Investing in real estate is some of the oldest and most reliable financial advice in the books. Few other assets can compete with real estate’s vast array of benefits. These benefits include tax advantages, appreciation, relative impunity to market shifts, and even the potential for passive income.
But even if you have every intention of investing in real estate, it can be challenging to get started. After all, even a modest home usually requires a substantial down payment. And it can take years to save up those five-figure sums. The term “real estate investor” may bring to mind a multi-millionaire who manages several properties, leaving you feeling overwhelmed enough to give up the ghost entirely.
Fortunately, it is possible to invest in real estate with little or no money, even if you aren’t swimming in discretionary income. For instance, with an Opportunity Fund or REIT (Real Estate Investment Trust) you can get your foot in the door even if you can’t afford to purchase an entire property. There are also a host of ways to leverage your own home. These include house hacking, renting vacation space on Airbnb, and more.
In this post, we’ll break down everything you need to know about how to invest in real estate. We’ll go over some of the most common types of real estate investing. We’ll also break down how they can help you make money. And we’ll explain how you can begin, no matter how much capital you have in hand.
Why Invest in Real Estate?
Before we dig into the meat of the post, let’s take a moment to backtrack. Why is real estate investing such a well-worn piece of financial advice?
You’ve probably heard that diversifying your portfolio of real estate investments is essential. But your “portfolio” doesn’t just have to live on the stock market! Real estate investing gives you, as the name suggests, a real, tangible asset. And it’s much less vulnerable to the capriciousness of the market.
Real estate investing can help you not only build home equity but also generate passive cash flow. Both through the process of appreciation and the more intentional, hands-on approaches we’ll study further below. And owning your own home can help you reap financial benefits while simultaneously providing for one of your most basic needs.
How to Invest in Real Estate with Little Money
When a down payment might cost as much as $60,000, it’s understandable that many first-time property shoppers feel overwhelmed. They say you have to spend money to make money. Yes, but that’s quite a hefty figure for the average American earner.
To be sure, some real estate investment strategies require a good deal of cash upfront to be workable. But there are other tactics that don’t necessitate such a large lump sum to begin with. This means you don’t have to be a real estate mogul to be a property owner. We’ll break down various strategies at both ends of the spectrum below.
Types of Real Estate Investing
Let’s get into the nitty-gritty. What types of real estate can you invest in?
There are three main types of investment properties available to real estate investors.
Residential properties are probably the ones you’re most familiar with. They are exactly what they sound like: buildings used by individuals and families as residential living spaces. These properties include single-family homes, duplexes, apartments, condominiums, and townhouses, and multi-family homes (so long as they’re being used residentially and don’t exceed four units).
Commercial real estate are properties used to conduct business. They may include offices, storefronts, retail spaces, farmland, and large multi-family houses or apartment buildings.
Industrial real estate are properties that serve industrial business purposes, such as factories, power plants, or storage and shipping warehouses.
Furthermore, there are both active and passive forms of real estate investing.
Active investing is, well, active. It requires a good deal of time, energy, and commitment from the investor. Active investing may become a part- or even full-time job for the investor. They usually share ownership with few (or no) other people and thus bears a lot of responsibility for the success of the investment.
Passive investing, on the other hand, allows the investor to reap the benefits of investing without taking on the pressure and responsibility of full ownership of a tangible property. In most cases, passive investing involves supplying capital to a larger investment pool. You earn capital gains on loan interest through dividends paid to shareholders.
We’ll go into it all of this in more detail, including specific ways you can invest in real estate, both active and passive.
How Real Estate Investing Can Help You Earn
Before we break down the specific ways you can get started investing in real estate, let’s talk about how it can help you make money. (After all, that’s the whole point!)
You can invest in real estate in several ways, depending on what type of investing you’re participating in.
Equity and appreciation
Purchasing real estate equips the owner with a “hard asset”; the tangible property or building. Owning this kind of asset confers equity, or value. It isn’t as vulnerable to the fluctuations of the market as stocks, bonds, and other securities. Furthermore, property has a longstanding history of increasing in value over time, or appreciating.
On the contrary, other types of purchases (like automobiles) depreciate, or lose value. Thus, purchasing a property may allow you to earn income passively simply through the process of appreciation. It more or less ensures that the cash value of your home is a safe and stable part of your overall net worth.
Rental income
Chances are, you’ve had to pay rent to a landlord at some point in your life. Well, if you become the landlord, someone’s paying you the rent. And as long as that rental price eclipses your total expenses, including your mortgage and maintenance costs, the rest is profit!
Aside from managing the investment property, you can also collect rental income by sharing your space on platforms like Airbnb or house hacking, which we’ll explain below.
Sale profit
This happens when you buy a home with the intention to fix it up and sell it down the line (also known as “house flipping”.) It’s the difference between your sale cost and your purchase cost (minus all the expenses put into maintenance and improvements) is pure profit.
Loan interest
The interest charged on home and property loans can increase the value of real estate investments made through REITs, investment platforms, and private equity firms.
Ways to Invest in Real Estate
Now we know a bit about the different types of properties available to investors and how those real estate investments stand to help you earn cash.
So, what are the specific ways to go about real estate investing? There are several in both the “active” and “passive” categories.
Active:
House flipping, or rehabbing, is when an investor purchases a property with the sole intent of fixing it up to sell it later on.
Wholesaling is similar to flipping houses, but less work intensive. Wholesaling occurs when an investor purchases a property they believe is underpriced, so they can quickly sell it to another investor at a profit.
Rental properties give investors a long-term way to draw profit from their investments, though they do require lots of hands-on management and maintenance over time.
Airbnb, Vrbo, and other vacation rentals can often be listed for substantial per-night prices. They can be especially lucrative in high-demand travel destinations.
Passive:
Private equity funds pool the assets of many investors, which creates a larger, more powerful investment fund. These funds are usually overseen and allocated by a dedicated manager. They may have high minimum investment thresholds and requirements to join.
Opportunity funds also pool investors’ assets, but with the specific purpose of making investments in qualified Opportunity Zones. These are low-income, up-and-coming communities that would benefit from private investments and economic development.
REITs are companies that invest in commercial properties. Private investors can purchase shares of the company and earn income on capital gains in the form of dividends.
Online REIT platforms can make real estate investing accessible to beginning investors, often carrying no net worth or accreditation restrictions. They may allow you to invest in specific properties or in pre-built, diversified portfolios of real estate.
We’re going to break down these different investment options in even more detail below. But first, let’s start a bit closer to home—literally.
Starting with Your Own Home
One of the most straightforward ways to invest in real estate is probably already on your financial to-do list, anyway: purchasing your own home.
Purchasing a home of your own allows you to kill two birds with one stone. You’re taking care of the basic need of shelter, while also leveraging the purchase to reap a host of financial benefits.
Here are just a few ways that owning a home can help you save and earn money.
Build equity: As discussed above, property ownership confers relatively immutable equity to the purchaser—that is, your home is a fairly safe, tangible asset to add to your overall investment portfolio.
Receive tax benefits: Certain homeowners’ expenses, including real estate taxes and home mortgage interest, are tax-deductible. And if you sell your home, you may exclude up to $250,000 of capital gains (or $500,000 if filing jointly) from your taxes.
Take advantage of appreciation: Even accounting for the 2008 crisis, the cost of homes and other properties have steadily increased over time for the past 50 years. So, the home you purchase today will likely be worth more than the price you paid for it in the future.
Stop paying rent: Although you’ll likely still have a mortgage payment and other expenses to cover as a homeowner, you won’t be paying rent to live in another person’s property. It’s a cost that is essentially entirely wasted, since you aren’t building home equity in the rental property.
Keep the value of your home improvements: When you own a home of your own, any improvements you make will add to the property’s total value, beefing up your asset as well as beautifying your living space.
House Hacking
Another way to make money by purchasing your own home is known as “house hacking“. It’s a real estate investment strategy wherein you leverage rental income from your primary residence to live there cost-free.
The term was originally coined by entrepreneur and author Brandon Turner, who wrote “The Book on Investing in Real Estate with No (and Low) Money Down” and “The Book on Rental Property Investing.”
House hacking may be done, for example, by purchasing a duplex. The investor rents out one unit at a price that covers the mortgage cost while living in the second unit. Some homeowners have also used space-share platforms like Airbnb to offset their housing costs in the same manner.
Real estate investors can use this strategy to pay off the property and even create a profit margin. This will eventually allow them to invest in more rental properties. Thus, house hacking is a great way to combine the personal financial benefits of homeownership with the long-term earning potential of other types of property investment.
Buying a Home Without a Huge Down Payment
Given the recent trends in the housing market, you may feel daunted by the prospect of becoming a homeowner. In 2023, the U.S. housing market experienced significant challenges, with home prices rising to near-record highs.
But there are many incentives and programs designed to make this large investment more feasible for first-time home buyers.
FHA (Federal Housing Administration) Loans may allow borrowers to purchase a home with a down payment as small as 3.5% of the purchase price and with credit scores as low as 580. (You may also be approved for an FHA loan with a lower credit score, but your minimum down payment may be higher.)
The USDA also offers low-cost loans to low- and moderate-income households purchasing homes in qualified rural areas.
Down Payment Assistance Programs offered by local governments and private firms can provide grants, loans, and educational materials to prospective home buyers
Many other financial institutions and organizations also have special incentives for those purchasing their first homes or low-income families in the housing market. Make sure you check with your local housing authority to learn more about what’s available in your area.
Active Investment Opportunities
Want to get hands-on? Here are the details on some of the most popular and accessible active real estate investment opportunities.
