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American spending habits fluctuate by generation. In 2023, Gen Z spent most of their money on food and clothes while baby boomers prioritized healthcare.
American spending habits fluctuate based on factors like the economy, average cost of living and global events. Interestingly, spending trends don’t always move in predictable patterns—NPR reported elevated spending in 2023 despite rising inflation costs.
Here, we’ll review American spending habits to paint a clearer picture of our potential expenses in the near future. We’ll also share personal finance resources that can help you refine your budget and reach your savings goals.
Table of contents:
Overview of American spending habits
According to the Bureau of Labor Statistics (BLS), Americans spent an average of $72,967 in 2022. This number suggests a 9 percent increase in American spending habits from 2021 (wherein the average annual expenditure was $66,400) to 2022. How much we spend makes a lot more sense when we break down what exactly our money is going toward.
What do Americans spend the most money on?
Expenditure
Cost
Housing
$24,298
Transportation
$12,295
Food
$9,343
Personal Insurance and Pensions
$8,742
Healthcare
$5,850
Entertainment
$3,458
All Other Expenditures
$2,080
Cash Contributions
$2,755
Apparel and Services
$1,945
Education
$1,335
Personal Care Products and Services
$866
Source: Bureau of Labor Statistics
In 2022, the BLS noted a 7.5 percent increase in income to coincide with a 9 percent increase in expenditures. Among the different categories, spending on food increased by 12.7 percent from 2021 to 2022. Vehicle purchases and entertainment expenses dropped by 6.9 percent and 3.1 percent, respectively.
These numbers fluctuate depending on the circumstances of a particular household. For example, the BLS found that 39.4 percent of a one-person household’s expenses go toward housing costs, while 32.1 percent of a two-person household’s funds are spent on housing.
To better understand American spending habits, we can examine the average expenditures of various groups based on factors such as age and education.
Teen spending habits
According to the United States Census Bureau, more than 43 million teenagers live in America. Gaining a better understanding of teen spending habits is important, as teens spend about $63 billion each year.
More than 50 percent of young adults (16 to 24) were employed in 2023. Some of the top brands that teens spend their new income on include Chick-fil-A, Netflix and Snapchat. In 2024, the BLS anticipates that more teenagers will prioritize school attendance over traditional means of employment—which could affect where and how often they’re spending money.
College student spending habits
College student spending habits fluctuate as changes to the American education system become more widespread. Four years in college is no longer the norm—many students take anywhere between an extra semester to a few extra years to graduate. This extra time incurs additional costs (like tuition and rent) that impact spending habits.
In addition to money spent on tuition, college students are purchasing new tech, tickets to festivals and events and lots of food. Older students with more life experience also have to balance school expenses with other mandatory purchases like groceries for the household.
Gen Z spending habits
Generation Z includes anyone born between 1997 and 2012. Gen Z spending habits reportedly differ even more than their older millennial counterparts. This generation grew up completely immersed in the digital era and is very likely to shop online.
A 2021 study by Elmira Djafarova and Tamar Bowes found that 41 percent of Gen Zers are impulse buyers. Quality and value are of the utmost importance to this generation. They may be quick to switch brands if they believe they’re getting better overall value from a different company.
Millennial spending habits
Millennials are generally defined as the generation born between 1981 and 1996. This group is known for making financial decisions that are strikingly different from those that came before them.
Millennial spending habits include increased online shopping, a preference for experiences over material things and an openness to generic brands if the choice saves money.
Baby boomer spending habits
Baby boomers are those born between 1946 and 1964. This group is filled with people who are close to or already in their retirement years. In contrast to their parents, who were born in the Great Depression, boomers expect to have a fun retirement.
They’re looking forward to experiencing new places and trying new things. However, many baby boomers are facing retirement issues due to a lack of savings and mounting debt. Despite it all, baby boomer spending habits indicate that this generation holds more than 50 percent of the wealth in the United States.
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Alexis Peacock
Supervising Attorney
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona.
In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
The Citizenry’s flagship store in New York City. [Photo: The Citizenry]
The Citizenry, a Dallas-based direct-to-consumer home decor brand that partners with artisans around the world, has been acquired by Havenly, a Denver-based interior design service and home furnishings company.
The acquisition will allow the socially motivated home decor company to continue to scale the availability of its sustainable artisanal furniture and goods, further multiplying its impact, Citizenry said. Terms of the deal were not disclosed.
“We set out to prove retail can be a force for good. Not only does the Havenly team appreciate our values, they have fallen in love with our unique design aesthetic, product line, and most importantly, our commitment to fair trade,” Rachel Bentley, co-founder of The Citizenry, said in a statement. “They’re the right partner to lead our next chapter of growth. We worked with almost 3,000 artisans last year, and with this step—that just feels like the beginning.”
Havenly said it anticipates retaining much of The Citizenry team, including Bentley, who will serve as president of The Citizenry, and Co-Founder Carly Nance, who will transition to serve as an executive brand advisor.
The Citizenry co-founders Rachel Bentley (left) and Carly Nance [Photo: The Citizenry]
Focused on fair trade—and poised for growth
The Citizenry joins Havenly as part of its ongoing efforts to build a collection of home brands and technologies that appeal to the next generation of shoppers, the companies said.
The deal will allow Havenly to expand its fair-trade initiations with The Citizenry and across other areas of the business.
The Citizenry co-founder Rachel Bentley visits with an artisan in Morocco, from our 2016 profile of the company. [Photo: The Citizenry]
Since its founding in 2014, The Citizenry has expanded its offerings to cover the whole home, while supporting the work of thousands of artisans around the globe at pay rates that average twice the fair trade requirement.
From its beginnings, The Citizenry said it set out to build a design-forward company that celebrates the people behind its products and sets new standards in social responsibility for the industry. The Citizenry adopts a fair trade business model, and its following has grown the company into the largest U.S. home decor company to have 100% of its products sourced according to the rigorous standards set by the World Fair Trade Organization.
In 2021, The Citizen raised $20 million in Series B Funding from San Francisco-based NextWorld Evergreen, a growth equity firm with a focus on conscious consumer brands. And just last September, The Citizenry launched a new brand campaign, “Uncontained,” to highlight a deep lineup of new brands hitting shelves at nearly 100 Container Store locations nationwide.
Rolling out its collections across Havenly’s platforms
The Citizenry said that with the acquisition, it will roll out its iconic collections to audiences across the Havenly platforms, expand its retail footprint, and scale its global network of artisans and heritage manufacturers to new levels.
“We’ve always said that our business marries old-world values with new-world market strategies,” Carly Nance, co-founder of The Citizenry, said in a statement. “We’ve grown to where we are today by being customer-centric and digitally-driven. This partnership provides even more strategic firepower in those arenas. The Havenly team is passionate about the same things we are—building potent, meaningful brands designed to stand the test of time.”
