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Mortgage rates dropped on all loan terms from a week ago, according to data collected by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans all fell.
While mortgage rates are still on track to gradually come down this year, the path might be bumpy. Fixed mortgage rates follow the 10-year Treasury yield, which moves as investor appetite fluctuates with the state of the economy and Federal Reserve decisions.
Although the Fed still expects to cut rates 2024, policymakers opted not to at the central bank’s latest meeting, thanks in part to inflation that hasn’t yet returned to the Fed’s 2 percent target.
“The Fed is not in a hurry to start cutting interest rates as the progress toward 2 percent inflation has encountered some turbulence,” says Greg McBride, CFA, chief financial analyst for Bankrate.
The Fed’s moves impact the cost of a variety of financial products, including adjustable-rate mortgages, but also mortgage pricing more broadly. Generally, mortgage rates track down when the Fed lowers its key federal funds rate.
Whether mortgage rates move up or down, though, it’s tough to time the market. Often, the decision to buy a home comes down to needs. Depending on your situation, it might make sense to take a higher rate now and hope to refinance later — buying a home at today’s prices rather than a higher price in the future, while building equity that much sooner.
Rates as of March 29, 2024.
These rates are averages based on the assumptions shown here. Actual rates available across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Friday, March 29th, 2024 at 7:30 a.m.
30-year mortgage slides, -0.09%
Today’s average 30-year fixed-mortgage rate is 6.90 percent, a decrease of 9 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.12 percent.
At the current average rate, you’ll pay a combined $658.60 per month in principal and interest for every $100,000 you borrow. That’s a decline of $6.03 from last week.
The 30-year mortgage is the most popular option for borrowers. It has a number of advantages. Among them:
Lower monthly payment: Compared to a shorter-term mortgage, such as 15 years, the 30-year mortgage offers more affordable monthly payments spread over time.
Stability: With a 30-year fixed mortgage, you lock in a set principal and interest payment, making it easier to plan your housing expenses for the long term. Remember: Your monthly housing payment can change if your homeowners insurance premiums and property taxes go up or, less likely, down.
Buying power: Because you have lower payments, you might qualify for a bigger loan or a more expensive house.
Flexibility. Lower monthly payments can free up some of your monthly budget for other goals, like building an emergency fund, contributing to retirement or college tuition, or saving for home repairs and maintenance.
15-year fixed mortgage rate falls, -0.11%
The average rate for the benchmark 15-year fixed mortgage is 6.35 percent, down 11 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $863 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.
5/1 adjustable rate mortgage falls, -0.09%
The average rate on a 5/1 adjustable rate mortgage is 6.27 percent, down 9 basis points over the last 7 days.
Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.27 percent would cost about $617 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Jumbo mortgage dips, -0.05%
Today’s average rate for jumbo mortgages is 7.00 percent, a decrease of 5 basis points since the same time last week. This time a month ago, the average rate was above that at 7.13 percent.
At the current average rate, you’ll pay $665.30 per month in principal and interest for every $100,000 you borrow. That’s down $3.36 from what it would have been last week.
Mortgage refinance rates
30-year fixed-rate refinance trends down, -0.14%
The average 30-year fixed-refinance rate is 6.88 percent, down 14 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was higher at 7.11 percent.
At the current average rate, you’ll pay $657.26 per month in principal and interest for every $100,000 you borrow. That’s a decline of $9.39 from last week.
Where are mortgage rates going?
With inflation still above the Fed’s 2 percent goal and the job market holding strong, policymakers refrained from cutting rates at the central bank’s latest meeting. That could change later this year, as the Fed still expects to slash rates three times in 2024.
Keep in mind: The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.
What today’s rates mean for your mortgage
While mortgage rates change daily, it’s unlikely we’ll see rates back at 3 percent anytime soon. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
To help you uncover the best deal, get at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
A home equity loan is a lump sum of money you can borrow at a fixed rate based on the equity, or ownership stake, in your home. If you already paid off 15% to 20% of your house, this one-time installment loan can be used to cover major expenses, from home renovations to paying off debt.
Home equity loans have fixed interest rates, so your monthly payments are predictable and easy to budget for. But because your home acts as collateral for the loan, you could risk foreclosure if you fall behind on repayments.
I’ve spoken with experts about the advantages and disadvantages of home equity loans, how they work and where to find the best rates. Here’s what I’ve uncovered.
This week’s home equity loan rates
Here are the average rates for home equity loans and home equity lines of credit as of March 27, 2024.
Loan type
This week’s rate
Last week’s rate
Difference
10-year, $30,000 home equity loan
8.73%
8.73%
None
15-year, $30,000 home equity loan
8.70%
8.70%
None
$30,000 HELOC
9.01%
8.99%
+0.02
Note: These rates come from a survey conducted by CNET sister site Bankrate. The averages are determined from a survey of the top 10 banks in the top 10 US markets.
Current home equity loan rates and trends
Though home equity loan rates will vary depending on the lender and loan type, their rates are generally lower than personal loans or credit card annual percentage rates.
Home equity loan rates aren’t directly set by the Federal Reserve, but adjustments to the federal funds rate impact the borrowing cost for financial products like home equity loans and home equity lines of credit, aka HELOCs.
Since March 2022, the Fed has hiked its benchmark rate a total of 11 times in an attempt to slow the economy and bring inflation down, driving home equity loan rates up alongside. Though the Fed has kept interest rates steady since last summer, home equity loan rates have remained elevated for borrowers. Home equity rates are likely to stay high until the central bank begins cutting interest rates, projected for later this year.
With home equity loans, you tap into your equity without giving up the rate on your primary mortgage, making them a popular alternative to cash-out refinances. If you use a home equity loan to install solar panels or renovate your kitchen, you get the added benefit of increasing your home’s value.
“Most homeowners with mortgages in 2024 are choosing home equity loans or HELOCs, instead of a cash-out refinance, to avoid losing their attractive interest rates,” said Vikram Gupta, head of home equity at PNC Bank.
Best home equity loan rates of March 2024
Lender
APR
Loan amount
Loan terms
Max LTV ratio
U.S. Bank
From 8.40%
Not specified
Up to 30 years
Not specified
TD Bank
7.99% (0.25% autopay discount included)
From $10,000
5 to 30 years
Not specified
Connexus Credit Union
From 7.20%
From $5,000
5 to 15 years
90%
KeyBank
From 10.29% (0.25% autopay discount included)
From $25,000
1 to 30 years
80% for standard home equity loans, 90% for high-value home equity loans
Spring EQ
Fill out application for personalized rates
Up to $500,000
Not specified
90%
Third Federal Savings & Loan
From 7.29%
$10,000 to $200,000
Up to 30 years
80%
Frost Bank
From 7.3% (0.25% autopay discount included)
$2,000 to $500,000
15 to 20 years
90%
Regions Bank
From 6.75% to 14.125% (0.25% autopay discount included)
$10,000 to $250,000
7, 10, 15, 20 or 30 years
89%
Discover
6.99% for 1st liens, 7.99% for 2nd liens
$35,000 to $300,000
10, 15, 20 or 30 years
90%
BMO Harris
From 8.84% (0.5% autopay discount not included)
From $25,000
5 to 20 years
Not specified
Note: The above annual percentage rates are current as of March 1, 2024. Your APR will depend on such factors as your credit score, income, loan term and whether you enroll in autopay or other lender specific requirements.
Best home equity loan lenders of March 2024
U.S. Bank
Good for nationwide availability
U.S. Bank is the fifth largest banking institution in the US. It offers both home equity loans and HELOCs in 47 states. You can apply for a home equity loan or HELOC through an online application, by phone or in person. If you want a loan estimate for a home equity loan without completing a full application, you can get one by speaking with a banker over the phone.
APR: From 8.40%
Max LTV ratio: Not specified
Max debt-to-income ratio: Not specified
Min credit score: 660
Loan amount: $15,000 to $750,000 (up to $1 million for California properties)
Term lengths: Up to 30 years
Fees: None
Additional requirements: Subject to credit approval
Perks: You can receive a 0.5% rate discount by enrolling in automatic payments from a U.S. Bank checking or savings account.
TD Bank
Good for price transparency
Primarily operating on the East Coast, TD Bank offers home equity loans and HELOCs in 15 states. You can apply for a TD Bank home equity loan or HELOC online, by phone or by visiting a TD Bank in person. The online application includes a calculator that will tell you the maximum amount you can borrow based on the information you input. You can also see a full breakdown of rates, fees and monthly payments. No credit check is required for this service.
