Despite being a city with a whole lot to offer, Toledo often flies under the radar. From its world-class art museum to its undeniably friendly people, there’s a place for everyone to feel at home in Toledo.
Home to a well-respected university, a handful of pristine parks, and a great local restaurant scene, Toledo is on the rise. From afternoons at Fifth Third Field to lunch at Tony Packo’s we’re here to find out what Toledo is really known for through ten of its top attractions. Enjoy!
1. Toledo Museum of Art
The Toledo Museum of Art is a beacon for the arts in the city. Known for its extensive collection spanning all corners of the globe, the museum gives visitors a profound look at classical and contemporary works. Noteworthy is the Glass Pavilion, which houses a stunning collection of glass art, reflecting Toledo’s historic connection to the glass industry.
2. The Toledo Mud Hens
Toledo takes immense pride in the Toledo Mud Hens, the beloved Minor League Baseball team affiliated with the Detroit Tigers. The team’s games are held at Fifth Third Field, a state-of-the-art ballpark in downtown Toledo, which provides a perfect family-friendly atmosphere. The Mud Hens are a cornerstone of Toledo’s sports scene.
3. University of Toledo
The University of Toledo is a stellar Ohio college, with a wide range of undergraduate and graduate programs. Known for its research and innovation, particularly in areas like engineering, medicine, and business, the university is a hotspot of academic activity and student life.
4. Oak Openings Preserve Metropark
Oak Openings Preserve Metropark is a natural treasure of Toledo, covering over 5,000 acres. It is renowned for its unique sand dunes and oak savanna ecosystems. The park offers tons of trails for hiking, biking, and horseback riding, making it a favorite among outdoorsy types.
5. Wildwood Preserve Metropark
Wildwood Preserve Metropark is another stellar Toledo park. Known for its beautiful manor house and well-maintained trails, the park is a scenic escape with plenty of shade thanks to the lush foliage soaring overhead.
6. Tony Packo’s Cafe
Tony Packo’s Cafe has been a Toledo staple since 1932, famously recognized for its Hungarian hot dogs and pickles. This iconic eatery gained national fame when mentioned in the television show MASH*. Visitors to Tony Packo’s can enjoy a taste of local history alongside their meals, which include a variety of Eastern European dishes, making it a must-visit for all foodies.
7. Fifth Third Field
Home to the Toledo Mud Hens, Fifth Third Field is not just a ballpark but a centerpiece of downtown Toledo’s revitalization. This modern facility is designed with fan experience in mind, offering great views of the game and the skyline.
8. Imagination Station
Imagination Station adds a scientific twist to Toledo. This interactive science museum engages all with hands-on exhibits and activities that make learning more fun than it is in the classroom. From physics to biology, the museum covers a broad spectrum of scientific fields, fostering curiosity in young Ohio minds.
9. Maumee River
The Maumee River is integral to Toledo’s identity. Fishing, boating, and riverside dining are popular here, drawing locals and tourists to enjoy the natural and scenic beauty of the river. The annual Walleye Run is a particularly exciting time to visit, attracting anglers from across the nation.
10. The Valentine Theatre
The Valentine Theatre is a historic venue in Toledo that hosts an array of performing arts. From ballets and musicals to dramatic plays, the theater is a destination that brings high-quality performances to the community.
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
A 1099-c cancellation of debt form is issued when a lender forgives or cancels a debt. The 1099 c form helps the IRS account for canceled debts from the previous tax year.
The 1099-C cancellation of debt form deals with canceled or forgiven debt from the previous tax year. This form exists to ensure accuracy when reporting taxes and to help filers determine if they owe debt forgiveness taxes.
Cancellation of debt happens when a creditor discharges or forgives a debt you haven’t paid off. The IRS notes that cancellation can occur when the creditor gives up on collecting because it’s exhausted its resources and is unable to collect. In some cases, cancellation can come about as an agreement between you and the creditor.
Here, we’ll answer several common questions about this form and explain how canceled debt relates to taxes.
Key Takeaways:
The IRS requires 1099-C forms because forgiven debt contributes to your gross income.
Receiving and filing a 1099-C form won’t affect your credit score positively or negatively.
Certain forgiven debts, such as mortgage forgiveness, are exempt from 1099-C requirements.
What Is a 1099-C Form?
Form 1099-C is a tax form required by the IRS in certain situations where your debts have been forgiven or canceled. Forgiven debt contributes to your gross income for the given tax year. The IRS requests 1099-C forms to account for those funds and debt forgiveness tax if need be.
If you received a 1099-C form in the mail, it’s because of a debt cancellation that occurred at some point during the previous tax year. Box 6 on the document contains a code to help you determine why you received the form.
Reasons why a cancellation might occur include:
A creditor stops trying to claim a debt.
Your mortgage is modified.
A property is foreclosed or repossessed.
You can also learn more about the 1099-C cancellation of debt processes and why you might receive such a form if you’re unsure whether yours is accurate.
Is a 1099-C Form Good or Bad for Your Credit?
The 1099-C form shouldn’t have any impact on your credit. However, the activity that led to the 1099-C probably does impact your credit. Typically, by the time a creditor forgives a debt, you’ve engaged in at least one of the following activities:
Failed to make payments for an extended period of time
Negotiated a settlement on the debt
Entered into a program with the creditor because you can’t pay the debt, such as a home short sale or voluntary repossession
Been sent to collections
Had a foreclosure or repossession
Gone through bankruptcy
All those are negative items that can impact your credit report and score for years. So, while getting a 1099-C itself doesn’t change your credit at all, you’ve probably already experienced a negative hit to your score.
What Should You Do with a 1099-C Form?
First, find out whether the type of debt cancellation on the 1099-C form is excluded from taxable income. The IRS provides a list of exclusions; if your debt is included on this list, you won’t have to worry about the 1099-C form.
Some of the items on this list include:
Canceled amounts that were gifts or inheritances
Certain student loans and student loan discharges
Qualifying purchase price reductions
If you ultimately need to claim the income, you must incorporate the 1099-C into your federal tax filing and report the canceled debt as “other income”. Forgiven debt can increase your gross income for that tax year, which might reduce your refund or increase the taxes you owe.
In cases where the 1099-C canceled debt falls under an IRS exclusion—which means you don’t have to pay taxes on all or some of the income—you still may need to file a form. The creditor that sent you the 1099-C also sent a copy to the IRS.
Some types of debt cancellation on the 1099-C form are excluded from taxable income. The IRS provides a list of exclusions, which include debts that were forgiven because you were insolvent or involved in certain types of bankruptcies. You may want to double-check with your bankruptcy lawyer about whether you need to claim 1099-C income relevant to your bankruptcy discharge.
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If you don’t acknowledge the form and income on your tax filing, it could result in a tax audit. Luckily, the IRS provides a form for this purpose. It’s Form 982, the Reduction of Tax Attributes Due to Discharge of Indebtedness.
Who Can File a 1099-C Form?
According to the IRS, you can file a 1099-C form if you’ve forgiven or canceled at least $600 in debt for an individual or entity in the previous tax year. You must also be an applicable financial entity, such as a bank or credit union.
For example, you don’t need to file a 1099-C form if you loaned your brother $1,000 and then told him on his birthday you’ve decided he doesn’t have to pay you back.
How to File a 1099-C Form
How you include your 1099-C depends on how you already file your taxes. Online tax filing programs include options for adding the 1099-C form when you file. Typically, you do this when entering various types of income.
You may need to file form 982 if you have exclusions to ensure you don’t pay more than you need to. You can work with a tax professional or use software to file taxes yourself. Both options can help you minimize mistakes and maximize your refund.
How to Read a 1099-C Form
Knowing how to read your 1099-C may help you understand why you got one and what you have to do with it. Here’s a breakdown of what each box means:
Codepen Link for 1099-C instructions
Codes that might be included in Box 6 on the 1099-C:
A. Bankruptcy Title 11
B. Other judicial debt relief
C. Statute of limitations or expiration of deficiency period
D. Foreclosure election
E, Debt relief from probate or similar proceeding
F. By agreement
G. Decision or policy to discontinue collection
H. Other actual discharge before identifiable event
What Is the Mortgage Forgiveness Debt Relief Act?
The Mortgage Forgiveness Debt Relief Act of 2007 generally excludes all forgiven debt on the mortgage of your primary residence. That means you may not have to include canceled debt on your mortgage as part of your income on your taxes.
For example, if your debt is reduced through a restructuring of your mortgage or in connection with a foreclosure, it may be excluded. This is one of the most common exclusions, but there are a few other situations where you don’t have to include canceled debt.
1099-C Cancellation of Debt FAQ
Receiving a 1099-C form is a rare occurrence, which is why people often have so many questions about it. Here are several frequently asked questions we’ve encountered about this rare tax document.
What If You Receive a 1099-C Form on an Old Debt?
There aren’t statutes of limitations on the cancellation of debt, though the IRS does have rules about when these forms should be filed. The creditor must file a 1099-C the year following the calendar year when a qualifying event occurs. That just means the creditor must file the next year if they discharge or forgive a debt.
If the creditor files a 1099-C with the IRS, it typically must provide you with a copy by January 31 so you have it for tax filing purposes that year. This is similar to the rule for W-2s from employers and other tax forms.
However, there’s no rule for how long a creditor can carry debt on its books before it decides it’s uncollectible. So, if your debt isn’t canceled via repossession, bankruptcy or other such processes, cancellation could happen at any time. The creditor doesn’t have to tell you about it other than sending the 1099-C.
What If You Don’t Get Your 1099-C?
You may not receive a 1099-C or might receive it after you already filed your taxes. If you receive the form after you file, you should file an amended return. That’s true even if the 1099-C doesn’t change your tax obligation, as you want to get a Form 982 detailing the reasons for exclusion on record for documentation purposes. If you don’t receive a form at all, it may mean the creditor didn’t send one and you don’t have to file.
What If You Have a Canceled Debt That Is Less Than $600?
Canceled debt less than $600 still needs to be reported as income on your taxes, though you may not receive a 1099-C for it. Working with tax professionals may be a good idea if it’s unclear which form you should use and what income you need to claim.
What If You Misplaced Your 1099-C?
