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I saw the news about the new FHFA lending fee structure for Freddie Mac and Fannie Mae and thought, as usual, things were being blown out of proportion. Then I saw the table for the new fees and I could not believe how they have made it more expensive for high-down-payment borrowers than low-down-payment borrowers. I don’t mean the fees decreased for low down payment mortgages and are closer, but still lower than high down payment mortgages. The total LLPA fees are lower across the board for those who put 5% down or less than those who put 20 percent down.

What are FHFA and LLPA Fees?

LLPA stands for loan level pricing adjustment. They are fees that were put in place after the 2008 crash to help Freddie and Fannie Mae stay solvent during another downturn. The Fees are applied on most conventional mortgages and were set high for low down payment and low credit borrowers because those borrowers are more likely to default. If the fees are higher the banks will typically raise the interest rate on those loans. In the past, people with high credit and high down payments paid lower fees and had lower interest rates.

FHFA is the Federal Housing Finance Administration. FHFA announced that they changed the fee structure in April and has received a ton of backsplash after many sources claimed mortgages for high credit and high down payment borrowers would be more expensive than mortgages for low credit and low down payment borrowers. This is not exactly true in all cases, but it is true that the interest rate will be higher for some people with higher credit and higher down payments than those with lower credit and down payments.

Why did FHFA change the fee structure?

FHFA said:

“It had been many years since a comprehensive review of the Enterprises’ pricing framework was conducted. FHFA launched such a review in 2021. The objectives were to maintain support for purchase borrowers limited by income or wealth, ensure a level playing field for large and small lenders, foster capital accumulation at the Enterprises, and achieve commercially viable returns on capital over time.”

From: https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-from-FHFA-Director-Sandra-Thompson-on-Mortgage-Pricing.aspx

There have been other articles that have claimed race inequality was part of the reasons for the change, but the just of it is, they wanted to make it cheaper for low-income and low-credit score borrowers to buy houses.

FHFA officials have justified this move by saying:

“An FHFA official told The Post the agency was “tasked with ensuring [Fannie and Freddie] fulfill their role in any market condition,” adding that shifts in long-term mortgage rates are a far bigger factor in determining finance conditions in the US housing market.

The latest recalibration to the pricing framework that FHFA announced in January 2023 is minimal, by comparison, and maintains market stability,” the FHFA official said in a statement.”

This is from a New York Post article: https://nypost.com/2023/04/16/how-the-us-is-subsidizing-high-risk-homebuyers-at-the-cost-of-those-with-good-credit/

What they said was that interest rates went up a ton, so you shouldn’t worry about what we are doing. Worry about interest rates instead.

How much more will good credit buyers pay for a mortgage?

While some buyers getting a mortgage will pay less than before, overall the fees will be higher now. The people paying the highest fees will be those with high down payments and low credit. That’s right. I said high down payments. Some high down payment borrowers with good credit will now pay a .2 to .3% higher interest rate than they paid before. In fact, those high down payment borrowers are paying higher fees than those putting less money down! While high credit, low down payment borrowers, may be paying lower fees than before.

On a $400,000 mortgage, a borrower with good credit putting 20% down may pay $40 more a month because of the higher rates. That is not a huge amount but it is tough to bear with interest rates already 2 to 3 times higher than 18 months ago.

How much less will bad credit buyers pay for a mortgage?

Those with lower credit and a high down payment will be paying less than before, but those with low credit and a low down payment get the biggest discount. Some of the worst buyers will now get a .4% discount on their interest rate compared to what they are paying now. Those low-credit borrowers won’t be paying less than high-credit, high-down-payment borrowers, but the gap shrunk significantly.

For someone with a 620 credit score and 5% down or less, they will now save about $80 to $100 off their mortgage payment thanks to the interest rate decrease.

All buyers will now pay more LLPA fees for 20% down vs 5% down or less

The crazy part of these changes is that across the board for good credit or bad credit, all buyers will be paying less LLPA fees for having a lower down payment (unless they put more than 25% down). Someone with an 800 credit score will pay three times the fees when putting 20% down versus putting 5% down or less. Even someone with a 620 credit score will pay less LLPA fees when putting less than 5% down verse 20% down.

Below is the table showing the new fees:

This is from: https://singlefamily.fanniemae.com/media/9391/display

The left side of the table shows the credit scores and the top shows the loan-to-value ratio (the higher the number the less money people are putting down). There are also many other factors that will impact these fees like debt-to-income ratios, type of property, refinance vs new purchase, etc. The video below goes over the changes in detail.

