Good morning! Buenos días! Buongiorno!

Another week has come and gone, and we’re back to another Tuesday newsletter. 🥳

No one can deny that spring has sprung. But beyond just warmer days and unrelenting allergies, spring also marks peak home-selling season! In fact, May is largely considered to be the best month to sell your home. Homes sold in May typically sell for around 13.1% over market value. 🤯

Spring and summer may be the best time to sell your home, but is now a good time to buy?

Today, our newsletter is all about homes! We’re going to discuss mortgage rate disparities, whether or not now is a good time to buy, and some easy ways to save money at home.

Let’s get to it! 🏡💰

TO DO

Calculate Your “Break Even” Point 🤓

Should you rent or buy a home? There are a ton of factors that go into making that decision, like affordability, lifestyle preferences, and interest rates.

But another way to help you decide if renting or buying makes more sense for you is to calculate your break-even point!

Your break-even point is the number of years you would need to live in a home for it to become cheaper than renting a place.

Renting gives you more flexibility- if there’s a chance you will need to relocate for work or are considering a big move in the next few years, renting is typically your best bet. However, the longer you stay in a home, the more affordable it will become compared to renting. If you’re looking to stay put, buying a house starts to look more attractive.

For example, if you currently pay $2,500 in rent each month and are considering purchasing a $410,000 home at a 6.99% interest rate and put down 20%, your break-even point will be roughly 5 years. If you plan on staying put for even longer, buying a home could be a good choice for you.

Two exceptions worth noting: House hacking can make buying a home more financially rewarding, since renting out a portion of that home will cover some of the mortgage costs. And remember, you’ll only actually save money renting if you invest that difference instead of spending it!

Crunch the numbers and calculate your break-even point using this calculator from NerdWallet!

HOUSING MARKET

Is now a good time to buy a home?

Home envy. It’s a reality for many Gen Z and Millennial renters, with 54% reporting they feel jealous of their peers who have already purchased a home. But despite the fact that 69% of Gen Z and Millennials consider homeownership a major aspiration, is now even a good time to purchase a home?

Well, the right time to buy a home is going to be different for everyone! It depends on a number of factors, both personal and according to the market. But here are a few points to consider when deciding if the time is right for you.

The housing market has been disjointed, particularly post-COVID. But things are looking better than they have in the past few years for potential buyers.

When it comes to home prices, they aren’t shooting up the way we saw back in 2021 and 2022. In March, home prices were only up 2.5% year over year, with the median home price sitting at $431,048. Better yet, Zillow has even predicted that home prices will decline by nearly 2% this year. While this isn’t a guarantee, it’s a good reminder that prices can’t defy gravity forever.

But, mortgage rates remain high, inflating monthly mortgage costs and pricing many folks out of the market. Another issue with high interest rates - it discourages current homeowners with lower mortgage rates from selling, decreasing the supply.

The good news for prospective buyers? Some sellers who have been holding out are starting to cave, putting their homes on the market. The number of homes for sale has increased by 20% year over year.

So, here are some key points to take from all of this:

1. Patience is a virtue - It can be hard to sit on the sidelines while home prices continue to soar. However, buying a home before you’re ready will create more problems for your finances than it solves. Waiting until you can comfortably afford that home, even if that means waiting a couple of extra years, will lead to far less stress and more stability in the long run.

2. Renting is NOT throwing money away - When you rent, you aren’t just flushing money down the toilet. You are trading money for a roof over your head. Renting is often cheaper (especially these days), and you can make some serious financial progress by investing the money you save while renting. Plus, it comes with added flexibility and less responsibility.

3. Buyers have more power now - We’re already seeing sellers cutting their asking price due to a lack of interest. Currently, buyers are in a better place to ask for price cuts and seller concessions. No, mortgage rates aren’t at 3% anymore. But if you are ready to buy, you’re in a better place to negotiate!

