Homebuyers hopeful that interest rates would be cut and that mortgage interest rate cuts would soon follow will have to wait a bit longer for relief. Or so it seems. After months of encouraging inflation news, the most recent report showed it increasing again in February. And anticipated rate cuts may now not come until June (or later). Last week, one Fed official even said that there may not be any rate cuts at all in 2024, which would leave mortgage rates stuck at their highest point in decades.
While this can be discouraging news for buyers (and current owners looking to refinance), it doesn’t mean that you need to get stuck with today’s average rate, either (6.95% for 30-year mortgages as of April 8). There are multiple ways to get a rate lower than that right now. Below, we’ll break down five ways to get a lower mortgage rate this spring.
Start by shopping for rates and lenders online today.
How to get a lower mortgage rate this spring
Here are five effective ways to get a below-average mortgage rate this season.
Boost your credit score
The best mortgage rates and terms will always go to the borrowers with the highest credit scores, so if your credit profile needs improving, now is the time to do so. While a high credit score won’t result in the mortgage rates of 2021 returning, it can help you get the lowest rate available right now, and that can result in major savings when spread over the traditional 30-year mortgage term.
See what mortgage rate you could qualify for here now.
Shop for lenders
Just like you wouldn’t purchase the first car you test-drove, you shouldn’t necessarily lock in the first mortgage rate offer you get from a lender. Instead, shop around and compare rates and options from multiple banks — and be sure to look at any fees or closing costs that are tacked on. While a lower mortgage interest rate is ideal, excessive fees could quickly eat away at the savings received with the lower rate.
Consider a shorter mortgage term
Today’s 30-year mortgage loan rate is 6.95% — but a mortgage term at half that time frame comes with a rate of 6.34% now. While that may not be a dramatic difference, every percentage point (and a quarter of a percentage point) can help. That said, a shorter mortgage term will result in a compressed time frame, leading to bigger mortgage payments, thus negating the benefit of the lower rate for many borrowers.
Get an adjustable-rate mortgage
An adjustable-rate mortgage is exactly what its name implies: the rate will adjust over time. This can result in a lower mortgage rate to start (usually for a few years) before re-adjusting to a higher one after that period has ended. That later adjustment could come, however, at a time when the rate climate has stabilized, allowing buyers to get the benefit of that lower rate for a few years before refinancing into a fixed, lower rate in the future.
Purchase mortgage points
By purchasing mortgage points from your lender, you’ll be able to secure a lower rate than you otherwise would have gotten on your own. The cost of these points can then usually be rolled into your overall mortgage loan or paid during the closing process. And while purchasing mortgage points won’t allow you to buy yourself a 3% rate, it can make a major difference by knocking off half a percentage point or slightly more from the rate you would have been offered without it.
Learn more about your mortgage rate options here now.
The bottom line
While the historically low mortgage interest rates of recent years are unlikely to return anytime soon, that doesn’t mean that buyers have to get stuck with a 7% rate either. By boosting their credit score, shopping for lenders, considering a shorter mortgage term, pursuing an adjustable-rate mortgage and purchasing mortgage points — or by combining multiple strategies — buyers can secure a below-average rate right now. Just be sure to carefully weigh the pros and cons of each option before acting, as some may be more costly than others.
Matt Richardson
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
With the next Federal Reserve meeting scheduled for April 30 — and the next inflation report slated for release on April 10 — many will be hopeful for some economic relief next month. If the inflation report shows a reduction in growth, the Fed may elect to keep interest rates unchanged or even reduce them if they feel confident that inflation is finally cooling.
However, if there is another disappointing inflation report, as there was this month, the Fed’s response may differ.
Against this backdrop, borrowers have limited options. Interest rate hikes have caused the cost of borrowing with mortgages, personal loans and other products to surge in recent years. One cost-effective alternative, however, has been home equity loans and home equity lines of credit (HELOCs). But which will be better this April, a month in which the trajectory of inflation and interest rates could change? That’s what we’ll break down below.
Are you considering tapping into your home equity? See what rate you could qualify for here now.
Will a HELOC or home equity loan be better this April?
Here’s what to consider when looking for a better home equity product in the new month.
Why a HELOC may be better this April
A HELOC operates like a revolving line of credit that allows homeowners to access their existing home equity. Unlike home equity loans, HELOCs come with variable interest rates that can change monthly. While today’s HELOC rates are slightly higher than home equity loan rates, they’re still competitive — and likely to fall if inflation improves and interest rates are reduced.
This could be a major advantage for HELOC users. While a reduction in rates won’t come in April, by securing one during the month users will be in a prime position to see their rate cut either in May or in June, when many experts predict the first rate cut of 2024. Home equity loan borrowers, meanwhile, would need to refinance to secure a lower rate.
Learn more about your HELOC options online today.
Why a home equity loan may be better this April
If your primary goal is to secure the lowest home equity rate possible right now, regardless of where the rate climate is headed, then a home equity loan may be better in April. Home equity loan rates, as of March 27, are 8.59% on average, with 10-year loans at 8.73% and 15-year loans at 8.70% — all three of which are lower than today’s 8.99% HELOC rate.
A home equity loan could also be preferable for you next month if you feel that there’s still work left to do to tame inflation — and that interest rate cuts will be delayed yet again. If this is how you’ve interpreted recent data (and some have), then it could make sense to lock in a home equity loan rate now, before any upward adjustments come later in the year.
