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Nurses who are looking for first-time homebuyer assistance have plenty of options available to them — including programs that are exclusive to individuals in the nursing profession as well as programs that are available to everyone. Plus, some companies stand out as the best mortgage lenders for first-time homebuyers.
If you work as a nurse and are ready to become a homeowner, here’s how you can find mortgages and grants to help you achieve that goal.
Are there special home loans for nurses?
Yes, there are a few different homebuyer programs available on a national level that help nurses and other healthcare professionals afford homeownership. This includes the Nurse Next Door program and Homes for Heroes.
However, you might find that you can get better assistance by utilizing programs that are available to all first-time homebuyers and aren’t limited by profession. Not that these programs specifically for nurses can’t be helpful, but there are many more first-time homebuyer loans available to the general population. So be sure to explore all your options to make sure you’re getting the help you need.
Your city or county housing authority may also have loans, grants, or other types of assistance for healthcare workers or first-time and low-income buyers. You can check the housing authority’s website to see what’s available.
How does the Nurse Next Door program work?
The Nurse Next Door program offers grants and down payment assistance to nurses and other healthcare professionals.
“Many times, the grants and other assistance we provide is the difference maker in purchasing a new home for their family,” says Stephen Parks, the national director of the Next Door programs, which includes Nurse Next Door and Teacher Next Door.
Parks says that those who utilize the program can get a grant up to $8,000 and up to $10,681 in down payment assistance.
Nurse Next Door program requirements
All healthcare employees are eligible for Nurse Next Door, so you don’t need to be an RN to benefit from the program. You don’t even need to be a first-time homebuyer.
You will, however, be limited in the professionals you can work with as you go through the homebuying process. Nurse Next Door participants will need to work with a Nurse Next Door-affiliated real estate agent and one of its preferred mortgage lenders.
If you’re considering this program, you may want to apply and shop around with other mortgage lenders as well, to compare rates and other offers of down payment assistance. This will help ensure you get the best overall deal.
Nurse Next Door program income limits
There are no income limits to use the Nurse Next Door program, though local down payment assistance offered through the program may have its own limits.
Do nurses qualify for the Good Neighbor Next Door program?
The US Department of Housing and Urban Development offers a program called Good Neighbor Next Door. GNND allows public servants to buy HUD-owned foreclosed homes in certain areas at a 50% discount.
Currently, nurses do not qualify for GNND. The program is only available to law enforcement officers, teachers, firefighters, and EMTs.
Homes for Heroes program for nurses
Homes for Heroes is a program that helps people in certain public service professions get discounts throughout the homebuying process. Nurses are eligible for Homes for Heroes, as are doctors and other healthcare professionals.
When you buy a house through this program, you’ll work with Homes for Heroes-affiliated professionals to get discounts on various services. Homes for Heroes says buyers save an average of $3,000 through the program, which comes in the form of a check after closing.
Low down payment home loans for nurses
The most popular types of mortgages all come with low or no down payment options for borrowers who qualify. If you’re a nurse with little savings or a lower income, you might benefit from getting one of these mortgages.
“Finding an affordable mortgage is simpler than one might think, as there are many great options and strategies that can help consumers achieve their homeownership goals,” says Eileen Tu, executive vice president of product development for Rocket Mortgage. “Future buyers can start laying the groundwork for their homeownership journey by raising their credit score and researching all loan options, including FHA loans.”
FHA loan
“These loans are particularly attractive for first-time homebuyers since they only require a 3.5% down payment and have more flexible homebuyer credit guidelines,” Tu says.
Borrowers only need to put 3.5% down to get an FHA loan. These mortgages, which are backed by HUD, are geared toward first-time and low-income borrowers, and come with less stringent credit requirements.
To qualify for an FHA loan, you’ll generally need at least a 580 credit score. However, if you make a 10% down payment, you could potentially qualify with a score as low as 500.
FHA loans also come with some of the lowest mortgage interest rates available, making them very affordable for borrowers.
Conventional loan
Conventional loans aren’t backed by a government agency, so they typically require borrowers to have better credit scores and low debt-to-income ratios. But they also often allow even lower down payments.
Borrowers may qualify for a conventional loan with as little as 3% for a down payment. You’ll need at least a 620 credit score to qualify.
VA loan
VA loans are backed by the US Department of Veterans Affairs, and they’re only available to military servicemembers and veterans who meet minimum service requirements. If you qualify for one of these mortgages, you could buy a home with 0% down and a low mortgage rate.
The VA doesn’t set a minimum credit score for the loans it guarantees, but many lenders require at least a 620 score. But some do allow lower scores.
USDA loan
If you’re buying a home in a rural or suburban area, you might qualify for a USDA loan. These mortgages also allow borrowers to purchase a home with no down payment.
You’ll need a decent credit score to qualify for a USDA loan — typically, at least 640. Like other government-backed mortgages, USDA loans generally offer lower rates compared to conventional mortgages.
Lender programs for nurses
As you shop around for a mortgage lender, ask about any programs they have for healthcare professionals. While it’s more common for lenders to offer mortgages specifically for doctors, rather than nurses, you may find lenders that also have programs for a wider range of healthcare professionals.
Flagstar Bank, for example, offers “professional loans” for nurses, nurse practitioners, nurse anesthetists, and other professions that require specialized training. These loans allow no down payment on amounts up to $1 million with a 740 credit score. You also won’t pay private mortgage insurance.
Guild Mortgage also offers a Medical Professional program that is available to nurses.
Additionally, some of the best mortgage lenders offer special programs to help first-time or low-income borrowers get into a home, regardless of their profession.
Tu suggests Rocket Mortgage’s ONE+ program for borrowers looking for homebuying assistance. With ONE+, you’ll only need 1% for a down payment, and the lender will provide a 2% grant to cover the rest. United Wholesale Mortgage, a wholesale lender that you can only work with through a mortgage broker, has a similar program.
Many of the most popular mortgage lenders offer programs that combine affordable mortgages with down payment or closing cost assistance. Smaller local lenders may also offer assistance. When you apply for a mortgage, ask what’s available to you.
Home loans for nurses FAQs
Nurses may be able to get a discount on their mortgage depending on what programs are available to them. Nurse Next Door and Homes for Heroes both offer discounts to healthcare professionals, including nurses.
Some programs specifically for nurses — as well as first-time and low-income homebuyer programs more generally — may advertise lower interest rates. But the only way to be sure you’re getting a low rate is to get approved with multiple lenders and compare the rates you’re offered.
A mortgage lender will look at all the income the nurse has earned in the last two years and use that to determine how much they earn per month on average.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
A soft credit check occurs when someone accesses your credit report for information purposes and does not affect your credit score or require your permission. Hard credit checks occur when someone accesses your credit report due to a credit application, temporarily impacting your credit score.