APR: From 7.99% (0.25% autopay discount included)
Max LTV ratio: Not specified
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: From $10,000
Term lengths: Five to 30 years
Fees: $99 origination fee at closing. Closing costs only application to loan amounts greater than $500,000.
Additional requirements: Loan amounts less than $25,000 are available only for primary residence property use.
Perks: You will receive a 0.25% discount if you enroll in autopay from a TD personal checking or savings account.
Connexus Credit Union
Good branch network
Connexus Credit Union operates in all 50 states, but it offers home equity loans and HELOCs in 46 states (excluding Alaska, Hawaii, Maryland and Texas). The credit union has more than 6,000 local branches. To apply for a home equity loan or HELOC with Connexus, you can fill out a three-step application online or in person. You won’t be able to see a personalized rate or product terms without a credit check.
APR: From 7.20%
Max LTV ratio: 90%
Max-debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: From $5,000
Term lengths: Five to 15 years
Fees: No annual fee. Closing costs can range from $175 to $2,000, depending on your loan terms and property location. It has returned loan payments fees of $15, convenience fees of $9.95 (for paying by debit or credit card online) and $14.95 (for paying by phone) and a forced place insurance processing fee of $12.
Additional requirements: Because Connexus is a credit union, its products and services are only available to members. Member eligibility is open to most people: you (or a family member) just need to be a member of one of Connexus’s partner groups, reside in one of the communities or counties on Connexus’s list or become a member of the Connexus Association with a $5 donation to Connexus’s partner nonprofit.
Perks: Flexible membership options
KeyBank
Good online application user experience
Based in Cleveland, KeyBank offers home equity loans to customers in 15 states and HELOCs to customers in 44 states. Aside from a standard home equity loan, KeyBank offers a few different HELOC options. The KeyBank application allows you to apply for multiple products at one time. If you’re not sure whether KeyBank loans are available in your area, the application will tell you once you input your ZIP code. If you’re an existing KeyBank customer, you can skim through the application and import your personal information from your account.
APR: From 10.29% (0.25% client discount included)
Max LTV ratio: 80% for standard home equity loans, 90% for high-value home equity loans
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: From $25,000
Term lengths: One to 30 years
Fees: Origination fee of $295. Closing costs aren’t specified.
Additional requirements: Borrowers must be at least 18 years of age and reside in one of the states KeyBank operates in.
Perks: KeyBank offers a 0.25% rate discount for clients who have eligible checking and savings accounts with them.
Spring EQ
Good option for high debt-to-income ratio limits
Spring EQ was founded in 2016 and serves customers in 38 states. Spring EQ offers home equity loans and HELOCs. Spring EQ doesn’t display rates for its home lending products online — you must complete an application to see your personalized rate. The Spring EQ loan application process is simple though. Customers can see an extensive breakdown of their loan term and rate options without needing to undergo a credit check or provide their Social Security number.
APR: Not specified
Max LTV ratio: 90%
Max debt-to-income ratio: 50%
Min credit score: 640
Loan amount: Up to $500,000
Term lengths: Not specified
Fees: Spring EQ loans may be subject to an origination fee of $995 and an annual fee of $99 in some states.
Additional requirements: Spring EQ does not display rates for its home lending products online — you must complete an application to see your personalized rate.
Perks: Spring EQ has a higher maximum DTI ratio than most other lenders — compare 50% with the typical 43% average.
Third Federal Savings & Loan
Good option for rate match guarantee
Third Federal Savings & Loan first opened in 1938. Today, the bank offers home equity loans in eight states and HELOCs in 26 states. Third Federal offers a lowest rate guarantee on its HELOCs and home equity loans, meaning Third Federal will offer you the lowest interest rate relative to other similar lenders or pay you $1,000. You can apply for a home equity loan or HELOC on the Third Federal website. You won’t have to register an account to apply, but you’re still able to save your application and return to it later.
APR: From 7.29%
Max LTV ratio: 80%
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: $10,000 to $200,000
Term lengths: Five to 30 years
Fees: Home equity loans and HELOCs with Third Federal have an annual fee of $65 (waived the first year). There are no application fees, closing fees or origination fees.
Additional requirements: Specific requirements aren’t listed.
Perks: If you set up autopay from an existing Third Federal account, you’ll be eligible for a 0.25% rate discount.
Frost Bank
Good option for Texas borrowers
Frost Bank’s home equity loans and HELOCs are only available to Texas residents. You can apply for a home equity loan or HELOC on the Frost Bank website, but you’ll need to create an account. According to the website, the application will only take you 15 minutes.
APR: From 7.3% (0.25% autopay discount included, only available for 2nd liens)
Max LTV ratio: 90%
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: $2,000 to $500,000
Term lengths: 15 or 20 years
Fees: No application fee, annual fee or closing costs. Frost Bank does charge a $15 monthly service fee, which can be waived with a Frost Plus Account.
Additional requirements: Borrowers must reside in Texas. The bank also requires proof of homeowners insurance.
Perks: 0.25% rate discount for clients who enroll in autopay from a Frost Bank checking or savings account. However, this feature is only available for second liens.
Regions Bank
Good rate discounts
Regions Bank is one of the nation’s largest banking, mortgage and wealth management service providers. Regions offers home equity loans and HELOCs in 15 states. You can apply for a Regions home equity loan or HELOC online, in person or over the phone. You’ll have to create an account with Regions to apply. Before you create an account, though, you can use the bank’s own rate calculator to estimate your rate and monthly payment.
APR: From 6.75% to 14.125%(0.25% autopay discount included)
Max LTV ratio: 89%
Max debt-to-income ratio: Not specified
Min credit score: Not specified
Loan amount: $10,000 to $250,000
Term lengths: Seven, 10, 15, 20 or 30 years
Fees: No closing costs and no annual fees. Late fees apply for 5% of the payment amount. There is a returned check fee of $15 and an over limit fee of $29.
Additional requirements: Not specified.
Perks: Rate discounts between 0.25% and 0.50% to those who elect to have their monthly payments automatically debited from a Regions checking account.
Discover
Good option for no fees or closings costs
Discover is known primarily for its credit cards, but it also offers home equity loans — available in 48 states. The lender does not offer HELOCs at all. You can apply for a home equity loan from Discover online or over the phone. The application process takes approximately six to eight weeks in total, according to Discover’s website.
APR: 6.99% for first liens, 7.99% for second liens
Max LTV ratio: 90%
Max debt-to-income ratio: 43%
Min credit score: 620
Loan amount: $35,000 to $300,000
Term lengths: 10, 15, 20 and 30 years
Fees: None
Additional requirements: Specific requirements not listed.
Perks: The lender charges no origination fees, application fees, appraisal fees or mortgage taxes.
BMO Harris
Good option for second liens
BMO Harris products and services are available in 48 states (all but New York and Texas). BMO Harris offers home equity loans and three variations of a HELOC. You can apply for a home equity loan or HELOC online or in person, but in order to get personalized rates, you’ll have to speak with a representative on the phone. Getting personalized rates doesn’t require a hard credit check.
Home equity loans from BMO Harris are only available as second liens. If you have already paid off your mortgage, a rate-lock HELOC from BMO Harris may be a better option.
APR: From 8.84% (0.5% autopay discount not included)
Max LTV ratio: Not specified
Max debt-to-income ratio: Not specified
Min credit score: 700
Loan amount: From $5,000
Term lengths: Five to 20 years
Fees: There is no application fee. BMO Harris will also pay closing costs for loans secured by an owner-occupied 1-to-4-family residence. If you pay off your loan within 36 months of opening, you may be responsible for recoupment fees.
Additional requirements: Home equity loans are only available as a second lien (meaning you can’t be mortgage free)
Perks: If you enroll in autopay with a BMO Harris checking account, you’ll be eligible for a 0.5% rate discount.
What is a home equity loan?
A home equity loan is a fixed-rate installment loan secured by your home as a second mortgage. You’ll get a lump sum payment upfront and then repay the loan in equal monthly payments over a period of time. Because your house is used as a collateral, the lender can foreclose on it if you default on your payments.
