Money Management

No one knows for sure when rates will drop, but they could start coming down sometime in 2024. Find out more here. 

Elevated mortgage interest rates have sidelined potential home buyers, leaving many waiting to buy homes when the conditions are more favorable. Right now, the average interest rate for a 30-year year mortgage is around 7%.

But some experts are already predicting when rates could be significantly lower. The Mortgage Bankers Association (MBA) recently forecasted interest rates to be 6.1% at the end of 2024 and fall to 5.5% at the close of 2025.

Those are just forecasts, of course, and no one knows where interest rates will be two months from now, let alone two years. But there are indications that lower rates could be on the way.

Why some people are getting more optimistic about housing

The latest U.S. Labor Department data showed inflation was flat in October and rose just 3.2% over the past year. This was welcomed news that inflation has cooled down, and some experts took it as proof the Federal Reserve no longer needs to increase rates.

And some are even hoping that mortgage interest rate cuts are on the way. However, it’s more likely that Fed officials will hold rates steady for a while, observing if inflation continues to moderate before they decide on any further rate adjustments.

How to put yourself in the best position to buy a house

Instead of simply waiting for interest rates to fall, you can do a few things right now to put yourself in a better financial position when they do come down. Here are just a few.

1. Pay off debt

Mortgage lenders will evaluate your finances partly based on how much debt you have relative to your income. If you have several credit cards maxed out and a big car payment, they may be less inclined to give you a mortgage.

So, as you wait for rates to fall, work on paying down your debt. You can use the debt snowball method to focus on the smallest credit balances first and work your way up to bigger ones.

2. Improve your credit score

It’s no secret that people with higher credit scores usually get better interest rates. If your credit score isn’t great, the good news is that there are mortgage lenders for bad credit. Even better news is that you can do something about your credit score.

I listed paying down your debt first on this list because not only could it help you obtain a mortgage, but it will also help boost your credit score.​​ A big portion of your FICO® Score — 35% — is determined by your payment history, and 30% is determined by how much of your available credit you use.

Making regular debt payments on time will help you lower your debt obligations and improve your credit score at the same time.

3. Don’t make any big changes

Mortgage lenders want to see that your income is steady and your debts aren’t increasing. As you get closer to the time when you want to buy a house, you may want to avoid changing jobs, and you definitely don’t want to take on any new debt, like buying a car.

4. Save as much money as you can

This is an obvious one, but save as much money as you can to put toward your down payment. Additionally, lenders may want to see that you’ll have enough money in your savings account to cover closing costs in addition to the down payment.

With some loans, you may be able to apply a monetary gift to the down payment from friends or family. Redfin said recently that nearly 40% of home buyers used a cash gift or inheritance to help them with their down payment.

You can’t control when mortgage rates drop (believe me, I would have if I could), but you can focus on the above to get yourself ready to pounce when they do.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More 

Hosting Thanksgiving this year? Read on for some Costco products you may find helpful. 

If you’re hosting for Thanksgiving, now’s the time to start gathering your favorite recipes and stocking your kitchen with all the items you’ll need to pull off an amazing meal. While you could run up a tab on your grocery credit card to load up on Thanksgiving dinner staples, you may want to try Costco first. Here are a few low-cost items to consider picking up.

1. Ocean Spray Craisins

Whether you’re using them as a salad garnish or as part of a side dish, dried cranberries fit into a host of Thanksgiving dishes. Right now, Costco is selling a 64-ounce bag of Ocean Spray Craisins for $9.99 online (your price might be lower at your local Costco store). At just $0.16 an ounce, you won’t have to feel guilty about snacking on some during your Thanksgiving Day prep.

2. Idahoan Real Premium Mashed Potatoes

Mashed potatoes are generally considered to be a staple item at Thanksgiving dinner. But let’s face it — unless you have a really awesome recipe or use a boatload of butter, there’s a good chance you’re going to end up with a heaping pile of leftovers. As such, why not go the instant mashed potato route and save yourself the hassle? Costco is selling a 3.25-pound box of Idahoan mashed potatoes for $10.99 online. It’s gluten free and has enough product for a whopping 65 servings.

3. Del Monte Canned Corn

Is your famous sweet corn casserole the highlight of your Thanksgiving meal? You can buy a 12-pack of Del Monte brand canned corn for $12.99 online at Costco, or check out your local warehouse club for what’s likely to be even more savings. In fact, this item is only available on Costco.com for two-day delivery, which means you’ll need to meet an order minimum of $75 to avoid a shipping charge.

4. Dixie Ultra 10-1/16″ Paper Plates

Nobody who hosts Thanksgiving wants to spend the next bunch of hours afterward washing dishes. So even if you’re someone who’s normally environmentally conscious, you may decide that Thanksgiving dinner is going to be served on paper. If so, now’s a good time to scoop up a pack of 186 Dixie plates.

