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Saving Money on Moving If Relocation Costs Make You Cringe

March 31, 2021 by Staff Reporter

Moving to a new place is exciting. Paying for the move, on the other hand, can feel like a nightmare. With boxes, truck rentals, new furniture, and other moving fees, the cost can add up fast. Moving.com estimates that it costs as much as $2,994 to move a 2 to 3 bedroom house just one zip code over (ouch).If you’re feeling overwhelmed by moving costs, we’ve got you. Here are eight simple steps to save money on moving costs:

1. Negotiate for your employer to subsidize your moving costs

If you’re moving because of your job, you can negotiate for your employer to cover or subsidize your relocation costs. Some companies offer “relocation packages” to employees moving from out of the area. According to a survey by Allied Vans, about  26% of people moving for a job received relocation packages, while another 28% received funds to help with house hunting and miscellaneous expenses.

Employment giant Monster.com recommends finding out what kind of relocation packages are typical at your company by contacting the HR department or asking current employees or employees at similar firms about their experiences. You can reach out to people on LinkedIn and read reviews on sites like Glassdoor to gain insight.

Once you have a good idea of what the company typically offers, pitch your relocation package as a benefit to the company; if you can get settled in quickly, you can work efficiently right away.

2. Choose the most affordable moving service for your needs

There are many options for moving services. If you’re moving from a small apartment to another and already own a large truck, you could possibly get away with doing the job solo. For more sizable moves, consider these options:

  • Full-service moving companies: These companies take care of everything from start to finish, including packing, loading, transporting, and unloading your belongings to the new destination. Companies that offer this service include Mayflower and United Van Lines.
  • Rental trucks: You can choose to rent a truck from a company like  U-Haul or Penske, load it up, and drive it to your new home yourself.
  • Freight trailers: Another option is to rent space on a freight trailer. You’ll pack and load yourself, but the company will handle transportation. Companies such as U-Pack and SureMove offer this service.
  • Portable storage containers: Finally, you can rent a portable storage container from Pods or SmartBox, load it up, and have it delivered to your new home. This option is helpful because you can leave the container outside your property while you move in, eliminating the need for renting out a storage unit.

Request estimates from a variety of companies to save money on moving costs. For a quick overview, see the below chart comparing the average price to move a 2-bedroom home for different types of moving services:

Moving serviceShort move (under 100 miles)Long move (over 100 miles)
Full service moving companies$550 – $2000$2000 – $7,500
Rental trucks (excluding per-mile fees and fuel costs)$132 – $366$500 – $1,700
Freight trailers$1,000 – $2,000$2,484 – $3,105
Portable storage containers$500 – $1,500$1,500 – $5,000
Exterior of house with moving van in front of it
NORRIE3699/Shutterstock

3. Reduce your belongings before you pack

While it’s natural to accumulate stuff, large items like pianos, surfboards, and TVs significantly increase the price (and difficulty!) of your move. Consider letting go of large items that don’t have too much sentimental value. You can replace them at your new location, and in the meantime, can put the sale money towards your moving costs.

Here are a few popular websites where you can easily list personal belongings for sale:

If selling everything online seems like a hassle, consider hosting a garage sale. If you think it’s unlikely that you’ll make enough money to justify the effort, you can always donate items to charity organizations. Some organizations, like Habitat for Humanity and The Arc, will even pick up your items for free.

4. Weigh the cost of moving furniture against selling and repurchasing

Do you love your couch beyond words? If not, selling it before you move and buying furniture to match your new home may be a wise choice. Long-distance moving companies usually charge by weight or by cubic feet. Since furniture accounts for more weight and mass than your other belongings, you can save money by reducing how many pieces you move.

On the flip side, buying new furniture is expensive, and your used bed frame and dresser won’t always catch a great price. Think about what furniture you need for your new home and research what the items you want cost. After that, reach out to a few moving companies for estimates based on the weight of your current furniture. If it turns out that selling your current furniture is cheaper, congratulations, you’ve saved money and upgraded your new home at the same time!

corner of a chair with a coffee cup on the arm and a pillow

5. Consider selling your car before you move

If you’re only relocating to a new neighborhood or the next town over, it might not make much sense to sell your vehicle. However, if you’re moving across the country, it might save you money to sell your car and purchase another one at your destination.

In some cases, you may need to drive a moving van cross-country to reach your new home, meaning that you’ll need to have someone else drive your car, rent a trailer in addition to your van, or pay to have the car shipped (the average cost to ship a mid-size vehicle cross-country is about $1,105). Additionally, if your car is older or in poor condition, adding cross-country mileage could result in more expensive issues like cracked radiators, worn-out bearings, or transmission failure.

6. Strategically plan your moving date

Everyone’s situation is different — your ideal moving date may depend on your work schedule, home sale closing, children’s school schedules, and even the weather. However, the timing of your move can have an impact on the cost. Just remember that you can save on moving costs if you plan your moving date wisely:

  • Research when your preferred moving company offers lower rates; many companies will offer reduced rates in the winter or on weekdays.
  • Schedule your move for a date when friends or family can help.
  • Try to align your moving-out and moving-in dates so you don’t overspend on temporary accommodation.
  • Take advantage of any accrued PTO days.

Person's hand holding a pen with a planner nearby

7. Find free moving boxes and padding

While the cheapest moving boxes might only cost a couple of dollars, larger and heavy-duty boxes can cost more than $20. When you consider how many boxes you need, the sum of small costs can add up to a significant expense. Additionally, fragile items and furniture may require padding like blankets, foam packing, or bubble wrap, which adds to your packing material costs.

Fortunately, people are almost always looking to get rid of boxes and padding. Here are some ideas for where you can snag them for free:

  • Use Freecycle, a network that connects you with people in your area looking to avoid waste by giving away stuff they don’t need. If you catch someone who has recently moved, they’ll probably have boxes they’re willing to part with.
  • Ask your office or your local liquor or grocery store to see if they’ve got any boxes that they’d otherwise throw away. You might also ask around at large retailers like Costco or Walmart.
  • Call ahead to an area recycling center and ask if they’ll keep boxes for you to pick up.
  • Post a wanted ad on Craigslist for moving boxes. People often need to get rid of boxes they’ve accumulated from a move or small business operations.

8. Enlist friends and family to help you pack

Helping your friends and family move is a time-honored tradition, and there’s no reason you shouldn’t make use of it to save some money. U-Haul prices professional packing and loading services at around $45 an hour. Depending on the size of your home, the job could take all day or even multiple days. While you might owe your loved ones a pizza after they’ve helped you move, it’ll cost much less than hiring a professional.

If you don’t have anyone available to help, try checking out TaskRabbit, a platform that connects you with people willing to help out with various jobs for a fair price.

Filed Under: Apartments, BUY HOME, HOME IMPROVEMENT, SELL HOME Tagged With: Buyers, Logistics, Moving Tips, Uncategorized

11 Ways First-Time Homebuyers Can Get Out of Paying PMI (or MI)

July 30, 2020 by Staff Reporter

Buying a home can feel overwhelming, especially if you’re new to the process. Not only is there a lot of new jargon to learn, but the dollar amounts you’ll be throwing around are enough to make anyone feel lightheaded. And when you throw private mortgage insurance (PMI) into the mix, and all the warnings about it, then a lot of buyers are preoccupied with one question: Do first time homebuyers have to pay PMI, and how can you get out of it?

Let’s back up and think about down payments. Lenders like to see you put 20% down, which might not seem like much — until you’re talking about an asking price of hundreds of thousands of dollars. After all, the median home price in the U.S. was $285,700 in June 2019. Paying 20% of that means you’d need $57,140 just to close on your new home loan!

But what if you don’t have that kind of money to put down? Don’t worry, you’re not out of luck. You can still get a mortgage. But if you don’t have the full 20% down payment, your lender will probably want a little extra insurance that you’ll pay your loan as agreed. If so, for a conventional loan, they’ll require you to add the cost of PMI to your monthly home loan (it’s called just MI, or mortgage insurance, if you have a government-backed loan such as an FHA loan).

It might seem daunting — after all, if you don’t have the money to put 20% down, why do you have to cough up extra? But here’s a secret: Not all first-time buyers have to pay PMI or MI. We’ve combed through the most recent data on home affordability to show you 11 great ways to buy your new home without paying your lender’s insurance premiums.

a hand holding a small model of a house in front of the sun indicates the protection mortgage lenders seek when they charge pmi
Image Source: Shutterstock.com/sommart sombutwanitkul

What’s PMI or MI, and why would I need to pay it?

As you’re figuring out how much you can afford and what kind of loan will be best for your situation, you’ll need to know when mortgage insurance applies. PMI is private mortgage insurance on a conventional home loan. Lenders require it to protect their investment in situations when buyers have less than a 20% stake in the home.

If you’re taking out a government loan — an FHA loan, for example — the same concept applies, but the lender’s insurance is just called mortgage insurance (and it’s not private).

In either situation, the mortgage insurance is an extra cost in addition to your monthly mortgage payment, and it usually costs between 0.5% and 1% of the value of your home each year. For our example home that costs $285,700, MI payments of 1% could be $2,857 a year, or $238 each month — on top of the cost of your mortgage and taxes.

Your agent can help you find a good lender

Because the mortgage insurance requirement will vary depending on the price of the house you choose, the lender, and even your particular loan, it pays to get some help as you’re figuring it all out. As real estate agent Josh Vernon explains, a good agent can help direct you to reputable lenders, which is crucial when you’re buying your first home. Vernon is a top-selling agent in Trussville, Alabama, and he makes a point of connecting his clients with vetted lenders who can help them.

“A lot of times, for the first-time homebuyer, they don’t even really know what their finances look like,” he says. So he makes sure to always follow up with a phone call to make sure his clients are comfortable with the lender they’ve selected. If you’ve chosen a good agent, you can be confident that they’ll work with you and the lender to make certain you find the best loan for your situation.

As you explore your lending options, you could opt to pay a smaller down payment and just deal with paying MI as the price of doing business.

But if you’d like to avoid that extra monthly cost, here are some proven strategies to make it possible.

Put down 20% (or more)

This may be the simplest way to avoid paying mortgage insurance, though of course it’s not necessarily the easiest. But if you have a significant stake in the home of 20% or more, the bank no longer requires insurance on your loan.

Coming up with a down payment of 20% for a home might be easier to do in areas of the country with a lower cost of living, although salaries can be lower there, too. A strict savings plan and a little bit of discipline will help get you there faster. Plus, knowing how much you can afford will help. HomeLight’s affordability calculator shows you what you could be shopping for.

Family members can also help you reach the 20% threshold by giving gifts, although your lender will require some documentation about this. If you go with an FHA loan (which has lower down payment requirements to begin with), the money must be a “bona fide” gift, with no expectation of repayment, and it should come from someone who might really be expected to give a gift like that: actual friends, family members, even charitable organizations.

There will be rules governing how you use a gift for a down payment, so be sure to work with your lender so that you proceed properly with the loan.

people helping each other hike up a mountain symbolizes a helping hand for buyers to get rid of pmi
Image Source: Shutterstock.com/KieferPix

Get help via a down payment assistance program

Saving up enough money for a down payment is definitely one of the toughest obstacles for first-time homebuyers. That’s why there are a number of programs designed by state housing agencies to help you clear that hurdle so you can begin your journey of homeownership.

These are typically called down payment assistance (DPA) programs, and a study from the Urban Institute shows there are 2,144 active programs across the country — 264 in California alone. The Urban Institute estimates that between 30% and 52% of buyers qualify for programs like these, and when doing so, they’re eligible for amounts up to $30,000. DPA programs are available for conventional as well as government loans; you’ll find the most assistance available with FHA, VA, and USDA loans. Ignoring these programs means you could be leaving a lot of money on the table.

Just take Nevada as an example. The state’s Home is Possible program will match up to 5% of the purchase price in the form of a grant, which you don’t have to pay back. Even more impressive: Consider Arizona, where the DPA is 10% of the purchase price (up to $20,000) — meaning if you came up with the other 10% for a down payment, you wouldn’t have to pay PMI. Buy a house in Tucson, where the median price is $177,900, and you could get a discount of $17,790. Provided you come up with the other $17,790 yourself, you’ll pay no MI, and you’ve just shaved a good portion off what you owe on your new home, too.

Not bad for free money!

Consider a ‘piggyback’ loan

Another way to skirt the PMI requirement is to try for an 80-10-10 loan, also called a “piggyback loan.” This method would have you take out two loans concurrently — one for 80% of the home’s purchase price, and a second mortgage for 10% of the purchase price. The final 10% you put down yourself.

You’ll still be financing 90% of the purchase price this way, but since the main mortgage is for only 80% of the home’s value, you won’t have to pay mortgage insurance.

A row of men in military uniforms saluting; veterans can buy a house without having to pay PMI
Source: Shutterstock.com/Bumble Dee

Take advantage of your veteran status

You’ve served your country — now the government wants to offer you assistance in return. If you’re a qualified veteran (meaning you meet requirements for service history and duty status) then you’re eligible to take advantage of a VA Home Loan, which has favorable terms: 0% down and no mortgage insurance. These loans are backed by the Department of Veterans Affairs and provided by a private loan company.

See if you’re eligible for a USDA loan

These loans are offered by the U.S. Department of Agriculture. They’re intended for rural buyers, but the definition of rural can be quite broad. The main requirement is that you meet the USDA’s income guidelines; then, you can check whether your intended home fits the USDA geographic designation.

As the USDA loan is a government loan, your income must not exceed 115% of the median household income and you must be a U.S. citizen (or qualified resident foreign national). If you qualify, expect to enjoy a loan with 0% down and no mortgage insurance; you can even finance repair costs if you’ve found yourself a fixer-upper.

Ask your lender if they offer a slightly higher interest rate in exchange for lender-paid MI

Another way to avoid PMI: Try the timeless tactic of negotiation. See if your lender will accept different terms in the form of a higher interest rate, which will convert your insurance requirement from borrower-paid MI to LPMI, or “lender-paid mortgage insurance.”

