A former high-ranking employee at nonbank The Change Company CDFI (TCC) filed a lawsuit in California accusing the company of retaliation after he notified executives of employees “mischaracterizing loans” to apparently skirt federal reporting requirements.
The lawsuit, filed in Orange County, alleges that Adam Levine, the chief of staff to CEO Steven Sugarman, began reporting illegal activity by the company’s employees in February 2023 to Sugarman and other executives and board members.
However, rather than investigating the complaints, the company’s leadership terminated Levine, he claims.
A representative for The Change Company and Levine’s attorneys did not return requests for comment.
Levine, who was an assistant White House Press Secretary under President George W. Bush and a vice president at Goldman Sachs before starting at the lender in 2021, listed several alleged violations related to lending practices.
The list includes potential irregularities regarding the Community Development Financial Institutions (CDFI) regulations, specifically a rule requiring lenders to provide annual documentation attesting that 60% of their loans go to the target markets certified by the U.S. Department of Treasury.
“Plaintiff has documented that TCC falsifies information on its annual certification by mischaracterizing its loans. This includes mischaracterizing the race, ethnicity, and income level of borrowers,” attorneys for Levine wrote in the lawsuit.
The lender claims that since becoming a CDFI in 2018, it has funded over $25 billion in loans to more than 75,000 families.
The lawsuit cites potential securities fraud when investors are induced to purchase the lender’s loans in the secondary market based on the false representations on the borrowers’ profiles. Investors looking to support low-income families would not purchase the lender’s loans if they knew they were provided to wealthy individuals or celebrities, the lawsuit states.
In its seventh securitization on June 14, The Change Company attracted 16 investors to a $306 million offering, including money managers, banks, insurance companies, and private funds. The loans in the pool had a weighted average FICO of 740, LVT of 71.1%, 43 months of reserves, and an 8.72% note rate, the lender said.
Other allegations made by Levine include after-hours parties at the lender’s premises and recordings of private conversations at the company’s Pacific Palisades office. The accusations include Steven Sugarman and his older brother, Jason Sugarman, who founded The Change Company.
Levine claims Steven Sugarman tried to block a lawsuit when he instructed the plaintiff to leak confidential documents to a journalist doing a profile on short-seller Carson Block, with whom Sugarman has civil litigation.
Meanwhile, Jason Sugarman potentially violated Securities and Exchange Commission (SEC) orders by associating with the securities industry – which he has been prohibited from since February based on a consent judgment regarding a scheme to defraud Native American pension funds, the lawsuit contends.
“In light of Jason Sugarman’s known work at TCC, Plaintiff strongly encouraged Steven Sugarman to appoint an outside law firm to certify to regulators, investors, shareholders, and other stakeholders that Jason Sugarman had no material business relationship with TCC,” the lawsuit states. “Steven Sugarman refused to do so and retaliated against Plaintiff by stating that Plaintiff’s business dealings should be investigated.”
Levine claims he brought his concerns to the appropriate regulatory authority on March 5 and his attorney informed the company the following day. The plaintiff claims he was terminated weeks later without bonus wages and equity compensation that he was “rightfully owned.”
Kris and I don’t have kids. We have cats. We have four of them.
Our “children”: Nemo, Simon, Maxwell, and Toto.
We’d have more, but Kris won’t allow it. She says I’m in danger of becoming the Crazy Cat Gentleman. On the whole, I cannot imagine my life without these animals. They bring us joy and fulfillment, and the cost is minimal.
Under normal circumstances, our four cats cost us a total of about $750 a year, which is roughly fifty cents per animal per day. That’s a bargain! The problem, of course, comes from abnormal circumstances. Once every three years or so, one of the cats costs us a small fortune.
In 2001, our beloved Tintin died of diabetes. In 2004, Toto suffered from heat stroke. In 2006, Nemo developed mysterious lesions on his legs. And this year, Simon took his turn at the veterinarian’s office. Last weekend, he became lethargic, and he stopped eating or drinking.
I took Simon to the vet on Friday, where they administered a subcutaneous fluid injection to hydrate him. Total cost? $224.70. Unfortunately, his condition did not improve over the weekend. On Monday, Simon and I returned to the vet. They kept him for the entire day, running tests and taking x-rays and, much to his chagrin, force-feeding him with a syringe. Total cost? $422.23.
Nursing Simon through his illness (“fever of unknown origin”, which seems to be vet-speak for “I’m stumped”) cost us $646.93, or nearly our entire yearly budget for all four animals!
The High Cost of Cats and Dogs
Last year, The New York Times ran an article about the financial implications of pet ownership. Alina Tugend wrote:
The American Pet Products Manufacturers Association asked 580 dog owners and 402 cat owners to record the amount they spent in the last 12 months on specific pet-related items. The dog owners spent almost $2,000; cat owners about $1,200. If you want a real deal, small animals came in at just under $300.
In 2001, Steph Bairey at FamilyResource.com researched the estimated costs of common pets. Though she doesn’t explain her methodology, she found that:
Dogs cost about $730 per year.
Cats cost about $355 per year.
Rodents cost about $160 per year.
A tank of fish costs about $200 per year.
Birds cost about $770 per year.
Lizards cost about $745 per year.
Snakes cost about $520 per year.
These numbers seem high to me. $355 per year per cat? (Or $1200 per year, according to The New York Times?) Each of ours runs about $200. $520 each year for a snake? Kris and I owned a snake for many years. Sanderling ate one $2 mouse every fortnight. With some very minor miscellaneous costs, she might have cost us $60 per year.
Worth the Cost
Some personal-finance bloggers have written that pets don’t make economic sense. Maybe so, but neither does television — and neither do children. But not every choice is made based on the economics of the situation. Some things transcend money. For me, pet ownership is one of those things.
Sidenote: While researching the cost of pet ownership, I kept coming across references to pet insurance — health insurance for dogs and cats. Is this for real? I can’t imagine buying such a policy. Do any of you insure your pets? Is it cost effective?
