Should You Borrow From Your Retirement to Pay Your Mortgage?

 

We’ve been seeing this question asked a lot lately. It’s a tough question to answer because everyone’s situation is different.
So today, we’ll look at the pros and cons and help you think about the important questions to make up your own mind if it’s the right thing for you.
Generally speaking, we’re not talking about savings. We’re talking about your 401k investments, IRA’s and other investments you may have specifically set aside for retirement.

Why You Should Borrow

Borrowing from your IRA’s is not like borrowing from your 401k. You have 60-days to pay back the IRA loan without penalty. You can borrow from your 401k for five-years without penalty as long as it’s all paid back before the five years have elapsed.
You can usually borrow up to half of your 401k balance up to a maximum of $50,000 at any age and for any reason.
If you’re young, you can withdraw money from an IRA for a first time home purchase subject to a lifetime limit of $10,000 as of June, 2013. Talk to a reputable tax adviser if this is something that you’re looking into.
Both of these will give you extra cash when you may need it most, like closing costs or getting a slightly higher down payment. The IRA would be interest free if you pay back without incurring penalties and 401k would charge the prime rate plus one or two percentage points that goes back into your account.
Borrowing from your 401k won’t count in your debt-to-income ratio when you apply for a mortgage, and it won’t get reported to the credit bureaus.

Why You Should NOT Borrow

If you borrow from your 401k and lose or leave your job, you have a 60-90 day window to pay back the loan or it will be considered a distribution subject to taxes plus 10% early withdrawal penalty if you’re under 55.
You can’t miss even one payment or else you will be considered in default and penalized.
You will get double-taxed when you repay the loan. This is because the loan repayments, including the interest, will be repaid with amounts that have already been taxed and will be taxed when withdrawn from the retirement account.
If you cash out other investments intended for retirement, you lose the benefit of holding onto it for long term, and may have to pay capital gains on your taxes.
Bottom line is talk to a tax professional to understand the impact to your taxes. Think about if the long term gain of the house will offset the lost opportunity by borrowing or cashing out your retirement investments. Will you have enough time to recover?
And finally, the bottom, bottom line is never borrow more than you can repay. Don’t borrow off of your 401k to buy a larger house and then not adjust your spending so you can’t repay the 401k every month. And remember that if you lose or change your job, you will be required to pay back the borrowed amount in full. Talk to a reputable mortgage loan officer to understand how much you can afford.

Ideas for Day Trips

 

Are you feeling some wanderlust? Have you been cooped up for too long and you want to go exploring? Maybe you got a great camera for Christmas and want to go test it out. Or maybe you bought a great pair of hiking boots that you want to break in before you go on a really big hike. Or maybe you just want to go kick up your heels and have some fun.
Whatever your reason, it’s time to look into a day trip.
Chances are, there are really fun things to do within a 25 mile radius of your home that you didn’t know about. Why? Because you live there and it would never occur to you to look for what a tourist wants.
So, let’s play tourist for a day and have some fun.

Road Trip Tips

First, if you have kids and you’ll be driving in the car, you’ll need to plan ahead.
Here are some tips to keep everyone happy and well-fed for traveling:

• Bring books and music that the whole family will enjoy, and don’t forget about classic games such as “I Spy” and “Go Fish.”
• When packing food for a day trip, keep it simple. Fill a cooler with a variety of sliced fruits and veggies stored in plastic baggies for hassle-free munching. Include drinkable yogurts, individually wrapped cheese slices and granola bars.
• If a long road trip is in store, plan for several stops throughout the day. Giving kids – and parents – time outside of the car will help everyone stay energized throughout the drive.

A Local Day Trip

Are you the mother of a teenage girl? No matter how close of a relationship you may have with your daughter, it may feel as if you are spending way too much time apart. Instead of traveling, make your day trip at an all day spa.
Look for a day spas  equipped to handle pairs or even groups (if you have more than one daughter).

Apps to Help You Find Fun

Let your smart phone do the heavy lifting to find events nearby. There are some apps that also tell you where to eat like a local.
This site has links for apps to help you find the best places for hikes and camping.

