Living in a residence hall or apartment can make it hard to decorate. There’s minimal space, and you probably bought everything from Target — which makes it easy to coordinate colors but difficult to create a space that doesn’t look like “dorm central” threw up all over it.
Here are some of the best and worst design choices we make in college. If you find yourself guilty of some of these, it’s OK. We all make mistakes sometimes.
First, we have maybe the worst offender of all: navy blue sheets. Navy blue sheets aren’t so bad on their own, but it’s really the Megan Fox poster covering up the hole a gym bro punched in the wall that makes it a crime against interior design. Here’s an easy fix: Find a different color of sheets. Better yet, go ahead and buy a second set of sheets altogether. Navy blue and white stripes are a good middle ground — still simple, but just a step above.
Speaking of simple yet a step above, a nice area rug elevates your space faster than your grades dropped as a freshman. Make sure you choose the right size rug for your room so that it doesn’t disappear under the lofted bed you’ve fallen out of a few times, but also doesn’t take up the entire floor.
Next, we have two that go together like ramen and your $2 plastic bowl: LED strip lights and fake vines. If you have these, I want to quickly remind you to check your email to see if your SHEIN order has shipped yet. If not, that’s OK. It just gives you more time to film another thirst trap for your TikTok while you wait.
Chances are, if you have fake vines hanging behind your bed collecting dust and critters, you might have a tapestry on your wall as well. I’m not judging — I think tapestries make a great backdrop for reading your horoscope and going online shopping for another evil eye necklace. But here is what is written in the stars for you, Leo: It’s time for better wall art.
Not to worry. You can up your wall art game at very little cost. Start by framing the posters that are already on your wall to add a put-together touch to the room. Stock up on Command strips and make sure you secure those posters to the wall really well, unless you want to find yourself being smacked in the face by a flying picture of Harry Styles at 2 a.m.
At the end of the day, decorating your space is all about making your dorm room or apartment your home away from home. Buy what you want, hang what you want, but whatever you do, remember to sweep your floors every once in a while.
A new startup called “Roam” has launched a service to make assuming a mortgage painless.
The company is backed by some prominent real estate figures, including Opendoor co-founder Eric Wu and former Fannie Mae CEO Tim Mayopoulos.
The goal is to help more home buyers take advantage of the many low-rate mortgages in existence via a loan assumption.
This includes FHA loans and VA loans, both of which are assumable by home buyers.
Roam acts as a hands-on guide for buyers and sellers to ensure the process goes smoothly in exchange for a 1% fee.
How Roam Makes It Easy to Assume a Mortgage
While many home loans are assumable, including all government-backed loans (FHA/VA/USDA), the process isn’t so straightforward.
Roam notes that the loan assumption process is “opaque and time-consuming,” and often requires buyers to fill out forms with paper and pen and fax them to the lender or loan servicer.
There’ also uncertainty for the home seller, who might not be sure if they’re still liable for the loan post-assumption.
To alleviate some of these pain points and ensure the process is done correctly, Roam manages all the operational details on behalf of the buyer, seller, and real estate agents.
Additionally, it makes it easier to find homes for sale that feature an assumable mortgage.
Once you sign up via their website, they’ll compile a set of for-sale listings that feature an assumable, low-rate mortgage.
These listings will also be tailored to fit your other criteria, such as location, home price, number of bedrooms and bathrooms, and so on.
At the moment, it seems only FHA loans and VA loans are included, not USDA loans.
If you come across a property you like, they will work with the lender and loan servicer to begin the loan assumption process.
As noted, this includes obtaining a release of liability of the loan for the home seller, which should ease their concerns as well.
Bridging the Gap Between Old Loan Amount and New Purchase Price
One sticking point to a loan assumption is the shortfall between the sales price and the remaining loan balance.
For example, the existing loan balance might be $450,000, while the new sales price is $550,000.
The buyer could come in with the difference, but it’s unlikely they’ll have the funds unless they have very deep pockets.
In this case, Roam has “preferred partners” that can provide additional financing, typically in the way of a second mortgage.
Together, this should still provide a blended rate that is well below current market rates.
If we consider a 2.5% first mortgage at 70% loan-to-value (LTV) combined with a second mortgage for an additional 10% at a rate of 8%, the blended rate is roughly 3.2%.
At last glance, the 30-year fixed is priced around 7.25%, so that represents quite the discount.
To that end, only mortgages with rates below 5% are included in the Roam listings.
How Much Does It Cost to Use Roam for an Assumable Mortgage?
While this service sounds pretty great, there is a cost to use it. At the moment, Roam is charging 1% to the home buyer via closing costs. I assume the 1% is based on the assumable loan amount.
In exchange for this fee, Roam says it will “coordinate every detail on behalf of sellers, buyers, and agents,” including connecting buyers and sellers, handling paperwork, and overseeing the financing.
Home sellers do not need to pay anything to take part and Roam will ensure the seller’s name is removed from the mortgage.
This means sellers will not be associated with the mortgage or held liable once the process is completed.
That should provide peace of mind to the seller, who might be concerned about their credit score being affected by the buyer’s subsequent mortgage payments.
If it’s a VA loan that is being assumed, Roam can help find a qualified military buyer if the seller would like to free up their entitlement.
This allows military homeowners to take out a new VA loan when it comes to their next home purchase.
Roam may also make money from their second mortgage partners, though they are fine with home buyers using the lender of their choosing.
Same goes with real estate agents. If the home seller doesn’t have a listing agent, Roam can recommend one. This may also earn the company a fee.
But the company can work alongside any listing agent, loan servicer, or mortgage provider to complete the process.
Is This a Good Deal?
Over the past couple decades, assumable mortgages weren’t a thing because mortgage rates were constantly falling.
In fact, mortgage rates hit record lows in 2021 and have since nearly tripled in just over two years.
This has finally made the assumable mortgage a thing, and a potentially very powerful thing.
If a home buyer is able to obtain the seller’s mortgage, possibly in the 2% range, it would be a huge feat, even with a 1% fee.
For example, take a $500,000 home purchase that has a $400,000 outstanding loan balance set at 2.5%.
The $400,000 loan amount would be about $1,580 per month. But let’s suppose the home buyer needs a second mortgage to bridge the gap with the new purchase price.
A $50,000 second mortgage set at 8% would be another $367 per month, or about $1,950 all in.
Compare that to a single new mortgage at $450,000 with an interest rate of 7%, which would be roughly $3,000.
And it could be subject to mortgage insurance as well if it’s one loan at 90% LTV.
The only thing you’d really need to watch out for would be an inflated purchase price if the seller believes they can charge more thanks to their assumable mortgage.
But even then, the property would need to appraise and the savings could still eclipse a slightly higher price, as explained in the scenario above.
Roam is initially available in the states of Arizona, Colorado, Florida, Georgia, and Texas, with other markets expected soon.
