Money Management

You might struggle to sell a townhouse after buying one. Read on to learn about one homeowner’s frustrating experience. 

In 2021, when mortgage lenders lowered their rates, my friend and her husband were eager to take advantage by purchasing a townhouse. At the time of their purchase, which was during the summer that year, the average 30-year mortgage rate was still under 3%. As such, they decided to move forward despite the home being priced at a higher number than what was typical for the community they bought in.

Fast forward 2.5 years later, and my friend and husband are looking to sell. They’re aiming to expand their family and feel they’ll outgrow their townhouse quickly once that happens. And they’d also like the benefit of more privacy.

Meanwhile, home inventory is low these days on a national level. As of the end of November 2023, there was only a 3.5-month supply of available homes, according to the National Association of Realtors.

Because of this, my friend assumed their home would fly off the market. Three months later, she still hasn’t found a buyer. And she thinks these are some of the reasons why.

1. Buyers will only pay so much for a townhouse

For what my friend paid for a townhouse, she almost could’ve gotten a standalone house in the same vicinity had she been willing to wait longer to buy. But since no one knew how long mortgage rates would remain low a few summers ago, she opted to take the opportunity to buy something.

My friend’s real estate agent says she should, in theory, be able to command the price she wants for her townhouse. In reality, buyers don’t seem to be biting. And my friend suspects it’s because they don’t want to pay her asking price when for just a small amount more, they could have a detached home with more privacy.

2. She doesn’t have an end unit

When you’re buying in a townhouse community, it’s generally a good idea to try to purchase an end unit. That way, you won’t share a wall with as many neighbors.

Since inventory was slim when my friend was looking to buy, she had to settle for a unit with neighbors on both sides. Thankfully, she’s been fortunate to have considerate neighbors who don’t disturb her. But she can see why a buyer may not want to take that same chance.

3. Her HOA fees are expensive

On top of her monthly mortgage payments, my friend pays dues to her homeowners association (HOA) for things like exterior maintenance. And those dues are on the high side.

Now, my friend’s townhouse community offers a number of benefits, including a pool that’s open seasonally, a playground, and a clubhouse. The more amenities a given HOA provides, the higher the dues are likely to be. But given that she’s not asking a small amount for her home and that mortgage rates are pretty high right now, she can see why buyers may not want to take on the added expense of HOA fees.

Be careful when buying a townhouse

For many people, a townhouse can serve as a nice starter home. It can also be a suitable option for people who don’t want to spend a lot of time on maintenance, since exterior items are commonly covered by the HOA a townhouse is a part of.

But the one issue you might run into with a townhouse is struggling to sell it — especially if you end up wanting to sell at a time when the borrowing environment isn’t so favorable for buyers. So if you’re going to buy a townhouse, make sure you intend to stay put for at least a few years so you can build some equity. Also, try to buy at a time when that home is competitively priced. Otherwise, you might really struggle to get your money back at resale.

For now, my friend is holding firm on her home’s asking price since she’s not necessarily under pressure to move — it’s more of a want. But if it sits much longer, she may have to go that route, which isn’t ideal at all.

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The average American has $201,000 in equity in their home. Here’s where equity comes from, and why it’s a good thing to have equity in your property. 

When you buy a house, one of the big benefits of doing so is that you begin to build equity. Equity is the difference between the market value of your property and the amount of money that you owe to your lender. It’s basically the money you have invested in the house that you’d walk away with if you sold the property.

The more home equity you have, the better. You can tap into this equity by getting a second mortgage or home equity loan, or you can walk away with the money when you sell the home and use it to buy a new property or other things.

Whether you’re currently a homeowner or hope to become one in the future, it can be interesting to see how much equity you have compared to your fellow Americans. Here’s what you need to know to figure that out.

Americans have a lot of equity in their homes

According to the Federal Reserve, for families who owned a home in 2022, the median equity in the house was $201,000 in 2022. This is a huge increase from the $139,100 in median equity that homeowner families had in 2019.

Homeowners acquired a lot more equity in their homes because property values went up so much during the pandemic. But even as property values rose, there wasn’t a big increase in the amount of people taking on debt. Homeowners across pretty much all income levels saw their home values increase, so people across the board found themselves with a lot more equity.

It’s great news that so many people now have homes worth so much more than they owe on them. The rise in housing values not only helped people increase their net worth, but it has also given people more options such as being able to sell, take their profits, and downsize to smaller homes they may be able to afford with cash or with much smaller mortgages.

