When both parents and kids in one family have student loans, you may benefit from a game plan about how to handle the debt and the stress that can go along with it. Perhaps the student is still in college and the parent is reaching the end of their payments. Or maybe the parent is currently getting a degree, and the child with student loans has just graduated and is living at home.
Whatever your particular situation may be, there is a silver lining when parents and kids both have student loans. You can all work together as a unit toward the same goal: to pay them off in the most manageable way possible.
Here, you’ll learn about the financial impacts of student loans, repayment strategies, how to prioritize financial security, and how to support each other. While being in debt can be hard, arming yourself with knowledge is a solid step forward.
Understand the Financial Impact
Student loans can have several impacts on individuals of any age. It can alter your budget and your debt-to-income ratio (also known as your DTI), meaning the amount of debt you carry versus your earnings. This, in turn, can make lenders less likely to offer you loans or credit, or do so at the most favorable rates.
To look at the big picture, student debt could affect your ability to do the following:
• Purchase housing, including renting an apartment or qualifying for a mortgage
• Get married due to financial setbacks and can also add stress to a marriage
• Commit to attending graduate school
• Build long-term savings
But keep in mind, plenty of people have student loans and achieve these things, whether the debt means a delay in plans or they find a way to forge ahead. And know that people without student loans also face financial challenges: Perhaps they have a lot of credit card debt or a mortgage that is difficult to pay. Know that you are not alone in having financial challenges.
If student debt proves to be really unmanageable, it can affect other areas of your life as well, and the consequences of default can range from ineligibility for more federal financial aid, having a default reported to credit bureaus, credit score impact, and paycheck garnishment.
Of course, you want to avoid these scenarios. So if your family unit has multiple members with student loans, it’s wise to start by having open communication between parents and kids. Take the following steps:
1. Talk with each other. Don’t sweep the topic under the rug. Talking about it together can help you both share knowledge, support one another emotionally during what can be a difficult time, and come up with ideas for tackling your debt.
2. Total it up. Identify the total student loan debt for parents and kids. Break it up individually and figure out how much you both owe and the types of loans you have. Federal or private? High interest rate or low interest rate? When does the loan interest accrue? Only after you map it all out can you see exactly what’s going on.
3. Explore the implications of student loan debt on future financial goals. How will student loan debt affect your future financial goals? Writing down your future financial goals can help you create goals for moving forward.
4. Budget together. Finding a budget that helps you manage and track your finances is crucial. Share learning about the different budgeting techniques available, experiment with them (including apps that may be provided by your bank), and land on a system that helps you.
💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.
Create a Repayment Strategy
Next, you can create a repayment strategy. Both parents and students can follow these steps:
• Understand the loans. Particularly in the child’s case, do they understand all the terms, including interest rate, repayment schedule, and cosigned loans? Cosigning means that the parents signed to obtain loans on their behalf. A Direct PLUS loan is a loan made to a parent to pay for a student’s education and cannot transfer to the child. The parent is legally responsible for repaying the loan.
• Look into repayment plans. Will you stick with the Standard Repayment plan or would a Graduated or Extended plan work better? Reach out to your loan servicer to find out if you qualify for an income-driven repayment plan. An income-driven repayment plan bases your payments on income and family size. It can help ensure that you make manageable payments every month.
You might also benefit from learning about the SAVE Plan, which replaces the REPAYE Plan, and can make debt repayment more manageable for some borrowers.
• See if you qualify for student loan forgiveness. If a government or nonprofit organization employs you, you might qualify for the Public Service Loan Forgiveness Program, or PSLF. If you qualify, you could have the remaining balance on your federal student loans forgiven. In other words, you won’t have to pay them back.
• Consider consolidating federal student loans. Consolidating means combining one or more federal education loans into a new Direct Consolidation loan to lower your monthly payment amount or gain access to federal forgiveness programs.
• Pay extra toward the principal. You can pay extra toward the principal, meaning you make more payments toward your loans every month — the principal is the amount you owe on your loans. This can help speed up repayment and potentially lower the amount of interest you pay over the life of the loan.
• Consider refinancing student loans. You can also explore refinancing your student loans, which means replacing your current student loans with private student loans. This might enable you to get a simpler single monthly payment that is more affordable. However, it’s important to know these two facts:
◦ When you refinance federal student loans with private ones, you forfeit federal benefits and protections, such as deferment and forgiveness. For this reason, think carefully about which option best suits your needs.
◦ When you refinance with an extended term, you may get a lower monthly payment, but you could pay more interest over the life of the loan. This knowledge can help you make an informed decision.
Yes, that’s a lot of information to digest and contemplate. What’s the right student loan debt solution? Ultimately, it’s determining the repayment strategy that will help you meet your financial goals while paying off your loans. Talking to your loan servicer about options can help, as can speaking with a nonprofit credit counselor who specializes in managing student loans.
Take control of your student loans. Ditch student loan debt for good.
Prioritize Financial Security
What does it mean to prioritize financial security? Financial security means having the money to cover the necessities in your life, like food, water, and shelter, and having a safety net, like an emergency fund and having money stashed away for your future retirement. It also means balancing loan repayments with these other financial obligations.
Building financial stability could also include:
• Creating a budget: Creating a budget involves totaling up your income and subtracting your expenses, choosing a budgeting system, like an app, and tracking your expenses. Many experts recommend the 50/30/20 budget rule, which advocates spending 50% of your budget on necessities, 30% on wants, and 20% on savings and additional debt repayment.
• Putting together an emergency fund: Try to put some money aside for an emergency fund. Many experts recommend at least $1,000 to start and then go on to save three to six months’ worth of emergency expenses. That said, $1,000 can be a significant chunk of money. Setting up automated deductions from checking into a high-yield savings account ($20 or so per paycheck is fine) can get you started.
Building an emergency fund can help you combat unexpected expenses that may come up, like a job loss.
• Setting long-term financial goals: What long-term financial goals do you have? Set some long-term financial goals, such as saving for retirement or achieving homeownership with student loans. Both parents and college-aged or newly graduated kids can do this with a financial advisor who can help everyone balance loan repayments alongside other financial aspirations.
Support Each Other
This is a biggie, emotionally and financially. As you discuss your money goals, consider creating a joint plan. Kids should remember that parents still need support throughout this journey, and the reverse is true. Paying off debt and staying motivated during your repayment journey can be incredibly stressful.
Reach out to the people who will support you in your journey, and that includes resources and support networks for guidance, such as your student loan servicer, a financial advisor, and, if stress is an issue, a mental health provider.
Planning for the Future
Planning for the future may seem overwhelming while managing student loan debt. However, you don’t have to go it alone. Consider meeting with a financial advisor to discuss how to balance today (as in, your student loan repayment strategies) and tomorrow, such as putting away some funds for retirement.
It can be a good idea to have an objective, outside expert come in and evaluate your situation so they can help you devise a plan of action — in both kids’ and parents’ situations. You may feel as if you can’t possibly save for the future while focused on paying off your student debt, but a trained professional can often offer wise guidance.
Both parents and students may also wonder how to save for college for future generations. Ultimately, it’s important to secure your financial path first to reach your long-term financial goals and achieve financial freedom before worrying about future generations. After all, grandchildren can also borrow for college, but you can’t borrow for retirement. That said, this is another good topic to broach with a financial expert who is familiar with student loans and saving.
The Takeaway
Student debt can be challenging on its own, but when two generations of the same family are paying off their loans, it can feel overwhelming. It’s important to remember that student debt is a phase you are moving through, like paying off a car loan or mortgage. It doesn’t define you, nor is it with you forever. By supporting one another emotionally, budgeting well, and exploring repayment options, families can take control of their debt and pay it off in the most manageable way possible.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
How does student debt affect families?
Student debt can affect families in many ways, from stretching the family budget thin to making it difficult to save for long-term financial goals. However, families that devise a plan and explore their loan repayment options can pay off their debt and work towards future goals successfully.
What is the average student loan debt?
The average student loan debt is $37,718 on average per borrower of federal loans — about 92% are federal student loans and the remaining are private student loans. Including both federal and private loans, borrowers in the U.S. owe about $1.75 trillion in student loan debt.
Are children responsible for parents’ student loan debt?
No, children are not responsible for parents’ student loan debt. However, parents may be legally obligated to repay student loans on behalf of a child if they took out Parent PLUS loans.
Photo credit: iStock/Daniel Balakov
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.
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.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how scammers deceive victims by using AI for voice cloning and learn how you can protect yourself from other AI-related fraud.
How can you protect yourself from AI-driven scams that target your finances?
What new scams are happening as technology advances?
Hosts Sean Pyles and Sara Rathner discuss the alarming use of AI in scams and the future of fraud to help you understand how to safeguard your personal security. They begin with a discussion of AI-driven voice scams, with tips and tricks on recognizing potential fraud, staying informed about scam tactics, and the importance of open discussion to empower against scammer tactics.
Then, scam expert Bob Sullivan, author of “Stop Getting Ripped Off” and host of the podcast The Perfect Scam, joins Sean to discuss the broader implications of AI technology in scams. They discuss the potential for AI to personalize phishing attacks, the ease of creating convincing fake audio, and the importance of skepticism in the face of unexpected calls. Plus: the need for technology companies to embed safeguards, the role of societal learning in approaching unexpected calls, and the importance of verifying any financial requests you receive.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
We already know that our robot overlords are coming, but in the meantime, while they plot, their artificial intelligence skills are being put to use by bad actors all over the world, utilizing technology to bilk people out of their money. That includes using AI to copy someone’s voice and demand ransom for a non-existent kidnapping.
Jennifer DeStefano:
I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that it wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” I didn’t believe it. It gave me hope, but I didn’t believe it.
Sean Pyles:
Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.
Sara Rathner:
And I’m Sara Rathner. And Sean, that clip is as creepy as it gets.
Sean Pyles:
It is, and the story we’re going to hear today is as creepy and as awful as it gets as we wrap up our Nerdy deep dive into scams and identity theft and how to protect yourself from all of it so you don’t lose your life savings. Today we’re going to examine the future of the scam industry and the expanding role of AI.
Sara Rathner:
Yeah, I have to say, and I know you’ve touched on this in several of your interviews already, this is exhausting. I mean, it’s hard to listen to this and not think, yeah, no matter what, I’m screwed. They’re going to get me unless I spend all this time and effort protecting myself. And who has the time for that?
Sean Pyles:
I hear you, Sara, and it’s easy to feel somewhat defeated by all these organized criminals whose sole job is to steal our identities, which technology seems to make easier and easier for them, and to scam us in ways that we can’t even conceive of until it happens.
Sara Rathner:
I mean, I’d rather spend more time taking naps, honestly. I don’t do that enough and I’m really sleep-deprived, which is probably making me more susceptible to scams, honestly.
Sean Pyles:
Yeah, I am totally there with you. But Sara, I think we’ve also provided listeners, you included, with some really practical ways to fully arm ourselves that don’t take an undue amount of effort. And as we’ve been saying, one of the most important takeaways from this series, I think, is for everyone to realize that there is no immunity here. This stuff can happen to anyone regardless of how old you are, how much schooling you’ve had, or how much money you make, where you live. It’s a universal risk, and the more we talk about it, the more power we take away from the bad actors.
Sara Rathner:
All right. Well, the idea that AI is getting in on the action is slightly terrifying. You mentioned our robot overlords at the top of the show, and I guess they’re coming for everybody’s bank account PINs.
Sean Pyles:
If only it were that simple, Sara. AI is being deployed in sophisticated ways to manipulate our emotions, find vulnerabilities in software that we rely on every day, and generally make our lives like something out of that show Black Mirror. So in this episode, we’re going to explore things like how is AI being used in scams, what’s the deal with these AI voice scams and what hellish development might we see next in the world of scams. To start, we hear from a woman named Jennifer DeStefano. She lives in Arizona and had an experience that no one should ever go through, but that provides a window into one of the ways that scammers can reach into your heart and try to pull money from your bank account.
Sara Rathner:
All right. We want to hear what you think too, listeners. So tell us your stories of identity theft or getting scammed or share how you’re working to fight it or recover from it. Leave us a voicemail or text the Nerd Hotline at 901-730-6373. That’s 901-730-NERD. Or email a voice memo to [email protected]. Here’s Sean with our first guest.
Sean Pyles:
Jennifer DeStefano. Welcome to Smart Money.
Jennifer DeStefano:
Thank you so much for having me.
Sean Pyles:
So Jennifer, you experienced an AI voice scam. Can you set the scene for us? What was that day like before you got this phone call?
Jennifer DeStefano:
It was just a normal day. I had two children that were up training for a ski race and I had my daughter, she was at dance, so I was going to go pick her up and then hopefully joining my other two kids later in the weekend. So I went to pull up to the studio and get out of my car to go get her, and I got a phone call and it came in from an unknown number. Originally I was going to ignore it, but knowing that I had two of them that were practicing for a ski race and unknown can be medical, you just never know, just in case I decided to answer it.
When I answered it, I said hello, and I was getting out of my vehicle, so I had all my stuff in my hands. I was walking through the parking lot, so I had the phone on speaker and it was my older daughter crying and sobbing saying, “Mom, Mom, I messed up.” And I said, didn’t think anything of it. She ski raced for a number of years. It was a very familiar phone call. And I said, “Okay. What happened?” And she goes, “Mom, I messed up.” And I said, “Okay. What’d you do?” And then all of a sudden a man came on and he said, “Put your head down, lay back.”
And at that point I thought she got really hurt just being toboggan. So then I started to get really concerned. I’m like, “Wait, wait, wait. What’s going on? What’s happening, Bri? What’s going on?” And then this man gets on the phone as she starts saying, “Mom, help me. These bad men have me. Help me, help me, help me.” The phone, her voice starts to fade off with her crying and sobbing and pleading for me. And this man gets on the phone. He goes, “Listen here, I have your daughter.”
“You call the police, you call anybody, I’m going to pop her stomach so full of drugs and have my way with her and then drop her for dead in Mexico.”And at that point was when I had my hand on the door handle of dance, and I walked inside the room and I just started screaming for help. So fortunately there happened to be three other moms there that know me well. I was asking my younger daughter to get her dad on the phone, call her brother, call anybody. So she actually jumped up and ran over to my younger daughter to say, “Let’s go find your dad. Let’s figure this out.”
