Downpayment Archives - Hanover Mortgages

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May 26, 2023 by Brett Tams

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Are you wondering how much money you should have saved by 25?

If so, this post is for you.

You need to learn how to save from a young age to be financially responsible and enjoy your life without stress.

In this post, I will outline the steps that I took to save a total of $25,000 by age 25. That ultimately led to becoming a millionaire well before most people earn that 7 figure status.

My goal is to help motivate and inspire you to save as much money as possible.

I believe that if everyone saves just 20% of their income each year, we could create massive waves of positive change across the world. So let’s get started!

Are you feeling overwhelmed with the idea of saving for your future? Don't worry, this guide will help you figure out how much money should I have saved by 25 and provide tips on how to make it happen. Whether you're looking to pay off debts, buy a car, or put away for a rainy day, we've got you covered.

How much money should you have saved by 25?

It’s never too late to start saving for your future.

By age 25, you should be working through paying off debt and starting to improve your savings rate.

Below are guidelines on how much money a 25-year old should have saved by the age of 25.

Save a Total of $20000

By 25, you should have saved $20000.

Given the average savings for this age is only $11,250 and the median savings is $3,240 (source), you will be ahead of the curve with those super savers in this age group. However, most twentysomethings fall in the middle of the bell curve and could barely afford a job loss or any major expense.

Save at Least 50% of your Annual Expenses

Another rule of thumb for a 25-year-old is to save 50% of your annual expenses.

Let’s say, you spend an average of $20000 a year on rent, food, insurance, discretionary spending, etc, then you would need to save at least $10000.

This method will make sure you have enough money saved based on your lifestyle.

How much money should you have saved by age 30 for retirement?

If you want to have a comfortable retirement, you should save as much money as you can by the age of 25 and 30.

Most people don’t save enough for retirement and twentysomething (age 20-29) only have average 401k balances of $10,500 (source).

That means at a retirement age of 65, your account balance would be $94,259 in a taxable 401k / IRA or $228,107 in a Roth 401k / Roth IRA. The assumptions include no additional contributions and an 8% rate of return.

To prepare for retirement, aim to save between $15000 and $20000 by age 25. To stay on track, use a benchmark to figure out how much you need to save each year and customize your target based on your individual circumstances.

If you’re not saving for retirement yet, start contributing to 401k plans and IRA accounts now so that you’ll have a solid foundation when it comes to savings.

Save at a Minimum of 10% of your Income

This needs to be non-negotiable at the age!

It is very easy to find ways to pay yourself first and save 10% of your income. While you may prefer to hit that happy hour or buy those designer shoes, you are better off trimming your spending and up your savings while you are young.

Then, each year increase your savings percentage by 1% until you reach the 20% threshold.

But, you don’t have to stop there! Many Gen Zs are wanting to explore why there are young and healthy and not be a slave to the workforce. That means you need to save more to make that happen.

What should your net worth be at 25?

Most people in their 20s are typically swaddled in debt, especially student loan debt.

Your goal is to have a positive net worth – even if by $100. That means your savings is greater than any debt you have.

Your goal is to double your liquid net worth quickly.

What is the average savings rate for people in their 20s?

Okay, let’s be real… okay?

Most young adults are spending more money than they are saving. That means each month their spending exceeds their income.

As such the statistics do not even include this age group.

how much should I have in savings at 25?

At 25, you should have about 3-6 months of living expenses saved up in the bank.

Additionally, it is important to start thinking about your long-term financial goals and make sure you are building a foundation that will support those goals.

What are the different savings goals that people in their 20s should have?

Saving for your future is important, and you need to make it a top priority.

There are many different savings benchmarks to choose from including:

Save an emergency fund of at least $2000.
Participate in one of our popular money saving challenges.
Start contributing to workplace retirement and save enough to get the company match.
Begin saving for those big purchases like a gently used car or downpayment for a house.
Set up a Roth IRA and start making contributions (even baby amounts count).

This will make sure you are on your way to becoming financially sound before you turn 30.

What are the list of ways to save money?

A picture of someone reviewing a list of ways to save money.

If you want to save money, there are a few things you can do.

Saving money in your 20s is the easiest age to save as you don’t have as many responsibilities and obligations as you will in the future.

Here is a list of the most common ways to save money:

1. Use Budget Percentages as a Guide

If you want to save money by 25, you’ll need to start by setting a budget and sticking to it. You can reach this goal by using different budgeting techniques, such as the 50/30/20 rule.

The 50/30/20 rule is a good place to start:

50% of your income going towards necessities (housing, food, utilities)
30% going towards discretionary expenses (groceries, entertainment, travel)
20% saved for emergencies

This will help you be consistent in your savings habits is key to saving money.

2. Track your spending

Tracking your spending is key to understanding where your money goes.

Save receipts from each purchase and go over them once a week to get a better understanding of your spending habits. This can help you see where you might be overspending and make improvements to your budgeting techniques.

Great apps to help you include Simplifi or Rocket Money.

2. Use AI Powered Savings Apps and put your savings on autopilot

With AI, you can save money by automating your savings process.

Setting up recurring transfers to automatically deposit money into your savings account means that you won’t have to worry about finances anymore.

The popular AI saving apps can also help you save for your retirement, as well as any financial goal you may have. Thus, reducing the amount of time spent on financial planning.

Top AI Savings Apps:

4. Use gamification to save

Gamification can help make saving fun and more likely to be kept up.

Gamification can help people save money by providing a tangible benefit to work towards and providing some valuable encouragement.

By using the method of gamification, you help others save money by motivating them to reach a goal while you work to complete the same goal.

For example, if you’re trying to save money for a trip, you could set up a game with friends (aka accountability partners) where you earn points every time you save money with the 100 envelope challenge. Those that save the goal amount get to go on the trip.

5. Collect your employer’s 401(k) match

If your employer matches your contributions to a 401(k) plan, it’s important to take advantage of the match.

A 401(k) match is a free money offer from your employer, so it’s worth maxing out your contributions in order to gain the most benefit.

Also as long as you meet the qualifications, you can also contribute post-tax dollars to a Roth IRA account. This is another great way to increase savings for retirement.

6. Delay buying a home

Buying a home is not easy, but it’s important to have goals and plan for what you want to achieve.

The down payment on a house is one of the most important factors when buying a home as such you may need to delay buying a home for as long as possible to save money.

Also, by delaying buying a home, you can save money by taking the time to research different neighborhoods, compare prices, and get pre-approved for a mortgage.

Not only will this save you money in the long run, but you will also have peace of mind knowing that your future home is exactly what you wanted.

7. Use Open banking to track your spending

If you’re interested in tracking your spending and saving money, you can use Open banking to do just that.

Open banking allows customers to access their bank account information and manage their finances through APIs.

This means you can see how much money you’ve spent and where your money is going, which can help you stay within your budget. Additionally, open banking tools can be used to better understand your bank’s products and services.

Many of the best budgeting apps, such as Quicken, allow you to utilize open banking data to help you organize and manage your money in one place.

8. Use credit cards sparingly

Even those Gen Z has the lowest credit card debt amount (source), it is still wise to make sure you are using credit cards appropriately.

Credit cards can be a great way to earn rewards or get cash back, but only if you use them sparingly and pay off your balance in full each month to avoid interest charges.

It’s also important to check your credit report regularly to make sure there are no outstanding debts you didn’t know about.

9. Use a budget

If you want to save money, using a budget is a great way to accomplish it.

By tracking your expenses and setting limits on how much you can spend each month, you can make sure that you are always saving money.

A budget is a great way to save money because it allows you to choose where you actually want to spend your money rather than figuring out where you spent your money afterward. It also allows you to optimize your spending so that you don’t waste money on unnecessary things.

10. Invest for the long term

Investing for the long term can be a great way to save money as you let your money grow instead of having to create new streams of income.

You can buy stocks in companies or ETFs and hold onto them for a long time, adding money to your account regularly. This strategy can help you take advantage of market volatility and make money over the long term.

You also need to make sure you’re properly investing your money in order to reach your savings goals.

What is the best advice to save money by 25?

Picture of a graphic with a laptop and money for the best advice to save money by 25.

To save money by 25, individuals should aim to save 10% of their income.

It may be difficult to save more than 10% of one’s income, but it is possible.

Saving money is essential for financial security at any age, and you can start by being determined and making sure you’re saving at least 10% of your gross salary.

Simple Tips to Save Money by 25

You should focus on spending as little as possible to save money, and set a fixed budget rather than relate your expenses to your income.

Be consistent in your savings and avoid impulsiveness to save money.

Save up on transport or any other thing you might feel is a luxury rather than a necessity.

What is the average savings rate for people in their 20s?

The average savings rate for people in their 20s is $11,250, so it’s important to start saving as soon as possible.

The median savings is $3,240, so most people in their 20s have modest savings.

Savings Tools to Build Cash Fund Savings

There are many ways to save money, so find what works best for you.

People in their 20s have a lot of opportunities to save money, so don’t wait to start!

You want a savings plan that matches your long-term financial goals!

Pay yourself first

In order to have a successful future, it is important to start saving from a young age. There are a few different ways to save money, and one of the most important is to pay yourself first.

This means putting your own money into your bank account before spending it on anything else.

This will help you build a strong foundation for your future, and you will be able to save more money

Save Consistently

Set aside money regularly so you have a stash of cash to use when you need it.

That means each you save $100 or each paycheck you save $250.

Whatever the amount, do it consistently.

Trim Spending

If you want to save more money each month or year, try cutting back on unnecessary expenses.

Don’t rely on your income to directly influence your costs – track how much you’re spending each month and try not to exceed your allotted amounts for each category.

Do not overspend just because there’s more money in your checking account – create healthy financial habits that will last long-term.