If you’re looking to apply for credit, you’ve likely wondered about the differences between soft vs. hard credit checks. Despite both involving credit report access, their purpose and impact differ significantly.
In this article, you’ll learn the differences between soft vs. hard credit checks, their purposes, how they affect your credit report and when and why creditors use them. Read the full guide for a comprehensive understanding of these types of credit checks, or you can jump ahead to the topic you need the most clarity on:
Table of contents:
What are credit checks?
A credit check is a process that financial institutions, such as banks or lenders, undertake to evaluate a potential borrower’s creditworthiness. Its main purpose is determining whether an individual is reliable and capable of paying their debts on time.
The credit check typically involves reviewing an individual’s credit health based on payment history, outstanding debts, length of credit history and types of credit used. This information helps lenders decide whether to grant loans, extend credit or enter financial agreements with individuals.
What is a soft credit check?
A soft credit check, also known as a soft pull or a soft inquiry, is a type of credit check conducted to gather information about an individual’s credit history without impacting their credit score. Soft credit checks include:
You reviewing your credit report
Loan pre-qualification assessments
Background checks
Individuals can initiate their own soft inquiries, as can potential employers or financial institutions aiming to preapprove individuals for credit opportunities.
Does a soft credit inquiry hurt your score?
No, a soft credit inquiry does not hurt your credit score. They’re essentially harmless and typically occur for informational purposes, such as when you check your credit report.
Only you can see soft inquiries on your credit report, which do not impact your overall credit standing. These inquiries don’t suggest that you are taking on new debt, so credit scoring models do not penalize you for them. And since they don’t negatively affect credit scores, you can request them freely without risking your creditworthiness.
What is a hard credit check?
A hard credit check, also known as a hard inquiry or hard pull, occurs when a lender or financial institution reviews your credit history as part of a credit application process. The purpose of a hard credit check is for lenders to determine the terms of the credit offer based on your creditworthiness.
These inquiries can slightly lower your credit score, usually by a few points, but their impact diminishes over time. Lenders typically perform hard credit checks if you apply for:
Auto, student and personal loans
An apartment
Credit cards
A mortgage
Be mindful of the number of hard credit checks you accumulate within a short period, as multiple inquiries may signal to lenders that you are taking on too much debt and may not be an ideal borrower.
Does a hard credit inquiry hurt your score?
Unlike soft credit checks, hard credit checks can negatively affect your credit. During a credit application, the lender will typically request a hard credit check to assess your creditworthiness. They may review your credit history, resulting in a small credit score decrease. That said, hard credit checks usually have minimal impact—usually just a few points—and their impact diminishes over time.
Fortunately, the credit scoring models consider that borrowers may shop around for credit options, which is apparent in how they handle multiple inquiries.
Do multiple inquiries count as one?
Generally, credit score models will count multiple inquiries of the same type, such as multiple auto loan inquiries, within a specific time frame as a single inquiry on your credit report. This is called deduplication—removing duplicate inquiries to minimize the negative impact on your credit. These deduplication periods recognize that individuals may shop for the best loan or credit card terms and differ across credit models. For example, VantageScore® has a 14-day window, and FICO® gives you 45 days.
Consolidating credit applications within this time frame allows you to compare offers without worrying about each inquiry affecting your creditworthiness. However, this may not apply to inquiries for different credit types.
How long do credit checks stay on your report?
Soft checks usually do not directly impact your credit, but they can remain on your report for around two years. While these inquiries are visible to you, lenders and creditors accessing your report can’t see them.
Hard credit inquiries can affect your credit score, but the impact is minimal and decreases over time. Most scoring models see recent inquiries as more relevant and important. These inquiries also stay on your credit report for about two years and are visible to anyone who accesses it.
Can you reduce the impact of hard credit checks?
While you can’t completely avoid the impact of hard credit checks on your credit, you can take a few steps to minimize it:
Consolidate your credit applications: As we mentioned, credit scoring models typically treat multiple inquiries as a single inquiry if they occur within a short period—usually around 14 – 45 days.
Avoid unnecessary credit inquiries: Being selective about the credit applications you submit can help prevent excessive inquiries, reducing the potential negative impact on your credit.
Monitor your credit report regularly: If you notice any errors or unauthorized hard inquiries, you can challenge them with the credit bureaus and seek credit inquiry removal.
How to dispute a hard credit card inquiry
When you are faced with a hard credit card inquiry that you believe is inaccurate or unauthorized, knowing how to dispute it is essential. By understanding the necessary steps to challenge a hard inquiry, you can protect your credit by ensuring the information on your credit report is correct.
Step 1: Compile supporting evidence by collecting essential documentation, including credit reports, any correspondence exchanged with the creditor and any evidence that disproves or indicates unauthorized hard inquiries.
Step 2. Thoroughly examine your credit report to identify the specific hard inquiry you intend to challenge. Take the time to review the report carefully and understand the details of the inquiry in question.
Step 3. Contact the creditor who made the hard inquiry and provide them with comprehensive details about the inquiry. To strengthen your case, ensure you have the necessary documents readily available. This can include an identification card, a utility bill, etc.
Step 4. If the creditor fails to respond or cooperate, proceed with filing a dispute directly with the credit bureaus. You can do this online, via mail or over the phone. Include all relevant information and clearly explain why you believe the hard inquiry is either incorrect or unauthorized.
After you’ve filed the dispute, the credit bureau will investigate the inquiry. As part of this process, they will reach out to the creditor and request verification of the inquiry. If the creditor does not respond within the designated time frame, typically 30 days, the credit bureau will eliminate the inquiry from your credit report.
Step 5. Stay vigilant by regularly monitoring your credit report to confirm the removal of the disputed inquiry. If the inquiry persists after the investigation, contact the credit bureau to seek an explanation. To resolve the matter, you may be required to submit additional evidence or escalate the dispute further.
Prevent what you can, credit repair what you can’t
Knowing the difference between soft vs. hard credit checks, how they occur and how to minimize their impact can help you maintain a positive credit history. This will increase your approval odds for agreeable loan terms and interest rates so you don’t end up with overwhelming levels of debt.
While prevention is the best approach, credit repair is useful if your report has negative items. Find out which service might work for you by getting your free credit assessment with Lexington Law Firm.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Nature Lewis
Associate Attorney
Before joining Lexington Law as an Associate Attorney, Nature Lewis managed a successful practice representing tenants in Maricopa County.
