Homes Arizona Real Estate, LLC's Blog
Your 401K is a great resource of investing for retirement. Many people use their 401k’s as a part of their overall investment strategies, pulling money out of it when it’s needed. When you’re ready to buy a house, you may think that pulling money out of your 401k for a down payment is a good idea. But think again.
Although you should always speak with a financial professional about your money matters, the bottom line is that is probably not the best idea to use your 401k to supply money for a downpayment on a home.
First, your 401k funds are pre-tax dollars. That means that you haven’t paid any taxes on these funds. Your employer will often match the amount of money that you put into your 401k, as an incentive to help you save money for your future. You need to keep your 401k for a certain amount of time before any funds in the 401k become available to you without having to pay any kind of penalty. If you decide to take on the penalty, you can often face a cut to your employer’s match programs as well. This is why you must make this decision wisely.
Anyone under the age of 59.5 pays a penalty of 10 percent to take the money out of the fund. In addition, you’ll now need to pay taxes on this money, because it becomes a part of your adjusted gross income.
If you are looking to invest in a property, there may be other options for you rather than pulling money out of your 401k. While some plans allow you to borrow money from it. However, if your only option to get money to invest in a property is to pull money from your retirement account, it may not be the best time to invest in property for you.
Keep It Separate
If you’re younger (say in your 30’s or 40’s) your best option is to have a completely separate account that is used to save for a downpayment and other expenses that you’ll incur when you buy a home. In this sense you aren’t spreading yourself too thin as far as investments go. You should compartmentalize your money. Buying a home is a large investment in itself. Home equity can also be a good source of a nest egg in later years when you need it. However, even if a property will be an income property, it’s never smart to take from one investment account to provide for another unless you’re shifting your focus. You don’t want to reach retirement, only to see that your funds have been depleted and you can’t retire as expected.
Let's face it – the homebuying journey may prove to be an expensive experience. If you're not careful, you risk overspending to acquire your dream house. On the other hand, if you purchase a home without identifying underlying structural problems, you risk costly home repairs down the line.
Ultimately, it helps to establish a budget for the homebuying journey. If you have a budget in place, you can increase the likelihood of having the necessary funds on hand to overcome many potential homebuying hurdles.
You should have no trouble creating a homebuying budget, either. In fact, here are three tips to help you put together a budget for the homebuying journey.
1. Assess Your Financial Situation
If you intend to purchase a house in the foreseeable future, you'll want to take a close look at your finances. By doing so, you may be able to reduce your monthly spending and use your savings to accelerate the homebuying journey.
It often helps to assess your daily, weekly and monthly expenses. Then, you may discover bills that you can cut from your everyday budget.
For example, you may enjoy dining out regularly, but cooking at home may prove to be more cost-effective. And as you reduce your dining expenses, you can save money that you can use toward the down payment on a new house.
2. Obtain Your Credit Score
Believe it or not, your credit score can make a world of difference in your quest to acquire a house. If you check your credit score, you may be able to find ways to improve your credit score prior to kicking off a house search.
You are eligible to receive a free copy of your credit report from each of the three reporting bureaus (Experian, Equifax and TransUnion). Take advantage of this perk, and you can learn your credit score in no time at all.
Remember, your credit score may have a major impact on your ability to land a favorable mortgage. And if you find that you have a below-average credit score, you then can pay off outstanding debt to improve it before you start your search for a new home.
3. Get Pre-Approved for a Mortgage
Pre-approval for a mortgage is ideal. With a mortgage in hand, you can enter the real estate market with a budget for buying a house.
To get pre-approved for a mortgage, you should meet with banks and credit unions. These financial institutions can offer insights into a variety of mortgage options and help you make an informed mortgage selection.
Lastly, as you prepare a homebuying budget, you may want to collaborate with a real estate agent. This housing market professional can help you hone your home search to residences that fall within your price range. Perhaps best of all, a real estate agent will make it simple for you to avoid spending too much to acquire your dream house.
Get ready to buy a house – use the aforementioned tips, and you can establish a successful homebuying budget.
As a home seller, you'll want to ensure all areas of your house look great. By doing so, you may be able to generate substantial interest in your house and boost your chances of a quick home sale.
Unfortunately, some home areas are tougher to clean than others. And when it comes to cleaning your attic, it may prove to be a time-consuming process to transform this space from a liability into an asset.
