“As we’ve noted previously, the recovery in home prices is broadly based. Prices rose in all 20 cities in June, both before and after seasonal adjustment,” Craig Lazzara, managing director at S&P DJI, said in the report. “Over the last 12 months, 10 cities show positive returns. Otherwise, half the cities in our sample now … [Read more…]
Two weeks since the first report of a wildfire in Lahaina, Hawaii, the scope of the tragedy is coming into focus.
Search teams looked through every single-story residence in the disaster area and found the remains of 115 people. The death toll is likely to grow as teams now look through multi-story residences and commercial properties.
As of Aug. 21, the fire, which began on Aug. 8, was considered 90% contained and has burned through more than 2,100 acres, according to Maui County.
More than 2,000 buildings in Lahaina were destroyed or damaged by the blaze, according to an artificial intelligence model compiled by Esri, a geographic information system software provider.
The AI model reviewed satellite photos of Lahaina before and after the fire and estimated on Aug. 11 that 2,088 structures – about 63% of all structures in the examined area – had been destroyed or damaged.
Most buildings were homes. The Federal Emergency Management Agency estimated on Aug. 12 that the fire had destroyed 1,466 houses; 85% of all structures that were assessed were destroyed.
Based on Esri’s estimates of damaged structures and building types provided by USA Structures, nearly 1,800 residential structures were damaged in the fire. USA Structures is a dataset maintained by the Department of Homeland Security, the Federal Insurance and Mitigation Administration, FEMA, Oak Ridge National Laboratory and the U.S. Geological Survey.
The financial toll of the damage is vast for a town of about 12,000 people. Rebuilding costs could total more than $450 million for residential structures alone, based on Esri’s damage assessment and Maui tax roll data.
That includes $242.1 million in total building value for owner-occupied homes, $136.1 million for non-owner occupied homes, $40.7 million for short-term rentals and $23.2 million for long-term rentals, based on the building values of parcels that overlap Esri’s assessed damaged buildings.
The median residence assessed damaged by the fire was a 62-year-old, three-bedroom, two-bath structure valued at $242,700, excluding land value.
The damage also complicates hundreds of millions of dollars’ worth of mortgages. Lenders originated more than $670 million in mortgages for borrowers to purchase, improve or refinance single-family dwellings in the census tracts covering Lahaina in 2018-2022, the most recent Home Mortgage Disclosure Act data available.
Lenders originated more than 1,200 such loans over that period, led by Bank of Hawaii with 525, First Hawaiian Bank with 490 and HighTechLending Inc. with 470.
Many of the loans loans originated by these lenders were then purchased by Fannie Mae and Freddie Mac.
The Department of Housing and Urban Development has granted homeowners with Home Equity Conversion Mortgages or mortgages insured by the Federal Housing Administration a 90-day moratorium on foreclosures. HUD also announced a package of regulatory and administrative waivers for further assistance to those in the disaster area.
Homeowners may also borrow up to $500,000 to repair or replace their homes in a low-interest disaster loan from the Small Business Administration. Real estate professionals, too, have provided relief funds.
Officials’ primary efforts are still directed towards meeting the immediate needs of people in the disaster area; a full assessment of the damage and what rebuilding will cost will come later.
So far, FEMA has approved more than $5.6 million in assistance to nearly 2,000 households, including more than $2.3 million in initial rental assistance. Maui County officials estimate about 1,900 people are currently sheltered in hotels. The Environmental Protection Agency and Army Corps of Engineers have started debris collection.
Beyond the need for rebuilding, the wildfire’s long-term impact on insurance and affordable housing remain to be seen.
Hawaii is one of several states recently affected by natural disasters, including wildfires.
Well that didn’t take long. Only about six months after we bid adieu to 3% down mortgages, they have resurfaced.
But this time things are a little different. Though Fannie Mae and Freddie Mac still don’t accept mortgages with less than five percent down, some individual lenders have loosened up guidelines in an effort to increase business.
It’s no secret that loan origination volume is well below levels seen last year, and perhaps the best way to boost sales is to make it easier to qualify for a mortgage.
One area that has been particularly troublesome for prospective buyers is coming up with a large enough down payment. In fact, most renters have no other choice than a 3.5% down FHA loan.
Get a 3% Down Mortgage with No PMI
On Friday, TD Bank reportedly began offering mortgages with down payments as small as three percent to certain low- and moderate-income borrowers via its Right Step program, per the WSJ.
The program is reserved for borrowers who earn up to 80% of the median area income as determined by HUD, the parent of the FHA.
While not everyone can qualify for such financing, it does represent a loosening from the original five percent down payment required a year ago.
The loan program doesn’t require private mortgage insurance either, and the down payment can come in the form of a gift from family or a non-profit.
However, the interest rate on such loans will likely be higher to compensate for the increased risk and lack of PMI, though it could still be cheaper than FHA financing.
I took a look at TD Bank’s mortgage rates on their website and they seemed to be in line with typical market rates – not significantly higher or lower than the competition.
Because Fannie and Freddie haven’t changed their stance, TD Bank will likely keep the loans on their own books and assume the risk of default.
This represents a shift from the originate-to-distribute model that has been widely relied upon before and after the most recent mortgage crisis.
The WSJ noted that the Arlington Community Federal Credit Union in Virginia would also begin making 3% down mortgages starting next month, down from a previous minimum of five percent.