I’m pleased to report that Simon is doing much better. He had the vigor to outrun a stray dog this afternoon (by climbing 20 feet up our redwood tree). We don’t regret spending $646.93 on his medical care last week, but the process made me think: How much is too much to spend on the health of an animal? Kris and I are fortunate to have savings and solid incomes. We can afford to take care of our animals. But what if it would have cost $2,000 to help Simon? Or $12,000? How much is too much to spend on a cat?
Northwestern Mutual Recognized Among the “Best Companies for Diversity” by Black Enterprise Magazine MILWAUKEE, July 3, 2023 /PRNewswire/ — An unwavering commitment to respect and inclusion is core to Northwestern Mutual’s culture – a quality that earned the company acclaim from one of the nation’s premier news outlets for Black and African American business professionals. … [Read more…]
Principal received an honorable mention on the list of Good Financial Cents Best Life Insurance Companies.
They are very solid financially and are a great option if they have the best rates when you run your quotes.
The History of Principal Life Insurance Company
The Principal Financial Group – also known as The Principal – was founded in 1879. This global investment management leader has been offering individuals and companies financial and insurance solutions for more than 135 years.
Since its founding, the company has grown considerably – today having more than 14,800 employees worldwide – of which roughly 10,000 are in the United States alone. The Principal is a stock company, and it trades on the New York Stock Exchange under the ticker symbol PFG.
Principal Life Insurance Company Review
Although it is known worldwide, the Principal is bound by one common purpose, and that is to provide its customers with the financial tools, resources, and information that they require to live the best lives that they can.
The Principal offers insurance, investment products, and retirement plans to both individuals and businesses. This large insurer currently has more than 19 million customers around the globe in 18 countries, and it holds more than $547 billion of assets under management. Its products and services are provided by a diverse network of companies and advisors.
This carrier has been noted as one of the World’s Most Ethical Companies, as well as One of America’s Best Employers, and the #3 Greenest CRE Company. It has also attained some additional accolades, including:
#1 Provider of Defined Benefit Retirement Plans
#1 Record Keeper of Employee Stock Ownership Plans
#1 Provider of Nonqualified Deferred Compensation plans
The Principal provides a great deal of information about its products and services on its website. Customers can also reach a customer service representative if they need help or if they have a question or a concern. A representative can easily be reached via a toll-free phone line, as well as via email.
Financial Strength and Ratings of Principal Life Insurance Company
The Principal has an excellent reputation as far as paying out it claims to its insurance policyholders.
Because of this, it has been provided with very high ratings from the insurer rating agencies.
These include the following:
A+ (Superior) from A.M. Best
AA- (Very Strong) from Fitch
A1 (Good) from Moody’s Investors Service
A+ (Strong) from Standard & Poor’s
Life Insurance Products Offered by Principal Life Insurance Company
Principal Life Insurance Company offers both term and permanent life insurance solutions. This can help its customers to better plan for their specific coverage needs when planning for the protection that they require – regardless of the stage of life that they are in.
Term Life Insurance Coverage through The Principal
With term life insurance, pure death benefit only coverage is provided, without any cash value or investment build up included in the policy. Because of that, term life insurance can often be more affordable than permanent coverage – primarily if the applicant is young and in good health. This can allow for the purchase of a larger amount of protection at an affordable premium price.
Term life insurance is often thought of as being “temporary” life insurance protection. This is because it is purchased for certain periods of time – or “terms” – of coverage such as for ten years, 15 years, 20 years, 25 years, or even for 30 years. However, when the term of coverage expires, it is necessary for the insured to purchase a new policy, at their then-current age and health condition, if they want to remain insured. However, in some cases, a term life insurance policy may offer a conversion feature whereby the insured may convert his or her policy over to a permanent form of life insurance. The Principal offers this feature on many of its term life insurance policies – and the insured will not need to provide additional evidence of insurability.
Permanent Life Insurance Coverage Through the Principal
Permanent life insurance coverage provides death benefit coverage, and it also has a cash value component as a part of the policy. The death benefit in a permanent policy will last for the remainder of the policy holder’s life. So, unlike a term policy, there is no time limit. As long as the premium is paid, the policy will remain in force.
The cash value in a permanent life insurance policy is allowed to grow on a tax-deferred basis. What this means is that there is no tax that will be due on the growth of the funds within the cash value until the time that the funds are withdrawn.
The Principal offers three key types of permanent life insurance policies. These include the following:
Universal Life Insurance Coverage
With universal life insurance coverage, there is death benefit protection, as well as cash value build up. A universal life insurance policy is flexible regarding the premium payments, as well as its death benefit protection. It can also provide flexibility concerning when the policyholder pays the premium (within certain guidelines).
With this type of life insurance policy, the cash value can accumulate based upon a floating rate of interest – yet it will have a minimum rate guarantee. In some cases, these policies may also include a secondary interest rate guarantee for even more security.
Variable Universal Life Insurance Coverage
Variable universal life insurance coverage also offers a death benefit, along with a cash component. However, the cash component policyholder be more aggressive by choosing from a variety of different market linked investments. This can allow funds to grow a great deal more, based on market performance. It can also, however, mean that there is more risk involved. With that in mind, it is important to be aware of risk tolerance before moving forward with a variable insurance product.
As with other types of permanent life insurance, a variable universal life insurance policy will also allow the policy to obtain the benefit of tax-deferred growth within the cash component. In addition, the policy holder will be allowed to either borrow or to withdraw the funds that are in the cash component for whatever need he or she has if they choose to do so.
Also, with this type of policy, the policyholder is allowed to convert the cash value to an annuity for income that he or she cannot outlive. This can help to alleviate the worry in retirement about running out of income – a fear that is held by many retirees today due in large part to our longer life expectancies.
