What can employers do to make sure their financial benefits attract and serve a truly diverse workforce?
It’s a question that has become increasingly relevant since the Covid-19 pandemic shed a harsh light on the pervasive economic inequalities embedded in society and the workplace. While there have been gains in the average wealth of all demographic groups since 2019, the racial wealth gap remains stubbornly wide.
According to Federal Reserve data from the second quarter of 2023, Black families had about $986,000 less wealth, on average, compared with white families, while Hispanic families had about $992,000 less wealth, on average, than white families. Put more starkly: Black and Hispanic families had 24 cents for every $1 of white family wealth.
Even when they attend and graduate from college, minorities still face an uphill financial climb. According to the Education Data Initiative, Black college graduates owe an average of $25,000 more in student loan debt than white college graduates. Four years after graduation, black students owe an average of 188% more than white students borrowed.
And while women have increased their presence in higher-paying jobs traditionally dominated by men, the gender pay gap hasn’t gone away: On average, women are paid 83.7 percent as much as men, which amounts to a difference of $10,000 per year. The gaps are even larger for many women of color, according to the U.S. Department of Labor.
Given these realities, it’s important that diversity, equity, and inclusion (DE&I) programs and financial wellness initiatives are effectively combined to help address the problems of economic inequality throughout every segment of your workforce.
By helping underrepresented employees turn wages into long-term wealth, companies can play a pivotal role in driving financial success that impacts future generations and results in systemic change.
Where Do Financial Wellness and Diversity, Equity, and Inclusion Intersect?
These days, many employers of all sizes have a DE&I strategy or program in place to increase inclusion and remove bias and discrimination in the workplace. Financial wellness benefits are also growing in popularity as a way to attract, retain, and add value to employees.
While companies may actively promote both financial wellness and DE&I, they often overlook the potential synergy between the two. Understanding how these two human resource pillars work together can help amplify the relevance, effectiveness, and success of both programs throughout your workforce.
Traditionally, financial well-being programs have focused on long-term savings and investing for retirement. But it’s becoming increasingly apparent that this approach doesn’t meet all the needs of an increasingly diverse workforce.
Depending on the individual, financial success can come in many forms, not just having enough for retirement. Success might also include paying off debt, saving for emergencies, or buying a first home. Understanding your workforce and its diverse needs — as well as understanding the importance of a broad-based definition of financial well-being — helps put you at the nexus of your DE&I and financial wellness goals.
Recommended: How to Support Your Low-Wage Workforce
Can Financial Well-Being Initiatives Enhance Diversity, Equity, and Inclusion in Your Workforce?
The answer is an overwhelming yes — as long as your financial well-being programs are designed to be customizable for employees on different financial footings with a range of financial goals and stresses. Here are some steps you can take to integrate your financial well-being and DE&I programs.
Ensure Fair Pay for All Employees
This may seem like a basic concept, but it still needs plenty of attention. Doing everything you can to close the race and gender pay gaps in your organization shows your commitment to both DE&I and financial well-being — and to making them work together.
Recommended: How Employers Can Help Close the Racial Wealth Gap
Embrace Flexible Financial Contribution Programs
Personalized, relevant financial benefits can help you meet your employees where they are in terms of financial challenges and goals. When you offer a range of financial well-being benefits, you give employees the power to choose the financial programs that can help them the most.
The pandemic highlighted for many people the need for short-term, goal-oriented savings as well as long-term investing. Programs that can resonate strongly with today’s diverse workforce and its many needs include: emergency savings accounts; student loan repayment programs, including 401(k) matches for employees paying off student loans; budget counseling, and debt management tools. Established college tuition reimbursement and retirement savings programs are also vital parts of a holistic financial wellness program.
Recommended: How Does an HR Team Implement a Student Loan Matching or Direct Repayment Benefit?
Get Creative
Don’t be afraid to think out of the box when it comes to expanding financial well-being programs so that you can include all employees. Many employers are reimagining traditional approaches to leaves and paid time off — for example, allowing employees to transfer unused PTO balances into accounts like emergency savings or 529 tuition savings plans.
Creativity is also important when it comes to education efforts. Simply offering new programs is not enough. Education efforts should be accessible, interactive, and customized so that each employee can find the information they need and act on it.
SoFi at Work has noticed that some employers are adopting a “learning journey” approach that allows workers to choose their own paths depending on where they are on their journey towards their individual financial goals and aspirations.
Recommended: Are Your Benefits Helping Women — Especially Moms — Achieve Financial Wellness?
Choose Credible Partners for a Sustainable Program
To provide this extra support and guidance across a broad spectrum of financial needs, you’ll need to choose credible partners that can provide expertise, platforms, and cost-effective services in specific areas. Good partners can help you launch personalized and sustainable programs that are accessible in the short-term, but also build the foundation for your department’s long-term goals.
The Takeaway
Employers can play a key role in ensuring that all employees have the same opportunities for financial success and control of their own financial futures. Democratizing financial well-being can not only create a more diverse and inclusive workplace, but ultimately a more equitable future for all of us.
SoFi at Work can help. We provide the benefits platforms and education resources that can enhance financial wellness throughout your workforce.
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Products available from SoFi on the Dashboard may vary depending on your employer preferences.
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Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
When it comes to their kids, many of your employees may be willing to put their retirement on the line.
As HR pros focus on workforce planning, understanding the burden that college costs impose on most employees is a key component for successful financial wellness programs.
Paying for college is a daunting challenge, and even financially savvy parents can become overwhelmed and confused by the college financing process. That’s where employer-sponsored education efforts can help. Employers who understand the following common college financing traps can better plan programs to alleviate the stress of paying for college and improve financial wellness overall.
Trap One: Prioritizing Their Children’s Education Over Their Own Retirement
By now, it’s become a financial wellness mantra: Parents should prioritize their retirement savings before saving for or paying for a child’s college education. After all, the thinking goes, students can borrow for education costs, but parents can’t borrow money to pay for retirement. And if parents don’t properly prepare for retirement, their children may end up supporting them in their later years, jeopardizing their future finances.
But with ever-rising tuition costs and the increasing burden of student debt, it may be harder for your employees to follow that tried-and-true advice. The cost of college has more than doubled over the past four decades — and student loan borrowing has risen along with it. Americans collectively owe more than 1.7 trillion in student loan debt, according to the Federal Reserve .
