Money Management

Closing costs can be expensive, but they don’t have to be. Read on for a few ways to reduce them so you can bring less money to the closing table. 

If you’re thinking about buying a home, or in the process of doing it right now, you’re probably counting your pennies as hard as you can. And for good reason — it’s super expensive to buy a home in today’s market, so every bit you can save right now can make it easier to buy a house. Although you can’t do much about a lot of the fees associated with buying a home, there are ways you can save on closing costs (or at least defer them until you’re a bit better off financially).

I made you a short list.

1. Don’t buy optional points

There are a couple of different kinds of points you can buy that are associated with your mortgage. Some are not optional, and others, like discount points, are. Discount points are basically a fee you pay to reduce your home’s interest rate. Each point or fraction of a point reduces your interest rate by a set percent, based on your lender’s internal rules.

Although it may be really tempting to buy discount points for your mortgage right now, it takes several years for them to pay for themselves, and in the meantime, you have to fork out the cash to cover them. If you’re cash thin, skip the points. You can refinance later if rates drop.

2. Pay for inspections out of pocket

Your closing costs are made up of all kinds of different fees that are collected by your closing company and bundled together. Sometimes, home inspectors will let you pay their fees at closing, or your real estate agent may already have a deal set up with their favorite home inspectors so this is the default.

The average cost of a home inspection for a 1,500 square foot home in the United States is $413, which can add a big chunk to your closing costs if paid at closing. Arrange to pay the inspection fee with funds you have on hand (do not put it on a credit card, as this can mess up your debt-to-income ratio, as well as your ability to get a mortgage).

3. Get several insurance quotes

Since you generally have to prepay a few months of your homeowners insurance at closing to establish your escrow account, the cheaper your insurance, the less you’ll pay for it. This, by no means, implies that you should cut corners or get sketchy homeowners insurance, but you should definitely shop around. There are lots of different homeowners insurance companies out there that rate customers on different factors to determine their risk, and some will give you a much more favorable rate than others.

In addition, moving your home and auto to the same insurer can score you discounts on your homeowners policy, and being a member of certain organizations will also help you earn more discounts. For example, I used to get a 10% discount for being a member of the National Association of Realtors.

4. Close at the end of the month

There’s a lot of debate about when is the right time to close your home’s loan, and there are a lot of different reasons why certain times of the month are right for certain buyers. But you’re a buyer who needs to minimize your closing costs for whatever reason, and that means that you need to close at the end of the month.

Mortgage payments are always paid on the first of the month, so when you pay a prorated portion of the mortgage at closing, you’re paying from that day to the first of the month. The less of that month left, the better. Since mortgage interest is calculated daily, the fewer days, the less you have to pay at closing. It’s a bit more complicated than this, but the main takeaway is that closing later in the month is cheaper.

5. Get first-time home buyer assistance for closing costs

In many states, you can qualify for closing cost assistance if you’re a first-time home buyer, and in some cases, even if you’re not. This assistance comes in a lot of forms, including as “soft” or “quiet” second mortgages that follow your home, but you don’t have to pay until you sell. The terms of many of these first-time home buyer assistance programs are such that if you stay in your home for a set number of years, the second mortgage is forgiven, and essentially becomes a grant.

If money is tight but you really need to buy a home, these programs can really change your trajectory. They’re not always the easiest to qualify for, and they don’t always cover all your closing costs, but the amount you’ll save on closing day can be tremendous.

6. Ask sellers to pay

If the problem you have with your closing costs is that you simply can’t afford them and your down payment, another solution is to ask the sellers to pay for your closing costs as part of the initial offer. This is completely legal and is allowed under most mortgage programs, up to a certain percentage of the property’s price. There’s a caveat, of course — your future home has to appraise for enough to cover both the amount that your seller wants to cash out of the home, plus the additional closing costs that you’re essentially including in the loan.

This is the most expensive way to reduce your closing costs in the long run, because you’ll be paying interest on them for as long as you have the loan, but it can be a good solution for someone who is in a tricky spot. Understand that you won’t win a bidding war by asking the sellers to pay your closing costs, but if you’re in a less competitive market, this is still a potential solution. Ask your favorite mortgage lender for more information on how much you can ask the sellers to pay on your behalf.

You can save money on closing day

Closing day can be really expensive, and the thought of taking on a new mortgage loan can be terrifying, but there are a lot of ways to minimize how much you have to give up on that big day. Just make sure that you understand the risks and requirements involved with different ways of reducing your closing costs before you commit to them.

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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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October is pumpkin central at Trader Joe’s. Read on to see what new items are in store. 

Grocery store shelves tend to be loaded with pumpkin-flavored items during October. And Trader Joe’s is no exception. Here are some fabulous autumn-inspired treats you’ll find on the shelves this month.

1. Gluten Free Pumpkin Spice Bagels

People with gluten sensitivity often miss out on breads and bakery items. But not at Trader Joe’s. Even if you and gluten don’t mesh, you can still get your fill of pumpkin spice bagels. Trader Joe’s is selling a 13-ounce bag for $4.49. For a real treat, find some pumpkin-flavored cream cheese and go all out.

