Money Management

Foreclosure could make it difficult to buy another home, but eventually, you might qualify for a mortgage. Read on to learn more. 

The foreclosure process can be miserable for not only the homeowners who are subject to it, but for the mortgage lenders that have to initiate it. Foreclosure can be costly and expensive for lenders, so in some cases, yours might be willing to work with you to help you avoid it. That could mean modifying your mortgage to lower your monthly payments, or allowing you to put your loan into forbearance for a period, thereby pausing your payments.

But if that doesn’t work, and you fall too far behind on your mortgage payments, then you may end up subject to foreclosure — and the loss of your home. If that happens, you may need to resign yourself to renting a home. But eventually, you may be able to qualify for a home loan once again. The question is, when?

When you’re looking for a conventional mortgage

A foreclosure can deal a major blow to your credit score, so you’ll generally need to build your credit back up before applying for a mortgage again. But you should also know that a foreclosure will remain on your credit report for seven years, says Experian. And during that time, you generally will not be able to qualify for a conventional mortgage.

That said, in some cases, you may be able to whittle your waiting period down to three years if you can prove that extreme circumstances resulted in your foreclosure. For example, if you were injured or were dealing with an illness that forced you out of work, you may be able to point to that as a reason why you wound up in foreclosure, and a lender might agree to give you a new mortgage before that seven-year period is up.

There are other loan types you can look into

While you might have to wait seven years to get a conventional mortgage following a foreclosure, the waiting period for an FHA loan is shorter — usually three years. And you may not even have to wait a full three years if you can show proof of extenuating circumstances that led to foreclosure for you.

Meanwhile, if you’re eligible for a VA loan, you may be able to qualify for a mortgage two years after a foreclosure (though the same possibility of shortening that period due to proof of extreme circumstances applies here, too). VA loans also offer the benefit of not having to make a down payment on a home. However, as you might imagine, you can only qualify for one if you’re a member (current or former) of the military or the surviving spouse of someone who served in the military.

While foreclosure can be a troubling thing to go through, and it can have longer-term repercussions, the good news is that if you work to rebuild your credit, you can get another mortgage and buy another home. You may just have to wait a bit of time.

But frankly, if you’ve been through foreclosure, it means your financial situation got pretty dire. So even if there wasn’t a mandatory waiting period to get another home loan, it would probably be in your best interest to hold off anyway.

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 

Homeownership isn’t ideal for me. But read on to see why I do it anyway. 

If you’re someone who rents your home, you’re in good company. As of 2019, 36% of U.S. households consisted of people who rent, according to Pew Research Center data.

But I’m not part of that statistic. I happen to own my home, and I’ve been in that boat for well over a decade now.

If it were up to me, however, I’d much prefer to rent a home. But there’s a big reason why I can’t.

Owning a home can be a real drag

I spent my first few years of young adulthood renting a home, and it worked out great. Sure, there were times when I wished my landlord would’ve addressed repairs more quickly (like the time my shower wouldn’t drain at all and I was forced to spend a week bathing at the gym). But for the most part, I liked being able to write out a single check each month and call it a day.

These days, my housing costs are far less predictable even though I have a fixed mortgage. While my mortgage lender isn’t going to start demanding more money from me every month, my property taxes have consistently gone up since I moved to my home more than a decade ago. And my homeowners insurance costs have risen, too.

Now to be fair, rent can increase from one year to the next as well. But what really gets me about homeownership is the maintenance and repairs.

You could have a sudden $5,000 repair bill on your hands that leaves you scrambling, and in many cases, there’s nothing you can do to prevent it. And even maintenance costs can rise based on different factors — such as if you pay for a gutter-cleaning service because the work is dangerous and all of the companies in your town decide to jack up their rates at once.

Also, I have to admit that home maintenance generally isn’t in my wheelhouse. I’m not particularly handy and I’d prefer to spend my time working, taking care of my kids, cooking, or pursuing hobbies rather than helping to sand a deck. But because I own my home, that work is on me — I either have to do it or pay for it to get done.

When the home you need just doesn’t exist where you need it

At this point, you may be thinking, “So why on earth doesn’t this woman just rent?” And the reason is that it’s impossible to find the type of home I want in rental form.

I have three kids and a dog, and I work remotely (this is a pre-pandemic thing), which means we need space. I need to have the ability for my family to spread out, have enough bedrooms for everyone, and have a yard where my children and dog can run around. And also, we need storage. Kids come with a lot of stuff, and even when you try to minimize it, that only goes so far.

But there are no rentals available in my neighborhood, or surrounding ones, that give us the space and layout I feel we need to live comfortably. I was fine with living in an apartment when it was just me. But an apartment won’t work for my family. Neither will a townhouse, frankly, since we’re a loud bunch, and I’d pity the neighbor who gets stuck sharing a wall with my crew.

Now to be clear, my neighborhood isn’t special. It’s your typical suburb in the NYC metro area. But most of the towns around here don’t offer detached homes for rent. And the ones that are available to rent tend to be smaller, which won’t work for us.

