30-Year Fixed Mortgage Rate Hits Yet Another Record Low, Falls Below 3.2 Percent for the First Time

As of May 5, the rate borrowers were quoted on Zillow for 30-year fixed mortgages was 2.72%.

Abstract illustration of houses and charts

As of May 5, the rate borrowers were quoted on Zillow for 30-year fixed mortgages was 2.72%.

Mortgage rates fall to lowest levels in months.

“Mortgage rates fell slightly again this week, pushing rates to their lowest level since mid-to-late February,” said Zillow Economist Matthew Speakman. “With few surprising economic data or pandemic-related developments this week, mortgage rates and the bond yields that tend to influence them saw little reason to move significantly over the past seven days. Unlike stocks, bonds and mortgage rates brushed aside comments made by Treasury Secretary Janet Yellen, in which she suggested (but did not recommend) that interest rates will likely have to rise somewhat in order to ensure that the economy doesn’t overheat. But this period of relative calm will be put to the test in the coming days. April employment figures and inflation data, two key gauges of the economy’s path forward, are due this week, and stronger-than-expected readings of either – or both – reports will likely revert mortgage rates back upward.”

Additionally, the 15-year fixed mortgage rate was 2.09%, and for 5/1 ARMs, the rate was 2.38%.

Check Zillow for mortgage rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

The weekly mortgage rate chart above illustrates the average 30-year fixed interest rate for the past week. Here’s a comprehensive look at the current mortgage rates for all loan types:

Today’s Average Rates for Conventional Loans

Program Interest Rate APR 1 Wk Change
30-Year Fixed 2.77% 2.82% 0.11%
20-Year Fixed 2.63% 2.71% 0.06%
15-Year Fixed 2.09% 2.17% 0.03%
10-Year Fixed 2.03% 2.15% -0.08%
7/1 ARM 2.22% 2.92% 0.26%
5/1 ARM 2.19% 3.04% 0.21%
3/1 ARM 0% 0% 0%

A 30-Year Fixed loan of $300,000 at 2.77% APR with a $75,000 down payment will have a monthly payment of $1,227. A 20-Year Fixed loan of $300,000 at 2.63% APR with a $75,000 down payment will have a monthly payment of $1,609. A 15-Year Fixed loan of $300,000 at 2.09% APR with a $75,000 down payment will have a monthly payment of $1,942. A 10-Year Fixed loan of $300,000 at 2.03% APR with a $75,000 down payment will have a monthly payment of $2,764. A 7/1 ARM loan of $300,000 at 2.22% APR with a $75,000 down payment will have a monthly payment of $1,141. A 5/1 ARM loan of $300,000 at 2.19% APR with a $75,000 down payment will have a monthly payment of $1,137. A 3/1 ARM loan of $0 at 0% APR with a $0 down payment will have a monthly payment of $0. All monthly payments displayed assume a maximum Loan to Value (LTV) of 80% and 740 credit score, and do not include amount for taxes and insurance. The actual monthly payment may be greater.

Today’s Average Rates for Government Loans

Program Interest Rate APR 1 Wk Change
30-Year Fixed FHA 2.4% 3.07% 0.17%
30-Year Fixed VA 2.47% 2.73% 0.12%
15-Year Fixed FHA 2.23% 2.93% 0.09%
15-Year Fixed VA 2.42% 2.89% 0.17%
5/1 ARM FHA 2.59% 2.97% 0.02%
5/1 ARM VA 3.17% 2.83% -0.27%

A 30-Year Fixed FHA loan of $300,000 at 2.4% APR with a $75,000 down payment will have a monthly payment of $1,170. A 30-Year Fixed VA loan of $300,000 at 2.47% APR with a $75,000 down payment will have a monthly payment of $1,180. A 15-Year Fixed FHA loan of $300,000 at 2.23% APR with a $75,000 down payment will have a monthly payment of $1,962. A 15-Year Fixed VA loan of $300,000 at 2.42% APR with a $75,000 down payment will have a monthly payment of $1,988. A 5/1 ARM FHA loan of $300,000 at 2.59% APR with a $75,000 down payment will have a monthly payment of $1,200. A 5/1 ARM VA loan of $300,000 at 3.17% APR with a $75,000 down payment will have a monthly payment of $1,291. All monthly payments displayed assume a maximum Loan to Value (LTV) of 80% and 740 credit score, and do not include amount for taxes and insurance. The actual monthly payment may be greater.