Another mom said, “I’m going to go call 911.” She stepped outside to go call the police, and the third mom sat beside me so she could hear everything the man was saying as I was trying to figure out where my daughter was, what’s going on.
Sean Pyles:
And so it’s a perfectly normal day. You’re about to get your kids after a day of them doing their activities, you get a phone call and within 30 seconds your world is turned upside down.
Jennifer DeStefano:
Completely upside down. I had no idea what was going on. I had a full conversation with my daughter. It was interactive. There was no pause. There was no break. There was nothing that would lead me to believe that wasn’t her. So when the mom that stepped outside called 911, she came back in and she said, “Hey, 911 tipped me off that there’s a scam where they use AI and they can replicate anyone’s voice.” She’s like, “It could have been a voice recording.” I’m like, “It was definitely not a voice recording. It was interactive. I was asking her questions. She was responding to me. It was not a recording.” And she’s like, “Well, they can do anything.” I’m like, “But it was her crying. It was her sobbing. I know it’s my daughter. It wasn’t a recording.”
Sean Pyles:
And what thoughts are going through your head as you’re having this conversation with what sounds exactly like your daughter?
Jennifer DeStefano:
I didn’t for a second not believe it. It wasn’t until another mom actually got my daughter on the phone and I talked to her and she reassured me that she was who she really was, and I could finally wrap my head around it. And then I finally believed her and then I knew it was a scam.
Sean Pyles:
How much time elapsed from the time that you answered the phone to when your actual daughter was speaking to you and you were reassured the phone call that you got wasn’t legitimate?
Jennifer DeStefano:
So the whole phone call actually took four minutes, but that’s where time freezes in that panic and fear.
Sean Pyles:
Right. Oh God, that’s heartbreaking. So do you know how the scammers got your daughter’s voice and maybe why they targeted you specifically?
Jennifer DeStefano:
So I had a bunch of different thoughts on that. Okay. She’s done a few interviews related to school, sports, whatnot, but that still doesn’t explain the crying and sobbing. It doesn’t explain that conversation. Her voice recording for her phone is her prepubescent voice, so it’s not her current voice. So I honestly have no idea. That’s where a lot of this, what’s scary is at first it was are they following me? Is it targeted? Do they know something? But then hearing how it had happened to a number of other people in different capacities, and you realize it’s a lot more arm’s length.
They were demanding money to be hand delivered to them. So they were making arrangements to come pick me up in a white van with a bag over my head. I had to have all the cash. They were going to take me to my daughter, and if I didn’t have all the cash, then we were both dead.
Sean Pyles:
God, how much were they asking for?
Jennifer DeStefano:
It was originally a million dollars. And then he came up with a number of $50,000 when I pushed back that that wasn’t possible.
Sean Pyles:
And to this day, it’s unclear why you specifically got this call?
Jennifer DeStefano:
I have no idea.
Sean Pyles:
Okay. And so after the phone call ended, I assume you hung up on the scammer when you realized that your daughter was safe.
Jennifer DeStefano:
So once I realized my daughter was safe, I actually had them on mute and they were furious that I wasn’t making final arrangements for a pickup. And then I picked the phone back up and I called them out and said, you don’t have my daughter, this is a scam and I’m going to make sure that this is going to come to a stop and I’m going to do anything I can to stop you. And I hung up on him.
Sean Pyles:
God, what are you on an individual or maybe even a family level doing to safeguard yourselves? Have you guys established a safe phrase that you might use to confirm your identities?
Jennifer DeStefano:
So we did create a safe word, and then it’s a lot of communication. Where are you? Who are you with? Where are you going? So that way if I do get a phone call or anybody gets a phone call, you can easily put it through the test. Does this make sense? Is this where they’re supposed to be? Is this even possible? Do you know the code word? Do you have some identifiers? If I didn’t know where my daughter was supposed to be, I wouldn’t have been able to locate her as fast as I did. And I had her brother, I had all of her siblings coming together in response to help me as well. So everybody was in full communication. You have to communicate and you have to seek help.
Sean Pyles:
Well, Jennifer, is there anything that you would like to leave listeners with?
Jennifer DeStefano:
Just awareness, have these conversations, sometimes maybe tough conversations, especially with children. But you have to have the conversations, have safe words, know where your kids are at. You have to have these conversations and make sure you safeguard your family.
Sean Pyles:
Well, Jennifer DeStefano, thank you for sharing your story with us.
Jennifer DeStefano:
Thank you so much for having me. I really appreciate it.
Sean Pyles:
Sara. I found this story just heartbreaking. I mean, at least they found out it was a scam before handing over money or before Jennifer offered herself up to scammers. But not everyone is so fortunate. Imagine how hard it is to say no to something like this when a loved one seems to be in jeopardy.
Sara Rathner:
Yeah, there was a piece recently in The Cut written by a journalist who knew she would never, ever fall for something like this. Don’t we all think that? And ended up handing over $50,000 in a shoebox to a stranger in a large SUV. I don’t think anybody ever sees themselves doing that. I’m glad Jennifer DeStefano didn’t let it get that far with the help of friends.
Sean Pyles:
And there’s hope that help will come from more than friends. Earlier this year the Federal Trade Commission proposed new rules that would prohibit the impersonation of individuals. It recently enacted rules that prohibit impersonating government or businesses. This proposed rule would extend to, well, us. The proposal is currently in a comment period, so if you feel so moved, go to the FTC’s website, ftc.gov, and comment.
Well, next we’re going to talk with another journalist, Bob Sullivan, who’s been covering the scam world for years now. He hosts a podcast for the AARP called The Perfect Scam and is the author of Stop Getting Ripped Off, among other books. We’re going to talk about the future of the scam world and how to protect yourself as technology continues to make it easier for the bad guys. That’s coming up in a moment. Stay with us.
Bob Sullivan, I’m so glad you could join us on Smart Money.
Bob Sullivan:
Thanks so much for having me.
Sean Pyles:
So Bob, the first question I have for you is how do I know that you are the real Bob Sullivan and not an AI-generated Bob Sullivan?
Bob Sullivan:
This is an excellent question and I’m glad that you’ve started there. You can’t, really. In fact, I did an episode on my own podcast recently where I had someone clone my voice and rather persuasively introduce the podcast, although family members pointed out to me that there were just little things that didn’t quite sound right. So either I was AI or maybe I had a bad cold or something. But it’s hard to tell, a little nasally.
Sean Pyles:
So in this series we’ve talked about identity theft, identity fraud, and the scam world, and I’m hoping that today you can give us a warning about the future of all of this and the role that artificial intelligence or AI is going to play and in fact is playing. So to start, when did we first start seeing AI being put to use in this way? Do you remember a specific AI-generated fraud or scam where you said, oh wow, this is something new?
Bob Sullivan:
Well, I have to be honest with you and say that I sit here reading emails about scams and fraud all day long, and I have not seen evidence of these kinds of things that a lot of folks are talking about right now, which is voice cloning or deep fake videos being used to fool people. Here’s a couple of things that I am worried about, however. All the data collection that we have, the criminals now have access to it and it’s going to be very easy for criminals to use that data to just really carefully craft their phishing pitches so that they’ll know exactly when you are transactional, for example.
Then they’ll know precisely when you order something from Amazon or what your zip code says about your income, and they’ll know how to attack the right person at the right time with the right message. And that’s the kind of artificial intelligence that I’m worried about, criminals using big data to essentially perfectly hone their crimes. But there’s one other thing that I’d really like to mention that enough experts have told me about that I am quite concerned about it, and that’s this idea of generative AI, where a tool like ChatGPT can engage in conversations and learn.
We have told people forever that one of the ways that they might recognize that they’re talking to a criminal over email or in chat or in a game is bad grammar or sentences that don’t quite make sense, non sequiturs. Well ChatGPT is getting very good at holding intelligent sounding conversations. Let’s start by saying it’s going to probably eliminate the bad grammar problem, but even more than that, imagine a tool that learns along the way just the right things to say to romance someone using a formula that’s been tested in the real world or the right things to say to get someone to follow the instructions for an investment scam.
I think these tools are going to learn how to carry on these conversations in ways that we’ve never seen at large scale, and that’s the kind of artificial intelligence that I’m worried about being used in scams.
Sean Pyles:
Okay. And can you talk us through how these AI voice cloning scams do work, whether they’re pervasive or not?
Bob Sullivan:
Sure. Well, I mean there are services, the fellow who did it on me signed up for a website that lets you do this for $5 a month and the first month is 80% off. So for literally one US dollar, you can upload samples of my voice or anyone’s voice and then generate for a potential scam victim, something that sounds incredibly realistic. I think the one thing that’s important to understand about what’s different about voice cloning, I don’t know if you remember the movie Sneakers, it’s one of my favorite hacker movies.
But in that movie, they basically needed a voice passport in order to enter a highly secure building, and they needed the authority figure to say things so that they could piece together cut and paste style a certain sentence, for example. So one way you might be imagining this works is someone tricks me into saying, my mother is in distress and I need you to send money to this wire account, but that’s not it. Instead, what’s powerful about AI voice cloning is with just a few sentences from me, they can extrapolate my intonation, my pausing and make me say anything.
So you don’t need a whole lot of vocabulary in order to make a really, really effective, almost fully independent voice clone.
Sean Pyles:
Well, I’d like to walk our listeners through some of the ways that fraudsters and scammers are putting this technology to work right now in ways that are shocking even to you. Can you share one or two examples that you know of that will give us a sense of just how bonkers this new era is?
Bob Sullivan:
Well, let me go back to the big data example. Foreign governments and large hacker organizations do have what would look to most people like a credit reporting agency on all of us. They have thousands of bits of data about all of us that they can use against us, and it’s data that they’ve been compiling for years. So they know what your tendencies are, they know where you shop, they know where you are. We never talk nearly enough about the theft of location data. All our cell phones are tracking devices.
And so a criminal could know when you’re walking past a store and send you a precisely timed invitation to either buy something at a discount or even worse to send you a note saying, I was just in Ireland. Bob, there’s a bank in Ireland that suddenly tried to charge a $2,000 charge to your account, say yes or no. And I would believe that message right now because I was just there. Those kinds of highly sophisticated, highly targeted crimes enabled by massive amounts of data that again can be searched now instantaneously, that’s the kind of thing that really scares me.
Sean Pyles:
And those examples are highly specific and individualized, which makes them all the more believable. So it makes it hard to trust anything that’s inbound to us.
Bob Sullivan:
Absolutely. And this is a tragedy because technology enables so many wonderful things. It is a terrible thing that we have all of these dark stories as this gray cloud around tech that’s going to prevent a lot of people from even trying to use it, and it’s going to make all of us feel just a little bit insecure because we know these sorts of bad and dangerous things can happen to us. The best example of this is in the health arena. We’re so far behind in what electronic health records could be in America right now.
When you go to the hospital, you’re laying on a gurney and there’s someone asking you over and over again, are you allergic to penicillin and you just were in a car accident. And that’s ridiculous. But because we are, I mean there’s many reasons, but a big one is we are so concerned about criminals misusing this data or companies misusing this data that we are decades behind where we could be with things like electronic health records.
Sean Pyles:
Earlier this episode, I spoke with a woman who received an AI voice scam call from what sounded like her daughter, and it of course wasn’t her daughter. But after everything settled down, she still doesn’t really understand how these people got her daughter’s voice. Her daughter isn’t really on social media, and this woman is also very unclear as to why she was targeted. So do you know how scammers are capturing people’s voices and why they might choose to target one person over another?
Bob Sullivan:
So I don’t know. I think for the vast majority of young people, it would be fairly trivial to examine a couple of TikTok videos and get enough voice sample in order to fake their voices. There are people who are not on social media and whose recorded voices aren’t in any, say, school websites or anything like that. I think they are few and far between. So I think most people should assume that a criminal could absolutely get enough audio samples of your voice to do this to you. So I can’t speak to that specific instance or why that person was targeted or why that child was targeted.
The only thing that concerns me is I don’t think we should give anyone the impression that this is happening on a widespread basis. It’s not. 99% of these kinds of calls are still being done by just human beings in boiler rooms. Nevertheless, this absolutely can be done. It can be done really inexpensively. And as I just mentioned, all of us are vulnerable to this. You’d be shocked at how much, even if you don’t have any social media, that pieces of your life have been posted by other people.
So it’s out there, and again, it takes very little, we’re talking probably less than a minute of audio in order to generate a fake you.
Sean Pyles:
What do you think we’re supposed to try to do to combat this? I mean, using me as an example, I host this podcast, you host one too. Our voices are out there just waiting for scammers to take a clip and make us say whatever they want, call our loved ones and use that voice to try to get their money. How do we fight that?
Bob Sullivan:
Yeah, you and I are screwed.
Sean Pyles:
Bob Sullivan:
Sorry. But the best, I talked to some other expert about this, so I can’t claim this advice myself, but I think it’s very good advice. At the beginning of the Photoshop era, people saw pictures of pyramids moved and weren’t skeptical of that. We just thought photographs couldn’t lie. I think nowadays for the most part, and certainly not everybody, for the most part, if you saw a crazy picture of Joe Biden riding on a camel or something, that there would be a piece of you at least that would say wait a minute, this might be fake.
There’s now an impulse that things you see might very well be faked. I’m hoping that our level of 21st century digital sophistication gets there quick enough with audio that your parents and my parents will have a predisposition to think if this is a weird phone call from Bob or Sean, it could be fake. And I think that’s the sort of learning curve we all have to go through kind of as a society.
Sean Pyles:
Well, let’s turn to some tactical ways that people can try to protect themselves. Can you tell us about the importance of things like pass keys, biometrics, other ways to authenticate that you are who you are when you get a call from someone or you allegedly call someone else?
Bob Sullivan:
I’m glad you brought that up. When it comes to voice printing in particular, there are these new technologies that are a little bit like image watermarking they’re discussing putting on voices. So you can imagine there being something even inaudible embedded in an audio phone call, which the technology company, the phone company, used seamlessly to verify that you were you, sort of like a Verisign email or whatnot. So there’s people who are working on technologies that would help with this verification. I’m not a fan of putting these really hard things onto individual consumers.