Through her representation of tenants, Nature gained experience in Federal law, Family law, Probate, Consumer protection and Civil law. She received numerous accolades for her dedication to Tenant Protection in Arizona, including, John P. Frank Advocate for Justice Award in 2016, Top 50 Pro Bono Attorney of 2015, New Tenant Attorney of the Year in 2015 and Maricopa County Attorney of the Month in March 2015. Nature continued her dedication to pro bono work while volunteering at Community Legal Services’ Volunteer Lawyer’s Program and assisting victims of Domestic Violence at the local shelter. Nature is passionate about providing free knowledge to the underserved community and continues to hold free seminars about tenant rights and plans to incorporate consumer rights in her free seminars. Nature is a wife and mother of 5 children. She and her husband have been married for 24 years and enjoy traveling internationally, watching movies and promoting their indie published comic books!
Collectively, Americans carry trillions in household debt. And the biggest single element of that burden by far is mortgage debt: It comprises close to $12 trillion of the $17.29 trillion overall.
Latest statistics on average mortgage debt
Mortgage
The average mortgage debt balance per household is $241,815 as of Q2 2023, a 4% increase from 2022.
The total mortgage debt balance in the U.S. is $12.14 trillion as of Q3 2023, an increase of $126 billion over the previous quarter.
The average mortgage balance exceeds $1 million in 26 U.S. cities, primarily on the East and West Coasts.
Mortgage originations collectively total $386 billion, as of Q3 2023, well below the trillion-dollar levels in 2020-21.
Total home equity line of credit debt equals $349 billion as of Q3 2023, more than a $25 billion year-over-year increase.
The average credit score for purchase mortgage holders is 733 as of November 2023.
The total debt service to income ratio (DTI) of U.S. households is projected to rise to 11.7% by 2025, up from 9.9% in 2022. The mortgage DTI alone will increase to 4.5%.
Total U.S. household debt is $17.29 trillion as of Q3 2023, an increase of $3.1 trillion since the end of 2019.
Annual average mortgage debt
Mortgage debt is the heavyweight when it comes to household debt, dwarfing credit card balances, student loans and auto loans. After the tough blow dealt by the 2007-08 subprime mortgage crisis, the annual average mortgage debt declined sharply. However, since 2013, the pendulum began to swing back, with mortgage debt on a steady rise. Since the pandemic, increases in home prices and in interest rates kicked the climb into overdrive.
So, what does this mean for the annual average American mortgage debt in 2024? With housing inventory still tight, interest rates still elevated, and people seeking larger homes to accommodate their evolving lifestyles, mortgage balances will likely continue to grow, though perhaps at a slower pace.
Most common types of debt
Mortgages continue to be a significant portion of household debt in the United States, with a current total of $12.14 trillion owed on 84 million mortgages. This equates to an average American mortgage debt of $144,593 per person listed with a mortgage on their credit report. Despite interest rates hovering above 7 percent, mortgage demand remains strong, driven by two key factors: an increase in the number of people seeking mortgages, and larger mortgages at that.
The record-low mortgage interest rates of recent years allowed buyers to purchase higher-priced homes or refinance their existing mortgages while maintaining low monthly payments. This has led to a rise in outstanding mortgage debt, which currently accounts for 70.2 percent of consumer debt in the U.S., according to New York Federal Reserve figures.
Here’s a look at the other common types of debt among American households, based on credit reporting company Experian’s midyear consumer debt review:
Auto loans. In the year between Q2 2022 and Q2 2023, auto loan debt witnessed a 5.8 percent increase, rising from $1.42 trillion to $1.5 trillion. This rising trend in auto loan debt can be attributed to persistent inventory shortages, escalating prices for new and used vehicles, and supplementary expenses such as auto insurance.
Credit card debt. Between Q2 2022 and Q2 2023, credit card debt surged by 16.3 percent, amounting to a total of $1.02 trillion. This increase is largely attributed to factors such as inflation and increasing credit card interest APRs. In a similar vein, unsecured personal loans also saw a 21.3 percent growth spurt, moving from $156.1 billion in 2022 to $189.4 billion in 2023.
Home equity lines of credit (HELOCs). As of Q2 2023, HELOCs have seen an 8.5 percent increase compared to the same quarter in 2022, reaching a total of $322 billion. This growth can be attributed to several factors. Firstly, the ongoing rise in home prices has increased homeowners’ equity, making it easier for them to tap into their home’s value through HELOCs. Additionally, the current high interest rate environment has made borrowing against home equity more attractive than refinancing a mortgage or taking out other types of loans.
Student loan debt balances. Student loan debt has long been a significant player in U.S. household debt. However, an 8 percent decrease occurred between Q2 2022 and Q2 2023, with loan balances falling from $1.51 trillion to $1.39 trillion. Influential factors behind this decline include the moratorium on interest on student loans, borrowers making payments during the three-year payment pause that concluded this year, and loan forgiveness initiatives introduced by the Department of Education.
Average mortgage debt by generation
Americans generally begin taking on debt as young adults, taper off their pace of borrowing in middle age and work to pay off loans near or during retirement.
Generation
Average mortgage debt
Generation Z
$229,897
Millennials
$295,689
Generation X
$277,153
Baby boomers
$190,441
Silent Generation
$141,148
Source: Experian
For each generation, this trend has taken place in tandem with mortgage rate fluctuations and home price appreciation, which has accelerated dramatically in recent years. In February 2012, the median existing-home price was $155,600, according to the National Association of Realtors. By the same time in 2017, the median was $228,200. As of November 2023, the median home price was $387,600.
States with the highest and lowest mortgage debt
These states had the highest average outstanding mortgage balance per borrower as of the end of 2022, according to Experian:
District of Columbia – $492,745
California – $422,909
Hawaii – $387,277
Washington – $331,658
Colorado – $319,981
In these states, borrowers are much closer to paying off their home loans:
West Virginia – $124,445
Mississippi – $139,046
Ohio – $139,618
Indiana – $141,238
Kentucky – $144,222
How mortgage debt compares to other household debt
In comparison to other types of household debt, mortgage debt often tends to take the lion’s share — largely due to the substantial cost of real estate (a home is likely to be the single biggest asset an individual ever purchases). While mortgage debt tends to be sizable, it is spread over a lengthy period, usually over a term of 15 to 30 years. This mitigates its impact on a household’s monthly budget, especially when compared to high-interest, short-term debt like credit card balances.
That longevity works to borrowers’ advantage in another way: Lenders often view mortgage-holders favorably for their demonstrated ability to manage large, long-term financial commitments. In fact, in contrast to other obligations, a mortgage is often viewed in a positive light by creditors, because — unlike with personal loans or credit card bills — your payment acts as an investment in an appreciating asset. Each monthly installment you pay reduces the principal owed on your house, increasing your stake in the property over time. This home equity can later be leveraged for financial liquidity or for securing lower-interest loans — or just held onto, enhancing your net worth and those of your descendants.
In short, a mortgage is considered “good debt,” due to its role in building equity, growing wealth and demonstrating creditworthiness.