Today’s Average Rates for Jumbo Loans

Program Interest Rate APR 1 Wk Change
30-Year Fixed Jumbo 3.2% 3.25% 0.09%
20-Year Fixed Jumbo 3.28% 3.32% 0.25%
15-Year Fixed Jumbo 2.81% 2.89% 0.11%
10-Year Fixed Jumbo 2.5% 2.6% 0.1%
7/1 ARM Jumbo 2.68% 3.17% -0.35%
5/1 ARM Jumbo 2.75% 3.21% -0.25%
3/1 ARM Jumbo 2.14% 2.74% 0%

A 30-Year Fixed Jumbo loan of $600,000 at 3.2% APR with a $150,000 down payment will have a monthly payment of $2,595. A 20-Year Fixed Jumbo loan of $600,000 at 3.28% APR with a $150,000 down payment will have a monthly payment of $3,411. A 15-Year Fixed Jumbo loan of $600,000 at 2.81% APR with a $150,000 down payment will have a monthly payment of $4,089. A 10-Year Fixed Jumbo loan of $600,000 at 2.5% APR with a $150,000 down payment will have a monthly payment of $5,656. A 7/1 ARM Jumbo loan of $600,000 at 2.68% APR with a $150,000 down payment will have a monthly payment of $2,428. A 5/1 ARM Jumbo loan of $600,000 at 2.75% APR with a $150,000 down payment will have a monthly payment of $2,449. A 3/1 ARM Jumbo loan of $600,000 at 2.14% APR with a $150,000 down payment will have a monthly payment of $2,259. All monthly payments displayed assume a maximum Loan to Value (LTV) of 80% and 740 credit score, and do not include amount for taxes and insurance. The actual monthly payment may be greater.

Source: zillow.com

Investing during a recession – Lexington Law

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When things get lean, it’s natural to want to tighten your belt and save money wherever possible. But should you stop investing completely? It’s an entirely personal decision. Get some facts and insights about investing during a recession below to help you determine what will work for you.

Is It a Good Idea to Invest During a Recession?

It depends on a few factors, including what you’re referring to when you say “investing.” If you’re talking about funding a 401(k), you probably want to continue doing so unless you would be unable to pay your necessary bills and living expenses.

But if investing means the stock market or other similar options, you should seriously consider your financial situation. If you already have emergency savings and have disposable income to risk, investing can be an option. This is especially true if you won’t be touching your portfolio for a while, so you have time to weather the ups and downs associated with a recession economy.

But you do want to be aware of the bear market trap so you don’t fall into it. Bear traps occur when a lot of investors have bought into certain stock. This increases the selling pressure, which just means that there are buyers for the stock but not a lot of stock to be had.

Institutions that want the stock to move higher may push prices lower via short sales or other strategies, making it appear as if the prices are falling. That can scare people into selling the stock. In the long run, however, the stock maintains its price or increases in value, so selling early can mean losing out on future gains. This is just one reason you might want to work with a professional advisor when investing.

7 Tips for Investing During a Recession

1. Be Patient and Think Long-Term

Buying and selling stocks rapidly to turn huge profits is mostly an event seen in movies and television. And while it’s not impossible for pros to luck into a big win, this is not typically how individuals should look at investing. It may take time for your investments to pay off, especially if the economy as a whole is struggling, so it’s important to avoid being guided by emotions and rely on logic and sound financial advice.

2. Commit to a Personal Investment Plan

A personal investment plan is a written document that includes your financial goals and what types of limitations you might have, such as what you can afford to spend on investing. Creating such a document ensures you have a logical, well-thought-out guide to turn to when things do get tricky. If you feel tempted by a seemingly perfect investment, for example, your plan can remind you what you can realistically put into this new investment.

3. Use the Dollar-Cost Averaging Strategy

Dollar-cost averaging is a strategy used by many investors, including some professionals. Its goal is to potentially reduce the volatile nature of a single purchase. The DCA strategy works like this:

  • You decide how much you’re going to invest in certain assets within a set period
  • You divide that budget over that time and make periodic purchases of the asset
  • You do this despite the price of the asset at any given time

The goal is to build up the investment for a long-term gain strategy. This is actually how most 401(k) investments are managed.

4. Focus on Quality Over Quantity

But don’t think that you have to buy tons of assets to be investing for the future. If you have limited funds to invest with, it can be tempting to buy up stock that is cheap just to get some quantity. But cheap stock isn’t always a great investment, and it might be better to buy a smaller number of shares in a well-trusted company with a history of strong stock performance.

5. Consider Funds Instead of Individual Stocks

Another option is to consider funds, which spread your investment over numerous stocks. You’ve probably heard that you have to diversify your portfolio. That just means investing in numerous types of assets so that if one doesn’t perform well, you have other gains to make up for the loss.

A mutual fund is an investment option that’s already diversified, for example. Plus, it’s a convenient way to add numerous assets to your equity portfolio without buying and managing numerous stocks yourself.

6. Rebalance When Necessary

While investing is a long-term strategy, active investing can’t be a set-and-forget strategy. You have to make efforts to rebalance your portfolio—or ensure someone is doing that for you—from time to time.

Rebalancing just means aligning your assets with your target goals. For example, you might have a goal of 60% in stocks and 40% in other assets. But if your stocks gain rapidly during a few years, outpacing the gains of your other assets, you could have a 70/30 split. If your goal is still 60/40, you would rebalance by selling stock, purchasing other assets or both.