They will accept loan amounts up to $417,000, the conforming loan limit.
Another community bank based in New Jersey, Valley National Bank, lowered their down payment requirement to five percent from 25% for certain buyers on the East Coast.
Wells Fargo Also Offers Quasi-3% Down Mortgages Now
Even the nation’s top lender is in on the 3% down game, kind of. Though Wells Fargo requires a five percent minimum down payment for primary residential purchases, they now allow up to two percent of that to come in the form of a gift from relatives.
So in a sense it’s a 3% down mortgage as long as the borrower can secure that two percent from an allowable source.
While it sounds like loose lending has returned, Wells apparently has strict underwriting requirements for such loans, including high minimum credit scores and so on.
In other words, we haven’t jumped in the DeLorean, punched it to 88 mph and traveled back to 2006.
Sure, there are some lenders offering FHA loans with credit scores as low as 550, but most are still relatively cautious, especially with the ATR and QM rules in effect.
And I’ve yet to come across any lenders offering 100% financing on 4-unit, non-owner occupied properties with sub-620 credit scores. When that happens run, or rather, sell!
Being a landlord isn’t all lounging around in designer sweatpants while the rent checks roll in.
If you’re managing your property yourself, you’ll find there’s more than a little legwork involved. Whatever your reasons, (and there are plenty, ranging from investing in property to getting stuck with a house you don’t want to live in), buckle up. We’ll be walking you through how to be a landlord.
How to price your rental
A lot of factors go into pricing a rental, but in the end, it’s all pretty simple. If you don’t hit the sweet spot, it’s either going to sit empty or cost you money.
Either way, you lose.
Here are the most important things to keep in mind:
1. What are your costs? Before anything else, do the math and find out how much you need to charge to not actively lose money. Take into account your mortgage payment, housing taxes, HOA fees, upkeep and repair costs, and anything else that will eat into your profit.
It’s okay to not pull in much extra cash right away, so long as you’re in the rental business for the long term. With time—and smart money management—you’ll pay off the mortgage and get your rental income (mostly) free and clear.
2. Timing is important. Just like the housing market, the rental market has slow and busy times of the year. Generally, they match up pretty closely. Demand is highest in the summer, when schools are out and the weather is good. You’ll be able to charge slightly higher prices in the warm months than the dead of winter.
3. High rent is not worth a bad tenant. Sure, the goal of a rental property is to make you money. But there’s more to it than setting your rent as high as you can and accepting anyone who’ll pay it. A good tenant—one who sticks around for multiple years, pays rent on time, and doesn’t damage your property or suck up your free time—is worth more than an extra few hundred dollars.
4. How much are other apartments going for? When in doubt, take a gander at comparable units on the sites you’ll be using to advertise your property. Just remember to take more than zipcode into account. Other factors include:
Nearness to amenities
Appliances (washer, dryer, dishwasher)
Renovations
Square footage
Layout
Carpet vs hardwood
5. Tenants will pay for something that looks like a good value—even if it really isn’t. Ever seen rental listings advertising things like “heat and water included?” This is a tactic used to attract renters without costing you money.
How?
It’s pretty simple.
If you’ve rented out this particular property in the past (or can get in touch with someone who knows what’s what), then you have a good estimate of what the monthly utilities cost—and that you can use in your favor. Say electricity usually costs about $70 a month. By rolling that into the monthly rent at $80 or $90 a month, you get a little extra cash and an attractive offer for renters.
How to advertise your rental
Once you’ve figured out your pricing strategy, it’s time to start attracting potential tenants. Back in the dark times, that meant putting an ad in the classified section of your local newspaper and hoping for the best.
These days, though, renters tend to start their search online, and that means you need to know where and how to put your best foot forward.
First, pictures. To really sell your property, you’re going to want to use recent pictures of your (clean!) rental. When writing the description, make sure to include all your good features. If there are one or two negative things about your rental, don’t try to hide them. Being honest can actually help you build trust with potential renters.
Which sites you use depends on your needs. Landlords generally agree, for instance, that Craigslist gets them a lot of attention, but that Zillow delivers the better quality tenants.
Here’s a quick list of some of the sites you should consider using:
Of course, some old school techniques like yard signs and referrals are definitely worth trying out. Test out your options. Soon you’ll find a combination that works best for your area and clientele.
How to screen potential tenants
Attracting the tenants is the easy part—it’s the picking that takes some time and energy.
1. Ask for a rental application. You can find templates online. Look for one that asks for current and previous employers, income level, contact info of previous landlords, number of occupants, number of pets, and personal references.
2. READ that application. Okay, so this is probably a no-brainer, but you should be able to weed out a lot of applicants at this stage. So they aren’t employed? Don’t have a (net!) monthly salary that’s at least 3 times the rent and can’t get a cosigner? Have previous evictions or references that don’t check out?
Those are all very good reasons to not rent to an applicant.
3. Run a credit and/or background check. Once you have your handful of maybes, it’s time to dig a little deeper. All three off the credit bureaus (Experian, TransUnion, Equifax) offer credit screening for landlords, and some even do background checks, too. They each had different offerings, so take a look at each before deciding.
Remember, though: a credit check doesn’t tell the whole story. While they’re usually a pretty good barometer when it comes to judging a person’s fiscal responsibility, there are situations where they don’t show you the whole picture. After all, filing for bankruptcy 5 years ago and staying current with your payments ever since is a little different than, say, skipping out on your last 4 credit card bills—both of which can tank your score.
