lender Archives - Hanover Mortgages

Apache is functioning normally

September 27, 2023 by Brett Tams

Buying your own debt for pennies on the dollar might seem like a great way to get out of debt fast. However, you can’t actually do this due to how debt buying works. Debts of this nature are sold in large bundles to debt collectors and other agencies. Learn more about how debt buying works, why it’s not an answer to your debt concerns, and what you can do to handle debt instead below.

In This Piece

How Debt Buying Works

Debt buying occurs when creditors gather old debts—also sometimes called bad debts—into portfolios. They sell these portfolios of debts to debt buyers at a fraction of the original value of the debt.

For example, imagine a credit card company that has thousands of delinquent accounts. It may gather 1,000 old accounts that are 180 days or more past due. Say the average owed on each of these accounts is $1,000—that would be a total of $1,000,000 in old debt.

The credit card company might sell the debt at a fraction of that value, such as 15 cents on the dollar. In that case, the debt buyer would purchase the debt for $150,000.

Once the debt buyer purchases this portfolio of debt, they can either try to collect on the original debt or sell the debt. In many cases, the debt buyers go through the portfolio, keeping debts they think they can collect and selling off others in a similar method.

If the debt buyer is able to collect any of the debt, the money is theirs to keep. So, in the hypothetical example above, if the debt buyer collects $250,000 of the original $1,000,000 in debt it purchased, it makes a profit of $100,000.

Why Are Debt Buyers Used?

The reason original creditors use debt buyers is that at some point, they consider debt uncollectible. They don’t want to spend any more of their own resources trying to collect on the debt. They could simply write the debt off and be done with it, but if they sell the debt to a debt buyer, they’re able to recoup at least some of their losses.

Many common types of debt can be sold to debt buyers. These include but aren’t limited to:

Credit card debts
Medical debts
Unpaid utility bills
Debts related to auto loans or mortgages

Can You Buy Your Own Debt?

You can’t buy your own debt because no one sells individual debts. It doesn’t make business sense on either side to do so. Instead, debts are sold in huge portfolios that cover many accounts. It would be difficult to impossible to discover what bundle of debt your debt would be placed in before the lender sells it off, never mind that you would likely pay more than your debt is worth to purchase both your debt and the debt of hundreds of other people.

For the creditor, selling off large sets of old, uncollected debt is a way to write things off the books while getting at least some payment. For the debt buyer, buying a large portfolio of debt at pennies on the dollar is a conservative gamble. Debt buyers hope that by investing in many accounts they’re able to collect money on some of them.

How to Deal With Debt Buyers

Because you can’t buy your own debt, someone else might. Here are some things you can do to deal with debt buyers if they end up holding your old debts:

Make sure it isn’t a zombie debt. These are debts that have already aged out of the statute of limitations for collection. However, they’ve risen to the top of a debt buyer’s or collector’s books, and someone is trying to resurrect them.
Negotiate to settle the debt. Debt buyers didn’t buy your debt for full price, so they don’t have to collect the full amount to make a profit. They’re often motivated to settle at less than the amount owed if you could pay them immediately.
Stand up for your rights. Your rights as a consumer are protected under federal and state laws. Make sure you understand your rights so you can stand up for them as you deal with debt buyers and collectors.

Manage Your Debt Better

Managing your debt in a responsible and proactive way can help you avoid debt buyers altogether because you never let your debts get so delinquent they might be sold. Some things you can do to manage your debt include:

Creating and sticking to a budget. When you’re spending within your means and making debt decisions that work with your budget, you’re less likely to fall behind on payments.
Pay all your debts on time. Use tools such as debt management apps to reduce the chance you might forget a debt or lose track of one.
Being proactive with debts. If you find yourself in a position where it’s impossible to keep up with a debt, such as being temporarily unemployed or dealing with a medical crisis, reach out to the creditor immediately. Many creditors have programs and options to help you deal with this type of issue.
Know what’s on your credit report. Keep up with your credit report so you don’t end up with old debt you thought was paid off coming back to haunt you. You can get a copy of all three of your major credit reports and track 28 of your credit scores when you sign up for ExtraCredit.

Source: credit.com

Apache is functioning normally

September 27, 2023 by Brett Tams

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.

A personal loan is money borrowed from a lender that can be used for almost any purpose, from debt consolidation to home improvement projects.

Most people don’t have $5,000+ sitting in their bank accounts—that’s where personal loans come in. Just like a mortgage or auto loan, personal loans allow you to cover large purchases or expenses under the terms that you’ll pay off the loan over time, typically with interest.

If you’re considering taking out a personal loan, here’s all you need to know to ensure you’re making the right money moves to fund your future investment.

What Is a Personal Loan?

A personal loan is money borrowed from a bank, credit union, or other financial institution that can be used for virtually any personal expense. Like any other installment loan, personal loan borrowers are expected to pay the money back over a set period.

The typical amount you can take out for a personal loan can range anywhere from $1,000 to $50,000, depending on several factors. Interest rates are just as variable—they can be as low as 6% and as high as 36%, depending on your unique financial situation. The current average interest rate for personal loans is 11.04% as of May 2023.

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Why Would I Need a Personal Loan?

If you’re planning on making a big purchase, getting a better handle on your debt, or have run into some unexpected expenses, applying for a personal loan can help cover the costs. People usually take out personal loans for:

Debt consolidation
Unexpected medical expenses
Home remodeling
Emergency expenses
Vehicle repairs or financing
Moving expenses
Vacations
Wedding expenses

While you could technically use this type of loan for, well, anything, there are a few things you should avoid using a personal loan for, like:

College tuition: It’d make more financial sense to use a federal student loan vs. a personal loan to pay for college tuition. Federal student loans typically come with lower interest rates, plus most don’t require a credit check. You may even qualify for a subsidized loan or an income-driven repayment plan.
Home down payment: Most mortgage lenders won’t accept a personal loan as a down payment, and even if they did, the increase a personal loan could cause to your debt-to-income ratio might disqualify you from the loan anyway.
Starting a business: Taking out a personal loan to open a business won’t help you build business credit since the loan is in your name. Instead, consider applying for a business credit card to start building credit so you can apply for a business loan down the road.
Everyday expenses: If you’re strapped for cash now, taking out a personal loan to cover bills and other living expenses may just create a bigger problem in the long run since you’ll have to repay the loan amount plus interest. Consider re-budgeting or finding ways to increase your income instead.

Personal Loans vs. Lines of Credit vs. Payday Loans

Personal loans, personal lines of credit, and payday loans are all money-borrowing options that can help you manage your finances or cover a significant expense. However, they’re typically used for different purposes.

Personal loans vs. lines of credit: Personal loans are typically used to cover large purchases or expenses since all the money is available upfront. On the other hand, personal lines of credit allow the borrower to use the credit available as needed and pay it off on their own timeline, so they’re more ideal for smaller everyday purchases.
Personal loans vs. payday loans: Whereas personal loans allow you to borrow a large sum of money with a loan term typically spanning several years, payday loans offer borrowers a small amount of cash—typically around $500 or less—at a higher interest rate that has to be repaid within 2-4 weeks. Payday loans are best if you have an urgent expense and know you can repay the loan within the term offered.

	Definition	What it’s best for
Personal loan	Supplies the borrower with a large sum of money upfront that must be paid back in fixed monthly payments throughout the loan term	Large purchases or expenses
Personal line of credit	Lets the borrower use credit as needed and pay it back on their own timeline with a variable interest rate	Building credit on everyday purchases
Payday loan	Gives the borrower a small sum of money—around $500 or less—at a high-interest rate that usually has to be repaid within 2-4 weeks	Quick cash for urgent needs, especially if the borrower does not qualify for a traditional loan

Types of Personal Loans

Before you apply for a loan, research the type of personal loan that will best serve your unique financial needs. Your credit history, credit score, and reason for needing the loan will determine which is best for you.

Here’s a quick breakdown of the seven most common types of personal loans:

Type of personal loan	Definition	Who it’s best for
Unsecured personal loans	Do not require any sort of collateral to qualify	Borrowers with excellent credit and a steady source of income
Credit-builder loans	Allow you to take out a small sum of money to demonstrate that you’re a reliable borrower by making regular on-time payments	Borrowers with low or no credit history looking to improve their credit score
Debt consolidation loans	Typically can be borrowed at a lower interest rate than most credit cards or other bills you plan to consolidate, saving you money on interest	Borrowers with multiple debt balances or balances with high interest rates
Co-signed and joint loans	Allow a co-signer to assume responsibility for a loan if the borrower does not qualify	Borrowers who do not qualify for a traditional loan or are hoping to be approved for a lower interest rate
Fixed-rate loans	Come with an interest rate that does not change over the repayment term, so the borrower pays the same amount every month	Borrowers who plan on paying off their loan over an extended period
Variable-rate loans	Come with a fluctuating interest rate that could increase or decrease monthly payments over time, but rates are sometimes lower vs. fixed-rate loans	Borrowers who only need to borrow funds for a short period

How Do Personal Loans Work?