Use Cash Windfalls Strategically

These cash windfalls could be from bonuses, inheritances, or even some left hand itching lottery luck!

You want to save those cash windfalls and make a plan on how you will spend them.

Additionally, you may be able to use the money to pay down debt or buy a home. This is an important lesson to learn if you have unexpected money coming your way—you don’t have to spend it all!

Save Increases in Income

Dedicate additional income to savings so that you’re really putting your money where your mouth is.

You can increase your savings by dedicating a percentage of your income to savings. Dedicate 10% of your income to savings, for example, and then an extra 1% to save search year.

Savings will grow along with your income, and you will have more money to use for other needs.

Make Saving a Habit

Your saving habits will change as you reach your 20s and into your 30s.

However, it’s important to keep track of your progress and make saving part of your regular routine. There are many different ways to save and reach your goals, so find what works best for you.

FAQs

If you have a low income, there are still ways that you can save money.

Try to focus on paying off high-interest debt first and then saving three months of living expenses.

Another way to save money is by reducing unnecessary expenses with a 30 day spending freeze.

The answer to this question depends on your individual situation and goals. However, we can offer some general advice on saving habits for a 25 year old should include:

First, it’s important to set a budget and stick to it. This will help you track how much money you are spending each month, and allow you to make better decisions about where to cut back. Add 1% to your monthly savings each month until you reach your goal of $20000 saved.

You also need to be mindful of how you spend your money. Try not to rely too heavily on credit cards or other forms of debt, which can quickly add up over time. Instead, try investing in stocks or bonds instead – these tend to provide more reliable returns over time and offer less risk than some other investments.

Finally, don’t forget about savings! Whether it’s into a high-yield savings account or an emergency fund earmarked for unexpected expenses, putting away some extra cash will help ensure that you have enough resources when necessary.

How much should I have in my emergency fund by 25?

By 25, you should have saved at least $1000.

However, 2% of your annual salary is a better threshold.

By age 25, most people should be saving at least 5% of their income and contributing an additional 1% every year.

If you can’t save enough money to contribute at the recommended rates, don’t worry – you can still save for retirement by gradually increasing your savings rate.

Saving money can be difficult, but it’s important to focus on not spending every penny you earn.

One way to do this is to set aside a certain amount of money each month that you will not spend.

Another way to save money is to find ways to reduce your monthly expenses. For example, you can cook at home more often instead of eating out, or you can carpool with friends to save on gas.

If you’re determined and have the skills, you can quickly learn how to make money online for beginners.

Side hustles are the name of the game right now.

Stick around Money Bliss – we have plenty of ways to help you earn extra money.

If you want to pay off your debts more quickly, you should start by saving money each month.

You can use your savings to pay down your debts faster if you focus on high-interest debt first.

If you have three months’ worth of living expenses saved up in case of emergencies, that would also be a good place to start. Check out the best debt apps to help you.

First, you need to make sure you are financially stable in other areas. You are fully funding your retirement accounts and Health Savings account, you have stable housing.

Then, you can consider saving for a child’s education through a 529 plan.

Saving for a child’s education can be difficult and expensive, but it’s important to start early if you have the extra income to support it.

To save money for a vacation, start by setting a specific amount you want to save each month. Then, calculate how much money you need to save by the date of your dream vacation.

Set a date by which you want to have traveled and begin backing out the math needed for that trip! As long as you continue saving 20% of your income each month and stay within budget, travel is always possible!

How to Save for a retirement

To save for retirement, you should start by investing 5-15% of your paychecks into a tax-advantaged account.

You should also plan your retirement based on your income, age, and desired lifestyle. You can save for retirement by consistently increasing how much you put in retirement accounts.

Don’t forget to include that employer match!

What should I do if I don’t have enough saved by 25?

Don’t get down on yourself!

Start now!

Waiting will only exacerbate things.

There are many different savings techniques to try, so it’s important to find one that works for you:

Start by putting away $50 every month and then add more funds as needed.
Pick one of our money saving challenges.
Use cash or debit cards instead of credit cards.

Even if you don’t have any big expenses planned in the near future, saving is still important for long-term financial stability. You’ll be on your way to having enough money when you’re older!

What are the consequences of not saving by 25?

You have nothing to show for your hard-earned income.

That is the cold and honest truth. But, you are only 25 years old, so you have plenty of time to change your ways.

If you’re not saving by 25, you may have to make some sacrifices in order to reach your financial goals. You may need to cut back on your spending, take on a second job, or make other changes to your lifestyle.

However, if you’re willing to make these sacrifices, you can still reach your goals.

Savings Steps for your Twenty-Something Self

When it comes to your twenties, there are a lot of things you want to do and accomplish.

One of the most important things on that list should be saving money.

After all, the earlier you start saving, the more time your money has to grow.

Starting to save money from a young age can lead to a larger nest egg over time. Plus, if you start early, you can take advantage of compound interest, which will help your money grow faster.

An individual’s earnings and spending patterns are still in flux during their twenties, so there are many opportunities to save.

Also, you need to remember there is more to life than just saving money–put other goals on your list (such as starting a business) and figure out how much you need to save each month in order to reach your targets.

Now, learn how much should I have saved by 30.

Source: moneybliss.org

Apache is functioning normally

May 26, 2023 by Brett Tams

The home-buying process can seem daunting for first-time homebuyers. The good news is there are some mortgage lenders that offer home loan products designed to provide more ease with the process, which can be very appealing to many first-time future homeowners.

To help you get started, CNBC Select rounded up a list of the best mortgage lenders first-time homebuyers should consider. We evaluated home loan lenders based on the types of loans offered, customer support, credit score requirements and minimum down payment amount, among others (see our methodology below.)

Beyond just the lowest rates, it’s important to go with the lender that offers the best loan terms to suit your needs. There’s a learning curve when it comes to homeownership, but we’ve included an FAQs section below to help you get a better understanding of some aspects of the process.

The best mortgage lenders for first-time homebuyers

Best for loan variety

PNC Bank

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms

10 – 30 years
Credit needed
Minimum down payment

0% if moving forward with a USDA loan

Pros

Offers a wide variety of loans to suit an array of customer needs
Available in all 50 states
Online and in-person service available

Cons

Doesn’t offer home renovation loans

Who’s this for? PNC Bank has a wide variety of home loan options, making it easy for first-time homebuyers to find a loan that suits their circumstances. This lender offers conventional loans, FHA loans, VA loans, jumbo loans and HELOCs. On top of that, PNC Bank offers USDA loans, which can be tougher to find among some lenders. PNC Bank also has some specialized loan options, like the Community Loan, which is meant for individuals with lower cash reserves and allows for a down payment as low as 3% and no PMI (private mortgage insurance).

It also offers a Medical Professional Loan for interns, residents, fellows or doctors who have completed their residency in the last five years. Eligible borrowers for this loan can borrow up to $1 million and won’t have to pay PMI, regardless of their down payment amount.

In addition to all these offerings, PNC Bank gives eligible borrowers the chance to qualify for a $5,000 grant to be used toward closing costs. Eligible borrowers must have an income at or below 80% of the median household income for the metropolitan statistical area (MSA), or their desired property must be located in a low- or moderate-income census tract as designated by the FFIEC, according to PNC’s website.

Best for educational offerings

Bank of America Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, FHA loans, VA loans, jumbo loans, doctor loans and the Affordable Loan Solution mortgage
Terms

15 – 30 years
Credit needed

Not disclosed
Minimum down payment

0% if moving forward with a VA loan; 3% if moving forward with the Affordable Loan Solution mortgage

Pros

Offers a wide variety of loans to suit an array of customer needs
Offers an Edu-Series for educating first-time homebuyers as well as other learning resources and materials
Online and in-person service available
Fixed-rate and adjustable-rate mortgages offered
Reduced cost of mortgage insurance

Cons

Doesn’t offer USDA loans

Who’s this for? Bank of America stands out for its first-time homebuyer educational resources. Aside from home loan calculators, which are typical for mortgage lenders to provide on their websites, Bank of America has an online “Edu-Series” for first-time home buyers. There are also guides on its website that break down key terms and a list of FAQs geared toward first-time home buyers.

Bank of America also offers a variety of loan options, including a home loan for medical professionals. With this loan, doctors, dentists, residents and fellows can make down payment minimums that are tiered based on the size of the loan they’re applying for. They’ll put down at least 3% on mortgages up to $850,000, at least 5% on mortgages up to $1 million, at least 10% down on mortgages up to $1.5 million and at least 15% down on mortgages to $2 million. If you’re a medical professional, Bank of America will also exclude your student loan debt from your total debt when you’re applying for the loan. This could bring down your debt-to-income ratio for the purposes of applying for the loan and make it easier for you to qualify.

Even if you aren’t a qualifying medical professional, you can still potentially take advantage of tiered down payment terms through the Affordable Loan Solution mortgage option. With this loan, eligible borrowers can make a down payment as low as 3% on loan amounts up to $726,200, and as low as 5% on mortgages up to $1,089,300. Mortgage insurance would be required if making down payments lower than 20%, but according to Bank of America’s website, the mortgage insurance would come at a reduced cost compared to that of other conventional loans.

Best for lower credit scores

Rocket Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates
Types of loans

Conventional loans, FHA loans, VA loans and Jumbo loans
Terms

8 – 29 years, including 15-year and 30-year terms
Credit needed

Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met
Minimum down payment

3.5% if moving forward with an FHA loan

Pros

Can use the loan to buy or refinance a single-family home, second home or investment property, or condo
Can get pre-qualified in minutes
Rocket Mortgage app for easy access to your account

Cons

Runs a hard inquiry in order to provide a personalized interest rate, which means your credit score may take a small hit
Doesn’t offer USDA loans, HELOCs, construction loans, or mortgages for mobile homes
Doesn’t manage accounts for jumbo loans after closing

Who’s this for? First-time homebuyers tend to be younger and may not have a long credit history, which can make it harder to qualify for a good mortgage rate. Rocket Mortgage stands here because it accepts applicants with credit scores as low as 580. The lender also has a program called the Fresh Start program that’s aimed at helping potential applicants boost their credit score before applying.