You should be able to contact the associated creditor for a copy of your 1099-C form if you lose it. If you can’t reach them or retrieve a copy, you may have to call the IRS to resolve the issue.
What If Your 1099-C Form Is Incorrect?
If your form is incorrect, you should contact the creditor to send a corrected version. If the creditor doesn’t send it before the tax deadline so you can file with the correct information, you’ll need to file an amended return when you receive it.
Though receiving a 1099-C doesn’t hurt your credit, the canceled debt that led to it probably will. It’s best to find other solutions to debt than delinquency or cancellation. You may be able to negotiate, refinance, or restructure your debt to make it more manageable.
Can a Creditor Still Collect After Issuing a 1099-C?
Yes, a creditor can still try to collect the debt a person owes even after a 1099-C has been issued. Even if a lender issues a 1099-C form, they can still choose to pursue delinquent funds if they simply want to collect the money you owe.
If you find yourself in this situation, reach out to your creditor as soon as possible and try to negotiate a new agreement.
What to Do If You Received a 1099-C Form after Filing Your Taxes
If you don’t know a 1099-C form is coming, you could make a mistake on your tax return by filing too early. If you receive the form after you file, you should file an amended return. That’s true even if the 1099-C doesn’t change your tax obligation, as you’ll want to get the Form 982 on record for documentation purposes.
The IRS also allows amended tax returns to be e-filed, making it even easier to quickly file an amendment. However, you can only amend 2020, 2021, and 2022 returns in this manner.
Enrich Your Personal Finance Knowledge with Credit.com
Learning more about taxes and financial matters is easier than ever. You can always consult Credit.com’s expansive personal finance guide to learn more about topics like unpaid taxes, credit reports, and debt-to-income ratios.
Receiving and filing a form 1099-C shouldn’t affect your credit, so you check your credit report if you notice any strange fluctuations in your score. Use Credit.com’s ExtraCredit® subscription for a full view of your credit profile—you can even get started with a free seven-day trial.
Your seven-day trial will begin after agreeing to these terms and submitting your ExtraCredit® sign-up. After your trial period, your subscription will automatically continue on the same day every month as the day you started your trial membership. The free trial is available for new ExtraCredit customers only. The credit card you provided will be charged $24.99 (plus any applicable tax) on the next business day and monthly; after your trial period unless you cancel. You may cancel at any time by downgrading your service level in your settings or by contacting us at [email protected]. Dishonored payments will result in an automatic downgrade to the free credit.com product.
Inside: Uncover the realities of financial aid repayment for students. Learn about FAFSA, loan forgiveness, credit impacts, and strategies for managing your student debt. Find out which types of debt you must pay back.
Financial aid is a beacon of hope for many aspiring students, granting them the financial support they need to access higher education.
Yet, understanding the basics of FAFSA makes applying for financial aid confusing for most students. When considering aid options, it’s crucial to differentiate between the various available types.
Navigating your repayment obligations can seem daunting, but with proactive management, they needn’t be overwhelming.
Take stock of your financial aid package and parse out which portions require repayment.
Understanding these details is the first step towards fulfilling your obligations without compromising your financial well-being.
Remember to read the fine print and don’t hesitate to reach out to your loan servicer for clarification. They are there to help guide you through the repayment process.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
Do you have to pay back FAFSA money?
Technically, FAFSA indicates how much financial aid you can qualify for. Whether you need to repay depends on the type of financial aid you received:
Grants and scholarships: These forms of aid do not require repayment.
Work-Study: These funds are earned through part-time work and do not require repayment.
Loans (subsidized, unsubsidized, and Direct Plus Loans): These must be repaid with interest.
It’s important to note that while grants typically don’t have to be paid back, certain circumstances, such as withdrawal from a program or changes in enrollment status, may require you to repay federal grant money.
Start filling out your FASFA properly with these tips.
Do you have to pay scholarships back?
When it comes to scholarships, the name of the game is financial support without the strings of repayment. Generally, scholarships are like gifts—they do not have to be paid back. Perfect for the undergraduate!
Scholarships are awarded for various reasons such as academic excellence, artistic or athletic talent, or involvement in community service, among others. That said, it’s imperative to understand the terms set by the scholarship provider.
Most scholarships are commitment-free, but some may carry conditions such as maintaining a certain GPA, completing a degree in a specified field, or requiring the recipient to follow through with certain obligations. If these conditions are not met, there could be repercussions, including the requirement to repay the funds.
Learn how to pay for college without loans.
Types of Financial Aid That Require Repayment
I’m not going to lie when I was looking at borrowing for financial aid for college I was confused with the names and types of aid offered. Now, I know the best course of action is to get paid to go to school.
Thankfully, there is more information readily available for this type of information rather than relying on your guidance counselor.
So, here is the info you need.
Unraveling Federal Student Loan Repayment
First, you must understand the different types of Federal Student loans to know their repayment requirements.
Each loan type has its own set of rules and repayment schedule, typically beginning after you graduate, leave school, or drop below half-time enrollment.
Federal loans boast flexible repayment options.1
The Standard Repayment Plan for federal loans entails a fixed monthly payment amount, ensuring that the loans are fully repaid within a standard period of 10 years, and extends to 30 years for direct consolidation loans. This plan is often the quickest way to pay off loans, providing a consistent monthly payment over the repayment term.
The Graduated Repayment Plan starts with lower monthly payments that increase every two years, designed to pay off all student loans within 10 years, or 30 years if it’s a direct consolidation loan.
The Extended Repayment Plan offers borrowers with over $30,000 in federal student loans the flexibility of fixed or graduated payments over a 25-year period.
If affordability is a concern, you might settle on an income-driven repayment (IDR) plan, which keys your monthly payments to your earnings and family size. Should your finances take a downward turn, relief is available through programs like deferment or forbearance, allowing you to temporarily suspend payments.
After 20 to 25 years on an IDR plan, you might even be eligible for loan forgiveness for any remaining balance. This doesn’t nullify your entire debt but can relieve a significant financial burden. Teacher Loan Forgiveness and Public Service Loan Forgiveness (PSLF) are two such avenues, provided eligibility requirements are met.
Deciphering Private Student Loan Responsibility
These private loans are offered by non-government entities such as banks, credit unions, and online lenders, and repayment rules can be more stringent. As such, it is best to start with traditional federal loans.
While you typically aren’t required to repay private student loans while you’re in school, interest accrues during this time, increasing your eventual debt. After leaving school, some lenders allow a grace period similar to federal loans, but this isn’t guaranteed. Check with your lender for specifics on repayment commencement and grace periods.
Repayment plans with private loans are usually less flexible and often lack income-driven options. Monthly payments are fixed, and lender offerings on deferment and forbearance can be less generous, with some providing no options for such measures.
This is why it is best to learn how to pay for college without parents’ help.
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When You Need to Start Paying Back Financial Aid
Federal Loans: Grace Periods and Repayment Plans
Federal student loans, notably, offer a six-month grace period following graduation, leaving school, or dropping below half-time enrollment status. During this period, no payments are due, offering you time to get financially settled and choose a repayment plan.
Repayment plans span the Standard, where you’ll pay a fixed amount each month for a term of usually ten years, to Graduated, where payments start lower and increase over time. Income-Driven Repayment Plans adapt to your income level, ensuring that your student loan payments are manageable relative to your earnings.
Each plan has unique advantages depending on your financial situation and long-term goals. The key is to select one that corresponds with your ability to pay, aligns with your career trajectory, and manages your debt effectively over time.
Always be proactive in contacting your loan servicer to discuss plan options or changes in your financial status.
Private Loans: Lender-Specific Timelines and Terms
Private loans come with lender-specific timelines and terms that can vary widely from one lender to another. Unlike federal loans, private loans don’t come with a standardized grace period, although some lenders may offer a similar post-graduation moratorium on payments.
Borrowers must check their loan agreements to determine when repayment should begin.
The terms of repayment for private loans are also set by the lender and typically don’t offer the same flexibility found in federal programs. Fixed and variable interest rates are based on credit scores, and while some lenders might offer loan modification options in cases of financial hardship, such policies are not universal.
Remember, with private loans, leniency for late or missed payments is not a given.
Consequences of Defaulting on Financial Aid
The Effects on Credit Scores and Future Borrowing
Missing payments, or worse, defaulting on your student loans, are red flags to future creditors that appear on credit reports and can significantly lower your credit score. A lower score can make securing further credit from lenders—whether it’s for a mortgage, a car loan, or a credit card—an uphill battle.
Moreover, the repercussions ripple outward: Not only might you face higher interest rates due to perceived risk, but landlords and employers can reference credit scores during their tenant or employment screening processes.
Maintaining on-time payments is an investment not only in your education but also in your broader financial stability and opportunities.
Legal Repercussions and Wage Garnishment Risks
Wading into the murky waters of default on student loans can unleash legal repercussions that ripple through your financial landscape. The government has tough mechanisms to recoup defaulted federal student loans, ranging from wage garnishment — where a portion of your paycheck is allocated to your debt without your consent — to seizing tax refunds and other federal benefits you may be entitled to receive.
The prospect of wage garnishment adds a level of complication to an already tense situation. In such cases, the government can legally claim up to 15% of your disposable income. This can strain your finances even more, potentially forcing you to make hard choices about your monthly budget.
These same consequences do not typically apply to private student loans, which are subject to state laws. However, private lenders can bring lawsuits against borrowers in default, leading to potential wage garnishment or asset liquidation as decided by a court.
The message is stern yet simple: Stay vigilant with student loan repayments to forestall these severe outcomes.
Options for Managing Repayment Challenges
Loan Forgiveness, Cancellation, and Discharge Opportunities
Navigating the sea of student loan debt isn’t without its lifelines. Loan forgiveness, cancellation, and discharge programs can serve as financial floatation devices, providing necessary relief in an ocean of repayment.
Loan forgiveness is typically occupation-specific. For instance, Public Service Loan Forgiveness (PSLF) absolves remaining federal loan debt after 120 qualifying payments for professionals in government or non-profit sectors.
Cancellation might occur under circumstances like your school closing prematurely or if you’ve been defrauded by the institution.2
Additionally, if you become totally and permanently disabled, you may qualify for a discharge, relieving you from the obligation to repay your federal student loans.