You have to receive a personal loan through an authorized lender, typically a bank or credit union. Here’s how the personal loan process works:

You must first apply for a personal loan. The lender will decide if you qualify based on your creditworthiness, income, and the type of personal loan you’re interested in.
If you qualify for a loan, your lender will usually set a loan term to determine how long you have to pay the money back. This can range anywhere from months to years, depending on the lender and your needs. A fixed or variable interest rate—the cost of taking out the loan—will also be applied to your monthly payments.
If you qualify for a loan, you’ll be issued a lump sum deposited into your bank account. You’re free to do with the money as you wish, but you’re expected to make regular monthly payments until the loan is paid off.

How to Apply for a Personal Loan

Personal loans are a great tool for financing some of life’s most important—and unexpected—milestones. If you’re ready to apply for a personal loan, follow these steps:

Check your credit: Your credit history will be one of the biggest determinants of whether or not you’re approved for a loan, so it’s important you know where you stand. Most lenders will want to see a “good” credit score (620) or above to ensure you can be trusted to meet your loan terms.
Decide how much to borrow: You may qualify for a $50,000 loan, but before you sign on the dotted line, you need to know how much you can realistically afford to borrow. Carefully consider your current and future financial situation before jumping into any personal loan.

Pro tip: Try our loan payment calculator to easily estimate monthly payments for different personal loan options.

Know your consumer rights: According to the Truth in Lending Act, lenders must disclose the APR finance charges, principal amount, and any fees and penalties associated with a loan offer. If you come across a lender that refuses to share this information, you’ll want to look for a different lender.
Gather essential documents: In addition to your credit report, potential lenders may also want to see the following documents to speed up the application process.
1. Proof of your annual income
1. Your debt-to-income ratio
1. Your Social Security number
1. Recurring monthly debt (like your house payment)
1. Employer information
1. Your cosigners financial information (if applicable)

Research loan options: Personal loan requirements and terms vary by the type of loan and lender, so you’ll want to research before applying. Details that may sway your decision include the loan amount, APR, monthly payments, loan term, secured or unsecured, and more. Ask lenders for this information in advance before applying for a personal loan.
Submit your application: Once you’ve settled on a loan that meets all your requirements, fill out your application, read it carefully for typos or errors, and submit it to your potential lender. You’ll likely know whether your application was approved within a day or two whether your application was approved.

How to Qualify for a Personal Loan

Each lender is different, so minimum requirements for personal loans vary. However, if you’re hoping to qualify for a large unsecured personal loan with a competitive interest rate, here are a few general requirements most lenders will want to see:

A minimum credit score of 620
A positive and established credit history
A debt-to-income ratio less than 36%
A steady income with proof of employment

Again, these requirements vary from lender to lender. In some cases, you may qualify for a loan with no credit at all. Some lenders even prioritize things like education and work history when evaluating applicants. Inquire with potential lenders before you apply for a personal loan to better understand what you need to qualify.

Personal Loan Alternatives

If credit history, high interest rates, or substantial fees are preventing you from applying for a personal loan, there are money-borrow alternatives that may be a better fit, like:

Home equity loans: Home equity loans or lines of credit (HELOC) are secured by the equity a borrower has built in their home. Because this is a type of secured loan, interest rates tend to be lower compared to an unsecured personal loan. The repayment terms are also longer than most personal loans, sometimes up to 20 years.
Credit Cards: Credit cards allow borrowers to use credit and pay it back as they go, offering more flexibility than personal loans. Many credit cards also offer rewards like cash back or airline miles for money spent.
Personal lines of credit: Like credit cards, personal lines of credit allow you to borrow money and pay it back as you go. However, personal lines of credit have a set draw period—once the period is over, you won’t be able to tap your line of credit and will need to pay back your balance. Interest rates for personal lines of credit are typically lower than credit cards, so they’re ideal for large ongoing projects.
Retirement loan: If you’re looking for more relaxed loan requirements, you may be able to borrow from your employer-sponsored retirement plan in the form of a 401(k) loan. This is a great alternative for borrowers with less-than-stellar credit, but keep in mind that you’ll be restricted to your current retirement accounts, and you may have to repay the loan early if you leave your current job before the loan term ends, often with penalties.

FAQs

Still weighing your personal financing options? We answered some of the most frequently asked questions about personal loans to help with your decision.

Will a Personal Loan Affect Your Credit Score?

Applying for a personal loan may cause a light dip in your credit score because lenders will run a hard inquiry on your credit. While a hard inquiry shouldn’t affect your credit score too much, it’s important to narrow down your options before applying to avoid multiple hard inquiries from multiple potential lenders.

It’s also wise to wait to apply for a personal loan if you’ve just opened another line of credit, which could cause an even bigger drop in your score.

Do You Need a Down Payment for a Personal Loan?

You do not need a down payment for a personal loan. However, In the case of a secured loan, you’ll need collateral, such as a car or money in a savings account.

Can You Use a Personal Loan for Whatever You Want?

A personal loan can be used for just about any purpose. Some lenders may want to know what the money will be used for, but others just want to be certain you’ll be able to pay it back. However, a better financing option may be available if you plan on using your loan for things like tuition or daily expenses. Research your options before applying for a personal loan.

How Big of a Loan Can I Get With a 700 Credit Score?

You’ll likely be able to borrow higher limits with a 700 credit score or higher, but other factors, including your income, employment status, and the type of loan you’re applying for will also impact how big of a loan you qualify for.

How Often Can You Apply for a Personal Loan?

There is no limit to how often you can apply for a personal loan. You can have multiple personal loans open at once, but remember that too much existing debt may lead lenders to disqualify you from taking out more loans or opening new lines of credit.

Researching personal loans can be daunting, especially if you’ve run into sudden unexpected expenses. The best loan for you will depend on your unique financial situation. Check out the personal loans at Credit.com to quickly compare options and see potential APR, terms, and maximum loan amounts.

Source: credit.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Wachovia said today that it will discontinue wholesale loan origination beginning this Friday, leaving very few players in the broker-originated space.

It’s unclear how many jobs will be lost as a result of the shift in operations, but that will likely be disclosed when the company announces second quarter results tomorrow.

It is assumed that loans already locked and in progress will continue to be processed until a certain funding cut-off date.

Tim Wilson, Head of Loan Origination for Wachovia Mortgage, explained that the bank and mortgage lender was repositioning itself to work with clients who have existing relationships and live in areas where the bank’s franchises are located.

The Charlotte-based bank’s third-party origination unit Vertice is apparently not affected by the changes, and will continue to offer broker-originated loans.

Wachovia has been hard-hit by the ongoing mortgage crisis, especially after acquiring option arm specialist Golden West for a staggering $25 billion in 2006.

The company has since stopped originating option arms with the negative amortization feature, and has waived prepayment penalties tied to the so-called toxic loans.

In early June, Wachovia said it would contact all portfolio loan applicants whose loans were submitted by mortgage broker clients in what it referred to as “enhanced customer service”.

The bank is expected to report a second quarter loss in the range of $2.6 billion to $2.8 billion, according to Reuters estimates.

That includes a $4.2 billion increase in loan-loss reserves, with $3.3 billion going towards those nasty pick-a-pays.

Shares of Wachovia slipped 71 cents, or 5.37%, to $12.52 in after hours trading.

Source: thetruthaboutmortgage.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Data Mining, Digital Lending, Real Estate Database, Servicing Products; Conventional Conforming Program Shifts

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Data Mining, Digital Lending, Real Estate Database, Servicing Products; Conventional Conforming Program Shifts

By:
Rob Chrisman

49 Min, 7 Secs ago

As if lenders and vendors don’t have enough other stuff to worry about, the budgetary standoff in the U.S. doesn’t look like it will abate soon, raising the likelihood of the first government shutdown since 2019. Current funding for federal operations will end on October 1 unless a deal is reached or the proverbial can kicked down the road. Thousands of federal workers might be furloughed without pay. Sure it will be temporary, and its wider impact will likely be limited, but still even talking about it is lousy. According to Morgan Stanley, the last 20 government shutdowns that occurred since 1976 “appear to have had limited impact on the economy.” As for bond prices, a shutdown may cause some “temporary instability”, but this is not a given. There is talk of a short-term Continuing Resolution (CR) providing funding until later this year, but federal agencies, including HUD and Treasury, will cease to function normally. The National Flood Insurance Program (NFIP) authorities also expire on October 1st. The Mortgage Bankers Association created a guide outlining how HUD (including FHA and Ginnie Mae), VA, and USDA would be directly affected by the furlough of government employees and the curtailment of agency operations. (Today’s podcast can be found here and this week’s is sponsored by Built. Built is powering smarter and faster money movement for the entire construction and real estate ecosystem, all while reducing risk. Hear an interview with Servbank’s Bryan Crofford on how companies can best invest in employees, promoting longevity and success.)