Mercado storage baskets from The Citizenry. [Photo: The Citizenry]
Havenly’s third acquisition in 36 months
This is Havenly’s third acquisition in 36 months, with past acquisitions including Interior Define and The Inside. Havenly said the deal cements it as the largest digital-first, DTC platform in the home decor market with a strong strategy for sustainable growth.
“As a personal customer of The Citizenry, I’m thrilled to bring the brand into the Havenly family,” Lee Mayer, co-founder and CEO of Havenly, said in a statement. “Rachel and Carly’s unrivaled commitment to sustainability, social impact, and support of artisans combined with premium quality and exquisite design is truly something revolutionary in the space, and a big reason why The Citizenry has long been a favorite among our customers. We’re excited to build on the work they’ve done to promote more sustainable values and help usher in the next era of great home brands for the modern consumers.”
Organic Turkish cotton duvet from The Citizenry. [Photo: The Citizenry]
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North Texas has plenty to see, hear, and watch. Here are our editors’ picks. Plus, you’ll find more selections to “save the date.”
Peruse Dallas Innovates’ special once-a-year magazines. Each edition is a keeper.
Dallas Innovates, the Dallas Regional Chamber, and Dallas AI are teaming up to launch the new AI 75 program at Capital Factory’s Future of AI Salon today. The first-ever list will recognize Dallas-Fort Worth innovators in artificial intelligence. Nominations are open through March 20.
You’ll find deadlines coming up for a new accelerator program; and many more opportunities.
Usually they race for the end zone, but Wednesday some of the Dallas Cowboys’ top players swung for the fences at the Reliant Home Run Derby in Frisco. And whether they got dingers or popups, it was all for a good cause. Find out which Cowboy won for the second straight year—as two all-new ‘Pokes players joined in the fun.
The Powerball jackpot rolled over yet again on Wednesday night and now stands at an estimated $1.23 billion, with its next drawing Saturday, April 6.
Meanwhile, a ticket bought in New Jersey was the sole winner of a $1.13 billion Mega Millions jackpot on March 26. It was the eighth-largest jackpot of all time.
Powerball: $1.23 billion estimated jackpot, next drawing Saturday, April 6.
Mega Millions: $67 million estimated jackpot, next drawing Friday, April 5.
How do I play the lottery?
Powerball and Mega Millions tickets are sold for $2 apiece in 45 U.S. states, as well as Washington, D.C., and the U.S. Virgin Islands.
To play Mega Millions, pick five numbers between 1 and 70, and a sixth number between 1 and 25. If you don’t want to pick the numbers yourself, you can get a set of numbers generated for you.
To play Powerball, pick five numbers between 1 and 69 and a Powerball number from 1 to 26 (or have them randomly generated).
If you plan to take part in an office lottery pool, consider taking these precautions.
How much is the Mega Millions jackpot?
The current jackpot is estimated at $67 million.
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Winners can opt to take their winnings in the form of an annuity or as a single lump sum, known as the cash option. The cash option for the current jackpot is estimated at $31 million.
By taking the annuity option, the winner would get the full jackpot advertised by Mega Millions, but it would be spread out in payments over 30 years.
No matter how lucky you are, you won’t get around paying taxes on a lottery jackpot. After mandatory federal income tax withholding, you’d have about $19.5 million if you took the cash option. How much more you’d pay come tax time can depend on where you bought the ticket — and where you live, if that’s another state. To prepare, make sure you know the ins and outs of how the lottery works.
When is the next Mega Millions drawing?
The winning numbers will be drawn Friday, April 5 at 11 p.m. Eastern Time.
If there’s still no jackpot winner, the grand prize will continue to grow.
The odds of winning the jackpot are roughly 1 in 303 million.
How much is the next Powerball jackpot?
The current jackpot is estimated at $1.23 billion.
Like Mega Millions, winners of Powerball can choose between an annuity that pays out over 30 years or a single lump sum. The cash option for the current jackpot is $595.1 million. After mandatory federal taxes, the holder of a single winning ticket would keep about $374.9 million, minus any state taxes.
When is the next Powerball drawing?
The winning numbers will be drawn Saturday, April 6 at 11 p.m. Eastern Time.
If there’s still no jackpot winner, the grand prize will continue to grow.
The odds of winning the jackpot are roughly 1 in 292 million.
The jackpot isn’t the only way to win. Both games have prizes for ticket holders whose chosen numbers match the drawing in a variety of combinations.
10 largest lottery jackpots
$2.04 billion (Powerball, Nov. 8, 2022 — one winning ticket).
$1.765 billion (Powerball, Oct. 11, 2023 — one winning ticket).
$1.586 billion (Powerball, Jan. 13, 2016 — three winning tickets).
$1.58 billion (Mega Millions, Aug. 8, 2023 — one winning ticket).
The Department of Housing and Urban Development announced an upcoming sale of vacant loans secured by home equity conversion mortgages.
HVLS 2024-2 will be up for bid on May 7 and comprises approximately 1,265 notes with loan balances of close to $346 million. The sale consists of due and payable residential loans secured by first-lien HECMs, where borrowers and non-borrowing spouses are now deceased, the announcement from HUD’s office of asset sales said.
Nonprofits, government agencies and for-profit businesses, are all eligible to bid in the sale. HUD will also consider offers from joint ventures and other partnerships between various enterprises.
HUD vacant loan sales, which were first introduced in 2016, emerged as a means to help increase supply through the disposition of assets. As much as 50% of an offering is sometimes prioritized for nonprofit and government organizations in hopes of providing housing, including homeownership opportunities for residents making under 120% of area median income. Unlike prior HVLS auctions, no mention was made of designated allotment for specific buyer segments in the latest announcement.
Through the first half of 2023, nonprofits have purchased 28% of all HVLS loans for sale since the program’s launch, HUD said in a report late last year. Settled loan count totaled 10,280.
An approximate 52% share of loans sold through HVLS come from 10 states. Florida headed the list with 13%, with Texas in second place at 7%. California, Illinois and New York all followed at 5% each.
The latest sale comes as home affordability and inventory issues rise in the public consciousness, after President Biden made the country’s housing situation a key talking point in his recent State of the Union address. The creation of more units has been a focus in the Biden Administration’s housing action plan, first announced a year ago. At the end of 2020, Freddie Mac estimated the U.S. was short 3.8 million units to adequately meet demand.
HECMs, a Federal Housing Administration-backed product offered to homeowners 62 or older, allows older borrowers to tap into home equity as they age, and are assigned to HUD from prior servicers when balances reach 98% of maximum claim amounts. Rather than foreclose on homes when borrowers are deceased, the agency puts loans up for sale to avoid disposition costs and help the housing industry generate supply.
Finance of America currently comes in as the country’ top HECM originator with almost one-third of overall volume, according to data from Reverse Market Insight. Mutual of Omaha Mortgage comes in second with about 22% of originations.
A home equity loan is a lump sum of money you can borrow at a fixed rate based on the equity, or ownership stake, in your home. If you already paid off 15% to 20% of your house, this one-time installment loan can be used to cover major expenses, from home renovations to paying off debt.
