Money Management

The quick answer? Not necessarily. 

Many would-be buyers are struggling to purchase a home today for several reasons. First, there’s a glaring lack of real estate inventory to contend with. There’s also the matter of elevated home prices. And finally, there are mortgage rates — namely, the fact that they’re higher these days than they’ve been in more than a decade.

You’ll generally hear that now’s a good time to bring a larger down payment to the table when you sign a mortgage. The more money you’re able to put down at your closing, the less interest you’re apt to rack up on your home loan — and the lower your monthly housing payments will be.

But saving more money for a home down payment is a tough thing to do at a time when inflation is soaring. And recently, inflation levels rose at a faster pace than expected.

January’s inflation data was loaded with surprises

In January, the cost of consumer goods rose 0.5% compared to the month of December. That’s a pretty notable month-to-month increase. And it also means the cost of consumer borrowing on a whole could potentially get more expensive.

The reason? The Federal Reserve is unlikely to be pleased with this recent inflation report. As such, its next interest rate hike could be a larger one. And that could indirectly drive up the cost of consumer borrowing, making it more expensive to take out an auto loan, home equity loan, or personal loan.

But while consumers could face higher borrowing costs in the coming months due to January’s inflation data, those looking to buy a home may not be as impacted. That’s because a larger interest rate hike on the part of the Federal Reserve won’t necessarily result in an increase in mortgage rates.

Mortgage rates tend to move independently

While it’s true that rate hikes on the part of the Federal Reserve tend to indirectly but notably drive up the cost of consumer borrowing, mortgage rates tend to be the one exception to that rule. Just look at what happened with mortgage rates last year.

To buyers’ dismay, they started rising sharply at the start of the year, even before the Federal Reserve started getting aggressive with its own rate hikes. And over the past few months, mortgage rates have cooled off substantially, giving home buyers some much-needed relief.

So all told, mortgage rates could climb back up in the coming months, or they could continue to fall. But either way, this recent inflation report — and the Fed’s reaction to it — may not influence mortgage rates all that much.

Of course, this doesn’t mean prospective buyers won’t continue to run into issues with affordability during the first half of 2023. Housing prices are still up, and low inventory means that sellers can still get away with charging a premium.

But mortgage borrowers are not necessarily doomed to higher rates on the heels of the latest economic news. And that’s an important thing for today’s buyers to keep in mind.

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An open house is your chance to vet a home before making an offer. 

Going to an open house is an exciting experience. As you explore the possibilities of a potential new home, it’s easy to get carried away and overlook any possible red flags. A home is likely the most expensive purchase you will make in your life, so before you make a decision, it’s important to be aware of the red flags that could indicate serious problems down the road. Here are some of the most common red flags to watch out for when attending an open house, so you can be ready before signing a mortgage loan.

Unpleasant smells or too much air freshener

When walking through a home, it’s important to pay attention to any unpleasant smells. Unpleasant odors can be caused by anything from pet accidents or mildew to something more serious like mold or pest infestations. While these issues can often be solved with proper cleaning and maintenance, they should still be taken seriously because they can cause health problems if left unchecked. It’s also important to ask the seller about any recent improvements that have been made in order to assess the severity of the issue.

On the flip side, many homeowners will bake cookies or use an air freshener to help make the house smell nice. But if you are overwhelmed with different smells, it could be that the homeowner is trying to hide something. Especially if one room in particular is chock full or candles, potpourri, or plug-ins, it could be they don’t want you to smell something in particular. It could be to cover something as innocent as dirty laundry, but it’s important to do your due diligence.

Signs of structural damage

It’s also important to look out for signs of structural damage, such as cracks in walls or ceilings, uneven floors, or loose fixtures. While these issues may not necessarily be deal-breakers depending on their severity, they could mean expensive repairs down the line, so they should always be taken into consideration before deciding to purchase the house. If you do notice any evidence of structural damage, it’s best to consult with a professional before signing on the dotted line.