Rocket Mortgage offers conventional loans, FHA loans, VA loans and jumbo loans but not USDA loans, which means this lender may not be the most appealing for potential homebuyers who want to make a purchase with a 0% down payment. Rocket Mortgage doesn’t offer construction loans (if you want to build a brand new custom home) or HELOCs, but if you’re a homebuyer who only plans to purchase a single-family home, a second home, or a condo that’s already on the market, this shouldn’t be a drawback for you.

This lender offers flexible loan repayment terms that range from 8 – 29 years in addition to standard 15-year and 30-year terms.

Best for no lender fees

Ally Bank Mortgage

Annual Percentage Rate (APR)

Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans

Conventional loans, HomeReady loan and Jumbo loans
Terms

15 – 30 years
Credit needed
Minimum down payment

3% if moving forward with a HomeReady loan

Pros

Ally HomeReady loan allows for a slightly smaller downpayment at 3%
Pre-approval in just three minutes
Available in all 50 U.S. states
Online support available
Doesn’t charge lender fees

Cons

Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs

Who’s this for? Ally Bank doesn’t charge any application fee, origination fee, processing fee or underwriting fees. These are what’s collectively known as “lender fees” and they can cost you anywhere from a few hundred to a few thousand dollars, and eat into the money you put aside for buying your home. When you’re a first-time home buyer, going through the process as affordably as possible is often top-of-mind, so saving on these fees will let you keep more of your money for other things, like renovations or moving costs.

Keep in mind, though, that Ally Bank may still charge appraisal fees and recording fees and may charge for the title search and insurance. As long as you have all the necessary documents handy and submit complete and accurate information, you can get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes.

Best for no PMI

CitiMortgage®

Annual Percentage Rate (APR)

Apply online for personalized rates
Types of loans

Conventional loans, FHA loans, VA loans and Jumbo loans
Terms

15 – 30 years
Credit needed
Minimum down payment

Terms apply.

Pros

Citi’s HomeRun Mortgage program allows for a downpayment as low as 3%
Citi’s Lender Assistance program gives eligible homebuyers a credit of up to $5,000 to use toward closing costs
Ability to choose between fixed-rate and adjustable-rate mortgages
New and existing Citi bank customers can qualify for closing cost discounts based on their account balance
HomeRun mortgage program allows for a downpayment of less than 20% without PMI
Provides homeownership education and counseling

Cons

No options for a 0% downpayment
Existing customers need high account balances to receive some of the highest interest rate discounts

Who’s this for? CitiMortgage gives homebuyers a chance to save big-time by waiving the PMI (private mortgage insurance) requirement on loans with down payments below 20%. This can be done by applying for a mortgage through Citi’s HomeRun program, which also allows for down payments as low as 3%.

PMI is typically a required monthly charge with other home loans if you make a down payment of 20% or less. But PMI can cost you tens of thousands of dollars extra over the entire life of the loan. The money you save from not paying PMI could potentially go towards saving for a second property, a home renovation, or any other financial goal you have. HomeRun mortgages also allow borrowers to lock in a fixed rate on their mortgage so they won’t have to worry about their rate increasing down the line.

FAQs

How do mortgages work?

A mortgage is a type of loan you can use to purchase a home. This agreement essentially says you can purchase a home without paying for it in full, upfront — you’ll just need to put some of the money down — usually between 3% and 20% of the home price — and pay smaller, fixed monthly payments over a certain number of years, plus interest and potentially other charges. Having a mortgage allows you to own the property even if you don’t have the hundreds of thousands of dollars in cash needed to purchase it outright.

What is a conventional loan?

A conventional loan is a home loan that’s funded by private lenders and sold to government enterprises such as Fannie Mae and Freddie Mac. It’s a very common loan type and some lenders may require a down payment as low as 3% or 5%.

What is an FHA loan?

A Federal Housing Administration loan, or FHA loan, is a loan program that has some slightly looser requirements. For example, this loan program may allow some borrowers to be approved for a loan with a lower credit score or be able to get away with having a higher debt-to-income ratio. You’ll typically only need to make a 3.5% down payment with this type of loan.

What is a USDA loan?

A USDA loan is offered through the United States Department of Agriculture and is aimed at borrowers who want to purchase a home in a qualifying rural area. USDA loans don’t require a minimum down payment, so borrowers can use this loan to purchase a home for almost no money upfront (you’ll still likely pay fees, though).

What is a VA loan?

VA mortgage loans are provided through the U.S. Department of Veterans Affairs and are meant for service members, veterans and their spouses. They typically require a 0% down payment and borrowers don’t have to pay private mortgage insurance.

What is a jumbo loan?

A jumbo loan is meant for home buyers who need to borrow more than $647,200 to purchase a home. Jumbo loans usually have stricter credit score and debt-to-income ratio requirements, and they also typically require a larger minimum down payment.

How is my mortgage rate decided?

Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. However, your specific mortgage rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.

Be sure to submit the necessary information for more personalized rate estimates from your desired lender.

What is the difference between a 15- and 30-year term?

A 15-year mortgage gives homeowners 15 years to pay it off in fixed, equal amounts plus interest, while a 30-year mortgage gives homeowners 30 years to pay it off. Monthly payments are generally lower with a 30-year mortgage since you’ll have a longer period of time to pay off the loan. However, you’ll wind up paying more in interest over the life of the loan since it is charged on a monthly basis. A 15-year mortgage, on the other hand, lets you save on interest but you’ll likely have to make a higher monthly payment.

How does private mortgage insurance (PMI) work?

Lenders charge private mortgage insurance (PMI) to protect themselves in the event that a borrower defaults on their loan. PMI is assessed to your account if you choose to make a down payment of less than 20%. You’ll be responsible for paying this in addition to your monthly mortgage payments.

However, you can usually have the PMI waived after you’ve made enough payments to build 20% equity in your home.

Bottom line

If you need to take out a mortgage to purchase your first home, you have options. Certain mortgage lenders stand out for first-time homebuyers by considering applicants with lower credit scores, offering lower down payments and providing useful educational resources.

Keep in mind that mortgage interest rates fluctuate often and the rate you receive will vary depending on your location, credit score and credit report. While lenders may post general interest rate ranges on their websites, the best way to get a more accurate estimate of your rate is to provide the necessary information to check your rate.

Our methodology

To determine which mortgage lenders are the best for first-time homebuyers, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best mortgages, we focused on the following features:

Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances in which a particular lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.

After reviewing the above features, we sorted our recommendations by best for loan variety, educational offerings, lower redit scores, no lender fees and no PMI.

Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee the interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

Catch up on Select’s in-depth coverage of personal finance, tech and tools, wellness and more, and follow us on Facebook, Instagram and Twitter to stay up to date.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Source: cnbc.com

Apache is functioning normally

May 24, 2023 by Brett Tams

Inside: This guide will teach you about the different factors you need to consider when purchasing a home with a 70k salary.

There are a lot of factors to consider when you’re trying to figure out how much house you can afford. Your income, your debts, your down payment, and the interest rate on your mortgage all play a role in determining how much house you can afford.

Your situation will be different than the person next-door or your co-coworker.

Making 70000 a year is a great salary. You are making the median salary in the United States.

It’s enough to comfortably afford most homes and gives you plenty of room to save money each month.

But how much house can you actually afford?

It depends on several factors, including your down payment, interest rate, income, and credit score.

In this ultimate guide, we’ll walk you through everything you need to know about how much house you can afford making 70000 a year.

Are you looking to buy a house but don't know where to start? This guide will teach you everything you need to know about buying a home, from Loan amount to Homeowner insurance premiums. By the end of this guide, you'll know that when I make 70000 a year how much house can I afford.

how much house can i afford on 70k

In general, you can expect to spend 28-36% of your income on housing.

Generally speaking, if you make $70,000 a year, you can afford a house between $226,000 and $380,000.

How much mortgage on 70k salary?

In general, you should expect to spend no more than 28% of your monthly income on a mortgage payment.

Thus, you can spend approximately $1633-2100 a month on a mortgage.

Just remember this is relative to the interest rate, term length of the loan, down payment, and other factors.

28/36 Rule

But there’s one factor that trumps all the others: The 28/36 rule.

Also known as the debt-to-income (DTI) ratio.

The 28/36 rule is a guideline that says that your housing costs (mortgage payments, property taxes, homeowners insurance, and HOA fees) should not exceed 28% of your gross monthly income.

And your total debt (housing costs plus any other debts you have, like car payments or credit card bills) should not exceed 36% of your gross monthly income.

You must follow the 28/36 rule.

How to calculate how much mortgage you can afford?

A picture of spreadsheet and a calculator to see how much mortgage can I afford.

If you’re like most people, you probably don’t know how to calculate how much mortgage you can afford.

This is actually a really important question that you need to ask yourself before beginning the home-buying process.

The answer will help determine the price range of homes you should be looking at. Plus know how much money you’ll need to save for a down payment.

Step #1: Check Interest Rates

Research current mortgage rates to get an accurate estimate. You can also check your credit score and search for average mortgage rates based on your credit score.

Right now, with sky-high inflation, you are unable to afford a bigger house when interest rates are hovering around 6% compared to ultra-low interest rates of 2.5%.

With a 70k salary, this can be the difference between $50-100k on the total mortgage amount you can afford.

Step #2: Use a Mortgage Calculator

Use a mortgage calculator to get an estimate of the home price you can afford based on your income, debt profile, and down payment.