4. Meet for the in-person walk through. Don’t be afraid to go all Sherlock on prospective tenants in-person. There are plenty of questions to ask yourself in order to get a sense for what sort of tenant a person will be.
Did they show up on time?
Is their car well-cared for?
Are their children well-behaved?
Do they know what kind of questions to ask about your property?
Have they tried to lie about their credit score or job?
Just make sure not to base your decision on age, gender, race, religion, or disability—that’s against the law and can get you sued (plus, it’s generally agreed upon to be pretty gross).
How to write a rental contract
First things first—are you a lawyer?
If the answer is no, don’t write your own lease.
As we’ll get into later, there are a lot of laws surrounding housing agreements, and when you’re not familiar with all of them, it’s alarmingly simple to get yourself into trouble.
To get started, you can find templates online for your state or city.
From there, though, it’s worth the money to have a lawyer look over it, especially if you’d like to customize it. If you do it right, it should be a one-time cost for a lease agreement you can use over and over.
How to figure out your rights as a landlord
Did you know that you can’t enter your rental without giving the tenant advance notice?
Or that you can’t evict a tenant by changing the locks—even if they haven’t paid rent in months?
A long list of laws govern the relationship between landlord and tenant, and it’s part of your new job to know them.
The tricky part is that many of these laws vary from state to state. While there’s no replacement for consulting a lawyer if you run into trouble, this resource on state landlord/tenant laws is a great place to educate yourself before you get started.
Useful tips for first time landlords
If you found your way here, I’m going to take a guess: you haven’t been at this landlord thing long. Heck, maybe you’re in the middle of buying your first rental property right now.
Here are a few things the pros already know:
1. Set your available hours. Unless you’re okay with tenants calling you to fix their toilet at 10pm, find a window of time that works for both of you and agree to it ahead of time.
2. You can collect rent payments online. Technology, amiright? These days, you collect rent from anywhere in the world—awesome if you don’t live near your property or choose to interact with your tenant as little possible. There are plenty of services available (Rentpayment.com, Cozy, and ClearNow are just a few). Do your research to find one that fits your needs.
3. Be wary of renting to family and friends. You’ve probably heard that sage advice to never do business with family or friends. Well, you probably don’t want to rent to them, either. If you value the relationship, it’s best to keep money out of the equation.
4. Your tenants don’t need to know you’re the owner. Think about it: instead of telling your tenant they can’t paint the kitchen chartreuse and facing their resentment, you play property manager and blame the owner for being a spoilsport. This is an especially helpful (and legal) tip if you’re not great at confrontation or have any reason to be extra conscious of your safety. Just remember: if your business contains your name, you’ll need to change the name of the LLC so paperwork won’t tip off your tenants.
5. Document the state of your property before and after each tenant. It’s possible to wind up with a wild animal of a tenant no matter how well you screen. By knowing exactly what sort of damage has been wrought upon your property—and having the pictures to back it up in court—you’re in a much better position to hold onto your money.
6. Document any agreement you make. You’re probably noticing a pattern here: when in doubt, document. That holds especially true for any changes you agree to make to your standard lease after it has been signed. In this case, what you need is called an “addendum to a lease.” You can find templates online, but it can pay to use a lawyer.
7. Consider insurance. Landlord insurance may not be required by law, but it can definitely be worth it in the event of property damage or accidents.
Dan Och said the deal for Rithm Capital Corp. to buy Sculptor Capital Management “substantially undervalues” the hedge fund firm and “penalizes” all shareholders.
Senior management may have sought to influence potential buyers into an “outcome in their favor and to the potential detriment of the company’s shareholders,” Och and four founding partners wrote in a letter Wednesday to the firm’s special committee.
The committee didn’t seriously entertain potential suitors whose offers focused more on shareholder value than management interests, they wrote in the letter, which was attached to a regulatory filing. Some bidders may have been excluded from the process, while others want to make a higher-value offer now but are barred from doing so by nondisclosure agreements, it said.
Och, who founded the firm formerly known as Och-Ziff, asked the committee to release all bidders from any restrictions.
Rithm agreed last month to buy Sculptor in a deal valued at about $639 million, which is expected to be completed in the fourth quarter. The company had been embroiled in litigation with Och over pay packages given to Sculptor Chief Executive Officer Jimmy Levin. The two resolved the legal dispute last year, and Sculptor formed a special committee to explore potential transactions.
The Och group previously expressed its concerns with the bidding process, according to the letter, which was also signed by Harold Kelly, Richard Lyon, James O’Connor and Zoltan Varga.
Under the terms of the deal, Sculptor’s Class A shareholders will receive $11.15 per share in cash, or they can choose to roll over their Sculptor stakes into partnership units in one or more Rithm subsidiaries.
Shares of Sculptor rose 0.9% to close at $11.03, extending their gain this year to 27%. The stock is still down about 60% over the past two years.
Rithm shares fell 1% to close at $9.74.
Sculptor and Rithm didn’t immediately reply to requests for comment.
“We have long sought a partner with the stable capital structure, culture and vision to help unlock the potential for our platform to deliver more and greater value to our fund investors,” Levin had said in a statement after the deal was announced.
