When the Federal Reserve kicked off its rate-hiking campaign in March last year, the housing market responded predictably — mortgage rates climbed, leading to eventual declines in home prices.
But after 10 rate hikes, the housing market — traditionally one of the most interest-rate-sensitive areas of the economy — is anything but predictable.
“It’s creating a lot of confusion,” said Orphe Divounguy, a senior economist at Zillow.
Mortgage rates have likely peaked — but home prices keep increasing
The Fed has raised its benchmark interest rate by five percentage points since last March to help lower inflation, which was at a 40-year high.
When the Fed raises interest rates, that increases the rates that banks charge each other for overnight loans. Banks and other financial institutions pass on the higher cost of borrowing to consumers by charging them higher rates on mortgages, credit cards, auto loans and other loans. In theory, consumers respond to this by cutting back on spending, which means businesses can’t raise prices as much as they had.
Before the Fed announced its first rate hike on March 16, 2022, average 30-year fixed mortgage rates hadn’t gone above 4% since May 2019, according to data from Freddie Mac. Rates began to increase in anticipation of the Fed’s decision to raise rates and climbed even higher to 4.42% immediately after the first hike. Mortgage rates then continued to climb in tandem with the Fed’s hikes until November, when mortgage rates peaked at 7.08%, despite four subsequent rate hikes since then.
Mortgage rates have been moving higher recently, after weeks of declines. For the week ending July 6, mortgage rates hit 6.81%, the highest level for the year so far, Freddie Mac reported on Thursday.
But the median price of an existing home in May was $396,100, down from 3.1% compared to a year prior, according to data from the National Association of Realtors. However, median prices were up 2.6% for the month, marking the fourth-straight monthly increase. The median price of a new home was $416,300 in May. That’s a 7.6% decline from last May, but a 3.5% increase on a monthly basis, according to US Census Bureau data.
Why did mortgage rates stop responding to Fed hikes?
The Fed’s monetary policy is one of many factors that influences mortgage rates, said Charles Dougherty, senior economist at Wells Fargo.
Another big factor is yields on 10-year Treasury notes, which tend to serve as a bellwether for mortgage rates. But in recent months, the spread between the 10-year Treasury and 30-year fixed mortgage rates has widened.
That’s a product of the uncertain economic outlook, Dougherty said. Inflation remains above the Fed’s 2% target, which means the central bank is likely to implement more rate hikes. But without fully knowing the full effect that more hikes could have on the economy, the Fed may inadvertently invite a recession, he said.
“Long-term interest rates are anticipating not just the Fed’s next move, but the potential path for rates over the next decade,” said Len Kiefer, deputy chief economist at Freddie Mac. “Mortgage rates may respond to the next Fed rate move, but it could seem counterfactual.”
“For example, if the market comes to the conclusion that future rate hikes are less likely, that could put downward pressure on mortgage rates. In that case, mortgage rates could fall, even if the policy rate goes up,” Kiefer told CNN.
Higher mortgage rates have reduced home inventory
In theory, when mortgage rates go up, home prices should fall since it raises the cost of homeownership, thereby reducing demand. But that’s not happening.
That’s partly because the higher mortgage rates that came after the Fed hiked rates created a major lock-in effect, said Kiefer.
At the start of the pandemic, the Fed slashed rates to near-zero levels in hopes of stimulating the US economy as businesses closed and workers stayed home to avoid catching or spreading Covid. With such low rates, homeowners and homebuyers were then able to refinance or buy with rates as low as 2%.
With mortgages now approaching 7%, all that has changed. Selling could mean forfeiting a low mortgage rate for one that’s potentially double.
“Many existing homeowners find it difficult to give up a mortgage under 4% to trade for one over 6%,” Kiefer said. That has contributed to a decline in housing inventory.
And since many homes are still listed above where they were before the pandemic, homeowners have little incentive to sell.
“It seems to be that supply will be stuck for the foreseeable future,” said Dougherty.
Housing inventory, or the number of active home listings, is down by a third from before the pandemic. As of June, there were nearly 614,000 existinghomes listed compared to almost 928,000 in February 2020, according to data from Realtor.com.
In many ways, the housing market is still playing catch-up from the Great Recession, which induced nearly a decade of sluggish new home construction, Divounguy said. When mortgages fell below 3% in 2020, home builders started to pick up — but not fast enough to meet the pandemicsurge in demand.
Home inventory is likely to drop even lower due to the “low flow of listings paired with the demand for homebuying in the spring,” Zillow’s Divounguy told CNN. On top of that, housing demands remain high because the labor market is still so strong and workers continue to earn more than they had before the pandemic, he added.
“That tells the crux of the story for why the housing market seems a bit odd right now,” Divounguy said.
As the pandemic shut down office life in Los Angeles’ downtown financial district, Claude Cognian tried to keep his gastropub Public School 213 open. But the evacuation of white-collar workers made way for an influx of homeless people and drug users — and more than a few troublemakers striding in the front door.
“It was hard to keep hostesses at the door, because they got scared,” said Cognian, chief executive of the restaurant’s parent company, Grill Concepts Inc.
Three break-ins cost as much as $12,000 each time just to repair the windows, all while the bottom line was cratering in the absence of the office employees who used to gather for lunch and after-work drinks. With sales down 75% from pre-pandemic days, his company closed the downtown gastropub in August and is not planning to return.
“Our bet was that downtown was going to come back, and it hasn’t,” Cognian said.
For decades the Los Angeles financial district was the beating heart of downtown, the corporate muscle that gave the city of sprawl a soaring glass skyline. But the pandemic and the wave of remote work hollowed out its skyscrapers and helped shut many restaurants and businesses that relied on crowds of workers. Though the neighborhood shows signs of recovery, few expect it to return to being the bustling hive of suits and ties that it was.
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To many insiders — the urban planners, real estate developers and business owners with interests in it — the area will recover only if its identity grows more textured than a zone of white-collar office space.
Desirable office addresses were already spreading beyond the financial district before the pandemic, as downtown experienced a renaissance in housing, art and entertainment on blocks previously shunned by investors and residents.
To the south, billions of dollars were spent improving the blocks around Crypto.com Arena with hotels, housing and entertainment venues. Obsolete century-old commercial and industrial buildings to the east were renovated into desirable housing and fashionably unconventional offices. Billions more were spent north on Bunker Hill where the Music Center including Walt Disney Concert Hall and office skyscrapers have been joined by museums, apartments and a high-rise hotel.
The housing boom drew residents to the financial district as well, and that has kept it from turning into a ghost town.
But for the area to truly come back to life, many say it will need to follow the path of Lower Manhattan. The financial capital of New York faced an exodus after 9/11, but city officials and investors staved it off by making it a place of more diverse uses. It is still an office district but is far more lively than it used to be since it also became a residential neighborhood with more shops, restaurants, parks and hotels than it had before the attacks. A performing arts center will open in September.
“Cities evolve. That’s what they do,” said downtown L.A. business representative Nick Griffin. “From natural disasters, wars and pandemics. They evolve with market changes, customer preferences and cultural shifts. Downtown has evolved pretty dramatically over the last 20 years and the next five or so are going to be very interesting.”
Many companies have returned to their offices, but on a limited basis as their employees work some days from home. “For Lease” signs clutter building fronts, tacked over restaurants and bars that once served lively hordes of office workers. Graffiti marks windows.
At Public School 213, the chairs are stacked neatly on tables as if it just closed for the night. Other former restaurants have been gutted by their landlords. Sidewalks are quiet, sometimes eerily so.
Downtown’s centers of gravity have shifted numerous times since its days as a remote Spanish pueblo.
The plaza by Olvera Street near the Los Angeles River was el centro until the late 19th century. When the railroads arrived in the American era, the business elite shifted the commercial district south from the plaza toward 1st Street in the Anglo section of the racially divided city, said Greg Fischer, an expert on the history of downtown who worked on planning matters for former City Councilwoman Jan Perry. Main, Spring, Broadway and Hill streets became the business hub.
In the early 20th century, elite social clubs such as the Jonathan Club, the California Club and the Los Angeles Athletic Club erected new buildings on the west side of downtown where property was relatively cheap. Soon the rooming houses, small apartment buildings and ramshackle Victorian homes there gave way. Richfield and other oil companies headquartered there, the seeds of today’s financial district.
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In “the Jetsons era,” as Fischer described the 1960s, corporate leaders viewed the Spring Street-centered office district as increasingly obsolete and passé and moved to newer buildings in the financial district. Downtown lost a lot of itslifeblood during that time, he said.