I think it’d be much better if the technology companies were forced to solve these problems because I can’t give my mom advice on how to verify how I might contact her at every platform that ever is going to exist. That advice is going to get outdated almost immediately.
Sean Pyles:
Given that we do live in this world that we are living in, I’m trying to think about ways that I can protect myself and my family. After I began doing research into 21st century scams, I established a safe phrase that if my family gets a call that alleges it’s from me and I’m in a panic, they’ll say, “Hey, what’s the safe phrase?” And I will tell them that phrase, if it’s actually me. And if it’s not, then the scammer’s going to try to divert them some other way, I’m sure.
Bob Sullivan:
I do think that’s great, and I don’t mean to trivialize any of that, but I would like to point out most people in security would say you’ve also created a vulnerability because someone armed with that phrase could easily disarm someone in your family, right?
Sean Pyles:
That’s true. Although the phrase has only been uttered in person when we agreed on what the phrase is. So we’ve tried to keep it as away from recording devices as possible to the extent that we can.
Bob Sullivan:
The only real point in my saying that was none of these things are foolproof. So it’s good to have that in mind. I think the one thing that helps all the time in the end, whatever we’re talking about here, almost inevitably, is a cover story for give me money. All of these, whatever technology we’re using, whatever the story is, in the end, there’s an ask of some kind. And stealing people against the ask is really, really important. And the best way to do that is interruption. The best way to do that is to train everybody in every circumstance, whatever is happening, to stop and talk to an independent third party, whether that be a family member or a financial professional or something.
Your son’s in jail in Europe, he needs bail money immediately, take the 15 seconds to talk to someone not involved in the situation and hear the words come out of your mouth. When you get a phone call you don’t expect, hang up and then go to the company’s website yourself and call the official published number, call the company back. That solves about 99% of these problems.
Sean Pyles:
Well, Bob, I’m asking this of all of the experts that we’re talking with for this series. So I’m going to ask you too, have you ever experienced a scam or identity theft or fraud?
Bob Sullivan:
No, but I’ve certainly been through a bunch of credit card-style identity thefts, but fortunately, knock on wood, nothing that we would consider deeply involved identity theft.
Sean Pyles:
Well, Bob, do you have any hopeful thoughts as we wrap up this series, which has been a bit of a bummer as we’ve talked about fraud and scams and people losing their life savings to technology assisted terrible people?
Bob Sullivan:
Yeah. So I spend all my week talking to people who’ve had their life savings stolen from them in all manner of speaking. It’s hard to stay optimistic. I think there’s a whole bunch of factors coming into play here. We have an aging population, many of whom thankfully have a lot of savings, they’re an easy target. And as I’ve mentioned, we have all of these tools that make it so much easier for someone halfway around the world to steal money instantly in untraceable ways. This has never happened in human history before, so this is the golden age of crime.
However, we are all talking about it now. So that’s really positive. Here’s the most optimistic thing I can tell you. Young people, software designers, engineers inside companies are now getting out of school having taken ethics classes and social impact classes and are starting to push back on their managers when they come up with tools like this. And that’s where the tide will turn is when enough people who have a grandparent who’s been a victim of a scam work at a software company and they say, we have to put this protection into this device before we release it to the world. And I do think those conversations are happening. So I am actually optimistic about that.
Sean Pyles:
That’s good to hear. And is there anything else that you wanted to mention that we didn’t touch on?
Bob Sullivan:
What we find is that a really, really big obstacle to fixing this problem is shame and embarrassment. Many, many people won’t come forward after they’ve been a victim of a crime like this because they feel stupid. I called myself stupid. All the language around scam crimes tends to focus on the individual instead of the system. Well, if you read a news story about a person who fell for a home improvement scam, that just doesn’t sound the same thing as someone who was robbed at gunpoint.
Sean Pyles:
Was the victim of a crime. That’s what happened at the end of the day.
Bob Sullivan:
They’re a victim of a crime, and we work hard on the language that we use to stress that there was a crime. There’s something about if we say, well, that person fell for this scam. Well, I would never fall for that scam. You can sort of put it at arm’s length, and that makes it a little easier to not do anything about the problem. And it takes the focus off the criminal. We kind of think the criminals are clever and sexy. But more than anything, we want to try to get away from the idea of shame because when someone is embarrassed because they are a victim of a crime, they don’t come forward.
The statistics don’t reveal the true nature and breadth of the crime. Everybody will tell you this, all this crime is wildly under reported. So however big the numbers seem to be, they’re at least double what we hear from the Federal Trade Commission and whatnot. And so anything that I can do to relieve the stigma from being a victim of crime like this, I’m all for it.
Sean Pyles:
Bob Sullivan, thank you so much for helping us out today.
Bob Sullivan:
Thanks a lot for having me.
Sean Pyles:
So Sara, after four episodes of hearing from experts and people who have experienced scams, I’m in a state of what I would call bleak optimism. The world right now is rife with scammers and their methods of duping innocent people are evolving at a rapid pace. But simultaneously, I can’t remember a time where scams and fraud were more present in the cultural conversation. Yes, it is fully a tragedy that our means of communication are so compromised that we cannot trust a call from a loved one in what seems like their most dire moment.
That really can’t be overstated. But hopefully the increased awareness of these scams will help people avoid sending money to bad actors and mitigate feelings of shame that people carry after enduring a scam. And hey, maybe one day our government will make some laws that help tamp down on the rampant scams that we’re all facing.
Sara Rathner:
And there’s this saying in journalism, if your mother tells you she loves you, fact check it. Well now you have to. So that’s the world we live in.
Sean Pyles:
If anyone contacts you at all, fact check it.
Sara Rathner:
Yeah. And text them on the side and be like, “Hey, are you calling me from jail right now?” And they’ll be like, “No.”
Sean Pyles:
I think the bottom line for everyone listening is to exercise extreme caution when you speak with anyone online and before you send money to anyone ever.
Sara Rathner:
If somebody is asking you for money and you don’t really know who they are, they are not who they tell you they are. How’s that? How’s that for general rule?
Sean Pyles:
All right. Well, for now, that’s all we have for this episode and this Nerdy deep dive about scams and ID theft and fraud. If you have a money question about any of this or anything else, turn to the Nerds and call or text us your questions at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode and remember to follow, rate and review us wherever you’re getting this podcast.
Sara Rathner:
This episode was produced by Tess Vigeland. Sean helped with editing. Kevin Berry helped with fact checking, Sara Brink mixed our audio.
Sean Pyles:
And here’s our brief disclaimer, we are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Sara Rathner:
And with that said, until next time, turn to the Nerds.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Being an authorized user can positively, negatively or minimally impact your credit score, depending on the primary cardholder’s financial actions surrounding monthly payments, credit history and credit utilization.
Whether you’re just starting to build your credit or have made some financial choices that have negatively impacted your credit, you’ve likely noticed that building credit isn’t easy. However, adding yourself as an authorized user on someone else’s credit card account is a useful way to establish new credit.
So, how does being an authorized user affect your credit? Let’s explore the various ways being an authorized user can impact your credit and how to start building credit using this strategy.
Table of contents:
What is an authorized user on a credit card?
An authorized user is an individual who is attached to another person’s credit card account but is not the primary cardholder. Authorized users are not legally responsible for credit card charges or ensuring on-time payments. They typically receive a credit card issued under their name, which is linked to the cardholder’s account.
However, the primary cardholder will receive the monthly statement for the card, not the authorized user. It’s the cardholder’s responsibility to complete payments for that card. Some credit lenders split charges by card so the cardholder can see which charges are being made by the authorized user.
How does being an authorized user affect your credit?
Being an authorized user on someone else’s account can both negatively and positively impact your credit. You’re taking a risk based on trust and communication that the primary cardholder will consistently complete payments on time and maintain a good credit history. Below are a few ways being an authorized user can affect your credit.
1. Help build your credit
If the primary cardholder consistently submits monthly payments on time and maintains a low credit utilization, you should see a positive impact on your credit. Before asking to be added to the account, ensure that the cardholder has a good credit history and that the credit lender they use reports it to the three major credit bureaus—Equifax®, Experian® and TransUnion®. This way, your authorized user account will eventually show up on your credit report.
2. Hurt your credit
Becoming an authorized user on someone else’s account, regardless of their relationship to you, involves taking a risk. Your credit can be negatively impacted if the primary cardholder fails to make timely payments or accumulates a high credit balance. If this happens, it’s best to remove yourself from the account to prevent any further impact on your credit.
3. Minimally impact your credit
If the card’s lender doesn’t report authorized user activity, the account won’t appear on your credit report. As a result, you won’t see any impact, positive or negative, on your credit.
How to build credit as an authorized user
Becoming an authorized user is a great way to start building credit or repairing a bad credit score. Follow the steps below to better your chances of successfully building credit through this method.
1. Choose the right credit card holder
Carefully consider who you want to ask to add you as an authorized user on their credit card account. Choose a relative or close friend who you can trust to make timely payments and who has a good credit history and low credit utilization.
2. Request to be added to the account
Kindly ask the primary cardholder to add you as an authorized user on their account. Keep in mind that not all credit lenders report authorized users to credit bureaus, so research the credit lender before proceeding with the approval process.
3. Monitor account activity and payments
Whether you’re using the credit card account or not, it’s important to communicate with the primary cardholder about payments and spending limits. While you aren’t legally responsible for submitting payments on time, you want to ensure that you’re not overspending on the account and increasing the utilization ratio—this ratio represents the proportion of your total credit limit that you’re using.
4. Regularly check your credit report
Regularly check your credit report to ensure that your authorized user activity is reported accurately and is positively affecting your credit. If you notice a negative impact on your credit, check to see if the primary cardholder is making timely payments and maintaining low credit utilization. If they aren’t, consider removing yourself from the account before your credit health worsens.
Authorized user FAQ
Below are answers to some common questions about how being an authorized user can affect your credit.
Who can be an authorized user?
Anyone can be an authorized user of a credit account. However, typically authorized users are family members, close friends, employees and legal guardians. Most commonly, authorized users are young individuals who want to build credit or have a poor credit history.
Who should you ask to add you as an authorized user?
While anyone can add you as an authorized user on their account, it’s best to ask someone you can trust and are close with. Relatives and close friends who have excellent credit and demonstrate a history of timely payments are good choices, as this behavior can further increase the likelihood of improving your credit.
Will adding someone as an authorized user hurt my credit?
Adding an authorized user to your credit account shouldn’t negatively impact your credit. If you maintain full control of the account and make payments on time, both you and the authorized user will benefit. However, if the authorized user misuses your credit on your account, both you and the authorized user can be negatively impacted.
Does removing an authorized user hurt their credit score?
Removing yourself as an authorized user on an account may affect your credit score. Removing yourself from an account with a good payment history may cause a slight decrease in your credit score, as you’re no longer benefiting from the credit account.
However, opening your own credit card as soon as you remove yourself from the other account can minimize the impact on your credit history. Additionally, if the primary cardholder isn’t making payments on time or is maxing out the card, removing yourself as an authorized user can benefit your credit. That’s why it’s important to carefully consider whose credit account you add yourself to.
What’s the difference between joint credit cards and authorized users?
Joint credit cards function exactly like a normal credit card, but they are shared by two people rather than one primary cardholder. The biggest difference between joint account holders and authorized users is that with a joint account, both parties are legally responsible for making payments on the account.
Additionally, those who apply for a joint credit card can expect to have their credit history and other financial information considered during the application process, whereas the authorized user’s typically isn’t considered.
How long until an authorized user account shows on your credit report?
The amount of time it takes for an authorized user account to show on your credit report depends on the credit bureau and when it’s reported. However, it’ll typically show up within 30 days of adding the authorized user to the account. Ultimately, being an authorized user can be a valuable tool for building credit, but it’s important to weigh the benefits and risks carefully. Not sure where to start but need help building your credit? Learn more about services offered at Lexington Law Firm and start repairing your credit today.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Sarah Raja
Associate Attorney
Sarah Raja was born and raised in Phoenix, Arizona.
In 2010 she earned a bachelor’s degree in Psychology from Arizona State University. Sarah then clerked at personal injury firm while she studied for the Law School Admissions Test. In 2016, Sarah graduated from Arizona Summit Law School with a Juris Doctor degree. While in law school Sarah had a passion for mediation and participated in the school’s mediation clinic and mediated cases for the Phoenix Justice Courts. Prior to joining Lexington Law Firm, Sarah practiced in the areas of real property law, HOA law, family law, and disability law in the State of Arizona. In 2020, Sarah opened her own mediation firm with her business partner, where they specialize in assisting couples through divorce in a communicative and civilized manner. In her spare time, Sarah enjoys spending time with family and friends, practicing yoga, and traveling.
Whether you’re in the market for a new student loan or looking to lower your current student loan payments, there may be a federal loan program available to help.
Student loan programs sponsored by the federal government are available to any eligible borrower (not just federal employees) and don’t always require a credit check. They also come with some advantages over private student lending options, such as income-based repayment plans, forgiveness programs, and (in some cases) lower interest rates.
Whatever stage you’re at in your education or borrowing journey, here’s what you need to know about federal student loan programs.
Why Consider Federal Loan Programs?
The federal government offers student loan programs for undergraduate students, graduate students, as well as those who are in the repayment phase of their student loan journey. These programs include:
• Direct Subsidized Loans With Direct Subsidized Loans, which are available to students who demonstrate financial need, the government pays all the interest that accrues on the loan during school and for six months after graduation.
• Direct Unsubsidized Loans Direct Unsubsidized Loans are available to eligible undergraduate, graduate, and professional students and are not based on financial need. With these loans, students are responsible for repaying all interest that accrues on the loan.
• Direct PLUS Loans Graduate or professional students (and parents of undergraduate students) can tap into Direct PLUS Loans. Eligibility isn’t based on financial need, but you must undergo a credit check. These loans have higher interest rates and fees than Direct Unsubsidized Loans, but you can borrow more money — up to your total cost of attendance, minus other aid received.