Trying to ease the burden on their children, your employees may be raiding their future. Among people aged 25 to 80 who are saving for both retirement and future college expenses, 58% say they are delaying retirement, and 41% say they have withdrawn money from their own retirement funds to pay for a child’s (or other relative’s) tuition, according to a July 2023 survey by the Society of Actuaries .
When an employee delays retirement to catch up on missed retirement savings or pay off education loans, it can be costly to an organization. What’s more, if paying for college forces an employee to work longer than they want to, the result may be a less productive, less engaged worker.
Recommended: SoFi Survey: The Future of Financial Well-Being at Work
Trap Two: Mismanaging PLUS loans
Parent Loans for Undergraduate Students (PLUS loans) are underwritten by the federal government and allow families to borrow without the same credit checks and other limits imposed on other types of lending. Because these loans are in a parent’s name, your employees may naturally gravitate to them as a way to help their children avoid debt.
But there are drawbacks. Unlike federal student loans, there are no limits on the amount parents can borrow as long as it doesn’t exceed education costs. To qualify for a PLUS loan, parents need only pass a check for an “adverse event” such as a recent bankruptcy filing or foreclosure. There is no consideration of the borrower’s ability to repay the loan. Given the often astronomical costs of attending a four-year college, your employees may quickly find they have taken on more debt than they can comfortably handle.
In addition, PLUS loan interest rates, set by the government each year, are usually significantly higher than student-held federal loans (8.05% for 2023-2024 versus 5.50%) and sometimes higher than some private college loans.
If parents default or consolidate their PLUS loans, or if they receive a forbearance or a deferment, the interest that continues to accrue is capitalized. That means that principal and payments can become even more unaffordable for employees. In addition, if the loans go into default, the government can garnish wages, Social Security checks, and tax refunds.
Recommended: Preparing for College Resource Guide for Parents
Trap Three: Avoiding College Financing at All Costs
Another common mistake lurks on the opposite side of the spectrum. In an effort to avoid college debt of any kind, parents who have some, but not enough, college savings may decide to forego saving for retirement, dip into retirement savings, or use home equity to pay tuition bills as they come.
Withdrawing 401(k) savings can result in significant penalties, taxes, and, importantly, lost principal and earnings. Cash-out home refinancing can lead to higher and perhaps unaffordable mortgage payments. Even putting retirement savings on hold when the year’s tuition is due can translate into large gaps in savings goals, depending on the number and ages of children attending college.
These are all understandable mistakes. As we saw above, an overreliance on debt to pay college bills can seriously jeopardize financial well-being. But so, too, can dismissing the strategic use of financial aid and loans to finance college costs.
For instance, your employees may neglect filling out the Free Application for Federal Student Aid (FAFSA), figuring that they earn too much to qualify for federal financial aid. According to Sallie Mae’s How America Pays for College 2023 report, 71% of families filed the FAFSA for the 2022-2023 academic year, down from 86% in 2016-2017.
These parents may not realize that without the FAFSA, the student will not be awarded federal subsidized and unsubsidized loans, which can be attractive for their low rates and, in the case of subsidized loan, help from the government in paying interest.
More importantly, many schools require students to submit a FAFSA to be eligible for merit-based scholarships and grants, even though these funds are awarded according to the student’s academic record and other achievements, not financial need. Merit-based aid does not have to be repaid and is usually awarded to undergraduates for the full four years.
While too much debt is never smart, a prudent and affordable mix of well-structured student debt can help parents avoid sacrificing retirement savings, home equity, and other long-term savings to pay for college now.
Employer-sponsored college financing education and one-on-one college counseling can help ensure parents understand the complexities of financial aid and student borrowing so they can balance long-term and current financial needs and goals.
The Takeaway
Employers who help parents avoid these common college financing traps may help alleviate what is fast becoming one of the largest sources of financial stress in your workforce.
SoFi at Work can help with student loan repayment platforms, extensive education efforts, plus a lending suite of student, graduate student, MBA, and parent loans. For organizations that are looking to help their employees get ahead on their education financing goals, SoFi at Work also offers a 529 College Savings Program, which can be integrated into any payroll system.
Photo credit: iStock/Orbon Alija
Products available from SoFi on the Dashboard may vary depending on your employer preferences.
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score provided to you is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
Advisory tools and services are offered through SoFi Wealth LLC, an SEC-registered investment adviser. 234 1st Street San Francisco, CA 94105.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Today’s jobs report has proven to be one of the most extreme examples of competing narratives in the past year or so. The headline number wasn’t too extreme compared to the forecast, but at 275k vs 200k, certainly the sort of thing that would hurt rates. Revisions told a completely different story with last month falling to 229k from 353k. The unemployment rate (3.9 vs 3.7) and wages (0.1 vs 0.3) added to the confusion. Bonds agreed with the morning’s trading having been very “2-way” so far.
If anything, this places even more emphasis on next week’s CPI to cast a deciding vote on whether rates should continue rallying into the following week’s Fed announcement, or if the last week and a half of improvement is a sufficient correction to the early-2024 rate spike. Either way, be sure to note that the pace of the rally over the past week and a half is decelerating noticeably.
Average mortgage rates fell moderately for a third consecutive day yesterday. But don’t get too comfortable. The two economic reports that are most consequential for those rates are both due over the next few days. And they could change everything.
First thing, it was looking as if mortgage rates today might fall, perhaps modestly. But that could change later in the day.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.1%
7.12%
-0.06
Conventional 15-year fixed
6.46%
6.49%
-0.08
Conventional 20-year fixed
7.03%
7.05%
-0.01
Conventional 10-year fixed
6.48%
6.51%
-0.11
30-year fixed FHA
6.11%
6.77%
-0.13
30-year fixed VA
6.43%
6.54%
-0.08
5/1 ARM Conventional
6.29%
7.36%
Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
Are the steady falls in mortgage rates we’ve been seeing in recent days the start of the sustained downward trend I’ve been predicting? It’s possible. But I doubt it.
I’m not expecting that to begin properly for at least a couple of months and perhaps longer.