House Flipping
If you’ve ever watched more than thirty minutes of HGTV, chances are you’re at least passingly familiar with the idea of flipping houses. It’s basically where you purchase a home with the express intent of fixing it up and selling it (at a higher cost) later.
House flipping is a great way for investors to earn a significant profit. However, they do need to know how to complete the flip successfully without incurring too many costs. Expenses can quickly eat into the investment’s return.
Finding a Home to Flip
House flippers have to be able to recognize a home that may be slightly undervalued but would be able to sell well given the proper upgrades. This involves both an understanding of the area’s desirability and the types of improvements that generate increased home value.
House flippers are responsible for the entire cost of the home purchase. They must also pay for all the upgrades, which they may either do themselves or hire out to professionals.
Either way, flipping houses incurs a hefty up-front cost, and it does come at a risk. Even after you make all the improvements, it’s possible that the house will languish on the market.
This can mean racking up maintenance, taxes, and other expenses for the real estate investor. However, a properly executed, short-term flip can create a substantial profit margin in a relatively small period of time.
Wholesaling
Like house flippers, wholesalers purchase homes with the intent of selling them quickly. But, they aren’t planning to do any heavy lifting along the way.
Instead, wholesalers find properties that are undervalued for their market. They scoop them up and resell them to other investors at a price closer to their true value. Thus, earning the difference as a profit.
Rental Properties
While managing rental properties may seem like a straightforward and reliable way to earn income, it’s one of the most work-intensive approaches on this list. It does require enough up-front capital to purchase the property (or properties) in the first place. However, landlords do stand to see substantial and steady returns in exchange for the work and effort they put into their properties.
After purchasing a viable property, which needs to be well-maintained, in a desirable location, and well-advertised, landlords are responsible for filling that property with qualified tenants. This can involve a time-consuming and labor-intensive screening process.
After all, as a landlord, you’re giving your renters the keys to your investment—literally! It can be a very risky move if you don’t take the time to ensure your tenants are well-qualified.
Finding & Qualifying Tenants
Along with running a standard background check, landlords may also conduct interviews with and request credit reports from prospective renters, all of which takes time. And don’t forget: every month your rental property is unfilled is a waste of potential income.
Once you do find qualified tenants, you’ll be responsible for a host of obligations unless you hire a property management company. You’ll need to provide maintenance and repairs. You’ll also need to stay on top of rent collection and record-keeping. It can quickly become unwieldy once you have several properties.
You’ll also need to be sure you’re in compliance with all the renters’ rights that exist in your jurisdiction, including laws that regulate the eviction process. Of course, you’ll need to put in the work to find good renters and a well-maintained property in the first place. When done so, managing rentals can provide a smooth and steady source of income for relatively little active work.
Seller Financing
Want to buy an investment property with no money down? Look into seller financing or a land contract. This is where the seller acts as the bank. You make your mortgage payments, including interest, to the seller.
After a few years or so, you will have enough equity in the home to get a bank loan. You can then make a lump sum payment to the seller.
Private & Hard Money Lenders
Private money lenders generally charge between 6% to 12% on the money borrowed. Hard money lenders usually charge 10% to 18%. Hard money loans are not from banks. They are from individuals or businesses aimed at financing real estate investments for a return on their money.
Hard money loans are used by investors who don’t qualify for conventional financing. They are typically used to fund renovations. Once the house is finished or has some equity in it, the borrower then refinances to a conventional mortgage with a lower interest rate.
Airbnb, Vacation Rentals, and Space Sharing
Managing a traditional property, wherein renters sign a multi-month lease, is not the only way to make money from an investment property. Platforms like Airbnb have revolutionized the real estate market. They allow homeowners (and sometimes even renters) to make money by renting out their space on a temporary, per-night basis as a vacation rental.
What’s more, you don’t necessarily have to rent out an entire home or unit to participate. A private room, or even a couch in a shared living room, is acceptable for some travelers using these services.
Airbnb and other vacation rental platforms make it simple for a novice renter. You don’t need to have a huge amount of know-how to start earning money this way. In fact, you don’t even necessarily have to “invest” in any property at all. Some landlords may allow their renters to list their housing on Airbnb as a sublet.
Airbnb Laws
However, as this new form of investment property has expanded, it’s created housing crunches in some cities. It’s resulting in “Airbnb laws,” or short-term rental legislation. These laws may limit your ability to use your housing in this way.
Always check your local regulations before you list your space on Airbnb or another of these types of platforms. If you don’t own the space, ensure that short-term sublets are allowed. Check your lease or ask your landlord directly.
Real Estate Investing Groups and Passive Investing
You may have noticed that many of the active real estate investment opportunities listed above do require substantial upfront capital to get started. You can’t wholesale or flip a house if you can’t purchase the house in the first place!
Furthermore, these active strategies generally involve a high level of skill, effort, and responsibility. It may not be feasible for those committed to other full-time careers.
Fortunately, there are still other ways to get involved with real estate investing, even if you don’t want to own or manage tangible property. (Or if doing so is out of financial reach for you right now). These passive investment tactics can help you glean the benefits of real estate investing without taking on quite as much of a fiscal and physical burden.
Private Equity Funds
A private equity, or PE fund, pools contributions from various investors to make larger investments. They’re often limited liability partnerships. That means there are fixed periods during which investors do not have access to their holdings.
Instead, PE funds allow investors to earn gains on debt and equity assets passively, without putting in much active work or research. Asset allocation and investments are managed by a dedicated individual or group. They earn money through annual fees as well as profit sharing.
PE funds come in various types, including the following:
Core equity funds generally invest in established commercial properties. They don’t carry risks like needing major improvements or experiencing losses for lack of consumer demand. The core strategy is simultaneously the least risky among PE funds and, typically, the least gainful.
Core plus equity funds generally follow the core strategy, but take a few more risks on properties that may require minor upgrades. This leads to a higher risk-return ratio on average.
Value added equity funds may invest in commercial properties that require substantial upgrades or new management to operate at their full potential. They may also seek to sell the property after improvements are made to create an additional profit margin.
Opportunistic equity funds offer the highest potential rewards, along with the highest risk. Investment properties purchased via these funds may need new construction or even land acquisitions. The payoff of such a new business venture is all but guaranteed. Furthermore, these developments take time, which means your investment capital may be tied up for longer. However, when they pay off, opportunistic equity funds see some of the best returns of the bunch.
Although PE funds are powerful real estate investment engines, they do often have high minimum investment requirements, generally not less than $100,000. Some funds may also be limited to accredited or institutional investors who can demonstrate available means.
Opportunity Funds
Opportunity funds operate on a similar model to private equity funds but are specifically used to make investments in qualified Opportunity Zones. These are economically distressed areas designated by the state and certified by the Secretary of the U.S. Treasury. Opportunity funds are legally required to invest 90% of their assets into properties in these Opportunity Zones.
Because these areas tend to be up-and-coming (and because tax benefits can incentivize investors to support them), opportunity funds often see substantial capital gains for their investors. And taxes incurred on those gains can be deferred until December 26, 2026.
That means the longer the investment is held before that date, the lower your overall tax liability will be. And opportunity fund investments held for at least ten years prior can expect their capital returns to be permanently excluded from capital gains taxes.
Of course, this strategy requires parting with your investment capital for a significant period of time. It’s best for those who can afford to put down the money to play the long game. If you can, however, investing in one is a great way to see substantial returns for almost zero effort.
Real Estate Investment Trusts (REITs)
A real estate investment trust(REIT) is a company that invests in commercial properties. As an investor, you purchase shares of this company just as you would any other. You earn income through its debt and equity assets in the form of shareholder dividends.
REITs operate similarly to mutual funds. They provide an excellent way for the average earner to experience the benefits of real estate investing. You don’t have to have a huge amount of capital to get started, as minimum investment requirements may be quite low.
However, they may carry high investment fees, especially in the case of private REITs (i.e., those not publicly traded on the stock market). Fees at these companies may run as high as 15%. REITs may also be illiquid and keep your money locked up for longer periods of time.
Online Real Estate Investment Platforms
In this digital, all-sharing-all-the-time age, most of us have already heard of crowdfunding. Real estate investments are no exception to the rules of the new millennium.
Online real estate investment platforms have begun springing up. They can make real estate gains achievable for average investors who may not have the towering net worth or accreditation status necessary to buy into more formal funds. Depending on the specific company, you might be able to choose specific investment properties to fund or buy into a diversified portfolio of investments.
Fees and minimum investment requirements are relatively low on real estate crowdfunding platforms. For instance, Fundrise lets you get started with just $500. That is much less than you’d have to pay to get in on most types of active investments! Check out our full review of Fundrise here.
Ready to Get Started Investing in Real Estate?
As you can see, there are several ways to start investing without saving up a five- or six-figure sum. And if you do it right, your investments can actually help you reach those high savings goals. You can then fund other types of investment projects!
However, as with any financial objective, planning and strategizing is key. Saving up as much capital as possible will help you get the best return on your investment once you’re ready.
You can’t allocate your assets without first keeping track of them, and to achieve that, you need to create a budget. If you’re in debt, aggressively paying it off will free you of a weighty financial anchor, so check out these powerful debt relief options.
Finally, if you intend to purchase property either to live in or as an investment opportunity, your credit score matters. It’s as simple as that. If your credit score isn’t quite where you want it to be, take these steps to raise it. Doing so will allow you to get the best interest rate once you’re ready to make the big purchase.
Mortgage interest rates inched up this week, following nine straight declines totaling a decrease of 118 basis points (1.18%).
The average 30-year fixed rate mortgage (FRM) rose from 6.61% on Dec. 28 to 6.62% on Jan. 4, according to Freddie Mac.
