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For those looking to trade big-city life for backyards and gardens, more square footage, home office space, and parks, the suburbs may be the perfect spot to call home.

Let’s not forget great public schools, a hallmark of a high-ranking suburb.

Top 50 Suburbs in the US

Although the country teems with ’burbs, here’s a look at the 50 best suburbs according to Niche, using government data and community reviews.

If safety is a big priority, also take a look at the 50 safest cities in America.

1. Chesterbrook, Pennsylvania

Chesterbrook was crowned first among U.S. suburbs. With highly rated public schools and an intimate feel (under 6,000 residents), this Philadelphia suburb is leafy and cozy. Chesterbrook is among eight Keystone State suburbs on this list.

2. Penn Wynne, Pennsylvania

Real estate can get pricey in Penn Wynne (also known as Wynnewood), a small Philly suburb where about half of the population of 6,650 has at least a master’s degree and where locals are passionate about the arts. Bars, coffee shops, and parks lend an urban-suburban feel.

3. Ardmore, Pennsylvania

Those looking to put down roots in a suburban neighborhood that also has an urban feel will like Ardmore, yet another Philadelphia ’burb, with about 13,800 residents. It has plenty of restaurants, bars, coffee shops, and parks to choose from and excellent schools.

4. Los Alamos, New Mexico

This historic suburb of 13,400 denizens is the birthplace of the atomic bomb, but it also happens to be known as a great place to live with a top-notch public school system and nature all around.

5. Carmel, Indiana

Carmel, north of Indianapolis, features neighborhoods rich in architectural diversity and low in crime. This spot is home to more than 103,000 people.

6. Great Neck Plaza, New York

With eateries, parks, and superlative public schools, this village on the North Shore of Long Island is walkable, dog friendly, and commutable to Manhattan by train. The burg of 7,640 has a strong contingent of retirees and home prices below the national average. If this New York suburb isn’t the right fit, maybe one of the other nine will be.

7. Okemos, Michigan

The east side of East Lansing is beloved because of its low crime rates, lower-than-average cost of living, and the amenities at Michigan State University. With a population of about 25,870, Okemos has stellar public schools, a college town vibe, and a small base of tech employment.

8. Richmond Heights, Missouri

This St. Louis suburb, home to about 9,400 people, offers amenities for both families and young professionals. With highly rated public schools, Richmond Heights also has a vibrant nightlife scene and good housing options.

9. Holly Hills, Colorado

For a small-town feel and great public schools, hop on over to Holly Hills. This Denver suburb is home to about 2,700, so you’re likely to know a lot of your neighbors.

10. Brookline, Massachusetts

This Boston suburb’s public schools constantly receive high marks and welcome families from around the globe. With about 64,000 residents, Brookline is attractive but not cheap: Its median home sale price is more than double the national median.

11. Great Neck Gardens, New York

With fewer than 1,300 residents, this New York City suburb has the usual perks of a coveted hamlet, and a relatively gigantic housing cost.

12. Clarendon Hills, Illinois

This community southwest of Chicago (pop. 8,760) offers top-notch public education for children, a safe environment, and a vibrant downtown. The median home sale price is a bit above the national median.

13. Swarthmore, Pennsylvania

Swarthmore has small-town charm but is only a 20-minute train ride to Philadelphia’s museums, theaters, and restaurants. The suburb of about 6,600 offers more than two dozen forested trails for those looking to connect with nature.

14. Clayton, Missouri

Those looking to give their career a boost may find opportunity in Clayton. This St. Louis suburb of 17,600 employs over 7,300 people. Clayton is also considered green and safe. The median home price tends to be above the U.S. median price.

15. Brentwood, Missouri

This affordable St. Louis suburb is home to nearly 8,300, many of whom are young professionals. Highly rated schools, a high homeownership rate, and a variety of parks and dining establishments make Brentwood one of the best suburbs in the Show-Me State and the country.

16. Brighton, New York

Brighton is overflowing with historic charm. This Rochester suburb of 37,200 was established in 1814 and features well-preserved 19th-century brick homes.

17. Manhasset Hills, New York

About 3,660 people call this New York City suburb home. Manhasset Hills has a rural feel and an average home sale price topping $1 million.

18. Mount Lebanon Township, Pennsylvania

Architecture lovers will fall head over heels for this neighborhood (lovingly known by locals as Lebo). This Pittsburgh suburb of about 33,600 people blends sophistication and small-town charm. Take your pick from American Craftsman, stone Colonials, Prairie, and English Tudor style homes.

19. Oakwood, Ohio

With about 9,500 residents, this Dayton suburb has a sparse suburban feel and an abundance of parks, bars, restaurants, and coffee shops. Most residents own their homes, and the public schools are, well, you know, above par.

20. North Potomac, Maryland

North Potomac, only about 20 miles from Washington, D.C., earned a spot on this list, thanks to awesome public schools and family amenities, not to mention a walkable and diverse environment. It’s home to about 23,700 people.

21. Narberth, Pennsylvania

You won’t get lost in the crowd in this friendly Philadelphia suburb of 4,500, which has an urban-suburban feel with historic homes, shops, restaurants, a train station, and the requisite good public schools.

22. Syosset, New York

Yet another New York City suburb makes the list. Syosset, with over 19,000 residents, has a rural vibe and all the bells and whistles of an attractive suburb. It also has a housing cost of more than twice the national median.

