Hey, I’ve just been featured on CNBC and I want to say hello to all of my new readers. You can read the CNBC article here – I made $40,000 a month from 3 income streams during a 4-month cruise around the world—here’s how If you are a new visitor – welcome to Making Sense…
Hey,
I’ve just been featured on CNBC and I want to say hello to all of my new readers.
You can read the CNBC article here – I made $40,000 a month from 3 income streams during a 4-month cruise around the world—here’s how
If you are a new visitor – welcome to Making Sense of Cents!
I have received many emails about how I was able to afford this trip. I have a free How To Start A Blog course that you can sign up for here. I also talk about this below and how I’ve been able to earn over $5,000,000 blogging over the years.
If you want to read more about my world cruise trip, I recommend reading Around-The-World Cruise With A Kid (25+ Countries In 4 Months!).
Here are some blog posts that you may find helpful and enjoy:
If you have any questions, please leave a comment below or send me an email.
Thanks for stopping by.
-Michelle Schroeder-Gardner
—-
In addition to reading the CNBC article linked above, I also want to talk about how I grew a blog that has earned me over $5,000,000. I know I will get a lot of questions, so I figured it’s best to lay it all out right here 🙂
What started as just a hobby turned into one of the most life-changing things I’ve ever done – that’s starting my blog, and learning how to make money with it.
Since learning how to monetize a blog over 10 years ago, I have now earned over $5,000,000 from my site. This is still hard for me to believe, and I’m the one who’s lived it!
In the beginning, all I was doing was tracking my own personal finance progress as I finished school and started paying off my student loans. Blogging was a very new concept to me at the time – I heard about it from a magazine – and people were just learning how to monetize blogs back in 2011.
Most bloggers started back then with display ads and sponsored posts, but the options have only increased.
Because of all of the new ways to make money blogging, like affiliate income and selling your own products, you can make somewhat passive income as a blogger.
Passive income is my favorite way to make money because it makes blogging even more flexible and something I can do as I work from home, travel, and work whenever I want.
Blogging has changed my life for the better, and I’m now earning thousands of dollars a month doing something I love.
Learning how to monetize a blog takes work and time, but it’s 100% possible to do. I started earning money after just six months of blogging, and I didn’t even set out to make money when I created Making Sense of Cents. Just think of the potential if you start out knowing that making money blogging is possible!
Starting my blog is one of the best things I’ve ever done for my work, personal, and financial life. And, I urge anyone who is interested to start a blog and learn how to monetize it.
How I earned my first income from blogging
Many of my readers have heard this story, but I love sharing it because I started out like many of you, except I had no idea that blogs could make money. When I started Making Sense in August of 2011, I simply wanted a way to keep track of my financial progress and meet others who had similar goals.
As I started getting to know other bloggers in the community, a blogger friend of mine connected me with an advertiser who was willing to pay me $100 for an advertisement.
I couldn’t believe someone would pay me $100 to advertise on my site!
While it wasn’t a lot of money, especially considering the amount of time and work I put towards my blog in those 6 months, it was very motivating to see that something I loved doing could actually make money.
After that first $100, I started doing a lot of research on how to monetize a blog, and my blogging income quickly grew from there.
One year after I started my blog, I was earning around $1,000 a month, and I was making around $10,000 monthly two years after I started Making Sense of Cents.
My income only continued to grow, and I am still earning a healthy income from this website today.
How To Start A Blog FREE Course
If you want to learn how to monetize a blog and you haven’t started your blog, then I recommend starting with my free blogging course How To Start A Blog FREE Course.
Here’s a quick outline of what you will learn in this free course:
Day 1: Reasons you should start a blog
Day 2: How to determine what to blog about
Day 3: How to create your blog – in this lesson, you will learn how to start a blog on WordPress, and my tutorial makes it very easy to start a blog
Day 4: How to monetize a blog – this is where you learn about the many different ways to make money blogging!
Day 5: My tips for earning passive income from your blog
Day 6: How to grow your traffic and followers
Day 7: Miscellaneous blogging tips that will help you be successful
This is delivered directly to your email inbox, and you will learn how to grow a blog from scratch.
Start with a plan for your blog
Sure, you can start on a whim, and that’s kind of what I did, haha.
But, I do think that creating a plan is a good idea if you want to learn how to monetize a blog. This can help you get an organized start, identify your blog’s niche, decide on your blogging goals, find opportunities for blogging income, and more.
It wasn’t until 2015 that I finally created a blogging plan (that’s 4 years after I started!), and my blog income grew significantly after that.
I credit that growth to creating a plan!
Having a plan would have been a huge help in the beginning, and I wish I would have started with one. I probably missed some income opportunities because I had no real plan or direction in the first couple of years.
Since creating a blogging plan, I became more focused on goals and motivated toward improving and building Making Sense of Cents.
Here are some questions that you may want to ask yourself when creating a plan for your blog:
What will you write about on your blog?
How do you want to make money with your blog?
What will you do to reach readers on your blog?
What are your goals for your blog?
Thinking about, researching, and answering these questions will help guide you on your journey and help you decide what to do next.
Write high-quality and engaging blog posts
Your blog’s content is extremely important. This will be what attracts your readers, has them coming back for more, earns you blogging income, and more.
Now, you don’t need to be an expert or need a degree to start talking about a subject, but you do need to be knowledgeable or interested in what you are talking about. And, always be truthful! This will show in your writing and actually help your readers.
To write high-quality content on your blog, here are some tips:
Figure out exactly what it is that you’d like to write about and why you think the content is important. Being passionate about a subject will give you the motivation to write content that people want to read. Just think about it: If you don’t enjoy writing your content, then why should you expect someone else to want to read it?
Ask your audience what they want you to write about. Many of my best ideas come from expanding on reader questions.
Research your blog topics by reading news articles, going to a library, searching for statistics and interesting facts, and more.
If your blog posts are more personal in nature, then dig deep and share your thoughts, and be personable in your writing – your readers want to hear your story!
Write long, helpful content. Sure, some great content may only be a few hundred words, but to be as helpful as possible, long content is usually the best. My content is usually over 2,000 words, and this article is around 5,000. Now, you don’t want to just write a lot of fluff content in order to get more words in – you want to actually be helpful!
Reread your content. I used to read my content 10 times or more before I would publish it. Now, I have an editor who makes sure I’m always publishing high-quality content.
Network, network, network
If you want to learn how to monetize a blog, then networking can be extremely helpful.
Networking can mean:
Making friends with other bloggers
Attending blogging conferences
Sharing content that other bloggers have written
Following other bloggers in your niche on social media
Signing up for other bloggers’ newsletters
Joining blogging groups on Facebook
Some bloggers don’t do any of these things and purely see other bloggers as competition. I don’t believe this is the correct way to approach blogging because you will hold yourself back immensely!
Networking is important because it can help you enjoy blogging (friends are nice to have, right?!), teach you new ideas (such as how to make money blogging or how to grow a blog), make valuable connections, and more.
Keep in mind that networking is even how I earned my very first $100 blogging. My blogging friend connected me with an advertiser, which helped changed my blogging journey.
I have learned a lot about blogging from the blogging community, and the people I’ve connected with have been a tremendous support as I’ve grown my blog.
Be prepared to put in a lot of hard work
Starting a blog is relatively easy. But, growing and learning how to monetize a blog takes a lot of work.
You’ll have to:
Start a blog, design it, create social media accounts, and more
Write high-quality blog posts
Attract an audience of readers
Monetize your blog
Continue learning about blogging
And more
Even when I was just a new blogger and had no plans of making money blogging, I was still spending well over 10 hours a week on Making Sense of Cents.
When I was working my full-time day job and earning an income from my blog, I was working around 40-50 hours a week on my blog on top of my day job!
Now that I blog full-time, my hours vary. Some months I hardly work, and there are other months that I may work 100 hours a week.
It’s not easy, and there’s always something that needs to be done.
But, I absolutely love blogging, which makes the hard work a little less tough.
How to monetize a blog: 4 different ways
There are many different ways you can monetize your blog, including:
Affiliate marketing
Advertisements and sponsorships
Display advertising
Create your own product, such as an ebook, course, physical or online products, and more
You could choose to monetize your blog using all of these methods, or even just one. It’s just a personal decision.
For me, I like to be diversified and monetize in many ways, so I do them all.
Below, I am going to dive a little deeper into each way to make money blogging.
1. Affiliate marketing
Affiliate marketing can be a great way to make money blogging because if there is a product or company that you enjoy, all you have to do is review the product and share a unique affiliate link where your readers can sign up or make a purchase.
In fact, this is my favorite way to monetize a blog. I enjoy it because it can be quite passive – I can create just one blog post and potentially earn an income from it years later. This is because even though a blog post may be older, I am still constantly driving traffic to it and readers are still purchasing through my affiliate links.
Affiliate marketing is a blog monetization method where you share a link to a product or company with your readers in an attempt to make an income from followers purchasing the product through your link.
Here are some quick tips so that you can make affiliate income on your blog:
Use the Pretty Link plugin tocleanupmessy-lookingaffiliatelinks. I use this for nearly all of my affiliate links because something like “makingsenseofcents.com/bluehost” looks much better than the long, crazy-looking links that affiliate programs usually give you.
Provide real reviews. You should always be honest with your reviews. If there is something you don’t like about a product, either don’t review the product at all or mention the negatives in your review.
Ask for a commission increase. If you are doing well with a particular affiliate program, ask to increase your commissions.
Build a relationship with your affiliate manager. Your affiliate manager can supply your readers with valuable coupons, commission increases, bonuses, and more.
Write tutorials. Readers want to know how they can use a product. Showing them how to use it, how it can benefit them, and more are all very helpful.
Don’t go overboard. There is no need to include an affiliate link 1,000 times in a blog post. Include them at the beginning, middle, and end, and readers will notice it. Perhaps bold it or find another way for it to stand out as well.
You can learn more about affiliate marketing strategies in my course Making Sense of Affiliate Marketing.
2. Advertisements and sponsorships
Advertising on a blog is one of the first ways that bloggers learn how to monetize a blog. In fact, it’s exactly how I started!
This form of blogging income is when you directly partner with a company and advertise for them on your website or social media accounts.
You may be writing a review for them, a tutorial, talking about their product or company, taking pictures, and so on.
If you want to learn how to increase your advertising-income, I recommend taking my Making Sense of Sponsored Posts course.
3. Display advertising
Display advertising is one of the easiest ways to make money blogging, but it most likely won’t earn you the most, especially in the beginning.
I’m sure you’ve seen display ads before. They may be on the sidebar, at the top of a post, within a blog post, and so on.