“Given the expectation of rate cuts this year from the Federal Reserve, as well as receding inflationary pressures, we expect mortgage rates will continue to drift downward as the year unfolds,” said Sam Khater, Freddie Mac’s Chief Economist.
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Will mortgage rates go down in January?
Mortgage rates fluctuated significantly in 2023, with the average 30-year fixed rate going as low as 6.09% on Feb. 2 and as high as 7.79% on Oct. 26, according to Freddie Mac.
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The range can be largely attributed to the Federal Reserve’s ongoing fight against inflation, juxtaposed with uncertainty in the banking sector sparked by Silicon Valley Bank’s collapse. However, with duress permeating the financial market and the fallout from U.S. debt ceiling talks, the Fed may continue making hikes to bring interest rates down.
With the economy likely heading into a recession, it’s possible we’ve already seen the peak of this rate cycle. Of course, interest rates are notoriously volatile and could tick back up on any given week.
Experts from CoreLogic, Home Qualified, Realtor.com and others weigh in on whether 30-year mortgage rates will climb, fall, or level off in January.
Expert mortgage rate predictions for January
Craig Berry, branch manager at Acopia Home Loans
Prediction: Rates will moderate
“As inflation is the no. 1 item on the Federal Reserve’s radar right now, the Feds may choose not to lower the federal funds rate until inflation comes down. And, while Fed rate cuts aren’t a must-have in order for mortgage rates to come down, interest rates are affected by the federal funds rate.
The Feds continue to seek a balance between inflation and maximum employment so as not to cause significant damage to the economy which could trigger a recession. Recent momentum has been positive, and as long inflation cooperates, mortgage rates may see a slight decline in January. However, it isn’t likely that we’ll see significant drops to longer-term rates until we get further into 2024.”
Ralph DiBugnara, president at Home Qualified
Prediction: Rates will fall
“Rates finally shifted down some in December and stabilized lower. U.S. payrolls came in lower than anticipated, unemployment was up and building of new homes was down. These are good signs that inflation may have reached its peak and could trigger a lowering of rates. I expect the Fed to stay neutral for the time being and possibly through the first quarter of the year with possible cuts coming only if we see a drastic shift in the economy. For January, I believe the average 30-year fixed will land at 7.125% and the 15-year fixed will be 6.75%.”
Selma Hepp, chief economist at CoreLogic
Prediction: Rates will fall
“Mortgage rates should continue to decline, albeit very gradually and given there are no surprises with inflation. We should see rates fall below 7% mark.”
Hannah Jones, senior economic research analyst at Realtor.com
Prediction: Rates will fall
“If inflation and employment data continue to show signs of slowing, mortgage rates are likely to ease in January, though at a slower clip than in recent weeks. As incoming data confirms that the economy is indeed cooling, the upward pressure on mortgage rates will continue to let up and buyers will enjoy lower rates than in recent months.
However, if inflation or employment data come in stronger than expected, we could see rates pick up steam once again. Investors expect the Fed to hold steady at the current target rate in next week’s meeting, which would signal the Committee’s confidence in the current policy stance to bring inflation down to the target 2%. As inflation reaches the target level, mortgage rates will continue to drift lower.”
Jess Kennedy, COO at Beeline
Prediction: Rates will fall
“We expect rates to continue to ease as we kick off 2024. You can see the signaling of a rate cut from the Fed in many ways. For example, it is harder to find long-term CDs at the higher interest rates we were seeing 45-60 days ago). Publicly traded companies are also seeing their stock prices move higher on the expectation of rate relief in 2024. All these signs signal rates start to tick down even ahead of an official rate cut.”
Odeta Kushi, deputy chief economist at First American
Prediction: Rates will fall
“In light of favorable trends in inflation and labor market data, the Federal Reserve appears to be on a path towards its goals, although achieving its 2% inflation target will take some time. Consequently, the Fed is expected to maintain a restrictive stance, which will keep mortgage rates elevated. However, given slowing inflation and a cooling labor market, and barring any unforeseen developments, modest reductions in mortgage rates are possible in January.”
Rick Sharga, CEO at CJ Patrick Company
Prediction: Rates will fall
“With inflation moving in the right direction, wage growth slowing, and the jobs market softening a bit, it seems likely that the Federal Reserve has finished rate hikes for this cycle. That, coupled with weakening bond yields, should create an environment where mortgage rates can start a gradual, but steady decline throughout 2024. January rates for 30-year fixed-rate loans will probably straddle 7% — ranging from 7.1% to about 6.9% as the market finds its footing to begin the year.”
Mortgage interest rates forecast next 90 days
As inflation ran rampant in 2022, the Federal Reserve took action to bring it down and that led to the average 30-year fixed-rate mortgage spiking in 2023.
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With inflation gradually cooling, the Fed adjusted its policies with smaller and skipped hikes. Additionally, the economy showing signs of slowing has many experts believing mortgage interest rates will gradually descend in 2024.
Of course, rates could rise on any given week or if another global event causes widespread uncertainty in the economy.
Mortgage rate predictions for 2024
The 30-year fixed-rate mortgage averaged 6.62%% as of Jan. 4, according to Freddie Mac. All five major housing authorities we looked at project 2024’s first quarter average to finish above that.
The National Association of Home Builders sits at the low end of the group, predicting the average 30-year fixed interest rate to settle at 7.04% for Q1. Meanwhile, Fannie Mae had the highest forecast of 7.6%.
Housing Authority
30-Year Mortgage Rate Forecast (Q1 2024)
National Association of Home Builders
6.77%
Wells Fargo
6.85%
Fannie Mae
7.00%
Mortgage Bankers Association
7.00%
National Association of Realtors
7.50%
Average Prediction
7.02%
Current mortgage interest rate trends
Mortgage rates came down for the ninth consecutive week.
The average 30-year fixed rate increased from 6.61% on Dec. 28 to 6.62% on Jan. 4 The average 15-year fixed mortgage rate fell, going from 5.93% to 5.89%.
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Month
Average 30-Year Fixed Rate
December 2022
6.36%
January 2023
6.27%
February 2023
6.26%
March 2023
6.54%
April 2023
6.34%
May 2023
6.43%
June 2023
6.71%
July 2023
6.84%
August 2023
7.07%
September 2023
7.20%
October 2023
7.62%
November 2023
7.44%
December 2023
6.82%
Source: Freddie Mac
After hitting record-low territory in 2020 and 2021, mortgage rates climbed to a 23-year high in 2023. Many experts and industry authorities believe they will follow a downward trajectory into 2024. Whatever happens, interest rates are still below historical averages.
Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.
Just make sure you shop around to find the best lender and lowest rate for your unique situation.
Mortgage rate trends by loan type
Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.
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Which mortgage loan is best?
The best mortgage for you depends on your financial situation and your goals.
For instance, if you want to buy a high-priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $ in most parts of the U.S.
On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.
Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low-down-payment options.
Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less-than-perfect credit history might not disqualify you.
Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA-eligible.
Mortgage rate strategies for January 2024
Mortgage rates displayed their famous volatility in 2023. Uncertainty in the banking sector led to downtrends, but ongoing inflation battles, Fed hikes and a hot job market drove growth.
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At its September and November meetings, the central bank held off on a rate hike, preferring to see if the economy would keep cooling organically. In December, the FOMC skipped a hike and projected cuts for 2024. As always, the committee said it would adjust its policies as necessary — which could mean additional hikes or possibly none at all.
Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.
Be ready to move quickly
Indecision can lead to failure or missed opportunities. That holds true in home buying as well.
Although the housing market is becoming more balanced than the recent past, it still favors sellers. Prospective borrowers should take the lessons learned from the last few years and apply them now even though conditions are less extreme.
“Taking too long to decide to make an offer can lead to paying more for the home at best and at worst to losing out on it entirely. Buyers should get pre-approved (not pre-qualified) for their mortgage, so that the seller has some certainty about the deal closing. And be ready to close quickly — a long escrow period will put you at a disadvantage.
And it’s definitely not a bad idea to work with a real estate agent who has access to “coming soon” properties, which can give a buyer a little bit of a head start competing for the limited number of homes available,” said Rick Sharga.
Buyer demand is lower than a typical year, but the market usually heats up in spring and summer. Being decisive (and prepared) should only play to your advantage.
Shopping around isn’t only for the holidays
Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.
Lenders charge different rates for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.
“For potential home buyers, it’s important to get quotes from multiple lenders for a mortgage, as rates can vary dramatically, especially during such a volatile period,” said Odeta Kushi.
As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.
How to shop for interest rates
Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.
The rate lenders actually offer depends on:
Your credit score and credit history
Your personal finances
Your down payment (if buying a home)
Your home equity (if refinancing)
Your loan-to-value ratio (LTV)
Your debt-to-income ratio (DTI)
To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.
You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.
This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.
Compare mortgage and refinance rates. Start here
Mortgage interest rate FAQ
What are current mortgage rates?
Current mortgage rates are averaging 6.62% for a 30-year fixed-rate loan and 5.89% for a 15-year fixed-rate loan, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.
Will mortgage rates go down next week?
Mortgage rates could decrease next week (Jan. 8-12, 2024) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve taking measures to counteract inflation or if a global event brings economic uncertainty.
Will mortgage interest rates go down in 2024?
If inflation continues to dissipate and the economy cools or goes into a recession, it’s likely mortgage rates will decrease in 2024. Although, it’s important to remember that interest rates are notoriously volatile and are driven by many factors, so they can rise during any given week.
Will mortgage interest rates go up in 2024?
Mortgage rates may continue to rise in 2024. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher in 2022 and 2023. However, if the U.S. does indeed enter a recession, mortgage rates could come down.
What is the lowest mortgage rate right now?
