Home appraisals play a crucial role in the real estate process, influencing everything from property financing to sales transactions. Whether you’re a first-time homebuyer or a seasoned real estate investor, understanding the basics of home appraisals is essential. In this guide, we’ll delve into the fundamentals of property valuation, demystifying the appraisal process and shedding light on its significance.
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A home appraisal is an unbiased assessment of a property’s market value conducted by a certified appraiser. The goal is to determine the fair market value—the price a willing buyer would pay and a willing seller would accept in a competitive market. Home appraisals cost anywhere between $300 to $500 and can take as long as a few hours to a few days depending on the condition of your home and the appraiser’s schedule.
Property Inspection:
The appraiser visits the property to assess its condition, size, layout, and overall appeal. They consider both the interior and exterior features, noting any upgrades or repairs.
Comparable Sales Analysis:
Appraisers research recent sales of comparable properties in the neighborhood. They compare factors such as size, age, condition, and location to determine the property’s value.
Market Trends and Conditions:
Appraisers analyze current market trends, considering factors like supply and demand, interest rates, and economic conditions.
Property Condition:
Well-maintained homes generally receive higher appraisals. In other words, if your home has nice curb appeal, updated features, and modern amenities then it’s likely it will get a higher appraisal. On the other side, structural issues or deferred maintenance can negatively impact the valuation.
Location:
Proximity to amenities, schools, and public services can influence and increase your property value. If your home is located in a desirable neighbourhood, within walking distance to shopping and parks then it will generally receiver a higher appraisal.
Comparable Sales:
Recent sales of similar properties in the area are a key factor. Appraisers consider the selling prices, conditions, and features of these comparable homes. The age of your home will also factor into its value.
Upgrades and Renovations:
Upgrades that enhance a property’s functionality and appeal can positively impact its appraisal value. Recent renovations should be accurately documented and communicated to the appraiser such as a finished basement, replaced doors and windows, the addition of a fire pit or outdoor fireplace, and a kitchen or bathroom remodel.
Mortgage Approval: Lenders use appraisals to ensure the property’s value aligns with the loan amount requested by the buyer.
Selling a Home: Sellers benefit from appraisals to set a realistic listing price. An accurate appraisal can facilitate a smoother selling process.
Estate Planning: Homeowners may need appraisals for estate planning, tax purposes, or division of assets.
Real Estate Investments: Investors rely on appraisals to assess the potential return on investment and make informed decisions.
Home appraisals are a critical component of the real estate landscape, providing a fair and impartial evaluation of a property’s value. Whether you’re buying, selling, or investing, understanding the appraisal process empowers you to make informed decisions and navigate the real estate market with confidence.
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What was your favorite thing to talk about as a kid? Maybe it was dinosaurs, or Barbie or the Magic Treehouse book series. It probably wasn’t compound interest. Getting kids excited about investing can pay off for the rest of their lives — but how do you do it?
Here are six strategies to help get kids interested in investing for good.
1. Make it relatable
Explaining what investing is and why people should care about it can feel like an exercise in futility — the jargon, the math, all the acronyms — but at its core, investing is incredibly simple. Investing means taking the money you already have and using it to make more money without having to do any additional work. When talking with kids, stay away from “Roth IRA,” “dividends” and “return on investment,” and instead focus on the basics.
The language should be simple: If you have $100 now, and you invest it, you may have $110 later. Then, that extra $10 you earned will start earning money, too. You can play around with an investment calculator to help them visualize how their money could earn more money over time.
And while it’s good to be skeptical of financial advice on social media, there are some great sources of information that may help get kids more interested in money management.
“I got started with the help of YouTube,” says Ariana Bribiesca, a content creator based in Malibu, California, who started investing at age 16 and now runs the TikTok account Ari Invests. “I spent about 10 months doing research before I decided to open up my brokerage account.”
Bribiesca got introduced to investing through social media, particularly through her YouTube recommendation page, which showcased videos about credit cards, the college application process, starting a business, and investing.
2. Have them invest in what they’re into
One way to get a kid excited about investing, according to Riley Adams, a certified personal accountant and founder of Young and the Invested in Pleasanton, California, is to help them connect with brands they like.
“Instead of saying, ‘I shop at Nike,’ or ‘I use Snapchat,’ it actually lets you go a step further and gets you involved by not just spending your money with these companies, but making money on things you already do,” Adams says.
Investing in brands kids are excited about may help them feel a more personal connection to the experience. If they’re invested in their favorite store, shopping there may feel like they’re helping make their own stock more valuable instead of just spending money.
3. Make it a game
Investing itself may not be something kids are interested in, but turning it into a game may help your kids feel more excited about it — especially if there’s a chance they can beat you at it.
“Gamification is definitely a big thing, so find little ways to make it seem more like a game, and it’s more fun to get involved with,” Adams says.
You can have regular contests to see who can make more money on their investments, with the winner earning a prize in addition to whatever profits they make; or see who can better predict what happens to the stock market based on what’s happening in the news.
Just like players can lose when playing a game, investors can lose money. Helping a child understand the risks is an important piece of the puzzle when it comes to helping them develop a healthy relationship with investing.
4. Get them some practice
If you don’t want to risk real money, you can open a paper trading account for kids, which allows them to simulate the investing experience for free.
“I practiced with fake money before investing my own money for about two months,” Bribiesca says. “I used the app Stock Market Simulator which gave me $10,000 of simulated money to invest. I showed my parents my entire journey with it and would even force them to watch a couple YouTube videos with me so they understood what I was learning.”
If the kids in your life are ready to start investing for real, you can help them open a 529 plan to help them save for college, a Roth IRA to get a jump on retirement, or a custodial brokerage account for general investing.
5. Help them make it a habit
Making a habit stick requires repeating the behavior again and again. If you’re trying to help a child stick with investing for good, they’ll need to get in the habit of doing so early.
If you give a child an allowance or pay them for small jobs around the house, help develop their investing habit by teaching them to take a portion of their earnings and put it toward investing for the future. This can help cement the habit and make it something they do regularly as they get older.
6. Talk openly about money
While some adults may not want to discuss finances in front of the kids, it may be more beneficial for children to see healthy financial behaviors and conversations modeled for them. If they never hear adults talking about investing or budgeting, or are told that talking about money is inappropriate, they may not have the tools to deal with financial conversations when they get older.
“Overall, it is important for parents to include their kids in talks about money and slowly introduce them to different topics or resources,” Bribiesca says. “It is important to include them because kids like to imitate their parents and follow their footsteps when they notice something can be very rewarding.”
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
Average mortgage rates came down on all loan terms from a week ago, according to rate data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans all dropped.
The average rate on the popular 30-year fixed-rate loan at times exceeded 8 percent in recent weeks, following a jump in 10-year Treasury yields. After a period of record lows, mortgage rates climbed in 2022 as inflation spiked and the Federal Reserve responded aggressively. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.
The central bank held firm on another rate hike this month, indicating it expects rates to stay on the higher side for the foreseeable future.