A guaranteed mortgage loan gives lenders the ability to qualify borrowers with looser eligibility requirements, allowing for lower credit scores, higher debt loads and more.
Many mortgages with less than 20 percent down are made possible by a guarantee.
The funds for guaranteed mortgages come from private-sector lenders, but the loan is backed by a guarantor, typically a government agency, that will pay out money to the lender if the borrower defaults.
Guaranteed loans are a critical part of the mortgage marketplace, offering borrowers more flexible qualifying terms. These loans are backed by a third party, most often the U.S. government, who agrees to cover a portion of the loan if the borrower defaults.
What is a guaranteed mortgage?
Guaranteed loans require a lower down payment percentage or no down payment at all, and can have lower credit score requirements.
A guaranteed loan is any loan that’s backed by a party other than the lender. That third party assumes some of the responsibility for the loan to the benefit of the lender. If the borrower stops repaying the loan, or defaults, the guarantor pays the lender some or all of the outstanding debt.
How guaranteed mortgages work
With a guaranteed mortgage, the third party guarantees, or agrees to be responsible for, some or all of the loan if the borrower defaults. The guarantor might extend the guarantee to all or a portion of the loan. The guarantee protects the lender, not the borrower.
Ultimately, the guarantee allows the lender to more confidently qualify a borrower who isn’t making a substantial down payment or otherwise might present more risk, such as having a lower credit score.
8%
The typical down payment for first-time homebuyers in 2022
Source:
National Association of Realtors
Guaranteed loans are most often backed by the U.S. government, namely the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA), which back FHA loans and VA loans, respectively. The Department of Agriculture also guarantees USDA loans in eligible areas.
One point of distinction: The VA loan program is generally considered a “guarantee,” while the FHA loan program is viewed more as “insurance.” From the borrower and lender’s perspective, however, they each provide third-party backing that helps borrowers qualify for a loan.
Despite the lower down payment, a guaranteed mortgage loan must meet underwriting standards established by the lender and the third party. Lenders often have additional requirements beyond what the guarantor mandates, a practice known as “overlaying.” For instance, the FHA requires a minimum credit score of 580 to allow a borrower to put just 3.5 percent down, but some lenders set the minimum higher, at 620.
Guaranteed vs. non-guaranteed loans
The main difference between guaranteed and non-guaranteed loans comes down to qualifying for the loan. Specifically, a guaranteed mortgage loan means:
Looser eligibility requirements: Because the third party promises to step in if you can’t or don’t repay what you borrow, the lender has a security net. As a result, lenders generally extend looser qualification requirements for a guaranteed mortgage loan — from credit score to income — than with a non-guaranteed loan.
Lower down payment: A guarantee for a home loan often incentivizes lenders to accept a larger loan-to-value (LTV) ratio, allowing for a smaller down payment — or potentially none at all, if you’re eligible for a VA loan.
More favorable rates and terms: Exploring a guaranteed mortgage might help you land a lower interest rate or terms that are otherwise more favorable.
Restrictions on use cases: Depending on the guarantor, you might be limited in how you can use the loan. You can only get a USDA loan, for example, if you purchase a home in a qualifying rural area.
Additional costs: While the guarantee provides protection for the lender, the guarantor might require you to pay into the pot. For example, with an FHA loan, you’ll need to pay for mortgage insurance.
Types of guaranteed home loans
FHA loans
The FHA loan program is popular for several reasons:
Borrowers can purchase with as little as 3.5 percent down, provided they have a credit score of 580 or better. For borrowers with a credit score between 500 and 579, the program requires 10 percent upfront.
Borrowers can qualify with a 43 percent debt-to-income ratio (DTI); however, a large portion actually qualify with a higher DTI ratio, sometimes over 50 percent. This is due to “compensating factors,” such as cash reserves or a higher credit score, that augment a borrower’s creditworthiness.
FHA interest rates are sometimes lower than those of conventional loans, which aren’t guaranteed or insured by the government.
However, if you choose this kind of mortgage guarantee, be ready to pay two insurance premiums: one premium paid upfront that’s equal to 1.75 percent of the loan principal and an annual premium ranging from 0.15 percent to 0.75 percent of the balance, paid monthly. In some cases (depending on the size of your down payment), the mortgage insurance goes away after 11 years. Otherwise, the annual premium can’t be removed unless you refinance to a different type of loan or pay off your FHA loan completely.
VA loans
VA loans are available to eligible active-duty servicemembers, veterans and surviving spouses to help finance or refinance a home with zero down — a benefit that can be used more than once. The VA guarantee for a home loan promises a certain amount to a lender should a VA loan borrower default.
VA loans give borrowers and lenders a lot of leeway. For example, VA guidelines don’t include minimum credit score standards or loan limits. Instead, lenders set their own credit score requirements and loan money to the extent the borrower is financially qualified.
VA loans also have a residual income standard that helps lenders determine how much a borrower needs, after expenses, to qualify for a loan.
When purchasing or refinancing, VA loan borrowers have to pay an upfront funding fee, although the fee can be waived under certain circumstances.
USDA loans
USDA loans are also available to lower- and moderate-income borrowers with no money down, but only in defined rural areas. (The term “rural” can be surprisingly broad, so check your area to find out if it qualifies.)
A USDA loan has both an upfront and annual fee, which are a percentage of the loan principal, in order to sustain the guarantee from the USDA. These fees are charged to the lender but usually passed on as a cost to the borrower.
Is a guaranteed loan right for you?
With guaranteed loans, more borrowers can qualify for mortgages. With that guarantee, a lender might extend looser LTV and DTI ratios, along with lower credit score and income thresholds. The guarantee might also translate to more favorable loan terms, like a lower interest rate — but also means paying additional costs, such as mortgage insurance or fees.
A loan officer can help you determine which option is right for you and what you’re likely to be preapproved for based on your credit and financial situation.
Last week’s DataDigest offered readers a host of housing forecasts from industry experts at banks, trade associations and more, the thrust of which was housing professionals should expect a modestly better year of sales thanks to retreating mortgage rates in the year to come.
A day after publication, Federal Reserve officials made several of their own forecasts – most importantly that the “appropriate policy path” for the Federal funds rate next year will be for it to decrease 0.75 percentage points, implying three cuts of 0.25 percentage points.
Those economic projections from the 19 members of the Federal Open Markets Committee show both a tighter consensus of opinions and a lower target Federal funds rate than the projections the FOMC made in September.
Following the Fed meeting last Thursday, mortgage rates dropped. Then they dropped. And then they dropped some more.
In fact, they dropped so much that they reached 6.69% on Dec. 15, just 0.07 percentage points above the average of four forecasts for the third quarter of 2024 and roughly 0.6 percentage points below the average forecast for the first quarter of the new year.