“In the years after World War II, downtown was a shopping, office and entertainment area,” Fischer said. “By the 1960s the office component had shifted west, most entertainment went to suburbs and housing just evaporated.”
Among the big businesses with offices in the west were the Richfield, Union, Signal, National and Superior oil companies. Pacific Mutual Life Insurance Co. was headquartered there and Bank of America had a big presence.
The boundaries of the financial district are not officially outlined, but property brokerage CBRE defines it as the office center south of Bunker Hill and 4th Street, flanked on the west by the 110 Freeway and on the east by Hill Street and extending south to 8th Street.
By the 1980s, much of downtown was moribund; buildings that once thrummed with commerce were dilapidated and vacant or underused. There were pockets of vibrancy, notably the Jewelry District and a Latino-centric shopping zone that emerged among aging buildings along Broadway in the Historic Core. The Civic Center around City Hallremained one of the largest concentrations of public administrative buildings in the country, employing thousands of workers.
But the financial district was the shinythriving part of the city, a high-rise office park for lawyers, bankers and accountants who piled into their cars for a mass exodus at the end of each workday.
To many, the neighborhood felt like a corporate fortress, invisibly walled off from the rest of downtown. Business leaders were painfully aware that downtown L.A. lacked the vibrancy of other big cities because it had so few residents, but was stuck in a chicken-and-egg dilemma: People didn’t want to live there because it lacked restaurants, grocery stores and other typical city-life amenities, but merchants didn’t want to set up shop because few lived there.
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The stalemate began to break around 2000 with an ordinance that made it easier to redevelop obsolete office buildings into housing. The relocation of the Lakers, Clippers and Kings pro sports teams to the new downtown arena then known as Staples Center brought thousands of sports and music fans and led a wave of development south of the financial district.
Decades of efforts to add rail service and thousands of apartments and condominiums helped create a more vibrant downtown that was taking on the flavor of other big cities before the pandemic.
“All of a sudden people were walking dogs and pushing baby carriages,” architect Martha Welborne said. “New restaurants came in, even destination restaurants that weren’t just for the people who worked downtown or lived there.”
Fortunately for downtown’s future prospects, its apartment towers remain nearly fully occupied. More than 35,000 units were built after 1999, when so few people lived there that downtown didn’t even have a big-chain grocery store.
Three new hotels have recently opened and a 42-story apartment tower will start leasing later this year. Bottega Louie, one of the region’s top-grossing restaurants before it shut down during the pandemic, reopened in 2021. A few blocks away, legendary Beverly Hills steakhouse Mastro’s also opened a seafood restaurant last year near Crypto.com Arena.
And last week, Metro opened its new Regional Connector, a 1.9-mile underground downtown track adding three stations and linking different lines to make travel more seamless.
Though some business owners have abandoned the financial district, others see an opportunity to get in at an affordable price during what they hope is a temporary economic dip.
Restaurateur Prince Riley recently leased a spot on Grand Avenue that was last home to the Red Herring restaurant. He grabbed it because he liked the location and it was already built-out for upscale dining.
“You can see all the love and care that went into this space,” he said. “They were a casualty of COVID.”
Riley and his wife plan to open their restaurant, named Joyce, in July, featuring a raw bar and Southern-style seafood such as crudo and ceviche. They moved into the apartment building upstairs to be close to it.
The couple like being near Bottega Louie, a popular Whole Foods grocery store and the recently opened Hotel Per La, which took over a lavishly refurbished 1920s building last occupied by another hotel that closed early in the pandemic.
“I can see business picking up,” Riley said. “This is an opportunity from a terrible tragedy like COVID. We wouldn’t have had this otherwise.”
A key factor keeping downtown teetering between recovery and a further downward slide appears to be discomfort with the streets and the sense that they are not as safe as they were before the pandemic.
The blocks close to Metro’s underground 7th Street/Metro Center station, where multiple light and heavy rail train lines meet, are among those that have changed the most since the pandemic as the Metro system struggles to combat rampant drug use and serious crimes such as robbery, rape and aggravated assault on its lines.
Thegrowing number of homeless people on the streets has been an issue in other cities too, said Cognian of Public School 213. His company also closed restaurants in Seattle and San Francisco because customers at their urban locations trickled away as unhoused people commandeered the sidewalks.
“Hopefully, we as a city, as a state, find a solution for the homeless,” he said. “If the homeless situation doesn’t get solved in some fashion that allows tourists, office workers and businesses to operate, it’s just going to bring down the area.”
Real estate broker Derrick Moore of CBRE, who specializes in matching restaurant and shop operators with landlords, said leasing of retail space downtown has improved in recent months, especially compared to the dark days of the 2020pandemic shutdown when downtown fell silent.
“It seems like ancient history,” Moore said, “but it was very devastating to one’s psyche.” And to downtown businesses.
In the wake of the COVID shutdown, downtown overall lost more than 100 food and beverage establishments with a combined footprint of more than 1 million square feet, Moore said.
“That’s restaurants, bars and lounges, juice bars, boutique coffee operators and even national brands,” Moore said. “A good portion of those remain vacant.”
Replacement tenants like Joyce restaurant are starting to come in, he said, with leasing and property showings picking up in the first quarter at a “resoundingly” busier pace than early 2022. Moore has taken potential tenants to the empty Public School space, where across the street the failed Standard Hotel just reopened under new management as the Delphi.
Faced with a challenging market, retail landlords have cut their asking rents as much as 50% from pre-COVID prices, Moore said, and more than doubled the amount they are willing to spend on tenant upgrades such as installing restaurant kitchens and restrooms, and providing periods of free rent.
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The financial district also faces a struggle of changing tastes, with many firms bypassing the gleaming skyscrapers that were the height of prestige in the late 20th century in favor of campus-style offices anda more laid-back vibe.
Even legal firms, long a stalwart in the financial district, are turning elsewhere in some cases. One firm established in February recently opted out of putting its office there.
“When we started to look at space it became very clear to us that locating in the financial district was a very different proposition than it used to be,” said Matt Umhofer, a partner at Umhofer, Mitchell & King. “Downtown has changed dramatically, and we wanted to rethink what it means to be a law firm in Los Angeles and let go of preconceived notions of needing to be in the financial district in order to be relevant.”
The fledgling firm opted instead for an office in Row DTLA, a campus of shops, restaurants and offices created out of century-old warehouses near the Arts District, east of the financial center, even though office rents in the Arts District are often higher than they are in the glitzy skyscrapers.
“The short version is, being in the financial district isn’t as cool as maybe it was in the past,” Umhofer said.
The spotty attendance of office workers has changed the character of business centers across the country, said Mark Grinis, leader of consulting firm EY‘s real estate, hospitality and construction practice.
An analysis by EY found that offices are being used at only 25% to 50% of the level they were before the pandemic.
“In some locations, three-quarters of the people that normally would have gone in, didn’t,” Grinis said. “People are not on the subway, ordering sandwiches at lunch or having a drink after work.”
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Vacant offices and storefronts can hinder recovery, he said, because people shy away from empty spaces.
“Three blocks of vacant houses in a residential neighborhood ultimately becomes a negative,” he said. “An office center is not that different.”
The physical appearance of vacancy becomes more alarming when graffiti, litter and grime follow and create a bad “multiplier effect,” Grinis said.
Stopping the spiral starts with making the streets safe and getting homeless residents into better housing, but there are also public policy decisions that could help landlords convert office buildings to housing if they are no longer competitive on the office leasing market.
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And the market has been brutal. Owners of some of downtown’s office high-rises have faced defaults, foreclosures and rushed sales in the face of falling demand, real estate data provider CoStar said.
The owner of two of the financial district’s premier office towers, 777 Tower and Gas Company Tower, said in February that it defaulted on loans tied to the buildings. Other high-rise owners are in similar straits.
In the face of rising vacancy rates, “those defaults could signal pain to come for the 69-million-square-foot downtown L.A. office market,” CoStar said.
Owners of buildings facing foreclosure sometimes don’t have enough money to build out new tenants’ offices, as is customary, which hinders strapped landlords from recovering financially.
Commercial landlords are getting hit on multiple fronts, said Jessica Lall, managing director of the downtown office of CBRE.
“What we’re seeing is a perfect storm when it comes to the office distress in downtown L.A.,” she said.
Loans on large-scale properties are maturing at a time when interest rates are high, making refinancing a challenge, Lall said. There is widespread uncertainty among tenants about how much space they will need to rent in the future if employees work remotely at least some of the time.
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Those issues are compounded by “the general perception around downtown being unsafe,” she said. “All urban centers are grappling with that issue right now.”