Unfortunately, now may not be a great time for homeowners to try to tap into the equity in their houses because mortgage rates are very high. That means refinancing or taking out home equity loans may not be worth it. And selling may not be a great idea right now for those who’d have to turn around and buy a new house with a home loan — which would likely have a much higher rate than they had if they got a mortgage over the last few years.

But the great thing is, unless home values plummet, homeowners will keep that equity and it will be there to borrow against or otherwise benefit them in the future when and if mortgage rates fall.

How can you build equity in your house

Having equity in your home is a good thing, so it’s important to understand how you build it. Basically, there are a few ways:

You build equity when your home goes up in value. You don’t have much control over this, but rising property values are a huge reason so many Americans have so much more equity now.You build equity when you make payments to your mortgage lender or make a large down payment. The smaller your mortgage balance relative to your home’s value, the more equity you have.You build equity when you improve your home’s value. If you install a new kitchen, for example, your home value would rise because of it.

You can work on paying down your mortgage and keeping your home in good condition and you’ll naturally build equity over time — which will go a long way toward helping you grow your wealth over the long term.

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Want to buy an electric vehicle in 2024? Buying used could be better for your bank account. See how you can save $4,000 with a used EV tax credit. 

If you want to buy an electric vehicle (EV) in 2024, it’s important to stay on top of the latest changes in the EV landscape. The rules for EV tax credits have changed for 2024 in a way that might make buying new EVs less appealing.

New electric vehicles continue to be significantly more expensive than gas-powered cars, and many people might suffer from range anxiety (concern over running out of battery), higher costs of auto insurance, or lack of reliable EV charging stations. Electric vehicle charging infrastructure is still being built, and many states offer tax credits and rebates for home charging stations. But some people might worry about arriving too early for the EV party.

With all of these factors in flux, the idea of buying a new EV might feel a little too risky, confusing, and expensive. If you want to buy an EV in 2024, buying a used EV could be a smarter move for your personal finances. Let’s look at a few reasons why.

$7,500 EV tax credits for new cars are harder to get in 2024

The federal government is offering significant tax credits of up to $7,500 for buying new EVs, but not all vehicles qualify. The tax credits are intended only for vehicles made from parts and materials that are mostly made in (or sourced by) U.S. companies. Some new electric vehicles in 2024 are no longer eligible for the $7,500 EV tax credit, or even for a reduced $3,750 credit.

According to Inside EVs, several models of electric vehicles, including the GM Chevy Blazer EV, the Ford Mustang Mach-E, and a few variants of Tesla Model 3, have lost their eligibility for EV tax credits. These changes might be temporary — car makers can regain eligibility for the EV tax credits if they change their supply chains to get more U.S.-made parts and materials. But it’s another sign of how uncertain the shopping environment for new EVs can be.

Why this makes used EVs a better buy: If you can’t get a tax credit for buying a new EV, buying a used one might be more cost-effective.

Used EVs can get tax credits of up to $4,000

The news about EV tax credits isn’t all bad for car shoppers: pre-owned EVs can also qualify for an EV tax credit of up to $4,000. And starting from January 2024, EV tax credits (for new and used cars) can be applied immediately to the purchase of your vehicle at the auto dealership.

This means that if the car you want to buy qualifies for a tax credit (your dealer will tell you), you can let the dealer give you an immediate rebate on your car sale, and the dealer gets reimbursed by the IRS. It’s like getting an immediate cash discount on your EV, instead of having to wait to file next year’s taxes.

If you want to get a $4,000 tax credit on your used EV, there are a few rules, including:

You must buy the vehicle from a dealer.The sale price of the pre-owned EV must be $25,000 or less.The tax credit is 30% of the sale price, up to $4,000. So if you buy a $25,000 car, even though 30% of $25,000 is $7,500, you can only get $4,000 of EV tax credit.The EV’s model year must be two years (or more) prior to the current year. (So you could get a car from model year 2022 or older — but some model years are too old, because those older EVs and plug-in hybrids don’t have the right battery capacity or sourcing requirements of the tax credit law.)Your modified adjusted gross income (AGI) must be $75,000 or less (for single filers) or $150,000 or less (married filing jointly).

The used EV tax credit can be applied to qualifying vehicles that are all-electric, plug-in hybrid, or fuel cell electric. To learn more about the rules for the used EV $4,000 tax credit, and see a full list of vehicles that qualify, check out the U.S. Department of Energy’s fuel economy site, fueleconomy.gov.