Lender and Broker Software, Programs, and Services

Life can change on a dime, and sometimes even the most prepared borrowers end up facing financial hardships they never would have imagined. Forward-thinking credit unions are preparing today, so they can be there for their members when they need help the most. It’s why Mission Federal Credit Union implemented the MSP® loan servicing system, to not only improve their own efficiencies, but better serve their members who are facing financial difficulty. Are you ready to join Mission Federal Credit Union by enhancing your technology to be there for homeowners in life’s most challenging moments? Learn more about MSP today.

One thing that you can always count on in the mortgage space, is that regulatory requirements are always changing. This is why it’s critical for Banks or Mortgage Servicers to stay vigilant with comprehensive Compliance Testing and Monitoring to mitigate exposure and minimize risk. At the MBA Annual in Philadelphia, PA, Servbank’s Shayna Arrington will be helping us all do exactly that. Watch her moderate the panel, “Today’s Top Regulatory Issues” on Tuesday, October 17 at 1:30 PM, on 200 Level, Exhibit Hall E. Want to dive deeper into how Servbank can partner with you? Servbank will have a meeting space at the W Philadelphia on 10/16 and 10/17. Schedule some time to meet with them here: [email protected] or learn more at www.servbank.com.

One-Time Close (OTC) Volume Soars to record highs at AFR Wholesale® (AFR)! While housing inventory is still at an all-time low, OTC loans have witnessed an unprecedented surge in volume! In August, AFR closed more One-Time Close loans in one month than at any other time in their long history of offering the product. Homebuyers are increasingly drawn to the convenience and cost-saving benefits of OTC loans, as they streamline the construction process, reduce paperwork, and offer more favorable terms. This surge in OTC loans at AFR is not just a testament to its effectiveness but also an indicator of the outstanding clients and partners of AFR. Breaking news: As a thank you to their clients, AFR has also brought back FHA OTC on site-built homes!! This long-awaited product is back for partners of AFR to utilize now. Partner Today or contact AFR, email or call 1-800-375-6071.

One of the biggest questions for LOs in a down market is “How do I find more agent partners?” The answer is MMI. To find the right agent partners, you need the right data. MMI has assembled the industry’s most comprehensive real estate and mortgage transaction database which is leveraged by thousands of mortgage professionals daily. Using MMI’s database, LOs can easily search & filter, find an agent and at the click of a button, push the info to a CRM like Bonzo. Sign up for a demo today to see why a majority of the top 25 lenders rely on MMI.

Free eBook: Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns. The exaggerated upcycles and downturns of the past few years underscore just how crucial it is for lenders to build resilience and flexibility into their businesses. To overcome today’s challenges, lenders need to hone their lending process at each step. In this new eBook, Maxwell provides 12 tips from industry veterans to help you optimize your mortgage process from loan application to the secondary market. You’ll get insight from exclusive interviews with industry veterans on how to increase efficiency, access economic scale, and become resilient to market volatility like never before. Click here to download Maxwell’s new eBook “Market-Proof: How to Build a Flexible Lending Business Resilient in Upcycles & Downturns.”

The transformation from paper to digital processes offers substantial benefits, including cost reduction and improved borrower experiences. Most lenders are in a hybrid phase, blending paper and digital processes. To navigate this ongoing change and ongoing innovations in the digital lending space, lenders should consider embracing five best practices: create a successful strategy, prioritize borrower experience, ensure compliance, harness technology, and stay adaptable in the evolving digital landscape. Tackle the future of lending by staying informed and proactive. For deeper insights into this digital lending revolution and actionable steps, read the full article.

“Heading to Vegas? The Total Expert team is in full force at the Digital Mortgage conference in Las Vegas! There are three ways to interact with us. The first is to stop by booth #501 to get your Customer Intelligence ROI report and learn how you could increase funded loan volume by 20 percent. You can watch a LIVE demo of Total Expert on Tuesday 9/26. Lastly, catch our Founder & CEO Joe Welu for a panel discussion: The Customer Data Goldmine Goes Way Beyond Credit Triggers on Wednesday 9/27.Schedule time to meet with the Total Expert team in Vegas.”

Freddie Mac, Fannie Mae, Conventional Conforming News

The Federal Housing Finance Agency (FHFA) released its second quarter 2023 Foreclosure Prevention and Refinance Report. The report shows that Fannie Mae and Freddie Mac (the Enterprises) completed 47,370 foreclosure prevention actions during the quarter, raising the total number of homeowners who have been helped to 6,818,471 since the start of conservatorships in September 2008. View the News Release

FHFA-OIG released two reports: Within the Federal Housing Finance Agency (FHFA), the Division of Federal Home Loan Bank Regulation (DBR) is responsible for supervising the Federal Home Loan Bank (FHLBank) System to ensure the safe and sound operation of the FHLBanks. In response to market disruptions, DBR adapted the scope of its Federal Home Loan Bank Supervisory Activities in 2023.

Regulated entities have not been immune to the trends affecting the labor market over the past few years. Some of the regulated entities experienced higher attrition in 2021 and 2022, consistent with trends in the broader labor market, but one Enterprise reported that its turnover rate started declining in 2022. Read the full report, People Risk at FHFA’s Regulated Entities.

Freddie Mac will update Loan Product Advisor® (LPASM) in October to support multiple recent Single-Family Seller/Servicer Guide announcements, plus more enhancements, described in Freddie Mac October LPA Releases.

Freddie Mac Loan Selling Advisor September Updates includes the following information: Uniform Loan Delivery Dataset (ULDD) Phase 4a Updates and Phase 5 Specification, Auto Evaluate on Import Loan, New Loan Delivery Rules Supporting the Duty to Serve Credit Fee Cap, Initial Principal and Interest Payment Amount Conditionality update, Auto Re-evaluate: Improvements to Modify and Evaluate, and Enhancements to Mandatory Cash Contracting.

Leverage Fannie Mae’s new edition of Beyond the Guide to help your organization build a best-in-class quality control (QC) program. Specific examples and scenarios provided can help teams understand and apply Selling Guide concepts in a way that is most impactful to their organization. A robust QC program helps strengthen loan quality ensuring a safe, sound, and resilient mortgage industry.

Fannie Mae Appraiser Update September 2023 edition focuses on dual themes of delivering high quality appraisals and understanding recent policy changes. Topics include updates to the Appraiser Independence Requirements (AIR), new options for 1004D completion, our stance on 3D printed homes, and more.

Fannie Mae posted the September Appraiser Quality Monitoring (AQM) list. Read the AQM FAQs.

Chris Whalen writes, “Our short take on the future of the GSEs (Government Sponsored Enterprises) looks a lot like the character played by Bruce Willis in the 1995 Terry Gilliam film, ‘Twelve Monkeys.’ Imagine if the GSEs were released from conservatorship, but then were immediately designated as a ‘systemically important financial institution’ (SIFI) by the FSOC. How do you think that would work for private investors? What would happen to the guarantee fees?”

Pennymac Conventional LLPAs updates effective for Best Efforts Commitments: Pennymac Announcement 23-58 replacement of ‘Purchase Special’ LLPA Grid with new ‘Area Median Income Adjustments’ LLPA Grid. Pennymac Announcement 23-59 introduces new ‘Investment Property’ LLPA to the ‘LLPAs by Product Feature for All Eligible Loans’ LLPA Grid. Pennymac Announcement 23-60 updates values for the ‘2nd Home Additional’ LLPA on the ‘LLPAs by Product Feature for All Eligible Loans’ LLPA Grid.

