I was tired of fighting with mortgage lenders about self-employment income, high-interest rates, and dealing with scarce inventory that fit our family’s needs. We decided to rent a bigger home. I was beyond done. It wasn’t meant to be. The awards for entrepreneurship did not extend to quickly buying a home.
My wife found a home with motivated owners due to a divorce. They had only lived there nine months and needed to make a move. The best way to say it is that the price point didn’t accommodate the rising interest rate environment, and they were open to many options.
I discussed rent-to-own options, and finally, she said the magic words: “They would even make an assumption – they don’t need to make money on the deal.”
My father had been diagnosed with stage four liver failure at that time, and we were aggressively looking for a home so he could move in with my family. He had been working full-time, despite the immense pain and turmoil he experienced daily.
To overcome the disparity in my income, my father agreed to be our co-borrower on the mortgage assumption application. This was ideal because he was also moving in with us.
I quickly applied with our names, and our combined income was approved. We agreed on a final sale price and were off to the races.
I have been in the mortgage industry for nine years, with my loan officer in the industry for 19 years and my Realtor for over 10 years. While all parties knew this option existed, none of us had ever participated in a real mortgage assumption transaction. I had written a dozen or so mortgage assumption content pieces for various mortgage lenders and realtors, but have never seen a single deal shake out.
Everyone was in for a new experience, and here are the things we learned almost immediately.
Assuming a VA loan
I have nothing but the utmost respect for everyone serving in the military. I have several family members on active duty; this is a sacrifice, and veterans deserve every benefit possible.
Veterans Affairs (VA) mortgage loans can be an excellent product for veterans. VA loans can be assumed by anyone, and the new borrower assumes those benefits. You do not have to be a veteran to assume a VA loan.
I am not a veteran, but I did assume a VA mortgage.
Minimum timeline of 12 months
The sellers had only lived in the home for nine months. To make a mortgage assumption, you must live in the home for 12 months. To move my father in, we opted to rent the house for the remainder of the three months. Ideally, these types of loans can close in 30-45 days from application.
Assume everything
You assume everything about the loan. The focus, of course, will be the mortgage rate, which is almost half what the current market mortgage rates are today. In addition, I received the existing escrow account as well.
However, for some reason, you must pay property insurance up front for a year. Still, these small concessions and fees pale compared to what we’d have to pay if we bought a home traditionally in this high-rate environment.
The price difference
Homeowners at certain price points may need help to sell their homes in this high-rate environment. In our case, we agreed to pay the list price and the difference between the remaining loan and the list price. They had only been there nine months, and the price they bought was the same as the price they listed. So, we didn’t have much to cover.
We paid nothing down and very few fees. Hypothetically, if a homeowner lives in a home for several years, this would be an incredible option for a borrower to cover the difference and receive a mortgage rate that is potentially almost half of the current market rate.
My father grew extremely ill in the weeks leading up to moving in and passed away seven days before we took occupancy. I had to reconfigure my taxes to show income qualifying for the mortgage payment we would soon take over. If my father hadn’t stepped up, we wouldn’t have had a chance to secure the deal of a lifetime.
Three months later, at the closing table, clasping a picture of my father, I went through a traditional mortgage loan closing. The 20+ mortgage title professional had never closed a mortgage assumption in his entire career.
Were we lucky? Maybe a little bit. It was a culmination of luck, mortgage knowledge, and timing.
When going through my father’s stuff after he passed, we found a New Year’s letter from one of those television evangelists he had subscribed to. The letter spewed about affirmations and claiming victories in your life. On that piece of paper, my father wrote down our new address. So maybe it was that.
We live in a weird market. The demand to buy a home has remained strong. As mortgage and real estate professionals, we must continuously educate and inform our clients about every opportunity that may exist.
Mortgage assumptions seem to be the Bigfoot of our industry, but they exist and are a viable option for thousands of home sellers and borrowers. I would recommend checking the option out.
This column does not necessarily reflect the opinion of HousingWire and its owners.
To contact the author of this story: Steven Cooley at ArtVsMath.com To contact the editor responsible for this story: Sarah Wheeler at [email protected]
In yet another effort to push mortgage lending firmly into the 21st century, loanDepot has debuted its proprietary “mello smartloan” technology, an end-to-end digital mortgage loan intended to cut out the paperwork and lengthy turn times.
It should also make the process a lot more secure, with less sensitive information floating around the web via email from borrower to lender.
loanDepot claims it made history with this launch, so let’s learn more about it.
mello smartloan Can Generate a Real Loan Approval in Just 7 Minutes
loanDepot claims its new proprietary loan engine technology is really fast
With real loan approvals generated in as little as seven minutes
The process is less paperwork-intensive and more secure
It can reduce fraud, lower costs to both lender and borrower, and create a better overall customer experience
Aside from being a more secure lending platform, mello smartloan is built for speed, similar to many of the other new offerings we’ve seen lately in this space.