Survivorship Life Insurance Coverage
A survivorship life insurance policy will cover two lives rather than just one. This can be less costly than purchasing two separate life insurance policies. The survivorship plans that are offered by The Principal will pay at the death of the second insured individual. These policies are frequently used for estate planning purposes to leverage various tax deductions.
Other Coverage Products Offered
In addition to life insurance, the Principal Life Insurance Company also offers other types of insurance coverage products. These include the following:
Disability Income Protection
A disability income insurance policy from The Principal can help an individual to protect their financial health from the loss of his or her income due to an injury or an illness.
While many people may think that their most valuable asset is their home or their retirement plan, it is their ability to earn an income. This is because, without the ability to earn, most other assets would be impossible to obtain or to keep.
It is estimated that one in four people who enter the workforce today will become disabled before the time that they retire. Therefore, protecting their income with a disability income policy can be a way to ensure that living expenses will still be paid over time.
With Principal, you can get a plan with as much as $20,000 in monthly benefits. One unique factor is you don’t have to be totally disabled to receive the benefits.
You can choose elimination periods as short as 30 days and benefit periods as long as 5 years. The plan is guaranteed renewable and non-cancelable, which means you don’t have to worry about losing protection.
Principal has a handful of benefits they include with their disability plan at no cost to the policyholder. One unique advantage of Principal’s plan is the death benefit, which will pay out a lump sum if the policyholder passes away while claiming the plan.
They also include a waiver of premium rider, a benefits update rider, future benefit increase rider, and several more benefits.
They also sell several additional riders you can add. They have four options to choose from:
Because of the rates and the benefits of the policy, Principal is one of the most popular options for disability coverage.
Retirement Savings Protection
In addition to just becoming disabled and not being able to earn an income, contributing to a retirement savings plan can also stop if a person is unable to work. Therefore, with retirement savings protection, contributions into retirement savings can continue while a person is not able to work because of a disabling illness or injury. With The Principal’s retirement savings protection, policy holders can insure “what could be” from “what if.”
Annuities from Principal Life
Buying an annuity is an excellent way for you to supplement your retirement income. If you’re shopping for annuities, it’s important that you find the perfect company for you. On top of all of the insurance products, Principal Life also has several types of annuities that they sell. They have four different types that you can invest your money in, depending on what your investment risk is. The four types are:
With a fixed annuity, you can choose how your money grows and select from a couple of different benefits. These annuities allow you to choose from a quick death benefit, emergency access, and IRS minimum distribution notification.There are two separate types of income annuities that are slightly different. Principal has Immediate Income Annuities and Deferred Income Annuities. The Immediate Income Annuities are designed for those that are looking to start getting income in retirement in the next 12 months. As you can probably guess, Deferred Income Annuities are for those that are looking for guaranteed income in the next 13 months or longer.
The next time is the indexed annuity. These annuities are going to give you investment safety, but without sacrificing the potential for more growth. The rates are linked to one or more equity-based indices.
Variable annuities allow you to save for retirement by getting growth that is based on market performance with different kinds of payout options. They have flexibility withdrawal options with tired surrender charges. They also offer some living benefit riders that can protect you from any risk of the market crashing and give you some additional benefits before you start taking withdrawals. A unique benefit that Principal offers with their variable annuities is the Deferred Income Rider, which lets you transfer money from your accumulated value to create more income payments, without having to pay any additional fees.
Average mortgage rates fell just a little last Friday. But last Thursday’s massive jump means they finished that week — and last month — higher than when they started them.
First thing, it was looking as if mortgage rates today might again barely budge. But that could change as the hours pass.
Markets will be closed tomorrow for the Independence Day holiday. And we’ll be back on Wednesday morning. Enjoy your celebrations!
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.129%
7.158%
Unchanged
Conventional 15-year fixed
6.638%
6.651%
Unchanged
Conventional 20-year fixed
7.506%
7.558%
Unchanged
Conventional 10-year fixed
6.997%
7.115%
Unchanged
30-year fixed FHA
6.672%
7.303%
Unchanged
15-year fixed FHA
6.763%
7.237%
Unchanged
30-year fixed VA
6.729%
6.937%
Unchanged
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
Recent reporting in the financial media makes me think mortgage rates are unlikely to see any significant and sustained falls until at least the fourth (Oct.-Dec.) quarter of 2023 and probably not until 2024.
And that’s why my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time last Friday, were:
The yield on 10-year Treasury notes edged down to 3.82% from 3.85%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were mostly lower. (Good for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices inched up to $70.61 from $70.25 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,930 from $1,919 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 84 from 80 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might again hold steady or close to steady. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Currently
To see sustained lower mortgage rates we need to see the inflation rate halving, the economy weakening, and the Federal Reserve stopping hiking general interest rates. And none of those looks likely anytime soon.
Some progress is being made on inflation. But not enough.
And the economy is showing extraordinary resilience. Last week’s gross domestic product (GDP) headline figure was 50% higher than many expected.
Meanwhile, the Fed seems highly likely to hike general interest rates by 25 basis points (0.25%) on Jul. 26. And there may well be at least one more increase after that in 2023.
Recession
As I’ve written before, our best hope for lower mortgage rates is a recession. That should weaken the economy, reduce inflation and perhaps cause the Fed to at least hold general rates steady.
Economists have been predicting an imminent recession for ages. And, not so long ago, I bought that line and was expecting one at any moment.
But, now, many big hitters aren’t expecting a recession until 2024. Yesterday, CNN Business listed a few of those making that prediction:
Bank of America CEO Brian Moynihan
Vanguard economists
JPMorgan Chase economists
Of course, others disagree, as economists always do. Some think a recession will still land later this year. And others believe there will be no recession at all.
This week
There are a few reports this week that could send mortgage rates up or down a bit. But Friday’s jobs report is the one most likely to have a decisive impact.
The consensus among economists is that the report will show 240,000 new jobs created in June compared with 339,000 in May. Anything lower than 240,000 might see mortgage rates tumble, which would be great.