7. Invest in Recession-Resistant Industries

Recession-resistant industries are those that don’t tend to succumb to downturns in the economy, often because they’re necessary. Examples of industries that have historically weathered recessions well include healthcare, technology, beauty, retail, construction and pet products.

Note that because a company is in a recession-resistant industry doesn’t mean that company itself is necessarily resistant. It’s always important to be discerning about which stocks you invest in. For example, if the company doesn’t have strong financial leadership or has known money problems, it may not matter what industry it’s in.

Review Your Finances and Decide What’s Best for You

Ultimately, only you can decide whether investing during a recession is right for you. Start by reviewing your own finances. Some things you might want to look at include:

  • What kind of savings you have. Having emergency savings is important, especially in a recession. Before you start investing, you may want to build yours.
  • Your income and expenses. You need disposable income before you can invest. That means that your income should be more than your expenses.
  • Your credit history. Buying stocks and investing typically doesn’t rely on you having good credit. But before you start building wealth, get a good look at your credit reports to ensure there’s nothing lurking that you might need to attend to. If you find any surprises, consider reaching out to Lexington Law for help disputing inaccurate items and working to make a positive impact on your credit.

And if you do decide to invest—during a recession or otherwise—consider working with a financial advisor to help you navigate the complexities of managing your portfolio.


Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

30-Year Fixed Mortgage Rate Holds Steady

As of May 5, the rate borrowers were quoted on Zillow for 30-year fixed mortgages was 2.72%.

Abstract illustration of houses and charts

As of May 5, the rate borrowers were quoted on Zillow for 30-year fixed mortgages was 2.72%.

Mortgage rates fall to lowest levels in months.

“Mortgage rates fell slightly again this week, pushing rates to their lowest level since mid-to-late February,” said Zillow Economist Matthew Speakman. “With few surprising economic data or pandemic-related developments this week, mortgage rates and the bond yields that tend to influence them saw little reason to move significantly over the past seven days. Unlike stocks, bonds and mortgage rates brushed aside comments made by Treasury Secretary Janet Yellen, in which she suggested (but did not recommend) that interest rates will likely have to rise somewhat in order to ensure that the economy doesn’t overheat. But this period of relative calm will be put to the test in the coming days. April employment figures and inflation data, two key gauges of the economy’s path forward, are due this week, and stronger-than-expected readings of either – or both – reports will likely revert mortgage rates back upward.”

Additionally, the 15-year fixed mortgage rate was 2.09%, and for 5/1 ARMs, the rate was 2.38%.

Check Zillow for mortgage rate trends and up-to-the-minute mortgage rates for your state, or use the mortgage calculator to calculate monthly payments at the current rates.

The weekly mortgage rate chart above illustrates the average 30-year fixed interest rate for the past week. Here’s a comprehensive look at the current mortgage rates for all loan types:

Today’s Average Rates for Conventional Loans

Program Interest Rate APR 1 Wk Change
30-Year Fixed 2.79% 2.84% 0.09%
20-Year Fixed 2.66% 2.73% 0.04%
15-Year Fixed 2.1% 2.19% 0.02%
10-Year Fixed 2.03% 2.15% -0.08%
7/1 ARM 2.24% 2.94% 0.24%
5/1 ARM 2.27% 3.08% 0.17%
3/1 ARM 0% 0% 0%

A 30-Year Fixed loan of $300,000 at 2.79% APR with a $75,000 down payment will have a monthly payment of $1,231. A 20-Year Fixed loan of $300,000 at 2.66% APR with a $75,000 down payment will have a monthly payment of $1,612. A 15-Year Fixed loan of $300,000 at 2.1% APR with a $75,000 down payment will have a monthly payment of $1,944. A 10-Year Fixed loan of $300,000 at 2.03% APR with a $75,000 down payment will have a monthly payment of $2,764. A 7/1 ARM loan of $300,000 at 2.24% APR with a $75,000 down payment will have a monthly payment of $1,144. A 5/1 ARM loan of $300,000 at 2.27% APR with a $75,000 down payment will have a monthly payment of $1,149. A 3/1 ARM loan of $0 at 0% APR with a $0 down payment will have a monthly payment of $0. All monthly payments displayed assume a maximum Loan to Value (LTV) of 80% and 740 credit score, and do not include amount for taxes and insurance. The actual monthly payment may be greater.