“To have the full effect of keeping interest rates higher for longer, the Fed will maintain a posture that rates could go higher and that any rate cuts are quite a ways off,” says Greg McBride, CFA, Bankrate chief financial analyst.
The rise in mortgage rates comes alongside appreciating home prices, both of which have kept homebuyers on the sidelines. More than half of home purchase mortgages originated in July had a monthly payment over $2,000, according to Black Knight. Twenty-three percent of originations in July had a payment over $3,000. The affordability squeeze is stretching budgets, and keeping many first-time homebuyers out of the market altogether.
Rates as of November 9, 2023.
The rates listed above are Bankrate’s overnight average rates and are based on the assumptions shown here. Actual rates available on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Thursday, November 9th, 2023 at 7:30 a.m.
30-year mortgage declines, -0.19%
Today’s average 30-year fixed-mortgage rate is 7.83 percent, down 19 basis points from a week ago. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 7.89 percent.
At the current average rate, you’ll pay a combined $721.95 per month in principal and interest for every $100,000 you borrow. That’s down $13.21 from what it would have been last week.
Use the loan widgets on this page or head to our primary rates page to see what kind of rates are available in your situation. You just need to give us a little information about your finances and where you live. With that data, Bankrate can show you real-time estimates of mortgages available to you from a number of providers.
15-year mortgage rate retreats, -0.08%
The average 15-year fixed-mortgage rate is 7.12 percent, down 8 basis points since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $906 per $100,000 borrowed. That may squeeze your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.
5/1 adjustable rate mortgage declines, -0.14%
The average rate on a 5/1 ARM is 6.97 percent, ticking down 14 basis points over the last week.
Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for people who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.97 percent would cost about $663 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Jumbo mortgage rate declines, -0.17%
The average rate for the benchmark jumbo mortgage is 7.83 percent, down 17 basis points from a week ago. This time a month ago, the average rate for jumbo mortgages was higher, at 7.92 percent.
At the current average rate, you’ll pay $721.95 per month in principal and interest for every $100,000 you borrow. That represents a decline of $11.81 over what it would have been last week.
Interested in refinancing? See rates for home refinance
30-year mortgage refinance trends down, -0.12%
The average 30-year fixed-refinance rate is 7.96 percent, down 12 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 8.08 percent.
At the current average rate, you’ll pay $730.98 per month in principal and interest for every $100,000 you borrow. That’s a decline of $8.37 from last week.
Where are mortgage rates heading?
Most rate watchers polled by Bankrate predict mortgage rates will rise this upcoming week. Looking to the remainder of the year, some forecasters still expect to see rates decrease, but the state of the U.S. economy and rising 10-year Treasury yields will be key factor.
30-year fixed mortgage rates mostly follow the 10-year Treasury yield, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
“Economic data that is not too hot and not too cold would be helpful to mortgage rates and could get rates back down below 7 percent,” says Greg McBride, chief financial analyst for Bankrate, adding, “but that has to be true for inflation, job growth, wages and consumer spending.”
What these rates mean for you and your mortgage
While mortgage rates move up and down on a daily basis,, there is some consensus that we won’t see rates return to 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than expected, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
You could save serious money on interest by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
For nearly 30 years, Deion Sanders has been a recognizable name in the sports world. He’s made headlines again this summer after being named the new head football coach at the University of Colorado Boulder and subsequently undergoing a roster overhaul that resulted in the departure of 81% of last year’s roster.
A majority of the exits were made after Sanders and the coaching staff audited the roster and determined it wasn’t optimized for the desired productivity and results. This move has paid off as three weeks into the 2023 season (as of this writing), the Colorado Buffaloes were 3-0 and hosted ESPN’s College GameDay.
Similarly, many lenders are currently auditing their roster of vendors and technologies to optimize productivity and return on investment (ROI).
One of the more commonly used metrics to determine a lender’s ROI is the per-loan pre-tax net production income, and the biggest factors impacting this metric are production volume in both dollars and units. Closing fewer loans means the production costs are spread out over fewer units, thereby increasing the production cost per loan.
Since peaking at $5,535 in Q3 2020, thanks to historically high production volume, the per-loan, pre-tax net production income for independent mortgage bankers (IMBs) has been falling. The most recent report from the Mortgage Bankers Association (MBA) shows that IMBs lost an average of $534 per loan in Q2 2023. The good news is that the last two quarters have shown steady improvement from Q4 2022.
For many lenders, priorities for this year include migrating their systems to the cloud and increasing production volumes, lead generation efficiency and productivity, which includes engaging business intelligence (BI) tools that can provide insights necessary when making staffing decisions. And they’re making sure they have the technologies to do so.
A very common sentiment in the industry is that now is the time to double down on implementing new tech because lenders have the time to focus on it. Obviously, that is a great mindset for vendors, but it isn’t really a great course of action for lenders because most are trying to decrease costs, not increase them.
Conduct a tech stack audit as a first step
As well as tabling tech stack additions initiated during the pandemic, lenders are reevaluating their current tech stack compositions, looking for areas where they can cut costs without sacrificing productivity or efficiency.
When auditing a tech stack, there are several factors to consider beyond immediate cost savings. These factors include the need the tech satisfies, the usefulness of the tech, operational errors, utilization, system functionality and vendor deficiency.
The objective of a tech stack audit is to consolidate, optimize and replace unnecessary tech. The benefits of considering these factors during a tech stack audit include reducing software redundancies, streamlining back-end processes, maximizing the advantages of integration, minimizing billing issues, decreasing the need for additional employee training and improving data flow.
While every lender will have unique considerations during a tech stack audit, there are basic steps that should be taken to realize the potential benefits of the audit. The first step in any audit is to compile a list.
It’s basically impossible to conduct a successful tech stack audit without knowing every software currently in it. This list should also be compared to accounting records to ensure that all tech is accounted for while verifying the current spend on each tool.
Analyze the audit to take decisive action
Once the tech stack list has been compiled, or as the list is compiled, it’s time to expand the data set associated with each technology.
This includes information such as the department(s) that use the software, type of software, features and functionalities, total number of users, definition of an active user, number of active users, annual cost and relevant integrations.
Lenders can also use this time to survey employees on why they do or do not use particular tools and the qualitative and quantitative impact of each tool.
With this information in hand, it becomes easier to determine the value each software brings, if there are better solutions on the market and how it affects the customer experience.
This information provides lenders with a greater understanding of the effectiveness of each technology, where there are overlaps in functionalities and the adoption rate of the technology within the organization.
Having these factors analyzed with the same criteria allows lenders to determine where to make cuts and improve efficiency by eliminating redundant, outdated and unused software.
A leaner tech stack should improve ROI, streamline business
As lenders slim down their tech stacks, they should quickly see increases in their ROI. This will typically result from a combination of several factors. Reducing expenses should positively impact the profit and loss statement (P&L), including showing a net increase in revenue.