However, we’ve witnessed economists making similar predictions for employment several times over recent months. And, nearly every time, their forecasts have greatly underestimated the resilience of the American labor market and therefore the American economy.
Of course, they might be right this time. Let’s hope so. But I shouldn’t hold my breath if I were you.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jun. 29 report put that same weekly average at 6.71%, up from the previous week’s 6.67%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert mortgage rate forecasts
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were published on May 23 and the MBA’s on Jun. 21.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.4%
6.2%
6.0%
5.8%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
If you’re a small business owner, one of your top priorities is surely to save money on unavoidable expenses. Purchasing business supplies online at Amazon.com is one of the ways many small business owners also save time.
With the Amazon Business Prime Card from American Express, you can do both while earning up to 5% back on your Amazon purchases. Or you can forgo the hefty cash-back rate and receive 90 days of interest-free financing on your Amazon charges instead. And for purchases made anywhere else American Express is accepted, you can earn unlimited 2% back, regardless of your Prime membership status.
But this isn’t a premium rewards credit card, and it doesn’t offer you any travel rewards or benefits. It’s a simple card designed to save you the most money on your Amazon charges and other business expenses, and not much else.
What Is the Amazon Business Prime Card?
The Amazon Business Prime Card is a co-branded small-business credit card that’s accepted anywhere American Express cards are. When you use it to shop at Amazon.com, Amazon Web Services (AWS), Amazon Business, or at Whole Foods Market, you can earn 5% back on your purchases with a valid Amazon Prime Business membership or 3% without one.
Alternatively, you can choose to receive 90 days of interest free financing on those purchases. Either way, there’s no annual fee or foreign transaction fee.
This card also offers 2% back at restaurants, gas stations and wireless phone services purchased directly from service providers. You earn 1% back on all other purchases.
Additional benefits are limited but include extended warranty coverage and a purchase protection plan that covers losses from theft or accidental damage. The card’s online dashboard features enhanced data views that show purchases listed by item and are easy to download.
What Sets the Amazon Business Prime Card Apart?
This card has several positive features that distinguish it from its competitors.
5%/3% back or 90 days of financing. It’s great to have this choice. With it, you can maximize your rewards or minimize your interest charges, whichever is more important to you at the time.
Additional cash back outside of Amazon. It’s competitive to earn 2% back at restaurants, gas stations and for wireless phone services expenses.
Amazon Business Enhanced Data Views offer more insights into your expenses. The tight integration between Amazon and American Express allows you to get a better look at your expenses and where you might be able to tighten up.
Key Features of the Amazon Business Prime Card
This small-business credit card offers a simple rewards program and a few key benefits beyond that.
Sign-Up Bonus
You earn a $125 Amazon.com gift card upon approval. There’s no minimum spending requirement, so this is basically a lock to earn.
Earning Rewards
If you have a valid Amazon Prime Business membership, you earn your choice of 5% back or 90 days of interest-free financing on purchases from the following vendors:
Amazon.com
Amazon Web Services (AWS)
Amazon Business
Whole Foods Market
You only earn 5% rewards on your first $120,000 of spending each calendar year, which adds up to $6,000 in potential annual rewards at this tier. If you exceed the $120,000 spending cap in a given year, you can still take advantage of 90-day interest-free financing on eligible purchases.
If you don’t have a valid Amazon Prime Business membership, you earn 3% back on the first $120,000 in eligible spending. The 90 days’ interest-free financing option still applies.
Beyond the 5%/3% tier, this card earns 2% back at restaurants, gas stations, and on eligible wireless phone service purchases. It earns 1% back on all other purchases.
Redeeming Rewards
You can redeem your rewards points to save on items at checkout on Amazon.com and Amazon Business (U.S.). You can also apply them as statement credits toward prior purchases. Either way, they’re worth one cent each at redemption.
Important Fees
There’s no annual fee or foreign transaction fee. Other fees may apply.
Credit Required
This card requires good or better credit to qualify. If your FICO score is much below 700, or your personal credit history is limited, then you’ll likely have trouble being approved.
Pros & Cons
This card has several key advantages and disadvantages to understand before you take the time to apply.
Generous, easy-to-earn sign-up bonus
Choose between up to 5% cash back or 90 days’ interest-free financing on eligible purchases
Earn unlimited 2% back in several spending categories
No recurring card fees
Annual spending cap on 3%/5% rewards tier
Few perks beyond the rewards program
Pros
The Amazon Business Prime Card has a generous, flexible rewards program without an annual fee.
$125 gift card upon approval. This is a relatively generous sign-up bonus for a no-annual-fee credit card, and it’s extremely easy to earn. There’s no early spend requirement.
Up to 5% cash back on eligible purchases. With an eligible Amazon Prime Business membership, you can earn 5% back on eligible spending with Amazon companies, including Amazon Business, AWS, Amazon.com and Whole Foods Market. Otherwise, you earn 3% — still a nice return.
Option for 90 days’ interest-free financing. If you prefer, you can receive 90-day terms on your purchases instead of 5% cash back.
Broad 2% cash-back categories. Outside the Amazon ecosystem, you can earn 2% rewards on purchases at restaurants, gas stations and wireless phone services purchased directly from service providers.
No recurring card fees. This card has no annual fee or foreign transaction fees, so it has no carrying costs and no penalties for international business travelers.
Cons
Unlike some popular business credit cards, the Amazon Business Prime Card is light on nonrewards perks and has a spending cap on its top rewards tier.
Spending cap on 5%/3% rewards tier. Your 5%/3% rewards earning potential is limited to $120,000 worth of purchases in a year, or $6,000 in rewards earned in this tier. Fortunately, you can take advantage of 90-day interest-free financing at any time.
Few value-added perks. This card has no real travel perks or travel insurance coverage, so it’s not ideal for users seeking truly generous benefits.