Most lenders require you to have 15% to 20% equity in your home to secure a home equity loan. To determine how much equity you have, subtract your remaining mortgage balance from the value of your home. For example, if your home is worth $500,000 and you owe $350,000, you have $150,000 in equity. The next step is to determine your loan-to-value ratio, or LTV ratio, which is your outstanding mortgage balance divided by your home’s current value. So in this case the calculation would be:
$350,000 / $500,000 = 0.7
In this example, you have a 70% LTV ratio. Most lenders will let you borrow around 75% to 90% of your home’s value minus what you owe on your primary mortgage. Assuming a lender will let you borrow up to 90% of your home equity, you can use the formula to see how that would be:
$500,000 [current appraised value] X 0.9 [maximum equity percentage you can borrow] – $350,000 [outstanding mortgage balance] = $100,000 [what the lender will let you borrow]
A standard repayment period for a home equity loan is between five and 30 years. Under the loan, you make fixed-rate payments that never change. If interest rates go up, your loan rate remains unchanged.
Second mortgages such as home equity loans and HELOCs don’t alter a homeowner’s primary mortgage. This lets you borrow against your home’s equity without needing to exchange your primary mortgage’s rate for today’s higher rates.
Home equity loans have fixed interest rates, which is a positive if you’re looking for predictable monthly payments. The rate you lock in when you take out your loan will be constant for the entire term, even if market interest rates rise.
Reasons to get a home equity loan
A home equity loan is a good choice if you need a large sum of cash all at once. You can use that cash for anything you’d like — it doesn’t have to be home-related.However, some uses make more sense than others.
Home renovations and improvements: If you want to upgrade your kitchen, install solar panels or add on a second bathroom, you can use the money from a home equity loan to pay for the cost of these renovations. Then, at tax time, you can deduct the interest you pay on the loan — as long as the renovations increase the value of your home and you meet certain IRS criteria.
Consolidating high-interest debt: Debt consolidation is a strategy where you take out one large loan to pay off the balances on multiple smaller loans, typically done to streamline your finances or get a lower interest rate. Because home equity loan interest rates are typically lower than those of credit cards, they can be a great option to consolidate your high-interest credit card debt, letting you pay off debt faster and save money on interest in the long run. The only downside? Credit card and personal loan lenders can’t take your home from you if you stop making your payments, but home equity lenders can.
College tuition: Instead of using student loans to cover the cost of college for yourself or a loved one, you can use the cash from a home equity loan. If you qualify for federal student loans, though, they’re almost always a better option than a home equity loan. Federal loans have better borrower protections and offer more flexible repayment options in the event of financial hardship. But if you’ve maxed out your financial aid and federal student loans, a home equity loan can be a viable option to cover the difference.
Medical expenses: You can avoid putting unexpected medical expenses on a credit card by tapping into your home equity before a major medical procedure. Or, if you have outstanding medical bills, you can pay them off with the funds from a home equity loan. Before you do this, it’s worth asking if you can negotiate a payment plan directly with your medical provider.
Business expenses: If you want to start a small business or side hustle but lack money to get it going, a home equity loan can provide the funding without many hoops to jump through. However, you may find that dedicated small business loans are a better, less risky option.
Down payment on a second home: Homeowners can leverage their home’s equity to fund a down payment on a second home or investment property. But you should only use a home equity loan to buy a second home if you can comfortably afford multiple mortgage payments over the long term.
Experts don’t recommend using a home equity loan for discretionary expenses like a vacation or wedding. Instead, try saving up money in advance for these expenses so you can pay for them without taking on unnecessary debt.
Pros
One lump sum payment of total loan up front.
Fixed interest rate, meaning you won’t have to worry about your rate rising over the repayment period.
Typically lower interest rate than credit cards or personal loans.
Little to no restrictions on what you can use the money for.
Cons
Your home is used as collateral, meaning it can be taken from you if you default on the loan.
If you’re still paying off your mortgage, this loan payment will be on top of that.
Home equity loans can come with closing costs and other fees.
May be hard to qualify for if you don’t have enough equity.
Home equity loan vs. HELOC
Home equity loans and HELOCs are similar but have a few key distinctions. Both let you draw on your home’s equity and require you to use your home as collateral to secure your loan. The two major differences are the way you receive the money and how you pay it back.
A home equity loan gives you the money all at once as a lump sum, whereas a HELOC lets you take money out in installments over a long period of time, typically 10 years. Home equity loans have fixed-rate payments that will never go up, but most HELOCs have variable interest rates that rise and fall with the prime rate.
A home equity loan is better if:
You want a fixed-rate payment: Your monthly payment will never change even if interest rates rise.
You want one lump sum of money: You receive the entire loan upfront with a home equity loan.
You know the exact amount of money you need: If you know the amount you need and don’t expect it to change, a home equity loan likely makes more sense than a HELOC.
A HELOC is better if:
You need money over a long period of time: You can take the money as you need it and only pay interest on the amounts you withdraw, not the full loan amount, as is the case with a home equity loan.
You want a low introductory interest rate: Although HELOC rates may increase over time, they also typically offer lower introductory interest rates than home equity loans. So you could save money on interest charges.
Home equity loans vs. cash-out refinances
A cash-out refinance is when you replace your existing mortgage with a new mortgage, typically to secure a lower interest rate and more favorable terms. Unlike a traditional refinance, though, you take out a new mortgage for the home’s entire value — not just the amount you owe on your mortgage. You then receive the equity you’ve already paid off in your home as a cash payout.
For example, if your home is worth $450,000, and you owe $250,000 on your loan, you would refinance for the entire $450,000, rather than the amount you owe on your mortgage. Your new cash-out refinance home loan would replace your existing mortgage and then offer you a portion of the equity you built (in this case $200,000) as a cash payout.
Both a cash-out refi and a home equity loan will provide you with a lump sum of cash that you’ll repay in fixed amounts over a specific time period, but they have some important differences. A cash-out refinance replaces your current mortgage payment. When you receive a lump sum of cash from a cash-out refi, it’s added back onto the balance of your new mortgage, usually causing your monthly payment to increase. A home equity loan is different — it doesn’t replace your existing mortgage and instead adds an additional monthly payment to your expenses.
Who qualifies for a home equity loan?
Although it varies by lender, to qualify for a home equity loan, you’re typically required to meet the following criteria:
At least 15% to 20% equity built up in your home: Home equity is the amount of home you own, based on how much you’ve paid toward your mortgage. Subtract what you owe on your mortgage and other loans from the current appraised value of your house to figure out your home equity number.
Adequate, verifiable income and stable employment: Proof of income is a standard requirement to qualify for a HELOC. Check your lender’s website to see what forms and paperwork you will need to submit along with your application.
A minimum credit score of 620: Lenders use your credit score to determine the likelihood that you’ll repay the loan on time. Having a strong credit score — at least 700 — will help you qualify for a lower interest rate and more amenable loan terms.
A debt-to-income ratio of 43% or less: Divide your total monthly debts by your gross monthly income to get your DTI. Like your credit score, your DTI helps lenders determine your capacity to make consistent payments toward your loan. Some lenders prefer a DTI of 36% or less.
A home equity loan is better if:
You don’t want to pay private mortgage insurance: Some cash-out refinances require PMI, which can add hundreds of dollars to your payments, but home equity loans don’t.
You can’t complete a refinance: With rates rising, it’s possible that your mortgage rate is lower than current refinance rates. If that’s the case, it likely won’t make financial sense for you to refinance. Instead, you can use a home equity loan to take out only the money you need, rather than replacing your entire mortgage with a higher interest rate loan.
A cash-out refinance is better if:
Refinance rates are lower than your current mortgage rate: If you can secure a lower interest rate by refinancing, this could save you money in interest, while providing access to a lump sum of cash.
You want only one monthly payment: The amount you borrow gets added back to the balance of your mortgage so you make only one payment to your lender every month.
Less stringent eligibility requirements: If you don’t have great credit or you have a high debt-to-income ratio, or DTI, you may have an easier time qualifying for a cash-out refi compared with a home equity loan.
Lower interest rates: Cash-out refinances sometimes offer more favorable interest rates than home equity loans.
Tips for choosing a lender
You’ll want to consider what type of financial institution best suits your needs. In addition to mortgage lenders, financial institutions that offer home equity loans include banks, credit unions and online-only lenders.
“Select a lender that makes you feel comfortable and informed with the home equity loan process,” said Rob Cook, vice president of marketing, digital and analytics for Discover Home Loans. “Look at what tools a lender makes available to borrowers to help inform their decision. For many borrowers, being able to apply and manage their application online is important.”