The bottom line
The choice between a HELOC and a home equity loan is a personal one with many factors to consider, especially now, with the prospect of interest rate cuts higher than it’s been in years. While it’s important to pick the optimal borrowing product for your needs and goals, either option is better than popular alternatives like credit cards (which hover around 20% right now) and personal loans (which have an average interest rate of 12%). Cash-out refinancing, meanwhile, would change your mortgage terms and likely saddle you with a higher mortgage interest rate in the process. But by understanding the drawbacks of the alternatives — and the rate considerations of HELOCs and home equity loans in the weeks and months ahead — borrowers will be better prepared to make an informed, secure decision.
Matt Richardson
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
After plummeting during the height of the pandemic in 2020 and 2021, mortgage interest rates have been on a steady upward trend. Thanks to decades-high inflation and a surging benchmark interest rate meant to tame it, mortgage interest rates have risen exponentially, hitting their highest point since 2000 last summer. While they’ve come down slightly since, disappointing inflation reports to start 2024 have resulted in the Federal Reserve keeping interest rates unchanged — and mortgage rates have stagnated.
That said, today’s mortgage rates are still relatively low, historically speaking. And the hope is high that a reduction in the benchmark interest rate later this year will also lower homebuyers’ rates. But there are some compelling reasons why homebuyers shouldn’t wait for that to happen. Below, we’ll detail three times you may want to buy a home even with interest rates as high as they are.
Ready to get started? See what mortgage interest rate you could qualify for here now.
4 times you should buy a home with interest rates high
Here are four instances in which you should consider buying a home despite higher mortgage rates.
When you find your dream home
Your dream home won’t be listed for sale every day, hence its name. When it does come up for sale, then, many would recommend buying it, even if it comes with a higher interest rate. After all, you could always refinance to a lower rate in the future, when the market stabilizes.
But, if you wait, you’ll lose out on the opportunity to own a home you truly love — and that opportunity may not arise again soon, particularly in desirable neighborhoods and locations around the country.
Learn more about today’s mortgage rate options online.
When you can afford the higher rate
Crunch the numbers and closely review your budget. You may be surprised at how much you can afford, even with today’s elevated rates. While no one wants to pay more than they should, mortgage interest rates are temporary and subject to change over time.
So if you can afford the higher rate and want to buy a home now, feel free to do so — and just look for the opportunity to refinance in the future.
When the home price is affordable
If you find a home priced right, or even lower than expectations, it could be worth buying, even with mortgage rates as high as they are. Understand that when mortgage rates eventually do come down, a whole slew of related complications may come into play, including a potential rise in home prices. But if you find an affordable home now, before that happens, it could be worth purchasing.
When the alternative is renting
Renting may be the only recourse for many. But renting is not a long-term investment and won’t build any equity. If this is the current alternative, then, it may be worth purchasing a home if you can afford it instead of renting with no end in sight.
While it may be more expensive than preferred, there are multiple advantages to owning a home versus renting, from the aforementioned home equity accumulation (which will build immediately) to interest tax deductions each year (which can be substantial at today’s high interest rates) and the potential profit that can be earned when selling.
Learn more about today’s top mortgage options online.
The bottom line
Today’s elevated mortgage rate environment isn’t preferable for homebuyers, but it doesn’t mean that you should refrain from acting, either. If you discover your dream home, can afford the interest rate, find an affordable house, or have an alternative to rent, it can be worth it for you now. Just make sure to crunch all of the numbers — including closing costs — before proceeding so you know exactly what you can afford to buy at today’s rates.
Matt Richardson
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
There’s no question that inflation has cooled significantly compared to mid-2022 when the inflation rate hovered above 9%. However, we aren’t back to normal just yet. At 3.2%, today’s inflation rate is still well above the Fed’s target rate of 2%, resulting in the Federal Reserve’s benchmark rate remaining paused at a 23-year high. In turn, borrowers now face elevated interest rates on everything from credit cards to mortgage loans — especially compared to the rates that were offered in 2020 and 2021.
But the good news is that mortgage rates, in particular, have declined slightly over the last few months, making it more affordable to borrow money for a home. And, as the spring homebuying season kicks into high gear, many prospective buyers are starting the pre-approval process to secure a mortgage loan.
Finding the right mortgage loan goes beyond just getting the best mortgage rate, though. It’s also critical that you understand all the details, fees and requirements from your lender so you can make the best decision possible for your money. And that starts by asking some important questions.
Explore your top mortgage loan options online now.
10 important mortgage loan questions to ask this spring
If you want to make an informed decision on your mortgage loan this spring, here are 10 crucial questions you should ask your mortgage lender:
What are the current mortgage rates and fees?
It’s crucial to get a clear picture of the interest rate you qualify for and understand all the lender fees involved in the transaction. As part of this process, be sure to ask about the mortgage loan’s annual percentage rate (APR), which includes the interest rate plus other costs. And, given that today’s mortgage rates are hovering near 7%, don’t forget to inquire about discount points to buy down the rate.
Find the best mortgage loan rates you could qualify for today.
What are the different loan program options?
There are various mortgage products to choose from. For example, your lender may offer you conventional or jumbo mortgage loan options as well as government-backed mortgage loans, like Federal Housing Administration (FHA), U.S. Department of Agriculture (USDA) and U.S. Department of Veterans Affairs (VA) loans.
Each type of mortgage loan has pros and cons to consider, and your lender should explain the differences and qualifications for each. That way, you can choose the right fit based on your down payment amount, credit score and financial situation.