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Were the FHFA LLPA fees always structured to reward low-down payments?

I am always skeptical of headlines and crazy stories like this. Many of you probably think it has always been this way, but the old fees were structured much differently. You can see them below:

This chart is from 2020 and can be found at: https://www.freeandclear.com/guides/mortgage-topics/loan-level-price-adjustments.html

As you can see, the fees were higher for low down payments and lower for high down payments. The fees were also higher for lower credit and low down payments. I think common sense tells us this is what the chart should look like.

Do high down payment borrowers really pay more?

FHFA said in a statement that while the fees from FHFA for high down payments are higher than the low down payments, that does not mean those high down payment borrowers will pay more. If you put less than 20% down on a mortgage you most likely will be paying mortgage insurance which would be higher than the LLPA fees. So those who put more than 20% down, will still most likely pay fewer fees. Those who put 15% or 10% down, will still have mortgage insurance and have higher fees and mortgage insurance than those putting 5% or less down.

What the spokesman for FHFA did not mention is that you can often get mortgage insurance removed after a couple of years on conventional mortgages. After the mortgage insurance is removed, many buyers who put less down would be paying a lower rate without mortgage insurance than those who put 20% down.

What is one of the craziest scenarios with LLPA fees?

The Mortgage Interest Rate Is now lower for someone with a 680 credit score putting 3% down than for someone with a 730 credit score putting 15% down. If you look at the chart from FHFA, a person with a 730 credit score putting 15% down would have a 1.25% LLPA fee, and the person with a 680 credit score with 3% down would pay a 1.125% fee. Both of those buyers would pay mortgage insurance.

Conclusion

I could not believe the numbers when I saw them on the LLPA fee table. The media was not overblowing what had happened, in fact, I think they missed how bad it was. These guidelines do not apply to FHA, VA, or USDA but for Freddie Mac and Fannie Mae. Most people with good credit and debt-to-income ratios will be using Fanie Mae and Freddie Mac and are being punished for putting more money down.

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Source: investfourmore.com

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UPDATED FOR 2020

Thinking about making a move to the highly-sought-after city of Draper? We can’t blame you! The city is thriving and there’s so much to do. Here are a few highlights of Draper, UT, that make it such a great place to live.

A Heart of Black and White Spots

Draper started out as a small town called Draperville. It was originally a place where cows were brought to graze, and it grew steadily as more and more farm families moved in. This area has a foundation built by the pioneers, and you can see some of the heritage on display at the Draper Historical Society & Museum; a fun and free learning experience!

Big Land, Big Homes

True to its roots, there are still farms within the city. However, Draper has grown from its humble beginnings and you can find several luxury homes atop the hills. There used to be just 20 families in the area, but now almost 50k people live in Draper. It’s safe to say that Draper is popular!

The Main Attraction

There is one central road that runs the city, known locally as 123rd or, as you’ll find on Google Maps,12300 south. The main street is home to all the hottest new shops and restaurants. From sushi to steak and shoes to art supplies, there’s something for every diner and shopper in the fam. Don’t worry though, you’re never too far from farm life. You might even pass a llama or two on your way to lunch!

Outdoorsy

If you’re not a shop-til-you-drop kinda person, no worries. Draper has adventures galore. Parks, hiking trails, an amphitheater, and a community garden are all waiting for you to explore and enjoy.

Commuting Ain’t Nothing but a Thang

Even though Draper is its own city outside of Salt Lake, it’s still easy to commute where you need to go. The central location makes it easy to reach downtown SLC or Utah County in a variety of ways. If you’re heading south, there’s a new wide freeway that will getcha there fast (AKA the point of the mountain) or you can catch a UTA method of transport. If you’re trekking north, Front Runner, Trax, or I-15 will have you in Salt Lake in a beat.

Places Worth Going, Things Worth Doing

Though the city is in close proximity to other large cities, like SLC and Lehi, Draper offers plenty to do. Here are a few of the attractions that locals and visitors find fun for the whole fam.

A Place Worth Living

Start browsing homes in the beautiful city of Draper here. If you find one you love, just hit Schedule a Tour and a helpful Homie buyer’s agent will reach out to you to go and see it in person.

Want to learn more about how to evaluate your next neighborhood?