The mortgage loan process can be very lengthy as it often takes anywhere from 30-45 days to close a mortgage, something that just won’t do in today’s era of instant gratification.
Coincidentally, the company claims it can provide a customer with a full loan approval in as little as seven minutes, which happens to be a minute faster than Quicken’s Rocket Mortgage.
So if you’re short on time (or patience), this might be just the ticket for you. Of course, timing isn’t everything. We also have to consider pricing, which will stick with you for as long as 360 months if you go with a 30-year fixed.
While convenience is great, a lower mortgage rate is probably a lot better, even if you have to put in a little more time.
How mello smartloan Works
Income, asset, and employment information are imported digitally
This data is then “intelligently processed through proprietary loan engines”
At which point loan options are presented to the borrower if they are approved for financing
The closing and funding process (and potentially the appraisal) are also digital to greatly increase speed and increase security
It’s different from “traditional mortgages” in that each step of the process is digital, as opposed to paperwork-intensive.
With just about any mortgage, you’re required to send the lender financial information such as income, asset, and employment documentation.
This allows the underwriter (or automated underwriting system) to determine if you’re eligible for certain loan programs based on your ability to repay the loan.
Because mortgage lenders are committing hundreds of thousands of dollars or more, they’ve got to be pretty thorough.
It’s for this reason that obtaining a mortgage has been so painstakingly long. What companies like loanDepot are attempting to do is speed up the process while also making the underwriting more reliable.
Sounds like a dream come true, right? Well, it’s no longer a dream, and will soon be a reality for all mortgage lenders.
What’s great is that these digital processes can actually reduce fraud and improve the customer experience, while also lowering lender costs, which sounds like the ultimate feat.
They can manage this because all that borrower information is now validated digitally.
Instead of sending over bank statements in PDF format, companies like loanDepot are granted access to your bank account information and can instantly import it into their loan decisioning engine.
That’s not only faster, but also more accurate, and it should be a lot more difficult to game the system.
The same digital process connects your income and employment, similar to how a credit report (and scores) are generated on the fly from the credit reporting agencies.
From there, the lender has all the key pieces of information it needs to generate an underwriting decision.
Instead of asking you how much you make, how much you’ve got in the bank, where you work, what you think your credit score is, they go straight to the source.
This allows their proprietary loan engines to almost instantly determine the loan options available to you that will provide the greatest potential cost- and/or time-savings.
Then one of the company’s 2,000+ loan officers can get involved and help guide the customer accordingly.
Time to Close a Mortgage Can Be Reduced by 75%
loanDepot projects that loan closings can be reduced by up to 75%
Which means some borrowers may be able to get a mortgage in as little as 8 days
However only about half of borrowers will be able to take advantage of mello smartloan
Because of issues like self-employment or other factors that prevent digital verification
Aside from making things a lot easier for the customer, something that will likely jibe well with today’s impatient consumer, turn times should also be drastically reduced.
loanDepot claims time to close can be condensed by as much as 75 percent, slashing the time it takes to get a mortgage to just eight days in some cases.
Of course, for that to happen the borrower will likely need to be of the vanilla variety, meaning everyday W2 employee (not self-employed) with nothing funky going on in their loan file.
Oh, and they’ll probably need to get an appraisal waiver to skip that lengthy step too, something that Freddie Mac has been working on since last year.
What might separate mello smartloan from the other digital mortgage offerings is that their paperless process exists from start to finish, including the closing and funding portion.
loanDepot projects that up to 55% of new applicants will be eligible for their digital home mortgage experience, with some left out thanks to things like being self-employed.
Additionally, these same customers may also enjoy favorable mortgage rate pricing due to lower overhead costs associated with the rollout of the technology.
Of course, loanDepot says it invested more than $80 million on the technology, so always take the time to shop around.
loanDepot, which has only been around since 2010, has funded over $165 billion in mortgages and currently ranks as the nation’s 5th largest retail mortgage lender and 2nd largest nonbank lender behind Quicken.
They’ve even been rumored to be a potential acquisition target for Amazon as a means to get into the lucrative mortgage space.
Inside: Find out what a good salary for a single person is. Plus how much you need to afford your lifestyle and reach your ambitions.
This question has been popping up more and more lately. People are starting to wonder about their income and whether or not they’re getting paid enough.
Some people might think that their salaries are too low, while others may be wondering if they can afford these new bills piling upon them? Everyone knows someone who isn’t making what they should be, but no one really wants to talk about it out loud. This causes a sense of tension, that’s when success can make or break your career.
This is why it’s important to talk about salaries and be aware of what others are making in the industry. It might not provide the answer you’re looking for, but at least you’ll know where everyone else falls so that you can set yourself up for future success!
Believe it or not, the amount of money you make is a very personal decision.
There are many factors to take into account when deciding how much you should be earning and what your career will be like, including your age and experience.
This guide will break down the steps you should take to find out what salary is right for you in today’s society.
What is considered livable salary?
