IndyMac Bancorp posted a fourth quarter loss of $509.1 million, or $6.43 per share, compared with a profit of $72.2 million, or 97 cents per share in the same period a year earlier due to higher credit costs.
The company said it absorbed $863 million in total pre-tax credit costs during the quarter, which ultimately led to the loss.
Analysts polled by Thomson Financial expected a much more modest loss of just $1.57 a share.
For the year, IndyMac posted a loss of $614.8 million, or $8.28 per share, compared with a profit of $342.9 million, or $4.82 per share, for all of 2006.
It was the Pasadena-based mortgage lender‘s first annual loss in its 23-year history.
“2007 was a terrible year for our industry, for IndyMac and for you, our owners,” Chief Executive Michael Perry said in his annual letter to shareholders today.
“Innovative home lending went too far,” Perry said. “All home lenders, including IndyMac, were a part of the problem, and, as IndyMac’s CEO, I take full responsibility for the mistakes that we made.”
At the same time, he noted that the loss was “consistent with nearly every other large financial institution in the mortgage lending and securitization business.”
During the quarter, the company’s total loan production was just over $12 billion, compared to $26 billion in the period a year ago.
For the full year, total loan production was $78.3 billion, down from $91.7 billion in 2006.
The company said its mortgage broker channel saw production fall by $4.7 billion, or 37 percent during the quarter, compared to a year ago, reflecting the ongoing retail push for lenders.
IndyMac’s pipeline of home loans fell 37 percent to $7.5 billion at the end of December compared to $11.8 billion as of December 31, 2006.
Non-performing assets jumped to 4.61 percent of total assets, up from just 0.63 percent a year ago, while the allowance for loan losses to total loans held for investment climbed to 2.42 percent from 0.61 percent.
The company said it expects charge-offs to “increase substantially” this year compared to 2007, but said its stockpile of credit reserves should absorb most of them.
At the end of the quarter, credit reserves for future losses totaled $2.4 billion, up from $619 million a year earlier.
“Our goal is to return IndyMac to profitability in (the second quarter) and grow our profit each quarter thereafter, and I believe that we have a realistic shot of achieving this goal,” Perry said.
The second largest independent mortgage lender also said it was suspending its $1 a year dividend “in light of current financial performance,” but would pay preferred shareholders 53 cents.
Perry projects a 2008 profit of about $13 million, or roughly 16 cents per share, compared to analyst expectations of a loss of 22 cents per share.
Shares of IndyMac were down 41 cents, or 5.39%, to $7.19 in early session trading on Wall Street.
Federal Reserve left its key short-term interest rate unchanged again Wednesday, hinted that rate hikes are likely over and forecast three cuts next year amid falling inflation and a cooling economy.
That’s more rate cuts than many economists expected.
The decision leaves the Fed’s benchmark short-term rate at a 22-year high of 5.25% to 5.5% following a flurry of rate increases aimed at subduing the nation’s sharpest inflation spike in four decades. The central bank has now held its key rate steady for three straight meetings since July.
That provides another reprieve for consumers who have faced higher borrowing costs for credit cards, adjustable-rate mortgages and other loans as a result of the Fed’s moves. Yet Americans, especially seniors, are finally reaping healthy bank savings yields after years of paltry returns.
Best high-yield savings accounts of 2023
401(k) boon:Stocks surge, Dow Jones hits all-time high at close after Fed forecasts lower rates
Leaving savings behind:Many Americans are missing out on high-interest savings accounts. Don’t be one of them
Is a soft landing in sight? What the Fed funds rate and mortgage rates are hinting at
Will the Fed raise interest rates again?
The central bank didn’t rule out another rate increase as it downgraded its economic outlook for next year while lowering its inflation forecast. In a statement after a two-day meeting, it repeated that it would assess the economy and financial developments, among other factors, to determine “the extent of any additional (rate hikes) that may be appropriate to return inflation to 2% over time.”
Fed Chair Jerome Powell said at a news conference, noting the Fed’s key rate is “at or near its peak.”
while the Dow Jones Industrial Average closed at a record high after rising 1.4% following the Fed’s signals that it’s probably done lifting rates and is forecasting three cuts next year. The 10-year Treasury was down to about 4% from 4.21% on Tuesday.
Last month, Powell said high Treasury yields, if persistent, likely would constrain the economy and require fewer Fed rate increases,
In its statement Wednesday, however, the central bank didn’t acknowledge the recent decline in Treasury yields, suggesting yields are still relatively high and could spike again, crimping the economy.
“Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring and inflation,” the Fed said, repeating the language of its previous statement.
Is inflation really slowing down?
The Fed’s middle-ground approach may have been cemented Tuesday by a mixed report on the consumer price index. The good news was that overall inflation barely budged in November amid falling gasoline prices, pushing down annual price gains to 3.1% from 3.2%, still well above the Fed’s 2% goal.
The Federal Reserve System is the U.S.’s central bank.
When does the Fed meet again?
The first Federal Reserve meeting of the new year will be from Jan. 30 through 31.
Federal reserve calendar
Jan. 30-31
March 19-20
April 30- May 1
June 11-12
July 30-31
Sept. 17-18
Nov. 6-7
Dec. 17-18
The U.S. economy was strong in the third quarter as consumers continued to spend despite high interest rates and inflation.
The value of all services and products generated in the U.S., or GDP, rose at a seasonally adjusted 4.9% for the year in the months spanning July to September, according to the Commerce Department. That was more than twice the 2.1% increase in the previous quarter and the most aggressive pace of growth since the end of 2021 when the economy surged back from a recession sparked by the pandemic.
a recession over the next year, down from the 61% odds forecast in May.
Barclays predicted a loss of roughly 375,000 jobs by the middle of next year. But consumer spending remains robust despite high inflation and interest rates that are making credit card use and consumer loans more expensive. And that may help stave off a recession, says Barclays economist Jonathan Millar.
What does FOMC stand for?
The FOMC is the Federal Open Market Committee, the voting body responsible for setting interest rates. The 12-member committee includes seven members of the Board of Governors and five of the 12 Reserve Bank presidents.
What causes inflation?
Inflation can have many roots. Typically, it’s caused by “a macroeconomic excess of spending over the economy’s relative ability to produce goods and services,” said Josh Bivens, the director of research at the Economic Policy Institute, a left-leaning think tank based in Washington D.C.
That means more people are wanting items and services than there is adequate supply, leading producers to raise prices.
“If everyone in the economy, tomorrow, decided they weren’t going to save any money from their paychecks, and they’re just going to spend every last dollar out of the blue, they would all run to the stores and try to buy things,” Bivens said. “But, producers haven’t produced enough to accommodate that big surge of across-the-board spending. So, you would see prices bid up.”
Inflation can also happen when there are too few producers, or there aren’t enough employees to provide the coveted products and services, Bivens said.
Finally, economies also have some “built-in inflation” to help keep inflation in check. In the U.S., that target is 2%, meaning businesses can raise prices 2% annually year and that shouldn’t overburden consumers. That’s also the typical cost of living raise offered by employers.
Inflation meaning
Inflation is the term for a “generalized rise in prices,” according to Josh Bivens, head of research at the Economic Policy Institute, a left-leaning think tank based in Washington D.C.
Everything from food to rent can become costlier due to inflation. But it is the overall impact that determines what the inflation rate actually is.
“Inflation, though, really is meant to only refer to all goods and services, together, rising in price by some common amount,” Bivens said. The Federal Reserve’s inflation goal is 2%, which means businesses can hike prices by 2% a year and that shouldn’t cause consumers financial distress. Cost of living increases to workers’ pay are also expected to meet that target to ensure consumers can adequately deal with the rising costs of goods and services.
What is CPI?
In November, the Consumer Price Index (CPI) ‒ a measure of the average shift in prices for different products and services ‒ was 3.1%, down slightly from the month before.
Annual inflation is down dramatically from the 9.1% in June 2022 that marked a 40-year high but remains above the 2% target the Fed sees as the level that signals the rate of price increases is under control.
Why is CPI important?
The Federal Reserve watches two key aspects of the economy, price stability and maximum employment, and those are the main factors it takes into account for its interest rate decisions. The CPI is a primary measure the Fed looks at to help determine if prices are “stable.’’
What is the difference between CPI and core CPI?