It’s not surprising these days to find many homes readied with a backyard pool. Depending on your motives, whether you are a seller trying to add value to your home, or a buyer on the hunt, this topic can be fairly debatable. So, will adding a pool to your backyard add value to your home? Yes…and no.
Typically, putting in the extra dollars and stressors of having a pool installed in your backyard will not substantially increase the value of your home when trying to sell. It would be more beneficial for you to make more physical interior and exterior improvements and additions to the house itself rather than adding an extra asset that may not be appealing to every buyer.
However, there are a few circumstances where a pool may add some value to your property.
1. Everyone in your neighborhood has a pool
If you happen to live in a wealthier and more established neighborhood where most homes have pools, not having one could very likely make it harder for your home to sell. It also could decrease the overall value of the home compared to the others built around you.
2. It won’t take up your whole yard
Similarly, if you can fit a pool into your backyard and still have some leftover yard space this is a huge bonus. Most buyers want the best of both worlds. A pool as well as backyard space for personal hobbies/entertainment purposes.
3. You live in a warm climate
Lastly, if you are located down South or out West, homeowners will most likely be looking for a home with a pool to cool off in because of the hot and humid temperatures. These factors alone or even collectively could potentially add value to your home.
Maximize your chances
Now, as mentioned before, even with the addition of a pool to your backyard, there is still no 100% guarantee of any return on your investment. Nonetheless, if you do happen to add this amenity to your property, you can take a few key factors into consideration that could help improve the selling point.
1. Appropriate design
For one thing, does the design and overall appearance of the pool somewhat coordinate and fit in with the rest of the neighborhood? If yes, you should be fine. If not, you should consider revamping the pool area to conform to the rest of the complementary neighborhood pools.
2. Keep it clean
Next on the list, is it apparent that the pool is clean and regularly kept? Or is it noticeably neglected and never maintained? An unkept pool would scare most buyers by giving the impression that it is too difficult and time-consuming to maintain and keep sanitary.
3. Newer is better
Lastly, how old is the pool? If you are adding a pool to your yard in an attempt to raise the value of your home and sell it, it is crucial to put your home on the market shortly after the pool is finished. You want a new and updated pool to ensure you recoup your costs/investment.
What is the ROI?
Now, the big burning question that everyone is dying to know: Will the money you put into the addition of your pool lead to a comparable increase in the value and sales price of your home?
Obviously, with all home repairs and enhancements, it is critical to not over-embellish your pool area. Whether you are repairing your current pool or building a brand new one from scratch, the goal is to add value to your home in an attempt to sell it.
You want to make sure your design is appealing and tasteful to buyers, not overly dramatic where they will be put off by it. You also want to take into consideration that you probably will not get the full value in return that you initially invested.
The cost alone to just build the pool can range from $30,000-$100,000 depending on how elaborate you want it to be. You then have to factor in extra costs such as filtration, maintenance, and insurance/taxes. While these costs are all very necessary for the addition of your pool, you may not receive the full value and dollar amount you put into it.
The bottom line
While a pool may not add monetary value to the home, it definitely can add value to the overall enjoyment and quality of living. Ultimately, the decision is up to you. Only the homeowner can decide the true return on the expenditure.
After looking at listings online, a prospective homebuyer typically reaches out to a real estate agent who then gives them a list of recommended lenders and LOs. But three multibillion-dollar class action antitrust lawsuits looming over the real estate industry may soon reshape how buyers interact with agents.
Some of the nation’s largest real estate brokerages, including Keller Williams, RE/MAX, HomeServices of America as well as the National Association of Realtors, are facing three class action lawsuits (NAR is only named as a defendant in two lawsuits) that could result in the industry paying out tens of billions in damages. Anywhere Real Estate just settled two of the cases for a total of $83.5 million, which suggests major changes could be on the horizon.
The three class action suits Moehrl, Sitzer/Burnett, and Nosalek, named after their lead plaintiffs, take aim at NAR’s Participation Rule, which requires listing agents to make a blanket offer of compensation to buyers’ agents in order to list the property on a Realtor-affiliated multiple listing service (MLS). According to the plaintiffs, commission sharing inflates the costs for consumers, in violation of the Sherman Antitrust Act. NAR, however, contends that the current commission structure, which has been in place for over 100 years, actually benefits consumers.
“The buyers want the listing brokers to pay their buyer representative so they can have the most money invested in their down payment and get the best loan terms and rates possible,” Katie Johnson, NAR’s chief legal officer, said. “Sellers want their listing broker to pay the buyer broker’s compensation because it will result in the most buyers being able to afford their house.”
At a time when affordability is constraining first-time buyers from entering the market and interest rates are still expected to climb, “it’s going to do nothing but hurt the potential buyer,” argued Michael Borodinsky, a vice president and branch manager at Caliber Home Loans.
“You’ve got current economic conditions that are not opportunistic for a homebuyer right now, inflation is still out there and it’s all constraining buyers’ ability to spend. So, if you take that, you add that to where mortgage rates are, which are currently at 20 year highs, you add that to the fact that as of today, there is a still a very, very big problem with housing inventory, which has put prices artificially higher than they probably should be in terms of valuation, the buyers are just going to be saddled with more pain”
It will be months or years until the final verdict in the three lawsuits comes out, but there will be clear winners and losers from the outcome, loan officers and housing industry experts said in interviews with HousingWire. If the traditional practice of sellers paying for both sides of the agents ends, housing agencies will have to weigh in to determine ways for buyers to finance their agents’ comp, LOs noted.
Reshaping the home selling and buying process
Although Johnson anticipates a lengthy appeals process with all of these lawsuits, round one of the fight is quickly approaching. Sitzer/Burnett is scheduled to head to trial in mid-October and Moehrl is expected to head to court in the first half of 2024 with Nosalek most likely following shortly thereafter.
When the day comes that a final verdict is reached, Steve Murray, the co-founder of RealTrends Consulting sees three possible outcomes.
“Worst case scenario, the broker representing the buyer will have to negotiate their own fee with their client and the seller can no longer be compelled to make a blanket offer of compensation in order to list on the MLS,” Murray said.
“The second thing that could happen, is that more and more buyers will go directly to the listing agent, in which case they are clearly unrepresented. The third thing that would happen is a whole new kind of buyer brokers arise that charge an hourly flat fee to represent buyers,” according to Murray.
In light of Anywhere’s recent settlement, Murray believes the other defendants may also consider settling the suits.
But Ken Trepeta, the president of RESPRO, is holding off on making any predictions. It might depend on the terms spelled out in the settlement agreement, which still aren’t public yet, he said.
“If they are settling this and it goes away and they don’t admit wrongdoing and there is no requirement to change policies,” he said. Potential damages in the Sitzer/Burnett suit are anticipated to be up to $4 billion, while damages in the Moehrl suit could reach up to $40 billion.
(An attorney for the plaintiffs in the Moehrl case said Anywhere will be making significant changes to its policies, but did not offer specifics.)