The downtown office vacancy rate — the share of total space that is unleased — climbed to 24% in the first quarter, up from 21.1% a year ago, according to CBRE. More empty space is coming, the brokerage said, pushing estimated availability to a daunting 30% as some companies shrink their offices or move away from downtown.
Law firm Skadden, for example, a large longtime tenant in downtown’s Bunker Hill district, has decided to move its offices to Century City .
The landlord of the U.S. Bank Tower, downtown’s tallest office tower at 72 stories, remains bullish on the market in spite of its troubles and recently spent $60 million to make the building more attractive to tenants by adding hotel-like amenities.
“People need offices,” said Marty Burger, chief executive of Silverstein Properties, which owns the tower. “Not every company in every industry needs an office, but the majority of them do.”
Among the reasons for offices are collaboration and education, he said. “How do you mentor the young folks who are coming up in your industry if the older people aren’t in the office for younger people to learn from? There is a whole ecosystem where you need people in an office now.”
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Companies may end up using their offices fewer days of the week than they used to as remote work and shortened schedules grow in popularity, he acknowledged: “Fridays may never be Fridays again.”
Burger says his optimism about downtown L.A.’s potential for improvement has a foundation in New York, where Silverstein built One World Trade Center on the site of the Twin Towers.
“After 9/11, everyone said that no one would ever live there or work there again,” Burger said.
In 2001, the neighborhood had about 20,000 residents and saw little activity after office hours. Now rebuilt, the neighborhood has about 75,000 residents and a greater mix of office tenants including businesses in tech and advertising in what was mostly a banking center before, Burger said.
“It’s a vibrant 24/7 community,” he said.
Many see this as the best future for L.A.’s financial district.
The city’s tight housing market combined with the downturn in office rentals opens the possibility to convert some office buildings into housing or hotels.
More residents and visitors would make the neighborhood more dynamic and better able to support restaurants, shops and nightlife, said Griffin, executive director of the privately funded Downtown Center Business Improvement District, a nonprofit coalition of more than 2,000 property owners.
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“If we trade some office for residential, that’s a good thing.”
The pandemic’s blow to the office market “is an opportunity that none of us ever imagined happening,” Welborne said, “transforming office buildings into residential buildings and reimagining our entire downtown.”
If you want to save up to 50% on a Disney hotel stay, it doesn’t take a fairy godmother or a magic wand. All it takes is knowing how to rent Disney Vacation Club points.
One of the easiest ways to quickly save a potentially significant amount of money on a Disney vacation — without sacrificing much of anything — is to stay in a Disney Vacation Club villa using rented Disney Vacation Club points.
You can find these villas at Disney resorts such as Bay Lake Tower at Disney’s Contemporary Resort, Disney’s Animal Kingdom Villas, Saratoga Springs or even Disney’s Aulani Vacation Club Villas in Hawaii.
The best part? You don’t have to be a Disney Vacation Club owner (or even know one) to rent Disney Vacation Club points and save money on a Disney vacation. There are services that match those looking to rent with those who have points up for renting.
Related: Guide to renting Disney Vacation Club points
Save up to 50% by renting DVC points
Some pretty big online companies essentially act as the middleman between owners of Disney Vacation Club points and those who want to rent them for a specific trip.
These companies will link Disney Vacation Club point owners with prospective renters so they can spend less money when renting anything from a one-room studio to a three-bedroom villa or even an overwater bungalow.
When you do this, you still get all the perks of staying on-site, such as early entry to the parks each morning and the opportunity to buy individual Lightning Lanes starting at 7 a.m. without paying full Disney prices.
We’ve rented Disney Vacation Club points numerous times in the past to save money on our family’s trips to Disney, both from other Disney Vacation Club owners and from a company called David’s Vacation Club Rentals.
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The name implies a mom-and-pop shop (or at least pop). It is a family-owned business, but the new reality is much more advanced; it has a few dozen team members listed on its site and frequent mentions on almost all Disney-related sites.
Here’s how it works: A Disney Vacation Club owner (Disney’s version of a timeshare) can use their points to book a stay for anyone at one of these resorts:
Disney’s Animal Kingdom Villas
Bay Lake Tower At Disney’s Contemporary Resort
Disney’s Beach Club Villas
Disney’s BoardWalk Villas
Boulder Ridge Villas at Disney’s Wilderness Lodge
Copper Creek Villas and Cabins at Disney’s Wilderness Lodge
The Villas at Disney’s Grand Floridian Hotel
Disney’s Riviera Resort
The Villas at Disney’s Grand Californian Hotel & Spa
Disney’s Polynesian Villas & Bungalows
Aulani, A Disney Resort & Spa
Disney’s Old Key West Resort
Disney’s Saratoga Springs Resort & Spa
Disney’s Vero Beach Resort
Disney’s Hilton Head Resort
Related: These are the best hotels at Disney World
If an owner doesn’t plan to use their entire Disney Vacation Club points allotment for the year, they can make some or all of the points available for rent via a service like David’s. David’s Vacation Club Rentals pays a rate to the points owner (often $16 – $18 per point) and then charges more to the renter (often $21 – $23 per point). The company’s profit lies in the difference.
The best way to use David’s Vacation Club Rentals, or any other similar site, is to first familiarize yourself with the Disney Vacation Club points charts; also, familiarize yourself with the online availability search tools to learn how much something costs and whether it is likely to be available on your dates.
Across Disney Vacation Club, rooms start at just 7 points per night and go as high as hundreds of points per night, so there’s a wide spread of points costs.
If you paid $21 per point to rent a room that costs 7 points per night, your costs would be $147 for that night. In fairness, rooms that cost that amount of points are few and far between, but they do exist.
Let’s look at a booking available right now. If you want to stay two nights at Animal Kingdom Lodge in a Kidani Village Studio with a standard view from Dec. 21 – 23, that booking is available for 28 total points. Since that date range is already within seven months, it would cost $21 per point, or $588 total, for the two-night stay if booked with points rented at that rate from David’s Vacation Club. There are no additional taxes or fees due on Disney Vacation Club stays.
If you booked that same room directly from Disney, it’s selling for $589 per night, which is $1,326 for the two-night stay with taxes and fees. That’s more than twice the cost of renting the points.
It’s important to know that some Disney Vacation Club rooms, especially the cheapest ones, can and do sell out well in advance.
You want to book as far in advance as you can. The Disney Vacation Club booking calendar opens 11 months before your check-in date. If you book seven or more months in advance, you may pay a $2 per night “home resort” premium at David’s, as only those owners who own points at a particular resort can make reservations more than seven months in advance. Within seven months, owners can use their points at any of the available DVC resorts (with a few caveats).
Related link: Rent DVC points via David’s Vacation Club
How to use David’s Vacation Club rentals
Once you know where you want to stay and verify there is availability for your dates (here’s the tool I use), it’s time to ask David’s Vacation Club Rentals to make the booking. Note that availability is dynamic, and you don’t want to delay once you know what you want.
To rent using David’s Vacation Club, complete its reservation form and make a $105 deposit that is applied to your final rental price using a Visa, Mastercard or Paypal. (I recommend using a card with no foreign transaction fees since David’s is based in Canada.) If they can’t book what you want, that money is refunded.
Once you submit your request, you wait. It’s not a live availability booking process — it’s manual.
We have waited as little as an hour to be informed via email that our request could be fulfilled. We were then given a link to pay the balance of our reservation (minus the $105 deposit), and then the booking was secured. Within a few more hours, the entire process was complete, and we had a reservation in our names with a Disney confirmation number.
The booking should code as travel, so use a card like the Chase Sapphire Reserve that awards a bonus on travel.
This Disney confirmation number you’ll get is a big deal because that’s what you’ll need to link the booking to your Disney account and unlock the perks of staying on the property.
In all of my stays, I have been able to successfully link the reservation to my online Disney account and easily check in under my name. Everything about my stays has been smooth. Once, we lived it up in a three-bedroom Grand Villa within walking distance to The Magic Kingdom for one night, thanks to renting Disney Vacation Club points. You can read our full Disney’s Bay Lake Tower review here.
Most recently, we rented a two-bedroom suite at Disney’s Animal Kingdom via David’s Vacation Club for a total of $840. The two individual bedrooms we would have otherwise needed would have cost more than the points than required to get the whole two-bedroom with the living room and kitchen. That particular resort is inching toward requiring a bit of a renovation to put it on par with some of the resorts more recently spruced up, but that’s true whether you booked with cash or Disney Vacation Club points.
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Downsides to renting DVC points
My experience and other online reviews show that David’s has the Disney Vacation Club rental process down to a science. However, there are downsides.