So, for now, my personal rate lock recommendations are:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes ticked down to 4.08% from 4.09%. (Good for mortgage rates. However, yields were rising this morning.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices inched down to $78.53 from $78.60 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices edged up to $2,174 from $2,158 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — increased minimally to 75 from 74 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to move downward. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
This morning, we finally saw the February jobs report (aka the employment situation report). And it might prove less bad for mortgage rates than one might fear.
Yesterday, I described the report’s three headline figures. Here they are again with this morning’s actual figures shown in bold:
Nonfarm payrolls (the number of new jobs created that month) — Today’s actual: 275,000. Markets were expecting that to be 198,000, well down from January’s 353,000
Unemployment rate — Today’s actual: 3.9%. Markets were expecting that to be 3.7%, unchanged from January
Average hourly wages — Today’s actual: 0.1%. Markets were expecting a 0.2% rise, much lower than January’s 0.6% increase
You can see that the unemployment rate and average hourly earnings numbers would typically be good for mortgage rates. But markets tend to react to nonfarm payrolls primarily. And The Wall Street Journal (paywall) reported the data under the headline, “Hiring Boom Continues With 275,000 Jobs Added.”
Still, the news wasn’t as dire as it could have been: Two out of three ain’t bad. So, I’m hoping that markets won’t punish mortgage rates too badly.
One caveat on today’s report — and other important ones. Markets don’t always respond in the ways we’ve come to expect. Sometimes, there’s a delayed reaction. Other times, investors might discover something hidden in the minutiae of the report that changes their response. And, occasionally, they just act perversely.
Next week
Just as this week has been dominated by this morning’s jobs report, next week is likely to pivot on Tuesday morning’s consumer price index (CPI).
We’re also due February’s retail sales figures on Wednesday and various inflation and other reports. But the CPI’s likely to rule next week.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Mar. 7 report put that same weekly average at 6.88% down from the previous week’s 6.94%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Feb. 12 and the MBA’s on Feb. 20.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.5%
6.3%
6.1%
5.9%
MBA
6.9%
6.6%
6.3%
6.1%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
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Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
In a world where speed and convenience have been the siren song to consumers, there’s a movement toward buying more mindfully, sustainably, “slowly.”
You’ve heard of slow fashion. Slow food. Slow travel. And when it comes to the home, “slow decorating.”
A reaction against rooms filled with mass-produced “fast furniture,” slow decorating embraces a more deliberate approach that prioritizes a personal connection to the stuff we live with. It might mean giving new life to heirloom or found pieces. Or buying new things that have the quality to last.
The journey of creating a space is as important as the destination.
New York City designer Gideon Mendelson thinks the movement echoes the Japanese philosophy of “ikigai,” which centers around finding meaning and purpose. Applied to interiors, it’s about creating spaces that promote all-around well-being.
“To me, good design makes room for living and doing. Decorating with meaningful pieces isn’t about chasing an aesthetic, but curating spaces that resonate with authenticity and personal stories,” he says.
“It’s not just about how it looks; it’s about how you want to live.”
And you don’t have to spend a lot, he says. He framed some inexpensive yet eye-catching vintage deli signs, adding a playful element to the Hamptons dining room of a family of five.
The trend toward “slower,” more thoughtful interior design, Mendelson thinks, lies in subtleties: “The cherished heirlooms, and the intimate connection between a space and its inhabitants.”
TOSSING HAS BECOME TURNING
Fast furniture’s association with cheaper materials, excessive packaging and frequent replacement clashes with consumers’ growing interest in minimizing our lasting impact on the planet.
Now, we’re buying more mindfully, but we’re also having a lot of fun DIYing.
During the pandemic, slow assembly lines and stalled container ships meant a lot of brand-new homewares weren’t getting made or sent to market, so upcycling stuff we had or found became hobby, and often necessity.
If you could find a great credenza at a flea market or online reseller that just needed a little TLC, why not?
Not too long ago, decor trade shows would include a handful of studio labs offering reclaimed wood items and organic textiles. Today, at global fairs like Ambiente in Frankfurt, Salone in Milan and Paris’ Maison et Objet, hundreds of companies show new design made with environmental and social impact in mind. Fair trade manufacturing. Fast-growing renewables like hemp, bamboo and cork. Cushions made of soy-based foam instead of petroleum-based foam. Recycled glass and metal accessories.
Mid 20- and 30-somethings are seen as drivers of the slow design trend. TikTok and Instagram feeds are full of refinish-and-reveal videos, and modest abodes full of found treasures.
Stephen Orr, editor in chief of Better Homes & Gardens, says he’s spent the past couple of years renovating a 1760s house on Cape Cod.
“The first year was during the pandemic, so antiques and flea markets were a godsend considering all the supply chain disruptions,” he says.
“But during that process, we came to the realization that pieces with a patina of age better celebrate the house’s long history anyway.”
He also added some new, modern pieces “so it doesn’t look like we should be dressed in period Colonial Williamsburg costumes.”
SHOPPING TIPS
Furniture for sitting, sleeping and eating is where you should spend more money on quality, says Jillian Hayward Schaible of Susan Hayward Interiors.
“We encourage clients to invest in pieces like sofas/sectionals, beds, dining tables and upholstered items, because you can really feel the difference when these items are well-made,” she says.
Peter Spalding of the designer furniture sourcing platform Daniel House Club notes that imitations of Chippendale and other legacy-style pieces — think cabinets and wingback chairs, for example — were common in the ‘80s and early ’90s.
“Now, the imitations aren’t very valuable, but the originals remain highly sought after,” he says. “As you collect ‘slow furniture,’ buy the most authentic versions you can afford.”
Dan Mazzarini of BHDM Design and ARCHIVE echoes the advice.
“If you’re looking for a good investment, go straight to vintage. Things that have already stood the test of time often have another 50 years left in them! Side tables, desks, even cabinets are great pieces to look for,” he says.
Mendelson mentions a pair of vintage French plaster shell sconces in his Sagaponack, New York, home. He bought them 15 years ago “and they still feel fresh and relevant today.”
“I think a desire for one-of-a-kind and bespoke is at least starting a conversation about handmade,” he says. “Quality vs quantity. Living with intention.”
STORES ON BOARD
Many retailers are getting seats on the slow train. West Elm, for instance, was early among home retailers in joining Fair Trade USA, which ensures that suppliers maintain good workplaces and wages, and support their communities.