For its part, NAR says it is not giving up the fight.
“Settlement is always an option for any party in litigation. NAR’s commitment to defend ourselves in court remains unchanged and we are confident we will prevail in proving the lawfulness of the rules under attack. Pro-competitive, pro-consumer local MLS broker marketplaces ensure equity, efficiency, transparency and market-driven pricing options for home buyers and sellers,” Mantill Williams, NAR’s vice president of communications, wrote in an email to HousingWire.
If buyer brokers and agents are no longer involved in most real estate transactions, as Murray suggests is a possibility, LOs and lenders who rely on agent referrals for transactions could have a smaller target group to focus on.
“There will likely be fewer Realtors, the sales volume will be handled by fewer Realtors. But if you’re an originator, that simply means that your target group is now smaller,” said Brian Hale, CEO of Mortgage Advisory Partners. “If you’re not dealing with the top producing agents or teams in the industry, you may find that your client has gone away.”
Loan officers may increasingly place more importance on reaching consumers directly especially when a buyer takes initiative in the homebuying process rather than relying on agents.
“If there isn’t a buyer’s agent involved – who’s just going to oversee step-by-step – I think consumers are going to take a little bit of that control back because they’re not willing to pay an agent for that level of hand holding and walking them through. So, they’ll reach out and they’ll find the companies that are publicly known as consumer-direct lenders,” said Mike Roberts, the co-founder of City Creek Mortgage.
TV, billboard and radio ads are traditional ways to reach consumers directly in hopes that borrowers will think of the lender when it’s time to buy a home, Roberts explained.
As industry players have begun preparing for a variety of potential outcomes in these lawsuits, some agents say they have seen lenders work to develop their consumer-facing marketing.
“I have seen some of the top loan officers go much more direct to the consumers,” said Gretchen Pearson, the broker-owner of Berkshire Hathaway HomeServices Drysdale Properties. “One of the top loan officers in the nation has set up webinars that he does four times a week and he is building up his own pipeline.”
Finding a way for buyers to finance their agents’ commissions is one of the critical issues that loan officers raise should the traditional practice of sellers paying for both agents’ commissions goes away.
The government-sponsored enterprises (GSEs) including Fannie Mae and Freddie Mac as well as the Federal Housing Administration (FHA) would likely have to weigh in, loan officers said.
“I think that’s the most important thing so that these buyers don’t get impacted negatively by their inability to have sufficient funds for a down payment,” Borodinsky said. “Because otherwise it’s going to sort of end the whole concept of how we define closing costs, because now we’ve got to add that in as almost as another tax or a fee.”
If Fannie Mae and Freddie Mac were to count the buyer’s agent fee as a seller contribution, listing agents would have more power in the homebuying and selling process, Roberts noted.
“I think listing agents are going to win. Agents who know how to get listings are going to win because buyers are gonna go straight to the listing agent and ask the listing agent to write a contract to present to the seller,” Roberts said.
Fannie Mae, Freddie Mac and the U.S. Department of Housing and Urban Development didn’t respond to HousingWire’s questions about whether they would come up with a mechanism to help buyers finance agent commissions.
“There is a potential of buyers having to directly pay buyer brokers and that could impact the lending side, and I know they are aware, but I am not aware of them taking any action,” Johnson said. “And maybe that is intentional because there might not be an immediate need for action.”
HousingWire reached out to the top 10 mortgage originators to comment on the impact commission lawsuit results could have on the mortgage industry. Wells Fargo, Pennymac, U.S. Bank Home Mortgage and Planet Home Lending declined to comment. Others didn’t respond.
Plenty of buyers still want a personal advisor
Although buyer’s agency commission may disappear or greatly slowdown, Murray believes the relationship between real estate agents and LOs will remain integral to the transaction.
“If buyer brokers agency goes away, I am not sure that the habit of referrals will go away or change too much,” Murray said. “Buyers will still rely on an agent, whether it is a listing agent or their own buyer broker to get a recommendation on mortgage companies.”
A significant number of consumers want a trusted advisor, Patrick Lamb, CEO of On Q Financial, said.
“They want somebody who knows the market, they want somebody who is advocating for them, and who is going to coordinate and go, drive around town and look at all these houses and do all the legwork. There’s some value in that,” Lamb explained.
A conclusion to these three lawsuits is not expected to come for several years. Industry experts believe there will be multiple appeals, giving real estate brokerages and lenders time to consider their options.
“I think it’s a tangential benefit. Whatever ruling likely comes out of this, you can’t change the world in 24 hours. It’ll take time for this to evolve through, there will likely be challenges, there could be appeals. You don’t know how all this goes,” Hale said.
What is certain is that many current LOs would have to reconsider how they get referrals and leads if the environment changes, he explained. And not all would fare well.
“[Only] a minority of LOs are very savvy and very smart about how they pursue referrals. If many of the current LOs in our industry don’t change the way they’re searching for referrals and/or leads in this kind of an environment, they have a high likelihood of becoming extinct.”
The ICE — Black Knight merger creates the first end-to-end digital infrastructure that will reorder incentives and change how housing markets operate. New competitive pressures on long-protected positions will force many to rethink delivery systems and reinvent organizations. The digital future is unknowable, but we do know that information power moves to consumers, value resides in networks and data rights are the new currency. These principles of digitization will test the adaptive capacity of every element in this diverse ecosystem.
The most likely outcomes include:
Lenders: Fewer than 50 mortgage lenders will transition to a federated model that enforces the controls necessary for secure cross-industry interoperability. The cost and benefits of migrating to network centric production will be substantial. The ERP projects of other manufacturers offer examples of the change management challenges lenders will face. Networks that have earliest visibility at the consumer points of intention will capture the data to win loans, provide servicing, create content and build a loyal audience.
GSEs: The concentration of lenders will lead to new systems that may reach deeper into the primary market. Lenders will align with marketing and services partners to gain pricing power. New methods, metrics and marketplaces will emerge from the non-QM segment that challenge conforming orthodoxy. Investor expectations will change, and government entities will attempt to coordinate their response. Any future exit from conservatorship will confront issues beyond capitalization such as data monetization, risk parameters, secondary market design, FHA execution and the pricing of mortgage guarantees.
Portals: These destinations become marketplaces that integrate the supply chain and allow consumers and their advisors to choose and close within minutes – not months. Portals will authenticate identity, validate content, facilitate standard agreements, and ensure timely payments between buyers and sellers of homes and service providers. Audience assets will be valued based on transaction volumes and bundles of listings, lending, loan sales and servicing and trading content. Consumer profiles will describe the interests, intentions and preferences that signal future purchases for the platforms that dominate the homeownership supply chain. Google, Amazon and their networks want to know when buying patterns are about to change.