How the Amazon Business Prime Card Stacks Up
This card’s closest competitor may be the The Costco Anywhere Visa® Business Card by Citi. While Costco offers online sales, it doesn’t have nearly the selection that Amazon.com does. On the other hand, Costco has hundreds of warehouse stores around the country, a physical footprint that Amazon can’t match.
Amazon Business Prime
Costco Anywhere Business
Annual Fee
$0
$0 (with your paid Costco membership)
Sign-Up Bonus
$125 Amazon Gift Card
None
Rewards Rate
Up to 5%
Up to 4% on gas and EV charging
0% Intro APR
90 day terms on Amazon purchases, in lieu of 3%/5% rewards
None
Foreign Transaction Fee
None
None
Credit Needed
Good or better
Good or better
Final Word
The Amazon Business Prime Card is a great way for small business owners to earn rewards worth 5% on their purchases. By far, that’s the biggest strength this card has. It offers few other perks and benefits.
Still, if your business spends a lot with Amazon companies like Amazon.com, AWS, and Whole Foods, this card makes perfect sense. Especially with no annual fee.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
The Verdict
Our rating
Amazon Business Prime Card
This small business card is ideal for companies that spend heavily at Amazon.com, Amazon Web Services (AWS), Amazon Business and at Whole Foods Market. It offers your choice of up to 5% back or 90 days of interest free financing on those purchases, both of which are very hard to beat. It even offers a competitive 2% back on other common business services.
Just don’t expect all the perks and benefits of a premium small-business credit card. This is not a luxury product.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Jason Steele is one of the nation’s leading experts in credit cards and travel rewards since 2008. Jason is also the founder and producer of CardCon, which is The Conference for Credit Card Media. Jason lives in Denver, Colorado where he enjoys bicycling, snowboarding and piloting small airplanes.
Unless you come by a huge influx of cash either by winning the lottery or through an inheritance; a mortgage remains the most affordable way to own a home. Among the tools that lenders use to determine your eligibility for a home loan is debt-to-income ratio, or DTI.
The ratio is used to determine how much of your income can go towards monthly mortgage payments as compared to other monthly debts that your income settles. Read on to find out how to calculate DTI and what ranges are desirable according to the industry standards.
What is a Debt-to-income Ratio & How is it Calculated?
A debt-to-income ratio is a number used to measure a person’s ability to manage their debt. This number is calculated using two key pieces of financial information: your debt and your income. By taking your total monthly debt and your total monthly income, which includes any money earned prior to taxes and deductions, you can determine your debt-to-income ratio.
In another example where the total debts are higher than $1,500 and income is still $4,000, you see an increase in the DTI. If you have monthly debt payments equal to $2,000, and your gross monthly income equals $4,000, your debt-to-income ratio will be 50%.
STEP 1. Determine your monthly liabilities. These include:
Monthly Home-related costs – If it is your first mortgage this will be sum of all monthly expenses that go towards paying your rent. It has to be expressed as a monthly amount i.e. if you pay an annual sum then divide it by 12. Similarly if you pay it quarterly, divide by 4. Add in the proposed or expected monthly payment for the mortgage you are considering.
Also included in this will be other housing costs such mortgage insurance, real estate taxes and homeowner’s association payments. In case you are a homeowner in the market for a second mortgage, the monthly payments you make towards your first mortgage will constitute the cost.
Although you could be paying monthly for utilities like power and gas, they are not taken into account in this summation. Same goes for food, health and car insurances, phone bill, your taxes and cable bill.
Monthly loan payments – A sum of all monthly loans that are deducted from your pay and show on your credit report. These include monthly remittances towards car loan, student loan, credit union and personal bank loans.
Monthly credit card payments – This is the sum of minimum payments that you make for each credit card. It excludes credit card debt that you settle monthly in full.
Other monthly obligations – This could be any other line of credit that involves financing. Monthly child support or alimony payments fall under these obligations.
This refers to your total pay before any deductions are made or simply pre-tax pay. This comprises of;
Basic wages or salary.
Bonuses and commissions
Alimony and or child support.
Income from investments (must be verifiable via your tax returns)
Tip: If you draw a salary, bonus or commission annually then divide it by 12 to arrive at its monthly value.
How to Calculate the Front-end Ratio
This is the home-related costs divided by your monthly gross income. It shows the amount of monthly income that can be freed to service the house loan you propose to get. To put this into context, suppose your monthly gross income is $6,000 and total monthly home-related costs are $1,500.
Front-end DTI = ($1500/ $6000) * 100 = 25%
How to Calculate the Back-end ratio
When lenders speak of DTI, this is mostly what they have in mind. It’s a ratio that shows the amount of your income that goes towards settling all your debts. It’s the sum of all monthly debts divided by your monthly gross income. Suppose your total monthly liabilities (including home related costs) in the above example is $2500 then,
Back-end DTI= ($2500/ $6000) *100 = 41%
Standards for Debt-to-income Ratio
A low DTI means that you have more of your income left after paying bills. Back-end ratio of 36% and front-end ratio of 28% or below is considered favorable by most lenders.
Back-end ratios of between 36%-49% translate to less amount left to spend. Lenders will view you as a potential defaulter. You may have to contend with higher interest rates and huge down payments for your loan.
Anything higher than 50% puts you on the red. It means half of your pay is going toward debt payments leaving you with little to spend or even take up a new financial obligation. This greatly reduces your chances of landing a mortgage.
What is the Ideal Debt-to-income Ratio?
If you aren’t thinking about applying for an auto or home loan, opening a credit card account, moving into a new apartment, or doing anything else that requires someone to review your credit and finances, you may not care too much about your DTI. But when you are seeking credit, part of the application process may include a thorough review of your finances. Even though it will vary, every creditor and lender has certain criteria that applicants must meet in order to approve an application, so they might be interested in examining your DTI to determine if you should be approved.