Core prices don’t count the volatile costs of food and energy items, giving a more accurate window into longer-term trends.
Are wages going up in 2024?
If you’re deemed a top performer at a company that is offering raises, you’ve got a pretty good chance of getting a pay boost next year.
About 3 out of four business leaders told ResumeBuilder.com they intended to give raises. But half of those company executives said only 50% or less of their staff members would see a pay hike, and 82% of the raises would hinge on performance. For those who do manage to get the salary boost, 79% of employers said the pay hikes would be greater than those given in recent years.
Are U.S. Treasury yields rising?
Not recently.
The 10-year Treasury yield was above 5% in November when the Fed kept rates steady for the second consecutive month the first time it had left the key rate unchanged two months in a row in almost two years.
That led to mortgage rates spiking to almost 8% and pushed up other borrowing costs for consumers and businesses. Stocks meanwhile sank close to a recent low, leading Fed Chair Jerome Powell to say such financial pressures could achieve the same cooling effect on the economy as additional rate hikes.
But in the following weeks, 10-year Treasury yields dipped to 4.2% and stocks rebounded. That might make the Fed resist rate cuts in case the economy heats up and causes the broader dip in prices “to stall at an uncomfortably elevated level,” Barclays says.
Barclays and Goldman Sachs forecast that rate cuts won’t happen until the spring, and that there will be only two, to a range of 4.75% to 5%, with more cuts implemented in the next two years.
When will inflation go back to normal?
It may take a little while.
Inflation’s decline likely “won’t show much progress in coming months,” Barclays wrote in a research note.
Overall price hikes have eased significantly since peaking at 9.1% in June 2022, a four-decade high. And in October, broader inflation as well as core prices experienced a dip, leading to a lower 10-year Treasury yield.
But core prices, which exclude the volatile costs of food and energy, will probably rise 0.3% each of the next three months, Goldman Sachs says. Used cars and furniture have been getting cheaper as the supply-chain shortages of the pandemic end. Meanwhile, health care, auto repairs, car insurance and rent continue to get more expensive, as employers pay higher wages to attract workers amid a labor shortage lingering from the global health crisis.
What is core inflation right now?
Core prices, which leave out the more volatile costs of food and energy, bumped up 0.3% in November, slightly more than the 0.2% uptick seen the previous month. That kept the yearly increase at 4%, the lowest rate since September 2021.
New inflation tax brackets
Inflation may also impact the amount of taxes you have to pay.
The Internal Revenue Service said in its annual inflation adjustments report that there will be a 5.4% bump in income thresholds to reach each new level in next year’s tax season.
In 2024, the lowest rate of 10% will apply to individuals with taxable income up to $11,600 and joint filers up to $23,200. The top rate of 37% will apply to individuals earning over $609,350, and married couples filing jointly who make at least $731,200 a year.
The IRS makes these adjustments annually, using a formula based on the consumer price index to account for inflation and stave off “bracket creep,” which happens when inflation shifts taxpayers into a higher bracket though they’re not seeing any real rise in pay or purchasing power.
The 2024/25 increase is less than last year’s 7% increase, but much more than recent years when inflation was below the current 3.1% inflation rate.
Will Social Security get a raise because of inflation?
Yes, but it will be a lot less than what recipients received in 2023.
The cost-of-living adjustment, or COLA, to Social Security benefits will be 3.2% next year. That’s roughly one-third of the 8.7% increase given in 2023, which marked a forty-year high.
The 2024 COLA hike is above the average 2.6% raise recipients have received over the past two decades, but seniors remain concerned about being able to pay their expenses as well as the increasing possibility Social Security benefits will be reduced in coming years, according to a retirement survey of 2,258 people by The Senior Citizens League, a nonprofit seniors group.
How does raising rates lower inflation?
The federal funds rate is what banks pay each other to borrow overnight. If that rate increases, banks usually pass along that extra cost, meaning it becomes more expensive for businesses and consumers to borrow as rates rise on credit cards, adjustable rate mortgages and other loans. That’s why the funds rate is the key mechanism used by the Federal Reserve to calm inflation.
Simply put, companies and consumers don’t borrow as much when loans cost them more, and that means an overheated economy can cool and inflation may dip.
Will credit card interest rates continue to rise this holiday season?
The Fed’s string of rate hikes, aimed at easing the highest inflation in four decades, are a big reason credit card interest rates have reached record highs just in time for the holiday season.
Some retail credit cards now charge more than 33% interest, topping a 30% threshold that stores and banks were previously able to bypass but seldom did – until now.
“They can charge that much,” said Chi Chi Wu, a senior attorney at the nonprofit National Consumer Law Center. “Credit cards can actually charge whatever they want. It’s a little-known fact.”
The domino effect of a high benchmark rate and soaring credit card interest could put many Americans in financial straits this holiday season.
Though some consumers are paring back to deal with high prices, rising debt and shrinking savings, the average shopper expects to spend $1,652 this year on holiday purchases, according to the consultancy Deloitte, more than was typically spent in the last three years.
A lot of the buying will be done with credit cards. In an October poll of 1,036 shoppers by CardRates.com, nearly 4 in 10 respondents said they intend to have holiday credit card debt in the new year.
The nation’s collective credit card debt was $1.08 trillion, at the end of September, a record high. And the average interest rate was 21%, the highest ever documented by the Federal Reserve.
Savings account impact of high rates
The upside to the Fed’s string of rate hikes has been that consumers were able to earn good interest on their savings for the first time in years. Even when the Fed leaves interest rates unchanged, savers can do well.
Unfortunately, most account holders aren’t making the most of that potential opportunity.
Roughly one-fifth of Americans who have savings accounts don’t know how much interest they’re earning, according to a quarterly Paths to Prosperity study by Santander US, part of the global bank Santander. Among those who did know their account’s interest rate, most were earning less than 3%.
But consumers have time to make a change that could enable them to make more from their savings.
“We’re still a long way from (the Fed) beginning to cut rates,” said Greg McBride, chief financial analyst at financial services platform Bankrate. “This is great news for savers, who will continue to enjoy inflation-beating returns in the top-yielding, federally insured online savings accounts and certificates of deposit. For borrowers, interest rates staying higher for a longer period underscores the urgency to pay down and pay off costly credit card debt and home equity lines.”
The string of Fed rate hikes that began in March 2022 has made it costlier for consumers to borrow as interest rates on credit cards and other loans increased dramatically.
At the same time, inflation has made daily needs more expensive, pushing more Americans to lean on credit cards to get by. But lenders have become more reluctant to issue new cards, so in the midst of the holiday season, more shoppers are seeking higher credit limits, experts say.
In October, the application rate for higher limits rose to 17.8% from 11.2% in the same month the previous year, and from 12.0% in 2019, New York Fed data showed.
For some consumers, a higher limit on a card they already have is about their only option.
“After COVID, inflation and interest rates went out of control … people have less emergency funds for car repairs or buying presents,” said Brandon Robinson, president and founder of JBR Associates, which specializes in retirement strategies. “What they’re doing is using more credit card utilization – over 30% or well over 50% of their credit card allowance – and then can’t get approved for another card because their credit rating is down.”
Inflation is leading more Americans to work multiple jobs
The number of Americans working at least two jobs is at its highest peak since before the COVID-19 pandemic, according to federal data, an uptick that may reflect the financial pressure people are feeling amid high inflation.
Almost 8.4 million people had multiple jobs in October, the Labor Department said, a figure that represents 5.2% of the laborforce, the highest percentage since January 2020.
“Paying for necessities has become more of a challenge, and affording luxuries and discretionary items has become more difficult, if not impossible for some, particularly those at the lower ends of the income and wealth spectrums,” Mark Hamrick, senior economic analyst at Bankrate, told USA TODAY in an email.
People may also be moonlighting to sock away cash in case they’re laid off since job cuts typically peak at the start of a new year.
What is the Federal Reserve’s 2024 meeting schedule? Here is when the Fed will meet again.
What is the mortgage interest rate today?
Mortgage rates are falling, so is it time to buy?
It depends.
First of all, the Fed doesn’t directly set mortgage rates, but its actions have an impact. For instance, when the central bank was steadily boosting its key rate, the yield on the 10-year treasury bond went up as well. Because those bonds are a gauge for the interest applied to an average 30-year loan, mortgage rates increased.