Title: Title may be best positioned to implement the “trust model” that defines the responsibilities of all parties to a complex transaction. Beyond reps and warrants this structure would assure the range of “soft” components required for digital transactions such as – interoperability compliance, security standards, credential criteria, data quality, payments reconciliation, sales and repurchase terms, limits of liability and audit requirements. These essential tools require a collective commitment. Will providers like MasterCard, that recently acquired Finicity, capture the opportunity to bring digital trust to the largest asset class?
Insurance: How will PMI and P&C firms address the opportunities as electronic marketplaces lower the cost of customer acquisition across a rapidly changing competitive landscape? Every ancillary service will rely on a deeper understanding of local environmental and credit conditions. Access and affordability may be dictated by the regulatory actions of higher risk states and the cost of increasingly ESG sensitive capital.
Brokers: Digitization puts middlemen in every industry at risk. Real estate and mortgage brokers will be marginalized as friction is removed. Advisory services based on relationships and unique insights will command price premiums in every metro, submarket and product niche. Effective local and national advocacy could allow agents to monetize their data and personal networks that extend across the entire homeownership cycle. MLSs must evolve from listing repositories that extend offers of compensation to become “Metro Property Networks” that serve the broader real estate interests of every major job center.
Housing can finally be rewired to make the leap to a smarter, safer, connected system. Networks that create richer data will change the game and control the trajectory of an AI powered future. Digital infrastructure arrives as earnings erode and liquidity risk forces change upon an unstable structure. Every leader in the ecosystem will be on a shared journey to a connected mindset. Thinking differently about digital will matter more than any technology.
Stuart McFarland is the former EVP Operations and CFO at Fannie Mae, EVP General Manager at GE Capital Mortgage Services, and CEO at GE Capital Asset Management.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story: Stuart McFarland at [email protected]
To contact the editor responsible for this story: Tracey Velt at [email protected]
Betterment and Betterment are not only two of the most popular robo advisors in the industry, but they may very well be the most innovative in the field. Though they represent two of the first robo advisors, both have built out their platforms and now offer robust portfolio options and other services to their clients.
Though they each have their own nuances–and specializations–you really can’t go wrong with either platform. Each will take complete control of your portfolio, managing every aspect of it for a very low annual fee. When you sign up with either service, your only responsibility will be to fund your account on a regular basis.
But what if you’re either new to robo advisors or you’re considering a switch from another one? If you’re researching robo advisors, the information will inevitably lead to Betterment and Wealthfront. So let’s take a look at the two heavyweights in the robo advisor space and see which might be a better fit for your portfolio. Listen to the Podcast of this Article
About Betterment
Betterment is not only the original robo advisor, but its also the largest independent robo (along with Wealthfront), with $21 billion in assets under management. The company is based in New York City and began operations in 2008.
As a robo advisor, Betterment is an automated, online investment platform that handles all aspects of investment management for you. When you sign up for the service, you complete a questionnaire that will help determine your investment goals, time horizon, and investment risk tolerance. From that information, Betterment creates a portfolio of stocks and bonds to meet your investor profile.
They dont actually invest your money in individual securities, but instead through exchange-traded funds (ETFs), each representing a specific asset class. They can build an entire portfolio for you through about a dozen funds that will give you exposure to the entire global financial markets.
All this is done for a low annual management fee. Your only responsibility will be to fund that your account on a regular basis and let Betterment handle all the management details for you.
Better Business Bureau rates Betterment as A+, which is the highest rating in a range from A+ to F. The company also scores 4.8 stars out of 5 by more than 20,000 users on the App Store, and 4.5 stars out of 5 by more than 4,500 users on Google Play.
About Wealthfront
Wealthfront is, with Betterment, the largest independent robo advisor, and Betterment’s primary competitor. In fact, with over $24 billion in assets under management, its now slightly larger than Betterment. The company is based in Redwood City, California, and launched operations in 2011.
As a robo advisor, it works much the same as Betterment, creating a portfolio for you based on your answers to a questionnaire when you open your account. Wealthfront will also manage your account using a small number of ETFs spread across various asset classes. But on larger accounts, they’ll also add individual stocks to get greater benefit from tax-loss harvesting.
Like Betterment and virtually all robo advisors, Wealthfronts basic investment strategy is based on Modern Portfolio Theory (MPT), which emphasizes asset allocation over individual security selection.
Similar to Betterment, and really all robo advisors, your account will receive full investment management for a very low annual fee. Your only responsibility will be to fund your account on a regular basis.
Unfortunately, Wealthfront has a Better Business Bureau rating of F, due to unanswered complaints. However, the company gets 4.9 stars out of 5 from more than 9,000 users on the App Store, and 4.8 stars out of 5 by more than 2,700 users on Google Play.
Investment Strategies Betterment vs Wealthfront
Betterment Investment Strategy
Betterment offers two plan levels, Digital and Premium. Premium is available for minimum account balances of $100,000, while Digital is open to all account balances. Like many robo advisors, Betterment has evolved past building and managing a basic portfolio comprised of a mix of stocks and bonds.
For example, if you choose the Premium Plan, you’ll have access to live financial advisors. But there are many other services and plans to choose from.
Read More: Betterment Promotions
Basic portfolio mix
Your portfolio will be invested in as many as six stock asset classes/ETFs and eight bond asset classes/EFTs.
Stocks:
US Total Stock Market
US Value Stocks Large Cap
US Value Stocks Mid Cap
US Value Stocks Small Cap
International Developed Markets Stocks
International Emerging Markets Stocks
Bonds:
US High-quality Bonds
US Municipal Bonds
US Inflation-Protected Bonds
US High-Yield Corporate Bonds
US Short-term Treasury Bonds
US Short-term Investment-Grade Bonds
International Developed Markets Bonds
International Emerging Markets Bonds
Use of value stocks
Notice that three of the six stock asset classes involve value stocks. This is a specialization of Betterment and represents a time-honored stock market investment strategy. Value stocks are investments in companies with stock prices that are low in relation to their competitors by various standard measurements. But the companies are deemed to be fundamentally sound, and therefore likely to outperform the general market once the investment community realizes the true value of the stocks.
In this way, Betterment makes an attempt to outperform the general market, such as the S&P 500 or even some broader indices.
Smart Beta
This is another investment strategy Betterment uses with the potential to outperform the general market. This specific portfolio is managed by Goldman Sachs. Smart Beta is a form of active portfolio management, which seeks high-quality companies with low volatility, strong momentum, and good value.
Since its a higher risk/high reward type of investing, it requires a minimum portfolio of $100,000.
Socially responsible investing (SRI)
This is an investment option increasingly being offered by robo advisors. However, with Betterment only a portion of your portfolio will be invested in SRI. They replace the ETFs in the International Emerging Market Stocks and US Value Stocks Large Cap with ETFs that specialize in socially responsible investing in those sectors.
