Despite the importance of interest rates and their direct influence on your monthly mortgage payment, rates should not necessarily be the deciding factor as to whether to buy now, later or at all. There are bigger questions to ask:

Predicting the Direction of Interest Rates

Despite all the known factors that influence rates, such as the state of the economy, inflation, the job market, the housing market, Fed policy, what the 10-year Treasury is doing, etc., no one knows what interest rates will do tomorrow. What is known is that rates will likely rise or fall, so a better exercise is to prepare homebuying strategies for these various interest rate environments.

Rising Rate Psychology

If you know that a purchase – say, a house – will cost you more tomorrow than it will today, you will likely be more motivated to buy that house today.

Yes, you could wait for rates to fall. Perhaps, you know someone who bought when rates were lower, making you think you should delay your buying decision. Buy low, sell high, right? But that strategy could be risky. Let’s use stocks as an example.  Say, you decide to buy ABC coffee at $50, even knowing some of your friends got in at $25. If the stock rises to $100, they certainly have greater gains than you, but you still did okay, too. If you sit out, hoping for falling rates and the reverse occurs, the opportunity could be more expensive.

Falling Rate Psychology

You can buy now, but fear rates are going to fall. In other words, that same house you want to buy today, even if the price doesn’t change, will cost less to finance (smaller mortgage payments) if you just delay buying a little longer. In this scenario, you still face risks. The most obvious is, rates could rise. Second, the home’s price could rise, potentially canceling any discount you would have achieved had rates fallen. And, if you decide to buy now and your fears come true – rates drop – it’s not the end of the world. You may be able to refinance to the lower rate.

Unchanging Rate Psychology

Sometimes, rates that move little or stay in a narrow range can seduce potential buyers into thinking they have ample time before they have to make a decision. What these people sometimes fail to realize is that their own circumstances could change. If two people work, for instance, it may be easier to qualify for a mortgage, than if only one is working, perhaps because the other is staying home to raise a child or start a business. The point is, circumstances change. If you have the means to qualify, this situation may be more important than which way mortgage rates are heading.

The Bottom Line

Rising rates or falling rates should not be the sole basis of whether to buy a home or not. They will play an important role in your homebuying decision, but there are many more factors to consider that you may regard as more important – and they’re not all financial.   

Freedom. You’re the landlord, not somebody else. You’re free to decorate and upgrade any way you like.

Predictability. Unlike rent, your fixed-rate mortgage payments don’t rise over the years.

Equity. Money paid for rent is money that you’ll never see again, but mortgage payments provide the opportunity to build equity in your home.

Appreciation. Like stocks or bonds, homes are assets. And like stocks and bonds, home prices can go up or down in the short term, but, historically, homes have shown steady appreciation.

Tax benefits. The U.S. Tax code lets you deduct the interest you pay on your mortgage, your property taxes and some of the costs involved in buying a home. Consult with your tax/legal advisor.

***

While interest rates play a major role in financing a home, they should hardly be the only factor influencing your decision to buy. Instead of trying to time which way rates are headed, perhaps you should ask, how much time am I willing to sacrifice not being a home owner and missing out on the advantages it affords.

A sure way of attracting the attention of a seller, especially in a hot housing market, is to make an all-cash offer. After all, it eliminates any suspense about your ability to close the deal. It also tends to fast track the transaction, which many sellers find attractive. However, while it is clearly advantageous for sellers, it may not make the most sense for you once you take ownership.

How Mortgages Benefit Financial Goals

While owning a home free and clear of a mortgage may be appealing, many cash buyers end up mortgaging their properties after they close. The reason: It often helps achieve more of their financial goals.

4 Ways Mortgages Benefit Borrowers

1. May Help Optimize Tax Deductions: Given that interest paid on a mortgage is tax deductible in most cases, having mortgage interest can help maximize a homeowner’s deductions. This can be especially beneficial for those in higher tax brackets. Be sure to consult a tax professional for advisement.

2. Can Enhance Liquidity: Retirees often add a reverse mortgage to their homes to boost their income. Additionally, a reverse mortgage line of credit can be used to ensure borrowers have ready access to money for any high-expense repairs, medical costs, or other purposes.