A leaner tech stack will help streamline training for new employees and clearly outlining the benefits and features of each tool should also lead to increased adoption by existing employees. A greater understanding of a tech stack’s offerings and how to maximize the benefits and efficiencies of each tool will improve employee satisfaction and provide a better customer experience.
By reducing a tech stack’s offerings, lenders also mitigate risk by minimizing software entry points, passwords and data access, keeping data and back-end processes clean and reducing the potential for quality control issues by eliminating software redundancies.
With much of the mortgage process reliant on the software in a lender’s tech stack, it’s improbable that a lender will see a reduction in their tech stack roster like the one orchestrated by Coach Sanders.
Unlike the Colorado football team, though, lenders shouldn’t be looking to build a new tech stack from scratch, but they can make winning moves with their tech stacks. Lenders should focus on increasing production volumes, operational efficiencies and profits. With these goals in mind, they should be able to easily reach their desired results of a tech stack audit.
Mortgage rates were mostly lower compared to a week ago, according to rates data collected by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo mortgages each decreased, while rates for adjustable rate mortgages rose.
The average rate on the popular 30-year fixed-rate mortgage topped 7.5 percent in late September. After a period of record lows, rates climbed in 2022 as inflation spiked and the Federal Reserve responded aggressively. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.
The central bank decided to hold firm on another boost to rates at its September meeting, indicating it expects rates to stay high for the foreseeable future. Its next meeting concludes Nov. 1.
“The Fed has made it clear that rates will remain higher for longer with the expectation that there will be another rate hike this year,” says Melissa Cohn, regional vice president for William Raveis Mortgage. “In their dot plot, the Fed also reduced the number of rate cuts by half for 2024, implying that the fed funds rate will remain at its high level for a good part of 2024.”
The rise in mortgage rates comes alongside appreciating home prices, both of which have prevented more buyers from entering the market. More than half of home purchase mortgages originated in July had a monthly payment greater than $2,000, according to Black Knight. Twenty-three percent of originations in July had a payment over $3,000. The affordability squeeze is stretching budgets, and keeping many first-time homebuyers out of the market altogether.
Rates last updated October 17, 2023.
These rates are averages based on the assumptions here. Actual rates listed within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Tuesday, October 17th, 2023 at 7:30 a.m.
30-year fixed-rate mortgage drops, -0.03%
The average rate for a 30-year fixed mortgage for today is 7.92 percent, down 3 basis points since the same time last week. Last month on the 17th, the average rate on a 30-year fixed mortgage was lower, at 7.59 percent.
At the current average rate, you’ll pay $728.20 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.08 lower.
Learn more about 30-year fixed mortgage rates, and compare to a variety of other loan types.
15-year fixed mortgage rate moves lower, -0.02%
The average 15-year fixed-mortgage rate is 7.06 percent, down 2 basis points from a week ago.
Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $902 per $100,000 borrowed. That may put more pressure on your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much faster.
5/1 ARM rate climbs, +0.09%
The average rate on a 5/1 ARM is 6.88 percent, adding 9 basis points over the last 7 days.
Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.88 percent would cost about $657 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Jumbo mortgage declines, -0.03%
The average rate for the benchmark jumbo mortgage is 7.95 percent, a decrease of 3 basis points since the same time last week. A month ago, jumbo mortgages’ average rate was below that, at 7.63 percent.
At the current average rate, you’ll pay a combined $730.28 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.09 lower.
Mortgage refinance rates
30-year mortgage refinance advances, +0.04%
The average 30-year fixed-refinance rate is 8.08 percent, up 4 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.78 percent.
At the current average rate, you’ll pay $739.35 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.80 higher.
Where are mortgage rates heading?
Economists can’t say for certain where mortgage rates are going from here, according to Bankrate’s latest mortgage rates forecast. Some experts have speculated the 30-year rate could reach 8 percent, while others expect rates to cool down by the end of 2023.
30-year mortgage rates mostly follow the 10-year Treasury yield, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
“Economic data that is not too hot and not too cold would be helpful to mortgage rates and could get rates back down below 7 percent,” says Greg McBride, chief financial analyst for Bankrate, adding, “but that has to be true for inflation, job growth, wages and consumer spending.”
What current rates mean for your mortgage
While mortgage rates fluctuate considerably,, there is some consensus that we won’t see rates return to 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than expected, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
When you purchased your first home, it likely checked off all the boxes. But over time, perhaps your lifestyle has changed and your family has grown, and now you’ve started asking yourself, “Should I buy a bigger house?” Whether you’re looking for larger bedrooms, expanded family space or more storage solutions, buying a bigger home — or even just moving to a different layout or location — might be a change you’re ready to make.
Scott Bridges, Senior Managing Director of Consumer Direct Lending at Pennymac, says that upsizing happens frequently. He explains that a “healthy percentage of buyers are looking to buy up for space, neighborhood, school district and work proximity reasons. It’s a great pursuit and one of the more exciting chapters in one’s homeownership journey.”
Here’s how to figure out if you’ve outgrown your current home and how to determine how big a house you actually need.
The Signs You’ve Outgrown Your Home
While starting a new chapter in a bigger home may sound appealing, moving is a big decision that can come with a hefty price tag. How do you know if you’ve really outgrown your house? Bridges says the following are some of the most important items to consider.
Physical Aspects
One of the first things you’ll want to assess is the number of bedrooms and bathrooms you have versus the number you need. Bridges notes, “If your family is growing, if you have kids or parents moving in, you will need additional space for the new members of the household.”
Evolving household dynamics can also change your idea of an optimal home layout. If you currently have a one-story home, do you want to move to a two-story residence or vice versa? Do you want your children’s bedrooms on the same floor as yours? Do you need a separate entrance and living area for mom and dad or grandma and grandpa?
You’ll also want to think about your outdoor space. Bridges recommends asking yourself how much space you’ll need. For example, will you want to entertain, maybe have a pool, how much yard would you like to manage? All things to consider when looking to buy a bigger house.
Future Plans
Even if you’re comfortable in your home right now, do you foresee life events on the horizon that may lead to things getting cramped? Think carefully about your future plans and determine if they align with your current living environment. Consider the following:
Will you be having more children or expanding your family?
How long will your kids be living in the house before they leave for college or work?
Will you need a larger garage or driveway as your children get their driver’s licenses?
Do you envision an elderly parent moving in with you at some point?
Your answers to these questions will help you decide if moving to a bigger home is right for you.
Daily Life
Your home’s physical size may be the primary factor when deciding if you’ve outgrown it, but there are other lifestyle factors to consider as well. For example, do you have a short or a long commute from your current home? Bridges points out, “Most people don’t want to add significant time to their commute, even if it is for a larger home.” Others, however, may feel a longer commute is an adequate trade-off for increased space.
Or maybe you aren’t commuting as much because you work or attend school from home. Could a dedicated work area in a larger home reduce distractions?