Learn More: The Pros and Cons of Socially Responsible Investing
Flexible Portfolios
If you want more control over your investment portfolio, you can choose this option. It allows you to adjust the individual asset class weights in your portfolio allocation. Its also designed for more advanced investors and gives you an opportunity to increase allocations in asset classes you believe are likely to outperform the market.
BlackRock Target Income
For investors looking for income and safety of principal, Betterment offers this portfolio, which consists of 100% of bonds. There is some risk of principal in this portfolio but it’s designed to be minimal. You can even choose the level of risk and return you want. It won’t provide the type of long-term gains you’ll get from a stock portfolio, but it will offer the kind of steady income that will work especially well for retirees.
Tax-loss Harvesting
Tax-loss harvesting is a year-end strategy in which asset classes with losses are sold (and later replaced with comparable ones) to offset gains in winning asset classes. The strategy helps to defer taxable capital gains on growing asset classes.
Betterment makes this strategy available on all account balances. However, it’s only offered on taxable accounts since it’s completely unnecessary for tax-sheltered retirement plans.
Betterment Everyday Cash Reserve
If you’re looking to add a cash option to your investment portfolio, you can do it through Betterment Cash Reserve. The account is eligible for FDIC insurance up to $1 million. The minimum deposit is $10, and offers unlimited transfers, both in and out of your account.
Betterment Checking
The Betterment Checking account gives you the flexibility to manage your money in a way that best fits your financial goals. You’ll get this account with a debit card and you can use it to pay in person or online. You’ll also get FDIC insurance on your money.
The Betterment Checking account is an innovative way to manage your money. It’s faster, more secure, and requires zero minimum balance requirements. You can now deposit checks using their streamlined mobile app. Just take a picture and deposit checks will be there for you on the other side.
Wealthfront Investment Strategy
Unlike Betterment, Wealthfront has a single plan for all investors, with an annual management fee of 0.25% on all account balances. And like Betterment, Wealthfront has expanded its investment options menu in many different directions.
Basic Portfolio Mix
Wealthfront uses 11 asset classes in the construction of its portfolios, including four stock funds, five bond funds, plus real estate and natural resources.
The allocation looks like this:
Stocks:
US Stocks
Foreign Stocks
Emerging Market Stocks
Dividend Stocks
Bonds:
Treasury Inflation-Protected Securities (TIPS)
Municipal Bonds (on taxable investment accounts only)
Corporate Bonds
U.S. Government Bonds
Emerging Market Bonds
Alternatives:
Real Estate
Natural Resources
Use of Alternative Investments
Wealthfront includes real estate and natural resources in its portfolio composition. The real estate sector invests in companies that provide exposure to commercial property, apartment complexes, and retail space. Natural resources are held in ETFs representing that sector.
The combination of the two offers a stronger diversification away from a portfolio comprised entirely of stocks and bonds, largely because they offer protection in an inflationary environment. It’s possible for these sectors to perform well when the general financial markets are not.
Smart Beta
The Smart Beta option attempts to outperform the general financial markets. The strategy deemphasizes market capitalization in the creation of a portfolio. For example, rather than using the capitalization allocations of certain companies within the S&P 500, the strategy might increase some allocations and decrease others. It’s more of an active investment strategy and requires a minimum investment portfolio of $500,000.
Wealthfront Risk Parity
This is another investment strategy for investors with larger accounts and a greater appetite for risk. Its been shown to provide higher long-term returns, but it may use leverage to increase those returns.
Stock-level Tax-loss Harvesting
Tax-loss harvesting is available on all taxable investment accounts. But Stock-level Tax-loss Harvesting is available to larger accounts to provide more aggressive tax deferral.
This is a fairly complex investment strategy, but it involves the use of individual stocks to take greater advantage of tax-loss harvesting. The use of individual stocks will make it easier to buy and sell securities to minimize capital gains taxes. Depending on the specific plan, the required minimum investment ranges between $100,000 and $500,000.
Wealthfront Path
This is a software-based financial advisory, providing you with financial planning tools. They can help you plan for retirement or saving for the down payment on a house or a college education for one or more of your children. The apps run what-if scenarios, that can make projections based on various savings levels for each of your specific goals.
Though it doesn’t offer live financial advice, the service is free to use.
Wealthfront Cash
You can open an interest-bearing cash account with Wealthfront Cash Account with just $1. There’s no market risk, no fees, unlimited free transfers, and your account is FDIC insured for up to $5 million. The account currently pays 4.30% APY and provides a safe, cash investment to go with your stock portfolios.
And now, Wealthfront Cash allows you to get your paycheck up to two days early when you set up a direct deposit. They’ve also implemented the ability for you to invest directly into the market within minutes, straight from your Wealthfront Cash account. That means you can get paid early and immediately invest – giving you about extra days of investing each year.
Read more: Wealthfront Cash Account review
Wealthfront Portfolio Line of Credit
Much like a home equity line of credit, the Wealthfront Portfolio Line of Credit is secured by your investment account. You can borrow up to 30% of the value of your account for any purpose. There’s no prequalification since the line of credit is completely secured by your investment account.
The line of credit is automatic if you have a non-retirement account balance of at least $25,000. You can request funds against the line on your smartphone and receive them in as little as one business day.
Current interest rates paid on the line range between 2.45% and 3.70% APR, depending on the size of your account.
Retirement Planning Betterment vs. Wealthfront
One of the most common uses of robo advisors is the management of retirement accounts. Both Betterment and Wealthfront can manage all types of IRA accounts, similar to the way they do with taxable accounts. But each also offers some level of retirement planning.
Read More: Best Robo Advisors Find out which one matches your investment needs.
Betterment Retirement Planning
Betterment is strong in this category because in addition to their regular portfolios, they also offer income-specific investment options, like their BlackRock Target Income and Everyday Cash Reserve. The Target Income option in particular focuses on maximizing interest income, which is exactly what most people are looking for in retirement.
One of the advantages Betterment offers is that you can connect your 401(k) with your investment account. Betterment cant manage the 401(k) (unless chosen to do so by your employer through their 401(k) management plan), but they can coordinate your Betterment retirement account(s) with the activity in your employer plan.
And of course, if you have at least $100,000 in your Betterment account, you can enroll in the Premium plan and have access to live financial advisors.
But Betterment also offers its Retirement Savings Calculator to help you know if you’re on track for your retirement. By answering just four questions, they’ll be able to determine if your current retirement plan will provide the income you’ll need in retirement, taking your projected Social Security income into consideration. If it isn’t, it’ll let you know how much more you need to invest on a regular basis.
Wealthfront Retirement Planning
You can take advantage of Wealthfront Path to help you with retirement planning. You’ll start by linking your financial accounts so the program can get a better understanding of your finances. Recommendations to help you reach your goals are made based on the amount of regular contributions you’re making and the income you will need in retirement.
Path will analyze your spending patterns, your average annual savings rate, the interest you’re earning on those savings, as well as your investment and retirement contributions. It will also analyze the fees you’re paying on your investment and retirement accounts. Loan accounts are analyzed as well.