Read: How to Find the Right Neighborhood

To learn more about Homie’s buy process, click here.

Source: homie.com

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Savings

Compare rates and save on home insurance today!

What is renters insurance and why should I consider it?

As of 2019, roughly 36% of U.S. households were living in rental properties, meaning that a large percentage of the population opts to rent instead of own. While renters don’t own the property they live in, it’s still important to have some protection in place, which renters insurance, also referred to as an HO-4 policy, can provide.

A comprehensive renters insurance policy can help cover your personal belongings, liability exposure and additional living expenses, should your home become uninhabitable due to a covered event. Purchasing renters insurance is typically easy and the premiums are usually affordable compared to many other types of insurance. If you’re in the market for renters insurance, here’s what you need to know before purchasing a policy.

What does renters insurance cover?

Renters insurance can cover numerous situations, depending on the endorsements that you add to your policy. However, the main coverages on a renters insurance policy are:

  • Personal property coverage: This coverage is designed to pay for your damaged or destroyed belongings after a covered loss. Covered personal property generally includes your furniture, clothing, household items and some electronics.
  • Liability coverage: Your liability coverage may pay for medical bills and your legal fees if you are found at fault for someone’s injuries or damage to someone’s property.
  • Additional living expenses: If you are unable to live in your rented home or apartment after a loss, this coverage could help pay for the cost of a hotel and other expenses, like laundromat services or pet boarding. Living expenses coverage only covers the necessities. You should ask your insurance agent to see what exactly is covered when you purchase your policy.

You may also have the option to add additional coverages, like identity theft coverage, pet liability coverage and scheduled personal property coverage to your policy. If you are not sure what coverages you should consider, talking to a licensed agent could help.

Most renters policies also exclude damage to your personal items caused by earthquakes and flooding. While earthquake coverage can often be purchased as an endorsement, you may need to buy a separate policy if you live in a high-risk area. Flood insurance is most commonly offered as a separate policy, although a few companies offer endorsements or include this as a coverage option.

How much does renters insurance cost?

Renters insurance costs, on average, about $179 per year, per Triple-I. However, the cost of your renters insurance policy will vary based on several factors, including how much personal property coverage you purchase, the level of liability coverage you select, what additional coverages you choose and your claim history.

What states offer renters insurance?

Renters insurance is available in all 50 states and Washington, D.C. However, states that have a high density of renters, such as California, New York and New Jersey, may have more active renters insurance markets with more companies and endorsements to choose from.

Renters insurance is not just for those who rent apartments. Renters in condos and homes also have the option to purchase renters insurance. In warmer states like Florida and Georgia, homeowners may choose to rent their homes out for part of the year if they live elsewhere. The renters who occupy those homes can also purchase renters insurance policies to cover their belongings and liability exposure.

What companies offer renters insurance?

There are numerous renters insurance companies on the market, but your options will depend on what state you live in. Not all companies are available nationwide, and not all companies offer renters insurance in each state where they operate. If you are looking for the best renters insurance company, you may want to get quotes from these providers:

  • Geico: Renters who want to handle their policies digitally may want to consider Geico. The company has one of the most highly-rated apps in the industry.
  • Progressive: If you are looking for a highly customizable policy, Progressive could be a good choice. The company offers a long list of optional coverages, including water backup and personal injury.
  • State Farm: Renters looking for an in-person agency experience might want to get a quote from State Farm. The company has over 19,000 agencies across the country.

How do I save on renters insurance?

Although renters insurance is generally much less expensive than homeowners or condo insurance, there are still ways to reduce your premium.

  • Bundle your policies: If you also have an auto insurance policy, consider bundling your renters insurance with the same insurer — you might earn a discount on both policies.
  • Install protection devices: If your apartment has smoke alarms, a carbon monoxide detector or a home invasion alert system, you might save money on your policy.
  • Consider how you pay: If you can pay your annual premium in full, you might save money. If you do need to pay in installments, many companies offer discounts if you sign up for an automatic withdrawal.
  • Increase your deductible: Your deductible is the amount you will pay out of pocket if you file a claim. Generally, the higher your deductible, the lower your premium. Just be sure to choose a level that you can afford to pay if you file a claim.

Every insurance company is different, so discussing your policy with a licensed agent could help you find additional ways to save.