Exploring these opportunities requires patience and diligence, as each comes with strict eligibility criteria. Nonetheless, they can significantly lighten the burden of student debt.
Strategies for Keeping Student Loan Payments Affordable
Crafting a strategy to keep student loan payments within the realm of affordability hinges on exploring all available options and making informed choices. Consider the following ways to ensure your loans remain manageable:
Income-Driven Repayment Plans: Federal loans offer several plans that base your monthly payment on your income, notably capping payments at a fixed percentage of your discretionary income. These plans can significantly decrease your monthly obligations if you’re starting with a lower salary.
Refinancing or Consolidation: You might find a lower interest rate through refinancing, which can reduce your monthly payments and the total cost over the life of the loan. Consolidating multiple federal loans can streamline payment processes, though it may average out to a higher overall interest rate. This is what I did.
Applying for Deferment or Forbearance: In times of financial hardship, job loss, or returning to school, you can apply for a temporary suspension of payments. While interest may still accrue, it can provide short-term relief.
Making Extra Payments: By paying more than the minimum or making bi-weekly payments, you can reduce the principal balance faster and save on interest in the long run.
Setting a Budget and Cutting Expenses: Sometimes, the most effective strategy is tightening your budget. By trimming unnecessary expenses, you may free up funds for your loan payments.
Every borrower’s situation is unique, so consider your financial circumstances and long-term goals when choosing the best strategy for you. Always maintain open communication with your loan servicer to stay abreast of changes or additional assistance programs that may become available.
Should I refinance my Student Loans?
Refinancing your student loans can be a strategic move to manage debt, potentially offering lower interest rates and different repayment terms to suit your financial situation. It involves replacing your current loan with a new one, typically through a private lender, and may provide relief if you’re struggling with high payments.
However, borrowers should carefully consider the loss of federal loan benefits, like loan forgiveness, before proceeding with refinancing their student loans.
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Making Informed Financial Aid Decisions – How to Review and Understand Your Aid Offer
When the much-anticipated financial aid offer lands in your hands, taking the time to thoroughly review and understand it ensures you’re making an informed decision. Here’s how you can break down your aid package:
Identify Free Money: Distinguish between grants and scholarships that don’t require repayment from loans that do. These are the parts of your offer that you’ll want to maximize.
Assess Work-Study Opportunities: If your offer includes federal work-study, understand that these funds must be earned and are not guaranteed. They depend on your finding an eligible job and fulfilling work hours.
Analyze Loan Details: Look closely at the type of loans offered, their interest rates, and repayment terms. Remember, federal loans generally offer more favorable terms than private loans.
Calculate Net Cost: Subtract the total aid package, excluding work-study, from the overall cost of attendance to determine what you’ll need to cover through savings, income, or additional loans.
Consider Cost of Living: Ensure that you take into account living expenses and indirect costs like books and supplies when reviewing your aid offer.
If anything is unclear, don’t hesitate to contact the school’s financial aid office for clarification. The goal is to fully understand your commitments before accepting any part of the aid offer.
Remember Not All Financial Aid Offers Must Be Accepted
Not every portion of the financial aid offered to a student needs to be accepted.
It’s crucial to carefully evaluate the components of the financial aid package, as some elements, such as loans, will need to be repaid with interest. Ultimately, it’s important to make informed decisions about which types of aid to accept based on one’s financial circumstances and long-term educational costs.
Frequently Asked Questions (FAQ)
FAFSA, the Free Application for Federal Student Aid, is a form that determines your eligibility for different types of financial aid, not money in itself.
Some aid offered via FAFSA does not need to be repaid, like grants and scholarships, while other types, such as federal student loans, do require repayment with interest.
If you withdraw from college, your student loans remain in place and need repayment.
Following withdrawal, usually a six-month grace period for federal loans before repayments start. However, interest may accrue during this time, except for subsidized federal loans, which don’t accumulate interest until after the grace period.
Yes, FAFSA loan debt, which generally refers to federal student loans obtained through the FAFSA application process, can be forgiven, canceled, or discharged under certain conditions, such as public service work, teaching in low-income areas, or permanent disability.
However, these options have specific eligibility requirements. So, be careful and read the fine print.
If you don’t pay back financial aid that is in the form of a loan, you risk defaulting, which can lead to wage garnishment, withheld tax refunds, lowered credit score, and other financial consequences.
It can make future borrowing more difficult and become a legal issue. Always seek help before defaulting.
What Happens If You Don’t Pay Back the Financial Aid?
If you don’t pay back financial aid that is in the form of a loan, you risk defaulting, which can lead to wage garnishment, withheld tax refunds, lowered credit score, and other financial consequences.
It can make future borrowing more difficult and become a legal issue. Always seek help before defaulting.
Source
Federal Student Aid. “Federal Student Loan Repayment Plans.” https://studentaid.gov/manage-loans/repayment/plans. April 28, 2024.
Student Loan Borrower Assistance. “Borrower Defense to Repayment.” https://studentloanborrowerassistance.org/for-borrowers/dealing-with-student-loan-debt/loan-cancellation-forgiveness-bankruptcy/cancellation-forgiveness-options/borrower-defense-to-repayment/. April 28, 2024.
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If you default on your federal student loans, the government can typically force you to pay without a court order through administrative wage garnishment. With this process, your student loan servicer is able to collect 15% of your paycheck to automatically go towards loan repayment.
Wage garnishment can happen if you’ve missed payments on federal student loans for at least nine months (and haven’t entered an agreement with your lender to pay them back), and may continue until your loan is paid in full or the default status is resolved. Your wages can also be garnished if you default on private student loans, but the process works differently.
Learn what you can do to avoid wage garnishment on your student loans, plus how to get help with student loan garnishment once it has started.
What Is Administrative Wage Garnishment?
Administrative wage garnishment (AWG) is a debt collection method at the federal level. A federal agency can require a non-federal employer to withhold money from an employee’s paycheck to pay for a debt.
Typically, an employer may withhold up to 15% of your wages to repay a defaulted student loan. However, if you have multiple loans in default with different companies or have an existing child support order, garnishment can increase to 25%.
For federal student loans, you must have missed 270 (or nine months of) payments before your loan goes into default and the government can garnish your wages. The time-frame for default and garnishment can vary for private loans, and will depend on the policy of the lender.
With federal student loans, wage garnishment can take place without your servicer taking you to court. With private student loans, on the other hand, most states require lenders to obtain a court order to garnish your wages if you default on a loan.
Generally, wage garnishment can continue until your loan balances plus interest and fees are paid back, or your loan is removed from default.
An important note about federal student loans: The U.S. Department of Education is providing a temporary “on-ramp” to repayment between October 1, 2023 and September 30, 2024 to protect federal borrowers from the worst consequences of not making their student loan payments. During this transition period, servicers aren’t reporting missed, late, or partial payments as delinquent. In addition, loans will not go into default.
For borrowers who defaulted on their loans prior to March 13, 2020, the Education Department has created a Fresh Start program , which temporarily offers special benefits for borrowers to help them get out of default (more on this program below). 💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.
How Does Administrative Wage Garnishment Affect Student Loans?
If your federal student loan goes into default, the Education Department (the lender) is required to send you a notice of wage garnishment by mail to the last known address 30 days before wage garnishment starts. This notice must inform you of the nature and amount of the debt and the agency’s intention to initiate garnishment.
You’ll be given the option to establish a voluntary repayment agreement as well as to request a court hearing.
If you don’t do either, wage garnishment will start. Your employer is required to comply with a wage garnishment request from the government. You’ll continue having money garnished from your paycheck until your loan is paid in full or has been removed from default.
If you request a hearing within the 30-day window, the government isn’t allowed to take money from your paycheck until the hearing is over and a decision is made.
With private student loans, wage garnishment follows a different process. For starters, private lenders may consider your loan in default after you’ve missed payments for three (rather than nine) months, though the time frame varies by lender. Once you default, a private lender may assign your loan to their collections department or sell your loan to a third party debt collection agency. The lender or collector must then sue you, take you to court, and receive a court order before they can garnish your wages.
How to Protect Yourself From Student Loan Wage Garnishment
Making your student loans payments on time and in full is the simplest way to protect yourself from student loan wage garnishment.
If you’re having trouble keeping up with your payments, the best time to take action is when you begin missing student loan payments and before you actually default on the loan. At this point, you’ll want to reach out to your loan servicer to discuss options that can help keep your loan in good standing. Here are some to steps that can help:
• Look into deferment and forbearance. The federal government has several deferment and forbearance options available, and some private lenders also offer forbearance programs. Keep in mind, though, that interest will likely still accrue on your loans during the deferment or forbearance period, which can make your loan more expensive in the end.
• Switch repayment plans to get a lower monthly payment. The Education Department offers a number of different repayment plans, including long-term plans that can last up to 30 years. You may be able to lower your monthly payment if you opt for a longer repayment term. Extending your repayment term generally means paying more in interest overall, though.
• Request an income-driven repayment plan. Income-driven repayment plans let you pay a percentage of your discretionary income toward federal loans for 20 to 25 years, at which point the remaining loan balances are forgiven. For some people, payments on an income-driven repayment plan can be as low as $0 per month.
• Refinance your student loans for a cheaper rate. If you can qualify for a lower interest rate, refinancing your student loans with a private lender can lead to lower monthly payments. If you have multiple loans, it can also simplify repayment by consolidating them into one loan. Just keep in mind that refinancing federal loans with a private lender means giving up federal protections like deferment, forbearance, and access to income-driven repayment plans.
💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.
Take control of your student loans. Ditch student loan debt for good.
Stopping AWG Orders
If your loans are already in default, you’ve received notice of wage garnishment, or you’re currently having your wages garnished, here are four steps you can take to remedy the situation.
1. Negotiate a Loan Settlement
You may be able to negotiate a loan settlement with a collections agency. Consider offering a lump sum or series of installment payments, and be sure to mention any specific financial hardships or medical issues you’re experiencing. A private lender or debt collector may be willing to settle the loan for less than the amount owed, such as principal and 50% interest or 90% principal and interest, or waive the collection fee (which may be 10% to 15% of the loan balance).
It is generally difficult to negotiate a loan settlement deal with federal student loans. Because federal loan servicers have multiple ways to recoup their money, including AWG, they have less incentive to negotiate with borrowers. You can only qualify in extenuating circumstances, and you’ll likely still have to pay the majority of your debt.
