Month: May 2024

Apache is functioning normally

If you’re tired of renting, it may be time to purchase your first home. Being a first-time homebuyer is nerve-wracking, but many of the myths about buying a home just aren’t true.

You don’t need a perfect credit score, and you don’t need 20% for a down payment. Many first-time homebuyer programs, grants, and down payment assistance programs are available to help you secure the financing you need to purchase your first home.

Key Takeaways

  • First-time homebuyer programs and grants offer various forms of financial assistance, such as low down payment options and closing cost aid, making homeownership more accessible without needing perfect credit or large down payments.
  • FHA, USDA, and VA loans provide significant benefits, including lower credit score requirements and minimal or no down payment requirements, tailored to help first-time buyers with limited resources.
  • Additional unique programs like the HUD Good Neighbor Next Door and HUD 203(k) Rehab Loans offer further advantages, like substantial discounts on home prices and funding for renovations, specifically designed to encourage public service employees and those interested in revitalizing homes.

Federal Housing Administration (FHA) Loans

FHA loans are a suitable option for first-time buyers with poor credit, or anyone who doesn’t have 20% to put toward a down payment. These loans are backed by the U.S. Department of Housing and Urban Development (HUD).

FHA Loan Requirements

If your credit score is at least 580, you qualify for minimum down payment of 3.5%. If your credit scores are between 500 and 579, you qualify with a 10% down payment. However, you should expect to receive a higher interest rate.

Here are some of the other requirements:

  • Have a steady employment history of at least two years
  • You plan to occupy this home as your primary residence
  • You’re prepared to get an FHA property appraisal

You can qualify for the FHA loan program even if you filed for bankruptcy, as long as it’s been at least two years. However, you should expect to pay for private mortgage insurance (PMI). However, you should expect to pay private mortgage insurance for the duration of the FHA loan if your LTV ratio is less than 90% at the time of closing.

If it’s lower, you’ll have to pay for 11 years (unless the home loan is paid off earlier). These proceeds are used to cover the lender if the borrower defaults on the loan.

FHA loan limits vary by area. You can view the loan limits for your area here.

Energy Efficient Mortgage Program

With this program, you can roll the cost of any energy-efficient improvements into your FHA mortgage. This won’t change your minimum down payment requirements, and the money financed for the EEM package won’t affect your loan limit. You’ll need to work with your mortgage lender to determine how much of an EEM benefit you qualify for.

Fannie Mae

With Fannie Mae, you can roll the cost of any energy-efficient improvements into your FHA mortgage. This won’t change your minimum down payment requirements, and the money financed for the EEM package won’t affect your loan limit. You’ll need to work with your lender to determine how much of an EEM benefit you qualify for.

HomeReady Mortgage Program

The HomeReady Mortgage program is ideal for first-time homebuyers who have a minimum credit score of 620. The minimum down payment is 3%, and PMI is required. If your credit score is 680 or higher, you may qualify for more competitive rates.

HomePath Ready Buyer Program

With this program, you can get up to 3% of the purchase price in closing cost assistance toward the purchase of a HomePath property. To qualify, you’ll need to complete a homebuyer education course.

You’re also limited in what you can buy. This program is only for HomePath properties, which are foreclosed homes owned by Fannie Mae.

97% LTV Mortgages

This mortgage loan could be the right option for first-time buyers that don’t have 20% for a down payment. 97% LTV mortgages from Fannie Mae allow you to make a down payment of only 3%.

You can only take out a fixed-rate mortgage for this type of loan. And the home you purchase must be your primary residence and not an investment property.

Freddie Mac

Freddie Mac is another entity that offers competitive mortgage products to consumers. Their most popular program for first-time homebuyers is the Home Possible mortgage. This mortgage is ideal for low to moderate-income borrowers in underserved communities.

Home Possible Mortgages

Buyers can choose from the 95% LTV (Home Possible) or 97% LTV (Home Possible Advantage) options. This conventional loan is not backed by the federal government, but it comes with flexible terms and low down payment minimums.

Plus, you can cancel your PMI once the loan balance reaches 79% of the home’s appraised value. And even if with no credit or bad credit, you may be eligible for a mortgage with as little as 5% down.

United States Department of Agriculture (USDA) Loans

Considering a home in a rural area? You may qualify for 100% financing through the USDA loan program.

There is no required down payment with this program, and the credit requirements are much lower than what other lenders look for. You can use this tool from the USDA’s website to see if your area qualifies. There’s a 2% guarantee fee with a USDA loan, but it can be rolled into your mortgage loan and spread across your monthly mortgage payments.

Veterans Administration (VA) Loans

If you’re an active service member, veteran, or surviving spouse, you may be eligible for a mortgage through the VA Home Loan Program.

VA loans are perfect for first-time homebuyers because the upfront costs are so low. There’s no down payment required, and you don’t have to pay for PMI. There is no minimum credit score requirement for a VA loan. However, most mortgage lenders want to see a FICO credit score of at least 580.