The global reforestation project One Tree Planted gets part of every purchase from furniture brand Joybird. Herman Miller’s rePurpose program gets used furniture to nonprofit organizations. And Ikea has initiatives like moving to bio-based glue, and instituting a buy-back/re-sell program that saw 230,000 items given a new life in 2022.
For the past five years, the United Nations Refugee Agency’s MADE51 initiative has helped artisans partner with fashion and home accessories businesses worldwide to create sustainable, fairly traded goods.
—-
New York-based writer Kim Cook covers design and decor topics regularly for The AP. Follow her on Instagram at @kimcookhome.
For more AP Lifestyles stories, go to https://apnews.com/hub/lifestyle.
Average mortgage rates just inched lower yesterday. And they were effectively unchanged over the last seven days.
Next week, the direction those rates take will probably hinge almost entirely on Friday’s jobs report and appearances before Congress of the Federal Reserve’s chair. (More on those below.) Of course, nobody knows what they will say. So, once again, I’m forced to say mortgage rates next week could go either way.
Find and lock a low rate
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.27%
7.29%
-0.02
Conventional 15-year fixed
6.68%
6.71%
-0.02
Conventional 20-year fixed
7.11%
7.14%
-0.02
Conventional 10-year fixed
6.59%
6.61%
-0.03
30-year fixed FHA
6.31%
6.98%
-0.08
30-year fixed VA
6.64%
6.75%
Unchanged
5/1 ARM Conventional
6.31%
7.39%
Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Find and lock a low rate
Should you lock a mortgage rate today?
There’s no such thing as certainty in future mortgage rates. However, the chances of their gently gliding lower in 2024 are good. Unfortunately, it’s looking unlikely that the happy trend will arrive before late spring, and possibly well into the summer.
So, my personal rate lock recommendations are now:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
What’s moving current mortgage rates
Next week’s jobs report
Two monthly economic reports vie for the top spot as the most consequential for mortgage rates. One, the jobs report, is due next Friday. And the other, the consumer price index (CPI), is scheduled for the following Tuesday.
We’ll deal with the CPI next week. But let’s look at what the jobs report (formally called the employment situation report) for February might do.
With almost all economic data, mortgage rates tend to fall when the figures in a report are lower than markets are expecting. One exception crops up in the jobs report. It’s better for mortgage rates when the unemployment rate is higher than expected.
Before each report, analysts come up with a consensus forecast. And many investors trade ahead of publication based on the forecast, pricing it into mortgage rates and assets. So, when the forecast is wrong, investors are left scrambling to buy or sell assets as they rebalance their portfolios to reflect reality. The asset that largely determines mortgage rates is a type of bond called a mortgage-backed security (MBS).
So, let’s see what markets are expecting, according to MarketWatch, from the jobs report:
Nonfarm payrolls (new jobs added during the month) — 210,000 in February, down from 353,000 in January
Unemployment rate — 3.7% in February, unchanged from January
Hourly wages — 0.2% in February, down from 0.6% in January
To be clear, mortgage rates tend to fall when economic data are worse than expected. So, we’d like nonfarm payrolls to be below 210,000, hourly wages to have risen more slowly than 0.2%, and the unemployment rate to be higher than 3.7%.
Chances are, the jobs report will on Friday swamp the effects of all the other economic reports next week. But a few of the lesser ones might cause some volatility earlier in the week.
Other important reports next week
The ones most likely to do so are:
January factory orders on Tuesday — Expected to fall to -3.1% from December’s +0.2%
February purchasing managers’ index (PMI) from the Institute for Supply Management (ISM) — Expected to fall slightly
February ADP employment report for the private sector on Wednesday — Expected to rise to 150,000 from 107,000 in January. Sometimes seen as a bellwether for the jobs report
January job openings and labor turnover survey (JOLTS) on Wednesday — Openings are expected to dip slightly to 8.9 million from 9 million in December. A helpful peek under the labor market’s hood
Second reading of productivity during the last quarter of 2023 (Q4/23) on Thursday — Expected to be a shade lower than the first reading at 3.1% compared to 3.2%
We’d need to see big variations from the analysts’ consensus forecasts for these to move mortgage rates far or for long. But any of these might push those rates up or down.
The Fed
Although these and other reports routinely move mortgage rates even when inflation and the Federal Reserve are not front of mind, things are different now. Investors tend to view the data through the prism of how they might affect the Fed’s decisions on the timing and scope of future cuts to general interest rates.
One way they can gauge that is by listening to what top Fed officials say in public. And those have nine speaking engagements next week.
Most importantly, Fed Chair Jerome Powell is due to provide evidence to Congress next Wednesday and Thursday. His voice is highly influential and his testimony could easily move mortgage rates.
The Fed will next decide on rate policy on Mar. 20. Very few expect it to cut general interest rates that day. But Wall Street hopes it will strongly hint at cuts at the May or June meetings of its rate-setting committee.
Economic reports next week
See above for details about the more important economic reports next week.
In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.
Monday — Nothing
Tuesday — February ISM PMI. Also factory orders for January
Wednesday — Fed Chair Jerome Powell testifies to Congress. Also February’s ADP employment report and January’s JOLTS
Thursday — Fed Chair Jerome Powell testifies to Congress (again). Plus productivity in Q4/23. And initial jobless claims for the week ending Mar. 2
Friday — February jobs report
The jobs report is by far the most important publication next week. But watch out, too, for the Fed chair’s appearances before Congress.
Time to make a move? Let us find the right mortgage for you
Mortgage rates forecast for next week
Once again, mortgage rates are unpredictable next week. Whether they move higher or lower will largely depend on the jobs report (which regularly confounds analysts’ forecasts) and on what Fed Chair Jerome Powell tells Congress.
How your mortgage interest rate is determined
A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.
Your part
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
Shopping around for your best mortgage rate — They vary widely from lender to lender
Boosting your credit score — Even a small bump can make a big difference to your rate and payments
Saving the biggest down payment you can — Lenders like you to have real skin in this game
Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on something called you “PITI.” That stands for:
Principal — Pays down the amount you borrowed
Interest — The price of borrowing
Taxes — Specifically property taxes
Insurance — Specifically homeowners insurance
Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Down payment assistance programs in every state for 2023
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
Ever dream of leaving your job to pursue a project you’ve always been passionate about, like starting your own business? Or going back to school without taking out student loans? What about the option to retire at age 50 instead of 65 without having to worry about money?