The ads are automatically added when you join an advertising network, and you do not need to manually add these ads to your blog.
Your display advertising income increases or decreases almost entirely based on your page views, and once you place the advertisement, there’s no direct work to be done.
If you want to learn how to monetize a blog through display advertising, then some popular networks include Adsense, MediaVine, and AdThrive.
Personally, I use AdThrive for my display advertising network. I don’t have many display advertisements on my blog, but it is easy income.
4. Sell your own products
Another popular way to monetize a blog is to create a sell your own products.
This could be an online product, something that you ship, and so on, such as:
An online course
A coaching program
An eBook
Printables
Memberships
Clothing, candles, artwork, hard copy books, and anything else you can think of
And the list goes on and on. I have seen bloggers be very successful in selling all kinds of things on their blogs.
What’s great about selling your own product is that you are in complete control of what you are selling, and your income is virtually unlimited in many cases.
I launched my first product about 5 years after I created Making Sense of Cents, which was a blogging course called Making Sense of Affiliate Marketing. I regret not creating something sooner because this has been an excellent source of income and has helped many people along the way.
Have an email list
If you really want to learn how to monetize a blog, I recommend that you start an email list from the very beginning.
I waited several years to start my email list, and that was a huge mistake!
Here’s why you need an email list right away:
Your newsletter is YOURS. Unlike social media sites, your newsletter and email subscribers are all yours, and you have their undivided attention. You don’t have to worry about algorithms not displaying your content to readers, and this is because they are your email subscribers. You aren’t fighting with anyone else to have them see your content.
The money is in your email list. I believe that email newsletters are the best way to promote an affiliate product. Your email subscribers signed up to hear what YOU have to write about, so you clearly have their full attention. Your email list, over any other promotional strategy, will almost always lead to more income and sales.
Your email subscribers are loyal to you. If someone is allowing you to show up in their inbox whenever you want, then they probably trust what you have to say and enjoy listening to you. This is a great way to grow an audience and a loyal one at that.
Email is a great way to deliver other forms of content. With Convertkit, I am able to easily create free email courses that are automatically sent to my subscribers. Once a reader signs up, Convertkit sends out all the information they need in whatever time frame I choose to deliver the content.
Attract readers
As a new blogger, you’ll want to find ways to attract a readership to your blog and your article.
No, you don’t need millions and millions of page views to earn a good living from blogging. In fact, I know some bloggers who receive 1,000,000 page views yet make less money than those with 100,000 monthly page views.
Every website is different, but once you learn what your audience wants, you can start to really make money blogging, regardless of how many page views you receive.
Having a successful blog is all about having a loyal audience and helping them with your content.
Even with all of that being said, if you want to learn how to monetize a blog, learning how to improve your traffic is valuable. The more loyal and engaged followers you have, the more money you may be able to make through your blog.
There are many ways to grow your readership, such as:
Write high-quality articles. Your blog posts should always be high-quality and helpful, and it means readers will want to come back for more.
Find social media sites to be active on. There are many social media platforms you can be active on, such as Pinterest, Facebook, Twitter, Instagram, TikTok, Youtube, and others.
Regularly share new posts. For most blogs, you should publish content at least once a week. Readers may forget about you if you go for weeks or months at a time without a blog post.
Guest post. Guest posting is a great way to reach a new audience, as it can bring new readers to your blog who will potentially subscribe to it.
Make sure it’s easy to share your content. I love sharing posts on social media. However, it gets frustrating when some blogs make it more difficult than it needs to be. You should always make sure it’s easy for readers to share your content, which means your social media icons should be easy to find, all of the info input and ready for sharing (title, link, and your username tagged), and so on. Also, you should make sure that when someone clicks on one of your sharing icons the title isn’t in CAPS (I’ve seen this too many times!).
Write better titles. The title of your post can either bring readers to you or deter them from clicking over. A great free tool to write better headlines is CoSchedule’s Headline tool.
Apply SEO strategies. SEO (search engine optimization) is not something I can teach in this small section, but I go over it below in another section.
Have a clean and user-friendly blog design. If you want more page views, you should make it as easy as possible for readers to navigate your blog. It should be easy for readers to find your blog homepage, search bar, blog posts, and so on.
Now, I also want to talk about helpful resources, courses, and more that can help you to learn how to grow your page views on your blog.
Below are some of my favorite blogging resources to help you improve your traffic:
Grow through SEO
SEO (search engine optimization) is how you get organic search traffic to your blog.
When you search a phrase on Google, you’ll see a bunch of different websites as the results. This is the result of these websites applying SEO strategies to their blog.
This is a great way for readers to find your blog, and SEO is important to pay attention to as you learn how to monetize a blog!
Below are some of my favorite SEO resources:
Stupid Simple SEO: This is my favorite overall SEO course, and one of the most popular for bloggers. I highly recommend taking it. I have gone through the whole course, and I constantly refer back to it.
Easy On-Page SEO: This is an easy-to-follow approach to learning on-page SEO so your articles can rank on Google. I have read this ebook twice, and it is super helpful.
Easy Backlinks for SEO: This ebook will show you 31 different ways to build backlinks, which are needed for SEO.
How To Get 50,000 Pageviews per Month With Keyword Research: This ebook shares the steps for keyword research so that you can get SEO traffic to your website.
Common questions about how to monetize a blog
Below, I’m going to answer some questions I’ve received about how to start a blog such as:
How many views do you need to monetize a blog?
How do beginner bloggers make money?
Why do bloggers fail?
How many posts should I have before I launch my blog?
How many times a week should I post on my blog?
How many views do you need to monetize a blog?
The amount of page views needed to make money blogging varies, and there is no magic number that you should be aiming for.
This is because it depends on so many factors, such as how you will monetize your blog, your niche, the number of email subscribers you have, the quality of your website, and more.
You may see success with 10,000 page views a month, or you may see success with over 100,000 page views a month. It simply depends on the factors above.
How do beginner bloggers make money?
Beginner bloggers can make money in many different ways, such as display advertising, affiliate marketing, creating their own products, and sponsorships.
You can start any of these right from the very beginning.
Display advertising is usually the easiest way to begin monetizing a blog, but the payoff is not very high, especially in the beginning when your page views are not high.
How many posts should I have before I launch my blog?
I recommend just launching your blog as soon as you have one blog post and a design. Building a huge backlog of blog posts isn’t usually needed, and it can prevent you from ever getting started!
How many times a week should I post on my blog?
The more blog posts you have, then the more traffic you may get. That’s because it’s more opportunities to show up in Google searches or share your posts on social media.
I recommend publishing a new blog post at least once a week. Anything less isn’t advised.
Publishing blog posts consistently is smart because readers know to expect regular content from you.
Why do bloggers fail?
Bloggers fail for many different reasons. These reasons may include:
Giving up too soon. It takes time to make money blogging, and sadly, many people give up just a few months into starting a blog.
Not publishing consistently. I recommend publishing content at least once a week, as described in the previous section. Some new bloggers may go months without publishing, and this will take them much longer to make money blogging as they are simply not dedicating enough time to their blog.
Not spending enough time learning about blogging. Blogging is not as easy as you may think. There is a lot to learn in order to make it work. You may need to learn about how to grow your blog’s traffic, how to monetize a blog, how to write high-quality content, and more.
Not having your own domain and self-hosting. If you want to make money blogging, I highly recommend owning your domain name and being self-hosted. The longer you put this easy step off, the longer it will most likely take for you to make money blogging. You can learn more at How To Start a WordPress Blog.
And much more. Blogging is like any business – there are things to learn, things to improve on, and more.
How do I start a blog?
If you have any other questions related to starting a blog, I recommend checking out What Is A Blog, How Do Blogs Make Money, & More. In this article, I answer more questions related to blogging such as:
How do I come up with a blog name?
What blogs make the most money?
How do you design a blog?
How many views do you need to make money blogging?
How many blog posts should I have before launching?
Buying your first home can be tedious and overwhelming.
While it’s exciting to visit properties and daydream about your dream home, getting over the financing hurdles is another story. But don’t fret.
This comprehensive guide for first-time homebuyers will walk you through the entire process from start to finish.
Benefits of Being a First-Time Homebuyer
As a first-time homebuyer, you may feel a mix of excitement and apprehension. While the home buying process can seem overwhelming, it’s important to recognize the numerous benefits that come with this milestone.
Financial Assistance
First-time homebuyers have access to several financial assistance programs that can make homeownership more affordable. These include down payment assistance programs, low-interest mortgage loans, and grants specifically designed for first-time buyers. Some of these programs are offered by state and local governments, while others are provided by non-profit organizations or private lenders.
Lower Down Payments
Several loan programs offer lower down payment requirements for first-time homebuyers. The FHA loan, for example, requires as little as 3.5% down if your credit score is 580 or higher. The USDA and VA loans even offer zero down payment options in some cases.
Access to Educational Resources
There’s a lot to learn when you’re buying a home for the first time, but fortunately, there are plenty of resources available. Many organizations offer homebuyer education courses that can help you understand the process and make informed decisions. Some lenders and assistance programs require you to take one of these courses, but even if it’s not mandatory, it can still be a valuable resource.
Before Starting Your Home Search
Check Your Credit
Not only will your credit score play a considerable factor in whether you’re approved for a mortgage, but it will also determine your interest rate.
A small increase or decrease in interest rates may not seem like a big deal. However, mortgage loans are for a hefty sum and for an extended period of time. So, a slight increase or decrease equates to thousands of dollars more spent or saved over the life of the loan.
To have the best chance of being approved for a home loan, you should aim for a credit score of at least 620. It’s possible to get approved for select home loan programs with a score as low as 580, but you may have fewer lenders to choose from.
Run the Numbers
It’s tempting for first-time homebuyers to start searching for homes when they know their credit score is up to par. But that’s probably not a good move until you determine how much home you can afford. Yes, the loan officer will give you a figure when you obtain a preapproval, but that amount isn’t always indicative of what you can afford.
Why so? Well, they focus on the debt-to-income (DTI) ratio to get an idea of a loan amount you qualify for. According to the Consumer Financial Protection Bureau, lenders prefer a DTI ratio of 43% or lower with your new mortgage payment. To illustrate:
CURRENT MONTHLY DEBT
GROSS INCOME
DEBT-TO-INCOME RATIO
MAXIMUM MORTGAGE PAYMENT (USING 43% RECOMMENDATION)
$1,000
$4,000
25%
$720
$2,000
$6,000
33%
$580
$3,000
$10,000
30%
$1,300
Note: Debt-to-Income Ratio = Aggregate Amount of Monthly Debt / Gross Income
The problem is that it fails to consider any expenses unrelated to debt. And if you have hefty insurance, childcare, or even grocery bills, that could be a major concern.