Native American Direct Loan

If you’re a Native American veteran looking to purchase your first home, this program may help you get the financing you need. Loans come with no down payment, minimal closing costs, and no PMI.

They are also much easier to qualify for than traditional mortgages. Your home must be located on Federal Trust Land, and the mortgage is for a 30-year term at a fixed rate.

HUD’s Good Neighbor Next Door (GNND) Sales Program

Do you work in a public service role such as law enforcement, teaching, or the fire department? Then you can receive 50% off the HUD appraised value of select homes through HUD’s GNND Sales program.

The only catch is that the home must be located in a revitalization area, and you must commit to living there for 36 months. You also need to act fast because homes are only listed for sale during a seven-day window.

HUD Dollar Homes Program

First-time homebuyers should also check out Dollar Homes offered by HUD. These are foreclosed FHA properties that have been on HUD’s website for over six months. The options may be limited, but you never know when a good deal may appear.

HUD 203(k) Rehab Loans

Do you have your eyes set on a fixer-upper? Check out HUD 203(k) loans, which are backed by the FHA and give additional funding to homebuyers who want to complete renovations. Instead of taking out a second loan, you can roll the renovation costs into the mortgage.

See also: How to Buy a HUD Home (And When You Should)

Other Homebuyer Grants and Programs

You can visit HUD’s website to learn more about programs that are available for first-time homebuyers in your area. Once you’ve selected your state, you’ll be redirected to a list of programs that you may qualify for.

National Homebuyers Fund

The National Homebuyers Fund (NHF) is available for low-income homebuyers that need down payment assistance. Once you find a participating lender, the NHF will provide a grant for up to 5% of the loan amount.

You don’t have to repay the grant, but there are income requirements based on the current housing market and your location. Your lender can provide you more information and help you determine if you qualify.

Employer-Sponsored First-Time Home Buyer Programs

Some employers are now offering housing incentives to help employees with down payments and closing costs. Your employer or labor union may give you a grant that’s forgivable over time. Check with your manager to see if they offer any kind of down payment or closing cost assistance.

Local Grants to First-Time Home Buyers

There are many state or local government grants available for first-time homebuyers. And many of these don’t require any repayment if you live in your home for a certain time frame. Contact a real estate agent and check with both your state and county to learn more about what options are available to you.

Learn More

  • What Is a NACA Mortgage? – For over two decades, NACA has been assisting borrowers in securing affordable housing through its renowned loan program. Here is an overview of how the program operates.
  • Home Loans for Single Moms – Single mothers often face challenges when trying to secure a mortgage due to having just one income and no down payment. Here are several mortgage programs available for single mothers.

Source: crediful.com

Apache is functioning normally

Known for its academic and medical prestige, Durham is also a growing powerhouse in sports, science, and entrepreneurship. With so much going on within the city limits, those lucky enough to find a home in Durham are reaping the benefits.

From the Durham Bulls to Eno River State Park, let’s take a closer look at ten of the top things Durham is known for and learn a bit more about why so many people are clamoring to lock down an apartment in Bull City.

1. Duke University

Duke University is pivotal to Durham’s identity and a beacon of academia. This prestigious university attracts students and scholars from all corners of the world, contributing to its reputation as a center for academic excellence. The Gothic architecture of its West Campus and the university’s significant contributions to fields like medical research, public policy, and environmental science mark it as a cornerstone of Durham.

2. City of Medicine

Durham is often referred to as the “City of Medicine” due to its many medical and health-related institutions. Home to over 300 medical companies and renowned healthcare systems, this designation highlights the city’s role as a leader in health innovation and services. The presence of the Duke University Medical Center helps spearhead research and advances in medical science and keeps highly skilled folks cycling through Durham.

3. Startup Capital of the South

Dubbed the “Startup Capital of the South,” Durham is a great spot for entrepreneurs. This startup-friendly environment is supported by a network of academic institutions, incubators, and venture capital firms. The city has become a magnet for tech startups and biotech research.

4. Durham Bulls

The Durham Bulls are a symbol of Durham’s commitment to community. This iconic minor league team, made famous by the movie Bull Durham, brings together families and fans from all over to enjoy America’s pastime. Their games are held at the Durham Bulls Athletic Park, a staple for entertainment in the city.

5. American Tobacco Historic District

Once the home of one of the largest cigarette manufacturers in the world, the American Tobacco Historic District has been transformed into a center for entertainment and business. This revitalized area is full of charming old factories converted into offices, restaurants, and shops. Plus, you can’t beat the views of the old water tower and the Lucky Strike smokestack.

6. The Museum of Life and Science

The Museum of Life and Science is a family favorite. With interactive exhibits and programs that ignite curiosity in the natural and physical sciences, this is a place that fosters scientific interest through interaction. Highlights include a butterfly conservatory, wildlife habitats, and aerospace exhibits.