2. Consolidate Defaulted Student Loans
If you have a federal loan already in default, you might consider loan consolidation. This allows you to pay off defaulted federal loans with a new loan (called a Direct Consolidation Loan) and new repayment terms. To consolidate a defaulted loan, you need to either agree to repay your new loan under an income-driven repayment plan or make three consecutive, voluntary, on-time, full monthly payments on the defaulted loan before consolidation.
Keep in mind that eligible borrowers will be able to use the Fresh Start program to get out of default without having to consolidate.
Also note that if you want to consolidate a defaulted loan that is being collected through wage garnishment, you can’t consolidate the loan unless the wage garnishment order has been lifted or the judgment has been vacated.
3. Enter Fresh Start or a Loan Rehabilitation Program
Normally, one of the main ways to get out of federal student loan default is by rehabilitating your loans. Right now, however, loan rehabilitation has been temporarily replaced by the Fresh Start program.
Fresh Start is a short-term, one-time program to provide relief for borrowers with defaulted federal student loans. Fresh Start automatically gives you some benefits, such as restoring access to federal student aid (including federal loans and grants). To use Fresh Start to get out of default and claim the full benefits of the program, you must contact your loan holder.
After September 2024, when Fresh Start ends, loan rehabilitation will be an option again. Loan rehabilitation is a program offered by the federal government that involves entering into a repayment agreement to get your loan out of default and back into good standing. If you make a certain number of consecutive payments on time under the rehabilitation agreement, you can get your loan out of default and avoid wage garnishment. Contact your loan holder for more information.
Private lenders typically don’t offer a formal loan rehabilitation option. However, if you’ve defaulted on your private loans, it’s worth reaching out to your lender and see what payment assistance programs they provide.
4. Dispute the Wage Garnishment
If you receive a wage garnishment notice from the federal government, you have the right to dispute the notice and request a hearing, in writing, within 30 days.
This could be a good option if you do not agree that you owe the student loan debt you’re being asked to pay, disagree with the amount, or believe you weren’t properly notified about the garnishment.
You may also ask for a hearing if you believe that wage garnishment could create an extreme financial hardship in your life, or if you have been employed for less than 12 months after losing a previous job.
If any of these scenarios ring true, be sure to make a request for a hearing in writing and that the letter is postmarked no later than 30 days from the date the wage garnishment notification was sent. You’ll also want to include proof to support your objections to the debt or the garnishment.
Student Loan Refinancing Tips
If you’re in danger of wage garnishment, refinancing your loans could be a way to get back on top of repayment. Refinancing involves getting a new student loan with a private lender and using it to pay off your existing federal or private student loans.
Refinancing can potentially allow you to lower your monthly payment by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.)
If you decide refinancing is right for you, it’s a good idea to assess your credit health, research lenders, and shop around for the best rates. If a lender offers a prequalification tool, consider taking advantage — these applications require only a soft credit inquiry on your credit report. Getting prequalified can help you see the rates and loan terms you might qualify for if you refinanced.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
How are administrative wage garnishments used?
Administrative wage garnishment is a debt collection process that allows a federal agency to order a non-federal employer to withhold up to 15% of an employee’s disposable income to pay a past-due (non tax) debt owed to the agency. For federal student loans, you typically must miss nine months of payments before the government can begin wage garnishment.
What happens if you get your wages garnished?
Wage garnishment happens when a court (or federal agency) orders that your employer withhold a specific portion of your paycheck and send it directly to the creditor or lender until your debt is resolved. Common sources of wage garnishment include child support, consumer debts, and student loans. Your wages will be garnished until the debt is paid off or otherwise resolved.
How do you respond to a wage garnishment?
First, you’ll want to carefully read the judgment to verify that all of the information is accurate. If you believe the garnishment was made in error, you can file a dispute.
If the garnishment is justified, it’s a good idea to call the creditor or loan servicer to see if you can work out a payment plan that brings the loan back to good standing and allows you to pay it off in a way that works with your budget. Or, you can simply accept the wage garnishment and pay off the debt in the installment plan instructed by the judgment.
Photo credit: iStock/fizkes
SoFi Student Loan Refinance If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
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.
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Austin is hailed by many as the “Live Music Capital of the World.” This self-proclaimed weird city has it all from an emerging comedy scene to some of the most talented chefs in the country.
Whether you’re looking for an apartment on 6th Street, enjoying some world-famous barbecue from Franklin, or soaking in Ladybird Lake, Austin provides activities for all.
Let’s dive a bit deeper into this fast-growing city and finally find out what Austin is really known for.
1. Live music
Austin’s identity is deeply intertwined with its live music scene, which resonates through the city’s veins all year. Venues range from intimate bars to grand concert halls, providing a stage for everything from blues and country to rock and indie. The city’s commitment to musical diversity is on full display during the annual Austin City Limits, which draws artists and audiences from around the globe.
2. Stand-up comedy
Beyond music, Austin has the fastest-growing comedy scene in the country. The city is home to an increasing number of comedy clubs and theaters, like Vulcan Gas Company and Comedy Mothership, where the future stars of comedy are cutting their teeth right now.
3. 6th Street
Renowned for its energetic atmosphere, 6th Street is at the heart of Austin’s nightlife. Those lucky enough to find a home near 6th Street enjoy the many bars, clubs, and concert venues that line the street.
4. Franklin Barbecue
Franklin Barbecue is a pilgrimage site for meat eaters. Known for its smoked brisket and ribs, this restaurant has earned a cult following and international acclaim. The line outside Franklin starts early in the morning, with people waiting to taste their slow-cooked meats. Be prepared, items often sell out within hours. Get there early!
5. Ladybird Lake
Ladybird Lake is a peaceful retreat in the heart of the city with picturesque views and plenty to do. Paddleboarding, kayaking, and canoeing are popular ways to explore the lake, while the surrounding trails invite joggers and cyclists to enjoy the scenic routes. This natural oasis is a favorite for many Austin locals when the weather allows.
6. Zilker Park
Zilker Park is Austin’s premier green space, spanning over 350 acres. It’s a central spot for outdoor activities, community events, and anything outdoors. The park is home to the Zilker Botanical Garden, Barton Springs Pool, and plenty of picnic and play areas, making it an ideal spot for a sunny day in Austin.
7. SXSW
South by Southwest (SXSW) is an annual festival that has put Austin on the map as a major center for technology, film, and music. This multi-week event showcases the latest in entertainment and tech. Beyond that, it fosters economic and creative interaction among professionals across the globe.
8. The University of Texas at Austin
The University of Texas at Austin is one of the largest and most respected universities in the United States. Its beautiful campus is located in the heart of the city and contributes to Austin’s youthful atmosphere and intellectual energy. The university is a major employer and plays a key role in the city’s community and economy.
9. Mount Bonnell
Mount Bonnell is one of Austin’s oldest tourist attractions, offering stunning views of the Colorado River and the surrounding hill country. A short climb to the top rewards visitors with panoramic city views and is a popular spot for sunsets, picnics, and photo opportunities.
10. Texas State Capitol
The Texas State Capitol stands as a symbol of Texan pride and history. Visitors can explore the public spaces and beautiful grounds, or join a guided tour to learn about Texas’ legislative process and history.
Pennymac Financial Services earned a profit of $39.3 million in the first quarter of 2024, the California-based multichannel lender and servicer announced Wednesday.
The company’s pretax gain in the first quarter was $43.9 million. That was less than the $38.1 million figure it posted during the same period last year but a significant improvement from the pretax loss of $54.2 million it incurred in fourth-quarter 2023.
“PennyMac Financial reported strong operating earnings in the first quarter, with an annualized operating return on equity of 15 percent in what is expected to be the one of the smallest quarterly origination markets of this cycle,” chairman and CEO David Spector said in a news release. “Strong volume increases in our consumer and broker direct channels drove continued profitability in our production segment.”
The company’s loan production pretax income was $35.9 million during the first quarter, down from $39.4 million in Q4 2023 but up from a pretax loss of $19.6 million in Q1 2023. Production revenue totaled $184.7 million, up 5% from the prior quarter and up 52% year over year.
Pennymac reported that the quarterly increase in production revenue was primarily tied to higher net gains on loans held for sale at fair value due to higher volumes in its direct-to-consumer channel. Meanwhile, the revenue growth compared to Q1 2023 was largely due to higher overall origination volumes and margins.
The total value of its loan acquisitions and originations dropped to $21.7 billion in unpaid principal balance (UPB), down 19% on a quarterly basis and 5% below year-ago levels.
During an earnings call on Wednesday, chief financial officer Daniel Perotti said that “Pennymac maintained its dominant position in correspondent lending in the first quarter” as it acquired $18 billion in volume. That was down from $24 billion in the prior quarter and was “driven by our focus on profitability over volatility,” he said.
In the wholesale channel, Perotti noted that locked loans were up 20% and funded loans were “essentially unchanged” from the prior quarter. But broker-channel margins grew from 79 basis points to 103 basis points during that period.
“The number of brokers approved to do business with us at quarter end was over 4,000 — up 36% from the same time last year,” Perotti said. “And we expect this number to continue growing as top brokers increasingly look for a strong second option.”
Pennymac’s servicing portfolio continues to grow. Its owned mortgage servicing rights (MSR) portfolio had a UPB of $386.6 billion on March 31, up 3% from the end of Q4 2023 and up 18% from the end of Q1 2023.
In response to an analyst’s question during the earnings call, Spector said he expects the company’s servicing channel to lead to more refinance opportunities when mortgage rates eventually decline.
“We have built a really great model in terms of growing the servicing portfolio as a byproduct of our organic growth strategy,” Spector said. “And as we continue to lead in the correspondent space and continue to grow our presence in the broker-direct space, I expect that our servicing will continue to grow at probably even a little faster clip. … I don’t see a melting ice cube scenario anytime in the future.”
Last year, Pennymac earned net income of $144.7 million, a decline of nearly 70% from the $475.5 million profit it posted in 2022. And in fourth-quarter 2023 alone, the company lost $36.8 million.
Its net revenues shrank from $2 billion in 2022 to $1.4 billion in 2023. Its overall profit was largely due to the strong performance of its servicing portfolio.
