partnership, two people shaking hands, merger and acquisition
New York Community Bancorp, the parent of Flagstar Bank, said it’s still committed to the home loan business despite selling approximately $5 billion in warehouse mortgages to JPMorgan Chase Bank to improve its capital and liquidity position.
Following the transaction, Flagstar will exit the mortgage warehouse lending space. However, it will continue financing mortgage servicing rights (MSR). Inside Mortgage Finance (IMF) first reported on the topic and a Flagstar spokesperson confirmed.
On Tuesday, NYCB said it entered into a commitment letter with JPMorgan. The transaction is subject to due diligence, negotiation of definitive terms and other closing conditions. The sale is expected to close in the third quarter of 2024.
“The mortgage business remains an important business for the company and we will continue to provide our mortgage customers and partners the same great service that they have come to expect from Flagstar,” Joseph Otting, NYCB president and CEO, said in a statement.
JPMorgan was the leader in the mortgage warehouse space in the fourth quarter of 2023, with $20 billion in volume and a 20.8% market share, according to IMF estimates.
The bank was followed by Flagstar, with $11.8 billion in volume and a 12.3% market share, the IMF data shows. The top- five is rounded out by Merchants Bank ($6.7 billion; 7%), EverBank ($5.8 billion; 6%) and First Horizon ($5.5 billion; 5.7%).
Loans at mortgage warehouse lending, a source of liquidity to independent mortgage bankers (IMB), have good yields, short terms and are highly secured and collateralized.
But they are not immune to systemic industry shocks, including last year’s bank crisis. Following the tumult, warehouse lenders – such as Dallas-based Comerica Bank – have decided to exit the business.
NYCB, which acquired Flagstar Bank in December 2022, ended up rescuing Signature Bank in March 2023. However, it affected its capital and liquidity structures amid a challenging market condition.
In January 2024, the bank suffered a confidence crisis after reporting a net loss in the last quarter of 2023 due to a provision for loan losses of $552 million, mainly impacted by its exposure to commercial real estate loans.
Fitch and Moody’s downgraded NYCB’s debt ratings on March 1, as the company disclosed internal control deficiencies and a $2.4 billion goodwill impairment. On March 6, the company received $1 billion in equity investment, led by former U.S. Department of Treasury Secretary Steven Mnuchin’s private equity firm, Liberty Strategic Capital.
“Consistent with my guidance during our recent earnings call, we are moving forward quickly to implement our strategic plan, which focuses on improving our capital, liquidity and loan-to-deposit metrics,” Otting said in a statement.
NYCB expects the transaction with JPMorgan to add 65 basis points to its CET1 capital ratio to 10.8% as of March 31. As the proceeds will be reinvested in cash and securities, its share of total assets will improve to 24% from 20% at March 31. Loan-to-deposit ratio is expected to decline to 104% from 110% at the end of the first quarter.
You can, but we don’t recommend it. In most cases, it’s not advisable to buy a car with a credit card due to limitations on credit card transaction amounts, high-interest rates on credit card balances, and potential merchant fees. However, some dealerships may allow you to use a credit card for a portion of the payment or for a down payment, but weigh the costs and consider alternative financing options before you do.
Are you shopping for a new or used car? If so, there’s a good chance you’ll need to finance this purchase. There are several financing options available, such as an auto loan or personal loan—but what about your credit card? Can you buy a car with a credit card?
The simple answer is yes, you probably could find a car dealership willing to accept a credit card payment. The real question you may want to ask yourself is, “Should I make such a large purchase with a credit card?”
Let’s take a closer look at the advantages and disadvantages of purchasing a car with a credit card so you can decide if it’s the right option for you.
Can You Buy a Car With a Credit Card?
Buying a new car with a credit card is possible, but it’s not going to be easy.
First, not all car dealerships accept credit card payments. This is likely due to the high processing fees credit card payments incur. These fees can range between 1.5% and 3.5%. For example, if you purchase a car for $20,000, these processing fees can range from $300 to $700.
Even if you do find a dealership willing to take a credit card payment, you may be responsible for paying these processing fees. The dealership may also limit the amount you can pay with your credit card. For instance, you may be able to use your credit card for a down payment but not to pay for the full value of the car.
Secondly, not all credit card companies allow cardholders to make a large purchase like this. It’s important to contact your credit card company first to better understand its policies.
Finally, even if the car dealership and credit card company permit this type of purchase, you have to have enough available credit. If you go over your credit limit, you could incur additional fees and higher interest rates—or the credit card company may decide to deny the transaction altogether.
Things to Consider
Before you grab your credit card and head to the car dealership, there are a few things you should know about making this type of purchase.
Limited Options
As mentioned above, not all car dealers and credit card companies allow this type of purchase. This could significantly decrease your options when you go looking for a car. You’ll be limited to finding a car at one of these dealerships.
Negative Impact on Your Credit Score
Adding a large purchase, such as a car, to your credit card balance can drastically increase your credit utilization. Because your credit utilization rate accounts for up to 30% of your overall FICO® credit score, any large purchase could cause your credit health to take a hit.
In fact, most experts agree that you should try to keep your credit utilization rate at or below 30%. It’s unlikely that adding a large purchase, such as a car, will keep your credit utilization low enough to meet this recommendation.
Your lower credit could impact your ability to get other credit cards, take out a personal loan, or even secure an apartment. This is why it’s important to understand the risks involved before buying a car with a credit card.
Lack of Available Credit
One of the main reasons people get a credit card is to have additional funds available in case of an emergency. Using a majority of these funds to purchase a car means you’ll have less available if you do face an emergency. Be sure to carefully consider this factor and the lasting effects it may have before making a large purchase.
Higher Interest Rates
Before you make any financing decisions, you should always compare interest rates. While your specific rates will vary based on your income and credit score, you’ll likely pay higher interest rates when making a credit card purchase than you would with an auto loan.
For instance, the average APR for credit cards is 27.89%, while average car loan rates range from 7.19% to 11.93%. Even if you have bad credit, you’re likely to find better interest rates through a car loan versus a credit card.
Even if your credit card comes with a 0% APR introductory rate, you still need to be careful. If you can’t pay the entire balance within the initial time frame, higher interest rates will be applied to your balance.