23. Wayland, Massachusetts

This Boston ’burb hosts 13,800 people, including a good number of retirees. People consider it safe, pretty, pricey, and calm.

24. Jericho, New York

Families will appreciate Jericho’s highly rated public schools, parks, and other amenities. The affluent Long Island hamlet of 15,000 is within reach of Manhattan.

25. Greenville, New York

Greenville, often called Edgemont, is a bedroom community of 4,700 residents north of Manhattan. It’s a magnet for parents who want good public schools.

26. Morrisville, North Carolina

Those who are moving to the Raleigh area may find Morrisville appealing, thanks to proximity to amenities and career opportunities like Raleigh-Durham International Airport, Research Triangle Park, and the Lenovo headquarters. The average home price in this community of 31,840 is around the national average.

27. Williamsville, New York

This little Buffalo village has great schools, several parks, historic landmarks, and a relatively low cost of living.

28. Long Grove, Illinois

Another Chicago suburb makes the list. Long Grove, pop. 8,400, is considered a great place to raise a family, thanks to highly rated public schools and low crime rates.

29. Mountain Lakes, New Jersey

This tiny suburb 31 miles from Manhattan is considered safe, charming, and green. It’s a wealthy pocket with a strong sense of community.

30. Chesterfield, Missouri

This sizable St. Louis suburb of 50,500 is partly situated on the floodplains of the Missouri River. There is no shortage of attractions here, including historical houses, conservation areas, and dining options.

31. East Williston, New York

Here’s another Manhattan bedroom community, this time 20 or so miles from the big city. The tiny Long Island suburb has great schools and a hometown feel. Household income and education level skew high, as they do in most of the ’burbs on this list.

32. Cascades, Virginia

Cascades is the first Old Dominion ’burb on the list of the top 50 suburbs in the U.S. The neighborhood of about 12,500 is within driving distance to Washington, D.C., and has good public schools, parks, playgrounds, and great housing options.

33. Kensington, New York

This tiny Manhattan suburb attracts families and retirees for all the reasons a ’burb bursts into the top 50. This is a highly educated, high-income enclave.

34. Ridgewood, New Jersey

This New York City suburb offers residents a sparse suburban feel, and most residents own their homes. The focus in this family-friendly village of over 26,000 is education. Home prices skew high.

35. Cary, North Carolina

Cary, with over 182,000 residents, affords fun, from outdoor concerts and movies to the annual Beer, Bourbon & BBQ Festival. Stop by the quaint downtown of this Raleigh suburb during the holiday season for a charming experience.

36. Aspinwall, Pennsylvania

This little borough on the Allegheny River is near downtown Pittsburgh. It’s historic and picturesque, with high education levels and average home prices below the national average.

37. South Kensington, Maryland

This little ’burb is near Washington, D.C., and has not-tiny home prices. With fewer than 9,000 residents, South Kensington has great public schools, a family-friendly vibe, and a nightlife scene. It looks like Mom and Dad need to book a babysitter.

38. North Bethesda, Maryland

Here’s another pocket of tranquility in the Old Line State. There are so many benefits of living in North Bethesda that it’s hard to keep track. Situated close to Washington, D.C., this suburb has its own dining, shopping, and entertainment scene.

39. Santa Monica, California

Santa Monica residents are lucky enough to live a stone’s throw from the Pacific Ocean, and many live within walking distance of the famed Third Street Promenade and its many restaurants, shops, and other amenities. Bring your wallet, of course, if you plan to live here.

40. Cave Springs, Arkansas

Move over, Hot Springs. Cave Springs made the list. Named for two caves and the water source that flows from one of them, this suburb of about 6,250 people has a small-town feel, home prices in line with the national average, and A-rated public schools.

Recommended: Home Affordability Calculator: How Much House Can You Afford?

41. Innsbrook, Virginia

Innsbrook is a thoughtfully planned community that is an ideal place to live, work, and play. Fortune 500 companies, startups, and small businesses are attracted to this Richmond bedroom community of 9,250 people.

42. Cinco Ranch, Texas

Cinco Ranch’s public schools, housing options, and job market put it on the map. A lot of house for the money combined with great outdoor and nightlife activities make this suburban swath of over 16,000 outside Houston a hot spot.

43. Fishers, Indiana

This Indianapolis suburb has an average of 187 clear days every year and an average high of 85 degrees in the summer. Many families and young professionals live in Fishers, pop. 37,835, where the average home price is below the national average.

44. Ottawa Hills, Ohio

The second Ohio suburb to make the list of the most popular suburbs in the U.S. is Ottawa Hills. This village outside Toledo is safe, well educated, affordable, and good for families.

45. Short Pump, Virginia

Short Pump, named for a short-handled water pump for horses at an 1800s tavern there, has a population of 27,500 and is home to lots of families and young professionals who own their own homes. This dense suburban neighborhood outside Richmond has good schools, great housing options, and nightlife to pursue.

46. Frontenac, Missouri

This tiny, affluent St. Louis neighborhood has a rural feel and all the things that make a suburb stand out.

47. White Rock, New Mexico

This community of 5,880 in Los Alamos County has a rural vibe, great schools, hiking trails, lots of parks, and home prices in line with the national average.