Pennymac is aligning with the FHFA based updated project review and eligibility requirements announced in Fannie Mae SEL 2023-06 and Freddie Mac Bulletin 2023-15, with the exception of any reference to co-op projects. View Announcement 23-61: GSE Updated Condo Project Review Requirements

Citizens Correspondent National Bulletin 2023-16 provides updates on the following topics: Conventional Conforming Products, Review requirements for condominium eligibility – DU and LPA, Gifts and Gifts of Equity – DU, 3D printed homes, Trust Income – DU, USDA-RD Product, Fiscal Year 2024 Conditional Commitment Notice, All Products, Disaster Tax Filing Relief.

PHH Mortgage Corporation updated Conforming Product listings for both Delegated and Non-Delegated loans.

Pennymac announcement 23-62: Fannie Mae SEL 2023-06 Condo Project Manager Updates

Citi Correspondent Lending Bulletin 2023-08 provides Credit policy updates regarding Non-Agency Depreciating Markets list updated, Condo & Co-Op Critical Repairs, Shared Equity and Shared Appreciation, LPA Asset, and Income Modeler (AIM), Continuity of Obligation: Limited Cash-Out, Hazard Insurance Update: Effective Date, and Taxpayer First Act.

On September 6, 2023, Fannie Mae and Freddie Mac announced Selling Guide policy changes addressing multiple topics in Fannie Mae SEL-2023-08 and Freddie Mac Bulletin 2023-18.

AmeriHome Mortgage accepts all revisions, view Product Announcement 20230910-CL for details.

Capital Markets

Ahead of today’s $48 billion 2-year Treasury auction, headlines to open the week revolved around increases in oil prices that’s evidence of inflation’s stickiness, Chinese developer Evergrande calling off talks with creditors as it appears headed for bankruptcy, and reaction to hawkish Fed remarks which is forcing yet another reprice from markets. There is growing sentiment that central banks across the globe aren’t done hiking rates, and Treasury yields trended higher to open the week as a result. With the calendar turning to fall, the economy is facing a few headwinds such as the run up in oil prices, student loan payment resumption, an expanding auto workers strike, and a partial shutdown of the U.S. government.

Every lender knows that mortgage rates remain above 7 percent, and housing data released over the last week highlighted another decline in builder sentiment. Housing starts fell 11.3 percent to a 1.25-million-unit pace in August. Existing home sales were down 0.7 percent in August as low inventory, high prices, and high mortgage rates continue to weigh on sales. Hoping for lower interest rates? A recession would likely mean lower interest rates, but workers with stable jobs (most individuals) would want to take advantage of low interest rates, causing home prices to rise faster. Initial jobless claims fell to 201k for the week ending September 16, which was the lowest weekly reading since January. The JOLTS report indicated that the demand for new workers is moderating somewhat however, significant layoffs are not on the horizon.

Today’s calendar includes the Philadelphia Fed non-manufacturing surveys for September, Redbook same store sales, July house price indexes from S&P Case-Shiller and FHFA, September consumer confidence, August new home sales, Richmond Fed manufacturing for September, Dallas Fed Texas services for September, the aforementioned Treasury auction of $48 billion 2-year notes, and remarks from Fed Governor Bowman. We begin Tuesday with Agency MBS prices a few ticks (32nds) better and the 10-year yielding 4.50 after closing yesterday at 4.54 percent. The 2-year is up at 5.12.

Employment

“At Fairway Independent Mortgage Corporation, customer service is a way of life. #FairwayNation mortgage loan officers are dedicated to finding great rates and loan options for our customers while offering some of the fastest turn times in the industry. Our goal is to act as a trusted mortgage advisor, providing highly personalized service and helping you through every step of the loan process, from application to closing and beyond.”

Logan Finance Corporation, a national Non-QM mortgage lender, is excited to welcome Aaron Samples to Logan’s Executive Leadership Team as Chief Revenue Officer. To learn more about why Aaron joined one of the fastest Non-QM lenders in the nation, contact Randy Viars.

The FHA has a job opening for a Senior Underwriter: Job Announcement Number 23-HUD-2915-P. Job duties include assisting the Branch Chief in monitoring the status of goal accomplishment. Advise the Chief of potential problems in attainment of goals and objectives. Research required underwriting procedures and techniques. Serve as an expert-level resource within his/her Office on matters relating to Underwriting and other Direct Endorsement issues.

Don’t forget that private mortgage insurance companies are hiring: MGIC, National MI, Arch MI, Radian, Essent, and Enact (in no particular order). And while’s we’re at it, Fannie Mae and Freddie Mac. And my cat Myrtle’s friend the CFPB.

Dovenmuehle Mortgage, Inc. announced that Robert Howerton has joined the organization as Chief Information Officer where he will be maintaining and expanding Dovenmuehle’s current information technology (IT) infrastructure.

Download our mobile app to get alerts for Rob Chrisman’s Commentary.

Source: mortgagenewsdaily.com

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September 26, 2023 by Brett Tams

Ready to buy a home? Whether you’ve already found your dream home or you’re just starting the process, one thing’s for sure—you’ll probably need a home loan. But before you start looking into mortgages, you might need to give your credit score a little evaluation. You need a decent score to get a decent mortgage, but what’s the minimum credit score for a home loan?

The short answer? It depends on a lot of things. If you’re ready to start looking for home loans, but aren’t sure if your score is up to par, we’re to help. Keep reading to learn if your credit score is mortgage-ready.

A Quick Look at Minimum Credit Scores for Mortgages

Mortgages are complex forms of financing, so a lot of factors come into play when you’re applying. Find out more about the minimum credit requirements for these types of loans—and why your credit score even matters—below.

Why Does Your Credit Score Matter for a Mortgage Loan?

Your credit history tells a financial story about you. It lets mortgage lenders better understand whether you’re reliable, how likely you are to pay off your debt and whether your debt-to-income ratio is low enough to allow you to cover your current debt obligations in addition to a new mortgage payment.

If you have bad credit, you may look like a risky investment to potential lenders and you’ll be less likely to get the approval. Or, if you do get approved, you may be required to pay higher interest rates than individuals with a better credit score might pay.

Luckily, you can still get approved for a home loan even with a lower-than-average score. That’s because your credit score is critical, but it’s not the only factor lenders consider. Plus, different types of loans come with different requirements, so you don’t always need a good credit score to qualify.

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What Credit Score Do You Need to Get a Mortgage?

As stated above, the required credit score really depends on what type of loan you’re looking at. Let’s break it down a bit, defining these types of loans, so you can understand more about mortgages and some of your options.

Credit Requirements for Conventional Mortgage Loans

Conventional mortgage loans are not backed by a government entity. They’re offered via private lenders, including banks and mortgage companies. Typically, you need good credit to qualify for a conventional mortgage. For this purpose, that’s considered to be 640 or higher.

However, if you fall slightly short of that mark, you might still be able to find a lender if your payment history, debt-to-income ratio and other factors are positive. Ultimately, lenders need to know that you’re likely to pay your mortgage as agreed and that you also have the resources to do so.

Credit Requirements for Government-Backed Mortgage Loans

Credit requirements for government-backed loans get a bit more complex. Since these loans are all or partially backed by federal government agencies, lenders may approve you even if you don’t have good credit. However, that doesn’t mean everyone gets approved. Here are some basics about eligibility and minimum credit score requirements for various government-backed mortgage types.

Credit Score Requirements for USDA Loans

These loans are partially backed by the federal government and are available to individuals buying qualifying suburban or rural homes. USDA loan lenders must conduct a thorough review of an applicant’s credit profile. Here are just some of the rules they must apply:

If three credit scores are present, they take the middle one. If two credit scores are present, they take the lowest one. If only one or no credit score is present, the lender must do a credit analysis and obtain alternate credit verification.
The credit score must be based on at least two trade lines (open accounts) that were active at least 12 of the past 24 months. In short, if you don’t have much credit or you haven’t dealt in credit for years, you may have a challenge getting approved.
There must be no significant delinquencies or collection accounts.

Credit Score Requirements for VA Loans

VA loans are available to eligible veterans and their families and are backed by the Department of Veterans Affairs. They don’t require a down payment or private mortgage insurance. The VA does not establish minimum credit score requirements and requires lenders to conduct a comprehensive credit analysis.

VA loans don’t have maximum debt ratios, but the lender has to provide compensating factors that prove they can pay the mortgage if their debt-to-income ratio is more than 41%. Veterans who borrow without a down payment may be limited to mortgages of $453,100 or less.

Credit Score Requirements for FHA Loans

FHA loans are backed by the Federal Housing Administration and are seen as a lower risk by lenders because they’re government-backed loans. This option is a common choice for anyone who qualifies as a first-time home buyer because of its relatively low minimum credit score requirements.