One option is to work with the lender that originated your first mortgage as you already have a relationship and a history of on-time payments. Many banks and credit unions also offer discounted rates and other benefits when you become a customer.
Some lenders offer lower interest rates but charge higher fees (and vice versa). What matters most is your annual percentage rate because it reflects both interest rate and fees.
Ensure the specific terms of the loan your lender is offering make sense for your budget. For example, be sure the minimum loan amount isn’t too high — be wary of withdrawing more funds than you need. You also want to make sure that your repayment term is long enough for you to comfortably afford the monthly payments. The shorter your loan term, the higher your monthly payments will be.
“Costs and fees are an important consideration for anyone who is looking for a loan,” Cook said. “Homeowners should understand any upfront or ongoing fees applicable to their loan options. Also look for prepayment penalties that might be associated with paying off your loan early.”
No matter what, it’s important to talk to numerous lenders and find the best rate available.
How to apply for a home equity loan
Applying for a home equity loan is similar to applying for any mortgage loan. You’ll need both a solid credit score and proof of enough income to repay your loan.
1. Interview multiple lenders to determine which lender can offer you the lowest rates and fees. The more companies you speak with, the better your chances of finding the most favorable terms.
2. Have at least 15% to 20% equity in your home. If you do, lenders will then take into account your credit score, income and current DTI to determine whether you qualify as well as your interest rate.
3. Be prepared to have financial documents at the ready, such as pay stubs and Form W-2s. Proof of ownership and the appraised value of your home will also be necessary.
4. Close on your loan. Once you submit your application, the final step is closing on your loan. In some states, you’ll have to do this in person at a physical branch.
FAQs
As of March 27, average home equity loan rates are 8.73% for a $30,000 10-year home equity loan and 8.70% for a $30,000 15-year home equity loan — higher than the average rate for a 30-year fixed rate mortgage, which is currently 7.01%. Both home equity rates and mortgage rates started off at historic lows at around 3% at the beginning of 2022 and have been consistently climbing in response to the Federal Reserve aggressively raising the benchmark interest rate.
Most lenders will allow you to borrow anywhere from 15% to 20% of your home’s available equity. To calculate your home equity, subtract your remaining mortgage balance from the current appraised value of your home. How much equity a bank or lender will let you take out depends on a number of additional factors such as your credit score, income and DTI ratio. For most homeowners, it can take five to 10 years of mortgage payments to build up enough tappable equity to borrow against.
A home equity loan can affect your score positively or negatively depending on how responsibly you use it. As with any loan, if you miss or make late payments, your credit score will drop. The amount by which it will drop depends on such factors as whether you’ve made late payments before. However, HELOCs are secured loans that are backed by your property, so they tend to affect your credit score less because they’re treated more like a car loan or mortgage by credit-scoring algorithms.
Lenders are currently offering rates that start as low as 5% to 6% for borrowers with good credit, but rates can vary depending on your personal financial situation. A lender will base your interest rate on how much equity you have in your home, your credit score, income level and other aspects of your financial life such as your DTI ratio, which is calculated by dividing your monthly debts by your gross monthly income.
Home equity loans can be used for anything you choose to spend the money on. Typical life expenses that people usually take out home equity loans for are to cover expenditures such as home renovations, higher education costs like tuition or to pay off high-interest charges like credit card debt. There’s a bonus for using your loan for home improvements and renovations: the interest is tax deductible.
You can also use a home equity loan in the event of an emergency like unplanned medical expenses. Whatever you chose to use your loan for, keep in mind that taking out a large sum of money that accrues interest is an expensive choice to carefully consider, especially because you’re using your home as collateral to secure the loan. If you can’t pay back the loan, the lender can seize your home to repay your debt.
Methodology
We evaluated a range of lenders based on factors such as interest rates, APRs and fees, how long the draw and repayment periods are, and what types and variety of loans are offered. We also took into account factors that impact the user experience such as how easy it is to apply for a loan online and whether physical lender locations exist.
Real estate investing can be an effective way to hedge against the effects of inflation in a portfolio while generating a steady stream of income. When it comes to how to invest in real estate, there’s no single path to entry.
Where you decide to get started can ultimately depend on how much money you have to invest, your risk tolerance, and how hands-on you want to be when managing real estate investments.
Why Invest in Real Estate?
Real estate investing can yield numerous benefits, for new and seasoned investors alike. Here are some of the main advantages to consider with property investments.
• Real estate can diversify your portfolio, allowing you to better balance risk and rewards.
• Provides the opportunity to generate investment returns outside of owning securities such as stocks, ETFs, or bonds.
• Historically, real estate is often seen as a hedge against inflation, since property prices tend to increase in tandem with price increases for other consumer goods and services.
• Owning real estate investments can allow you to generate a steady stream of passive income in the form of rents or dividends.
• Rental property ownership can include some tax breaks since the IRS allows you to deduct ordinary and necessary expenses related to operating the property.
• Real estate may appreciate significantly over time, which could result in a sizable gain should you decide to sell it. However, real estate can also depreciate in value, leading to a possible loss or negative return. Investors should know that the real estate market is different than the stock market, and adjust their expectations accordingly.
There’s one more thing that makes real estate investing for beginners particularly attractive: There are many ways to do it, which means you can choose investments that are best suited to your needs and goals.
💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.
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7 Ways to Invest in Real Estate
Real estate investments can take different forms, some of which require direct property ownership and others that don’t. As you compare different real estate investments, here are some important things to weigh:
• Minimum investment requirements
• Any fees you might pay to own the investment
• Holding periods
• Past performance and expected returns
• Investment-specific risk factors
With those things in mind, here are seven ways to get started with real estate investing for beginners.
1. Real Estate Investment Trusts (REITs)
A real estate investment trust (REIT) is a company that owns and operates income-producing properties. The types of properties you might find in a REIT include warehouses, storage facilities, shopping centers, and office space. A REIT may also own mortgages or mortgage-backed securities.
REITs allow investors to enjoy the benefits of property ownership without having to buy a building or land. Specifically, that means steady income as REITs are required to pay out 90% of taxable income annually to shareholders in the form of dividends. Most REIT dividends are considered to be ordinary income for tax purposes.
Many REITs are publicly traded on an exchange just like a stock. That means you can buy shares through your brokerage account if you have one, making it relatively easy to add REITs to your portfolio. Remember to consider any commission fees you might pay to trade REIT shares in your brokerage account.
2. Real Estate Funds
Real estate funds are mutual funds that own a basket of securities. Depending on the fund’s investment strategy, that may include:
• Individual commercial properties
• REITs
• Mortgages and mortgage-backed securities
Mutual funds also trade on stock exchanges, just like REITs. One of the key differences is that mutual funds are not required to pay out dividends to investors, though they can do so.
Instead, real estate funds aim to provide value to investors in the form of capital appreciation. A real estate fund may buy and hold property investments for the long term, in anticipation of those investments increasing in value over time.
Investing in a real estate fund vs. REIT could offer broader exposure to a wider range of property types or investments. A REIT, for instance, may invest only in hotels and resorts whereas a real estate mutual fund may diversify with hotels, office space, retail centers, and other property types.
3. REIT ETFs
A REIT ETF or exchange-traded fund is similar to a mutual fund, but the difference is that it trades on an exchange just like a stock. There’s also a difference between REIT ETFs and real estate mutual funds regarding what they invest in. With a REIT ETF, holdings are primarily concentrated on real estate investment trusts only.
That means you could buy a single REIT ETF and gain exposure to 10, 20 or more REITs in one investment vehicle.
Some of the main advantages of choosing a REIT ETF vs. real estate funds or individual REITs include:
• Increased tax efficiency
• Lower expense ratios
• Potential for higher returns
A REIT ETF may also offer a lower minimum investment than a REIT or real estate fund, which could make it suitable for beginning investors who are working with a smaller amount of capital.
But along with those advantages, investors should know about some of the potential drawbacks:
• ETF values may be sensitive to interest rate changes
• REIT ETFs may experience volatility related to property trends
• REIT ETFs may be subject to several other types of risk, such as management and liquidity risk more so than other types of ETFs.
As always, investors should consider the risks along with the potential advantages of any investment.
4. Real Estate Crowdfunding
Real estate crowdfunding platforms allow multiple investors to come together and pool funds to fund property investments. The minimum investment may be as low as $500, depending on which platform you’re using, and if you have enough cash to invest you could fund multiple projects.
