Money Management

Mortgage rates have more than doubled since the beginning of 2022, but you still may be able to find one with a low rate — if you know where to look. Here’s how. 

It’s not just that home prices are significantly higher than they were a few years ago. Rising interest rates have done even more than higher prices to hurt home affordability. Even without the price increases, the average payment on a $400,000 mortgage at the current 6.87% average 30-year interest rate is $2,626, as compared with about $1,686 for a loan of the same amount in January 2022 before rates started to spike higher.

While we can’t exactly go back in time to the days of sub-3% mortgage rates, you might be able to do the next best thing — take over the mortgage of someone who bought with a low rate. This might sound too good to be true, and to be fair, it isn’t possible in all situations. But it’s more practical than you might think.

An assumable mortgage can make your home purchase much cheaper

Some of the most popular types of mortgages are assumable. In a nutshell, an assumable mortgage means that when a home is sold, the buyer can simply take over the seller’s existing mortgage instead of needing to get a new one. They agree to pay the remaining balance and get the exact same interest rate the seller had.

In order to assume a mortgage, a buyer needs to meet the mortgage lender’s requirements just as if they were applying for a new mortgage. But to put it mildly, assuming someone else’s mortgage can save you a lot of money when rates are high.

It’s also worth mentioning that contrary to when you obtain a new 30-year mortgage, when you assume a loan, you pick up where the seller left off. In other words, if the seller owned the home for six years and has 24 years left on their mortgage, so will you. Getting an assumable mortgage can result in you owning your home free and clear faster.

A few caveats

The biggest caveat to mention is that conventional mortgages are not assumable. In order to be able to take over an existing mortgage, it generally must fall into one of the three major government-backed categories: FHA, VA, or USDA loans.

FHA loans are assumable as long as the buyer can meet the FHA’s qualification requirements, such as a 580 credit score and a debt-to-income ratio of 43% or less. VA loans can be assumed even if the buyer wouldn’t be eligible for one on their own. And USDA loans on rural properties can be assumed by a buyer that meets the lender’s requirements.

Another big caveat, which can be a limiting factor for many borrowers, is that you’ll still need to pay the difference between the assumable mortgage amount and the selling price. In other words, if you buy a home for $400,000 and assume a VA loan with a $250,000 balance, you need to come up with the other $150,000 to complete the sale.

Finally, an assumable mortgage is an excellent asset for a seller to have, and it makes it significantly easier to sell a property. Sellers know this. Therefore, the asking price on the property might be quite a bit higher than if it didn’t have an assumable loan attached to it.

The bottom line

An assumable mortgage can make your next home purchase significantly more affordable. As you might imagine, assumable mortgages are a major selling point and make homes extremely attractive to buy, so they can be difficult to find. But if you’re discouraged by today’s relatively high mortgage rates, it can be well worth the time it takes you or your real estate agent to search for one.

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Buying a house in a gated community can come at an added cost, but there are some perks. Keep reading to learn why a gate community could be a fit for you. 

There are many gated communities across the United States that control access. If you are considering buying a new house in one of these areas, you need to take the time to consider whether doing so is really a smart financial move. And, there’s more to this than you might think.

Before you get a mortgage and rush out to buy your dream home in a gated neighborhood, take the time to think of these issues.

A gated community could increase the cost of your home

There’s no doubt that buying a house in a gated community is going to cost more. In fact, prices average around $30,000 more for houses in gated neighborhoods compared with properties in other locales that aren’t secured.

Of course, while you are going to have to pay a higher price for your property, you should also be able to sell it for more money than you would if you lived elsewhere. So, you may be able to recoup the added costs — if you’re planning on moving. If you want to stay put for a long time, you’ll be incurring added expenses that could cause financial stress and won’t reap the resulting benefits of increased property value for years to come.

There’s also a question of whether other issues could end up dragging sale prices down. Specifically, with gated communities often requiring high fees for amenities such as pools and tennis courts, it’s possible the added costs of these features will reduce the price you’d get on your property. In fact, one study found that while gates increased the value of properties, amenities within gated neighborhoods ended up reducing sale prices by around $19,500 thanks to the huge maintenance and upkeep costs.

