, it can be actually take quite a bit of cash to make a down payment.

Location, Location, Location

It’s amazing how much the location of the property you are going to buy can make a difference in whether or not you are ready to buy a house. Part of this is because the price of properties can vary widely in different areas. It’s always a good idea to do some shopping around to decide what area you want to live and work in before you buy a house. Lend Lease have houses for sale in Melbourne and you can easily price compare them online with houses in other areas.

Maintenance and Repairs

Another one of the most costly things about being a homeowner is maintenance and repairs. When you rent a home, the landlord is responsible for at least most of the repairs and maintenance of the property, but when you are a homeowner you have to take on this responsibility. A lot of house maintenance and repairs are DIY type projects, but if you don’t have the skills to do it yourself, you’ll have to spend more money to hire a professional to do it instead.

What the Future Holds

You never know what the future holds in 5 years, 10 years, or even 6 months from now. You might have a very solid 5 year plan, but that doesn’t mean life will work out that way. One nice thing about renting is that you can pick up and move much more quickly than if you are a homeowner who has to put their house on the market and find a buyer.

Plus, if you don’t plan on living a house for at least 3 years (or more depending on the source), it’s usually not worth it to buy a house because of the money you’ll lose in closing costs and other fees. In these types of situations renting is probably best.

The decision between renting and buying, and when you are actually ready to buy a house, is a tough one. There are many factors to consider in this life-altering decision and these are just some of them.

Are You Ready to Buy a House? is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

The following is a guest post.

I just turned 29, so I’ve got a full year to make sure my 20’s were the foundation for a good financial life. I’m happy with some of the decisions I made, unhappy with others.

Generally, people wake up to the value of money in this decade. Some overachievers get the idea a bit younger, with teenage investors growing up to be among the world’s billionaires.

Making money is all about time. Some make it fast through ingenuity and hard work. But these folks are outliers. You and I are playing for scraps compared to the world’s richest people. And that’s fine, because it’s possible to make a perfectly wonderful life for yourself with even moderate wealth.

Personal satisfaction is a characteristic all its own. Financial security has something to do with it, but it’s also possible to cultivate it despite your net worth. That said, here are the three financial moves that I think are just about essential for anyone in their 20’s. I won’t tell you which ones I’ve managed to accomplish myself…

• Start Investing. Investing takes many, many forms. But all forms of investment require time. On one extreme, you’ve got Forex, a form of day trading that allows you to make many investments a minute, if you’re really fast. Forex is based on making value judgments on the near-future values of currency pairs relative to one another. If you can get good at anticipating the way they’ll change value, you can make a lot of money fast. On the other extreme, you’ve got long term mutual funds, which are meant to be bought a held, growing over months and years and decades with the US and global economies. This is all well and good, but if you never start investing you’ll never make any money, and this is money that you’ll need for your future! So invest!
• Get Out of Debt. You’ve just got to do this. In fact, you won’t be able to do #1 until you’ve accomplished #2. Getting out of debt requires a set of skills. You’ll have to change your spending patterns and adjust your expectations for what a good time looks like. You may have to learn how to cook, come up with quick meal ideas, get different friends, or move to a cheaper area. But whatever you do, get out of debt. Debt is a boa constrictor. In your 20’s it is hurting your present. In your more distant future, it’ll strangle your finances completely.
• Buy a House. This is controversial, and also not a reasonable goal for all. But if you can possibly buy a fairly sturdy house in an area that has appreciating real estate, you will be very glad you did. You’ll lose so much money through rent. You probably already have. Add up all the monthly payments you’ve made to landlords over the years. Doesn’t that total make you mad? If you had bought a house ten years ago, you’d still have all that money in the form of equity. Don’t sit there steaming; start saving for a down payment and get a little credit history so you can get a mortgage loan when you’re ready.

Have you accomplished these 3 things? What other things do you think need to be accomplished during your 20’s?

3 Financial Moves to Make in Your 20’s is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Most first-time homebuyers often debate whether they are ready to invest in their first properties and transition from renting to buying. Hesitation on such large purchases is inherent.

However, rent prices are more expensive than ever, prompting many lessees to dip into their savings and apply for mortgages without second thought. After all, owning an affordable home is a long-term investment that hopefully presents returns at resale, whereas renting only helps the landlord build equity.

The American dream of buying a home and make the transition from renting to buying starts with sensible financials, but homeownership isn’t for everyone. Ask the following questions before breaking a lease and moving money around to support a down payment.

Is a mortgage affordable?

Generally, putting down at least 20 percent of a home’s purchase price with a loan covering no more than 80 percent is recommended when making the transition from renting to buying. Loans of more than 80 percent of the home price often require homeowners to pay additional insurance to protect their lenders’ investments, called private mortgage insurance.

Credit scores significantly impact interest rates offered to borrowers, even when buyers provide heftier down payments. Typically, credit scores under 680 are red flags to bankers. They might agree to financing, but usually with increased interest rates or less favorable terms.

Prospective buyers should raise their credit scores before applying for mortgages to receive optimal offers. Individuals with credit scores above 750 receive lower interest rates, allowing them to put more money toward their principals and build their equity faster.

When researching the transition from renting to buying, don’t forget about closing costs, or mandatory fees charged by lenders and third parties, which typically range between 2 and 5 percent of a home’s purchase price. Some homeowners can negotiate for their mortgage lenders to pay for closing costs, but unsurprisingly, the deal usually entails higher interest rates that cost borrowers more over the life of their loans. Sellers sometimes agree to cover these costs, especially when they receive their initial asking prices without bargaining.