Frequently asked questions

    • Everyone’s situation is different and purchasing any kind of insurance policy is a highly individualized decision. Renters insurance is not required by law in any state, but a landlord has the right to require tenants to purchase a policy. However, even if you are not required to carry coverage, renters insurance does typically offer quite a bit of coverage for a relatively low cost. If your budget is particularly tight, you may be able to take advantage of discounts to lower the cost of a renters insurance policy while still getting valuable coverages.

    • The process of purchasing renters insurance is generally simple and there’s typically no waiting period, which means you may be eligible to get coverage on the same day you apply. For most people, the first step to getting a renters insurance policy is to obtain quotes from multiple insurance companies. Most companies offer personalized quotes online or by phone, or you could visit a local agency to speak to an insurance agent about your needs. During the quote process, you typically need to provide personal information, like your name, address and date of birth. This information can help determine the options and levels of coverage that are right for you. Once you have chosen a renters insurance policy to purchase, a representative will discuss the next steps. You may need to sign an application, and you will probably need to make at least one month’s payment for your policy to be active.

    • Because there are several insurers that offer renters on the market, you may not know where to start your search. Determining what kind of coverages you need and what features you want — like a digital app, 24/7 customer service or a live agent — may help you to find carriers that fit your needs. You can then request quotes from several companies to compare prices, coverages, discounts and features.

    • If you rent out a property, you may want to consider a landlord dwelling policy. This type of policy covers the structure of the home, detached structures and any personal property that you provide for the home (such as furniture). Your renters should consider purchasing a renters insurance policy, though, because a landlord dwelling policy does not provide any coverage for renters’ possessions.

      If you operate a short-term vacation rental, you may want to speak with your insurance agent to make sure you have adequate insurance coverage. Your short-term vacation rental tenants likely will not need a renters insurance policy. If they already have a homeowners, condo owners or renters insurance policy, their personal property coverage should transfer to a short-term rental, just as it would transfer to a hotel room.

    • That depends on the situation. Your pets are generally not considered personal property, so damage or injury to your pets is not typically covered by a renters insurance policy. For that, you need pet insurance. However, your liability coverage may cover damage or injury that your pets cause to others. However, some dog breeds and exotic animals are often excluded, and any animal that you do not disclose to your insurance company could also be excluded from coverage. Discussing your pet with your insurance company is often the best way to confirm your carrier’s guidelines.

    • Yes, renters insurance is a common policy. There are about 109 million renters in the United States, and most financial experts agree that renters insurance is a prudent purchase. Because of the prevalence of renters in the country, many different insurance companies offer renters insurance.

Source: thesimpledollar.com

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Should You Become an Authorized User? – MintLife Blog

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establish credit history, consider becoming an authorized user and building your credit in other ways, like getting a secured credit card.

What Is an Authorized User? 

An authorized user is someone who can make purchases on your credit card but isn’t legally obligated to pay the balance. It’s easy to sign someone up as an authorized user online or over the phone with a few pieces of information like their address, name, and birth date. You can order a separate card or have them use your credit card. You can have several authorized users on a single credit card, usually up to five. If the person is under 18, they can still usually be an authorized user on a parent or guardian’s account.

You get some privileges as an authorized user, but not the same ones as the cardholder. You can make purchases, find the available balance, and make payments. You can also report a missing card and dispute a fraudulent charge. Authorized users aren’t able to make changes to the account, though. For instance, they can’t close the account, add another user, or change the address.

Authorized Users and Credit

Becoming an authorized user could improve your credit score, but not always, and typically not in a drastic way. Check to see if the creditor sends authorized users’ activity to the major credit bureaus. Most do, but not all. If you’re trying to build your credit, you want to make sure being an authorized user will count toward your history.

When you’re a user on someone’s account who has a solid history of on-time payments and low credit utilization, it can help your credit. On the flip side, if you’re connected to someone with a lower credit score or a spotty payment history, your credit might suffer. For instance, if the cardholder misses a payment, your score could be affected, because it will also be reported on your history. That’s why it’s important to select someone you trust. Choose someone who you know will pay on time and not let their balance lapse. You can even have an upfront conversation about credit history and payments before being added as an authorized user to their credit card.

Just because you won’t be legally responsible for your charges, you may have a different arrangement with family. For example, Asher is an authorized user on his mom’s credit card. She pays for his groceries and utilities, but he is responsible for discretionary spending like going to the movies. Still, if the authorized user like Asher refuses to pay their portion, the cardholder remains responsible for covering it. If the cardholder doesn’t pay or can’t pay the balance, it could harm you more than help you.