They’re high in quality, so you can pile on the food without them leaking or caving in on you. At a price of $20.49, you’re looking at just $0.11 per plate — though once again, this item happens to fall into the two-day delivery category if you’re ordering it online.

5. Swanson Chicken Broth

You may need chicken broth as a base for a number of your Thanksgiving side dishes, from stuffing to sweet potato souffle. Costco is selling a 12-pack of Swanson chicken broth for $7.99 online as part of its two-day delivery program. This particular broth has 33% less sodium than Swanson’s regular chicken broth, so it may be a good bet if you have people coming for dinner who need to be mindful of their salt intake.

Whether you’re excited to make Thanksgiving dinner or are growing increasingly stressed about it by the day, Costco has great prices on a host of staple items you might need to pull off the big event. It pays to head over to your local store this week to see what’s in stock (and how much cash you could save). Or, order your staples online, but do so quickly to make sure you don’t run into issues with shipping delays.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

 Read More 

‘Tis the season to be jolly…and spend money. Read on to find ways you can give yourself the gift of earning more in the future. 

No matter what holiday you celebrate, this time of year is filled with gift-giving. And while it may bring you great joy to find just the right present for each person in your life, it’s important to treat yourself a little, too.

You could buy a new gadget you’ve been eyeing or a new pair of boots you’ve been coveting. But you may want to consider directing some of your funds to one of the following options that can earn you money in return.

1. Switch to a high-yield savings account

The average annual percentage yield (APY) on a savings account at a brick-and-mortar bank is 0.45%, according to the FDIC. While that’s not exactly nothing, it’s underwhelming. If your emergency fund is currently stored in one of these accounts, consider switching to a savings account that can earn you more.

High-yield savings accounts offer a much higher rate than the average. This year, many have hovered at or above an APY of 4.5%. That means if you have $5,000 in a regular account earning the average APY, your savings would grow by $21.04 in one year. If you had that same money tucked away in a high-yield account, you’d instead gain $229.70 by year’s end.

2. Open a brokerage account

Investing can feel like an intimidating prospect, but it doesn’t have to be. If you don’t yet have a brokerage account, consider opening one and dipping your toes in the investing pool. There are plenty of great brokerage accounts for beginners that offer user-friendly interfaces and educational resources.

Opening an account with a stock broker gives you the opportunity to earn money on your money. You can start simple and invest in an exchange-traded fund (ETF). These funds allow you to essentially put your money into a group of stocks rather than picking out individual ones, meaning you don’t have to do so much research into particular companies and can still have diversified holdings.

With the average annual return on the S&P 500 index over the past 50 years sitting at 10%, chances are good that if you invest with the long term in mind, you’ll be better off financially down the road.

3. Meet a 401(k) match

If you work for a company that offers a 401(k) match, please, please do what you can to meet that match. Quite simply, this is free money, and who wants to pass that up?

Your company might match up to a certain percentage of your income, or a certain dollar amount. Whatever the policy, find out what the maximum match you can receive is and aim to contribute at least that much to your 401(k). Doing so will double your investment — at no extra cost to you.

4. Max out an IRA

Individual retirement accounts, or IRAs, are another great way to make your money work for you. As the name implies, these savings vehicles allow you to put aside money that you can access in retirement (specifically, after age 59 ½). Money in an IRA is tax-deferred and can grow tax-free — a benefit not afforded to money in a regular brokerage account.

You can also open a Roth IRA, which you fund with after-tax dollars. The benefit of these accounts is that you don’t pay taxes when you withdraw your money in retirement.

There’s an annual combined contribution limit on IRAs — in 2023, it’s $6,500 for those under age 50, and $7,500 for those 50 and older — but they’re a great option for setting aside more money and allowing it to grow.

5. Invest in furthering your education and career

Whether you choose to take a one-time class, commit to an ongoing program, or go back to school for a higher degree, spending money on your education is an excellent use of your money. Improving your knowledge base puts you in a great position for a raise at work or for a lucrative career move in the future.

If you have any interest you’ve wanted to pursue but are worried about the cost or the time commitment, give yourself permission to go for it. It’s very likely that a small investment in your career today will pay you back generously down the road.

Think outside the tinsel-wrapped box

While the “gifts” on this list may not look like your average stocking stuffers, the benefits they can bring you will have you writing thank-you notes to yourself for years to come. Whatever your current personal finance situation, consider unwrapping one, a few, or all of these presents this holiday season.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

Doing your share of holiday shopping? Read on to see why it pays to support the small businesses in your town instead of giant retailers. 

At this point, it’s pretty fair to say that the holiday shopping season is in full swing. And ideally, you’ve been padding your savings account for quite some time to be able to buy the things you want and need.