Generally, lenders cap the maximum amount of monthly gross income you can use toward the loan’s principal and interest payment to not more than 28% of your gross monthly income (called the “Front-End” or “Housing Expense” ratio). Then, limit your total allowable debt-to-income ratio (called the “Back-End” ratio) to not more than 36%.

You can use a mortgage calculator to a ballpark range of what house you can afford.

Step #3: Taxes, Insurance, and PMI

When planning for a home purchase, it’s important to factor in all of your monthly expenses, including taxes, insurance, and PMI.

This will ensure that you get an accurate estimate of your home-buying budget based on your household annual income.

Don’t forget to include these payments to get a realistic understanding of your monthly budget.

Step #4: Remember your Living Expenses

When considering how much house you can afford based on your $70,000 salary, you must consider your lifestyle and current expenses.

It is important to factor in other monthly expenses such as cell phone and internet bills, utilities, insurance costs, and other bills.

More than likely, you will be approved for a higher mortgage amount than you would feel comfortable with. This is 100% what lenders will do.

They want to provide you with the most you can afford – not what you should afford.

Step #5: Get prequalified

Prequalifying for a mortgage is an important first step to take when estimating how much house you can afford.

It gives you a more precise figure to work with and helps you make a more informed decision based on your personal situation.

Remember that your final amount will vary depending on a number of factors, especially your interest rate, which will be based on your credit score.

Taking the time to research current mortgage rates helps you secure a better mortgage rate, giving you more buying power.

Home Buying by Down Payment

How much house can you afford?

It’s a common question among home buyers — especially first-time home buyers. Use this table to figure out how much house you can reasonably afford given your salary and other monthly obligations.

The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 4% interest rate.

Annual Income	Downpayment	Monthly Payment	How Much House Can I Afford?
$70,000	$9,552 (3%)	$1,750	$318,412
$70,000	$16,215 (5%)	$1,750	$324,316
$70,000	$34,058 (10%)	$1,750	$340,581
$70,000	$53,573 (15%)	$1,750	$357,152
$70,000	$75,094 (20%)	$1,750	$375,468
$70,000	$98,933 (25%)	$1,750	$395,731

**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.

Mortgage on 70k Salary Based on Monthly Payment and Interest Rate

Picture of someone showing you how much mortgage on 70k salary you can afford.

How much house can you afford on a $70,000 salary?

This largely depends on the current interest rate of the mortgage loan you’re considering. When interest rates are high, people aren’t actively buying as when interest rates are low.

By understanding these factors, you can better gauge how much house you can afford on a $70,000 salary.

The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 20% downpayment.

Annual Income	Monthly Payment	Interest Rate	How Much House Can I Afford?
$70,000	$1,750	3.25%	$406,796
$70,000	$1,750	3.5%	$396,231
$70,000	$1,750	3.75%	$386,101
$70,000	$1,750	4%	$375,994
$70,000	$1,750	4.5%	$357,554
$70,000	$1,750	5%	$339,954

**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.

Home Affordability Calculator by Debt-to-Income Ratio

Around here at Money Bliss, we always stress that debt will hold you back.

In the case of buying a house, debt increases your DTI ratio.

Here is a glimpse at what monthly debt can cause your debt-to-income (DTI) ratio to increase. Thus, making the house you want to buy to be more difficult.

Annual Income	Monthly Payment	Monthly Debt	How Much House Can I Afford?
$70,000	$2,100	$0	$440,085
$70,000	$1,900	$200	$404,584
$70,000	$1,800	$300	$382,334
$70,000	$1,600	$500	$337,883
$70,000	$1,350	$750	$282,208
$70,000	$1,100	$1000	$226,582

**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.

Increase your Home Buying Budget

Here are a few ways you can increase your home buying budget when buying a house on a $70k annual income.

By following these steps, you can increase your home buying budget and find a more suitable house for your income.

1. Pick a Cheaper Home

Home prices vary significantly in different parts of the country.

Moving out of a major metropolitan area with notoriously high housing costs can help you find more affordable homes.

There are plenty of ways to find a home that is cheaper than you would normally expect.

Look for homes that are for sale in less desirable neighborhoods.
Find homes that are for sale by owner or have not been listed yet.
Check for homes that are for sale outside of your usual price range and haven’t sold as they may drop their price.
Move to a lower cost of living area.

2. Increase Your Down Payment Savings

A larger down payment can reduce the amount you have to finance, which lowers your monthly payment.

Plus help you get a lower interest rate and avoid paying PMI.

Putting down at least 10-20 percent of the home sale price can help boost your home buying power. You can also take advantage of down payment assistance programs in your area.

3. Pay Down Your Existing Debt

Paying down your debts such as credit card debts or auto loans can help raise your maximum home loan.

Paying down your debts can help you qualify for a higher loan amount.

This is because when you have lower amounts of debt, your credit score is higher and your debt-to-income ratio is less. This means you are less likely to be rejected for a home loan.

4. Improve Your Credit Score

A higher credit score can lead to lower rates and more affordable payments.

You can improve your credit score by:

Paying your bills on time
Paying down your credit card balances
Avoiding opening new credit before applying for a mortgage
Disputing any errors on your credit report

This is very true! We had an unfortunate debt that wasn’t ours added to our credit report right before closing. While the debt was an error, it still cost us a higher interest rate and forced us to refinance once the credit report was fixed.

5. Increase Your Income

Asking for a raise, seeking a higher-paid position, or starting a side gig can help you increase the amount of home you can afford.

While you need two years of income from a side gig or your own online business to count as income, the extra cash earned helps you to increase the size of your downpayment. Plus it lowers your debt-to-income ratio with the savings you are setting aside.

What factors should you consider when deciding how much you can afford for a mortgage?

How much house can you afford on your current salary and with your current monthly debts?

This is a question that we are often asked, and it’s one that we love to answer.

We’ll walk you through all the different factors that go into this decision so that you can make an informed choice.

1. Loan amount

The loan amount is a key factor that affects the total cost of a mortgage.

If you have no outstanding debt, a 20% down payment, a high credit score, and a 3.5% interest rate from an FHA loan, you could be able to afford up to $508,000.

However, if you have debt, a smaller down payment, or a lower credit score, the loan amount you can qualify for will be lower.

Similarly, if you choose a 15-year fixed-rate loan, your monthly payments will be higher, but you will end up paying less in interest over the life of the loan than with a 30-year fixed-rate loan.

Ultimately, your loan amount will affect the total cost of your mortgage, so it’s important to consider all the factors when making your decision.

2. Mortgage Interest rate

Mortgage interest rates can have a significant impact on the cost of a mortgage. The higher the interest rate, the more expensive the loan will be.

For example, a difference between a 3% and 4% interest rate on a $300,000 mortgage is more than $150 on the monthly payment.

Remember, in the first few years of a mortgage, the majority of the payment goes toward interest rather than trying to reduce the principal amount.

3. Type of Mortgage

The primary difference between a fixed and variable mortgage is the interest rate and the amount of your payment

Fixed-rate mortgages offer the stability of having the same interest rate for the life of the loan.
Adjustable-rate mortgages (ARMs) come with lower interest rates to start, but those rates can change over the life of the loan. ARMs are often a riskier choice, as if the economy falters, the interest rate can go up.

Fixed-rate loans are typically the most popular choice, as the monthly payment amount is more predictable and easier to budget for. The terms of a fixed-rate loan can range from 10 to 30 years, depending on the lender.

Adjustable-rate mortgages (ARMs) have interest rates that can increase or decrease annually based on an index plus a margin. ARMs are typically more attractive to borrowers who plan on staying in the home for a shorter period of time, as the lower initial interest rate can make the payments more manageable.

The Money Bliss recommendation is to choose a 15-year fixed-rate mortgage.

4. Property value

Property value can have a direct effect on how much you can afford for a mortgage.

As the value of the property increases, so does the amount of money you will need to borrow to purchase it. This, in turn, affects the monthly payments and the amount of interest you will pay over the life of the loan.

This is especially important as many people have been priced out of the market with the rising home prices.

Additionally, higher property values can mean higher taxes, which will add to the amount you need to budget for your mortgage payments.

5. Homeowner insurance

Homeowner’s insurance is a requirement when securing a loan and it can vary depending on the value and location of the home.

Additionally, certain areas that are prone to natural disasters or are located in densely populated areas may have higher premiums than other locations and may require additional insurance like flood insurance.

As a result, lenders typically require that you purchase homeowners insurance in order to secure a loan, and may have specific requirements for the type or amount of coverage that you need to purchase.

Before committing to a mortgage, it is important to consider the cost of homeowner’s insurance and make sure it fits into your budget.

This is something you do not want to skimp on as the cost to replace a home is very expensive.

6. Property taxes

Property taxes are calculated based on the value of a home and the tax rate of the city or county where the property resides.

The higher the property taxes, the more you will have to pay in your monthly mortgage payment.

In states with high property taxes, the property tax bill can be a large sum of the mortgage payment.

It is important to consider these costs when comparing different homes and locations to ensure you can afford the home without stretching your budget too thin.

7. Home repairs and maintenance

It’s important to also consider other factors such as the age of the house, since some properties may require renovation and repairs that can cost more than the house price itself.

Beyond the cost of purchasing a home, homeowners will likely have other expenses related to owning and maintaining the property.

Also, many homeowners prefer to do significant upgrades to the home before moving in, which comes at an additional expense.

These can include ordinary expenses such as painting, taking care of a lawn, fixing appliances, and cleaning living spaces, which can add up.

Additionally, it’s advisable to buy a home that falls in the middle of your price range to ensure you have some extra money for unexpected costs, such as repairs and maintenance.