What is the required down payment minimum?
Down payment requirements can vary across mortgage loan programs, and depending on the amount of money you have to put down on the home, one mortgage loan could make more sense over another. So, be sure to find the minimum down payment percentages for each type of loan you’re considering, as well as the benefits of putting down a higher amount to avoid mortgage insurance.
You may also want to ask if you’re eligible for any down payment assistance programs, as these programs may be available for certain types of buyers or mortgage loans.
How much home can I afford?
Your lender will pre-approve you for a maximum mortgage loan amount based on your income, debts and credit. However, it’s important to understand that the amount you’re approved for is the maximum, and you need to know what monthly payment you can realistically afford.
With that in mind, be sure to ask your lender to run different home price scenarios with estimated payments to ensure that you’re comfortable with the potential costs each month and that they align with what you have budgeted for your mortgage payments.
What documentation is required?
Your lender will need various documentation, from tax returns and pay stubs to bank statements and gift letters, to verify your income, assets and other information that’s required to approve you for your mortgage loan. It can be helpful to get a full checklist of required paperwork so you can prepare in advance, helping to expedite the pre-approval process (and ultimately the loan approval process).
How long is the mortgage pre-approval valid?
Pre-approvals typically have an expiration date, which can vary by lender, but are often between 60 and 90 days. Ask your lender how long your mortgage loan preapproval is valid for and find out what the process is to get re-approved if your home search takes longer just in case there are issues with finding the right home in that time frame.
What are the estimated closing costs?
In addition to your down payment, you’ll need to pay closing costs, which can vary by lender, but typically amount to 2% to 5% of the home’s purchase price. Be sure to request a fee worksheet or estimate from your lender to understand this significant upfront expense.
And, in some cases, you may be able to negotiate with your lender to lower some of these closing costs and fees. Knowing what these costs are as you compare your loan and lender options can be useful as you determine whether it would be worth it to do so.
What is the rate lock period?
A mortgage rate lock guarantees that your quoted interest rate won’t increase for a set period, which is often between 30 and 60 days. As you navigate the mortgage lending process, be sure to find out the lender’s lock periods and associated fees in case you need an extended rate lock.
What are the steps after pre-approval?
Having clarity on the next steps after pre-approval is an important component of ensuring the mortgage lending process is a success. So, be sure to ask your lender about the typical timeline for what happens after pre-approval. That way you know how long you have to shop for homes, the timeline for having a home under contract, when you need to secure the appraisal and the estimated time it will take for the underwriting processes to get the final approval.
Are there any prepayment penalties?
These days, it’s rare for lenders to charge mortgage prepayment penalties. However, it’s still important to confirm there are no fees if you pay off your loan early or refinance down the road, so be sure to ask this question of your lender.
The bottom line
The mortgage process can be daunting, especially in today’s high-rate environment, but being an informed borrower is half the battle. So, as you navigate the mortgage lending process, don’t hesitate to ask your lender plenty of questions, as this will likely be one of the biggest financial decisions you’ll make. That’s why an experienced, communicative lender is key to making the right mortgage choice this spring homebuying season.
Angelica Leicht
Angelica Leicht is senior editor for CBS’ Moneywatch: Managing Your Money, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
Borrowers hoping for some quick relief were left disappointed this week after the Federal Reserve elected to keep interest rates paused. While the benchmark interest rate range will stay the same between 5.25% and 5.50% — a 23-year high — there were indications that rate cuts could come later this year and into 2025. Against this backdrop, borrowers should remain judicious about how they access credit and which credit forms they use.
Homeowners, for example, have a great resource at their disposal: their home equity. Considering that the average homeowner has around $200,000 to utilize in today’s market, right now may be a great time to do so, even with elevated interest rates on pause. Below, we’ll break down three reasons why you should get a home equity loan now.
Start by seeing what home equity loan rate you could qualify for here.
Why you should get a home equity loan with interest rates paused
Here are three compelling reasons why homeowners should get a home equity loan or home equity line of credit (HELOC) with rates frozen.
Rates will stay where they are (for now)
An interest rate pause is still better than an interest rate hike, particularly for those considering accessing their home equity. The average home equity loan interest rate as of Thursday was 8.59% while the average HELOC was 8.99%. And that’s after the Fed’s announcement, meaning that the repercussions of keeping rates the same have likely been accounted for — and rates are still under 9%.
And if hints of a rate cut become more substantive in the weeks to come, rates on both borrowing products may drop lower. This gives borrowers some more flexibility and an extended window of opportunity to find the best lender for their needs (homeowners don’t need to use their current home loan lender if they don’t want to).
Start shopping for home equity loans online now.
Rates are still lower than popular alternatives
Have you looked at the interest rates on other popular credit alternatives lately? Credit card interest rates are around 20% right now while the average personal loan interest rate is better, but still around 12%, for borrowers. Both are significantly higher than what home equity and HELOC lenders will offer right now — and neither comes with the interest tax deductions if used for eligible home repairs and renovations. And with interest rates on pause, the rate climate is likely to remain as is, at least until the Fed meets again at the end of April.
Your rate could drop later this year
While home equity loan rates are fixed and will require refinancing to secure a lower rate, HELOC rates are not. As such, if you take out a HELOC this spring and rates drop fall later in the season, the payment you’ll need to make on the line of credit will fall in tandem. This could result in immediate savings back to you.