Credit score requirements for FHA loans are:

580 or higher for maximum financing—this means you wouldn’t need a down payment or could have a very small down payment, depending on other factors.
500 or higher for partial financing—this means you’d need at least some down payment orwould need to buy a house for less than it was worth.

You can’t get approved for an FHA loan with a credit score less than 500. Other factors do impact approval, such as your payment history, income and debt level.

Do You Need Good Credit to Refinance Your Mortgage?

A refinance is still a mortgage, so yes, you typically need good credit to get approved for one. Many of the minimum credit scores for home loans above apply to refi loans too. One benefit you get when refinancing is that you may owe less than your house is worth. That could reduce the need for down payments and even help you access better interest rates because the lender has less risk in making the loan.

Has COVID-19 Impacted Mortgage Credit Requirements?

Yes, COVID-19 has impacted minimum credit scores for mortgages. These changes are typically made by each bank. In the early months of the pandemic, uncertainty led many banks to drastically reduce home loans or even put them on hold. For example, in April 2020, JPMorgan Chase changed credit requirements to at least a 700 credit score with a 20% down payment.

However, falling interest rates and improved economic factors caused many banks to loosen requirements in the later months of the pandemic and into 2021. Ultimately, you’ll need to do your research when you’re ready to apply for a mortgage loan to find out what options you might qualify for.

What You Can Do Now

First, check your credit score. You might consider signing up for ExtraCredit. You’ll get access to 28 of your FICO scores—and you’ll see the credit scores that mortgage lenders see. ExtraCredit also has features such as Build It to help you positively impact your credit score if you need to boost it before applying for a mortgage.

Once you have a credit score that’s above 640—or, even more optimally, above 700—you can start shopping for mortgage loans and good rates. And remember that if you do get approved, your credit score also impacts your interest rates. Always ensure you know what your mortgage is going to cost you each month and over the life of the loan.

Source: credit.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Yes, you can refinance student loans with a private lender more than once in the quest for a lower interest rate and different repayment term.

How Many Times Can You Refinance Student Loans?

If you’re a graduate who has the credit score and income to qualify, you can refinance your student loans as many times as you’d like. In fact, some folks refinance multiple times.

But before you get too refi-happy, it’s important to know the advantages and disadvantages of this strategy.

What Are Some Advantages of Refinancing Multiple Times?

One of the biggest advantages of refinancing your student loans is that you may be able to qualify for a lower interest rate, whether you refinance once or several times. A reduced rate can help you save money in the long run.

For example, let’s say you’ve been paying down an older federal Grad PLUS loan that currently has a balance of $40,000 and an interest rate of 7.90%. You have 10 years of payments left, which are currently $483.20 per month.

You have good credit and qualify for a seven-year, fixed refinance rate of 6%. If you were to go through with the refinance, you’d actually increase your monthly payment by about $100. However, you’d save about $8,900 in total interest.

Later on, you might qualify for a lower fixed rate or an even lower variable rate, and so on.

Or you might find it helpful to refinance to a longer term, with lower monthly payments. That will likely mean paying more in interest over the life of the loan, but lower monthly payments may put you in a better position to accomplish your short-term financial goals.

Reputable lenders charge no application or origination fees, so refinancing each time will not cost you anything.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Are Some Disadvantages of Refinancing Multiple Times?

One disadvantage of refinancing your student loans is that your credit score could temporarily drop by a few points. Whenever you apply for a loan, the lender performs a hard credit inquiry. One or two inquiries usually have a small and temporary impact on your score. However, too many hard inquiries within a short time frame could cause some damage. The good news is that many student loan refinancing lenders allow you to shop for rates and get quotes online using a soft credit pull, which has no impact on your score.

Another factor to consider is your time. Though you can refinance as many times as you want, it helps to make sure it’s worth the effort. That means researching reputable lenders and the rates and terms they offer.

It’s important to point out that refinancing federal student loans even once will cause you to permanently forfeit government-backed protections and benefits, such as federal student loan forgiveness programs, deferment, and forbearance.

How Is Student Loan Refinancing Different Than Consolidation?

It’s important to make a distinction between refinancing and consolidation. When you refinance your student loans with a private lender, you are borrowing one new loan with new terms, such as a lower interest rate or different repayment term, and using the proceeds to pay off your existing loans.

When you consolidate federal student loans into a Direct Consolidation Loan, you combine your existing loans into one. The term may be drawn out to up to 30 years, and the interest rate will be the weighted average of the original loans’ rates, rounded up to the nearest eighth of a percentage point. For this reason, your new rate may actually be higher than the rate of your previous lowest-interest loan.

Things to Look for When Refinancing

Whether you refinance your student loans for the first or sixth time, it would be smart to check that your new rate and term make sense for you.

You’ll encounter fixed-rate and variable-rate loans. Fixed-rate loans have one set interest rate that does not change over the life of the loan. The rates on fixed-rate student loans are typically higher than the initial rates of variable-rate loans. However, because the rate never changes, it can make budgeting easier.

Variable-rate loans have interest rates that start off lower, but can fluctuate based on the prime rate or another index. Rates can climb if the rate or index they are tied to goes up (and vice versa).

Variable-rate loans might be a good choice for shorter-term loans. The longer the loan term, the bigger the chance of a rate hike.

Also, beware of qualifying for a low interest rate that’s attached to a longer-term loan. Though monthly payments might be low, a longer term might mean you’ll end up paying much more in interest over the life of the loan. If you can afford the higher monthly payment, loans with shorter terms can be a good cost-saving option.

Consider looking for a refinance lender that offers competitive rates and flexibility in choosing the repayment term. And if you want to refinance both federal and private student loans into one new loan, look for a lender that does that.

Serious savings. You could save thousands of dollars.
We offer flexible terms and low fixed or variable rates.

Refinancing Your Student Loans More Than Once

It’s all about the great rate chase.

Having a low debt-to-income ratio can help you qualify for a lower interest rate. So if you have a higher salary, get a big bonus, or pay off other debts, your debt-to-income ratio might improve.

Similarly, if your credit score increases, you typically become more attractive to lenders. This could happen if you are using a small amount of your available credit, or if you find and correct a mistake on one of your credit reports. (Do student loans affect your credit score? Continuous on-time payments may have a positive effect.)

Married couples may want to consider refinancing student loans together to put the power of two earners to use. A solid cosigner could also be brought aboard.

If you’re thinking about a refinance, it could help to keep an eye on the federal funds rate, which is the rate banks charge one another for overnight loans. When the Federal Reserve raises or lowers short-term interest rates, private lenders respond in turn. (This does not apply to federal student loans, whose interest rates have been set by Congress once a year since 2006.)

Even if interest rates rise now, they could still be considered low by historical standards.

Refinancing Your Student Loans With SoFi

Is it bad to refinance multiple times? If it saves you money, that’s nothing but a good thing. Refinancing won’t be the right move for all people, but everyone should know the rates they’re paying, their total student debt load, and their repayment strategy.

SoFi is a leader in refinancing student loans, with low fixed or variable rates and flexible loan terms.

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.

FAQ

Can I consolidate student loans more than once?

You can consolidate federal student loans into a Direct Consolidation Loan more than once only if you have federal loans that were not included in a previous consolidation, or if you previously consolidated loans under the Federal Family Education Loan (FFEL) consolidation program. Remember that consolidation does not lower your loan rate.

How many times can you refinance a loan?

As many times as you qualify to do so.

How many times can you take out student loans?

When it comes to federal student loans, there is no time limit on how long a borrower can receive Direct Unsubsidized Loans or Direct PLUS loans, but annual and aggregate limits for Direct Unsubsidized Loans apply.

Private student loans, for which you must qualify or have a cosigner, usually have an annual limit equal to an institution’s cost of attendance minus other financial aid. Most have aggregate loan limits for undergraduate and graduate students.

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.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) 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, such as the SAVE Plan, or extended repayment plans.

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.

SOSL0823017

Source: sofi.com

Apache is functioning normally

September 26, 2023 by Brett Tams

By the end of 2022, 27 million Americans had an outstanding personal loan balance with the average amount owed being $11,116. The interest rates of these loans are also the highest they’ve been since 2011 at 11.23 percent.

Sources: TransUnion and the St. Louis Federal Reserve

As of the second quarter in 2022, Americans owed over $192 billion in personal loans, according to TransUnion®. This was a 31% increase from 2021 and is thought to be due to the financial hardships Americans experienced during the COVID pandemic that overwhelmed the nation in 2020.

If you’re one of the many Americans who took out a personal loan in early 2022, the good news is that interest rates were very low, according to the St. Louis Federal Reserve. Since then, rates have reached new highs, so many Americans are struggling to pay back these loans.