But over the past six weeks, mortgage rates have been declining, averaging 7% for a 30-year fixed mortgage. That’s down from almost 7.8% at the end of October, according to data released by Freddie Mac on Dec. 7.
That may be giving some wannabe homeowners the confidence to start house hunting. For the week ending Dec. 1, mortgage applications rose 2.8% from the prior week, according to the Mortgage Bankers Association.
“However, in the big picture, mortgage rates remain pretty high,” says Danielle Hale, senior economist for Realtor.com. “The typical mortgage rate according to Freddie Mac data is roughly in line with what we saw in August and early to mid-September, which were then 20 plus year highs.”
So, many potential buyers may still need to sit on the sidelines, waiting for rates to drop further, says Sam Khater, chief economist for Freddie Mac. Hale and many other experts believe mortgage rates will dip next year.
Interest rate projection 2024
The Fed is expected to cut interest rates next year, though markets and economists disagree about how many rate cuts there will be.
Futures markets forecast there will be four or five rate cuts in 2024, amounting to a quarter of a percentage point each. The cuts, they predict, should start by spring, and ultimately drop interest rates as low as 4% to 4.25%.
But core prices, which leave out the volatile costs of food and energy and are the metric followed more closely by the Fed, ticked up 0.3% in November, higher than the 0.2% increase the month before. That might make the Fed more hesitant to nip rates in the immediate future.
Goldman Sachs and Barclays expect there to be only two rate decreases in 2024. And Fed Chair Jerome Powell has cautioned in recent public remarks that it was “premature” to talk about rate cuts.
November inflation report
Inflation dipped slightly last month, with falling gas prices mitigating the impact of rising rents.
Consumer prices overall increased 3.1% from a year earlier, slightly below the 3.2% rise in October, according to the Labor Department’s consumer price index. That slower pace moves the inflation rate nearer to the level, reached in June, that was the lowest in over two years. Month over month, prices increased a slight 0.1%.
Core prices, however, which leave out the more erratic costs of food and energy and which are more closely monitored by the Fed, increased 0.3% in November after rising 0.2% the previous month. That means core inflation’s yearly increase remained at 4%, though it’s the lowest level since September 2021.
Flying can be anxiety inducing for some, and when traveling with a baby in tow can be its own stressor. If you’re traveling Spirit Airlines with a baby for the first time, you may have quite a few questions. How much does a ticket for a baby cost? Can they travel on my lap? Is there an age requirement to travel? The list of questions can be long.
Here’s a closer look at the Spirit Airlines infant policies, including how its car seat and stroller policies work.
Spirit Airlines infant policy
The Spirit infant policy states that a baby at least 7 days old but younger than 2 years of age counts as an infant, and an infant can sit on your lap for the duration of the flight for free — no ticket purchase required.
After their second birthday, you will be required to purchase your child their own ticket and seat. That includes if your kid turns 2 between your outbound flight and your return home. If that happens, you’ll have to purchase a seat for them for the return flight.
🤓Nerdy Tip
If your child is just under 2, travel with a copy of their birth certificate or passport in case the airline asks for confirmation of their age.
Other requirements for traveling with an infant on Spirit:
A lap infant can only sit with a passenger 15 or older.
Only one infant is allowed per passenger.
Infants 6 days old and younger won’t be permitted to board.
Lap children aren’t allowed in exit rows or the rows immediately in front of or behind.
You are required to check in with an agent at your gate before boarding.
Can you bring a stroller on spirit airlines?
On Spirit Airlines, a stroller is always free to check either at the check-in counter or at the gate (if you need it in order to travel through the airport).
You’re allowed one stroller per child, but you can also opt for a two-seater if you’re traveling with more than one kid.
Can you bring a car seat on Spirit Airlines? Are they free?
The Spirit car seat policy states you can check one car seat at the gate or the ticket counter per child free of charge.
If you don’t want to hold your baby on your lap the whole flight, you can also bring an FAA-approved car seat on board for your child assuming it physically fits in the seat. To do this, however, you will have to purchase a ticket for your infant.
If you do plan to go this route, check to make sure the seats on your aircraft are large enough to accommodate your car seat. Standard seats on Spirit planes can range from 15.5 inches to 17 inches wide, but upgrading to a wider Big Front Seat is also an option.
🤓Nerdy Tip
Don’t try to bring a rear-facing carseat if it’s over 25 inches tall; Spirit won’t allow it onboard.
Also important to note is that collapsible cribs or pack-and-plays won’t be checked for free. You’ll have to pay for those items. Peruse Spirit’s baggage fees for pricing.
Can I bring a carry-on diaper bag?
There’s no official Spirit diaper bag policy; the airline treats these items as any other type of baggage or carry-on. That means your diaper bag can count as your personal item, which is free.
Alternatively, you can pay for a carry-on during booking or at check-in if the included personal item isn’t enough. You’ll save cash if you pre-pay for this allowance in advance.
Remember to measure and weigh your personal items and carry-on before you leave home, so you’re not surprised and hit with an unexpected fee once you arrive at the airport. A personal item can’t be larger than 18 x 14 x 8 inches and a carry-on must be within 22 x 18 x 10 inches.
How to add a lap child on Spirit Airlines
If you’re ready to book travel with your infant — whether you want them in your lap or in a car seat in their own seat — Spirit makes it simple to do so. When booking online at Spirit.com, simply enter your preferred dates and routes, then select the dropdown menu at the top left of the flight search bar that says “Adult.”
When an option window pops up, you can enter the number of children traveling with you and their dates of birth. Check the “seat required” box if you want them to have their own seat and the minor will be counted as a child and be charged a ticket price accordingly.
Leave the “Seat Required” box unchecked, and as long as the date of birth is within the last 24 months, the child will be counted as an infant and not charged for a seat.
If you’d like to purchase a separate seat for your baby, keep the checkmark in the “Seat Required” box.
Click “Save,” then “Search flights,” and continue the flight selection process as usual.
Spirit baby policies, recapped
Flying Spirit with a baby is simple to book, and it’s free if they qualify as a lap infant (under age 2). Strollers and car seats can be checked for free at the ticket check-in counter or at the gate. If you would like your child to travel in their carseat, you will need to purchase a separate ticket for them. Either arrangement can be made during the booking process on Spirit’s website.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
Home insurance is meant to protect your finances: your house, your belongings and your assets. But not all policies are created equal. What they cover depends on whether you own or rent, and whether the residence is a house, a condo or a mobile home.
Many homeowners insurance policies are based on a set of templates issued by the Insurance Services Office (ISO), which is why these templates are sometimes called ISO forms. (The Insurance Services Office is now part of analytics firm Verisk.) Although you may not see technical terms like “HO-3” or “named perils” when you’re shopping for a policy, knowing the different coverage types can help you better understand what you’re buying.
This guide breaks down the different types of home insurance policies to help you understand which policy is right for your needs.
Get home insurance quotes in minutes
Answer a few questions to see custom quotes and find the right policy for you.
Named perils vs. open perils
Before diving into the different types of home insurance and what they cover, it’s helpful to understand how perils work. A “peril” is an event that can cause damage or loss to your home and your belongings.
Some parts of your home insurance policy may operate on a “named perils” basis, meaning you’re only insured against the specific events listed in your policy. Others may operate on an “open perils” or “all-risk” basis, meaning you’re insured against all events except listed exclusions.
Understanding what types of perils a home insurance policy covers is vital. Generally, open peril policies provide the most coverage.
Types of home insurance coverage
Standard homeowners insurance policies generally include these six types of coverage, unless otherwise noted in the policy:
Coverage type
What it does
Typical amount
Covers damage to the home and attached structures, such as a porch.
Enough to rebuild your home.
Covers stand-alone structures on your property, such as a fence or shed.
10% of dwelling coverage.
Pays to repair or replace stolen or damaged belongings.
50% to 70% of dwelling coverage.
Helps pay temporary living expenses while your home is being repaired.
20% of dwelling coverage.
Pays if you injure someone or cause property damage unintentionally or through neglect.
$100,000 to $500,000.
Pays to treat someone injured on your property, regardless of who’s at fault. It also pays if you, a family member or a pet injures someone away from your home.
$1,000 to $5,000.