Ability to Make Payments
No matter what lending option you choose when purchasing a new car, it’s crucial to make sure you can afford the monthly payments. Before you even start shopping for a car, set a realistic budget to determine how much you can afford. Be sure to take the interest rate and any other additional fees and costs into account, such as insurance, registration, and processing fees.
Advantages of Buying a Car With a Credit Card
There is a potential advantage of buying a car with a credit card to consider. If you have a rewards card, making such a large purchase could help you earn cash back or travel points quickly. This could be very beneficial, especially if your rewards card has a welcome bonus that requires you to spend a certain amount in a short period of time.
The idea of earning big rewards with just one purchase may sound great, but you have to consider other factors. For instance, does your credit card charge an annual fee? Unless your rewards exceed the annual fee, it may not be worth it. You also need to factor in the higher interest rates.
Alternative Lending Options
Before using your credit card to purchase a new car, be sure to explore your other options, including:
Getting an auto loan. You’ll likely find better interest rates with an auto loan through a bank or credit union. Additionally, you’ll probably get a higher credit limit with a car loan than by relying on your available credit card balance.
Getting a cosigner. If you’re having trouble securing an auto loan due to your credit or lack of credit, you can consider using a cosigner. If your cosigner has good credit, it may help you get a car. There are some risks involved for the cosigner, so consider this option carefully.
Using your savings. If you have an emergency fund set up or available savings, it may be worthwhile to use this money to purchase a new car. Then, you can keep your credit card to use for any emergencies that may arise while you’re rebuilding your savings.
Doing a trade-in. If you don’t have money in your savings account to use as a down payment, trading in your current car may provide the funds you need. The more money you can put down on a new car, the better chance you have of being approved for a car loan and keeping monthly payments within your budget.
Before you use your credit card to buy a car, find out what your credit score is. This can help you determine what lending options are available to you. If your score is too low to secure an auto loan with reasonable interest rates, you can take steps to repair and rebuild your credit.
Use Credit.com’s Free Credit Score to find out your credit score and get started today.
One key question emerging following a recent Financial Stability Oversight Council report on nonbank mortgage risks is whether it will lead to the new authorities for Ginnie Mae in line with its recommendations.
A growing number of reactions to the report, which also advocates for other measures like expanded powers for the entity that regulates government-sponsored enterprises Fannie Mae and Freddie Mac, are centering on Ginnie’s role in the market
“The most significant advance responsibilities that servicers have are in the Ginnie Mae program. They’re much higher than Fannie and Freddie’s,” said Scott Olson, executive director the Community Home Lenders of America.
The CHLA, which was in the midst of elaborating on what’s been a broad call for greater financial and hiring resources at Ginnie when the council’s report came out, considers the issue a particularly prominent one within the council’s study, Olson said.
“FSOC is this broad agency, they’re not going to focus on just this one thing, but we think they should,” he said.
Other commentators like independent analyst Chris Whalen also spotlighted Ginnie as a risk-management priority because servicers’ responsibility for advancing payments to mortgage securitization investors when borrowers aren’t paying is greatest in that market.
“The liquidity problem discussed in the FSOC report is specific to Ginnie Mae servicing assets,” said Whalen in his Institutional Risk Analyst blog. (Whalen also is a regular columnist for this publication.)
The issue is one Ginnie has long had its eye on, Sam Valverde, acting president of the government mortgage securitization guarantor, recently reminded FSOC.
“We have been raising this source of concern for over a decade,” he said. “We have spent just as long deploying our existing authorities to develop a suite of risk management and oversight tools to manage these risks, but we need new authorities,” he added.
Ginnie’s budget and salary authorizations should be increased in line with current costs and so they’re competitive with those of other agencies, Olson said, calling for an increase in its current $54 million in funding to $67 million for fiscal year 2025.
The agency could use the additional funding to oversee issuers, put issuer financing pacts in place more quickly and transfer servicing if needed, the CHLA said.
It also could expand and make permanent the temporary liquidity program available during the pandemic as recommended by the FSOC report and previously by Ginnie itself.
That Pass-Through Assistance Program facility was only lightly used during the pandemic due to its last-resort nature and the Federal Reserve’s decision to lower interest rates as a form of relief. Rate-driven refinancing returned cash to mortgage companies to cover advances.
However, there is concern that heavy advancing responsibilities could re-emerge in a market environment where this source of cash would not be available to the industry, particularly given that many borrowers have now recently refinanced at record-low rates.
While some in the industry back suggestions in the FSOC report for an expanded PTAP or a former Ginnie chief’s proposal for a guaranteed commercial paper facility, they’ve been less enthusiastic about another recommendation in the study for an industry-funded resource.
While the idea of expanding Ginnie’s authorities is gaining momentum in the wake of the FSOC report, it ultimately depends on Congressional intervention that might not be forthcoming.
The Ginnie liquidity problem “cannot be fixed without legislation,” Whalen noted.
Stock analysts at Keefe, Bruyette & Woods issued a research note on Thursday skeptical of such intervention.
“We believe that congressional action to increase regulation is very unlikely, especially because the larger nonbank servicers appear well capitalized,” said Bose George and Alexander Bond, analysts at KBW, in a report.
Ginnie has issued a nonbank, risk-based capital rule for mortgage servicing rights set to go into effect at the tail end of this year.
The rule received some pushback from mortgage firms early on, with some indicating it could discourage the holding of MSRs and push companies toward subservicing. Others have called it manageable.
Ginnie has pledged to work with companies that foresee challenges on implementation.
Inside: Learn what 28 an hour is how much a year, month, and day. Plus tips to budget your money. Don’t miss the ways to increase your income.
You’re probably wondering if I made $28 a year, how much do I truly make? What will that add up to over the course of the year when working? Is $28 an hour good?
Is this wage something that I can actually live on? Or do I need to find ways that I can increase my hourly wage? How much more is $28.50 an hour annually?
When you finally start earning $28 an hour, you are happy with your progress as an hourly employee. Typically, this is when many hourly employees start to become salaried workers.
In this post, we’re going to detail exactly what $28 an hour is how much a year. Also, we are going to break it down to know how much is made per month, bi-weekly, per week, and daily.
That will help you immensely with how you spend your money. Because too many times the hard-earned cash is brought home, but there is no actual plan for how to spend that money.
By taking a step ahead and making a plan for the money, you are better able to decide how you want to live, make sure that you put your money goals first, and not just living paycheck to paycheck struggling to survive.