The group of former Sculptor executives said they have been pushing Rithm for better terms, both before and after the transaction was announced, and that if there are no material changes “we will vigorously oppose this transaction.”
loanDepot has agreed to settle a securities class action lawsuit filed by shareholders that alleged the company, its executives and investment banks made false or misleading disclosures before and after the lender’s initial public offering in 2021.
According to court filings, the parties agreed to settle and release all claims against the defendants in exchange for a cash payment of $3.5 million. However, the defendants deny any fault, liability, wrongdoing or damages.
“On July 26, plaintiffs filed a motion for preliminary approval of the settlement, which is pending approval,” loanDepot disclosed in a 10-Q filing on Thursday morning.
loanDepot declined to comment on the case, which was filed in California. A representative for the shareholders did not respond to a request for comments.
Defendants include loanDepot, its founder Anthony Hsieh, former chief financial officer Patrick Flanagan and former accounting officer Nicole Carrillo, among other executives. Bank underwriters of the IPO, such as Goldman Sachs, BofA Securities, Credit Suisse Securities, Morgan Stanley, Barclays Capital and Citigroup Global Markets, were also named.
The class action was filed on behalf of investors who purchased loanDepot’s class A common stock in connection with the company’s initial public offering on February 16, 2021. It also includes investors who acquired company stock between March 16, 2021 and September 22, 2021.
loanDepot debuted on the stock exchange in February 2021, raising $54 million. loanDepot stock was trading at $2.14 on Thursday around noon.
The shareholders allege loanDepot improperly collected double daily interest from refi borrowers, inflating its interest income. The plaintiffs claimed the matter was brought to Hsieh’s attention in late 2019, but he returned improperly collected interest only to borrowers in states with active attorneys general. Ultimately, the lender misrepresented its compliance practices and omitted to disclose its “years-long improper collection of double interest payments,” the lawsuit alleges.
In addition, the shareholders claimed that loanDepot’s registration statement for the IPO misrepresented to investors exactly when—and how quickly—the company’s “gain-on-sale margins” had begun to erode.
The plaintiffs also alleged that loanDepot’s registration statement misleadingly omitted to disclose “Project Alpha” and “Project Beta.” These projects systematically violated mandatory loan origination and underwriting requirements to allow the lender to close loans as quickly as possible and boost the lender’s performance, capturing additional market share, shareholders alleged.
The shareholders’ complaint mentions another lawsuit filed by Tammy Richards, formerly loanDepot’s chief operations officer. In September 2021 Richards alleged that loanDepot and its subsidiary Closing USA had engaged in interest overcharging between 2016 and 2019. Richards also claimed that the lender closed 8,000 loans without proper documentation, at the behest of Hsieh.
loanDepot’s 10-Q filing says that the company deposed Richards and “anticipates filing its Motion for Summary Judgment, or in the alternative, Summary Adjudication on or before November 15, 2023.” Richards is seeking damages north of $75 million.
A representative for Richards did not reply to a request for comments.
Lawsuits had an impact on loanDepot’s financials in the second quarter. In a call with analysts on Tuesday, executives said the company sustained $8 million in costs related to the “settlement of legacy litigation” during the second quarter of 2023.
“Excluding volume-related expenses, Vision 2025 related charges and the litigation settlement accrual, our adjusting operating expenses decreased by $10 million compared to the previous quarter, reflecting the ongoing benefits of our efficient improvements,” David Hayes, loanDepot’s Chief Financial Officer, told analysts.
The lender narrowed its losses in Q2 2023. It recorded a non-GAAP adjusted net loss of $34.3 million, compared to a $60.2 million loss in the previous quarter.
There are two separate shareholders lawsuits still pending against loanDepot, in California and Delaware. Beginning in June 2023, three similar shareholder derivative complaints were filed in the Delaware Court of Chancery, and actions are in their preliminary stages.
loanDepot has agreed to settle a securities class action lawsuit filed by shareholders that alleged the company, its executives and investment banks made false or misleading disclosures before and after the lender’s initial public offering in 2021.
According to court filings, the parties agreed to settle and release all claims against the defendants in exchange for a cash payment of $3.5 million. However, the defendants deny any fault, liability, wrongdoing or damages.
“On July 26, plaintiffs filed a motion for preliminary approval of the settlement, which is pending approval,” loanDepot disclosed in a 10-Q filing on Thursday morning.
loanDepot declined to comment on the case, which was filed in California. A representative for the shareholders did not respond to a request for comments.
Defendants include loanDepot, its founder Anthony Hsieh, former chief financial officer Patrick Flanagan and former accounting officer Nicole Carrillo, among other executives. Bank underwriters of the IPO, such as Goldman Sachs, BofA Securities, Credit Suisse Securities, Morgan Stanley, Barclays Capital and Citigroup Global Markets, were also named.
The class action was filed on behalf of investors who purchased loanDepot’s class A common stock in connection with the company’s initial public offering on February 16, 2021. It also includes investors who acquired company stock between March 16, 2021 and September 22, 2021.
loanDepot debuted on the stock exchange in February 2021, raising $54 million. loanDepot stock was trading at $2.14 on Thursday around noon.
The shareholders allege loanDepot improperly collected double daily interest from refi borrowers, inflating its interest income. The plaintiffs claimed the matter was brought to Hsieh’s attention in late 2019, but he returned improperly collected interest only to borrowers in states with active attorneys general. Ultimately, the lender misrepresented its compliance practices and omitted to disclose its “years-long improper collection of double interest payments,” the lawsuit alleges.