Today’s Average Rates for Government Loans

Program Interest Rate APR 1 Wk Change
30-Year Fixed FHA 2.41% 3.07% 0.16%
30-Year Fixed VA 2.49% 2.75% 0.1%
15-Year Fixed FHA 2.23% 2.94% 0.08%
15-Year Fixed VA 2.42% 2.89% 0.17%
5/1 ARM FHA 2.59% 2.97% 0.02%
5/1 ARM VA 3.09% 2.77% -0.22%

A 30-Year Fixed FHA loan of $300,000 at 2.41% APR with a $75,000 down payment will have a monthly payment of $1,170. A 30-Year Fixed VA loan of $300,000 at 2.49% APR with a $75,000 down payment will have a monthly payment of $1,183. A 15-Year Fixed FHA loan of $300,000 at 2.23% APR with a $75,000 down payment will have a monthly payment of $1,962. A 15-Year Fixed VA loan of $300,000 at 2.42% APR with a $75,000 down payment will have a monthly payment of $1,989. A 5/1 ARM FHA loan of $300,000 at 2.59% APR with a $75,000 down payment will have a monthly payment of $1,200. A 5/1 ARM VA loan of $300,000 at 3.09% APR with a $75,000 down payment will have a monthly payment of $1,279. All monthly payments displayed assume a maximum Loan to Value (LTV) of 80% and 740 credit score, and do not include amount for taxes and insurance. The actual monthly payment may be greater.

Today’s Average Rates for Jumbo Loans

Program Interest Rate APR 1 Wk Change
30-Year Fixed Jumbo 3.24% 3.28% 0.06%
20-Year Fixed Jumbo 3.3% 3.34% 0.23%
15-Year Fixed Jumbo 2.83% 2.9% 0.09%
10-Year Fixed Jumbo 2.5% 2.6% 0.1%
7/1 ARM Jumbo 2.65% 3.1% -0.28%
5/1 ARM Jumbo 2.66% 3.15% -0.18%
3/1 ARM Jumbo 2.14% 2.74% 0%

A 30-Year Fixed Jumbo loan of $600,000 at 3.24% APR with a $150,000 down payment will have a monthly payment of $2,606. A 20-Year Fixed Jumbo loan of $600,000 at 3.3% APR with a $150,000 down payment will have a monthly payment of $3,416. A 15-Year Fixed Jumbo loan of $600,000 at 2.83% APR with a $150,000 down payment will have a monthly payment of $4,093. A 10-Year Fixed Jumbo loan of $600,000 at 2.5% APR with a $150,000 down payment will have a monthly payment of $5,656. A 7/1 ARM Jumbo loan of $600,000 at 2.65% APR with a $150,000 down payment will have a monthly payment of $2,418. A 5/1 ARM Jumbo loan of $600,000 at 2.66% APR with a $150,000 down payment will have a monthly payment of $2,420. A 3/1 ARM Jumbo loan of $600,000 at 2.14% APR with a $150,000 down payment will have a monthly payment of $2,259. All monthly payments displayed assume a maximum Loan to Value (LTV) of 80% and 740 credit score, and do not include amount for taxes and insurance. The actual monthly payment may be greater.

Source: zillow.com

What’s Your Strategy for Maximizing Your Social Security Benefits?

Deciding when to take social security is a bit like playing chess. You’ll need to strategize and think a few moves ahead to maximize your benefit because age and timing matter. Applying at the youngest age possible, 62, reduces a monthly benefit 25% to 30% for the rest of your life than if you had waited until full retirement age. Delay until the latest age possible, 70, and that monthly benefit increases 8% each year you wait past your full retirement age, a bonus of 24% to 32% depending on your birth year.

Your birth year matters because the full retirement age is rising — from 66 for people born between 1943 and 1954, to 67 for those born in 1960 or later. If your birth year falls between 1955 and 1959, the full retirement age rises two months every year.

The retirement age isn’t the only thing that’s changing. The rules for claiming Social Security are different for those born after Jan. 1, 1954. This includes the majority of people filing for benefits today, and the changes especially affect married, two-earner couples.

First, the basics: Individuals pay into Social Security their entire working life in order to receive a steady stream of income in the form of a monthly benefit once they retire. The benefits are based on the person’s 35 highest years of earnings. If you don’t have 35 years of earnings, then zeroes are entered for the remaining years, reducing the monthly benefit.

As pensions disappear and life expectancies rise, a guaranteed lifelong income that isn’t tied to the stock market has tremendous value. “Social Security is the best deal out there,” says Diane M. Wilson, a claiming strategist and founding partner of My Social Security Analyst in Shawnee, Kan. “It’s an annuity that lasts a lifetime, and it’s indexed to inflation.”

Maximizing that benefit has produced a cottage industry of claiming strategists to help retirees determine the best time to start taking benefits, but it’s not a simple calculus. “In the end, it’s a longevity decision,” says Kurt Czarnowski, who counsels clients about Social Security at Czarnowski Consulting in Norfolk, Mass. “If you knew when you were going to die, all this would be a snap.” Instead, people should understand their choices and make an informed decision, he says.

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The Differences Between Restricted Filing and Deemed Filing

A stack of Social Security cardsA stack of Social Security cards

For married couples, that decision involves accounting for two people’s earnings and benefits, as well as the likelihood of one spouse outliving the other. Spouses are not only entitled to the benefit based on their own work history, but they also may be eligible for additional money when the spousal benefit is factored in, what Wilson calls “add-ons.” The spousal benefit equals 50% of the higher-earning spouse’s benefit if the lower-earning spouse takes it at full retirement age. The amount is reduced when taken early, and you can’t claim the spousal benefit until your spouse begins taking Social Security. To be clear, you do not get to take two benefits, but rather Social Security increases your benefit to equal half of your spouse’s if the one based on your own work history is smaller.