The most common types of home insurance policies
Insurance providers typically sell several types of home insurance policies, each of which offers varying levels of coverage. It’s important to read the details of your policy to understand what is and isn’t covered.
HO-1: Basic form policy
An HO-1 policy is the most bare-bones type of home insurance. It generally covers the physical structure of your house. It may sometimes include coverage for other structures, personal property, additional living costs and liability.
An HO-1 policy typically covers damage caused by these 10 named perils:
Fire or lightning.
Windstorm or hail.
Explosion.
Riot or civil commotion.
Damage caused by aircraft or vehicles.
Vandalism.
Volcanic eruption.
Even if an HO-1 policy is available to you, many homeowners opt for an HO-3 policy instead because it offers more coverage.
HO-2: Broad form policy
HO-2 policies are sometimes known as “broad form” policies because they cover more perils than HO-1 policies, but their coverage is still limited. In addition to the 10 perils covered by HO-1 policies, the HO-2 policy adds coverage for:
Falling objects.
Weight of ice, snow or sleet.
Accidental overflow or discharge of water or steam.
Freezing of plumbing, heating or air conditioning.
Sudden and accidental tearing apart, cracking, burning or bulging of certain household systems.
Sudden and accidental damage from artificially generated electrical current.
If a peril that damages your house or belongings isn’t explicitly named in the policy, the loss won’t be covered.
Some HO-2 policies also provide personal liability coverage.
HO-3: Special form policy
An HO-3 policy is the most popular type of home insurance. It’s known as a “special form” or “open perils” policy. It insures the structure of your home against all causes of damage except those specifically listed as exclusions in your policy.
Here are common exclusions:
Earthquake.
Power failure.
War and nuclear accidents.
Intentional damage.
Government actions.
Birds, vermin, rodents or insects.
Damage caused by your pets.
Smog, rust or corrosion.
Wear and tear.
Pollution.
Personal belongings like furniture, electronics and clothes are covered on a “named perils” basis. That means only damage caused by events specifically listed in your policy are covered. These typically include:
Fire or lightning.
Windstorm or hail.
Explosion.
Riot or civil commotion.
Damage caused by aircraft or vehicles.
Vandalism or mischief.
Volcanic eruption.
Falling objects.
Weight of snow, ice or sleet.
Accidental discharge or overflow of water or steam.
Sudden or accidental tearing, cracking, burning or bulging.
Freezing of plumbing or HVAC systems.
Damage due to artificially generated electrical current.
🤓Nerdy Tip
You’ll typically need separate flood insurance or earthquake insurance if you live in an area that’s prone to these risks, as they are not covered by standard home insurance policies.
HO-4: Contents broad form policy
An HO-4 policy is commonly referred to as renters insurance. It’s designed specifically for individuals who are renting a home or an apartment. The main purpose of this policy is to cover your belongings, not the building itself.
An HO-4 policy safeguards your stuff — like furniture, clothes and electronics — against the same 16 perils covered by an HO-3 policy. It also includes personal liability and additional living expenses coverage.
The actual building you live in is not covered under your HO-4 policy. It’s your landlord’s responsibility to insure the structure of the building and to have it fixed if it’s damaged.
HO-5: Comprehensive policy
An HO-5 policy is like the gold standard of home insurance. It’s also called a comprehensive policy because it typically offers higher coverage limits for personal belongings and personal liability than an HO-3 policy.
An HO-5 policy covers your personal belongings on a replacement cost basis. So if something happens to them, you get the amount it costs to replace them, not just their current depreciated value. In addition, an HO-5 policy covers your belongings on an open perils basis. It also provides coverage for loss-of-use and medical payments for others.
HO-6: Unit owners policy
An HO-6 policy is for condo owners. It’s often called “walls-in coverage” because it protects what’s inside your condo, like the floors, ceilings, walls and any renovations you’ve made. It insures against the same perils as an HO-3 policy and includes coverage for your personal belongings, additional living expenses and personal liability.
But here’s the catch — this policy doesn’t cover the entire building or common areas. That’s usually handled by your condo association’s insurance. You pay for this through your condo or HOA fees. Check what your association’s policy covers to avoid any gaps or overlaps.
HO-7: Mobile home policy
An HO-7 policy is for mobile homes. It includes coverage for your home, your personal property, other structures, loss of use, personal liability and medical payments.
Similar to HO-3 policies, HO-7 policies work on an open perils basis for your mobile home’s structure and a named perils basis for your belongings. Read more about mobile home insurance.
HO-8: Modified coverage policy
HO-8 insurance is for homes more than 40 years old where it might cost more to rebuild than the house is worth. This includes historic houses or ones built in unique ways.
HO-8 insurance covers your dwelling and personal property on a named perils basis. Instead of paying the full replacement cost for damages to your home’s structure, an HO-8 policy typically reimburses the actual cash value. This means it pays you what your home is worth in cash at the time of the claim, not what it costs to rebuild.
HO-14: Contents comprehensive policy
The HO-14 policy is an advanced version of the traditional HO-4 renters insurance. Unlike the HO-4, which covers named perils, the HO-14 operates on an open perils basis, meaning it covers all risks unless they’re specifically excluded. Also, while the HO-4 provides actual cash value coverage, the HO-14 insures your items at their full replacement cost.
HO-14 insurance may come with unique features like coverage for home-sharing activities, a $500 allowance for bed bug treatments and a $300 provision for hard drive data recovery.
Get home insurance quotes in minutes
Answer a few questions to see custom quotes and find the right policy for you.
The difference between HO-3 and HO-5 policies
Both HO-3 and HO-5 policies cover your home’s structure, personal belongings, liability, medical payments and additional living expense coverage. The big difference is how they insure your belongings.
HO-3 policies use open perils for the house’s structure but named perils for personal belongings. If the policy doesn’t specifically exclude a risk for the house, it’s covered. But for belongings, it only covers listed events.
HO-5 policies are more comprehensive. They use open perils for both the home and personal belongings, covering all risks unless specifically excluded. Because HO-5 offers broader coverage, it’s often more expensive than HO-3.
What was your favorite thing to talk about as a kid? Maybe it was dinosaurs, or Barbie or the Magic Treehouse book series. It probably wasn’t compound interest. Getting kids excited about investing can pay off for the rest of their lives — but how do you do it?
Here are six strategies to help get kids interested in investing for good.
1. Make it relatable
Explaining what investing is and why people should care about it can feel like an exercise in futility — the jargon, the math, all the acronyms — but at its core, investing is incredibly simple. Investing means taking the money you already have and using it to make more money without having to do any additional work. When talking with kids, stay away from “Roth IRA,” “dividends” and “return on investment,” and instead focus on the basics.
The language should be simple: If you have $100 now, and you invest it, you may have $110 later. Then, that extra $10 you earned will start earning money, too. You can play around with an investment calculator to help them visualize how their money could earn more money over time.
And while it’s good to be skeptical of financial advice on social media, there are some great sources of information that may help get kids more interested in money management.
“I got started with the help of YouTube,” says Ariana Bribiesca, a content creator based in Malibu, California, who started investing at age 16 and now runs the TikTok account Ari Invests. “I spent about 10 months doing research before I decided to open up my brokerage account.”
Bribiesca got introduced to investing through social media, particularly through her YouTube recommendation page, which showcased videos about credit cards, the college application process, starting a business, and investing.
2. Have them invest in what they’re into
One way to get a kid excited about investing, according to Riley Adams, a certified personal accountant and founder of Young and the Invested in Pleasanton, California, is to help them connect with brands they like.
“Instead of saying, ‘I shop at Nike,’ or ‘I use Snapchat,’ it actually lets you go a step further and gets you involved by not just spending your money with these companies, but making money on things you already do,” Adams says.
Investing in brands kids are excited about may help them feel a more personal connection to the experience. If they’re invested in their favorite store, shopping there may feel like they’re helping make their own stock more valuable instead of just spending money.
3. Make it a game
Investing itself may not be something kids are interested in, but turning it into a game may help your kids feel more excited about it — especially if there’s a chance they can beat you at it.
“Gamification is definitely a big thing, so find little ways to make it seem more like a game, and it’s more fun to get involved with,” Adams says.
You can have regular contests to see who can make more money on their investments, with the winner earning a prize in addition to whatever profits they make; or see who can better predict what happens to the stock market based on what’s happening in the news.
