First-time Home Buyers Rely More on Family for Mortgage Help
The way that people are financing their first home purchase is changing. More than 26% of mortgage borrowers who used FHA-insured loans received help from a relative to make the down payment, according to 2018 FHA data reported by the Wall Street Journal. That number is up from 22% in 2011. Rising home prices and interest rates made it difficult for buyers to save enough for down payments — not to mention generally higher debt loads from college loans.1 Further adding to borrower stress is the fact that the gap between owning and renting continues to widen, according to Freddie Mac.2
Quarterly Reminder
With changes in the new tax law, you may have decided to lower your federal tax withholding so that you’re taking home more pay. It may be very tempting to use a fatter wallet to buy more things. But if you are falling short of your retirement goals, consider increasing your 401(k) contribution instead.
Tools & Techniques
Investment concepts you should understand
Fraud is a rapidly growing risk for all Americans, not just the elderly. The AARP Fraud Watch Network has useful tips to avoid credit card scams, get scam alerts delivered to your phone and offers a scam-tracking map to see (and report) what’s been perpetrated in your local area — and much, much more: https://www.aarp.org/money/scams-fraud/.
Corner on the Market
Basic financial terms to know
Inflation
Inflation measures the rate at which the average price level of a basket of selected goods and services in the economy rises over a period of time. When prices rise, money loses value. That’s why it’s important that your investments keep pace with inflation — so that you don’t lose purchasing power.
Q&A
How can I include funds that consider ESG in my portfolio?
The companies you choose to invest in can matter to you just as much as the financial results. Many 401(k) plans offer funds that incorporate environmental, social and governance (ESG) criteria as well as financial fundamentals in their investment process. Studies show that a growing number of investment managers consider ESG factors when selecting companies for investment. To learn how to incorporate more ESG exposure into your portfolio, talk to your plan administrator or HR department.
1Source: “More First-Time Home Buyers Are Turning to the Bank of Mom and Dad,” Wall Street Journal, Jan. 4, 2019. https://www.wsj.com/articles/more-first-time-home-buyers-are-turning-to-the-bank-of-mom-and-dad-11546597800?cx_testId=16&cx_testVariant=cx&cx_artPos=3&cx_tag=collabctx&cx_navSource=newsReel#cxrecs_s
2Freddie Mac Multifamily Research Center, 2019 Outlook, Jan. 2019. http://www.freddiemac.com/research/pdf/2019-Outlook.pdf