8. HOA or Homeowners Association Maintenance

This is often an overlooked factor by many new homebuyers, but extremely important as some HOAs add $500-800 per month to the total housing budget.

The purpose of a homeowners association (HOA) is to establish a set of rules and regulations for residents to follow as well as maintain the community or building.

These fees are typically used to pay for maintenance, amenities, landscaping, and concierge services.

HOA fees are used to finance community upkeep, including landscaping and joint space development, and can range from $100 to over $1,000 per month, depending on the amenities in the association.

9. Utility bills

When switching from renting to buying a home, you will have to factor in the costs of your monthly utility bills such as electricity, natural gas, water, garbage and recycling, cable TV, internet, and cell phone when calculating how much mortgage you can afford.

In addition, the larger the home, the higher the costs to heat and cool your new home.

Make sure to ask your realtor for previous utility bills on the property you are interested in.

10. Private Mortgage Insurance

The purpose of private mortgage insurance (PMI) is to protect the lender in the event of foreclosure. It is typically required when a borrower is unable to make a 20% down payment on a home purchase.

PMI allows borrowers to purchase a home with less upfront capital, but also comes with additional monthly costs that are added to the mortgage payment. These fees range from 0.5% to 2.5% of the loan’s value annually and are based on the amount of money put down.

PMI can also be canceled or refinanced once the borrower has achieved 20% equity in the home or when the outstanding loan amount reaches 80% of the home’s purchase price.

11. Moving costs

Moving is expensive, but also a pain to do. So, consider the moving costs associated with relocating from one location to another.

Typically fees for packing, transportation, and possibly storage, and can vary depending on the size of the move and the distance the move needs to cover.

Also, consider if by buying a home, you will stop having moving costs associated with moving from rental to rental.

FAQ

When determining how much house you can afford, it’s important to consider several factors.

These include your income, existing debts, interest rates, credit history, credit score, monthly debt, monthly expenses, utilities, groceries, down payment, loan options (such as FHA or VA loans), and location (which affects the interest rate and property tax). Also, think about the costs of maintaining or renovating a home.

Additionally, you should also evaluate your own budget and assess whether now is the right time to purchase a home. Taking all of these factors into account can help you set the maximum limit on what you can realistically afford.

A mortgage calculator can help you determine your home affordability by providing an estimate of the home price you can afford based on your income, debt profile, and down payment.

It works by inputting your annual income and estimated mortgage rate, which then calculates the maximum amount of money you’re able to spend on a house and the expected monthly payment.

Additionally, different methods are available to factor in your debt-to-income ratio or your proposed housing budget, allowing you to get a more accurate estimate of your home buying budget.

The debt-to-income ratio or DTI is used by lenders to assess a borrower’s ability to make mortgage payments.

This ratio is calculated by taking the total of all of a borrower’s monthly recurring debts (including mortgage payments) and dividing it by the borrower’s monthly pre-tax household income.

A high DTI ratio indicates that the borrower’s debt is high relative to income, and could reduce the amount of loan they are qualified to receive.
Generally, lenders prefer a DTI of 36% or less, which allows borrowers to qualify for better interest rates on their mortgages.

To calculate their DTI, borrowers should include debt such as credit card payments, car loans, student and other loans, along with housing expenses. It is important to note that the DTI does not include other monthly expenses such as groceries, gas, or current rent payments.

Closing costs can have an enormous impact on how much home you’re able to afford.

From application fees and down payments to attorney costs and credit report fees, these costs can add up quickly and affect your overall budget. Unfortunately, most of these closing costs are non-negotiable, but you can ask the seller to pay them.

When buying a house, it is important to research the different mortgage options available to you.

You can typically choose between a conventional loan that is guaranteed by a private lender or banking institution, or a government-backed loan. Depending on your monthly payment and down payment availability, you may be able to select between a 15-year or a 30-year loan.

A conventional loan typically offers better interest rates and payment flexibility.
While a government-backed loan may be more lenient with its credit and down payment requirements.
For veterans or first-time home buyers, there may be special mortgage options available to them.

Ultimately, it is important to talk to a lender to see which loan type is best for your personal circumstances.

When it comes to saving for a down payment, it’s important to understand how much you’ll need and how much it will affect your budget.

Generally, you’ll need 20% of the cost of the home for a conventional mortgage and 25% for an investment property. When you put down more money, it gives you more buying power and may help you negotiate a lower interest rate.

For example, if you’re buying a $300,000 house, you’ll need a down payment of $60,000 for a conventional mortgage. On the other hand, if you put down 10%, you can still afford a $395,557 house. But, you will have to pay for private mortgage insurance.

In addition, there are other ways to help you cover these upfront costs. You can look into down payment assistance programs.

Ultimately, the size of your down payment will depend on your budget and financial goals. You should never deplete your savings account just to make a larger down payment. It’s important to factor in emergency funds and other expenses when deciding on the best option.

Eligibility requirements for loan lenders can vary, but in general, lenders are looking for borrowers with a good credit score, a reliable income, and a history of employment or income stability.

For most loan types, borrowers will need to show a history of two consecutive years of employment in order to qualify. However, lenders may be more flexible if the borrower is just beginning their career or if they are self-employed and do not have W2 forms and official pay stubs.

Income verification also needs to be done “on paper”, meaning that cash tips that do not appear on pay stubs or W2s can not be used as income. The lender will look at the household’s average pre-tax income over a two-year period before determining the amount that can be borrowed.

In order to make sure that the borrower is financially secure, lenders will also pull the borrower’s credit report and base their pre-approval on the credit score and debt-to-income ratio. Employment verification may also be done.

For certain government-backed loan types, such as FHA, VA, and USDA loans, there may be additional or different requirements for eligibility. For instance, for FHA loans, the borrower must intend to use the home as a primary residence and live in it within two months after closing. VA loans are more lenient, and may not require a down payment.

The qualifications for VA loans vary based on the period and amount of time the borrower has served. There are many ways to qualify, whether the borrower is a veteran, active duty service member, reservist, or member of the National Guard. For more information on eligibility requirements for VA loans, borrowers can visit the U.S. Department of Veteran Affairs.

A good credit score will mean you have access to more lending options, better interest rates, and more purchasing power.

On the other hand, a poor credit score could mean you are approved for a loan, but at a higher interest rate and with a smaller house.

This means your budget will be more limited and you may not be able to buy as much home as you had hoped for. Additionally, lenders will also look at other factors, such as your debt-to-income ratio, employment history, and loan term, in order to determine your overall affordability.

What House Can I Afford on 70k a year?

As a borrower, you need to consider the interest rate, down payment, credit score, debt-to-income ratio, employment history, and loan term when determining how much house you can afford.

A higher credit score can often mean a lower interest rate, and a larger down payment can bring down the monthly payments.

All of these factors can have an effect on the amount of money you can borrow and the home you can afford.

Ultimately, understanding the impact of different factors can help borrowers make the best decisions when it comes to getting a mortgage.

Now that you know how much house you can afford, it’s time to start saving for a down payment.

The sooner you start saving, the sooner you’ll be able to move into your dream home. But you may have to wait if you are considering a mansion.

By taking into consideration this guide into account, you can make a more informed decision about the cost of a mortgage for your new home.

Source: moneybliss.org

Apache is functioning normally

May 20, 2023 by Brett Tams

Posted on: March 7, 2018

When you’ve finally decided it’s time to buy a home, a lot of things can start moving quickly. However, if you aren’t prepared, the VA loan application process and take much longer than you would like.

VA loans already close slightly slower than most other loan programs, but the wait is well worth it. They’re usually the best loan program available for those who are eligible, due to their low mortgage rates and 100% financing.

To make sure that the VA application process goes smoothly, there are a few steps you’ll want to take to prepare. These won’t take much time, and they can save you from plenty of stress down the road.

Click to begin the VA application process.

Check your eligibility

Before you start the application process, double check to make sure that you’re eligible. A full list of requirements can be found on the VA page, but generally speaking, the VA loan is available to veterans, current service members and surviving spouses.

Next, you’ll need to apply for a Certificate of Eligibility (COE). You need a COE so your lender can verify that you’re eligible for the program. You can get your COE online to save your lender (and yourself) some time.

Check your credit score

Technically, there is no minimum credit score required to be approved for a VA loan. However, lenders will want to see a score of 620 or higher in most cases.

One thing to note is that the higher your credit score is, the better the mortgage rate you’ll get. This means lower monthly payments throughout the life of the loan.

You can check your credit score through sites like Experian, Equifax and Transunion, giving you a better idea of what your score is. Keep in mind that other sites don’t always have an accurate representation of your score.

After finding your credit score, it’s smart to make moves to bump your score higher. This might mean paying off debts, holding off on opening new credit cards, etc. You want your credit as high as possible before you apply.

Check current VA mortgage rates.

Make sure you have enough saved

You won’t need to pay a downpayment for a VA loan, but that doesn’t mean that you don’t need money. Upfront costs will be needed at closing, and those can range in the thousands.

Also, you’ll need to budget to pay your monthly payments. You’ll also be in charge of your own repairs and replacements, costs that renters don’t need to cover. If your new home will have a yard, you’ll need to buy a lawnmower. If you’re getting more rooms, you’ll need to buy furniture.

There’s no set amount that you should save before buying a home, but going through and calculating how much money you think you’ll spend will give a better idea of how much you should store before applying.

Get your documents together

Once you’re ready to apply for a VA loan, you’ll be getting in touch with your lender. But before they can pre-approve you, they’ll need some of your information.

To save them the hassle of looking it up themselves or to prevent having to schedule a second meeting in the future, make sure that you have the following documents with you when you apply:

Certificate of eligibility
Credit report
Proof of income/employment history (W-2)
Bankruptcy information (if applicable)
Personal information (name, address, SSN, etc.)