“This is simply an interest rate question,” Mark Charnet, founder and CEO of American Prosperity Group, a financial planning firm, recently told CBS News. “If the borrower feels rates will fall in the short-term, a HELOC, which normally adjusts the interest rate monthly, may be a better opportunity.”
Explore your HELOC options to learn more.
The bottom line
With interest rates on pause — and cuts likely for later in the year — now is an opportune time for homeowners to tap into their home equity. By doing so now they can still get a relatively low rate and save money versus using alternatives with much higher rates. And if they use a HELOC over a home equity loan, owners can position themselves for further savings due to the HELOC’s variable rate nature. As is the case when considering home equity borrowing, however, owners should thoroughly consider all options as their home will be used as collateral. If they can’t adequately pay back what they borrow, then they could risk losing their home in the transaction.
Matt Richardson
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
Building a budget is a fundamental way to save smarter. But to do that, you need a basic understanding of fixed and variable expenses—and how they can impact your ability to stick to a budget.
What is a fixed expense?
Fixed expenses stay the same every month. They’re predictable and rarely change, making them easy to plan for.
Examples of a fixed expense include:
Rent or mortgage payment
Child care costs
Phone bill
Internet bill
Loan payments
Subscriptions
Insurance premiums
Tuition bill
You may have different fixed expenses than those listed. Go through your past year’s expenses to make sure you don’t skip anything when making up your budget.
How to budget for fixed expenses
With fixed expenses, you typically know what to include in your budget. These tips can help you create the most effective budget for your situation.
Prioritize essential expenses—the things you need to survive. Make sure your income covers essentials like housing and child-care over wants like gym memberships.
Convert nonmonthly costs into fixed monthly expenses. For example, if you pay $600 twice a year for car insurance, mark that down in your monthly budget as $100.
Add savings into your budget as a fixed expense. Whether you’re saving for unexpected expenses or financial goals like retirement, include it in your budget to ensure it happens.
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Discover Bank, Member FDIC
Saving money on fixed expenses
Fixed expenses tend to be bigger and may take planning to reduce—like moving to reduce your monthly rent. Others are easier to cut or trim. To save money on fixed expenses:
Cancel unused subscriptions and memberships
Switch to a cheaper phone or internet plan
Shop around for lower rates on insurance
Avoid unnecessary expenses
What is a variable expense?
Variable expenses change, often monthly, making them less predictable and trickier to budget for. That makes it easier to overspend on them.
Variable expense examples include:
Groceries
Medical bills
Utility bills
Clothing costs
Gasoline prices
Car or home repairs
Some variable expenses are easier to manage than others. For example, you can control what you buy at the grocery store but not how much it costs to fill your gas tank.
How to budget for variable expenses
Like fixed expenses, it’s important to prioritize essential variable expenses like food and utilities. Here are two options to help determine realistic figures for your budget:
Calculate the average of three to six months’ spending in each category.
Determine the highest amount that you spend in a month in each category, and use that maximum number in your budget to provide a cushion.
Either of these methods can help you get a better handle on how much you’re spending on variable expenses. Another tip: Keep a budget buffer in a savings account to provide a safety net when variable expenses are higher than expected (or when unexpected expenses pop up).
Saving money on variable expenses
Reducing variable expenses can free up space in your budget, making it easier to handle your fixed expenses and funnel more into savings.
Here are five simple ways to reduce variable expenses:
Make grocery lists and stick to them.
Wait for sales whenever possible.
Reduce your dining out and takeout orders.
Seek free or low-cost entertainment like local museums that offer discount days and perks.
Invest in a programmable thermostat to save on utilities.
Now that you understand the differences between fixed and variable expenses, you can build a budget that helps you control your spending and meet your financial goals. When you know exactly where your money is going, you can take steps to shed unnecessary expenses, plan for the unexpected, and let your money work harder for you.
Take a proactive approach to planning for fixed and variable expenses with a Discover® Online Savings Account.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.
Paying bills is one of those forever things in life. But between the sheer number of bills for the month—rent or mortgage payment, car payment, utilities, credit cards—and the different ways to pay them, it can be tough to keep track of it all.
Making timely payments, though, is essential. Paying bills on time can mean avoiding late fees, higher interest rates, and dings to your credit score. In fact, your payment history—or how often you pay your bills on time—makes up the biggest portion of your credit score.
Fortunately, learning how to pay bills on time is often just a matter of getting organized and setting up a bill payment schedule. Try these tips and tricks to make missing bill due dates a thing of the past.
Take stock of all your monthly bills
First things first: You need to make a list of your bills for the month. Comb through your credit card and bank statements, and even your credit reports, to find typical payment amounts for your rent, utilities, loans, and credit cards. And don’t forget to look for more irregularly scheduled bills, like car insurance or subscription renewals.
Next, record the bills on a spreadsheet, in a budgeting app, or using any “method that will keep you organized and help you pay your bills on time,” says Dan Herron, a CFP® and certified public accountant. Be sure to include payments that are automatically paid out of your checking account or billed to your credit card. For each bill, write down:
Even if you’re a budgeting whiz, there may come a day when you can’t afford to pay all of your bills on time. That’s why you should also organize monthly bills by payment priority.
Using the above list, sort your bills into two groups: higher and lower priority. High-priority bills are for basic needs like shelter, transportation to work, and health insurance, or those that generally must be paid in full. Lower-priority bills are those that are important but offer some flexibility—for example, the ability to make a minimum payment (as is the case for a credit card) or to extend your payment due date.
Now you have a categorization system to help you make smart decisions about how to pay bills during times when you’re short on money.