In addition, the shareholders claimed that loanDepot’s registration statement for the IPO misrepresented to investors exactly when—and how quickly—the company’s “gain-on-sale margins” had begun to erode.
The plaintiffs also alleged that loanDepot’s registration statement misleadingly omitted to disclose “Project Alpha” and “Project Beta.” These projects systematically violated mandatory loan origination and underwriting requirements to allow the lender to close loans as quickly as possible and boost the lender’s performance, capturing additional market share, shareholders alleged.
The shareholders’ complaint mentions another lawsuit filed by Tammy Richards, formerly loanDepot’s chief operations officer. In September 2021 Richards alleged that loanDepot and its subsidiary Closing USA had engaged in interest overcharging between 2016 and 2019. Richards also claimed that the lender closed 8,000 loans without proper documentation, at the behest of Hsieh.
loanDepot’s 10-Q filing says that the company deposed Richards and “anticipates filing its Motion for Summary Judgment, or in the alternative, Summary Adjudication on or before November 15, 2023.” Richards is seeking damages north of $75 million.
A representative for Richards did not reply to a request for comments.
Lawsuits had an impact on loanDepot’s financials in the second quarter. In a call with analysts on Tuesday, executives said the company sustained $8 million in costs related to the “settlement of legacy litigation” during the second quarter of 2023.
“Excluding volume-related expenses, Vision 2025 related charges and the litigation settlement accrual, our adjusting operating expenses decreased by $10 million compared to the previous quarter, reflecting the ongoing benefits of our efficient improvements,” David Hayes, loanDepot’s Chief Financial Officer, told analysts.
The lender narrowed its losses in Q2 2023. It recorded a non-GAAP adjusted net loss of $34.3 million, compared to a $60.2 million loss in the previous quarter.
There are two separate shareholders lawsuits still pending against loanDepot, in California and Delaware. Beginning in June 2023, three similar shareholder derivative complaints were filed in the Delaware Court of Chancery, and actions are in their preliminary stages.
There are certain aspects of personal finance that I’ve never had to deal with. Student loans are one of these. But student loans are a huge concern for many people. This guest-post from SJean is an introduction to repaying these debts.
There are really two things to know about student loans: How to get them, and what to do when you have to start paying them back. I’m going to write about the latter, as I am more experienced with that aspect. It seems everyone can figure out how to get student loans (whether or not they are getting the best deal), but paying them back can be more confusing.
Most federal student loans come with a grace period of six months during which you are not required to make payments. That means if you graduated in May of this year, your grace period is coming to a close and you have some decisions to make.
What do I owe? The first step is to find out how much you owe and to whom. Your financial aid office can help you with this, as can this site.
There are three major types of federal loans you may have: Federal Subsidized Stafford, Federal Unsubsidized Stafford, and the Federal Perkins loan. Some people may also have private loans, which I’ll cover at the end of this article. (They’re a different beast than federal loans.) For now, let’s focus on the federal loans. According to the U.S. government’s Student Aid site:
During the grace period on a subsidized loan, you don’t have to pay any principal, and you won’t be charged interest. During the grace period on an unsubsidized loan, you don’t have to pay any principal, but you will be charged interest. You can either pay the interest or it will be capitalized (added to your principal loan balance, thus increasing the amount you’ll repay).
Can someone PLEASE make these go away? You may feel overwhelmed by your loans and wish that they would just go away. Actually, there are a few ways that they can be diminished without you paying them, but these are special cases. Most of us are going to pay back every dollar we borrowed. And more.
If you are interested in volunteer work, check out the benefits provided by joining the Peace Corps or AmeriCorps. (For strictly financial reasons, you are probably better off getting a job and paying back the loans, but there are other reasons you may want to consider volunteering). If you are planning to be a teacher, join the military, or work in the legal or medical profession, there are some loan forgiveness programs you might be able to take advantage of.
Other than that, your student loans are going to be with you until you pay them back. Even bankruptcy will not destroy them. (But if you die, they are forgiven.) If your best shot of getting out of your loans is death, you probably should start working on a plan to repay them.
Consolidation: What is it? Consolidating your federal student loans may lower your total monthly payment, but note this is primarily because you are extending the terms of your loan and paying more interest in the long run. If you can afford your monthly payment, and would rather not have a loan for 20 years, you still should consider consolidation. You also can stick with a standard repayment if you know you can afford it and don’t think you are disciplined enough to make extra payments. There are no prepayment penalties in consolidation loans and there are a lot of benefits.
Consolidation: Can I consolidate? Before you concern yourself with whether you should consolidate, you should check to make sure you are eligible. If you haven’t graduated yet, you cannot consolidate your loans. (This was not true a year ago!) You must either be in your six-month grace period or in repayment. You must have eligible loans, usually totaling over $7,500 (you may be able to find some lenders who will do it for less). You can consolidate a single loan, as long as the loan being consolidated has not previously been consolidated. You can’t consolidate with your spouse anymore, but that was usually a bad idea anyway.
Consolidation: Should I do it? Student loan rates are adjusted annually on July 31st, based on the 91-day T-bill rates.