If you’ve prepared well enough, you’re going to make this process a lot easier for your lender.

Getting started

Before anything, you can begin the pre-qualification process. This is just a quick process to help you find out how much home you can afford.

While pre-qualification is fast and easy, it’s also the first step in buying a home with any loan program.

Click to begin the pre-qualification process.

Source: militaryvaloan.com

Apache is functioning normally

May 19, 2023 by Brett Tams

Do you receive a year-end bonus? Lucky you! While you may be tempted to go on a shopping spree or take your gang out to a great dinner, hold on a second. Yes, you can use some for fun, but you might also want to put some of a year-end bonus toward your financial goals.

Smart bonus money moves may include paying down debt, helping to fund a short-term savings goal (such as a downpayment on a house or establishing an emergency fund), as well as investing the money to potentially achieve long-term growth.

There’s no one right formula for spending (or not spending) a bonus: Each person’s financial situation and future goals are entirely unique.

But here are some ideas for using your bonus — or any other cash infusion, in fact — that can help improve your financial wellness today and tomorrow.

Allocating Some Money to Fun

You worked hard all year. So it’s totally understandable if you want to put some of your bonus money simply towards a few wants vs. just needs.

With any financial decision, it typically doesn’t have to be all or nothing, and that includes your work bonus. In fact, taking a balanced approach to your money might actually help you to maintain the stamina that financial goals often require.

Although the exact split is ultimately up to you, to avoid overspending, you might want to consider putting roughly 90% of your bonus towards your financial goals, and devoting about 10% to “fun money.”

If you’re getting a $5,000 bonus (after taxes), for example, that means you would have $500 to spend treating yourself. The other $4,500 would then go towards putting a big dent in your money goals.

Recommended: Benefits of Automating Your Finances

Chipping Away at Debt

If you have debt — whether from a student loan, car loan, or credit card debt — a bonus can be a great way to start whittling away at whatever balance you have to contend with, or even wiping it out completely.

Doing this can help you avoid throwing more money away just on interest charges, and if you manage to wipe out debt completely, you’ll have one less financial responsibility to stress about every month.

How much of your recent influx of cash should be directed toward debt reduction is entirely personal, and will depend on your situation.

Some financial planners recommend that people with high-interest debt consider putting around half of their annual bonuses toward paying down that debt. But this decision will depend on your individual circumstances.

Since credit card debt typically costs the most in interest, that can be a great place to start. Many credit cards charge close to 20% interest or higher. So if your goal is to ultimately build wealth, it may be smart to minimize credit card balances or, even better, pay them off completely.

It would be unreasonable to expect that you could out-invest what you are paying out in credit card interest.
The same idea goes for any high-interest or emotionally stressful debt on your balance sheet.

Recommended: 5 Reasons to Switch Bank Accounts

Saving for a Short-Term Goal

If you haven’t yet started, or haven’t quite finished, creating an emergency fund, getting a bonus is a great time to beef up that financial cushion.

While many people don’t like to think about the possibility of their car breaking down, a medical emergency, or job loss, should one of these unexpected events occur, it could quickly put you in a difficult financial situation.

Without back-up, you can risk landing in debt should you experience a financial set-back.

How much to sock away for a rainy day is highly personal. But a common rule of thumb is to create an emergency fund that has enough money to cover three to six months of living expenses. You may need more or less, depending on your situation.

If you already have a decent cash cushion, you may next want to think about what large purchases you are hoping to make in the not-too-distant future, say, less than five years.

This could be a downpayment on a home, a renovation project, taking a special family vacation, buying a new car, or any financial step that requires a large infusion of cash.

Then consider using at least some of your bonus check to jump start these savings goals, or add to previously established ones.

It’s a good idea to put money you are saving for a short-term goal (whether it’s a downpayment or an emergency fund) in an account that is safe, earns interest, and will allow you to access it when you need it.

Some options include a savings account at a bank, an online savings account, a checking and savings account, or a certificate of deposit (CD). Keep in mind, though, that with a CD, you typically need to leave the money untouched for a certain period of time.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning 1% APY on your cash!

Invest for the Future

Bonus money can also help you start investing in longer term goals, such as retirement or paying for a child’s education. Using bonus money to buy investments can help you create additional wealth over time.

For example, a lump sum of cash can work wonders in boosting your retirement savings. Even if you’re technically on track for retirement, adding more money to your IRA or 401(k) today can leave you with a larger income stream when you’re older. If you’re already contributing to these accounts, be aware of the annual limits.

You can contribute to your retirement using your bonus in a couple of ways. Many companies will automatically deduct from your bonus for your 401(k) at the same rate as usual.

You can also ask your company in advance if you can have a special withholding for your bonus. You may be able to fill out a form (or go onto the company portal) to designate up to 100 percent of your bonus to your 401(k).

If you can’t direct that money to your 401(k), and you’re eligible for an IRA, consider maxing that out instead.

Either one can help get you closer to a great retirement–and may also help you save significantly on taxes in the short term.

People who have kids may want to consider putting some bonus money toward starting, or adding to, a college savings account, such as a 529 plan (which in some states can offer tax benefits).

For financial goals outside of retirement, you may want to look into opening a brokerage account.

This is an investment account that allows you to buy and sell investments like stocks, bonds, and mutual funds. A taxable brokerage account does not offer the same tax incentives as a 401(k) or an IRA, but is much more flexible in terms of when the money can be accessed.

How much of your bonus you should put towards long-term investments is an individual decision that will depend on your current financial circumstances.

The Takeaway

No matter the size of your hard-earned bonus, it’s a good idea to think about how it can best serve you and your goals in both the short and long term. Some smart ways to use bonus money include getting ahead of high-interest debt, setting up or enlarging your emergency fund, saving up for a large purchase (such as a home), as well as beefing up retirement savings and other long-term investments.

You can mix and match smart spending and smart saving to fit your financial situation. One easy way to do this is to sign up for an online bank account from SoFi Checking and Savings. You’ll earn a competitive annual percentage yield, pay no account fees, and you’ll spend and save — all in one convenient place. Whether you’re saving for something specific or storing cash until you’re ready to invest, SoFi Checking and Savings can help you put that year-end bonus to good use.

Help your money work harder for you with SoFi.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.

The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit can earn up to 4.20% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 4/25/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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Source: sofi.com

Apache is functioning normally

May 19, 2023 by Brett Tams

If you have a savings goal that’s coming up in the not too distant future — such as the downpayment on a home, a bathroom reno, or plumping up an emergency fund — you may want to consider some good short-term savings options.

There isn’t a hard and fast definition of short-term savings, but it’s typically considered to be money you want to use in five years or less.

While there are a number of options for short-term savings, one of the best places to start stashing cash for a short-term goal can be a savings account. They can offer safety (so you shouldn’t lose any money), liquidity (allowing you to access money when needed), and growth (meaning they are interest-bearing).

But some of these accounts offer more liquidity and higher interest than others. With a little reading and research, you can start socking your cash away in the right place — and start moving closer to those short-term savings goals.

Should You Invest Short-Term Savings?

Depending on your short-term savings goals, a savings account may be a wise move. One significant downside to any cash savings account is that they tend to have relatively low-interest rates.

You might however wonder: Should I invest this money in stocks or a mutual fund in order to meet my short-term goals more quickly?

Generally speaking, for short-term money, your goal is not necessarily to maximize returns. It is to control the risk — to keep it safe — so that the money is available when it’s needed.

While everyone’s risk tolerance is different, the downside to investing in the market is that you might lose money in the short term. Investment returns start to “smooth out,” or return their average yield, over longer periods. Shorter periods tend to be volatile and unpredictable — especially in the stock market.

cost of living. For money that isn’t needed for many years to come, it can be a smart idea to consider investing to grow beyond inflation.

If you’d prefer to avoid risk with your short-term savings, here are options to consider.

Recommended: 5 Types of Savings You Should Consider Having

Option 1: Online Savings Account

Online-only savings accounts, also sometimes referred to as high-yield savings accounts, are an increasingly popular option for short-term savings. As their name implies, these banks or financial institutions only operate online. Here’s the scoop:

• That means no brick-and-mortar locations and no chatting up a banker face-to-face with employees. The upside: When you compare accounts offered by traditional banks vs. online banks, the latter typically pass the savings onto their clients in the form of a higher annual percentage yield (APY).

• A potentially higher rate of interest isn’t the only reason to use online-only savings accounts. The websites and mobile apps for online accounts essentially serve as storefronts, so online financial institutions often devote lots of resources to make sure they’re optimized and easy to navigate.

• Additionally, many online-only institutions don’t have monthly account fees, which can be a real burden for those at the start of their savings journey. (For example, some traditional banks might charge a fee when you balance drops below the minimum.)

• Banking online doesn’t mean you have to forgo the conveniences of your neighborhood bank. You can typically still do all of the important banking duties, such as depositing checks (via mobile deposit, or snapping a picture of the check on your phone), moving money back and forth between accounts, and speaking with a customer service rep.

In the past, most online savings accounts were required by the Federal Reserve to limit withdrawals to six times per month. These rules are evolving; post-pandemic, some banks dropped this rule. Before you sign up, you’ll want to understand the rules for accessing your money.

Also, while online banking is now considered mainstream, it’s always smart to do a little background research before you open an online account. You may want to check, for instance, to make sure an institution has Federal Deposit Insurance Corp (FDIC) coverage, a government-guaranteed program that protects your money.

Option 2: Certificate of Deposit

A certificate of deposit (CD) is a savings account that holds a specific and fixed amount of money, and for a designated period of time, such as six months or three years. In exchange for the deposit, the bank pays a fixed rate of interest.

Generally, CDs with longer maturities offer higher interest rates. For example, a bank is typically going to be willing to pay more for a deposit that’s guaranteed for five years as compared to three months.
As a saver, you often get more rewards for the risk.