Ways to Build Credit

Besides becoming an authorized user, there are other ways to build your credit. Try a combination of different approaches to build your history and show that you’re a responsible borrower.

  • Try a rent reporting service: Put your monthly payments toward your credit history by signing up for a rent reporting service. Proof of your payments is sent to the major credit bureaus. You’ll have to pay a small fee for the service, but it’s a low-risk way to create a credit history for payments you already make.
  • Apply for a secured credit card: Most credit cards are unsecured but require an established credit history. Secured credit cards allow you to put down collateral, such as a $500 cash deposit, in case you don’t pay your bills. These cards are for those without much credit history because the deposit guarantees payment to the lender if you don’t make payments. In most cases, secured credit cards carry higher fees and interest rates than normal unsecured cards.
  • Have someone cosign on a loan: Whether you’re purchasing a vehicle or need more funds for college, having someone cosign on a loan can help build your credit. Banks and lenders will often give out small loans to those without much credit history, as long as they have a solid cosigner backing them.
  • Choose a student credit card: If you’re in college, build credit with a student card. You may be approved even with no credit history. You might have a lower credit limit, such as $500 or $1,000, but the card allows you to spend on credit and build trust with creditors.

Practicing smart financial habits, like building your credit or having a personal budget, reaps rewards both now and in the future. Being an authorized user is one practical way to go about improving your overall financial health when done correctly. With a higher credit score and stronger finances, you can achieve bigger goals, like buying a home or saving for early retirement.

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Source: mint.intuit.com

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Posted on: March 17, 2021

There are different types of mortgage loans available to today’s consumers, each with slightly different guidelines. Some have inherent advantages so it takes some time to consider which loan type best suits your requirements.

Let’s take a look at the different programs to see what’s right for you.

Click here to check today’s VA loan rates.

VA Refinance

VA loans are available for eligible veterans, certain active-duty personnel, borrowers with six years’ service in the National Guard or Armed Forces Reserves, and other selected borrowers. VA loans offer two types of refinancing, a standard or a streamline — all backed by the Department of Veterans Affairs.

A standard VA refinance requires the borrowers to provide complete documentation of their loan file including a new appraisal, income and employment verification and fair credit. This loan is also known as a VA cash-out refinance, and is typically only used when getting cash out or paying off a non-VA loan.

Apply for a VA cash out loan here.

For those with a VA mortgage, there’s the VA streamline refinance, officially called the Interest Rate Reduction Refinance Loan (IRRRL). This refinance in essence allows eligible borrowers to drop their rate with very little documentation, time, or money. No income or asset verification and no appraisal are required.

Click here to apply for a VA streamline refinance.

The streamline program may be used to finance a property that was previously occupied and a VA loan used to finance the original purchase. Only an existing VA loan may be eligible for the streamline program. No cash out is allowed.

All VA loans require a funding fee which can be as high as 3.3 percent of the loan amount and may be included in the final loan. For the VA streamline, the funding fee is dramatically reduced to as low as 0.50 percent.

Non-VA Refinance Types

For eligible homeowners, the VA loan is usually the cheapest and easiest option. However, in some cases, those looking to refinance might choose another loan type.

Here are the main non-VA choices.

1. Conventional Refinance

Conventional mortgages are those approved using guidelines established by Fannie Mae and Freddie Mac and are by far the most popular program. Almost every lender offers them and guidelines are mostly consistent from lender to lender, with very few differences.

Mortgage rates on conventional loans are very competitive as lenders compete using the same programs. The best use of a conventional refinance occurs when the homeowners have at least 20 percent equity in the home. In this case, no private mortgage insurance is required.

A VA refinance requires an upfront funding fee, which ranges from 0.50% to 3.3% depending on refinance type. But conventional loans don’t require an upfront fee. This could save Veterans money, provided they have enough home equity for a conventional refinance.

Check your refinance eligibility here.

A conventional loan can also be used to finance an investment property. Other programs, VA, FHA, and USDA loans are only available to purchase an owner-occupied home while a conventional loan can be used to finance the purchase of a primary residence or a rental property.

Borrowers are also allowed to pull equity out of the home in the form of cash when refinancing, referred to as a “cash out” refinance. Most lenders allow for a cash out refinance up to 80 percent of the value of the property, although you’ll likely get a lower interest rate if you stay below 75 percent.