Understanding the current trends in personal loans can help you see where you stand financially. We’ve gathered 10 personal loan statistics that include the most common reasons people take out personal loans, delinquency rates and which states have the highest personal loan debt to help you make better financial decisions if you’re accumulating too much debt.

In This Piece

Must-know Personal Loan Statistic Findings

Millions of Americans are taking out personal loans, and the following are some of the most interesting facts on the topic.

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27 million Americans have personal loan debt (TransUnion)
At the end of 2022, the average new loan amount was $8,018 (TransUnion)
The average amount owed in personal loan debt was $11,116 at the end of 2022 (TransUnion)
In November of 2022, personal loan interest rates were the highest they’ve been since May of 2011 (St. Louis Federal Reserve Bank)
New Jersey has the highest average new personal loan account balance at $13,494 (TransUnion)

Average Personal Loan Debt in America

According to TransUnion, Americans owed roughly $9,896 on average as of the first quarter in 2022, the highest it’s been in recent years. Americans took out loans at an average of $6,656 per loan, which was over $1,000 more than in the previous quarter of 2022.

The amount owed per borrower dropped significantly between Q2 and Q3 in 2022, but by the end of the fourth quarter, the average amount owed increased by over 100 percent with the new loan amount dropping to $8,018.

The increase in personal loan debt may have been due to the inflation the country experienced in 2022. TransUnion also reports that there were more loans approved to “super prime borrowers,” or those with credit scores over 720, stating, “On a percentage basis, personal loan originations for subprime and near-prime borrowers increased in the single digits [year over year] whereas super prime borrowers experienced a 33% rise in the third quarter.”

How Many Americans Have Personal Loans?

The amount of Americans taking out personal loans increased 12 percent from 23.9 million in the first quarter of 2022 to 27 million by the fourth quarter.

Prior to the beginning of the COVID-19 pandemic, the total amount of personal loan borrowers was 23.3 million at the end of 2019 and dropped to 21.2 million by the end of 2020. The number of borrowers then grew back to 22.8 million in the following fourth quarter of 2021 and continued to grow as the pandemic regressed.

Quarter	Q4 2022 Average new account balance
Q4 2019	23.3 million
Q4 2020	21.2 million
Q4 2021	22.8 million
Q4 2022	27 million

The Most Common Reasons to Take Out a Personal Loan

LendingTree conducted a survey of their users in 2022 and found that the most common reason consumers took out personal loans was to pay down other debts. Over 58 percent of borrowers used these loans to pay down debt, and the other main reasons included credit card refinancing, home improvements and other major purchases.

Rank	Reason	Percentage of respondents
1	Debt consolidation	41%
2	Other	17.3%
3	Credit card refinance	17.3%
4	Home improvements	6.2%
5	Major purchase	4.1%
6	Medical expenses	3.0%
7	Moving/relocation	2.9%
8	Everyday bills	2.9%
9	Car financing	1.7%
10	Car repair	1.1%
11	Business	0.9%
12	Vacation	0.5%
13	Homebuying	0.4%
14	Wedding expenses	0.4%

Average Personal Loan Interest Rates

During the second quarter of 2022, the Federal Reserve Bank of St. Louis reported that interest rates reached an all-time low of 8.73 percent. By the end of the year, these rates were the highest they’ve been since 2011 at over 11.2 percent.

Personal Loan Debt Compared to Other Debts

Based on TransUnion data, personal loans account for less than four percent of the total number of accounts when compared to other types of loans, such as credit cards, home and auto loans.

Account type	Number of accounts	Percentage of accounts
Credit card	518.4 million	76.3%
Auto loan	81.2 million	11.9%
Mortgage loan	52.6 million	7.83%
Personal loan	27 million	3.97%

It’s also important to note that not all credit card accounts carry a balance.

Personal Loan Delinquency Rates

Delinquent accounts are accounts 60 days or more past due and can hurt your credit score. The Q4 TransUnion report shows that the delinquency rate dropped year over year between 2019 and 2020, but was up 53 percent as of 2022, with an overall delinquency rate of 4.14 percent.

Quarter	Delinquency rate
Q4 2019	3.48%
Q4 2020	2.7%
Q4 2021	3%
Q4 2022	4.14%

TransUnion’s 2022 Credit Snapshot shows that in the last month of the report, those with the lowest credit scores have the highest delinquency rate of 23.9 percent, while super prime borrowers are only at 12 percent.

Credit score range	Percentage of delinquent borrowers
Subprime (300 to 600)	23.9%
Near prime (601 to 660)	23.7%
Prime (661 to 720)	23.3%
Prime plus (721 to 780)	17%
Super prime (781 to 850)	12%

Personal Loan Statistics by State

TransUnion’s 2022 Credit Snapshot reports that New Jersey has the highest average new account balance at over $13,000, and Oklahoma has the lowest at $3,170. Although Oklahoma has the lowest new account balance, they have the highest delinquency rate at 7.73 percent.

State	Q4 2022 Average new account balance	Q4 2022 Delinquency rate
AK	$10,296	2.9%
AL	$4,362	6.59%
AR	$7,089	5.18%
AZ	$9,343	3.78%
CA	$10,454	3.47%
CO	$12,322	2.03%
CT	$11,712	2.57%
D.C.	$9,016	6.55%
DE	$9,146	4.04%
FL	$8,379	3.94%
GA	$8,621	5.18%
HI	$12,224	2.28%
IA	$7,443	2.94%
ID	$9,072	4.38%
IL	$9,236	3.46%
IN	$7,439	2.97%
KS	$8,349	3.05%
KY	$6,875	3.36%
LA	$6,797	5.07%
MA	$12,518	2.24%
MD	$10,956	2.77%
ME	$6,651	1.67%
MI	$7,052	3.21%
MN	$10,692	3.73%
MO	$6,522	6.69%
MS	$5,179	4.96%
MT	$9,326	2.53%
NC	$10,035	3.03%
ND	$8,051	1.89%
NE	$7,755	3.65%
NH	$11,719	2.31%
NJ	$13,494	3.49%
NM	$5,418	6.31%
NV	$8,839	3.74%
NY	$11,843	2.77%
OH	$7,595	3.75%
OK	$3,170	7.73%
OR	$10,523	2.93%
PA	$10,418	3.06%
RI	$8,744	2.14%
SC	$5,924	4.89%
SD	$9,945	2.06%
TN	$5,355	5.38%
TX	$4,952	6.33%
UT	$7,966	4.23%
VA	$9,875	3.37%
VT	$6,180	0.82%
WA	$9,570	2.94%
WI	$6,489	3.95%
WV	$10,864	1.96%
WY	$7,698	2.66%

Personal Loan Statistics by Type of Lender

More and more Americans are turning to financial technology companies, also known as FinTech, for their personal loans. These are online banking services that are done via a company’s website or mobile app, and 32.9 percent of all personal loans are done through these types of companies.

Lender type	Distribution of total balances
FinTech	32.9%
Banks	20.5%
Credit unions	19.7%
Other finance companies	26.9%

Can Personal Loan Debt Affect Your Credit Score?

If you’re one of the 27 million Americans with a personal loan, you don’t have to let your debt harm your credit score. As you’ve learned from these personal loan statistics, many Americans have turned to personal loans to pay off other debts, but many people are delinquent with their payments, which can hurt their scores.

Credit.com provides a variety of credit tools and tips to help you work to repair and improve your credit. You can learn more about our services, like ExtraCredit, or click here to get your free credit report card.

Source: credit.com

Apache is functioning normally

September 26, 2023 by Brett Tams

A hard credit inquiry is when a credit card issuer or another lender reviews a credit report as part of your credit application. Their request to review your credit will be shown as a hard inquiry on your credit report and will affect your credit score.

Let’s say you’re looking to apply for a new credit card. Whether you want to expand your available credit, create a credit mix, or simply apply for a credit card online with your desired rewards, you’ll often encounter a hard inquiry.

A hard credit inquiry—or a hard credit check—is a natural part of the credit card application process. It happens when the lender or bank associated with your credit card company checks your credit report to see if you are eligible for acceptance.

What Are Hard Inquiries?

Hard inquiries—or hard credit checks—occur whenever a lender or bank accesses your credit account. The credit bureaus log the activity, recording the date and the name of the company or entity that accesses it.

Hard inquiries refer to when a lender accesses your credit report to evaluate your merit as a borrower. In other words, hard inquiries happen when lenders look at the information in your report to decide whether to approve or deny your credit card application.

How Do Hard Inquiries Impact Your Credit?