Any of these opportunities could happen if you’re able to achieve financial freedom — having the money and resources to afford the lifestyle you want.
Intrigued by the idea of being financially free? Read on to find out what financial freedom means and how it works, plus 12 ways to help make it a reality.
What Is Financial Freedom?
Financial freedom is being in a financial position that allows you to afford the lifestyle you want. It’s typically achieved by having enough income, savings, or investments so you can live comfortably without the constant stress of having to earn a certain amount of money.
For instance, you might attain financial freedom by saving and investing in such a way that allows you to build wealth, or by growing your income so you’re able to save more for the future. Eventually, you may become financially independent and live off your savings and investments.
There are a number of different ways to work toward financial freedom so that you can stop living paycheck-to-paycheck, get out of debt, save and invest, and prepare for retirement. 💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
12 Ways to Help You Reach Financial Freedom
The following strategies can help start you on the path to financial freedom.
1. Determine Your Needs
A good first step toward financial freedom is figuring out what kind of lifestyle you want to have once you reach financial independence, and how much it will cost you to sustain it. Think about what will make you happy in your post-work life and then create a budget to help you get there.
As a bonus, living on — and sticking to — a budget now will allow you to meet your current expenses, pay your bills, and save for the future.
2. Reduce Debt
Debt can make it very hard, if not impossible, to become financially free. Debt not only reduces your overall net worth by the amount you’ve got in loans or lines of outstanding credit, but it increases your monthly expenses.
To pay off debt, you may want to focus on the avalanche method, which prioritizes the payment of high-interest debt like credit cards.
You might also try to see if you can get a lower interest rate on some of your debts. For instance, with credit card debt, it may be possible to lower your interest rate by calling your credit card company and negotiating better terms.
And be sure to pay all your other bills on time, including loan payments, to avoid going into even more debt.
3. Set Up an Emergency Fund
Having an emergency fund in place to cover at least three to six months’ worth of expenses when something unexpected happens can help prevent you from taking on more debt.
With an emergency fund, if you lose your job, or your car breaks down and needs expensive repairs, you’ll have the funds on hand to cover it, rather than having to put it on your credit card. That emergency cushion is a type of financial freedom in itself.
4. Seek Higher Wages
If you’re not earning enough to cover your bills, you aren’t going to be able to save enough to retire early and pursue your passions. For many people, figuring out how to make more money in order to increase savings is another crucial step in the journey toward financial freedom.
There are different ways to increase your income. First, think about ways to get paid more for the job that you’re already doing.
For instance, ask for a raise at work, or have a conversation with your manager about establishing a path toward a higher salary. Earning more now can help you save more for your future needs.
5. Consider a Side Gig
Another way to increase your earnings is to take on a side hustle outside of your full-time job. For instance, you could do pet-sitting or tutoring on evenings and weekends to generate supplemental income. You could then save or invest the extra money.
6. Explore New Income Streams
You can get creative and brainstorm opportunities to create new sources of income. One idea: Any property you own, including real estate, cars, and tools, might potentially serve as money-making assets. You may sell these items, or explore opportunities to rent them out.
7. Open a High-Yield Savings Account
A savings account gives you a designated place to put your money so that it can grow as you keep adding to it. And a high-yield savings account typically allows you to earn a lot more in interest than a traditional savings account. As of February 2024, some high-yield savings accounts offered annual percentage yields (APYs) of 4.5% compared to the 0.46% APY of traditional savings accounts.
You can even automate your savings by having your paychecks directly deposited into your account. That makes it even easier to save.
8. Make Contributions to Your 401(k)
At work, contribute to your 401(k) if such a plan is offered. Contribute the maximum amount to this tax-deferred retirement account if you can — in 2024, that’s $23,000, or $30,500 if you’re age 50 or older — to help build a nest egg.
If you can’t max out your 401(k), contribute at least enough to get matching funds (if applicable) from your employer. This is essentially “free” or extra money that will go toward your retirement. 💡 Quick Tip: Want to lower your taxable income? Start saving for retirement with a traditional IRA. The money you save each year is tax deductible (and you don’t owe any taxes until you withdraw the funds, usually in retirement).
9. Consider Other Investments
After contributing to your workplace retirement plan, you may want to consider opening another retirement account, such as an IRA, or an investment account like a brokerage account. You might choose to explore different investment asset classes, such as mutual funds, stocks, bonds, or exchange-traded funds.
When you invest, the power of compounding returns may help you grow your money over time. But be aware that there is risk involved with investing.
Although the stock market has generally experienced a high historical rate of return, stocks are notoriously volatile. If you’re thinking about investing, be sure to learn about the stock market first, and do research to find what kind of investments might work best for you.
It’s also extremely important to determine your risk tolerance to help settle on an investment strategy and asset type you’re comfortable with. For instance, you may be more comfortable investing in mutual funds rather than individual stocks.
10. Stay Up to Date on Financial Issues
Practicing “financial literacy,” which means being knowledgeable about financial topics, can help you manage your money. Keep tabs on financial news and changes in the tax laws or requirements that might pertain to you. Reassess your investment portfolio at regular intervals to make sure it continues to be in line with your goals and priorities. And go over your budget and expenses frequently to check that they accurately reflect your current situation.
11. Reduce Your Expenses
Maximize your savings by minimizing your costs. Analyze what you spend monthly and look for things to trim or cut. Bring lunch from home instead of buying it out during the work week. Cancel the gym membership you’re not using. Eat out less frequently. These things won’t impact your quality of life, and they will help you save more.
12. Live Within Your Means
And finally, avoid lifestyle creep: Don’t buy expensive things you don’t need. A luxury car or fancy vacation may sound appealing, but these “wants” can set back your savings goals and lead to new debt if you have to finance them. Borrowing money makes sense when it advances your goals, but if it doesn’t, skip it and save your money instead.
The Takeaway
Financial freedom can allow you to live the kind of life you’ve always wanted without the stress of having to earn a certain amount of money. To help achieve financial freedom, follow strategies like making a budget, paying your bills on time, paying down debt, living within your means, and contributing to your 401(k).