The ultimate goal with money success is to be wise with how you spend your money.
If that is something you want too, then keep reading. You are in the right place.
$28 an Hour is How Much a Year?
When we ran all of our numbers to figure out how much is $28 per hour is as an annual salary, we used the average working day of 40 hours a week.
40 hours x 52 weeks x $28 = $58,240
$58,240 is the gross annual salary with a $28 per hour wage.
As of June 2023, the average hourly wage is $33.58 (source).
Breakdown of 28 Dollars An Hour is How Much A Year
Typically, the average workweek is 40 hours and you can work 52 weeks a year. Take 40 hours times 52 weeks and that equals 2,080 working hours. Then, multiply the hourly salary of $28 times 2,080 working hours, and the result is $56,160.
That number is the gross income before taxes, insurance, 401K, or anything else is taken out. Net income is how much you deposit into your bank account.
That is super close to the $60000 salary threshold, which is desired to become middle-income worker.
Work Part Time?
But you may think, oh wait, I’m only working part-time. So if you’re working part-time, the assumption is working 20 hours a week at $28 an hour.
Only 20 hours per week. Then, take 20 hours times 52 weeks and that equals 1,040 working hours. Then, multiply the hourly salary of $28 times 1,040 working hours and the result is $29,120.
How Much is $28 Per Month?
On average, the monthly amount would average $4,853.
Annual Amount of $58,240 ÷ 12 months = $4,853 per month
Since some months have more days and fewer days like February, you can expect months with more days to have a bigger paycheck. Also, this can be heavily influenced by how often you are paid and on which days you get paid.
Plus by increasing your wage from $26 an hour, you average an extra $346 per month. So, yes a few more dollars an hour add up!
Work Part Time?
Only 20 hours per week. Then, the monthly amount would average $2,427.
How Much is $28 per Hour Per Week
This is a great number to know! How much do I make each week? When I roll out of bed and do my job, what can I expect to make at the end of the week?
Once again, the assumption is 40 hours worked.
40 hours x $28 = $1,120 per week.
Work Part Time?
Only 20 hours per week. Then, the weekly amount would be $560.
How Much is $28 per Hour Bi-Weekly
For this calculation, take the average weekly pay of $1,120 and double it.
$1,120 per week x 2 = $2,240
Also, the other way to calculate this is:
40 hours x 2 weeks x $28 an hour = $2,240
Work Part Time?
Only 20 hours per week. Then, the bi-weekly amount would be $1,120.
How Much is $28 Per Hour Per Day
This depends on how many hours you work in a day. For this example, we are going to use an eight-hour workday.
8 hours x $28 per hour = $224 per day.
If you work 10 hours a day for four days, then you would make $280 per day. (10 hours x $28 per hour)
Work Part Time?
Only 4 hours per day. Then, the daily amount would be $112.
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$28 Per Hour is…
$28 per Hour – Full Time
Total Income
Yearly Salary (52 weeks)
$58.240
Yearly Wage (50 weeks)
$56,000
Monthly Salary (173 hours)
$4,853
Weekly Wage (40 Hours)
$1,120
Bi-Weekly Wage (80 Hours)
$2,240
Daily Wage (8 Hours)
$224
Net Estimated Monthly Income
$3,705
**These are assumptions based on simple scenarios.
Do you know how many work days in a year you work? This answer may surprise you.
Paid Time Off Earning 28 Dollars an Hour
Does your employer offer paid time off?
As an hourly employee, you may or may not get paid time off.
So, here are the scenarios for both cases.
For general purposes, we are going to assume you work 40 hours per week over the course of the year.
Case # 1 – With Paid Time Off
Most hourly employees get two weeks of paid time off which is equivalent to 2 weeks of paid time off.
In this case, you would make $58,240 per year.
This is the same as the example above for an annual salary making $28 per hour.
Case #2 – No Paid Time Off
Unfortunately, not all employers offer paid time off to their hourly employees. While that is unfortunate, it is best to plan for less income.
Life happens. There will be times you need to take time off for numerous reasons – sick time, handling an emergency, or even vacation.
So, let’s assume you take 2 weeks off without paid time off.
That means you would only work 50 weeks of the year instead of all 52 weeks. Take 40 hours times 50 weeks and that equals 2,000 working hours. Then, multiply the hourly salary of $28 times 2,000 working hours, and the result is $56000 per year.
40 hours x 50 weeks x $28 = $56,000
You would average $224 per working day and nothing when you don’t work.
$28 an Hour is How Much a year After Taxes
Let’s be honest… Taxes can take up a big chunk of your paycheck. Thus, you need to know how taxes can affect your hourly wage.
Also, every single person’s tax situation is different.
On the basic level, let’s assume a 12% federal tax rate and a 4% state rate. Plus a percentage is taken out for Social Security and Medicare (FICA) of 7.65%.
Gross Annual Salary: $58,240
Federal Taxes of 12%: $6,989
State Taxes of 4%: $2,330
Social Security and Medicare of 7.65%: $4,455
$28 an Hour per Year after Taxes: $44,466
This would be your net annual salary after taxes.
To turn that back into an hourly wage, the assumption is working 2,080 hours.
$44,466 ÷ 2,080 hours = $21.38 per hour
After estimated taxes and FICA, you are netting $21.38 an hour. That is $6.62 an hour less than what you thought you were paid.
This is a very highlighted example and can vary greatly depending on your personal situation. Therefore, here is a great tool to help you figure out how much your net paycheck would be.
Plus budgeting on a just over $21 an hour wage is much different.
$28 an Hour Salary Calculator
Now, you get to figure out how much you make based on your hours worked or if you make a wage between $28.01-28.99.
This is super helpful if you make $28.13 or $28.85.
$28 an Hour Budget – Example
You are probably wondering can I live on my own making 28 dollars an hour? How much rent or mortgage payment can you afford on 28 an hour?
Using our Cents Plan Formula, this is the best-case scenario on how to budget your $28 per hour paycheck.
When using these percentages, it is best to use net income because taxes must be paid.
In this example, we calculated $28 an hour was $21.38 after taxes. That would average $3705 per month.