Conventional refinance loans are always “fully documented” meaning the borrowers must qualify in the same manner as during the purchase with paycheck stubs, appraisal, and income tax returns in addition to other standard requirements.

2. FHA Refinance

The FHA refinance also has a streamline program, very similar to the VA program.

No credit score requirement, no appraisal, and no income or employment verified. The FHA streamline is available for FHA-to-FHA transactions. In other words, you have an FHA loan currently.

It may also be used to finance a property that was previously occupied by the borrowers but is now rented out.

The new loan rate and mortgage insurance must drop. The refinance must benefit the borrower.

There can be no payments within the previous three months more than 30 days past the due date.

FHA loans require a monthly and upfront mortgage insurance premium. If the original FHA loan was opened prior to June 1, 2009, the mortgage insurance premiums receive a nice discount.

If you have a VA loan, however, your best option is the VA streamline.

3. USDA Refinance

The USDA program is for properties located in rural or semi-rural areas and the borrowers must not exceed specific income guidelines. The USDA refinance is a standard refinance requiring a fully documented loan including an appraisal, credit, and income among others.

There is a pilot streamline refinance program available in 35 states and operates in a similar fashion as VA and FHA streamline programs. The USDA streamline is for a 30 year fixed rate only and the rate must be at least one percent lower than the existing one and can only be a USDA-to-USDA transaction. No cash out is allowed.

VA, FHA, USDA or Conventional: Which Refinance is Best?

It really all depends on your home equity. VA, FHA, and USDA loans all have some form of mortgage insurance or funding fees applied, increasing the loan amount as well as the monthly payment. If there is at least a 20 percent equity position in the property refinancing out of one of these three loan types into a conventional one is the better choice.

If there are loan to value issues and there isn’t at least 20 percent equity in the transaction then the applicable streamline should be considered.

There can always be additional lender requirements on top of any issued guidelines called overlays. Some lenders may ask for an appraisal for a streamline for instance. If you’re thinking about refinancing, consider all your options. Not only could you benefit from a lower rate, but you might also be able to get rid of mortgage insurance premiums as well.

Click here to check today’s VA refinance rates.

Let’s look at a comparison of the four major loan types for a $250,000 purchase price.

Head to Head – VA Compared to other Loan Types

VA FHA Conventional USDA
APR* 3.721% APR 4.798% APR 5.192% APR 4.246% APR
Principle and Interest $1146 $1102 $1168 $1163
Monthly Mortgage Insurance or Fee $0 $269 $210 $84
Estimated Taxes and Insurance $268 $268 $268 $268
Total Monthly Payment $1414 $1639 $1646 $1515

Qualification:

Comparison of Qualification Requirements

VA FHA Conventional USDA
Down Payment Percentage 0% 3.5% 5% 0%
Approx. Cash Needed** $0 $8750 $12,500 $0
Typical Minimum Credit Score Needed*** 620-640 620-640 680 620-640
Streamline Refinance Available? Yes Yes No Yes

**Assumes $6000 in seller-paid closing costs;
***Varies based on lender; All scenarios assume 700 credit score, property in WA

Additional Benefits of VA Home Loans

  • VA home loans have more lenient credit and debt ratio guidelines. You may qualify for a VA loan even if you can’t be approved for other loan types. Get your  free rate quote.
  • You can refinance or sell your home at any time without penalty with a VA loan.
  • The seller is allowed to pay all of your closing costs up to 4% of the purchase price.

I’m Ready to Apply for This Great Benefit

The VA home loan program is a great opportunity for active-duty service members and veterans. Take advantage of your entitlement.

Request a no-obligation eligibility check here.

More VA Loan Resources:

Source for VA loan information: VA Handbook

Source: militaryvaloan.com

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Interest Rate for Series I Savings Bonds Falls to 4.3%. Here’s What it Means

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Gone are the days of series I savings bonds paying almost 7% in interest. The U.S. Treasury announced Friday that the inflation-protected bonds would start paying investors 4.3% on May 1, down from the 6.89% that they’ve paid out over the last six months.

Since they were first introduced in 1998, series I savings bonds – also known as I bonds – have helped investors keep pace with inflation. They’ve especially come in handy in recent years, as inflation has reached levels not seen since the early-1980s. Here’s what you need to know about I bonds and Friday’s interest rate adjustment.