People born on or before Jan 1, 1954, can maximize benefits while still receiving some Social Security. By taking whichever benefit is lower — their own or a spouse’s — when they first apply, they let the larger benefit grow before switching to it at a later age. That option, known as “restricted filing,” isn’t available for people born after Jan. 1, 1954. For them, there’s no choice. Social Security simply bestows their own benefit and any add-ons the person is eligible for when they file for benefits, a practice known as “deemed filing.”

Let’s say the higher-earning spouse is the husband and the lower-earning spouse is the wife. Under deemed filing, when the wife applies for Social Security at her full retirement age, she is given the highest amount she is eligible for, which in this instance is 50% of her husband’s benefit, assuming he started taking it. If he hasn’t, she will be given only the benefit based on her own work history. Once her husband applies for his benefits, Social Security will increase hers so that it equals half of his. If the wife was the higher earner and her benefit was more than 50% of his, she won’t get any additional money when he starts claiming Social Security. She will simply continue collecting her own higher work benefit.

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Maximizing Social Security Benefits for Married Couples

A couple looks at a laptop. A couple looks at a laptop.

Deemed filers may have fewer options, but there are other strategies to consider, such as when to start claiming and which spouse should file for Social Security first. Those decisions can change cumulative lifetime benefits substantially, sometimes by as much as six figures, says Wilson. When she advises couples affected by the new rules, she generally recommends the higher earner to delay as long as possible, ideally until age 70, while the lower earner can file, giving the retired couple some income.

The couple’s age difference matters, particularly if the younger spouse is also the lower earner, says Jim Blair, co-owner of Premier Social Security Consulting in Cincinnati. In that case, “if they’re five years or more apart in age, you want the younger person filing as early as possible, at 62, and the older person delaying as long as possible,” he says. “Odds are the younger person is going to receive a survivor benefit before they reach their breakeven point, which is about 12 years past retirement age.” The breakeven point is the age when the total value of cumulative benefits, whether taken early or later, is roughly the same.

If the situation is reversed and the younger spouse is the higher earner, “we’ll look at what the younger individual will need in retirement,” Blair says. “If taking that benefit early at age 62 means a 25% reduction, they’re going to have to live with that for the rest of their life.” There will need to be other income to compensate for the reduction, he adds.

Couples who straddle the 1954 birth year, with one spouse falling under the old rules and the other under the new, have more ways to move the pieces on the Social Security chess board. For instance, if the wife is the younger, lower earner, she may want to apply early, taking her own reduced benefit. That would allow the husband, who was born before the 1954 cutoff date, to use a restricted application and request only a spousal benefit. Meanwhile, his benefit based on his own work history continues to grow 8% per year from his full retirement age until he turns 70. He can switch to his own higher benefit later, whether at 70 or sooner.

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Understanding Social Security Survivor Benefits

A man sits alone on a swing. A man sits alone on a swing.

Couples should try to postpone taking whichever spouse’s benefit is higher to ensure a larger survivor benefit. This is particularly important when the lower earning spouse is younger and likely to outlive the higher earner by many years. “You want that higher benefit to take care of the survivor,” says Wilson, who warns clients of expenses, like home health aides, that someone living alone will almost certainly have.

A spousal benefit turns into a survivor benefit when a spouse dies, but the benefits are not the same. A surviving spouse who is at least full retirement age can receive 100% of the deceased spouse’s benefit, as opposed to 50% for a spousal benefit. The amount is reduced if the surviving spouse claims the benefit before full retirement age. You can claim a survivor benefit as early as age 60 (50 if you are disabled). But you don’t have to take it early, and you may not want to if you’re still working.

Social Security imposes an annual earnings limit for anyone younger than full retirement age who collects benefits, a rule that also applies to surviving spouses. For every $2 earned above the limit, which is currently $18,960, Social Security will deduct $1 in benefits, with the money restored later in the form of a higher benefit when you reach full retirement age. The earnings rule is more generous the year you reach full retirement age with Social Security deducting $1 for every $3 in earnings above $50,520. There’s no limit on earnings once you are full retirement age.

A widow who is, say, 60 when her husband passes away could hold off and take the survivor benefit when she reaches her full retirement age and stops working. There’s no reason to wait beyond that age because the survivor benefit won’t increase.

A survivor benefit is also not subject to the deemed filing rule. Someone born after the 1954 cutoff date can choose to take either their own or the survivor benefit when applying for Social Security. That opens a whole new avenue of claiming strategies. A widower, for example, could take the survivor benefit first if he needs the income and let his own larger benefit continue accruing delayed retirement credits before switching to it at age 70. If his own benefit is smaller, he could take that early and switch to the larger survivor benefit when he reaches full retirement age. The survivor benefit won’t be reduced because he took his own benefit early. The survivor benefit is only reduced if he takes it before his full retirement age.