3. Enables Wealth to Accumulate: A mortgage provides a homeowner with access to a large chunk of money that can be used to invest in other assets. From a side business to an investment portfolio, the money may boost returns , especially if it produces a source of income. It also enables the homeowner to diversify across a wider variety of markets and create a liquid reserve to ensure against possible repairs and expenses.

4. Capitalizes on Borrowing Capability: Borrowing when income and credit ratings are high is less costly than borrowing when money is actually needed. For instance, borrowers who decide to enter a second career later in life or who transition to self-employment may face higher borrowing costs when they apply for a loan. Those who already have a mortgage and have used it to build savings to meet future goals, could potentially save on their interest expense in the long run.

Competing Against an All-Cash Offer

As attractive as a cash offer is to a seller, you needn’t feel as though it is your only option as a buyer. Having a preapproval letter from your Loan Officer and verification from your financial institution that you have an account with a balance that covers the down payment can also set a seller’s mind at ease. This is particularly true if your offer is a little higher than the all-cash offer.

Being able to provide sufficient flexibility to accommodate the seller’s preferences regarding a closing date can also influence an acceptance in your favor.  With emotions so closely tied to a long-time family home, writing a letter to persuade a seller that you would make a good caretaker has also been known to seal the deal.

Whether you decide to make an all-cash offer or are determined to compete against one, be strategic about it. As nice as owning a home free and clear sounds, make sure it serves your personal financial goals and circumstances first.

As you head toward your closing date, one of the most helpful things you can do to prepare for homeownership is to make sure you are properly equipped. With the right tools, you can literally nail this home owning thing on the first try!

Tape Measure and Level

A tape measure and level will come in handy for centering and leveling shelves, hanging pictures, and installing curtain rods. There are also apps you can download to your phone, so that these tools are virtually always with you. For example, EasyMeasure and iHandy Level are two apps that let you measure distances and pinpoint a horizontal plane using your phone’s camera.

Power Drill

A power drill makes drilling neat, precise holes in drywall, wood trim, or masonry fast and easy. Having a good selection of drill bits in various sizes and styles, including ones that let you use your drill like a powered screwdriver, is even better. Cordless models let you handle projects anywhere on your property, are easy to use in tight spots, and can make you feel invincible.

Screwdrivers

Whether manual or battery powered, your screwdriver collection should include slotted, Phillips, and square-drive heads in an assortment of blade lengths. Also, consider picking up a set of hex keys (Allen wrenches). These are especially useful if ready-to-assemble furniture is in your future.

Hammers

Your choice of hammer depends on the job you're doing. While any hammer can drive a nail into an object, only a claw hammer has what you need to remove nails.

Stud Finder

These convenient, handheld devices help locate the framing studs inside your walls when you are hanging things. Simply run the stud finder across the wall surface to determine where to drive a nail or sink a screw so that it will be securely anchored in solid wood (not just drywall).

Pliers

Having a variety of this tool—slip-joint, needle-nose, and locking pliers—will enable you to handle a range of jobs that require gripping small parts or securing a firm hold in tight spaces.

Utility Knife and Blades

A handheld utility knife (with a sharp, new blade) is great for trimming work materials, removing old caulk, cutting vinyl tile, and very useful on move-in day when you are breaking down your unpacked boxes.

Extension Cords and Work Lights

Keep your workspace safe and more efficient with easy-to-access electrical power and adequate lighting. A portable, hanging utility light with a built-in electrical outlet gives you both. For convenience, a heavy-duty flashlight with a beam that can be aimed directly at your work surface is hard to beat. Also, a head-strap-mounted "miner's light" will let you keep both hands on your project.

Ladder or Step Stool

It's always a good idea to avoid overreaching—and often necessary as you unpack and store items in your new home.

Seasonal Tools

When moving in during warm weather, having a garden hose and lawnmower on hand can help maintain your curb appeal. If moving in during wintry conditions, a bag of salt and a shovel are must-haves.

Duct Tape

Yes, it's true: you can fix anything with duct tape!