Saving and investing your money are other ways to potentially help build wealth over time. Do your research to find the best types of accounts and investments for your current situation and future aspirations.
Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
Invest with as little as $5 with a SoFi Active Investing account.
FAQ
How can I get financial freedom before 30?
Achieving financial freedom before age 30 is an ambitious goal that will require discipline and careful planning. To pursue it, you may want to follow strategies of the FIRE (Financial Independence Retire Early) movement. This approach entails setting a budget, living below your means in order to save a significant portion of your money, and establishing multiple streams of income, such as having a second job in addition to your primary job.
What is the most important first step towards achieving financial freedom?
The most important first step to achieving financial freedom is to figure out what kind of lifestyle you want to have and how much money you will need to sustain it. Once you know what your goals are, you can create a budget to help reach them.
What’s the difference between financial freedom and financial independence?
Financial freedom is being able to live the kind of lifestyle you want without financial strain or stress. Financial independence is having enough income, savings, or investments, to cover your needs without having to rely on a job or paycheck.
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Retirement is supposed to be a time for enjoying life after decades of work. Yet many women are in a financially precarious situation when it comes to the so-called “golden years.” In a 2023 SoFi survey, 57% of women said they aren’t saving for retirement. Similarly, 50% have no personal retirement savings according to a 2022 Census Bureau Report.
Given that women now outlive men by approximately six years, according to a recent study in JAMA, they need to save for an even longer retirement than their male counterparts. That makes the fact that they have fewer funds earmarked for retirement even more troubling.
Why aren’t women saving for the future? And how can they start financially preparing for retirement? Read on to learn about the retirement gender divide, why it exists, and some possible solutions for overcoming it.
A Look at Retirement Trends for Women and Men
There has long been a disparity in retirement savings for men and women. According to the U.S. Department of Labor, as women get older, their chances of living in poverty increase, a trend that has persisted for at least 50 years, when such data collection started.
Consider the current retirement savings divide between women and men today, as reported by respondents to the SoFi 2023 Ambitions Survey:
Retirement Savings for Women and Men in US
According to the survey of Americans ages 18 to 75, men have a median retirement savings that’s about $40,000 to $60,000 higher than women’s savings. In addition, 11% more women than men aren’t saving for retirement, and likewise 11% more women don’t know how much is in their retirement savings. In fact, 33% of women have less than $5,000 in retirement savings, the survey found.
Men
Women
Median Retirement Savings
$70,001-$80,000
$20,001-$30,000
% Not Saving for Retirement
46%
57%
% Who Don’t Know What Their Retirement Savings Is
45%
56%
*Source: SoFi Ambition Survey, 2023
This savings disparity typically begins early in adult life and accumulates over time. Employment, marriage, and motherhood all play a role.
💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.
How Marriage and Children Impact Retirement
Women aged 55 to 66 who have been married once tend to have more retirement savings than women who have never been married, or those who have been married two or more times. According to a recent income survey from the U.S. Census Bureau, close to 37% of women married once have no retirement savings, compared to 41% of women married two or more times and 55% who never married.
Women, Marriage and Retirement Savings*
Women Married Once
Women Married Two or More Times
Women Who Never Married
36.7% have no retirement savings
40.9% have no retirement savings
54.5% have no retirement savings
11.8% have $1 to $24,999
11.8% have $1 to $24,999
11.7% have $1 to $24,999
14.9% have $25,000 to $99,999
13.6% have $25,000 to $99,999
13.6% have $25,000 to $99,999
36.6% have $100,000 or more
33.7% have $100,000 or more
20.2% have $100,000 or more
*Source: U.S. Census Bureau, Survey of Income and Program Participation
In a divorce, some couples may be required to split their retirement savings or one may need to transfer some of their retirement funds to the other, which could be one of the reasons why the percentage of those without retirement savings is lower among women married two or more times than those who never married.
Motherhood and Money
When women have children, they often take time off from the workforce and/or may work part-time, which can have an impact on their earnings. According to an analysis by the Pew Research Center, among people 35 to 44, 94% of fathers are active in the workforce while 75% of mothers are.
Motherhood is also a time when the wage gap comes into play. In 2022, mothers 25 to 34 earned 85% of what fathers the same age did, while women without children at home earned 97% of what fathers earned, the Pew analysis found. The less money women make, the less they have to save for retirement.
Earnings for Mothers 25-34
85% of what fathers earned
Earnings for Women 25-34 Without Children at Home
97% of what fathers earned
*Source: Pew Research Center, 2023
Earning less also affects the Social Security benefits women get in retirement. While men got $1,838 a month on average in Social Security in 2022, women received on average $1,484, according to the Social Security Administration.
Retirement Is a Top Priority for Women and a Bigger Concern
While saving for retirement is the top goal for women, they are also focused on, and perhaps feeling stress about, paying off credit card and student loan debt, according to the SoFi Ambitions Survey.
Overall, women tend to perceive financial goals and success quite differently than men do. Two-thirds of female survey respondents said their marker of success is being able to feed their families. By comparison, one-third of men said their marker of success is being seen as successful, while another one-third say it’s reaching a certain income bracket.
That divergence may help explain why men are far more likely than women to consider investing a top financial goal, which could help them build retirement savings. For women, investing is at the bottom of the list of their financial priorities, perhaps out of necessity.
Women’s Financial Goals vs. Men’s Financial Goals
Women’s Financial Goals
Men’s Financial Goals
Saving for retirement: 45% Paying down credit card debt: 41% Paying down student loans: 39% Continue Investing: 33%
Continue Investing: 52% Saving for retirement: 49% Paying down credit card debt: 33% Paying down student loans: 27%
*Source: SoFi Ambition Survey, 2023
Retirement is women’s number-one goal and it’s also one of their greatest worries. One in five female respondents to SoFi’s survey said they may not be able to retire.
Those Who Worry They Won’t Be Able to Retire
Women
Men
20%
15%
*Source: SoFi Ambition Survey, 2023
That means women are 33% more likely than men to believe that retirement may not happen for them.
Even if they can retire, there is no guarantee women’s savings will cover their expenses. In fact, women are approximately 10% more likely than men to say they are concerned about outliving their assets and having enough savings, according to a report from McKinsey Insights.
Recommended: When Can I Retire?
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Why Are Women Facing a Retirement Gap?