Consider, too, the benefits and drawbacks of your present location. Even if you love your neighborhood, perhaps you want to move to a quiet, traffic-minimal cul-de-sac. Or maybe you’d like to be within walking distance of stores, restaurants or public transportation.
Quality of life is key. If your current home is causing you stress and not providing you the comfort you need, it may be time to upsize. Bridges urges, “Carefully think about how much better your day could potentially be with more space, a bigger kitchen, larger yard and more rooms.”
Considerations for Staying Put
There are many reasons why you may want or need to move to a bigger house. But that increase in square footage will likely increase your expenses and responsibilities. Here are a few reasons why staying put may be a better option for some homeowners.
Difficulty Finding a Home in Your Ideal Location
Depending on your desired location, a larger home in your price range may be difficult to find. If you want to remain in the same neighborhood or school district, you’ll have to decide whether moving away from your preferred area for a bigger space is worth the sacrifice.
Higher Costs Beyond the Mortgage
Even if you can comfortably afford your down payment and monthly mortgage payment, there are other expenses you’ll need to consider when moving to a bigger house. “If you live in an area with colder winters, understand your heating costs will go up,” Bridges says. “In a warmer climate, think Arizona and Texas in the summer, AC costs can run very high electric bills in bigger homes.”
Increased Responsibilities
A larger home requires more interior and exterior upkeep. There’s more to clean, furnish, repair, landscape and maintain, which takes time, money and energy.
Not a Guaranteed Investment
If you’re purchasing a home based on an anticipated greater return on investment, keep in mind that real estate values can be unpredictable. There’s no guarantee that your larger home will increase in value when you’re ready to sell.
Commute
Housing costs are often less the further you move away from city centers, giving you more bang for your real estate buck. But if it takes you longer to get to your job, the added time, hassles and transportation expenses may not be worth it. Bridges notes, “If you’re extending your commute to live in a bigger house in the suburbs, the drive may be just too hard.”
Financial Tips for Buying a Larger Home on a Budget
Moving involves a considerable amount of expense, stress and time. Many people try to avoid it by buying a home that will meet their needs for many years to come. However, it’s also important not to buy a house bigger than what you really need. Maintenance requirements, increased utility bills and expensive mortgage payments can be significant burdens. When purchasing a home, how can you be prepared for a growing family without overstretching your budget? Here are a few tips.
Anticipate Costs
Try your best to forecast the additional costs of a bigger home. “When you buy a larger home, you can easily anticipate your mortgage, taxes and insurance costs increasing, but many people don’t anticipate the additional costs of a larger home,” Bridges explains. “Your utilities will be more expensive, lawn and landscaping and amenities like pools will increase your monthly expenses as well. Lastly, repair costs can be much more expensive on bigger homes. Think of a roof replacement on a 2,000 square foot house versus a 4,000 square foot house.”
Consider Your Income and Employment Stability
While more space may support your plans, Bridges stresses that stability of income and employment must be part of the discussion when considering moving to a larger home. Your household income will need to cover the higher costs of owning a bigger house — now and in the days ahead.
Rent Out Your Original House for Income
It may make sense to sell your current home and use the proceeds for the down payment. But if you don’t have to do that, consider keeping it as a rental. Some homeowners move to a bigger home while renting out their old home, creating what can be a lucrative income stream in the future. Bridges advises, “Depending on how much you owe on your house, sometimes it makes sense to keep the original house and rent it out, as it can represent a good income source in the long run. Over time, real estate tends to appreciate and rents tend to rise, so holding the property as a rental can add to your overall wealth as the years go by.”
What to Look Out for When You’re Ready to Buy a Bigger House
Moving to a larger home is a significant change and takes careful thought. If you’re ready to upsize, think about how your prospective new home could adapt as your needs evolve. Bridges says that during the buying stage, homeowners with growing families often look for the following:
Bedrooms on the same floor
A bigger kitchen, a nursery or a media room
Backyard space for kids and pets
A better school district, which generally speaking, impacts home value stability
Want to start your new home search now? See how much your current home is worth, and then go beyond home affordability calculators to determine how much house you can actually afford.
Are You Ready to Move to a Larger Home?
So, should you move to a bigger home? “Every buyer has to make their own decision, as their circumstances vary,” Bridges says. Moving may be challenging, and selling is a process, but he adds, “At the end of the day, buying a bigger home might be one of the more memorable and enjoyable things you can do in your life, so don’t wait too long, if you can!”
Choosing a home that is the right size for your life today and tomorrow involves balancing both your family needs and your budget. If you’re ready to take the next step toward a larger home and are looking for expert guidance in the mortgage loan process, get a custom instant rate quote from Pennymac today.
Many people are lured into the world of real estate investing by stories of millionaires who started their journey with no money down or no steady employment. But the reality is that making money in real estate isn’t easy; a good credit score, investment capital and steady income can help in the beginning.
You’ll also need to grasp the nuances of the local real estate market and learn how to manage financial aspects such as cash flow and property taxes. While real estate buying, selling, and renting may not be much like a game of Monopoly, it is possible to earn steady side income, supplement your retirement, or even build a full-time real estate investment business with the right tools, knowledge, and patience.
Unlike mutual funds, the stock market, cryptocurrency or many other investments, real estate is tangible. Real estate is a concrete asset—one can see, touch, and even reside in. That gives investors a sense of security. However, it also creates unique challenges.
Managed well, the stability and passive income from rental properties can be a safety net against more volatile investments.
This guide is here to clarify the process for beginners. It aims to empower you to make informed decisions, reduce risks, and lay a strong foundation for your real estate investing journey.
Benefits of Investing in Real Estate
The allure of real estate goes beyond the mere ownership of tangible assets. It presents a robust suite of financial benefits that have the potential to amplify wealth and provide stability in uncertain times. As we navigate the advantages, it becomes evident why many seasoned investors prioritize real estate in their portfolios.
Steady and Passive Income
Real estate investing, especially in rental properties, stands out for its potential to provide a consistent revenue stream. When you own a rental property, the monthly or quarterly distributions from tenants contribute to steady income, which can safeguard your finances against unexpected events or economic downturns.
This consistency contrasts with the often erratic nature of the stock market, which can fluctuate daily based on global events, company performances, and other factors. Additionally, for those aiming to attain financial freedom, the passive income generated from real estate can be a step closer to achieving that goal. Over time, as the mortgage payment decreases or remains static, rental rates may rise, increasing your monthly cash flow.
Appreciation Potential
Every investor dreams of their assets appreciating, and real estate often doesn’t disappoint. While there can be periodic downturns in the real estate market, historical trends suggest that properties generally gain value over the long run.
This means that not only can investors benefit from rental income, but they can also potentially see substantial gains when they choose to sell the property.
Tax Benefits
Navigating the world of taxes can be intricate, but real estate investors often find several advantages here. The ability to deduct mortgage interest and property taxes from taxable income can be a significant financial boon.
Furthermore, strategies like depreciation allow real estate investors to offset rental income, reducing their tax burden. Consulting with a financial advisor can help investors maximize these benefits and understand other potential tax advantages, such as 1031 exchanges or deductions related to property management.
Diversification
The saying “don’t put all your eggs in one basket” is sound investment advice. Diversification is a fundamental strategy to mitigate risks. By adding real estate to an investment portfolio, investors introduce a separate asset class that doesn’t directly correlate with the stock market or mutual funds. This can provide a buffer, ensuring that a downturn in one sector doesn’t wholly derail an investor’s financial trajectory.
Leverage
Leverage, in the context of real estate investing, refers to the ability to use borrowed capital to increase the potential return on an investment. When you purchase property with a mortgage loan, you’re often putting down only a fraction of the property’s total cost, while still reaping the benefits of its entire value in terms of appreciation and rental income.
This magnifies the return on investment, as the gains and income generated are based on the property’s total value, not just the down payment. It’s a powerful tool but should be used wisely. Over-leveraging or not accounting for potential rental vacancies can turn leverage into a double-edged sword.
Types of Real Estate Investments
As one dives deeper into the world of real estate, it becomes evident that this asset class is multifaceted, with various avenues to explore and invest in. The right choice often depends on an investor’s goals, risk tolerance, budget, and expertise. Here’s a closer look at some prominent types of real estate investments:
Residential Properties
Residential properties cater to individuals or families. They range from single-family homes to duplexes, triplexes, high-rise buildings with apartments, and other multi-unit properties. You may encounter the term “MDU” or “MUD,” which stand for multi-dwelling unit or multi-unit dwelling, to describe anything more than a single family home, or SFR (single family real estate).
Investing in residential real estate, especially the SFR market, is often a beginner’s first step due to its familiarity and the perpetual demand for housing. While these properties can be a reliable source of rental income, investors should be prepared for the challenges tied to property management, tenant turnover, and ongoing maintenance.
Commercial Real Estate
When one thinks of skyscrapers lining city horizons or sprawling office parks in suburban locales, that’s commercial real estate. These properties are tailored to businesses, and can include complete corporate headquarters or individual offices.
Commercial leases often run longer than residential ones, offering the potential for stable, long-term rental income. However, the entry point can be higher, with larger down payments and a more extensive due diligence process. Additionally, commercial real estate values can be closely tied to the business environment of the locality.
Industrial
Industrial real estate encompasses properties like warehouses, distribution centers, and manufacturing facilities. They’re integral to business operations, ensuring products move efficiently from manufacturers to consumers.
Investing in this sector can offer substantial rental yields, especially if the property is strategically located near transportation hubs. However, the nuances of industrial real estate, such as zoning laws and environmental concerns, necessitate a more in-depth understanding than residential or commercial sectors.
Retail
This sector includes shopping malls, strip malls, and standalone stores. What’s unique about retail real estate is that leases sometimes include a provision where the landlord gets a percentage of the store’s profits, termed as “percentage rent.”
In a thriving commercial area, retail properties can be quite profitable, with long-term leases and the potential for appreciating property values. However, investors should be mindful of shifts in consumer behavior and the evolving retail landscape, especially with the rise of e-commerce.
Multi-Purpose Commercial
A new breed of commercial real estate has emerged to compete with the growth of e-commerce. Multi-purpose commercial spaces blend housing units with office space and retail, often adding hospitality and entertainment venues.
Typically, these spaces are the domain of large real estate investment and property management firms. But if you invest in commercial office space or retail, you will be competing with these multi-purpose properties for tenants, so they are worth acknowledging.
Real Estate Investment Trusts (REITs)
For those not keen on direct property ownership, REITs present an attractive alternative. These are companies that own, operate, or finance income-producing real estate across various sectors. What makes REITs distinctive is that they’re traded on stock exchanges, similar to stocks.
By investing in a REIT, you’re buying shares of a company that manages a portfolio of properties, thus gaining exposure to real estate without the hassles of property management. Moreover, by law, REITs are required to distribute at least 90% of their taxable income to shareholders, leading to potentially attractive dividend yields. However, it’s essential to remember that like all publicly traded entities, REITs can be subject to market volatility.
9 Ways to Invest in Real Estate
Investing in real estate can seem tricky for beginners. But, with time and patience, anyone can master it. Focus on simple investment methods first to get to know your local property scene, meet experienced investors, and learn how to handle money wisely. As you learn and grow, you can dive into more complex investment options.
Here are some great ways for beginners to start in real estate:
1. Wholesaling
Acting as the bridge between property sellers and eager buyers, this method primarily focuses on securing properties at a rate below the prevailing market value. The secured contract is then transferred to an interested buyer, ensuring a margin for the wholesaler.
2. Prehabbing
Unlike intensive property renovations, prehabbing is about amplifying a property’s appeal through minimalistic enhancements. These properties, once given their facelift, usually attract investors with a keen eye for larger renovation projects.
3. Purchasing Rental Properties
An avenue promising consistent returns, this involves acquiring properties to lease them out. For those not inclined towards the intricacies of landlord duties, there’s always the option of hiring seasoned property management professionals.
4. House Flipping
A strategy that has garnered significant attention, house flipping involves a cycle of purchasing, upgrading, and promptly reselling properties, aiming for a profit. The emphasis is on swift transactions and keen market acumen.
5. Real Estate Syndication
Envision a collective where like-minded investors come together, pooling both resources and expertise. Such collectives venture into large-scale property acquisitions, and the ensuing profits or rental incomes are distributed among the participants.
6. Real Estate Investment Groups (REIG)
Primarily, these are conglomerates that steer their operations around real estate investments. By amassing capital from a plethora of investors, they dive into acquisitions of sizeable multi-unit residences or commercial holdings.
7. Investing in REITs
Real Estate Investment Trusts (REITs) revolve around the ownership and meticulous management of properties that yield income. However, investors don’t have to handle the management themselves. Instead, participants can relish the benefits of the real estate sector without the responsibilities of direct property ownership.
8. Online Real Estate Platforms
A fusion of technology with real estate, these platforms seamlessly connect potential investors with vetted property developers. This synergy enables backers to finance promising property ventures and, in exchange, enjoy periodic returns that encompass interest.
9. House Hacking
A blend of homeownership and investment, house hacking is about maximizing the potential of a multi-unit property or a single-family home. Investors live in one segment while leasing out the remaining portions. This dual approach can significantly reduce or even negate monthly housing expenses, serving as an excellent introduction to the world of property management for novice investors.
6 Steps to Get Started in Real Estate Investing
Starting on the path of real estate investing requires careful planning, due diligence, and a methodical approach to ensure that your investments are sound and have the potential for fruitful returns. Whether you’re dreaming of becoming a millionaire real estate investor or merely looking to diversify your investment portfolio, following a structured process can be the key to success. Here’s a step-by-step breakdown:
1. Assess Your Financial Health
Every investment journey should begin with introspection. As an aspiring real estate investor, it’s essential to have a clear understanding of your current financial standing. Ask yourself questions like:
How much capital am I willing to invest?
What are my short-term and long-term financial goals?
Do I have an emergency fund set aside?
Evaluating your risk tolerance is equally crucial. Some might be comfortable flipping houses, while others might prefer the steadiness of rental properties. Consulting a financial advisor at this stage can provide insights tailored to your financial health, enabling you to make informed decisions as you proceed.
2. Dive Deep into Market Research
Knowledge is power in the world of real estate. The local market can be significantly different from national or even statewide trends. Delve deep into understanding:
The demand for rental properties in your target area.
The average property values and rental rates.
The historical appreciation rates.
Any upcoming infrastructure projects or urban development initiatives.
Furthermore, familiarize yourself with real estate terminology. Phrases like “cap rate,” “loan-to-value,” and “operating expenses” will become a regular part of your vocabulary. The better informed you are, the more confidently you can navigate your investments.
3. Assemble Your Real Estate Team
No investor is an island. Success in the real estate business often hinges on the strength and expertise of your team. Look for professionals with a proven track record and positive reviews. Your team might include:
Real estate agents who understand the investor’s perspective.
Property managers to streamline tenant interactions and maintenance.
Lawyers specializing in real estate transactions.
Accountants familiar with the tax implications of real estate investments.
4. Explore Financing Options
The path to acquiring a property is paved with various financing methods. Traditional mortgages are common, but the real estate industry offers other mechanisms like:
Hard money loans.
Private money loans.
Real estate syndication where multiple investors pool resources.
Seller financing.
Each of these has different pros and cons, interest rates, and repayment terms. Understand each deeply to determine which aligns best with your financial strategy.
5. Analyze Potential Properties
The crux of real estate investing is ensuring that the numbers make sense. Before purchasing, assess the property’s potential for generating rental income. Break down:
Monthly mortgage payments
Property taxes
Maintenance costs
Potential vacancy rates
Your goal should be a positive cash flow, where the monthly income from the property (rent) exceeds all these expenses.
6. Negotiate and Close the Deal
Once you’ve zeroed in on a property, the negotiation phase begins. Here, understanding the property’s market value, any existing damages or repair needs, and the local real estate market dynamics can give you an edge.
When it comes to closing, be aware of all associated costs. These might include inspection fees, title insurance, and escrow fees. Being well-informed can help you negotiate these fees and ensure that you’re not overpaying.
Risks and How to Mitigate Them
Like any investment, real estate comes with its set of challenges and uncertainties. The difference between successful real estate investors and those who falter is often the ability to anticipate risks and prepare for them. Here’s an exploration of some prevalent risks in real estate and actionable steps to manage them:
1. Market Fluctuations
Real estate markets can be volatile, with property values rising and falling based on a myriad of factors.
Mitigation: To protect against market downturns, it’s essential to buy properties below their market value. Conducting comprehensive research and seeking expert investment advice can help investors make informed decisions. Remember, real estate is often a long-term game, so a short-term dip can be offset by long-term appreciation.
2. Unexpected Repairs and Maintenance
Properties can often come with surprises, from plumbing issues to roof repairs.
Mitigation: Regular property inspections can catch potential problems before they become major expenses. Setting aside a buffer fund specifically for maintenance can also cushion the financial blow of unforeseen repairs.
3. Vacancy Periods
There might be periods where your property remains unoccupied, leading to loss of rental income.
Mitigation: Properly vetting and building a good relationship with tenants can lead to longer lease periods. Diversifying your investment properties across different areas can also help, as vacancy rates might vary from one location to another.
4. Legal and Tax Implications
Real estate investors can sometimes find themselves entangled in legal disputes or facing unexpected tax bills.
Mitigation: Regular consultations with a tax professional or attorney familiar with the real estate industry can keep investors informed and protected.
Long-term Strategy and Growth
Real estate investing is not just about making a quick buck; it’s about building lasting wealth. Adopting a long-term perspective and continuously refining your strategy can pave the way for consistent growth in the real estate industry. Here’s how:
1. Define Your Real Estate Identity
Are you more comfortable with a buy-and-hold strategy, where properties are retained for long-term growth and steady rental income? Or do you thrive on the excitement of flipping houses, where properties are bought, renovated, and sold for profit? Understanding your preference can help tailor your investment strategy.
2. Reinvestment is Key
For those adopting a buy-and-hold strategy, reinvesting the rental income can substantially grow your real estate portfolio. By channeling profits into purchasing additional properties, investors can benefit from compounded growth.
3. Diversify Your Portfolio
As you gain experience, consider diversifying across various real estate sectors. Branching out into commercial real estate or exploring real estate investment trusts (REITs) can provide additional avenues for income and growth.
4. Continue Your Education
The real estate industry is continually evolving. By staying updated on market trends, attending seminars, and networking with other real estate professionals, you can adapt your strategy and seize new opportunities as they arise.
5. Scale Strategically
A real estate empire begins with just one property. With time, dedication, and a sound strategy, it’s possible to grow your holdings into a substantial full-time income. As you scale, ensure you’re not overextending; always prioritize the quality of investments over quantity.
Key Tips for Beginners
Embarking on a journey into real estate investing can be thrilling, yet the complexities of the industry can sometimes overwhelm beginners. Simplifying the learning curve is essential for novice investors to make informed decisions and find success. Here are some pivotal tips to guide those just starting out:
1. Start Small and Scale Gradually
Many millionaire real estate investors began their journey with a modest property. Purchasing a smaller, more manageable property as your first investment can help you navigate the nuances of the real estate business without being overwhelmed. As you gain confidence and experience, you can then venture into bigger and more diverse properties to scale your portfolio.
2. Prioritize Education
The world of real estate is vast and ever-evolving. Leverage online real estate platforms to learn about market trends, investment strategies, and financing options. Additionally, joining real estate investment groups can be invaluable. These groups not only provide mentorship but also offer opportunities to share resources, insights, and deals with other investors.
3. Location is Crucial
In the real estate realm, location often takes precedence over the type or condition of a property. A mediocre house in a prime location can fetch better returns than a grand mansion in a less desirable area. Research local market dynamics, neighborhood amenities, future development plans, and other location-specific factors before making an investment decision.
4. Networking is Key
Surrounding yourself with knowledgeable people can fast-track your learning process. By connecting with seasoned real estate investors, you can gain insights from their experiences, avoid common pitfalls, and even discover potential partnership opportunities. Attend local real estate seminars, join investor forums online, and participate actively in real estate conferences to grow your network.
5. Stay Updated and Adapt
The real estate industry is not static. Market conditions, property values, and investment strategies can change. Being adaptable and staying updated on industry trends will ensure you remain ahead of the curve and can capitalize on new opportunities.
6. Always Conduct Due Diligence
Before diving into any real estate transaction, thorough due diligence is imperative. From understanding property taxes and zoning laws to estimating potential repair costs and evaluating tenant profiles, leaving no stone unturned will protect you from potential setbacks.
8 Terms Beginner Real Estate Investors Should Know
Venturing into real estate can feel like you’ve entered a world with its own language. Don’t worry; everyone feels this way at the start. Knowing basic real estate terms can help you communicate confidently and make informed decisions.
Dive into these essential terms every beginner should grasp:
Appreciation: Appreciation is the increase in the value of a property over time. It’s one of the primary ways real estate investors make money, especially in growing markets. Appreciation can result from factors like inflation, increased demand, or improvements made to the property.
Capitalization rate (cap rate): Think of the cap rate as a tool to gauge the potential return on a property. It’s a percentage derived from comparing a property’s net operating income to its current market price.
Cash flow: This term captures the money dance – what’s coming in and what’s going out. In the context of rental properties, it means the rental earnings minus all the costs. Positive cash flow indicates you’re earning more than you’re spending.
Equity: Equity represents the value of ownership in a property. It’s calculated by taking the market value of the property and subtracting any outstanding mortgage or loans against it. As an investor pays down their mortgage or if the property appreciates in value, their equity in the property increases. This equity can be tapped into for various financial needs or reinvested.
Leverage: This term refers to the concept of using borrowed money, often in the form of a mortgage, to invest in real estate. It allows investors to purchase properties with a small down payment and finance the remainder. When used correctly, leverage can amplify returns, but it can also increase the risk if property values decline.
Net operating income (NOI): Simplified, NOI is the profit made from a property after deducting all operational costs. It’s your rental income minus all the expenses, showing the true earning potential of a property.
Real estate owned (REO): An REO property is one that didn’t sell at a foreclosure auction and is now owned by the bank. These properties are often sold at a lower price because banks aim to sell them quickly, making them attractive to investors.
Return on investment (ROI): In simple terms, ROI measures the bang you get for your buck. It’s calculated by comparing the profit you made to the amount you invested. The higher the ROI, the better your investment performed.
Conclusion
Real estate investing offers an avenue to diversify your portfolio, generate steady income, and potentially achieve long-term growth. With due diligence, a clear strategy, and the right team, beginners can successfully navigate the complexities of the real estate industry and lay the foundation for a prosperous investment journey. Remember, every millionaire real estate investor started with their first property. Your journey is just beginning.
National mortgage rates rose for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans increased.
The average rate on the popular 30-year fixed-rate mortgage broke through 7.5 percent in late September. After a stretch of record lows, rates climbed in 2022 as inflation spiked and the Federal Reserve worked to tame it. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.
The central bank decided to hold firm on another increase in rates at its September meeting, indicating it expects rates to stay on the higher side for the foreseeable future. It meets next at the end of October.
“The Fed has made it clear that rates will remain higher for longer with the expectation that there will be another rate hike this year,” says Melissa Cohn, regional vice president for William Raveis Mortgage. “In their dot plot, the Fed also reduced the number of rate cuts by half for 2024, implying that the fed funds rate will remain at its high level for a good part of 2024.”
The rise in mortgage rates comes alongside appreciating home prices, both of which have kept homebuyers on the sidelines. Over half of home purchase mortgages originated in July had a monthly payment over $2,000, according to Black Knight. Twenty-three percent of originations in July had a payment over $3,000. The affordability squeeze is stretching budgets, and keeping many first-time homebuyers out of the market altogether.
Rates as of October 9, 2023.
The rates listed above are averages based on the assumptions shown here. Actual rates available within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, October 9th, 2023 at 7:30 a.m.
30-year mortgage rate advances, +0.19%
Today’s average rate for the benchmark 30-year fixed mortgage is 7.93 percent, up 19 basis points since the same time last week. A month ago, the average rate on a 30-year fixed mortgage was lower, at 7.59 percent.
At the current average rate, you’ll pay principal and interest of $728.89 for every $100,000 you borrow. That’s $13.17 higher compared with last week.
Use the loan widgets on this page or head to our primary rates page to see what kind of rates are available in your situation. You just need to give us a little information about your finances and where you live. With that data, Bankrate can show you real-time estimates of mortgages available to you from a number of providers.
15-year mortgage rate moves up, +0.18%
The average rate you’ll pay for a 15-year fixed mortgage is 7.08 percent, up 18 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost $903 per $100,000 borrowed. That may put more pressure on your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more quickly.
5/1 ARM rate rises, +0.13%
The average rate on a 5/1 ARM is 6.78 percent, ticking up 13 basis points from a week ago.
Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.78 percent would cost about $651 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Jumbo mortgage increases, +0.20%
The average rate for the benchmark jumbo mortgage is 7.96 percent, an increase of 20 basis points since the same time last week. This time a month ago, the average rate for jumbo mortgages was below that, at 7.62 percent.
At the current average rate, you’ll pay $730.98 per month in principal and interest for every $100,000 you borrow. That’s an increase of $13.88 over what you would have paid last week.
Interested in refinancing? See mortgage refinance rates
30-year mortgage refinance rate advances, +0.17%
The average 30-year fixed-refinance rate is 8.12 percent, up 17 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.78 percent.
At the current average rate, you’ll pay $742.15 per month in principal and interest for every $100,000 you borrow. That’s an additional $11.87 per $100,000 compared with last week.
Where are mortgage rates heading?
Economist are having a hard time pinning down a path for mortgage rates, according to Bankrate’s latest mortgage rates forecast. Some experts have speculated the 30-year rate could increase to 8 percent, while others expect rates to cool down by the end of the year.
30-year fixed mortgage rates mostly follow the 10-year Treasury yield, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
“Economic data that is not too hot and not too cold would be helpful to mortgage rates and could get rates back down below 7 percent,” says Greg McBride, chief financial analyst for Bankrate, adding, “but that has to be true for inflation, job growth, wages and consumer spending.”
What these rates mean for you and your mortgage
While mortgage rates are notoriously volatile, there is some consensus that we won’t see rates back at 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than expected, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Average mortgage rates jumped for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans moved higher.
Mortgage rates have been increasing for some time, with the popular 30-year fixed rate loan breaking through 7 percent this summer. After a stretch of record lows, rates climbed in 2022 thanks to inflation and the Federal Reserve’s response. The Fed last hiked its key interest rate in July, the latest in a tightening cycle that began last year.
The central bank decided to hold firm on another hike at its September meeting, indicating it expects rates to remain elevated in the near term and that it’s not done battling inflation just yet. “Until inflation goes down to the Fed’s target of 2 to 2.5 percent, do not expect rates to move lower,” says Derek Egeberg, a branch manager for Academy Mortgage in Yuma, Arizona.
The increase in mortgage rates comes alongside appreciating home prices, both of which have prevented more homebuyers from entering the market. More than half of home purchase mortgages originated in July had a monthly payment over $2,000, according to Black Knight. Twenty-three percent of originations in July had a payment over $3,000.
Rates as of September 28, 2023.
The rates listed here are averages based on the assumptions here. Actual rates available on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Thursday, September 28th, 2023 at 7:30 a.m.