Who does the current market favor?

Determining the financial benefits of making a transition from renting to buying requires an understanding of the current real estate market. In some locales, renting is inexpensive and therefore more cost-effective for the majority of residents unconcerned with building equity.

In most major metro areas, renting is the norm as it allows for more freedom. However, rents are currently at historical highs. In these rent-heavy cities, leasing becomes cost-prohibitive quickly and the price of a mortgage is more affordable than continuing to rent. The formula to determine the time it takes for buying and renting to equalize – and owning to eventually become cheaper than renting – is known as the breakeven horizon.

The breakeven horizon estimates the point at which buying a home becomes cheaper than renting. Renters looking for apartments in Dallas, for instance, face a median rental price of $1,244 per month. After only 1.1 years of renting in Dallas, buying becomes more financially beneficial than resigning a lease. Further, the median list price of homes for sale in Dallas is $249,000, which isn’t far from the national median of $211,400.

Dallas is much cheaper than a hot market like San Francisco, where the median list price is a staggering $947,000. Prospective Dallas homeowners, on the other hand, would only have to save $50,000, assuming a 20 percent down payment on a $250,000 purchase price, before beginning their home searches. To compare rental properties and homes on the market in Dallas or other areas, visit Zillow. 

How much should homeowners save?

Spending every dime saved to buy a home and make the transition from renting to buying presents many issues. One is that working individuals should have substantial savings for emergencies. Layoffs, illnesses or other events usually require more than one paycheck to address.

Homeowners facing unexpected expenses might struggle to keep up with their home payments, and therefore go into default with their lenders, putting themselves at a high risk of foreclosure.

An appropriate savings goal for financially-minded homeowners is six months of expenses dependent on lifestyle. For example, an individual living on $5,000 a month would be wise to accumulate $30,000 in savings. After accruing six months of living costs, devote additional money to high-earning investments.

Keep in mind additional post-purchase costs, including homeowners association fees, utilities, landscaping and plumbing, among others. Also consider career and future plans when considering the transition from renting to buying.

Homeowners usually remain in one city long-term, especially if they want to receive returns on their investments. Owning a home is a serious commitment, which is why many choose to rent regardless of high rates and lack of equity – the sense of freedom can be priceless and not worth the transition from renting to buying.

Photo credit: Tax Credits.net via Flickr Creative Commons.

When to Transition From Renting to Buying is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.

Fannie Mae is the name commonly associated with the Federal National Mortgage Association. It is a publicly traded company that is sponsored by the government with the purpose of expanding the secondary mortgage market by allowing lenders to reinvest their assets. Fannie Mae may have properties for sale because a homeowner was unable to avoid foreclosure on the home in which Fannie Mae was the investor

HomePath and Fannie Mae

HomePath.com by Fannie Mae provides a home buyer with the tools to search for a home that fits with his or her price, location, size and style preferences, as well as offering financing with a low down payment and flexible mortgage terms.

Related Article: How To Buy A Foreclosure

HomePath has one distinguishing feature when it comes to their home search, and that is that they only offer listings for foreclosed properties owned by Fannie Mae. The selection of properties includes single family homes, townhouses and condos. While sales prices vary, most are newer homes that require repair. HomePath financing is only available for properties owned by Fannie Mae by result of a default mortgage, and they claim to have special offers and incentives but also mention home buyers have their choice of lender.

Foreclosures and the Housing Market

While HomePath provides housing options on the real estate market, they are ruining the housing market by only providing financing for foreclosed homes owned by Fannie Mae. Foreclosed homes are homes that the previous owner could not pay the mortgage on, and therefore, they were turned over to its lender (the “bank”). Foreclosed homes are bad for the housing market because they typically sell for lower prices, and, as a result, they lowering the value on neighboring homes for sale.

Related Article: Why Harp 2.0 Will Not Work and How Banks Really Think

HomePath.com is doing potential home buyers an injustice by only offering listings on foreclosed properties and not allowing them to search for other homes that fit their price, location and size requirements.

Why purchasing a foreclosed home from Fannie Mae is bad for the housing market…

• The economy receives zero stimulation for the purchase of a foreclosed home because all of the funds go back to the lender to make up for the mortgage that was defaulted on by the previous owners. Whereas a person selling his or her home generally makes a profit and usually has money to spend, and/or the realtor makes a commission and also has money to spend.

With HomePath financing, Fannie Mae is the only company to see any of that money.

• The lower price of a foreclosed home reflects poorly on the value of neighboring homes and can result in a much lower selling price for the other houses on the street.

• Foreclosed properties are flooding the housing market, and other home sellers are having a hard time competing Fannie Mae, which is promoting this by only offering financing for foreclosed properties.

• A foreclosed home is sold “as-is” and many times, it is not properly inspected, which can lead to problems for the new owners. They might have a false sense of security when they acquire the home at a low price, but in reality, it is in need of costly repair.

Because HomePath by Fannie Mae only offers financing on foreclosed homes and foreclosed homes are bad for the housing market and economy, Fannie Mae is helping to bring down the real estate market.

While buying a foreclosed home is not necessarily a bad thing, you should make sure to do your research. You do not want to be tempted by the low price tags and end up buying something that is not worth the money.

Have you ever bought a foreclosed home? Did you flip it? Keep it? Have you used HomePath? Tell us your story!

How Fannie Mae HomePath Financing is Ruining the Housing Market! is a post from: When Life Gives You Lemons. Did you like the post? Follow me on Twitter, like me on Facebook, or hop on over to my blog and leave me your feedback.