Freddie Mac is now citing average 30-year rates in the 7% range. If you can find a rate in the 5s or 6s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.
Will there be a housing crash?
For the most part, industry experts do not expect the housing market to crash in 2023. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.
What is the lowest mortgage rate ever?
At the time of this writing, the lowest 30-year mortgage rate ever was 2.65%. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.
Should I lock my rate now or wait?
Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.
Is now a good time to refinance?
That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.
Is it worth refinancing for 1 percent?
It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.
How do I shop for mortgage rates?
Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.
What are today’s mortgage rates?
Mortgage rates are rising, but borrowers can almost always find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.
Time to make a move? Let us find the right mortgage for you
1Today’s mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.
Is it worth it to start a blog in 2024? Is it profitable to have a blog? If you’re thinking about starting a blog, then I think it’s a great time. Whether you want to start a blog or create a social media account and make money on there (such as TikTok), a blog of…
Is it worth it to start a blog in 2024? Is it profitable to have a blog?
If you’re thinking about starting a blog, then I think it’s a great time.
Whether you want to start a blog or create a social media account and make money on there (such as TikTok), a blog of your own is something that I always recommend. This is because you own your blog and you are in control!
Perhaps you’ve been thinking about starting a blog for some time, but you’re afraid that you have waited too long.
Every year I get the same questions from people who are thinking about starting a blog but are worried that it’s too late.
I also have friends who have started blogs in the past year or two and were told the same thing.
I still remember the early days from when I first started my blog.
I was so clueless when I first started my blog. And, it seemed like a very random thing when I first heard about blogging, but I decided to go ahead and create a blog of my own.
Making Sense of Cents was started simply as a way to keep track of my own personal finance journey. Most people in my life didn’t even know I had a blog.
It’s so funny to think back to when I first started my blog, but I’m so glad I gave blogging a chance. I can’t imagine how different my life would be if I had listened to the people who said it was too late to start a blog.
Because of how blogging changed my life, I love telling others about it. That’s exactly what I’m doing today if you are on the fence about starting a blog.
Blogging helped me pay off my debt, quit my regular job, travel full-time, and more. The best part is that I love what I do. And, as you can tell from my business income reports, I now earn a great living from my blog.
Related content on blogging:
Is it worth it to start a blog in 2024?
1. Yes, you can still start a blog
2024 is not too late to start a blog, but you will want to get started! I hear from so many bloggers who have delayed launching their blogs because they are afraid.
Well, you won’t know how blogging will go for you unless you start a blog.
Yes, blogging has changed over the years, but it is constantly changing and always will be. You will have to do things differently than when I first started blogging, but that’s normal with any online business, job, and so on.
Related content: The Best Blogging Courses & Resources That Helped Me Make $5,000,000
2. There is space for new bloggers
I often hear, “But there’s so many blogs out there now.” Yes, there are many blogs, but there is still space. It’s all about finding your own voice and attracting your own audience.
I am still finding brand new blogs that I love, and it’s exciting watching them grow.
Everyone is different, and everyone has their own point of view.
Of course, just like with any time, you will have to find ways to make your story stand out, grow your audience, and more. But, that is completely normal.
Plus, there are so many social media platforms that you can grow on as well, such as Facebook, Twitter, Instagram, TikTok, YouTube, and more.
3. Blogs can make money in 2024 (and into the future)
Companies and brands are still putting money toward investing in blogs and social media accounts.
Companies are increasing their marketing budgets, specifically to grow their market and audience through blogs.
And, that’s where you and I come in!
Before, companies usually would advertise and promote their products through celebrities, TV shows, movies and more. However, these days, so many people are buying products from things that they see from their favorite bloggers and social media accounts, and companies are definitely noticing this and are putting more of their marketing budget toward it.
Related tip: Sign up for Making Sense of Affiliate Marketing and learn how I’ve earned over $1,000,000 through affiliate marketing with my blog.
4. Starting a blog can be quite enjoyable
Okay, so not everyone will love having a blog. That is completely normal! After all, not everyone likes every single job out there either.
But, for me, I absolutely love blogging. And, I know many others who do as well.
I enjoy helping others improve their financial situation, reading blog posts from other bloggers, finding new people to talk to, working on my blog, and especially writing.
I love waking up each morning to work, and I no longer dread work like I did when I had my day job.
Blogging is both challenging and rewarding, as there is always something new to learn. And, it’s a lot of fun to reach and connect with new people through your blog.
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Want to see how I built a $5,000,000 blog?
In this free course, I show you how to create a blog, from the technical side to earning your first income and attracting readers.
5. You can start a blog for cheap
A blog is very affordable to create.
I spent less than $100 total for the whole first year of Making Sense of Cents.
If you are interested in taking the steps to learn how to create a blog, I have a tutorial that will help you create a blog of your own for cheap, starting at only $2.75 per month for blog hosting (this low price is only through my link). In addition to the low pricing, you will receive a free website domain (a $15 value) through my referral link if you purchase at least 12 months of blog hosting.
This means you can learn how to start a blog in 2024 and make money for less than $50 a year.
I started my blog with super cheap blog hosting, and I designed it myself (even though I had no experience ever doing something like that).
I did pretty much everything myself so that I could save money, and while it was a learning experience, it was well worth it.
This is great because you can start a blog, test it out, and not spend a lot of money.
6. You are in control
Do you want a flexible schedule? What about controlling how you make an income? Want to work from home?
By starting a blog, these are all things that you can be in control of. You get to be the decision-maker when it comes to deciding on what type of business you’ll run, your schedule, your goals, the topic you write about, and more.
I love being in complete control of what I do, and becoming self-employed may allow you to feel that way as well. I enjoy deciding what I will do each day, creating my own schedule, determining my business goals, handling everything behind the scenes, and more.
7. You don’t need to be a tech wizard to start a blog
I get asked this all the time, “Do I need to be good at social media or know how to code in order to start a blog?”
No!
You definitely do not.
In order to become a blogger in 2024, you don’t need previous experience. You don’t need to have a computer degree (I don’t think I know any bloggers who do, haha), previously be active on social media, or know how to design a website.
These are all things that you will learn as you go, or you may even hire some tasks out.
Nearly every single blogger was brand new at some point, and they had no idea what they were doing.
I’m proof of that. I had just learned that blogs existed when I started Making Sense of Cents, and I definitely didn’t know that bloggers could make money. I learned how to create a blog from the bottom up and have worked my way to where I am today.
Now, that doesn’t mean that blogging is easy. It will require hard work and the beginning can be tough. But it is something that you can learn.
8. You can still learn how to start a blog
One of the great things about starting a blog in 2024 is that there are many free resources that can help you get started.
In fact, I didn’t spend any money in the beginning in order to learn how to blog – instead, I signed up for free workshops, free resources, and more. Since I didn’t know what I was doing, I knew that I didn’t want to spend a lot of money.
Here are some free resources to help you learn how to start a blog.
I recommend starting off with my free blogging course How To Start A Blog FREE Course.
Affiliate Marketing Tips For Bloggers – Free eBook – This is a free 36-page ebook that will teach you what affiliate marketing is, how you can get started with affiliate links, the best affiliate marketing programs for bloggers, how bloggers get paid, and more.
8 Easy Tips To Make Money From Sponsored Posts On Your Blog – Sponsorships on your blog are a great way of earning a living online. Learn how I made my first blogging income, and how I’m now making $10,000 to $20,000 a month with sponsored partnerships!
The SEO Starter Pack (FREE Video Training) – Level up your SEO knowledge in just 60 minutes with this FREE 6-day video training.
The Free Blogging Planner – The Blogging Planner is a free workbook that I created just for you! In this free workbook, you’ll receive printables for starting your blog, creating a blog post, a daily/weekly blog planner, goals, and more.
How Anyone Can Create an Online Course That Sells – In this free training, you will learn the 7-step process to create, market, and launch a profitable online course.
Pinterest Image Guide – This guide will teach you how to create the best pins for your blog posts.
ConvertKit – A great email marketing company to check out is ConvertKit. They have great customer service and a free trial for new customers. They also hold a lot of free workshops that you can sign up for. I personally use ConvertKit for my email list and I highly recommend them.
How can I start a successful blog in 2024?
Here are some things to keep in mind in order to create a successful blog:
Brainstorm a good blog niche. Some do better than others, and this is something to keep in mind
Be self-hosted and create an easy-to-navigate blog design
Brainstorm and write content for your blog
Create an email list
Start social media accounts
Find ways to grow your blog
Learn how to make money blogging
You can learn more at How To Start A Successful Blog In 10 Steps.
Is it still profitable to start a blog? Is it worth it to start a blog and make money?
Yes, blogs can still make money in 2024. I think starting a blog can definitely be worth it and valuable. You can turn your hobbies, expertise, and/or creativity to start a profitable blog. And, even if you don’t have strong writing skills, that is something that you can learn as you go.
Luckily, you don’t need much to start a blog either. An internet connection, computer, and a domain name are the best ways to start!
If blogging is so wonderful, then why doesn’t everyone start one?
Not everyone starts a blog because it isn’t for everyone.
That would be like saying that becoming a zoologist or an astronaut is for everyone.
Everyone has different skills, different passions, and more.
So, not everyone will want to be a blogger. That is completely fine.
Learning how to earn money blogging is work, and just like with all jobs – not everyone wants what you want.
And, for every successful blog out there, there are probably hundreds of bloggers who will never earn money blogging. While you can earn money blogging, not all bloggers will.
It would be like saying that 100% of people who start a business will see success. That is just never going to happen – businesses fail, business owners have a change of heart, and others just don’t find it enjoyable.
I know I am always talking about the positives of blogging, but I also like to mention how it’s not the easiest.