Suspicious renovations or decorations

A well-decorated home can be appealing, but it’s always important to look closer and make sure everything is as it appears. Does the furniture seem too staged? Are there signs of wear and tear that were covered up? Is there odd-colored paint that seems out of place? These are all telltale signs that something might not quite be right about this property.

Mold and mildew

Mold and mildew can cause serious health problems for anyone living in the home. Keep an eye out for signs such as visible mold growth on walls, musty odors, and water spots on ceilings or floors. Ask if there has ever been water damage in the house and whether it was properly addressed by professionals.

Odd viewing schedule

Is the open house outside of normal business hours or during odd times? If so, this could be a sign that the home may have issues that the seller doesn’t want people to notice. Be sure to ask why there is an unusual viewing schedule before you set foot in the door.

Unsafe area or poor neighborhood condition

When looking at potential homes, it’s important to take note of the neighborhood and check if it is safe, if neighboring homes are boarded up, or there are a lot of vacant properties. It’s also helpful to research local crime rates online before deciding on a house in order to ensure your family’s safety. Talk to neighbors and see if they have experienced any crime or safety concerns and to discuss the history of the area. They can provide helpful insights.

Inadequate insulation

Poor insulation can lead to uncomfortable temperatures inside your home during both summer and winter months and higher-than-average energy costs throughout the year. Be sure to check for visible signs of inadequate insulation, such as drafty windows or doors, and feel around walls and other areas for cold spots, which could indicate insufficient insulation in those areas. If you find any evidence of inadequate insulation, it would be wise to speak with a contractor about ways you might improve a home’s insulation before making an offer on the property.

Vague answers

There will be plenty of questions to ask when walking through an open house. If the seller or agent doesn’t give straightforward answers, keeps changing the subject, or gives vague responses, it could be a red flag.

When it comes to investing in a home, there is no room for mistakes. Looking for a new home can be an exciting yet daunting experience. An open house is a great way to get an up-close look at a property and decide if the layout, features, and amenities work for you. But it’s also important to know what red flags to look out for so that you don’t inadvertently buy into a bad situation.

It’s important to keep your eyes peeled for red flags like unusual viewing schedules, odd odors, suspicious decor, or not getting straight answers from the owner or selling agent. Doing your due diligence can help save money and time down the road as well as give you peace of mind knowing you and your family will be safe in a new home!

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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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It’s time to break the cycle. 

At the start of the new year, we promise ourselves that we’re going to make some changes to our lives, but that’s easier said than done. Without a solid plan in place, we can easily slip back into our old habits. This can be frustrating or even dangerous when it comes to your finances.

If you’re still doing any of the three things below, it’s time to make a permanent change. Here’s what you need to do.

1. Not paying attention to where your money goes

Knowing where your money goes each month is key to budgeting and saving. If you aren’t tracking where your cash is going, you could be missing opportunities to rein in your spending and boost your savings.

There are a number of ways to track your spending, so you may have to try a few to figure out what works best. Some prefer old-fashioned pen and paper, while others set up spreadsheets to help them track their spending across various categories.

Budgeting apps are becoming increasingly popular because they do a lot of the work for you. They can break your spending down by category and spare you a lot of the math, leaving you with a high-level view of where your money is going that you can use to make future spending decisions.

2. Paying unnecessary bank fees

Monthly maintenance fees and minimum balance requirements used to be a standard part of banking, but that’s not the case anymore. Online banks have exploded in popularity, largely due to their lack of fees and high interest rates on savings products. Many brick-and-mortar banks can’t compete with this because they have to spend a lot of money to maintain their branch networks.

Owning a brick-and-mortar bank account may not cost you anything, depending on how much you keep in the account. But for those with low average balances, switching to a free online bank account could be a huge help. Most don’t have minimum balance requirements, and their above-average interest rates mean you’re much more likely to earn money than lose it.

But before you make this transition, be sure to switch any automatic bill payments you have set to come out of your old bank account so you aren’t charged for late payments. And consider closing your old account, especially if it charges a maintenance fee.