Having the right tool on hand will get the job done faster and make moving in that much easier, and cut down on the trips to the hardware store.

Did you fall in love with your home at first sight?  For many homebuyers, the first step through the door seals the deal. They just feel right…at home. However, with time, love for your home is a lot like the love you feel for your family and friends. There are some things you need to get used to, and it takes some maintenance to keep the feeling going strong.

Show It Some Love

Fortunately, keeping the spark alive doesn’t require a major financial commitment. Often, it can be rekindled with some attention to the details.

1. Develop a new attitude. Replace worn towels and bed linens with fresh sets that offer more comfort and perhaps introduce a brighter or trendier color into your rooms. It can both lift your spirit and make your daily routines feel more luxurious.

2. Throw something other than shade. Try replacing your throw pillows and, perhaps, the area rug to create a whole new vibe if your living room no longer sparks your interest. Consider adding violets or reds for a romantic touch or go green to refresh your space ahead of the seasonal change.

3. Rekindle the flame. Your home’s fireplace may have been a selling point, but if you aren’t using it, ask yourself why. Not only are fireplaces romantic when it’s just the two of you, they are a good place for creating childhood memories with the whole family. Consider converting your wood burning hearth into one with gas logs. It creates the same cozy atmosphere but turns on and off from a single switch.

4. Add color to your life. The latest trends in kitchens show a move from monochromatic to two-tone color. Repainting cabinet doors may be all you need to see things in a whole new light.

5. Replace old hardware. Change out your knobs, pulls, and door handles for a refreshed look. Whether you switch from brass to crackled glass or hand-painted enamels, this simple step can literally reinvigorate the feel of your home.

6. Start looking up. New ceiling fans and fixtures can refine a room. They can also greatly improve the comfort level of a room, leading you to want to spend more time in it.  Better yet, there is an opportunity to save on energy.

Share the Love

While you’re taking the time to show some love to your home, don’t forget to extend your affections to the people who live there, too.  Perhaps, add a few dimmer switches or spread a few bouquets of flowers around to make any day seem special, perhaps even set out some chocolates or make your kids’ favorite dessert. Then, settle in to share the special days, from family movie night to Valentine’s Day, with those who make your house the place you love coming home to.

The beginning of a new year comes with the opportunity for improvement and renewal. According to experts, making resolutions and sticking to them can lead to realistic lifestyle changes. Since most healthy habits begin at home, here are some of the most popular New Year’s resolutions—and ways your home can help in keeping them.

1. Eat Healthier and Lose Weight

Heading into 2017, one poll found that 21.4% of respondents wanted to change their diet and lose weight. Having the right setup at home can encourage healthier food preparation and make eating in more enjoyable. Rethinking your kitchen’s layout or adding a few small appliances can make it easier to prepare more meals at home. Plus, the health benefits can compound when you prepare and eat fresh fruits and vegetables from your own garden.

2. Exercise More

Most of us recognize the benefit of getting our bodies moving, both in terms of weight loss and overall health, but finding time is a challenge. That’s where a home gym comes into play. It doesn’t have to be anything fancy, but having a designated, ready-to-use space for a treadmill, yoga mat, and free weights cuts down on travel time to and from the gym. Water-based exercises are options for pool owners and can help justifying becoming one.

3. Get Organized

Another popular resolution is to become more organized. As you look around your home, there is likely to be room for improvement. Whether it’s a new closet system, clearing out the garage, or optimizing your home office, maximizing your living space can help reduce stress and improve family time in the long run.

4. Spend Time with Family

Spending quality time with the people who are important to you is another key focus. That may mean converting a room or area of your home into a family den, complete with games, an entertainment system for movie nights, and comfortable seating. Alternatively, maybe more dinner parties should be in your future, along with an upgrade to your current dining room or outdoor spaces for al fresco meals.

5. Save More Money

Making better financial choices and saving more money are goals many people aspire to throughout the year. By making a few energy-saving changes, you can reduce the amount you spend on your monthly bills. Installing a programmable thermostat, sealing drafty windows, and replacing incandescent bulbs with energy-saving alternatives are just a few of the ways your home can contribute to the cause. 