A living salary is one that covers all or most of the expenses.
Your salary should be a number that ensures you meet all of your bills and hopefully have money left over to save.
For many people, there is always a conflict between what income can meet the expenses and that salary may not be enough to conduct your life.
What is a livable salary for a single person?
A livable salary for a single person is the amount of money an individual needs in order to support themselves. This amount differs based on a number of factors, including location and an individual’s age.
There is no easy answer when it comes to determining a livable salary for a single person.
One of the biggest variables depends on the cost of living in your area and whether you share housing costs with roommates.
Other variables include the cost of food, transportation, healthcare, and entertainment in that area. We will break down the livable salary by each state shortly.
What is the average salary for a single person in today’s society?
In general, though, a single person should expect to make at least $30,000-$40,000 per year in order to cover all of their basic expenses. That is considered a decent salary for a single person.
Most college graduates should expect to make at least the average salary starting out.
You need to make at least $15 an hour to meet the minimum average salary for a single person.
Learn how to calculate your annual income.
How Much Does a Single Person Need to Live by State?
To be realistic, this amount varies greatly by state!!
Especially with the number of workers moving remote, there are opportunities to increase your income by moving to a lower cost of living state. However, many employers are updating their figures to adjust accordingly.
So, how much do you need to live by your state (according to the Living Wage Calculator):
Alabama: $13.77 an hour or $28,642 per year
Alaska: $15.06 an hour or $31,325 per year
Arizona: 14.94 an hour or $31,075 per year
Arkansas: $13.29 an hour or $27,643 per year
California: $18.66 an hour or $38,813 per year
Colorado: $16.35 per hour or $34,008 per year
Connecticut: $15.98 per hour or $33,238 per year
Delaware: $15.32 per hour or $31,865 per year
District of Columbia: $20.12 an hour or $41,850 per year
Florida: $14.82 an hour or $30,826 per year
Georgia: $15.36 an hour or $31,949 per year
Hawaii: $19.43 per hour or $40,414 per year
Idaho: $13.95 an hour or $29,016 per year
Illinois: $15.37 an hour or $31,970 per year
Indiana: $13.44 an hour or $27,955 per year
Iowa: $13.62 an hour or $28,330 per year
Kansas: $13.51 an hour or $28,101 per year
Kentucky: $13.48 an hour or $28,038 per year
Louisiana: $14.06 an hour or $29,245 per year
Maine: $14.92 an hour or $31,034 per year
Maryland: $17.25 per hour or $35,880 per year
Massachusetts: $17.74 per hour or $36,899 per year
Michigan: $13.63 per hour or $28,350 per year
Minnesota: $14.90 per hour or $30,880 per year
Mississippi: $13.43 per hour or $27,934 per year
Missouri: $13.72 per hour or $28,537 per year
Montana: $13.94 per hour or $28,995 per year
Nebraska: $13.57 per hour or $28,225 per year
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Nevada: $13.67 per hour or $28,443 per year
New Hampshire: $14.47 per hour or $30,097 per year
New Jersey: $16.20 per hour or $33,696 per year
New Mexico: $13.97 per hour or $29,057 per year
New York: $18.62 per hour or $38,729 per year
North Carolina: $14.72 per hour or $30.617 per year
North Dakota: $13.08 per hour or $27,206 per year
Ohio: $13.16 per hour or $27,373 per year
Oklahoma: $13.53 per hour or $28,142 per year
Oregon: $16.85 per hour or $35,048 per year
Pennsylvania: $13.39 per hour or $27,851 per year
Rhode Island: $14.79 per hour or $30,763 per year
South Carolina: $14.58 per hour or $30,326 per year
South Dakota: $12.61 per hour or $26,299 per year
Tennessee: $13.25 per hour or $27.560 per year
Texas: $14.01 per hour or $29,140 per year
Utah: $14.52 per hour or $30,201 per year
Vermont: $14.93 per hour or $31,054 per year
Virginia: $16.61 per hour or $34,549 per year
Washington: $16.34 per hour or $33,987 per year
West Virginia: $13.38 per hour or $27,830 per year
Wisconsin: $14.02 per hour or $29,162 per year
Wyoming: $?13.19 per hour or $27,435 per year
Honestly, with the recent inflation reports, I truly believe it would be difficult for most of these salaries to be livable wages. But, reports like this, take time to be produced and lag what is truly happening in the world.
The US average cost of living single person will vary greatly depending on HCOL vs LCOL areas.
What is a good salary for a single person?
A good salary to live on is the amount of money you need in order to maintain a comfortable living.
The salary you need to live on depends on many factors, such as where you live and how much money you want to spend. The average annual salary in the US is $60,000. This figure takes into account all income sources including full-time employment, part-time employment, self-employment, investments, and other forms of income.
So, if you are single making over the median US salary of $60000, then you are in a better financial picture than most.
Honestly, I think most people would agree that livable wages are very difficult for many people to sustain a comfortable living for a long period of time. How would you feel making $13 an hour and barely scraping by?