At the end of the day, take your own finances into consideration. Buying conditions might be sweetening, but if you don’t have the down payment saved up and the monthly cash flow to afford those mortgage payments (and maintenance costs), buying will never be the right move.

No one timeline dictates when you should purchase your first home. Or whether you should try to buy one at all! Don’t let that home envy get the best of you. 😊

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MORTGAGE RATES

Comparing Lenders Saves You Thousands! 💵

At How to Money, we’re always encouraging our listeners and readers to shop around - whether it’s for car insurance, internet providers, or household goods. But shopping around becomes even more important when it comes to your mortgage, especially when Americans will pay an estimated $11 billion more than they needed to on their mortgages just this year! 🫨

Here’s the deal. The gap between a good mortgage rate and a bad one has widened. While mortgage rates have been increasing over the past few years, so has the APR difference between the best and worst lenders.

Between 2018 and 2020, the gap between the best and worst lending rates sat at around half a percent. Since 2020, that gap has widened significantly. At the time of writing this, it currently sits at around 0.88%.

While this may not sound like a lot, this small difference can result in massive savings over the life of your loans. For example, Tomo Mortgage found that the difference between the best and worst rates can yield a savings of around $287 per month in mortgage payments.

According to Lending Tree, those who shop around for their mortgage can save an average of $76,410 over the life of their loan, with savings shooting up into 6 figures for folks who live in more expensive states.

Your home will likely be the biggest purchase you ever make, so treat it with the careful consideration it deserves. If you’re in the market for a home, it pays to shop around.

We recommend getting rates from a minimum of 3 lenders to score the best deal. Don’t forget to include a credit union in your search - they typically offer the best rates on mortgages. And if you don’t have time to hunt yourself, consider asking a mortgage broker who can shop with multiple lenders on your behalf.

One big win can net you more than a hundred small ones. Tens of thousands of dollars are at stake, which means this is serious business. We put so much effort into finding the perfect home. Don’t be lazy when it comes time to shop for a mortgage!

ICYMI

Here’s the scoop…

Millionaire Renters 🤩
More and more folks making $750,000 or more are choosing to rent instead of buy, citing market conditions, flexibility, and prioritizing other financial goals as major factors in this decision.

Apple Settlement 📱
If you’ve purchased or owned an Apple device over the past decade and experienced an unprompted Siri activation, you could receive up to $20 per Siri-enabled device.

Credit Card Rewards Shrinkflation 💳
We recommend not squirreling away your credit card points for long because the value erodes over time. Many rewards credit cards, including Southwest Airlines and British Airways, have been devaluing their points systems. However, there are still ways to make the most out of your travel rewards credit cards!

Bill Gates Gives Back 🤝
Microsoft founder Bill Gates is planning to give away nearly all of his fortune over the next 20 years, instead of 20 years after his death as originally planned. He believes his money can have a more positive impact now as opposed to down the line.

P.S. - You don’t need to be Bill Gates rich to enjoy the many benefits of giving away your money!

COMMUNITY

Cozy Home Cafés ☕️

@urgirlvic

it’s saturday - let’s turn my apartment into a cafe

Ah, the $7 latte. Ragged on by personal finance gurus, blamed for a lack of savings, and often championed as the poster child for overspending. But personally? I don’t want to live a life without good coffee. And I can’t think of a better way to spend a Sunday morning than at your favorite local café. So what’s the solution?

Well, one of our new favorite TikTok trends is brewing up some serious savings. Lately, we’ve been seeing tons of folks carving out some space in their homes to create their own mini “coffee shops!”

Making your home a place you enjoy spending time in, whether you rent or own, is a great way to increase savings and get more for your money. You can think of it like price per use- the more hours you spend enjoying your space, the less you’re “paying” per hour of being there.

It reminds us of one of our favorite tips for eating out less. Decorating your kitchen like a restaurant can make dining in more exciting than going out!

To all the homeowners, potential buyers, and renters for life, we wish you a joyful, fulfilling, and productive week ahead!

Best friends out 🍻