Legal troubles with Black Knight contributed to the loss in Q4 2023. Late in the year, an arbitrator awarded Black Knight $155.2 million in damages tied to a breach of contract claim in a four-year dispute involving the companies. Black Knight accused Pennymac of copying its mortgage servicing platform.
At the close of the market on Wednesday, Pennymac’s stock price was $92.07, up 4.86% since the start of the year.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how scammers deceive victims by using AI for voice cloning and learn how you can protect yourself from other AI-related fraud.
How can you protect yourself from AI-driven scams that target your finances?
What new scams are happening as technology advances?
Hosts Sean Pyles and Sara Rathner discuss the alarming use of AI in scams and the future of fraud to help you understand how to safeguard your personal security. They begin with a discussion of AI-driven voice scams, with tips and tricks on recognizing potential fraud, staying informed about scam tactics, and the importance of open discussion to empower against scammer tactics.
Then, scam expert Bob Sullivan, author of “Stop Getting Ripped Off” and host of the podcast The Perfect Scam, joins Sean to discuss the broader implications of AI technology in scams. They discuss the potential for AI to personalize phishing attacks, the ease of creating convincing fake audio, and the importance of skepticism in the face of unexpected calls. Plus: the need for technology companies to embed safeguards, the role of societal learning in approaching unexpected calls, and the importance of verifying any financial requests you receive.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
We already know that our robot overlords are coming, but in the meantime, while they plot, their artificial intelligence skills are being put to use by bad actors all over the world, utilizing technology to bilk people out of their money. That includes using AI to copy someone’s voice and demand ransom for a non-existent kidnapping.
Jennifer DeStefano:
I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that it wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” I didn’t believe it. It gave me hope, but I didn’t believe it.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Sara Rathner:
And I’m Sara Rathner. And Sean, that clip is as creepy as it gets.
Sean Pyles:
It is, and the story we’re going to hear today is as creepy and as awful as it gets as we wrap up our Nerdy deep dive into scams and identity theft and how to protect yourself from all of it so you don’t lose your life savings. Today we’re going to examine the future of the scam industry and the expanding role of AI.
Sara Rathner:
Yeah, I have to say, and I know you’ve touched on this in several of your interviews already, this is exhausting. I mean, it’s hard to listen to this and not think, yeah, no matter what, I’m screwed. They’re going to get me unless I spend all this time and effort protecting myself. And who has the time for that?
Sean Pyles:
I hear you, Sara, and it’s easy to feel somewhat defeated by all these organized criminals whose sole job is to steal our identities, which technology seems to make easier and easier for them, and to scam us in ways that we can’t even conceive of until it happens.
Sara Rathner:
I mean, I’d rather spend more time taking naps, honestly. I don’t do that enough and I’m really sleep-deprived, which is probably making me more susceptible to scams, honestly.
Sean Pyles:
Yeah, I am totally there with you. But Sara, I think we’ve also provided listeners, you included, with some really practical ways to fully arm ourselves that don’t take an undue amount of effort. And as we’ve been saying, one of the most important takeaways from this series, I think, is for everyone to realize that there is no immunity here. This stuff can happen to anyone regardless of how old you are, how much schooling you’ve had, or how much money you make, where you live. It’s a universal risk, and the more we talk about it, the more power we take away from the bad actors.
Sara Rathner:
All right. Well, the idea that AI is getting in on the action is slightly terrifying. You mentioned our robot overlords at the top of the show, and I guess they’re coming for everybody’s bank account PINs.
Sean Pyles:
If only it were that simple, Sara. AI is being deployed in sophisticated ways to manipulate our emotions, find vulnerabilities in software that we rely on every day, and generally make our lives like something out of that show Black Mirror. So in this episode, we’re going to explore things like how is AI being used in scams, what’s the deal with these AI voice scams and what hellish development might we see next in the world of scams. To start, we hear from a woman named Jennifer DeStefano. She lives in Arizona and had an experience that no one should ever go through, but that provides a window into one of the ways that scammers can reach into your heart and try to pull money from your bank account.
Sara Rathner:
All right. We want to hear what you think too, listeners. So tell us your stories of identity theft or getting scammed or share how you’re working to fight it or recover from it. Leave us a voicemail or text the Nerd Hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected]. Here’s Sean with our first guest.
Sean Pyles:
Jennifer DeStefano. Welcome to Smart Money.
Jennifer DeStefano:
Thank you so much for having me.
Sean Pyles:
So Jennifer, you experienced an AI voice scam. Can you set the scene for us? What was that day like before you got this phone call?
Jennifer DeStefano:
It was just a normal day. I had two children that were up training for a ski race and I had my daughter, she was at dance, so I was going to go pick her up and then hopefully joining my other two kids later in the weekend. So I went to pull up to the studio and get out of my car to go get her, and I got a phone call and it came in from an unknown number. Originally I was going to ignore it, but knowing that I had two of them that were practicing for a ski race and unknown can be medical, you just never know, just in case I decided to answer it.
When I answered it, I said hello, and I was getting out of my vehicle, so I had all my stuff in my hands. I was walking through the parking lot, so I had the phone on speaker and it was my older daughter crying and sobbing saying, “Mom, Mom, I messed up.” And I said, didn’t think anything of it. She ski raced for a number of years. It was a very familiar phone call. And I said, “Okay. What happened?” And she goes, “Mom, I messed up.” And I said, “Okay. What’d you do?” And then all of a sudden a man came on and he said, “Put your head down, lay back.”
And at that point I thought she got really hurt just being toboggan. So then I started to get really concerned. I’m like, “Wait, wait, wait. What’s going on? What’s happening, Bri? What’s going on?” And then this man gets on the phone as she starts saying, “Mom, help me. These bad men have me. Help me, help me, help me.” The phone, her voice starts to fade off with her crying and sobbing and pleading for me. And this man gets on the phone. He goes, “Listen here, I have your daughter.”
“You call the police, you call anybody, I’m going to pop her stomach so full of drugs and have my way with her and then drop her for dead in Mexico.”And at that point was when I had my hand on the door handle of dance, and I walked inside the room and I just started screaming for help. So fortunately there happened to be three other moms there that know me well. I was asking my younger daughter to get her dad on the phone, call her brother, call anybody. So she actually jumped up and ran over to my younger daughter to say, “Let’s go find your dad. Let’s figure this out.”
Another mom said, “I’m going to go call 911.” She stepped outside to go call the police, and the third mom sat beside me so she could hear everything the man was saying as I was trying to figure out where my daughter was, what’s going on.
Sean Pyles:
And so it’s a perfectly normal day. You’re about to get your kids after a day of them doing their activities, you get a phone call and within 30 seconds your world is turned upside down.
Jennifer DeStefano:
Completely upside down. I had no idea what was going on. I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” She’s like, “It could have been a voice recording.” I’m like, “It was definitely not a voice recording. It was interactive. I was asking her questions. She was responding to me. It was not a recording.” And she’s like, “Well, they can do anything.” I’m like, “But it was her crying. It was her sobbing. I know it’s my daughter. It wasn’t a recording.”
Sean Pyles:
And what thoughts are going through your head as you’re having this conversation with what sounds exactly like your daughter?
Jennifer DeStefano:
I didn’t for a second not believe it. It wasn’t until another mom actually got my daughter on the phone and I talked to her and she reassured me that she was who she really was, and I could finally wrap my head around it. And then I finally believed her and then I knew it was a scam.
Sean Pyles:
How much time elapsed from the time that you answered the phone to when your actual daughter was speaking to you and you were reassured the phone call that you got wasn’t legitimate?
Jennifer DeStefano:
So the whole phone call actually took four minutes, but that’s where time freezes in that panic and fear.
Sean Pyles:
Right. Oh God, that’s heartbreaking. So do you know how the scammers got your daughter’s voice and maybe why they targeted you specifically?
Jennifer DeStefano:
So I had a bunch of different thoughts on that. Okay. She’s done a few interviews related to school, sports, whatnot, but that still doesn’t explain the crying and sobbing. It doesn’t explain that conversation. Her voice recording for her phone is her prepubescent voice, so it’s not her current voice. So I honestly have no idea. That’s where a lot of this, what’s scary is at first it was are they following me? Is it targeted? Do they know something? But then hearing how it had happened to a number of other people in different capacities, and you realize it’s a lot more arm’s length.
They were demanding money to be hand delivered to them. So they were making arrangements to come pick me up in a white van with a bag over my head. I had to have all the cash. They were going to take me to my daughter, and if I didn’t have all the cash, then we were both dead.
Sean Pyles:
God, how much were they asking for?
Jennifer DeStefano:
It was originally a million dollars. And then he came up with a number of $50,000 when I pushed back that that wasn’t possible.
Sean Pyles:
And to this day, it’s unclear why you specifically got this call?
Jennifer DeStefano:
I have no idea.
Sean Pyles:
Okay. And so after the phone call ended, I assume you hung up on the scammer when you realized that your daughter was safe.
Jennifer DeStefano:
So once I realized my daughter was safe, I actually had them on mute and they were furious that I wasn’t making final arrangements for a pickup. And then I picked the phone back up and I called them out and said, you don’t have my daughter, this is a scam and I’m going to make sure that this is going to come to a stop and I’m going to do anything I can to stop you. And I hung up on him.
Sean Pyles:
God, what are you on an individual or maybe even a family level doing to safeguard yourselves? Have you guys established a safe phrase that you might use to confirm your identities?
Jennifer DeStefano:
So we did create a safe word, and then it’s a lot of communication. Where are you? Who are you with? Where are you going? So that way if I do get a phone call or anybody gets a phone call, you can easily put it through the test. Does this make sense? Is this where they’re supposed to be? Is this even possible? Do you know the code word? Do you have some identifiers? If I didn’t know where my daughter was supposed to be, I wouldn’t have been able to locate her as fast as I did. And I had her brother, I had all of her siblings coming together in response to help me as well. So everybody was in full communication. You have to communicate and you have to seek help.
Sean Pyles:
Well, Jennifer, is there anything that you would like to leave listeners with?
Jennifer DeStefano:
Just awareness, have these conversations, sometimes maybe tough conversations, especially with children. But you have to have the conversations, have safe words, know where your kids are at. You have to have these conversations and make sure you safeguard your family.