In addition to the financial impact of marriage, motherhood, and lower earnings, women also experience some additional barriers to retirement saving.
For instance, a report from the Global Financial Literacy Excellence Center found that women tend to score lower in financial literacy than men do. And women with lower financial literacy are less likely to save and plan for retirement, according to the research.
Women also lack confidence when it comes to investing. Only 33% see themselves as investors, according to a 2022 SoFi Women and Investing Insights analysis, and 71% of their assets are in cash, rather than in investments or a retirement account, where their funds might have the potential to grow.
Minding and Mending the Gap
So how can women and society at large move forward and start closing the retirement gap?
The first step is for everyone, across all genders and ages, to build confidence in their financial skills by learning about money, saving, and investing. Knowledge helps create strength and belief in oneself, and it’s never too early or too late to start learning.
There are numerous good resources on retirement planning, to help individuals determine how much they may need to save for retirement and strategies that could help them get there. They can also sign up for financial classes and courses, and they might even want to consult a financial advisor.
At work, employees can participate in their employer’s 401(k) plan or any other retirement savings plan offered. Because money is automatically deducted from their paychecks and placed in their 401(k) account, saving may be easier to accomplish.
💡 Quick Tip: Did you know that a traditional Individual Retirement Account, or IRA, is a tax-deferred account? That means you don’t pay taxes on the money you put in it (up to an annual limit) or the gains you earn, until you retire and start making withdrawals.
How to Start Saving for Retirement
No matter what your age, the time to kick off your retirement savings is now. Here’s how to begin.
Figure out your retirement budget.
To determine the amount you’ll need for retirement, think about what you want your life after work to look like. Do you want to move to a smaller, less expensive home? Do you hope to travel as much as possible? Having a clear picture of your goals can help you calculate how much you might need.
You can also consider the 4% rule, which suggests withdrawing 4% of your retirement savings each year of retirement so that you don’t outlive your savings. That could give you a ballpark to aim for.
Cut back on current expenses.
Take an honest look at what you’re spending right now on everything from rent or your mortgage to car payments, groceries, clothing, and entertainment. Find things to cut or trim — for example, do you really need three streaming services? — and put that money into your retirement savings instead.
Some savvy belt tightening now could help give you a more financially secure future.
Contribute as much as you can to your 401(k).
If you can max out your 401(k), go for it. You’re allowed (per IRS rules) to contribute up to $23,000 in 2024. If that much isn’t possible, contribute at least enough to get your employer’s matching contribution. That’s essentially “free money” that can help build your retirement savings.
Consider opening an IRA.
If you’ve contributed the max to your workplace retirement plan, a traditional or Roth IRA could help you save even more for retirement. You can contribute up to $7,000 in an IRA for 2024, or $8,000 if you’re 50 or older. IRAs offer certain tax advantages that may help you save money as well by lowering your taxable income the year you contribute (traditional IRA), or allowing you to withdraw your money tax-free in retirement (Roth IRA).
Diversify your portfolio.
Whatever type of retirement account you have, including a brokerage account, diversifying your portfolio — which means investing your money across a variety of different asset classes — may help mitigate (though not eliminate) risk, rather than concentrating your funds all in one area.
Just make sure that the way you allocate your assets matches your retirement goals and your risk tolerance.
The Takeaway
Women are far behind men when it comes to retirement savings, due to a number of factors, including earning lower wages, and motherhood, which can mean time away from work, costing them in lost earnings. There’s also an emotional component involved: Women are less confident about investing overall.
However, building financial strength, and educating themselves about retirement planning is a good way for women to start saving for their future. Cutting expenses and directing that money into savings instead, participating in their workplace retirement plan, and opening an IRA or investment account are some of the ways women can take charge of their finances and help position themselves for a happy and secure retirement.
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Liberty Reverse Mortgage, a top 10 reverse mortgage lender owned by Ocwen Financial Corp. and its subsidiary PHH Mortgage Corp., allegedly violated California labor laws by failing to provide employees with rest breaks, meal breaks and appropriate compensation for off-the-clock and overtime work, according to a newly filed class-action lawsuit.
The suit, filed by former Liberty employee Michaela LaNere in Sacramento County Superior Court, seeks to recoup lost wages and other associated damages as detailed in a court complaint, which was reviewed by RMD.
If approval for a class is granted, attorneys seek to “temporarily, preliminarily and permanently [enjoin and restrain Liberty] from engaging in similar unlawful conduct,” and to require the company to “pay all overtime wages and all sums unlawfully withheld from compensation.”
Attorneys for the proposed class also seek restitution for the company’s “ill-gotten gains” resulting from its alleged violations, as well as compensatory damages that include pay for overtime worked.
This includes compensation for meal and rest periods that were allegedly unfulfilled, as well as expenses incurred by the class for their job duties and any legal fees that may arise from the case.
The plaintiff and proposed class are represented by attorneys at Zakay Law Group APLC and JCL Law Firm APC, according to a press release announcing the lawsuit. Representatives for the law firms could not be immediately reached for comment.
A representative of PHH Mortgage told RMD that the lender is currently weighing its next steps in response to the complaint.
“We are aware of the complaint and reviewing the matter,” the PHH spokesperson said. “Regarding the allegations made in the complaint, we take pride in how we treat our employees, and we do so fairly and within the requirements of the law.”
Liberty/PHH parent company Ocwen posted a $64 million loss in 2023 but forecasts a generally positive trajectory for its reverse mortgage origination and servicing businesses, according to a recent earnings report.
As more forward mortgage participants seem to be entering the reverse space of late, Ocwen CEO Glen Messina said during the earnings call that the company is supporting several forward correspondent clients in joining the reverse mortgage business.
“Because we participate in all segments of the reverse industry from an originations perspective — so direct-to-consumer, wholesale and correspondent — we would expect to benefit the most in our correspondent channel by seeing a growth in forward originators moving into the reverse product space,” he said.
Roughly 72% of potential homebuyers say homeownership would be financially feasible if mortgage rates fell below 5%, according to a recent survey from Realtor.com. That means mortgage rates would need to drop by at least 2% to unlock today’s unaffordable housing market.
But there’s a problem. Major forecasts don’t call for mortgage rates to slip under 6% until 2025.