7. Research Triangle Park

Located near Durham, Research Triangle Park (RTP) is one of the largest research parks in the world. It hosts over 200 companies specializing in pharmaceuticals, biotechnology, information technology, and environmental sciences.

8. Durham Performing Arts Center

The Durham Performing Arts Center (DPAC) is a premier venue for entertainment in the city, hosting Broadway shows, concerts, comedy, and more. With state-of-the-art facilities, DPAC attracts major national tours and acts.

9. Eno River State Park

Eno River State Park offers a retreat into nature with its lush forests and rolling river. Visitors can enjoy hiking, picnicking, canoeing, and fishing within its extensive trails and scenic spots. The park is a testament to Durham’s commitment to preserving natural landscapes.

10. Brightleaf Square

Brightleaf Square houses a collection of shops, restaurants, and boutiques. This shopping complex perfectly combines the historical with the contemporary. The area is known for its lively atmosphere during the evening, with frequent events and live music drawing a regular crowd.

Apache is functioning normally

An above-ground swimming pool can mean summertime fun in the backyard, but installing one can cost a thousand dollars or more. Paying with cash is an interest-free way to cover the cost of a pool, but financing options can help spread payments over time.

Can you finance an above-ground pool?

You can finance the cost of an above-ground pool a few different ways. Credit cards, “buy now, pay later” plans and retailer financing let you borrow money and make payments until the amount is paid off. The cheapest option offers zero or low interest.

Pool loans are another way to finance your above-ground pool. These loans are unsecured, so there’s no collateral, but interest rates and loan amounts can be higher than alternatives.

If you have fair or bad credit (a score of 689 or lower), look for pool financing options with low or no minimum score requirements and check your budget to ensure you can repay the loan on time.

Ways to finance an above-ground pool

Credit card

A credit card is a convenient way to finance an above-ground pool, but interest rates can be high on unpaid balances. One way to avoid interest is to use a card with a 0% introductory rate, which allows interest-free payments for 15 to 18 months. After that, the regular variable interest rate kicks in. You typically need a good or excellent credit score (690 or higher) to qualify. 

Pros and cons of financing an above-ground pool with a credit card

Pros

Can be used nearly everywhere.

Allows for a fast purchase.

Can be interest-free if paid off in full each month or if you qualify for a 0% card.

Cons

Need good or excellent credit to qualify.

Interest rates are variable.

High interest rates can make the cost more expensive.

When it’s best: Consider a credit card if you qualify for a 0% APR card or you can pay off the cost of the pool before your next statement. Credit cards can be helpful if you want the flexibility to add items like ladders or heaters later on.

Buy now, pay later

“Buy now, pay later” plans let you break up the cost of an above-ground pool into equal biweekly or monthly payments, sometimes at zero-interest. Stores like Walmart and Home Depot offer BNPL plans from Affirm or Afterpay online and in-store. There is no minimum credit score required, but providers run a soft credit check.

It can be easy to overspend with “buy now, pay later” so ensure you have a plan for making all the payments. Some BNPL providers report late payments to credit bureaus, which can hurt your credit score.

Pros and cons of financing for an above-ground pool with buy now, pay later

Pros

Zero-interest plans available.

No minimum credit score required.

Available at major retailers online and in-store.

Fixed term and payments.

Cons

Some plans may charge fees.

Longer-term plans may charge interest.

Returns can be difficult.

When it’s best: Buy now, pay later works best when you qualify for a zero or low-interest plan and the payments fit within your monthly budget.

Pool retailer financing

Some pool retailers provide financing with lower rates when compared with options like a credit card. Retailers typically require an application and credit check to determine your loan eligibility.

Consider pool retailer financing if you understand approval requirements and the loan terms. Compare offers with other financing options to make sure you’re getting the lowest APR for the loan.

Pros and cons of pool retailer financing for an above-ground pool

Pros

Purchase and financing through the same company.

Low rates.

Cons

Not available with all pool retailers.

Financing may only be available on certain pool models.

May have a minimum credit score.

When it’s best: A pool retailer is a good financing option when it’s available for the pool you want, there are no fees and you qualify for a low rate.

Pool loans

Pool loans are personal loans you get from a bank, credit union or online lender that you use to finance a new pool. Loan amounts range from $1,000 to $50,000, and the funds are distributed in one lump sum. These loans come with fixed annual percentage rates, so your monthly payment won’t change, and terms typically range from two to seven years.

Rates on personal loans are from 6% to 36%, and borrowers with good to excellent credit typically get the lowest rates. Many lenders can provide same-day approval and funding.

Some personal loan lenders offer home improvement loans specifically to bad credit borrowers. These lenders will consider factors beyond credit score, like your monthly cash flow and employment history, but loan rates are higher.

Pros and cons of financing for an above-ground pool with pool loans

Pros

No collateral required.