Since this number gives insight into how you manage your debt, specifically your ability to repay your debt, the higher your DTI, the more likely you are to be denied. Creditors will look for borrowers who have a debt-to-income ratio no higher than 43%. This means that if your monthly income is $4,000, your total monthly debt payments should be equal to no more than $1,720. Although 43% is acceptable to most creditors, a lower DTI is even better.
Improving Your Debt-to-income Ratio
If your DTI is above 43%, you have the power to change it. Since your monthly debts and income are the two important factors used to determine your DTI, there are a number of ways you can lower your DTI and get in a better position financially.
If you want to improve your debt-to-income ratio, one thing you can do is reduce the total amount of debt you owe. If you have taken out a loan for $5,000, your monthly loan payment will be included in your debts used to calculate your DTI. By making extra payments on your loan, you will be able to pay off the loan faster and reduce the amount of debt owed.
Additionally, if you want to improve your DTI, you can also avoid adding to your current amount of debt or increase your monthly income by taking on a hiring paying full-time job, part-time job, or gig.
Open a BMO Harris Premier™ Account online and get a $500 cash bonus when you have a total of at least $7,500 in qualifying direct deposits within the first 90 days of account opening. Expires 9/15. Conditions Apply.
Even the most aggressive stock market investors keep some cash on the sidelines. That balance helps offset market volatility and cover end-of-year tax payments on capital gains. It’s there when you’re ready to put more money in the market too.
Many brokerages hold cash in basic, boring accounts that pay little or no interest and have no real features of their own. Others, like Fidelity, offer more appealing cash management accounts with much higher yields and checking-like features.
There’s no contest. True cash management accounts are better. And the Fidelity Cash Management account is among the best of the bunch. Even if you’re not a current Fidelity brokerage customer, it’s worth checking out. Just make sure you understand how it works — and its limitations — before you apply.
What Is the Fidelity Cash Management Account?
The Fidelity Cash Management account is an FDIC-insured cash management account with no maintenance fees and competitive interest rates on eligible balances.
You can open a Fidelity cash management account without an existing Fidelity brokerage account. Once open, you can keep the entire balance in cash or use a portion of it to purchase stocks, ETFs, or mutual funds. You don’t need to apply for a separate brokerage account.
Fidelity cash management account balances up to $5 million earn 2.60% APY. Interest is variable above that threshold. Other notable features include a secure debit card compatible with major digital wallets, global ATM fee reimbursement, mobile check deposit, and online bill payments.
Unlike a traditional bank account, funds deposited into the Fidelity cash management account may be distributed among a network of partner banks rather than held with Fidelity. This enables much higher FDIC insurance coverage because more than one FDIC-insured bank is involved. It also offers the possibility (though not the guarantee) of higher yields because each bank sets their own interest rates.
What Sets the Fidelity Cash Management Account Apart?
The Fidelity cash management account stands out for several reasons:
Comes with a Visa debit card that works worldwide. This account comes with a Visa debit card accepted by millions of merchants worldwide. As a payment method, it’s as good as any other Visa debit card or credit card.
No limits or geographical restrictions on ATM reimbursements. Fidelity reimburses ATM fees worldwide. There’s no monetary limit to this privilege either.
FDIC insurance many times the standard limit. Although the exact limit is subject to change based on how Fidelity allocates the funds in your cash management account, Fidelity advertises up to $5 million in FDIC coverage. That’s 20 times the standard limit of $250,000.
Impressive mobile features. This account holds its own against any mobile-friendly checking account. It has a full lineup of mobile features in an easy-to-use app.
Key Features of the Fidelity Cash Management Account
Before you open a Fidelity cash management account, take some time to understand its core features and capabilities.
Account Yield & Requirements
This account yields 2.60% APY on the first $5 million. Fidelity allocates this portion of your balance among its FDIC-insured partner banks, but for all practical purposes, it’s held with Fidelity.
Any portion of your balance above $5 million goes into a Fidelity money market fund, which holds a mix of government securities. The interest rate on this portion is variable but generally lower than the rate on the partner bank portion. Importantly, there’s no FDIC coverage on balances held in money market funds.
Account Fees & Minimums
This account has no monthly or annual maintenance fee. There’s no minimum or ongoing balance requirement either.
Secure Debit Card
This account comes with a secure Visa debit card accepted by millions of merchants worldwide. The card itself has no additional maintenance fee, though fees may apply for foreign transactions or overdrafts.
ATM Access
This account’s debit card works at tens of thousands of machines worldwide: any with the Visa, Plus, or Star logos. Fidelity charges no ATM fees of its own and reimburses any fees charged by third parties, like other banks or ATM owners.
Mobile Features
This account has a user-friendly mobile app and a responsive web interface that works well on small screens. It has a full feature lineup:
Mobile check deposit
Digital bill payments
Digital wallet integration
Real-time spending view
Fast internal and external funds transfers
Deposit Insurance
This account has FDIC insurance on balances up to $5 million. Balances above that amount are held in a money market fund that has no FDIC coverage and can lose value due to market volatility.
Access to Stocks & Other Asset Classes
True to its name, the Fidelity cash management account is first and foremost a cash account. You can use it as you would any other checking account.
But because it’s associated with a major investment company, it’s also easy to use some or all of the balance to fund your investing activities. You can buy stocks, ETFs, and mutual funds directly out of your cash management account balance. If you want to trade in riskier asset types, such as options contracts, you need to apply for those privileges separately.
Pros & Cons
The Fidelity cash management account has plenty of upsides and a few notable downsides too.
Visa debit card accepted worldwide
No limits on ATM fee reimbursements
Lots of checking-like features
Very high FDIC insurance limits
Brokerage account link could be too much temptation
Yield isn’t competitive with the best savings accounts
Some traditional checking features missing
Pros
The Fidelity cash management account is a well-rounded cash account with enough firepower for higher-asset users.
Visa debit card accepted worldwide. This account comes with a Visa debit card that’s accepted by millions of merchants worldwide. Functionally, it’s as good as any checking account debit card.