• Direct Consolidation Loans Direct Consolidation Loans allow you to combine your eligible federal student loans into a single loan with one loan servicer. This can simplify repayment. However, it won’t lower your interest rate. 💡 Quick Tip: Ready to refinance your student loan? You could save thousands.
Take control of your student loans. Ditch student loan debt for good.
Benefits of Federal Loan Programs for Students
Federal loan programs offer a number of benefits for college students. Here are some to keep in mind.
• Payments not due until six months after graduation: Students don’t need to make any payments on their student loans while they are in school at least half-time or during the post-graduation grace period, which is six months.
• Fixed interest rates: Federal student loans have fixed interest rates that are often lower than student loans from private lenders. For federal loans first disbursed on or after July 1, 2023, and before July 1, 2024, the rate is 5.50% for undergraduate Direct Subsidized and Unsubsidized Loans; 7.05% for Direct Unsubsidized Loans for graduate students; and 8.05% for Direct PLUS Loans.
• Subsidized options: If you have financial need, the government may offer you a subsidized loan, which means the government pays the interest while you’re in school at least half-time and for six months after you graduate.
• No credit checks for certain loans: You don’t need a credit check to qualify for Direct Subsidized or Unsubsidized Loans.
Federal Loan Programs to Consider After You Graduate
Once you graduate and need to begin paying back your federal student loans, the government offers a number of programs that can make repayment more manageable. Here’s a look at some of your options.
Federal Student Loan Repayment Plans
The Education Department offers a number of different repayment plans, including long-term plans that can last up to 30 years. You may be able to lower your monthly payment if you opt for a longer repayment term. Extending your repayment term generally means paying more in interest overall, though.
Fixed repayment plans include the Standard, Graduated, and Extended plans. Here’s a look at how they compare.
Fixed Repayment Plan
Eligible Loans
Monthly Payment Amount
Standard Plan
Direct Subsidized and Unsubsidized Loans; Subsidized and Unsubsidized Federal Stafford Loans; PLUS loans, Consolidation loans
Payments are a fixed amount that ensures your loans are paid off within 10 years (within 10 to 30 years for Consolidation Loans)
Graduated Plan
Direct Subsidized and Unsubsidized Loans; PLUS loans; Consolidation Loans
Payments start out lower and then increase, usually every two years. Payment amounts ensure you’ll pay off loans within 10 years (within 10 to 30 years for Consolidation Loans)
Extended Plan
To qualify, you must have more than $30,000 in outstanding Direct Loans (or FFEL Program loans)
Payments can be fixed or graduated and will ensure that your loans are paid off within 25 years
Income-Driven Repayment Plans
Income-driven repayment (IDR) plans aim to make student loan payments more manageable by tying them to the borrower’s income. They allow you to pay a percentage of your discretionary income toward federal loans for 20 to 25 years, at which point the remaining loan balances are forgiven.
The Saving on a Valuable Education (SAVE) Plan is the newest and one of the most affordable repayment plans for federal student loans. For some borrowers, payments can be as low as $0 per month.
Here’s a look at how the four IDR federal loan payment programs stack up.
Income-Driven Repayment Plan
Eligible Loan Types
Monthly Payment Amount
SAVE
Direct Subsidized and Unsubsidized Loans; Direct PLUS Loans (made to students); Direct Consolidation Loans (that do not include parent PLUS loans)
10% of discretionary income
PAYE
Direct Subsidized and Unsubsidized Loans; Direct PLUS Loans (made to students); Direct Consolidation Loans (that do not include parent PLUS loans)
10% of discretionary income but never more than what you would pay under the 10-year Standard Repayment Plan
IBR
Direct Subsidized and Unsubsidized Loans; Subsidized and Unsubsidized Federal Stafford Loans; Direct and FFEL PLUS Loans (made to students); Direct or FFEL Consolidation Loans (that do not include parent PLUS loans)
Either 10% or 15% of discretionary income but never more than what you would pay under the 10-year Standard Repayment Plan
ICR
Direct Subsidized and Unsubsidized Loans; Direct PLUS Loans (made to students); Direct Consolidation Loans
Either 20% of your discretionary income or the amount you would pay on a repayment plan with a fixed payment over 12 years, adjusted according to your income (whichever is lower)
Student Loan Forgiveness Programs
In addition to the loan forgiveness associated with IDR plans, the federal government offers other federal loan forgiveness programs, including Public Service Loan Forgiveness (PSLF), which is for public-sector workers. The PSLF program allows you not to repay the remaining balance on your Direct Loans as long as you’ve made the 120 qualifying monthly payments under an accepted repayment plan and worked for an eligible employer full-time.
There is also a separate forgiveness program just for teachers, as well as one borrowers with permanent disabilities.
Federal Student Loan Consolidation Program
If you have multiple federal student loans, you can consolidate them into a single new loan (called a Direct Consolidation Loan) with new repayment terms. This can simplify the repayment process, since you’ll only have one payment and one loan servicer to keep track of.
Federal loan consolidation also allows some borrowers (such as those with Federal Family Education or Perkins Loans) to access repayment and forgiveness programs that they otherwise are ineligible for.
The federal student loan consolidation program does not lower your interest rate, however. Your new fixed interest rate will be the weighted average of your previous rates, rounded up to the next one-eighth of 1%.
Your new loan term could range from 10 to 30 years, depending on your total student loan balance. If you extend your loan term, it can lower your monthly payments but the total amount of interest you’ll pay will increase.
It’s also important to note that when loans are consolidated, any unpaid interest is added to your principal balance. The combined amount will be your new loan’s principal balance. You’ll then pay interest on the new, higher balance. Depending on how much unpaid interest you have, consolidation can cost you more over the life of your loan.
Recommended: Student Loan Consolidation vs Refinancing
Factors to Evaluate Before Refinancing
Refinancing is the process of taking out a new student loan from a private lender (ideally with better rates and terms) and using it to pay off your existing federal and/or private student loans. Generally, refinancing only makes sense if you can qualify for a lower rate. Here are some things to consider before you explore refinancing your student loans.
Current Interest Rates and Loan Terms
Refinancing can potentially allow you to lower your monthly payment by getting a lower interest rate than what you currently have, extending your loan term, or both. Keep in mind, though, that lengthening your loan term may mean paying more in interest over the life of the loan.
Credit Score Requirements
Not every borrower is eligible for refinancing. To get approved, you typically need a credit score of at least 650. A score in the 700s, however, gives you a much better chance of qualifying.
Your credit score also helps determine your new interest rate. Generally, the better your credit score is, the more competitive your interest rate will be. If you can’t qualify for an attractive refinance on your own, you might want to recruit a cosigner who has excellent credit.
Potential Savings Through Refinancing
One of the main reasons people refinance their existing student loans is because they can find a lower interest rate through a new lender. This can help you save money, potentially thousands over the life of your loan. A lower rate can also help you pay off your loan faster, or lower the amount you pay each month.
While student loan interest rates have been on the rise in the last couple of years, you may still be able to do better if your financial situation has considerably improved since you originally took out your student loans or you have higher-interest federal student loans.
Impact on Loan Forgiveness Options
Refinancing federal loans makes them ineligible for federal forgiveness and protections. If you think you may benefit (or are currently working towards) public service, teacher, IDR, or other federal forgiveness program, it may not be a good idea to refinance your federal student loans. Doing so will bar you from getting your federal loans forgiven.
Refinancing also makes your loans ineligible for government deferment and forbearance programs, which allow you to temporarily postpone or reduce your federal student loan payments. However, many private lenders offer their own deferment and forbearance programs.
💡 Quick Tip: It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.
The Takeaway
Federal loan programs, including loan consolidation, graduated repayment plans, income-driven repayment plans, and forgiveness programs can make repaying your federal student loans more manageable after you graduate.
If you have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans, however, it can also be worth looking into private student loan refinancing.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.
FAQ
Does it make sense to refinance student loans?
Refinancing student loans can make sense if you are able to qualify for a lower interest rate through a new lender. This can help you save money, potentially thousands over the life of your loan. A lower rate can also help you pay off your loan faster, or lower the amount you pay each month.
Keep in mind that refinancing federal student loans with a private lender means giving up federal protections and relief programs.
Under what circumstances would you want to consider refinancing a debt?
You might consider refinancing a debt if your financial situation has improved since you originally got the loan and can now qualify for a lower rate. Refinancing also allows you to extend your loan term, which can lower your payments. Keep in mind, however, that a longer term generally means paying more in overall interest.
Which is a downside of refinancing out of federal student loans?
The biggest downside of refinancing your federal student loans is forfeiting federal protections, such as income-driven repayment plans and loan forgiveness options.
Photo credit: iStock/Drazen Zigic
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.
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Boston, MA, is a bustling waterfront city with nearly 700,000 residents. It is renowned for its prestigious universities, world-class museums, historic sites, and thriving arts scene. Boston is a beacon of history, innovation, and New England charm, with iconic landmarks such as the Freedom Trail, Faneuil Hall Marketplace, and Fenway Park.
If you’re considering living in Boston, the average rent for a one-bedroom apartment is $3,782. It’s no surprise that Boston is an expensive place to live, with many neighborhoods rent being more than the city’s average.
However, if you’re looking to rent an apartment in Boston and want a luxury apartment with water views or something in the heart of the city, then you’re in the right place. At ApartmentGuide, we’ve collected 14 of the most expensive neighborhoods in Boston to rent an apartment.
14 Expensive Neighborhoods in Boston, MA
From Columbia Point to Fort Point, there are plenty of amazing Boston neighborhoods to call home. Whether you’re looking for a luxury unit with plenty of amenities or a neighborhood with waterfront views, you’ll find them on this list.
1. Columbia Point 2. Fort Point 3. Financial District 4. D Street – West Broadway 5. Seaport District 6. Back Bay 7. Prudential – St. Botolph 8. West Fens 9. Harrison Lenox 10. Back Bay East 11. Central 12. Downtown 13. Shawmut 14. South End
Read on to see what each neighborhood has to offer its residents.
1. Columbia Point
Average 1-bedroom rent: $4,428 Apartments for rent in Columbia Point
Columbia Point is the most expensive neighborhood in Boston, as the average rent for a one-bedroom unit is $4,428. There are plenty of reasons why this neighborhood draws residents. Columbia Point is near attractions like the John F. Kennedy Presidential Library and Museum, the Commonwealth Museum, and the University of Massachusetts Boston. The area also has views of the Boston Harbor, making apartment views stunning. If you’re exploring the area, you can find plenty of waterfront trails. For renters living in Boston without a car, there are several bus stops and trains close to Columbia Point.
2. Fort Point
Average 1-bedroom rent: $4,097 Apartments for rent in Fort Point
Fort Point is a bustling area that’s south of downtown Boston. This former industrial neighborhood is near lots of attractions like the Institute of Contemporary Art and the Boston Children’s Museum. Fort Point is well-known for its waterfront spaces like Martin’s Park and the charming shops and cafes around Congress Street. The average rent for one-bedroom apartments is $4,097, which is about $300 above the city’s average, making it a pricier neighborhood. However, Fort Point’s location and amenities may be worth it.
3. Financial District
Average 1-bedroom rent: $4,087 Apartments for rent in Financial District
With an average one-bedroom rent of $4,087, theFinancial District is the third most expensive neighborhood in Boston. This neighborhood has plenty of historic buildings in styles like Georgian and Federal, as well as properties with picturesque views of Boston Harbor. Financial District is also near the highway and subway stations, making it a convenient location for commuters. If you’re looking for a relaxing afternoon, you can find the Norman B. Leventhal Park and Rose Fitzgerald Kennedy Greenway or museums like the Boston Tea Party Ships & Museum.
4. D Street – West Broadway
Average 1-bedroom rent: $4,025 Apartments for rent in D Street – West Broadway
D Street – West Broadway is the next most expensive neighborhood in Boston. This neighborhood is known for its central location near the Boston Convention and Exhibition Center and the Boston Tea Party Ships & Museum. One of Boston’s charming neighborhoods, it’s no wonder that this is a popular area. D Street – West Broadway has a lot of shops and restaurants, reflecting Boston’s vibe. Make sure to check out places like Amrheins, Lincoln Tavern & Restaurant, and Harpoon Brewery & Beer Hall.
5. Seaport District
Average 1-bedroom rent: $3,972 Apartments for rent in Seaport District
Just about 2 miles from Downtown, Seaport District is a stellar neighborhood if you want to live close to Downtown Boston and the waterfront. While more expensive, the perks of living in the Seaport District may help offset the costs. For example, you can live in Boston without a car as the Seaport District is near subway routes. You can also walk to attractions like Fan Pier Park, Pier 4, and Leader Bank Pavilion. The views in the Seaport District are also gorgeous, as you can see the Boston Harbor.
6. Back Bay
Average 1-bedroom rent: $3,945 Apartments for rent in Back Bay
Next up is Back Bay, the sixth most expensive neighborhood in Boston. Back Bay is full of history and charm with tree-lined streets, historic brick buildings, and museums like Newbury Street and Trinity Church. This area has plenty of parks, restaurants, and attractions, like the Boston Public Library, so you’ll have lots to explore. Make sure to enjoy the outdoors at the Charles River Esplanade or grab a meal at one of the neighborhood restaurants like Saltie Girl and Joe’s on Newbury. It’s no wonder the rents are above Boston’s average.
7. Prudential – St. Botolph
Average 1-bedroom rent: $3,945 Apartments for rent in Prudential – St. Botolph
Located in the Back Bay area, Prudential – St. Botolph is the next neighborhood on our list. Prudential – St. Botolph has a bustling atmosphere with venues, local cafes, and restaurants, such as The Friendly Toast and Flour Bakery + Cafe. The area is well-known for its shopping centers like Prudential Center and Copley Place, so make sure to explore all the stores. You can also check out some of Prudential – St. Botolph’s green spaces like Titus Sparrow Park.
8. West Fens
Average 1-bedroom rent: $3,925 Apartments for rent in West Fens
West Fens takes the eighth spot on our list of most expensive neighborhoods in Boston. The average rent for a one-bedroom unit is roughly $200 more than the city’s average. West Fens is a great option if you’re looking to be near attractions like Fenway Park, MGM Music Hall at Fenway, and James P. Kelleher Rose Garden. The area has plenty of local restaurants and shops, particularly along Boylston Avenue. West Fens is also great if you don’t have a car, as there are plenty of transit stops in the area. It’s also near some of the most affordable neighborhoods in Boston.