After all, if blogging was easy, then everyone would do it and everyone would make thousands of dollars a month.
But as you know, that’s not the case.
Not everyone is going to earn money blogging because it can be a lot of work! Most new bloggers quit just a few months in. A few months is not enough time to see if your blog will be successful. It took me six months before I started to earn money blogging, and I only earned $100.
It’s funny and weird to think about what life would be like if I would have quit back then.
I’m constantly learning something new when it comes to blogging, and that is why I enjoy it so much.
If you are interested in starting a blog, I do recommend giving it a shot.
How To Start A Blog FREE Course
With this free course, I show you how to grow a blog from scratch, from the technical side (it’s easier than you think – trust me!) all the way to earning your first income and attracting followers.
Each day for seven days, you will receive an email in your inbox that will help you from the beginning, and I will teach you how to start a blog in 2024 and make money.
Below is a quick summary of what you will learn in this free 7-day course:
Day 1: Why you should start a blog.
Day 2: How to decide what to write about.
Day 3: How to create your own blog. This lesson focuses on creating a blog with WordPress. My tutorial makes it very easy to start your blog.
Day 4: How to make money with your blog.
Day 5: My tips for earning passive income.
Day 6: How to grow your page views on your blog.
Day 7: My other blogging tips to help you see success.
Please sign up for my How To Start a Blog FREE Course by clicking here or signing up below.
What do you think: Should you start a blog in 2024? Do you want to learn how to start a blog and get paid?
How To Start A Blog Free Email Course
Want to see how I built a $5,000,000 blog?
In this free course, I show you how to create a blog easily, from the technical side all the way to earning your first income and attracting readers. Join now!
Thursday’s trading session provided an unpleasant but worthwhile reminder that “data dependence” cuts both ways in terms of its impact on the bond market. Yesterday’s session saw weaker data help rates avoid a break above 4% while today’s data arguably did the opposite. None of the above was a very big deal in the bigger picture, but Friday’s jobs report certainly has the power to change the tone if it falls far enough from forecast.
ADP Employment
164k vs 115k f’cast, 101k prev
Jobless Claims
202k vs 216k f’cast, 220k prev
08:34 AM
Weaker overnight, led by Europe. More selling after data. 10yr up 7bps at 3.989. MBS down 10 ticks (.31).
12:20 PM
Slightly choppy, but mostly sideways all morning. MBS down 9 ticks (.28). 10yr up 7.3bps at 3.993.
02:19 PM
MBS are now down to the weakest levels of the day with 5.5 coupons down 3/8ths in total. 10yr yields are near their highs, up 8.1bps at 4.001.
Download our mobile app to get alerts for MBS Commentary and streaming MBS and Treasury prices.
California-based Pennymac Financial Serviceshas hired Kristy Dickey, a former executive at Citizens Bank, as first vice president of TPO sales.
Dickey will be responsible for growing the lender’s broker division and support its brokers and non-delegated partners, the firm said.
A total of five additional senior account executives joined Dickey. The new hires joined Pennymac after Citizens exited the wholesale channel in November.
Dickey brings more than two decades of financial industry experience to the position.
For more than 10 years, she served as vice president and regional manager for the Southeast at Citizens, formerly Franklin American Mortgage which was acquired in 2018.
Prior to that, Dickey worked for SunTrust Mortgage for more than 15 years, and left as regional sales manager.
She also serves on the National Association of Mortgage Brokers (NAMB) Corporate Board of Governors and is a member of Inspire, NAMB’s networking group for women in the workforce.
“Kristy’s proven talent, track record and enthusiasm for what we intend to achieve in 2024 will continue to drive our ‘tech forward, human focused’ approach home. We look forward to having Kristy lead and inspire our team, while providing best-in-class service to our partners,” said Kim Nichols, chief TPO production officer.
Pennymac TPO is the country’s second largest third-party originator trailing United Wholesale Mortgage (UWM), per Inside Mortgage Finance estimates. Most of its volume comes through the correspondent channel.
Production volume came in at around $68.8 billion in the first nine months of 2023, which gave the lender 14.4% market share in the TPO space.
Where you live can play a major role in how enjoyable your retirement is. So, where do the happiest retirees reside? To determine which cities in the U.S. are the happiest places to retire, we studied the 200 largest metropolitan statistical areas (MSAs) using the latest U.S. Census Bureau population estimates, and consulted multiple sources, including the Sharecare Community Well-Being Index, Tax Foundation, Walk Score, Sperling’s Best Places, and County Health Rankings & Roadmaps.
By identifying key elements that contribute to happiness — social networks, financials, and health — and examining 13 pivotal rankings within them, such as community, cost of living, and healthcare access, we created the Happiest Places to Retire in the U.S. in 2024. Read on to learn about the 20 best places to retire in the U.S. to help you explore your options for where to live in retirement.
Key Findings on Retirees’ Favorite Cities
• Barnstable, MA is the happiest city to retire to, ranking #1 of all 200 cities we analyzed. It has the highest ranking overall for community well-being, and one of the highest percentages of residents who are 65-plus. The other cities at the top of the list: Naples, FL at #2, and Ann Arbor, MI at #3.
• Colorado has the highest number of happiest cities for retirees on our top 20 list, beating out Florida. Boulder, CO is the #5 happiest city for retirees, and Fort Collins and Denver also made the list.
• Colder climates are now attracting retirees. Three of our top 5 cities for retirement (Barnstable, MA; Ann Arbor, MI; and Boulder, CO) have average high winter temperatures in the 30s or 40s.
• Naples, FL residents live the longest. The city has the highest average life expectancy (86.1 years) of all 200 cities we analyzed.
• Ann Arbor, MI, has the lowest tax burden for retirees on our top 20 list, followed by Myrtle Beach and Charleston in South Carolina. Meanwhile, Akron, OH has the lowest cost of living of the top 20 cities for retirees, 80.8% of the U.S. average.
Top 20 Happiest Cities to Retire
Looking for information on the happiest places to live after retirement? Whether you dream of an ocean breeze or mountain views, you have plenty of cities to consider.
The top 20 happiest cities for retirees offer a broad range of activities, amenities, and resources. They’re also located all across the nation, as shown in this map of the top 10, so you can find a place in the part of the country you’d most like to live in.
1. Barnstable, MA
Coming in at the top of the happiest cities to retire in the U.S. list is Barnstable. Located on Cape Cod, its beachside beauty attracts retirees, making it one of the top three cities for residents 65 and up. While living here can be expensive (the median household income is $91,438) and there’s less access to healthcare than the other top contenders have, residents enjoy a high level of social interaction and plenty of entertainment and activities.
2. Naples, FL
Those who want to live by the water and enjoy warmer weather can head south to Naples. The cost of living in this city is fairly reasonable, and there’s no state personal income tax, which means your retirement savings can go a lot further. Naples also has the highest life expectancy (age 86.1) of all 200 cities we analyzed.
3. Ann Arbor, MI
Want to enjoy city life without the high prices? Ann Arbor, a college town, has plenty of big city amenities at an affordable price point. Another draw for retirees: Ann Arbor residents enjoy the highest level of healthcare access of the cities on our list, and ranks #1 for health overall.
4. Durham, NC
Friendship and social interaction are important in retirement. Durham, one of the top cities to retire in the U.S., offers a strong sense of community and social well-being, according to the data. Residents will find plentiful healthcare in Durham as well. It ranks #2 out of the top 20 for healthcare access.
5. Boulder, CO
If you like to hit the slopes, Boulder may be the ideal location for your retirement years. The city is #3 on the top 20 list for housing and transportation, so you should be able to find the right place to live and get around easily.
6. North Port, FL
North Port is the second Florida city to make the top 20 list of the happiest places to live in the U.S. Community and social connection is high here, and there’s a sizable population of those aged 65 and up, making it easier to meet new friends. It also has one of the lowest tax burdens among the top 20 cities.
7. Olympia, WA
Retirees who want to live affordably on the west coast can check out scenic Olympia, WA. It ranks as #1 in the financial category, which takes into account factors such as cost of living and household income. It’s also one of the best states to retire in for taxes, which can help retirees stretch their savings. Olympia has the lowest number of residents living below the poverty level of all 200 cities we analyzed.
8. San Jose, CA
Retirees in San Jose enjoy the second-highest average life expectancy (after Naples, FL) of the 200 cities we studied, making it one of the top places for a long and healthy retirement. But there’s a tradeoff: The cost of living in San Jose is extremely high: a whopping 231% of the U.S. average.
9. San Luis Obispo, CA
If being in a comfortable environment is one of your top retirement priorities, look no further than San Luis Obispo. Along with San Jose, the city scored the highest level of comfort for retirees on our top 20 cities list, thanks to its temperate weather.
10. Madison, WI
A low average cost of living plus a high median household income ($83,214) make Madison not only one of the happiest places to live in retirement, but also one of the most affordable. In this relatively walkable city, you can save on transportation costs and live a healthier lifestyle.
Recommended: Average Retirement Savings By State
11. Honolulu, HI
Honolulu combines great weather, pristine beaches, and big city living. It gets high scores for comfortable weather and transportation. And Honolulu has some of the highest scores for social factors and community. Retiring in paradise comes at a price, however — namely, the city’s high cost of living (171.5% of the U.S. average).
12. Salisbury, MD
Salisbury, in the Eastern Shore area of Maryland, is a popular place for retirees. More than a quarter of the population is 65 and over, which means you should have plenty of peers to socialize and do activities with.
13. Washington, DC
If you’re interested in history and culture, Washington D.C. might be a good fit. And many of the city’s major attractions are free of charge. The nation’s capital is also the most walkable city on our top 20 list of the happiest places to live after retirement, so you’ll save on transportation as you get your steps in.