Sean Pyles:
Well, Jennifer DeStefano, thank you for sharing your story with us.
Jennifer DeStefano:
Thank you so much for having me. I really appreciate it.
Sean Pyles:
Sara. I found this story just heartbreaking. I mean, at least they found out it was a scam before handing over money or before Jennifer offered herself up to scammers. But not everyone is so fortunate. Imagine how hard it is to say no to something like this when a loved one seems to be in jeopardy.
Sara Rathner:
Yeah, there was a piece recently in The Cut written by a journalist who knew she would never, ever fall for something like this. Don’t we all think that? And ended up handing over $50,000 in a shoebox to a stranger in a large SUV. I don’t think anybody ever sees themselves doing that. I’m glad Jennifer DeStefano didn’t let it get that far with the help of friends.
Sean Pyles:
And there’s hope that help will come from more than friends. Earlier this year the Federal Trade Commission proposed new rules that would prohibit the impersonation of individuals. It recently enacted rules that prohibit impersonating government or businesses. This proposed rule would extend to, well, us. The proposal is currently in a comment period, so if you feel so moved, go to the FTC’s website, ftc.gov, and comment.
Well, next we’re going to talk with another journalist, Bob Sullivan, who’s been covering the scam world for years now. He hosts a podcast for the AARP called The Perfect Scam and is the author of Stop Getting Ripped Off, among other books. We’re going to talk about the future of the scam world and how to protect yourself as technology continues to make it easier for the bad guys. That’s coming up in a moment. Stay with us.
Bob Sullivan, I’m so glad you could join us on Smart Money.
Bob Sullivan:
Thanks so much for having me.
Sean Pyles:
So Bob, the first question I have for you is how do I know that you are the real Bob Sullivan and not an AI-generated Bob Sullivan?
Bob Sullivan:
This is an excellent question and I’m glad that you’ve started there. You can’t, really. In fact, I did an episode on my own podcast recently where I had someone clone my voice and rather persuasively introduce the podcast, although family members pointed out to me that there were just little things that didn’t quite sound right. So either I was AI or maybe I had a bad cold or something. But it’s hard to tell, a little nasally.
Sean Pyles:
So in this series we’ve talked about identity theft, identity fraud, and the scam world, and I’m hoping that today you can give us a warning about the future of all of this and the role that artificial intelligence or AI is going to play and in fact is playing. So to start, when did we first start seeing AI being put to use in this way? Do you remember a specific AI-generated fraud or scam where you said, oh wow, this is something new?
Bob Sullivan:
Well, I have to be honest with you and say that I sit here reading emails about scams and fraud all day long, and I have not seen evidence of these kinds of things that a lot of folks are talking about right now, which is voice cloning or deep fake videos being used to fool people. Here’s a couple of things that I am worried about, however. All the data collection that we have, the criminals now have access to it and it’s going to be very easy for criminals to use that data to just really carefully craft their phishing pitches so that they’ll know exactly when you are transactional, for example.
Then they’ll know precisely when you order something from Amazon or what your zip code says about your income, and they’ll know how to attack the right person at the right time with the right message. And that’s the kind of artificial intelligence that I’m worried about, criminals using big data to essentially perfectly hone their crimes. But there’s one other thing that I’d really like to mention that enough experts have told me about that I am quite concerned about it, and that’s this idea of generative AI, where a tool like ChatGPT can engage in conversations and learn.
We have told people forever that one of the ways that they might recognize that they’re talking to a criminal over email or in chat or in a game is bad grammar or sentences that don’t quite make sense, non sequiturs. Well ChatGPT is getting very good at holding intelligent sounding conversations. Let’s start by saying it’s going to probably eliminate the bad grammar problem, but even more than that, imagine a tool that learns along the way just the right things to say to romance someone using a formula that’s been tested in the real world or the right things to say to get someone to follow the instructions for an investment scam.
I think these tools are going to learn how to carry on these conversations in ways that we’ve never seen at large scale, and that’s the kind of artificial intelligence that I’m worried about being used in scams.
Sean Pyles:
Okay. And can you talk us through how these AI voice cloning scams do work, whether they’re pervasive or not?
Bob Sullivan:
Sure. Well, I mean there are services, the fellow who did it on me signed up for a website that lets you do this for $5 a month and the first month is 80% off. So for literally one US dollar, you can upload samples of my voice or anyone’s voice and then generate for a potential scam victim, something that sounds incredibly realistic. I think the one thing that’s important to understand about what’s different about voice cloning, I don’t know if you remember the movie Sneakers, it’s one of my favorite hacker movies.
But in that movie, they basically needed a voice passport in order to enter a highly secure building, and they needed the authority figure to say things so that they could piece together cut and paste style a certain sentence, for example. So one way you might be imagining this works is someone tricks me into saying, my mother is in distress and I need you to send money to this wire account, but that’s not it. Instead, what’s powerful about AI voice cloning is with just a few sentences from me, they can extrapolate my intonation, my pausing and make me say anything.
So you don’t need a whole lot of vocabulary in order to make a really, really effective, almost fully independent voice clone.
Sean Pyles:
Well, I’d like to walk our listeners through some of the ways that fraudsters and scammers are putting this technology to work right now in ways that are shocking even to you. Can you share one or two examples that you know of that will give us a sense of just how bonkers this new era is?
Bob Sullivan:
Well, let me go back to the big data example. Foreign governments and large hacker organizations do have what would look to most people like a credit reporting agency on all of us. They have thousands of bits of data about all of us that they can use against us, and it’s data that they’ve been compiling for years. So they know what your tendencies are, they know where you shop, they know where you are. We never talk nearly enough about the theft of location data. All our cell phones are tracking devices.
And so a criminal could know when you’re walking past a store and send you a precisely timed invitation to either buy something at a discount or even worse to send you a note saying, I was just in Ireland. Bob, there’s a bank in Ireland that suddenly tried to charge a $2,000 charge to your account, say yes or no. And I would believe that message right now because I was just there. Those kinds of highly sophisticated, highly targeted crimes enabled by massive amounts of data that again can be searched now instantaneously, that’s the kind of thing that really scares me.
Sean Pyles:
And those examples are highly specific and individualized, which makes them all the more believable. So it makes it hard to trust anything that’s inbound to us.
Bob Sullivan:
Absolutely. And this is a tragedy because technology enables so many wonderful things. It is a terrible thing that we have all of these dark stories as this gray cloud around tech that’s going to prevent a lot of people from even trying to use it, and it’s going to make all of us feel just a little bit insecure because we know these sorts of bad and dangerous things can happen to us. The best example of this is in the health arena. We’re so far behind in what electronic health records could be in America right now.
When you go to the hospital, you’re laying on a gurney and there’s someone asking you over and over again, are you allergic to penicillin and you just were in a car accident. And that’s ridiculous. But because we are, I mean there’s many reasons, but a big one is we are so concerned about criminals misusing this data or companies misusing this data that we are decades behind where we could be with things like electronic health records.
Sean Pyles:
Earlier this episode, I spoke with a woman who received an AI voice scam call from what sounded like her daughter, and it of course wasn’t her daughter. But after everything settled down, she still doesn’t really understand how these people got her daughter’s voice. Her daughter isn’t really on social media, and this woman is also very unclear as to why she was targeted. So do you know how scammers are capturing people’s voices and why they might choose to target one person over another?
Bob Sullivan:
So I don’t know. I think for the vast majority of young people, it would be fairly trivial to examine a couple of TikTok videos and get enough voice sample in order to fake their voices. There are people who are not on social media and whose recorded voices aren’t in any, say, school websites or anything like that. I think they are few and far between. So I think most people should assume that a criminal could absolutely get enough audio samples of your voice to do this to you. So I can’t speak to that specific instance or why that person was targeted or why that child was targeted.
The only thing that concerns me is I don’t think we should give anyone the impression that this is happening on a widespread basis. It’s not. 99% of these kinds of calls are still being done by just human beings in boiler rooms. Nevertheless, this absolutely can be done. It can be done really inexpensively. And as I just mentioned, all of us are vulnerable to this. You’d be shocked at how much, even if you don’t have any social media, that pieces of your life have been posted by other people.
So it’s out there, and again, it takes very little, we’re talking probably less than a minute of audio in order to generate a fake you.
Sean Pyles:
What do you think we’re supposed to try to do to combat this? I mean, using me as an example, I host this podcast, you host one too. Our voices are out there just waiting for scammers to take a clip and make us say whatever they want, call our loved ones and use that voice to try to get their money. How do we fight that?
Bob Sullivan:
Yeah, you and I are screwed.
Sean Pyles:
Bob Sullivan:
Sorry. But the best, I talked to some other expert about this, so I can’t claim this advice myself, but I think it’s very good advice. At the beginning of the Photoshop era, people saw pictures of pyramids moved and weren’t skeptical of that. We just thought photographs couldn’t lie. I think nowadays for the most part, and certainly not everybody, for the most part, if you saw a crazy picture of Joe Biden riding on a camel or something, that there would be a piece of you at least that would say wait a minute, this might be fake.
There’s now an impulse that things you see might very well be faked. I’m hoping that our level of 21st century digital sophistication gets there quick enough with audio that your parents and my parents will have a predisposition to think if this is a weird phone call from Bob or Sean, it could be fake. And I think that’s the sort of learning curve we all have to go through kind of as a society.
Sean Pyles:
Well, let’s turn to some tactical ways that people can try to protect themselves. Can you tell us about the importance of things like pass keys, biometrics, other ways to authenticate that you are who you are when you get a call from someone or you allegedly call someone else?
Bob Sullivan:
I’m glad you brought that up. When it comes to voice printing in particular, there are these new technologies that are a little bit like image watermarking they’re discussing putting on voices. So you can imagine there being something even inaudible embedded in an audio phone call, which the technology company, the phone company, used seamlessly to verify that you were you, sort of like a Verisign email or whatnot. So there’s people who are working on technologies that would help with this verification. I’m not a fan of putting these really hard things onto individual consumers.
I think it’d be much better if the technology companies were forced to solve these problems because I can’t give my mom advice on how to verify how I might contact her at every platform that ever is going to exist. That advice is going to get outdated almost immediately.