So what does it take to fully clean an attic? Here are three tips to help a home seller revamp an attic in no time at all.
1. Look Out for Dust and Mold.
Dust and mold can be problematic, but these issues may arise if you rarely enter your home's attic. Fortunately, a home seller who spends some time cleaning the attic can minimize dust and mold with ease.
Repair or replace any loose, broken or missing shingles in your attic. Also, check attic windows for missing caulk or cracked panes. Resolving these issues may help you prevent mold from forming.
If you encounter mold, contact a certified indoor air quality professional immediately. This professional can evaluate your attic and offer recommendations to correct the problem.
In addition, dust your attic thoroughly. This will enable you to minimize the risk that dust mites and other irritants could enter other areas of your home.
2. Get Rid of Unwanted Items.
From holiday decorations to family photo albums, your attic may be filled with a broad assortment of items. And if you remove clutter from your attic today, you may be able to save time after you sell your residence.
Go through your attic belongings and separate the essential items from the non-essential ones. That way, as moving day approaches, you won't have to rush to get rid of non-essential items.
Furthermore, wear rubber gloves, eye protection and a dust mask any time you clean or organize your attic. This will enable you to stay safe as you work.
3. Collaborate with Your Real Estate Agent.
Does your attic require a complete overhaul? If so, you may need professional cleaning support, and your real estate agent can put you in touch with the right cleaning company instantly.
Your real estate agent will do what it takes to help your home stand out in the eyes of homebuyers. He or she can offer attic cleaning recommendations and general cleaning tips, guaranteeing you should have no trouble creating a dazzling home interior.
When it comes to selling your home, it is easy to ignore your attic. However, a home seller who performs extensive attic cleaning may be able to differentiate his or her residence from others – something that is exceedingly important in a highly competitive real estate market.
Take advantage of the aforementioned attic cleaning tips – you'll be happy you did! If you revamp your attic, you could improve your chances of maximizing the value of your residence and accelerating the home selling process.
Buying a house should be a fast, simple process. However, problems sometimes can arise that prevent a homebuyer from discovering his or her dream residence.
Ultimately, there are many factors to consider before you purchase a house to ensure you can avoid myriad homebuying hurdles, and these factors include:
1. Your Home Needs
No two houses are identical, and much in the same vein, no two homebuyers have the same definition of the perfect residence. As such, a homebuyer should consider his or her dream home demands prior to kicking off a home search.
Making a checklist of home "must-haves" and "wants" is paramount. With this checklist in hand, a homebuyer will be able to refine his or her home search and map out the property buying journey accordingly.
It may be helpful to consider your day-to-day activities as you evaluate where you want to live too.
For example, if you work in the city, you may want to find a house that is located near public transportation. Comparatively, if you have kids, you may want to consider houses that are located close to top schools.
2. Your Budget
You know that you want to buy a house. On the other hand, you still have no idea how much money is available to ensure you can make your homeownership dreams come true.
When it comes to buying a house, it pays to meet with banks and credit unions. With pre-approval for a mortgage, you'll know precisely how much you can spend on a house.
To get pre-approved for a mortgage, set up consultations with several potential lenders. Then, you can learn about all of your mortgage options and select a mortgage lender that matches or surpasses your expectations.
3. Your Homebuying Timeline
Are you looking to buy a home as soon as possible? Or, can you afford to take a wait-and-see approach throughout the homebuying journey?
Examine your homebuying timeline and plan ahead as much as possible. By doing so, you can boost your chances of finding a terrific house and minimize stress as you browse the real estate market.
Regardless of your homebuying timeline, it always helps to work with a real estate agent. This housing market professional can take the guesswork out of searching for a residence and ensure you can discover a stellar house at a budget-friendly price.
Typically, a real estate agent will keep you up to date about new residences as they become available. He or she also will provide honest, unbiased homebuying recommendations and respond to any homebuying concerns and questions.
Let's not forget about the support that a real estate agent can provide during homebuying negotiations, either.
A real estate agent is happy to negotiate with a home seller on your behalf. That way, he or she can help you secure a great house without having to worry about paying too much.
Streamline the process of acquiring your ideal residence. Consider the aforementioned factors, and you can keep things simple as you proceed along the homebuying journey.