Between last November and early January, the average rate for a 30-year fixed mortgage, the most popular home loan type, fell from a high of 8.01% to the mid-6% range, according to Bankrate, CNET’s sister site. However, throughout February, rates have gone up and kept steady at around 7.25%.
Though mortgage rates aren’t expected to fall dramatically this year, any dip is good news for homebuyers. If home loan rates manage to reach the low-6% range by the end of the year, it would increase housing affordability for a large number of families who have been stuck on the sidelines.
Will 6% be the magic mortgage rate to kick-start the housing market? Or will we need to wait for 5% rates a year from now? Here’s what experts are saying.
Mortgage rates: Rise like a rocket, fall like a feather?
The recent surge in mortgage rates was fueled by hotter-than-expected inflation and labor data, which sent the 10-year Treasury yield (a key benchmark for the 30-year fixed mortgage rate) higher. But in some ways, rates were just recalibrating to an appropriate level.
“Investors got a little ahead of themselves in terms of expectations for lower rates this year,” said Keith Gumbinger, vice president of mortgage site HSH.com. Given the state of the economy — like sticky inflation and the Federal Reserve’s reactive monetary policy — financial markets may have been overly optimistic in projecting when interest rate cuts would start.
After nearly two years of aggressive interest rate hikes to tame inflationary pressures, the Fed signaled in December it would likely cut rates three times in 2024. Though the Fed doesn’t directly set mortgage rates, a lower federal funds rate, combined with cooler inflation, would help mortgage rates go down.
Overall forecasts still project mortgage rates to decline, but exactly when and by how much is murkier. Before adjusting the federal funds rate, the central bank wants to see inflation steady at its 2% year-over-year target.
Even if economic data points to a slowdown, mortgage rate movement will likely be slow and gradual, so 5% rates aren’t in the cards this year.
Read more: Mortgage Predictions: How Labor Data Could Impact Mortgage Rates in 2024
Will mortgage rates go below 6% this year?
Mortgage rates tend to be volatile and preemptive. Rate movement depends not on what’s happening now, but on what investors and lenders believe will happen in the future, according to Orphe Divounguy, senior economist at Zillow Home Loans.
“Today’s mortgage rates, to some extent, already reflect expectations of slowing economic growth and future Fed rate cuts,” Divounguy said.
While next month’s economic data could change the equation, expectations for mortgage rates haven’t changed much. Rates in the low-6% range are still possible in 2024, just not in time for the spring homebuying season.
What the experts are saying
“If we’ve learned anything over the past few years, it is that mortgage rates and other financial conditions can shift rapidly as conditions change. My base expectation is that mortgage rates will decline more gradually and not break below 6% in 2024.”
“As the Federal Reserve holds interest rates steady before beginning to slowly cut rates in May, the spread on the 30-year fixed-rate loan and the 10-year Treasury bond will normalize, and mortgage rates gradually will fall. That said, forecasting mortgage rates is challenging, and near-term volatility is likely. While the rate will trend lower, there is uncertainty in the month-to-month movement in rates.”
“A 6-8% range can be a possible outcome if inflation remains stickier and higher than expectations, and the Fed does not cut until much later than the second half of this year. If the soft landing scenario occurs, then we could see a range closer to 5-7% once the Fed starts to cut rates later in 2024.”
“I don’t think present conditions change the overall forecast for mortgage or other interest rates all that much, but sustained higher economic growth or more persistent inflation would.”
Is 6% an affordable mortgage rate?
Today’s mortgage rates feel high, even if they’re not in a broad historical sense.
Most prospective first-time homebuyers have witnessed low rates over the past decade, especially when they hit rock bottom in the 2% to 3% range during the pandemic. Current buyers likely weren’t on the market for a home in the 1980s, when rates peaked above 18%.
What’s considered an affordable mortgage rate depends on your financial situation. Broadly speaking, a good mortgage rate is generally at or below the national average. The median 30-year mortgage rate since 1971 is 7.4%, according to Freddie Mac.
For many homeowners, the mortgage rate they start with is only temporary: They refinance to a lower rate when mortgage rates drop.
Mortgage rates feel so high nowadays because of the housing market’s overall affordability crisis. Home prices keep rising, inflation is cutting into wages, and debt from credit cards and student loans continue to chip away at savings. All those factors combined have put homeownership out of reach for middle-income and low-income Americans.
Comparing 6% vs. 7% vs. 8% mortgage rate
If you’ve been waiting for rates to plummet before buying a home, doing some basic calculations might change your perspective. Yes, a 6% mortgage is higher than just four years ago. But it’s still a better deal than an 8% or even 7% mortgage rate.
What difference does 1% or 2% make?
Does a 1% drop in mortgage rates make a difference in your monthly payment? The answer is yes. What about a 2% drop? Even more.
Using CNET’s mortgage calculator, we did the math to demonstrate what a 1% or 2% difference can make on your home loan payment. In the chart above, we assumed a 20% down payment on a $500,000 home, making a total loan amount of $400,000 with a 30-year fixed term comparing a 6%, 7% and 8% rate.
Getting a home loan at a 6% interest rate versus a 7% rate gives you savings of $263 a month. That’s $3,156 a year and $94,683 in total interest over the life of your loan.
The savings are even bigger when comparing a 6% interest rate with an 8% rate: The lower rate saves you $537 per month, $6,444 per year and $193,267 in total interest paid.
Pro Tip: Even if you’re getting a lower interest rate, pay attention to lender fees and other costs. Excessive fees or mortgage “discount” points are often hidden and can offset the savings.
For example, a lender might advertise a below-average rate, let’s say 6%. But that’s often based on the borrower having an excellent credit score and paying discount points in exchange for that low rate, which can cost thousands of dollars upfront. Each mortgage discount point results in a 0.25% decrease in your rate but will typically cost 1% of the loan amount.
How to get a lower mortgage rate
While it’s important to keep track of current mortgage rate trends, the best thing to do is focus on doing things like improving your credit score, paying off debt and saving for a bigger down payment.
Many mortgage lenders advertise lower-than-average interest rates. But to qualify for those low rates, you’ll need to have excellent credit, a low debt-to-income ratio and (typically) a down payment of at least 20%.
Experts also recommend comparing loan offers from at least two different mortgage lenders to help you secure the best deal.