Home equity loans have fixed interest rates, so your monthly payments are predictable and easy to budget for. But because your home acts as collateral for the loan, you could risk foreclosure if you fall behind on repayments.
I’ve spoken with experts about the advantages and disadvantages of home equity loans, how they work and where to find the best rates. Here’s what I’ve uncovered.
This week’s home equity loan rates
Here are the average rates for home equity loans and home equity lines of credit as of March 27, 2024.
Loan type
This week’s rate
Last week’s rate
Difference
10-year, $30,000 home equity loan
8.73%
8.73%
None
15-year, $30,000 home equity loan
8.70%
8.70%
None
$30,000 HELOC
9.01%
8.99%
+0.02
Note: These rates come from a survey conducted by CNET sister site Bankrate. The averages are determined from a survey of the top 10 banks in the top 10 US markets.
Current home equity loan rates and trends
Though home equity loan rates will vary depending on the lender and loan type, their rates are generally lower than personal loans or credit card annual percentage rates.
Home equity loan rates aren’t directly set by the Federal Reserve, but adjustments to the federal funds rate impact the borrowing cost for financial products like home equity loans and home equity lines of credit, aka HELOCs.
Since March 2022, the Fed has hiked its benchmark rate a total of 11 times in an attempt to slow the economy and bring inflation down, driving home equity loan rates up alongside. Though the Fed has kept interest rates steady since last summer, home equity loan rates have remained elevated for borrowers. Home equity rates are likely to stay high until the central bank begins cutting interest rates, projected for later this year.
With home equity loans, you tap into your equity without giving up the rate on your primary mortgage, making them a popular alternative to cash-out refinances. If you use a home equity loan to install solar panels or renovate your kitchen, you get the added benefit of increasing your home’s value.
“Most homeowners with mortgages in 2024 are choosing home equity loans or HELOCs, instead of a cash-out refinance, to avoid losing their attractive interest rates,” said Vikram Gupta, head of home equity at PNC Bank.
Best home equity loan rates of March 2024
Lender
APR
Loan amount
Loan terms
Max LTV ratio
U.S. Bank
From 8.40%
Not specified
Up to 30 years
Not specified
TD Bank
7.99% (0.25% autopay discount included)
From $10,000
5 to 30 years
Not specified
Connexus Credit Union
From 7.20%
From $5,000
5 to 15 years
90%
KeyBank
From 10.29% (0.25% autopay discount included)
From $25,000
1 to 30 years
80% for standard home equity loans, 90% for high-value home equity loans
Spring EQ
Fill out application for personalized rates
Up to $500,000
Not specified
90%
Third Federal Savings & Loan
From 7.29%
$10,000 to $200,000
Up to 30 years
80%
Frost Bank
From 7.3% (0.25% autopay discount included)
$2,000 to $500,000
15 to 20 years
90%
Regions Bank
From 6.75% to 14.125% (0.25% autopay discount included)
$10,000 to $250,000
7, 10, 15, 20 or 30 years
89%
Discover
6.99% for 1st liens, 7.99% for 2nd liens
$35,000 to $300,000
10, 15, 20 or 30 years
90%
BMO Harris
From 8.84% (0.5% autopay discount not included)
From $25,000
5 to 20 years
Not specified
Note: The above annual percentage rates are current as of March 1, 2024. Your APR will depend on such factors as your credit score, income, loan term and whether you enroll in autopay or other lender specific requirements.
Best home equity loan lenders of March 2024
U.S. Bank
Good for nationwide availability
U.S. Bank is the fifth largest banking institution in the US. It offers both home equity loans and HELOCs in 47 states. You can apply for a home equity loan or HELOC through an online application, by phone or in person. If you want a loan estimate for a home equity loan without completing a full application, you can get one by speaking with a banker over the phone.
APR: From 8.40%
Max LTV ratio: Not specified
Max debt-to-income ratio: Not specified
Min credit score: 660
Loan amount: $15,000 to $750,000 (up to $1 million for California properties)
Term lengths: Up to 30 years
Fees: None
Additional requirements: Subject to credit approval
Perks: You can receive a 0.5% rate discount by enrolling in automatic payments from a U.S. Bank checking or savings account.
TD Bank
Good for price transparency
Primarily operating on the East Coast, TD Bank offers home equity loans and HELOCs in 15 states. You can apply for a TD Bank home equity loan or HELOC online, by phone or by visiting a TD Bank in person. The online application includes a calculator that will tell you the maximum amount you can borrow based on the information you input. You can also see a full breakdown of rates, fees and monthly payments. No credit check is required for this service.
APR: From 7.99% (0.25% autopay discount included)
Max LTV ratio: Not specified
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: From $10,000
Term lengths: Five to 30 years
Fees: $99 origination fee at closing. Closing costs only application to loan amounts greater than $500,000.
Additional requirements: Loan amounts less than $25,000 are available only for primary residence property use.
Perks: You will receive a 0.25% discount if you enroll in autopay from a TD personal checking or savings account.
Connexus Credit Union
Good branch network
Connexus Credit Union operates in all 50 states, but it offers home equity loans and HELOCs in 46 states (excluding Alaska, Hawaii, Maryland and Texas). The credit union has more than 6,000 local branches. To apply for a home equity loan or HELOC with Connexus, you can fill out a three-step application online or in person. You won’t be able to see a personalized rate or product terms without a credit check.
APR: From 7.20%
Max LTV ratio: 90%
Max-debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: From $5,000
Term lengths: Five to 15 years
Fees: No annual fee. Closing costs can range from $175 to $2,000, depending on your loan terms and property location. It has returned loan payments fees of $15, convenience fees of $9.95 (for paying by debit or credit card online) and $14.95 (for paying by phone) and a forced place insurance processing fee of $12.
Additional requirements: Because Connexus is a credit union, its products and services are only available to members. Member eligibility is open to most people: you (or a family member) just need to be a member of one of Connexus’s partner groups, reside in one of the communities or counties on Connexus’s list or become a member of the Connexus Association with a $5 donation to Connexus’s partner nonprofit.
Perks: Flexible membership options
KeyBank
Good online application user experience
Based in Cleveland, KeyBank offers home equity loans to customers in 15 states and HELOCs to customers in 44 states. Aside from a standard home equity loan, KeyBank offers a few different HELOC options. The KeyBank application allows you to apply for multiple products at one time. If you’re not sure whether KeyBank loans are available in your area, the application will tell you once you input your ZIP code. If you’re an existing KeyBank customer, you can skim through the application and import your personal information from your account.
APR: From 10.29% (0.25% client discount included)
Max LTV ratio: 80% for standard home equity loans, 90% for high-value home equity loans
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: From $25,000
Term lengths: One to 30 years
Fees: Origination fee of $295. Closing costs aren’t specified.
Additional requirements: Borrowers must be at least 18 years of age and reside in one of the states KeyBank operates in.
Perks: KeyBank offers a 0.25% rate discount for clients who have eligible checking and savings accounts with them.