Just like players can lose when playing a game, investors can lose money. Helping a child understand the risks is an important piece of the puzzle when it comes to helping them develop a healthy relationship with investing.
4. Get them some practice
If you don’t want to risk real money, you can open a paper trading account for kids, which allows them to simulate the investing experience for free.
“I practiced with fake money before investing my own money for about two months,” Bribiesca says. “I used the app Stock Market Simulator which gave me $10,000 of simulated money to invest. I showed my parents my entire journey with it and would even force them to watch a couple YouTube videos with me so they understood what I was learning.”
If the kids in your life are ready to start investing for real, you can help them open a 529 plan to help them save for college, a Roth IRA to get a jump on retirement, or a custodial brokerage account for general investing.
5. Help them make it a habit
Making a habit stick requires repeating the behavior again and again. If you’re trying to help a child stick with investing for good, they’ll need to get in the habit of doing so early.
If you give a child an allowance or pay them for small jobs around the house, help develop their investing habit by teaching them to take a portion of their earnings and put it toward investing for the future. This can help cement the habit and make it something they do regularly as they get older.
6. Talk openly about money
While some adults may not want to discuss finances in front of the kids, it may be more beneficial for children to see healthy financial behaviors and conversations modeled for them. If they never hear adults talking about investing or budgeting, or are told that talking about money is inappropriate, they may not have the tools to deal with financial conversations when they get older.
“Overall, it is important for parents to include their kids in talks about money and slowly introduce them to different topics or resources,” Bribiesca says. “It is important to include them because kids like to imitate their parents and follow their footsteps when they notice something can be very rewarding.”
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
Flying with small children, especially babies, can be extra stressful. There’s often more to bring with you when you fly and more preparations to make beforehand, and many airlines have different policies when it comes to traveling with an infant. Here’s everything you need to know about the Southwest Airlines infant policy so you can travel prepared.
Flying Southwest with an infant: Age restrictions
If you’re traveling with Southwest Airlines with a baby, a lap child or lap infant is at least 14 days old, but under 2 years old. They will not be occupying their own seat, but spending the duration of the flight on an adult’s lap. A child 2 years or older will need their own ticket and their own seat.
Because there’s an age restriction, you may have to prove how old your child is, so bring along an original or photocopy of either a birth certificate, passport, or government-issued ID card. A screenshot or digital copy won’t be accepted.
If you’re asked to prove the baby’s age at any point in the trip and you can’t, you may be forced to purchase a full-price ticket. However, after you return home, you can submit valid proof of age to Southwest via email and request a refund.
Southwest baby policy: Fees and boarding passes
The Southwest infant policy doesn’t require babies to have their own boarding pass, but they will need a boarding verification document, which can be printed out at a check-in kiosk or check-in counter on the day of travel. It’s definitely not a bad idea to arrive a few minutes early to the airport to make sure you have everything you need in hand before you head through security.
The good news is that lap infants travel free on domestic flights, which make up the bulk of Southwest routes. On international flights, taxes and fees will likely be imposed and a more official ticket issued for your child.
Flying with an infant on Southwest: How to book
First, you’ll need to let the airline know you’ll be carrying an infant. To do so, search for flights as usual on Southwest.com, but when you select how many passengers will be traveling, make sure to select the number of lap infants traveling in addition to adults.
After you select your flights, when you get to the “who’s traveling” section, type in all the adults’ info as well as the child’s.
If you plan to book a flight for you and a lap infant with Rapid Rewards points, you’ll have to call the airline to do so. You’ll also need to call or visit a Southwest agent at the airport to make changes to a reservation that includes a lap child after you’ve completed the booking.
As long as you’re flying domestically, you can add a lap child to an existing reservation at a self-service kiosk at the airport. You can also update the baby’s date of birth, gender and name, as well as print a boarding document at a kiosk.
Flying with an infant on Southwest while breastfeeding
Nursing mothers will be pleased to know that in addition to the typical carry-on allowance (one carry-on and one personal item), those who are breastfeeding may carry an extra bag for a breast pump and breast milk.
Do keep in mind, though, that there aren’t typically outlets on board Southwest planes, so you may not be able to use electric breast pumps.
As for how much breast milk or liquid formula you can carry onboard, TSA considers the liquids medically necessary, so you can travel with more than the typical 3.4 ounces per container. Just let the TSA agents know you’re traveling with nursing liquid and they may have you remove them from your bag to be screened separately.
Boarding tips for flying Southwest with an infant
Since there are no assigned seats on Southwest flights, those with young children or lap children will want to be at the gate a few minutes before the start of boarding so they can board the plane together during family boarding.
This happens after boarding group A is called and allows up to two adults to board with small children — at least one has to be 6 or younger. This provides families with a few more precious seconds to get situated and a better chance at securing seats together if you’re in boarding group B or C.
Bottom line
The Southwest Airlines infant policy is straightforward from booking to boarding. You’ll just need to ensure your lap child is included on your reservation, bring all the proper documentation, take advantage of the airline’s unique boarding system and then enjoy the journey.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
Good morning and thank you for joining today’s call to review Freddie Mac’s business and financial results.
As many of you know, September marked 15 years since Freddie Mac entered government conservatorship. And the company has made significant progress.
While much remains to be done, and this company is committed to the work, today I will cover three topics that illustrate how far Freddie Mac has come since 2008:
First, how the company has intensified its focus on mission, particularly related to affordable housing.
Second, how risk has been reduced.
And finally, how Freddie Mac has made progress in its work to build financial stability.
Then I will turn it over to our CFO, Chris Lown, for an update on the company’s third quarter financial performance.
Ongoing Improvement
Mission
Let’s start with mission.
Over the past few years, Freddie Mac has strengthened its focus on its mission and embraced an expansive view of support for affordable housing.
Freddie Mac strives to meet or exceed a number of affordable housing-related commitments, such as:
Affordable Housing Goals in both Single Family and Multifamily,
The Duty to Serve Plan, which targets high-needs rural regions, manufactured housing, and affordable housing preservation.
And that includes the company’s payments into the Capital Magnet Fund and Affordable Housing Trust Fund, which now top $2.2 billion.
And finally, Freddie Mac’s Equitable Housing Finance Plan, which expands the company’s efforts to promote equity in the Single-Family and Multifamily markets.
Regulatory commitments are the baseline expectation. Today, the company approaches mission more broadly, with a range of initiatives to help renters, lenders, diverse developers and other market participants. For example:
Single-Family improved its technology to help borrowers with thin credit files by allowing lenders to access bank data, tax transcripts and direct deposit data to verify critical information such as income, assets, and on-time rent payments.
Multifamily is helping renters prepare for homeownership though an on-time rent reporting initiative, which helps them establish or raise credit scores. To date, more than 375,000 renters can participate.
Freddie Mac has also provided tools to help borrowers receive down payment assistance, including through Special Purpose Credit Programs and the newly launched DPA One tool, both of which I have discussed previously.
This company’s commitment to housing affordability is more ingrained in its DNA than ever before.
Reducing Risk
That’s equally true for the company’s commitment to strong risk management. Today, it is both a requirement and a vital part of Freddie Mac’s identity.
Here are just a few of the many examples:
Since 2008, Freddie Mac has reduced its mortgage-related investments portfolio down to approximately $85 billion. This is less than one-tenth of its $867-billion peak.
In 2020, the company adopted bank-like capital requirements designed to backstop its risks and has been steadily building total equity to meet those requirements.
And finally, Freddie Mac pioneered credit risk transfer. CRT brings billions of dollars of private capital into the U.S. housing finance system, dramatically reducing taxpayer exposure and lowering the company’s own risk.
In fact, the third quarter marked 10-years since the first Single-Family CRT transaction.
To date, Freddie Mac’s Single-Family CRT program has transferred more than $108 billion of credit risk on approximately $3.3 trillion of mortgages.
Multifamily has also protected a half-trillion dollars of loans via its K-Deal program, which started in 2009.
Ensuring Stability
Finally, let me turn to the growing stability of Freddie Mac’s financial position after 15 years of change and improvement.
In the third quarter the company earned $2.7 billion and grew its net worth to $44.7 billion.