Optimize your payment schedules
Once you have a monthly bills checklist, you can create a bill payment schedule that turns a slew of payment due dates and methods into a more streamlined system for how to pay bills. Here’s how to create one.
Group bills by due date
Many bills are due around the same time. Go through your monthly bills checklist and group them based on due date similarity.
Change your bill due dates
Some creditors allow you to change your regular bill due date. If you have many bills due at the beginning of the month, you may want to move some to the end of the month for better cash flow (for example, instead of paying a bill on Oct. 1, see if you can move it up to Sept. 30.) Update your bill payment schedule if you make any changes.
Add due dates to a calendar
Once you have your bills organized by due date, add them to a digital calendar and set payment reminders for a week before each bill is due, Herron says.
How to organize your bills
Staying organized is the best way to pay bills each month. What works best for you won’t be exactly the same as for someone else, but there are guidelines for how to pay bills most efficiently.
Create a bill ‘drop zone’
Rather than tossing your paper bills onto an already teetering pile of mail, keep unpaid bills in a dedicated file folder or basket. For electronic bills, create a digital folder for unpaid bills in your email, on your desktop, or in a cloud storage system. Once you’ve paid a bill, move it from the unpaid folder into a paid folder for that month or year, Herron says.
Automate as much as possible
The bill pay feature in your Discover® Cashback Debit account can make paying bills a snap. While automating all your bills comes with the risk of overdrawing your checking account—be sure you have overdraft protection or a connected savings account, Herron says.
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Decide when to pay your bills
Figure out how to pay bills that won’t be automatically paid from your checking account. Will you pay them when they come due or on a specific day or two each month? For example, if you have a bunch of bills due on the 15th of the month, you might decide to pay them all on the 8th of the month.
Take advantage of tech
Good news: You don’t have to rely solely on your memory or your organizational skills to pay your bills on time. Lean on technology for help.
Sign up for reminders from your bank and creditors when your bills are due. You can also receive notices of when payments or checks have cleared and when your checking account balance has dipped below a certain amount.
Also, consider using online bill pay through a checking account, which is one of the best ways to pay bills each month. In addition to automatic payments, this service offers features you can’t get from many other payment methods, such as paying multiple bills from one place and scheduling your bills to be paid in advance.
Have savings ready in case of an emergency
Having savings can help you ride out an emergency—say, a medical issue or a surprise car repair—without skipping a bill payment or taking on debt. Many financial experts recommend having enough money stored up to cover three to six months’ worth of expenses in case of a financial emergency. (Read our guide on adjusting your budget in case of a layoff.)
You can build your savings with sporadic deposits over time, but it’s also a good idea to include saving a regular amount as an “expense” in your budget. And if you have money left over after paying your bills, consider setting aside an additional portion in a separate savings account. “If the account is a high-yield savings account, you can earn some interest while you’re at it,” Herron says.
Ask for help when you need it
If you’re worried you won’t be able to cover all your bills—or you’ve already fallen behind—you have options! While it’s best to contact your creditors before you miss a payment, don’t be afraid to reach out at any point. Many creditors—such as credit card companies, medical providers, and banks—have options to help make paying your bills more manageable. For example, they might put you on a payment plan, adjust your payment due dates, or waive late fees.
Depending on your income level, there are also government programs targeted at helping people pay their utility bills.
Reevaluate and readjust
Managing and paying your bills is not a one-and-done situation. Be sure to keep your monthly bills checklist and bill payment schedule updated throughout the year.
Herron recommends reviewing your credit card and checking account statements weekly to “check your spending and see if there are any bills that you don’t recognize or that have gone up in price.” Not only can this help you stay on budget, but it’s also a good opportunity to cancel any subscriptions you no longer want. If you’re struggling to pay your bills, look for areas where you can reduce your expenses or find a better deal and then take action, like shopping around for cheaper internet service.
You’re in control
Paying bills may never be your favorite thing to do, but creating a system for how to pay bills on time can make you feel much more prepared and secure when the first of the month (or the 15th or the 30th) rolls around.
Automation is one easy step to help ensure your bills get paid on time each month, and a Discover Cashback Debit account makes bill paying simple and straightforward. Plus, it earns 1% cash back on up to $3,000 in debit card purchases each month.1 That’s a win-win for anyone looking to stay current on their bills and make a little extra cash while they do it.
Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
1ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay® Cash), online sports betting and internet gambling transactions, and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple Pay is a trademark of Apple Inc. Venmo and PayPal are registered trademarks of PayPal, Inc. Samsung Pay is a registered trademark of Samsung Electronics Co., Ltd. Google, Google Pay, and Android are trademarks of Google LLC.
Homebuyers waiting for mortgage rates to be reduced may have to wait a few more months.
That seemed to be the message this week after the latest inflation report from the Bureau of Labor Statistics showed inflation higher in January than expected. Although that 3.1% rate was lower than December’s 3.4%, it was still more than a full percentage point above the Federal Reserve’s target 2% goal. That means today’s interest rates are likely to stay high and an expected rate cut may not now come until late spring or early summer.
It also means that today’s mortgage rates — already hovering near the highest point since 2000 — will remain elevated as well. While that’s disappointing news for many homebuyers ready to act now, it doesn’t necessarily mean that they’re out of options. There is one way that homebuyers can reduce their mortgage rate by half a percentage point and it doesn’t involve an unpredictable adjustable-rate mortgage to do so.
Not sure what mortgage rate you’d qualify for today? Find out here now.