48. Stone Ridge, Virginia

Good public schools, housing options, and diversity all helped Stone Ridge land the 48th spot on this list of top U.S. suburbs. The Washington, D.C., bedroom community has about 16,600 residents.

49. The Woodlands, Texas

This sounds like a good kind of sprawl, y’all. The Woodlands, a 29,000-acre master-planned home to 118,500 people and over 2,000 businesses, has a natural forest and 140 parks and is linked by more than 220 miles of hiking and biking trails. With top schools, home prices just a bit above the national average, and nightlife, this Houston suburb scores.

50. Berwyn, Pennsylvania

This pricey Philadelphia suburb of just 3,800 residents offers an urban-suburban feel. Most residents own their own homes, and there are charming coffee shops, restaurants, and parks to visit.

Financing a Fresh Start

You might have a fave or two among the best suburbs in the U.S. Is it time to fund the dream for your family and start anew in a place you hadn’t considered?

When you’re ready to look for a mortgage, know that SoFi offers home loans with low rates, low down payments, flexible term options, and a closing time guarantee.

Applying for a home mortgage loan doesn’t have to be complicated. Start by getting a quick, no-obligation rate quote.

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SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you plan to take out a $300,000 mortgage, the costs of the loan can vary considerably based on your rate, term, property tax and insurance costs, and whether you need mortgage insurance.

Read on to learn how much a $300,000 mortgage could cost over the life of the loan.

What Are the Monthly Payments on a $300k Mortgage?

In April 2022, Redfin found that the monthly mortgage payment on the median asking price home had risen 39% from a year earlier, thanks to rising mortgage rates.

Ouch. But calculating the average monthly payment on $300,000 mortgages is not straightforward.

The lower the interest rate, the lower the monthly mortgage payment, holding other loan terms constant. The interest rate can be calculated differently for different types of mortgages. For instance, fixed-rate mortgages maintain a steady interest rate, whereas an adjustable-rate mortgage fluctuates over time based on market conditions.

The mortgage term also affects mortgage costs. The 30-year fixed-rate mortgage is by far the most popular choice, but a 15-year loan translates to a higher monthly cost for a $300,000 mortgage yet much less total interest paid.

Owning a home comes with annual property taxes based on the local tax rate and the home’s assessed value, which can change over time. Generally, this expense is divided across your monthly mortgage payments.

Your down payment also matters. Borrowers putting less than 20% down on a conventional mortgage usually need to pay for private mortgage insurance, often 0.5% to 1.5% of the original loan amount per year, until the mortgage balance reaches 80% (homeowner requests cancellation) or 78% of the home’s value, or the mortgage hits the halfway point of the loan term.

FHA loans require mortgage insurance premiums, which will last for the whole loan term if your down payment is less than 10%. MIP ranges from 0.45% to 1.05% of the loan balance, divided by 12 and added to your monthly payments.

Homeowners insurance is typically required by mortgage lenders regardless of the down payment amount.

How Much Income Is Needed to Qualify?

When taking out a home loan, lenders often ask for proof of consistent income, such as W-2s. But income is just one aspect of your personal finances a lender will evaluate to determine if you qualify for a mortgage on a $300,000 house.

Lenders use borrowers’ debt-to-income ratio to get a more holistic assessment of their ability to make monthly payments. DTI is calculated by dividing your monthly debt payments by your gross monthly income, then coming up with a percentage.

For example, if you gross $5,000 a month and have a $400 car payment and a $600 student loan bill, your DTI ratio is 20%.

A DTI ratio of 43% is usually the highest a borrower can have to obtain a qualified mortgage, according to the Consumer Financial Protection Bureau. However, lenders may prefer a lower DTI ratio — usually below 36% — for greater certainty that borrowers can afford their mortgage payments.

Programs like the FHA loan and Fannie Mae HomeReady® loan allow a DTI of up to 50% when compensating factors like a higher credit score exist.

Your credit history is another important factor to qualify for a mortgage on a $300k house, and will determine the rate you’ll pay.

How Much of a Down Payment Is Needed?

So how much do you have to put down for a $300k mortgage? The traditional ideal of a 20% down payment is not always necessary or doable. In fact, the latest median down payment is 13%.

How much you need for a down payment depends on the mortgage type, the lender, and if you’re planning to occupy or rent the property.

This is how much you’ll need to put down for different loan types.

•   Conventional loan: As little as 3% down for a primary residence. Buying a second home or investment property typically calls for at least 10% down and 25% down, respectively.

•   FHA loan: As little as 3.5% down if your credit score is 580 or higher. Borrowers with lower credit scores will need to put down at least 10%.

•   VA loan: Usually available with no down payment. This option is only available for active and veteran service members and some surviving spouses.

•   USDA loan: No down payment required. Eligibility is based on income and buying a home in a designated rural area.

But do down payment requirements change for different types of houses?

If you’re planning on buying a duplex or up to four units, you’d still qualify for residential financing, with the same parameters, if you plan to live in one of the units.

Recommended: A Guide to Buying a Single-Family Home

What Are the Parts of a Mortgage Payment?

What you pay to your lender each month includes more than just what you owe on the loan. The mortgage payment consists of the principal, interest, and potentially, escrow costs.

Principal

The principal portion of the mortgage payment goes toward gradually paying the amount initially loaned to you.