Compared to REITs, REIT ETFs, or real estate funds, crowdfunding is less liquid since there’s usually a required minimum holding period you’re expected to commit to. That’s important to know if you’re not looking to tie up substantial amounts of money for several years.
You’ll also need to meet a platform’s requirements before you can invest. Some crowdfunding platforms only accept accredited investors. To be accredited, you must:
• Have a net worth over $1 million, excluding your primary residence, OR
• Have an income of $200,000 ($300,000 if married) for each of the prior two years, with the expectation of future income at the same level
You can also qualify as accredited if you hold a Series 7, Series 65, or Series 82 securities license.
5. Rental Properties
Buying a rental property can help you create a long-term stream of income if you’re able to keep tenants in the home. Some of the ways you could generate rental income with real estate include:
• Buying a second home and renting it out to long-term tenants
• Buying a vacation home and renting it to short-term or seasonal tenants
• Purchasing a multi-unit property, such as a duplex or triplex, and renting to multiple tenants
• Renting a room in your home
But recognize the risks or downsides associated with rental properties, too:
• Negative cash flow resulting from tenancy problems
• Problem tenants
• Lack of liquidity
• Maintenance costs and property taxes
Further, the biggest consideration with rental properties usually revolves around how you’re going to finance a property purchase. You might try for a conventional mortgage, an FHA loan if you’re buying a multifamily home and plan to live in one of the units, a home equity loan or HELOC if you own a primary residence, or seller financing.
Each one has different credit, income, and down payment requirements. Weighing the pros and cons of each one can help you decide which financing option might be best.
6. Fix and Flip Properties
With fix-and-flip investments, you buy a property to renovate and then resell it for (ideally) a large profit. Becoming a house flipper could be lucrative if you’re able to buy properties low, then sell high, but it does take some knowledge of the local market you plan to sell in.
You’ll also have to think about who’s going to handle the renovations. Doing them yourself means you don’t have to spend any money hiring contractors, but if you’re not experienced with home improvements you could end up making more work for yourself in the long run.
If you’re looking for a financing option, hard money loans are one possibility. These loans let you borrow enough to cover the purchase price of the home and your estimated improvements, and make interest-only payments. However, these loans typically have terms ranging from 9 to 18 months so you’ll need to be fairly certain you can sell the property within that time frame.
7. Invest in Your Own Home
If you own a home, you could treat it as an investment on its own. Making improvements to your property that raise its value, for example, could pay off later should you decide to sell it. You may also be able to claim a tax break for the interest you pay on your mortgage.
Don’t own a home yet? Understanding what you need to qualify for a mortgage is a good place to start. Once you’re financially ready to buy, you can take the next step and shop around for the best mortgage lenders.
How to Know If Investing in Real Estate Is a Good Idea for You
Is real estate investing right for everyone? Not necessarily, as every investor’s goals are different. Asking yourself these questions can help you determine where real estate might fit into your portfolio:
• How much money are you able and willing to invest in real estate?
• What is your main goal or reason for considering property investments?
• If you’re interested in rental properties, will you oversee their management yourself or hire a property management company? How much income would you need them to generate?
• If you’re considering a fix-and-flip, can you make the necessary commitment of time and sweat equity to get the property ready to list?
• How will you finance a rental or fix-and-flip if you’re thinking of pursuing either one?
• If you’re thinking of choosing REITs, real estate crowdfunding, or REIT ETFs, how long do you anticipate holding them in your portfolio?
• How much risk do you feel comfortable with, and what do you perceive as the biggest risks of real estate investing?
Talking to a financial advisor may be helpful if you’re wondering how real estate investments might affect your tax situation, or have a bigger goal in mind, like generating enough passive income from investments to retire early.
💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
The Takeaway
Real estate investing is one of the most attractive alternative investments for portfolio diversification. While you might assume that property investing is only for the super-rich, it’s not as difficult to get started as you might think. Keep in mind that, depending on how much money you have to invest initially and the degree of risk you’re comfortable taking, you’re not just limited to one option when building out your portfolio with real estate.
Ready to expand your portfolio’s growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi’s easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it’s important to consider your portfolio goals and risk tolerance to determine if they’re right for you.
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FAQ
How Can I Invest in Property With Little Money?
If you don’t have a lot of money to invest in property, you might consider real estate investment trusts or real estate ETFs for your first investments. REITs and ETFs can offer lower barriers to entry versus something like purchasing a rental property or a fix-and-flip property.
Is Real Estate Investing Worth It?
Real estate investing can be worth it if you’re able to generate steady cash flow and income, hedge against inflation, enjoy tax breaks, and/or earn above-average returns. Whether investing in real estate is worth it for you can depend on what your goals are, how much money you have to invest, and how much time you’re willing to commit to managing those investments.
Is Investing in Real Estate Better Than Stocks?
Real estate tends to have a low correlation with stocks, meaning that what happens in the stock market doesn’t necessarily affect what happens in the property markets. Investing in real estate can also be attractive for investors who are looking for a way to hedge against the effects of inflation over the long term.
Is Investing in Real Estate Safer Than Stocks?
Just like stocks, real estate investments carry risk meaning one isn’t necessarily safer than the other. Investing in both real estate and stocks can help you create a well-rounded portfolio, as the risk/reward profile for each one isn’t the same.
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US households have felt the pain of higher interest rates over the last two years. Homebuyers taking out a home loan with a 7% interest rate are likely budgeting hundreds more than expected to cover their average monthly mortgage payment.
A recent survey by Realtor.com noted that 22% of potential homebuyers said they’d be more willing to take on a mortgage if rates were to drop below 6%. Most mortgage forecasts don’t expect rates to dip below that number until 2025.
But you don’t have to wait for market rates to drop. Getting a 6% mortgage rate could be possible right now.
What are average mortgage rates now?
Mortgage rates change daily, but as of March, the average weekly rate on a 30-year fixed-rate mortgage has been around 7%, according to Bankrate, CNET’s sister site.
Rates generally climb higher when the economy is strong and drop at the sign of trouble. When the pandemic pushed the economy into uncertainty in 2020, rates plummeted to historic lows and hovered below 4% for the next two years.
Yet high inflation and the Federal Reserve’s aggressive interest rate hikes pushed rates higher, reaching 8% last October.
“What’s keeping rates volatile and higher is an underlying strong economy,” said Nicole Rueth, senior vice president with Movement Mortgage. “We continue to have economic reports and indicators that show consumers are spending and staying confident.”
The good news for homebuyers is that mortgage rates are expected to slowly decline in 2024, though they won’t reach record lows again.
Does 1% make a difference?
Snagging a 6% rate can offer savings on your monthly payment and over the life of the loan. A difference of 1 percentage point may not seem like much, but the savings add up over time.
For instance, let’s say you buy a home for $400,000 and make a down payment of 20% on a 30-year fixed-rate mortgage. The difference between a 7% rate and a 6% rate means a savings of $210 a month, which amounts to $75,746 saved over the life of the loan.
How can I get a 6% rate?
Many factors go into determining mortgage rates. You can’t control the economic factors, but there are ways to prepare your finances to get the best deal and lower your personal rate.
Buy mortgage points
A mortgage point, also known as a mortgage discount point, is an upfront fee you can pay the lender in exchange for a lower interest rate on your home loan. Each point costs 1% of the purchase price of a home and usually knocks the rate down by 0.25%.
On a $400,000 home, you’d pay $4,000 for one discount point. The lender may even allow you to buy four mortgage points to lower the rate from 7% to 6%, though you’d have to shell out $16,000 to get there.
To check whether this strategy is worthwhile, take the total cost of the points, and compare it to the overall monthly savings. “How long is it going to take you to pay it back? Are you going to be in the house that long?” Rueth asked.
In this case, when you pay $16,000 to buy four points and save $210 per month, it would take you more than six years to reach your break-even point.
Improve your credit score
Lenders look at your credit score to decide whether you qualify for a home loan and the interest rate you receive. Generally, a higher credit score shows you’ve managed debt responsibly in the past. A better credit history lowers your risk to a lender, which can help you secure a lower interest rate.
In fact, raising your credit score from the “fair” range to the “very good” range may help lower your rate by around 0.22 percentage points, according to a 2024 Lending Tree survey. In the survey example, that rate difference helped borrowers save $16,677 over the lifetime of a home loan.