The information is assembled, and future projections are made. You’ll be given advice on any needed increases in savings for retirement contributions, as well as asset allocations. And perhaps best of all, since all your financial accounts are linked to the service, it will provide continuous updates on your progress toward your retirement goals.
Betterment Pros & Cons
No minimum initial investment or account balance requirement.
Reduced fee structure on larger account balances.
Use of value stocks seeks to outperform the general market.
Unlimited access to certified financial planners on account balances over $100,000.
Comprehensive retirement planning package.
Limited investment diversification, excluding alternative asset classes, like real estate and natural resources.
The annual management fee rises from 0.25% to 0.40% if you select the Premium plan.
The reduced fee structure on large account balances doesn’t kick in until you reach a minimum of $2 million.
Wealthfront Pros & Cons
Your account includes alternative investments, like real estate and natural resources. This offers greater diversification than a portfolio invested only in stocks and bonds.
The minimum initial investment is just $500. That’s not zero, but it’s an amount most small investors can comfortably start with.
Flat-rate fee of 0.25% on all account balances.
Larger accounts get the benefit of more efficient tax-loss harvesting strategies through Wealthfront Risk Parity.
The Wealthfront Portfolio Line of Credit lets you borrow up to 30% of the value of your non-retirement accounts at very low interest and with no credit check.
There’s no reduced management fee for larger account balances.
The retirement planning tool (Path) is an automated system and does not provide advice from live financial advisors.
Poor rating from the Better Business Bureau.
Bottom Line
We’ve covered a lot of territory and details in this side-by-side comparison of Betterment vs Wealthfront. The summary table below should help you to be able to compare the various services each offers with a quick glance.
Category
Betterment
Wealthfront
Minimum initial investment
Digital: $0 Premium: $100,000
$500
Promotions
Up To 1 Year Free
First $5,000 Managed Free
Management fees
Digital: 0.25% up to $2 million, then 0.15% above Premium: 0.40% to $2 million, then 0.30%
0.25%
Available accounts
Individual and joint taxable accounts; traditional, Roth, rollover and SEP IRAs; trusts and nonprofit accounts
Individual and joint taxable accounts; traditional, Roth, rollover and SEP IRAs; trusts and 529 accounts
Rebalancing
Yes
Yes
Dividend reinvestment
Yes
Yes
Tax-loss harvesting – on taxable accounts only
Yes
Yes
Socially-responsible investing
Yes
Available through Smart Beta ($500,000 minimum) and Stock-level Tax-Loss Harvesting ($100,000 minimum)
Smart Beta investing
Yes
Yes, minimum $500,000
Interest bearing cash account
Yes
Yes
Line of credit
No
Yes
Financial advice
Yes, on Premium Plan only
Automated only
Mobile app
Yes
Yes
Customer service
Phone and email, Monday through Friday, 9:00 am to 6:00 pm Eastern time
Phone and email, Monday through Friday, 10:00 am to 8:00 pm Eastern time
You’ve probably already guessed were not declaring a winner between these two popular roboadvisors. Both are first rate and you can’t go wrong with either. More than anything, your decision will likely come down to specific details–what features and benefits one offers that better suits your own personal preferences and investment style.
But one advantage that’s undeniable with both Betterment and Wealthfront is that not only is each a first-rate service, but they provide enough investment options and related services that they can accommodate your growing financial capabilities and needs well into the future.
For example, while you may start out with a basic managed portfolio, you’ll eventually want to get into higher risk/higher reward options as your wealth grows. As well, you’ll like the flexibility of having high-interest cash investment options, as well as low-cost or free financial or retirement advice.
We like both these services and are certain you can’t go wrong with whichever one you choose.
Betterment Cash Reserve Disclosure – Betterment Cash Reserve (“Cash Reserve”) is offered by Betterment LLC. Clients of Betterment LLC participate in Cash Reserve through their brokerage account held at Betterment Securities. Neither Betterment LLC nor any of its affiliates is a bank. Through Cash Reserve, clients’ funds are deposited into one or more banks (“Program Banks“) where the funds earn a variable interest rate and are eligible for FDIC insurance. Cash Reserve provides Betterment clients with the opportunity to earn interest on cash intended to purchase securities through Betterment LLC and Betterment Securities. Cash Reserve should not be viewed as a long-term investment option.
Funds held in your brokerage accounts are not FDIC‐insured but are protected by SIPC. Funds in transit to or from Program Banks are generally not FDIC‐insured but are protected by SIPC, except when those funds are held in a sweep account following a deposit or prior to a withdrawal, at which time funds are eligible for FDIC insurance but are not protected by SIPC. See Betterment Client Agreements for further details. Funds deposited into Cash Reserve are eligible for up to $1,000,000.00 (or $2,000,000.00 for joint accounts) of FDIC insurance once the funds reach one or more Program Banks (up to $250,000 for each insurable capacity—e.g., individual or joint—at up to four Program Banks). Even if there are more than four Program Banks, clients will not necessarily have deposits allocated in a manner that will provide FDIC insurance above $1,000,000.00 (or $2,000,000.00 for joint accounts). The FDIC calculates the insurance limits based on all accounts held in the same insurable capacity at a bank, not just cash in Cash Reserve. If clients elect to exclude one or more Program Banks from receiving deposits the amount of FDIC insurance available through Cash Reserve may be lower. Clients are responsible for monitoring their total assets at each Program Bank, including existing deposits held at Program Banks outside of Cash Reserve, to ensure FDIC insurance limits are not exceeded, which could result in some funds being uninsured. For more information on FDIC insurance please visit www.FDIC.gov. Deposits held in Program Banks are not protected by SIPC. For more information see the full terms and conditions and Betterment LLC’s Form ADV Part II.
DoughRoller receives cash compensation from Wealthfront Advisers LLC (“Wealthfront Advisers”) for each new client that applies for a Wealthfront Automated Investing Account through our links. This creates an incentive that results in a material conflict of interest. DoughRoller is not a Wealthfront Advisers client, and this is a paid endorsement. More information is available via our links to Wealthfront Advisers.
WASHINGTON — After years of proposals, counterproposals, interagency disagreement and political intrigue, the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency appear poised to finish their modernization of the Community Reinvestment Act’s implementing rules.
FDIC Chairman Martin Gruenberg said last fall that he expected the three agencies would finalize a joint rule updating the CRA in early 2023. But the intricacies of the rule, a shake-up of leadership and a string of midsize bank failures this spring likely contributed to pushing back that timeline, according to Jesse Van Tol, CEO of the National Community Reinvestment Coalition.
“You had a mini banking crisis in the spring that certainly pulled people away from this. You had a leadership transition at the Fed as well with [former Vice Chair Lael] Brainard’s departure, [and] you’ve gotten new Fed governors who came on board.” he said. “The light at the end of the tunnel is here, and I think we will see the final rule in October.”