Think Like A Tourist

Finally, go to your local library and look for a guide like Fodor’s to see what they recommend doing in your area.
Don’t wait to go do the silly things that only the tourists do. Play tourist for a day and make some silly memories.

What To Buy In February

What To Buy In February

Hopefully you purchased your jewelry during the sales in December and January because prices are back up for February.
If not, don’t despair! Look for coupons for value-driven jewelry sites like  Netaya, ICE.com, Limoges Jewelry, and Ross-Simons.
There are also great coupons for lingerie sites like Victoria’s Secret and Frederick’s of Hollywood but watch the expiration date carefully.
Also, look at the ads for department stores like Macy’s. Last year, they had some good sales through February 14th.Then look for really big President’s Day sales the weekend after Valentine’s Day. This may be a good time to buy jewelry for Mother’s Day. Historically, retailers take as much as 85% off on a variety of goods like clothing, tools, bedding, and furniture. Some retailers tend to offer deeper discounts on existing sales, while others will lean towards modest coupons (likely an extra 20% to 30% off) that are applicable sitewide. Look to clothing and department stores for a big Presidents’ Day sale push.

So, what else to buy? If you’ve wanted a Wii U, look for great prices or amazing bundles. Nintendo released a report that showed their sales were far lower then they’d hoped. So, they will be motivated to get more people buying. Tax software will still be priced lower than it will in April.
Winter clothes are on the clearance racks right now as Spring apparel is being highlighted.

For big screen televisions, look for 55″ 3D 1080p LCD HDTVs. For the past five months the best deals on these TVs have averaged $700, and it’s only a matter of time before they hit sub-$700 terrain — especially now that 2014′s new models were announced at last month’s Consumer Electronics Show. If you don’t care for 3D, then look for standard 55″ 1080p LCDs that dip as low as $500. And while we generally wouldn’t recommend jumping on the 4K bandwagon, the 65″ Seiki SE65UY04, which Dealnews.com predicted would hit $1,900 in February, actually hit $1,388 last month. That’s a 53% drop from its December launch and a much faster price drop than expected. While it’s not videophile quality, it is a cheap way to get your feet wet with 4K technology, and may be more appealing in 2014, since there are more providers of 4K content.

Touchscreen ultraportable laptops have gone below $200, so if you’ve been thinking about it, now may be the time.

Don’t buy smartphones if you can help it. New models will be announced soon, and we should see price breaks then.

And to save money on groceries, buy what’s in season. There’s more than you might think.

• Arugula
• Asparagus
• Artichokes
• Beets
• Bok choy
• Broccoli
• Brussels Sprouts
• Cabbage
• Cauliflower
• Carrots
• Celery
• Cilantro
• Clementines
• Dill
• Fennel
• Grapefruit
• Kale
• Lemons
• Lettuce
• Leeks
• Oranges
• Onions
• Parsnips
• Pears
• Shallots
• Sweet Potatoes
• Tangelos
• Tangerines
• Turnips
• Rhubarb

And there are cycles to what’s on sale in your supermarket.
National Canned Food Month: Canned Fruit, Pie Fillings, Vegetables, Meats: Tuna, Chicken, Salmon
National Hot Breakfast Month:  Malt O Meal, Oatmeal, Eggo Waffles, Syrup
Valentines:  Chocolate,  flowers

Chinese New Year: Soy Sauce, Teriyaki Sauce, Noodles, Canned Water Chestnuts
Heart and heart-healthy products (American Heart Month): aspirin, supplements,low cholesterol oils and spreads

Westminster Dog Show February promotions: Dog food from Eukanuba, Pedigree, Purina, and Iams

What do you usually buy in February?

Planting Spring Bulbs

If you’ve gone into your local gardening supply store, you’ve probably seen large racks of bulbs for sale. The bulbs have big flowers and fun names like Dahlias and Gladiolas.

These are the bulbs you plant now that bloom in the summer and create a gorgeous burst of color. There are many varieties of flowering plants, but few offer all the advantages of bulb plants. For starters, bulbs are generally cheap to buy, and are available from local shops or on the internet.