No limit on ATM fee reimbursements. Fidelity is unusually generous when it comes to ATM fee reimbursements. No matter how many withdrawals you make, Fidelity covers the associated fees.
Lots of checking-like features. This account isn’t quite as good as a checking account, but it’s pretty close, and you might not need a checking account if your financial life is otherwise simple.
Very high FDIC insurance limit. Your Fidelity cash management account balance has FDIC insurance up to $5 million, many times the standard limit and high enough not to be an issue for the vast majority of users.
Integrates seamlessly with Fidelity brokerage account. Your Fidelity cash management account integrates seamlessly with your Fidelity brokerage account. That is, if you want it to. It functions perfectly fine as a standalone cash-only account too.
Cons
The Fidelity cash management account is stingier than some other cash management accounts and could tempt less sophisticated users with potentially risky investments.
Yield can’t match top cash management or savings accounts. Though variable, the Fidelity cash management account’s yield tends lower than the leading high-yield savings accounts and interest checking accounts. If your top priority is to maximize your return on cash balances, this isn’t the best account for you.
Direct access to stocks and ETFs could threaten users’ emergency savings. Traditional checking and savings accounts aren’t linked to online brokerage accounts, which means they don’t carry the temptation to invest FDIC-insured emergency savings (or any other cash balances) in stocks and ETFs that can lose value.
Some missing checking features. This account has important checking features like online billpay and mobile check deposit, but it’s not quite a full-service checking account.
How the Fidelity Cash Management Account Stacks Up
The Fidelity cash management account shares the spotlight with several other high-yield accounts tied to brokerage platforms. One of its top competitors is the Wealthfront Cash Account. Before applying for either, compare them head to head.
Fidelity Cash Management
Wealthfront Cash
Maintenance Fee
$0
$0
Yield
2.60% APY
4.55% APY
ATM Reimbursements
Yes, unlimited
No
FDIC Insurance
Up to $5 million
Up to $5 million
The Fidelity cash management account is clearly better for folks planning to use it more like a checking account, thanks in particular to unlimited ATM fee reimbursements. But Wealthfront has a significantly higher yield, which is a key consideration for many investors.
Final Word
The Fidelity Cash Management account is a checking-like deposit account with a much higher yield than most checking accounts and direct access to a low-cost digital brokerage. It has sky-high FDIC insurance limits and unlimited ATM fee reimbursements too, making it appropriate for high rollers.
It’s not perfect though. Its yield is lower than many competing cash management accounts, not to mention high-yield savings accounts, and it’s not quite a full-service checking account. Before you apply, make sure it’s the best choice for your cash management needs.
Editorial Note:
The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author’s alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.
The Verdict
Our rating
Fidelity Cash Management Account
With a strong-but-not-industry-leading yield and very high FDIC insurance coverage, the Fidelity Cash Management account is an ideal place to park money you don’t need right away. It also has enough checking-like features to potentially replace your existing bank account. But it’s not the best option if all you care about is earning the most interest possible.
@media (max-width: 1200px)
body .ns-buttons.ns-inline .ns-button-icon width: 100%; .ns-inline .ns-button –ns-button-color: #000000;
Brian Martucci writes about credit cards, banking, insurance, travel, and more. When he’s not investigating time- and money-saving strategies for Money Crashers readers, you can find him exploring his favorite trails or sampling a new cuisine. Reach him on Twitter @Brian_Martucci.
When you’re buying a home, you probably have a million questions that need answering, especially when it comes to getting the proper insurance to protect your investment.
Soon-to-be homeowners may see both title and homeowners insurance on the lending documentation and wonder what the difference is between the two. While both types of insurance can provide vital coverage for homeowners, they differ vastly in their purpose and protection.
What Is Homeowners Insurance?
A homeowners insurance policy protects a home and personal property from loss or damage. It may also provide insurance in the event someone is injured while they are on the property.
Here are some common things homeowners insurance may cover:
• Damage that may occur in the home, garage, or other buildings on the property • Damaged, lost, or stolen personal property, such as furniture • Temporary housing expenses if the homeowner must live elsewhere during home repairs
Depending on the policy, homeowners insurance may also cover:
• Physical injury or property damage to others caused by the homeowner’s negligence • An accident that happens at home, or away from home, for which the homeowner is responsible • Injuries that take place in or around the home and involve any person who is not a family member of the homeowner • Damage or loss of personal property in storage
Some coverage may also apply to lost or stolen money, jewelry, gold, or stamp and coin collections.
Buying Homeowners Insurance
While someone can legally own a home without taking out homeowners insurance, the mortgage loan holder may require the homeowner to purchase an insurance policy. Typically, lenders do require this as a condition of the home loan.
It’s important to understand that homeowners need to insure the home but not the land underneath it. Some natural disasters — tornadoes and lightning, for example — are covered by typical homeowners policies. Floods and earthquakes, however, are not. If you live in an area where floods or earthquakes are common, you may want to consider purchasing extra insurance to cover damages from potential disasters.
Special coverage may also be worthwhile for those who own valuable art, jewelry, computers, or antiques. There are two policy options that can help homeowners replace insured property in the event of damage or a loss. Replacement cost coverage covers the cost to rebuild the home and replace any of its contents, while actual cash value simply pays the current value of the property at the time of experienced loss.
When it comes time to shop for and buy homeowners insurance, start by asking trusted friends, family, or financial advisors for their recommendations. Do some online research, too. Before you make a final decision, contact multiple companies and request quotes in writing to compare their offerings. That process can give you a good idea of who is offering the best coverage for the most affordable price.
Recommended: Is Homeowners Insurance Required to Buy a Home?
What Is Title Insurance?
Title insurance provides protection against losses and hidden costs that may occur if the title to a property has defects such as encumbrances, liens, or any defects unknown when the title policy was first issued.
The insurer is responsible for reimbursing either the homeowner or the lender for any losses the policy covers, as well as any related legal expenses.