Spring EQ
Good option for high debt-to-income ratio limits
Spring EQ was founded in 2016 and serves customers in 38 states. Spring EQ offers home equity loans and HELOCs. Spring EQ doesn’t display rates for its home lending products online — you must complete an application to see your personalized rate. The Spring EQ loan application process is simple though. Customers can see an extensive breakdown of their loan term and rate options without needing to undergo a credit check or provide their Social Security number.
APR: Not specified
Max LTV ratio: 90%
Max debt-to-income ratio: 50%
Min credit score: 640
Loan amount: Up to $500,000
Term lengths: Not specified
Fees: Spring EQ loans may be subject to an origination fee of $995 and an annual fee of $99 in some states.
Additional requirements: Spring EQ does not display rates for its home lending products online — you must complete an application to see your personalized rate.
Perks: Spring EQ has a higher maximum DTI ratio than most other lenders — compare 50% with the typical 43% average.
Third Federal Savings & Loan
Good option for rate match guarantee
Third Federal Savings & Loan first opened in 1938. Today, the bank offers home equity loans in eight states and HELOCs in 26 states. Third Federal offers a lowest rate guarantee on its HELOCs and home equity loans, meaning Third Federal will offer you the lowest interest rate relative to other similar lenders or pay you $1,000. You can apply for a home equity loan or HELOC on the Third Federal website. You won’t have to register an account to apply, but you’re still able to save your application and return to it later.
APR: From 7.29%
Max LTV ratio: 80%
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: $10,000 to $200,000
Term lengths: Five to 30 years
Fees: Home equity loans and HELOCs with Third Federal have an annual fee of $65 (waived the first year). There are no application fees, closing fees or origination fees.
Additional requirements: Specific requirements aren’t listed.
Perks: If you set up autopay from an existing Third Federal account, you’ll be eligible for a 0.25% rate discount.
Frost Bank
Good option for Texas borrowers
Frost Bank’s home equity loans and HELOCs are only available to Texas residents. You can apply for a home equity loan or HELOC on the Frost Bank website, but you’ll need to create an account. According to the website, the application will only take you 15 minutes.
APR: From 7.3% (0.25% autopay discount included, only available for 2nd liens)
Max LTV ratio: 90%
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: $2,000 to $500,000
Term lengths: 15 or 20 years
Fees: No application fee, annual fee or closing costs. Frost Bank does charge a $15 monthly service fee, which can be waived with a Frost Plus Account.
Additional requirements: Borrowers must reside in Texas. The bank also requires proof of homeowners insurance.
Perks: 0.25% rate discount for clients who enroll in autopay from a Frost Bank checking or savings account. However, this feature is only available for second liens.
Regions Bank
Good rate discounts
Regions Bank is one of the nation’s largest banking, mortgage and wealth management service providers. Regions offers home equity loans and HELOCs in 15 states. You can apply for a Regions home equity loan or HELOC online, in person or over the phone. You’ll have to create an account with Regions to apply. Before you create an account, though, you can use the bank’s own rate calculator to estimate your rate and monthly payment.
APR: From 6.75% to 14.125%(0.25% autopay discount included)
Max LTV ratio: 89%
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: $10,000 to $250,000
Term lengths: Seven, 10, 15, 20 or 30 years
Fees: No closing costs and no annual fees. Late fees apply for 5% of the payment amount. There is a returned check fee of $15 and an over limit fee of $29.
Additional requirements: Not specified.
Perks: Rate discounts between 0.25% and 0.50% to those who elect to have their monthly payments automatically debited from a Regions checking account.
Discover
Good option for no fees or closings costs
Discover is known primarily for its credit cards, but it also offers home equity loans — available in 48 states. The lender does not offer HELOCs at all. You can apply for a home equity loan from Discover online or over the phone. The application process takes approximately six to eight weeks in total, according to Discover’s website.
APR: 6.99% for first liens, 7.99% for second liens
Max LTV ratio: 90%
Max debt-to-income ratio: 43%
Min credit score: 620
Loan amount: $35,000 to $300,000
Term lengths: 10, 15, 20 and 30 years
Fees: None
Additional requirements: Specific requirements not listed.
Perks: The lender charges no origination fees, application fees, appraisal fees or mortgage taxes.
BMO Harris
Good option for second liens
BMO Harris products and services are available in 48 states (all but New York and Texas). BMO Harris offers home equity loans and three variations of a HELOC. You can apply for a home equity loan or HELOC online or in person, but in order to get personalized rates, you’ll have to speak with a representative on the phone. Getting personalized rates doesn’t require a hard credit check.
Home equity loans from BMO Harris are only available as second liens. If you have already paid off your mortgage, a rate-lock HELOC from BMO Harris may be a better option.
APR: From 8.84% (0.5% autopay discount not included)
Max LTV ratio: Not specified
Max debt-to-income ratio: Not specified
Min credit score: 700
Loan amount: From $5,000
Term lengths: Five to 20 years
Fees: There is no application fee. BMO Harris will also pay closing costs for loans secured by an owner-occupied 1-to-4-family residence. If you pay off your loan within 36 months of opening, you may be responsible for recoupment fees.
Additional requirements: Home equity loans are only available as a second lien (meaning you can’t be mortgage free)
Perks: If you enroll in autopay with a BMO Harris checking account, you’ll be eligible for a 0.5% rate discount.
What is a home equity loan?
A home equity loan is a fixed-rate installment loan secured by your home as a second mortgage. You’ll get a lump sum payment upfront and then repay the loan in equal monthly payments over a period of time. Because your house is used as a collateral, the lender can foreclose on it if you default on your payments.
Most lenders require you to have 15% to 20% equity in your home to secure a home equity loan. To determine how much equity you have, subtract your remaining mortgage balance from the value of your home. For example, if your home is worth $500,000 and you owe $350,000, you have $150,000 in equity. The next step is to determine your loan-to-value ratio, or LTV ratio, which is your outstanding mortgage balance divided by your home’s current value. So in this case the calculation would be:
$350,000 / $500,000 = 0.7
In this example, you have a 70% LTV ratio. Most lenders will let you borrow around 75% to 90% of your home’s value minus what you owe on your primary mortgage. Assuming a lender will let you borrow up to 90% of your home equity, you can use the formula to see how that would be:
$500,000 [current appraised value] X 0.9 [maximum equity percentage you can borrow] – $350,000 [outstanding mortgage balance] = $100,000 [what the lender will let you borrow]
A standard repayment period for a home equity loan is between five and 30 years. Under the loan, you make fixed-rate payments that never change. If interest rates go up, your loan rate remains unchanged.
Second mortgages such as home equity loans and HELOCs don’t alter a homeowner’s primary mortgage. This lets you borrow against your home’s equity without needing to exchange your primary mortgage’s rate for today’s higher rates.
Home equity loans have fixed interest rates, which is a positive if you’re looking for predictable monthly payments. The rate you lock in when you take out your loan will be constant for the entire term, even if market interest rates rise.