According to the Cents Plan Formula, here is the high-level view of a $28 per hour budget:
Basic Expenses of 50% = $1853
Save Money of 20% = $741
Give Money of 10% = $371
Fun Spending of 20% = $741
Debt of 0% = $0
Obviously, that is not doable for everyone. Even though you would expect your money to go further when you are making double the minimum wage. So, you have to be strategic in ways to decrease your basic expenses and debt. Then, it will allow you more money to save and fun spending.
To further break down an example budget of $28 per hour, then using the ideal household percentages is extremely helpful.
recommended budget percentages based on $28 per hour wage:
Category
Ideal Percentages
Sample Monthly Budget
Giving
10%
$437
Savings
15-25%
$971
Housing
20-30%
$1,141
Utilities
4-7%
$170
Groceries
5-12%
$323
Clothing
1-4%
$19
Transportation
4-10%
$170
Medical
5-12%
$243
Life Insurance
1%
$15
Education
1-4%
$24
Personal
2-7%
$73
Recreation / Entertainment
3-8%
$121
Debts
0% – Goal
$0
Government Tax (including Income Taxes, Social Security & Medicare)
15-25%
$1,148
Total Gross Income
$4,853
**In this budget, prioritization was given to basic expenses. Thus, some categories like giving and recreation were less.
Can I Live off $28 Per Hour?
At this $28 hourly wage, you are more than likely double the minimum wage. Things should be easy to live off this $28 hourly salary.
However, it is still slightly above $58000 per year. That means it can still be a tough situation.
Is it doable? Absolutely.
In fact, $28 an hour is higher than the median hourly wage of $19.33 (source). That seems backward, but typically salaried workers earn more per hour than hourly workers.
Can you truly live off $28 an hour annually?
You just have to have the desire to spend less than your income. Plus consistently save.
If you are constantly struggling to keep up with bills and expenses, then you need to break that constant cycle. It is possible to be smart with money.
You need to do is change your money mindset.
This is what you say to yourself… Okay, I have aspirations and goals to increase how much I make. This is the time to start diversifying my income into multiple streams and start investing. I am going to stretch my 28 dollars per hour.
In the next section, we will dig into ways to increase your income, but for now, is it possible to live on $28 an hour?
Yes, you can do it, and as you can see it is possible with the sample budget of $28 per hour.
Living in a higher cost of living area would be more difficult. So, you may have to get a little creative. For example, you might have to have a roommate. Move to a lower cost of living area where rent is cheaper.
Also, you must evaluate your “fun spending” items. Many of those expenses are not mandatory and will break your budget. You can find plenty of free things to do without spending money.
5 Ways to Increase Your Hourly Wage
This right here is the most important section of this post.
You need to figure out ways to increase your hourly income because I’m going to tell you…you deserve more. You do a good job and your value is higher than what your employers pay you.
Even an increase of 50 cents to $28.50 will add up over the year. Even better $29 an hour!
1. Ask for a Raise
The first thing to do is ask for a raise. Walk right in and ask for a raise because you never know what the answer will be until you ask.
If you want the best tips on how specifically to ask for a raise and what the average wage is for somebody doing your job, then check out this book. In this book, the author gives you the exact way to increase your income. The purchase is worth it or go down to the library and check that book out.
2. Look for A New Job
Another way to increase your hourly wage is to look for a new job. Maybe a completely new industry.
It might be a total change for you, but many times, if you want to change your financial situation, then that starts with a career change. Maybe you’re stressed out at work. Making $28 an hour is too much for you and you’re not able to enjoy life, maybe changing jobs and finding another job may increase your pay, but it will also increase your quality of life.
Start looking at these low stress jobs in retirement.
3. Find a New Career
Because of student loans, too many employees feel like they are stuck in the career field they chose. They feel sucked into the job that they don’t like or have the potential they thought it would.
For many years, I was in the same situation until I decided to do a complete career change. I am glad I did. I have the flexibility that I needed in my life to do what I wanted when I needed to do it. Plus I am able to enjoy my entrepreneurial spirit.
4. Find Alternative Ways to Make Money
In today’s society, you need to find ways to make more money. Period.
There is no way to get around it. You need to find additional income outside a traditional nine-to-five position or typical 40 hour a week job. You will reach a point where you are maxed on what you can make in your current position or title. There may be some advancement to move forward, but in many cases, there just is not much room for growth.
So, you need to find a side hustle – another way to make money.
Do something that you enjoy, turn your hobby into a way to make money, turn something that you naturally do, and help others into a service business. In today’s society, the sky is the limit on how you can earn a freelancing income.
Must Read: 20 Genius Ways on How to Make Money Fast
5. Earn Passive Income
The last way to increase your hourly wage is to start earning passive income.
This can be from a variety of ways including the stock market, real estate, online courses, book sales, etc. This is where the differentiation between struggling financially to becoming financially sound.
By earning money passively, you are able to do the things that you enjoy doing and not be loaded down, with having a job that you need to work, and a place that you have to go to. And you still make money doing nothing.
Here is an example:
You can start a brokerage account and start trading stocks for $50. You need to learn and take the one and only investing class I recommend. Learn how the market works, watch videos, and practice in a simulator before you start using your own money.
One gentleman started with $5,000 in his trading account and now has well over $36,000 in a year. Just from practice and being consistent, he has learned that passive income is the way for him to increase his income and also not be a slave to his job.
Watch his inspiring story!
Tips to Live on $28 an Hour
In this last section, grasp these tips on how to live on a $28 an hour or above $58k yearly salary. On our site, you can find lots of money saving tips to help stretch your income further.
Here are the most important tips to live on $28 an hour. More importantly stretch how much you make, in case you are in the “I don’t want to work anymore” mindset. Highlight these!
1. Spend Less Than you Make
First, you must learn to spend less than you make.
If not you will be caught in the debt cycle and that is not where you want to be. You will be consistently living paycheck to paycheck.
In order to break that dreadful cycle, it means your expenses must be less than your income.
And when I say income, it’s not the $28 an hour. As we talked about earlier in the post, there are taxes. The amount of taxes taken out of your paycheck is called your net income which is $28 an hour minus all the taxes, FICA, Social Security, and Medicare are taken out. That is your net income.
So, your net income has to be less than your gross income.
2. Living Below Your Means
You need to be happy. And living on less can actually make you happier. Studies prove that less is better.
Finding contentment in life is one thing that is a struggle for most.
We are driven to want the new shiny toy, the thing next door, the stuff your friend or family member got. Our society has trained you that you need these things as well.