Now, you may be inclined to do a fair amount of your holiday shopping at big-box retailers. After all, these stores can offer competitive prices because they see so many customers day in, and day out.

If you do most of your holiday shopping at small businesses in your area, you might end up spending a little more money than you would at larger retailers. But here’s why it pays to shop small and local regardless.

1. You’re putting money back into your community

When you support small businesses in your area, you help those businesses thrive. And that’s a good thing, because you want an active business scene nearby.

Think about it this way. Let’s say there’s a bookstore in town that’s forced to shutter due to a lack of business. If you then have to drive 15 minutes to the nearest bookstore, that’s less convenient than strolling into town and visiting a shop three minutes away.

2. You’re helping to create local jobs

Small businesses tend to hire locally. So let’s say you have a teen who will soon be old enough to work. Would you rather they be able to walk a few blocks to an after-school job? Or do you want to have to spend the time and gas money to drive them to a big-box store 12 miles down the highway?

3. You’re helping to maintain or increase your home’s value

The more built-up a given neighborhood is, the more the homes there are likely to be worth. While it’s true that an increase in property value could lead to a higher property tax bill for you, it also gives you more home equity to borrow against should that need arise. Plus, you may want to sell your home at some point. Wouldn’t you rather it be worth more rather than less?

4. You might enjoy superior products and customer service

Big-box retailers see their fair share of business, and losing a customer here and there is generally not a big deal. Small businesses tend to see things differently. They tend to value their customers and go out of their way to deliver good customer service. You may enjoy a better experience when you shop at a local business.

Plus, while you might spend more at a small business, think about the quality of the products you’re getting. You might find a pair of boots at a big-box store for $49.99, but they might only last you a year. You might spend $100 at a small business for a similar item. But if that purchase lasts four years, that’s the better deal.

Shopping locally during the holidays may not be your most cost-effective bet. But there are other benefits to consider outside of near-term savings. A good 36% of Americans intend to shop on Small Business Saturday, according to recent data from Drive Research. If you care about your community, then you may want to seriously consider joining their ranks.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2025

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR for 15 months, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

It’s rough out there in real estate. Here’s why housing is so expensive and what you can do about it. 

Interest rates have brought a near-freeze to the housing market. The latest National Association of Realtors data shows just 3.9 million existing homes were sold in September, a 15.4% drop from the same time a year ago.

The Federal Reserve has hiked the federal funds rate 11 times since 2022 to cool inflation. Those rate hikes have caused mortgage interest rates to rise, climbing from 2.7% in November 2020 to 7.5% right now.

The rising rates have essentially wiped out any possibility of home buyers finding a great deal on a house, and it’s still unclear where the housing market goes from here.

Cheap housing is nearly non-existent right now

To give you an idea of how much interest rates have affected housing affordability, let’s look at the price of a theoretical home with two different interest rates. If you bought a $350,000 house in late 2020, had a 20% down payment, and were able to score an interest rate of 2.7%, your monthly mortgage payment (principal and interest) would be about $1,136.

But if you bought a similar $350,000 home right now, with a 20% down payment with interest rates at 7.5%, you’d pay $1,958 per month. That means buying a home of the same price today is $822 more per month than just three years ago.

If that weren’t bad enough, the home prices have also soared over the past few years. The pandemic set off a buying frenzy in the housing market that has wreaked havoc on prices. The average selling price of a home was $337,500 toward the end of 2020, but it has since climbed 27.7% to 431,000.

Adding even more fuel to the fire of housing costs is the fact that the price of homeowners insurance has also increased dramatically. Homeowners insurance prices are up 21% nationwide over the past year.

How to prepare to buy a home in this climate

Home affordability is the worst it’s been in 40 years, according to mortgage technology company Black Knight. Clearly, it’s not a great time to buy a house.

First-time home buyers and many others are sitting on the sidelines, waiting for interest rates to fall. There’s no telling when that will happen, and the Federal Research has indicated it’s still open to raising rates further if inflation doesn’t continue to make progress. Still, some experts think mortgage rates will be much lower by the end of 2024.

Still, you may need, or just want, to buy a house right now. Here are a few things you should do to help your situation:

Save as much money as possible: This applies to any time you’re considering buying a home, but it may be especially important now. The more money you have for a down payment, the lower your monthly mortgage payment will be. Shop around for a mortgage lender: Not every lender looks at your financial situation the same way, and not all will offer you the same mortgage terms. That means you could get a better interest rate by comparing lenders. Consider new construction: One place where you still may find a lower interest rate is by purchasing a new construction home. Some large home builders offer discounted rates if you get a mortgage through their preferred mortgage lender. Shop around for homeowners insurance: With the rapid rise in insurance prices, comparing insurance companies to ensure you’re getting the best deal is more important than ever.

While finding a great deal on a house may be out of the question, following some of these suggestions could help put you in a better position when you’re ready to buy a home.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More