Fixed APR and monthly payments.

Fast funding.

Cons

Starting loan amounts can be high.

Rates can be high.

May charge an origination fee.

Can’t request more funds for surprise expenses or additions.

When it’s best: A pool loan can be a good choice when you need a high loan amount, fast funding and you qualify for a low APR.

How much is an above-ground pool?

The cost of an above-ground pool can range from about $1,000 to $6,000, according to home services website, Angi. The pool’s size, type and additional features will determine your overall cost.

Once the pool is installed, you will need to budget for ongoing costs, including cleaning, water filtration, chemical balancing and repairs. This can cost a few hundred dollars a month, depending on the size of the pool.

Source: nerdwallet.com

Apache is functioning normally

Purchasing a home is a milestone achievement for many, filled with excitement and the promise of new beginnings. However, the process involves navigating a maze of legal documents, negotiating contracts, and understanding zoning laws, which can vary widely from one location to another.

These complexities can quickly transform the joy of buying a home into a stressful ordeal.

Over the years, we’ve seen many individuals and families encounter unexpected hurdles during what should be one of the most exciting times of their lives.

That’s why we strongly recommend enlisting the services of a skilled real estate lawyer. In this article, we will explore the peace of mind and protection a real estate lawyer can offer, using real-life scenarios to illustrate the value they bring to the homebuying process.

The pitfalls of going solo: A cautionary tale

Let’s take the case of John and Sarah, a young couple brimming with excitement about purchasing their first home in Philadelphia.

They found a charming row house in Bella Vista, perfect for their growing family. They poured over the contract themselves, feeling confident in their ability to handle the legalese. Everything seemed straightforward.

Unfortunately, a month into ownership, a major leak sprung from the roof. The previous owner had neglected crucial repairs, and the cost of fixing the damage was substantial. John and Sarah, devastated and frustrated, discovered a hidden clause in the contract limiting their ability to recoup repair costs from the seller.

A real estate lawyer in Philadelphia could have identified this clause during the review process, potentially saving them a significant financial burden.

How a real estate lawyer protects your investment

Photo credit: Anton_Ivanov / Shutterstock.com

Peace of Mind: Buying a house is likely the biggest financial investment you’ll ever make. A lawyer ensures the process is smooth and transparent, mitigating potential headaches and legal roadblocks.

Contract Expertise: Real estate contracts are intricate documents. A real estate lawyer can decipher legalese, identify potential issues, and negotiate terms in your best interest. This includes crucial details like property disclosures, inspections, closing costs, and title insurance.

Dispute Resolution: Unexpected issues can arise during a transaction. A lawyer can advocate for you and protect your rights if disagreements emerge with the seller, lender, or other parties involved, just like a Philadelphia real estate lawyer could have helped John and Sarah spot the hidden clause and navigate the ensuing disputes.

Beyond contracts: The ongoing value a real estate lawyer brings to the table

Real estate law goes beyond just buying a house. A lawyer can also assist with:

  • Zoning and permitting issues
  • Foreclosure defense
  • Landlord-tenant disputes
  • Commercial property transactions

FAQs: Your questions answered

Photo credit: Africa Studio / Shutterstock

1. When should I hire a real estate lawyer?

Ideally, consult with a lawyer as early as possible in the homebuying process. Their guidance can save you time, money, and stress throughout the transaction.

2. What are the qualities of a good real estate lawyer?

Look for a lawyer with solid experience in real estate law, a strong reputation, and clear communication skills. You’ll also want to ensure they’re responsive and don’t take long to reply to emails and phone calls to avoid extending your closing process for longer than needed.

3. How much does a real estate lawyer cost?

Costs vary depending on the complexity of your case. Many lawyers offer flat fees or hourly rates.

4. What documents should I bring to my initial consultation?

Bring any relevant documents you have, such as the purchase agreement, inspection reports, and loan pre-approval paperwork.

5. Can I negotiate lawyer fees?

Yes, discuss fees upfront and inquire about potential discounts or payment plans.

Remember, buying a house is a significant undertaking. Don’t navigate this journey alone. A real estate lawyer can be your trusted advisor, ensuring a smooth and successful transaction. Contact us today to schedule a consultation and turn your dream home into a reality.

More stories

Do You Pay Taxes When Selling Your House?

Can You Sell a House and Buy Another at the Same Time? We Explore Your Options

A Step-by-Step Guide to Buying a Property for Airbnb

Source: fancypantshomes.com

Apache is functioning normally

In early January 2024, I wrote an answer to reader-of-the-blog Vince’s question about his retirement portfolio. A quick summary of that article is:

If Vince’s portfolio is $4.2M and his annual spending needs are $100,000, he’ll be entering retirement following (essentially) a “2.38% Rule.” That’s way more conservative than the classic 4% Rule.