How homebuyers can reduce their mortgage rate by half a percentage point
If you’re a homebuyer looking to reduce the mortgage rate you’ve been offered consider buying “points” to do so. Specifically, many lenders will allow applicants to purchase mortgage points to reduce their rate. This involves paying a fee to the lender either during the mortgage closing process or by rolling it into the overall mortgage loan. This fee, then, will reduce the initial rate you were offered.
So, if you purchase 0.750 points, you can reduce your mortgage from 7% to 6.625%. If you buy 0.50 points, you can reduce your mortgage from 7% to 6.50% and so on. A full point is generally worth 1% of your total loan amount.
This is worth considering for many homebuyers right now, especially now that the hope for a rate cut has been dimmed a bit. That said, it does have some drawbacks. An additional fee — no matter how it is paid — can be difficult for buyers to manage. It also may not be worth it if the new, lower rate is something that can be obtained by waiting out the market or by refinancing in the future. And you’ll be limited on how many points you can buy (you won’t be able to buy a rate down to zero, for example).
On the other hand, every dollar helps, and if you can potentially save hundreds of dollars in a mortgage loan each month, it may be worth it for you.
Crunch the numbers here to learn more.
Other ways to get a below-average mortgage rate
Mortgage points aren’t the only way to get a below-average mortgage rate.
As mentioned above, adjustable-rate mortgages may also be advantageous. These types of loans generally start with a lower rate but adjust, over time, to a higher one. But once that increase comes into play, the rate environment may have stabilized, allowing buyers to refinance into a lower, fixed rate instead.
It’s also smart to improve your credit score and profile as much as possible (remember that the advertised rates are only for those with the best credit) and you should shop around for lenders to secure the best deal. Even a mortgage rate a few basis points lower than another one can add up to major savings over the lifespan of the mortgage loan.
The bottom line
Today’s mortgage rate environment isn’t ideal, especially compared to the lows from 2020 and 2021. But, historically speaking, it’s about average. To get a below-average rate by half a percentage point or more, borrowers should consider buying mortgage points from their lender. While points may not always be advantageous, they can make a major difference in your interest rate and can be especially helpful now when the forecast for rate cuts looks less clear. But options like an adjustable-rate mortgage may also be worth it for some buyers, all of whom should improve their credit score and shop for lenders before finally committing to a specific rate and lender.
Matt Richardson
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
Inflation remained stubbornly high in January, possibly pushing back any interest rate cuts by the Federal Reserve. Still, the long line graph indicates a cooling trend, albeit a bumpy one. Nevertheless, lenders have already begun lowering mortgage rates in anticipation of any cuts to the federal funds rate. According to Freddie Mac, the rate on a conventional 30-year fixed-rate mortgage is currently 6.90%, down from 7.79% in late October.
The good news for homeowners is that despite dips in some areas, prices are generally holding steady and preserving home equity for owners. A 2023 report from the real estate analytics firm CoreLogic says the average homeowner in the U.S. holds $300,000 in home equity.
With lower interest rates than other forms of lending, home equity loans may be a good option for borrowers. The best lending option depends on a several factors, including the loan amount, borrowing costs and your time horizon for repayment. However, a home equity loan could be a better option than the below five alternatives in specific situations.
Considering tapping into your home equity? See what interest rate you could qualify for here now.
Why a home equity loan is better than these 5 alternatives
Here are five lending options that a home equity loan may be preferable to.
Credit cards
As of February 27, the average home equity loan interest rate is 8.78%. That’s substantially lower than the average credit card interest rate of 22.75%, according to the Federal Reserve. If you’re looking to borrow a substantial amount, such as $50,000 for a home renovation project, you could save thousands of dollars in interest charges over the life of the loan.
“When you need a sizable sum and can repay it over a longer period, a home equity loan is the better choice,” says Mike Roberts, co-founder of City Creek Mortgage. “The interest rates on home equity loans are generally lower, making them more cost-effective.”
Keep in mind, home equity loans use your house as collateral, which means the bank could foreclose on your home if you default on the loan. If you need a smaller amount, a credit card or other alternative may be less risky, especially if you can repay the amount quickly.
Compare your home equity loan options here to learn more.
Personal loans
As with credit cards, home equity loans may be preferable to personal loans because they usually come with lower interest rates. They also have higher borrowing limits, up to 75% to 85% of your home’s equity. As mentioned, U.S. homeowners have an average of $300,000 in equity, which means they could potentially borrow from $225,000 to $255,000. By contrast, borrowing amounts on personal loans typically don’t exceed $100,000. If you’re consolidating a substantial amount of debt or undertaking a pricey home improvement project, the higher borrowing limit and lower rates may be advantageous.
Bill Westrom, the CEO and founder of TruthInEquity.com, advises borrowers refrain from borrowing the maximum amount, even if they qualify. “If we use 2008 to 2009 as a teaching lesson when home values fall, you might find yourself in a negative equity position that might take years to recover from.”
Cash-out refinance loans
If you took out your current mortgage before 2022, you likely have a more favorable rate than what you’ll find on the market now. Specifically, mortgages taken out between 2019 and 2021 have average interest rates below 4.00%. Refinancing at today’s higher rates doesn’t make much sense. A home equity loan allows you to access the funds you need without changing the terms of your original mortgage.
“If you have a first mortgage with an interest rate of 4.00% or less, do not ever let it get away,” says Westrom. “There really is no complimentary argument for the cash-out refinance if you have a low, low rate already.”