So, you’ll need to research property values carefully in gated versus non-gated communities with differing levels of amenities in order to find out if you’ll actually be paying a higher price or fetching a larger sum for your home.

A gated community can come with amenities — and costs associated with them

One of the biggest benefits of living in a gated community is the amenities that these types of neighborhoods often offer.

At a minimum, of course, you will have the gates that can help keep people out. But as mentioned above, you may also get pools, tennis courts, playgrounds, golf courses, community activities, pickleball and tennis courts, and more.

While it can be really nice to have these things, there’s also an expense associated with their upkeep. You’ll need to be able to work that into your monthly budget and OK with paying it. You’ll also need to remember, as mentioned above, that high monthly association fees could scare off some buyers.

Consider whether you’ll actually use the amenities often enough to justify paying the association fees for them. If not, you may want to pick a different community without the gates and the perks, but also with lower costs.

A gated community can come with rules and restrictions

Finally, a gated community comes with rules and restrictions in most cases. You may be required to get approval to change your home and may need to do things like mow your lawn regularly and keep your garage doors closed. You may also not be allowed to have boats, RVs, or commercial vehicles in your driveway.

Some people like these rules and may find living in a gated community with these regulations is good because it maintains their desired neighborhood look and helps keep up property values. But, if you don’t want to deal with them, then this is a big negative that should cause you to steer clear of a gated neighborhood.

By considering these key issues, you can make an informed choice about whether living in a gated community is worth it to you. Be prepared to pay more upfront and more each month, and to deal with the rules — but also to get a home valued higher, access to fun amenities, and a safer and more secure place to live.

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Dollar Tree has a ton of fun items for children. Here are five of the best products you can buy there to provide endless fun for just $1. 

Any parent knows that having kids can quickly lead to an empty bank account as you spend money on clothes, food, activities, and entertainment. The good news is that there are ways to entertain your kids while giving your credit cards a rest. One of the best options is to buy items from Dollar Tree that are both cheap and that offer endless amounts of fun.

If you’re looking for inexpensive ways to make your children happy, consider picking up these five great Dollar Tree products.

1. Squirt guns

Squirt guns can provide a lot of summertime entertainment.

Beyond the obvious — water fights — you can also do a lot more with squirt guns than you might think. My kids love to “hunt dinosaurs” with them by shooting at (and knocking over) plastic dinosaurs. They also like to wash the car tires with squirt guns, and fill them with watered-down paint and spray them on Dollar Tree posterboard sheets to make art.

Dollar Tree has tons of squirt guns, or water blasters, and they’re a lot cheaper than the competitor models, which can cost $6 or more for similar options.

2. Coloring and activity books

We try to take coloring books with us in the car and also to restaurants, so we can get a few minutes of peace. Unfortunately, toddlers can finish coloring books quickly. The good news is that Dollar Tree has tons of coloring books and activities available and they’re only priced at $1.25 apiece.

Not only does Dollar Tree offer regular coloring books, but some of its offerings include educational activity books with lessons designed to teach numbers and the alphabet. And you can buy color or paint-with-water books as well, which is great if you don’t want a mess on your hands.

3. Craft kits

Doing arts and crafts can help your kids develop fine motor skills as well as keeping them entertained. Dollar Tree has a wide selection of craft kits and materials, to get their creative juices flowing.

You can find a ton of paints and craft materials like pompoms and popsicle sticks for sale at Dollar Tree. There are also ready-to-use kits, if you aren’t up to trolling Pinterest to find creative crafts to make from scratch.

My kids have enjoyed painting wooden animals from Dollar Tree, as well as making custom-designed picture frames, creating wall art, and making animals out of yarn. This keeps them busy and gives them a beautiful finished product to show off and put on the fridge.

4. Building block sets

Let’s face it — Lego sets can be expensive. But, Dollar Tree has their own version of building blocks, including sets you can use to make your own creative designs as well as kits to make dinosaurs, cars, or a host of other cool creations.