First and foremost, cancellations and changes are not permitted. This will be a non-starter for some folks. For others, look into travel insurance or be sure to use a credit card with built-in trip protections that might help you as a method of last resort.
Also, know that stays booked via the Disney Vacation Club do not come with full housekeeping (er, “mousekeeping”) the way that standard hotel rooms would (though only deluxe Disney resorts booked with cash get guaranteed nightly housekeeping).
Rooms booked via Disney Vacation Club get “trash and towel” service on the fourth night. If your stay is more than eight days, you get a full cleaning on the fourth night. Housekeeping also inspects rooms daily and may remove trash during that time.
If you want more housekeeping services, you can pay for additional cleaning at rates that range from $30 for a studio villa to $75 for a three-bedroom villa.
Look for last-minute specials
If you like the idea of renting Disney Vacation Club points to save as much money as possible, keep an eye out for last-minute specials where you can save even more. These reservations tied to a specific resort and date are currently available for as little as $16 per point. This can happen when Disney Vacation Club members have points they really need to rent out as soon as possible or risk letting them expire and go to waste.
Bottom line
I’ve rented from David’s Vacation Club Rentals multiple times since 2018. The site has a prompt online chat option for quick questions during working hours, and I’ve had real success renting DVC points to save money over cash rates at Disney World and beyond.
Read on to continue your Disney vacation planning:
Starting a Roth IRA is one of the easiest — and best — steps you can take to save for retirement. But you should understand the Roth IRA rules before investing in them.
I know I’ve written a lot about the Roth IRA in the past, but I still get questions all the time. People find them intimidating. For example, Lynn wrote last week:
I’m a 36-year-old single mother of two. I want to start investing for my future, but I am so overwhelmed by all the information. I was wondering if you could give me some advice on my best options for a Roth IRA. I am a school teacher and earn $41,000 per year.
I am going to do more research, but I would appreciate some advice from someone who already has expertise in this area. I am not sure what I need to start a Roth IRA, or who I should go with. I don’t know much about mutual funds or anything of that sort, so any help and advice would be appreciated.
Let’s clear things up: A Roth IRA does not need to be confusing. In fact, a Roth IRA is actually fairly easy to understand.
Note: This post is going to keep things basic. For more detailed info, see the resources at the end of this article, or consult a financial planner.
Roth IRA Basics
The Roth IRA is an individual retirement arrangement: It lets you save and invest for your future. An IRA is simply a holding account. It’s a label. When you own a Roth IRA, it contains nothing. It’s like a bucket, a place for you to put things. (Most people think of an IRA as an individual retirement account, which is fine, but it’s actually an “arrangement.”)
The things you put in your bucket are investments. You might, for example, buy a stock to put in your retirement account. Or maybe government bonds. Or certificates of deposit. The important thing to understand is that a Roth IRA is not an investment — it’s a place to put investments.
Related >> Best CD Rates | Certificate of Deposit Rates
With many retirement accounts — such as 401(k)s and traditional IRAs — you contribute pre-tax money and are taxed when you take the money out during retirement. Because they work with after-tax money, earnings from a Roth IRA can be withdrawn tax-free at retirement.
Roth IRA Rules and Requirements
Because Roth IRAs are meant to encourage ordinary people to save for retirement, not everyone qualifies for them. If you do qualify, you can contribute up to $5,000 to your Roth IRA every year. If you’re 50 or over, you can contribute $6,000.
Who qualifies? Nearly everyone. However:
If your tax filing status is single and you earn more than $105,000 per year, your contributions are restricted.
If you’re married filing jointly, your contributions are limited if your household earns more than $160,000 per year.
You can use a Roth IRA even if you have a 401(k) or other retirement plan, but you must make your contributions by the tax deadline each year.
The rules are a little more complex than that, but those are the basics. If you need more info, take a look at the resources listed at the end of this article.
Where to Open a Roth IRA
Deciding where to start your Roth IRA is the most difficult part of the process. Many financial institutions offer IRAs. Each has its own strengths and weaknesses. Don’t fret about finding the perfect match — find a good match and then get started.
To make things simple, here are four big companies that provide Roth IRAs (though these are by no means your only options):
Fidelity Investments offers a no-fee IRA. There’s a $2,500 minimum initial investment, but this is waived if you commit to $200/month automatic contributions. They offer 4,600 mutual funds, about a quarter of which have no transaction fee. In short, you can open a no-cost IRA at Fidelity with a $200 starting investment if you invest in mutual funds and you agree to contribute $200/month. Apply for a Roth IRA with Fidelity.
It’s also possible to open a no-cost Roth IRA at The Vanguard Groupif you elect to receive electronic statements. Otherwise, a $20 annual fee is charged until your Roth IRA balance is over $10,000. Your minimum to get started is $3,000 — except that you can start with just $1,000 in the company’s STAR fund. (The STAR fund is an mutual fund of mutual funds, a safe choice for beginners.) Additional contributions require a minimum of $100 unless you use their Automatic Investment Plan, in which case the minimum is $50. There are no fees to purchase the STAR fund. Start a Roth IRA at Vanguard.
T. Rowe Price charges $10/year for Roth IRA accounts until you have a balance above $5,000, after which there is no fee. You need $1,000 to open your IRA, but this minimum goes away if you sign up to contribute at least $50/month with the Automatic Asset Builder. There are no sales fees or commissions to invest this money in T. Rowe Price mutual funds. Open an IRA at T. Rowe Price.
Scottrade resists charging its customers set-up, annual or maintenance fees for its online trading services and also offers them the opportunity to get a refund of up to $100 in transfer fees from other brokers for bringing their Roth IRA to Scottrade. Scottrade’s pricing on trades is fairly simple: $7 for stocks $1 and above for online market and limit equity orders. You might also consider a Scottrade checking, savings or money market account. These can be joined with a trading account to help easily fund transactions.
Opening a Roth IRA is easy. You’ll need some minimal bank account info and about 30-60 minutes of free time. If you’ve ever filled out a job application or applied for a credit card, you can certainly open a Roth IRA. Once you’ve completed your application, you can transfer money to the account. It might have to sit in a money market fund until you have enough saved to buy your first mutual fund, but that’s okay. You’re developing the saving habit!
Note: I’m a big fan of automatic investment plans. Most of these companies offer some sort of program that will pull money from your bank account every month to invest in stocks or mutual funds that you designate. By setting aside $50 or $100 or $500 in this way, saving becomes a habit.
Which Investments to Choose
Here’s where I cop out. I’m not a financial adviser. I don’t know your goals or risk tolerance. I can’t tell you were to invest.
Related >> What if the Stock Market Makes You Nervous?
And to be honest, where you invest doesn’t matter nearly as much as the fact that you do invest. To get some ideas, browse through the investing archives here at Get Rich Slowly. (Maybe start with these “lazy portfolios.”)
Related >> The Passive Way to Investment Success
If you’re really stressed, pick a target-date fund that most closely matches the year you’ll retire. This probably isn’t the best option, but it’s fine. Just use it while you get in the habit of making contributions. You can always switch the money to something more appropriate later.
Related >> Choosing a Target-Date Fund
Learning More About the Roth IRA
In 2007, I ran a four-part series exploring the benefits of a Roth IRA. If you need more info about these accounts — or if you have questions — you should start here first:
I’ve revised these articles and compiled them into a free e-book called The Get Rich Slowly Guide to Roth IRAs (518kb PDF). (Note that this e-book was produced in April 2008, so some of the info is a little out of date, especially about Zecco.) And if you want the official word on the subject, check out IRS publication 590, which is all about IRAs.
Now’s the part where you can tell Lynn how easy it is to set up a Roth IRA. (And share what sort of things you’ve invested in.) My own Roth IRA started with stupid stock picks (Countrywide, The Sharper Image) and has moved toward index funds. I’m all about making things easy right now!
Zillow announced today that it will now offer rental listings to go along side the millions of homes for sale in its massive database.
Homeowners can now list their properties for rent or for sale, while prospective home buyers can search both rental homes and homes for sale.
Additionally, the company will offer the industry’s first “search by monthly payment” option, allowing home shoppers to specify a certain amount they wish to pay in rent or mortgage.
“In today’s volatile housing market, many would-be sellers are opting to rent for a few years and ride out the market, while many home shoppers are just trying to decide whether to buy or rent,” said Spencer Rascoff, Zillow Chief Operating Officer, in a press release.
“With the launch of rental listings and search, we are arming our more than 8 million monthly users with information, tools and options to make the right housing decisions for them today.”
Zillow compares the monthly cost of owning versus renting side-by-side so prospective buyers can determine more easily what’s best for their unique situation.