Thus, what is considered a good salary for a single person depends on your education, training, and industry.
Good Salary for a Single Person by Age
Another factor to consider is your stage of life.
When you are just starting out in the workforce, you are at the early bell curve of your potential earnings. On the flip side, if you have been in your career for 10 or more years, you deserve to receive higher pay.
So, what salary should I be making at my age?
These numbers are heavily weighted by your education, training, and industry. These are the median earnings (source):
Just Starting Out (age 16-24): $646 weekly or $33,592 annually
Early Career (In your mid-20s – age 34): $960 weekly or $49,920 annually
Mid Career (In your mid-30s- age 44): $1127 weekly or $58,604 annually
Later Career (ages 45-64): $1149 weekly or $59,748 annually
One of the reasons a college education is heavily pushed is because all college graduates will make more than the median $60000 salary.
As you can see, that would put you above a good salary.
The best way to calculate how much you need is by using a cost of living calculator.
What is considered low-income for a single person?
The official definition of low-income for a single person is $12,000 in annual income.
The Federal Poverty Level is an annual income level that determines what a family or individual’s income must be in order to qualify as living in poverty. The number of people considered “below the poverty line” is different for each family size.
Given the federal minimum wage is $7.25, the poverty wage for a single person will be above this threshold if you work more than 32 hours per week.
Honestly, how much is low income for a single person is when you are able to make ends meet. Then, you need to find ways to increase your income.
Is a 3 percent raise good?
A 3 percent raise on a $50,000 salary would mean that the employee would make $1,500 more per year. Will that actually make an impact on you?
Well, more than likely, your raise is keeping up with inflation.
On average, inflation runs between 1.5-2% a year (source). So, a 3 percent raise would give you a net salary increase of 1%.
However, in 2022, inflation skyrocketed to over 8%. Thus, a 3 percent raise means nothing and will not help your situation. Another way to put it, you are making 5% less than you did the year before since the costs of goods have increased dramatically.
The goal is to increase your hourly wage or salary each year. However, you are in a linchpin situation based on what your employer wants to do. That is why many employees change jobs every 3-5 years to receive a bigger raise in salary.
What is a Good Salary for Single Person to Retire Early?
For many people in the FIRE movement, it is more about making a certain amount of money, saving a huge percentage, and investing that money to pay for their future life.
Specifically, these people are looking for a certain amount of net worth. Typically, $500k to $1 million in investments.
First of all, that number is very dependent on a number of factors.
So, let’s run through an example…
Current age: 25 years old
Current expenses: $30000
Annual Income: $50000
Zero net worth
You could retire in 23 years at the age of 48 with approximately $750K in investments.
However, you want a shorter time frame of 10 years… Then, you need your salary to be over $90,000 to retire by age 35.
Overall, if you want to retire early, then the more you can earn and save today will help you on your path quicker.
Here is a helpful FIRE calculator to help you based on your circumstances.
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What is a good yearly salary for a single person?
Honestly, the answer will vary from person to person based on their upbringing, education, experience, and age.
If you are making above the median income of $60k salary as a single person, then you should be doing very well for yourself.
One of the things we stress here at Money Bliss is finding ways to have more than one stream of income. That way you are not forced into a financial pickle and have more opportunities.
Also, the salary expectations for a single person (those not in a relationship) have changed greatly over the past years. The expectation is that people can provide for themselves; yet, are getting priced out of the rental and home market due to skyrocketing costs.
Now, you have to decide what is a good yearly salary for you.
What are your dreams?
Your ambitions?
Your goals in life?
Answer those questions and you will know if your salary lines up.
If not, find ways to make more money.
Know someone else that needs this, too? Then, please share!!
Taxes are unavoidable but that doesn’t mean you have to pay more than you owe. What happens to your tax liability with proper financial planning? The simple answer is that it can allow you to minimize what you owe while preserving more of your income to fund your financial goals. Talking to a financial advisor is a good first step in creating a strategy for effectively managing tax liability.
Understanding Tax Liability
Tax liability refers to the money that an individual, business or organization owes to a federal, state or local tax authority. A simpler way to think of your tax liability is the difference between your taxable income and the tax deductions you’re able to claim.
As a general rule of thumb, earning a higher income can result in a higher tax liability. The U.S. uses a graduated tax system, which means that income and tax rates move together. As income increases, so does your tax rate.
The amount you pay in taxes is determined by your income, but capital gains can also affect your tax liability. That’s important to know if you’re focused on investing and building wealth, as higher net-worth individuals may face a steeper tax liability if they’re reaping capital gains from investments.
What Happens to Your Tax Liability With Proper Financial Planning?
Managing your tax liability is important as it can directly influence how much of your income or investment earnings you get to keep. The more income and assets you have to work with, the easier it becomes to build wealth.