While I’ll admit these don’t hold together as well as Lego blocks and are smaller than some of the elaborate kits, they are great for younger kids who may just be getting into the hobby or who can’t be counted on not to take apart their finished product and lose the pieces.

5. Glow sticks

Finally, glow sticks can provide endless entertainment and you can get multi-packs of them for $1.25.

My kids love building forts and taking the glow sticks in with them, creating a bathtub rave by putting the glow sticks in the tub, and just running around the backyard with their special glow lights. Dollar tree also offers other glowing products, like frisbees and balls. My kids’ much-older cousins think these are cool, too.

If you’re looking for an inexpensive way to keep your kids entertained, these Dollar Tree items are well-worth their minimal cost.

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Paying more for auto insurance than you’d like? Read on for tips on snagging a reduced rate. 

When you own a car, you need auto insurance. There’s really no getting around that. But the cost of auto insurance may be getting difficult to bear.

As of June, the cost of auto insurance was up 16.9% on an annual basis, according to that month’s Consumer Price Index. And at a time when living costs are still elevated across the board due to inflation, that’s a hard increase to absorb.

The good news, though, is that you’re not necessarily doomed to spend a fortune on auto insurance. Here are a few steps you can take to lower your costs.

1. Maintain a safe driving record

Auto insurance companies set premium rates based on a few different factors. One such factor is the value of your car. The more it’s worth, the more you can expect to pay for insurance, since it will cost your insurer more money to replace it should it become totaled.

Another factor that goes into auto insurance rates is your driving record. If you have a history of being a safe driver, you’re considered a less risky person to insure, and your premium rates are apt to reflect that. A history of moving violations, on the other hand, could leave you paying a lot more for car insurance.

If you’d like to see your premiums go down, do your best to drive safely. And if you already have a few black marks on your record, talk to your insurance company about taking a defensive driving course, which might help your rates go down.

2. Bundle your auto and homeowners policies

Insurance companies want your business, and they may be willing to offer a discount to get it. If you own a home, see if there are savings to be reaped by bundling your auto and homeowners insurance policies.

What it actually pays to do in this situation is contact both your homeowners insurance company and your auto insurance company to discuss bundling, and then see which one might offer a better rate. But at the same time, shop around with other insurers before signing up for a bundle to make sure you’re really getting the best deal.

3. Make sure your insurer knows how infrequently you drive

The more you drive, the greater your likelihood of getting into an accident. And so if your car largely stays parked in your driveway or garage, that’s something you should make certain your auto insurance company is aware of.

Many people have, over the past few years, gone from using their cars for a daily commute to barely driving due to working from home. If you’re in that boat, inform your auto insurer and see what that does for your premium rates.

If you’re struggling to cover the cost of auto insurance, you’re probably not alone. But if you make these moves, you might manage to lower your costs significantly. And your savings there could go a long way toward covering the cost of vehicle maintenance, gas, and the many other expenses associated with owning a car.

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Ready to invest? Read on to see which items you need to check off your list first. 

Investing money is a great way to grow wealth over time. Over the past 50 years, the stock market has delivered an average annual 10% return (before inflation), based on the performance of the S&P 500 index. This means that if you were to invest $5,000 today, sit back over the next 30 years, and allow your money to grow at a rate of 10% per year, you’d end up with over $87,000.

But eager as you may be to start investing, there are a few key items you’ll need to tackle first. So be sure to check these off of your list.

1. Make sure your emergency fund is complete

It’s really important to make sure your savings account has enough money to cover a full three months of essential bills. That could be your ticket to getting through a period of unemployment. Or, it might enable you to cover an unexpected home or car repair without having to resort to borrowing money.

If you don’t have a complete emergency fund, hold off on investing your money until you have one. The value of your stock portfolio could fluctuate from week to week (or even day to day). And you don’t want to land in a position where you have to cash out stocks at a loss to scrounge up funds to cover an emergency. So first make sure to build adequate cash reserves and then put extra funds you have into an investment account.