14. Portland, ME
In this city on the coast, you can enjoy all that the ocean has to offer plus metropolitan amenities. Portland ranks as one of the best cities to retire in when it comes to community, and it also has abundant options for art, recreation, and entertainment, which can help you stay happily busy in retirement.
15. Myrtle Beach, SC
Retirees settle down in this popular travel destination to take advantage of the reasonable cost of living and low tax burden. They also love the miles of beaches, plentiful golf courses, and comfortable weather. Myrtle Beach has the 4th highest population of people age 65-plus.
16. Harrisburg, PA
The capital city of Pennsylvania is an affordable place to retire. It has a low cost of living, which means the city’s average median income of $73,739 can go farther. Fewer people live below the poverty line here than in many other cities. Retirees can be active here as well: Harrisburg ranks as #2 of our top cities when it comes to walkability.
17. Fort Collins, CO
If you love the great outdoors, this city, located at the foot of the Rocky Mountains, has a lot to offer. All those outside adventures come with some nice health perks: Fort Collins has one of the higher life expectancies of our 20 top cities for retirees.
18. Denver, CO
Where is the happiest place to retire? It might just be the state of Colorado. Denver is the third Colorado city to make the top 20 list of happy places for retirees to live. Denver has a high level of community and social well-being, which could make retirement a lot more fulfilling. It’s very walkable, too, coming in at #5 out of the top 20 in the walking category.
19. Akron, OH
With the lowest cost of living (80.8% of the U.S. average) of the 20 best cities, Akron offers retirees affordability plus many opportunities for social and community connection. That can make it easier to make new friends in retirement.
20. Charleston, SC
A vibrant cultural scene, great food, ocean access, and lovely architecture make Charleston one of the best places to retire in 2024. Charleston ranks #2 for art, recreation, and entertainment out of the 200 cities studied, following only Los Angeles, so you’ll find plenty to do here in your golden years. And the tax burden is one of the lowest on our 20 happiest cities list.
Best Places to Retire for a Happy Retirement
Want to consider some of the different places that could make for a very happy retirement? The map below shows the top five cities out of the 200 analyzed in each of the three key categories that contribute to happiness: social, financial, and health.
200 Cities Studied for Happiest Places to Retire
Reviewing the full list of 200 cities studied for the Happiest Places to Retire can reveal additional great options for retirement. For example, following Naples, FL, the next three cities with the highest life expectancy — San Jose, CA, San Francisco, CA, and New York, NY — are all bustling, well-populated cities that also rank highly for community and social factors. Take a look at what cities across the U.S. have to offer.
Overall Rank
City
Total Score
Social rank
Financial Rank
Health Rank
1
Barnstable, MA
62.05
1
6
120
2
Naples, FL
61.43
2
18
32
3
Ann Arbor, MI
61.40
64
14
1
4
Durham, NC
57.56
57
13
2
5
Boulder, CO
56.95
21
16
13
6
North Port, FL
56.77
4
37
129
7
Olympia, WA
56.46
32
1
88
8
San Jose, CA
55.52
5
113
7
9
San Luis Obispo, CA
55.18
9
11
41
10
Madison, WI
55.13
84
5
11
11
Honolulu, HI
54.82
7
71
12
12
Salisbury, MD
54.70
11
3
177
13
Washington DC
54.33
23
17
19
14
Portland, ME
53.86
17
35
22
15
Myrtle Beach, SC
53.66
8
20
181
16
Harrisburg, PA
52.39
50
24
24
17
Fort Collins, CO
52.11
34
19
80
18
Denver, CO
52.03
86
9
33
19
Akron, OH
51.64
55
10
69
20
Charleston, SC
51.62
37
55
30
21
Manchester, NH
51.49
47
22
58
22
Seattle, WA
51.44
19
101
15
23
Minneapolis, MN
51.22
48
26
28
24
Richmond, VA
50.56
24
46
40
25
Bridgeport, CT
50.52
25
83
8
26
Daphne, AL
50.50
31
12
171
27
Des Moines, IA
50.49
106
2
158
28
San Francisco, CA
50.42
6
172
4
29
Santa Rosa, CA
50.11
14
81
43
30
Raleigh, NC
50.08
45
42
56
31
Prescott Valley, AZ
49.92
3
118
193
32
Oxnard, CA
49.38
16
78
49
33
Asheville, NC
49.35
10
125
57
34
Bremerton, WA
49.22
22
52
108
35
Boston, MA
49.18
33
139
6
36
Colorado Springs, CO
49.18
95
7
141
37
Pittsburgh, PA
49.14
35
82
47
38
Portland, OR
49.03
58
96
14
39
Hartford, CT
49.02
62
36
16
40
Omaha, NE
49.00
87
25
37
41
St. Louis, MO
48.88
56
73
36
42
Lancaster, PA
48.80
46
48
74
43
Chattanooga, TN
48.79
43
53
122
44
Appleton, WI
48.78
41
30
128
45
Sioux Falls, SD
48.48
92
34
83
46
Salt Lake City, UT
48.42
125
23
25
47
Charlotte, NC
48.40
38
61
90
48
Allentown, PA
48.35
52
43
42
49
Crestview, FL
47.95
61
15
183
50
Cape Coral, FL
47.88
13
119
110
51
New Haven, CT
47.81
73
65
9
52
Austin, TX
47.76
123
40
48
53
San Diego, CA
47.73
27
103
29
54
Peoria, IL
47.60
66
27
91
55
Tucson, AZ
47.56
69
59
67
56
Green Bay, WI
47.33
80
33
92
57
Lexington, KY
47.28
94
79
31
58
Deltonah, FL
47.24
18
58
198
59
Reno, NV
47.08
44
67
117
60
Tyler, TX
47.07
127
28
99
61
Ogden, UT
47.07
101
8
160
62
Santa Cruz, CA
46.99
12
147
27
63
Atlanta, GA
46.97
54
100
60
64
York, PA
46.96
53
49
112
65
Palm Baye, FL
46.89
20
84
182
66
Boise City, ID
46.89
96
32
98
67
Grand Rapids, MI
46.89
140
39
55
68
Cincinnati, OH
46.77
71
74
63
69
Wilmington, NC
46.53
40
105
79
70
Canton, OH
46.52
100
29
131
71
Fargo, ND
46.49
154
21
71
72
Savannah, GA
46.37
107
63
59
73
Provo, UT
46.20
135
4
175
74
Norwich, CT
46.08
49
31
115
75
Roanoke, VA
46.05
28
123
46
76
Baltimore, MD
45.92
29
120
68
77
Philadelphia, PA
45.91
63
109
44
78
Nashville, TN
45.89
99
68
105
79
Anchorage, AK
45.87
136
87
86
80
Indianapolis, IN
45.73
119
44
95
81
Sacramento, CA
45.72
42
98
50
82
Trenton, NJ
45.67
70
110
18
83
Lincoln, NE
45.63
103
38
93
84
Port St. Lucie, FL
45.51
15
126
173
85
Albany, NY
45.48
60
62
38
86
Vallejo, CA
45.16
36
97
89
87
Louisville, KY
45.03
117
47
106
88
Worcester, MA
44.90
82
94
51
89
Virginia Beach, VA
44.90
83
70
64
90
Huntsville, AL
44.81
77
60
142
91
Chicago, IL
44.70
79
107
26
92
Kalamazoo, MI
44.57
149
64
70
93
Poughkeepsie, NY
44.47
90
54
45
94
Spokane, WA
44.35
113
51
111
95
Eugene, OR
44.29
68
108
81
96
Columbia, SC
44.22
105
91
104
97
Kansas City, MO
44.13
75
88
103
98
Phoenix, AZ
43.94
89
104
85
99
Jacksonville, FL
43.71
67
102
152
100
Salinas, CA
43.70
85
86
66
101
Little Rock, AR
43.63
144
80
61
102
Dallas, TX
43.55
130
90
97
103
Cleveland, OH
43.47
139
142
10
104
Greenville, SC
43.41
118
106
75
105
Lansing, MI
43.35
150
56
125
106
Rochester, NY
43.26
114
93
20
107
Cedar Rapids, IA
43.25
104
50
161
108
Winston, NC
43.23
91
116
73
109
Greeley, CO
43.15
141
41
162
110
Detroit, MI
43.15
72
122
116
111
Reading, PA
42.88
76
117
87
112
Fort Wayne, IN
42.52
152
45
168
113
Dayton, OH
42.43
111
95
127
114
Davenport, IA
42.37
110
77
139
115
Atlantic City, NJ
42.26
39
131
100
116
Fayetteville, AR
42.17
122
75
151
117
Santa Maria, CA
42.11
59
134
53
118
Evansville, IN
41.59
161
57
144
119
Knoxville, TN
41.58
74
138
149
120
Oklahoma City, OK
41.21
148
89
150
121
Milwaukee, WI
41.18
98
141
54
122
South Bend, IN
41.14
145
85
167
123
Hagerstown, MD
40.26
81
112
179
124
Columbus, OH
40.23
166
72
137
125
Ocala, FL
40.11
26
153
199
126
Birmingham, AL
39.94
65
159
107
127
Montgomery, AL
39.91
134
92
189
128
Rockford, IL
39.80
143
76
157
129
Pensacola, FL
39.44
133
121
153
130
New York, NY
39.32
51
184
5
131
Syracuse, NY
39.27
137
124
35
132
Killeen, TX
39.26
186
69
114
133
Lynchburg, VA
39.22
155
66
174
134
Buffalo, NY
38.98
128
128
39
135
Wichita, KS
38.67
97
135
163
136
Tallahassee, FL
38.65
147
132
134
137
Providence, RI
38.62
112
167
34
138
Los Angeles, CA
38.60
30
187
23
139
Kennewick, WA
38.45
151
127
123
140
Flint, MI
38.34
171
111
156
141
Orlando, FL
38.33
153
155
72
142
Tulsa, OK
38.31
174
99
169
143
Las Vegas, NV
38.31
121
146
135
144
Salem, OR
38.25
138
130
133
145
Duluth, MN
38.21
116
136
126
146
Erie, PA
37.91
126
137
154
147
Springfield, MA
37.88
115
162
62
148
Hickory, NC
37.71
93
140
194
149
Tampa, FL
37.66
102
174
77
150
Albuquerque, NM
37.59
146
157
65
151
Gainesville, FL
37.58
178
182
3
152
Huntington, WV
37.41
88
161
159
153
Toledo, OH
37.11
168
144
82
154
Scranton, PA
37.05
109
156
143
155
Jackson, MS
36.89
175
148
76
156
Amarillo, TX
36.78
142
149
176
157
Kingsport, TN
36.67
158
133
190
158
Springfield, MO
36.65
164
129
165
159
Youngstown, OH
36.63
78
158
188
160
Houston, TX
35.66
179
164
52
161
Binghamton, NY
35.66
162
114
124
162
Charleston, WV
34.97
132
168
138
163
San Antonio, TX
34.88
184
152
94
164
Waco, TX
34.80
176
143
170
165
Greensboro, NC
34.68
108
175
148
166
Augusta, GA
34.56
120
176
145
167
New Orleans, LA
34.48
172
181
21
168
Utica, NY
34.17
167
115
155
169
Memphis, TN
34.17
182
160
130
170
Lubbock, TX
33.95
183
166
84
171
Lakeland, FL
33.94
124
173
178
172
Stockton, CA
33.82
156
154