When you start making mortgage payments, the amount paid toward the principal is somewhat low. Over time, greater proportions of each monthly payment will chip away at the principal balance.

Interest

The interest rate — how much you’re being charged to borrow the money — is determined by the type of loan, your personal finances, and market factors outside your control.

Borrowers with high credit scores are usually able to snag the best rates. Just a 1% increase in mortgage rate can add tens of thousands of dollars over the life of a 30-year loan.

The bulk of the mortgage payment goes toward interest at the beginning of an amortized loan.

You may be able to recoup some of the interest cost through the mortgage interest deduction.

Escrow

Most lenders require an escrow account to roll tax and insurance bills into monthly mortgage payments. This includes property taxes, homeowners insurance, and, if applicable, mortgage insurance.

How Much Interest Will Be Paid on a $300k Mortgage?

If you have a fixed-rate loan, the total interest can be easily calculated for the life of the loan. Borrowers with a 30-year fixed-rate mortgage at 5.6% APR would pay about $320,000 in interest on a $300,000 home loan.

Shortening the loan term to 15 years and getting a rate of 4.8% APR would reduce the total interest paid to $121,302.

With an adjustable-rate mortgage, the interest rate can change over time with market conditions.

Try out this mortgage payment calculator to see how much you might pay in interest with different rates and down payments. You can also toggle the amortization chart on a desktop.

How Much Is the Mortgage on a $300k House?

Using the previous example of a 30-year fixed-rate loan with a 5.6% annual percentage rate, the principal and interest would be $1,720 per month, and would total about $620,000 over the 30 years. To capture the full mortgage cost, you also need to estimate the tax and insurance costs.

•   PMI (if applicable): often 0.5% to 1.5% of the original loan amount but up to 2.25%. Assuming a 1% rate, monthly PMI would be $250, with $21,303 the total amount of PMI you’d pay until you reach 20% equity.

•   Homeowners insurance: $2,305 on average annually, or $192 per month.

•   Property taxes: 0.28% to 2.49% of assessed value on average, depending on U.S. state. Most states have a homestead exemption that gives homeowners a tax break.

Recommended: A Guide to Mortgage Relief Programs

How to Get a $300k Mortgage

Prospective homebuyers can take steps to help qualify for a $300k mortgage and obtain more favorable terms.

•   Budget: First, it’s important to estimate how much you can afford.

•   Check your credit: Assess your credit history and take care of any late payments to improve your FICO® scores.

•   Get pre-approved: Starting the mortgage pre-approval process with one or more lenders gives you tentative approval for a loan amount and type, making you a more competitive buyer.

   Consider the interest rate, fees, and closing costs among lenders when shopping for a mortgage.

•   Make an offer: When you find a home that meets your needs and budget, consult with a real estate agent to submit an offer with your pre-approval letter.

•   Apply for the mortgage and get loan estimates: Now that you have a property address, you might want to request loan estimates from a number of lenders. A loan estimate is a three-page standard form that details the loan after you apply for a mortgage. Applying with more than one lender within 14 to 45 days counts as a single credit inquiry.

•   Choose a lender, and wait for the lender to verify your finances and appraise the property to underwrite the loan.

•   Close the deal: Get your cash to close and homeowners insurance ready and finalize the paperwork to close on your $300,000 mortgage.

Recommended: SoFi’s 2022 Home Loan Help Center

Where to Get a $300k Mortgage

The Consumer Financial Protection Bureau and others recommend getting quotes from multiple lenders. Buyers can choose from banks, credit unions, online lenders, and mortgage brokers to finance a home purchase.

While we’ve identified the interest rate and loan term as key information to compare, keep an eye out for fees paid directly to the lender, like origination fees and mortgage points.

The Takeaway

How much will a $300,000 mortgage cost you? The interest rate, loan term, insurance costs, and taxes will determine the amount you pay each month and over the life of the loan.

As you begin comparing lenders, give SoFi a look. SoFi fixed rate mortgage loans require as little as 3% down for qualifying first-time homebuyers.

Check your rate in just minutes

FAQ

How much is a $300,000 mortgage per month?

The monthly payment on a $300,000 mortgage depends on the loan length, interest rate, whether mortgage insurance is required, and more.

How much do I need to earn to get a mortgage of $300,000?

The required annual income to get a $300,000 mortgage is affected by your other debts and the down payment amount.

Can I get a $300,000 mortgage with a bad credit history?

You might be able to obtain a $300,000 mortgage with subpar credit, but the terms may be less competitive. For instance, borrowers with credit scores from 500 to 579 could be eligible for FHA loans, but they’ll have to make a down payment of at least 10% instead of 3.5%.

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Photo credit: iStock/Vertigo3d

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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In a competitive market, buyers have been known to waive contingencies, increase earnest money, insert escalation clauses, and pen love letters. Yes, that’s right: personal letters to sellers in an attempt to stand out from the crowd.

The National Association of Realtors® (NAR) isn’t feeling the love for “love letters” because they often contain personal information about the buyer, like their race and culture, that could make sellers and their agents vulnerable to accusations of discrimination.

Oregon was poised to ban homebuyer offer letters until a federal judge permanently blocked the law in March 2022. That month a Rhode Island representative introduced a bill to outlaw the practice in her state, calling it “kind of a very quiet way of redlining, potentially,” before the bill was held for further study.