Have you ever taken a step back and looked at what you really need?
Once you are able to find contentment with life, then you are going to be set for the long term with your finances.
Here is our story on owning less stuff. We have been happier since.
3. Make Saving Money Fun
You need to make saving money fun. If you’re good, since you must keep your expenses low, you have to find ways to make your savings fun!
Find new ways of saving money and have fun with it.
Even better, get your family and kids involved in the challenge to save money. Tell them the reason why you are saving money and this is what you are doing.
Here are 101 things to do with no money. Free activities without costing you a dime. That is an amazing resource for you and you will never be bored.
And you will learn a lot of things in life you can do for free. Personally, some of the best ones are getting outside and enjoying some fresh air.
4. Make More Money
If you want if you do not settle for less, then find ways to make more money. If you want more out of life, then increase your income.
You need to be an advocate for yourself.
Find ways to make more money.
It could be a side hustle, a second job, asking for a raise, going to school to change careers, or picking up extra hours.
Whatever path you take, that’s fine. Just find ways to make more money. Period.
5. No State Taxes
Paying taxes is one option to increase what you take home in each paycheck.
These are the states that don’t pay state income taxes on wages:
Alaska
Florida
Nevada
New Hampshire
South Dakota
Tennessee
Texas
Washington
Wyoming
It is very interesting if you take into account the amount of state taxes paid compared to a state with income taxes.
Also, if you live in one of the higher taxed states, then you may want to reconsider moving to a lower cost of living area. The higher taxes income tax states include California, Hawaii, New Jersey, Oregon, Minnesota, the District of Columbia, New York, Vermont, Iowa, and Wisconsin. These states tax income somewhere between 7.65% – 13.3%.
6. Stick to a Budget
You need to learn how to start a budget. We have tons of budgeting resources for you.
While creating a budget is great, you need to learn how to use one.
You do not have to budget down to every last penny.
You need to make sure your expenses are less than your income and that you are creating sinking funds for those irregular expenses.
Budget Help:
7. Pay Off Debt Quickly
The amount that you pay interest on debt is absolutely absurd.
Unfortunately, that is how many of these companies make their money from the interest you pay on debt.
If you are paying 5% to even 20-21% or higher, you need to find ways to lower that debt quickly.
Here’s a debt calculator to help you. Figure out your debt-free date.
Make that paying off debt fast is your target and main focus. I can tell you from personal experience, that it was not until we paid off our debt that we finally rounded the corner financially. Once our debt was paid off, we could finally be able to save money. Set money aside in separate bank accounts and pay for cash for things.
It took us working hard to pay off debt. We needed persistence and patience while we had setbacks in our debt-free journey.
Jobs that Pay $28 an Hour
You can find jobs that pay $28 per hour. Polish up that resume, cover letter, and interview skills.
Job Search Hint: Always send a written follow-up thank you note for your interview. That will help you get noticed and remembered.
First, look at the cities that require a minimum wage in their cities. That is the best place to start to find jobs that are going to pay higher than the federal minimum wage rate. Many of the cities are moving towards this model so, target and look for jobs in those areas.
Possible Ideas:
Virtual Assistant – Get free training NOW!
Freelance writer
Class A Truck Driver
Managers
Entry Level Marketing Jobs
Data Entry Clerks
Customer service managers
Bank tellers
Maintenance workers
Freight broker – Learn how easy it is to start!
Administrative assistants
Athletic Trainers
Event Planners
Day trader
Security guard
Movers
Cashiers
Warehouse workers
Companies that pay more than $28 per hour: Wells Fargo, Disney World, Disney Land, Bank of America, Cigna, Aetna, etc
$28 Per Hour Annual Salary
In this post, we detailed 28 an hour is how much a year. Plus all of the variables that can impact your net income. This is something that you can live off.
How much is 28 dollars an hour annually…
$58,240
This is right between $58000 per year and $59k a year. In this post, we highlighted ways to increase your income as well as tips for living off your wage.
Use the sample budget as a starting point with your expenses.
You will have to be savvy and wise with your hard-earned income. But, with a plan, anything is possible!
Still thinking I don’t want to work anymore, you aren’t alone and need to start to plan for your early retirement.
Learn exactly how much do I make per year…
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
For millennia, humans have used precious metals such as silver as a way to barter and exchange value. And even in today’s modern economy, many people believe that there is room for investing in silver and other precious metals as a way to diversify their overall portfolio.
Investing in silver can come in many different ways, from buying stocks or mutual funds focused on precious metals to holding the actual silver metal yourself. Depending on how you are investing in silver, it can be considered a valuable hedge against inflation and one way to diversify your overall investment portfolio.
Key Points
• Investing in silver can help diversify an investment portfolio and act as a hedge against inflation.
• Silver is considered valuable due to its historical use in coins, jewelry, and industrial applications.
• Silver and gold are both precious metals that have been used as currency and for portfolio diversification.
• Investing in silver can offer advantages such as portfolio diversification and lower cost compared to gold.
• However, investing in silver carries risks, including price volatility and the need for secure storage for physical silver holdings.
Why Is Silver Considered Valuable?
Silver is a type of alternative investment, in that it’s different from a conventional stock or other type of security. And similar to how those types of securities or investments hold value, silver does as well.
At its most basic, silver is valuable for the same reason that anything is considered “valuable” — because we as a society have decided that it is valuable. Silver has been used for making coins and jewelry since the early days of history, which is one reason that silver is considered valuable. Silver is also quite conductive, which means that it has uses in industry as well.
Silver has many of the same qualities as gold, which is why many investors have similarly looked for different ways to invest in precious metals.
Silver vs Gold
Silver and gold have both been used as currency and jewelry since nearly the beginning of human civilization. They are both considered valuable precious metals and useful for portfolio diversification and as an inflation hedge. Deciding whether to invest in gold or invest in silver is in some ways a personal choice, and many investors decide to invest in both.
💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.
Alternative investments, now for the rest of us.
Start trading funds that include commodities, private credit, real estate, venture capital, and more.
What Are the Advantages of Investing in Silver?
One of the biggest advantages of investing in silver is that it can help diversify your portfolio. The rate of return for silver and other precious metals is not always correlated with that of other investments, which means that it can be a useful form of portfolio diversification. Silver is also cheaper than gold on a per-ounce basis.