Proper financial planning can help you implement strategies that are designed to minimize taxes while maximizing income and assets. Having a solid financial plan in place can generate significant tax savings year by year. You can then use those savings to generate additional income through investments, grow your retirement accounts and increase your net worth.
Does financial planning require you to work with a financial advisor? Not necessarily. You could always go it alone. But there are some distinct advantages to having a financial advisor help you formulate a plan for managing tax liability.
Financial advisors have extensive knowledge about how tax planning can affect your financial plan. A good advisor is also familiar with the tax code and the latest tax rules. Even if you think you have a relatively straightforward tax situation, a financial advisor may be able to pinpoint areas where you can improve tax efficiency that you might have missed.
Financial Planning Strategies for Minimizing Tax Liability
There are different ways to approach tax planning in order to reduce your tax bill, depending on the specifics of your situation. If you’re working with a financial advisor to create a tax plan, then it may include any or all of the following.
Retirement Planning
Retirement planning is a focal point of a solid financial plan, particularly with regard to taxes. Aside from ensuring that you have enough money to retire, it’s also important to consider how much of your savings you’ll be able to keep once you start making withdrawals.
In terms of how you plan for retirement, your financial advisor may suggest any of the following:
Maxing out annual contributions to a traditional 401(k) or to a Roth 401(k) if you have that option.
Contributing money to a traditional or Roth IRA each year.
Funding a Health Savings Account (HSA) if you have that option with a high deductible health plan.
If you’re self-employed or own a business, you might open a solo 401(k), SEP IRA or SIMPLE IRA to save for retirement instead. It’s important to understand the tax treatment of different retirement savings options.
For example, traditional 401(k) plans and traditional IRAs allow for tax-deductible contributions. Qualified distributions are taxed as ordinary income in retirement. Roth accounts don’t offer a tax deduction, but you can make withdrawals tax-free when you retire.
A Health Savings Account is not a retirement account, per se. It’s meant to be used to save money for medical expenses, but it can double as a source of retirement income since you can withdraw funds for any purpose after age 65 without a tax penalty. You’ll just owe regular income tax on withdrawals.
Investment Planning
Investment planning is related to retirement planning, but it can include different aspects of managing tax liability. For instance, say that you’re investing through a taxable brokerage account, which is subject to capital gains tax. Your financial advisor can offer different strategies for managing tax liability, which may include:
Holding investments longer than one year to take advantage of the more favorable long-term capital gains tax rate.
Choosing tax-efficient investments, such as exchange-traded funds (ETFs), which can trigger fewer turnover events than traditional mutual funds.
Harvesting tax losses to offset some or all of your capital gains for the year.
Your advisor may also be able to guide you on how to deduct expenses related to investment properties if you own one or more rental homes. They could also help with executing a 1031 exchange if you’re interested in swapping out one property for another to minimize capital gains tax.
Tax Deductions and Credits
Tax deductions reduce your taxable income, which can help to push you into a lower tax bracket for the year. There are numerous expenses you might be able to deduct, including:
Mortgage interest
State and local taxes
Charitable donations
Business expenses
Self-employment expenses
Medical expenses
Student loan interest
Tax credits, meanwhile, reduce what you owe in taxes on a dollar-for-dollar basis. For instance, if you owe $1,000 in taxes and qualify for a $1,000 tax credit, the credit can wipe out what you owe. Some credits are refundable which can increase the size of your tax refund for the year. A financial advisor can walk you through the various deductions and credits you might be eligible to take in order to reduce your tax liability.
Withdrawal Planning
As you approach retirement, it’s important to consider how you’ll withdraw the money that you’ve saved. Your advisor can discuss different strategies for withdrawing money from a 401(k), IRA or taxable brokerage account so that you’re not overpaying taxes or draining your retirement reserves too quickly.
Your advisor may also discuss ways to tax-friendly ways to create supplemental income in retirement, such as purchasing an annuity or taking out a reverse mortgage. An advisor can also help you figure out when to take Social Security benefits to maximize your payment amount and how to coordinate those benefits with other sources of income in retirement.
The Bottom Line
Knowing what happens to your tax liability with proper financial planning is important for creating a long-term strategy for growing wealth. Handing over more money than you need to in taxes doesn’t offer any tangible benefit and it can be problematic if it leaves you with less money to save and invest. Having a trusted financial advisor to work with can ensure that you’re meeting your tax obligations without shortchanging your goals.
Financial Planning Tips
Tax planning can seem complicated if you’re not well-versed in the Internal Revenue Code. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Robo advisors can offer a more affordable way to manage financial planning, as the fees may be lower than what traditional advisors charge. However, it’s important to know what you’re getting for the money. For example, some robo-advisors offer tax loss harvesting but not all of them do. Additionally, robo-advisors aren’t really equipped to offer one on one advice about tax planning or investing. Those are good reasons to consider working with a human advisor instead, even if it means paying a slightly higher fee.