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How Death, Divorce and Remarriage Affect Social Security Benefits

picture of wedding photo cut in halfpicture of wedding photo cut in half

A divorced spouse is also eligible for benefits based on a former spouse’s earnings history. If your ex is still alive and both of you are at least age 62, you can collect a spousal benefit even if your ex hasn’t started collecting, provided that the marriage lasted at least 10 continuous years, the divorce was two or more years ago, and you haven’t remarried. Your ex won’t know you’re taking the benefit. A divorced spouse who is full retirement age can get 50% of the former spouse’s benefit; it’s reduced if taken early. Deemed filing rules still apply if you were born after New Year’s Day 1954, with only the highest benefit amount given to you.

If your ex has passed away, you can collect a survivor benefit as early as age 60, but the other requirements — a marriage that lasted at least 10 years and a divorce that was finalized two years ago — remain. You also can’t have remarried before age 60.

If you remarry after age 60, you are allowed to keep the survivor benefit from a former spouse whether you were divorced or not, but timing is everything. Wilson had a client, a widower, who was two months away from turning 60 and collecting a survivor benefit. He was also about to remarry. “I told him about the rule, and he said, ‘I can’t reschedule this now.'” He went ahead with the wedding as planned, sacrificing the survivor benefit at the altar. Wilson points out that her client could collect a survivor benefit from his first marriage if the second one ends for any reason.

As with any survivor benefit, there’s no deemed filing. A divorced spouse has the option of choosing which benefit to take first — their own or the survivor benefit — and let whichever is larger continue to grow before switching to it later on.

Remarriage brings other claiming strategies, such as applying for a spousal benefit based on the new spouse’s work record, but there is a waiting period. To collect a spousal benefit, you generally need to be married one year, Czarnowski says. An exception is made for someone who is already collecting a Social Security benefit and remarries. Then the waiting period is waived, he says. For example, a widow over age 60 who is collecting a survivor benefit and remarries is “immediately eligible to collect 50% of the new husband’s benefit, assuming he is collecting his benefit,” Czarnowski says. You will need to choose which benefit you want — the survivor benefit from an earlier marriage or the new spousal benefit.

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When Singles Should File for Social Security Benefits

A man works on a computer. A man works on a computer.

For single people who never married, there’s no survivor to consider so the decision of when to claim is based on the need for income and how much they’ll get at any given age between 62 and 70. “It’s really which point along this continuum makes sense,” Czarnowski says. You can get an idea of how much your benefit will be at different ages based on your current earnings by using Social Security’s quick calculator. You can also enter your earnings history for a more precise figure.

Most of Wilson’s single clients start claiming at full retirement age so that their benefits aren’t reduced. Should they wait until age 70 to get the highest possible benefit? “They may want to if they’re still working and they don’t need Social Security,” Blair says. “The flip side is when they pass away, the benefits end. If they pass away at 72, they didn’t collect very long.”

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You Can Pause Your Social Security Benefits

Someone pushes a red button that is labeled "No!"Someone pushes a red button that is labeled "No!"

Social Security also gives people who regret taking a benefit early the chance to reverse that decision. If you change your mind within the first 12 months of claiming your benefit, you can withdraw the application. All the benefits you received will need to be repaid, including any spousal benefits based on your work record, but you’ll get a higher monthly benefit when you restart later on.

The second way is to suspend your benefit, which you can only do once you reach full retirement age. You won’t need to repay the benefits you’ve received, and you earn delayed retirement credits of 8% per year until age 70, enabling you to reverse some of the damage from claiming early. Keep in mind, however, that when you suspend a benefit, you also suspend any other benefits based on your work record, such as a spousal benefit. If your spouse was getting $1,500 per month and $500 was based on your work record, she’ll only get her own $1,000 benefit when you suspend.

Source: kiplinger.com

What Is Real Estate Due Diligence?

There isn’t an Easy Button for doing your due diligence. It’s really a time-consuming process, and few people have any idea what to do.

Purchasing and owning real estate is always high risk — whether it’s a single family home that you’ll occupy or a 50-unit apartment building for income. You’ll hear experts say to make sure to “do your due diligence” when buying property, but what does that actually mean? What is due diligence?

The truth is, there isn’t an “easy button” for doing your due diligence. It’s really a time-consuming process, and few people have any idea what to do. So here is what it means and some of the steps you should consider and perform.

Do your homework

Due diligence means taking caution, performing calculations, reviewing documents, procuring insurance, walking the property, etc. — essentially doing your homework for the property BEFORE you actually make the purchase. If there are too many issues with the property — and that means too much potential risk and cost — then you can cancel your purchase agreement and look for a better property.

Here are just a few of the steps that apply to both personal residences and investment properties, although some may only apply to one.

Shop the marketplace

Make sure you know what the market has to offer. Too many people look at just a few properties, put in an offer and purchase. You should spend several months looking at properties before you buy.