You may also want to keep in mind that the interest rate on a CD is locked in at the point of purchase, as opposed to the interest rate in a savings account (both traditional and online-only), which may fluctuate.
If you’re interested in locking in a certain rate, you may want to consider a CD. (Although be aware that you would be locking yourself into a lower rate, if rates rise.)

While savings accounts are designed to provide regular access to your money, CDs are not. Because CDs have a fixed timeframe, there may be a penalty to access the money before the period is over. And in exchange for the lock-up period, you may find that financial institutions pay slightly more interest than online-only savings accounts.

CDs can be a good option for people who don’t need to touch their short-term savings for a certain period of time. And they are typically FDIC-insured.

Option 3: Money Market Account

A money market account (MMA) is like a mix between a savings and a checking account.

These accounts, offered by banks and credit unions, can allow you to write checks (though you may be limited on how often) and may also have a debit card. (Savings accounts, whether online or at a traditional bank, typically do not allow for check-writing.

Returns on these accounts often beat those on traditional savings accounts. Depending on what’s happening in the economy overall, an MMA may be in line with that of an online-only bank account.

However, MMAs sometimes require higher minimum balances than other types of savings accounts. So, this might be a better option for those with more money to save.

MMAs are considered a safe choice since, like other types of savings accounts, they are typically covered by FDIC if held by a bank, and National Credit Union Administration (NCUA), if held by a credit union. (Although, it’s always a good idea to double-check insurance coverage to be sure.)

Keep in mind that MMAs differ from money market mutual funds, which are not FDIC- or NCUA-insured.

Option 4: Cash Management Account

A cash management account (CMA) is a cash account offered by a financial institution other than a bank or credit union. These accounts are designed to merge the services and features of checking, savings, and investment accounts, all into one offering.

While CMAs are typically offered by financial service providers that are not themselves technically classified as banks, they are still usually covered by FDIC deposit insurance like regular bank deposits — often through a partner bank.

Generally, CMAs function similarly to a traditional checking account, yet pay interest that is often higher than most savings accounts.

Some brokerage firms require a large minimum deposit to open a CMA, or may charge monthly fees for anyone under that minimum. Before opening a checking and savings account, it’s a good idea to ask about monthly fees and minimum balance requirements.

Also, since checking and savings account providers automatically “sweep” your unused cash into investments that pay dividends or interest (which maximizes the account’s profitability), you may want to make sure those sweep accounts are low-risk or FDIC-insured.

The Takeaway

Short-term savings is money that you likely will need in the not too-distant future, such as within two to five years.

There are a number of options for short-term savings, but some of the safest bets include online savings accounts and CDs, among others. These accounts tend to be low-risk, typically allow you to have access to your money when you need it, and can offer a higher return than a traditional savings or checking account.

If you’re saving for a large purchase (perhaps a wedding or a down payment on a home, consider signing up for a high yield bank account. SoFi’s Checks and Savings Account offers a competitive APY, charges no account fees, and let’s you spend and save in one convenient place.

Start working towards those short-terms savings goals today!

Source: sofi.com

Apache is functioning normally

May 17, 2023 by Brett Tams

Does it seem as if the second you earn money, it goes flying off to pay for food, gas, utility bills, dining out, student loans, and everything else on your plate?

It can be hard to track where your hard-earned cash goes, and that’s where a budget can help. A budget provides a framework to see how much is coming in and what it’s being spent on, and it gives you the chance to recalibrate so you can, say, put more into savings.

Zero-based budgeting is one method that can help you account for every collar so you better understand your cash flow situation. This in turn can help you better manage your money and hit your financial goals.

How Zero-Based Budgeting Works

When building a zero-based budget, your income minus your expenses should equal zero. In other words, with zero-based budgeting, every dollar of your income has purpose.

This doesn’t mean you won’t have any money in your bank account, since you might want to allocate some of your budget to savings. Rather, using this method could help you know exactly how much you will spend, save, and invest in any given month. And depending on your monthly needs, these figures may change or stay the same.

Recommended: How to Switch Banks

How to Build a Zero-Based Budget

As with most budgeting techniques, you might want to start the zero-based budgeting process by making a list of your expenses. Start with your fixed and necessary expenses first, such rent, utilities, groceries, transportation, insurance payments, and debt payments.

You know that these payments have to be covered each month, so you could allocate income to each necessary expense. Tally these expenses and subtract them from your total income. The resulting figure could be the amount available for discretionary expenses.

Next, you could allocate those remaining discretionary funds. These expenses could include money that you pay to yourself to save for short-term goals such as an emergency fund.

Or you might target longer-term goals such as stocking an online retirement account, or other farther-along savings goals, such as a down payment on a house.

Other expenses might include entertainment, clothing, and non-essential items.

Keep in mind that some expenses might be seasonal, such as vacations or holiday gifts. You might want to determine how you’d like to save for these expenses. You may choose to allocate funds in a single month, or it may make sense to set aside a small amount over each monthly period. It might take a little bit of extra planning to figure out how much you’ll need and how to divide up the cost.

Some expenses may also be variable — for example, say you’re hit with an unexpected bill when your car needs a new transmission — and these can be tricky to deal with. One way you could build them into the budget is to have a line item such as “savings for variable expenses” to help you cover them. This line item would be different from your other savings.

A simple example of a zero-based budget for someone who makes $6,000 a month might look like this:

Rent/Housing	$3,500
Utilities	$200
Car payment	$300
Gas	$200
Groceries	$400
Savings	$750
Eating out	$200
Entertainment	$150
Student loan payments	$200
Credit card payments	$100
Total	$6,000

In this example, the person’s income less their total expenses — $6,000 minus $6,000 — equals $0. As mentioned above, every dollar has a job to do.

Finally, remember that with a zero-based budget every dollar should have a purpose. So if at the end of figuring out your expenses, you find yourself with some extra cash, it needs to go somewhere. You might want to put a little extra toward savings or pay off some debt quicker.

But if you don’t allocate the funds, they might get spent. The problem is you may not know where you spent that money, and keeping track of it is the whole point of this exercise.

Ready for a Better Banking Experience?

Open a SoFi Checking and Savings Account and start earning up to 4.20% APY on your cash!

Tracking Your Budget

You might want to keep an eye on your spending throughout the month to make sure you’re sticking to your budget. This process could be dynamic. If you find that you don’t need to spend as much on one budget item one month, you could shift that extra cash into another category the next month.

If you find yourself needing extra money to cover an expense, you could look for places to save. If you find yourself with little wiggle room in your budget and need to add to or boost your existing expenses, you might want to increase your budget with extra sources of income, like a side hustle.

A Zero-Based Budget on an Irregular Income

Many people earn a variable income, whether that means being a seasonal worker or a freelancer whose earnings ebb and flow. A variable income can pose some challenges to building a zero-based budget, but they’re not insurmountable. First, you could consider maintaining a buffer of cash, or a cash cushion, to help cover your expenses as your income expands and contracts.

You could then use your previous month’s budget as a base for the current month, using the buffer to cover any shortfalls. You might want to replenish this buffer when you have extra money in a month. You may also try building your budget based on a low estimate of your monthly income to increase the odds that you’ll be able to stay within your budget.

An irregular income means that you might spend more time adjusting your budget as you income fluctuates.

Recommended: How to Transfer Money

Other Budgeting Strategies to Consider

There are other budgeting methods that may be worth a try. One rule of thumb, called the 50-30-20 rule, allocates percentages of your income to different categories. When using this rule, 50% of income goes to necessities, like housing, utilities, and food. The next 30% of income goes to discretionary spending, and the final 20% is allocated to retirement accounts and savings.

You may also consider a budgeting system known as reverse budgeting, in which you focus on savings goals rather than expenses. To use this method, you might want to determine your short- and long-term savings goals, such as a downpayment on a house, paying down student loan debt, and retirement.

You could figure out how much you need to save for those goals and then automate the savings. The money could be taken from your checking account and put into a savings account each month. You might use the money left in your checking account to pay for necessary expenses first, and the rest you could use however you’d like.

The Takeaway

Budgeting can help you take a closer look at how you’re spending your money and how you want to be spending it. By taking time to work through a budget, you could make sure that your money is going exactly where it needs to go.

Budgeting can also help you stop spending on things that aren’t important to you (things you may not even realize you are spending money on) and can help you fund the things you care about most.

It’s a good idea to find a budgeting strategy that works for you and that you’ll stick with. Budgeting apps can be a good solution to help you track your purchases, and some financial institutions offer excellent ones. An online account like SoFi Checking and Savings is one example: You spend and save in one convenient place and can keep track of your money on the dashboard. What’s more, your money earns a competitive annual percentage yield (APY) and you pay no account fees, both of which can help your money grow faster.

Bank smarter with SoFi.

Source: sofi.com

Apache is functioning normally

May 16, 2023 by Brett Tams

Posted on: April 24, 2018

Anyone who has used a VA loan knows that they usually have the lowest rates available. This is made possible by the VA guarantee, meaning the VA backs the mortgage to ensure lower mortgage rates while not requiring any type of downpayment.

But VA rates are still a type of mortgage rate. This means that they increase and decrease over time.

Also, VA rates and mortgage rates tend to follow similar trends. This is because VA rates are supposed to stay competitive with conventional rates. If conventional rates increase, so much VA rates – and vice versa.

A lot has happened with mortgage rates over the past year, and we can use that information to try and predict what will happen to mortgage rates in the near future. All this information can be used to try and time when you lock-in on low mortgage rates.

Click to check today’s VA rates.

What’s happened in 2018

Mortgage rates have jumped across the board to start the year. The average rate for all closed loans in December of 2017 was 4.28%, according to mortgage giant Ellie Mae’s Origination Insight Report.