6. Get More—and Better—Sleep

A look at resolution topics that have previously trended on Twitter found many people seek more sleep and relaxation. A new mattress, blackout shades, or even a fresh coat of paint in a soothing tone can make a bedroom more conducive to getting those highly desired and necessary Zs.

Whatever your goals are as you begin 2018, here’s to achieving them!

Saving for a down payment can be less about how much you can afford to put away than about what you spend your money on. Many fees, for instance, are expenses that are easily reduced without compromising your current lifestyle. The fewer you pay, the more cash you’ll have available to add to the down payment cause.

Where to Begin

Here are some ideas for where to find fees that can be negotiated, minimized, or eliminated altogether.

Bank Fees

Ask your personal banker about ways to reduce any fees you are paying on your checking account, particularly if you have been with your bank for a while. Be sure to mention you are saving for a down payment. The more services you use and the more money you have with a bank, the better your negotiating power is regarding fee reduction. Even if you receive a concession on your fees, stay focused on managing your balances. Avoiding fees for overdrafts and bounced checks is quite savings-friendly.

Credit Card Fees

Call your issuer and request a reduction of your annual fee in view of your history of consistent and timely payments. The alternative, which your issuer knows, is to transfer your balances and relationship to a different card issuer offering lower or no-fee accounts. Similarly, if a payment does arrive late, request a reversal. Generally, issuers are accommodative; they want to avoid losing business to a competitor over an occasional late fee.

Claim Rewards

Loyalty adds up. Whether it is at a local store, restaurant group, or major airline, signing up to receive points is a way to get a little more out of each expense. When you are asked to pay a fee to join a program, however, look long and hard at your break-even point, which is where the benefits you would gain exceed the fees you will pay. Programs like Amazon Prime, which offers free shipping that often pays for itself at holiday time, are good examples of this.

Attendance Fees

Many museums and galleries offer regular free admission days. They tend to be more crowded on those days, but this can save your family enough to pay for lunch after a visit. You will also avoid the handling fee often charged for mailing tickets. Becoming a member of a museum you frequent can also save you and your family money since attendance is free and, often, a portion of the membership fee is tax deductible. 

Cutting Other Expenses

Whether it’s your cell phone, Internet, cable, alarm-monitoring company, or satellite radio subscription, monitor your bills and periodically call to ask if they can be lowered. Often, especially if you’ve been a loyal customer—and make timely payments—the company will be able to find an incentive that can be applied to your account.

With every fee or bill that you cut—or incentive you earn—make it a point to match that amount with a deposit to your down payment savings account. The amounts may be small, but you’ll be surprised by how quickly each of these financial victories can add up. 

You may already be investing in your education, your career, and perhaps even in a home. So, how do you start putting away enough to meet your long-term plans? Fortunately, several options can help you start small— with minimal fees— even as you continue working toward your more immediate life goals.

Where to Begin

When it comes to saving, no amount is too small. Diverting just $20 from your food or transportation bill each week toward investing can help build a nest egg over the course of 20 years valued at nearly $30,000. As you start to benefit from your education and career investments, you may be able to contribute more to that weekly program, even as you start to participate in an employer-provided retirement plan.

While preparing for the future using traditional savings accounts helps, investing through stocks, bonds, mutual funds, or ETFs is regarded as a better alternative for money that you are saving for the distant future. The annual returns can be expected to be substantially higher and do a better job of keeping up with the rate of inflation.

Building a Portfolio

There is a misperception among new savers that to invest you should have large balances. Currently, several large, well-known financial firms have no-minimum, low-fee, online-only discount brokerage accounts. These include Ally Invest, TD Ameritrade, Charles Schwab, and MerrillEDGE. All currently have no minimum account opening requirements and charge between $4.95 and $6.95 for online trades. Also, many mutual fund companies will lower their account opening minimums if you agree to make deposits to the fund each month. However, other services may incur fees at many of these larger, more established companies.

Perhaps more accessible for beginners are app-based investment options like Acorns and Stash. Both mobile-friendly options allow you to nickel and dime your way to a well-diversified portfolio. Acorns works with your debit and credit cards to round up every purchase you make. The spare change is automatically diverted into a managed ETF portfolio.