Bulbs are also beautiful putting out the most beloved flowers in the garden. Irises, hyacinths, daffodils and tulips are also bulb plants. Most of these should have been planted in the late fall or early Winter. But don’t let that stop you. If you can find the bulbs, plant them and they will certainly bloom the next year. Sometimes, they even reward you by blooming the first year.
Even though bulbs are among the hardiest of all plants, it is important to exercise caution when planting them, and to buy only the best and most healthy bulbs. By choosing the healthiest bulbs, it will be easy to create a beautiful and healthy garden year after year.

When shopping for bulbs, look for the firmest, plumpest bulbs you can find. A good, high quality bulb will seem surprisingly heavy for its size. Avoid bulbs that are too soft as it’s often a sign of bulb rot. In addition, bulbs that are very light in weight, or that appear shriveled or cracked, should be rejected. These bulbs may have lost too much of their moisture to bloom in the garden.
The best blooms are generally provided by the largest bulbs. For instance, the largest iris bulbs will generally provide the biggest irises, and the biggest tulip bulbs will produce the largest tulips. Since bulbs bloom every year, a most cost effective approach for the patient gardener is to buy small bulbs and allow them to grow over time. Or you can buy some large and some small and build up your garden with a variety of color and flowers that are timed with the season. For example, you could have the crocuses and paperwhites flower in early spring giving way to tulips and then irises and finally the dahlias.

Just be certain to give each bulb plenty of space to grow, and plant them in well draining soil. If water hangs out, you’ll unfortunately rot out your bulb.
And take care of your bulbs annually. A great gift could be some bulbs and directions on how to grow them.

Home Improvement With A Pocketful Of Tips

It’s a new year, and maybe it’s time for some “newness” in your home. If you have been planning for a while that you would like to make some updates to your home, but have put it off because you just don’t know where to start, let us help you determine what to do, how to do it, and how to get the best deal possible.

 

 Today, we’ll do some quick tips.

To keep your toilets clean, pour bleach inside the bowl. Close the lid and let it sit for 15-20 minutes. Bleaching your toilets will smell bad for a while, but it will decrease your chance of getting sick and spreading germs as well as making your toilet nice and shiny.

When looking to improve your home, consider going with Compact Fluorescent Lights. CFLs do not use as much energy as a normal light, and they last a lot longer. When you switch your lights to Compact Fluorescent Lights, you will save money on your energy bills. CFLs do contain mercury, so you will need to find out where to properly dispose of them. If you don’t like the idea of the mercury, spend a little bit more on LED bulbs. They last just as long and you don’t have to worry about calling a hazmat team if they break.

When you are remodeling your bathroom, make sure not to add carpeting to the floor. Not only does carpeting stain easily, but the water from the shower will give the carpet, and subsequently your whole bathroom, a musty odor. Instead, go with a tile so you can easily clean up any water that may get on the floor.

Store your paint cans upside down. A skin forms inside used cans of paint. When you open the can it’s a mess to remove. One solution is to put the used paint cans in your storage area upside down! That way when you turn the can over and open it, the skin is underneath the paint where it can’t cause a problem.

Cover your door knobs, hinges and other hardware with petroleum jelly before painting. It is an easy way to insure they don’t get covered in paint. All you have to do when you are finished painting is use a soft cotton cloth to wipe the petroleum jelly from the surfaces of the hardware.

Painting an indoor room can be done quickly and easily. If possible, try to do all your painting in daylight hours, as artificial light can cause you to miss small areas. Tackle the ceiling first painting around the edges in bands then working your way towards the center. The walls should be painted starting at the top, and working downwards in overlapping sections.

If you are having home repairs done by a contractor, always get multiple bids from several licensed contractors that are well established and highly recommended. Make sure that the bids you receive are written and contain fixed-price bids for the needed services. Ensure that the wording is detailed. You don’t want to go with the best price and find out it didn’t include something major.

Don’t keep putting off your home improvement projects because you lack the knowledge or expertise to do it all on your own. There are plenty of ways that you can make significant changes in your home, with a little bit of time, research, and practice.

What home improvement projects are on your list for this year?