Rebecca Lake, CEPF®
Rebecca Lake is a retirement, investing and estate planning expert who has been writing about personal finance for a decade. Her expertise in the finance niche also extends to home buying, credit cards, banking and small business. She’s worked directly with several major financial and insurance brands, including Citibank, Discover and AIG and her writing has appeared online at U.S. News and World Report, CreditCards.com and Investopedia. Rebecca is a graduate of the University of South Carolina and she also attended Charleston Southern University as a graduate student. Originally from central Virginia, she now lives on the North Carolina coast along with her two children.
Last Updated: June 14, 2021 BY Michelle Schroeder-Gardner – 56 Comments
Disclosure: This post may contain affiliate links, meaning I get a commission if you decide to make a purchase through my links, at no cost to you. Please read my disclosure for more info.
Currently, one of our main goals is to save for a down payment for our next house. Due to this, we have been wondering about how much exactly we should save.
With our first house we didn’t put down 20% and had to pay PMI (big mistake), so we will definitely put down at least 20% on our next house.
Also, we are self-employed and I have heard that most self-employed people have to put around 25% to 30% down (and sometimes even 35%!) because banks want to see more upfront from small business owners.
Now, that’s a lot of money!
This has got us thinking. While we are aiming for 30% or more, at what point should we stop saving for our down payment and ramp up our retirement savings instead? Yes, we are still saving for retirement, but should we be saving more?
In the personal finance world, the decision seems to be split. Some are all about paying off a mortgage quickly, whereas others don’t think that’s a good idea. There is no right or wrong answer, which makes the decision a little more difficult.
Of course, I do realize that this is a good situation to be in, so I am not complaining. However, how do you decide what is best for you?
Below are positives and negatives of paying off your mortgage early or even buying your house upfront with cash.
Related content: How can I pay off my 30 year mortgage in 10 years?
Positive – Your house will be paid off early!
Of course, this is the biggest positive.
Your house will be paid off, you will be able to free up some cash each month, and you won’t have to worry about paying for a roof over your head each month.
Not having that huge amount of debt hanging over your head would be a wonderful feeling. Life would probably be a little less stressful and you may feel more financially independent.
Negative – Your money may do better if it’s invested in a different way.
While paying off your mortgage early can feel great and be a big accomplishment, mortgage interest rates right now are low.
You may do better by investing your money in other ways and earning a higher return. This can mean investing in certain companies, paying off high interest rate debt, investing in passive income, and more.
Positive – You can earn a guaranteed return by paying off your mortgage early.
On the flip side, by paying off your mortgage early, you can earn a guaranteed return.
Other investments most likely will mean that a return is not guaranteed (unless we are talking about paying off other debt), whereas when paying off your mortgage early, you will be certain what your return is.
Negative – A lot of your money is in one place if you pay off your mortgage early.
This is one big reason why I’m not sure if paying off your mortgage early is a good idea. If you have other investments and are on track for retirement, then by all means go for paying off your mortgage early.
However, if you don’t have much saved, then having everything you own in one place may not be a good idea.
Also, since all of your money is tied up with your house, it might be hard to get money if you end up needing it. Having at least some liquid money is a good idea.
Positive – You don’t have to deal with the hassle of getting a mortgage if you pay in cash.
If you have enough cash, then you might be able to skip the whole process of getting a mortgage.
Skipping a mortgage can be a positive for many reasons. Sellers love cash buyers, as it makes the buying process easier on them since they don’t have to wait for a mortgage to go through. This means you may get a discount if you buy 100% in cash or your offer may be chosen over others.
Also, if you are self-employed, skipping the mortgage process can be a good thing. I’ve heard stories of self-employed people trying to get a mortgage and it sounds like it’s a very difficult thing to do.
Are you wanting to pay off your mortgage early? Why or why not?
Even as mortgage rates continue to rise, buying opportunities remain – especially for the self-employed. Learn more about the current state of the industry in this week’s Mortgage Monday update!
Rates Update
Last week, mortgage rates jumped to their highest since the start of the pandemic. Freddie Mac expects this to continue, citing inflation and economic growth as causes of the increase. Like previous weeks, this is on par with predictions of a “new normal” for rates and the mortgage industry in 2022. But let’s dive deeper…
The start of last week saw relatively little change in mortgage rates. It wasn’t until Thursday, when the Bureau of Labor Statistics released their January Consumer Price Index, that markets reacted and adjusted based on new inflation numbers – the highest in years. Then on Friday, news of Russia’s potential invasion of Ukraine caused markets to shift accordingly; we’ll continue to monitor this variable as it may affect mortgage rates in the future.
For now, contact your Total Mortgage loan officer if you’ve been considering any type of home financing. We only expect rates to continue rising through this year, so be sure to lock yours in sooner rather than later.
FHFA Retires Restrictions for Self-Employed Borrowers
Good news for self-employed borrowers! At the start of February, the Federal Housing Finance Agency (FHFA) lifted its restrictions on borrowers with self-employment income. These were originally put in place in response to the pandemic but have since been removed, offering borrowers greater opportunities in an already competitive market. The same credit and income requirements may apply, but home financing is now generally more accessible for the self-employed.