That drop – 0.3 percentage points from Dec. 11 to Dec. 15 – is hardly trivial for forecasters. In addition to predicting mortgage rates, they based their predictions for home sales and home starts largely on mortgage rates, as several experts have stated:
“The story this year and the story next year depend on two variables: mortgage rates and inventory.”
Lawrence Yun, chief economist for the National Association of Realtors
High mortgage rates depress not only homebuyer demand but home sellers’ willingness to put their homes on the market:
“High mortgage rates are the main reason for the low level of sales. Higher interest rates make it more expensive to purchase a home and more difficult to qualify for a mortgage. The sharp increase in the mortgage rate from its lowest level on record in 2021 to a 23-year high has caused the vast majority of homeowners to become ‘locked in’ to their existing mortgages.”
Cristian deRitis, deputy chief economist at Moody’s Analytics
So with mortgage rates so important to outcomes next year and mortgage rates now at levels that are far ahead of predicted levels, are forecasts for next year already off the rails?
What the Fed said
The Federal Reserve did not announce rate cuts or provide a schedule of future rate cuts.
Instead, the Fed kept the target Fed funds rate at 5.25-5.5% for the fourth consecutive time. It also provided committee members’ forecasts of what would be the appropriate rate in 2024, which was based on their forecasts of inflation, GDP growth and other economic indicators.
The median of these rate forecasts – 4.63% – is what implies three cuts next year, given that it is 0.75 percentage points below the current rate. But Fed Chair Jerome Powell stressed that “these projections are not a Committee decision or plan.”
Powell further noted that although the FOMC believes “we are likely at or near the peak rate for this cycle” of rate hikes, the possibility of another rate hike has not been taken off of the table if inflation does not continue to moderate.
“No one is declaring victory,” he said. “That would be premature, and we can’t be guaranteed of this progress.”
Yet what the market seems to be focusing on is not Powell’s cautionary comments, but his statement that the FOMC had begun discussing rate cuts in their meeting last week, which sparked a wave of optimism across several market sectors.
However, while Powell said, “We’re sort of just at the beginning of that discussion,” New York Fed President John Williams said on CNBC two days after Powell’s comments, “We aren’t really talking about rate cuts right now.”
Cuts were expected
Forecasters were certainly not blindsided by the possibility of the Fed cutting rates next year. Rather, their forecasts are predicated on the assumption that rates will fall.
The National Association of Realtors, for example, made their quarterly predictions for 2024 on October 30, long before last week’s Fed meeting, and predicted three cuts to the Fed funds rate in 2024 – with the rate reaching 4.4% by the end of the year.
In NAR’s outlook summit held the day before the FOMC released its forecasts, NAR predicted four cuts next year.
The Fed’s median forecast of 4.6% for 2024, then, is both fewer cuts and a higher funds rate than NAR predicted when it forecast mortgage rates of 7.5-6.9% in the first half of the year and a full-year average mortgage rate of 6.3%.
Similarly, Wells Fargo noted in its forecast made on Nov. 9 that “we look for the FOMC to cut its target range for the federal funds rate by 225 bps [2.25 percentage points] by early 2025, which is more than both Fed policymakers and market participants currently project.” Wells Fargo predicted mortgage rates of 7.2-6.7% in the first half of next year.
In other words, the forecasters expected rate cuts that are more aggressive than the Fed has so far forecasted for 2024 when they predicted mortgage rates of 6.6-7.6% in the first half of 2024.
Mortgage rate movements
For those who regularly watch mortgage rates, this winter’s decline may look familiar. Since October 26, the weekly average rate for a 30-year mortgage has fallen from about 7.8% to just under 7%.
The drop is reminiscent of a similar period a year ago when the weekly average rate fell from about 7.1% to 6.1% from early November through early February.
The decline in rates last year was motivated in part by a market consensus that a recession was imminent, which could in turn prompt rate cuts to stimulate the economy. When the recession proved elusive, mortgage rates about-faced.
The current market consensus seems to reflect optimistic prospects for a “soft landing,” an inflation-crushing economic slowdown that doesn’t prompt a job-loss recession. Lower mortgage rates are just one signal of this optimism; stock prices for tech, banking, real estate and other companies that went out of favor when interest rates were expected to rise have now soared.
Will this year’s favorite market theory fare better than last year’s? Wall Street Journal’s senior markets columnist James Mackintosh, for one, is skeptical.
“What’s surprising to me is that there seems to be so little investor concern that a slow-growing economy will turn into something worse, or that inflation proves stickier than expected,” he wrote.
So where do forecasts stand?
Housing professionals can take heart that forecasters generally believe 2023 was rock bottom for this economic cycle and expect 2024 to be better – but modestly better. Most forecasters don’t expect significant improvement in home sales until mortgage rates fall to 6% or lower.
Although mortgage rates are currently well ahead of forecasters’ outlooks, they are not near 6%, and only time will tell if they continue on their current path or return to recent highs and descend more inline with forecasters’ expectations.
Forecasts can be useful for businesses planning for the year ahead, but only time will tell what 2024 will bring.
For a third day, average mortgage rates barely moved yesterday. But that’s good because it means last week’s big falls remain effectively uneroded.
First thing, it was again looking as if mortgage rates today might fall, perhaps modestly or moderately. However, that could change as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.125%
7.14%
-0.075
Conventional 15-year fixed
6.385%
6.415%
-0.1
Conventional 20-year fixed
6.975%
7%
-0.045
Conventional 10-year fixed
6.12%
6.145%
-0.065
30-year fixed FHA
5.98%
6.88%
-0.095
30-year fixed VA
6.165%
6.315%
-0.13
5/1 ARM Conventional
6.425%
7.675%
-0.035
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
Every day that passes makes a corrective bounce (when mortgage rates rise as markets think they’ve got carried away) less likely. And it reinforces my hope that those rates are in a downward trend that could last well into next year.
So, my personal rate lock recommendations are:
LOCK if closing in 7 days
FLOAT if closing in 15 days
FLOAT if closing in 30 days
FLOAT if closing in 45 days
FLOATif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged lower to 3.90% from 3.92%. (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 falling this morning. (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 climbed to $75.14 from $73.12 a barrel. (Bad for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices held steady at $2,049 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 — ticked down to 77 from 78. (Good for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to decrease. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
The Federal Reserve
This morning’s Wall Street Journal (paywall) observed: “After their policy meeting last week, Fed officials released projections of at least three rate cuts [in general interest rates] next year. They have since been flummoxed that investors expect even faster and deeper cuts. The result: Confusion over when and how quickly the Fed might cut as the central bank tries to bring inflation down without a painful recession.”