So, your best bet is to look at your current budget and come up with a realistic figure for your new mortgage payment. But don’t forget to keep the recommended DTI ratio in mind.
Explore Mortgage Options
There are several mortgage options on the market for first-time homebuyers, but the most prevalent are:
Conventional Loans
A conventional mortgage is a type of home loan that is not insured or guaranteed by the government. It’s typically offered by a private lender, such as a bank or credit union, and is the most common type of mortgage used to purchase a home.
Conventional mortgages typically require a down payment of at least 3% of the purchase price of the home. Borrowers typically must have a credit score of 620 or higher and a DTI ratio of 36% or lower to qualify. If you have bad credit or are unable to make a large down payment may have a harder time qualifying for a conventional mortgage.
If the loan amount is over $726,200, it becomes a jumbo loan and requires a higher down payment.
FHA Loans
An FHA loan is a type of home loan insured by the Federal Housing Administration (FHA), a government agency within the U.S. Department of Housing and Urban Development (HUD).
FHA loans are designed to make it easier for people to buy homes, especially for first-time homebuyers. They offer lower down payment requirements and more flexible credit guidelines than conventional mortgages.
The minimum credit score required for an FHA loan is 500. If your credit score is between 500 -579, the down payment is 10%. However, if you have a credit score of 580 or above, the down payment is 3.5% of the purchase price.
VA Loans
VA Loans are insured by the Department of Veterans Affairs. They don’t require a down payment and are easier to qualify for than conventional loan products. However, you must be an active-duty member of the armed forces. Surviving spouses also qualify.
USDA Loans
A USDA loan is a type of mortgage offered by the U.S. Department of Agriculture (USDA) to low- and moderate-income borrowers who are looking to buy a home in a rural or suburban area.
See also: 14 First-Time Home Buyer Grants and Programs
Check Out Our Top Picks for 2024:
Best Mortgage Lenders
Most mortgages have a 30 or 15-year term. The latter will cost you more per month, but you’ll save a load of cash on interest.
You can also choose from a fixed or adjustable-rate mortgage (ARM). Fixed-rate mortgages have the same interest rate for the duration of the loan. But ARMs typically start with a lower interest rate for a set amount of time. In fact, they usually span from five to ten years and then adjust depending on the housing market.
Some first-time homebuyers choose ARMs over fixed-rate mortgages because it gives them the option to make a smaller monthly payment in the first few years. It could also mean that you can qualify for a more expensive home. But, be careful not to get too overextended, as erratic market behavior could cause the rate to skyrocket.
Get Preapproved
This is one of the more time-consuming parts of the entire mortgage process for a first-time home buyer. The good news is you don’t have to settle for the first offer that comes your way out of fear that your credit score will take a hit.
“FICO Scores ignore [mortgage] inquiries made in the 30 days prior to scoring,” according to myFICO. So, you won’t be penalized for multiple inquiries.
So, start by researching mortgage lenders that you may be interested in working with. You could also solicit the help of a mortgage broker if you’re strapped for time or want someone to do the legwork for you.
Once you’ve settled on a few lenders, be prepared to provide the following to get preapproved:
Financial statements to confirm your assets, including retirement accounts and real estate
Recent bank statements
Last two pay stubs
W-2s from the last two years
They will also pull your credit report and credit scores. If you qualify, the mortgage lender will then provide you with a preapproval letter, valid for a certain time period, that specifies how much you’re eligible for.
Save Up for a Down Payment and Closing Costs
During the preapproval process, the lender should have discussed loan options that could be a good fit for you. They should also have communicated how much you will need for a down payment and closing costs.
While some sellers may be willing to cover closing costs, be prepared to provide earnest money to secure your offer. And you may need a large down payment if you’re taking out a jumbo loan, or don’t qualify for the FHA or VA loan program. If that’s the case, now’s the time to figure out a plan for it.
If the seller is not paying closing costs, expect to pay between 2% and 5% of the sales price. And if a hefty down payment isn’t required, it’s not a bad idea to bring money to the table. Doing so allows you to reduce the Loan-to-Value, which positions you as less risky to the lender.
You may also be able to avoid private mortgage insurance (PMI), which is required until you reach 20% in equity, and possibly qualify for a reduced interest rate.
How to Find the Perfect Home
Go Home Shopping
All squared away with a preapproval and planned to save up the cash you need? Now, it’s time to go home shopping. But before you go, you have to decide if you want to enlist the assistance of a real estate agent.
It’s possible to find a slew of listings within your price range on the web with minimal effort. However, real estate agents have access to a system that could expand your reach. Even better, they could be integral in helping you choose a home that’s a good buy and negotiating the final purchase price.
And the seller’s agent pays their commission, so no need to worry about forking over extra cash. Just be sure to hire a real estate professional that is seasoned and reputable.
Now for the fun part: home shopping. Be careful not to judge a home solely by its appearance. Some other important factors to keep in mind:
Taxes: are the property taxes affordable or beyond what you can comfortably afford? (You can roll property taxes and homeowners insurance into an escrow account, but they can easily make or break your budget if the figures are steep).
Location: is the home in an area that has historically held its value? Is the location optimal for your commute to and from work?
Crime: is it a high crime area or is it relatively safe?
Condition: how old is the property? Does it need tons of repairs, or is it close to being move in ready?
Floor plan: is the floor plan feasible or ideal for your situation? Would it be appealing to other buyers if you had to sell?
School district: how are the schools? Have they received a good rating, or do they struggle to stay afloat?
All of these factors can have an effect on the value of the property over time.
Submit an Offer
You’ve found the perfect home, and you’re ready to sign on the dotted. Before you can finalize the paperwork and move in, there’s one more important step. And that’s making the offer. Even if the sales price seems fair, you may need to make an offer that’s higher or lower to snag the home.
Why so? Well, there could be a slight or drastic bidding war going on, and the only way for you to win is to beat out the competition. Or maybe your real estate agent did some research and determined the asking price was a bit high based on similar properties in the area or the home’s current condition.
Either way, you want to submit an offer that stands out and gets accepted. Your real estate agent will be able to do so on your behalf. But if you don’t have a real estate agent, check out these letters from Trulia to get you started.
The Mortgage Process
Even after your offer is accepted, there’s still more work to do. You’re not done just yet! It’s time to move on to the mortgage process.
Remember that preapproval letter? The lender will make sure all the information you initially provided is accurate through a process called underwriting.
Depending on how long it’s been since you were preapproved, you may be asked to provide updated bank statements or pay stubs.
The faster you submit the requested information, the quicker you’ll get a response. So, don’t drag your feet if you want a closing date that’s sooner than later.
Home Inspections and Appraisals
Before you close on the home, you will need to have a home inspection and appraisal complete.
The home inspection shouldn’t cost you more than $500. It will give you an overall assessment of the property and identify any potential issues.
The appraisal also plays an integral role as it will give you a solid idea of the home’s fair market value. The lender will mandate it, but it’s not a bad idea to get an independent appraisal done to serve as a second opinion.
An inspection and appraisal may help you decide if you should lower your offer or walk away from the property.
Purchase Homeowners Insurance
Your mortgage lender will require that you take out homeowners insurance. So, you want to start shopping around for quotes and select a policy prior to closing.
Close on Your Loan
At last! You’ve reached the finish line, and it’s time to close on your loan. During the closing, expect to:
Sign a load of paperwork.
Provide any amounts owed for the down payment.
Pay closing costs, which could include property tax obligations, premiums for homeowner’s insurance and association dues, title insurance, and any other costs associated with finalizing the loan.
Pay discount points or prepaid interest that can reduce the interest rate.
But before you show up at closing, it’s a good idea to speak with the lender, so you’ll know what to expect. You can also request a copy of the final closing document, or Closing Disclosure, to see a detailed breakdown of expenses.
A Few More Tips
Here are a few more suggestions for first time home buyers to help you get approved for your first loan:
Refrain from applying for new credit before you close. This could throw off your DTI ratio, lower your credit score, and ultimately prevent you from closing on the loan.
State and local programs may be available to assist with down payments. If you’re low on funds, be sure to explore options that may be available to you.
Several builders offer buyer incentives, like allowances for upgrades and closing costs. So if you haven’t considered new construction, it may not be such a bad idea to take a look if the price points are within your budget.
Should You Rent, Instead?
Perhaps you’ve done a little legwork, ran the numbers, and are on the fence about home buying. You will typically find that it’s cheaper to make monthly mortgage payments than to pay rent.
You can also take advantage of tax deductions and build up equity as you’re making monthly payments. The equity can be borrowed against for a loan or put some extra money in your pocket should you decide to sell before the repayment period ends.
However, renting a home gives you the flexibility to move to a new location if the home isn’t quite what you expected, don’t like the neighborhood, or want something more affordable.
Furthermore, renting allows you to pass the costs of maintaining the home on to the owner. But as a homeowner, you’ll be responsible for costs associated with maintenance and repairs.
Another reason why some choose to rent over buying is the upfront costs. Most landlords require a security deposit. However, it could be substantially lower than the money you may have to bring to the table for the down payment and closing costs.
Ultimately, you have to decide which is the better fit: investing in an asset that could build wealth or continuing to pay rent until you feel the time is right. There is no right or wrong answer; it just depends on your personal preference and financial situation.
Bottom Line
By taking the time to learn about the home buying process, you’ll be well-prepared and save yourself time and headaches. Best of all, you’ll increase your chances of landing your dream home with the most competitive mortgage product on the market.
Frequently Asked Questions
What is the process for buying a home?
The process for buying a home typically involves the following steps:
Determine your budget and get preapproved for a mortgage.
Find a real estate agent and start looking for homes.
Make an offer on a home and negotiate the terms.
Get a home inspection and address any issues that are found.
Get a mortgage and close on the home.
How much house can I afford?
When determining how much house you can afford, there are several factors to take into account. You should consider your income, expenses, down payment, credit score, and mortgage type before making a decision.
A larger down payment can help you get a lower mortgage rate, and a higher credit score can qualify you for better rates and loan terms. Shopping around for mortgage rates and considering different types of mortgages, such as fixed-rate or adjustable-rate, can also help you find the best deal.
Keep in mind that owning a home involves more than just the monthly payments. You will also need to factor in property taxes, insurance, and maintenance costs. You should create a budget that includes all of these costs and leaves room for unexpected expenses.
How much money do I need for a down payment?
The amount of money you need for a down payment will depend on the type of mortgage you get and the price of the home you are buying.