3. Not building your emergency fund

Building an emergency fund should be everyone’s top financial goal after paying their bills, but many still struggle to do this. Approximately 32% of people wouldn’t be able to cover a $400 emergency, according to a government survey. This number has dropped over the last decade, but it’s still alarmingly high. And even those who have saved $400 may find that it’s not sufficient to cover all emergencies.

Ideally, you’d save at least three months of living expenses in an emergency fund to help you cover unexpected costs like a hospital visit, insurance claim, or your bills following a job loss. Some people feel more comfortable saving six months of living expenses or more.

If you just haven’t made the time to set up an emergency fund, consider prioritizing it now. See if you can set up automatic transfers to a savings account each pay period until you’ve reached an amount you’re comfortable with. And be sure to replenish your emergency fund every time you tap it.

For those who don’t have an emergency fund because they don’t have much cash to spare, things are trickier. Take a look at your budget to see if there are any areas where you could cut back spending, even temporarily, to enable you to build your emergency fund. If not, explore opportunities to increase your income. Working overtime or starting a side hustle could give you the extra cash you need. And if it’s too much for you to keep up with long term, you can always stop once you’ve established your emergency fund.

It can take some time to find a new bank account or savings strategy that works for you, so don’t get discouraged if you try something and it doesn’t work for you right away. Try different approaches until you find a solution that fits in with your lifestyle.

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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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Building an emergency fund is a popular savings goal for Americans. 

Saving is a big goal for many Americans. Having extra money set aside in a savings account can make it easier to handle future expenses. Plus, you can earn interest on your savings contributions. A recent study by New York Life found that Americans saved an average of $5,011 in 2022. Do you have significant savings goals that you want to reach this year? If so, you’re not alone. Below, we’ll share a few tips that may help you be more successful.

Americans saved an average of $5,011 in 2022

New York Life’s Wealth Watch Survey examined Americans’ financial goals, progress in reaching their goals, and the overall outlook on their financial futures. When asked to think about the current state of their finances at the end of 2022 going into 2023, 33% of adults felt hopeful, while 31% felt stressed.

Many of those surveyed were successful in saving money in 2022. While on average, American adults planned to save $5,437 in 2022, they saved slightly less. American adults saved $5,011 on average. It turns out men saved more than twice as much as women. The study found that women saved an average of $3,146, while men saved an average of $7,007.

Meanwhile, 83% of adults said they had a long-term financial goal for 2023. The most commonly reported financial goals were building emergency funds and paying off credit card debt.

Don’t put off your savings goals

If you want to save more money this year, make sure you stay on top of your goals. Having an emergency fund can make dealing with unexpected expenses less stressful. It’s also good practice to save for future costs so you don’t risk accumulating credit card debt.

These five tips may help you find success as you commit to saving.

Start now: The longer you put off saving, the longer it will take you to reach your goals. If you hope to save money in 2023, now is the time to start. Set a goal and create a plan.Break your goal into smaller chunks: It may feel more overwhelming to tackle your goals when looking at a large number. It’s okay to set a yearly savings goal. But you may want to break that goal down into something more manageable. Setting monthly or quarterly savings goals may feel more achievable.Start budgeting to free up extra money: If you’re not monitoring your spending, you may be saving less than you hope. Budgeting apps can take the stress out of budgeting. By reducing your overspending, you may be able to save more money this year.Automate your savings: It can be easy to forget to save when life gets busy. Luckily, you can automate the savings process to eliminate forgetfulness. Setting up automatic transfers from your checking account to your savings account can ensure that you stay committed to your goal.Track your progress: For many people working on important financial goals, it can be helpful to track progress. You may find that you can stay more motivated as you see how well you’re doing. Many of the best banking apps have built-in progress reporting tools to help you stay on track.

It’s not too late to get started on your 2023 savings goals. Make sure you keep your extra money in a savings account instead of your checking account, as high-yield savings accounts offer an excellent opportunity for savers to earn interest. For additional money management tips, check out our personal finance resources.

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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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