9. Harrison Lenox
Average 1-bedroom rent: $3,912 Apartments for rent in Harrison Lenox
A well-loved Boston neighborhood, Harrison Lenox is the next area. Harrison Lenox is home to the Boston University School of Medicine and the Frederick Douglass Square Historic District. You’ll find there are countless historic buildings in Harrison Lenox, so make sure to explore the area’s charm. You can also check out the SoWa Open Market, a Sunday farmers’ market that operates from May to October. If you need to commute to work, there are many options, as the Massachusetts Turnpike is nearby.
10. Back Bay East
Average 1-bedroom rent: $3,900 Apartments for rent in Back Bay East
The tenth most expensive neighborhood in Boston is Back Bay East. This area has a vibrant feeling with its popular restaurants and quirky shops, like Jonquils Cafe and Bakery, Tatte Bakery & Cafe, and Lolita Back Bay. You can find parks like the Commonwealth Avenue Mall and the Charles River Esplanade, perfect for enjoying a sunny day in Boston. Back Bay East is also close to the Boston Marathon finish line, providing residents with lots of opportunities to enjoy their neighborhood.
11. Central
Average 1-bedroom rent: $3,891 Apartments for rent in Central
Number 11 on our list is Central, which encompasses several areas like Downtown, West End, and the Waterfront. This neighborhood is fantastic if you’re looking for a neighborhood with charming streets and historic landmarks. There are plenty of cozy cafes and lively restaurants alongside major attractions like the Old State House, Faneuil Hall Marketplace, and the Paul Revere House. This is an excellent area if you’re looking to be close to plenty of activities and immerse yourself in Boston’s history.
12. Downtown
Average 1-bedroom rent: $3,872 Apartments for rent in Downtown
Taking the 12th spot is Downtown Boston. The average rent for a one-bedroom apartment is $3,872, compared to the city’s average of $3,000. Downtown’s expensive rent may be offset by its famous attractions like Faneuil Hall, the Quincy Market, the Boston Athenaeum, and the New England Aquarium. The convenience of these activities might be worth it to move to the neighborhood. You can find countless hidden gems, historic spots, and famous restaurants in the neighborhood – all showcasing Boston’s charming heritage.
13. Shawmut
Average 1-bedroom rent: $3,823 Apartments for rent in Shawmut
Shawmut is a popular area to consider living in Boston, which is close to Downtown. With attractions like Tremont Street and Peter’s Park and an average one-bedroom rent of $3,823, there are many reasons this expensive area may be for you. Be sure to check out nearby neighborhoods like Columbus and South End to get the most out of the area.
14. South End
Average 1-bedroom rent: $3,803 Apartments for rent in South End
Taking the final spot on our list of expensive neighborhoods in Boston is the South End. This area has an average one-bedroom rent of $3,803, meaning it’s closer in price to the city’s average. If you plan to rent in the South End, make sure to check out the SoWa Open Market and the South End Buttery to immerse yourself in the neighborhood’s vibrant atmosphere. You’ll never tire of exploring the charming streets filled with Victorian-style row homes, galleries, and pubs.
Methodology: Whether a neighborhood has an average 1-bedroom rent price over the city’s average. Average rental data from Rent.com in March 2024.
Hey, I’ve just been featured on CNBC and I want to say hello to all of my new readers. You can read the CNBC article here – I made $40,000 a month from 3 income streams during a 4-month cruise around the world—here’s how If you are a new visitor – welcome to Making Sense…
Hey,
I’ve just been featured on CNBC and I want to say hello to all of my new readers.
You can read the CNBC article here – I made $40,000 a month from 3 income streams during a 4-month cruise around the world—here’s how
If you are a new visitor – welcome to Making Sense of Cents!
I have received many emails about how I was able to afford this trip. I have a free How To Start A Blog course that you can sign up for here. I also talk about this below and how I’ve been able to earn over $5,000,000 blogging over the years.
If you want to read more about my world cruise trip, I recommend reading Around-The-World Cruise With A Kid (25+ Countries In 4 Months!).
Here are some blog posts that you may find helpful and enjoy:
If you have any questions, please leave a comment below or send me an email.
Thanks for stopping by.
-Michelle Schroeder-Gardner
—-
In addition to reading the CNBC article linked above, I also want to talk about how I grew a blog that has earned me over $5,000,000. I know I will get a lot of questions, so I figured it’s best to lay it all out right here 🙂
What started as just a hobby turned into one of the most life-changing things I’ve ever done – that’s starting my blog, and learning how to make money with it.
Since learning how to monetize a blog over 10 years ago, I have now earned over $5,000,000 from my site. This is still hard for me to believe, and I’m the one who’s lived it!
In the beginning, all I was doing was tracking my own personal finance progress as I finished school and started paying off my student loans. Blogging was a very new concept to me at the time – I heard about it from a magazine – and people were just learning how to monetize blogs back in 2011.
Most bloggers started back then with display ads and sponsored posts, but the options have only increased.
Because of all of the new ways to make money blogging, like affiliate income and selling your own products, you can make somewhat passive income as a blogger.
Passive income is my favorite way to make money because it makes blogging even more flexible and something I can do as I work from home, travel, and work whenever I want.
Blogging has changed my life for the better, and I’m now earning thousands of dollars a month doing something I love.
Learning how to monetize a blog takes work and time, but it’s 100% possible to do. I started earning money after just six months of blogging, and I didn’t even set out to make money when I created Making Sense of Cents. Just think of the potential if you start out knowing that making money blogging is possible!
Starting my blog is one of the best things I’ve ever done for my work, personal, and financial life. And, I urge anyone who is interested to start a blog and learn how to monetize it.
How I earned my first income from blogging
Many of my readers have heard this story, but I love sharing it because I started out like many of you, except I had no idea that blogs could make money. When I started Making Sense in August of 2011, I simply wanted a way to keep track of my financial progress and meet others who had similar goals.
As I started getting to know other bloggers in the community, a blogger friend of mine connected me with an advertiser who was willing to pay me $100 for an advertisement.
I couldn’t believe someone would pay me $100 to advertise on my site!
While it wasn’t a lot of money, especially considering the amount of time and work I put towards my blog in those 6 months, it was very motivating to see that something I loved doing could actually make money.
After that first $100, I started doing a lot of research on how to monetize a blog, and my blogging income quickly grew from there.
One year after I started my blog, I was earning around $1,000 a month, and I was making around $10,000 monthly two years after I started Making Sense of Cents.
My income only continued to grow, and I am still earning a healthy income from this website today.
How To Start A Blog FREE Course
If you want to learn how to monetize a blog and you haven’t started your blog, then I recommend starting with my free blogging course How To Start A Blog FREE Course.
Here’s a quick outline of what you will learn in this free course:
Day 1: Reasons you should start a blog
Day 2: How to determine what to blog about
Day 3: How to create your blog – in this lesson, you will learn how to start a blog on WordPress, and my tutorial makes it very easy to start a blog
Day 4: How to monetize a blog – this is where you learn about the many different ways to make money blogging!
Day 5: My tips for earning passive income from your blog
Day 6: How to grow your traffic and followers
Day 7: Miscellaneous blogging tips that will help you be successful
This is delivered directly to your email inbox, and you will learn how to grow a blog from scratch.
Start with a plan for your blog
Sure, you can start on a whim, and that’s kind of what I did, haha.
But, I do think that creating a plan is a good idea if you want to learn how to monetize a blog. This can help you get an organized start, identify your blog’s niche, decide on your blogging goals, find opportunities for blogging income, and more.
It wasn’t until 2015 that I finally created a blogging plan (that’s 4 years after I started!), and my blog income grew significantly after that.
I credit that growth to creating a plan!
Having a plan would have been a huge help in the beginning, and I wish I would have started with one. I probably missed some income opportunities because I had no real plan or direction in the first couple of years.
Since creating a blogging plan, I became more focused on goals and motivated toward improving and building Making Sense of Cents.
Here are some questions that you may want to ask yourself when creating a plan for your blog:
What will you write about on your blog?
How do you want to make money with your blog?
What will you do to reach readers on your blog?
What are your goals for your blog?
Thinking about, researching, and answering these questions will help guide you on your journey and help you decide what to do next.
Write high-quality and engaging blog posts
Your blog’s content is extremely important. This will be what attracts your readers, has them coming back for more, earns you blogging income, and more.
Now, you don’t need to be an expert or need a degree to start talking about a subject, but you do need to be knowledgeable or interested in what you are talking about. And, always be truthful! This will show in your writing and actually help your readers.
To write high-quality content on your blog, here are some tips:
Figure out exactly what it is that you’d like to write about and why you think the content is important. Being passionate about a subject will give you the motivation to write content that people want to read. Just think about it: If you don’t enjoy writing your content, then why should you expect someone else to want to read it?
Ask your audience what they want you to write about. Many of my best ideas come from expanding on reader questions.
Research your blog topics by reading news articles, going to a library, searching for statistics and interesting facts, and more.
If your blog posts are more personal in nature, then dig deep and share your thoughts, and be personable in your writing – your readers want to hear your story!
Write long, helpful content. Sure, some great content may only be a few hundred words, but to be as helpful as possible, long content is usually the best. My content is usually over 2,000 words, and this article is around 5,000. Now, you don’t want to just write a lot of fluff content in order to get more words in – you want to actually be helpful!
Reread your content. I used to read my content 10 times or more before I would publish it. Now, I have an editor who makes sure I’m always publishing high-quality content.
Network, network, network
If you want to learn how to monetize a blog, then networking can be extremely helpful.
Networking can mean:
Making friends with other bloggers
Attending blogging conferences
Sharing content that other bloggers have written
Following other bloggers in your niche on social media
Signing up for other bloggers’ newsletters
Joining blogging groups on Facebook
Some bloggers don’t do any of these things and purely see other bloggers as competition. I don’t believe this is the correct way to approach blogging because you will hold yourself back immensely!
Networking is important because it can help you enjoy blogging (friends are nice to have, right?!), teach you new ideas (such as how to make money blogging or how to grow a blog), make valuable connections, and more.
Keep in mind that networking is even how I earned my very first $100 blogging. My blogging friend connected me with an advertiser, which helped changed my blogging journey.
I have learned a lot about blogging from the blogging community, and the people I’ve connected with have been a tremendous support as I’ve grown my blog.
Be prepared to put in a lot of hard work
Starting a blog is relatively easy. But, growing and learning how to monetize a blog takes a lot of work.
You’ll have to:
Start a blog, design it, create social media accounts, and more
Write high-quality blog posts
Attract an audience of readers
Monetize your blog
Continue learning about blogging
And more
Even when I was just a new blogger and had no plans of making money blogging, I was still spending well over 10 hours a week on Making Sense of Cents.
When I was working my full-time day job and earning an income from my blog, I was working around 40-50 hours a week on my blog on top of my day job!
Now that I blog full-time, my hours vary. Some months I hardly work, and there are other months that I may work 100 hours a week.
It’s not easy, and there’s always something that needs to be done.
But, I absolutely love blogging, which makes the hard work a little less tough.
How to monetize a blog: 4 different ways
There are many different ways you can monetize your blog, including:
Affiliate marketing
Advertisements and sponsorships
Display advertising
Create your own product, such as an ebook, course, physical or online products, and more
You could choose to monetize your blog using all of these methods, or even just one. It’s just a personal decision.
For me, I like to be diversified and monetize in many ways, so I do them all.
Below, I am going to dive a little deeper into each way to make money blogging.
1. Affiliate marketing
Affiliate marketing can be a great way to make money blogging because if there is a product or company that you enjoy, all you have to do is review the product and share a unique affiliate link where your readers can sign up or make a purchase.
In fact, this is my favorite way to monetize a blog. I enjoy it because it can be quite passive – I can create just one blog post and potentially earn an income from it years later. This is because even though a blog post may be older, I am still constantly driving traffic to it and readers are still purchasing through my affiliate links.
Affiliate marketing is a blog monetization method where you share a link to a product or company with your readers in an attempt to make an income from followers purchasing the product through your link.
Here are some quick tips so that you can make affiliate income on your blog:
Use the Pretty Link plugin tocleanupmessy-lookingaffiliatelinks. I use this for nearly all of my affiliate links because something like “makingsenseofcents.com/bluehost” looks much better than the long, crazy-looking links that affiliate programs usually give you.
Provide real reviews. You should always be honest with your reviews. If there is something you don’t like about a product, either don’t review the product at all or mention the negatives in your review.
Ask for a commission increase. If you are doing well with a particular affiliate program, ask to increase your commissions.
Build a relationship with your affiliate manager. Your affiliate manager can supply your readers with valuable coupons, commission increases, bonuses, and more.
Write tutorials. Readers want to know how they can use a product. Showing them how to use it, how it can benefit them, and more are all very helpful.
Don’t go overboard. There is no need to include an affiliate link 1,000 times in a blog post. Include them at the beginning, middle, and end, and readers will notice it. Perhaps bold it or find another way for it to stand out as well.
You can learn more about affiliate marketing strategies in my course Making Sense of Affiliate Marketing.
2. Advertisements and sponsorships
Advertising on a blog is one of the first ways that bloggers learn how to monetize a blog. In fact, it’s exactly how I started!
This form of blogging income is when you directly partner with a company and advertise for them on your website or social media accounts.
You may be writing a review for them, a tutorial, talking about their product or company, taking pictures, and so on.
If you want to learn how to increase your advertising-income, I recommend taking my Making Sense of Sponsored Posts course.
3. Display advertising
Display advertising is one of the easiest ways to make money blogging, but it most likely won’t earn you the most, especially in the beginning.
I’m sure you’ve seen display ads before. They may be on the sidebar, at the top of a post, within a blog post, and so on.
The ads are automatically added when you join an advertising network, and you do not need to manually add these ads to your blog.
Your display advertising income increases or decreases almost entirely based on your page views, and once you place the advertisement, there’s no direct work to be done.