By comparison, the average rate for all closed loans in March of this year was 4.69%, a jump of nearly half a percent in just a four-month span.

Of course, VA rates have been lower than this average, but the same thing holds true. The average VA rate at the end of the year was 4.05%, and in March it was 4.50%. It was a steeper increase than the overall average even though more current rates are still well below.

So, what increased mortgage rates? In a large part, rates increased because the economy is growing. Both January and February were huge months for job and wage growth, something that has long been a concern. On top of that, inflation rates have moved closer to the two-percent level that the Federal Reserve wants.

Basically, rates have been going up because the economy has been strong.

Today’s VA rates

With mortgage rates going up, what does that mean for today’s VA rates? Well, the good news is that VA rates (and mortgage rates in general) haven’t increased much over the past month.

Also, there have been a number of pieces of news, such as potential trade disputes, that might affect the economy. In anticipation, rates stopped moving as much.

The thing about mortgage rates is that they never stop moving. While rates could go up today, they could just as easily go down tomorrow. Rates could even start the day higher than they end up because they can move quickly.

It’s also worth noting that different lenders offer different rates, and rates are also dependent on other factors like FICO scores. While the average rate for VA loans last month was 4.50%, plenty of home buyers got an even lower rate.

The best method for determining the rates available to you is to get connected with lenders. These are the people that will actually give you the mortgage rate on your VA loan.

Click to get connected to multiple lenders.

Where will rates go from here?

The big question on everyone’s mind is where mortgage rates will go from here. The short answer is that nobody knows.

If trends tell us anything, it’s that mortgage rates are lowest during the summer and into the fall. We saw this last year when rates started dropping in April and didn’t start picking back up until October. The same thing happened in 2016.

While this could happen again, nobody should assume that rates are going to trend downward. Mortgage rates have been getting higher and higher over the past four years, so there might not be much stopping them from moving even higher throughout 2018.

The best move for VA home buyers is to lock-in on rates when you’re comfortable and ready to buy a home. Low rates are great, but in today’s competitive housing market, getting the perfect home is even better. Besides, with a VA loan, home buyers will have access to lower rates than with any other type of loan, making the entire process more affordable.

Click to begin the home buying process.

Source: militaryvaloan.com

Apache is functioning normally

May 14, 2023 by Brett Tams

Posted on: April 19, 2018

Today’s housing market is red hot. Homes are hitting record prices, and a nationwide shortage of housing isn’t making it easier.

On top of that, most loan programs have specific standards for deciding the home buyers they accept. For most home buyers, this might mean they need a higher credit score or larger downpayment.

Fortunately for VA members, there are hardly problems in today’s market. The VA loan, the main mortgage product available only to eligible members, has plenty of benefits that help home buyer’s in today’s market.

Here are a few reasons why a VA loan can help you get into a new home:

Check today’s VA loan rates.

Lenders are willing to take on more risk

Risk is a big part of the job for lenders, and it’s part of the reason some mortgage applications are rejected.

Lenders often evaluate risk by looking at the:

FICO score, or credit score
LTV, or loan-to-value of the loan
DTI, or debt-to-income ratio

Credit scores

Your credit score is straightforward, but most loan programs require a minimum score. FHA loans, which are well-known for having relaxed standards, require a minimum score of 620. Conventional loans have even higher credit score standards.

VA loans technically have no minimum credit requirement – part of the benefit of it being guaranteed by the VA. Loans with credit scores as low as 580 can get accepted, depending on the lender.

LTV

LTV is the portion of the loan that you’re financing. For example, if you’re buying a home and make a 10 percent downpayment, your LTV would be 90.

Because LTV represents how large of a downpayment is made, it’s an important number to track. According to Ellie Mae, the LTV of all closed loans in March was 79, meaning an average downpayment of 21 percent.

However, VA loans had much different numbers. The average LTV for VA loans was 98, meaning 2 percent down.

This is only possible because the VA doesn’t require downpayments, unlike other mortgage products. In a housing market where home prices may seem out of reach, being able to finance the entire home can make purchasing a home much more affordable.

DTI

Deb-to-income is the ratio between how much debt you have and how much of your income it takes. When lenders evaluate potential home buyers, they tally all their debt (from car payments to credit cards) and put it against their income.

After, lenders take would-be monthly payments of a loan and add it to the DTI calculation. As a result, DTI comes with two numbers: the first which is without a mortgage, and the second which is with a mortgage.

For closed loans in March, the average DTI was 26/39, showing that after the mortgage was approved, the average homeowner’s debt was 39% of their income. For closed VA loans, the average DTI was 26/42, meaning lenders allowed VA borrowers to take on more debt than non-VA borrowers.

All three of these factors were more relaxed for VA loan applicants, showing that it’s easier to get approved for a mortgage with a VA loan than other products – an important edge in a competitive housing market.

Click to get connected with multiple VA lenders.

Lower mortgage rates

On top of the hot housing market, mortgage rates continue to increase. This forces monthly payments higher, and it pushes some homes out of affordability.

VA members get another benefit here because VA loans tend to have the lowest mortgage rates out there. In March, the average VA loan had a rate of 4.50%. The next lowest, conventional loans, had an average rate of 4.72%. That’s a huge difference, especially when spread over 30 years.

These low rates help keep homes affordable, and it gives VA home buyers more houses to choose from when they shop. With low housing inventory in most areas, this is a helpful advantage.

Buying fixer-uppers

Not all homes on the market are move-in ready. With a VA renovation loan, VA home buyers can purchase these homes and get a loan to fix the homes up.

The VA renovation loan allows home buyers to borrow up to $35,000 on top of the value of their VA loan. This money goes toward repairs and improvements, making sure that the home fits the VA’s standards.

Fixer-uppers take more time to move in to, but many home buyers in today’s market can’t afford to buy a home and fix it. They also struggle to find financing to pay for both.

There are plenty of benefits with a VA loan, and many of them help home buyers in today’s competitive market. With summer just around the corner, many people are going to be looking for a new home – and a VA loan might give them the best chance at finding the right place.

Check your VA loan eligibility.

Source: militaryvaloan.com

Apache is functioning normally

May 9, 2023 by Brett Tams

With a Friday deadline looming over lawmakers’ heads, the latest stimulus package seems closer than ever. But nothing has been signed just yet. The $900 billion stimulus proposal didn’t originally include direct payments to Americans, though the latest word from Congress tells us checks will be included after all — even if they’re only half of the CARES act counterpart.

As stimulus checks have been one of the largest pain points for lawmakers, the addition means we very well could have something tangible by the weekend. This is just in time for the 10 million people whose unemployment benefits would end on December 26 and the millions who would face eviction without aid.

Here’s what’s expected to be included

Aid for schools and vaccine distribution is included, though the exact breakdown isn’t quite clear. Here’s what we know so far.

Stimulus checks — While it was a late addition, one time direct payments to Americans is in the current plan. It’s just not at the level of the CARES act. Americans are expected to get $600, $700 if we’re lucky.
Unemployment benefits — $300 weekly unemployment aid is included — a 50% decrease from the $600 weekly benefits offered by the CARES act. The long-term unemployed also see some relief with the extension of extra state unemployment benefits.
Business aid — More than $300 billion is pledged to business support, including another round of paycheck protection for struggling small businesses.
Renters and food assistance — $25 billion is allocated to help renters say in their homes. Food assistance is also included.
Postal service — $10 billion has been allotted to bail out the U.S. Postal system.

[ Read: Latest PPP Data Raises Questions About the Distribution of Loans ]

What’s the holdup?

It’s the same old story, Democrats and Republicans can’t agree on what should be included and prioritized in the package. We seem to be over the stimulus check hurdle, though it did come at the cost of a larger check.

The original $908 billion bipartisan stimulus package proposal included $106 billion for state and local governments — a provision that Republicans would not pass. So that slowed things down. Democrats were able to secure help for cities through funds for transportation, schools and vaccine distribution; it’s just not as much as they originally pushed for. Democrats opposed the liability shield for businesses and universities that may face coronavirus-related lawsuits, so both sides have been forced to compromise.

[ Read: 11 States Stepping up to Supplement Unemployment Benefits ]

The present solution has been to split the original plan into two smaller bills — allowing them to delay the controversial topics without holding up the majority of the package. The first bill will total $748 billion and include measures like the Paycheck Protection Program and Unemployment benefits.

Too long, didn’t read?

The string of swapped proposals seems to be coming to an end — with barely any time to spare to avoid a government shutdown. But there are things lawmakers still can’t agree on. Despite it all, Biden remains eager for aid and has said this package is “an important downpayment” for the additional aid that will come in 2021.

We welcome your feedback on this article. Contact us at [email protected] with comments or questions.

Image Credit: Tasos Katopodis/ Getty Images

Source: thesimpledollar.com

How much money should you have saved by 25?

Save a Total of $20000

Save at Least 50% of your Annual Expenses

How much money should you have saved by age 30 for retirement?

Save at a Minimum of 10% of your Income

What should your net worth be at 25?

What is the average savings rate for people in their 20s?

how much should I have in savings at 25?

What are the different savings goals that people in their 20s should have?

What are the list of ways to save money?

1. Use Budget Percentages as a Guide

2. Track your spending

2. Use AI Powered Savings Apps and put your savings on autopilot

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8. Use credit cards sparingly

9. Use a budget

10. Invest for the long term

What is the best advice to save money by 25?

Simple Tips to Save Money by 25

What is the average savings rate for people in their 20s?

Savings Tools to Build Cash Fund Savings

Pay yourself first

Save Consistently

Trim Spending

Use Cash Windfalls Strategically

Save Increases in Income

Make Saving a Habit

FAQs

How to Save for a retirement

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Savings Steps for your Twenty-Something Self

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