Reasons to get a home equity loan
A home equity loan is a good choice if you need a large sum of cash all at once. You can use that cash for anything you’d like — it doesn’t have to be home-related.However, some uses make more sense than others.
Home renovations and improvements: If you want to upgrade your kitchen, install solar panels or add on a second bathroom, you can use the money from a home equity loan to pay for the cost of these renovations. Then, at tax time, you can deduct the interest you pay on the loan — as long as the renovations increase the value of your home and you meet certain IRS criteria.
Consolidating high-interest debt: Debt consolidation is a strategy where you take out one large loan to pay off the balances on multiple smaller loans, typically done to streamline your finances or get a lower interest rate. Because home equity loan interest rates are typically lower than those of credit cards, they can be a great option to consolidate your high-interest credit card debt, letting you pay off debt faster and save money on interest in the long run. The only downside? Credit card and personal loan lenders can’t take your home from you if you stop making your payments, but home equity lenders can.
College tuition: Instead of using student loans to cover the cost of college for yourself or a loved one, you can use the cash from a home equity loan. If you qualify for federal student loans, though, they’re almost always a better option than a home equity loan. Federal loans have better borrower protections and offer more flexible repayment options in the event of financial hardship. But if you’ve maxed out your financial aid and federal student loans, a home equity loan can be a viable option to cover the difference.
Medical expenses: You can avoid putting unexpected medical expenses on a credit card by tapping into your home equity before a major medical procedure. Or, if you have outstanding medical bills, you can pay them off with the funds from a home equity loan. Before you do this, it’s worth asking if you can negotiate a payment plan directly with your medical provider.
Business expenses: If you want to start a small business or side hustle but lack money to get it going, a home equity loan can provide the funding without many hoops to jump through. However, you may find that dedicated small business loans are a better, less risky option.
Down payment on a second home: Homeowners can leverage their home’s equity to fund a down payment on a second home or investment property. But you should only use a home equity loan to buy a second home if you can comfortably afford multiple mortgage payments over the long term.
Experts don’t recommend using a home equity loan for discretionary expenses like a vacation or wedding. Instead, try saving up money in advance for these expenses so you can pay for them without taking on unnecessary debt.
Pros
One lump sum payment of total loan up front.
Fixed interest rate, meaning you won’t have to worry about your rate rising over the repayment period.
Typically lower interest rate than credit cards or personal loans.
Little to no restrictions on what you can use the money for.
Cons
Your home is used as collateral, meaning it can be taken from you if you default on the loan.
If you’re still paying off your mortgage, this loan payment will be on top of that.
Home equity loans can come with closing costs and other fees.
May be hard to qualify for if you don’t have enough equity.
Home equity loan vs. HELOC
Home equity loans and HELOCs are similar but have a few key distinctions. Both let you draw on your home’s equity and require you to use your home as collateral to secure your loan. The two major differences are the way you receive the money and how you pay it back.
A home equity loan gives you the money all at once as a lump sum, whereas a HELOC lets you take money out in installments over a long period of time, typically 10 years. Home equity loans have fixed-rate payments that will never go up, but most HELOCs have variable interest rates that rise and fall with the prime rate.
A home equity loan is better if:
You want a fixed-rate payment: Your monthly payment will never change even if interest rates rise.
You want one lump sum of money: You receive the entire loan upfront with a home equity loan.
You know the exact amount of money you need: If you know the amount you need and don’t expect it to change, a home equity loan likely makes more sense than a HELOC.
A HELOC is better if:
You need money over a long period of time: You can take the money as you need it and only pay interest on the amounts you withdraw, not the full loan amount, as is the case with a home equity loan.
You want a low introductory interest rate: Although HELOC rates may increase over time, they also typically offer lower introductory interest rates than home equity loans. So you could save money on interest charges.
Home equity loans vs. cash-out refinances
A cash-out refinance is when you replace your existing mortgage with a new mortgage, typically to secure a lower interest rate and more favorable terms. Unlike a traditional refinance, though, you take out a new mortgage for the home’s entire value — not just the amount you owe on your mortgage. You then receive the equity you’ve already paid off in your home as a cash payout.
For example, if your home is worth $450,000, and you owe $250,000 on your loan, you would refinance for the entire $450,000, rather than the amount you owe on your mortgage. Your new cash-out refinance home loan would replace your existing mortgage and then offer you a portion of the equity you built (in this case $200,000) as a cash payout.
Both a cash-out refi and a home equity loan will provide you with a lump sum of cash that you’ll repay in fixed amounts over a specific time period, but they have some important differences. A cash-out refinance replaces your current mortgage payment. When you receive a lump sum of cash from a cash-out refi, it’s added back onto the balance of your new mortgage, usually causing your monthly payment to increase. A home equity loan is different — it doesn’t replace your existing mortgage and instead adds an additional monthly payment to your expenses.
Who qualifies for a home equity loan?
Although it varies by lender, to qualify for a home equity loan, you’re typically required to meet the following criteria:
At least 15% to 20% equity built up in your home: Home equity is the amount of home you own, based on how much you’ve paid toward your mortgage. Subtract what you owe on your mortgage and other loans from the current appraised value of your house to figure out your home equity number.
Adequate, verifiable income and stable employment: Proof of income is a standard requirement to qualify for a HELOC. Check your lender’s website to see what forms and paperwork you will need to submit along with your application.
A minimum credit score of 620: Lenders use your credit score to determine the likelihood that you’ll repay the loan on time. Having a strong credit score — at least 700 — will help you qualify for a lower interest rate and more amenable loan terms.
A debt-to-income ratio of 43% or less: Divide your total monthly debts by your gross monthly income to get your DTI. Like your credit score, your DTI helps lenders determine your capacity to make consistent payments toward your loan. Some lenders prefer a DTI of 36% or less.
A home equity loan is better if:
You don’t want to pay private mortgage insurance: Some cash-out refinances require PMI, which can add hundreds of dollars to your payments, but home equity loans don’t.
You can’t complete a refinance: With rates rising, it’s possible that your mortgage rate is lower than current refinance rates. If that’s the case, it likely won’t make financial sense for you to refinance. Instead, you can use a home equity loan to take out only the money you need, rather than replacing your entire mortgage with a higher interest rate loan.
A cash-out refinance is better if:
Refinance rates are lower than your current mortgage rate: If you can secure a lower interest rate by refinancing, this could save you money in interest, while providing access to a lump sum of cash.
You want only one monthly payment: The amount you borrow gets added back to the balance of your mortgage so you make only one payment to your lender every month.
Less stringent eligibility requirements: If you don’t have great credit or you have a high debt-to-income ratio, or DTI, you may have an easier time qualifying for a cash-out refi compared with a home equity loan.
Lower interest rates: Cash-out refinances sometimes offer more favorable interest rates than home equity loans.