So the practice goes on, legally, as of now, despite the letters’ tepid sway. A Zillow survey of partner agents showed that love letters were the least successful strategy for winning the deal (all-cash offers made sellers’ hearts beat fastest).

If you’re inclined to write a homebuyer love letter, here are tips.

1. Make a Strong Opening

Remember handwriting? Do your best and write your letter on a nice piece of stationery. You’re trying to humanize yourself in the eyes of the seller, and a handwritten note can go a long way toward doing so.

Address the seller by name if possible, searching for it online, or asking your real estate agent. As you write the letter, convey a friendly tone and a sincere message.

2. Tell the Owner About Yourself

You might choose to tell the sellers something memorable about your family, that you plan to raise kids in the house, or that the yard is perfect for your dogs.

You could also talk about where you’re moving from and why. Maybe you’ve taken a new job, you’re looking for a sense of community, and you fell in love with this neighborhood.

If you mention your family, just realize that familial status is protected against discrimination under federal housing rules. (In this case, sellers or their agents are not to act with bias against, or in favor of, families with children. The point of the Fair Housing Act is to create a level playing field for all people renting or buying a home, getting a mortgage, or seeking housing assistance.)

3. Think Twice About Sending Photos

Photos are part of what makes NAR uneasy, because race, gender, gender identity, sexual orientation, disability, religion, and familial status are protected against housing discrimination under the Fair Housing Act.

Yet many real estate agents allow buyer clients to include photos with their offer letters.

The NAR director of legal affairs advises Realtors to “avoid helping buyer clients to draft or deliver love letters. … Counsel them to focus on the characteristics of the home or other objective information.”

Still, buyer love letters are actually encouraged by some agencies — along with photos and even videos.

4. Share What You Like Best About the Home

Why you want to buy the home is the central theme of your letter. So you may want to tell the sellers somewhere near the top what you like best about their house.

Mention details. For example, maybe you like the large front porch and can picture gathering there with friends and family on summer nights. Or maybe you’ve become enamored of the kitchen, where you’ll perfect your bread-making skills. If, by chance, the property has an ADU, you could describe your plans for it.

You could throw in a bit of flattery, letting the sellers know how much you appreciate how they’ve maintained the home.

5. Find a Connection

One way to develop a relationship with someone is to find common traits or interests. If you notice that you and the sellers share an interest, it can’t hurt to let them know.

Perhaps you’re a gardener, and it’s clear they’ve got the plant bug. Maybe you have a passion for pottery, and the seller has a small ceramics studio. Or maybe you noticed a jersey from your favorite basketball team.

As you hunt for a connection, be careful not to cross any personal boundaries that might make the seller uncomfortable.

6. Explain Your Offer

Once you’ve given a sense of yourself and why you want to live in this house, you can get down to explaining your offer. Be honest and respectful as you give context.

If you’re living in a time of bidding wars and your offer isn’t the highest, there’s no need to dance around it. You could explain that the house is your dream home, but it’s at the top of your price range and that you respectfully ask the seller to consider your offer.

If the sellers are selling and buying at the same time, you could mention your willingness to do a rent-back agreement that would allow them to lease their former house from you for a set period of time.

7. Let Them Know You Are Serious

Selling a home is a lot of work. The last thing sellers want on their hands is a buyer who slows down the process and might not even make it through closing.

Make sure your letter reiterates that you are pre-approved for a mortgage and are flexible about closing dates.

8. Mind the Length

If there’s a lot of interest in a property, sellers might receive many love letters. They may not have the time, or interest, to read long-winded missives, so keep yours short and sweet, perhaps one page.

9. Thank the Owners

The close of your letter should be as strong as the opening. This is your last chance to make an impression, weave in some personal notes, and make any final flattering remarks.

Thank the sellers for considering your offer, and let them know you are looking forward to hearing from them soon.

10. Avoid Negativity

Some things are better left unsaid, like changes you’d like to make. The sellers may have spent a long while making their home perfect in their eyes. So even if you want to open up the floor plan and pull up the carpet, it’s a good idea to keep those thoughts to yourself for now.

You don’t want to make market prices, or this particular one, sound unfair. And it’s smart to avoid pressuring the sellers in any way, as with talk about time constraints.

Finally, don’t contradict anything that might go into a purchase agreement.

The Takeaway

In a seller’s market, a so-called love letter gives buyers a chance to distinguish themselves. Though not all real estate agents are keen on clients sending personal letters, the practice continues.

Home shoppers in an active market will want to get pre-qualified and then pre-approved. Learn the SoFi Mortgage advantages: loans with competitive fixed rates and low down payment options.

Check your rate in minutes.

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SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you are a young professional, you most likely have multiple savings goals, including retirement and buying your first home. Saving for both can be challenging while also covering your monthly expenses.

When you factor in things like student loan payments and any other debt, not to mention a bit of wiggle room to actually live your life, you might find yourself struggling to balance it all. You don’t want to spread yourself thin with all of the different payments, so it is a good idea to get an understanding of how much home you can afford.

On one hand, if you start saving early for retirement, your money has more time to grow with compound interest. On the other hand, saving for a down payment on a home in today’s market can take years depending upon the purchase price and loan program you choose. According to research by Zillow, it takes about seven years for home buyers to save a 20% down payment for the median value of a home in the U.S.