If you are self-employed and considering a new home purchase or refinance, we have many loan officers available to help. Contact us or find a banker to get started.
Older, But Still Important News
The Federal Housing Finance Agency (FHFA) announced upcoming fee increases for certain Fannie Mae and Freddie Mac home loans. Effective April 1, 2022, upfront fees for these options will have the following increases:
Upfront fees for high-balance loans will increase between 0.25 and 0.75 percent.
Upfront costs for second home loans (non-primary residence) will increase between 1.125 and 3.875 percent.
These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.
Last month, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit. To learn more about these changes and your new borrowing options, get in touch with your Total Mortgage loan officer.
In Closing
2022 continues to serve as a revitalizing year for the economy (and in turn, the mortgage industry). We expect rates to rise in the coming months as the labor market grows stronger, so be sure to contact us and lock in a low rate now.
In the meantime, we’ll continue to monitor our industry news and keep you updated. Enjoy the rest of your week!
With mortgage rates continuing to rise this year, it’s more important than ever to stay informed with the latest industry news. Let’s get right into this week’s update!
Rates Update
2022 continues to be on track with earlier predictions of a return to pre-pandemic markets. Last week’s mortgage rate shift reflected as much with increases across the board for multiple loan products, as reported by Freddie Mac. For the most part, this is the continued result of record-high inflation, rising house prices, optimistic consumer spending, and more. One concern of note is that all of these things could affect the general affordability of homeownership; if you’d like to lock in a rate while they’re still low and enjoy the benefits of long-term savings, contact your Total Mortgage loan officer today.
Our prediction: mortgage rates will continue to increase. In the past month, they’ve neared levels not seen since the start of the pandemic. This may seem scary, but it’s important to remember that despite everything, rates are still relatively low. Contact us to secure financing now before they continue to rise.
Older, but Still Important News
Let’s cover some of the most significant industry news that has affected buyers since the start of this year.
At the start of February, the Federal Housing Finance Agency (FHFA) lifted its restrictions on borrowers with self-employment income. These were originally put in place in response to the pandemic but have since been removed, offering borrowers greater opportunities in an already competitive market. The same credit and income requirements may apply, but home financing is now generally more accessible for the self-employed.
The Federal Housing Finance Agency (FHFA) announced upcoming fee increases (effective April 1, 2022) for certain Fannie Mae and Freddie Mac home loans. These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1 – more information on that below.
At the start of the year, the borrowing limits for Conventional and Federal Housing Administration (FHA) loan options saw significant increases to help buyers combat rising market prices. The conforming limit for single-unit home loans is now $647,200 – an 18.05 percent increase from last year’s limit.
To learn more about any of these recent developments, get in touch with your Total Mortgage loan officer. Our goal is to educate and inform all of our borrowers, so we’d be happy to meet with you!
In Closing
As always, our door is always open if you have any questions about financing a home or exploring the benefits of homeownership. The market may be changing and mortgage rate increases may seem intimidating, but opportunities to buy are still available for borrowers everywhere. In the months to come, it’ll be important for borrowers to act decisively and purchase sooner than later – especially as the market returns to its pre-pandemic self.
We’ll continue to monitor the news and provide updates as they come. Find your mortgage banker if you have any questions and enjoy the rest of your week!
Last week brought big news and significant mortgage rate increases. Let’s cover the Fed’s announcement and more in this week’s Mortgage Monday update!
Rates Update
For the week ending March 17, Freddie Mac reported significant mortgage rate increases following the Federal Reserve’s meeting on Wednesday. For the first time since 2018, the Fed announced that interest rates will be rising by 0.25 percentage points – meaning mortgage rates will also rise – and that future increases will come over the rest of this year with each proceeding Fed meeting.
According to Freddie’s weekly rate survey, this announcement caused some mortgage rates to jump to their highest levels since May 2019. The average 30-year fixed-rate mortgage is well beyond four percent now, which should be a red flag to any borrowers considering a home purchase. We’ve said before that in the current market, it would be best to buy a home sooner than later; the Fed’s announcement last week has only confirmed this sentiment.
To get started, contact a Total Mortgage loan officer or apply now!
Older, but Still Important News
Let’s cover some older industry news that has affected buyers since the start of this year.
At the start of February, the Federal Housing Finance Agency (FHFA) lifted its restrictions on borrowers with self-employment income. These were originally put in place in response to the pandemic but have since been removed, offering borrowers greater opportunities in an already competitive market. The same credit and income requirements may apply, but home financing is now generally more accessible for the self-employed.
Coming soon: The Federal Housing Finance Agency (FHFA) announced upcoming fee increases (effective April 1, 2022) for certain Fannie Mae and Freddie Mac home loans. These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1.
To learn more about any of these recent developments, contact your Total Mortgage loan officer today.