146
173
Riverside, CA
33.53
129
169
121
174
Macon, GA
33.03
163
180
101
175
Spartanburg, SC
32.77
131
177
185
176
Longview, TX
31.85
185
150
191
177
Miami, FL
31.74
157
192
17
178
Baton Rouge, LA
31.69
181
170
136
179
College Station, TX
30.49
193
165
96
180
Tuscaloosa, AL
30.35
165
179
180
181
Clarksville, TN
30.17
189
145
200
182
Mobile, AL
29.95
170
185
113
183
Shreveport, LA
29.22
177
191
78
184
Fayetteville, NC
28.42
187
171
184
185
Fort Smith, AR
27.72
159
186
196
186
Beaumont, TX
27.36
197
151
195
187
Gulfport, MS
27.33
173
183
197
188
Fresno, CA
26.58
188
178
119
189
Corpus Christi, TX
26.09
192
189
102
190
Modesto, CA
26.05
169
190
147
191
Visalia, CA
25.28
196
163
166
192
Columbus, GA
24.08
160
193
192
193
Lafayette, LA
23.64
180
196
109
194
Bakersfield, CA
21.84
190
188
186
195
Merced, CA
18.10
191
194
187
196
Yakima, WA
17.32
195
195
164
197
El Paso, TX
8.56
194
198
118
198
McAllen, TX
3.30
200
197
132
199
Brownsville, TX
2.10
198
199
140
200
Laredo, TX
-3.32
199
200
172
Tips for a Happy Retirement
You’ve worked hard, now it’s time to enjoy yourself! These smart strategies can help you find happiness in retirement.
• Create a budget. You may have fewer expenses when you’re retired, but you’ll still need a roadmap for managing them. This is where retirement planning and a budget come in handy. If you are already retired, create a budget that works well for your retirement income. If retirement is still in the future, map out a plan to see how much you’ll need to save to be properly prepared.
• Keep tabs on your retirement savings. Don’t forget to check on your retirement savings regularly to ensure that you’re on track financially. And, of course, make sure you have retirement savings accounts like a 401(k) or a traditional or Roth IRA to help you reach your goal.
Don’t yet have a retirement account? Learn how to set up your own retirement account.
• Prioritize health and wellness. To be at your best, strongest, and happiest in retirement, prioritize your physical and mental health with regular exercise, a balanced diet, and lots of social interaction.
• Pursue your passions. Don’t let retirement slow you down. You can pursue your favorite hobbies, work on fulfilling and meeting your top ambitions and challenges, and do the activities you’ve always wanted to try now that you have the time and freedom for them. When choosing among the best retirement cities, be sure to look for places that cater to your interests.
Methodology
To find the happiest cities for people to retire in the U.S., we looked at the 200 largest metropolitan statistical areas (MSAs) based on the U.S. Census Bureau’s 2022 population estimates for 13 ranking factors across three categories (Social, Finance, and Health).
We graded each factor on a 100-point scale, where 100 was the highest possible score. Each factor was weighted differently.
Socioeconomic Score Factors
• Community well-being
• Social well-being
• Comfort index*
• Percentage of population age 65 and over
• Percentage of art, recreation, and entertainment businesses
Financial Score Factors
• Housing & transportation
• Cost of living index*
• Median household income
• Percentage of people aged 65 and over living below poverty level
• Tax burden**
Health Score Factors
• Healthcare access
• Life expectancy
• Walk Score*
*Data represents city proper data (excluding surrounding metro). **Data represents state level data.
Sources: U.S Census Bureau, Sharecare Community Well-Being Index, Walk Score, Tax Foundation, County Health Rankings & Roadmaps, Sperling’s Best Places.
The Takeaway
When you’re ready to retire, choosing where to settle down is a big and important decision. Exploring our list of top 20 happiest places is a great place to start. You can look for cities that offer affordability, good access to healthcare, entertainment and cultural activities, and opportunities for making social and community connections.
And to ensure that your retirement is as happy and stress-free as possible, you’ll want to have your retirement savings in order. Contributing to your 401(k) or IRA can help you build the retirement nest egg you’ll need.
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), 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.
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The Federal Housing Administration (FHA) faces a potential loss of roughly $7 billion in receipts in 2024, and a failure by Congress to come to terms on certain spending agreements could force across-the-board cuts to non-defense spending of roughly 5-to-9%.
This is according to a letter published this week by the Congressional Budget Office (CBO), submitted to the chairman and ranking member of the U.S. House of Representatives budget committee.
CBO projections for FHA
“This letter provides CBO’s assessment of the effects of the caps on discretionary funding in fiscal year 2024,” the letter reads. “Those effects will depend on the nature and timing of appropriation legislation and on decisions by [OMB]. If necessary, the caps will be enforced by OMB through sequestration, the process by which across-the-board reductions are applied to budgetary resources.”
If Congress is unable to come to a compromise on government funding — with current continuing resolutions in place in two phases — sequestration would force cuts to both defense and nondefense government spending. The latter would see far more severe cuts, according to CBO.
“In the scenarios CBO examined, if enacted funding equaled the annualized amount of funding under the continuing resolution, sequestration would be required and would result in across-the-board reductions ranging from 5 percent to 9 percent for nondefense funding and from zero to 1 percent for defense funding, depending on when appropriations were enacted and what form they took,” the letter said.
FHA’s lower expected receipts in 2024 are cited by CBO as one of the reasons that nondefense spending could see more severe cuts in 2024, but both housing groups and the agencies themselves have explained that additional resources from Congress are needed to adequately handle the housing challenges across the country today.
MBA, NRMLA advocate for full FHA, Ginnie Mae funding
Leaders in Congress have been entertaining the notion of a 1% cut to housing agencies. In December, leaders at housing advocacy groups including the Mortgage Bankers Association (MBA) and the National Reverse Mortgage Lenders Association (NRMLA) submitted a letter urging leaders in Congress to fully fund FHA and Ginnie Mae.
“The [budget agreement] enacted this past spring contained an overall discretionary spending level of 1% below FY 2023 spending levels,” the letter said. “At this time, it is unclear whether FY 2024 HUD funding will be approved through a traditional conference report, a continuing resolution, or a reversion to the budget agreement default process.”
FHA, the groups said, provides “the most important mortgage option for affordable mortgage loans for first-time, minority, and other underserved homebuyers – responsibly serving qualified borrowers with low down payment requirements or minor credit blemishes,” while Ginnie Mae maintains a “critical role” in the housing ecosystem with its mortgage-backed securities (MBS) program and its other important roles in rural housing and loans for veterans.
A one percent cut to these agencies, the letter said, would “prove inadequate and substantially undermine FHA’s ability to fulfill its baseline responsibilities and pursue the initiatives identified above,” and would “result in harmful mortgage market impacts and taxpayer risks” for Ginnie Mae.
Possible reverse mortgage impacts
A reduction in FHA’s budget could negatively impact the administration of the Home Equity Conversion Mortgage (HECM) program, but another reverse mortgage impact could be from potential cuts to Ginnie Mae due to liquidity challenges being faced in the reverse mortgage business.
After assuming control of Reverse Mortgage Funding (RMF)’s portfolio of HECM-backed securities late last year, Ginnie Mae officials explained throughout last year that the assumption of a large portfolio — estimated to contain as much as one-third of all HMBS issuance as of mid-2023 — necessitated more appropriations from Congress to adequately manage it.
In its 2024 budget request submitted to Congress last March, Ginnie Mae explained some of the challenges inherent in managing the RMF portfolio.
“We continue to spot new issues as we take the RMF portfolio in-house,” Ginnie’s budget request document said. “It has become clear that the HECM program requires enhanced governance across how Ginnie Mae makes decisions […] because the HMBS program presents a heightened set of operational risks for Ginnie Mae, we require additional staff to work through these issues.”