Mortgage financing

Make sure the mortgage deal you get is fair and in line with competitors. Probably less than 20 percent of people get two bids for their financing, so they don’t know whether they’ve received a fair deal.

Pencil out your investment

If you’re buying an investment property, it’s vital to pencil out your deal. How do you know whether it’s a good deal if you haven’t done the math and compared it to other opportunities?

Property inspection

You probably had an inspection, but did you go to it? Did you review the inspector’s remarks on all the work that needs to be done? Then did you call a contractor or go to a home repair store to see how much it will cost to put the property in the shape you desire? Renovating properties is hugely expensive and high risk, so make sure you get estimates for the work before you decide to move forward with a purchase.

Insurance

Did you check to see whether an insurance policy can be written for the property? How much will it cost? Some areas, such as fire-prone or hurricane-prone areas, might not even be able to get a policy. And even if they do, it might be prohibitively expensive. Get some bids before you’re too far along in your purchasing process.

Homeowners association

Do you know how to review the HOA documents to avoid communities that are in disastrous shape, out of money or have significant construction issues? This is actually a pretty complicated task, but you don’t want to buy into a total mess of an HOA. If you do, you will feel some discomfort as the years go by and you have to deal with the issues and special assessments that you will be required to pay.

Title insurance & plat

Did you look at the title abstract and insurance policy? This will help you see if there are some issues that should concern you. Talk to the title insurance company agent and lawyer to help you review the documents. Also look at the plat of the property, have the easements plotted by title and walk the property for encumbrances.

Those are just a few of the many items that make up due diligence when buying real estate. Remember, you have to do these before you close escrow on the property. If you fail to do the proper tasks, problems might arise that were preventable, and might make your real estate experience less than palatable, or downright life changing! Or they might cause you to lose all the money you’ve put into the property.

Leonard Baron is America’s Real Estate Professor®. His unbiased, neutral and inexpensive “Real Estate Ownership, Investment and Due Diligence 101” textbook teaches potential real estate buyers how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com.

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

Hidden Costs to Watch Out For

Getting a loan? Whether it’s for a new home, car, or something else, don’t make the mistake of focusing solely on the monthly fee. There are many hidden costs out there that can trip you up and make you spend more than you intended over the long run. Here are three of the most common ones to watch out for.

Discount Points on Home Mortgages

When getting home mortgage, you’ll likely be offered the option to pay “discount points.” This is the option to pay a certain fee up front to lower the interest rate throughout the loan’s lifetime. In a sense, it’s “pre-paid interest,” and on average every 1% of the total loan amount you pay up front will lower the interest rate by about 0.125%.

Here’s the thing about discount points: They’re only beneficial if you break even on the up front payment eventually. That only happens when you hold on to the house long enough. Otherwise, you end up paying more than if you simply kept the interest rate where it was.

The key to getting the most out of home mortgage discount points is to decide ahead of time how long you’ll keep the house. If you’re planning to keep it for 10 years or more, then paying for discount points is a smart move. Otherwise, skip them.

Admin/Underwriting Fees

These fees are only supposed to apply when you get your loan from a bank or other lending agency. You don’t need to pay admin/underwriting fees when you get your loan from a broker – simply because they don’t do any underwriting. The lender does.

It pays to know this little bit of trivia, because a fair number of unscrupulous brokers use this technique to pad their bottom line. Don’t be fooled!

Cost of Ownership

Cost of ownership is not a “hidden cost” per se, but it’s definitely unexpected for many individuals. But more importantly, not factoring it in may cost you thousands of dollars in the long run.

Cost of ownership is basically those other costs that come with owning a new asset. For instance, if you’re getting a new home, cost of ownership will include paying property taxes, insurance, furniture, landscaping, etc. If you’re getting a new car, you’ll have to fork over some cash for insurance and the sales tax.

Our advice: If you’re getting a loan that’s right at your financial limit, you’re likely heading for trouble. You may need to dial back a bit, or postpone taking that loan until you’re better prepared for the costs of ownership.

One Final Tip

Even if you’re not planning to take out a loan anytime soon, work on your credit score as early as now. Bring it up to 760 or more, so that any loan you take out in the future will be met with the lowest interest rates. And, perhaps more importantly, working on your credit score trains you to handle your finances better, so you’ll make smarter decisions on money matters moving forward.

Source: creditabsolute.com

Investing during a recession

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

When things get lean, it’s natural to want to tighten your belt and save money wherever possible. But should you stop investing completely? It’s an entirely personal decision. Get some facts and insights about investing during a recession below to help you determine what will work for you.

Is It a Good Idea to Invest During a Recession?

It depends on a few factors, including what you’re referring to when you say “investing.” If you’re talking about funding a 401(k), you probably want to continue doing so unless you would be unable to pay your necessary bills and living expenses.