This could turn into a real issue that could push mortgage rates higher, probably in the new year. Wall Street has a long and inglorious record of hearing what it wants the Fed to say rather than what the Fed actually says. And we’ve seen quite recently examples of sharp rises in mortgage rates when markets’ wishful thinking collides with reality.
Still, last week’s Fed meeting did deliver genuinely good news. And, even if mortgage rates rise when investors face the cold light of dawning reality, I’m optimistic that we’ll keep at least most of the recent gains. Just be aware that the path to lower mortgage rates is unlikely to be smooth.
Today
This morning’s economic reports cover existing home sales in November and consumer confidence in December. They’re both published too late for me to assess their likely impact on markets and mortgage rates.
They could push mortgage rates a little higher or lower, but they rarely move them far or for long.
Tomorrow
Tomorrow brings gross domestic product (GDP) figures for the third quarter of this year. This will be the third and final estimate for this number.
The second estimate put GDP growth at 5.2%, up from 2.1% in the second quarter. MarketWatch says that market expectations for tomorrow’s figure have recently been slightly scaled down to 5.1%.
If the actual number tomorrow is lower than 5.1%, that could drag mortgage rates lower. But, if it’s higher, that could push those rates upward.
Friday
We’re due November’s personal consumption expenditures (PCE) price index on Friday. Markets might get nervous if that shows inflation rising more than expected because that could destroy the Fed’s new-found optimism.
More on what to expect from the PCE report tomorrow.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time 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 Dec. 14 report put that same weekly average at 6.95%, down from the previous week’s 7.03%. Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q4/23) and the following three quarters (Q1/24, Q2/24 and Q3/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Dec. 19 and the MBA’s on Dec. 13.
Forecaster
Q4/23
Q1/24
Q2/24
Q3/24
Fannie Mae
7.4%
7.0%
6.8%
6.6%
MBA
7.4%
7.0%
6.6%
6.3%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
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.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. 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.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Nearly two-thirds of college graduates leave school with debt, which means many couples have to manage outstanding student loans after they get married. If you and your spouse each have multiple student loans, you could potentially end up with a large number of loans to manage in one household. That might make the idea of consolidating student loans with your spouse appealing. So, can you do it? And, if so, is it a good idea?
Yes — and maybe.
The federal government no longer offers spousal consolidation of federal student loans. However, you may be able to combine your federal or private loans by refinancing with a private lender. Whether or not that’s a wise move will depend on a number of factors, including the types of loans you have and your interest rates.
Here’s a look at options available for consolidating your loans as a couple, plus other ways to make student loan payments more manageable after marriage.
Consolidating Federal Loans
Consolidating is the process of combining your loans so you only have to make one payment and keep track of one due date, rather than several. Individual borrowers can consolidate their federal student loans through the federal government.
When you consolidate federal loans, the government pays them off and replaces them with a Direct Consolidation Loan. Your new fixed interest rate will be the weighted average of your previous rates, rounded up to the next one-eighth of 1%.
Previously, married federal student loan borrowers could consolidate their loans together through a joint consolidation loan. However, the government ended that program in 2006 and no longer offers federal loan borrowers a way to consolidate student debt with a spouse.
Currently, the only way to consolidate federal student loans with a spouse is through refinancing with a private lender. This involves taking out a new, larger student loan to pay off all of your existing loans. The lender will base your new loan’s interest rate on your combined income and creditworthiness, and both of you will be listed as primary borrowers on the loan.
It’s important to note that consolidating in this way will convert those federal loans into private loans, which removes all federal benefits and protections, such as income-driven repayment plans and student loan forgiveness programs. 💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.
Refinancing Student Loans With Your Spouse as a Cosigner
Another way to commingle student loan repayment responsibility is to apply for refinancing with your spouse as a cosigner (or vice versa). While your loans won’t be consolidated together if you’re approved, you’ll share ownership of the loan with your spouse. This could be a good idea if you would not be able to qualify for a refinancing on your own or could qualify for a better rate if your spouse serves as a cosigner, due to their added income and/or good credit.
An advantage of cosigning versus joint consolidation is that some lenders allow you to eventually remove a cosigner from a loan, which could be useful should you ever part ways. Joint refinancing, on the other hand, generally doesn’t have an “out” clause.
Recommended: Student Loan Consolidation vs Refinancing
How to Combine Student Loans With Your Spouse
If you’re interested in combining student loans with your spouse, here’s a look at the steps involved in a joint refinance.
1. Find a lender. You’ll need to find a lender that offers joint refinancing (not all do). Ideally, you’ll want to shop around and compare offers from multiple lenders to make sure you find the best deal. Browsing around and receiving prequalified rates won’t affect your credit, since companies will do a “soft” credit check.
2. Apply for the loan. Once you find a lender you want to work with, you’ll need to choose which loans you want to consolidate (you don’t have to include every loan you have) and officially apply for the loan. Both you and your spouse will need to supply personal and financial information.
3. Review your documents and sign. Once approved, it’s a good idea to carefully review all the documents you receive and check the fine print before signing anything. Confirm the loan terms you were approved for match the ones you applied for.
4. Keep paying your individual loans until the refinance is complete. When you refinance a loan, your new lender must then pay off your old lender. It may take a little while for that process to finalize. In the meantime, it’s important for you and your spouse to continue making your payments on your individual loans until you’ve received notice from your new lender that the debt transfer is complete.
Recommended: Pros and Cons of Refinancing Student Loans
Advantages of Consolidating Student Loans With Your Spouse
Combining your student loans with your spouse’s through refinancing comes with certain advantages. Here are some to consider:
• Simplified repayment Rather than juggling multiple student loan payments and due dates, you and your spouse will only have one payment to make.
• A potentially lower rate If your spouse has better credit or a higher income than you, refinancing with your spouse may allow you to qualify for a lower interest rate than you’d get on your own. Together, you could potentially save money.
• You could lower your payment You may be able to lower your monthly payment by getting a lower interest rate and keeping the same repayment term. You can also lower your payment by extending your loan term. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)
• Fosters teamwork When you combine student loans with your spouse, there’s no longer separate debt. You have one joint goal you’re working towards as a team.
Recommended: Making Important Money Decisions in Marriage
Disadvantages of Consolidating Student Loans With Your Spouse
Although consolidating student loans with your spouse can seem appealing, there are some significant drawbacks to keep in mind:
• Few lenders offer it Only a small number of lenders offer spousal student loan consolidation. With few options to choose from, you may have trouble getting approved or finding a competitive interest rate.
• Loss of federal protections If you or your spouse have federal student loans and you refinance them, they become private student loans. You’ll lose federal loan benefits and protections, including the ability to enroll in an income-driven repayment plan and access to federal forbearance or deferment options.