The monthly mortgage payment is calculated using that day’s local mortgage rate for a 30-year fixed rate mortgage, assuming a 20 percent down payment.
The company cited a recent survey, which found that 25 percent of respondents who plan to move in the next three years intend to search for both homes for rent and homes for sale.
My philosophy on credit cards has changed completely in the last five years. I’ve gone from anti-credit-card to pro-credit-card — but only for those who can use them responsibly. I think they’re a great convenience, and I like getting cash back when I use mine.
But not everyone thinks this cash-back feature is a good thing. In fact, my inbox is a-flutter with folks who want me to comment on the recent credit-card study from the Consumer Payments Research Center. This study (which can be downloaded as a 810kb PDF from the Federal Reserve Bank of Boston) found that credit cards transfer wealth from the poor to the rich. How? Through fees and rewards programs.
From the abstract:
Merchant fees and reward programs generate an implicit monetary transfer to credit card users from non-card (or “cash”) users because merchants generally do not set differential prices for card users to recoup the costs of fees and rewards. On average, each cash-using household pays $151 to card-using households and each card-using household receives $1,482 from cash users every year.
Because credit card spending and rewards are positively correlated with household income, the payment instrument transfer also induces a regressive transfer from low-income to high-income households in general. On average, and after accounting for rewards paid to households by banks, the lowest-income household ($20,000 or less annually) pays $23 and the highest-income household ($150,000 or more annually) receives $756 every year.
To summarize: Wealthy people are more likely to use credit cards than poor people (and more likely to receive rewards for doing so). But because prices are generally the same whether you pay with cash or credit — in most cases, credit-card companies prohibit stores from adding a fee for credit-card use — poor people usually pay more for things than wealthy people do. This is, effectively, a transfer of wealth from the poor to the rich. This isn’t just hypothetical or abstract; the paper lays out the details for just how this occurs.
Note: There are many other ways in which the poor pay more than the rich. Wealthy people are more likely to negotiate. (No evidence — my own belief.) Wealthy people usually have the ability to wait before buying something. Wealthy people tend do have more buying options (and thus find lower prices). And so on.
There’s a lot of interesting information in this study, and if you have time, you ought to read it. It’s thought-provoking. And it has created quite a stir in the media.
Even before this study was released, Ron Lieber at The New York Times was contemplating the damage of rewards cards. Lieber has been “fanatical” about using his mileage card for fifteen years, but recognizes that he may be part of the problem. Since the release of the study, the NYT Bucks blog has posted a follow-up about how much credit card rewards cost the poor.
The Wall Street Journal blog post on the study offers no opinions, but the commenters make some interesting points. (Well, those that aren’t being internet idiots, that is.) I particularly like the comment from Jay on July 27th at 10:48am (which describes the reasons low-income earners shouldn’t use credit cards).
GRS reader Alan forwarded this article from the Portland Oregonian, in which Brent Hunsberger does a good of explaining the complicated web of fees and payments in the current system. (And the comments on his article are surprisingly rational; OregonLive.com is not known for its intelligent discussions.)
The article from the Oregonian also includes this video, in which Hunsberger diagrams the web of credit-card fees and payments:
Out of curiosity, I pinged my pals at Index Credit Cards. Their new spokeswoman, Dr. Mary Ann Campbell, had this to say:
The problem, as I see it, is that there aren’t enough options to incentivize the poor, such as discounts for cash or no-fee cards with low limits and strict rules to help them build their credit. Increased options and incentives for the poor without taking away the reward for good behavior earned by people who are managing their money well would be a smart and healthy way to address this dilemma.
It’s all about incentives and options. The incentive of credit card companies to get people who have the money to spend more is working through reward cards. As the economy is driven through more spending, so are more jobs created, and tax revenues increased, which I see as actually helping the poor.
So, what do you think of this research? I understand the research and accept that it’s true, yet it’s unlikely to change the way I use credit cards. Yes, I could take a moral stand and refuse to use credit for most of my purchases. But doing so would cost me a lot of money — roughly the same as my dining-out budget for a few months. (And I like my clams in butter sauce!)
The main problem is that the system already exists, and it’s deeply entrenched. It’s not going away. By electing to opt out, smart consumers — wealthy or not — cost themselves money. If using a rewards credit card without carrying a balance is a way for me to save a few hundred dollars a year, that qualifies as one of those Big Wins I’m always preaching about. It seems foolish to give this up.
But maybe I’m just being selfish.
What about you? Does this study make you think twice about your own use of credit cards?
Canceling a life insurance policy is an important decision that can have financial and emotional implications.
Deciding whether to continue with your life insurance policy or cancel it is not just a significant financial choice, it can also have profound emotional implications.
After all, life insurance isn’t just a monetary consideration – it’s about ensuring that your loved ones are protected in case of your untimely demise.
However, sometimes circumstances may lead you to contemplate canceling your life insurance policy. The question then arises: should you and if so, how do you go about it? Let’s delve deeper.
Understanding Life Insurance Policies: More Than Meets the Eye
First off, to make an informed decision, it’s crucial to understand the two main types of life insurance policies that are on the market.
Term Life Insurance: The Straightforward Option
As its name suggests, term life insurance provides coverage for a specified term, which typically ranges from 10 to 30 years. If you pass away during this term, your designated beneficiaries receive the policy’s death benefit. This type of insurance is often viewed as the simpler and more affordable option, as it strictly provides coverage without any investment component.
Permanent Life Insurance: Coverage Plus Investment
On the other hand, permanent life insurance policies, such as whole life or universal life insurance, provide coverage for your entire lifetime and include an investment element known as cash value. This cash value portion grows over time and can be borrowed against or even surrendered for cash, making this type of policy more complex and usually more expensive.
Reasons for Canceling Life Insurance: Making the Tough Call
Several scenarios might lead you to contemplate canceling your life insurance policy.
Financial Reasons: When the Premiums are too High
It could be that the premiums have become unaffordable due to changes in your financial circumstances. As the cost of living increases, especially in the light of rising inflation as highlighted in a recent FT Adviser report, it’s not uncommon for individuals, especially those over 50, to consider cutting back on their life insurance.
Policy No Longer Needed: When Life Takes a Better Turn
Your reasons for canceling could also be positive. Maybe your children have grown up and become financially independent, or your financial status has improved significantly since you first took out the policy.
Considerations Before Canceling Your Life Insurance: Weigh Your Options
But before you make the decision to cancel your life insurance policy, there are several factors to consider.
Evaluate Your Current Situation: Checking the Safety Net
Firstly, evaluate your current financial situation. You should be sure that you and your dependents won’t need the safety net that life insurance provides in the future.
Understand Potential Consequences: The Trade-Offs
It’s important to understand the potential consequences of canceling your life insurance. If you cancel your term life insurance, you won’t receive any money back and will be left without coverage.
On the other hand, canceling a permanent life insurance policy might allow you to recover some of the cash value, but could also result in surrender charges, especially if the policy is still in its early years, as pointed out by a Forbes Advisor article.
Alternatives to Canceling: Is There a Middle Ground?
Before canceling your policy outright, it’s worth exploring other options. For instance, you could reduce the death benefit to lower the premiums or even switch to a more affordable term life insurance policy if you currently have a permanent life insurance policy.
How to Cancel Your Life Insurance: Following the Right Steps
If, after considering all the implications and alternatives, you still decide that canceling your life insurance is the best course of action, then here are the steps you need to take.
Steps to Cancel Term Life Insurance: It’s All About Communication
The process for canceling term life insurance is generally straightforward. First, you need to contact your insurance provider and inform them of your intention to cancel the policy. This could be over the phone, via email, or sometimes through an online portal.
Ensure you follow all the steps they provide and always ask for a confirmation of your policy’s cancellation. It’s also important you understand your rights to canceling your insurance policy.
Steps to Cancel Permanent Life Insurance: A Bit More Complex
The process of canceling a permanent life insurance policy, on the other hand, could be a bit more complex, particularly because of the cash value component. You may need to complete a policy surrender form or send a written request to your insurance provider.
Remember:
Always confirm the details with your insurer and remember that you might be entitled to receive some of the policy’s cash value upon surrendering the policy.
Life After Canceling Your Life Insurance: Managing Your Risks
The aftermath of canceling your life insurance policy requires careful financial planning. Now that you no longer have the protection that the policy provided, you need to manage the financial risk that the policy once covered.
Managing Financial Risk: New Strategies
This risk management could involve several strategies, from building an emergency fund to investing for your long-term financial goals.