30-year mortgage rate trends higher, +0.24%
Today’s average 30-year fixed-mortgage rate is 7.83 percent, up 24 basis points since the same time last week. A month ago, the average rate on a 30-year fixed mortgage was lower, at 7.53 percent.
At the current average rate, you’ll pay a combined $721.95 per month in principal and interest for every $100,000 you borrow. That’s $16.56 higher compared with last week.
Standard lending practices defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers buying a home because it allows the borrower to spread payments out over 30 years, keeping their monthly payment lower.
15-year fixed mortgage rate goes up, +0.08%
The average rate for a 15-year fixed mortgage is 6.90 percent, up 8 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $893 per $100,000 borrowed. That may squeeze your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.
5/1 adjustable rate mortgage moves up, +0.12%
The average rate on a 5/1 ARM is 6.63 percent, climbing 12 basis points since the same time last week.
Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for people who expect to sell or refinance before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.63 percent would cost about $641 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Jumbo mortgage interest rate moves higher, +0.24%
The average rate for a jumbo mortgage is 7.86 percent, up 24 basis points from a week ago. A month ago, the average rate was below that, at 7.55 percent.
At today’s average rate, you’ll pay a combined $724.03 per month in principal and interest for every $100,000 you borrow. That’s $16.58 higher compared with last week.
Interested in refinancing? See rates for home refinance
Current 30 year mortgage refinance rate trends upward, +0.20%
The average 30-year fixed-refinance rate is 7.98 percent, up 20 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.66 percent.
At the current average rate, you’ll pay $732.37 per month in principal and interest for every $100,000 you borrow. That’s an increase of $13.88 over what you would have paid last week.
Where are mortgage rates going?
Economists can’t say for certain where mortgage rates are going from here, according to Bankrate’s latest forecast. Some have speculated the 30-year rate could increase to 8 percent, while others expect rates to cool down by the end of 2023.
30-year fixed mortgage rates mostly follow the 10-year Treasury yield, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
“Economic data that is not too hot and not too cold would be helpful to mortgage rates and could get rates back down below 7 percent,” says Greg McBride, chief financial analyst for Bankrate, adding, “but that has to be true for inflation, job growth, wages and consumer spending.”
What current rates mean for you and your mortgage
While mortgage rates move up and down on a daily basis,, there is some consensus that we won’t see rates return to 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than expected, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Very few of us can freshen our home design on an endless budget. But you don’t have to feel constrained by your wallet. That’s because not every piece needs to be the highest quality.
We asked Dallas interior designers where they splurge and where they save to help you stretch your home-decorating fund.
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Invest in key parts of your bedroom.
No surprises here. We spend a third of our lives sleeping, so your bedroom matters — even though it’s an area guests may not see.
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“Your main bedroom is where you should splurge on yourself,” advises Denise McGaha, owner and principal of Denise McGaha Interiors. “A lot of my clients leave that to the last, and I think it’s so important for you to have a really luxurious, amazing night’s sleep. If you don’t sleep well, you’re not fun to be around the next day.”
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McGaha says the mattress is key, but linens are too. So that’s where to concentrate your funds. What about the rest of your bedroom design? Consider buying lower-tier antiques or quality used pieces instead of brand-new furniture.
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You can also look for deals on lamps, rugs and throw pillows, creating a designer-approved look that is budget friendly. “Every time you walk in that space,” McGaha says, “I want it to make you smile.”
Chairs trump table in your dining room.
What about the star of the show in the dining area: the table? McGaha says don’t spend a lot, even though it’s one of the biggest pieces, size-wise, in your home.
“I want to encourage people to buy vintage or used tables, because the chairs are where it’s at. People are paying attention to the chair and they’re going to see the back of the chair. Do they even see the base of the table? Especially if you love to entertain, you’re going to put a tablecloth over it a lot. So let’s get you a beautiful antique or vintage table, or use your grandmother’s table, and get new chairs.”
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When it comes to what’s over the table, that’s another place to go all out. “Lighting is where you want to spend money,” says Nikki Watson, founder of The Design Quad. “Especially with a new build, people will put in basic fixtures. But if they want to update the space and make it look awesome, then lighting makes a big difference.”
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How to redecorate your house for free — using items you already own
In the living room, spend money where people sit.
The living room is all about the return on investment — or in designers’ terms, “seat time.” The more time someone is likely to sit there, the more you should invest in the piece, says McGaha.
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So spend time and money picking out a great sofa that will last a long time, but go for less expensive pieces when it comes to to accent furniture. “Like a lounge chair that goes in the room with your really great sofa, you don’t have to spend nearly as much money on that. That way if you get tired of it, you can change it out,” McGaha notes.
“I wouldn’t spend tons of money there because people don’t sit in a lounge chair as long as they relax on a sofa.”
Watson agrees that a sofa is really worth investing in — a neutral sofa, in particular. Bargain accent pillows and throws can be incorporated to stay on trend.
A living space can also be a good choice for spending on lighting, wallpaper and custom upholstery. After all, this room is where we spend many of our waking hours.
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“I love to splurge on upholstery,” McGaha shares. “By upholstery I mean getting a piece that’s custom for you, meaning it’s deeper or it’s got a different fill on the cushion, so that every time you sit down you say, ‘I just love this sofa.’”
Where can you save in a living room? Look under your feet. “Rugs are something trendy, so they can be replaced pretty often,” points out Watson.
“I wouldn’t say spend a lot of money, because that trend will change. I know we have faded antique rugs that have been the style for about three to four years now, but now geometrics are coming back in.”
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Limit what you spend in your guest room.
It can be tempting to go big in the guest room to really make an impression on people who stay with you, but resist the urge, says McGaha. Your investment in a space should relate to how much time you, the homeowner, spend there.
“I love to use artist prints instead of originals in hallways or guest bedrooms or bathrooms. I’m always going to tell you not to spend all your dollars in those secondary spaces,” says McGaha. “And while I love my guest rooms to be luxurious and really elegant for guests, let’s not put something in there that only that one person gets to enjoy. They’re only there for a few nights.”
To save in a guest room, you could paint instead of doing high-end wallpaper. Your window coverings can be sale items; so can guest linens and bedding. When you look for deals, you can more easily change out those elements for a style update.
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Go for cost-effective pieces in kids’ rooms.
Keep in mind that kids tend to be harder on furnishings, and their tastes will change as they grow up — so feel free to choose lower-cost, trendier pieces for their spaces. McGaha says the bed is a particular place you can save in a child’s room. Use a metal bed frame and score a fun and comfy upholstered headboard.
Don’t neglect your entryway.
You might not think about splurging on the entry to your home, but hear us out. It’s often the first thing you see when you return home and the last thing you see before you leave. And it’s the first and last impression of your home that guests have, too.
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This is where you want to go for original art, amazing lighting and the wallpaper of your dreams. And best of all, it’s a small space compared to other areas in your home, so you can choose just a few things and still have a big impact.