• Divorce could be messy When you refinance your student loans with your spouse, you are taking on a new loan together. If you end up divorcing, you’ll still be legally obligated for the combined debt and you’ll have to work out payment terms with your former spouse as part of the divorce agreement.
• You might not lower your rate In most cases, refinancing only makes sense if you can get a lower interest rate. This is especially true if you have federal loans because you give up many protections by refinancing.
Other Ways to Tackle Student Debt as a Couple
A joint refinance isn’t the only way to manage your combined student debt load. Here are some other tips for how to manage student debt as a married couple.
• Be honest — with yourself and your spouse Having a high student loan balance might feel overwhelming, but avoiding your debt or hiding it from your spouse can affect your relationship. You can start by getting acquainted with exactly how much you each owe, your interest rates, and the loan terms.
• Know your repayment options If you have federal loans, it can be helpful to read up on the different plans available for student loan repayment and the pros and cons of each. If you’re having trouble making payments, you can look into income-driven repayment plans or other federal loan forgiveness programs. Speak to your loan servicer(s) if you’re concerned with your ability to repay your total loans as a couple.
• Consider consolidating separately If your or your spouse has multiple federal student loans, consolidating with a Direct Consolidation Loan can help you better manage the loans you have in your name. If you have loans other than Direct Loans, it can also give you access to additional repayment options. Federal consolidation won’t lower your rate, however. It could also extend your loan term, which would increase your overall costs.
• Look into refinancing separately If you (or your spouse) has higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans, refinancing could help you get a lower rate, a lower payment, or both. Keep in mind that refinancing federal student loans with a private lender means giving up federal benefits. And, if you opt for a longer loan term, you could end up spending more over the life of the loan.
💡 Quick Tip: It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.
Figuring Out the Financial Path that’s Right for You
While you and your partner can’t jointly refinance your student loans with the federal government, you may be able to find a private lender that offers a spouse consolidation loan. Other ways to manage student loan repayment after marriage include: listing all of your loans and coming up with a repayment strategy together, re-evaluating your payments plans, and looking into consolidating or refinancing your loans separately.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
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SoFi Student Loan Refinance If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
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Although our early 20’s are an exciting era full of new-found freedom, there are a lot of ways that the choices we make in our early adulthood affect the trajectory of the next few decades. Occasionally, someone finds the right teachers, mentors and friends to really set them up well for their 20’s and 30’s, but often we look back after several years and wish there were things we’d known how to do differently. From finance strategies to mental health awareness, savvy knowledge can make all the difference as young adults take their first steps towards forging their futures. Below are the 20 surprising things everyone wishes they knew at age 21.
1. Find Someone Who Shares Your Values
Whether you’re dating, getting married, or just trying to find friends, finding people who share your values is crucial. Of course you’ll always have differences with the people around you, but if you share the same core values, like kindness, being fiscally responsible, etc., you’ll find it much easier to remain together.
One user shared, “Find someone who shares your values and wants the same things as you when finding a partner. Whatever that is, everyone else is a placeholder at best and a waste of time and energy at worst.”
Another user replied, “That’s why I’m not dating right now.”
2. Invest Money as Soon as You Can
Investing even a small amount early in your life will drastically change your ability to retire comfortably later. No amount is too small: open some type of retirement account and put in even just ten dollars a month. Bonus points if you can put in your bonuses from work, your tax return, and other cash that’s not part of your regular income!
One Redditor commented, “Invest money as soon as you’re able to while making sure you have enough money to survive on. The plan you may have for your life now may change. Be okay with that. My life is way different than I thought it would be. Stay physically active and eat healthy. Come 30s, it catches up to you if you stop being active and [don’t eat well].”
3. How Interest Rates Work
Interest rates work differently for you on different types of account; credit cards are different from loans, regular savings accounts are different from high-interest savings accounts.
One online user posted, “How interest rates work. What is a stock, and what to do with them. Impact of having children very early. Taxes. Keep making your dream a reality.”
4. How Precious Time Is
Time is one thing we’ll never get back once we give it away. That’s not to scare you; it’s not as if we should feel guilty for watching a movie we only slightly enjoyed. But time is a resource, and a really precious one. You can use time for social media, and if it’s relaxing to you that might be a good use of your hours. But don’t forget about relationships, education (even just learning hobbies counts!) and recreation that really refreshes you.
Another user added to the thread, “How precious time is.”
5. Everyone Has Their Own Issues: Do Not Expect Help
One user pointed out that, among other things, there won’t always be somebody who wants to listen to you vent or moan about your life, or to lend you money if that’s what you need. Plan ahead for yourself, don’t always assume your community will be your safety net.
One user broke down his own learnings and shared, “I wish I would have taken my credit seriously. Never stop being active; it greatly helps your mental and physical health. Learned a skill. I’m in IT now, but I should have been making way more at 35 if I had taken it seriously at 21.
“Who you choose as a partner matters a lot. Unless you have parents that love and have the means to help you, it’s just you against the world, and that’s okay. Everyone has their issues and do not expect help from anyone.”
Another user responded, “5 hit hard.”
6. Everything Is Going to Work Out Great
While you may have been launched into your 20s unprepared, wishing you knew a whole lot more than you did, don’t freak out. You know a lot more now. You’ve made it this far and you’re going to be ok.
“That regardless of how it looks right now, everything is going to work out great,” one user stated.
The OP replied, “My therapist reminds me of this during every session.”
7. Understand Monthly Installments
Lots of big-ticket items will offer you the chance to make several small payments instead of paying in one lump sum, but don’t assume it’s an easy way out of paying all at once. Double check how much the smaller payments actually add up to. Are they charging you interest, or hiking up the price just by making it look easier? Pay all at once if you can; it’ll save you some money, and help you to only buy things you can really afford.
Another commenter shared, “Okay, now take that monthly payment fee, multiply it by the number of months for the payment plan, and finally compare that result to the cost of them before the payment plan. Only had to learn that lesson once.”
8. Save as Much as You Can
One user commented, “Save as much money as you can; always split your checks into savings, bills, and for fun!! Just always those 3; just because you’re saving doesn’t mean you can’t have fun; limit yourself so you’re not spending so much money just on that. Putting these three categories together will save you a headache in the future. I started saving when I was 16 because I got my first job! By 20, I had saved 30k through work and financial aid.”
9. Find High-Paying Jobs
While everyone tells us in high school that we should follow our dreams, there’s a lot of wisdom in making sure you’ll be able to get a higher paying job too. If you put in several years with a higher paying job while you’re younger, imagine how much more freedom you could have to go after your hobbies when you have a good amount saved up?
One commenter added, “Find high-paying jobs that give you a 401k or retirement fund if you work full time. My job matches up to 4% of what I put in.”