Home equity lines of credit (HELOCs)
While home equity lines of credit (HELOCs) include many of the same benefits as home equity loans, there are times when the latter can be more advantageous. For starters, home equity loans can provide you with a large sum of money upfront, whereas HELOCs are designed to draw funds as needed over time.
Additionally, home equity loans come with fixed interest rates, while HELOCs typically have variable ones. With a stable rate and payment that remains the same throughout the loan, a home equity loan is more predictable and easy to manage. It also can save you on interest charges as it isn’t subject to interest rate fluctuations.
Learn more about your HELOC options here.
401(k) loans
Both a 401(k) loan and a home equity loan allow you to “borrow from yourself.” A 401(k) loan allows you to borrow up to $50,000 in emergency cash from your retirement plan, and pay yourself back within five years with interest, usually a point or two higher than the current prime rate.
However, borrowing from your 401(k) comes at a massive opportunity cost. The money you withdraw will no longer earn interest, and it could take years to regain your former account position. During those five years of repayment, you could forfeit your employer’s matching contributions, and the lower account balance will yield less earnings.
With a home equity loan, you’ll pay interest charges, and the risk to your home must be strongly considered. However, a well-planned home equity loan with affordable payments could be considered a more favorable option than depleting your retirement savings.
The bottom line
A home equity loan can be more advantageous than the alternatives above in many situations, but not always. Deciding whether to get a home equity loan, one of these five alternatives or another financing option should be based on how each option addresses your unique circumstances. Explore your options and read the fine print before proceeding with any loan offers. Finally, make sure you can comfortably afford the payments on any new loan or credit you’re considering before taking on new debt.
Matt Richardson
Matt Richardson is the managing editor for the Managing Your Money section for CBSNews.com. He writes and edits content about personal finance ranging from savings to investing to insurance.
Are you looking for the best books about budgeting? Learning how to budget can change your life – you may be able to improve your finances, stop living paycheck to paycheck, start living debt-free, improve your net worth, and so much more. All from learning how to budget. To get good at budgeting, I think…
Are you looking for the best books about budgeting?
Learning how to budget can change your life – you may be able to improve your finances, stop living paycheck to paycheck, start living debt-free, improve your net worth, and so much more.
All from learning how to budget.
To get good at budgeting, I think it’s a great idea to learn from people who know a lot about it, which includes reading the best money books. There are all different kinds of budgeting books out there that cater to different people and their unique financial situations, so you are sure to find one that fits what you are looking for.
Key Takeaways
Best Books About Budgeting
Below are the best books about budgeting.
1. The Millionaire Next Door
The Millionaire Next Door: The Surprising Secrets of America’s Wealthy written by Thomas J. Stanley is a favorite personal finance book for many people and is a great first budgeting book to read.
This book helps you to better understand the habits and mindset of millionaires in an easy-to-understand way (and it’s so interesting to read as well!). You will learn about the importance of living below your means and avoiding lifestyle inflation to achieve financial success and build real wealth.
You’ll find out that many millionaires live real simple lives, spending wisely and doing things differently, like how they use their time and raise their kids. It’s surprising to see what being rich really means, and some people who seem rich might actually have a lot of debt.
This is one of the best budgeting books because it teaches you that anyone can retire with wealth.
Please click here to learn more about The Millionaire Next Door.
2. The Simple Path To Wealth
The Simple Path To Wealth was written by J.L. Collins, and it’s one of the best books on money management, especially if you want to retire early.
This highly recommended book makes building wealth easy to understand, and it’s the book to go to if you want to make your finances better but don’t want to spend a lot of time on it.
In his book, Collins talks about important money topics, like staying away from debt, building wealth, understanding the 4% rule, and much more.
Please click here to learn more about The Simple Path To Wealth.
3. Broke Millennial
Broke Millennial: Stop Scraping By and Get Your Financial Life Together was written by Erin Lowry, and is one of the must-read best money books for young adults. The author makes talking about money fun and interesting, especially for young adults.
This book is made for millennials (and young adults!) who want to manage their money well.
Erin writes about how to have a clear plan to stop being broke and gives a step-by-step guide where she covers many different topics, including tricky ones like managing student loans and talking about money with your partner.
I like to give this book as a graduation gift to those finishing high school or college. It’s one of the best personal finance books for beginners because it helps young adults better understand money.
Please click here to learn more about Broke Millennial.
4. The No-Spend Challenge Guide: How to Stop Spending Money Impulsively, Pay off Debt Fast, and Make Your Finances Fit Your Dreams
The No-Spend Challenge Guide by Jen Smith is the perfect book for those struggling with spending. This guide has actionable steps to stop impulsive spending, pay off debt, and align your financial decisions with your dreams.
Jen Smith went from struggling to stay on a budget for more than two weeks to paying off $78,000 of debt in under two years. In her book, she shares experiences and strategies, including using No-Spend Challenges to shift her money mindset and budget more effectively.
Please click here to learn more about The No-Spend Challenge Guide.
5. The One Week Budget: Learn to Create Your Money Management System in 7 Days or Less!
The One Week Budget by Tiffany Aliche (The Budgetnista) is a great book to read if you want to create a better money management system that takes less of your time. So many people are afraid to manage their money because they think it will be hard or take a lot of time, so this is a great book to read to overcome that.
In just one week, this book will help you create a budgeting system to manage your money effectively. This is a great read for anyone new to budgeting or looking for a more simple approach to managing their money.