Title insurance can protect both the homeowner and lender if the title of the property is challenged. If there is an alleged title defect, which the homeowner may be unaware of at the time of purchase, title insurance can provide protection to cover any losses resulting from a covered claim.
The policy will cover legal fees incurred if there is a claim against the property.
Recommended: How to Read a Preliminary Title Report
Buying Title Insurance
Both home buyers and lenders can purchase title insurance. If the home buyer is the purchaser, they may want to insure the full value of the property. (The value of the property will affect how much the policy costs). When the lender is the purchaser, they typically only cover the amount of the homeowner’s loan. When it comes time for a home buyer to purchase title insurance, they have full choice of the insurer.
According to the Real Estate Settlement Procedures Act (RESPA) of 1974, the seller cannot require the home buyer to purchase title insurance from one certain company.
Lenders are required to provide a list of local companies that provide closing services, of which title insurance is just one. But it may be worth doing independent research. Lenders may not select their recommendations based on the home buyer’s best interest, but instead because a service provider is an affiliate of the lender and provides a financial incentive in exchange for a recommendation.
Again, it’s a smart idea to seek the counsel of friends and family and do online research to uncover competitive prices and learn which service providers have a solid reputation.
Recommended: What Are the Different Types of Mortgage Lenders?
The Takeaway
Homeowners insurance is an ongoing cost (billed monthly, quarterly, or annually) that helps cover damage or loss of the home and possessions within the home. Title insurance, on the other hand, can help protect against losses caused by defects in the title and is a one-time fee payable during the closing process. The advantage to having both types of coverage is that each policy can protect homeowners against financial loss in very different circumstances.
Shopping for homeowners insurance often requires considering several options, from the amount of coverage to the kind of policy to the cost of the premium. To help simplify the process, SoFi has partnered with Lemonade to bring customizable and affordable homeowners insurance to our members.
Lemonade is a name you can trust. It has exceptional ratings, is fully licensed, and reinsured by some of the most trusted names on the planet. Plus, it donates any leftover money to nonprofit partners chosen by customers.
Check out homeowners insurance options offered through SoFi Protect.
SoFi offers customers the opportunity to reach the following Insurance Agents:
Home & Renters: Lemonade Insurance Agency (LIA) is acting as the agent of Lemonade Insurance Company in selling this insurance policy, in which it receives compensation based on the premiums for the insurance policies it sells.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Mortgage rates dropped this past week amid mixed economic data and uncertainty around the Fed’s upcoming decision to either raise interest rates again or take this month off.
“While the potential for another rate hike raises the prospect of increased mortgage rates, the objective of curbing inflation will ultimately lead to a decline in mortgage rates, bringing much-desired stability to the market,” says Realtor.com economist Jiayi Xu.
Don’t miss
Meanwhile, borrowers still contend with rates close to 7%, limiting the kind of home average families can afford.
Say you’re buying a $500,000 home. Assuming you have a 10% down payment and lock in a 30-year fixed mortgage at today’s average rate of 6.71%, you’d have to pay about $3,800 a month after property taxes and home insurance, according to estimates from Zillow.
Considering that most lenders want you to keep your housing expenses at or under 30% of your gross income, you’d need to earn at least $152,000 a year to afford that $500,000 home.
30-year fixed-rate mortgages
The average 30-year fixed rate slipped to 6.71% this week, according to the latest data from Freddie Mac, compared to last week’s average of 6.79%.
A year ago at this time, America’s most popular home loan averaged 5.23%.
“Even though the strong employment data suggests that households are in a favorable position to assess their housing options, the overarching concern of affordability continues to impose limitations on homebuyers,” says Xu.
Realtor.com reports the median listing price grew just 0.2% year-over-year — its slowest pace ever recorded (since 2016).
But “while the growth slowed to a halt, the homebuying costs haven’t come down.”
15-year fixed-rate mortgages
The average rate on a 15-year home loan also lowered from 6.18% to 6.07% this week. This time a year ago, the 15-year fixed-rate averaged 4.32%.
“While elevated rates and other affordability challenges remain, inventory continues to be the biggest obstacle for prospective homebuyers,” says Sam Khater, Freddie Mac’s chief economist.
New listings for sale have fallen 25% from last year — marking their lowest level of any early June on record — according to Redfin.
This has also driven the total number of homes on the market down 5% since a year ago to its lowest level on record for early June.
Read more: Americans refuse to let higher prices derail their travel plans — 10 tactics to keep your summer vacation on budget
Shortage for middle-income buyers
The U.S. housing crunch affects middle-income buyers more than any other income bracket — with a shortage of about 320,000 affordable homes, according to a report from the National Association of Realtors (NAR).
That’s any home priced at $256,000 or less, which NAR considers an affordable range for middle-income buyers, or households earning up to $75,000 a year.
Currently, middle-income buyers can afford less than a quarter of listings — compared to five years ago, when the group could afford to buy about half.
“Ongoing high housing costs and the scarcity of available homes continues to present budget challenges for many prospective buyers, and it’s likely keeping some buyers in the rental market or on the sidelines and delaying their purchase until conditions improve,” says Realtor.com chief economist Danielle Hale.
“Those who are able to overcome affordability constraints may be increasingly drawn to newly constructed homes or to the suburbs and beyond, both of which may offer buyers more realistic opportunities for homeownership in the near term.”
Mortgage applications still declining
Demand for mortgages decreased 1.4% from last week, according to the Mortgage Bankers Association (MBA).
“Overall applications were more than 30% lower than a year ago, as borrowers continue to grapple with the higher rate environment,” says Joel Kan, vice president and deputy chief economist at the MBA.
“Purchase activity is constrained by reduced purchasing power from higher rates and the ongoing lack of for-sale inventory in the market, while there continues to be very little rate incentive for refinance borrowers.”
Refinance activity similarly fell by 1% — and is 42% lower than the same week a year ago.
What to read next
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.