2. Petite Pumpkin Spice Cookies

Pumpkin cookies are a great way to celebrate the fall season with a little sweetness. What makes these Trader Joe’s cookies so great is that they’re itty bitty, so you can have several without feeling too guilty or full. Plus, they’re fun to look at. You’ll pay just $3.99 for a 10-ounce box.

3. Pumpkin Recipe Dog Treats

Who says only humans can enjoy their share of pumpkin products this October? Trader Joe’s has got your furry friends covered, too. These dog treats are made with real pumpkin, which can be good for dogs’ digestive systems. And at just $4.29 for a 16-ounce box, you may want to pick up extra to last beyond fall.

4. Pumpkin Ice Cream

If you love pumpkin and you love ice cream, then this is a product you’ll want to check out. Trader Joe’s pumpkin ice cream is heavy on the pumpkin and loaded with fall spices that include cinnamon, nutmeg, and ginger. This super-rich ice cream is a true indulgence, and a one-quart container will cost you only $4.99.

5. Mini Spicy Pumpkin Samosas

Hosting a gathering this month — maybe a football party on a Sunday afternoon? These mini pumpkin samosas make a great appetizer. They’re warm and comforting with just the right amount of heat. Serve them on their own or with a cool yogurt dip. An 8.5-ounce box will cost you $4.29.

Be careful when loading up on pumpkin products

You may be eager to get your fill of pumpkin products while they’re available. But before you do, be mindful of your finances.

If money is tight and you don’t normally buy a lot of pumpkin items, then it’s important to focus on the staples you usually bring home. It’s okay to spend extra money on pumpkin-flavored goodies, but only if you can swing it without risking credit card debt.

Remember, too, that even if you’re a fan of all things pumpkin, when you buy something new, you take a chance — a chance that the item in question won’t taste the way you expect or go over well with the other people in your household. You never know when a given product might be too pumpkin-forward, or not pumpkiny enough. So you may want to limit yourself to a handful of pumpkin items at Trader Joe’s — or any other store — rather than go all out.

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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.Maurie Backman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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There is a magic dollar amount that could guarantee you a Powerball jackpot win. Here’s what you need to know. 

When it comes to playing the lottery, people can be pretty superstitious. Some only play their favorite numbers, while others will only buy tickets from a particular place. But ultimately, there’s only one thing that’s proven to increase your odds of taking home that sweet, sweet jackpot: Buying more tickets.

With enough time and money, it’s technically possible to guarantee yourself a win. But it might come at a higher cost than you were expecting. Let’s take a closer look at the math.

Here’s how much you’d have to spend to win the Powerball jackpot

The odds of winning the Powerball jackpot — currently estimated at $1.4 billion for Saturday’s drawing — are 1 in 292,201,338. Since a Powerball ticket costs $2, that means you’d have to spend $584,402,676 to purchase every possible number combination and guarantee yourself the victory. So basically, you’d have to have already won the lottery before to make this strategy remotely feasible.

And even if you had the cash to pull this off, you couldn’t do it alone. You’d need close to 3 million tickets. With only two to three days between drawings, you’d need to find a way to obtain 1,127 to 1,691 tickets per second to have them all in time for the next drawing. So unless you’ve got an army of helpers to go along with your hundreds of millions of dollars in your bank account, it’s not happening. Sorry to disappoint you.

Here’s how much you’d have to spend to claim smaller Powerball prizes

The following table gives the odds of winning each of Powerball’s smaller prizes. The winning amounts assume you opt for a standard $2 ticket instead of paying extra for the Power Play. As you can see, it’s not promising.

At a minimum, if you wanted to ensure some kind of Powerball win, you’d have to spend $52. That’s enough to get you a ticket with each of the Powerball numbers — 1 to 26. If you did that, you’d guarantee yourself a $4 win. And I don’t know about you, but that seems like an awful lot of work for what would likely turn out to be a $48 loss after factoring in the amount spent on tickets.

I don’t say any of this to discourage you from playing the lottery if you’re comfortable with the risks and can afford to lose the cash. I’ve even been known to throw a couple of dollars in the ring for my chance at the big money when the jackpot is high. But a Powerball win definitely shouldn’t be part of your long-term plans for your future.

How to increase your odds of growing your wealth over time

If you want to grow your wealth over the long term, investing is a smart way to do it. There’s still an element of risk involved, but you’re a lot more likely to wind up with a profit over the long term. Of course, that depends on how you’re investing too.

If you take all the extra cash you have and throw it on a single penny stock, you’re basically still gambling. To give yourself the best odds of success, you need to spread your money around between at least 25 stocks (or an index fund). And ideally, you want these to be from proven, strong companies you expect will continue to grow and improve their business far into the future.

Investing isn’t a get-rich-quick scheme. If you’re looking for one of those, you may as well keep playing the Powerball and hoping for the best. It obviously works out for some people. But for the majority of us, we have to take things a little slower and focus on building our wealth up a little at a time. Nothing will ever match the thrill of holding a winning lottery ticket. But watching your investment portfolio make slow and steady progress comes with its own kind of reward.

If you’re willing to give it a try, you first need to open a retirement account or a brokerage account where you can invest your funds. Start small if you have to. Consider saving those few dollars you planned to spend on lottery tickets at first. Then, add more cash as it becomes available to you. As you watch your portfolio grow over time, you might even decide it’s more worthwhile than risking your hard-earned cash on Powerball.

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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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