Setting Up an Emergency Fund: An Essential Buffer
An emergency fund is an essential financial tool that provides a buffer against sudden expenses or financial emergencies. It ensures that even if unexpected costs arise, you have a financial cushion to rely on.
Investing for Long-term Goals: Playing the Long Game
By investing, you can grow your wealth over time and work towards achieving your financial goals. Whether it’s retirement planning, saving for a home, or investing in your child’s education, having a robust investment strategy can provide financial security in the long run.
Conclusion: Making the Best Choice for You
Canceling your life insurance policy is a significant decision that should be made with careful consideration. It’s crucial to weigh the potential risks and benefits, evaluate your current and future financial situation, and explore all available alternatives.
Remember, the right choice will depend on your unique circumstances and the needs of your dependents.
FAQs – Cancelling Life Insurance Policy
Can I cancel my life insurance policy?
Yes, you can cancel your life insurance policy at any time. It’s your right as the policyholder to do so.
How do I cancel my life insurance policy?
The cancellation process may vary depending on your insurance provider. Generally, you can contact your insurance company directly and inform them of your decision to cancel. They will guide you through the necessary steps and paperwork.
Will I get a refund if I cancel my policy?
It depends on the type of life insurance policy you have. Term life insurance policies typically do not have a cash value, so cancelling them usually doesn’t result in a refund.
However, if you have a permanent life insurance policy, such as whole life or universal life, there may be a cash surrender value that you could receive upon cancellation.
Are there any fees or penalties for cancelling my life insurance policy?
Some life insurance policies may have surrender charges or penalties for early cancellation. These charges are more common with permanent life insurance policies, and they can vary depending on the specific terms of your policy.
Review your policy documents or contact your insurance company to understand any potential fees or penalties.
For many people, that monthly mortgage payment can be their biggest recurring bill. It may be the main expense that guides the development and management of their monthly budget, because that is an important bill to pay on time.
Prevailing wisdom says that your mortgage payment shouldn’t be more than 28% of your gross (pre-tax) monthly pay. But whatever that sum actually is, you may be wondering how to shave down the amount. Think about it: A lower mortgage payment could reduce your financial stress. And it can also open up room in your budget to allocate more money towards shrinking other debt, pumping up your emergency fund, and saving for retirement or other goals.
Here, you’ll learn more about your mortgage payment and possible ways to lower it.
What Is a Mortgage Payment?
A mortgage payment is a sum you typically pay every month, but it’s more than just a bill. It reflects an agreement between you and your lender that you have borrowed money to buy or refinance a home, and in exchange, you’ve agreed to pay back the sum with interest over time. If you fail to keep up with your payments, the lender may have the right to take your property.
There are typically four parts of your monthly payment: the loan principal, the loan interest (which is how the lender makes money), taxes, and insurance fees.
A mortgage payment may be a fixed rate, meaning your payment stays the same, month after month, year after year. Or it might be an adjustable rate, meaning the interest and therefore the payment can change at regular intervals.
Pros and Cons of Lowering Your Mortgage Payments
There are upsides and downsides to lowering your mortgage payments.
On the plus side, lowering your mortgage means you likely have more money to apply elsewhere. You might apply the freed-up funds to:
• Pay down other debt
• Build up your emergency fund
• Put more money towards retirement savings
• Use the cash for discretionary spending.
On the other hand, there are downsides to consider too:
• You might wind up paying a lower amount over a longer period of time, meaning your debt lasts longer
• You could pay more in interest over the life of the loan
• If a lower monthly payment means you are not paying your full share of interest due, you could wind up in a negative amortization situation, in which the amount you owe is going up instead of down.
6 Ways to Lower Your Mortgage Payments
Now that you know a bit about how mortgage payments work and the pros and cons of lowering your mortgage payments, consider these ways you could minimize your monthly amount due.
Recommended: How to Pay Off a 30-Year Mortgage in 15 Years
1. Give Your Mortgage a Bonus
If you get a bonus or a windfall, consider throwing some of that money at your mortgage. If you are in a position to make a major lump-sum payment on your home loan, you may benefit from mortgage recasting.
With recasting, your lender will re-amortize the mortgage but retain the interest rate and term. The new, smaller balance equates to lower monthly payments. Worth noting: Many lenders charge a servicing fee and have equity requirements to recast a mortgage.
Other similar options:
• Make a lump-sum payment toward the mortgage principal (say, if you inherit some money or get a large bonus at work)
• Make extra payments on a schedule or whenever you can.
It’s a good idea to tell your lender that you want to put the extra money toward the principal and not the interest. Paying extra toward the principal provides two benefits: It will slowly reduce your monthly payment, and it will pare the total interest paid over the life of the loan.
Refinance your mortgage and save– without the hassle.
2. Reap Rental Income at Home
You could lower how much you pay out-of-pocket for your mortgage by bringing in rental income and putting it towards that monthly bill. You’re not lowering how much you owe, but you are using your home to bring in another income stream.
There are two common methods: “house hacking” (generating income from your property) and adding an accessory dwelling unit (ADU).
• House hacking can mean buying a two- to four-unit multifamily building for little money down and living in one of the units. Multi-family homes with up to four units are considered residential when it comes to financing. Owner-occupants may qualify for and opt for Federal Housing Administration (FHA) loans, Veterans Affairs (VA) loans, or conventional financing.
Some people house-hack a single-family home, which just translates to having housemates or short-term rental guests.
• An ADU is another option for bringing in rental money to use towards your mortgage. This secondary dwelling unit on the same lot as a primary single-family home could be a detached cottage, a garage or basement conversion (that is, an in-law apartment or similar), or an attached unit.
With any planned addition or renovation to create an ADU, you might want to estimate return on investment — how much you’d charge and how long it would take to recoup the cash you put in before turning a profit.
3. Extend the Term of Your Mortgage
If your goal is to reduce your monthly payment — though not necessarily the overall cost of your mortgage — you may consider extending your mortgage term. For example, if you refinanced a 15-year mortgage into a 30-year mortgage, you would amortize your payments over a longer term, thereby reducing your monthly payment.
This technique could lower your monthly payment but will likely cost you more in interest in the long run.
(That said, just because you have a new 30-year mortgage doesn’t mean you have to take 30 years to pay it off. You’re often allowed to pay off your mortgage early without a prepayment penalty by paying more toward the principal.)
4. Get Rid of Mortgage Insurance
Mortgage insurance, which is needed for some loans, can add a significant amount to your monthly payments. Luckily, there are ways to eliminate these payments, depending on which type of mortgage loan you have.
• Getting rid of the FHA mortgage insurance premium (MIP). Consider your loan origination date that impacts when you can get rid of the extra expense of mortgage insurance:
• July 1991 to December 2000: If your loan originated between these dates, you can’t cancel your MIP.
• January 2001 to June 3, 2013: Your MIP can be canceled once you have 22% equity in your home.
• June 3, 2013, and later: If you made a down payment of at least 10% percent, MIP will be canceled after 11 years. Otherwise, MIP will last for the life of the loan.
Another way to shed MIP is to refinance to a conventional loan with a private lender. Many FHA homeowners may have enough equity to refinance.
• Getting rid of private mortgage insurance (PMI) If you took out a conventional mortgage with less than 20% down, you’re likely paying PMI. Ditching your PMI is an excellent way to reduce your monthly bill.
To request that your PMI be eliminated, you’ll want to have 20% equity in your home, whether through your own payments or through home appreciation.
Thinking about starting a new home renovation project? Use this Home Improvement Cost Calculator to get an idea of what your project will cost.
Your lender must automatically terminate PMI on the date when your principal balance reaches 78% of the original value of your home. Check with your lender or loan program to see when and if you can get rid of your PMI.
5. Appeal Your Property Taxes
Here’s another way to lower your mortgage payments: Take a closer look at your property taxes. Your property taxes are based on an assessment of your house and land conducted by your county’s tax assessor. The higher they value your property, the more taxes you’ll pay.
If you think you’re paying too much in taxes, you can appeal the assessment. If you do, be prepared with examples of comparable properties in your area valued at less than your home. Or you may also show a professional appraisal.
To challenge an assessment, you can call your local tax assessor and ask about the appeals process.
6. Refinance Your Mortgage
One of the best ways to reduce monthly mortgage payments is to refinance your mortgage. Refinancing (not to be confused with a reverse mortgage) means replacing your current mortgage with a new one, with terms that better suit your current needs.
There are a number of signs that a mortgage refinance makes sense, such as lower interest rates being offered or the desire to secure a fixed rate when you have an adjustable rate mortgage.
Refinancing can result in a more favorable interest rate, a change in loan length, a reduced monthly payment, and a substantial reduction in the amount you owe over the life of your mortgage. Do note, however, that there are often fees for refinancing your mortgage.