Congress passed the CRA in 1977 as a way to address de facto lending discrimination faced by communities of color. The act requires that banks be graded on how equitably they are lending to low- and moderate-income customers and neighborhoods in their service areas, typically determined by where they have branches and deposit-taking automated teller machines. Banks need to receive a satisfactory mark in order to merge with or acquire other banks.
Given the advent of mobile banking, both banks and community groups have long agreed on the need to update the CRA — the most recent comprehensive overhaul of the rules was conducted in the 1990s.
Former Comptroller of the Currency Joseph Otting previously attempted to reform CRA implementation during the Trump administration, but community organizations argued the proposal effectively allowed banks to ignore underinvested communities and they threatened to sue the OCC when the plan was finalized in 2020. Otting’s proposal also failed to gain the support of Fed officials. The Biden administration then took on the task of reform, starting from scratch under the leadership of former Brainard.
The banking agencies issued a notice of proposed rulemaking in May 2022, but banking trade organizations raised a variety of concerns about the proposal. Banks argued that it would be too difficult to attain satisfactory ratings under the change, particularly under the retail lending portion of CRA exams. Banks also argued that the 90-day comment period was too short for banks to meaningfully respond to the proposed changes under the Administrative Procedure Act and hinted at a legal challenge if the rule was finalized as written.
Banking groups on Tuesday asked regulators to delay issuing the final joint rule due to uncertainty created by a constitutional challenge to the Consumer Financial Protection Bureau’s funding structure and by the recent capital changes regulators have proposed as part of the Basel III accords.
But the regulators appear unfazed by that criticism. Ian Katz, a Washington analyst with Capital Alpha Partners, said that may be due in part to the closing window of opportunity that regulators have to finalize the rule and avoid a congressional repeal after the 2024 election. The Congressional Review Act allows Congress to nullify a regulation within 60 legislative days of its finalization with a majority vote in both chambers and approval of the president. Katz said that a real threat of an override exists if Republicans win the House, Senate and White House.
“If the administration wants to make sure that the rule can’t be nullified by a Republican administration and Congress, it probably needs to finalize it by roughly mid-2024 to avoid the other CRA, the Congressional Review Act,” Katz said. “I think they’ll put it out before then.”
But in addition to racing against the clock, experts say regulators also have to take their time to ensure that the final rule is not vulnerable to a legal challenge.
“CRA is complicated, and the proposal gives the banks a lot of different pieces they can attack. The banks are also asserting that the regulators are going beyond their statutory authority and that the proposal, if unchanged, would be vulnerable to a legal challenge,” Katz said. “I imagine the regulators have been taking a look at that and will try to make sure they put out something that won’t be easy to strike down in court.”
Van Tol said the agencies are highly sensitive to industry concerns and have spent a lot of time making certain the law complies with statutory authority. To craft a durable rule, the agencies — particularly the Fed, which is leading the rewrite — are likely to take all the time they have. Van Tol said this puts pressure on regulators to ensure the rule withstands the test of time.
“Because the banking trades have threatened to sue them, I think they are trying to make sure that they’ve dotted the i’s and crossed their t’s in such a way that the rules are best protected,” said Van Tol.
Ye the delay in finalization can’t all be attributed entirely to industry pressure, Van Tol said. CRA-related rules have historically been very difficult to get done, in part because the details are very complex and also because they require interagency collaboration.
“It’s an interagency ruling, it’s much more complicated to coordinate amongst three agencies — two of whom have boards — who have to vote on the proposal,” he said. “The Fed [officials] are perfectionists. If you give them time, they’ll take it. They’ll take as much time as they need to get to something they’re satisfied with.”
Dennis Kelleher, CEO of the public advocacy organization Better Markets, said part of the problem is that industry turmoil and agency turnover made an already tedious process more difficult.
“I think anyone thinking it was going to be finalized earlier this year was overly optimistic,” Kelleher said. “It would have been record-breaking for them to do all that and finalize by earlier this year. While we always prefer rules to be finalized sooner than later, we’re more interested in rules being finalized that are effective, workable, durable and achieve the intended goal. If that takes more time than less, better to get it right than be quick about it.”
When reached for comment, officials at the OCC indicated they are working on the rule and incorporating public feedback.
“The OCC has been working with the Federal Reserve and FDIC to modernize and strengthen the Community Reinvestment Act to expand financial inclusion and opportunity for all Americans, especially the underserved,” they noted in an email. “The agencies received hundreds of detailed and thoughtful comments on the notice of proposed rulemaking, and we are working together to consider the suggestions.”
The FDIC and the Fed did not comment for this story.
Van Tol said that for all the bluster about a possible legal challenge, he is skeptical that banks would actually follow through on their threat to sue their prudential regulators over the rule.
“I think the trades sending that letter [on Tuesday] is just an attempt to continue to delay, which is really just an attempt to kill it,” Van Tol said. “It will be interesting to see if they do. I think it’s one thing to sue the CFPB; I think it’s another thing entirely to sue your prudential regulator. I wouldn’t want to be in that position.”
He added that banks also must toe a fine line in opposing the CRA, given how such a stance could contradict banks’ previous stated commitments to racial justice.
“Some banks will think twice — many of them having made statements about their commitment to racial equity, their commitment to the community in the wake of George Floyd — about suing over a rule that fundamentally is about lifting up underserved communities,” he said. “I think obviously that’s the reason why they work through their trades, to shield themselves from criticism.”
A rental agent is your personal guide in the world of real estate rentals. While we often associate real estate agents with home purchases, rental agents specialize in helping you find the perfect apartment or house to rent. They’re the experts who know the rental market like the back of their hand, equipped with a deep understanding of local neighborhoods, rental trends, and available properties.
In this article, we’re diving into the world of rental agents and how they can be the game-changer you didn’t know you needed for your next living space. So, whether you’re a first-time renter or a seasoned tenant, let’s uncover how a rental agent can transform your search for your next apartment or house.
Should you use a real estate agent to find your next rental?
Using a real estate agent to find your next apartment or home offers many advantages that streamline the process and enhance your overall experience. These professionals possess in-depth knowledge of the local rental market, which can help them find properties that align with your preferences and budget. In highly competitive markets such as Los Angeles, New York City, Miami, and Boston, the role of rental agents becomes paramount in the quest to secure an apartment. However, it’s worth noting that rental agents are not exclusive to these larger cities; they are also present in smaller cities, offering valuable assistance to those seeking lease accommodations.
7 key ways a rental agent can help you
Navigating the rental market can be a challenge, but with a skilled rental agent by your side, you’ll have a seasoned expert to guide you. From finding the right apartment or house to handling negotiations and paperwork, here are the key ways a rental agent can make your renting journey a breeze.
1. Tailored property searches
A rental agent will curate a list of rental options that match your preferences, saving you time by presenting choices that align with your needs and budget.