If you want to learn how to monetize a blog through display advertising, then some popular networks include Adsense, MediaVine, and AdThrive.
Personally, I use AdThrive for my display advertising network. I don’t have many display advertisements on my blog, but it is easy income.
4. Sell your own products
Another popular way to monetize a blog is to create a sell your own products.
This could be an online product, something that you ship, and so on, such as:
An online course
A coaching program
An eBook
Printables
Memberships
Clothing, candles, artwork, hard copy books, and anything else you can think of
And the list goes on and on. I have seen bloggers be very successful in selling all kinds of things on their blogs.
What’s great about selling your own product is that you are in complete control of what you are selling, and your income is virtually unlimited in many cases.
I launched my first product about 5 years after I created Making Sense of Cents, which was a blogging course called Making Sense of Affiliate Marketing. I regret not creating something sooner because this has been an excellent source of income and has helped many people along the way.
Have an email list
If you really want to learn how to monetize a blog, I recommend that you start an email list from the very beginning.
I waited several years to start my email list, and that was a huge mistake!
Here’s why you need an email list right away:
Your newsletter is YOURS. Unlike social media sites, your newsletter and email subscribers are all yours, and you have their undivided attention. You don’t have to worry about algorithms not displaying your content to readers, and this is because they are your email subscribers. You aren’t fighting with anyone else to have them see your content.
The money is in your email list. I believe that email newsletters are the best way to promote an affiliate product. Your email subscribers signed up to hear what YOU have to write about, so you clearly have their full attention. Your email list, over any other promotional strategy, will almost always lead to more income and sales.
Your email subscribers are loyal to you. If someone is allowing you to show up in their inbox whenever you want, then they probably trust what you have to say and enjoy listening to you. This is a great way to grow an audience and a loyal one at that.
Email is a great way to deliver other forms of content. With Convertkit, I am able to easily create free email courses that are automatically sent to my subscribers. Once a reader signs up, Convertkit sends out all the information they need in whatever time frame I choose to deliver the content.
Attract readers
As a new blogger, you’ll want to find ways to attract a readership to your blog and your article.
No, you don’t need millions and millions of page views to earn a good living from blogging. In fact, I know some bloggers who receive 1,000,000 page views yet make less money than those with 100,000 monthly page views.
Every website is different, but once you learn what your audience wants, you can start to really make money blogging, regardless of how many page views you receive.
Having a successful blog is all about having a loyal audience and helping them with your content.
Even with all of that being said, if you want to learn how to monetize a blog, learning how to improve your traffic is valuable. The more loyal and engaged followers you have, the more money you may be able to make through your blog.
There are many ways to grow your readership, such as:
Write high-quality articles. Your blog posts should always be high-quality and helpful, and it means readers will want to come back for more.
Find social media sites to be active on. There are many social media platforms you can be active on, such as Pinterest, Facebook, Twitter, Instagram, TikTok, Youtube, and others.
Regularly share new posts. For most blogs, you should publish content at least once a week. Readers may forget about you if you go for weeks or months at a time without a blog post.
Guest post. Guest posting is a great way to reach a new audience, as it can bring new readers to your blog who will potentially subscribe to it.
Make sure it’s easy to share your content. I love sharing posts on social media. However, it gets frustrating when some blogs make it more difficult than it needs to be. You should always make sure it’s easy for readers to share your content, which means your social media icons should be easy to find, all of the info input and ready for sharing (title, link, and your username tagged), and so on. Also, you should make sure that when someone clicks on one of your sharing icons the title isn’t in CAPS (I’ve seen this too many times!).
Write better titles. The title of your post can either bring readers to you or deter them from clicking over. A great free tool to write better headlines is CoSchedule’s Headline tool.
Apply SEO strategies. SEO (search engine optimization) is not something I can teach in this small section, but I go over it below in another section.
Have a clean and user-friendly blog design. If you want more page views, you should make it as easy as possible for readers to navigate your blog. It should be easy for readers to find your blog homepage, search bar, blog posts, and so on.
Now, I also want to talk about helpful resources, courses, and more that can help you to learn how to grow your page views on your blog.
Below are some of my favorite blogging resources to help you improve your traffic:
Grow through SEO
SEO (search engine optimization) is how you get organic search traffic to your blog.
When you search a phrase on Google, you’ll see a bunch of different websites as the results. This is the result of these websites applying SEO strategies to their blog.
This is a great way for readers to find your blog, and SEO is important to pay attention to as you learn how to monetize a blog!
Below are some of my favorite SEO resources:
Stupid Simple SEO: This is my favorite overall SEO course, and one of the most popular for bloggers. I highly recommend taking it. I have gone through the whole course, and I constantly refer back to it.
Easy On-Page SEO: This is an easy-to-follow approach to learning on-page SEO so your articles can rank on Google. I have read this ebook twice, and it is super helpful.
Easy Backlinks for SEO: This ebook will show you 31 different ways to build backlinks, which are needed for SEO.
How To Get 50,000 Pageviews per Month With Keyword Research: This ebook shares the steps for keyword research so that you can get SEO traffic to your website.
Common questions about how to monetize a blog
Below, I’m going to answer some questions I’ve received about how to start a blog such as:
How many views do you need to monetize a blog?
How do beginner bloggers make money?
Why do bloggers fail?
How many posts should I have before I launch my blog?
How many times a week should I post on my blog?
How many views do you need to monetize a blog?
The amount of page views needed to make money blogging varies, and there is no magic number that you should be aiming for.
This is because it depends on so many factors, such as how you will monetize your blog, your niche, the number of email subscribers you have, the quality of your website, and more.
You may see success with 10,000 page views a month, or you may see success with over 100,000 page views a month. It simply depends on the factors above.
How do beginner bloggers make money?
Beginner bloggers can make money in many different ways, such as display advertising, affiliate marketing, creating their own products, and sponsorships.
You can start any of these right from the very beginning.
Display advertising is usually the easiest way to begin monetizing a blog, but the payoff is not very high, especially in the beginning when your page views are not high.
How many posts should I have before I launch my blog?
I recommend just launching your blog as soon as you have one blog post and a design. Building a huge backlog of blog posts isn’t usually needed, and it can prevent you from ever getting started!
How many times a week should I post on my blog?
The more blog posts you have, then the more traffic you may get. That’s because it’s more opportunities to show up in Google searches or share your posts on social media.
I recommend publishing a new blog post at least once a week. Anything less isn’t advised.
Publishing blog posts consistently is smart because readers know to expect regular content from you.
Why do bloggers fail?
Bloggers fail for many different reasons. These reasons may include:
Giving up too soon. It takes time to make money blogging, and sadly, many people give up just a few months into starting a blog.
Not publishing consistently. I recommend publishing content at least once a week, as described in the previous section. Some new bloggers may go months without publishing, and this will take them much longer to make money blogging as they are simply not dedicating enough time to their blog.
Not spending enough time learning about blogging. Blogging is not as easy as you may think. There is a lot to learn in order to make it work. You may need to learn about how to grow your blog’s traffic, how to monetize a blog, how to write high-quality content, and more.
Not having your own domain and self-hosting. If you want to make money blogging, I highly recommend owning your domain name and being self-hosted. The longer you put this easy step off, the longer it will most likely take for you to make money blogging. You can learn more at How To Start a WordPress Blog.
And much more. Blogging is like any business – there are things to learn, things to improve on, and more.
How do I start a blog?
If you have any other questions related to starting a blog, I recommend checking out What Is A Blog, How Do Blogs Make Money, & More. In this article, I answer more questions related to blogging such as:
How do I come up with a blog name?
What blogs make the most money?
How do you design a blog?
How many views do you need to make money blogging?
How many blog posts should I have before launching?
Buying your first home can be tedious and overwhelming.
While it’s exciting to visit properties and daydream about your dream home, getting over the financing hurdles is another story. But don’t fret.
This comprehensive guide for first-time homebuyers will walk you through the entire process from start to finish.
Benefits of Being a First-Time Homebuyer
As a first-time homebuyer, you may feel a mix of excitement and apprehension. While the home buying process can seem overwhelming, it’s important to recognize the numerous benefits that come with this milestone.
Financial Assistance
First-time homebuyers have access to several financial assistance programs that can make homeownership more affordable. These include down payment assistance programs, low-interest mortgage loans, and grants specifically designed for first-time buyers. Some of these programs are offered by state and local governments, while others are provided by non-profit organizations or private lenders.
Lower Down Payments
Several loan programs offer lower down payment requirements for first-time homebuyers. The FHA loan, for example, requires as little as 3.5% down if your credit score is 580 or higher. The USDA and VA loans even offer zero down payment options in some cases.
Access to Educational Resources
There’s a lot to learn when you’re buying a home for the first time, but fortunately, there are plenty of resources available. Many organizations offer homebuyer education courses that can help you understand the process and make informed decisions. Some lenders and assistance programs require you to take one of these courses, but even if it’s not mandatory, it can still be a valuable resource.
Before Starting Your Home Search
Check Your Credit
Not only will your credit score play a considerable factor in whether you’re approved for a mortgage, but it will also determine your interest rate.
A small increase or decrease in interest rates may not seem like a big deal. However, mortgage loans are for a hefty sum and for an extended period of time. So, a slight increase or decrease equates to thousands of dollars more spent or saved over the life of the loan.
To have the best chance of being approved for a home loan, you should aim for a credit score of at least 620. It’s possible to get approved for select home loan programs with a score as low as 580, but you may have fewer lenders to choose from.
Run the Numbers
It’s tempting for first-time homebuyers to start searching for homes when they know their credit score is up to par. But that’s probably not a good move until you determine how much home you can afford. Yes, the loan officer will give you a figure when you obtain a preapproval, but that amount isn’t always indicative of what you can afford.
Why so? Well, they focus on the debt-to-income (DTI) ratio to get an idea of a loan amount you qualify for. According to the Consumer Financial Protection Bureau, lenders prefer a DTI ratio of 43% or lower with your new mortgage payment. To illustrate:
CURRENT MONTHLY DEBT
GROSS INCOME
DEBT-TO-INCOME RATIO
MAXIMUM MORTGAGE PAYMENT (USING 43% RECOMMENDATION)
$1,000
$4,000
25%
$720
$2,000
$6,000
33%
$580
$3,000
$10,000
30%
$1,300
Note: Debt-to-Income Ratio = Aggregate Amount of Monthly Debt / Gross Income
The problem is that it fails to consider any expenses unrelated to debt. And if you have hefty insurance, childcare, or even grocery bills, that could be a major concern.
So, your best bet is to look at your current budget and come up with a realistic figure for your new mortgage payment. But don’t forget to keep the recommended DTI ratio in mind.
Explore Mortgage Options
There are several mortgage options on the market for first-time homebuyers, but the most prevalent are:
Conventional Loans
A conventional mortgage is a type of home loan that is not insured or guaranteed by the government. It’s typically offered by a private lender, such as a bank or credit union, and is the most common type of mortgage used to purchase a home.
Conventional mortgages typically require a down payment of at least 3% of the purchase price of the home. Borrowers typically must have a credit score of 620 or higher and a DTI ratio of 36% or lower to qualify. If you have bad credit or are unable to make a large down payment may have a harder time qualifying for a conventional mortgage.
If the loan amount is over $726,200, it becomes a jumbo loan and requires a higher down payment.
FHA Loans
An FHA loan is a type of home loan insured by the Federal Housing Administration (FHA), a government agency within the U.S. Department of Housing and Urban Development (HUD).
FHA loans are designed to make it easier for people to buy homes, especially for first-time homebuyers. They offer lower down payment requirements and more flexible credit guidelines than conventional mortgages.
The minimum credit score required for an FHA loan is 500. If your credit score is between 500 -579, the down payment is 10%. However, if you have a credit score of 580 or above, the down payment is 3.5% of the purchase price.
VA Loans
VA Loans are insured by the Department of Veterans Affairs. They don’t require a down payment and are easier to qualify for than conventional loan products. However, you must be an active-duty member of the armed forces. Surviving spouses also qualify.
USDA Loans
A USDA loan is a type of mortgage offered by the U.S. Department of Agriculture (USDA) to low- and moderate-income borrowers who are looking to buy a home in a rural or suburban area.
See also: 14 First-Time Home Buyer Grants and Programs
Check Out Our Top Picks for 2024:
Best Mortgage Lenders
Most mortgages have a 30 or 15-year term. The latter will cost you more per month, but you’ll save a load of cash on interest.
You can also choose from a fixed or adjustable-rate mortgage (ARM). Fixed-rate mortgages have the same interest rate for the duration of the loan. But ARMs typically start with a lower interest rate for a set amount of time. In fact, they usually span from five to ten years and then adjust depending on the housing market.
Some first-time homebuyers choose ARMs over fixed-rate mortgages because it gives them the option to make a smaller monthly payment in the first few years. It could also mean that you can qualify for a more expensive home. But, be careful not to get too overextended, as erratic market behavior could cause the rate to skyrocket.
Get Preapproved
This is one of the more time-consuming parts of the entire mortgage process for a first-time home buyer. The good news is you don’t have to settle for the first offer that comes your way out of fear that your credit score will take a hit.
“FICO Scores ignore [mortgage] inquiries made in the 30 days prior to scoring,” according to myFICO. So, you won’t be penalized for multiple inquiries.
So, start by researching mortgage lenders that you may be interested in working with. You could also solicit the help of a mortgage broker if you’re strapped for time or want someone to do the legwork for you.
Once you’ve settled on a few lenders, be prepared to provide the following to get preapproved:
Financial statements to confirm your assets, including retirement accounts and real estate
Recent bank statements
Last two pay stubs
W-2s from the last two years
They will also pull your credit report and credit scores. If you qualify, the mortgage lender will then provide you with a preapproval letter, valid for a certain time period, that specifies how much you’re eligible for.
Save Up for a Down Payment and Closing Costs
During the preapproval process, the lender should have discussed loan options that could be a good fit for you. They should also have communicated how much you will need for a down payment and closing costs.
While some sellers may be willing to cover closing costs, be prepared to provide earnest money to secure your offer. And you may need a large down payment if you’re taking out a jumbo loan, or don’t qualify for the FHA or VA loan program. If that’s the case, now’s the time to figure out a plan for it.