Please click here to learn more about The One Week Budget.
6. We Should All Be Millionaires: A Woman’s Guide to Earning More, Building Wealth, and Gaining Economic Power
We Should All Be Millionaires by Rachel Rodgers is an inspiring book that teaches women how to build wealth and achieve financial independence.
You will learn how to make better money decisions, strategies to bring in more income, and how to change your attitude about money.
This book will also show you how to overcome obstacles in your life (such as lack of confidence or knowledge) so that you can build wealth.
Please click here to learn more about We Should All Be Millionaires.
7. How to Stop Living Paycheck to Paycheck (2nd Edition): A Proven Path to Money Mastery in Only 15 Minutes a Week!
How to Stop Living Paycheck to Paycheck by Avery Breyer is a practical guide that helps readers break the cycle of living paycheck to paycheck, and it gives tips on budgeting, saving, and investing.
You will learn how to build an emergency fund, get out of debt, avoid budget traps, and more.
This book teaches a complete budget system for beginners and takes only 15 minutes per week to do.
Please click here to learn more about How to Stop Living Paycheck to Paycheck.
8. How To Pay Off Your Mortgage In Five Years: Slash Your Mortgage with a Proven System the Banks Don’t Want You to Know About
How To Pay Off Your Mortgage In Five Years by Clayton Morris and Natali Morris is a great book for anyone looking to pay off their mortgage fast.
This is a helpful read for homeowners looking to shorten their mortgage term and save money on interest in the long run. This is a step-by-step system with a strategic plan to pay off your mortgage fast.
Please click here to learn more about How To Pay Off Your Mortgage In Five Years.
9. You Need A Budget
You Need A Budget: The Proven System for Breaking the Paycheck-to-Paycheck Cycle, Getting Out of Debt, and Living the Life You Want by Jesse Mecham is a great personal finance book that teaches you a step-by-step budgeting system for managing your money more effectively.
You will learn things such as how to pick your priorities for your money, how to not let expenses sneak up on you, how to handle an unexpected expense, and how to get your money to last.
Please click here to learn more about You Need A Budget.
10. The Automatic Millionaire
The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich by David Bach is a book that simplifies the process of becoming financially independent, emphasizing the power of automating your savings and investments.
The Automatic Millionaire begins with the inspiring tale of an ordinary American couple — a low-level manager and a beautician — whose combined income never surpasses $55,000 per year. Remarkably, they achieve debt-free homeownership of two houses, put both kids through college, and retire at 55 with over $1 million in savings.
Please click here to learn more about The Automatic Millionaire.
11. I Will Teach You To Be Rich
I Will Teach You To Be Rich was written by Ramit Sethi and is a great first personal finance book to read. This has been a popular money book for years and for good reason!
This book is full of very helpful lessons presented in a fun way, and he covers the basics of personal finance, including budgeting, saving money, investing, and more.
Please click here to learn more about I Will Teach You To Be Rich.
12. The One Page Financial Plan
The One-Page Financial Plan: A Simple Way to Be Smart About Your Money by Carl Richards is a book that will help you create a single-page plan based on your personal financial goals.
This book will help you figure out how much money to invest each year, how much life insurance you need, how to handle unexpected costs (or a job loss), and more.
If you are looking for more of a visual way to manage your money, then this is the book to read.
Please click here to learn more about The One Page Financial Plan.
13. Your Money or Your Life
Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence by Vicki Robin and Joe Dominguez has sold more than one million copies and is one of the most popular and best money books ever.
This book has been popular for over 25 years (but don’t let that stop you from reading it!), and it’s been updated with more recent topics like side hustles, new investment options, how to track your money online, and more.
This book focuses on mindful spending and helps you reevaluate your relationship with money. This book will guide you in getting out of debt, saving money with mindfulness and good habits, building wealth, contributing to saving the planet, and so much more.
Please click here to learn more about Your Money Or Your Life.
14. The Financial Diet
The Financial Diet (same name as the very popular blog!) by Chelsea Fagan is a guide to managing money, including tips on budgeting, saving, and investing so that you can make smart financial decisions.
This book will teach you how to get good with money, how to stick to a budget, how to invest, how to save money on food, and more.
The Financial Diet is the personal finance book for someone who doesn’t care about personal finance but is looking for a beginner’s guide to improve their financial situation. The writing style of this book will keep you interested and actually want to learn about personal finance.
Please click here to learn more about The Financial Diet.
Frequently Asked Questions About Budgeting Books
Below are common questions about finding the best budgeting books.
What are the best budgeting books for young adults?
My favorite budgeting book for young adults is Broke Millennial, and I personally buy this book and give it as a gift to anyone I know who is graduating from high school or college.
There are many other budgeting books that people love such as How To Manage Your Money When You Don’t Have Any by Erik Wecks, The Total Money Makeover by Dave Ramsey, Money Honey by Rachel Richards, Spend Well, Live Rich by Michelle Singletary, and so many others.
What’s the best budgeting book planner?
A budgeting book planner is a tool that you can use to organize your finances in one place and stick to your budget. You can find many different budgeting book planners here.
Best Budgeting Books – Summary
I hope you enjoyed this list of the best books on budgeting.
As you can see, there are many different budgeting books that can fit your personal situation.
These books talk about different parts of budgeting, like making a basic plan or handling money when you don’t have much. Whether you’re just starting or want to get better at budgeting, there is probably a book above that has something for you to learn.
Here’s a quick list of the best budgeting books listed above: