Thornburg Mortgage released a statement today saying it was unable to meet millions in margin calls and that’s its financial statements would need to be restated to account for a $427.8 million write-down to the value of its mortgage securities.
The Santa Fe-based mortgage lender said that as of end of business Thursday it had $610 million in outstanding margin calls “which significantly exceeded its available liquidity at that date.”
The company said it had roughly $580 million in available liquidity as of December 31, 2007, but was faced with approximately $1.8 billion in margin calls since then, satisfying just under $1.2 billion.
Thornburg received notices of default from four different lenders as of yesterday but said it was granted the ability to freeze additional margin calls through Friday while it explored solutions to raise capital.
“The company is working to meet all of its outstanding margin calls within a timeframe acceptable to its lenders, through a combination of selling portfolio assets, issuing collateralized mortgage debt and raising additional debt or equity capital,” the company wrote in a statement.
CEO Larry Goldstone expressed aggravation over the recent dealings, claiming that his company’s high quality mortgage securities were being comprised by industry-wide panic.
“The mortgage financing market’s complete inability to differentiate and appropriately value superior AAA-/AA-rated mortgage securities from all other mortgage assets is as unprecedented as it is frustrating,” said CEO Larry Goldstone.
“Our portfolio of mortgage-backed securities has exhibited exceptional credit performance and comprises loans that are among the most solid in the industry. Quite simply, the panic that has gripped the mortgage financing market is irrational and has no basis in investment reality.”
“We are committed to implementing initiatives that will resolve our current liquidity issues so we can deliver long-term growth, continue as a going concern, and ensure stability for our shareholders and for the company,” he concluded.
Shares of Thornburg fell 44 cents, or 26.67%, to $1.21 in late session trading on Wall Street.
The company specializes in jumbo mortgages and adjustable-rate mortgages for the very creditworthy.
While investors can buy both secured bonds or unsecured bonds, the main difference between the two is the amount of risk for the investor. Secured bonds are secured with collateral, e.g. by an asset or assets of commensurate value. Unsecured bonds are not secured with collateral, but investors who buy these bonds put their faith in the creditworthiness of the issuing company.
An example of a secured bond might be a mortgage bond, which is secured by the value of the underlying mortgage as well as the payments on that mortgage. An unsecured bond might be issued based on the promise of revenue. For example, a municipal bond that’s issued to raise money for a new hospital.
Key Points
• Secured bonds have collateral backing, reducing risk for investors, while unsecured bonds rely on the creditworthiness of the issuer.
• Secured bonds may be backed by physical assets or income streams, such as mortgage bonds or revenue bonds.
• Unsecured bonds, like U.S. Treasury Bonds, depend on the issuer’s creditworthiness and are riskier than secured bonds.
• Secured bonds offer the benefit of potential collection from issuer assets in case of default, but the process can be complex.
• Investors should consider their risk tolerance and goals when choosing between secured and unsecured bonds for their portfolios.
What Are Secured Bonds?
A secured bond is one that has an asset as collateral to back up a person’s investment. This asset can be something physical, such as a piece of property or equipment, or an income stream. A government agency might issue bonds to raise money to build a bridge, which is a common example of how bonds work.
In the government bridge-building example, the bonds could be secured — but, in this case, not by the bridge itself; rather, by the future revenue stream that will be generated after construction is complete when a toll will be charged for people to drive over that bridge.
This type of bond can sometimes be referred to as a revenue bond. These are often considered non-resource — meaning that, if the source of revenue dries up, the investor often doesn’t have an ability to get paid.
And a bond can actually be secured by both a physical asset and an income stream. An example of bonds that are secured by both is a bundle of mortgage loans. This has the physical property being mortgaged by borrowers as collateral, as well as the income stream that comes in when people make their mortgage payments.
A key benefit of choosing a secure bond is that, if the entity issuing the bond defaults on making payments to bond purchasers, then the investors can attempt to collect from the assets of the issuer to get their money.
The process isn’t necessarily as straightforward as an investor owning or buying bonds in default might like, however, in part because the collateralized assets may not be significant enough in worth to cover the totality of what’s owed — and in part because issuers may challenge the investors’ right to those assets. So, in reality, it can take weeks to months, or even longer, to actually get bond-related money from an issuer in default.
Investors who want to purchase secured bonds typically seek them out from corporations and municipalities. That doesn’t mean, however, that all corporate bonds are secured; in fact, many of these types of bonds are in fact unsecured.
💡 Quick Tip: Before opening any investment account, consider what level of risk you are comfortable with. If you’re not sure, start with more conservative investments, and then adjust your portfolio as you learn more.
What Are Unsecured Bonds?
Unsecured bonds are those that don’t have assets backing them. Instead, investors are given the “full faith and credit” of the entity issuing them that the bonds will be paid upon, as promised. U.S. Treasury Bonds, for example, are considered unsecured (although these are also considered one of the lowest risk investments available).
If the issuer of an unsecured bond defaults, owners of these bonds would still have a claim on the issuer’s assets, but are paid only after holders of secured bonds are paid.
From a risk and return perspective, it might seem as though secured bonds present a lower risk because they have collateral behind them. There may be some truth to that, but investors wanting low risk often buy Treasury bonds — unsecured investments — because the U.S. government has made all scheduled payments over the past 200+ plus years.
When choosing what bonds to buy, here’s guidance: as a generalization, debt that’s considered riskier will offer more attractive interest rates. Those backed by entities with strong economic profiles will have relatively lower rates. And, although “secured” sounds more reliable than “unsecured,” the reality is that a secured bond of “junk” quality is actually riskier than an investment grade unsecured bond.
A person’s goals when investing, including when choosing bonds, should help to guide which ones make sense to purchase.
Check out SoFi’s Investing 101 Center for strategies, news, and resources.
Secured vs Unsecured Bonds
There are pros and cons to investing in both secured and unsecured bonds. Investors would be wise to take everything into consideration. Here’s a quick look at the pros and cons
Secured vs. Unsecured Bonds: Pros
Secured bonds
Unsecured bonds
Security
Potential for higher returns
Low default risk
May be more choices on the market
Good diversification assets
May be a good middle-ground investment for less risk-averse investors
Secured vs. Unsecured Bonds: Cons
Secured bonds
Unsecured bonds
Subject to interest rate risks
Higher-risk
Not completely risk-free
More volatile
Lower potential returns
Subject to interest rate risks
Benefits of Investing in Bonds
In general, investing in either secured or unsecured bonds can have some benefits. Namely, that they provide a source of income, and can reduce portfolio volatility to certain degrees. But there are some differences, too.
Benefits of Investing in Secured Bonds
Bonds pay a fixed interest rate, typically paying investors twice a year, which creates the income that a bond holder may want. Plus, because they are typically lower in risk than stocks, they can help to reduce the overall levels of risk in an investor’s portfolio.
Because a person’s risk tolerance plays a significant role in the type of investing that is best for them, investors can determine their risk tolerance as a way of analyzing the degrees of risk that feel comfortable for them. Again, secured bonds are among the safest investments out there — but they’re not completely risk-free.
Benefits of Investing in Unsecured Bonds
The main benefit of investing in unsecured bonds versus secured bonds is the potential for higher or better returns. Since unsecured bonds are riskier, there’s a potential for higher rewards — the old adage is true, that there’s a correlation between risk and reward.
While unsecured bonds aren’t the riskiest investment on the market, they tend to be riskier than their secured counterparts.
How Bonds Factor Into Asset Allocation
Savvy investors typically create diversified portfolios, which contain a mix of assets, often including stocks and bonds with varying levels of risk and reward.
Diversification is the financial version of not putting all eggs in one basket, with asset allocation referring to the amount of money invested into each type of asset class within a person’s portfolio.
Individual investors can each decide what asset allocation makes the most sense for them, perhaps including 60% stocks and 40% bonds, as just one example.
Factors involved in determining asset allocation include an investor’s
• Financial goals
• Risk tolerance
• Investing timelines (when retirement is looming, for example, asset allocations may be different than for a younger investor)
By looking at these factors, along with possible investment options and their historical performances, an investor can choose a mix of assets that seem to dovetail best with his or her unique goals, challenges, and overall financial situation.
💡 Quick Tip: How to manage potential risk factors in a self-directed brokerage account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.
Asset Allocation Models
There are four broad asset allocation models that can be shared to show varying investment strategies. Some, but not all of them, typically include bonds.
Capital Preservation Portfolio
As the name suggests, an investor creating this type of portfolio wants to preserve capital, and is averse to losing money, even short term.
This can be the type of portfolio created for investors who have short-term goals (meaning, those intended to be accomplished within one year), such as someone building an emergency fund, or saving to buy a car. Investors with capital preservation goals might put an entire portfolio in a money market fund because stocks and bonds alike can have short-term losses.
Income-producing Portfolio
Investors using this strategy typically focus on generating income, rather than portfolio growth, often because they will be living off investment income to some degree. For example, someone who is already retired might invest in income producing vehicles to supplement a monthly pension.
This person’s portfolio might include bonds, whether secured or unsecured, from government entities or corporations with a history of steady profitability. Other elements of the portfolio might include shares of stocks that pay dividends and/or real estate investment trusts. Investing in I bonds is another possibility.
Growth Portfolio
As a third investment model, a growth strategy can be chosen by people who want long-term portfolio growth. These investors may be willing to take more risk than those who fit into one of the two previous models described if they believe they can receive higher returns.
This investor may still be working and therefore not need to have their portfolios generate income yet. A portfolio focusing on growth may largely or even fully have stock investments.
Balanced Portfolio
This type of portfolio can be a blend of an income-producing and a growth portfolio. People of all ages along the investment journey may choose to use a balanced approach to manage portfolio volatility, and this type often contains a mix of common stocks with investment-grade bonds.
This type of portfolio, in other words, is created to balance assets that grow over time with less volatility with those that can produce growth.
Stock and Bond Allocation “Rule”
Financial professionals sometimes use formulas to determine the best mix of stocks and bonds in a portfolio for an investor. One such “rule” is to subtract the investor’s age from 110.
The number that remains may indicate the percentage of a portfolio that should go into buying stocks. So, while a 30 year old may use this to put 80% of funds into stocks, a 60 year old — using the same formula — would put in only 50%.
The remainder could be invested into a more conservative choice: bonds. Because different people have different risk tolerances, this is not a hard and fast rule; rather, it’s a starting point when deciding how aggressive or conservative an investor wants a portfolio to be.
💡 Recommended: Conservative Investing Explained
The Takeaway
Secured bonds and unsecured bonds differ in one key way: One is secured by collateral, and the other is not. That plays a role in how risky each type of bond is, and thus, can inform an investor’s strategy. Both types of bonds may have a place in an investor’s portfolio.
Portfolios may be rebalanced more often if an asset class experiences a significant change, with the goal always being to keep an investor’s portfolio on track with stated goals. Bonds of all types can be a part of that, but it may be best to consult with a financial professional for advice.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.
FAQ
What is the difference between secured bonds and unsecured bonds?
The main difference between secured bonds and unsecured bonds is that secured bonds are secured by collateral, whereas unsecured bonds are more or less dependent on the issuers’ creditworthiness.
What does it mean when a bond is secured?
A secured bond refers to the fact that the issuer of the bond has put up some sort of collateral. In that case, the bonds are less risky, because if the issuer defaults, the collateral can be sold to pay back bondholders.
What is the purpose of an unsecured bond?
Unsecured bonds allow companies or organizations to borrow money without putting up any collateral – which can be extremely helpful if they don’t have any. That makes them riskier, however, than secured bonds.
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Home sales numbers released Tuesday offered more sobering news: The number of existing homes sold continued their fall to levels last seen during the fallout of the Great Recession. At the same time, prices remain stubbornly high amid the highest mortgage rates in 23 years.
The National Association of Realtors reported that existing-home sales in October dropped below economists projections to 3.79 million. The median price last month ticked up to $391,800 – a 3.4% increase from 2022 but a 6.3% decline from September.
Since 2000, annualized home sales figures averaged about 5.3 million each month. Only three other months – all following the 2007-08 financial crisis – registered lower sales than October, including July 2010 which set the low watermark of 3.45 million.
here to see them.
The number of homes sold has been tumbling since 2022 when the Fed announced its plans to raise interest rates in an effort to tame 40-year high inflation. Mortgage rates have more than doubled since and, in turn, increased monthly payments for new homeowners.
30-year mortgage rates have fallen to 7.44%. Rates, which might have peaked at the end of the month, appeared to deterred some buyers in October, according to the NAR report. All-cash sales rose from 26% last year to 29% in October, while the percentage of first-time buyers, the next biggest group, was unchanged.
Fed Chairman Jerome Powell and other Fed presidents continue to say that we shouldn’t expect a reduction in interest rates any time soon. That said, nearly all investors who bet on the movements of interest rates expect the Fed will hold interest rates steady following its next meetings in December and January, according to the CME FedWatch Tool.
The Federal Housing Administration’s latest version of a proposed vehicle for helping distressed borrowers with older loans obtain affordable payments responds to some key industry requests.
Notably, it reduces what would have been a complicated claim process for mortgages the FHA insures when the strategy gets used, in line with a previous ask for simplification from trade associations, according to the Housing Policy Council.
“This is probably the most significant change: They were going to have servicers submit multiple and ongoing claim submissions, and they’ve moved to a one-time submission,” said Matt Douglas, senior vice president, mortgage policy, HPC.
The term of the redrafted payment-supplement partial claim also no longer includes a complicated set of rules for the remuneration period, which is now set at three years as housing finance organizations had requested.
“It previously had been pretty complex,” said Pete Mills, senior vice president of residential policy and member engagement at the Mortgage Bankers Association.
The FHA did not raise incentives connected with the foreclosure prevention strategy the way some advocates hoped, but with the process for claims streamlined, they were reconsidering their position on what type of payments would be appropriate at deadline.
“This is going to require less work. We need to take a look at what’s a reasonable request for an incentive. That’s an open question. I don’t think we have developed a position on that yet,” Douglas said.
The administration has promised not to move ahead on the proposal without reviewing another round of feedback, which is due by Dec. 7.
“This one was particularly complicated. We’re very appreciative we got back to the drafting table one more time, even with a short turnaround,” Mills said. “I give the FHA a fair amount of credit for using the drafting table, not just for this, but in general. I think it results in better policy.”
The FHA would now like to implement the PSPC within nine months of finalizing it. That’s more than the six months previously floated but less than the year residential entities originally sought.
“I think it’ll probably include the option to implement sooner, in cases where you can’t, this certainly addresses some of the challenges of getting this built into the permanent FHA loss-mitigation waterfall,” Mills said.
There’s a balance that should be struck between meeting borrower needs for the PSPC that exists under current market conditions, and the need for the industry to have enough bandwidth to take all the steps required to make sure it’s operationally effective, Douglas said.
“A loss mitigation offering that works more effectively in a high interest rate environment is a tool that we think FHA needs. However, this is a novel, untested concept that we want to make sure we get it right,” said Douglas.
The vehicle for the payment-supplement partial claim is a subordinate lien. That avoids a modification of the first lien that would create a need to adjust the loan to the higher market rate.
“There’s a second lien in favor of HUD that secures the repayment of the amounts that HUD has extended to bring the loan current,” said James Wright Jr., a partner that represents banks and other financial services companies at Bradley, a national law firm.
“It’s a 0% loan but it does have to be paid off either when it’s refinanced or when the property is sold,” he added, noting that if the loan does extend out to its full term the borrower may have a balloon payment at the end.
One thing the FHA has not produced yet, but servicers would like to review, are certain documents involved.
“We do think that’s an important step so that we understand: What does the model note look like? What does the model borrower agreement look like? What does the rider to the note look like? We have asked for them to publish that and they have not yet,” Douglas said.
Inside: Are you looking to achieve financial freedom? This guide teaches you the 12 habits you need along the journey. Learn how people changed their lives with simple steps of savings and minimized expenses.
Achieving financial freedom is often misconceived as simply accumulating great wealth.
However, as David Bach, a renowned financial expert and top-selling author emphasizes, “Financial Freedom is about a lot more than money, it’s about living a richer life.” Indeed, true financial freedom is not solely dictated by the figures in your bank account, but more by the ability to live life on your terms, unencumbered by financial restraints.
There are reasons financial freedom is a coveted goal for many. Having more than enough monetary resources to finance your desired lifestyle without being driven by the need to earn a certain amount every year can be liberating.
This post will explain financial freedom in-depth, its benefits, the keys, and simple strategies to attain it.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is Financial Freedom?
Financial freedom is understood in various ways depending on people’s personal goals and values. Essentially, it’s having ample savings, cash, and investments to live as desired, both presently and in the future.
Those who reach financial freedom find themselves in control of their money, not allowing it to control them. Imagine enjoying your favorite hobby, traveling, or simply relaxing without stressing about money.
That’s the essence of financial freedom.
Why is Financial Freedom Good?
Financial freedom is a game-changer. It gives you complete control over your finances, allowing you to make choices that align with your values and long-term plans.
Financial independence reduces anxiety tied to unforeseen expenses and offers a safety net during unexpected hardship. It also allows you to work on your terms, pursue passions, take risks, and ultimately, leads to a more fulfilling and happier life.
This is something I can attest to when my husband was able to leave a toxic work environment on his terms.
What is the key to financial freedom?
The key to financial freedom lies in attaining financial literacy, prioritizing your goals, and cultivating good financial habits.
This involves setting and being adamant about your life goals, living within your means, saving diligently, investing wisely, diversifying income streams, and regularly reviewing and adjusting your financial plan.
Control over your finances and informed decisions pave the way toward financial freedom.
12 Simple Strategies for Financial Freedom
Achieving financial freedom requires strategic planning and disciplined execution. It’s not just about earning more, but about saving wisely, spending judiciously, and investing intelligently.
This section introduces you to key strategies for securing financial independence, illustrating their importance and demonstrating their role in paving the way toward a stress-free financial future.
Remember, financial freedom is not just about an affluent lifestyle, but about taking control of your finances, making your money work for you, and living a life on your own terms.
Something we emphasize around here at Money Bliss.
1. Set Life Goals
Setting clear, tangible life goals — both big and small, financial and lifestyle — is the first step towards achieving financial freedom. These smart goals form the backbone of your financial plan.
For instance, you may aspire to own a house, increase your liquid net worth, or retire early. The more specific your goals, with concrete amounts and deadlines, the higher the likelihood of achieving them.
2. Create a Monthly Budget
Creating a monthly budget is an instrumental step towards financial freedom.
Start by taking account of all your income like your paycheck and expenses.
Identify non-essential items you can cut down, and set money aside for emergencies and savings.
Focus on mindful spending and curb the urge to splurge.
Following a monthly budget guarantees that all bills are paid, and savings are progressing at a solid pace. Get solid budgeting advice to help you get started.
3. Spend Less Than You Earn
To reach financial freedom, it’s fundamental to spend less than you earn. This tip may seem overly simple, but it lays the foundation for wealth accumulation.
I cannot stress this concept of spending less and saving more enough. By reducing discretionary expenses and embracing frugality where possible, you maximize savings.
This doesn’t mean an austere life but simply cutting back on unnecessary expenses to create more room for savings and investments.
4. Invest in Your Future
Investing is a path towards creating wealth for your future. Even small amounts invested wisely can have big results, thanks to the power of compound interest.
Whether it’s real estate, the stock market, or mutual funds, investing can generate an income stream and significant long-term growth. This also means increasing your financial literacy to bring direction and discipline to your investment journey.
Learn how to start investing 10K.
Trade & Travel
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Whether you want to:
Retire in peace without financial anxiety
Pay your bills without taking on a side hustle
Quit your 9-5 and do what you love
Or just make more than your current income….
Making $1,000 every.single.day is NOT a pie-in-the-sky goal.
It’s been done over and over again, and the 30,000 students that Teri has helped to be financially independent and fulfill their financial dreams are my witnesses…
5. Stay Educated on Financial Issues
Staying attentive to financial news and developments is crucial. Knowing current trends can aid in timely adjustments to your investment portfolio.
Staying educated on financial issues and increasing financial literacy is an effective step toward achieving financial freedom. This includes acquiring competencies in areas such as understanding debt, budgeting, keeping track of cash flow, and investing wisely.
From changes in tax law to swings in the stock market, keep informed to make well-rounded financial decisions. Remember, knowledge is your best protection against fraud or investing missteps.
6. Develop Passive Income Streams
In your hunt for financial freedom, developing passive income streams can be a great advantage.
Passive income refers to earnings derived from a rental property, selling printables, or other enterprises in which you’re not actively involved. This could be writing a book, starting a blog, or investing in stocks.
These income streams can dramatically boost your earnings and aid your journey to financial freedom.
7. Diversify Your Investments
Diversifying your investments is a key strategy to mitigate risk and potentially increase returns. Remember the statement of don’t put all of your eggs in one basket.
Portfolio diversification involves spreading investments across different asset classes – such as cash, stocks, bonds, and real estate. Diversification ensures downturns in a single area won’t devastate your finances.
The best tool to track your investments would be Empower and you can use it for free.
Empower
Empower offers powerful tools to help you plan your investment strategy along with basic budgeting features and a great net worth tool.
As a free app, Empower can help you to save money, save time, and even make more money.
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8. Maintain Your Property and Health
Maintaining your property and health is vital to your financial wellness. Regular care and maintenance for your properties, like homes and cars, help prevent expensive repair costs in the future.
Investing time and effort in your health, with regular doctor visits, a healthy diet, and exercise, prevents long-term costly health issues, securing your financial future. This is why I decided to share my spinal fusion journey to help others because your health is vital to your wealth.
This investment is integral to a life of financial freedom.
9. Build a Retirement Savings Plan
Building a robust retirement savings plan is a significant step towards financial freedom. Contributing to a 401(k) or an IRA can lead to tax advantages while saving for retirement.
Here is the key to success: don’t wait to start saving for retirement until you feel like you have extra money lying around. Because that will never happen.
Start simple by maxing out your Roth IRAs and contributing enough to your employer’s 401k to receive any matching. Initiate early and let the compounding interest work in your favor for a secure retirement fund.
10. Calculate Your Financial Independence Number
Your financial independence number is a benchmark for your financial freedom goals. I’ll be honest this is one of the hardest things to do is calculate how much you need to retire.
Recently, I had a conversation with someone who retired early and she said it is so hard to know how much you need and then also live off your savings.
However, calculating this FI number can provide a roadmap for your financial freedom journey.
11. Increase Your Income
Increasing your income can expedite your journey to financial freedom. Around here at Money Bliss, we stress the need for multiple streams of income.
Consider asking for a raise, taking on more responsibility at work, or learning new skills to command a higher salary.
Explore side hustles fitting your skills and interests. This may lead to a new career for you!
And don’t forget about passive income.
Generating more income not only enhances your lifestyle today but also boosts your savings and investments for a financially free tomorrow.
12. Regularly Review and Adjust Your Financial Plan
Your financial plan is not a static document but a living, changing guide. As your life and goals evolve, so should your financial strategy.
Regularly reviewing your plan helps assess your progress, make necessary adjustments, and keep you focused on your financial freedom journey.
This is something you need to prioritize on your calendar.
Dealing with Debt in the Path of Financial Freedom
Our journey of student loans was deeply intertwined with our pursuit of financial independence as we wanted more money in our budget. This systematic approach not only expedited our progress but also instilled a discipline that prepared us for a future of responsible financial decisions.
While not easy, it is best to pay off debt sooner than later.
Prioritize Paying Off Debts
Addressing debt is imperative on your financial freedom journey. Prioritize paying off debts, particularly high-interest ones. This could mean scaling back your lifestyle temporarily.
You might find strategies like the debt snowball method, paying off the smallest debts first, effective. Or the debt avalanche as we chose. Find out which way to debt payments is best for your situation.
Clearing debts reduces monthly bills and creates more room in your budget for saving and investing.
Minimize Reliance on Borrowings
If you are consistently relying on debt methods to make ends meet, that needs to stop. Instead of taking loans for significant purchases, it’s more beneficial to accumulate savings first and then purchase in cash. For instance, when looking at car loans, the interest rate is pretty high, so this is a great example to save first.
This is backward of what most people do. However, it provides wise decisions with your money like having an emergency fund to fall back on.
Just to note… for most people, a mortgage may be cheaper than renting in their area.
Commit to Debt Free Living
Committing to a debt-free lifestyle is not about sacrificing everything today for tomorrow, but about making smarter financial choices. These include fully paying off credit cards each month, preparing a budget and sticking to it, and systematically paying off any existing debts.
Over time, these actions lead to a reduction or elimination of debt contributing significantly to your financial freedom.
Achieving Financial Freedom: Success Stories
There is no shortage of inspiring stories of people going from rags to riches or overcoming financial hardships to achieve financial freedom.
One notable example is the story of Grant Sabatier, who went from having only $2.26 in his bank account to reaching financial independence in just five years.
Similarly, Kristy Shen was an ordinary programmer who quit her job and, with calculated financial decisions, managed to retire as a millionaire.
Farnoosh Torabi, a celebrated financial correspondent, was once overwhelmed by $30,000 in student loan debt. Through disciplined budgeting and effective money management, she was able to shake off the chains of debt and now leads a financially free life.
Likewise, Robert Kiyosaki, the author of “Rich Dad Poor Dad,” started his journey with little and is now known for his financial education organization.
There are numerous success stories affirming the attainability of financial freedom. These success stories inspire and offer valuable insights into achieving financial freedom.
Frequently Asked Questions (FAQ)
Financial freedom means having sufficient savings, investments, and cash at hand to afford the lifestyle you desire without being burdened by economic constraints.
In essence, it’s about more than just having money – it’s about having financial choices, control, and security to live life on your own terms, both now and in the future.
Achieving financial freedom isn’t about get-rich-quick schemes. Instead, it typically involves a combination of saving, investing, and increasing your income.
This can mean anything from asking for a promotion at work or starting a side business to investing in stocks or real estate. Building multiple income streams, particularly passive ones, and maintaining a disciplined budget can significantly speed up the journey.
The amount of money required to attain financial freedom varies from person to person, as it’s highly dependent on individual lifestyle aspirations and expected annual expenses.
A general rule is to multiply your expected annual income by 25. For example, if you need $50,000 a year for your dream lifestyle, your financial freedom amount would be $1.25 million. It’s crucial to reassess this number regularly and adjust for changes like inflation. Learn more on saving for retirement.
Create Financial Freedom Journey for Yourself
Achieving financial freedom is a journey, not a destination. It demands consistent effort, discipline, and wise decision-making.
Every step you take towards reducing debt, saving, investing, or earning more income brings you closer to a life self-directed rather than dictated by economic constraints.
You have the opportunity to change your family’s future for many generations to come.
Although challenges will arise, remember, as Arthur Ashe once said, “Start where you are. Use what you have. Do what you can.” With determination, you can achieve financial freedom.
Start by learning to become financially independent and grow from there.
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Fortune magazine released its top 10 list of the most admired mortgage companies in the March 17th edition, which begs the question: What makes a company admirable?
Topping the list was LandAmerica, a title insurance company that reported a fourth-quarter loss of $45.9 million, closed 160 offices, and currently faces an antitrust lawsuit that claims it artificially inflated rates.
Second was Washington Mutual, a Seattle-based thrift that saw its shares fall to their lowest point since 1995 last week amid concerns it faced billions more in write-downs despite recording its first quarterly loss since 1997.
In a close third was Fidelity National Financial, a title insurance provider that was also involved in the previously mentioned antitrust suit and whose shares are trading near a 52-week low.
Fourth was First American, another title insurer/appraisal company that was part of the aforementioned antitrust suit, which posted an annual loss for 2007, cut 1,100 jobs, and whose eAppraiseIT unit was accused of colluding with Washington Mutual to inflate appraised values.
That brings us to Sovereign Bancorp, which posted a $1.6 billion loss and scrapped its dividend amid higher credit losses, leading the company to fire its CFO following the CEO’s departure last year. A sale to Santander Bank is also starting to slip away.
Next is IndyMac, the Pasadena, CA-based mortgage lender that recently posted its first annual loss, cut 24 percent of its staff, and warned this week that it could miss first-quarter estimates as well.
Stewart Title followed, a title insurer that recorded a fourth-quarter loss and its first annual loss since 1974 while slashing 2,100 jobs, or roughly 20 percent of their workforce over the last two years and shuttering 145 locations.
Freddie Mac claimed the eighth spot after it posted a $2.5 billion fourth-quarter loss and an annual loss of $3.1 billion, while cutting its dividend in half and selling $6 billion in stock to raise much needed capital.
Troubled jumbo mortgage lender Thornburg took the nine hole despite teetering on the brink of bankruptcy after receiving margin calls it couldn’t meet and seeing its share price fall as low as 69 cents earlier this week.
And you guessed it, Countrywide Financial somehow rounded out the top ten, despite the fact that it faces class action lawsuits, scrutiny from Congress over executive pay, an FBI probe, probes from state attorney generals, and widespread criticism from the general public and consumer advocacy groups who claim it engaged in predatory lending.
Kansas City, MO is the sixth-largest city in the Midwest with over 481,000 people calling it home. Like all big cities, Kansas City has some great amenities like shops, entertainment venues and incredible restaurants.
Kansas City has some perks that not every large city in the U.S. can boast, though. Like the infrastructure — it’s designed to make driving less of a hassle. Raise your hand if you can’t wait to stop spending hours in bumper-to-bumper traffic!
Another perk of living in this city is the low prices. The cost of living in Kansas City, MO is 6.3 percent lower than that U.S. average. That number has dropped in the last year, too, by 2.3 percent.
To find out whether this city is for you, you’ll need to see if it meshes with your budget. Can you really afford the average rent in Kansas City, MO when you add the following factors into the total cost of living?
Housing costs in Kansas City, MO
The biggest expense in your monthly budget is housing costs. Where you live and what you pay for rent will have a direct and sometimes radical impact on the cost of living in Kansas City, MO.
Housing costs in the city are only 1.6 percent lower than the national average. Interestingly, this is a 13.8 percent increase over the cost of housing in 2020. One reason for the increase is that the demand for housing is up but the supply is not meeting that need.
The average rent in Kansas City, MO is $1,540 per month. However, there are neighborhoods throughout the city where you’ll find apartments for much higher (almost $1,000 more) and those for much less. If you look for apartments in the River Market area, you’ll be happy to learn that the average rent in that neighborhood is $2,338. On the other hand, if you look in the River View neighborhood, you’ll find an average rental rate of $720 per month.
Average rent prices in cities near Kansas City, MO
If you’re not sure you want to live directly in this city or aren’t happy with the average rent in Kansas City, MO, another option is to find an apartment for rent in nearby cities. The following cities range from 15 minutes to more than an hour away from Kansas City, so far enough from the hustle and bustle but close enough to still enjoy time spent in the city regularly.
Home prices in Kansas City, MO
You aren’t limited to renting in Kansas City. You might find that purchasing a home is, overall, more affordable for you and your family.
According to Redfin, the average cost of a house in Kansas City is $250,000, an increase of over 11 percent since 2020. As with rentals, the housing market is very competitive with most homes getting multiple offers and selling for 2 to 6 percent higher than the asking price.
Monthly mortgage rates are a little cheaper than the average rent in Kansas City, MO. You’d pay $1,079 per month with a 5 percent down payment or $909 with 20 percent down.
Food costs in Kansas City, MO
Kansas City is one of those awesome cities where you can get big city amenities but you don’t always have to worry about big city prices. Take food costs as an example. On average, they’re 11.4 percent lower than the U.S. average, which is a somewhat significant decrease over last year’s costs (5.7 percent higher).
In fact, if you love to dine out, you’ll be happy to know that there are a lot of amazing restaurants that cater to people on a budget. Like Happy Gillis Café + Hangout, where you can get a delectable dish of biscuits and gravy for $5 or a salad for $4.50. Or, try their Roasted Heirloom Tomato Grilled Cheese, made with farm toast, cheddar, roasted heirloom tomatoes, parsley, garlic, scallions and greens — all for $9.
If you’re in the mood for some fine dining, international cuisine or other specialty eateries, you won’t be disappointed. Kansas City offers Italian, gourmet barbecue, classic fare (think 1950s cocktail party) and much more.
Buying food in Kansas City, MO
If you’re like most people, you’re re-thinking how to maximize your budget since so much is up in the air during the pandemic. Cooking most of your meals at home is one way you can cut food costs significantly.
Let’s take a steak dinner for example. In the U.S., a good steak dinner can cost between $28 and $119, depending on the cut of meat and the restaurant.
If you make a steak dinner for two at home, you can expect to pay:
Steak: $22.06 (for two steaks)
Potatoes: $2.43
Lettuce (for a salad): $1.46
Sweet peas: $0.98
Your total comes to $26.93. The U.S. average for the same meal (cooked at home) comes to $30.66. Not only will cooking at home save you a few bucks (compared to the national average), but you’ll still be able to enjoy an incredible meal without having to leave the comfort of your own home — or paying $119 for the same meal.
Utility costs in Kansas City, MO
Besides food, utility costs take up another large portion of your monthly budget and can increase the cost of living in Kansas City, MO. Depending on whether your landlord covers these costs or not, utility fees can even increase the average rent in Kansas City, MO.
Overall, utility costs here are 3.2 percent lower than the national average. The monthly median energy prices are around $157.44 in this city, whereas the U.S. average is $161.20. One reason for the lower costs is power usage, which might be lower in this city than others because the weather here isn’t quite as extreme in other parts of the country.
Other utility fees to add to your budget include cell phone service (between $10 and $90), water and sewage (average = $109.67 per month), internet (average = $60 per month) and cable ($25 to $65).
If you’re looking to save on utilities (and who isn’t), you might want to look for apartments in Kansas City, MO that offer eco-friendly amenities. The savings can add up over time.
Transportation costs in Kansas City, MO
The best way to get around Kansas City is in a car. The walkability and bike scores (48 and 43, respectively) are relatively low, mainly due to the lack of bike lanes. There are some walkable neighborhoods within the city — Old Westport, South Plaza and Downtown Loop — where you can get some exercise and do a few errands.
The public transit score is lacking as well (37), though there are some options like the Kansas City Regional Transit company (RideKC). The company has a Park and Ride option and multiple buses. Their Transit app helps with planning your ride as it provides real-time information. You can also pay for fares and passes via Freedom On-Demand.
Most residents own their own vehicle since doing so gives them the freedom to come and go according to their schedule, not that of a bus company.
Transportation costs in Kansas City, MO are 11.8 percent lower than the national average. Fuel prices are currently at $2.50 per gallon, compared to $2.76 nationally. The national average for maintenance like tire balancing is around $52.40. The cost in Kansas City is $44.60.
Other transportation costs that can increase the cost of living in Kansas City, MO include parking ($6 to $20 for 2 hours), vehicle registration fees and insurance.
Healthcare costs in Kansas City, MO
Kansas City healthcare costs are an average of 9 percent lower than the U.S. average. For example, a trip to your doctor for your annual check-up will cost around $86.34. Elsewhere in the U.S., the same appointment costs an average of $112.81, though some people pay upwards of $234.
Over-the-counter medications are around 7.08 percent less than the national average, while prescription costs are about the same as the U.S. average (only 0.035 percent difference).
It’s important to note that determining healthcare cost averages is often difficult. What you pay compared to your neighbors is going to vary, sometimes drastically so. The reason for this is not just the insurance company you choose or the plans they offer. Some people will have higher costs because they don’t have insurance. Others because they have chronic health conditions. Finding out how healthcare costs impact the cost of living in Kansas City, MO will take some sleuthing, but it will be worth it to see if living in this city is within budget.
Goods and services costs in Kansas City, MO
Miscellaneous goods and services are, on average, 7 percent cheaper than other cities in the U.S.
It can be hard to figure in all the costs that go into living your life in a big city, but you can get a somewhat accurate estimate by looking at the things you purchase with relative frequency. Things like:
Petcare (vet services, grooming, etc.)
Gym fees and exercise classes (or Peloton membership fees)
Plants, potting soil and anything else you need to create and develop an apartment patio garden
Let’s say you want to take your partner out to a movie. The tickets will cost around $21.42. The national average for a Saturday trip to the movies runs about $22.24 for a couple.
If you’re a fitness buff, the average gym membership in Kansas City is $45 per month. A yoga class will cost you around $15.60, which is $0.60 higher than the national average.
Though it’s not easy to try and calculate everything you spend your money on each month (or quarter or year), it’s important to get a general idea of how much you spend on miscellaneous goods and services. These fees can significantly increase the cost of living in Kansas City, MO, and might even make the average rent in Kansas City, MO out of reach.
Taxes in Kansas City, MO
Another factor to consider in determining the cost of living in Kansas City, MO is the tax rate in that city, as well as county and state taxes.
Kansas City has a 1 percent earnings tax rate. Everyone in the city who earns an income (even if they work outside the city) must pay this tax, which covers the city’s cost for:
Snow removal
Road repair
Trash collection
Police, firefighter, ambulance and paramedic services
Historic preservation
Code inspections
As a resident here, you’ll also pay 8.86 percent sales tax. The state sales tax in Missouri is 4.23 percent. City and county taxes make up the additional 4.63 percent. How does this translate to cash? Let’s say you find a must-buy item with a $1,000 price tag. In addition to paying $1,000, you’ll also pay $88.60 in sales tax.
Finally, if you decide to purchase a home in Kansas City, MO, you’ll have the added responsibility and expense of paying residential property taxes. The Jackson County tax rate is 1.35 percent. If you buy a $250,000 home, you’ll pay a little under $3,400 per year in property taxes.
How much do I need to earn to live in Kansas City, MO?
Whether you can afford the cost of living in Kansas City, MO depends on what you earn. On average, residents of Kansas City earn $54,194 annually. This is slightly higher than the national average of $51,916.
If you earn the average annual income, can you afford the average rent in Kansas City, MO? Rent in this city is approximately $1,540 per month or $18,480 per year. This is nearly $3,000 more than the oft-recommended 30 percent rental budget.
Though the price is higher, it doesn’t mean you can’t afford to live in Kansas City, MO. If you’re comfortable cutting costs in other areas (walking and biking as much as possible to save on fuel or eating out less frequently), you can afford the cost of rent in this city. Also, remember that there are several neighborhoods in Kansas City and suburbs around it that offer great rentals for lower prices.
If you’re curious whether you can afford to live in this city, be sure to check out our free rent calculator.
Understanding the cost of living in Kansas City, MO
There’s no flat rate when it comes to the cost of living in Kansas City, MO. As nice as that would be (talk about easy calculations!), we all have varying needs. And those needs result in different housing, food, tax and healthcare costs.
That said, for many people, the cost of living and the average rent in Kansas City, MO is quite affordable. Much more so than many large cities across the country.
If you’re one of those people who want to take the plunge and move to this fair city, make sure to check out our rental listings to find apartments for rent in Kansas City, MO that fit your budget.
Cost of living information comes from The Council for Community and Economic Research.
Rent prices are based on a rolling weighted average from Apartment Guide and Rent.‘s multifamily rental property inventory of two-bedroom apartments as of August 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.
NEW ORLEANS (WVUE) – High property insurance costs are doing more than straining some people’s budgets. The ongoing insurance crisis in Louisiana is forcing some people into foreclosure.
Andreanecia Morris is the executive director of Housing NOLA.
“We’re seeing people who are having their principal and interest which is the largest part of your loan be eclipsed by the taxes and insurance portion, be double what that principle and interest payments to the banks is. That’s a dramatic increase in your monthly payment and it’s leading to foreclosures,” said Morris.
Insurance Commissioner Jim Donelon recently told FOX 8 that many people are losing their homes due to higher insurance costs.
“They are losing their houses every month because we had to raise the rates for Citizens, 120,000 policies at the time, this past January 1, so that 10,000 renew each month throughout the year and are hit with that 63% rate increase,” said Donelon.
Morris says, “We’re seeing that as well. We’re seeing people who are, foreclosure takes a minute, so we’re seeing people who are behind. We’re seeing particularly for people who were able to buy in the last 18 years through the myriad of programs that we stood up to help first-time homeowners build wealth here in New Orleans.”
Guy Williams is president and CEO of Gulf Coast Bank & Trust.
“Fortunately, none of our customers have lost their homes because of insurance but what we are seeing is some of our citizens, particularly the seniors that don’t have mortgages are choosing not insure and that’s unfortunate because if there’s a storm or hurricane they’ll have no ability to rebuild unless they have substantial assets,” said Williams.
He added that some real estate deals are not closing because of the insurance cost.
“Definitely, it makes the real estate business tougher we’re seeing fewer sales this year than last and I think people are having to adjust to higher insurance but also higher interest rates. And so it has been a challenge,” said Williams.
Typically, insurance costs get factored into monthly mortgage payments.
“When the buyer finds out what their premium is, particularly some of the new flood numbers they’re saying well I just can’t afford it and either the deal has to be renegotiated to a lower price or some cases the transactions just doesn’t occur at all.”
According to ConsumerFinance.Gov which has data through March 2023, Louisiana had a 2.5% mortgage delinquency rate compared to the national average of 1.3%.
And that’s not all. ConstructionCoverage.Com shows New Orleans-Metairie at the top of the list in terms of large metro areas and mortgage delinquencies.
Morris says it is not a surprise.
“Unfortunately, it’s not.”
She says communities could have done more years ago to help give people more of financial cushion.
“And so, when the recovery dollars come in, when the insurance proceeds come in, when the bank financing comes in, it’s all of our responsibility. I’m not letting the bankers off the hook, I’m not letting the insurance companies off the hook, I’m not letting our policymakers off the hook, I’m saying we need to design programs and we need to be holding that line that we are creating success stories not simply saying you’re going to pull yourself up by your bootstraps,” said Morris.
Meanwhile, Williams says people who want to become homeowners should not give up.
“What we encourage people to do is what we call, “marry the home and date the mortgage. If you find a home you love, go ahead and buy it and then when rates drop which we think they will in a year or so refinance to a lower mortgage,” he said.
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Owning your own home is typically a foundation of the American Dream, and many people are saving for a down payment right this minute. But when you are already paying rent, it can be a challenge to save for a down payment on a house, especially if you live in an area with a high cost of living or are dealing with the impact of inflation.
But that doesn’t mean it can’t be done. You can save up for your home purchase by following some wise financial advice and simplifying the process of socking away your cash.
If buying a home is a priority for you, read on. You’ll learn how to grow your down payment savings while still paying rent.
5 Tips to Save for a Home While You’re Still Renting
Rent can take a big bite out of your take-home pay, but it doesn’t rule out saving for a down payment on a house. Here’s some smart budgeting advice to help you set aside money for your future homeownership.
💡 Quick Tip: You deserve a more zen mortgage. Look for a mortgage lender who’s dedicated to closing your loan on time.
1. Pay Down Your Debt First
In order to save for a house, it’s wise to figure out a plan to pay down your existing debt. This will free up more money for you to save for that down payment. Also, when you do apply for a mortgage, you will likely have a lower debt-to-income ratio, or DTI ratio. Reducing you DTI ratio can help your application get approved.
Student loan debt is a common kind of debt to have; the average American right now has $37,338 in loans. If you’re a full-time employee, reach out to your company’s HR department to learn more about student debt repayment assistance. A recent survey by the Employee Benefit Research Institute found that 17% of companies in the U.S. currently have this type of assistance, so it’s worth a try.
Gain home-buying insights with the latest housing market trends.
As a more drastic measure, you could always think about going into a profession that offers partial or total student loan forgiveness (such as teaching in certain public schools) or moving to a state that will help pay off your student loan debt just for moving there (currently Kansas, Maine, Maryland, and Michigan).
For an easier fix, you could consider student loan refinancing options, which might lower your rate. By dropping your interest rates, you could significantly reduce both your payments and the length of time you’ll be making them.
However, a couple of points to note. If you extend your term to lower the payment, you will pay more interest over the life of the loan. Also, do be aware that, when refinancing federal loans to private ones, you may then no longer be eligible for federal benefits and protections. However, by getting a lower interest rate, you may accelerate your path to saving for your down payment and getting keys to your very own home.
Credit card debt can also play a role in preventing you from saving for a down payment. This is typically high-interest debt, with rates currently hovering just below 25%.
There are a variety of ways to pay down this debt, such as the debt avalanche method, which has you focus on your highest-interest debt first; the debt snowball; and the debt fireball methods.
If none of these techniques seems right for you, you might look into getting a balance transfer credit card, which will give you a period of zero interest in which you may pay down debt. Or you might take out a personal loan to pay off the credit card debt and then potentially have a lower interest loan to manage.
2. Create a Budget That Will Help You Spend Less and Save More
Another way to free up funds for that down payment is to budget well. Creating and sticking to a realistic budget can help you spend less while saving for a house. While budgeting can sound like a no-fun, punitive exercise, that really doesn’t have to be the case. A budget is actually a helpful tool that allows you to manage your income, spending, and saving optimally.
To get there, you can pick from the different budgeting methods. Most involve these simple steps.
Gather your data: Figure out how much you’re earning each month (after taxes), along with how much you’re currently spending. Add it all up including cell phone bills, insurance, grocery bills, rent, utilities, your coffee habit, the dog walker, gym membership, etc. Don’t miss a dime.
List your current savings: Are you currently putting money into an IRA, 401(k), or other savings plan? List it, so you can see what you’ve already got in the bank.
Really dig into and optimize your spending: Can you cut back anywhere? You might trim some spending by bundling your renters and car insurance with one provider. Perhaps you can save on streaming services by dropping a platform or two. And how’s your takeout habit? If you really want to save for a house, you may need to learn to cook. You might even consider taking in a roommate or moving to a less expensive place to turbocharge your savings for your down payment while renting.
Making cuts, admittedly, can be the toughest step in the budgeting process, but it’s crucial to be honest with yourself about your spending. Remember: However much you cut back can help you get a new home that much sooner.
Finally, check in on your budget every so often and adjust as needed. For example, if you land a new job, get a promotion, or are given an annual raise, perhaps you can add that money to your savings account or put it toward paying off your loans. Whichever one feels more important to you is OK, so long as that extra cash isn’t vanishing on impulse buys.
3. Investigate How Big a Down Payment You Actually Need
Many prospective homebuyers think they must have 20% down to buy a house, but that is not always the case. That is how much you need to avoid paying for private mortgage insurance (PMI) with a conventional conforming loan. Private mortgage insurance typically ranges from 0.5% to 2% of the loan amount, and it’s automatically canceled when your equity reaches 78% of the home’s original value.
Here are some valuable facts: You may be able to take out a conforming loan with as little as 3% down, plus PMI. Certainly, that’s a sum that can be easier to wrangle than 20%, though your mortgage principal will be higher. According to National Association of Realtors data, the average first-time homebuyer puts down about 6%.
In addition, you might qualify for government loans that don’t require any down payment at all, such as VA and USDA loans.
You might also look into regional first-time homebuyer programs that can provide favorable terms and help you own a property sooner.
💡 Quick Tip: Don’t have a lot of cash on hand for a down payment? The minimum down payment for an FHA mortgage loan is as little as 3.5%.
4. Grow Your Savings
If you’ve paid off your debt, set realistic budgeting goals, and are raking in some dough to add to a savings account, you’re already on the right track. A good next move is to put your money to work for you. Among your options:
• Open a high-interest savings account. These can pay multiples of the average interest rate earned by a standard savings account. You will frequently find these accounts at online vs. traditional banks. Since they don’t have brick-and-mortar branches, online financial institutions can save on operating costs and can pass that along to consumers. Just be sure to look into such points as any account fees, as well as opening balance and monthly balance requirements. (Features such as round-up savings can also help you save more quickly.)
You can also look into certificates of deposit (CDs) and see what interest rates you might get there. These products typically require you to keep your funds on deposit for a set period of time with the interest rate known in advance.
• If you have a fairly long timeline, you might consider opening an investment account to grow your savings. The market has a historical 10% rate of return, though past performance isn’t a guarantee of future returns. You could try using a robo advisor, or you could work with a financial advisor who will walk you through investment strategies for beginners and beyond and help you invest. Just be aware that investments are insured against insolvency of the broker-dealer but not against loss.
Recommended: First-time Homebuyer Guide
5. Automate as Much of Your Finances as Possible
This is a lot of information to process, but once you get through all the work upfront, you can start automating as much as possible. For example, have a portion of your paycheck automatically go into your savings account each month to plump up that down payment fund.
You might set up the direct deposit of your paycheck to send most of your pay to your checking account and a portion to a savings account earmarked for your down payment. You can check with your HR or Benefits department to see if this is possible.
Another way to automate your savings is to have your bank set up a recurring transfer from your checking account, as close to payday as possible. That can route some funds to your down payment savings without any effort on your part. Nor will you see the cash sitting in your checking account, tempting you to spend it.
The Takeaway
While saving for a down payment isn’t exactly a piece of cake, it doesn’t have to feel overwhelming. By trying five effective strategies, which can include budgeting, paying down debt, and automating your savings, you can accumulate enough money to start on your path to homeownership.
Once you have the down payment taken care of, you’ll be ready to shop for a home mortgage that suits you.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
SoFi Student Loan Refinance If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
The District of Colombia has sued RealPage and fourteen of the largest landlords in DC for unlawfully conspiring to use RealPage’s Revenue Management (RM) software to inflate rents for tens of thousands of apartments in the District.
Besides RealPage, the Defendant Landlords mentioned in the lawsuit filed in DC Superior Court include Avenue5 Residential, LLC; AvalonBay Communities, Inc.; Bell Partners, Inc.; Bozzuto Management Company; Camden Development, Inc.; Equity Residential Management, LLC; Gables Residential Services, Inc.; Greystar Management Services, LP; Highmark Residential, LLC; JBG Associates, LLC; Mid-America Apartments, LP; Paradigm Management II, LP; UDR, Inc.; and William C. Smith & Co., Inc.
RealPage promotes three revenue management products: YieldStar, LRO, and AIRM. These products share the same functionality as they utilize algorithms powered by RealPage’s extensive data repositories accessible to all three products. RealPage’s RM Software enables clients to optimize rental prices to achieve the highest possible yield or a combination of rent and occupancy for each property. Simply put, these products employ statistical models that analyze data, including proprietary and non-public information, to estimate the supply and demand for specific types of multifamily housing in particular geographic areas. Based on this analysis, the products generate optimal rental prices that maximize the landlord’s revenue. All these actions constitute unreasonable and unlawful restraints of trade in violation of the District of Columbia Antitrust Act, DC Code § 28-4502. The lawsuit demands maximum civil penalties as provided by the DC Antitrust Act.
Instead of competing on price, Defendant Landlords have delegated their price-setting authority to RealPage, creating a centralized system. Additionally, Defendant Landlords have agreed in writing to share competitively sensitive data with RealPage, allowing them to monitor and enforce compliance with the agreed-upon rents set by the RM Software.
This scheme extends beyond the District, as many of the largest providers of multifamily housing in the nation have also joined this rent-setting cartel and adopted RealPage’s RM Software. However, the scheme’s impact is particularly significant in the DC metropolitan area.
Defendant Landlords are among the largest providers of multifamily housing in the District, and RealPage’s RM Software is used to set rents for over 90% of units in large buildings with 50 or more units. Even when considering the broader multifamily housing market, the scope of this misconduct remains significant, with RealPage’s RM Software used to set rents at over 50,000 units in the District.
The consequences of the Defendants’ anticompetitive scheme are widespread and severe. To entice more landlords to join their cartel, Defendants have publicly advertised that participating landlords can increase their revenue (rents) by 2-7%, resulting in millions of dollars in wrongfully inflated rents over the past four years alone.
Defendants achieve these results by limiting market competition. Instead of competing on price to attract renters, they conspire to share information, restrict supply, and drive up rents. In a competitive market, competitors would keep their pricing strategies confidential. However, Defendants understand that recruiting more participants to their anticompetitive scheme strengthens their ability to extract unlawfully higher rents, as they trust that their competitors will not drastically undercut their prices.
The rising cost of housing is a challenge for District residents, particularly as most of the city’s population consists of renters. In recent years, renters in the District have faced staggering rent increases, with approximately a quarter of renters spending over 50% of their income on rent.
The Defendants’ anticompetitive agreement has worsened the affordable housing crisis in DC, causing numerous District renters to overpay for rent month after month. Housing is a fundamental necessity, and by demanding unlawfully high cartel rents, Defendants have inflicted significant harm on neighbourhoods across the District. Every dollar of increased rent that the cartel unlawfully extracts from District renters contributes to widening wealth gaps, forces residents to make sacrifices in other areas of their lives, and pushes them out of a District whose housing is increasingly unaffordable.
The Attorney General is bringing this action in his parens patriae capacity to seek treble damages for the harm inflicted on District renters, along with civil penalties and allow to the District of Columbia its costs, including reasonable attorneys’ fees; and k. Order any additional relief the Court deems just and proper.
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Mihaela Lica Butler is senior partner at Pamil Visions PR. She is a widely cited authority on public relations issues, with an experience of over 25 years in online PR, marketing, and SEO.She covers startups, online marketing, social media, SEO, and other topics of interest for Realty Biz News.