Tips for choosing a lender
You’ll want to consider what type of financial institution best suits your needs. In addition to mortgage lenders, financial institutions that offer home equity loans include banks, credit unions and online-only lenders.
“Select a lender that makes you feel comfortable and informed with the home equity loan process,” said Rob Cook, vice president of marketing, digital and analytics for Discover Home Loans. “Look at what tools a lender makes available to borrowers to help inform their decision. For many borrowers, being able to apply and manage their application online is important.”
One option is to work with the lender that originated your first mortgage as you already have a relationship and a history of on-time payments. Many banks and credit unions also offer discounted rates and other benefits when you become a customer.
Some lenders offer lower interest rates but charge higher fees (and vice versa). What matters most is your annual percentage rate because it reflects both interest rate and fees.
Ensure the specific terms of the loan your lender is offering make sense for your budget. For example, be sure the minimum loan amount isn’t too high — be wary of withdrawing more funds than you need. You also want to make sure that your repayment term is long enough for you to comfortably afford the monthly payments. The shorter your loan term, the higher your monthly payments will be.
“Costs and fees are an important consideration for anyone who is looking for a loan,” Cook said. “Homeowners should understand any upfront or ongoing fees applicable to their loan options. Also look for prepayment penalties that might be associated with paying off your loan early.”
No matter what, it’s important to talk to numerous lenders and find the best rate available.
How to apply for a home equity loan
Applying for a home equity loan is similar to applying for any mortgage loan. You’ll need both a solid credit score and proof of enough income to repay your loan.
1. Interview multiple lenders to determine which lender can offer you the lowest rates and fees. The more companies you speak with, the better your chances of finding the most favorable terms.
2. Have at least 15% to 20% equity in your home. If you do, lenders will then take into account your credit score, income and current DTI to determine whether you qualify as well as your interest rate.
3. Be prepared to have financial documents at the ready, such as pay stubs and Form W-2s. Proof of ownership and the appraised value of your home will also be necessary.
4. Close on your loan. Once you submit your application, the final step is closing on your loan. In some states, you’ll have to do this in person at a physical branch.
FAQs
As of March 27, average home equity loan rates are 8.73% for a $30,000 10-year home equity loan and 8.70% for a $30,000 15-year home equity loan — higher than the average rate for a 30-year fixed rate mortgage, which is currently 7.01%. Both home equity rates and mortgage rates started off at historic lows at around 3% at the beginning of 2022 and have been consistently climbing in response to the Federal Reserve aggressively raising the benchmark interest rate.
Most lenders will allow you to borrow anywhere from 15% to 20% of your home’s available equity. To calculate your home equity, subtract your remaining mortgage balance from the current appraised value of your home. How much equity a bank or lender will let you take out depends on a number of additional factors such as your credit score, income and DTI ratio. For most homeowners, it can take five to 10 years of mortgage payments to build up enough tappable equity to borrow against.
A home equity loan can affect your score positively or negatively depending on how responsibly you use it. As with any loan, if you miss or make late payments, your credit score will drop. The amount by which it will drop depends on such factors as whether you’ve made late payments before. However, HELOCs are secured loans that are backed by your property, so they tend to affect your credit score less because they’re treated more like a car loan or mortgage by credit-scoring algorithms.
Lenders are currently offering rates that start as low as 5% to 6% for borrowers with good credit, but rates can vary depending on your personal financial situation. A lender will base your interest rate on how much equity you have in your home, your credit score, income level and other aspects of your financial life such as your DTI ratio, which is calculated by dividing your monthly debts by your gross monthly income.
Home equity loans can be used for anything you choose to spend the money on. Typical life expenses that people usually take out home equity loans for are to cover expenditures such as home renovations, higher education costs like tuition or to pay off high-interest charges like credit card debt. There’s a bonus for using your loan for home improvements and renovations: the interest is tax deductible.
You can also use a home equity loan in the event of an emergency like unplanned medical expenses. Whatever you chose to use your loan for, keep in mind that taking out a large sum of money that accrues interest is an expensive choice to carefully consider, especially because you’re using your home as collateral to secure the loan. If you can’t pay back the loan, the lender can seize your home to repay your debt.
Methodology
We evaluated a range of lenders based on factors such as interest rates, APRs and fees, how long the draw and repayment periods are, and what types and variety of loans are offered. We also took into account factors that impact the user experience such as how easy it is to apply for a loan online and whether physical lender locations exist.
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.
Try to pay your credit card bill on or before the due date as often as possible. The due date is usually 20 to 25 days after your billing cycle ends.
Paying your credit card early can improve your credit. After your statement closes, your credit card issuer reports your balance to the main three credit bureaus (Equifax®, Experian® and TransUnion®). Paying your bill early lowers your overall balance, so the bureaus will see you using less credit in total.
If you’re wondering, “When should I pay my credit card bill?” know that it’s always best to pay as early as possible. According to the FICO® credit scoring model, credit utilization makes up 30 percent of your score. We’ll explain the factors that affect credit in more detail below and answer common questions about when to pay off your balances.
Key takeaways:
Making at least the minimum payment is good for your credit health.
Payment history and credit utilization make up 65 percent of your FICO credit score together.
Credit card grace periods usually last up to 25 days after a billing cycle ends.
Table of contents:
Why should I pay my credit card early?
To understand how paying a bill early could raise your score, you need to understand what factors affect your score and how your credit issuer reports to the credit bureaus.
The Fair Isaac Corporation (FICO) uses a unique credit scoring system to issue a FICO credit score to every individual. FICO scores consist of the following five categories:
Payment history makes up around 35 percent of your score. Late payments can negatively affect your score, so paying your bill on time or early can help improve it.
Credit utilization accounts for 30 percent of your score and represents how much of your available credit you’re currently using. You should aim to use 1/3 of your credit or less (e.g., if you have a total credit limit of $9,000, try to keep your balance below $3,000.)
Age of credit reflects your total credit history, and it makes up roughly 15 percent of your score. Your oldest accounts will influence this factor the most.
Credit mix measures the variety of open credit accounts you have, and it makes up 10 percent of your score. Having several cards and an auto loan or mortgage can help.
New credit makes up the last 10 percent of your score, and it considers your applications for new lines of credit.
After your monthly statement is issued with your balance, you have a grace period before the payment is due—ranging from 21 to 25 days. During that time, your credit card provider will report your balance to the credit bureaus. If you pay your balance before your statement closes, the total listed balance will be lower. Moreover, credit bureaus will see your overall utilization as lower, which could increase your score.
However, paying your credit card bill early may work differently if your card has a balance each month. Instead of paying your next statement early, you’re making an extra payment on your balance. Therefore, you’ll likely still need to pay the minimum amount on your next statement, or your payment could be considered late.
Is it bad to pay off a credit card early?
It is never bad to pay your credit card bill early, but the benefits you receive from doing so may vary depending on your circumstances. For example, if you carry a balance on your credit card every month, you may need to adjust how you handle early payments.
It’s also important to separate facts from credit myths when planning out your debt repayment strategy.