In Closing
As expected, the Federal Reserve’s announcement of higher rates was last week’s biggest news and will continue to affect the market through the rest of the year. Our prediction: mortgage applications will likely increase with a correlating decline in refinances. Borrowers will want to lock in a rate now before the Fed inevitably raises them again, reducing affordability as they combat inflation. At the same time, refinancing will become less feasible as lower-rate options begin to disappear and give way for a true purchase market this spring.
If you’re on the fence about pursuing a home purchase, contact us or apply now! Experts have been predicting a return to pre-pandemic markets for some time and last week was a major step in that direction. Prospective buyers will need to be proactive to be successful – but for now, stay tuned for our next update and enjoy the rest of your week.
With an announcement from the Federal Reserve coming soon, we have a big week ahead of us. Let’s cover the latest in this week of mortgage industry news.
Rates Update
Despite their small, recent declines, mortgage rates rose last week in parallel with rising Treasury yields. Even so, rates are still relatively stable – especially with the Ukraine war as a driving factor for decreases and market volatility these past few weeks. This uncertainty overseas will likely continue to affect mortgage rates in the short term until some form of compromise is reached.
Of course, this doesn’t mean that rates will remain where they are forever. Record-high inflation in 2022 has signaled the Federal Reserve to ramp up its tapering of asset purchases and begin raising interest rates. A significant rate hike is expected to be announced this week when the Fed convenes tomorrow, March 15, and March 16. Depending on how things develop, we’ll likely see rate increases to products across the board – not just mortgages.
For now, be sure to keep an eye out for an announcement from the Federal Reserve. Follow us online for the latest information and contact your Total Mortgage loan officer so you can act quickly if further increases are announced.
Older, but Still Important News
Let’s cover some older industry news that has affected buyers since the start of this year.
At the start of February, the Federal Housing Finance Agency (FHFA) lifted its restrictions on borrowers with self-employment income. These were originally put in place in response to the pandemic but have since been removed, offering borrowers greater opportunities in an already competitive market. The same credit and income requirements may apply, but home financing is now generally more accessible for the self-employed.
The Federal Housing Finance Agency (FHFA) announced upcoming fee increases (effective April 1, 2022) for certain Fannie Mae and Freddie Mac home loans. These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1.
To learn more about any of these recent developments, contact your Total Mortgage loan officer today.
In Closing
The immediate future of our industry points to higher mortgage rates across the board as we continue our return to pre-pandemic levels. The Ukraine war has held rates steady since it began, but the Fed has indicated that this likely won’t steer them from their course of raising rates this year. Higher rates mean lower affordability for the average buyer, so it’s important to act sooner than later if you’re in the market for a home. Contact a Total Mortgage loan officer to get started now.
Even as mortgage rates continue to gradually rise, their future could be uncertain as markets react to the Ukraine conflict – all of this and more in this week’s Mortgage Monday update.
Rates Update
For the week ending February 24, Freddie Mac reported generally stable mortgage rates with very slight decreases across the board. An important note to remember, however, is that Freddie’s survey comes in every Thursday and doesn’t account for end-of-week market volatility. Mortgage rates change every day and last Friday’s data pointed to overall higher rates than the week before. This is on par with the gradual rise we’ve been seeing since the start of the year and should encourage consumers to buy or refinance before the increase continues.
For the immediate week ahead, an important variable to consider is the current conflict in Ukraine. Global disruptions such as this often pressure investors to pursue safer options, which could in turn result in temporarily lower mortgage rates. Our prediction: depending on the scale of the conflict and its developments this week, we could see mortgage rates hold steady or even slightly decline for a short period – but ultimately they will get back on track and continue their upward trend through the remainder of the year.
Despite everything, most experts agree that mortgage rates will continue to rise through 2022 as markets prepare for less aid from the Federal Reserve. This means that the longer consumers wait, the fewer opportunities they’ll have to refinance and save more with a lower rate. Contact your Total Mortgage loan officer now to lock yours in and take advantage of the market while mortgage rates are still low.
Older, but Still Important News
Let’s cover some of the most significant industry news that has affected buyers since the start of this year.
At the start of February, the Federal Housing Finance Agency (FHFA) lifted its restrictions on borrowers with self-employment income. These were originally put in place in response to the pandemic but have since been removed, offering borrowers greater opportunities in an already competitive market. The same credit and income requirements may apply, but home financing is now generally more accessible for the self-employed.
The Federal Housing Finance Agency (FHFA) announced upcoming fee increases (effective April 1, 2022) for certain Fannie Mae and Freddie Mac home loans. These increases will ultimately depend on each product’s loan-to-value ratio. “High-balance” loans qualify as any that go above the conforming baseline limit introduced on January 1.
To learn more about any of these recent developments, contact your Total Mortgage loan officer today.
In Closing
As always, we will continue to monitor all news that could affect our industry and average mortgage rates. Follow us on Facebook for future updates and contact us now to get started on your path to homeownership.