Tips on Lowering Your Mortgage Payment
If you’re serious about lowering your mortgage payments, consider these methods:
• Refinance to get a lower rate or other changes in your mortgage’s terms
• Apply a windfall (a tax refund, say, or a bonus) to your mortgage’s principal
• Reach enough equity in your home to drop mortgage insurance
• Make extra mortgage payments or higher mortgage payments (this can build equity or pay off the loan sooner, saving you interest)
• Ask about loan modification or forbearance programs if you are struggling to make payments.
Recommended: First-time Homebuyer Programs
The Takeaway
How to lower your mortgage payment? There are several possible ways. And who wouldn’t love to shrink their house payment? You might look at strategies to build equity and ditch mortgage insurance, extend the terms of your loan, or refinance to reduce your monthly payment.
If refinancing could help, see what SoFi offers. Both refinancing and cash-out refinancing are possible. And SoFi also offers a range of flexible home mortgage loans with competitive rates to help you make homeownership that much more affordable. Plus, our online process is fast and simple.
Ready to see how much simpler a SoFi Home Mortgage Loan can be?
FAQ
How can I make my mortgage payment go down?
There are several ways to lower your monthly mortgage payment. A few options: You could refinance at a lower rate or longer term, or you could build enough equity to forgo mortgage insurance.
How can I lower my house payment without refinancing?
To lower your house payment without refinancing, you could appeal to lower your property taxes; you might apply a windfall to lower your principal; or you could rent out part of your property to bring in more income.
What is the average mortgage payment?
According to the C2ER’s 2022 Annual Cost of Living index, the average monthly mortgage payment in the U.S. is $1,768.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
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.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Rachel Richards retired at age 27 thanks to real estate. Whether you’re looking to retire or hit a short-term financial goal, you won’t want to miss today’s podcast. In this interview, Rachel shares the secret to accomplishing any goal and offers financial tips that will help you achieve that next milestone. Rachel also talks syndication, discusses how to reduce the cost of divorce, and more.
Listen to today’s show and learn:
How Rachel Richards retired at age 27 [4:23]
Why cutting costs is only part of the financial-freedom equation [7:56]
An argument for frugality [11:38]
How delayed gratification ties in with financial freedom [14:43]
Aaron’s five-day water fast [15:50]
Why motivation really matters [17:27]
About Rachel Richards’ books: Money Honey and Passive Income, Aggressive Retirement [23:05]
Why Rachel sold most of her rentals [24:50]
The problem with cheap real estate rentals [27:26]
What syndications are and why Rachel Richards loves investing in them [30:18]
How to find the right syndicator [32:54]
How to vet potential syndicators [34:47]
Rachel Richards’ financial advice on prenups [39:34]
How to reduce the cost of divorce [46:35]
Why it makes financial sense to cut the attorneys out [48:44]
Where to find and follow Rachel Richards [50:18]
Rachel Richards
Rachel Richards built a real estate portfolio of 38 rental units by the age of 26. She is a 2X bestselling author and has been featured in Forbes, CNBC, and Business Insider. She makes the topic of money management fun, entertaining, and simple for her 450,000+ millennial followers. Rachel helps women feel excited, capable, and confident about their financial futures.
Rachel has a Bachelor of Science in Financial Economics from Centre College. She has held roles as a licensed financial advisor, a real estate analyst, and a senior finance analyst.
Rachel is based out of Colorado.
Related Links and Resources:
Thank You Rockstars!
It might go without saying, but I’m going to say it anyway: We really value listeners like you. We’re constantly working to improve the show, so why not leave us a review? If you love the content and can’t stand the thought of missing the nuggets our Rockstar guests share every week, please subscribe; it’ll get you instant access to our latest episodes and is the best way to support your favorite real estate podcast. Have questions? Suggestions? Want to say hi? Shoot me a message via Twitter, Instagram, Facebook, or Email.
As you’ve probably noticed, many people are traveling this summer. If that includes you, there are ways to save a bunch of money (and maybe a little sanity) while traveling this summer.
How can you navigate this high-demand travel environment while controlling costs and minimizing headaches?
Here are our top tips for travel this summer and how to overcome problems you might run into along the way.
Fly without breaking the bank
You’re not wrong if you think flights are more expensive.
Fares for summer travel have risen, sometimes dramatically, compared to both 2022 and 2019, according to data provided by the Airlines Reporting Corporation, a travel intelligence firm and ticket processor. The company says average fares were 9%-37% higher for the top 10 summer destinations, which include Yellowstone National Park and Hawaii. Flights are exorbitant to Europe this summer, too.
Fortunately, there are several strategies to reduce the cost of your flights.
Let the prices and availability decide your destination
If you want deals, this summer may be the one to let special offers inspire your next trip. Keep an eye on our flight deals, and book something that sounds interesting — either because of a good price or solid points and miles availability. The flexibility to go wherever the price is reasonable can lead to big savings.
Consider alternative airports
With prices on the rise, now is the time to be flexible and check all nearby airports.
For example, Houston and Chicago have two airports. The New York City area has three. It may even make sense to get to one city by flying to another before taking a short train ride for the rest of the journey, like flying into Philadelphia and catching a train up to New York. Strategies like this can help you get to your destination on a flight with better pricing or award availability.
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Expand your search for awards when your first attempt strikes out if you want to avoid the highest prices this summer.
Use positioning flights
Positioning flights are not realistic for every situation or trip, but they can often offer better award availability or pricing than those from your home airport.
Can you get to your destination for a lot less by starting in Seattle or Chicago, for example? Would adding another flight to a different airport ultimately save you money or miles?
Just make sure you leave enough time between flights to avoid any unnecessary travel headaches.
Book a backup plan
If you can’t get the flight you really want, book an alternative trip with that same airline. Then, get on the standby list for the flight you really want.
Plan your itinerary so you’re at the airport in time to get on that other flight. You can also monitor other flights and take advantage of same-day change policies.
Use up your points and miles
Summertime is a great time to use up points and miles you were hoarding. One of our big pieces of advice at TPG is to earn and burn those airline and credit card points and miles. You’ll maximize the redemption value if you can use them when cash prices are high, especially if you can find a mileage deal.
Fly on a holiday
Have you noticed that flights the day before Thanksgiving are extremely expensive, but flights on Thanksgiving morning are often cheaper? That’s because everyone wants to get to their final destination before the holiday.
This phenomenon plays out during some summer holidays, too, so look to fly the morning of the holiday to see if that lowers the price. Flying on July 4 is cheaper, generally, than flying on July 3 or July 6.
Get a hotel at the right price — and place
The good thing about hotels is that there are usually a lot of options. The bad thing about hotels is that there are usually a lot of options.
Having multiple properties to choose from can sometimes make the process of picking one feel overwhelming. However, if you have a stash of points, you can use those to narrow the field.
Here are our tips for locking in the right hotel for your trip.
Instead of burning cash, consider using your points
Just like with flights, points redemptions can make a lot of sense when hotel rates are high. Do you have Chase or American Express points you can transfer to a hotel program? Or are you sitting on a bunch of Marriott Bonvoy points? Several of us at TPG like to transfer our bank points, like Chase Ultimate Rewards points, to World of Hyatt for otherwise-expensive hotels (like the Park Hyatt Paris Vendome).
Book early and use a flexible cancellation policy
Booking a refundable hotel that seems right while you finalize everything else may be the way to go, even if you’re not 100% certain you’ll stay at that hotel. Avoid “pay now” rates in favor of a room that you can change or cancel without fees. Many award bookings allow you to cancel up to a couple of days before check-in, but always double-check the terms.
Use your elite status
Some hotel programs set aside rooms for elite members or will bump non-elite guests in favor of those with status if all the rooms are booked. Taking this a step further, travelers with top-tier Globalist status in the World of Hyatt program have a concierge who can help reserve properties. Take advantage of these perks if space is limited.
Additionally, your elite status may be the key to money-saving perks such as waived resort or parking fees, free breakfast and complimentary lounge access.
Discover similar locations
If you don’t need to be in a specific location, this may be the time to change things up a bit.
For example, if you’re seeking time on the beach, consider the panhandle of Florida or even the coast of Alabama instead of Miami and other popular parts of South Florida. Think of places that seem similar but may have better pricing if you’re running into sky-high rates.
Book directly
Instead of booking a room through a portal or online travel agency, reserve one directly with the hotel. By booking directly, you’ll likely have access to more flexible terms, as hotel cancellation policies are typically more forgiving. Additionally, if something goes wrong, you’ll have an easier time changing your itinerary since you’ll be dealing with the hotel directly instead of a third party.