Many investors also consider investing in precious metals to be an inflation hedge – it’s commonly believed that precious metals like silver or gold hold their value more efficiently or for a longer-term than cash or other assets.
If you invest in actual physical silver, another advantage is that it is a hard asset — it cannot be hacked or erased. Silver and other precious metals are one of the few investments that you can actually hold in your hand. Unlike other investments, your holdings in silver can also be as private as you want them to be.
What Are the Potential Drawbacks?
One drawback of investing in silver is that its price is considered fairly volatile. That doesn’t make it a great investment if you are only holding for the short-term. Prices for precious metals can fluctuate wildly over the short-term, and even over the long-term, may not provide investors with the type of appreciation they may have seen if they had invested in other assets.
Further, if you hold physical silver, you do run the risk of having it stolen. Unlike digital assets, physical silver may not be recoverable if it is lost or stolen. As such, if you are buying physical silver coins or bars, you will need to find a safe and secure way to store them.
💡 Quick Tip: Look for an online brokerage with low trading commissions as well as no account minimum. Higher fees can cut into investment returns over time.
Is Silver an Inflation Hedge?
As noted, investing in precious metals is often considered an inflation hedge.
Inflation is a natural phenomenon that gradually increases the cost of many goods and services. Silver has many uses – it can be used to mint coins, for instance, and be used as an actual currency, or be incorporated into other products. For that reason, it may hold its value more effectively than cash or other assets.
But there’s no guarantee that silver will always be an effective inflation hedge, and it’s important to remember that it’s a volatile asset.
How Can I Invest in Silver?
There are a number of different ways to invest in silver, depending on what you’re looking for in your portfolio. One popular way to invest in silver is by buying physical bars or coins of silver. Another possible way to invest in silver is by investing in the stocks of silver mining companies.
Silver Funds
It may also be possible to invest in silver using various types of funds, such as exchange traded funds (ETFs) that own silver or silver mining companies. There may also be options for investors to invest in mutual funds with concentrations in the silver industry or market, too – doing a bit of research to see what your options are in relation to silver investments is likely to yield results.
The Takeaway
Investing in silver offers investors a way to add an alternative asset to their portfolio, which can help them diversify, and hedge against inflation. There are many ways to invest in silver — including investing in silver mining companies, silver ETFs or owning physical silver like coins or silver bullion.
But investing in silver has its risks, and investing in precious metals typically means investors are okay with adding a relatively volatile asset to their portfolios. As always, if you have questions, it may be a good idea to speak with a financial professional.
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 in alts to take your portfolio beyond stocks and bonds.
FAQ
Does owning silver diversify your portfolio?
Depending on the composition of your investment portfolio, owning silver can diversify your portfolio. Silver and other precious metals are often considered an inflation hedge, meaning that their price generally holds its value, regardless of the inflation rate. The rate of return on investing in silver and other precious metals is also not often correlated with returns of other types of investments, like the stock market or real estate.
Will the price of silver always go up?
Like all investments, there is no guarantee that the price of silver will always go up. The price of silver can fluctuate wildly, which means that depending on when you buy and/or sell, you may lose money. Before investing in silver, make sure you understand the risks and drawbacks of silver investing.
What are some alternative metals to silver?
Probably the most popular alternative precious metal to silver is gold. Like silver, gold has been used in currency and jewelry for most of the length of human civilization. Other options for investing in precious metals if you’d rather not own gold or silver are platinum or titanium.
Photo credit: iStock/oatawa
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The latest data on new residential construction from the U.S. Census Bureau paints a somewhat mixed picture of the housing market. While housing completions surged in April, Housing starts only increased modestly and building permits declined both building permits slipped to the lowest level since last summer.
The following bullet points break down the numbers in seasonally adjusted annual rates for the 3 phases of construction:
Building Permits
1.44 million versus 1.48 million forecast and 1.467 last month
Of that, 976k were single family permits and 408k were 5+ units
Housing Starts (breaking ground phase)
1.36 million versus 1.42 million forecast and 1.29 million last month
last month revised down from 1.32 million
Of that, 1.031 million were single family and 322k were 5+
Housing Completions
1.62 million versus 1.495 million last month, a 10.3 percent increase
Of that, 1.092 were single family and 516k were 5+
We could attempt to over-analyze the month to month changes in this notoriously noisy data series, but in the bigger picture, permits and starts have been flat for more than a year while completions continue to improve.
Zooming out a bit more, the takeaway isn’t much different, but it adds context from the previous highs and also shows starts and permits remaining near pre-covid highs.
The average 30-year fixed mortgage interest rate is 7.13% today, down -0.05% over the last week. The average rate for a 15-year fixed mortgage is 6.57%, which is an increase of 0.03% compared to a week ago. For a look at mortgage rate movement, see the chart below.
Because inflation data hasn’t been improving, the Federal Reserve has been postponing rate cuts. Though mortgage rates could still go down later in the year, housing market predictions change regularly in response to economic data, geopolitical events and more.
Today’s average mortgage rates
Today’s average mortgage rates on May. 17, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Which mortgage term and type should I pick?
Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 7.13% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
Today, the average rate for a 15-year, fixed mortgage is 6.57%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 6.58% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
What’s behind today’s high mortgage rates?
Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.
Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Will mortgage rates drop this year?
Most housing market experts predict rates will end the year between 6% and 6.5%. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. The central bank could start lowering interest rates in the fall, but it will depend on how the economy fares in the coming months.
Mortgage rates fluctuate for many reasons: supply, demand, inflation, monetary policy, jobs data and market expectations. Homebuyers won’t see lower rates overnight, and it’s unlikely there will ever be a return to the 2-3% mortgage rates we saw between 2000 and early 2022.
“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.
Every month brings a new set of inflation and labor data that can influence the direction of mortgage rates, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
How can I find the best mortgage rates?
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
The East Coast and Midwest stand out as prime locations for veterans and current military service members, according to the 2024 Best Cities for Veterans to Live list compiled by Veterans United Home Loans.
Tampa emerged as the top metro area for veterans. It was followed by Rochester, Minnesota; Wichita Falls, Texas; Fargo, North Dakota; Virginia Beach, Virginia; Watertown, New York; Charleston, South Carolina; Medford, Oregon; Altoona, Pennsylvania; and Sioux Falls, South Dakota.