Many people will argue the merits of renting a home versus owning one. But one overlooked aspect of that debate is that sometimes, you have to buy because your area doesn’t have a rental that suits your needs. Such is the case for me, which is why I own a home even though I really don’t like doing so.

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 

Shopping on Costco’s website may be convenient. But read on to see why it could be a bad idea. 

A Costco membership costs $60 a year for the basic version and $120 a year for the executive version. In exchange, you not only get access to a network of warehouse club stores, but you also get the option to do your Costco shopping online.

If you’re going to go the latter route, though, you’ll need to be careful. That’s because you might fall into these specific traps.

1. Paying more than you would at the store

Many people’s credit card bills are higher these days due to lingering inflation. So you may be eager to trim your costs as much as possible. In fact, part of your motivation to join Costco in the first place might stem from a desire to save money on things like groceries and household essentials. But if you buy those things at Costco online, you may not reap as much savings as expected.

Costco commonly offers lower prices in its warehouse club stores than it does online. And if you’re buying fresh groceries online, you can bank on paying more because you’re getting the convenience of a personal shopper who will deliver your items to your door.

You may decide to purchase Costco items online for the convenience of not having to leave your house. But in most cases, you’re paying more than you need to.

2. Buying food items you don’t want to eat

Many of Costco’s food items can be purchased online. The delicious muffins you can find in the bakery section of Costco, for example, are available online, so you can satisfy your sweet tooth without having to get in the car.

But when you buy food online at Costco, you pass up the chance to sample it at the store first. And that could lead to a situation where you end up buying something you don’t really enjoy.

Now to be fair, Costco doesn’t offer samples of every single food item it sells. But it does tend to sample new items as they hit the store. And popping a free cracker in your mouth before committing to a pack of 400 could spare you from buying a bulk item you don’t end up liking.

3. Purchasing furniture that isn’t as comfortable as it looks

You can purchase a wide range of furniture items at Costco online, from couches to dining room sets. But the best way to know if a given furniture piece is right for you is to try it out.

In the case of a couch, for example, you want to sit on it to make sure it’s comfy. You can’t do that online. And if you order furniture online from Costco, you might fall into the trap of buying something you don’t end up happy with.

The good news is that Costco has a generous return policy, so if you buy furniture you don’t like, you can bring it back for a refund — in theory. In practice, how are you going to haul a couch back to Costco that you’re not in love with (keeping in mind that by the time you come to that realization, you’ve most likely gotten rid of your old couch)?

Shopping at Costco online can certainly be a time-saver, especially if your nearest warehouse club store isn’t close to where you live. But take care to avoid these blunders in the course of your online shopping.

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

New construction has its benefits and drawbacks. Read on to learn more. 

There’s a reason so many buyers are struggling to purchase homes this year. Not only are mortgage rates high, but housing inventory is extremely low.

As of the end of June, there was only a 3.1-month supply of homes on the real estate market nationwide, according to the National Association of Realtors. It can take up to a 6-month supply of homes to meet buyer demand in full.

Given the lack of available existing homes, buyers are increasingly turning to new construction. In May, new construction sales were up 20% from a year prior, according to a joint report from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. But while buying new construction certainly has its advantages, it also has its drawbacks.

The upside of buying new construction

The benefit of buying new construction is pretty clear — you get to purchase a home no one has lived in before. That means the home is apt to be in pristine condition, and your appliances and fixtures will all be new. Combine that with various warranties, and your likelihood of having to make major repairs in your first few years in your home is pretty slim.

Plus, if you buy new construction at a point when your home isn’t finalized, your builder might allow you to customize certain features. You may be able to choose your wall colors or the type of flooring you want. You may even be able to do things like design your own kitchen based on your preferred layout.

The downside of buying new construction

While new construction has its benefits, one major pitfall to consider is the cost. NewHomeSource reports that newly built homes typically cost about 17% more than existing ones. You might also have to put down more money upfront when you buy new construction.

In some cases, mortgage lenders will accept as little as 5% down on a conventional loan for an existing home. But you might have to put down a lot more than that on your mortgage if you’re buying new construction.

What’s more, if you’re given the opportunity to upgrade during the construction process, you won’t get to shop around with different contractors for that additional work. You’ll have to use your builder. And whatever price they give you is the price you’ll have to pay for the upgrades you want.

Also, when you’re buying a home that’s still being built, delays are not only possible, they’re practically inevitable. That could make things stressful for you if you’re on a specific timeline.

Plus, while new construction homes might look nice, they’re not always made of the highest quality materials. That old saying “they don’t make ’em like they used to” can easily apply to homes built today.

At a time when housing inventory is frustratingly low, it’s easy to see why more buyers are turning to new construction. But before you take that leap, consider the pitfalls you might encounter if you purchase a newly built home.

And be especially careful if you’re buying a new home that’s not yet complete. It may be nice to get a say in the design process, but you risk extensive delays that could put you in a serious bind.