10. Drinking Is Fun, but It’s Costly
We all know that the hard partying often starts in our 20’s, but how many of us have stopped to consider the cost of that? We’re not suggesting you don’t go out at all, but consider setting a budget for your evenings out, and plan how many times you go based on what you know you can afford.
One Redditor posted, “Drinking is fun, but it’s costly; I spent a lot of my money going out, and now that I’m 23 those ‘friends’ are nowhere to be found. Except for like 2.”
11. Find Friends That Will Stick With You
“Find friends that will stick with you no matter what. Watch out for jealous people who want your downfall. Not everyone will be happy with your achievements, and that’s okay, but don’t let them suck your energy and shine. Cut anyone that’s not making you a better person or pushing you to do better,” one user commented.
12. True Friends Will Always Be Honest
There will come a time in each our lives when when we need to be called out. It’s not comfortable or fun, but if you have friends who are willing to lovingly point out your flaws, consider yourself lucky. True friends will be honest with you and tell you when your habits have become hurtful. But true friends will also remain your friends afterwards; they’ll call you out and then stick around for the fallout and still love you on the other side.
One user shared, “True friends will always be honest even when it hurts … and they will be supportive and want what’s best for you. Don’t settle for less.”
13 Relationships Are Hard, but Dating Is Fun
One user posted, “Relationships [are hard], but dating is fun! As long as you are staying safe and setting boundaries. Relationships are fun when they work, and you feel fulfilled. Don’t settle for anything half-a-. If you spend 70% of your time unhappy and communicate that and nothing changes, it’s not worth it.”
14. Pick a Better College Degree
It’s true: your college degree can make or break your income earning potential. College isn’t necessary for everyone, but if you’re going to college, make sure that you’re choosing a really functional degree. If you want to get an education for fun, then be sure you can really afford to do that.
“Pick a better college degree. INVEST YOUR MONEY. Live frugally. Keep away from my dysfunctional family. Let my first boyfriend break up with me when he wanted to,” one user commented.
15. You Don’t Need to Do It All Tonight
Some of us need a serious pep-talk just to get up off our couches and get things done … and others need permission to just rest. So if that’s you, remember it’s ok not to get everything done at once. You may feel like you have to juggle everything, but a big key to “keeping it all together” is knowing which things you can drop and which things you actually need to get done.
One user shared, “You don’t need to do it all tonight.”
16. Forge Lots of Strong, Healthy Friendships
We’re made to live in community, and it shows. All of us will feel lonely from time to time, but having really strong friendships around you to support you in those times will help immensely. And sure, finding high-quality friends is really hard, but it will always pay off.
One Redditor highlighted friendship; “Forge as many strong, healthy friendships as possible.”
17. Take Care of Your Skin
Beyond taking care of your finances, your menta health and community, and your career, don’t forget your skin. Adjust your skin care to your climate and skin type, drink lots of water, and eat lots of whole foods. Those things together will probably make up ninety percent of a poppin’ skin care regime.
“I wish I’d taken better care of my skin. There’s a texture difference as you get older,” one commenter stated.
Another user replied, “Second this! Wearing sunscreen is always worth it (decades) later!”
18. Put Some Stock in Your Career
One user posted, “Wish I had taken more stock in my career. I wish I had taken college more seriously. I wish I hadn’t lost myself in another person so young. This destroyed my ability to have real relationships. Wish I had never stayed in upstate NY.”
19. How Fast You Become Yesterday’s News
Another Redditor shared, “How fast you forget about yesterday’s news. How eventually we all fade away and how nothing in this world lasts. So, all these fleeting pursuits of happiness lead to emptiness in the end. How quickly your body gives out on you as you age. How the older I am, the more I want to sleep as if I’m always catching up on a never-ending sleep debt. Or save money … lol.”
20. Bet on Apple Stock
One user commented, “To bet on Apple stock.in 1994, it was .24 cents a share. Sigh.”
Sure, it’s impossible to know which investments are going to really take off, but do yourself a favor and invest in what you can while you’re young. You might get a few duds, but hopefully there will be some winners among them. You have more ability to take chances while you’re young since you’re less likely to need the financial security yet, so take some time to learn what you’re doing or consult a professional.
What do you think of the things listed above? Share your thoughts down in the comments!
Source: Reddit.
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Seniors held a record amount of equity in their homes, but also hit a high in terms of the amount of borrowings outstanding they had against it at the end of the third quarter, the National Reverse Mortgage Lenders Association and Riskspan found in a new report.
People ages 62 and up held a total $13.08 trillion in the third quarter, consisting of a $15.39 billion in property value offset by $2.32 billion in borrowing. This demographic’s quarterly home equity totaled nearly $12.7 trillion the previous fiscal period and $11.81 trillion a year earlier.
The quarterly increase is the second consecutive one. Home equity in this demographic faltered a little in the first quarter of 2023, dropping briefly to $11.62 trillion from $12.39 trillion the previous fiscal period.
The third quarter gain is significant to lenders because as interest rates have risen, more have shown interest in offering the Federal Housing Administration-insured Home Equity Conversion Mortgages that allow older adults to withdraw equity while living at home, so long as the borrowers can maintain the property.
Relatively higher interest rates had diminished the amounts that could be withdrawn through reverse mortgages, but with financing costs falling a little recently, borrowers may have more to gain from taking out these types of loans.
And while borrowing for this age group did reach a record high during the quarter, the spread relative to total home equity is still wide, suggesting there’s still opportunity for expansion in this part of the market.
“There’s lots of room for additional market participants,” NRMLA President Steve Irwin said.
That could offset some of the consolidation that’s occurred among reverse mortgage lenders in the past couple of years.
Finance of America, which acquired top reverse-mortgage lender American Advisors Group, is currently the largest player. It’s currently working to address a notice from the New York Stock Exchange warning that its stock price has been trading below compliant levels.
Guild bought Cherry Creek this year to expand its reverse mortgage division and Reverse Mortgage Funding filed for bankruptcy last year.
Participation in a market where there’s room to move may be limited because Home Equity Conversion Mortgages have their challenges.
In addition to periods of higher rates and slightly weaker equity, the product is complex and can take time to originate. HECMs also have some cumbersome servicing process policymakers are working to improve.
The FHA loan products require meeting with housing counselors and increasingly have been offered in conjunction with personal finance professionals who can help explain them as well.
“We’re seeing more and more borrowers utilize the reverse mortgage as an integral part of an overall retirement plan,” Irwin said. “We think that such strategic uses of the reverse mortgage will only continue to grow in the coming years.
He peeked into the future to assess what might happen in the first and second half of next year. “I imagine that deal activity remains slow for the first half of next year, and it’s possible that continues into the second half,” Snyder said. “But given what we know about rate expectations –that if we … [Read more…]