He doesn’t need to expose himself to undo risk. 60% stocks, 55% stocks, 50% stocks…Vince will be successful in any of these portfolios. Since he has “won the game” of career financial success, he can “stop playing the game” by taking some of his chips off the table a.k.a. reducing his exposure to risk assets (stocks).

Vince wrote back! He asked this week:

If the market goes down, should I perform my annual rebalance into stocks, or because we have 20 years of spending in our fixed income portion of our portfolio, should we only rebalance into bonds from now on when our equities get too high. It may come back to living comfortably vs. passing on more money to heirs. (I choose the former). 

Vince

Ahh! Rebalancing. Let’s dive in.

Two Sentences on Rebalancing

Rebalancing is the act of adjusting the asset allocation within an investment portfolio (how much in stocks? how much in bonds? etc.) to maintain the desired level of risk and return.

To learn more, here’s a deep dive on the topic of rebalancing.

Vince’s Question, Summarized

This is such an interesting question!

Vince is asking:

  • Should Vince’s rebalancing go in both directions?
  • If stocks are up compared to bonds, should Vince sell stocks to buy more bonds?
  • If stocks are down compared to bonds, should he sell bonds to buy more stocks?
  • Why does it matter? Because part of Vince’s portfolio approach is that his bond allocation represents 20 years’ worth of spending in his portfolio. He’s not measuring in percentages! He’s measuring in years’ worth of spending.
  • So, in essence, Vince is asking: should he rebalance, even if doing so results in him having “fewer years of bonds” than he’s comfortable with?

We need to understand two different schools of thought regarding portfolio construction. These two schools are definitely similar but with slight, nuanced differences.

The first is the “bottoms-up, bucket method” described on the blog before. It recommends an investor assign a timeline to every dollar in their portfolio, then align those timelines with appropriate levels of risk in investment assets. The money with a 6-month timeline needs to be in cash or ultra low-risk Treasury notes. The money with a 30-year timeline should be in higher risk assets (like stocks) in search of greater returns.

The other common approach is the “expected risk, expected return” method. This approach uses historical data and the investor’s unique risk appetite (a combination of their age, their cashflow needs, their unique mental approach to losing money, etc.) to hone in on the “right” allocation for them. Younger, riskier investors can stomach more stocks, while older, risk-averse investors should own more bonds, etc.

Ideally, the portfolio’s future “expected returns” are then used to test the validity of the overall financial plan (e.g. via Monte Carlo simulation).

Which Method is “Right?”

Which method is right?

Both methods work. And, in theory, both should lead to very similar outcomes. The two methods differ more in mindset than in “brass tacks.”

I prefer the “bottoms-up, bucket method” because it puts planning first (“give the dollar a job and a timeline”) and then determines appropriate investments. I used that approach in my original response to Vince. He is also using that method in his new question today. Vince feels particularly safe with 20 years’ worth of spending in fixed income. Those dollars have timelines, and he’s built an appropriate cash, CD, and bond ladder for those timelines.

Is It Right to Rebalance?

Should Vince rebalance? Let’s start by using some reasonable numbers to add color to Vince’s question.

Let’s say Vince needs $100,000 per year from his portfolio. And, based on his personal risk tolerance, he wants 20 years of that annual spending in bonds**. Easy math. That’s $2 million in bonds.

**For what it’s worth, most of the time for most investors, their timelines beyond 10 years should not be in bonds. The math simply says otherwise – that money should be in a higher risk asset, like stocks.

But finance is personal. And many retirees are acutely aware of the fact that “this is all the money I have!” Extra caution – aka extra fixed income – is understandable. It’s helps the investor sleep at night…return on sleeplessness!!! And as long as that extra fixed income doesn’t damage the portfolio’s probability of success, I’m ok with it.

Ok. $2 million in bonds, meaning the rest of Vince’s $4.3M portfolio (as of this writing) is in stocks. That’s $2.3M in stocks. That’s a 55% stock, 45% bond allocation.

Looks like a 55/45 split, no?

Next, we need hypothetical returns.

Let’s say over the rest of 2024, bonds provide their expected 5% interest while stocks drop 8%. But Vince withdraws $100,000 (from bonds, because that’s why they’re there) to support his annual expenditures. Vince’s portfolio will shift to $2.1M in stocks, $2.0M in bonds.

That’s a 51% stock, 49% bond portfolio. Should Vince rebalance to 55% / 45%?! Let’s go back to first principles. Why did Vince end up 55/45 in the first place?

Because he wanted 20 years of bonds to cover his next 20 years of expenses, and everything thereafter went to stocks. And because his financial plan appears to be perfectly successful with that portfolio.

We should look through that exact same lens when considering rebalancing.

  • Does Vince still need 20 years of bonds to sleep at night? Or, with one more year in the rearview mirror, is he comfortable with 19 years of bonds? This is a mental/personal question.
  • Depending on that answer, does Vince need more/fewer bonds than he has right now?
  • And finally, does his financial plan’s probability of success change depending on his rebalancing? This is a math/brass tacks question.