“Our in-depth analysis factors in feedback and priorities from hundreds of Veterans we surveyed, so we can really dig into what those who serve are looking for when it comes to planting roots and building communities,” Chris Birk, vice president of mortgage insight at Veterans United, said in a statement.
“These cities, both big and small, are great places to raise a family, offer healthy job markets, an abundance of outdoor activities to enjoy for those kicking off the next chapter after the military and provide ample opportunities to connect with fellow Veterans.”
On a more granular level, Sioux Falls topped the list for affordability among the top 10 metros, followed closely by Wichita Falls. Conversely, Virginia Beach was the most expensive city in the top 10, with a cost-of-living score that was slightly above the national average.
In terms of safety, Rochester ranked first. Only two cities in the top 10 — Sioux Falls and Charleston — had crime rates slightly above the national average.
There were a total of 25 factors considered in the analysis, including median home prices, quality of life and the strength of the veteran community.
According to data from the U.S. Department of Veterans Affairs (VA), Texas led the nation with 10,237 VA loans originated in second quarter of 2024. Florida and North Carolina followed with 9,413 and 5,809 loans, respectively.
Purchasing a home is a journey filled with complexities and legalities. The process that can seem bewildering, particularly for first-time homebuyers. Among the many terms you’ll encounter in your home buying process, “escrow” is one that plays a pivotal role but is frequently misunderstood.
To understand the home buying process fully, and to ensure you’re well-equipped for this significant financial decision, it’s vital to grasp the concept of escrow. This guide aims to help you understand escrow, explaining its role in real estate transactions, the purpose of escrow accounts, and the pros and cons of this system.
Key Takeaways
Escrow is a financial arrangement where a neutral third party holds funds until the buyer and seller fulfill their obligations, providing security and neutrality during real estate transactions.
The escrow process includes steps like signing the agreement, depositing earnest money, obtaining mortgage approval, coordinating closing costs, and transferring the property title.
Escrow accounts offer benefits like financial protection and managing taxes but add complexity and extra costs. Be aware of potential escrow fraud by verifying companies and consulting professionals.
What Is Escrow?
At its core, escrow serves as a neutral third party in various types of transactions, most commonly in real estate. It’s a financial arrangement where a third party, the escrow agent, holds and regulates payment of the funds required for two parties involved in a given transaction.
This process ensures the transaction is carried out smoothly and everyone fulfills their obligations before the transfer of ownership occurs. Whether it’s earnest money from buyers, the deed from sellers, or the paperwork in between, escrow plays a critical role in safeguarding assets during the transaction period. It’s like a financial safety net, protecting both the buyer and seller from potential complications.
How Does the Escrow Process Work?
The escrow process can feel like a whirlwind of paperwork, signatures, and deadlines. But when broken down into a series of steps, it’s a structured system designed to safeguard all parties involved in a real estate transaction. Let’s take a closer look at each phase of the escrow process:
Step 1: Agreement Signing
The escrow process starts when both the buyer and seller come to a mutual understanding and sign a purchase agreement. This agreement outlines the terms of the transaction, including the purchase price, any contingencies, and the closing date.
Step 2: Earnest Money Deposit
The buyer then makes an earnest money deposit, demonstrating their commitment to the transaction. This earnest money is placed into an escrow account, providing security until the final closing day of the home purchase.
Step 3: Mortgage Approval Process
Meanwhile, the buyer works with their mortgage lender to secure a mortgage loan for the remaining purchase price. This process includes credit checks, income verification, and property appraisal.
Step 4: Escrow Agent Coordination
The escrow agent coordinates various administrative tasks. They ensure all necessary documents are signed, and that the mortgage lender releases funds to cover the purchase price, less the buyer’s deposit.
Step 5: Managing Closing Costs
The escrow agent also manages the payment of closing costs. These costs can include real estate agent commissions, title insurance, property tax liens, and the fees for the escrow services.
Step 6: Conclusion of Escrow
Once all paperwork is finalized, funds have been disbursed, and all conditions met, the escrow process concludes. The title of the property is then transferred to the buyer.
What Is an Escrow Account?
Escrow accounts are secure, temporary homes for funds during a transaction. Let’s look at how they work in the context of real estate.
Escrow Accounts During Home Purchase
During the purchase of a home, the buyer’s earnest money deposit is held in an escrow account until the sale closes. This account secures the down payment, releasing it only when all contractual obligations are met.
Mortgage Escrow Accounts
Many mortgage lenders set up a mortgage escrow account as part of the home loan process. This account accumulates a portion of the monthly mortgage payments, paying your yearly property taxes and homeowners insurance premiums when they’re due.
Monthly contributions: Each month, as part of your monthly mortgage payment, you contribute to your escrow account.
Payment of taxes and insurance: This account, in turn, pays your yearly property taxes and homeowners insurance premiums when they’re due.
Smooth out expenses: Mortgage escrow accounts help smooth out these significant expenses, breaking them down into manageable monthly payments.
Adjustments: The mortgage servicer can adjust your monthly escrow payment each year based on changes to property taxes or insurance premiums.
Ownership of funds: The funds within these accounts are still yours. If the property is sold, or the mortgage loan paid off, any funds remaining in the escrow account will be returned to you.
The Role of Escrow in Real Estate
In the world of real estate, escrow plays a significant part in ensuring all parties meet their obligations. An escrow company provides escrow services, managing the earnest money deposit and any agreed-upon funds until the sale is finalized.
The real estate agent often helps facilitate the setup of this escrow process, but ultimately, it’s the escrow company that guides the process, ensuring all contract conditions are met before the transfer of funds and property.
Who Manages an Escrow Account?
Managing an escrow account is typically a job for a neutral third party, such as an escrow agent or an escrow company. In the context of a mortgage, however, the task often falls to mortgage servicers. Let’s examine the role of each:
Escrow Agents and Companies
Escrow agents or escrow companies are neutral third parties that hold on to the funds and documents involved in a transaction until the deal’s conditions are met. In a real estate transaction, they handle tasks like facilitating the closing process, recording deeds, and disbursing funds.
It’s worth noting that sometimes, the escrow agent or company may also be the same as the title company. In such cases, this entity not only manages the escrow process but also oversees the title search, ensuring there are no issues with the property’s title before the sale is finalized. This consolidation of services can streamline the transaction, as you will be working with a single company throughout the process.