If the seller is not paying closing costs, expect to pay between 2% and 5% of the sales price. And if a hefty down payment isn’t required, it’s not a bad idea to bring money to the table. Doing so allows you to reduce the Loan-to-Value, which positions you as less risky to the lender.
You may also be able to avoid private mortgage insurance (PMI), which is required until you reach 20% in equity, and possibly qualify for a reduced interest rate.
How to Find the Perfect Home
Go Home Shopping
All squared away with a preapproval and planned to save up the cash you need? Now, it’s time to go home shopping. But before you go, you have to decide if you want to enlist the assistance of a real estate agent.
It’s possible to find a slew of listings within your price range on the web with minimal effort. However, real estate agents have access to a system that could expand your reach. Even better, they could be integral in helping you choose a home that’s a good buy and negotiating the final purchase price.
And the seller’s agent pays their commission, so no need to worry about forking over extra cash. Just be sure to hire a real estate professional that is seasoned and reputable.
Now for the fun part: home shopping. Be careful not to judge a home solely by its appearance. Some other important factors to keep in mind:
Taxes: are the property taxes affordable or beyond what you can comfortably afford? (You can roll property taxes and homeowners insurance into an escrow account, but they can easily make or break your budget if the figures are steep).
Location: is the home in an area that has historically held its value? Is the location optimal for your commute to and from work?
Crime: is it a high crime area or is it relatively safe?
Condition: how old is the property? Does it need tons of repairs, or is it close to being move in ready?
Floor plan: is the floor plan feasible or ideal for your situation? Would it be appealing to other buyers if you had to sell?
School district: how are the schools? Have they received a good rating, or do they struggle to stay afloat?
All of these factors can have an effect on the value of the property over time.
Submit an Offer
You’ve found the perfect home, and you’re ready to sign on the dotted. Before you can finalize the paperwork and move in, there’s one more important step. And that’s making the offer. Even if the sales price seems fair, you may need to make an offer that’s higher or lower to snag the home.
Why so? Well, there could be a slight or drastic bidding war going on, and the only way for you to win is to beat out the competition. Or maybe your real estate agent did some research and determined the asking price was a bit high based on similar properties in the area or the home’s current condition.
Either way, you want to submit an offer that stands out and gets accepted. Your real estate agent will be able to do so on your behalf. But if you don’t have a real estate agent, check out these letters from Trulia to get you started.
The Mortgage Process
Even after your offer is accepted, there’s still more work to do. You’re not done just yet! It’s time to move on to the mortgage process.
Remember that preapproval letter? The lender will make sure all the information you initially provided is accurate through a process called underwriting.
Depending on how long it’s been since you were preapproved, you may be asked to provide updated bank statements or pay stubs.
The faster you submit the requested information, the quicker you’ll get a response. So, don’t drag your feet if you want a closing date that’s sooner than later.
Home Inspections and Appraisals
Before you close on the home, you will need to have a home inspection and appraisal complete.
The home inspection shouldn’t cost you more than $500. It will give you an overall assessment of the property and identify any potential issues.
The appraisal also plays an integral role as it will give you a solid idea of the home’s fair market value. The lender will mandate it, but it’s not a bad idea to get an independent appraisal done to serve as a second opinion.
An inspection and appraisal may help you decide if you should lower your offer or walk away from the property.
Purchase Homeowners Insurance
Your mortgage lender will require that you take out homeowners insurance. So, you want to start shopping around for quotes and select a policy prior to closing.
Close on Your Loan
At last! You’ve reached the finish line, and it’s time to close on your loan. During the closing, expect to:
Sign a load of paperwork.
Provide any amounts owed for the down payment.
Pay closing costs, which could include property tax obligations, premiums for homeowner’s insurance and association dues, title insurance, and any other costs associated with finalizing the loan.
Pay discount points or prepaid interest that can reduce the interest rate.
But before you show up at closing, it’s a good idea to speak with the lender, so you’ll know what to expect. You can also request a copy of the final closing document, or Closing Disclosure, to see a detailed breakdown of expenses.
A Few More Tips
Here are a few more suggestions for first time home buyers to help you get approved for your first loan:
Refrain from applying for new credit before you close. This could throw off your DTI ratio, lower your credit score, and ultimately prevent you from closing on the loan.
State and local programs may be available to assist with down payments. If you’re low on funds, be sure to explore options that may be available to you.
Several builders offer buyer incentives, like allowances for upgrades and closing costs. So if you haven’t considered new construction, it may not be such a bad idea to take a look if the price points are within your budget.
Should You Rent, Instead?
Perhaps you’ve done a little legwork, ran the numbers, and are on the fence about home buying. You will typically find that it’s cheaper to make monthly mortgage payments than to pay rent.
You can also take advantage of tax deductions and build up equity as you’re making monthly payments. The equity can be borrowed against for a loan or put some extra money in your pocket should you decide to sell before the repayment period ends.
However, renting a home gives you the flexibility to move to a new location if the home isn’t quite what you expected, don’t like the neighborhood, or want something more affordable.
Furthermore, renting allows you to pass the costs of maintaining the home on to the owner. But as a homeowner, you’ll be responsible for costs associated with maintenance and repairs.
Another reason why some choose to rent over buying is the upfront costs. Most landlords require a security deposit. However, it could be substantially lower than the money you may have to bring to the table for the down payment and closing costs.
Ultimately, you have to decide which is the better fit: investing in an asset that could build wealth or continuing to pay rent until you feel the time is right. There is no right or wrong answer; it just depends on your personal preference and financial situation.
Bottom Line
By taking the time to learn about the home buying process, you’ll be well-prepared and save yourself time and headaches. Best of all, you’ll increase your chances of landing your dream home with the most competitive mortgage product on the market.
Frequently Asked Questions
What is the process for buying a home?
The process for buying a home typically involves the following steps:
Determine your budget and get preapproved for a mortgage.
Find a real estate agent and start looking for homes.
Make an offer on a home and negotiate the terms.
Get a home inspection and address any issues that are found.
Get a mortgage and close on the home.
How much house can I afford?
When determining how much house you can afford, there are several factors to take into account. You should consider your income, expenses, down payment, credit score, and mortgage type before making a decision.
A larger down payment can help you get a lower mortgage rate, and a higher credit score can qualify you for better rates and loan terms. Shopping around for mortgage rates and considering different types of mortgages, such as fixed-rate or adjustable-rate, can also help you find the best deal.
Keep in mind that owning a home involves more than just the monthly payments. You will also need to factor in property taxes, insurance, and maintenance costs. You should create a budget that includes all of these costs and leaves room for unexpected expenses.
How much money do I need for a down payment?
The amount of money you need for a down payment will depend on the type of mortgage you get and the price of the home you are buying.
Some mortgage programs, such as FHA loans, allow for down payments as low as 3.5%, while others may require a higher down payment. It’s a good idea to speak with a mortgage lender to determine how much you will need.
Can I buy a house if I have a low credit score?
It’s possible to buy a house with a low credit score. However, it may be more difficult to get approved for a mortgage, and you may have to pay a higher interest rate. Before applying for a mortgage, work on improving your credit scores, as this will help you qualify for a better loan and save you money over time.
How much will closing costs be?
Closing costs are fees that are paid at the closing of a real estate transaction. These costs can vary widely and may include things like mortgage origination fees, title insurance, and appraisal fees. On average, closing costs can range from 2% to 5% of the purchase price of the home.
What is a mortgage preapproval?
A mortgage preapproval is a letter from a lender that indicates how much you are qualified to borrow for a mortgage. The preapproval letter is based on a review of your financial information, including your credit score, monthly income, and debts. A mortgage preapproval can help you understand how much you can afford to borrow and can make you a more competitive buyer in the real estate market.
What is a mortgage rate?
A mortgage rate is the interest rate that you will pay on your mortgage. The mortgage rate will determine the amount of your monthly payments and the overall cost of your loan. Interest rates can vary depending on the type of mortgage you get and your credit scores.
What is PMI?
PMI, or private mortgage insurance, is insurance that is required by lenders for certain types of mortgages when the borrower has less than a 20% down payment. PMI protects the lender in the event that the borrower defaults on the mortgage. The cost of PMI is typically added to the borrower’s monthly mortgage payment.
Rhode Island boasts a rich historical heritage, evident in its colonial-era architecture, maritime museums, and significant landmarks. Cities like Providence and Newport are treasure troves of history, with attractions such as the Providence Athenæum, one of the oldest libraries in the country, and the Newport Mansions, opulent Gilded Age residences open to the public.
2. Con: High cost of living
Rhode Island’s high cost of living can pose challenges for residents, particularly in areas such as housing and utilities, which often exceed national averages. The state’s limited land availability and high demand for coastal properties contribute to inflated real estate prices and rental rates, making housing affordability a concern for many. For instance, Providence, Rhode Island’s largest city has a median sale price of $470,00 and an average rental price for a one-bedroom apartment of $2,075.
3. Pro: Access to beautiful beaches
Rhode Island’s abundant coastline offers residents easy access to some of the most beautiful beaches on the East Coast, perfect for leisurely strolls, sunbathing, and water sports. From the sandy shores of Misquamicut Beach to the tranquil coves of Block Island, there’s a beach to suit every preference and activity.
4. Con: Limited public transportation
Rhode Island’s public transportation system is limited, with fewer options compared to larger metropolitan areas, making car ownership essential for many residents. While the Rhode Island Public Transit Authority (RIPTA) provides bus services across the state, routes may be infrequent or limited in coverage, especially in more rural areas. Cities like Central Falls has a transit score of 36, meaning that most errands require a car.
5. Pro: Vibrant arts and cultural scene
The state boasts a vibrant arts and cultural scene, with numerous galleries, theaters, and live music venues. Providence, in particular, is home to the renowned Rhode Island School of Design Museum and the Providence Performing Arts Center, enriching residents’ lives with diverse artistic expressions.
6. Con: Weather variability
Rhode Island’s weather variability presents a challenge to residents, as they must adapt to frequent fluctuations in temperature and conditions throughout the year. The unpredictability of coastal weather can disrupt outdoor plans and activities, from sudden rain showers to icy winter storms, impacting daily routines and travel.
7. Pro: Excellent seafood cuisine
Rhode Island is renowned for its excellent seafood cuisine, offering residents and visitors alike a delectable array of fresh catches from its coastal waters. From succulent lobster rolls served in quaint seaside shacks to flavorful clam chowder and crispy fried calamari, the state’s culinary scene celebrates its maritime heritage.
8. Con: Small state size
Rhode Island’s status as the smallest state in the U.S. can present challenges for residents, particularly in terms of limited land space and resources. The compact size of the state means that housing options may be more limited and densely packed, leading to higher property prices and potential congestion in urban areas. Additionally, the state’s small size may result in fewer job opportunities and amenities compared to larger states.
9. Pro: Strong sense of community
Rhode Island’s strong sense of community fosters close-knit neighborhoods and supportive networks among residents, creating a welcoming and inclusive atmosphere. Whether through annual events like WaterFire in Providence or local gatherings in historic towns like Bristol, residents come together to celebrate shared traditions.
10. Con: Traffic congestion
Rhode Island grapples with traffic congestion, especially during peak commuting hours on interstate 95 along with tourist seasons, which can lead to delays and frustration for residents. The limited road infrastructure, particularly in urban areas like Providence, exacerbates congestion, resulting in longer travel times and increased stress for commuters.
11. Pro: Proximity to major cities
Rhode Island’s close proximity to major cities like Boston and New York City offers residents convenient access to a wealth of cultural, educational, and employment opportunities. Within a short drive or train ride, residents can explore world-class museums, attend concerts and sporting events, or pursue career advancements in bustling metropolitan centers.
12. Con: High property tax
Rhode Island’s high property taxes can be a significant financial burden for homeowners, often ranking among the highest in the nation. With property tax rates averaging over 1.3% of a property’s assessed value, residents may find themselves grappling with hefty tax bills each year.
Methodology : The population data is from the United States Census Bureau, walkable cities are from Walk Score, and rental data is from ApartmentGuide.
Cybersecurity, TPO, Verification Tools; Tech Tracking Whereabouts; Why Rates Are Where They Are
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Cybersecurity, TPO, Verification Tools; Tech Tracking Whereabouts; Why Rates Are Where They Are
By: Rob Chrisman
Fri, Apr 19 2024, 11:33 AM
It is “Take Your Child to Work Day” next Thursday which, if you work from home, is probably like a day off from school for the tyke. (I won’t be bringing my son Robbie to work, who, as I write this, is pedaling from Chicago to New York and bunked down last night in Union Home’s Bill Cosgrove’s humble abode.) I do not track his exact whereabouts, but we all know that, in having a smart phone, one gives up pretty much all of their privacy. For example, a new working paper posted to the National Bureau of Economic Research sought to examine the polling data that indicates 22 percent of Americans reported attending religious services on a weekly basis. They did this by looking at geodata from smartphones of 2 million people in 2019, and found that while 73 percent of people did indeed step into a place of worship on a primary day of worship at least once over the course of the year, just 5 percent of Americans studied in fact did so weekly, significantly smaller than the data people reported to pollsters. (Found here, this week’s podcasts are sponsored by Optimal Blue. OB’s smart solutions automate critical functions like pricing, hedging, trading, and social media. More originators and investors rely upon Optimal Blue’s integrated solutions, data, and connections to support their unique business strategies, no matter how complex. Hear an interview between Robbie and me on a variety of topics in mortgage that are germane to the Daily Commentary.)
Lender and Broker Products, Software, and Services
Operations leaders! You don’t want to miss this event if you care about improving your operations! Join Femi Ayi, EVP Operations at Revolution Mortgage, Brooke Smith, Senior Manager, Loan Sourcing Digital Solutions at Fannie Mae, and Jodi Eberhardt, Strategic Integration Director at Freddie Mac, and Richard Grieser, VP, Marketing at Truv, as they highlight different strategies to provide customers with a more transparent, efficient borrowing experience. Freddie Mac’s Loan Product Advisor® asset and income modeler (AIM) and Fannie Mae’s Desktop Underwriter® (DU®) validation service play a critical role for lenders committed to streamlining origination processes and improving loan quality. However, the key to optimizing borrower verification workflows and ensuring compliance is partnering with the right provider that helps lenders improve loan quality and save hundreds of dollars per loan compared to traditional verification providers. Come join us! “Minimizing Risks with GSE Borrower Verifications”, April 24 2:00 PM ET Use code TRUV100 to participate FOR FREE, even if you are not an MBA member! Register now.