If you do carry a balance on your card each month, keep the following in mind:
Your early payment may not count as your minimum payment. If you have a balance from a previous month, your early payment will count as an extra payment on your outstanding balance.
You may not save money on interest and fees by making an early payment. For example, if you’re charged based on your average daily balance, simply paying at the end of the month may not help much.
All that said, it’s still usually a good idea to pay down your credit card debt if you have the funds available to do so. When considering how to build credit, remember that consistent, timely payments can help you eliminate debt and qualify you for better loans and cards.
When is the best time to pay your credit card?
The best time to pay your credit card bill is before the payment is late. While you may benefit from paying your bill early, you’ll definitely see negative effects if you pay your bill late.
Paying early keeps your payment history intact and may help lower your overall utilization, while paying your bill more than 30 days late will likely lead to a negative item on your credit report. And if you neglect to pay long enough, your account could get sent to collections.
If you do start paying your credit card bill early, begin checking your credit report regularly to see how your balance is being reported to the credit bureaus. Over time, you should see your utilization drop and your credit improve.
Understand your credit with Lexington Law Firm
While sifting through your credit report, look for inaccurate information like fraudulent accounts, incorrect negative items or factual mistakes. Any of these inaccurate items could be hurting your credit, but you can challenge them with the right credit repair services.
Lexington Law Firm helps clients repair and monitor their credit. Learn more about our services, which can help you address incorrect marks on your credit report. Start by taking our free credit assessment today.
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
Sarah Raja
Associate Attorney
Sarah Raja was born and raised in Phoenix, Arizona.
In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts. Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
After drawings this weekend for both lottery games failed to produce a winning ticket, Mega Millions and Powerball continued their steady marches into mend-bendingly large jackpot numbers.
On Saturday night, the Powerball jackpot rolled over yet again and now stands at an estimated $800 million, with its next drawing Monday, March 25
Likewise, the Mega Millions drawing on Friday night failed to produce a winner and the jackpot swelled beyond the billion-dollar barrier. Only five previous Mega Millions jackpots have hit that mark.
Mega Millions: $1.1 billion estimated jackpot, next drawing Tuesday, March 26.
Powerball: $800 million estimated jackpot, next drawing Monday, March 25.
This year now has its first billion-dollar-plus jackpot, a mark that has become more common in recent years. Powerball had a $1.765 billion jackpot (won by a single ticket) as recently as October 2023.
Powerball and Mega Millions tickets are sold for $2 apiece in 45 U.S. states, as well as Washington, D.C., and the U.S. Virgin Islands.
To play Mega Millions, pick five numbers between 1 and 70, and a sixth number between 1 and 25. If you don’t want to pick the numbers yourself, you can get a set of numbers generated for you.
To play Powerball, pick five numbers between 1 and 69 and a Powerball number from 1 to 26 (or have them randomly generated).
How much is the Mega Millions jackpot?
The current jackpot is estimated at $1.1 billion.
Winners can opt to take their winnings in the form of an annuity or as a single lump sum, known as the cash option. The cash option for the current jackpot is estimated at $525.8 million.
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By taking the annuity option, the winner would get the full jackpot advertised by Mega Millions, but it would be spread out in payments over 30 years.
No matter how lucky you are, you won’t get around paying taxes on a lottery jackpot. After mandatory federal income tax withholding, you’d have just shy of $400 million if you took the cash option. How much more you’d pay come tax time can depend on where you bought the ticket — and where you live, if that’s another state. To prepare, make sure you know the ins and outs of how the lottery works.
When is the next Mega Millions drawing?
The winning numbers will be drawn Tuesday, March 26 at 11 p.m. Eastern Time.
If there’s still no jackpot winner, the grand prize will continue to grow.
The odds of winning the jackpot are roughly 1 in 303 million.
How much is the next Powerball jackpot?
The current jackpot is estimated at $800 million.
Like Mega Millions, winners of Powerball can choose between an annuity that pays out over 30 years or a single lump sum. The cash option for the current jackpot is $384.8 million. After mandatory federal taxes, the holder of a single winning ticket would keep about $292.5 million, minus any state taxes.
When is the next Powerball drawing?
The winning numbers will be drawn Monday, March 25 at 11 p.m. Eastern Time.
If there’s still no jackpot winner, the grand prize will continue to grow.
The odds of winning the jackpot are roughly 1 in 292 million.
The jackpot isn’t the only way to win. Both games have prizes for ticket holders whose chosen numbers match the drawing in a variety of combinations.
10 largest lottery jackpots
$2.04 billion (Powerball, Nov. 8, 2022 — one winning ticket).
$1.765 billion (Powerball, Oct. 11, 2023 — one winning ticket).
$1.586 billion (Powerball, Jan. 13, 2016 — three winning tickets).
$1.58 billion (Mega Millions, Aug. 8, 2023 — one winning ticket).
The economic landscape of the United States is experiencing a significant shift, marked by a new event: the average FICO credit score has dropped for the first time in a decade.
In a recently released report on credit score data from October 2023, major credit reporting company, FICO, says that the national average credit score has decreased for the first time in a decade from 718 to 717.
Why did credit scores drop?
The decrease in average credit scores may be attributed to several key factors:
Increased Missed Payments: There has been an increase in missed borrower payments, showing serious financial strain among consumers. The FICO report shows that, as of October 2023, more than 18% of the population was late on payments.
Rising Consumer Debt Levels: Consumer debt, particularly credit card debt, has risen to over 1 trillion. This indicates that more consumers may be leaning on credit cards to cover everyday expenses.
Slowing New Credit Activity: New credit activity – consumers applying for new lines of credit – has slowed down.
What this means for you
It’s hard to say what this will mean moving forward, but at this moment it’s too soon to say – or worry too much. In a statement given to Bloomberg, Ethan Dornhelm, VP at FICO, said that “This isn’t a blinking red light, but it certainly is a yellow light.”
Whatever happens in the future, it’s important to take steps to try to protect your credit. Here are some strategies:
Reduce Credit Utilization Rates: Your credit utilization ratio is the amount of available credit you have compared to the amount of credit you’ve used. Generally, the best practice is to keep your credit utilization ratio below 30%, if you can.
Consolidate Debt: If you’re worried about tracking different payments, consider consolidating your debt into one payment to avoid the risk of missing a payment. A missed payment is a negative mark on your credit, and can stay on your credit reports for 7 years.
Protect Your Credit History: Length of credit history is a significant factor in how your credit score is calculated. Closing a credit card that you’ve had for a long time, for example, might actually hurt your credit score. If you can, try to keep lines of credit – especially revolving credit accounts, like credit cards – open.
If You’re Rejected, Pause Before Applying Again: If you’ve been rejected for a line of credit in the past, like an auto loan or a credit card, pause before immediately applying again. Multiple “hard inquiries” – when a lender pulls your credit to evaluate your creditworthiness – in too short a time could potentially harm your credit.