I did some quick car shopping on Cars.com for examples of used EVs that might qualify for the $4,000 used EV tax credit. Here are a few cars that I found on my national search:

2021 Volkswagen ID.4 Pro with 26,510 miles. Price: $24,8552016 Audi A3 e-tron plug-in hybrid with 51,226 miles. Price: $17,9902021 Chevrolet Bolt EV with 4,647 miles. Price: $23,977

I found plenty of used EVs and plug-in hybrid cars with low mileage and competitive pricing. As part of your online used EV shopping, get price quotes from car insurance companies. It might be cheaper to get insurance for a used EV than a new one.

You can keep your EV battery warranty

People may worry that they won’t have enough life left on the battery if they buy used. But EV car batteries typically have a warranty of at least eight years or 100,000 miles. And when you buy a used EV, if your battery still has some time or mileage left under warranty, you’re covered too!

Bottom line: If you’re tired of paying for gas, and you can charge your EV at home, buying a used EV could help you save significant money in 2024. Depending on the used EV you choose, you could save an extra $4,000 at the dealership.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.

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The new year brings lots of opportunities to find good deals. Take a look at a few items you can likely find on sale right now. 

January is often a good time of the year to get your personal finances in order. The post-holiday shopping period comes at the same time many people are resetting financial goals and planning for the year ahead.

But if your finances are already well in order and you’re on the hunt for some good deals, these five items are usually on sale in January and might be worth splurging on.

1. TVs

It’s no secret that many televisions go on sale in January as retailers discount TVs ahead of February’s big game.

Many retailers use this period to sell last year’s model at a lower price, giving you the chance for big savings. Improved manufacturing processes and increased competition have driven TV prices down even when inflation was rising, making it potentially easier than ever to find a good deal.

Some 55-inch TVs can be yours for less than $250. If you racked up cash back rewards during your holiday shopping, you could use them to bring that price down even further.

2. Linens

Bedding, towels, and blankets often go on sale in January, and you can often score significant discounts. Department stores and online retailers typically discount linens and other similar items between 40% and 70%, giving you the perfect opportunity to grab an extra set of flannel sheets to ride out the rest of winter.

3. Fitness equipment

You know this one had to be on the list! Many Americans commit to fitness goals for the new year, and retailers look to tap into that demand by discounting workout equipment and clothes. You may be able to find deals for up to 60% off in January.

And even if you don’t have specific workout equipment needs, you might benefit from the more general wellness deals that some companies offer. I did a quick search and found fitness trackers, vitamins, blenders, and other related items on sale.

4. Leftover holiday items

I was in a store just a few days before Christmas, and even then, all the decorations looked pretty well picked over. But January can still be a great time to find holiday items you weren’t ready to add to the credit card last month.

I found everything from Christmas candles to red and green storage bins to turkey roasting pans with a quick search on Target’s website. Take a tip from me and look for the best deals online instead of hunting through the bare shelves.

5. Winter clothes

If you didn’t get the sweater or jacket you wanted for Christmas, don’t fret. There are lots of winter clothes deals beginning in January as retailers look to move cold-weather clothes off the shelves.

Even though winter has just begun, retailers always look ahead to the next shopping season. Some companies start putting out spring clothes as early as February, which means you can find big discounts of up to 75% off some winter clothes this month.

Budget for your winter shopping

While it can be tempting to whip out your store card and start buying up every deal, it’s best to do winter shopping on a budget. There are plenty of easy-to-use budgeting apps that will help you track your spending and keep you on track for your 2024 financial goals.

It’s also a good idea to download a few price comparison apps. You’ll be able to find the best deals faster than browsing sites on your own, and can even set up price drop alerts.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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There’s a big cost difference between business class and economy. Check out easy and effective travel hacks to get cheap business-class flights. 

The business-class experience can be incredible, especially when you compare it to economy. Goodbye cramped, uncomfortable seating where you need to battle for the armrest. In business class, the seats are spacious — they may even turn into beds — and the in-flight meal service is a giant step up.

A premium experience also normally comes with a premium price tag. If you want to book a business-class ticket on an international flight, it could cost $3,000 or more each way.

Some people see those hefty ticket prices and decide to stick to economy. But there are several easy hacks that savvy travelers use to book business class at a fraction of its typical cost.

1. Start earning credit card travel rewards

The best way to save on business class is with travel credit cards. You can use these cards to earn points or miles, and then use those rewards to pay for business-class airfare.

If you always fly with the same airline, you could open one of its airline credit cards. When you use an airline card, you earn miles that you can redeem with that airline. But if you’re not loyal to one airline, a better option is a travel card with transferable rewards. These are travel cards that let you transfer your rewards to airline partners.

