The economy has obviously been in a continued slump, and despite random predictions of an eventual recovery, there’s no definite end in sight.  Everything including the housing market has taken a hit, and that might leave you wondering if now is a good time to buy a house.  Actually, yes, it is a good time to buy a house, and it doesn’t matter if you’re buying your first or fifth home (although first-time buyers can get a little better deal right now).

Plan to Stick Around for a While

First, regardless of your situation, you should be planning on remaining in your new home for at least five years.  If you’re considering buying a home that you may or may not stay in very long, you may want to look for a different house or simply wait out the economic downturn; you won’t get any value out of your purchase, and you’re likely to lose money when reselling so soon.

Better Bargaining With Sellers

Beyond that, you can find quite a few bargains right now.  It has been difficult for many sellers, leaving them more open to price negotiation.  While some may try their hardest to stay close to their desired price, others may be more desperate to simply get rid of the house at the best price possible, especially if their house has been listed for a frustratingly long time.

Foreclosed Homes

And then you’ll also encounter foreclosed homes, where the homeowner has been unable to make their own payments; it’s a sad situation for them, but it does leave a good deal on the table for you.  You just need to learn the right time for you to jump at it—that’s going to mean a little homework for you, an important step in order to avoid extra financial surprises.

First-Time Homebuyer Tax Credit

If you’re looking to buy your very first home, you get an extra benefit if you act before December 1, 2009.  You could qualify for a tax credit of up to $8000.  Of course, there’s some fine print to read ahead of time (you can start with www.irs.gov for all the information), but you also do not have to pay it back in any form.  This could help put the house you’re hoping for more within your reach.

Good Credit Rating

Finally, mortgage rates are exceptionally low in many areas, which means you’ll pay less interest on your loan than you would if the economy were doing well.  However, no matter what kind of deal you find, you still need a high credit score.  As prices and interest rates have loosened, credit restrictions have tightened.  You want to make sure your score is a minimum of 720, higher if you can manage it.  Your deal might be canceled out by a lower score.

Home prices may rise again at any point along with interest rates, so now is a great time to look for a new home.  As always, though, make sure your credit score is excellent and that your job is steady right now, and don’t forget about your tax credit!

When hiding your money in a piggy bank or under your mattress is no longer a plausible option, it’s time to start looking for a bank.  With so many options out there (local banks, national banks, credit unions, etc.), how do you know which to choose?  It’s important to ask yourself some questions about what you want from your bank before deciding.

• How often will you need to stop at the bank?  If this will be a regular part of your daily or weekly routine, you’ll want to choose one that has a convenient location for you.
• Do you travel often?  If so, is it necessary for you to be able to access your bank in person?  You might want to choose a bank with locations covering the entire country.
• Do the bank’s hours fit your schedule?  If not, do they offer the right online banking options for you to use after hours?
• Most banks do offer online banking.  You can check your current balances, transfer money between accounts, and even pay your bills.  Most often, this service will be free.  If not, you may want to avoid using that particular bank.
• You’ll want to compare available interest rates; they will differ across the board, and there will be different requirements to meet in order to qualify for the offered rates.  For example, most banks require a minimum balance of $10,000 to receive the best interest rate for a money market account.  The bank that I use only requires $2500 to get the market rate.  Quite a difference.
• Does the bank offer interest-bearing checking accounts?  These ones typically require a minimum balance just like most savings accounts, but if this is a priority for you, look for a bank that provides this service.
• Does the bank charge service fees?  What is their overdraft fee?  How much do they charge if you go below a minimum required balance?  Do they charge you for using a different bank’s ATM (in which case, you’ll pay that bank’s ATM fee and your bank’s fee as well)?  If you’re likely to end up in these situations, you should find the bank with the lowest fees.
• Will you be opening more than one account, such as a checking and a savings?  Is it important for them to be linked together?  Or do you simply prefer the ability to easily transfer money between them online?  You’ll want to choose a bank that offers the best rates across the board so you get the most out of it.  You may have to sacrifice in a few areas; for example, you might accept a couple points less in interest on your savings than you’d get at another bank if the checking benefits are better at this bank.
• Is the customer service good?  How were you treated when you asked for information on accounts?  How did the other customers appear to be treated?  Ask for people’s opinions to help you get a better view of the overall picture.
• Is the bank FDIC insured?  If so, your deposits are protected up to $100,000.  If the bank is not, don’t bother.

You’ll be doing a lot of reading and asking a lot of questions.  Don’t be afraid to take your time and explore every option before you choose a bank—you want to be sure you’re getting the best benefits to meet your banking needs and wants.

So you’ve reached the point where your 401(k) is maxed out, but you have more money you want to put away for your retirement.  Now is the time to consider other savings options to keep your money safe and allow it to grow at the same time.  Many factors such as your income, tax bracket, and how close you are to retirement will affect which one is most beneficial for you.

Traditional IRA

One option is a traditional IRA.  Your money will earn money, and you won’t pay taxes on it until you retire; this is especially nice because your income will be lower, placing you in a lower tax bracket.  It’s also tax-deductible until you withdraw, and there is no income limit to qualify.  You need to be careful here, though, as there is a 10% tax penalty for early withdrawal, and your spouse’s income or employer-provided 401(k) may affect your eligibility and/or your contribution limit.

Nondeductible IRA

A nondeductible IRA can be a good option if you are not going to be retiring soon but you have maxed out your 401(k) and do not qualify for a traditional IRA.  This one is not tax-deductible since you contribute after-tax money, but just like a traditional IRA, it is taxed as though it was ordinary income rather than other types of savings gains, and you won’t have to pay until it’s time to withdraw.

Roth IRA

A Roth IRA is a good choice if you are still working with no plans to retire soon.  This one is also not tax-deductible, but it is essentially tax-free.  You can start to withdraw money five years after opening the account without an early withdrawal penalty, but there is an income limit in order to qualify for this one.  If you file taxes as single, your income limit is $95,000.  Couples must make less than $150,000 combined.

Pay Off Debt

This one is always a good option.  If you’ve maxed out your 401(k) but have quite a bundle of debt, you’ll want to pay it off before you retire and are living on a lower income.  You can use all of your extra money that would be going into your 401(k) for your debt, or find a balance between this and depositing money into an IRA.

Other options include regular savings (which won’t net you as much gain), mutual funds, variable annuities, etc.  There is some debate over whether variable annuities are beneficial due to annual fees, contract fees, and the potential for loss, so if you’re considering this one, do some research and try to stick to annuities with low fees.