Mortgage Servicers
Mortgage servicers play a pivotal role in the lifespan of your mortgage, from closing until the day you pay off your loan. They are responsible for various tasks, including collecting your mortgage payments, maintaining the records of payments, and crucially, managing your escrow account.
Your mortgage servicer could be the same as your originating lender. However, this is not always the case, as sometimes lenders sell the servicing rights to your loan. Understanding whether your lender typically services their own loans can be beneficial, as not all mortgage servicers provide the same level of service, and some charge more fees than others.
With a mortgage servicer taking care of your escrow account, your involvement is minimal. You don’t have to send in your tax or insurance bills—your servicer ensures they know who to pay, and when.
The only exception is if you change insurance providers or policies. In such cases, you may need to provide the new policy information to your servicer.
The management of your escrow account, therefore, can fall to different parties depending on the nature of your transaction. Whether it’s an escrow agent, an escrow company, or your mortgage servicer, their role is essential in ensuring a secure, fair, and efficient process.
The Pros and Cons of an Escrow Account
Just as every coin has two sides, using an escrow account in a real estate transaction comes with both benefits and drawbacks. Here’s a look at the main pros and cons:
Pros of an Escrow Account
Protection: An escrow account adds a layer of protection for both parties involved in the transaction. It holds funds and documents securely until all terms of the transaction are met.
Financial management: Escrow accounts, especially mortgage escrows, can help homeowners manage their yearly property taxes and homeowners insurance premiums. They break down these large expenses into manageable monthly escrow payments, preventing any potential financial strain.
Neutral oversight: The escrow process ensures a neutral third party is involved to oversee the transaction, offering a fair and unbiased service to both the buyer and seller.
Cons of an Escrow Account
Complexity: Escrow accounts add an extra layer of complexity to transactions. For some buyers and sellers, particularly those experienced in real estate, this additional step might feel unnecessary.
Time-consuming: The process of setting up an escrow account, managing it, and closing it can be time-consuming. This is particularly the case in more complex real estate transactions, which may already involve a significant amount of paperwork.
Extra costs: While escrow accounts offer benefits, they come at a cost. Fees for escrow services are usually part of the closing costs paid at the end of the transaction. Buyers should factor these costs into their budget when planning their home purchase.
Escrow Fraud and How to Avoid It
The unfortunate reality is that even with systems designed for protection, there can be risks of fraud related to escrow accounts. Just as cybercriminals target banking systems, scammers can also target the escrow process. Let’s look at how you can steer clear of such threats.
Recognizing Escrow Fraud
In escrow fraud scenarios, scammers pose as legitimate escrow companies or agents, creating a false sense of security. They might set up sophisticated websites and provide convincing, yet fake, contact information. The goal? To trick buyers or sellers into handing over funds or sensitive information.
Tips to Avoid Escrow Fraud
With the right precautions, you can protect yourself from becoming a victim of escrow fraud:
Do your homework: Don’t take an escrow company’s legitimacy at face value. Research the escrow service before engaging in any transaction.
Check licensing: A legitimate escrow company will be licensed in the state where it operates. You can typically verify licensing through the state’s Department of Insurance or Department of Financial Institutions.
Beware of unusual payment requests: Be cautious if an escrow service asks you to transfer funds to an individual or to an overseas account. Reputable escrow companies will not make such requests.
Secure communication: Ensure all communications happen through secure channels. Never share sensitive information via email.
Consult professionals: If in doubt, consult a real estate agent, attorney, or financial advisor. They can help validate the escrow company’s legitimacy.
Remember, vigilance and due diligence are your best defenses against escrow fraud. Always double-check before you send funds or personal information.
Conclusion
Understanding the escrow process can make a world of difference in your real estate transactions. It provides security, aids in financial management, and ensures smooth transitions for both buyers and sellers. Despite its complexities, the benefits of escrow are clear, offering a level of protection and neutrality that’s integral to the success of a transaction.
However, It’s essential to do your homework, ensure the legitimacy of your escrow service, and understand the full scope of your financial commitments.
Whether you’re a first-time homebuyer or an experienced real estate investor, a well-informed approach to escrow can help streamline your buying or selling process. As you move forward, remember to consult professionals and always make decisions in your best financial interest. Here’s to successful real estate transactions and secure, informed decisions. Happy home buying – or selling!
Frequently Asked Questions
What happens to the money in the escrow account if the deal falls through?
If a real estate deal falls through, what happens to the money in the escrow account usually depends on the reason the deal didn’t close, and the stipulations outlined in the purchase agreement. Both the buyer and seller have certain contingencies that, if not met, could allow them to back out of the deal without forfeiting the earnest money deposit.
If these contingencies are not met and the buyer backs out, the earnest money is typically returned. If the buyer simply changes their mind or cannot secure financing, the seller may keep the earnest money.
Can you waive escrow?
In some cases, you may be able to waive escrow. This typically requires a significant down payment or a high level of equity in your home. However, waiving escrow means you’ll be responsible for paying your taxes and insurance premiums directly, which requires discipline to ensure these large bills are paid on time. Some lenders may also charge a fee for waiving escrow.
How long does the escrow process take?
The length of the escrow process can vary widely, but it typically takes 30 to 60 days for residential real estate transactions. This timeline can be affected by various factors, including loan underwriting times, inspections, and negotiations after inspections.
What types of transactions might use an escrow account?
While escrow accounts are commonly associated with real estate transactions, they can be used in many types of large transactions where the buyer and seller do not fully trust each other to fulfill their obligations. This can include the sale of expensive items like cars, boats, or art, and even online transactions for goods or services.
Are escrow accounts only used in real estate?
No, escrow accounts aren’t solely used for real estate transactions. They can be used in many types of contractual agreements where an impartial third party is needed to ensure the terms of the contract are fulfilled. This can include business acquisitions, online sales, and construction projects, to name a few.
E-commerce transactions can benefit from escrow, especially when they involve high-ticket items or international trade. The escrow process protects both the buyer and seller by holding the purchase price until the buyer receives the goods in the agreed condition.
How are escrow fees determined?
Escrow fees are typically based on the purchase price of the home and can vary widely by region and company. Some escrow companies charge a flat fee, while others charge a percentage of the home’s purchase price. Always ask for a breakdown of the fees and compare costs from different companies before making a decision.