Hard inquiries aren’t the most impactful thing that affects your credit score, but they are one of the five major factors that make up your credit score. That’s because having many hard inquiries on your account looks like you’re chasing credit. Lenders don’t want to see that behavior from potential borrowers as it reduces their credibility.

Here are the five factors that impact your credit score:

Payment history accounts for around 35% of your credit score. This factor is whether you pay your bills on time and as agreed upon.
Credit utilization accounts for around 30%. This reports how much of your available revolving credit limit you’re actively using.
Credit age accounts for around 15% of your score. This is how long you’ve had credit and the age of your oldest accounts.
Credit mix makes up around 10% of your credit score. Creditors want to see that you can manage different types of accounts, such as revolving and installment accounts.
Hard inquiries affect around 10% of your score. This is the number of recent hard inquiries on your report.

Hard Inquiries vs. Soft Inquiries

Not all inquiries that show up on your credit report impact your score. Only those that evaluate your financial creditworthiness do—these are hard credit checks.

Soft inquiries, which are purely informational, have little to do with credit and don’t have the same impact. They’re also not usually visible to lenders or banks—only you.

Hard inquiries	Soft Inquiries
Affect your credit score	Don’t affect your credit score
Count against your credit score for 1 year	Appear only to you on your credit report
Occur during the approval process	Occur during pre-approval processes
Happen when you’re actively searching for credit	Happen during noncredit screenings and background checks
Require your authorization	Do not require authorization

Examples of Hard Inquiries

Hard inquiries happen when you apply for a line of credit that will impact your financial health. Hard credit checks will affect your credit score and stay on your credit report for a year or two, so having too many of them in a short period may hurt you in the long run.

Credit card companies, car dealerships, banks, lenders, and others may perform a hard credit check only after your written approval—you will always know when a hard credit check will happen.

Examples of things that will require hard inquiries include:

Examples of Soft Inquiries

Soft inquiries typically happen for nonfinancial inquiries and don’t affect your credit score. Typically, only you can see the soft credit checks on your report. Soft credit checks also don’t need your permission to happen. Though employers will request permission for background checks, creditors can run a soft credit pull to prequalify you for marketing purposes. Note that you do have the opportunity to opt out of those soft checks, though.

Soft inquiries happen when:

Employers run background checks
Credit card companies do a pre-approval process
Utility companies screen you
You check your credit report

Disputing Hard Credit Inquiries

You should always review the hard inquiries on your credit report to ensure that you authorized them. If you see something on your credit report that you didn’t authorize or approve, you can dispute your hard inquiry by following these steps:

Reach out to your current lenders and confirm that they didn’t create a hard credit inquiry for your credit.
Research the creditor that authorized the hard inquiry. Sometimes, they will remove the inquiry from your report.
Open a formal dispute with the credit bureaus. You will normally do this by filing a dispute on an online platform.

You will generally need to wait around 30 days (give or take) before receiving a reply about your hard inquiry dispute. When the credit bureaus reach a conclusion, they will remove the hard inquiry from your credit report.

Frequently Asked Questions

How Long Do Hard Inquiries Last?

According to Experian®, hard inquiries remain on your credit report for 25 months. However, they only tend to impact your credit score in the first 12 months.

How much a hard inquiry affects your credit depends on various factors, including what your credit score was to begin with. Experian notes that a hard inquiry can bring your score down 5-10 points on average. The drop might be even less if you have excellent credit and no other issues.

How Many Hard Credit Inquiries Is Too Many?

There’s no set number of inquiries that are too many. If you suddenly have a lot of inquiries, it can look bad to potential creditors. And if you’re losing up to 10 points for each one, you could drop from excellent or good credit to fair or poor credit with just five or more inquiries.

Spacing out the inquiries and ensuring that your credit report doesn’t take a hit can help minimize these issues. It also gives your score time to recover before another inquiry.

Are Hard Inquiries Bad?

Not necessarily. They’re simply an aspect of how credit reporting works—it’s actually good that this information gets recorded. Knowing who accessed your personal credit information and why can help keep you informed on your credit application history.

That said, hard inquiries aren’t neutral. They can impact your credit, so you want to keep them to a minimal number when possible.

What Triggers a Hard Inquiry?

Any time you apply for credit-related accounts with a lender, you will trigger a hard inquiry that will appear on your credit report. It’s important to remember that you will always authorize hard credit checks, so be mindful of how you space them out and what loans you need at what times.

Minimize Your Hard Inquiries

So, how do you reduce the impact of hard inquiries on your credit score? Nowadays, it can be challenging to go through life without ever applying for credit. But you can follow the steps below to reduce how hard inquiries impact your score:

Don’t spread out loan shopping: Credit scoring models know that you’ll want to shop around for the best rates. Because of that, multiple applications for credit during short periods can appear as a single inquiry on your credit report.
Don’t apply without confidence: Understand your credit score and what type of credit you are likely to qualify for, and only apply when you need the credit. Otherwise, you’ll rack up hard inquiries for no reason.
Manage other aspects of your score responsibly: Make payments on time, keep your credit utilization low, and manage multiple types of accounts well. These all have more impact on your credit score than hard inquiries.
Keep tabs on your credit report: The last step in minimizing hard inquiries is tracking your report and score. Check your credit regularly to see where you stand and whether potential mistakes could bring down your score.

You can check your Vantage 3.0 score with Credit.com’s free Credit Report Card or get many versions of your FICO® Score with ExtraCredit®. Neither of these options constitutes a hard inquiry, so using them won’t hurt your credit.

Source: credit.com

Apache is functioning normally

September 26, 2023 by Brett Tams

Just weeks after New York-based digital lender Better Home & Finance Holding went public, Better issued pink slips to employees in early September in a new round of layoffs, Insider reported.

Better laid off about a quarter of its U.S. mortgage sales and origination team, according to the news outlet, citing two former employees who were affected by the latest downsizing.

The layoff news comes on the heels of Better going public via special purpose acquisition company (SPAC) Aurora Acquisition Corp. in August.

About 75 employees are left on the mortgage origination team in the U.S. as well as some employees in India, according to Insider.

While Better didn’t respond to HousingWire‘s inquiry about the number of affected employees, spokeswoman Jessica Schaefer told Insider the firm has more than 100 people left on the team.

Better plans to fill some vacant positions from the layoffs.

“As a publicly listed company, we’re focused on making prudent and disciplined decisions that account for market dynamics so that we can continue to serve both customers and shareholders for the long-term,” Better’s spokesperson said in an e-mailed statement to HousingWire.

“We are hiring more seasoned professionals who can sell in this tough mortgage environment and then making them 10X more productive through our continued investment [in] technologies such as Tinman and One Day Mortgage, which have created efficiencies that streamline and automate nearly every major function of homeownership,” the spokesperson said.

As of June, Better had 950 team members, a 91% decrease over an 18-month period from 10,400 in Q4 2021, according to its previous filing with the Securities and Exchange Commission (SEC).

While Better was an efficient refi shop during the pandemic years when rates hit record lows, the lender and other independent mortgage banks (IMBs) were hit hard by the Federal Reserve‘s monetary policy.

The digital lender reported a net loss of $45.5 million in Q2, an improvement from a net loss of $89.9 million the previous quarter.

In Q2, Better’s origination volume was $900 million across 2,421 loans, compared to production of $800 million across 2,347 loans funded in Q1.

When Better debuted on Nasdaq in late August, the SPAC deal unlocked $565 million of fresh capital for the unprofitable company.

The digital lender has pivoted its strategy from being a one-stop-shop to becoming a “mortgage-as-a-service” company or a white-label provider of mortgage tech.

“For things like homeowner’s insurance, title insurance, and Realtors, we’ve now just become a marketplace. We match the consumer with a partner capable of delivering the best product to them. So, we ended Better Real Estate for the sake of efficiency and savings for the consumer. We partner with best-in-class agents, insurance companies and title companies,” Better CEO Vishal Garg said in an interview with HousingWire in August.

Better will invest in tech-driven products like One Day Mortgage, a program that will allow customers to apply for a mortgage, get preapproved, lock their rate and receive a mortgage commitment letter within 24 hours.

“We are committed to further developing this technology during an interest rate environment where customers need it the most,” Better’s spokesperson noted.

Better was ranked as the 59th largest lender in Q1 2023, plummeting from the 19th in 2021, according to Inside Mortgage Finance.

Source: housingwire.com

Apache is functioning normally

September 26, 2023 by Brett Tams

On top of sorting out whether you’re eligible for federal student loans and the difference between subsidized and unsubsidized loans, you may be wondering how student loans may impact your taxes and whether student loans count as income. In a nutshell, the answer is no, student loans are debt, and do not count as income.