Years ago, rates were very low (as low as 2%!), and consolidation was a no-brainer. When I consolidated, they were around 4.5%. As of today, you can probably consolidate at 6.62% (before discounts) if you are in your grace period. If you don’t consolidate, that rate will jump to 7.22% when the grace period ends.
Students who received Stafford Loans on or after 01 July 2006 have a fixed 6.8% rate of interest for the life of their loan. The rate on previous loans will continue to be adjusted annually. If you have loans that were dispersed both before and after that date, the interest rate is averaged and weighted accordingly.
The decision isn’t as clear cut as it once was — it’s something you have to decide for yourself. But my opinion is that for most people, consolidation makes a lot of sense. If you aren’t happy with the current rates you could wait for lower rates, but who knows when they will be coming? In the meantime, you’ll be subject to a variable interest rate. Consolidating now may result in lower payments and a lower fixed interest rate immediately.
Consolidation: How do I do it? From the day I graduated (and even before), my mailbox was filled with offers to consolidate my student loans. Why does everyone want to help me with this? I was surprised to learn that my student loans are backed by the US government. If I default on my loan, the government will pay it, then try to get the money from me themselves. This means that the companies are essentially guaranteed to get their money back! Because of this, you will have plenty of offers to choose from. In reality, most of the offers are nearly identical, but pick wisely — this is a relationship you may have for a long time!
Remember, if you consolidate during your grace period, you can lock in your interest rate 0.6% lower and still not make any payments until your grace period ends. If you graduated last May, your grace period is probably ending very soon. Don’t hesitate!
Here are some important things to consider when choosing a lender:
interest rate (will likely be the same for all lenders)
discounts for auto-payment
discounts for on-time payments
website and user interface for payments
ability to pay with credit card with no fee (to get cash back bonus, not to convert to credit card debt!)
ability to use Upromise rewards to pay back the loan (Sallie Mae)
I chose Wells Fargo because my other banking is there, making it really easy to make extra payments. I wouldn’t exactly recommend them (a lot went wrong during the consolidation process), but now that everything is consolidated, they are working out just fine. Honestly, I wasn’t as well informed as I should have been, and if I could do it again, I’d do more research.
Here are some sites to get you started on your research:
What if I can not afford my payments? If you are unable to pay the monthly bill, there are a few things you can do, all starting with talking to your lender.
You can usually arrange an alternative payment plan, where you pay less now and payments increase as your income increases.
You also may qualify for a deferment, where you are not required to make payments for some set period of time (interest will still accrue though!). Your credit score will not be hurt, but these require special circumstances.
As a last resort, there is the option of forbearance. This is similar to deferment, but you don’t need qualifying circumstances, and it will negatively impact your credit score.
I can pay them… and more! Should I pay them back quickly? The general advice on this is no, as long as the interest rate is low. This does make sense if you are investing the difference of what you can pay and what you are paying. By the math, you should hang on to them as long as the term allows. Personally, my loan is for 20 years, and I just don’t think I want to have them around when I’m in my 40s. Mathematically sound or not, I will be paying them off a bit early, but they are the lowest priority of my financial goals. The Get Rich Slowly philosophy “Do what works for you” certainly applies here.
The most often cited reason for not repaying student loans early is that the interest is generally tax deductible and you don’t even have to itemize to take this deduction. Also, if you have a government loan, your money usually can make more for you elsewhere, though there is often more risk involved. If choosing between a Roth/401k or paying off loans early, I would recommend investing in your future.
What about private loans? Private loans usually aren’t low interest, and they don’t have as many nice benefits as federal loans. If you consolidate, you typically aren’t locking into a lower rate, just switching lenders. There may be some benefits, but be skeptical and don’t consolidate them with your federal loans, as you will lose some important benefits. The best way to handle private loans is to pay them off as soon as possible.
Among the reasons private loans should be repaid as soon as possible:
You cannot defer payments on a private loan consolidation if you want to go back to school.
You cannot forbear payments in case of economic hardship.
You cannot apply for forgiveness on a private loan consolidation.
If you should pass away, private loans are passed to your next of kin. Federal loans are forgiven.
Private loan consolidation very often has variable rates, which means you cannot lock in today’s current historic low rates. Those rates may be tied to volatile indexes like the Prime Rate, which can jump as high as 13%.
My private loans were somewhere around 8%, and I paid them off in about six months. I focused all of my financial energy on them, and even did a balance transfer to a 0% interest card, but paid it off as quickly as I could.
For more information on anything about student loans, visit FinAid! This site is excellent and should answer all of your questions.
In these languid—and, for much of the country, excruciatingly, unbelievably hot—days of summer, the timeless allure of a large, cool body of water beckons. And while heading to the lake is, for some, an occasional destination, for others it’s a way of life.
Sure, some of America’s more famous lake towns are pricey. But there are others that are surprisingly affordable, offering lakeside living for bargain-basement prices. The data team at Realtor.com® dug into the data to find some of the cheapest lake town real estate in the nation.
It helps that there are a lot of lakes in America. According to the U.S. Geological Survey, there are just shy of 7 million bodies of water in the U.S. and in adjacent areas along the borders. Of those, 5.76 million are classified as a lake or pond, and 134,000 have official names.
Each of the lake towns we found has a unique charm, blending natural beauty and local culture. All of them are nestled in the most affordable regions of the country, especially the Upper Midwest to the Deep South—areas known for their low cost of living. As it turns out, they’re also ideal places for lake house shoppers not looking to stretch their budget.