Sean Pyles:
Given that we do live in this world that we are living in, I’m trying to think about ways that I can protect myself and my family. After I began doing research into 21st century scams, I established a safe phrase that if my family gets a call that alleges it’s from me and I’m in a panic, they’ll say, “Hey, what’s the safe phrase?” And I will tell them that phrase, if it’s actually me. And if it’s not, then the scammer’s going to try to divert them some other way, I’m sure.
Bob Sullivan:
I do think that’s great, and I don’t mean to trivialize any of that, but I would like to point out most people in security would say you’ve also created a vulnerability because someone armed with that phrase could easily disarm someone in your family, right?
Sean Pyles:
That’s true. Although the phrase has only been uttered in person when we agreed on what the phrase is. So we’ve tried to keep it as away from recording devices as possible to the extent that we can.
Bob Sullivan:
The only real point in my saying that was none of these things are foolproof. So it’s good to have that in mind. I think the one thing that helps all the time in the end, whatever we’re talking about here, almost inevitably, is a cover story for give me money. All of these, whatever technology we’re using, whatever the story is, in the end, there’s an ask of some kind. And stealing people against the ask is really, really important. And the best way to do that is interruption. The best way to do that is to train everybody in every circumstance, whatever is happening, to stop and talk to an independent third party, whether that be a family member or a financial professional or something.
Your son’s in jail in Europe, he needs bail money immediately, take the 15 seconds to talk to someone not involved in the situation and hear the words come out of your mouth. When you get a phone call you don’t expect, hang up and then go to the company’s website yourself and call the official published number, call the company back. That solves about 99% of these problems.
Sean Pyles:
Well, Bob, I’m asking this of all of the experts that we’re talking with for this series. So I’m going to ask you too, have you ever experienced a scam or identity theft or fraud?
Bob Sullivan:
No, but I’ve certainly been through a bunch of credit card-style identity thefts, but fortunately, knock on wood, nothing that we would consider deeply involved identity theft.
Sean Pyles:
Well, Bob, do you have any hopeful thoughts as we wrap up this series, which has been a bit of a bummer as we’ve talked about fraud and scams and people losing their life savings to technology assisted terrible people?
Bob Sullivan:
Yeah. So I spend all my week talking to people who’ve had their life savings stolen from them in all manner of speaking. It’s hard to stay optimistic. I think there’s a whole bunch of factors coming into play here. We have an aging population, many of whom thankfully have a lot of savings, they’re an easy target. And as I’ve mentioned, we have all of these tools that make it so much easier for someone halfway around the world to steal money instantly in untraceable ways. This has never happened in human history before, so this is the golden age of crime.
However, we are all talking about it now. So that’s really positive. Here’s the most optimistic thing I can tell you. Young people, software designers, engineers inside companies are now getting out of school having taken ethics classes and social impact classes and are starting to push back on their managers when they come up with tools like this. And that’s where the tide will turn is when enough people who have a grandparent who’s been a victim of a scam work at a software company and they say, we have to put this protection into this device before we release it to the world. And I do think those conversations are happening. So I am actually optimistic about that.
Sean Pyles:
That’s good to hear. And is there anything else that you wanted to mention that we didn’t touch on?
Bob Sullivan:
What we find is that a really, really big obstacle to fixing this problem is shame and embarrassment. Many, many people won’t come forward after they’ve been a victim of a crime like this because they feel stupid. I called myself stupid. All the language around scam crimes tends to focus on the individual instead of the system. Well, if you read a news story about a person who fell for a home improvement scam, that just doesn’t sound the same thing as someone who was robbed at gunpoint.
Sean Pyles:
Was the victim of a crime. That’s what happened at the end of the day.
Bob Sullivan:
They’re a victim of a crime, and we work hard on the language that we use to stress that there was a crime. There’s something about if we say, well, that person fell for this scam. Well, I would never fall for that scam. You can sort of put it at arm’s length, and that makes it a little easier to not do anything about the problem. And it takes the focus off the criminal. We kind of think the criminals are clever and sexy. But more than anything, we want to try to get away from the idea of shame because when someone is embarrassed because they are a victim of a crime, they don’t come forward.
The statistics don’t reveal the true nature and breadth of the crime. Everybody will tell you this, all this crime is wildly under reported. So however big the numbers seem to be, they’re at least double what we hear from the Federal Trade Commission and whatnot. And so anything that I can do to relieve the stigma from being a victim of crime like this, I’m all for it.
Sean Pyles:
Bob Sullivan, thank you so much for helping us out today.
Bob Sullivan:
Thanks a lot for having me.
Sean Pyles:
So Sara, after four episodes of hearing from experts and people who have experienced scams, I’m in a state of what I would call bleak optimism. The world right now is rife with scammers and their methods of duping innocent people are evolving at a rapid pace. But simultaneously, I can’t remember a time where scams and fraud were more present in the cultural conversation. Yes, it is fully a tragedy that our means of communication are so compromised that we cannot trust a call from a loved one in what seems like their most dire moment.
That really can’t be overstated. But hopefully the increased awareness of these scams will help people avoid sending money to bad actors and mitigate feelings of shame that people carry after enduring a scam. And hey, maybe one day our government will make some laws that help tamp down on the rampant scams that we’re all facing.
Sara Rathner:
And there’s this saying in journalism, if your mother tells you she loves you, fact check it. Well now you have to. So that’s the world we live in.
Sean Pyles:
If anyone contacts you at all, fact check it.
Sara Rathner:
Yeah. And text them on the side and be like, “Hey, are you calling me from jail right now?” And they’ll be like, “No.”
Sean Pyles:
I think the bottom line for everyone listening is to exercise extreme caution when you speak with anyone online and before you send money to anyone ever.
Sara Rathner:
If somebody is asking you for money and you don’t really know who they are, they are not who they tell you they are. How’s that? How’s that for general rule?
Sean Pyles:
All right. Well, for now, that’s all we have for this episode and this Nerdy deep dive about scams and ID theft and fraud. If you have a money question about any of this or anything else, turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode and remember to follow, rate and review us wherever you’re getting this podcast.
Sara Rathner:
This episode was produced by Tess Vigeland. Sean helped with editing. Kevin Berry helped with fact checking, Sara Brink mixed our audio.
Sean Pyles:
And here’s our brief disclaimer, we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time, turn to the Nerds.
Average mortgage rates inched lower yesterday. But all that did was wipe out last Friday’s similarly tiny rise.
Earlier this morning, markets were signaling that mortgage rates today might barely budge. However, these early mini-trends often alter direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.302%
7.353%
+0.01
Conventional 15-year fixed
6.757%
6.836%
+0.01
30-year fixed FHA
7.064%
7.111%
-0.07
5/1 ARM Conventional
6.888%
8.036%
+0.12
Conventional 20-year fixed
7.199%
7.257%
+0.05
Conventional 10-year fixed
6.663%
6.737%
+0.06
30-year fixed VA
7.292%
7.332%
+0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
This morning’s Financial Times reports, “While the base case remains a reduction in borrowing costs, the options market shows a 20% probability of an increase.” That means most investors think the Federal Reserve will cut general interest rates this year, but they reckon there’s a 20% chance of the central bank actually hiking them. That’s new and scary.
Although the Fed doesn’t directly determine mortgage rates it has a huge influence on the bond market that does. And I very much doubt mortgage rates will fall consistently before the Fed signals that a cut in general interest rates is imminent. And a Fed rate hike is likely to send mortgage rates much higher: maybe back up to 8% or beyond.
So my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged down to 4.6% from 4.64%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $81.59 from $82.06 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices fell to $2,333 from $2,350 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 40 from 33 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So, lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
This morning’s two April purchasing managers’ indexes (PMIs) will likely be good for mortgage rates. These “flashes” (initial readings and subject to revision) are both from S&P.
Here are this morning’s actual numbers in bold, alongside the prepublication consensus forecasts, according to MarketWatch, together with the March actual figures:
Services PMI — 50.9 actual; 52 expected; 51.7 in March
Manufacturing PMI — 51.1 actual; 52 expected; 51.9 in March
You can see that the PMIs were worse than expected, which is typically good news for mortgage rates.
Tomorrow
Tomorrow’s durable goods orders for March rarely affect mortgage rates. And they’d need to contain some pretty shocking data to do so tomorrow.
Markets are expecting those orders to have risen by 2.6% in March compared to a 1.3% increase in February. They’ll probably need to be significantly higher than 2.% to exert upward pressure on mortgage rates and appreciably lower to push them downward.
The rest of this week
Nothing has changed since yesterday concerning economic reports due on Thursday and Friday. So, I’ll repeat what I wrote yesterday:
We’re due the first reading of gross domestic product (GDP) for the January-March quarter on Thursday. And that could have a larger effect than PMIs and durable goods orders, depending on the gap between expectations and actuals.
But Friday’s personal consumption expenditures (PCE) price index for March is this week’s star report. That’s the Federal Reserve’s favorite gauge of inflation. And it could certainly affect mortgage rates, possibly appreciably.
The next meeting of the Fed’s rate-setting committee is scheduled to start on Apr. 30 and last two days. So, the PCE price index will be the last inflation report it sees before making decisions.
And index that shows inflation cooling could change the mood at that meeting. True, it’s vanishingly unlikely that a cut to general interest rates will be unveiled on May 1 no matter what.
But a PCE price index that shows inflation cooling could help the Fed to move forward with cuts earlier than expected, which should cause mortgage rates to fall. Unfortunately, one that suggests inflation remains hot or is getting hotter could send those rates higher.
I’ll brief you more fully on each potentially significant report on the day before it’s published.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
You’ve spent weeks preparing paperwork for your mortgage application. Now that you’re pre-approved for a loan, it’s time to talk numbers.
At first glance of the document detailing the breakdown of your monthly mortgage payments, the term PMI catches your eye. It’s a little over $100 per month, and you’re not sure what it’s for.
From what you’ve read, it’s standard on loans if the borrower puts little or no money down. But before you panic, take a deep breath and read on to learn more about PMI and how it works.
What is private mortgage insurance (PMI)?
What happens when your down payment is less than 20% of the cost of your new home? You may get approved for a mortgage loan. However, you pose more risk to the mortgage lender since you’re starting with no equity in your home. And if you fall behind on monthly payments and the lender forecloses on the home, they could stand to lose on the sale.