Some mortgage programs, such as FHA loans, allow for down payments as low as 3.5%, while others may require a higher down payment. It’s a good idea to speak with a mortgage lender to determine how much you will need.
Can I buy a house if I have a low credit score?
It’s possible to buy a house with a low credit score. However, it may be more difficult to get approved for a mortgage, and you may have to pay a higher interest rate. Before applying for a mortgage, work on improving your credit scores, as this will help you qualify for a better loan and save you money over time.
How much will closing costs be?
Closing costs are fees that are paid at the closing of a real estate transaction. These costs can vary widely and may include things like mortgage origination fees, title insurance, and appraisal fees. On average, closing costs can range from 2% to 5% of the purchase price of the home.
What is a mortgage preapproval?
A mortgage preapproval is a letter from a lender that indicates how much you are qualified to borrow for a mortgage. The preapproval letter is based on a review of your financial information, including your credit score, monthly income, and debts. A mortgage preapproval can help you understand how much you can afford to borrow and can make you a more competitive buyer in the real estate market.
What is a mortgage rate?
A mortgage rate is the interest rate that you will pay on your mortgage. The mortgage rate will determine the amount of your monthly payments and the overall cost of your loan. Interest rates can vary depending on the type of mortgage you get and your credit scores.
What is PMI?
PMI, or private mortgage insurance, is insurance that is required by lenders for certain types of mortgages when the borrower has less than a 20% down payment. PMI protects the lender in the event that the borrower defaults on the mortgage. The cost of PMI is typically added to the borrower’s monthly mortgage payment.
Rhode Island boasts a rich historical heritage, evident in its colonial-era architecture, maritime museums, and significant landmarks. Cities like Providence and Newport are treasure troves of history, with attractions such as the Providence Athenæum, one of the oldest libraries in the country, and the Newport Mansions, opulent Gilded Age residences open to the public.
2. Con: High cost of living
Rhode Island’s high cost of living can pose challenges for residents, particularly in areas such as housing and utilities, which often exceed national averages. The state’s limited land availability and high demand for coastal properties contribute to inflated real estate prices and rental rates, making housing affordability a concern for many. For instance, Providence, Rhode Island’s largest city has a median sale price of $470,00 and an average rental price for a one-bedroom apartment of $2,075.
3. Pro: Access to beautiful beaches
Rhode Island’s abundant coastline offers residents easy access to some of the most beautiful beaches on the East Coast, perfect for leisurely strolls, sunbathing, and water sports. From the sandy shores of Misquamicut Beach to the tranquil coves of Block Island, there’s a beach to suit every preference and activity.
4. Con: Limited public transportation
Rhode Island’s public transportation system is limited, with fewer options compared to larger metropolitan areas, making car ownership essential for many residents. While the Rhode Island Public Transit Authority (RIPTA) provides bus services across the state, routes may be infrequent or limited in coverage, especially in more rural areas. Cities like Central Falls has a transit score of 36, meaning that most errands require a car.
5. Pro: Vibrant arts and cultural scene
The state boasts a vibrant arts and cultural scene, with numerous galleries, theaters, and live music venues. Providence, in particular, is home to the renowned Rhode Island School of Design Museum and the Providence Performing Arts Center, enriching residents’ lives with diverse artistic expressions.
6. Con: Weather variability
Rhode Island’s weather variability presents a challenge to residents, as they must adapt to frequent fluctuations in temperature and conditions throughout the year. The unpredictability of coastal weather can disrupt outdoor plans and activities, from sudden rain showers to icy winter storms, impacting daily routines and travel.
7. Pro: Excellent seafood cuisine
Rhode Island is renowned for its excellent seafood cuisine, offering residents and visitors alike a delectable array of fresh catches from its coastal waters. From succulent lobster rolls served in quaint seaside shacks to flavorful clam chowder and crispy fried calamari, the state’s culinary scene celebrates its maritime heritage.
8. Con: Small state size
Rhode Island’s status as the smallest state in the U.S. can present challenges for residents, particularly in terms of limited land space and resources. The compact size of the state means that housing options may be more limited and densely packed, leading to higher property prices and potential congestion in urban areas. Additionally, the state’s small size may result in fewer job opportunities and amenities compared to larger states.
9. Pro: Strong sense of community
Rhode Island’s strong sense of community fosters close-knit neighborhoods and supportive networks among residents, creating a welcoming and inclusive atmosphere. Whether through annual events like WaterFire in Providence or local gatherings in historic towns like Bristol, residents come together to celebrate shared traditions.
10. Con: Traffic congestion
Rhode Island grapples with traffic congestion, especially during peak commuting hours on interstate 95 along with tourist seasons, which can lead to delays and frustration for residents. The limited road infrastructure, particularly in urban areas like Providence, exacerbates congestion, resulting in longer travel times and increased stress for commuters.
11. Pro: Proximity to major cities
Rhode Island’s close proximity to major cities like Boston and New York City offers residents convenient access to a wealth of cultural, educational, and employment opportunities. Within a short drive or train ride, residents can explore world-class museums, attend concerts and sporting events, or pursue career advancements in bustling metropolitan centers.
12. Con: High property tax
Rhode Island’s high property taxes can be a significant financial burden for homeowners, often ranking among the highest in the nation. With property tax rates averaging over 1.3% of a property’s assessed value, residents may find themselves grappling with hefty tax bills each year.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
Cybersecurity, TPO, Verification Tools; Tech Tracking Whereabouts; Why Rates Are Where They Are
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Cybersecurity, TPO, Verification Tools; Tech Tracking Whereabouts; Why Rates Are Where They Are
By: Rob Chrisman
Fri, Apr 19 2024, 11:33 AM
It is “Take Your Child to Work Day” next Thursday which, if you work from home, is probably like a day off from school for the tyke. (I won’t be bringing my son Robbie to work, who, as I write this, is pedaling from Chicago to New York and bunked down last night in Union Home’s Bill Cosgrove’s humble abode.) I do not track his exact whereabouts, but we all know that, in having a smart phone, one gives up pretty much all of their privacy. For example, a new working paper posted to the National Bureau of Economic Research sought to examine the polling data that indicates 22 percent of Americans reported attending religious services on a weekly basis. They did this by looking at geodata from smartphones of 2 million people in 2019, and found that while 73 percent of people did indeed step into a place of worship on a primary day of worship at least once over the course of the year, just 5 percent of Americans studied in fact did so weekly, significantly smaller than the data people reported to pollsters. (Found here, this week’s podcasts are sponsored by Optimal Blue. OB’s smart solutions automate critical functions like pricing, hedging, trading, and social media. More originators and investors rely upon Optimal Blue’s integrated solutions, data, and connections to support their unique business strategies, no matter how complex. Hear an interview between Robbie and me on a variety of topics in mortgage that are germane to the Daily Commentary.)
Lender and Broker Products, Software, and Services
Operations leaders! You don’t want to miss this event if you care about improving your operations! Join Femi Ayi, EVP Operations at Revolution Mortgage, Brooke Smith, Senior Manager, Loan Sourcing Digital Solutions at Fannie Mae, and Jodi Eberhardt, Strategic Integration Director at Freddie Mac, and Richard Grieser, VP, Marketing at Truv, as they highlight different strategies to provide customers with a more transparent, efficient borrowing experience. Freddie Mac’s Loan Product Advisor® asset and income modeler (AIM) and Fannie Mae’s Desktop Underwriter® (DU®) validation service play a critical role for lenders committed to streamlining origination processes and improving loan quality. However, the key to optimizing borrower verification workflows and ensuring compliance is partnering with the right provider that helps lenders improve loan quality and save hundreds of dollars per loan compared to traditional verification providers. Come join us! “Minimizing Risks with GSE Borrower Verifications”, April 24 2:00 PM ET Use code TRUV100 to participate FOR FREE, even if you are not an MBA member! Register now.
“AFR Wholesale® is thrilled to announce the renewal of our partnership with AIME for 2024, underscoring our commitment to the wholesale channel. As we continue our collaboration, we are committed to providing essential resources, comprehensive training, and robust support to independent mortgage professionals and the wholesale channel. This partnership will allow AFR to set new industry standards, promote best practices, and deliver exceptional services to our clients and partners. We also will look to spearhead innovative initiatives aimed at boosting operational efficiencies and enhancing customer experiences. Reflecting on a history of successful collaborations, we are excited about the potential for even greater achievements. This announcement is just the beginning, as AFR plans to unveil several exciting partnerships and updates in the coming weeks. Join us in driving change in mortgage lending. To get involved, contact us at [email protected], 1-800-375-6071, visit AFR.”
In the wake of frequent breaches within our industry, we are reminded of the precarious position mortgage lenders and their customers’ data are currently in. These repeated security incidents emphasize an undeniable truth: robust cybersecurity defenses are not merely an option; they are imperative. A breach can mean the difference between a thriving business and a devastating collapse. There is a very real risk to mortgage companies right now; you’re not just guarding data, you’re safeguarding trust, livelihoods, and the very integrity of the financial system. It’s a responsibility to take seriously, and it’s time to double down on cybersecurity. Richey May’s cybersecurity team is here to help: Check out the latest post detailing the often-overlooked risks in the industry.
Capital Markets
One can’t ignore the U.S. Federal Reserve’s role in interest rates. (The current STRATMOR blog is titled, “Relying on the Fed: How Did This Happen?”) The “experts” have been predicting multiple rate cuts in 2024. Sure enough, the much-awaited Fed pivot has materialized, but it’s not what investors had been expecting. The Fed change was supposed to signal a reverse of its contractionary monetary policy path, keeping rates high, which has been in place since March 2022.
But that is not the message, especially after three consecutive months of stronger-than-expected inflation readings. Fed Chair Jay Powell said, “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence. Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation. The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2 percent inflation goal.”
As always, the Federal Reserve is watching the data as it comes out. But things will be higher for longer. At least the next rate move is still forecast to be a cut. Things could get rocky for lenders and borrowers if that shifts to a hike, which could happen if price pressures resurface and put a so-called soft landing into doubt. And now we have the yield on the benchmark 10-year U.S. Treasury note up at its highest level since November, above 4.6 percent versus a yield of 4.25 percent in the last week or two and starting the year at 3.88 percent, meaning that the 10-year is now nearing a full point rise for 2024!
As today’s podcast interview alluded, it’s been pretty quiet out there in terms of market-moving news. Weekly jobless claims showed no change from last week’s level and there was a better-than-expected Philadelphia Fed survey for April yesterday, which prompted some selling. Investors bought plenty of Treasuries to close 2023 and open 2024, betting on several rate cuts this year from the Fed. However, Fed speakers hammering home patient rhetoric on interest rates (several more Fed speakers reiterated yesterday that they do not feel urgency to cut rates at this time) due to a reluctance of the U.S. economy to cool, has forced investors to abandon bets on a rally, giving way to a wave of selling.