Based on Vince’s investing rationale, his rebalancing decision is a function of bond prices.“I said I needed ~20 years of bonds to sleep at night; do I have them?”

The stock portion of his portfolio has little to do with that! If stocks go up 30%, but he still has 20 years of bonds, I don’t think he should rebalance into even more bonds.

Off the Balance Beam

As asset prices move, our portfolio allocations shift like desert sand beneath our feet. Our targeted risk and return can veer off course and our financial plan’s likelihood of success can decay. These are reasons to rebalance.

However, rebalancing isn’t always needed, depending on your portfolio and the unique rationale of your financial plan. As in Vince’s case, some market movements create more rebalancing needs than others.

Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.

-Jesse

Want to learn more about The Best Interest’s back story? Read here.

Looking for a great personal finance book, podcast, or other recommendation? Check out my favorites.

Was this post worth sharing? Click the buttons below to share!

Source: bestinterest.blog

Apache is functioning normally

Getting into gold coin investing can be a smart move for anyone looking to add some shine to their financial strategy. In this guide, we’ll give you the lowdown on different types of gold coins, how to figure out what they’re really worth, and tips for keeping your investment safe and sound.

You’ll also get the inside scoop on dealer markups, how to make sure you can cash out when you need to, and the steps to check that your coins are the real deal. Ultimately, we want to empower you with the knowledge to make informed decisions and enhance your investment portfolio with the timeless appeal of gold coins.

Key Takeaways

  • Gold coins offer investment diversity, with bullion coins being tied to gold content and purity, numismatic coins prized for their rarity and design, and semi-numismatic coins providing both gold value and collectible interest.
  • Key factors in gold coin investment include understanding premiums over spot price, ensuring liquidity and ease of resale, and selecting appropriate storage options to safeguard the investment.
  • Investing in gold coins entails choosing reputable dealers to prevent counterfeit risks, understanding tax implications like capital gains, and considering gold coins as a way to diversify and hedge against inflation within an investment portfolio.

The Fundamentals of Investing in Gold Coins

Gold coins, with their gleaming allure and historical significance, offer investors a tangible asset that stands the test of time. They come in various forms, each bearing unique characteristics and investment potential.

From bullion coins valued for their gold content and purity to collectible gold coins prized for their rarity and historical significance, the world of gold coins is as diverse as it is fascinating. As a form of precious metals, these coins, along with silver coins, provide a sense of security and value for investors.

Bullion Coins

Bullion coins, including bullion gold coins, are the go-to choice for those seeking straightforward exposure to gold. Valued based on their gold content and purity rather than historical and artistic considerations, a bullion coin like the Canadian Maple Leaf and American Gold Buffalo offers a direct link to the global gold market. For those interested in other forms of investment, gold bars can also be considered.

Numismatic Coins

For the history buffs and collectors, numismatic coins offer a unique allure. These coins are valued not just for their gold content, but also for their rarity, historical significance, and the artistry of their designs. Their value is less tethered to the spot price of gold, making them less susceptible to short-term market fluctuations.

Semi-Numismatic Coins

Straddling the line between bullion and numismatic coins are semi-numismatic coins. These coins offer both the gold value of bullion coins and the collectible appeal of numismatic coins. Their versatility makes them an attractive choice for a range of investors, from those seeking a straightforward gold investment to collectors looking for unique assets.

Top Gold Coin Options for Investors

There are a wide variety of gold coins to choose from, which can be overwhelming for new investors. However, some standout choices have captured the attention of investors worldwide. Let’s examine three popular gold coin options: the American Gold Eagle, the Canadian Gold Maple Leaf, and the South African Krugerrand.

American Gold Eagle

The American Gold Eagle coin, prominently displaying Lady Liberty and an American bald eagle, not only represents American heritage and freedom but also stands as a testament to the nation’s robust minting capabilities.

Introduced in 1986, these coins are struck in 22-karat gold, which includes a small alloy of copper and silver to ensure durability. Their availability in multiple denominations—1 oz, 1/2 oz, 1/4 oz, and 1/10 oz—makes them accessible to a wide range of investors, from those starting out to seasoned collectors. The blend of historical significance and investment flexibility has cemented their status as a favored option in precious metals markets.

Canadian Gold Maple Leaf

Produced by the Royal Canadian Mint, the Canadian Gold Maple Leaf is globally acclaimed for its .9999 fine gold purity, one of the highest in the market. Launched in 1979, this coin features the sugar maple leaf, a national symbol of Canada, which underscores the country’s appreciation of its natural environment and cultural heritage.

Its cutting-edge security features, like light diffracting patterns of radial lines and micro-engraved laser marks, ensure its authenticity and protect investors. The coin’s combination of high gold content and stunning design makes it not only a secure investment but also a collector’s delight.