Should You Rent or Buy in 2014

 

Housing prices are increasing and so are mortgage interest rates. New regulations in 2014 also increased closing costs and put limits on the amount of points you could use to pay down your interest rate. They also created stricter guidelines for application approvals.

So if you’re a first time home buyer, you may be asking yourself: should I continue to rent or should I buy in 2014?

TIG adviser Jeff Lewis was interviewed on Fox Business to answer this very question. You can see the full 6:32 minute video here. His prediction is that the housing market will get back to normal by the end of the calendar year.

In his opinion, housing prices are still affordable now compared to housing prices before the real estate bubble that inflated costs tremendously. They are not as easily affordable as they were the last two years, and as interest rates continue to increase and housing prices level up, we will achieve a normal balance by the end of the year.

We’re seeing a greater recovery in the states with the better abilities to create jobs. Housing is still in a very bad state in the Midwest and big cities like Detroit. Mr. Lewis speculated that increased home ownership may be part of the problem because it reduced mobility of people to leave the area and find a better job. The homeowners are stuck in underwater housing and no jobs.

Also, in large cities, home ownership is near impossible, and there isn’t the same stigma attached to being a life-long renter. In fact, renting is considered a bonus because when there are problems like water leaks, the owner of the building has to fix it.

Still, for many people buying a home is achieving an American Dream. The bottom line for future homeowners is to evaluate their expectation of prices and goals. If it is your goal to own a home on a nice tree-lined street and have block parties, then you should start talking with a reputable mortgage officer to find out how much you could pre-qualify for. A knowledgeable real estate agent will also be able to help you find the right home. You may want to save up longer and buy the one home you will stay in, or you may want to invest in a starter home that you can sell to get back your equity, or rent out.

For real estate investors, it’s still a great time to be buying homes that are lower than their normal value. Rental vacancy rates are still at an all time low.

Will you be buying in 2014?

Now Is The Time To Buy Before 2014 Begins

We mentioned in an earlier blog that interest rates will be staying lower, and it's still cheaper to own than to rent. 

So in today’s blog, we’re pulling out the sledgehammer to give you a nudge if you’re on the fence: This last quarter is a great time to buy a home before 2014.

There had been concerns that the feds would tighten requirements for home loans, but that hasn’t happened yet. Many banks and credit unions have easier criteria to help some people get that home loan they’ve been wanting. If you have good credit and some savings for a down payment, you probably can get your own home. If you stay in your home at least five years, you could profit from the sale.

Home prices aren’t at rock bottom anymore, but they are still relatively low. And they will continue to rise. The Home Price Expectation Survey projects an increase in home values over the next five years to be between 12.3% and 32.8%. If you wait longer, the house will cost more.

There is less competition from home flippers. Investors can’t move as quickly now as they used to coupled with increasing housing prices are making house flipping less attractive. That gives you more inventory. And as we also mentioned, home builders are still building new homes to also increase the inventory.

MSN Real Estate reported that builders are offering aggressive discounts with completed new homes. The nice thing about a new home is you get a warranty not only on the home, but also the appliances.

“[Builders] want to save their credit, save their brand, save their reputation and clear out inventory,” he said. “They can go buy cheap land today with that cash.”

Did we mention it’s cheaper to buy than to rent in most areas? You also get the mortgage interest deduction which isn’t going away any time soon. Plus instead of putting money into savings, you’re building up equity in your home. And you’re avoiding the cost of rising rents. How many of us have met people who had their rents increased recently because the landlords felt they could?
Interest rates aren’t at their lowest, but they are still relatively low. Unfortunately, they could start increasing again.

As reported by Freddie Mac, interest rates for 30-year fixed-rate mortgages have risen about one full percentage point over recent historic lows.
The National Association of Realtors, the Mortgage Bankers Association, Freddie Macand Fannie Mae, in their July forecasts, have all projected 30-year-fixed mortgage interest rates to be between 4.8 and 5.1% by this time next year.

One percent could mean the difference in the amount of house you can afford.
There’s still time to get your credit in order.  Talk to a reputable loan officer about what your options could be and how much you could afford. It’s still a solid investment if you’re intending on living there for a few years.