Accordingly, mortgage rates surged in the latest Primary Mortgage Market Survey from Freddie Mac, with the 30-year rate above 7 percent for the first time this year. For the week ending April 18, the 30-year and 15-year mortgage rates jumped 22 basis points and 23 basis points versus the prior week to 7.10 percent and 6.39 percent, respectively. Those rates are 71 basis points and 63 basis points higher than this time last year.
Inflation is back below 3 percent, but hotter-than-expected readings for the rental category of housing in the first few months of the year are a big reason the Fed has held back on the rate cuts that Wall Street has been hoping for. Markets seeing the biggest rent declines are the ones where there’s been the most construction. The Northeast and Midwest have experienced lingering high inflation, while the West and South have seen it moderate rapidly.
Existing-home sales fell 4.3 percent in March to a seasonally adjusted annual rate of 4.19 million, a widely expected decline given the recent slip in purchase mortgage applications and solid gains registered in the first two months of 2024 from increased supply and a temporary dip in mortgage rates. Sales were down 3.7 percent from the previous year. The median existing-home sales price rose 4.8 percent from a year ago to $393,500, the ninth consecutive month of year-over-year price gains and the highest price ever for the month of March. The inventory of unsold existing homes grew 4.7 percent from one month ago to the equivalent of 3.2 months’ supply at the current monthly sales pace.
There is no data of note on today’s economic calendar, though there is one Fed speaker, Chicago President Goolsbee. For capital markets folks, today is Class D 48-hours. We begin the day with Agency MBS prices better by .125-.250, the 10-year yielding 4.59 after closing yesterday at 4.65 percent, and the 2-year is at 4.96.
Employment
“At Evergreen Home Loans, our mission is simple: equip our clients with affordable strategies to not only buy a home but to make a winning offer. Our unique approach helps families secure their futures and build generational wealth. As we navigate a fluctuating housing market, Evergreen Home Loans remains committed to innovation and client success. Our tailored solutions emphasize stability and long-term prosperity, ensuring that homeownership is a reality for first-time buyers and seasoned investors alike. By fostering a supportive environment and providing strategic financial guidance, we empower our clients to turn their dreams of homeownership into tangible assets that benefit generations. We’re expanding our team and invite skilled loan officers and branch managers to explore the career opportunities we offer. Join us in making a difference and shaping the future of homeownership. To view all openings visit: Careers.”
Synergy One Lending continues to reemerge as one of the industry success stories in 2024. The addition of 12 new branches and the successful expansion of the company’s footprint into several new markets has provided an even stronger foundation of profitable growth as it prepares for even more ahead. A vision with a P&L structure built to grow market share, relentless execution and adoption of leading-edge technology and a culture that is focused on their 3 core values (delighted customers, inspired employees and a pristine reputation) are leading indicators of the company’s trajectory. Be part of it and Make Your Mark by reaching out to Aaron Nemec at (208) 794-7786 or Eric Kulbe at (303) 717-0293.
Geneva Financial, operating in 48 states, announced that Jessie Ermel has joined its leadership team as Chief Compliance Officer where Jessie will drive quality control and compliance for the company’s mortgage operations.
Our industry lost another veteran recently with the death of Alabama’s John Johnson. John was CEO and co-founder of MortgageAmerica, Inc. from 1978 to 2012. But John’s mortgage career began in 1966 at Colonial Mortgage Company and then Molton-Allen & Williams. He served as the Mortgage Bankers Association of Alabama President in 1980-1981 and chaired the organization’s Convention in 1982. John was awarded the Certified Mortgage Banker designation in 1982. was a member of the Board of Directors of the Mortgage Bankers Association of America from 1999-2003, served as Chairman of the Residential Board of Governors in 2001-2002, and was Chairman of the Board of Directors for MERS in 2006. Guys like this helped make our industry what it is today, and he’ll be missed.
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Indianapolis, IN, is a quintessential Midwestern city, home to the Indy 500, the Indianapolis Colts, and historic landmarks like the Soldiers & Sailors Monument. With nearly 800K residents, there’s plenty to do on any given day – from enjoying the beautiful outdoors, seeing a concert, exploring a museum, or checking out Indy’s food scene.
If you’re looking to rent an apartment in Indianapolis, the average rent for a studio is $$1,163, while a one-bedroom is $$1,224. At ApartmentGuide, we’ve collected a list of the most affordable neighborhoods in Indianapolis. You’re sure to find the right place to call home – and fit in your budget.
12 Affordable Neighborhoods in Indianapolis, IN
From the charming Martindale – Brightwood to the cozy Crown Hill, Indianapolis has a variety of neighborhoods with average rents for studio apartments ranging under the city’s average. These Indianapolis neighborhoods have something for all renters.
1. Martindale – Brightwood 2. Crown Hill 3. Irvington 4. Eagledale 5. Arlington Woods 6. South Broad Ripple 7. East Gate 8. East Side 9. Far East Side 10. North High School 11. Valley Mills 12. Crooked Creek
Read on to see what each neighborhood has to offer its residents.
1. Martindale – Brightwood
Average studio rent: $1,115 Average 1-bedroom rent: $675 Apartments for rent in Martindale – Brightwood
Martindale – Brightwood is the most affordable neighborhood in Indianapolis, as the average rent for a one-bedroom unit is $675. There are plenty of reasons to love living in Martindale – Brightwood, from attractions like the Douglass Park Pool to green spaces like Washington Park. This neighborhood is also a historic area, so make sure to explore all the historic homes and architecture.
2. Crown Hill
Average studio rent: $625 Average 1-bedroom rent: $699 Apartments for rent in Crown Hill
Crown Hill is a relaxing area that’s just north of downtown Indianapolis. This affordable neighborhood has lots of attractions such as the Crown Hill Cemetery, The Children’s Museum of Indianapolis, and the Newfields museum. Crown Hill is also close to I-65, so it’s easy to commute into Downtown Indianapolis.
3. Irvington
Average studio rent: $675 Average 1-bedroom rent: $739 Apartments for rent in Irvington
Irvington is the third-most affordable neighborhood in Indianapolis. This neighborhood is an awesome option as it’s near attractions like the Irving Theater and the Benton House. You can find local restaurants and shops along Washington Street, like Jockamo Upper Crust Pizza and Los Cuates Mexican Restaurant. The area also has plenty of historic homes, often in Victorian or Edwardian styles, so it’s excellent for exploring and enjoying Indianapolis. Or, if you’re looking for a relaxing afternoon, you can find Ellenberger Park in the area.
4. Eagledale
Average studio rent: $853 Average 1-bedroom rent: $799 Apartments for rent in Eagledale
Eagledale is the fourth-most affordable neighborhood in Indianapolis. This neighborhood is a great option if you’re looking for access to plenty of shops and restaurants. For example, you can easily access the Eagledale Plaza Shopping Center. There are also a lot of parks in Eagledale, like Moreland Park and Centennial & Groff Park. It’s also next to the Indianapolis Motor Speedway, making it an awesome choice if you want to be close to this famed car racing track.
5. Arlington Woods
Average studio rent: $769 Average 1-bedroom rent: $849 Apartments for rent in Arlington Woods
Arlington Woods is a stellar neighborhood if you want to live a little further outside Downtown. You’ll likely need a car in this neighborhood, so it’s important to consider that if you’re renting. There are also parks nearby, like Pogues Run Art and Nature Park and Roselawn Park.
6. South Broad Ripple
Average studio rent: $799 Average 1-bedroom rent: $894 Apartments for rent in South Broad Ripple
Next up is South Broad Ripple, the sixth-most affordable neighborhood in Indianapolis. South Broad Ripple is full of history and charm with tree-lined streets, historic buildings, and museums, like the Indianapolis Opera and the Indiana State Fairgrounds . This area also has plenty of parks, restaurants, and attractions, so you’ll have lots to explore. Make sure to enjoy the outdoors at Broad Ripple Park or grab a meal at one of the neighborhood restaurants. There’s something for everyone living in South Broad Ripple.
7. East Gate
Average studio rent: $750 Average 1-bedroom rent: $906 Apartments for rent in East Gate
East of downtown, East Gate is the seventh-most affordable neighborhood in Indianapolis. East Gate has a friendly atmosphere and community feel, with plenty of local cafes and restaurants along East 10th Street and Shadeland Avenue, such as Kasai Sushi Bar & Kitchen and Four Seasons Diner.
8. East Side
Average studio rent: $769 Average 1-bedroom rent: $924 Apartments for rent in East Side
East Side takes the eighth spot on our list of most affordable neighborhoods in Indianapolis. Not to be confused with the Eastside area, East Side is located just south of Fort Harrison State Park. The average rent for a one-bedroom unit is roughly $924, making East Side a great option. East Side has plenty of outdoor spaces, like Fort Harrison State Park, which has plenty of fishing and hiking areas. You can also grab a meal at one of the restaurants along Pendelton Pike.
9. Far East Side
Average studio rent: $825 Average 1-bedroom rent: $972 Apartments for rent in Far East Side
A well-known Indianapolis neighborhood, Far East Side is the next area. Far East Side is home to Grassy Creek Regional Park and the Far East Side Neighborhood Center, meaning there’s plenty to do throughout the week. You’ll find several shopping centers in the area, making errands a breeze. If you need to commute to work, there are many options, as the I-465 is nearby.
10. North High School
Average studio rent: $900 Average 1-bedroom rent: $998 Apartments for rent in North High School
The tenth most affordable neighborhood in Indianapolis is North High School, also called Northwest High School. This area has a vibrant feeling with its popular restaurants and quirky shops. You can find parks like Eagle Creek Park and Northwestway Park, perfect for enjoying a sunny day in Indianapolis.
11. Valley Mills
Average studio rent: $929 Average 1-bedroom rent: $999 Apartments for rent in Valley Mills
Number 11 on our list is Valley Mills. This affordable neighborhood is located southwest of downtown Indianapolis and is an awesome area if you’re looking for a neighborhood close to nature. Valley Mills is also close to parks like Southwestway Park and Carson Park. You can find plenty of cozy cafes and lively restaurants along Kentucky Avenue.