South African Krugerrand

The South African Krugerrand is renowned for being the first gold bullion coin available to the general public, introduced in 1967 to help market South African gold. Named after the 19th-century Boer leader and the rand, the national currency, this coin features the image of Paul Kruger on one side and the Springbok gazelle on the other, celebrating South Africa’s rich wildlife and cultural heritage.

Unlike many other gold coins, the Krugerrand is minted from a gold alloy that is 22 karats, or 91.67% gold, with the remainder being copper, giving it a distinctive, more durable rose tint. This combination of affordability, durability, and cultural symbolism makes it a staple in the global gold trade, appealing to both investors and collectors alike.

Factors to Consider When Investing in Gold Coins

Investing in gold coins doesn’t just stop at choosing the right coin. It’s also about understanding the inherent factors that come with it. Let’s explore these key factors: premiums over spot price, liquidity, and storage options.

Premiums and Spot Price

While the spot price of gold is a key factor in determining the price of a gold coin, it’s not the only cost to consider. Premiums over the spot price can significantly impact the overall investment returns. Therefore, it’s essential to understand how premiums work and to be mindful of market trends.

Liquidity and Ease of Sale

One of the key advantages of gold coins is their liquidity. Gold coins are recognized worldwide and can generally be sold in any volume. However, the ease of sale can vary depending on the specific coin and market conditions.

Storage Options

Once you’ve invested in gold coins, you need a safe place to store them. Storage options range from home safes to professional vaulting services. Each comes with its own advantages and costs, and choosing the right one is crucial to the security of your investment.

How to Buy Gold Coins Safely and Securely

Investing in gold coins requires careful planning and vigilance. From choosing a reputable dealer to avoiding counterfeit coins and inspecting your purchase upon delivery, let’s explore how to buy gold coins safely and securely.

Choosing a Reputable Dealer

Purchasing gold coins from a well-established dealer is the first step towards a secure investment. A reputable dealer provides high-quality coins and offers invaluable customer support and guidance.

Avoiding Counterfeit Coins

Counterfeit coins pose a significant risk to investors. It’s crucial to understand how to identify counterfeit coins and ensure the authenticity of your purchase. From requesting documentation to conducting physical tests, vigilance is the key to safeguarding your investment.

Delivery and Inspection

The final step of your gold coin purchase is the delivery and inspection of your coins. Upon delivery, be sure to promptly inspect your gold coins to ensure they meet quality and authenticity standards.

Like all investments, gold coins come with their own set of tax implications and legal considerations. From capital gains tax to reporting requirements, it’s crucial to understand these aspects to avoid legal complications and ensure a smooth investment journey.

Capital Gains Tax

Profits from the sale of gold coins are subject to capital gains tax. The rate of this tax can vary depending on the holding period of the coins and the investor’s income level. It’s essential to understand these rates and plan your investments accordingly.

Reporting Requirements

Certain gold coin transactions may be subject to reporting requirements. Be prepared to declare your holdings when necessary and ensure you comply with all applicable regulations.

Maintaining accurate records of transactions and ownership is crucial when investing in gold coins. These records not only help establish legal ownership, but are also essential for proper tax reporting.

Diversifying Your Investment Portfolio with Gold Coins

Bringing gold coins into your investment portfolio can add a unique layer of diversification. They can hedge against inflation, balance risk with other investments, and open up opportunities for both long-term and short-term investment strategies.

Hedging Against Inflation

In times of economic uncertainty, physical gold, particularly gold coins, can serve as a protective hedge against inflation. As the cost of living rises, gold coins can help maintain the value of your investment portfolio, safeguarding your purchasing power.

Balancing Risk with Other Investments

Including gold coins in your investment portfolio can help balance risk. The value of gold coins often moves inversely to other asset classes like stocks and bonds, providing a buffer against market volatility.

Long-Term vs. Short-Term Investment Strategies

Whether you’re looking for a long-term investment to weather market fluctuations or a short-term investment influenced by temporary market trends, gold coins can be a fit for your gold investing strategy, making them a viable option for gold investments.

The choice depends on your financial objectives and risk tolerance.

Bottom Line

Investing in gold coins can be a rewarding journey. From understanding the basics to navigating tax implications and legal considerations, it’s a path filled with learning and potential growth. As you progress, remember the importance of diligence, careful planning, and informed decision-making. With the right approach, you can unlock the golden opportunities that await in gold coin investing.

Frequently Asked Questions

How do I determine the authenticity of gold coins?

The authenticity of gold coins can be verified through several methods, including checking for hallmarks, weight and size measurements, and performing sound and magnetism tests. Purchasing from reputable dealers and considering third-party grading and certification can also ensure authenticity.

Can I purchase gold coins from banks?

Some banks do offer gold coins for sale, but availability can vary widely depending on the bank and the country. It’s often more common to purchase gold coins from specialized bullion dealers, coin shops, or online marketplaces.