Increase your down payment
Your down payment is the amount you can contribute to your home purchase upfront. Each type of home loan comes with a minimum down payment, usually ranging from 0% to 5%, but a higher down payment can help lower your rate. That’s because the lender takes on less risk when you contribute more toward the loan.
Because a down payment lowers your rate and contributes to your home equity, some home loan experts recommend making a larger down payment, around 20%, instead of buying mortgage points. That’s because if you sell the home or refinance before reaching your break-even point, you lose money. But the amount you spent for your down payment becomes part of your equity.
Take out an adjustable-rate mortgage
An adjustable-rate mortgage, or ARM, is a home loan with a fixed rate for a set introductory period, such as five years. Once that period ends, the interest rate can go up or down in regular intervals for the remaining term.
The big appeal of ARMs is that the introductory interest rate is often lower than the rate on traditional mortgages. In early March, the average 5/1 ARM rate was 6.61% compared to 6.98% for 30-year fixed-rate mortgages.
Negotiate your rate
When you’re applying for mortgage loans, you don’t have to go with the company that did your preapproval. In fact, research shows that getting rate quotes from multiple lenders and comparing offers can result in significant savings. If you want to use this strategy, start by submitting a mortgage application with lenders that fit your criteria. Once you have a few loan estimates in hand, use the best one to negotiate with the lender you want to work with.
The loan officer may lower your rate, help you save on closing costs or offer other incentives to get you onboard. In early 2022, one-third of homebuyers negotiated their mortgage rates and many were able to get a better deal, according to research from Fannie Mae.
Get a shorter loan term
Nearly 90% of homebuyers choose a 30-year fixed mortgage term because it offers the most flexibility and monthly payment affordability. Payments are lower because they’re stretched over a longer timeline, but you can always put more toward the principal here and there. But when you take out a longer-term home loan, “you’re holding up the lender’s money, and there’s an opportunity cost for the funds to be invested elsewhere,” Rueth said.
Shorter loan terms (10-year and 15-year mortgages) and ARMs have lower interest rates, giving you the option of reducing your rate now.
Choosing a shorter repayment term could help you save money since you’ll be paying less in interest over the long term. But don’t make the homebuying mistake of choosing a shorter loan term just for the lower rate. Because you’ll have less time to pay back the money you borrow, shorter loan terms break down to higher monthly payments, and you’ll need to make sure those fit within your budget.
Is a 6% mortgage rate even that good?
In short, yes — but it’s all relative.
“In today’s market, 6% is a great rate compared to the historic average of a little over 7%,” Rueth said. “However, 6% no longer looks good because homeowners were spoiled by 2.75% mortgage rates a few years ago.”
Homeowners are also feeling the burden of steep home prices, making those high rates hurt even more.
But you can save money on your mortgage by taking some (or all) of these steps. Improving your credit score, increasing your down payment, buying points and negotiating your rate may help bring your rate from 7% down to 6%, or even lower.
Investors can look at a company’s price to earnings ratio, among many other metrics, to help determine if a stock is a worthy investment. This figure gives an investor a quick read on how much a stock costs compared to that company’s profitability — the earnings.
However, the price to earnings ratio alone does not tell investors everything they need to know about a stock and whether it is a sound investment. But the price to earnings ratio is a helpful tool available for all investors when analyzing stocks.
Table of Contents
What Is the Price to Earnings Ratio?
The price to earnings ratio (sometimes written as the P/E ratio, PER, or P/E) is a ratio of a company’s current share price relative to the company’s earnings per share (EPS). This ratio provides investors with an understanding of how the market feels about a company (stock price) compared to the company’s profitability (EPS).
One of the main benefits of the P/E ratio is that it gives investors and analysts a way to compare different companies on a more level playing field. The stock price or earnings alone may not be adequate to compare investments, but the P/E ratio can be used to compare the valuations of companies in similar sectors. 💡 Quick Tip: When you’re actively investing in stocks, it’s important to ask what types of fees you might have to pay. For example, brokers may charge a flat fee for trading stocks, or require some commission for every trade. Taking the time to manage investment costs can be beneficial over the long term.
P/E Ratio Formula
The formula for calculating price-to-earnings is fairly simple:
Price to Earnings Ratio = Current Stock Price ÷ Earnings per Share
The price to earnings ratio is calculated by dividing a company’s current stock price (P) by the company’s earnings per share (E).
An investor can find the company’s current share price by looking up the stock’s ticker symbol on any search engine or financial website.
The EPS of a company can also be found on a financial website, but investors should be aware that there are different ways to calculate this figure.
Generally, the EPS is calculated by using a company’s earnings over the previous year, usually called the trailing 12 months (TTM). It is also possible to calculate EPS using the earnings guidance that a company provides in its quarterly earnings release. These are called forward earnings or forward-looking earnings.
These different versions of EPS determine the trailing and forward P/E, respectively.
If a company has yet to report earnings or is reporting losses, then its P/E ratio will be N/A, or not applicable.
Recommended: The Ultimate List of Financial Ratios
Examples of P/E Ratio Calculation
Company XYZ has a current stock price of $10 per share. The company’s earnings per share was $2 for the previous twelve months. In this example, Company XYZ would have a P/E ratio of 5, which is $10 per share divided by $2 per share.
$10 per share ÷ $2 per share = 5 P/E
With the data related to earnings and stock prices, an investor can calculate P/E with relative ease.
Interpreting the Results of P/E Ratio
Being able to calculate P/E ratio is one thing – being able to interpret it and put it to use as a part of an investment strategy is another.
What is a Good P/E Ratio?
There is no “good” P/E ratio, and the current P/E ratio of a company doesn’t provide much information alone. In the examples above, a high or low P/E ratio does not necessarily make one stock a more attractive investment over the other.
To determine if a P/E ratio suggests a good investment opportunity, an investor should compare it to similar stocks, the overall market, or a company’s past performance.
High P/E Ratio
If the current P/E ratio of a company is high relative to its past P/E ratio or compared to similar companies, it could be an indication that the stock is overvalued. An overvalued stock could mean that investor exuberance boosts the stock price, especially if earnings remain low, thereby representing poor value.
However, a high P/E ratio may indicate widespread investor confidence in a company’s position to grow and expand. This high ratio can indicate a growth stock, where investors believe the company’s future earnings will be higher than current profitability.
Low P/E Ratio
If the current P/E ratio of a company is low, it could indicate that the company’s stock is underpriced and represents a good value. Some analysts believe that stocks with relatively low P/E ratios present buying opportunities, allowing investors to purchase an undervalued stock that still has strong earnings. Investors seeking out these value investments expect a potential for share price growth.
On the other hand, the low P/E ratio may also indicate that investors are actively selling shares and driving the price down. Such a wide-scale selloff would suggest that investors are losing confidence in the stock, and a low P/E is an alarm.
Recommended: How to Evaluate a Stock Before You Buy
Types of P/E Ratios
There are two main P/E ratios: the trailing P/E and the forward P/E. These ratios use different measures of EPS depending on whether an analyst is interested in the past performance of a company (trailing P/E) or the future earnings of a company (forward P/E).
Trailing P/E
The trailing P/E relies on examining the past performance of a stock. It is calculated by dividing the current share price by the earnings per share over the past 12 months (TTM). Some analysts prefer the trailing P/E because it’s based on actual earnings performance rather than guidance that a company may provide.
However, the trailing P/E may be a misleading indicator because a company’s past earnings performance doesn’t necessarily predict future results. Investors want to put their money where they expect future earnings power, not the past.
Forward P/E
The forward P/E uses future earnings guidance rather than a company’s previous earnings. This forward-looking ratio can be helpful because investment decisions are generally better made based on future expectations than past results.
But this doesn’t mean the forward P/E is a flawless indicator. The forward P/E can be problematic because companies may miscalculate earnings expectations, and external analysts may miss on earnings forecasts for a company.
P/E Ratio Comparison
Though popular, the price to earnings ratio is just one of many indicators that investors use when analyzing stocks.
P/E Ratio vs P/S Ratio
The price-to-sales ratio (P/S ratio) is calculated by dividing a company’s current stock price by the company’s revenue per share. Another way to determine the P/S ratio is by dividing the company’s market capitalization by the company’s total revenue. So, while the P/E ratio looks at a company’s bottom line, the P/S ratio is concerned with a company’s top line.
The P/S ratio provides an alternative to the P/E ratio that can be useful when analyzing companies that are young and yet to make a profit. When a company shows negative earnings, they do not have a P/E ratio. The P/S ratio fills that void.