Furthermore, credit quality today is strong in both the Single-Family and Multifamily mortgage businesses. Chris will say more about that in a moment, but it is clear that the changes the company made since 2008 have set Freddie Mac on a new course.
Keeping What Works
While the company made significant strides to improve its focus and performance over the past 15 years, it still preserved the core elements of Freddie Mac that have worked for decades.
That includes support for the 30-year mortgage—the cornerstone of the American housing finance system and Freddie Mac’s business. Thirty-year fixed-rate mortgages accounted for more than 90 percent of the home loans we purchased this year.
Freddie Mac is also helping provide access to housing for low- and moderate-income renters and borrowers.
Support for first-time homebuyers is near all-time highs at 50 percent of purchase loans.
And more than 90 percent of the eligible rental units financed were affordable to low-income and working families.
The company also has preserved small lenders’ access to the secondary mortgage market via the cash window.
And it enhanced liquidity in the to-be-announced market as one of the leaders in the creation of the uniform mortgage-backed security, one of the most significant changes to the market in a generation.
Since inception more than $284 trillion of UMBS have been traded.
Finally, Freddie Mac has maintained its counter-cyclical role. The company’s market presence in the early days of the pandemic and current support for the housing market are solid examples.
Playing an Important Role
Before I turn it over to Chris Lown, allow me to put the work of thousands of talented people over 15 years into context.
Since 2008, Freddie Mac has:
Provided more than $8 trillion in liquidity to the mortgage market,
Helped nearly 11 million homebuyers, including more than 4.1 million first-time homebuyers, and
Funded more than 8.3 million rental units, 87 percent of which were affordable.
Further the company has returned nearly $120 billion to taxpayers, approximately 67 percent more than it borrowed from the U.S. Treasury.
And most importantly, Freddie Mac is a strong, stable organization that is unwavering in its focus on Making Home Possible for renters and borrowers well into the future.
Now, let me turn it over to Chris.
Financial Results (Remarks of Chris Lown)
Thank you, Michael, and good morning.
As Michael noted, this morning we reported net income of $2.7 billion for the quarter, an increase of $1.4 billion, or 104 percent, year-over-year. This increase was primarily driven by a credit reserve release in our Single-Family business versus a credit reserve build in the prior year quarter.
Third quarter net revenues were $5.7 billion, an increase of $509 million, or 10 percent, year-over-year. This increase was driven by both higher net interest income and higher non-interest income. Net interest income increased 4 percent year-over-year to $4.7 billion, driven by higher investments net interest income benefiting from higher short-term interest rates. Non-interest income of $941 million was up 50 percent year-over-year driven by higher Multifamily guarantee income and higher investment gains.
An increase in observed and forecasted house price appreciation drove a $263 million benefit for credit losses this past quarter versus an expense of $1.8 billion in the prior year quarter.
In the third quarter of 2022, the provision for credit losses was driven by deterioration in housing market conditions coupled with lower observed and forecasted house price appreciation.
These increases were partially offset by a $751 million, or 41 percent, increase in our non-interest expense, which was primarily driven by an allocation of $313 million for the accrual for the judgement in the Fairholme Funds litigation and a $314 million decrease in Single-Family credit enhancement recoveries due to a decline in expected credit losses on covered loans.
Our total mortgage portfolio at the end of the third quarter was $3.5 trillion, a 2 percent increase year-over-year.
Single-Family Business Segment
Turning to our individual business segments, the Single-Family segment reported net income of $2.3 billion for the quarter, up $1.5 billion, or 176 percent, from the prior year quarter.
Single-Family net interest income of $4.5 billion was up 4 percent year-over-year, primarily driven by higher income on our investment portfolio, which benefited from higher short-term interest rates, partially offset by lower deferred fee income recognition as prepayments slowed due to higher mortgage interest rates. Mortgage interest rates at the end of this quarter were 7.31 percent, up 61 basis points from the prior year quarter. Non-interest income for Single-Family was $393 million this quarter, up $335 million from the prior year quarter. This increase was primarily driven by higher net investment gains which benefited from higher interest rate-related gains.
Our benefit for Single-Family credit losses this quarter was $304 million, primarily driven by increases in observed and forecasted house price appreciation. In the prior year quarter, we had a provision expense of $1.8 billion, which was primarily driven by deterioration in forecasted housing conditions and lower observed and forecasted house price appreciation.
House prices increased by 2.5 percent this quarter and our forecast assumes an increase of 2.9 percent over the next 12 months and 1.7 percent over the subsequent 12 months.
The Single-Family allowance for credit losses coverage ratio at the end of the quarter was 22 basis points, down from 23 basis points a year earlier.
The Single-Family serious delinquency rate declined to 55 basis points at the end of the third quarter, down 12 basis points from the end of the prior year quarter. The Single-Family serious delinquency rate remains historically low and is down 8 basis points from the pre-COVID rate of 63 basis points at the end of 2019.
In the third quarter, we helped approximately 18,000 families remain in their homes through loan workouts. Our loan workouts have continued to decline as the seriously delinquent loan population has declined.
Our Single-Family mortgage portfolio increased 2 percent year-over-year to $3 trillion at the end of the third quarter.
Credit characteristics of our Single-Family portfolio remained strong, with the weighted average current loan-to-value ratio at 53 percent and the weighted average current credit score at 756. At the end of the quarter, 62 percent of our Single-Family portfolio had some form of credit enhancement.
New business activity was $85 billion, up $2 billion from the second quarter. However, year-over-year new business activity declined $36 billion, or 30 percent, as both refinance and purchase activity declined due to higher mortgage interest rates. Home purchase volume of $76 billion made up 89 percent of our total new business activity this quarter. First-time homebuyers represented 50 percent of new Single-Family home purchase loans. The average guarantee fee rate charged on new business was 55 basis points this quarter.
Multifamily Business Segment
Moving on to Multifamily, the segment reported net income of $362 million, down 23 percent, or $108 million, from the prior year quarter. This decrease was primarily driven by higher provision for credit losses and higher non-interest expense in this period.
The provision for credit losses in Multifamily this quarter was $41 million, an increase of $29 million from the prior year quarter primarily driven by deterioration in overall loan performance. The Multifamily allowance for credit losses coverage ratio at the end of this quarter was 54 basis points, up from 14 basis points a year earlier.
Non-interest expense was $266 million, up $94 million, or 55 percent, year-over-year, primarily driven by an allocation for the accrual for the judgment in the Fairholme Funds litigation.
The Multifamily delinquency rate was 24 basis points at the end of the quarter, up from 21 basis points last quarter and 13 basis points at the end of September 2022. This increase was primarily driven by an increase in delinquent loans in our senior housing and small balance loans portfolios. Ninety four percent of these delinquent loans have credit enhancement coverage.
We have seen a continued decline in demand for Multifamily mortgage financing due to higher mortgage interest rates and a slowdown in the Multifamily origination market.
Our Multifamily new business activity was $13 billion for the third quarter, bringing the year-to-date volume to $32 billion versus $44 billion for the same time last year.
Our Multifamily mortgage portfolio increased 4 percent year-over-year to $432 billion, of which 95 percent was covered by credit enhancements.
Capital
On the capital front, our net worth increased to $44.7 billion at the end of the quarter, representing a 27 percent increase year-over-year.
With that I will turn it back over to Michael.
Conclusion (Remarks of Mr. DeVito)
Thanks, Chris.
Before we close, let me say a few words about the recent announcement that I will be departing Freddie Mac in early 2024.
It is a privilege to lead this company. And Freddie Mac is fortunate to have a strong leadership team, ready to meet the challenge of guiding this company into the future, and an outstanding group of employees who are intensely dedicated to its mission and making home possible.
Thank you for joining us today.
MEDIA CONTACT: Frederick Solomon 703-903-3861 [email protected]
Lenders who provide VA home loans often offer better terms than a borrower might get with a conventional mortgage. Private mortgage insurance (PMI) isn’t required, interest rates may be lower than with other types of mortgages, and most VA-backed loans (90%) are made with no down payment.
Still, when you’re shopping for any type of mortgage, it can be helpful to have a good idea of where you stand and what your monthly payments might be. And that’s why a VA loan calculator table can be instrumental. By plugging in a few key numbers, you can feel better informed, whether you’re planning to buy a home or considering refinancing your current mortgage.
Why Use a VA Home Loan Mortgage Calculator Table?