12. Crooked Creek
Average studio rent: $824 Average 1-bedroom rent: $1,034 Apartments for rent in Crooked Creek
Taking the 12th spot on our list of affordable neighborhoods in Indianapolis is Crooked Creek. The average rent for a one-bedroom apartment is $1,034, compared to the city’s average of $1,224. This neighborhood is about 10 miles from downtown, which means it’s closer to some other popular neighborhoods, such as Broad Ripple and Meridian-Kessler. Be sure to explore some of the neighborhood’s attractions, like Juan Solomon Park or Broadmoor Country Club.
Methodology: Affordability based on whether a neighborhood has average studio and 1-bedroom rent prices under the city’s average. Average rental data from Rent.com in March 2024.
It’s the season of new beginnings and fresh starts: Spring cleaning, the outdoors, weddings, gardening and… real estate.
But in a housing market marked by high mortgage rates, low housing inventory and steep home prices, we still haven’t seen a typical spring homebuying season.
Though mortgage application volume is higher than it was last fall when home loan rates peaked above 8%, it’s still 10% lower than it was last year.
As temperatures go up in 2024, experts anticipate a somewhat healthier spring market, with inventory and home listings growing. So far, however, it hasn’t been such a great kickoff: In April, the average rate for a 30-year fixed mortgage pushed back above 7% in response to hot inflation data.
But context is critical, according to Logan Mohtashami, lead analyst at HousingWire. “Last year was the all-time low in new listings data,” he said.
Here’s a look at how the spring market is shaping up and what buyers can do to navigate it successfully.
Why is spring the season to buy and sell a home?
There are several reasons behind the rush of home listings and sales in the springtime and early summer months, according to Jeb Smith, realtor and CNET Money Expert Review Board member.
Warmer weather: Better temperatures and more sunlight make it easier for buyers to go out, tour and inspect properties compared with the winter months.
Timing with academic calendar: Families start the buying process so they can be settled into a new home before the start of their child’s school year in the fall.
Greater inventory: With sellers motivated to sell due to an influx of motivated buyers, increased supply hits the market.
Favorable to buyers and sellers: Buyers know there will be more choices available to them, and sellers take advantage of demand to list their homes at higher prices.
Why is today’s spring market different?
Beyond seasonal trends, the housing market is highly sensitive to broader economic shifts. Over the past two years, high inflation and surging mortgage rates have done significant damage to affordability for the average homebuyer.
From May 2019 to May 2023, average mortgage rates increased by more than 2%, causing a roughly 25% drop in home sales, according to data from Redfin. Homeowners who are currently “locked in” with low home loan rates have less incentive to sell, which keeps prospective buyers “locked out.”
Meanwhile, many prospective buyers are priced out of the market. According to Zillow, the monthly mortgage payment on a typical US home has almost doubled since January 2020. The average income needed to afford a home is now more than $106,500 — an 80% increase over four years — while the typical US household earns around $81,000 each year.
High mortgage rates also negatively impact existing housing inventory, said Daryl Fairweather, chief economist at Redfin. Because most sellers are also buyers, homeowners would rather hold onto their sub-5% mortgage rates than take out a new home loan at a 7% rate.
This “rate-lock” scenario — with sellers reluctant to give up their existing mortgage — is starting to loosen, according to Orphe Divounguy, senior economist at Zillow Home Loans. Homeowners have accrued substantial equity over the last period and are more motivated to cash in on it. “Any who were waiting for rates to fall have likely given up,” Divounguy said.
Who has the upper hand this season? Buyers or sellers?
Shrinking housing supply over the past several years has given sellers the upper hand. After all, you can’t buy what’s not for sale.
“In most areas of the country, we still have more buyer demand than inventory, which is typically indicative of a seller’s market,” Smith said. Because of that imbalance, many housing markets continue to be very competitive with multiple offers on homes, he said.
Yet in some areas where supply has returned to pre-pandemic levels, buyers have more of the upper hand. Divounguy said that in markets where new construction has taken off and existing inventory has recovered, price growth is slower, giving buyers better traction in negotiations.
Generally speaking, however, housing supply is still too low. “Even with home sales still trending at record-low levels, we have too many people chasing too few homes,” Mohtashami said.
In a buyer’s market, there’s a surplus of homes for sale and not enough buyers. Buyers have more options and leverage to negotiate lower prices or other concessions from sellers.
In a seller’s market, demand for homes exceeds supply. With more buyers ready to make offers on fewer homes, sellers are at an advantage and asking prices are generally higher.
If mortgage rates were to drop significantly, we’d likely see a substantial uptick in buyer and seller activity. However, 6% mortgage rates are still several months away, keeping a lid on the number of new listings this spring.
At the same time, homeseekers who need to relocate — or those getting tired of waiting on the sidelines — are starting to adjust to the new normal. Many families can’t put their lives on hold forever, and another era of sub-3% mortgage rates isn’t on the horizon.
“Buyers seem to now be accepting this higher-rate environment and are getting back into the market,” said Melissa Cohn, regional vice president at William Raveis Mortgage. Many of them know they have the option to refinance to a lower rate when mortgage rates eventually come down, she said.
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How does low inventory affect home prices?
In February, new listings increased 14.8% from the prior year, the largest annual gain since May 2021, according to Redfin. Currently, there are about 25% more available homes for sale compared with 2023, adding up to around 100,000 extra single-family homes on the market, Smith said. But again, context is critical.
“Even with this increase, the number of homes for sale is still much lower than what we saw before the pandemic hit, indicating we’re not yet back to a ‘normal’ market,” Smith said.
With buyer demand outweighing existing supply, home prices continue to go up. In February, the median sale price was $412,778, which is 6.6% higher than the previous year.
Should you sit it out this homebuying season?
Ultimately, the right time to buy a house depends on your finances, goals and timeline. The housing market has its patterns and fluctuations, but that doesn’t mean it has to dictate what works for you.
If you find a home that meets your needs and aligns with your budget, go for it. You can always refinance to a lower mortgage rate later.
But if you decide to delay buying a house, you can take steps toward having a more solid foundation as a future homeowner. By waiting, you’re giving yourself time to save for a bigger down payment, improve your credit and be in an overall better position to purchase a house, even if it’s not for several spring seasons down the road.
Along the scenic shores of the Chesapeake Bay, Maryland offers a captivating blend of vibrant urban centers and picturesque landscapes. From the bustling streets of Baltimore, with its historic charm and lively cultural scene, to the quaint waterfront town of Annapolis, steeped in colonial heritage and nautical tradition, this state has a lot to offer its residents. However, living in Maryland comes with its challenges. In this ApartmentGuide article, we’ll dive into the pros and cons of living in Maryland giving you a clear picture of what to expect.
Renting in Maryland snapshot
1. Pro: Rich historical sites
Maryland has a wealth of rich historical sites that offer residents a fascinating glimpse into the past. From the colonial-era streets of Annapolis to the Civil War battlefields of Antietam, history buffs can immerse themselves in the state’s diverse heritage. These landmarks along with historical sites provide insight into Maryland’s significant role in shaping American history.
2. Con: High cost of living
Maryland’s high cost of living, especially in cities like Bethesda and Columbia, poses a challenge for many residents. Housing costs, including rent and property prices, are notably steep, making it difficult to afford adequate accommodation. In fact, the median sale price in Bethesda is $1,123,750 where rent for a one-bedroom apartment is $2,522. Additionally, expenses for everyday necessities such as groceries, healthcare, and transportation tend to be higher compared to national averages, impacting residents’ overall quality of life and financial well-being.
3. Pro: Access to quality education
Maryland offers residents access to quality education through its esteemed institutions and strong public school system. Universities like Johns Hopkins and the University of Maryland rank among the nation’s top academic institutions, providing students with world-class education and research opportunities.
4. Con: Traffic congestion
Maryland’s major urban centers, particularly the Baltimore-Washington metropolitan area, grapple with significant traffic congestion. Daily commutes are often plagued by long delays and gridlock on highways and major thoroughfares.
5. Pro: Outdoor recreation
From the sandy beaches of Ocean City to the rolling hills of the Appalachian Mountains in Western Maryland, the state’s varied terrain caters to outdoor enthusiasts of all kinds. Residents can explore scenic hiking trails in places like Patapsco Valley State Park, kayak along the tranquil waters of the Chesapeake Bay, or enjoy birdwatching in the marshes of Blackwater National Wildlife Refuge on the Eastern Shore.
6. Con: Weather variability
Maryland’s weather is characterized by variability, with residents experiencing a range of climatic conditions throughout the year. Winters can be cold and snowy, while summers are hot and humid, with occasional heatwaves. Additionally, the state is prone to severe weather events such as thunderstorms, hurricanes, and nor’easters, which can disrupt daily life and pose risks to property and safety.
7. Pro: Delicious seafood
Maryland’s proximity to the Chesapeake Bay and the Atlantic Ocean ensures a bounty of delicious seafood for residents to enjoy. The state is renowned for its blue crabs, prized for their sweet and succulent meat, which are a staple of Maryland cuisine. Residents can indulge in iconic dishes like crab cakes, steamed crabs, and Maryland crab soup at local seafood restaurants and crab shacks throughout the state.
8. Con: High pollen levels
Maryland’s diverse environment and seasonal changes contribute to high pollen levels, triggering allergies for many residents. Springtime brings pollen from trees like oak, maple, and birch, while summer and fall see increased pollen from grasses and weeds.
9. Pro: Proximity to major cities
Maryland’s strategic location along the East Coast provides residents with easy access to major cities like Washington D.C. and Philadelphia. Commuters can take advantage of commuter rail services like MARC and Amtrak to travel to urban centers for work or leisure. This proximity to major cities also offers cultural amenities, entertainment options, and job opportunities for Maryland residents.
10. Con: High humidity
Maryland’s humid subtropical climate brings high humidity levels, especially during the summer months, creating uncomfortable conditions for residents. Coastal areas like Annapolis and Ocean City experience muggy air and oppressive humidity, making outdoor activities challenging. The combination of heat and humidity can lead to discomfort, dehydration, and heat-related illnesses.
11. Pro: Sports culture
12. Con: Property taxes
Maryland’s high property taxes are largely influenced by the state’s higher housing costs, especially in affluent areas like Bethesda and Potomac. The demand for housing in these regions drives up property values, resulting in higher assessed values and subsequently higher property tax bills for homeowners. These additional costs should be considered when jumping from renting to homeownership.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
The main types of mortgages are conventional loans, government-backed loans, jumbo loans, fixed-rate loans and adjustable-rate loans.
There are other types of mortgages for various purposes, such as building or renovating a home or investing in property.
The right mortgage for you depends on the strength of your credit score and finances along with your goals.
Most of us need a mortgage to buy a home, but this type of loan isn’t one-size-fits-all. To help you find the right home loan for your needs, here’s our guide to the five main types of mortgages.