In general, a lower P/S ratio suggests that a company is a more attractive investment.
P/E Ratio vs EPS
Earnings per share (EPS) is the denominator of the P/E ratio equation. EPS is the bottom line of a company, indicating its profitability. It is calculated by dividing a company’s net profit by the number of its common shares. By looking at a company’s EPS over time, an investor can see how the company’s profitability is changing.
Though the EPS metric is good for comparing a company’s profits over time, it can also be misleading when a company repurchases or issues new stock. Those moves could raise or lower the EPS, respectively, even if the net income stays the same.
When analyzing a stock, it is wise to examine both the P/E Ratio and the EPS. 💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
Pros and Cons of Using P/E Ratio
As mentioned above, there are benefits and drawbacks to using the P/E ratio to evaluate stocks. Here are some of the pros and cons of using the P/E ratio.
Pros and Cons of Using P/E Ratio
Pros
Cons
Easy to calculate
Based on earnings from the past, or potentially misleading forecasts
Widely used by investors and analysts
Can be manipulated with share buybacks
Helps investors compare stocks
Can’t be used for companies that have no net income
Can indicate undervalued and overvalued stocks
Doesn’t factor in other financial metrics, like debt
The Takeaway
The P/E ratio is a useful metric for investors when evaluating stocks. The ratio can help an investor wrap their heads around the value of a stock and how it compares to similar companies. However, the metric is just a starting point, and investors shouldn’t make decisions based on a stock’s P/E ratio alone.
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FAQ
What does PE ratio tell you?
P/E ratio tells investors how a company’s revenue relates to its share price, and can be used as an indicator that a stock is either over or undervalued.
What does a PE ratio of 10 mean?
A P/E ratio of 10 means that a stock is trading at ten times the company’s annual profits.
What does a PE ratio of 120 mean?
A P/E ratio of 20 means that a stock is trading at 20 times the company’s annual profits.
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One of the most critical moments in any race is the very beginning. A mistake at the start can snatch away a win before the race is even underway. Any coach will tell you that springing into action the moment the shot is fired is a critical success factor for any athlete.
A race is a useful analog for the mortgage business, especially as it relates to the refinance business.
Lenders in a purchase money market, like the one we’re in now, are running a long-distance race. Starting strong is less important for a deal that takes a long time to close.
Responding to the real estate agent’s or prospective borrower’s first call is the start of this race. Data show that returning that call within a few hours will get your race off to a good start. It’s amazing how many loan officers miss this, don’t return the call quickly, and lose their race before it’s even underway.
It’s the sprint that can really set lenders apart. In our business, that’s the refinance transaction.
Anticipating the start of the refi race
When mortgage rates finally rose above their historically low levels, the mortgage refinance business started to dry up. By the time rates reached 5%, the refi business was essentially gone.
This was a crisis for many large Independent mortgage banks that had created fine-tuned systems for refinancing loans and had virtually no trained sales force to prospect for new purchase money business.
The bankers who stockpiled cash they earned during the COVID crisis have weathered this storm, those that did not have the cash have either sold out or shut down.
Now, everyone is waiting for rates to drop and the refinance business to return. Most experts believe that it’s only a matter of time before mortgage rates come down. When they fall below 5% — maybe even before that — it will be a shot from a starter’s pistol and the race will be on.
The lenders who aren’t ready will falter under the pressure, stumble out of the starter’s blocks, and lose out to lenders who have prepared in advance for the influx of new business.
Leaders are preparing now to make sure they’re not the ones who are left in the dust when the race starts.
Preparing for the next mortgage market
What should lenders be doing now to be ready for the return of the refinance business? Those of us who have been in this business more than a cycle or two know what’s coming next. There is no secret or required magic to be a frontrunner when the refi business returns.
What it will take is strong leadership to spur lethargic institutions to action when it feels less risky to stay the course and wait. That’s an illusion, a false sense of security. The reality is this race will go to the prepared.
I can think of three important actions every lender should be taking now to be prepared for the next wave of refi business.
Build the right team
Given the new technologies and expert outsourcing options available to lenders today, staffing up to handle new business doesn’t make as much sense as it did in the past. Lenders have other options for building ability into their enterprises. That’s a good thing.
Instead of going to the expense and added risk of staffing up to handle more business, now is the time for executives to think through their strategic options and evaluate their existing partnerships. It doesn’t matter what the lender’s current capacity is, everyone should be thinking about this now.
This is the time to sit down with your A and B players and make sure they’re committed to the long term, and understand your commitment to them. The time to let your C and D players go has passed now. Do it if you haven’t.
Then, start visiting with outsourcing firms. I spent a good part of my career working for lenders who originated consumer direct but also provided essential origination outsourcing services to other institutions. When they’re done right, these partnerships offer a balanced model of operational efficiency and scalability, regardless of overall loan volume.
When this work is done, the lender will have a core team of domain experts supplemented by reliable outsourcing partnerships. This provides a buffer against fluctuating demand but also affords lenders a competitive edge in workforce flexibility and cost management.
Fine-tune your tech stack
Once your team is in place, it’s time to empower them with the right technology. For the past few years, I’ve been working inside one of the mortgage industry’s leading technology providers. Lenders have never before had access to such powerful technology.
There are too many factors involved in implementing a lender’s strategy to go too deeply into the technology here, but regardless of how the lender wants to run the business, there are tools available that can make that happen. Each lender is different and so their use of these tools will differ.
Two things I will say about technology. First, a simpler tech stack is a better tech stack. Improvements in the way developers bring products to market have resulted in a flood of new tools and many lenders have invested. Now, their tech stacks are bloated with functionality that doesn’t work well with their core systems and creates more friction. Simplify. Keep what you need and discard the rest. Don’t let the “sunk costs” fallacy keep you paying for technology that doesn’t help you become excellent lenders.
Second, if the tool doesn’t provide a measurable increase in efficiency by reducing touch points and overall cycle time, it’s not a good tool. When this work is done, the lender will have all of the technology required for its team to operate at peak efficiency, and nothing more.
Perfect your process
There’s an old adage in executive management that says you should tell your people what to do, but not necessarily how to do it. In many industries, this frees people up to be great team players and there are wins all around.
In industries where the government is just waiting for someone on your team or extended team to make a mistake, this doesn’t work as well. People need to know what the process is and how to perform it to the satisfaction of the lender, their investors and government regulators.
Lenders are pretty good at this in the back office, but when it comes to front-line salespeople they often leave them free to do what they do best. The problem with this is that good salespeople are often like water, they tend to follow the path of least resistance.
When refis are pouring in, they know where to go and who to contact (or recontact) to get more business. The hard work of building and maintaining relationships with business referral partners falls by the wayside.
Alternatively, when refis are down and purchase money is high, many loan officers don’t stay in contact with past borrowers as well because they know they’re not going to refinance a low-interest-rate loan. By the time the refis come back around, those past customers have made new friends.
The lender should take an active role in all processes the institution uses to do its work, including those in the sales department. When this work is done, every salesperson will be a top salesperson, doing the work required to bring in a steady stream of business, regardless of which loan products consumers are buying.
Today, the race is a long-distance, purchase-money event, where it takes seven or eight calls over the course of 30-45 days to reach the finish line. Soon, it will be all about refinance sprints that only take a call or two and as few as seven days to win.
To get ready for those races, leaders will begin now to pull their expert teams together, both internally and externally, fine-tune their tech stacks, and double-check their processes.
When that work is done, they’ll be in the starter’s blocks. When the pistol is fired, they’ll win the bulk of the new business.
Joseph Camerieri is a former mortgage lending executive, technology system sales leader and outsourcing leader. Today, he consults in the mortgage industry.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the author of this story: Joseph Camerieri at [email protected]
To contact the editor of this story: Tracey Velt at [email protected]
Inside: Learn what 29 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $29 a year, how much do I truly make? What will that add up to over the course of the year when working? Is $29 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $29.50 an hour annually?
When you finally start earning $29 an hour, you are happy with your progress as an hourly employee. Typically, this is when many hourly employees start to become salaried workers.
In this post, we’re going to detail exactly what $29 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$29 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $29 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $29 = $60,320
$60,320 is the gross annual salary with a $29 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Let’s Break Down Of 29 Dollars An Hour Is How Much A Year
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $29 times 2,080 working hours, and the result is $60,320.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
That is slightly above the $60000 salary threshold, which is desired to become middle-income worker.