If you’re a veteran, service member, or eligible survivor interested in learning about a VA loan — which is one of the different types of mortgage loans available — a VA home loan calculator can help you estimate what your monthly payments might be based on data you provide.
You can see how a 15-year mortgage might differ from a 30-year mortgage, for example, or what different interest rates might mean for your monthly payments. You also can get an idea of how much you might pay in interest over the life of your VA home loan. 💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you throughout the process.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
How to Calculate Your VA Home Mortgage Loan Payment
To calculate your monthly VA mortgage payment with a VA loan calculator table, you’ll need to gather up a few key pieces of information, including:
Home Purchase Price
This can be the actual cost of a home you hope to buy, or what you’ve budgeted for your home purchase.
Down Payment Amount
For most eligible veterans and service members, this amount will be $0.
Loan Term
This is the expected length of your loan, usually 15 or 30 years.
Interest Rate
You won’t know your exact interest rate until you lock it in with your lender, so this will be an estimate. Lenders base their rates on current market rates, a borrower’s credit profile, and other factors.)
Property Tax Rate
If you have a particular home in mind to purchase, the tax rate may appear on the listing. You also can look for property tax rates on county websites.
The formula used to calculate a mortgage payment can be complicated, so it may be easier to use a VA home loan calculator to check how changing various numbers might affect your loan. Our VA Loan Mortgage Calculator Table, with averages used below in various fields, also can help you see what your payments might look like.
2023 VA Home Loan Mortgage Calculator Table
Purchase Price
$210,000
$375,000
$675,000
Down Payment
$0
$0
$0
Avg. Property Tax Rate*
1.45% (St. Louis)
1.15% (Tampa)
.82% (Los Angeles)
PMI:
$0
$0
$0
Interest Rate
9%
7%
5%
Loan Term
15-year/30-year
15-year/30-year
15-year/30-year
Estimated Payment
$2,384/$1,943
$3,730/$2,854
$5,799/$4,085
Principal & Interest Monthly
$2,130/$1,690
$3,370/$2,495
$5,338/$3,624
Taxes Monthly
$254
$359
$461
Total Interest Paid
$173,393/$398,290
$231,709/$523,162
$285,814/$629,475
*Property tax exemptions and special tax districts may apply
Examples from the VA Home Mortgage Calculator Table
Because VA-backed loans don’t require mortgage insurance, and most don’t require a down payment, the main factors that will influence your monthly mortgage payment are the amount of the loan, the interest rate you pay, and the length of the loan.
As you can see from the VA loan affordability calculator table above, borrowers can get a smaller, more manageable monthly payment if they opt for a longer loan term. But they’ll pay more in interest than they would if they had a shorter term. Using the Tampa home as an example, the estimated monthly payment would be $2,854 with a 30-year term, vs. $3,730 with a 15-year loan. But the total amount of interest paid for the 30-year loan could end up being more than twice as much: $523,162 vs. $231,709.
And, of course, the cost of the home you choose to buy can also be an important factor. As shown in the table, even with a much higher interest rate, both the monthly payment and total interest paid for the home in St. Louis would be lower than for the home in Los Angeles — simply because the cost of living in California is high and the St. Louis home is less expensive.
It can be helpful to check the cost of living by state if you’re deliberating between two different locations for your next home. 💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†
Other Costs to Consider
Most VA loan mortgage calculators stick to the basics, but there are other costs you may want to consider when you’re trying to determine the monthly loan payment you can afford, including:
VA Funding Fee
Though borrowers don’t pay mortgage insurance on a VA loan, most will pay a one-time funding fee. (Some borrowers are exempt.) The fee, which can be paid upfront or rolled into the loan, is a percentage of the loan, and is based on the type of loan and other factors.
Homeowners Insurance
Homeowners insurance can help protect your home and property in case of expensive damage and other potential costs. Your lender will likely require that you buy homeowners insurance before you close on your home purchase.
HOA Fees
If the home you purchase is part of a homeowner’s association (HOA), you may have to pay a monthly or annual fee. The HOA may use this money to cover maintenance costs and amenities.
VA Home Loan Limits
Typically, the VA guarantees that it will repay the lender up to 25% of your loan amount if you should fail to make your payments. But if you’re still paying off another VA loan, your VA guarantee may be limited, and the lender may ask you for a down payment to make up the difference. Your lender can help you determine how VA home loan limits might affect your new loan.
Recommended: 2023 Home Loan Help Center
Reasons to Calculate Your VA Home Mortgage Loan First
You may want to calculate the monthly payment and interest costs for your VA loan first, then compare those numbers to other types of loans – especially if you’re a first-time buyer who’s struggling to come up with a down payment. Your VA loan may come with a lower interest rate, and you won’t have to pay private mortgage insurance, which can keep your payments lower. Your lender also may accept a lower credit score if you’re applying for a VA loan vs. a conventional loan.
Still, it can be a good idea to compare all the different types of mortgage loans for which you might be eligible. If you can afford to make a 20% down payment on a conventional loan, for example, you can avoid the VA funding fee, and you’ll have some equity in your home right away. It doesn’t hurt to keep your options open, whether you’re buying a home or refinancing your mortgage.
Tips on How to Save on Your VA Home Mortgage Loan
To get the best VA loan payment, these are a few strategies that could help you save money.
Work on Your Credit
There isn’t a required minimum credit score for VA loans. Instead, the VA asks approved lenders to review the borrower’s “entire loan profile,” which could include your credit history, debt-to-income (DTI) ratio, employment history, and assets.
Individual lenders also may have their own approval criteria you should be aware of when you’re ready to apply for a loan. The more you can do to improve your financial health, the better the chances that you’ll get the loan terms you want.
Consider Making a Down Payment
Most borrowers don’t have to make a down payment on their VA home loan, but that doesn’t mean you can’t. Putting a down payment on your loan could show the lender that you’re a serious buyer, which may help you get a lower interest rate or reduce the VA funding fee on your loan.
Roll Your VA Funding Fee into Your Loan
If you’re a first-time homebuyer or low on cash for closing, the VA’s one-time funding fee may seem like a daunting amount. But you don’t have to pay the entire fee upfront. You can ask your lender to include that amount in your loan, and it will be added to your monthly payments. Your payments will be a bit more, but it may make the difference in being able to buy a home of your own.
Recommended: Tips to Qualify for a Mortgage
The Takeaway
Because VA home loans have some different requirements and benefits than other mortgages, it can be helpful to get an idea of what those differences might mean for your monthly payment and overall loan by using a VA loan calculator table.
If you’re preparing to buy or refinance a home, a VA mortgage loan calculator table can give you a useful estimate of what your new loan might look like, depending on your loan amount, length, interest rate and other factors.
SoFi offers VA loans with competitive interest rates, no private mortgage insurance, and down payments as low as 0%. Eligible service members, veterans, and survivors may use the benefit multiple times.
Our Mortgage Loan Officers are ready to guide you through the process step by step.
FAQ
Will VA home loan limits increase in 2023?
Yes, VA home loan limits increased significantly in 2023. The baseline limit for VA loans in 2023 is $726,200, compared to $647,200 in 2022.
How much do I need to make to buy a $300,000 house with a VA loan?
Your income is only one factor that goes into deciding how much you can afford to borrow. Lenders also will look at your debt-to-income (DTI) ratio, which is the amount of your monthly debt payments compared to your monthly gross income. The VA doesn’t have a required DTI ratio for borrowers, but a maximum DTI of 41% is preferred.
What is the VA benefit increase for 2023?
Military retirees and disabled veterans got an 8.7% increase in their monthly checks in 2023, thanks to the annual adjustment to the federal cost of living allowance.
Photo credit: iStock/joel-t
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
Family travel is no child’s play, especially when taking a plane. Traveling with an infant takes trip planning to a whole new level. What do you do with your stroller, car seat and diaper bag? And don’t forget all the necessary travel documents.
If you’re traveling with United Airlines, we’ve got the details for how to book an infant’s ticket, what kind of baggage allowance you get and even which aircraft have changing tables.
United Airlines infant policy
If your child is under the age of two (but older than seven days old), he or she can sit on a parent’s lap on flights to any destination. However, the cost varies by destination:
U.S. domestic flights (including flights to Puerto Rico and the U.S. Virgin Islands): free, no ticket required.