While 20% down is often thought of as the golden rule for mortgage down payments, these days it’s not required. In 2018, the median down payment on a home was around 5%, according to HousingWire.

There’s one tool of many that can help you reach both your home and retirement goals without requiring you to plan your entire life out before you turn 30: A Roth IRA.

While you’ve probably been told that you should never tap into your retirement money, using cash from a Roth IRA to fast-track your dream of home ownership can be a worthy exception.

Here are a few reasons you may consider leveraging a Roth IRA to become a first-time homeowner without having to delay your retirement goals, and some tips on how to go about it.

The Low-Down on a Roth IRA

IRAs are designed to help you save for retirement. However, a Roth IRA is different from other retirement accounts, such as 401(k)s and traditional IRAs. The main distinction is that you contribute after-tax dollars to a Roth IRA because contributions are not tax deductible.

Since you already paid taxes on the money before putting it into the account, the distributions you take when you retire can be withdrawn tax-free.

Compare that to traditional IRAs where you reap the tax benefits at the time of contribution (they’re deducted from your income on your tax return). The money is taxed when it is withdrawn in retirement, which according to IRS rules is after age age 59 ½.

Under certain circumstances, distributions can also be withdrawn tax free before retirement from a Roth IRA. So long as the account has been open for at least five years distributions can be withdrawn tax free; in the case of disability, if the distribution is made to a beneficiary after the account holder’s death, or in the case that the withdrawal fulfills the requirements for the first time home buyer exception.

But here’s the real game-changer: Unlike a traditional IRA, you can withdraw the money you contributed to a Roth IRA at any time without penalty.

Things get a little more complicated when it comes to your investment earnings. In very specific instances—buying your first home, for one—you are allowed to withdraw up to $10,000 of investment earnings from a Roth IRA with no tax or penalty. The only stipulations are that you must have had the account open for five years, and that the withdrawal is for your very first home.

Traditional IRAs also qualify for the first time home buyer exception. While this exception allows first time home buyers to avoid the 10% penalty, the withdrawal would still be charged income tax. By comparison, if you wanted to withdraw money from your 401(k), you would likely pay taxes and a penalty. However, there are certain situations that allow first-time homebuyers to withdraw from a 401(k). Whichever retirement account you decide to go with, SoFi is here to help. Start contributing to your account today by opening a online ira.

Crunching the Numbers

The best way to explain how this all works is by running the numbers. Let’s say you open a Roth IRA in 2019, contribute $6,000 per year (the current maximum contribution allowed) for five years, and hypothetically earn 7% per year on that money.

After three years, you would have made $18,000 in contributions and earned about $1,300 on your investment. If you continue to save $6,000 for two more years, your contributions would climb to $30,000 and the investment earnings would be around $4,500.

After five years, you can withdraw all of your contributions and up to $10,000 of your investment earnings—but you might not have earned that much yet.

Because this withdrawal benefit is available only once in a lifetime, ideally, you might want to time it so that you only tap into your Roth after you’ve earned the full amount allowable.

One other important thing to keep in mind: Roth IRAs have contribution limits based on your income. For example, if you are single and make less than $129,000 in 2022 , the maximum Roth IRA contribution is $6,000 , even if you participate in a retirement plan through your employer.

If you make more than that, the benefit begins to phase out. If you make more than $144,000 as a someone who is filing single, you’re not able to contribute to a Roth IRA.For more information about IRA accounts and contribution, check out SoFi’s IRA calculator.

To recap, you can withdraw from the investment earnings in your Roth IRA to buy a house if:

•   You are a first time home buyer.

•   It has been at least five years since you first contributed to your Roth IRA (the five year mark starts on January 1st of the year you made your first contribution.)

•   You only withdraw up to $10,000 within your lifetime (pre-retirement).

•   You use the funds to purchase, build, or rebuild a home.

•   You can also use the money to help fund the purchase of a home for your child, grandchild, or parent who qualifies as a first time home buyer.

•   The funds must be used within 120 days of withdrawal.

You can withdraw from the contributions you have made into your Roth IRA at any time, for any reason. There is no tax or penalty, and you can use the money however you like.

Qualifying as a First Time Home Buyer

Even if you have owned a home in the past, you may still be able to qualify as a first time home buyer and withdraw money from your Roth IRA.

According to the IRS, you qualify as a first time home buyer if “you had no present interest in a main home during the 2-year period ending on the date of acquisition of the home which the distribution is being used to buy, build, or rebuild. If you are married, your spouse must also meet this no-ownership requirement.”

So if the acquisition date (the date you enter into a contract to purchase a home or start building a home) is at least two years later than the last date you had any ownership interest in a primary residence home, you can qualify as a first time home buyer under this program.

💡 Recommended: First-Time Home Buyer’s Guide

Things to Consider Before Withdrawing from Your Roth IRA

Although using money from your Roth IRA may seem like an easy source to fund a down payment to purchase your first home, it might not be the right decision for everyone. Before you cash out your Roth IRA, think about how it might broadly impact your financial future.

Where Will Your Money Work the Hardest?

Figure out where your money will be working harder for you. Keep market conditions in mind and compare your mortgage interest rate to the expected long term return you would earn by keeping your money in your Roth IRA.