Fellowships and other forms of financial grants, however, may be counted as income, depending on how the funds are spent. And loans that are forgiven have counted as income.

Read on for more about the tax implications of student loans, grants, and student loan repayment. Of course, this is just a helpful guide as you begin to explore the basics of student loans and taxes; always seek out a tax professional to help you with your specific situation.

Are Student Loans Taxable?

There are multiple types of student loans — each with their own unique terms. As noted earlier, though, student loans are not taxed as income.

This is true of other types of loans generally as well, like credit card spending, mortgages, and personal loans (unless the loan is forgiven) — basically most credit that needs to be repaid. The IRS considers student loans a form of debt — not income — therefore, it is not taxed.

The only time that student loans (or other types of debt) can be taxed is if they are forgiven during repayment. If you are eligible for a federal student loan forgiveness program and have met the requirements (which vary, and may include stipulations like making eligible payments for 20 to 25 years via an income-driven repayment plan or completing eligible public service work/payment requirements, and others), the remaining balance on your student loans (the amount forgiven) may be taxed as income, depending on the repayment plan. This could amount to a hefty tax bill.

Are Scholarships Taxable?

The high-level answer to this question is: it depends. There are many different forms of scholarships, grants, and fellowships that are awarded to students to cover the costs of studying and research. Some are need-based and some are merit-based. The basic difference between scholarships and loans is that a scholarship is given while a loan is borrowed. You won’t typically have to pay back a scholarship, but you do have to pay back a loan.

Most scholarships are not taxed when you are enrolled in a formal educational institution and the scholarship is directly used to cover the costs of tuition, fees, books, and supplies used for study.

There are some situations in which scholarships can be taxed, however. For instance, a scholarship can be taxed as income if you use it to cover what are considered “incidental” expenses related to your education such as travel, room and board, and supplementary equipment and supplies.

Another type of scholarship that can be taxed is a scholarship that has a service-related requirement to it. This frequently applies to scholarships for graduate students. If you are required to teach, provide research assistance, or perform other services as a condition of your scholarship, it can be taxed as income and you will be required to report the scholarship as part of your gross income.

(For more about which types of scholarships are considered income and what scholarship-related activities are taxable, check out IRS Publication 970 .)
💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

Do Student Loans Come with Any Tax Benefits?

Student loans aren’t usually taxable as income, and in fact, may come with a tax benefit that is meant to make repayment a little easier on borrowers investing in their education.

The Student Loan Interest Deduction allows you to deduct the amount of interest you paid on both federal and private student loans, up to a maximum of $2,500 per year. In order to be eligible to deduct the full amount, your modified adjusted gross income (AGI) must be $70,000 or less (or $145,000 for married couples filing jointly). The amount you’re allowed to deduct is gradually reduced if your modified AGI is more $70,000 but less than $85,000 (or more than $145,000 but less than $175,000 for married couples filing jointly. Income above these thresholds renders you ineligible for the deduction.

As a tax deduction, the amount deducted helps to lower your overall taxable income, potentially resulting in a lower tax bill or higher tax refund. This deduction can also help defray some of your repayment costs.

Are Employer Student Loan Payments Taxable?

An increasingly popular benefit offered in some workplaces is help with education costs and student loan repayment. Employers such as Aetna, Fidelity Investments, Google, and more offer student loan assistance programs to employees.

Currently, employers are allowed to contribute up to $5,250 toward employees’ qualified education costs tax-free. Payments or reimbursements above that amount are considered taxable income for the employee. It’s important to note that this special tax treatment is temporary, however, and expires December 31, 2025. After this date, the full amount of any employer contributions toward education expenses or student loan repayment will be taxed as income.

How Can I Make My Student Loan Repayment Easier?

The cost of a student loan comes in the form of the interest you pay each month on the balance owed. Consider this example: Say you have a $30,000 loan with a 7% interest rate. On the 10-year Standard Repayment Plan, you would pay roughly $11,800 in interest in addition to repaying the $30,000 principal.

So what can make repayment easier, other than the student loan interest deduction? One option is to refinance your student loans with a private lender.

If you already have private and/or federal student loans, you may be able to refinance your student loans at a lower interest rate than you currently are paying. If you are eligible to refinance your student loans, you could shorten your term length, qualify to lower the interest rate on your loans, or possibly lower your monthly payment (by extending your term). But there can be some drawbacks to think about.

For instance, federal student loans come with several benefits and protections such as forbearance, deferment, income-driven repayment plans, and certain forgiveness programs that private loans do not offer. If you think you might need some of these benefits, or if you are eligible for student loan forgiveness, it might not be the right time to refinance.

However, if you have a steady income and good cash flow — along with other aspects of your financial picture that are appealing to a lender — and you are ready to focus on paying down your loans, refinancing might be the right solution for you.

SoFi is a leader in the student loan space, offering refinancing options to help you save on the loans you already have.

The Takeaway

Generally, student loans are not considered income, so they are not taxed. The exception is when some or all of your student loan balance is forgiven. In some cases, the IRS may count the canceled debt as taxable income.

Educational grants and scholarships, on the other hand, may or may not count as income. Typically, they are taxed when they are spent on expenses outside of tuition and fees, such as room and board and travel.

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.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) 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, such as the SAVE Plan, or extended repayment plans.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

In This Piece

How Debt Buying Works

Why Are Debt Buyers Used?

Can You Buy Your Own Debt?

How to Deal With Debt Buyers

Manage Your Debt Better

What Is a Personal Loan?

Why Would I Need a Personal Loan?

Personal Loans vs. Lines of Credit vs. Payday Loans

Types of Personal Loans

How Do Personal Loans Work?

How to Apply for a Personal Loan

How to Qualify for a Personal Loan

Personal Loan Alternatives

FAQs

Will a Personal Loan Affect Your Credit Score?

Do You Need a Down Payment for a Personal Loan?

Can You Use a Personal Loan for Whatever You Want?

How Big of a Loan Can I Get With a 700 Credit Score?

How Often Can You Apply for a Personal Loan?

Data Mining, Digital Lending, Real Estate Database, Servicing Products; Conventional Conforming Program Shifts

Option 1: Copy and send this link

A Quick Look at Minimum Credit Scores for Mortgages

Why Does Your Credit Score Matter for a Mortgage Loan?

What Credit Score Do You Need to Get a Mortgage?

Credit Requirements for Conventional Mortgage Loans

Credit Requirements for Government-Backed Mortgage Loans

Credit Score Requirements for USDA Loans

Credit Score Requirements for VA Loans

Credit Score Requirements for FHA Loans

Do You Need Good Credit to Refinance Your Mortgage?

Has COVID-19 Impacted Mortgage Credit Requirements?

What You Can Do Now

How Many Times Can You Refinance Student Loans?

What Are Some Advantages of Refinancing Multiple Times?

What Are Some Disadvantages of Refinancing Multiple Times?

How Is Student Loan Refinancing Different Than Consolidation?

Things to Look for When Refinancing

Serious savings. You could save thousands of dollars. We offer flexible terms and low fixed or variable rates.

Refinancing Your Student Loans More Than Once

Refinancing Your Student Loans With SoFi

FAQ

Can I consolidate student loans more than once?

How many times can you refinance a loan?

How many times can you take out student loans?

In This Piece

Must-know Personal Loan Statistic Findings

Average Personal Loan Debt in America

How Many Americans Have Personal Loans?

The Most Common Reasons to Take Out a Personal Loan

Average Personal Loan Interest Rates

Personal Loan Debt Compared to Other Debts

Personal Loan Delinquency Rates

Personal Loan Statistics by State

Personal Loan Statistics by Type of Lender

Can Personal Loan Debt Affect Your Credit Score?

What Are Hard Inquiries?

How Do Hard Inquiries Impact Your Credit?

Hard Inquiries vs. Soft Inquiries

Examples of Hard Inquiries

Examples of Soft Inquiries

Disputing Hard Credit Inquiries

Frequently Asked Questions

How Long Do Hard Inquiries Last?

How Many Hard Credit Inquiries Is Too Many?

Are Hard Inquiries Bad?

What Triggers a Hard Inquiry?

Minimize Your Hard Inquiries

Are Student Loans Taxable?

Are Scholarships Taxable?

Do Student Loans Come with Any Tax Benefits?

Are Employer Student Loan Payments Taxable?

How Can I Make My Student Loan Repayment Easier?

The Takeaway

Serious savings. You could save thousands of dollars.
We offer flexible terms and low fixed or variable rates.