Types of home loans
There are five main kinds of mortgages, each with their own benefits and features.
Conventional loan: Best for borrowers with good credit scores
Jumbo loan: Best for borrowers with good credit looking to buy a more expensive home
Government-backed loan: Best for borrowers with lower credit scores and minimal cash for a down payment
Fixed-rate mortgage: Best for borrowers who’d prefer a predictable, set monthly payment for the duration of the loan
Adjustable-rate mortgage: Best for borrowers who aren’t planning to stay in the home for an extended period, prefer lower payments in the short term or are comfortable with possibly having to pay more in the future
1. Conventional loan
Conventional loans, the most popular type of mortgage, come in two flavors: conforming and non-conforming.
Conforming loans: A conforming loan “conforms” to a set of Federal Housing Finance Agency (FHFA) standards, including guidelines around credit, debt and loan size. When a conventional loan meets these standards, it’s eligible to be purchased by Fannie Mae and Freddie Mac, the two government-sponsored enterprises (GSEs) that back much of the mortgage market.
Non-conforming loans: These loans do not meet one or more of the FHFA’s standards. One of the most common types of non-conforming loan is a jumbo loan, a mortgage in an amount that exceeds the conforming loan limit. Non-conforming loans can’t be purchased by the GSEs, so they’re considered a riskier prospect for lenders.
Pros of conventional loans
Available from the majority of lenders
Can be used to finance primary residences, second or vacation homes and investment or rental properties
Can put down as little as 3% for a conforming, fixed-rate loan
Cons of conventional loans
Need a credit score of at least 620 to qualify
Lower debt-to-income (DTI) ratio threshold compared to other types of mortgages
Need to pay private mortgage insurance (PMI) premiums if putting less than 20% down
Who are conventional loans best for?
If you have a strong credit score and can afford to make a sizable down payment, a conventional mortgage is the best pick. The 30-year, fixed-rate option is the most popular choice for homebuyers. Compare conventional loan rates.
2. Jumbo loan
Jumbo mortgages are home loans in an amount that surpasses FHFA’s conforming loan limits. In 2024, that means any loan over $766,550, or $1,149,825 in higher-cost areas. Because these are bigger loans ineligible to be purchased by the GSEs, they can present more risk.
Pros of jumbo loans
Can finance a more expensive home
Competitive interest rates, nowadays on par with those on conforming loans
Often the only option in areas with high home values
Cons of jumbo loans
Not available with every lender
Higher credit score requirement, often a minimum of 700
Higher down payment requirement, often 10% to 20%
Who are jumbo loans best for?
If you’re looking to finance a home with a purchase price exceeding the latest conforming loan limits, a jumbo loan is the best route. Compare jumbo loan rates.
3. Government-backed loan
The U.S. government isn’t a mortgage lender, but it does play a role in making homeownership accessible to more Americans by backing three main types of mortgages:
FHA loans: Insured by the Federal Housing Administration (FHA), FHA loans can be had with a credit score as low as 580 and a 3.5 percent down payment, or a score as low as 500 with 10 percent down. FHA loans also require you to pay mortgage insurance premiums, adding to your costs. These premiums help the FHA insure lenders against borrowers who default. In addition, you can’t borrow as much money with an FHA loan; its ceiling is much lower than those on conventional conforming loans.
VA loans: Guaranteed by the U.S. Department of Veterans Affairs (VA), VA loans are for eligible members of the U.S. military (active duty, veterans, National Guard and Reservists) as well as surviving spouses. There’s no minimum down payment, mortgage insurance or credit score requirement, but you’ll need to pay a funding fee ranging from 1.25 percent to 3.3 percent at closing.
USDA loans: Guaranteed by the U.S. Department of Agriculture (USDA) loans help moderate- to low-income borrowers buy homes in rural, USDA-eligible areas. These loans don’t have a credit score or down payment requirement, but do charge guarantee fees.
Pros of government-backed loans
Much more flexible credit and down payment guidelines
Help borrowers who wouldn’t otherwise qualify
Cons of government-backed loans
Additional cost for FHA mortgage insurance, VA funding fee and USDA guarantee fees
Limited to borrowers buying a home priced within FHA loan limits or in a rural area, or servicemembers
Who are government-backed loans best for?
If your credit or down payment prevents you from qualifying for a conventional loan, an FHA loan can be an attractive alternative. Likewise, if you’re buying a home in a rural area or are eligible for a VA loan, these options might be easier to qualify for. Compare FHA loan rates and VA loan rates.
4. Fixed-rate mortgage
Fixed-rate mortgages maintain the same interest rate over the life of your loan, which means your monthly mortgage payment (the loan principal and interest) always stays the same. Fixed loans typically come in terms of 15 years or 30 years, although some lenders offer flexible term lengths.
Pros of fixed-rate mortgages
Fixed monthly mortgage payment
Easier to budget for
Cons of fixed-rate mortgages
Interest rates usually higher than introductory rates on adjustable-rate loans
Need to refinance to get a lower rate
Who are fixed-rate mortgages best for?
If you’re planning to stay in your home for some time and looking for the stability of a monthly payment that doesn’t change (notwithstanding homeowners insurance premium and property tax increases), a fixed-rate mortgage is right for you. Compare current mortgage rates.
5. Adjustable-rate mortgage (ARM)
In contrast to fixed-rate loans, adjustable-rate mortgages (ARMs) come with interest rates that change over time. Typically with an ARM, you’ll get a lower, fixed introductory rate for a set period. After this period, the rate changes, either up or down, at predetermined intervals for the remainder of the loan term. A 5/6 ARM, for example, has a fixed rate for the first five years; the rate then increases or decreases based on economic conditions every six months until you pay it off. When your rate goes up, your monthly mortgage payment does as well, and vice versa.
Pros of ARMs
Lower introductory rates
Could pay less over time if prevailing interest rates fall
Cons of ARMs
Ongoing risk of higher monthly payments
Tougher to plan your budget as rate changes
Who are adjustable-rate mortgages best for?
If you don’t plan to stay in your home beyond a few years, an ARM could help you save on interest payments. However, it’s important to be comfortable with a certain level of risk that your payments might increase if you’re still in the home. Compare ARM loan rates.
Other types of home loans
In addition to these common kinds of mortgages, there are other types you might encounter when shopping around for a loan:
Construction loans
If you want to build a home, a construction loan can be a good financing choice — especially a construction-to-permanent loan, which converts to a traditional mortgage once you move into the residence. These short-term loans are best for those who can make a higher down payment.
Interest-only mortgages
With an interest-only mortgage, the borrower makes interest-only payments for a set period – usually five or seven years — followed by payments for both principal and interest. You won’t build equity as quickly with this loan since you’re initially only paying back interest. These loans are best for those who know they can sell or refinance, or reasonably expect to afford the higher monthly payment later.
Piggyback loans
A piggyback loan, also referred to as an 80/10/10 loan, involves two loans: one for 80 percent of the home price and another for 10 percent. You’ll make a down payment for the remaining 10 percent. These loan products are designed to help the borrower avoid paying for mortgage insurance, but also require two sets of closing costs. You’ll also accrue interest on two loans, making this unconventional arrangement best for those who’ll actually save money using it.
Balloon mortgages
A balloon mortgage requires a large payment at the end of the loan term. Generally, you’ll make payments based on a 30-year term, but only for a short time, such as seven years. When the loan term ends, you’ll make a large payment on the outstanding balance, which can be unmanageable if you’re not prepared. These loans are best for those who have the stable financial resources needed to make a large balloon payment once the loan term ends.
Portfolio loans
While most lenders sell the loans they make to investors (more on that here), some choose to keep them in their portfolio, or “on the books.” Because the lender holds onto these loans, they don’t have to adhere to FHFA or other standards. As such, they might have more lenient qualifying requirements.
Renovation mortgages
If you want to purchase a home that needs major work, you could use a renovation loan. These loans combine the costs of purchasing and renovation into one mortgage.
Physician loans
Because doctors often have large amounts of medical school debt, qualifying for a traditional mortgage can be hard, even with a good-paying job. Enter physician loans, which help doctors, nurses and other health professionals buy a home.
Non-qualifying loans
Non-qualifying mortgages or non-QM loans don’t meet certain standards set by the Consumer Financial Protection Bureau, so they offer more lenient credit and income requirements. This might appeal to a borrower with unique circumstances, such as an inconsistent income. Some non-QM loans, however, come with higher down payments and interest rates.
How to choose the right type of mortgage loan for you
Depending on your credit and finances, more than one type of mortgage could make sense for you. Likewise, you might be able to strike some loan types off your list immediately. You can’t get a VA loan, for example, if you or your spouse haven’t served in the military.
As you think about which type of mortgage to get, consider:
Your credit score – Which loan types do you qualify for from a credit standpoint?
Your anticipated down payment – Do you need a low- or no-down payment loan? What about down payment assistance? Will you be using gift funds from family or friends?
Your debt and income – After debt payments, is your monthly income sufficient to cover a mortgage?
Your appetite for risk – Do you need a stable monthly payment? Do you expect to earn more money in the future?
Your future plans – Do you plan to move in the short term? Do you want to pay off your mortgage sooner than 30 years?
Once you’ve weighed these questions, compare mortgage lenders and talk to a loan officer. They can help you pinpoint the best fit. Here’s more on how to get a mortgage.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
A hard credit inquiry occurs when lenders look at your credit score after you apply for new credit. This process can temporarily reduce your score by a small amount. Inquiries can stay on your credit report for up to two years, but they typically only impact your score for the first six to 12 months.
If you’re wondering “what is a hard inquiry on my credit?” here’s a quick breakdown: a hard inquiry, also known as a “hard pull,” occurs when a potential lender reviews your credit report after you apply for new credit.
There are two types of credit inquiries: hard inquiries and soft inquiries. Hard inquiries stay on your credit report for up to two years and temporarily hurt your score, while soft inquiries have no impact.
Below, we’ll explore the nuances of hard credit inquiries and explain how credit repair services can help you improve your credit after it takes a hit.
Key takeaways:
Hard credit inquiries will cause your score to briefly dip.
Inquiries will stay on your credit report for 2 years, though they only affect your score for about 12 months.
FICO® will usually lump multiple inquiries of the same type together if they occur within a window of 14 to 45 days.
Table of contents:
What is a hard credit inquiry?
A hard credit inquiry is a formal request by another party to review your credit report. These requests usually come from potential lenders who want to vet your credit history before agreeing to offer you a loan. The process of looking into your credit report generates a hard inquiry.