It can be difficult to predict the stock market, but in the past 90 years, the average rate of return for the S & P 500 has hovered around 7%, and that’s adjusted for inflation. When money is withdrawn from the Roth IRA, the potential for additional growth is eliminated, as is the opportunity to benefit from compounding interest.

The housing market is also subject to fluctuation. Consider things like the location and housing market where you plan to buy. In addition, it’s worth factoring in things like current mortgage rates. Another factor that could influence your decision—mortgage interest is generally tax deductible up to $750,000.

There are a lot of moving pieces to consider when determining whether or not to use your Roth IRA to fund a down payment on a house. Consulting with a financial advisor or other qualified professional could be helpful as you weigh your options.

What Mortgage Options Are Available?

Conventional wisdom suggests a 20% down payment when buying a house. And generally, a larger down payment can mean improved loan terms and lower monthly payments.

But if it requires tapping into your retirement fund you may want to think twice. Before committing to a mortgage, explore your options—some mortgages, such as Fannie Mae’s 97% program, offer as little as 3% for a down payment.

How Will Your Retirement Goals Be Impacted?

Everyone’s financial journey is different. Financial and retirement goals are deeply personal, as are the amount of money an individual is able to save each month. For most people, taking money out of a retirement account early will hinder their progress.

Plus withdrawing the money early means you’ll miss out on the tax free growth offered by a Roth IRA. These negative impacts would need to be weighed against any market appreciation you may gain through homeownership.

How Will Your Retirement Goals Be Impacted?

Everyone’s financial journey is different. Financial and retirement goals are deeply personal, as are the amount of money an individual is able to save each month. For most people, taking money out of a retirement account early will hinder their progress.

Plus withdrawing the money early means you’ll miss out on the tax free growth offered by a Roth IRA. These negative impacts would need to be weighed against any market appreciation you may gain through homeownership.

Making This Strategy Work for You

In a perfect scenario, you wouldn’t choose to become a homeowner at the expense of draining your retirement nest egg. Instead, explore other options such as opening a Roth IRA and treat it almost like a savings account, with the intention of using it for your first home purchase five years (or more) from now.

Unlike other investment accounts, your investment returns are tax free, and—contrary to other retirement products—you wouldn’t even be taxed when it comes time to withdraw, as long as all Roth IRA requirements are met.

Ideally, at the same time, you would continue to fund other retirement accounts, such as the one offered through your employer. Even though home ownership is your immediate goal, you’d likely be working toward other longer-term financial goals (like retirement) as well.

And what if you don’t end up buying a home, or you come up with another source of down payment? A Roth IRA is still a win, since you can leave that money be and let it continue to grow for your retirement.

There are a few other circumstances in which you can likely avoid penalties on a withdrawal. These include qualified higher education expenses, some medical costs, and other hardships. Be sure to consult with your tax professional to clarify any of these exceptions before you move forward.

It’s also worth noting that traditional IRAs also qualify for a first time home buyer exception. This exception allows for up to $10,000 to be withdrawn from the IRA before the age of 59 ½, to purchase a house as a first time home buyer and avoid penalties.

In this case, income tax will likely need to be paid but qualifying withdrawals won’t be subject to the additional 10% early withdrawal penalty.

For most young adults with other financial obligations and an early career-level salary, using a Roth IRA to help save for a down payment will require an examination of personal priorities.

Getting Professional Advice

Only you can determine if using money from your Roth IRA to purchase your first home is a trade-off you are willing to make. As you’re starting to make these large life decisions, it can be very useful to seek out tools and resources to help you through the process.

SoFi offers an integrated platform where you can invest toward your financial goals and get personalized advice from qualified professionals.

With SoFi Invest®, you can set up an IRA or another investment vehicle and choose between active or automated investing, depending on your personal preference and financial goals.

Schedule a complimentary consultation with a SoFi Financial Planner to discuss your goals and develop a plan to help you reach them.

Learn more about SoFi Invest now, and start online investing smartly.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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When most of us think of homeowners insurance, we think about getting coverage for major home repairs — the big-ticket items the insurance company can pay out for in the event of a loss or damage. We’re talking about things like a tree falling over in a storm and wrecking your roof or a robber making off with your electronics and jewelry.

Sure, you need that kind of protection, but your homeowner’s insurance policy should also include a very important kind of coverage beyond that: loss of use coverage. This is also sometimes known as additional living expenses (ALE) coverage or Part D coverage. Loss of use coverage is an important part of your home insurance (and some rental insurance policies) that kicks in when your home is rendered uninhabitable. Let’s say in the example above, where your roof needs major repair work. You may not be able to live in your home while this is underway. Since you have “lost the use” of your typical living space, the policy will help you pay for lodging and other expenses.

Read on to learn more about the loss of use coverage, including coverage limits and policy conditions. It’s an important consideration if a worst-case scenario ever happens to your home sweet home.

What Does Loss of Use Coverage Mean?

Loss of use coverage is the part of your homeowner’s insurance policy that covers the costs you’ll incur if you lose the usage of your home.

For example, if a fire destroys a significant portion of your house and it needs to be rebuilt, your typical home insurance policy will cover the cost of repairs. But (and this is a biggie) you may find yourself suddenly facing a whole lot of living expenses you otherwise wouldn’t. Hotel rooms and restaurant meals can add up quickly, and without your own kitchen and bedroom to cook in and retire to, you’d be pretty much forced to take advantage of these expensive options. Or perhaps you have to put your possessions in storage as your home is rebuilt, or even rent an apartment. These are the kinds of expenses that loss of use coverage will typically reimburse.