Meanwhile, Stash provides entry to investing for as little as $5. Both firms are designed to help you learn how to invest and to get you started. They essentially create portfolios with training wheels. As with bicycle riding, you will probably want to graduate from being an investor-in-training at some point, and use a different program once you get the hang of it. Until then, they are both good starting points.

Other alternatives for investors include Robinhood, a new entry with no costs at all, and Motif. Motif allows its clients to create sophisticated, fully diversified, and customized portfolios—like a mutual fund—but with individual shares they select. It, too, is highly cost efficient.

Robo-advisors, such as Wealthfront and WiseBanyan, are app-based firms that do all the work for you, making your investment choices based on your circumstances and goals. While your balances are low, they assess no fees. Once you can afford to pay for advice and management, fees, which are still low by industry standards, are applied.

Given recent changes in the investment industry and the emergence of app-based alternatives, getting started as an investor is very much within the reach of most individuals. It just takes a willingness to consistently add what you can to your account and allow time for your portfolio to build momentum as its balance grows.

Whether you live in a coastal area or in the heart of the Midwest, weather happens. Accurate forecasts can help minimize the potential for storm-related issues by giving homeowners time to prepare. However, solid construction and having appropriate insurance coverage are two of the surest ways to minimize the financial impact.

Weathering Storms

While most homeowners’ insurance policies cover water-related damage caused by rain coming into your home through a compromised roof or windows, once the water is on the ground and the damage is due to flooding, it is a different story. Flood damage requires separate coverage.

The availability and cost of flood insurance, however, depend on where you live. Flood insurance is only available through a government program called the National Flood Insurance Program (NFIP). Your community needs to be a participant in this program for you to be eligible to purchase flood insurance.

Flood insurance is voluntary except for homes located in a federally designated flood plain zone. These homes are required to have coverage if they were financed with a federally backed mortgage.

With premium rates for this type of policy established by the NFIP, it eliminates the need to contact multiple insurance agencies seeking the best deal as you would do with other insurance policies. The only price variance would be for homeowners who are eligible for subsidies.

However, the NFIP establishes the premiums you pay based on your location and the type of coverage you request. The cost can range from a few hundred dollars a year for coverage that might help offset some of the cost of repairing your basement and the replacement of its furnishings, to several thousand dollars a year for full structure coverage (up to $250,000) and the replacement of personal belongings (up to $100,000).

Talk to Your Insurance Agent

When buying a home, talk to your insurance agent to determine the status of the areas where you are looking at homes. This will help you assess the availability of insurance and its cost versus the risk—factors you may want to consider before placing your offer.

When you have this conversation, be sure to address the following points. They will help you determine the level of insurance that makes sense for you.

 Specific circumstances covered and the likelihood of them occurring.

• Any agency fees that might be charged in relation to this type of policy.
• Whether coverage is for actual cost or the replacement value.
• The likelihood that the NFIP may adjust local maps in the near future and alter the cost and nature of the coverage needed.

Weighing Your Options

Whether you decide flood insurance coverage is necessary, be proactive. Like the weather, things can change. Monitor adjustments in your zone map and construction in your immediate area. New developments, infrastructure projects, and even a neighbor’s landscaping choices can alter the path storm waters may take. Being preventative can help you protect your home, its belongings, and your bank account in the long run. 

Purchasing a fixer-upper can do more than satisfy your housing needs. It offers you an opportunity to restore a whole structure to its full market value and even improve the look of your neighborhood. In the process, it can also boost your own net worth.

Fixer-Upper vs. Reconstruction  

Often, fixer-uppers are well-constructed homes that have been neglected or experienced unfortunate updates. These homes typically need cosmetic changes that can range from repainting and landscaping to kitchen and bath updates.

In other cases, homes that have structural issues in need of attention generally require a more substantial investment. Repairing a foundation, mold remediation, water damage, new plumbing and electrical, and replacing a furnace or adding air conditioning are higher cost fixes. However, this is also your chance to make sure the job is done right.