2. Local expertise
With in-depth knowledge of the area, your agent will provide insights into neighborhoods, schools, transportation, and amenities, helping you make an informed decision.
3. Protection from scams
Rental agents prevent you from scams by verifying ownership, checking landlords, and ensuring legally sound leases, creating a safe rental process.
4. Schedule property viewings
Say goodbye to endless property visits. Your agent can schedule and coordinate viewings for you, ensuring you see the most suitable options without the hassle.
5. Communicate with landlords on your behalf
These agents act as intermediaries, communicating with landlords on your behalf to address queries, negotiate terms, and facilitate effective communication throughout the rental process.
6. Assist with lease negotiations
Leave the negotiating to the pros. Rental agents are skilled at securing favorable lease terms, rental rates, and other terms on your behalf.
7. Help you through the application process
Through the application process, rental agents provide the necessary forms, explain requirements, and assist with document submission.
How much do you pay real estate agents?
The cost of a real estate agent for rentals can vary based on factors such as location, market norms, and the specific services offered. Typically, you can expect to pay around one month’s rent or a percentage of one year’s rent. So if you rent an apartment in Tallahassee for $2,000 a month, you could pay anywhere between $2,000 to $2,400 if the agent takes 10% of the annual rent. However, practices can differ from region to region, so clarifying the terms and fees with the agent before entering into any agreements is essential. Consulting with the agent or agency upfront will help you understand the cost structure and any potential fees associated with their services in your market.
Where can you find a real estate agent that works with rentals?
You can find agents through various channels. A common approach is to search on reputable real estate agency websites, where agents often list their specialties and contact information. Additionally, requesting recommendations from friends, family, or colleagues who have recently rented properties can yield reliable referrals. Ultimately, online research, word-of-mouth referrals, and attending local events can help you find an excellent real estate agent to assist you in your apartment or home search.
The bottom line
In a nutshell, rental agents are your go-to resource for a stress-free renting experience. They’ve got your back, whether it’s finding the right place, protecting you from scams, or handling all the paperwork. So, whether you’re on the hunt for your first apartment or your rental dream house, partnering with a rental agent could be the key to a smoother, safer, and simpler renting experience.
Bank of America (BofA) prevailed in a court case brought against it by Cook County, Illinois, which sued the bank alleging predatory mortgage loans to Black and Hispanic borrowers in the Chicago area. The news was first reported by Bloomberg Law.
Cook County initially sued BofA and other banks in 2014, alleging that the company had violated the Fair Housing Act in making credit too easily available to borrowers in the Chicagoland area with mortgages the county described as “unchecked or improper.”
When the borrowers could not repay these mortgages, the county alleged that it was hurt as a result of vacant properties and lost taxes and fees.
When the District Court of Northern Illinois sided with Bank of America in the 2014 case, Cook County appealed to the Court of Appeals for the Seventh Circuit. This week, that court affirmed the lower court’s decision and sided with BofA, finding that Cook County was “at best a tertiary loser” — with its injury deriving from the injuries to the borrowers and banks —and not the proper plaintiff.
The Fair Housing Act only provides relief for more immediate injuries, according to Judge Frank H. Easterbrook in his decision cited by Bloomberg Law. Cook County, the judge said, was too far removed from the alleged predatory lending scheme to be considered the proper plaintiff.
“The banks are secondary losers, for they did not collect the interest payments that the borrowers promised to make and often did not recover even the principal of the loans in foreclosure sales,” Easterbrook wrote in his published opinion.
Circuit Judge Kenneth F. Ripple wrote in a concurring opinion that the dismissal should be affirmed due to an exclusion of testimonies from two expert witnesses called by Cook County. Without them, two of the three county claims against BofA had less merit, but the lower court was appropriate in its exclusionary discretion because it found the statements of the witnesses unreliable Ripple wrote.
The presence of an alleged scheme was also not supported, he said.
“As the district court explained, the record does not support the County’s suggestion that the defendants engaged in a coordinate scheme to target minority borrowers for loans that they could not afford in order to provoke defaults and foreclosures,” Ripple wrote.
After promising signs that it was cooling off, inflation ticked back up in July, giving many Americans pause. With higher costs come higher interest rates meant to combat it. And, after the Federal Reserve made yet another increase last month interest rates hit a 22-year high, the benchmark interest rate is now sitting at a range of 5.25% to 5.50%, leaving many borrowers with few options.
This has been felt for everything from credit card usage to personal loans to homebuying. With interest rates for mortgages currently around 7%, many buyers have elected to sit tight until they come back down again. But they don’t have to be completely idle, either. In fact, there are some things buyers can do now, even if mortgage rates stay elevated.
Start by exploring your personal mortgage rate options here now to see what you qualify for.
What homebuyers should do in today’s high rate environment
Here are three things prospective buyers can still do in today’s high rate environment.
Shop around for lenders
Will you find the 3% interest rate of the recent past by shopping around for lenders? That’s unlikely. But you still may be able to secure a better rate by shopping around instead of committing to the first lender you find. The difference in rate quotes you get may be small, but every point (and every tenth of a point) still counts, particularly now.
Most experts would recommend getting quotes from at least three lending institutions, although it couldn’t hurt to get more. Just make sure you coordinate your research appropriately and time your requests within a short window. Otherwise, you could damage your credit score with multiple, prolonged credit qualification checks.
You can easily compare rates and lenders online here now.
Consider buying mortgage points
Mortgage points allow borrowers to get a lower interest rate than the market rate — for a fee. By paying the fee upfront (or by rolling it into your overall mortgage loan), you could secure a lower interest rate, thus opening the potential to buy a home now.
While you won’t be able to buy points that drop a 7% mortgage to 2%, you may be able to get it down to 6.6% or slightly lower. That difference could add up over time — making your immediate mortgage payments more manageable.
Just plan on staying in your new home long enough to recuperate the costs spent to obtain the mortgage points. Otherwise, it may not be worth it.
Improve your credit as much as possible
While a 7% interest rate may not be particularly appealing, it could be worse. And it will be if you apply for a mortgage with a low credit score or incomplete credit history. The best and lowest mortgage interest rates are reserved for those with the best credit, so if your score is subpar you’ll want to make every effort to improve it.
This can include paying down (or off) existing debts, paying bills on time (or early) and not applying for any additional credit. Every additional credit application you submit will require a credit check, resulting in your score getting dropped further.
By improving your credit score — and maintaining it at a high level — you’ll be best positioned to get the lowest rate available.
The bottom line
The low mortgage interest rates from 2020 and 2021 are in the past, with no real expectation that they will return anytime soon. That said, there are still some advantages to buying a home now — and there are things buyers can do to get the best rate possible in today’s market. By shopping around for lenders, buying mortgage points and improving your credit score as much as possible, you’ll position yourself for the very best rates and terms available while still keeping an eye on a potential refinance in the future. Get started here now!