Flights between the U.S., Canada and Mexico: ticket is required, and you pay only taxes.
International flights (including flights to Guam): ticket is required and charged a partial fare based on the destination.
If you’re flying in United Polaris business class or in economy on select routes, United will provide free bassinets. To request one ahead of your flight, contact United customer service.
If you decide to pay for an infant’s seat, you must bring an approved car seat — as all passengers must be in their seats during takeoff, landing and turbulence. Additionally, children flying in car seats must be in a window seat, and the car seat must be secured to the aircraft seat.
Look for car seats made after 1985, as these are Federal Aviation Administration-approved — and will have a certificate attached to them stating as much. Keep in mind that car seats aren’t allowed in Polaris business class on most Boeing 767, Boeing 777 and Boeing 787 aircraft.
Do I have to pay for an infant’s seat when flying United?
As mentioned above, you don’t have to purchase a seat for a child under two if you keep them in your lap for the duration of the flight. However, some situations require you to book a seat for your child.
You book a round-trip flight, and your child turns two before the return segment of the itinerary.
You’re an adult traveling with two children under the age of two. You must purchase at least one seat for an infant because you can’t hold more than one child in your lap.
How much will I pay for a lap infant’s ticket on an international itinerary?
The lap infant fare varies based on destination. For example, we’ve looked up a round-trip flight from Newark to Frankfurt in economy class for two adults and one lap infant. The total came to $1,113 per adult, including taxes and fees, and $118 for the lap infant, including taxes and fees. A lap infant’s ticket costs just a fraction of the price of an adult ticket.
When it comes to tickets booked with United MileagePlus miles, you’ll pay 10% of the revenue fare, which includes travel on United as well as on partner airlines. The lap infant fee is capped at $250, which comes in handy if you’re booking a pricey business-class ticket for the parent.
United Airlines stroller policy, carry-on allowance when traveling with an infant
In addition to a regular United carry-on allowance, you may bring the following items onboard when traveling with an infant:
Diaper bag.
Breast pump, milk or formula.
FAA-approved car seat.
Compact folding stroller (must be under standard carry-on limits).
At the airport, you may use standard strollers, folding wagons and car seats to get to your gate and check them for free at the gate.
If you’re nursing, you can breastfeed or pump from your seat or bathroom. You’re also allowed to bring ice to keep the milk and formula cold in the cabin. Unfortunately, you won’t be able to store breastmilk in the onboard fridges, so plan ahead.
Do United planes have changing tables?
The following aircraft feature changing tables in lavatories:
Boeing 757-300.
Boeing 767.
Boeing 777.
Boeing 787.
Select Boeing 757-200.
United Airlines family boarding
Anyone flying with children two or younger qualifies for pre-boarding on United planes. Pre-boarding is the first boarding group and also includes the following travelers:
Customers with disabilities.
Unaccompanied minors.
Active members of the military.
Global Services and Premier 1K elites.
How to book a ticket for a lap infant on United
To book an infant’s ticket on United, go to United.com and input your search parameters, including origin city and destination, travel dates and whether you need a round-trip or a one-way ticket.
Under “Travelers,” you’ll be able to select the number of passengers. If you want to buy a ticket with a seat for your child under two, select “Infants (Under 2).” If you don’t want to purchase a ticket, select “Infants on lap.”
If you’re booking an international trip, make sure your child has a valid passport. For domestic travel, a birth certificate should be enough.
Can I sit together with my child on United?
Parents on a budget might be inclined to book basic economy tickets, which normally don’t include a complimentary seat selection. However, thanks to United’s recent policy, families flying with children under 12 can sit together for free.
So, if you’ve compromised between cost and comfort and purchased a separate seat for your child under two, you can skip paying for seat selection, even on a basic economy fare.
United Airlines infant policy recapped
Although you don’t have to get a ticket for a lap infant when flying on domestic flights, you need to get one when flying internationally. Luckily, it won’t cost you as much as a full fare, so you can save some money until your child turns two. After that, your kid will require his or her own seat.
United also offers some great perks for parents traveling with infants, such as priority family boarding, extra carry-on and checked luggage allowance, and free seat selection, even on basic economy fares.
How to maximize your rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2023, including those best for:
The state of the mortgage industry is rife with concern as elevated rates and low inventory have stunted both refinance and origination activity. As a result, the makeup of the mortgage ecosystem is shifting.
Private correspondent aggregators play an essential role in the upkeep of a balanced mortgage ecosystem. While this term may be unfamiliar to many, a private correspondent aggregator is a fancy title for an entity that purchases mortgages and repackages the loans into mortgage-backed securities.
When we think of aggregators, often the first entities that come to mind are the GSEs, Fannie Mae and Freddie Mac. However, private aggregators play an equally important part in the facilitation of a balanced market by providing small banks and independent originators with the infrastructure to securitize loans. These private entities not only oversee the eligibility for originators to deliver loans to the Enterprises, but they also serve as a technical resource when it comes to best pricing, underwriting and securitization practices.
Private aggregators provide a wide range of services, including an extra layer of risk mitigation. This has created an advantageous situation for the GSEs. However, recent pricing policies on behalf of the GSEs have illuminated that this relationship may not be as mutually beneficial as it once seemed.
Historically, the Federal Housing Finance Agency (FHFA) has been committed to pricing parity, which has ensured a level playing field for all lenders. The idea that all originators are entitled to a non-varying of loan fees promotes competition in customer service, quality, and efficiency amongst lenders, which benefits the borrower. Despite pricing parity’s vital role in ensuring a competitive market, the GSEs have strayed from this by engaging in activities that exacerbate disparate pricing in the correspondent channels.
We see this disparity most clearly through the pricing advantage Fannie Mae and Freddie Mac cash windows hold over private aggregators. While private aggregators enhance loan quality by essentially vetting a loan through a number of risk analysis practices, all loans that are sent directly through these cash windows secure more advantageous pricing.
The bias in Fannie Mae and Freddie Mac cash windows is contradictory to FHFA’s principle of price equity and promotes a deviation from risk-based pricing. Additionally, this practice has made the cash windows vulnerable to adverse selection, as many of the loans purchased through these windows have already declined in value in large part due to their lack of being properly reviewed.
The incentive to funnel loans directly through the cash windows benefits the Enterprises at the expense of private aggregators and consumers. Rather than evaluate and price loans based on their performance and value, Fannie Mae and Freddie Mac are promoting a system that rewards loans based purely on which channel they travel through.
Moving forward, it is imperative that FHFA addresses this problem in order to safeguard the viability of an equitable mortgage industry. The GSEs should be required to create a comprehensive Seller quality and performance ranking system under the thorough guidance of FHFA.
Such a system would motivate originators to enhance their loan quality, while also ensuring standardized compliance with regulatory requirements. Also, it’s important to promote policies that support aggregators. In a low origination market, there is a need for a strong group of aggregators that will compete for small and mid-sized IMB originators’ loans.
A small or midsized IMB will need to sell a percentage of their loan servicing release to generate the funds needed cover the negative cash flow of originating a mortgage. So, policymakers and regulators should support aggregators’ ability to meet the liquidity needs of small to mid-sized IMBs by having a competitive bid for their loans. Aggregators can only provide competitive pricing if there are treated fairly by the GSEs.
In any ecosystem, a disruption in one area has the potential to adversely impact the entire food chain. While the allowance of disparate pricing between correspondent channels may seem like a small problem in the grand scheme of the mortgage origination process, this inequity in pricing harms the health of independent originators and borrowers by reducing competition and incentivizing a lack of risk-mitigation.
The mortgage industry boasts the impressive reputation of being a highly competitive market because of important regulation that ensures a level playing field. Let’s keep it that way.
David Stevens has held various positions in real estate finance, including serving as senior vice president of single family at Freddie Mac, executive vice president at Wells Fargo Home Mortgage, assistant secretary of Housing and FHA Commissioner, and CEO of the Mortgage Bankers Association.
Ted Tozer is a non-resident fellow at the Urban Institute’s Housing Finance Policy Center (HFPC). He served as president of Ginnie Mae for seven years.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the authors of this story: Dave Stevens at [email protected]
Ted Tozer at [email protected]
To contact the editor responsible for this story: Sarah Wheeler at [email protected]