As famously avid lake admirer Henry David Thoreau once wrote, “A lake is a landscape’s most beautiful and expressive feature. It is Earth’s eye; looking into which the beholder measures the depth of his own nature.”
To find the most affordable lake towns, we looked at all the home listings for the past year within a half-mile (roughly a 10-minute walk) of a named lake or pond. (Named bodies of water exclude reservoirs and lakes that folks can’t swim or boat on.) Then we calculated the median prices from July 2022 through June 2023 for homes in those areas to pinpoint the most affordable lake towns in 2023. Only towns with at least 50 home listings over that period were included.
We excluded big cities, because we’re looking for places where the lake plays a large part in the local culture. And we didn’t include extremely small towns, because you’ve got to have at least a few shops and restaurants to keep you busy when you’re not on the water. And we included only the single most affordable lake town in any state, to ensure geographic diversity.
So let’s set sail to the most affordable lakeside real estate in 2023.
Median list price: $154,900 Median list price per square foot: $76 Population: 29,534
Danville, a relatively small town in east central Illinois along the Indiana border, is home to Lake Vermilion. The human-made reservoir provides drinking water for the city, but it has also become a popular fishing and boating location. Cabins and docks line its forested edge.
The town was an industrial hot spot for the region from the mid-19th century to the mid-20th century, as a major coal mining town and a rail hub. Abraham Lincoln was known to visit the town and once delivered a speech from the balcony of the home of a prominent Danville resident.
The median home listing within a half-mile of Lake Vermilion over the past year had a price tag 65% below the national median list price of $445,000 in June. A three-bedroom home within walking distance of Lake Vermilion, with hardwood floors, a garage, and a big yard, goes for $120,000. And for just over $100,000, home shoppers can find a two-bedroom condo about as close to the lake.
Median list price: $140,000 Median list price per square foot: $79 Population: 2,838
Rogers City is the smallest of any of the spots on our list of affordable lake towns, just shy of 3,000 residents.
Situated on the banks of Lake Huron, about 45 minutes from Cheboygan, Rogers City residents have quick access to multiple parks along the lakeshore. They include Harbor View Park on the southern corner, Seagull Point Park on the northern tip of the town, and several in between, including the Rogers City Yacht Harbor and Lakeside Park.
Rogers City has been host to multiple salmon fishing tournaments in the summer, including the vividly named Fat Hogs Fishing Frenzy and the more straightforward Rogers City Salmon Tournament.
It’s also home to the Great Lakes Lore Maritime Museum and the Presque Isle County Historical.
A large three-bedroom home with a garage and a brick fire pit in the backyard can be found for $165,000, a short walk from Rogers City’s North Shore Park and beach.
Median list price: $122,750 Median list price per square foot: $83 Population: 12,651
The western tip of northern New York state, in the Chautauqua-Allegheny region, is known for its lakeside getaway culture. And although some of the area’s real estate is quite pricey, the lowest home prices within a half-mile of a lake can be found in Dunkirk at the edge of Lake Erie.
The area was first occupied by the Indigenous Erie and Seneca tribes, then colonized by the French, who erected the Dunkirk Lighthouse at Point Gratiot in 1826. This helped the town become a significant regional port for coal and lumber shipping. It’s now listed on the National Register of Historic Places.
Dunkirk has multiple beach parks, and it hosts several summertime events, including an annual strawberry festival, arts and music festivals, and a “Fly-In Breakfast,” which welcomes pilots from all over to the small lakeside town.
Duke McLachlan, a real estate agent with Howard Hanna Hold Real Estate in neighboring Jamestown, says that from June through August, life in this area is all about the lake, for residents and visitors alike.
“It’s the whole Chautauqua area,” McLachlan says. “The local economy really picks up.”
Buyers will find the most listings just before and after prime lake season. Sellers know they can find buyers looking forward to the summer in April and May. Meanwhile, other sellers will list in September and October after they used their homes for the summer.
Median list price: $129,900 Median list price per square foot: $86 Population: 10,465
Minnesota is called the “Land of 10,000 Lakes” for a reason: The state has 11,842 of them.
So don’t drop your oar in the water when you hear that Fairmont, a small town in southern Minnesota near the Iowa border, sits on a string of five small lakes. These include George Lake, in the northern part of Fairmont, and Budd Lake, near the center of town.
All five offer boating and fishing—and there is very affordable real estate near two of these bodies of water.
The median home that was listed over the past year near both Lake George and Budd Lake is less than half the national list price. The real estate near Budd Lake is a little pricier, due to its proximity to the center of Fairmont, and a couple of developed parks along its edge.
For those who want to live and work near the water year-round in the “City of Lakes,” Fairmont’s local economy is driven by the local Mayo Health System hospital, two small colleges, and a couple of modern industrial companies.
Median list price: $126,900 Median list price per square foot: $91 Population: 4,977
Cherokee Village, a small town in central northern Arkansas about 20 miles south of the Missouri border, boasts seven lakes in total.
Lake Cherokee, the smaller of the two lakes where we found low-priced homes, has a park and private docks. Meanwhile, Lake Thunderbird, the town’s largest lake, has a public marina and the town’s public recreation center, which has two swimming pools and a minigolf course.