Creditors do this to check that your credit profile meets their requirements and to look for negative items on your report, like late payments or charge-offs. The more negative items that appear on your credit report, the less likely you are to get approved for new loans or credit cards.
Hard inquiries typically occur when applying for:
Credit cards
Auto loans
Student loans
Personal loans
Mortgages
Apartment rentals
New phone or utility applications
What is a soft credit inquiry?
A soft credit inquiry is a check into your credit report that will not affect your credit score. While hard inquiries are thorough reviews of your credit history, soft inquiries are partial reviews that aren’t as extensive. For example, soft pull credit cards are typically sent in the mail by lenders who’ve already reviewed your report and preapproved you.
Soft inquiries typically occur when:
You access your credit report
You are preapproved for a credit card without request
A potential employer performs a background check
You apply for certain utilities and services
How much does a hard inquiry affect your credit score?
Typically, a single hard inquiry will not majorly impact your credit score. For example, one hard inquiry will usually decrease your credit score by a small amount, such as five to 10 points or less. When thinking about what affects your credit score, keep this in mind: new credit makes up 10 percent of your FICO credit score.
A hard credit inquiry impacts your credit score based on your credit history. FICO will usually lump multiple inquiries of the same type together if they occur within two weeks to 45 days, depending on the exact model being used. But be careful about applying for different kinds of credit in a short time span.
Hard inquiries may have a greater effect on your credit score if:
You have few or no credit accounts
You have a short credit history
You authorize many different inquiries within a short time
When do hard inquiries fall off your credit report?
A hard inquiry will stay on your credit report for two years, though it only usually impacts your credit score for about 12 months. Inquiries within the past six months affect your credit the most.
If your credit history is substantial, a few hard inquiries on your credit report will not likely have a significant impact over the two years they are on your account.
How to remove a hard inquiry from your credit report
Credit bureaus cannot remove accurate, authorized inquiries. However, you can dispute inaccurate information and unauthorized inquiries with the credit bureaus. Federal law will support credit disputes against inaccurate or suspicious information on your credit report.
Here is how you can initiate this process:
Frequently review your credit reports and challenge inaccurate or unfair items. In some cases, unauthorized hard inquiries could signal that you’ve experienced identity theft.
Write letters to credit bureaus. This is one of the first steps in the credit inquiry removal process. List all relevant information about the hard inquiry, including the date it occurred.
Wait for credit bureaus to investigate your dispute. Hard inquiries will be removed from your report if the credit bureau determines that an error has been made, which could help improve your credit.
You can contact the Consumer Financial Protection Bureau for issues concerning your credit reports, including the dispute of a hard inquiry.
Can you avoid hard credit inquiries?
It is difficult to avoid hard credit inquiries if you apply for a loan or credit card. However, hard inquiries generally don’t significantly impact your credit, so don’t let them worry you too much.
If you want to improve your credit after it has been affected by a hard inquiry, consider focusing on the other factors that play a role in determining your credit health. These factors include your payment history, your credit usage, the length of your credit history and your credit mix.
It may be easier to improve your credit by paying your bills on time, monitoring your credit card balances and clearing any collection accounts that may appear on your credit report rather than trying to avoid credit inquiries.
Work to recover from hard inquiries with Lexington Law Firm
Our credit scores can fluctuate vastly over time, but recovering from a hit is possible. Consider using our services to help you challenge inaccurate, unfair or invalid items with Experian®, Equifax® and TransUnion®. We can also help you learn more about responsible credit management to maintain your credit health moving forward.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Brittany Sifontes
Attorney
Prior to joining Lexington, Brittany practiced a mix of criminal law and family law.
Brittany began her legal career at the Maricopa County Public Defender’s Office, and then moved into private practice. Brittany represented clients with charges ranging from drug sales, to sexual related offenses, to homicides. Brittany appeared in several hundred criminal court hearings, including felony and misdemeanor trials, evidentiary hearings, and pretrial hearings. In addition to criminal cases, Brittany also represented persons and families in a variety of family court matters including dissolution of marriage, legal separation, child support, paternity, parenting time, legal decision-making (formerly “custody”), spousal maintenance, modifications and enforcement of existing orders, relocation, and orders of protection. As a result, Brittany has extensive courtroom experience. Brittany attended the University of Colorado at Boulder for her undergraduate degree and attended Arizona Summit Law School for her law degree. At Arizona Summit Law school, Brittany graduated Summa Cum Laude and ranked 11th in her graduating class.
The average barber’s salary is $52,123 a year, according to the latest data from ZipRecruiter. But barber salaries can range from about $17,500 to more than $86,000.
How much money you can make as a barber may depend on several factors, including education, certifications, experience, and where you’re located. Here’s a look at what barbers do and how they get paid.
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What Are Barbers?
A barber’s main job is to cut and style hair, usually for male clients. Barbers also may trim or shave facial hair, fit hairpieces, and provide hair-coloring services.
To become a barber, you must obtain a license in the state where you plan to work. Licensing qualifications can vary, but you’ll likely have to meet a minimum age requirement, have a high school diploma or equivalent, and have graduated from a state-licensed barber program. You may also have to pass a state licensing exam.
A barbershop often doubles as a social hub where men can go to swap stories and catch up on the latest news while they enjoy a little personal care. If mingling with clients all day isn’t your thing, you may want to check out jobs with less human interaction. 💡 Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.
How Much Do Starting Barbers Make?
An entry-level salary for a barber can range from $8.41 to $41.35 or more an hour, according to ZipRecruiter. Brand-new barbers tend to earn the highest hourly wages in New Jersey, Wyoming, and Wisconsin.
Recommended: What Trade Jobs Make the Most Money?
What Salary Can a Barber Expect to Make?
Barber jobs in the U.S. can pay anywhere from $17,500 to $86,000 or more, according to ZipRecruiter data. How much you can expect to make may depend on several factors, including how many hours you work and how many clients you serve; if you live in a region with more competitive pay; and if you work on commission, rent a chair at a shop, or own your own barbershop.
Here’s a look at the average barber’s income by state.
State
Average Salary for a Barber
Alabama
$49,572
Alaska
$53,033
Arizona
$50,968
Arkansas
$40,073
California
$46,632
Colorado
$50,860
Connecticut
$47,890
Delaware
$48,177
Florida
$40,869
Georgia
$46,181
Hawaii
$51,460
Idaho
$44,515
Illinois
$46,962
Indiana
$52,044
Iowa
$47,980
Kansas
$44,493
Kentucky
$42,214
Louisiana
$44,134
Maine
$45,672
Maryland
$46,693
Massachusetts
$53,224
Michigan
$42,137
Minnesota
$50,551
Mississippi
$47,266
Missouri
$45,239
Montana
$50,200
Nebraska
$45,804
Nevada
$50,144
New Hampshire
$54,449
New Jersey
$53,861
New Mexico
$50,829
New York
$60,841
North Carolina
$43,866
North Dakota
$52,473
Ohio
$49,290
Oklahoma
$44,358
Oregon
$52,559
Pennsylvania
$55,714
Rhode Island
$48,681
South Carolina
$44,791
South Dakota
$49,593
Tennessee
$47,059
Texas
$44,130
Utah
$46,849
Vermont
$60,007
Virginia
$47,628
Washington
$53,744
West Virginia
$43,029
Wisconsin
$52,882
Wyoming
$53,101
Source: ZipRecruiter
Recommended: Highest Paying Jobs by State
Barber Job Considerations for Pay and Benefits
A barber’s compensation is traditionally set up in one of two ways:
• Renting a chair or booth: Barbers who rent a chair at a barbershop pay the owner or franchise a fee for the space where they work, but they keep the rest of what they earn. This can give barbers more control over their work schedule and the services they choose to offer.
• Earning a commission: Barbers who work on commission are paid a percentage of what they earn (typically between 40% to 70%). Or they could receive a predetermined hourly wage or salary plus a bonus commission. New barbers may choose to work a few years on commission to gain knowledge of how the business works and build a clientele, and then switch to renting a chair.
In addition, barbers can earn tips, usually about 15% to 20% of the price of a haircut or other service provided. Online tools like a money tracker app can help you keep track of your spending and saving from month to month.
Pros and Cons of a Barber’s Salary
As with any job, there are pros and cons to working as a barber, including:
Pros
• Attending a barber school can take less time (usually a year or less) and is far less expensive than getting a college degree. Tuition is about $14,000 on average (not including books and supplies), but costs can range from about $4,000 to $25,000, depending on the program. Financial assistance may be available through federal or private student loans, grants, and scholarships.
• Job prospects for barbers are good. According to the U.S. Bureau of Labor Statistics, employment for barbers is projected to grow by 7% over the next decade, which is faster than the average for all occupations.
• Popular barbers often can work the hours they choose while serving clients who appreciate their creativity — and reward them with their loyalty and generous tips. If you like the idea of becoming an entrepreneur, you may even decide to start your own business someday.
Cons
• It can take time to build a reputation and a reliable list of repeat customers. In the meantime, you may experience some income instability, and tips may vary from one client to the next. This could make budgeting and spending difficult at times.
• As a barber, you may not receive the same employee benefits that other careers generally offer, including health insurance, a 401(k) or similar retirement plan, paid sick leave, or vacation pay. You might have to work nights, weekends, or a fluctuating schedule that makes it hard to plan your social life. And you may have to pay for your own work tools.
• You might also want to consider how long your career as a barber might last. Though it can be a fulfilling job, the work can be hard on your neck, back, hands, and feet. 💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.
The Takeaway
Your income potential as a barber will likely depend on where you work and the loyalty of your clientele. If you’re a creative and skilled stylist who likes keeping up with the latest trends, and you have good social skills, being a barber could be a great career choice. It also can help to have some business skills, as you may face unique challenges when it comes to managing your income, tracking your cash flow, planning for retirement, and paying taxes.
FAQ
Can you make $100,000 a year as a barber?
Once you establish yourself and build a solid clientele, you may be able to earn six figures as a barber. Your success, though, will likely depend on how in demand you are, how willing you are to travel or work long hours, the clientele you cater to, and if you own your own shop.
Do people like being a barber?
Though barbering can be hard work, barbers on Payscale.com gave their job an average of 4.2 stars out of 5. If cutting hair and providing other personal care services is your passion — and you’d enjoy building a bond with your clients — you could find a career as a barber is right for you.
Is it hard to get hired as a barber?
According to the U.S. Bureau of Labor Statistics, the job outlook for barbers should be solid for at least the next decade. If you get the proper training, become a licensed barber, and can demonstrate that you have the skills and demeanor for the job, it shouldn’t be too hard to find work.
Photo credit: iStock/dusanpetkovic
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