2. Develop an investment strategy

You don’t want to open a brokerage account and start scooping up stocks at random. Rather, you should have a strategy.

First, decide what you’re investing for. Is it retirement? Another objective?

Next, decide how much work you’re willing and able to do. Buying stocks individually means having to research each and every one. A more efficient way to build a portfolio may be to load up on broad market ETFs, or exchange-traded funds. These make it possible to own many stocks with a single investment.

Of course, stocks aren’t the only investment vehicle you can consider. There are also bonds, which tend to deliver lower returns than stocks but also tend to be less volatile.

Think about your tolerance for risk as well as your goals. That should help you put together a portfolio that works well for you.

3. Find the right account to invest in

You may be inclined to invest in a taxable brokerage account so you’re not restricted in the amount of money you can put in yearly or your ability to take withdrawals as you please. But if you’re investing for the express purpose of being able to cover expenses in retirement, then you may want to invest in an IRA — either a traditional one or a Roth.

IRAs offer tax benefits that regular brokerage accounts do not. With a traditional IRA, your contributions go in tax-free, which means they exempt a portion of your income from taxes. With a Roth IRA, investment gains in your account are tax-free, and so are withdrawals.

Of course, IRAs limit the amount of money you can put in each year, and tapping one before age 59 1/2 could result in a costly early withdrawal penalty. But if you’re committed to investing for your retirement, then it could pay to choose an IRA.

Investing for the first time can be an exciting milestone. Just be sure to make these essential moves before you dive in.

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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.
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Costco members can snag discounts from suppliers at Costco Next. Find out what sales this special Costco site offers. 

A Costco membership gives you discounts on items not available in-store. It’s called Costco Next. But there’s a catch: You’ve got to go through the Costco Next website for special discounts. It’s low-key like that — most shoppers don’t know about it.

Interested? Here’s what you need to know.

Costco Next is members only

Only Costco members get access to non-store discounts. That’s because you need a Costco card to sign into the Costco Next website. To use Costco Next, you’ll need the following handy:

Full name of Costco memberCostco membership number

Members can find both on their regular Costco cards. Members should note that Costco will ask you for permission to transfer some of your information from Costco to the supplier when you begin to poke around. If you’re uncomfortable with that, maybe stick to Costco.com.

Read more: What is Costco Next, and Should You Try It?

Costco Next offers non-Costco products

Costco shoppers can shop directly from Costco suppliers. Here’s how it works: Costco vouches for hand-picked suppliers on Costco Next. You can purchase items you can’t find in Costco Warehouses or on Costco.com through the website.

There are some consequences to this that should matter to you, the average Costco member. For one thing, Costco Next suppliers handle checkout, shipping, and handling. If a problem comes up, you must contact the supplier directly — not Costco.

But in exchange, you get a broader selection of products than what Costco alone can offer. These include bikes, sheds, home installation services, and overseas skincare products. Plus, you get these products at low, low Costco prices.

Costco Next offers big discounts

Members pay for low wholesale pricing. Costco Next honors that by slashing prices on products offered through Costco Next. Products on Costconext.com may be cheaper than elsewhere.

Here are some examples of Costco Next discounts:

Some products are hard to find outside of Costco Next. Costco claims these products are good deals, but you can poke around Google to double-check. As with any brand you shop, consider how much you trust Costco to follow through on price promises.

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You can quickly get 3%-5% refunds on Costco purchases. The best cash back credit cards offer this perk, no extra steps necessary. Just check out and go. But with credit card interest rates so high, you’ll want to pay back every penny at the end of the month (credit card debt is no good).

To avoid late payments, schedule automatic payments to come out of your checking account. Or, pay with a zero-interest debit card, just to be safe. Totally up to you. Some rewards checking accounts even give cash back on debit card purchases.

Costco members can freely poke around the site. You can compare prices like you do while shopping on Amazon or Shopify websites. Do perform a quick Google search, and voila! You know you’ve got the lowest price possible on Costco Next.

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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. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Cole Tretheway has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon.com, and Costco Wholesale. The Motley Fool has a disclosure policy.

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