How does the price of gold affect gold coin values?

The value of gold bullion coins is closely tied to the current market price of gold, known as the spot price. As the price of gold fluctuates, so does the value of gold coins. Numismatic and semi-numismatic coins may also be affected by gold prices, but their value is more influenced by rarity, condition, and historical significance.

Are gold coins a good option for short-term investments?

Gold coins can be a good option for short-term investments if you are knowledgeable about the gold market and current economic conditions. However, due to the premiums over the spot price and potential market volatility, gold coins are generally considered a more stable long-term investment.

How do I store and insure my gold coin collection?

Gold coins should be stored in a secure location, such as a safe deposit box at a bank or a home safe. For insurance, you can add a rider to your homeowner’s insurance policy or obtain a separate policy specifically for valuable items like gold coins. Ensure that your insurance policy covers the full value of your collection.

What impact do market conditions have on gold coin investing?

Market conditions can significantly impact gold coin investing. Economic uncertainty, inflation, and currency devaluation typically increase demand for gold, potentially raising gold coin prices. Conversely, a strong economy might lead to less demand for gold as an investment.

Is it better to invest in gold coins or gold bars?

The choice between investing in gold coins or gold bars depends on your investment goals. Coins are better for those interested in collectability and legal tender value, while bars typically have lower premiums over spot price and may be preferable for those focusing purely on the gold content and investment.

How do I sell my gold coins when I want to cash out?

To sell your gold coins, you can approach coin dealers, precious metal exchanges, online marketplaces, or auction houses. It’s important to research the current gold price and get multiple quotes to ensure you receive a fair price for your coins.

Source: crediful.com

Apache is functioning normally

If you are a serious secondhand home decor lover, and if you live in New York City, then you know that Design on a Dime (DOAD) is one of the most highly anticipated thrifting events of the year. Founded by interior designer James Huniford in 2004, this three-day shopping experience is celebrating its 19th anniversary (they skipped 2020 due to the Covid-19 pandemic) at the Metropolitan Pavilion where 60 designers have created one-of-a-kind, shoppable vignettes using donated decor and furniture items that are being sold at an extreme discount. The pieces sold will directly benefit Housing Works, the New York organization that’s working to end the HIV/AIDS epidemic and provide support and healthcare to the unhoused.

Courtesy of Housing Works
Design firm Redd Kaihoi’s vignette from Design on a Dime 2024.

In the previous years, designophiles—both professional and recreational—have purchased amazing finds marked up to 80 percent off at this secondhand extravaganza, from gorgeous couches and statement light fixtures to breath-catching pottery and cashmere throws. Plus, these vignettes can serve as some great interior inspiration. Directly source tips from interior designers and firms like Keith Carroll, Redd Kaihoi, Shakoor Interiors, and Eclectic Home, all with a great mix of styles represented in each “room.:

wallpaper and pattern on print this year. “Rayman Boozer’s room in particular screamed House Beautiful to me,” Huniford says, explaining that Boozer opted for a range of different, highly patterned wallcoverings for his vignette.

This year, between April 25 and 27, thrifters can expect a record number of donated items to shop from out of the swiftly completed vignettes, Huniford tells House Beautiful, with even more in back stock when the first round gets shopped out. “People have really gone overboard with donations,” he explains, happily. “So in the first go round, if things get sold out, there’s that opportunity to have back stock, which I think is unusual.” Some of the brands featured at DOAD this year include Serena & Lily, ABC Carpet & Home, OKA, and West Elm to name a few, with a price range of items from $50 to $5,000.

Courtesy of Housing Works

Out of the thousands of pieces donated, Huniford gives a little peek at what types of products you can expect to find while there, and what pieces he, along with other interior designers, always love to shop for secondhand. There are exclusive pieces, like a custom desk from Steven Gambrel and a René Prou chair in Cliff Fong’s booth. Other amazing finds include a pair of galvanized metal planters in Mark Cunningham’s booth, a gorgeous coffee table in Michael Mezzano’s booth, and a blue lapis-looking mirror in Redd Kaihoi’s. “That’s just my brain on speed dial,” Huniford adds.

Huniford expects the coffee tables, the lamps, and the accessories—like pottery—to be the first to go. “Those kind of singular things make a room really special and personal and unique,” he says, are what interior designers are always on the hunt for, both at DOAD and the local thrift store.

Courtesy of Housing Works

While the sheer number of pieces donated this year was extraordinary, it’s the fact “that people are still showing up and doing it” that completely fills Huniford up with joy after these almost two decades of DOAD. Tickets are still available for purchase for opening night, which is April 25th, but entry is free for the public sale days on April 26 and 27. Even if you don’t plan on buying anything, we highly recommend stopping by for endless interior inspiration. Click through the gallery below for a peek at some of the stunning vignettes you’ll find this year.

Follow House Beautiful on Instagram and TikTok.

Source: housebeautiful.com