But the down payment of 20% is a way to create instant home equity. It also provides a layer of protection for the lender if they have to sell at a discounted price to recoup losses.
So, how does the lender protect themselves if you make little to no down payment? That’s where private mortgage insurance (PMI) comes in.
PMI is a type of mortgage insurance that protects the lender from taking a loss if you default on the loan. If the lender is unable to recover the outstanding balance of the loan from the sale, PMI will kick in and pay the difference. PMI is not to be confused with homeowners insurance, which protects you against damage to your property.
Who pays for private mortgage insurance?
This protection comes at a cost to borrowers. But it allows those with a down payment of less than 20% to buy the home of their dreams. It also minimizes risk, so lenders can extend these types of mortgage loans to consumers.
Does it cover private and public lenders?
PMI is only available to private lenders. Government agencies and other public lenders have their own form of mortgage insurance.
When is private mortgage insurance required?
Mortgage lenders use the loan-to-value (LTV) ratio to determine whether a borrower has to pay PMI. Typically, you’ll only have to pay PMI premiums if your loan-to-value ratio exceeds 80%. To calculate the mortgage LTV, the lender divides the mortgage amount by the home value.
Other circumstances may cause the lender to require PMI coverage. This includes past foreclosures, a less-than-perfect credit score, or other factors the lender thinks will increase your chances of defaulting on the loan.
A few scenarios:
SCENARIO 1
SCENARIO 2
SCENARIO 3
Home Value [1]
$100,000
$200,000
$250,000
Down Payment
$10,000
$50,000
$25,000
Mortgage Amount
$90,000
$50,000
$25,000
Loan to Value Ratio
90%
75%
90%
PMI Required
Yes
No [2]
Yes
[1]: Equivalent to sales price at the time of purchase [2]: This may change if the lender determines the borrower is riskier than normal
Private Mortgage Insurance vs. Mortgage Insurance Premiums
As mentioned earlier, mortgage insurance comes in a few variations:
Private Mortgage Insurance (PMI): protects private lenders who offer conventional loans. There are two types of PMI for conventional loans: borrower-paid mortgage insurance and lender-paid mortgage insurance. In most instances, PMI only applies until your LTV reaches 80%. But there are situations where the lender will require a higher percentage for the coverage to be lifted from the loan.
Mortgage Insurance Premium (MIP): protects government-backed VA loans and FHA loans. You pay a portion of the premium at the close of a VA loan or FHA loan. Then, you continue to pay mortgage insurance premiums on a monthly basis for the life of the loan, even once LTV is below 80%.
The LTV ratio is computed in the same manner for both private and government-backed mortgage products.
How much does PMI cost?
Premiums vary by loan. On average, you can expect to pay between 0.5 and 1% of the loan amount annually. So, if your mortgage is $350,000 and the PMI rate is 0.8%, your annual premiums will be around $2,800, or $233.33 per month.
The insurer will analyze your profile, including your credit score and down payment, to determine your interest rate.
The type of mortgage could also impact your premium. For example, if you take out an Adjustable Rate Mortgage (ARM) with floating interest, your premium may be higher. Why so? If the interest rate increases, your monthly mortgage payment will rise. And there’s a possibility you’ll default on the loan.
The condition of the real estate market in your area could also impact your PMI premiums. If projections state home values will plummet in the future, your premiums may be higher. This is due to the likelihood of you walking away once you’re upside-down on the loan.
How are PMI premiums paid?
There are three ways to make PMI premium payments:
Borrower-Paid PMI: Most mortgage lenders make it easy to manage premiums by rolling the monthly obligation into the amount you already pay for your home. This is the method used by most borrowers.
Single Premium PMI: You can also make a single lump-sum payment at the start of the loan by paying cash or rolling sum of the premiums into the loan.
Lender Paid PMI: If you wish to lower the monthly mortgage payment, Lender Paid PMI is also an option. The lender will pay premiums on your behalf. But keep in mind that the costs will be recouped in interest. And premiums don’t automatically go away when the mortgage LTV reaches 80%.
How to Avoid Paying Private Mortgage Insurance
The easiest way to avoid paying PMI is by making a larger down payment. If you can’t afford to put 20% down, it reduces your LTV ratio. Plus, you’ll be able to drop coverage quicker.
1. Take out a second mortgage or piggyback loan
To use this strategy effectively, you’ll need to take out a mortgage for the home’s purchase price, minus 20%. The remaining loan balance, minus the down payment, is then rolled into a second mortgage or piggyback loan.
So, if you buy a home for $200,000 and make a down payment of $15,000, the first mortgage will amount to $160,000. The second mortgage will amount to $25,000 since you are making a down payment of $15,000.
With this method, you avoid PMI since the LTV ratio on the first mortgage is 80%. But keep in mind that a second mortgage comes with a higher interest rate. So, you’ll want to pay it off sooner than later to avoid spending a fortune in interest.
2. Monitor the loan-to-value ratio
When you took out the mortgage loan, your lender used the home’s purchase price to determine the LTV ratio. However, an increase in the market value of your home could mean you are no longer obligated to pay for PMI.
By law, under the Homeowner’s Protection Act, PMI has to come off once the outstanding principal reaches 78% of the original loan amount.
Prepare to provide a professional appraisal to the lender to substantiate your claim. You may spend a few hundred dollars to get it done, but the cost savings will be worth it.
3. Request PMI Cancellation
If you’re nearing the 80% mark, the lender may be willing to remove the PMI from your loan. However, there’s also a possibility that you’ve already met some other criteria that warrant a request to cancel PMI coverage.
4. Refinance your mortgage
Perhaps your credit score was in shambles, and you were forced to take out a government-backed loan that requires you to carry PMI for the duration of the loan. Or maybe you got stuck with a conventional loan from a private lender that requires PMI until the LTV ratio reaches 70%.
Either way, refinancing your loan with laxer PMI restrictions may be a better option. But be sure to run the numbers to confirm that the new loan will not cost you more over time. (Remember, extending or resetting the loan term allows the lender more time to collect interest from you).
5. Shop for a loan that doesn’t require PMI
Compare loan programs to find one that doesn’t require PMI. For example, VA loans don’t require PMI, which can save you a bundle. Additionally, explore loans insured by the Federal Housing Administration (FHA) or the U.S. Department of Agriculture (USDA). Both of them offer programs designed to make homeownership more accessible to low- and moderate-income buyers.
Some lenders also offer mortgage products that allow you to make a small down payment and not have to pay for PMI. Bank of America’s “Affordable Loan Solution” mortgage product is a great example.
6. Ask about exemptions
If you’re a physician or veteran, you could also be exempt from PMI, even if you don’t put down 20%. Ask your lender for more details to determine if you qualify.
7. Consult the lender
Still no luck? Reach out to the lender to inquire about other ways to stop paying PMI. They may know of tips and tricks on how to get rid of PMI that may not be obvious to the average borrower.
Finally, if you still have questions or don’t understand how mortgage insurance works, seek clarification before signing on the dotted line. That way, you won’t be in for any surprises later on down the line.
Frequently Asked Questions
When is private mortgage insurance required?
PMI is typically required when a borrower makes a down payment of less than 20% of the purchase price of the home.
How much does private mortgage insurance cost?
The cost of PMI can vary depending on the size of the loan and the down payment amount. Generally, the cost of PMI is between 0.5% and 1.5% of the loan amount.
How long do I have to pay PMI?
Generally, PMI is required until the loan-to-value ratio (LTV) reaches 78%. Once the LTV reaches 78%, the lender must automatically cancel the PMI.
How can I avoid PMI?
Borrowers can avoid PMI by making a down payment of at least 20% of the purchase price of the home. Additionally, some lenders offer programs that allow borrowers to put down less than 20% and still avoid PMI.
What if I want to cancel my PMI?
Borrowers can request to cancel their PMI once their loan-to-value ratio (LTV) reaches 80%. The lender may require proof that the LTV has reached 80% before canceling the PMI.
Can I deduct PMI on my taxes?
PMI is not tax-deductible as of 2019. However, borrowers may be able to deduct the interest portion of their mortgage payments, which may include PMI.
Average mortgage rates rose very slightly yesterday. I’m afraid it’s a sign that Wednesday’s moderate fall wasn’t necessarily the start of much happier times.
Earlier this morning, markets were signaling that mortgage rates today could barely budge. However, these early mini-trends frequently alter direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.29%
7.34%
+0.03
Conventional 15-year fixed
6.744%
6.822%
+0.04
30-year fixed FHA
7.129%
7.179%
+0.21
5/1 ARM Conventional
6.682%
7.918%
-0.01
Conventional 20-year fixed
7.15%
7.207%
+0.07
Conventional 10-year fixed
6.607%
6.68%
+0.02
30-year fixed VA
7.28%
7.324%
+0.2
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
I reckon it’s likely to be some months before we begin to see consistently falling mortgage rates. The economy is currently too robust and inflation is too warm for a sustained downward trend. And there are few signs of that changing until the summer or fall — or perhaps even later.
So my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes ticked lower to 4.62 from 4.63%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were mixed this morning. (Neutral for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $82.77 from $82.98 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $2,398 from $2,393 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — nudged down to 32 from 35 out of 100. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So, lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
There are no economic reports scheduled for release today. And the words of the sole senior Federal Reserve official with a speaking engagement, Chicago Fed President Austan Goolsbee, are unlikely to affect markets. His boss, Fed Chair Jerome Powell, laid out the central bank’s position on future cuts to general interest rates as recently as Tuesday.
Of course, mortgage rates can still move on days like today. But they’re generally driven by market sentiment or occasionally by important news that affects the economy.
Next week
Next Monday is much like today: zero economic reports on the schedule. Tuesday’s purchasing managers’ indexes (PMIs) could produce some movement in mortgage rates. But that’s typically limited and temporary, a description that applies to Wednesday’s durable goods orders data, too.
Things could warm up next Thursday when the first reading of gross domestic product (GDP) for the January-March quarter is due.
And next Friday should bring the March personal consumption expenditures (PCE) price index. That’s the Federal Reserve’s favorite gauge of inflation. So, it can certainly affect mortgage rates.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
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Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
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Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.