A financial advisor can help you determine whether I bonds or other inflation-protected securities are right for your portfolio. Find an advisor today.

About I Bond Interest Rates

An I bond’s interest rate is calculated using two separate rates – a fixed rate and an inflation rate. While the former stays the same for the duration of the bond, the inflation rate changes every six months. That’s because the latter is linked to the Consumer Price Index for all Urban Consumers (CPI-U).

As a result, when inflation increases, like it has in recent years, I bonds pay out more interest. When inflation falls, they pay out less.

On Friday, the Treasury raised the fixed interest rate for I bonds from 0.40% to 0.90% but dropped the semiannual inflation rate to 1.69%. This resulted in a combined interest rate of 4.3% for newly issued bonds.

Keep in mind that an I bond’s combined rate is calculated in two steps. First, the fixed rate is added to double the semiannual inflation rate. Next, the fixed rate gets multiplied by the semi-annual inflation rate. The two sums are then added together, resulting in the combined interest rate of an I bond. Here’s the formula:

[Fixed rate + (2 x semiannual inflation rate) + (fixed rate x semiannual inflation rate)]

What Falling Rates Mean

As inflation has climbed in recent years – peaking at 9.1% in summer 2022 – so did I bond interest rates. But as inflation continues to fall, the same will happen for I bond yields.

Friday’s rate adjustment comes one year after I bonds were paying investors a whopping 9.62%. In November, the Treasury raised the fixed rate from 0% to 0.40% but lowered the inflation rate to 3.24%. That brought the combined rate down to 6.89%.

While Friday’s adjustment results in lower overall interest rates, the fixed rate is now at its highest point since November 2007 (1.20%). Keep in mind that if the inflation rate increases again in another six months, those who purchase I bonds now will stand to benefit because their bonds will continue to pay out 0.90% in fixed interest plus the higher interest rate.

Bottom Line

Series I savings bonds or I bonds are inflation-protected debt securities issued by the U.S. Treasury. The bonds, which were previously paying 6.89%, will begin paying out 4.3% on May 1, the Treasury announced Friday. However, those who buy I bonds now will lock in a 0.90% fixed rate – the highest it’s been since 2007.

Tips for Managing Inflation

  • Treasury Inflation-Protected Securities (TIPS) are another low-risk investment that can help soften the blow of inflation. Instead of the interest rate rising and falling with inflation, the principal of a TIPS bond increases with inflation. This differentiates TIPS from I bonds, whose interest rate is linked to inflation.
  • A financial advisor can help you invest in I bonds, TIPS and other assets to protect your portfolio from rampant inflation. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock.com/DNY59, ©iStock.com/hobo_018, ©iStock.com/Khanchit Khirisutchalual

Patrick Villanova, CEPF®
Patrick Villanova is a writer for SmartAsset, covering a variety of personal finance topics, including retirement and investing. Before joining SmartAsset, Patrick worked as an editor at The Jersey Journal. His work has also appeared on NJ.com and in The Star-Ledger. Patrick is a graduate of the University of New Hampshire, where he studied English and developed his love of writing. In his free time, he enjoys hiking, trying out new recipes in the kitchen and watching his beloved New York sports teams. A New Jersey native, he currently lives in Jersey City.

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Apache is functioning normally

Your outdoor living space is a place where you should be able to relax, clear your mind and regain energy. This is the main reason why people who are lucky enough to have a backyard or front yard, invest heavily in beautifying them.

You definitely don’t need to break your piggy bank to make this space look gorgeous. From gazebos, picnic tables, or outside benches, there are hundreds of outdoor structures that you can choose from. However, if you want to accent a special area, pergolas are the way to go.

Maybe you’ve already read about vinyl pergola kits in home improvement blogs and channels. They are an easy and great way of decorating your yard so that you can take full advantage of it.

If this design idea has piqued your curiosity, here is what you need to know about pergolas.

What is a pergola? 

Pergolas are large column structures that consist of a beamed ceiling. They are usually made out of wood and placed as a roof for patios and front yards. Those who are not familiar with its appearance would generally regard it as having an unfinished look.

A pergola intends to provide a place where people can hang out. Although the ceiling consists of beams, you can cover it using tarps, portable canopies, and fabric sails that provide shelter from the rain or the sun. However, you can always leave the beamed ceiling as it is so that you and your guests can enjoy the light that shines through.