Work Part Time?
But you may think, oh wait, I’m only working part time. So if you’re working part time, the assumption is working 20 hours a week at $29 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $29 times 1,040 working hours, and the result is $30,160.
Just over $30000 a year.
How Much is $29 Per Month?
On average, the monthly amount would average $5,027.
Annual Amount of $60,320 ÷ 12 months = $5,027 per month
Just over $5000 a month.
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $24 an hour, you average an extra $867 per month. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $2,513.
How Much is $29 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $29 = $1,160 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $580.
How Much is $29 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $1,160 and double it.
$1,160 per week x 2 = $2,320
Also, the other way to calculate this is:
40 hours x 2 weeks x $29 an hour = $2,320
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $1,160.
How Much is $29 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $29 per hour = $232 per day.
If you work 10 hours a day for four days, then you would make $290 per day. (10 hours x $29 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $116.
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$29 Per Hour is…
$29 per Hour – Full Time
Total Income
Yearly Salary (52 weeks)
$60,320
Yearly Wage (50 weeks)
$58,000
Monthly Salary (173 hours)
$5,027
Weekly Wage (40 Hours)
$1,160
Bi-Weekly Wage (80 Hours)
$2,320
Daily Wage (8 Hours)
$232
Net Estimated Monthly Income
$3,834
**These are assumptions based on simple scenarios.
Paid Time Off Earning 29 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $60,320 per year.
This is the same as the example above for an annual salary making $29 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $29 times 2,000 working hours, and the result is $58000 per year.
40 hours x 50 weeks x $29 = $58,000
You would average $232 per working day and nothing when you don’t work.
$29 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $60,320
Federal Taxes of 12%: $7,238
State Taxes of 4%: $2,413
Social Security and Medicare of 7.65%: $4,614
$29 an Hour per Year after Taxes: $46,054
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$46054 ÷ 2,080 hours = $22.14 per hour
After estimated taxes and FICA, you are netting $22.14 an hour. That is $6.86 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting for under $22 an hour wage is much different.
$29 An Hour Salary Calculator
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $29.01-29.99.
This is super helpful if you make $29.15, $29.45, or $29.81.
Also, if you work various hours other than the standard 40 hours per week. You can adjust to your personal situation.
$29 an Hour Budget – Example
You are probably wondering can I live on my own making 29 dollars an hour? How much rent or mortgage payment can you afford on 29 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $29 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, above we calculated that $29 an hour was $22.14 after taxes. That would average $3838 per month.
According to the Cents Plan Formula, here is the high-level view of a $29 per hour budget:
Basic Expenses of 50% = $1919
Save Money of 20% = $768
Give Money of 10% = $384
Fun Spending of 20% = $768
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $29 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $29 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$402
Savings
15-25%
$1005
Housing
20-30%
$1,181
Utilities
4-7%
$176
Groceries
5-12%
$385
Clothing
1-4%
$20
Transportation
4-10%
$176
Medical
5-12%
$251
Life Insurance
1%
$15
Education
1-4%
$25
Personal
2-7%
$75
Recreation / Entertainment
3-8%
$126
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$1,189
Total Gross Income
$5,027
**In this budget, prioritization was given to basic expenses.
Can I Live off $29 Per Hour?
At this $29 hourly wage, you are more than likely double the minimum wage. Things should be easy to live off this $29 hourly salary.
However, it is still slightly above the median income of over $60,000 salary. That means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $29 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $29 an hour annually?
You just have to have the desire to spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
Your mindset is everything.
This is what you say to yourself… Okay, I have aspirations and goals to increase how much I make. This is the time to start diversifying my income into multiple streams and start investing. I am going to stretch my 29 dollars per hour.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $29 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $29 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most crucial section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $29.50 will add up over the year. An increase to $30 an hour is a big milestone!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $29 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: How to Make Quick Money in One Day: 50 Best Ways to Make Cash
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially and becoming financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in 8 months. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Watch his inspiring story!
Tips to Live on $29 an Hour
In this last section, grasp these tips on how to live on a $29 an hour or just above $60k yearly salary. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $29 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than you Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $29 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $29 an hour minus all the taxes, FICA, Social Security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your gross income. Learn more on gross pay vs net pay.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Jobs that Pay $29 an Hour
You can find jobs that pay $29 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant – Get free training NOW!
Freelance writer
Class A Truck Driver
Managers
Entry Level Marketing Jobs
Data Entry Clerks
Customer service managers
Bank tellers
Maintenance workers
Freight broker – Learn how easy it is to start!
Administrative assistants
Athletic Trainers
Event Planners
Day trader
Security guard
Movers
Cashiers
Warehouse workers
Companies that pay more than $29 per hour: Wells Fargo, Disney World, Disney Land, Bank of America, Cigna, Aetna, etc
$29 Per Hour Annual Salary
In this post, we detailed 29 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
$60,320
That is making between $60000 a year and $62000 a year.
In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Today’s average mortgage rates on Mar. 29, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Current mortgage refinance rates
Refinance rates are still high, but your personal interest rate will depend on your credit history, financial profile and application.
Average refinance rates reported by lenders across the US as of March 28, 2024. We track refinance rate trends using information from Bankrate.
Mortgage refinance rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Refinance rate news
A vast majority of US homeowners already have mortgages with a rate below 6%. Because mortgage refinance rates have been averaging above 6.5% over the past several months, households are choosing to hold on to their existing mortgages instead of swapping them out with a new home loan.
If rates fell to 6%, at least a third of borrowers who took out mortgages in 2023 could reduce their rate by a full percentage point through a refinance, according to BlackKnight.
Refinancing in today’s market could make sense if you have a rate above 8%, said Logan Mohtashami, lead analyst at HousingWire. “However, with all refinancing options, it’s a personal financial choice because of the cost that goes with the loan process,” he said.
Where refinance rates are headed in 2024
Mortgage rates have been sky-high over the last two years, largely as a result of the Federal Reserve’s aggressive attempt to tame inflation by spiking interest rates. Experts say that decelerating inflation and the Fed’s projected interest rate cuts should help stabilize mortgage interest rates by the end of 2024. But the timing of Fed cuts will depend on incoming economic data and the response of the market.
For homeowners looking to refinance, remember that you can’t time the economy: Interest rates fluctuate on an hourly, daily and weekly basis, and are influenced by an array of factors. Your best move is to keep an eye on day-to-day rate changes and have a game plan on how to capitalize on a big enough percentage drop, said Matt Graham of Mortgage News Daily.
What does it mean to refinance?
When you refinance your mortgage, you take out another home loan that pays off your initial mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you’ll tap into your equity with a new loan that’s bigger than your existing mortgage balance, allowing you to pocket the difference in cash.
Refinancing can be a great financial move if you score a low rate or can pay off your home loan in less time, but consider whether it’s the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to cut your monthly payment significantly.
How to choose the right refinance type and term
The rates advertised online often require specific conditions for eligibility. Your personal interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application. Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates.
30-year fixed-rate refinance
The average rate for a 30-year fixed refinance loan is currently 6.88%, a decrease of 14 basis points from what we saw one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance, but it will take you longer to pay off and typically cost you more in interest over the long term.
15-year fixed-rate refinance
For 15-year fixed refinances, the average rate is currently at 6.39%, a decrease of 9 basis points from what we saw the previous week. Though a 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan, you’ll save more money over time because you’re paying off your loan quicker. Also, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.
10-year fixed-rate refinance
The average rate for a 10-year fixed refinance loan is currently 6.27%, a decrease of 11 basis points compared to one week ago. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your house much quicker and save on interest, but make sure you can afford the steeper monthly payment.
To get the best refinance rates, make your application as strong as possible by getting your finances in order, using credit responsibly and monitoring your credit regularly. And don’t forget to speak with multiple lenders and shop around.
When to consider a mortgage refinance
Homeowners usually refinance to save money, but there are other reasons to do so. Here are the most common reasons homeowners refinance:
To get a lower interest rate: If you can secure a rate that’s at least 1% lower than the one on your current mortgage, it could make sense to refinance.
To switch the type of mortgage: If you have an adjustable-rate mortgage and want greater security, you could refinance to a fixed-rate mortgage.
To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
To tap into your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
To take someone off the mortgage: In case of divorce, you can apply for a new home loan in just your name and use the funds to pay off your existing mortgage.