Good credit is always important
If you’re worried about your credit, the best thing you can do is consistently check and monitor your credit – not just your score. Be on the look out for any changes to your credit reports and score, whether expected or unexpected, and make sure that everything in your credit profile is accurate. You can get started with a free credit assessment at Lexington Law for a snapshot of what’s in your credit profile.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
Existing-home sales jumped unexpectedly in February to the highest monthly increase recorded in a year, according to the National Association of Realtors (NAR).
Total existing-home sales — which includes previously owned single-family homes, townhomes, condominiums and co-ops — increased 9.5% from January to a seasonally adjusted annual rate of 4.38 million in February. But sales are still down 3.3% from last year, when 4.53 million were recorded for February 2023, a NAR report released Thursday said.
“Additional housing supply is helping to satisfy market demand,” said NAR chief economist Lawrence Yun. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”
While Americans may want to buy houses, scarce supply, inflated prices and high mortgage rates have made home ownership unaffordable for many. Housing inventory in 2022 dipped to its lowest point since the Federal Reserve began tracking the data in 2016, while housing costs reached record highs.
AMERICANS ARE MAKING A MASS EXODUS FROM BIG CITIES ACCORDING TO CENSUS BUREAU DATA
Home prices and associated costs have followed the same inflationary trend as the rest of the economy since President Biden assumed office in January 2021.
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Compared to three years ago, the median price for existing-home sales has increased 25%, from $307,400 in January 2021 to $384,500 in February 2024, according to NAR data.
Existing home sales were 6.6 million when Biden took office and have since fallen to 4.38 million, according to Thursday’s report — a 34% decrease.
Not only are house prices up and supply down — home loan costs have skyrocketed. As of February, the monthly mortgage payment on an existing home was $2,001, according to NAR. That compares to a January 2021 reading of $1,009 and represents a walloping 98% increase.
US HOMEBUILDER SENTIMENT UNEXPECTEDLY RISES TO HIGHEST LEVEL SINCE JULY
Mortgage rates, which were an average 2.79% in January 2021, are now 6.78%.
For those who can’t afford a home or don’t wish to purchase one, rent is also more expensive. The average monthly rent for a two-bedroom apartment in the U.S. was $1,132 in January 2021. Now the average rent for an apartment that size has climbed 20% to $1,363 per month, according to data from apartmentlist.com.
Housing costs are expected to keep rising so long as there is strong demand and limited supply.
“Home sales dipped in February compared to a year earlier because not enough homes were on the market to meet demand,” explained Holden Lewis, a home and mortgage expert with NerdWallet.
HOW IT STARTED … HOW IT’S GOING: INFLATION UNDER BIDEN DRIVES UP COSTS FOR BREAD, BUTTER, CHICKEN
According to the NAR report, total housing inventory at the end of February — the number of homes listed for sale — was 1.07 million units, a 5.9% increase from January and 10.3% surge from 970,000 units one year ago.
“Just 1.07 million existing homes were for sale at the end of February. In the same month five years earlier, before the pandemic, there were 1.63 million homes on the market. Consequently, many more homes were sold back then,” Lewis said. “Because demand exceeds supply, buyers are competing with each other and driving up prices.”
Regional sales climbed in the West, South and Midwest, but remained unchanged in the Northeast, the report said. Year-over-year sales declined in all regions.
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Housing became more expensive in all major U.S. regions as well, according to NAR. The median existing-home price for all housing types in February was $384,500, an increase of 5.7% from February 2023, according to NAR.
“Due to inventory constraints, the Northeast was the regional under-performer in February home sales but the best performer in home prices,” Yun said. “More supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences.”
Original article source: How it Started… How it’s Going: Home sales down, housing prices, mortgage rates up since Biden took office
Everything’s bigger in Texas, luxury homes included. And the latest example of opulent real estate to hit the Dallas market is the former mega-mansion of six-time NBA All-Star Jermaine O’Neal, which recently resurfaced on the market for $12.4 million in the suburb of Southlake.
A former Indiana Pacers center and power forward, O’Neal played for an additional six teams throughout his athletic tenure — none of which were in Texas- before retiring in 2016.
Still, O’Neal chose to settle in Southlake for its prestige, allure, and vicinity to vibrant Dallas, which happens to be the home of his favorite football team, the Cowboys.
And while he parted ways with the house some while back, for us, the retired NBA star’s home at 940 W Dove Rd. scores as many points as its previous owner racked up over his career.
Designed by the esteemed local builder Michael Kindred and sitting on nearly 5 landscaped acres, the Southlake, Texas house is anything but humble.
The elegant and modern Mediterranean-style mansion has everything you could ask for in a property and more, with 8 bedrooms, 10 full baths, and 3 half baths spanning over an impressive 16,000 square feet of living space.
Curated details like the natural limestone and custom wood flooring elevate the mansion while offering a homey feel despite its massive size.
A two-story open living space stuns with statement chandeliers, glossy marble finishes, and colossal windows overlooking the grounds beyond.
Meanwhile, the upscale kitchen boasts all the bells and whistles of a multi-million dollar home, including double sinks and dishwashers, state-of-the-art Wolf Brand appliances, and a spacious walk-in pantry.
The dining areas and additional living room all feature large windows that provide ample natural lighting while offering views of the surrounding scenery — a common theme throughout the property.
Whichever couple or bachelor(ette) snatches the sizable mansion can truly spoil themselves in the master suite featuring a spacious shower and soaking tub, his and her closets, and a cozy bedroom with intricate crown molding for an extra dose of opulence.
In addition to the closets, a pair of exclusive his and her home offices mean the next owners can get down to business without distractions before unwinding lavishly in the home’s entertainment areas.
The future homeowner of 940 W Dove Rd. can get the party started in the posh game room, complete with a billiard table, bowling alley, wet bar, and private theater.
Outside, a resort-style oasis boasts an outdoor kitchen and two covered seating areas- including a cabana with a fireplace- to wine and dine al fresco in unparalleled comfort.
What steals the show, though, is the mega pool featuring a slide, mood lighting, and a spa corner for ultimate relaxation.
Moving back indoors, you’ll find a home gym that’s anything but average, offering lockers, a full bath, and a sauna for an elevated workout worthy of a pro athlete.
What’s more? You guessed it — an indoor basketball court totaling 8,300 square feet, almost like a tribute to the home’s former basketball star owner.
Anyone who values privacy or throwing lavish parties will appreciate all 4.828 acres of this sprawling compound. Thanks to its six-car garage and motor court in the back of the grounds and charming grand circle entry to the front, a lengthy list of guests can be easily accommodated.
We think the now-retired Pacers player’s home is just as outstanding as his athletic record. And while O’Neal parted ways with the property in 2022, he left the mark of his basketball legacy behind. Sherri Murphy of Coldwell Banker Realty Dallas is now listing the buff all-star home in the Lone Star state for $12.4 million.
Featured image credit: True Homes Photography, insert Noah Salzman, CC BY-SA 3.0, via Wikimedia Commons
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