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 

Tapping your home equity via a HELOC? Read on for some major mistakes to steer clear of. 

A personal loan could be a good way to borrow money when you need cash for something important. But if you own a home, you may be able to tap the equity you have in it by signing up for a home equity line of credit, or HELOC.

The upside of HELOCs is that they can be very flexible. Often, you’ll have many years to tap your HELOC. And if you don’t end up borrowing the entire sum you’re approved for, you won’t have to pay interest on all of it.

But there are certain pitfalls you might encounter when you sign up for a HELOC. Here are a few big mistakes to avoid at all costs.

1. Applying with a low credit score

Because a HELOC is secured by the equity you have in your home, you might assume that your credit score doesn’t matter much. After all, if you fall behind on your payments, your lender has recourse. So it may be willing to overlook a poor credit score, right?

Not necessarily. Although your home equity will play a role in your ability to qualify for a HELOC, so will your credit. Lenders will want to see a reasonable payment history, and a low score sends the message that you don’t have the strongest history of making loan or bill payments on time.

Take a look at your credit score, and if it needs work, try to put off your HELOC application while you work to improve it. You can do so by being timely with bill and loan payments and paying down credit card debt if you have a lot of it. It’s also worth reviewing your credit report for errors — and of course working to correct any you come across.

2. Not shopping around

It’s important to shop around any time you take out a loan. And a HELOC is no exception.

It can take a while for a HELOC to close, so you may be eager to get the ball rolling. But if you don’t shop around for rates, you might get stuck paying more for your HELOC than necessary. And if you end up with a higher interest rate to begin with, it might increase your risk of falling behind on your payments.

3. Not paying attention to closing costs

Just as closing costs tend to come into play when you sign a mortgage, so too should you expect to pay closing costs when you put a HELOC in place. Discover says that on average, closing costs on a HELOC can amount to 2% to 5% of your total loan amount. That’s comparable to what borrowers pay on a mortgage.

Just as it’s important to shop around for rates on a HELOC, also compare closing costs and other fees. And speaking of fees, see if your lender will charge any for terminating your HELOC early. You may be surprised at what the fine print contains, and you definitely don’t want any surprises.

A HELOC could be a good way to get access to money when you need it. But aim to avoid these mistakes when signing one.

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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

 Read More 

Should your next date take place at Costco? Read on to see what that might save you. 

There are certain financial disadvantages to being single. You don’t have someone to split the rent or mortgage with, and you can’t share the cost of travel by booking a single hotel room that both of you pay for equally.

Being single can also be financially draining when you factor in the cost of dating. Recent data from Match.com reveals that single Americans are spending a collective $117.4 billion annually on dates. That amounts to $1,560 a year per person.

If you’re tired of draining your savings account to keep up with dating, there may be a better solution. And you just might find it at your local Costco.

When Costco’s food court comes to the rescue

If you shop at Costco regularly, you’re no doubt aware that the stores’ food courts offer a variety of menu items at extremely reasonable price points. For example, it’s hard to beat the $1.50 hot dog and soda combo. And even if you want to spring for a slice of pizza, that’ll generally run you just $1.99 for a giant portion.

Meanwhile, the cost of restaurant food increased 7.1% between July 2022 and July 2023, according to the Consumer Price Index. That means it’s more expensive than usual to take a prospective romantic partner out to a restaurant.

Of course, the cost of a restaurant meal will hinge largely on factors such as what type of establishment you choose to dine at and what you order. Loading up on alcoholic beverages and appetizers will no doubt drive your bill up, as will choosing a restaurant where the typical entree is $30 or more. But even if you stick to lower-cost restaurants, you won’t get anywhere close to the cost of a meal at a Costco food court.

At an Applebee’s in Central New Jersey, for example, a fiesta lime chicken entree costs $16.49. Meanwhile, a chicken bake at the Costco food court will cost you $3.99. And while you can argue that the Applebee’s entree is larger, the Costco chicken bake is pretty darn filling in its own right. And if not, you can buy two for half of the Applebee’s entree price.

It’s more than a matter of saving money

The Costco food court may not exactly provide the ambiance you’re after in the context of a date. And you may need to put up with screaming children, frazzled shoppers, and the occasional poke from an overloaded shopping cart if you choose to dine there.

But from a money-saving perspective, it’s hard to beat the prices at the Costco food court. So if you have a membership, why not suggest it the next time you’re scheduling a date?

Not only might a Costco food court date save you money, but it might also give you key insight into the person you’re meeting up with. If they’re cool with the idea of a Costco food court date (or, better yet, enthusiastic), it’s a sign you’ve found someone who’s low-key and not too materialistic. But if your date scoffs at the idea of meeting for food at Costco, then they may not be an optimal match for you to begin with.

Alert: highest cash back card we’ve seen now has 0% intro APR until nearly 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 positions in Apple. The Motley Fool has positions in and recommends Apple and Costco Wholesale. The Motley Fool has a disclosure policy.

 Read More