Recommended: Homeowners Insurance Coverage Options to Know

Coverage Limits

Like most other forms of insurance, loss of use coverage does come with certain limits — you don’t have carte blanche to go out and stay at a swanky hotel for months and eat exclusively Wagyu beef on the insurance company’s dime.

Generally, loss of use insurance is calculated and expressed as a percentage of your dwelling coverage limit — the amount of money up to which the insurer will pay out to repair or rebuild your home in the event of a qualified loss.

For example, if your dwelling insurance limit is $350,000, and your loss of use coverage is 20%, you’d have up to $70,000 to put toward living expenses during the time your home is being repaired. That may sound like a lot of money, but you’re likely to face a lot of expenses, especially since you’ll still be responsible, during that time, for paying your mortgage, insurance premiums, and other normal monthly bills.

Loss of use coverage is most commonly between 20% and 30% of the dwelling coverage limit, but it is possible to find plans with a higher loss of use limit — or a lower one.

In fact, although loss of use coverage is fairly standard, it is possible to purchase a homeowners or renters insurance policy that doesn’t include it, so always be sure to read your paperwork in full, including the fine print, to ensure you know what you’re getting.

Recommended: What Is Renters Insurance and Do I Need It?

Policy Conditions

Loss of use coverage is subject to additional conditions along with the coverage limit. For example, you’ll most likely be asked to prove your expenses to the insurance company in order to get the claim paid — so be sure to keep the receipts for all those hotel-room breakfasts!

Your policy may include other terms and conditions as well. Yet again, another good reason to get nice and cozy with that fine print.

Which Living Expenses Are Covered By Loss of Use Insurance?

Although the loss of use insurance covers many different kinds of living expenses while your home is being rebuilt or repaired, it doesn’t cover everything.

Once again, the only place to get verified information about what your specific policy covers is — you guessed it — your specific policy paperwork, but here are some of the most common covered costs.

•   Temporary housing, such as hotels, motels, or a temporary apartment

•   Moving costs

•   Public transportation

•   Grocery and restaurant bills beyond your typical expenditure

•   Storage costs

•   Costs to board a pet

•   Laundry costs

•   Parking fees

Once again, refer to your policy documentation in order to confirm which expenses are covered under your plan.

What Else Does Your Home Insurance Cover?

Loss of use coverage is only one small part of your overall homeowner’s insurance policy, which likely has several different coverages built in. A standard homeowners insurance policy offers coverage in the following categories:

•   Dwelling coverage, which covers the cost of repairing or rebuilding your house up to the given limit

•   Personal property coverage, which covers the costs of replacing your belongings in the event they are stolen, lost or damaged as part of a covered event

•   Personal liability coverage, which pays out to cover the medical or legal expenses you might incur if someone is accidentally hurt on your property (for example, if they’re bitten by your dog)

•   Additional coverages, such as coverage for additional structures on the property, specific damaging events (or “perils”) that aren’t listed in the standard policy, excess coverage for expensive belongings, etc.

As you can see, homeowners insurance is about way more than insuring the four walls of your home, though it should cover that, too. Keep in mind that each of these coverages comes with its own limits and policy conditions. (We’d remind you to read the fine print again, but at this point, you’ve probably got it. Right?)

In addition, homeowners insurance generally involves — as do most forms of insurance — paying a deductible when it comes time to file a claim. That means you’ll be responsible for a certain out-of-pocket cost to cover even coverage-eligible sustained damages, although the insurance company will likely pay out significantly more. (For example, a homeowners insurance deductible might be $1,000, which isn’t nothing… but is a lot better than paying $30,000 out of pocket to replace your entire roof. In this instance, you’d pay $1,000 while the insurer would pay $29,000.)

Deductibles are charged in addition to the premiums you pay on a monthly, quarterly, or annual basis simply to keep the insurance policy active. (Typically, the higher the deductible, the lower the premium, and vice versa.) Again, it may feel like a pain to have to pay so much money simply to have insurance just in case something happens, at which point you’d have to pay out your deductible as well… but for most of us, our homes are the single largest purchase we ever make and the biggest asset to our names. It’s an investment worth protecting, especially when you consider the often astronomical cost of even basic home repairs.

The Takeaway

Loss of use insurance is a type of coverage baked into most homeowners and many renters’ insurance policies. This coverage pays out toward the extra living expenses you’ll incur if your home is rendered uninhabitable by a qualified loss, such as the cost of hotel rooms, additional food expenses, pet boarding, and public transportation.

While homeowners insurance is a valuable financial tool, it’s not the only one to keep in your tool belt. If you have family members and loved ones who rely on your income in order to maintain their lifestyle and comfort, life insurance can be a great way to ensure your death is primarily an emotional, rather than financial, loss.

SoFi has teamed up with Ladder to offer high-quality life insurance plans that are quick to set up and easy to understand, and our overall policy limits go up to $8 million. You can get a decision in minutes today, right from the comfort of your home — which, after all, already has its own insurance policy. (Right?)

Photo credit: iStock/Ridofranz

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Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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