But if investing means the stock market or other similar options, you should seriously consider your financial situation. If you already have emergency savings and have disposable income to risk, investing can be an option. This is especially true if you won’t be touching your portfolio for a while, so you have time to weather the ups and downs associated with a recession economy.

But you do want to be aware of the bear market trap so you don’t fall into it. Bear traps occur when a lot of investors have bought into certain stock. This increases the selling pressure, which just means that there are buyers for the stock but not a lot of stock to be had.

Institutions that want the stock to move higher may push prices lower via short sales or other strategies, making it appear as if the prices are falling. That can scare people into selling the stock. In the long run, however, the stock maintains its price or increases in value, so selling early can mean losing out on future gains. This is just one reason you might want to work with a professional advisor when investing.

7 Tips for Investing During a Recession

1. Be Patient and Think Long-Term

Buying and selling stocks rapidly to turn huge profits is mostly an event seen in movies and television. And while it’s not impossible for pros to luck into a big win, this is not typically how individuals should look at investing. It may take time for your investments to pay off, especially if the economy as a whole is struggling, so it’s important to avoid being guided by emotions and rely on logic and sound financial advice.

2. Commit to a Personal Investment Plan

A personal investment plan is a written document that includes your financial goals and what types of limitations you might have, such as what you can afford to spend on investing. Creating such a document ensures you have a logical, well-thought-out guide to turn to when things do get tricky. If you feel tempted by a seemingly perfect investment, for example, your plan can remind you what you can realistically put into this new investment.

3. Use the Dollar-Cost Averaging Strategy

Dollar-cost averaging is a strategy used by many investors, including some professionals. Its goal is to potentially reduce the volatile nature of a single purchase. The DCA strategy works like this:

  • You decide how much you’re going to invest in certain assets within a set period
  • You divide that budget over that time and make periodic purchases of the asset
  • You do this despite the price of the asset at any given time

The goal is to build up the investment for a long-term gain strategy. This is actually how most 401(k) investments are managed.

4. Focus on Quality Over Quantity

But don’t think that you have to buy tons of assets to be investing for the future. If you have limited funds to invest with, it can be tempting to buy up stock that is cheap just to get some quantity. But cheap stock isn’t always a great investment, and it might be better to buy a smaller number of shares in a well-trusted company with a history of strong stock performance.

5. Consider Funds Instead of Individual Stocks

Another option is to consider funds, which spread your investment over numerous stocks. You’ve probably heard that you have to diversify your portfolio. That just means investing in numerous types of assets so that if one doesn’t perform well, you have other gains to make up for the loss.

A mutual fund is an investment option that’s already diversified, for example. Plus, it’s a convenient way to add numerous assets to your equity portfolio without buying and managing numerous stocks yourself.

6. Rebalance When Necessary

While investing is a long-term strategy, active investing can’t be a set-and-forget strategy. You have to make efforts to rebalance your portfolio—or ensure someone is doing that for you—from time to time.

Rebalancing just means aligning your assets with your target goals. For example, you might have a goal of 60% in stocks and 40% in other assets. But if your stocks gain rapidly during a few years, outpacing the gains of your other assets, you could have a 70/30 split. If your goal is still 60/40, you would rebalance by selling stock, purchasing other assets or both.

7. Invest in Recession-Resistant Industries

Recession-resistant industries are those that don’t tend to succumb to downturns in the economy, often because they’re necessary. Examples of industries that have historically weathered recessions well include healthcare, technology, beauty, retail, construction and pet products.

Note that because a company is in a recession-resistant industry doesn’t mean that company itself is necessarily resistant. It’s always important to be discerning about which stocks you invest in. For example, if the company doesn’t have strong financial leadership or has known money problems, it may not matter what industry it’s in.

Review Your Finances and Decide What’s Best for You

Ultimately, only you can decide whether investing during a recession is right for you. Start by reviewing your own finances. Some things you might want to look at include:

  • What kind of savings you have. Having emergency savings is important, especially in a recession. Before you start investing, you may want to build yours.
  • Your income and expenses. You need disposable income before you can invest. That means that your income should be more than your expenses.
  • Your credit history. Buying stocks and investing typically doesn’t rely on you having good credit. But before you start building wealth, get a good look at your credit reports to ensure there’s nothing lurking that you might need to attend to. If you find any surprises, consider reaching out to Lexington Law for help disputing inaccurate items and working to make a positive impact on your credit.

And if you do decide to invest—during a recession or otherwise—consider working with a financial advisor to help you navigate the complexities of managing your portfolio.


Reviewed by John Heath, Directing Attorney of Lexington Law Firm. Written by Lexington Law.

Born and raised in Salt Lake City, John Heath earned his BA from the University of Utah and his Juris Doctor from Ohio Northern University. John has been the Directing Attorney of Lexington Law Firm since 2004. The firm focuses primarily on consumer credit report repair, but also practices family law, criminal law, general consumer litigation and collection defense on behalf of consumer debtors. John is admitted to practice law in Utah, Colorado, Washington D. C., Georgia, Texas and New York.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com