Either way, if you’ve found a home in a location you like and that you connect with, it helps to refocus on the investment that will be needed to address any necessary changes. Then, you can make an offer and come up with a plan for how you will finance the fixes.

Look Before You Leap

With a fixer-upper, you’ll want to hire a well-regarded inspector to walk through the home and determine what will need addressing before you make an offer. For instance, this person can tell you if the water stain on the wall is from a loose gutter or if the roof needs to be replaced, which are repairs that reside in two very different price brackets.

Having an inspection report and estimates for the work you expect to have done can also help when you start negotiating with the current owner. It can both substantiate your offer and potentially alert the owner to issues they may not have been aware of.

Financing Options for a Fixer Upper

Unless you are buying a property for cash or can pay for your planned renovation out of pocket, you will want to choose a Loan Officer who can provide you with options that accommodate both the purchase and the improvements.

Some lenders are able to offer a Federal Housing Administration loan, the FHA 203k Home Improvement Loan, which enables you to receive a mortgage for more than the market value of the home you are purchasing (up to $35,000). By combining the amount of your expected costs with your purchase, the FHA 203K also enables you to limit your closing costs and to start working on the home immediately after closing.

Conventional mortgages are also an option. Often, borrowers will use savings or take out a personal loan to cover their renovation expenses and then refinance (with a cashout) once the renovation is complete and the home appraises at a higher value.

So, What Type Are You?

Restoring a home requires either the willingness to hire and manage contractors or the time and skills necessary to do the work yourself. It also requires the ability to see beyond what a structure looks like today to how it will look after you transform it into your dream home.

The hardest part of selling a home, whether you do it yourself (FSBO) or use a Real Estate Agent, is putting a price on your property. Pricing a property too low or too high might keep you from getting all you can for your home or lead potential buyers to not consider your listing.

Valuing one’s things more highly than other people do is called the endowment effect and it’s a natural inclination. However, if you keep a few things in mind it’s entirely possible to arrive at a price that works for both the seller and the buyer.

Getting the Listing Price Right

Counteracting the endowment effect is a key benefit of working with a Real Estate Agent. However, their objectivity comes from knowledge you can obtain for yourself. It starts with looking at what homes are selling for in your area. Also, attend open houses for properties currently on the market to see how yours stacks up. Then, to help you get into a buyer’s frame of mind, ask yourself what you would pay for your house today if you did not already own it.

You may also want to consider paying for an appraisal. The buyer’s bank will eventually insist they obtain one during the closing process. However, having your own done helps you value your property and lets you know what the bank’s mortgage limit on your home would likely be.

Negotiating Tips

Once you receive an offer, what you do next will ultimately determine your selling price. Here are some best practices to keep in mind when negotiating with potential buyers.

1. The first offer could be the best. Typically, the first offer is a good assessment of your market value. Though, there are some buyers who will start very low hoping you are in a hurry to sell. When an offer is too low, you have the option of not countering, but instead asking them to resubmit.

2. Consider conceding before countering. Often, offers come with concessions, like a request for a delayed closing, for instance. When an offering price is close to your listing price, you may want to accept a concession instead of immediately lowering your price.

3. Be a listener, not a talker. The less buyers know about your circumstances and reasons for selling, the better. Additionally, the more you know about the buyer’s circumstances, the more leverage you have in a negotiation.

4. Know your limits. Before you list, determine your minimum sales price. Then, ask yourself how long you are willing and can afford to have your home on the market. You may come out money ahead by selling at a lower price due to your carrying costs, especially if you have already moved.

5. Know your facts. Create a history of upgrades you’ve made since you bought the home, the age of appliances, and how much it would cost to replace them. You may want to consider offering a home warranty to counteract any reluctance on a buyer’s part. This relatively inexpensive insurance covers repair costs should something break down within the first year of you selling the home.

6. Follow the money. Understand the lending conditions your buyer is working with. That can help you determine whether you want to agree to a lower price to help them qualify for their mortgage in exchange for a larger participation from them in the closing costs, for example.

Successfully selling your home on your own may require a little more upfront research, but when you know what to negotiate, it should lead you to the results you originally sought from choosing an FSBO solution, a larger check at closing.