Yes, LPMI will likely increase your rate, but this tactic isn’t as offbeat as it sounds.

In fact, Vernon says some lenders in his market offer a flat-rate loan, which includes an eighth or a quarter of a percentage point rate bump in exchange for LPMI. You’ll need to do the math on your particular loan; it’s possible to actually see a savings in monthly costs because the tiny interest-rate bump is smaller than your MI payment would have been.

To see some examples of how MI (lender- or borrower-paid), down payment, and loan-to-value rates interact, check out the tables produced by the Urban Institute (under the Monthly Payment Comparison section).

a teacher helping a student in a classroom; teachers are eligible to buy a house without paying pmi
Image Source: Shutterstock.com/Jacob Lund

If you’re a teacher, check out this program

Are you a school teacher, firefighter, police officer, or emergency medical technician (EMT)? You could get a discount of 50% off your house through the HUD Good Neighbor Next Door program.

Here’s how it works: You’ll take out two loans, each for half of the purchase price. The first loan is a traditional one, with interest and regular payments, and the second one is a “silent” second mortgage.

As long as you comply with the regulations, buy a home in one of the program’s designation revitalization areas, and fulfil your promise to live in the home for three years, you don’t owe any payments or interest on that silent loan. No MI, either, since the first loan was for 50% of the price of the home. And after the three years are over, that second loan gets completely dismissed.

You could qualify for Bank of America’s low-down-payment program

The government isn’t the only entity offering loans with tiny down payments. Check out Bank of America’s Community Homeownership Commitment, which offers affordable housing programs for first-time homebuyers.

Requirements vary by location, but generally, you can expect to be asked to complete homebuyer education through an approved counseling agency. Then you’ll be eligible for an Affordable Loan Solution mortgage, with as little as 3% down on loan amounts up to $510,400 ($765,600 in high-cost areas) and no mortgage insurance.

Scoop up special loans for doctors, lawyers, and other professionals

If you’ve chosen a profession that requires a lot of advanced training or specialized degrees, you know what burden home loans can be when you have student loans, too. Flagstar Bank offers unique home loan programs especially for recent grads and medical residents. These loans offer mortgages up to $1.5 million with a low or no down payment and no mortgage insurance required.

Get help with high-cost housing

If you’re feeling overwhelmed or trapped living in an expensive housing market, there are loans designed specifically to help you. The HomeRun Mortgage from Citi can grant you a down payment as low as 3% and no MI if you meet their qualifications — even if your loan is jumbo-sized. The program covers loans up to $510,000 (up to $765,600 in certain high-cost areas).

Let this start-up help you finance your home

If you’ve never heard of Sofi, it’s a lending start-up that’s aiming to help you make your dream home a reality. Sofi mortgages are available for as little as 10% down, with no PMI on jumbo loans, regardless of your loan-to-value ratio. There are no hidden fees, either, so you’ll know exactly what you’re paying when it comes time to close.

A hand letting sand fall out of the palm to symbolize how first time homebuyers can drop pmi after their equity accrues
Image Source: Shutterstock.com/Pra Chid

Bonus solution: Pay MI – but drop it when you’re eligible

One last way to handle the MI problem: roll up your sleeves and pay, but only for a short while. Once you reach 20% equity in your home — a good reason to monitor your home’s value regularly — you can request PMI be removed. In fact, there’s a federal law that protects your right to do so (it’s called the Homeowners Protection Act).

What you’ll need to do is make a request to your lender in writing and ask for MI to be removed. Make sure your loan is in good standing and that there are no other liens on your property first. Even if you neglected to ask your lender to drop it, MI will still be taken off automatically when you reach 78% loan-to-value (LTV) on your home for most loan products.

Some government programs, which allow for very low down payments, may require MI for the lifetime of the loan, but you can often remove this additional payment by refinancing that loan when you reach an LTV of 80% or less.

The bottom line

So now you have the lowdown on mortgage insurance and ways around it. Is it worth it to pay? That’s up to you. Just make sure you haven’t left any money on the table in the form of grants, aid, or other homeowner assistance before you cough up extra payments.

This is where a good real estate agent can come in handy — the best-connected agents will know the sorts of lenders that will get you a fair mortgage and any assistance you’re qualified for.

“As your real estate agent, we’re going to protect you and make sure that this process is stress-free and streamlined,” says Vernon’s business partner, Jamey Reynolds. “We never promise perfection, but we promise we’re gonna work through this process so that we help you hit your goal.”

The end result? Your dream home — and maybe even your dream loan.

Header Image Source: Shutterstock.com/Gts

Filed Under: BUY HOME, INSURANCE Tagged With: Buyers, First-Time Homebuyer, Get Started, Uncategorized

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