For just under $290,000, a homebuyer can get a 1,200 square-foot, two-bedroom house with a backyard dock on Lake Thunderbird. For those looking for homes costing less, just across the street from Lake Cherokee, a two-bedroom townhome can be found for as little as $120,000.
Median list price: $169,900 Median list price per square foot: $95 Population: 9,305
Pickwick Lake, a popular boating and fishing destination, was created by the Pickwick Landing Dam on the Tennessee River near where Alabama, Tennessee, and Mississippi meet.
The lake is known for record-size smallmouth bass and catfish. Local fishing guides say 2- or 3-pound smallmouth bass are the norm—and catches of 5 to 6 pounds are not uncommon.
History lovers will also appreciate the small town of Sheffield. It became a major wartime aluminum smelting location in the 1940s, boosting the nation’s aircraft production. It’s also the hometown of Senate Majority Leader Mitch McConnell.
And it’s where you’ll find the famous Muscle Shoals Sound Studio, where a litany of modern musical icons came to record, including The Rolling Stones, Aretha Franklin, Cher, and Wham! The studio faded and was repurposed for several years, before a documentary reignited interest and a restoration brought it back to life. It’s now a museum during the day and a working studio at night.
Median list price: $135,000 Median list price per square foot: $96 Population: 65,440
Lorain is a small city on Lake Erie, in the far western corner of the Cleveland metro area. Like the other Great Lakes locations on our list, Lorain was once an industrial production mecca, dominated by steel.
Now, says Bill Swanzer, a real estate broker at The Swanzer Agency Realtors in neighboring Amherst, Lorain mixes a classic lake culture with good access to the city.
“You’re only 20 or 30 minutes from the Cleveland Browns‘ stadium,” Swanzer says. “So you can get to all the big-city things—live sports, live music, shows.”
But for Lorain residents, Lake Erie’s offerings are right in the backyard.
“The lake’s always been a big draw for us,” Swanzer says. “You’ve got kayaking, boating, fishing, swimming—you’ll see Jet-Skis on the water and parasailing.”
Median list price: $139,900 Median list price per square foot: $97 Population: 11,276
Two Rivers is uniquely situated on Lake Michigan, such that it remains cooler than nearby areas on hot summer days—earning the town its nickname “Cool City.” It became a summertime destination for folks looking for a reprieve from the heat.
The moniker is memorialized just about everywhere, from the annual Cool City Car Show & Cruise, the Cool City Brewing Co., and Cool City Coffee Shop to the Cool City Charters and Cool City Cleaners.
Summer activities include swimming and sunbathing at Neshotah Park & Beach, and hiking and camping in Point Beach State Forest, just north of town. There’s also boating and fishing on Lake Michigan and the town’s—you guessed it—two rivers. It’s also only about 30 miles southeast of Green Bay, offering relatively quick access to a big city nearby.
But what’s especially cool about Two Rivers for us is the low price of homes near Lake Michigan. Take this recently listed two-bedroom home with an updated bathroom and floors about a block from Lake Michigan, priced at just $134,000.
Median list price: $185,000 Median list price per square foot: $106 Population: 9,299
About 30 miles east of Wichita is Augusta and its 190-acre human-made lake on the north end. Augusta Lake, lined with parks, grassy embankments, and walking trails, is a community center of sorts. There are Little League tournaments, concerts, disc golf, and the town’s Fourth of July celebration, in addition to the standard lake activities like fishing, boating, and kayaking.
The town is known for its historic buildings, many of which have been added to the National or State Register of Historic Places.
Of course, we’re interested in the home prices, which are inexpensive, even for a relatively affordable state like Kansas. A three-bedroom, ranch-style home six doors away from Augusta Lake can be found for just $150,000.
Median list price: $285,000 Median list price per square foot: $125 Population: 7,565
Homes within a half-mile of Prestwood Lake are the most expensive of any place on our list of affordable lake towns—but they’re still about 35% less expensive than the national median list price.
Lauri McLeland, a Realtor with Better Homes and Gardens Real Estate Segars Realty in Hartsville, says it’s not uncommon to see small speed boats and jon boats on Prestwood Lake, and even some kayakers on Black Creek, which leads into the lake.
But although there’s a decent amount of housing within that half-mile of the lake, it can be a tight market for buyers looking for something right on the water.
The small South Carolina town, about an hour northeast of the state capital of Columbia, is a tight-knit community, says McLeland. Word of someone selling their home can lead quickly to an offer from another local looking to get closer to the water.
“Prestwood is a really pretty lake,” McLeland says. “There’s not a lot of housing right on the lake, and some of those sell before they even hit the market.”
[Note from editor: The “Mastermind Showcase” highlights companies and news from members of the GEM. Today’s showcase: WeatherCheck.]
WhetherCheck monitors severe weather conditions (mostly hail) so that insurance carriers, mortgage companies, and property owners can take action–for 20 homes or 2,000. Monitoring assets from $45,000 to upwards of $4.5 million, they help uncover hidden damage in the tens of thousands, still eligible for insured repairs. They can monitor conditions in the most challenging time period, 24 hours before and after an event by using proprietary algorithms to aggregate and process storm data.
The company has received 150K in funding from 2 different investors.
Represented in the GEM: Demetrius Gray
What we like: WeatherCheck provides address-specific information for owners in order to minimize out-of-pocket expenses, maximize profit, and safeguard their investment