Instead of having miles that you can only use with one airline, you’ll be able to transfer your rewards to any of your card issuer’s partner airlines. This gives you far more options for booking business class.

2. Fly to an affordable destination

Airfare tends to be much cheaper when you fly to places with a lower cost of living. That’s true with economy and business-class seats. So if you’re hoping to have a better travel experience, without shelling out thousands of dollars for a flight, try looking for more affordable destinations.

Latin America is a popular choice because it has a low cost of living and it’s not far from the United States. I’ve often found business-class tickets for $500 to $700 traveling to and around Latin America. If you’re interested in going to Europe, Portugal and Spain are two of the less expensive options.

3. Go where the deals are

If you’re the adventurous type, another way to save is an open-ended flight search. Many flight booking tools, including Google Flights and Skyscanner, let you explore destinations this way. Here’s how:

Choose your departure airport.Select the option to search for business-class flights.Enter your desired travel dates.In the destination field, choose the “anywhere” option.

You’ll get a list of places you can visit, with prices for business-class airfare. Open-ended flight searches have become popular — Skyscanner reports that 1 in 2 travelers start their searches without a destination in mind.

4. Compare prices on different travel dates

When you’re trying to get cheap flights, being flexible makes it much easier. Flights sometimes cost half as much, or less, depending on the travel dates you choose. This is true when you’re paying in cash or credit card miles.

The cheapest days to fly are Tuesdays and Wednesdays, according to research by CheapAir.com, so you may want to start your search there. With most airlines and online travel portals, you can quickly jump from day to day and see which have the lowest prices. Many airlines also have low-fare calendars where you can quickly check prices for an entire month at a time.

5. Upgrade your way into business class

Can’t find a deal on the flight you want? You could book an economy ticket, and then see if it’s possible to upgrade it later, space permitting. This is more of a gamble, so only do it if you wouldn’t mind flying economy.

The upgrade process will depend on the flight and the airline. Some airlines give you the option to pay a flat fee for an immediate upgrade. Others use bidding systems, where you bid the amount you’re willing to pay, and the airline later lets you know if your bid was accepted.

You don’t need to stretch your travel budget to the limit for a business-class flight. If you shop around for deals, are flexible about when you travel, and use credit cards that earn travel rewards, you can fly this way at a reasonable cost.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

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A CD can come with a predictable return and a higher interest rate than many savings accounts offer. Read on to see why you may want to invest in one. 

In 2022, just 6.5% of Americans owned certificates of deposit (CDs). That’s a really small percentage of people who have this investment.

While CDs may not be the most popular asset to buy, there are a few really good reasons why you might want to own one. In fact, here’s why putting some of your money into a CD could be a smart move for you.

1. CDs are safe investments

A certificate of deposit is not a risky investment. When you buy a CD, the bank or financial institution offering it promises you a guaranteed return on your investment (ROI). As long as you don’t take out your money early and get hit with penalties, you will get the ROI you were offered upfront. You will definitely get your invested funds back, plus the interest that you were expecting to earn. So there won’t be surprises.

Generally, CDs are also FDIC insured up to $250,000. So if you choose an FDIC-insured CD, not only do you get your money back that you invested if the bank fails, but you also get any interest that you’re due to be paid up until the date the bank defaults. So, the government is guaranteeing you’ll get your funds. That means you can’t lose when you put your money into a CD.

2. You can usually earn a higher return than you could with a savings account

CDs are as safe as savings accounts, although they are not as liquid — you can’t just take your money out whenever you want if you invest in a CD.

In exchange for agreeing to lock up your cash for the length of the CD term, you usually do get a higher ROI than you would with a savings account. In fact, the table below shows the average interest rates for savings accounts versus CDs, according to data from the FDIC from Dec. 18, 2023.

Many CDs and many high-yield savings accounts currently offer rates well above these averages, but even when comparing these two products, CDs tend to beat out savings in terms of your ROI.

Plus, savings account rates are variable and will go down if rates fall, while your rate is locked in for your entire CD term. So, if you want a higher-yield product and you want to ensure you keep your higher rate for a while, a CD may be a better bet.

3. You have flexibility in how long you’ll need to lock up your money

Finally, there’s another benefit to CDs. You have flexibility in how long you’ll commit. While it may seem scary to agree to lock up your money and not take it out for the CD term, there are many CD options with terms as short as three months, and some financial institutions even offer 1-month CDs. So, you don’t necessarily have to make a huge time commitment.

Ultimately, if you have some money you may not need for a little while — either a few months or a few years — you may want to seriously think about using it to buy a CD. Research the best CD rates out there to see if any of these great financial products could work for you.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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