What is the difference between pergolas and arbors?

Pergolas usually get mistaken for an arbor. The former is generally more extensive, and its structures attach to the house. On the other hand, arbors are relatively smaller and usually function not as a shade but a design for entrances and exits.

The most popular types of pergolas

Much like gazebos, a pergola can be made out of three materials: metal, wood, and vinyl. For homeowners, wood and vinyl pergola kits are the most popular choices. Deciding which you prefer really depends on what material goes with your overall outdoor design and how much you are willing to spend.

Why you should have a pergola 

Simple! They are great outdoor structures not only because they provide a breathy shade, but also because they are customizable. When you hold parties, you can add accessories according to your theme and change the roofing materials any time you like. 

Moreover, they are also a great space to place your plants. Most gardeners hang flowerpots, plant grapevines or ivies. These plants usually cover the pillars of the pergolas, making the whole structure look like a dreamy ancient column. 

Ways to decorate a pergola

Once you have found the design that you were looking for, you might be wondering what kind of furniture or items go with it.

Generally, sofas and outdoor seating are the first choice for homeowners who prefer having a place to hang out with their friends. Pergolas are an ideal place to set up a dining table where you could spend Sunday brunches and host dinner parties.

On the other hand, you could convert them into a greenhouse or a place where you can enjoy outdoor cooking. Some people place them over their pool or Jacuzzi to provide shade and protection from rain.

There are many ways to decorate a pergola and you can use your imagination to make it aesthetically pleasing while also functional. That’s what makes them the perfect addition to your outdoor living space.

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The thrift store scene in Las Vegas is fantastic, especially if you know where to look.

Eva Hagan

Apr. 28 2023, Published 2:52 p.m. ET

Thrift stores, as we know, are the mecca of eco-couture. You can basically find anything and everything, from designer dresses to retro furniture to electronics that may or may not work.

But, one of the best things about thrifting is how it holds the history and personality of a place, and the people that live there. For a city like Las Vegas, its flair can be discovered all throughout its stores.

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Alt Rebel

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Located in the heart of the Downtown Las Vegas Arts District at 1409 South Commerce Street, Alt Rebel is a place to buy, sell, and trade gently used merchandise. If you are looking to refresh your wardrobe with some refined vintage pieces, Alt Rebel describes itself to be an upscale thrift spot, including pieces from brands like Marc by Marc Jacobs, Dr. Martens, True Religion, and Louis Vuitton.

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Opportunity Village Thrift Store

Located at 390 South Decatur Boulevard, Opportunity Village Thrift Store is not only a place to shop but a chance to support an organization that dedicates itself to empowering those with disabilities. The thrift store is owned by the nonprofit Opportunity Village, which provides workforce development, employment assistance, housing, and more for people with disabilities.

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This spot is a great place to shop for furniture, tools for those with disabilities, and all your usual thrift store finds. The store is partnered with World Market Center and local trade shows where it sources everything from vintage wall art to designer shoes, available for purchase in stores as well as online.

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Savers

With six locations in the Las Vegas Valley, Savers is an obvious choice for finding new outfits without resorting to fast fashion. Although it’s not unique to the area, Savers is a place where you can find some of the largest selections of cheap clothing sustainably.

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The Red Kat Vintage

Find new vintage pieces at 1300 South Main Street, at The Red Kat Vintage. The store is full of retro pieces, with vinyl records, eclectic accessories, and clothing to sort through. This is definitely the spot to find the coolest colors, textures, and inspiration to branch out when it comes to fashion, per Thrillist.

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Patina

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If you are on the hunt for one-of-a-kind, vintage home decor, and furniture, look no further than 1300 South Main Street. Patina is known for its upscale vintage home furnishings, lighting, accessories, and apparel, all found in the heart of downtown Las Vegas. And the best part? You can shop online as well as in-store to locate your new favorites.

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Off The Threads

With two locations on the same block, at 1403 South Commerce Street and 1415 South Commerce Street, this thrift store has a unique backstory.

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Off The Threads was started by Linda Ruiz in 2018, when she was just 18 years old. Since then, Off The Threads has taken off with the help of Ruiz’s family, and Ruiz and her grandma even scored a gig as seamstresses for singer Dua Lipa for the Billboard Music Awards. At both shops, you can find racks full of vintage goodies, designer pieces, and even mystery bags for those who need a little push to expand their wardrobe.

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