Consider alternative accommodations
If you can’t find hotels that work for you, consider vacation rental platforms like Vrbo and Airbnb, as well as hotel-branded vacation rentals like Homes & Villas by Marriott Bonvoy, Mandarin Oriental Exclusive Homes and Accor-affiliated Onefinestay.
You can also go camping, glamping, stay in a “tiny home,” or rent a recreational vehicle for a few nights. There are even ways to use points to book vacation home rentals.
Score an affordable rental car
While not quite the same level of “car rental apocalypse” we saw in 2021, there are still some shortages of rental cars. There are already summertime sellouts happening in select leisure destinations. Hertz, as an example, is limiting one-way car rentals in Europe this summer due to supply constraints.
Even when vehicles are not sold out, demand (and prices) are still quite high, in part because car rental companies haven’t been able to completely replenish their fleets.
Planning ahead and leveraging your elite status can be the difference between getting a rental car and not getting one at all, according to Jonathan Weinberg, founder of AutoSlash.
Book first, plan later
Prices rise, and availability shrinks as you get closer to your travel dates. Take advantage of flexible car rental rules that usually provide a “pay later” option and book now, even if your plans aren’t finalized. Since car rental prices are up compared to pre-pandemic numbers, according to Weinberg, car rental prices may make or break some summer travel plans.
Use coupons or discount codes to save
If you’re a member of AAA or AARP, have a Costco membership, are a veteran or work for a large company with a car rental discount code, pull all of these levers. You might be eligible for discount codes you didn’t even know about.
Don’t despair if none of those reduced rates applies to you. AutoSlash can track prices and look for eligible coupon codes, too.
Leverage elite status
Having elite status with a car rental company can be the difference between getting a car and not — even if you have a reservation. That’s because cars are sometimes set aside exclusively for elite members.
Additionally, car rental program members can often skip the line at the counter and go straight to the lot, which can be what it takes to get one of the last vehicles. Luckily, you may already have a credit card that offers car rental elite status, which you could use to status match with other car rental loyalty programs.
Look beyond traditional companies and locations
Most people search for rentals at the airport with the standard companies. If you’re not finding good results, consider off-airport locations or try alternatives like Kyte, Turo and Silvercar.
Consider a longer rental
If you have trouble finding an available or affordable rental car, try adjusting the rental period. Here’s an example of how adding one day to trigger a monthlong rental cut the price by about $3,000:
Just know you should plan to keep the car for the full rental period, as returning the car early has an inherent risk of the car rental company charging a fee or adjusting pricing back to the daily rate. However, this avenue can unveil better prices and expanded inventory.
Visit national parks for less and without the crowds
The busiest national park in 2021 (Great Smoky Mountains National Park) saw 14.1 million visitors, according to statistics from the National Park Service. At the opposite end of the spectrum, Aniakchak National Monument and Preserve in Alaska saw just 145 visitors in 2021.
While the major parks are undoubtedly busy, there are still parklands that are less frequented than others, though you’ll still want to plan ahead.
Here’s everything to keep in mind for a national park adventure this summer.
Book in advance
Many parks require advance reservations for campsites and lodging inside the park’s boundaries.
How far in advance you can book varies, but these limited reservations fill up quickly at the more popular parks. Find out when reservations open for the date you want, and plan to book as soon as possible.
Stay outside the park
You might be dreaming of a night in a rustic cabin inside a national park, but getting that reservation could be challenging or costly, especially if you’re unable to pay for it with points.
However, just beyond the park, there’s probably a hotel where you can pay with points. For example, the SpringHill Suites just outside of Zion National Park is a great property if you have Marriott points to spend.
Make reservations
Some parks limit how many people can visit on any given day. Others place limits on how many people can go on a particular hiking trail. Some locations even require you to enter a lottery to get a chance to visit.
Apply for these permits and lotteries as early as possible for a better chance of securing access.
Avoid ‘free days’
It may sound counterintuitive, but “free days” at national parks may not be the best time to visit, as they tend to be particularly busy.
Instead of visiting on a weekend, holiday or day with free admission, aim for an early morning in the middle of the week for more elbow room on hiking trails and at can’t-miss natural wonders.
Visit alternative parks
Given the sheer number of national parks, national monuments, state parks and protected areas in the U.S., there’s likely a parkland near you that isn’t regularly packed with people. In fact, there may even be a park that offers similar geography to the one you’re considering but with a slightly more remote location and, consequently, thinner crowds.
For example, the second-largest canyon in the U.S., Palo Duro Canyon in the Texas Panhandle, sees 4 million fewer visitors per year than the Grand Canyon.
Plan for maximum enjoyment with minimum stress
You may have all types of activities in mind for this summer: theme parks, a road trip to visit grandparents or even an isolated beach getaway.
To cut down on travel headaches and bank account woes for the many trips you hope to take, consider these helpful tips.
Visit amusement parks on weekdays
While summer is a peak travel season since kids are out of school, many parents are still working Monday through Friday, meaning weekdays are generally less crowded. As a result, visiting a theme park in the middle of the week and arriving early in the morning typically leads to shorter lines for rides and shorter waits at in-park dining venues. It may even help you score cheaper tickets and lodging.
Ditch major theme parks
Growing up in Ohio, I had easy access to Kings Island and Cedar Point — two great theme parks that didn’t require flying to Florida or California.
Do as my parents did when I was a kid and look for regional parks that provide a lot of fun without the hefty price tag. Getting tickets will probably be easier, plus you may not need to add flights or hotels to the list of expenses.
Book Disney reservations early
You still need actual reservations (not just tickets) for Disneyland and Disney World.
To avoid any unexpected surprises, lock in your reservation as soon as possible to guarantee access to your preferred park, as they can sell out.
Reserve airport parking in advance
If flights and airports are packed, you can expect full parking lots, too.
Reserving airport parking ahead of time can be the difference between having a spot and not — or paying extra for the premium or far-away lot. If you aren’t having any luck finding a space at the airport, try snagging one at an off-airport parking location that offers shuttle service to the terminals.
Take a road trip
When you fly, you may have to buy four tickets for your family. When you drive, you don’t have to put gas in four cars.
The price of gas has come down lately, and a road trip may be calling your name this summer. An added bonus: Driving your own car means you won’t need a rental car at your final destination.
Look for coupons and codes
You don’t usually see Marriott or Delta Air Lines on Groupon, but activities are definitely more prolific.
Watch for coupons, group deals or sales for activities you’re planning to do during your trip. From roller coasters to roller derbies, the internet offers all kinds of deals, midweek sales and discount codes for activities that can lead to big savings. AAA, AARP and other advocacy memberships can help here, too.
Buy gift cards on sale
This tip can apply to many areas of life, but it’s especially true for theme parks and other activities.
Your local supermarket, big-box store or office supply store may sell gift cards at a discount. E-commerce sites also sell discounted gift cards.
When buying gift cards, use shopping portals whenever possible and pay with a card that will earn maximum points. Once you have your gift cards in hand (or your email inbox), use them to purchase Disney tickets, a hot air balloon ride or whatever activity you’re hoping to enjoy while on vacation.
Consider a cruise
While we’ve written about sold-out theme parks and hard-to-come-by flight deals, you should know that cruises are not quite as expensive as many other types of summer vacation. You’ll often save money when you account for the costs of flights and hotel rooms for multiple nights. With a cruise, you could simultaneously unlock serious savings and avoid crowds.
Hunt for deals
Cruise deals are not as plentiful as they were at the peak of the coronavirus pandemic. However, you can still find amazing deals on cruises. If you are flexible, sometimes cruise companies offer substantial deals on last-minute cruises if they have excess inventory (unsold cabins).
It’s not uncommon to see deals on cruises pop up, like this one back in March, but you need to act fast when you see them. Virgin Voyages has been offering some incredible deals this year, including a cruise for just 40,000 Virgin Atlantic points.
Look for bundles and packages
You may find that you can also save by bundling items. Search for deals on drink packages or onboard spending credits, or consider “kids sail free” options — even if the first number you see (the price for an adult) doesn’t look like a bargain right away.
Bottom line
Summer is here, and just like last year, prices and demand are through the roof.
It is possible, however, to avoid hordes of tourists if you’re looking for some peace and quiet. You may even be able to visit a popular destination without spending a fortune, having a 16-hour layover or coughing up all of your airline miles to get there.
Regardless of where you plan to go, flexibility is the best thing you can bring to your travel plans. You should book now (if you haven’t already) so you can make the most of your summer without breaking the bank.