“AFR Wholesale® is thrilled to announce the renewal of our partnership with AIME for 2024, underscoring our commitment to the wholesale channel. As we continue our collaboration, we are committed to providing essential resources, comprehensive training, and robust support to independent mortgage professionals and the wholesale channel. This partnership will allow AFR to set new industry standards, promote best practices, and deliver exceptional services to our clients and partners. We also will look to spearhead innovative initiatives aimed at boosting operational efficiencies and enhancing customer experiences. Reflecting on a history of successful collaborations, we are excited about the potential for even greater achievements. This announcement is just the beginning, as AFR plans to unveil several exciting partnerships and updates in the coming weeks. Join us in driving change in mortgage lending. To get involved, contact us at [email protected], 1-800-375-6071, visit AFR.”
In the wake of frequent breaches within our industry, we are reminded of the precarious position mortgage lenders and their customers’ data are currently in. These repeated security incidents emphasize an undeniable truth: robust cybersecurity defenses are not merely an option; they are imperative. A breach can mean the difference between a thriving business and a devastating collapse. There is a very real risk to mortgage companies right now; you’re not just guarding data, you’re safeguarding trust, livelihoods, and the very integrity of the financial system. It’s a responsibility to take seriously, and it’s time to double down on cybersecurity. Richey May’s cybersecurity team is here to help: Check out the latest post detailing the often-overlooked risks in the industry.
Capital Markets
One can’t ignore the U.S. Federal Reserve’s role in interest rates. (The current STRATMOR blog is titled, “Relying on the Fed: How Did This Happen?”) The “experts” have been predicting multiple rate cuts in 2024. Sure enough, the much-awaited Fed pivot has materialized, but it’s not what investors had been expecting. The Fed change was supposed to signal a reverse of its contractionary monetary policy path, keeping rates high, which has been in place since March 2022.
But that is not the message, especially after three consecutive months of stronger-than-expected inflation readings. Fed Chair Jay Powell said, “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence. Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation. The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2 percent inflation goal.”
As always, the Federal Reserve is watching the data as it comes out. But things will be higher for longer. At least the next rate move is still forecast to be a cut. Things could get rocky for lenders and borrowers if that shifts to a hike, which could happen if price pressures resurface and put a so-called soft landing into doubt. And now we have the yield on the benchmark 10-year U.S. Treasury note up at its highest level since November, above 4.6 percent versus a yield of 4.25 percent in the last week or two and starting the year at 3.88 percent, meaning that the 10-year is now nearing a full point rise for 2024!
As today’s podcast interview alluded, it’s been pretty quiet out there in terms of market-moving news. Weekly jobless claims showed no change from last week’s level and there was a better-than-expected Philadelphia Fed survey for April yesterday, which prompted some selling. Investors bought plenty of Treasuries to close 2023 and open 2024, betting on several rate cuts this year from the Fed. However, Fed speakers hammering home patient rhetoric on interest rates (several more Fed speakers reiterated yesterday that they do not feel urgency to cut rates at this time) due to a reluctance of the U.S. economy to cool, has forced investors to abandon bets on a rally, giving way to a wave of selling.
Accordingly, mortgage rates surged in the latest Primary Mortgage Market Survey from Freddie Mac, with the 30-year rate above 7 percent for the first time this year. For the week ending April 18, the 30-year and 15-year mortgage rates jumped 22 basis points and 23 basis points versus the prior week to 7.10 percent and 6.39 percent, respectively. Those rates are 71 basis points and 63 basis points higher than this time last year.
Inflation is back below 3 percent, but hotter-than-expected readings for the rental category of housing in the first few months of the year are a big reason the Fed has held back on the rate cuts that Wall Street has been hoping for. Markets seeing the biggest rent declines are the ones where there’s been the most construction. The Northeast and Midwest have experienced lingering high inflation, while the West and South have seen it moderate rapidly.
Existing-home sales fell 4.3 percent in March to a seasonally adjusted annual rate of 4.19 million, a widely expected decline given the recent slip in purchase mortgage applications and solid gains registered in the first two months of 2024 from increased supply and a temporary dip in mortgage rates. Sales were down 3.7 percent from the previous year. The median existing-home sales price rose 4.8 percent from a year ago to $393,500, the ninth consecutive month of year-over-year price gains and the highest price ever for the month of March. The inventory of unsold existing homes grew 4.7 percent from one month ago to the equivalent of 3.2 months’ supply at the current monthly sales pace.
There is no data of note on today’s economic calendar, though there is one Fed speaker, Chicago President Goolsbee. For capital markets folks, today is Class D 48-hours. We begin the day with Agency MBS prices better by .125-.250, the 10-year yielding 4.59 after closing yesterday at 4.65 percent, and the 2-year is at 4.96.
Employment
“At Evergreen Home Loans, our mission is simple: equip our clients with affordable strategies to not only buy a home but to make a winning offer. Our unique approach helps families secure their futures and build generational wealth. As we navigate a fluctuating housing market, Evergreen Home Loans remains committed to innovation and client success. Our tailored solutions emphasize stability and long-term prosperity, ensuring that homeownership is a reality for first-time buyers and seasoned investors alike. By fostering a supportive environment and providing strategic financial guidance, we empower our clients to turn their dreams of homeownership into tangible assets that benefit generations. We’re expanding our team and invite skilled loan officers and branch managers to explore the career opportunities we offer. Join us in making a difference and shaping the future of homeownership. To view all openings visit: Careers.”
Synergy One Lending continues to reemerge as one of the industry success stories in 2024. The addition of 12 new branches and the successful expansion of the company’s footprint into several new markets has provided an even stronger foundation of profitable growth as it prepares for even more ahead. A vision with a P&L structure built to grow market share, relentless execution and adoption of leading-edge technology and a culture that is focused on their 3 core values (delighted customers, inspired employees and a pristine reputation) are leading indicators of the company’s trajectory. Be part of it and Make Your Mark by reaching out to Aaron Nemec at (208) 794-7786 or Eric Kulbe at (303) 717-0293.
Geneva Financial, operating in 48 states, announced that Jessie Ermel has joined its leadership team as Chief Compliance Officer where Jessie will drive quality control and compliance for the company’s mortgage operations.
Our industry lost another veteran recently with the death of Alabama’s John Johnson. John was CEO and co-founder of MortgageAmerica, Inc. from 1978 to 2012. But John’s mortgage career began in 1966 at Colonial Mortgage Company and then Molton-Allen & Williams. He served as the Mortgage Bankers Association of Alabama President in 1980-1981 and chaired the organization’s Convention in 1982. John was awarded the Certified Mortgage Banker designation in 1982. was a member of the Board of Directors of the Mortgage Bankers Association of America from 1999-2003, served as Chairman of the Residential Board of Governors in 2001-2002, and was Chairman of the Board of Directors for MERS in 2006. Guys like this helped make our industry what it is today, and he’ll be missed.
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Indianapolis, IN, is a quintessential Midwestern city, home to the Indy 500, the Indianapolis Colts, and historic landmarks like the Soldiers & Sailors Monument. With nearly 800K residents, there’s plenty to do on any given day – from enjoying the beautiful outdoors, seeing a concert, exploring a museum, or checking out Indy’s food scene.
If you’re looking to rent an apartment in Indianapolis, the average rent for a studio is $$1,163, while a one-bedroom is $$1,224. At ApartmentGuide, we’ve collected a list of the most affordable neighborhoods in Indianapolis. You’re sure to find the right place to call home – and fit in your budget.
12 Affordable Neighborhoods in Indianapolis, IN
From the charming Martindale – Brightwood to the cozy Crown Hill, Indianapolis has a variety of neighborhoods with average rents for studio apartments ranging under the city’s average. These Indianapolis neighborhoods have something for all renters.
1. Martindale – Brightwood 2. Crown Hill 3. Irvington 4. Eagledale 5. Arlington Woods 6. South Broad Ripple 7. East Gate 8. East Side 9. Far East Side 10. North High School 11. Valley Mills 12. Crooked Creek
Read on to see what each neighborhood has to offer its residents.
1. Martindale – Brightwood
Average studio rent: $1,115 Average 1-bedroom rent: $675 Apartments for rent in Martindale – Brightwood
Martindale – Brightwood is the most affordable neighborhood in Indianapolis, as the average rent for a one-bedroom unit is $675. There are plenty of reasons to love living in Martindale – Brightwood, from attractions like the Douglass Park Pool to green spaces like Washington Park. This neighborhood is also a historic area, so make sure to explore all the historic homes and architecture.
2. Crown Hill
Average studio rent: $625 Average 1-bedroom rent: $699 Apartments for rent in Crown Hill
Crown Hill is a relaxing area that’s just north of downtown Indianapolis. This affordable neighborhood has lots of attractions such as the Crown Hill Cemetery, The Children’s Museum of Indianapolis, and the Newfields museum. Crown Hill is also close to I-65, so it’s easy to commute into Downtown Indianapolis.
3. Irvington
Average studio rent: $675 Average 1-bedroom rent: $739 Apartments for rent in Irvington
Irvington is the third-most affordable neighborhood in Indianapolis. This neighborhood is an awesome option as it’s near attractions like the Irving Theater and the Benton House. You can find local restaurants and shops along Washington Street, like Jockamo Upper Crust Pizza and Los Cuates Mexican Restaurant. The area also has plenty of historic homes, often in Victorian or Edwardian styles, so it’s excellent for exploring and enjoying Indianapolis. Or, if you’re looking for a relaxing afternoon, you can find Ellenberger Park in the area.
4. Eagledale
Average studio rent: $853 Average 1-bedroom rent: $799 Apartments for rent in Eagledale
Eagledale is the fourth-most affordable neighborhood in Indianapolis. This neighborhood is a great option if you’re looking for access to plenty of shops and restaurants. For example, you can easily access the Eagledale Plaza Shopping Center. There are also a lot of parks in Eagledale, like Moreland Park and Centennial & Groff Park. It’s also next to the Indianapolis Motor Speedway, making it an awesome choice if you want to be close to this famed car racing track.
5. Arlington Woods
Average studio rent: $769 Average 1-bedroom rent: $849 Apartments for rent in Arlington Woods
Arlington Woods is a stellar neighborhood if you want to live a little further outside Downtown. You’ll likely need a car in this neighborhood, so it’s important to consider that if you’re renting. There are also parks nearby, like Pogues Run Art and Nature Park and Roselawn Park.
6. South Broad Ripple
Average studio rent: $799 Average 1-bedroom rent: $894 Apartments for rent in South Broad Ripple
Next up is South Broad Ripple, the sixth-most affordable neighborhood in Indianapolis. South Broad Ripple is full of history and charm with tree-lined streets, historic buildings, and museums, like the Indianapolis Opera and the Indiana State Fairgrounds . This area also has plenty of parks, restaurants, and attractions, so you’ll have lots to explore. Make sure to enjoy the outdoors at Broad Ripple Park or grab a meal at one of the neighborhood restaurants. There’s something for everyone living in South Broad Ripple.
7. East Gate
Average studio rent: $750 Average 1-bedroom rent: $906 Apartments for rent in East Gate
East of downtown, East Gate is the seventh-most affordable neighborhood in Indianapolis. East Gate has a friendly atmosphere and community feel, with plenty of local cafes and restaurants along East 10th Street and Shadeland Avenue, such as Kasai Sushi Bar & Kitchen and Four Seasons Diner.
8. East Side
Average studio rent: $769 Average 1-bedroom rent: $924 Apartments for rent in East Side
East Side takes the eighth spot on our list of most affordable neighborhoods in Indianapolis. Not to be confused with the Eastside area, East Side is located just south of Fort Harrison State Park. The average rent for a one-bedroom unit is roughly $924, making East Side a great option. East Side has plenty of outdoor spaces, like Fort Harrison State Park, which has plenty of fishing and hiking areas. You can also grab a meal at one of the restaurants along Pendelton Pike.
9. Far East Side
Average studio rent: $825 Average 1-bedroom rent: $972 Apartments for rent in Far East Side
A well-known Indianapolis neighborhood, Far East Side is the next area. Far East Side is home to Grassy Creek Regional Park and the Far East Side Neighborhood Center, meaning there’s plenty to do throughout the week. You’ll find several shopping centers in the area, making errands a breeze. If you need to commute to work, there are many options, as the I-465 is nearby.
10. North High School
Average studio rent: $900 Average 1-bedroom rent: $998 Apartments for rent in North High School
The tenth most affordable neighborhood in Indianapolis is North High School, also called Northwest High School. This area has a vibrant feeling with its popular restaurants and quirky shops. You can find parks like Eagle Creek Park and Northwestway Park, perfect for enjoying a sunny day in Indianapolis.
11. Valley Mills
Average studio rent: $929 Average 1-bedroom rent: $999 Apartments for rent in Valley Mills
Number 11 on our list is Valley Mills. This affordable neighborhood is located southwest of downtown Indianapolis and is an awesome area if you’re looking for a neighborhood close to nature. Valley Mills is also close to parks like Southwestway Park and Carson Park. You can find plenty of cozy cafes and lively restaurants along Kentucky Avenue.
12. Crooked Creek
Average studio rent: $824 Average 1-bedroom rent: $1,034 Apartments for rent in Crooked Creek
Taking the 12th spot on our list of affordable neighborhoods in Indianapolis is Crooked Creek. The average rent for a one-bedroom apartment is $1,034, compared to the city’s average of $1,224. This neighborhood is about 10 miles from downtown, which means it’s closer to some other popular neighborhoods, such as Broad Ripple and Meridian-Kessler. Be sure to explore some of the neighborhood’s attractions, like Juan Solomon Park or Broadmoor Country Club.
Methodology: Affordability based on whether a neighborhood has average studio and 1-bedroom rent prices under the city’s average. Average rental data from Rent.com in March 2024.