A continuing resolution keeps Ginnie Mae ‘flat’
In an interview with RMD late in 2023, Ginnie Mae President Alanna McCargo spoke about some of the challenges in securing additional appropriations considering the narrow political majorities in both houses of Congress.
“We’ve been on a journey to right-size Ginnie Mae since I started, and then the acquisition of this portfolio and with the role we’re playing right now in the reverse industry, [that has] only accelerated our need to have more focus, more resources and more people to do the business that we have to do,” McCargo said.
While there has been some support shown for fully funding Ginnie Mae in Congress, operating off of a continuing resolution has stifled any potential growth in appropriations, she explained.
“Unfortunately, the [continuing resolution] that we’re currently operating under keeps us flat, so it really does slow down our ability to do the hiring and planning that we want and need to do,” McCargo said.
External to the budget issues, Ginnie Mae has taken steps to improve reverse industry liquidity by reducing the minimum size required to create HMBS pools to assist smaller issuers and changing certain pool eligibility requirements to ease some strain.
Many people mistakenly believe they can’t afford to buy a home because they don’t really know what their options are. Fortunately, home loans are not one-size-fits-all. There are various mortgages available to suit your budget and preferences.
So, before you start visiting open houses, take some time to familiarize yourself with the different home loans that are available. Going into the home buying process informed could help you save a lot of money on your down payment, interest, and fees.
The 8 Types of Mortgage Loans Available
Understanding the different types of mortgage loans will help you choose the option that’s best suited for you. Let’s look at a brief overview of the eight types of mortgages available in 2024.
1. Conventional Loans
A conventional loan is a mortgage that’s not issued by the federal government. There are two different types of conventional mortgages you can choose from: conforming and non-conforming loans.
A conforming loan falls within the guidelines laid out by Fannie Mae and Freddie Mac. You’ll take out a conforming loan through a private lender like a bank, credit union, or mortgage company. Since the government doesn’t guarantee the loan, conventional mortgages typically come with more stringent lending requirements.
According to the CFPB, the maximum loan amount for a conventional loan is $484,350. However, it may be as high as $726,525 in counties with a high cost of living. You’ll have to take out private mortgage insurance (PMI) if you don’t have a 20% down payment.
Conventional loans are fixed-rate mortgages, which means your monthly mortgage payment remains the same throughout the entire life of the mortgage loan. The terms typically range from 10 to 30 years:
30-year fixed-rate mortgage
20-year fixed-rate mortgage
15-year fixed-rate mortgage
10-year fixed rate mortgage
Pros:
It can be used to purchase a primary home or an investment property
Tends to cost less than other types of loans
You can cancel your private mortgage insurance (PMI) once you reach 20% equity in your home
Cons:
Must have a minimum FICO score of 620 or higher
Harder to qualify for than government-backed loans
You’ll need to have a low debt-to-income ratio to qualify
2. Conventional 97 Mortgage
A conventional 97 mortgage is similar to a conventional loan in that it’s widely available to various borrowers. The main difference is that with this type of home loan, you only have to pay a 3% down payment.
The program is available for first-time and repeat home buyers. However, it must be your primary place of residence, and the maximum loan amount is $510,400.
Pros:
Widely available to most borrowers
Only requires a 3% down payment
Available for first-time and repeat homebuyers
Cons:
Cannot be used to purchase investment properties
The maximum loan amount is $510,400
Requires a minimum FICO score of 660 or higher
3. FHA Loans
FHA loans are backed by the Federal Housing Administration and are a popular option for first-time home buyers. To qualify, you need to have a 3.5% down payment and a minimum credit score of 580.
If you have a credit score of 500 or higher, you can qualify for an FHA loan with a 10% down payment. These flexible requirements make FHA loans a suitable option for borrowers with bad credit.
To qualify for an FHA home loan, you must have a debt-to-income ratio of 43% or less. These loans can’t be used to purchase investment properties, and your home must meet the FHA’s lending limits.
These limits vary by state, so you’ll need to check the FHA’s website to see what the guidelines are for your area.
Pros:
Loans come with low down payment options
A viable option for borrowers with bad credit
Available for first-time and repeat homeowners
Cons:
Loans can’t be taken out for investment properties
If your credit score is below 580, a 10% down payment is required
You must have a debt-to-income ratio below 43%
Mandatory mortgage insurance premiums
4. FHA 203(k) Rehab Loans
An FHA 203(k) rehab loan is sometimes referred to as a renovation loan. It allows home buyers to finance the purchase of their home and any necessary renovations with a single loan.
Many people purchase older homes to fix them up. Instead of taking out a mortgage and then applying for a home renovation loan, you can accomplish both within a single mortgage.
A rehab loan is similar to an FHA loan in that you’ll need a 3.5% down payment. However, the credit requirements are stricter, and you’ll need a minimum credit score of 640 to qualify.
Pros:
Allows you to buy a home and finance the remodel within one mortgage
Requires a minimum 3.5% down payment
Easier to qualify since the FHA backs your loan
Cons:
Credit requirements are more stringent than typical FHA loans
You must hire approved contractors and cannot DIY the renovations
The closing process takes longer than other types of mortgages
5. VA Loans
The Department of Veteran Affairs guarantees VA loans. These loans are designed to make it easier for veterans and service members to qualify for affordable mortgages.
One of the biggest advantages of taking out a VA loan is that it doesn’t require a down payment or mortgage insurance premium (MIP). And there are no listed credit requirements, though the lender can set their own minimum credit requirements. VA loans typically come with a lower interest rate than FHA and conventional loans.
To qualify for a VA loan, you must either be active duty military, a veteran or honorably discharged. You’ll need to apply for your mortgage through an approved VA lender.
Pros:
No down payment required
No PMI required
Flexible credit requirements
Cons:
Must be a veteran to qualify
Some sellers will not want to deal with a VA loan
6. USDA Loans
A USDA loan is a type of mortgage that’s available for rural and suburban home buyers. It’s a viable option for borrowers with lower credit scores that are having a hard time qualifying for a traditional mortgage.
USDA loans are backed by the U.S. Department of Agriculture, and they help low-income borrowers find housing in rural areas. USDA loans do not require a down payment, but you will need a minimum credit score of 640 to qualify.
You will need to meet the USDA’s eligibility requirements to qualify for the loan. But according to the department’s property eligibility map, over 95% of the U.S. is eligible.
Pros:
No down payment required
A practical option for low-income borrowers
Available to first-time and repeat home buyers
Cons:
A minimum credit score of 640 is required
Housing is limited to rural and suburban areas
7. Jumbo Loans
A jumbo loan is a mortgage that exceeds the financing guidelines laid out by the Federal Housing Finance Agency. These loans are unable to be purchased or guaranteed by Fannie Mae or Freddie Mac.
A jumbo mortgage is financing for luxury homes in competitive real estate markets, and the limits vary by state. In 2024, the FHFA raised the limits for a one-unit property to $766,550, increasing from $726,200 in 2023. In certain high-cost areas, the limits for jumbo loans vary, reaching up to $1,149,825. These jumbo loans are for mortgages that exceed the set limits in their respective counties.
If you’re hoping to buy a home that costs more than $1 million, you’ll need to take out a super jumbo loan. These loans provide up to $3 million to purchase your home. Both jumbo and super jumbo mortgages can be difficult to qualify for and require excellent credit.
Pros:
These loans make it possible to purchase large homes in expensive areas
Typically comes with flexible loan terms
Cons:
Jumbo loans and super jumbo loans come with higher interest rates
You’ll need a good credit history to qualify
8. Adjustable Rate Mortgages (ARMs)
Unlike a fixed-rate mortgage, where the interest rate is set for the life of the loan, an adjustable-rate mortgage (ARM) comes with interest rates that fluctuate. Your interest rate depends on the current market conditions.
When you first take out an ARM, you will typically start with a fixed rate for a set period of time. Once that introductory period is up, your interest rate will adjust on a monthly or annual basis.
An ARM can be a suitable option for some borrowers because your interest rate will likely be low for the first couple of years you own the home. But you need to be comfortable with a certain level of risk.
And if you choose to go this route, you should look for an ARM that caps the amount of interest you pay. That way, you won’t find yourself unable to afford your monthly payments when the interest rates reset.
4 Types of ARMs
There are 4 different types of adjustable-rate mortgages typically offered:
One Year ARM – The one-year adjustable-rate mortgage interest rate changes every year on the anniversary of the loan.
10/1 ARM – The 10/1 ARM has an initial fixed interest rate for the first ten years of the mortgage. After 10 years is up, the rate then adjusts each year for the remainder of the mortgage.
5/5 and 5/1 ARMs – ARMs that have an initial fixed rate for the first five years of the mortgage. After 5 years is up, for the 5/5 ARM, the interest rate changes every 5 years. For the 5/1 ARM, the interest changes every year.
3/3 and 3/1 ARMs – Similar to the 5/5 and 5/1 ARMs, except the initial fixed-rate changes after 3 years. For the 3/3 ARM, the interest rate changes every 3 years and for the 3/1 ARM, it changes every year.
Pros:
Interest rates will likely be low in the beginning.
If you pay the loan off quickly, you could pay a lot less money in interest.
Cons:
Your monthly mortgage payments will fluctuate.
Many borrowers have gotten into financial trouble after taking out an ARM.
Choosing the Right Home Loan
When it comes to choosing a home loan, you need to consider a few key factors. First, you’ll want to think about the type of loan that is best suited to your needs.
Fixed-rate mortgages offer stability and predictability, while adjustable-rate mortgages (ARMs) can be a viable option for those who expect their income to increase significantly over time. You’ll also want to consider your budget and how much you can afford to borrow, as well as the size of your down payment and the length of the loan term.
It’s also crucial to shop around and compare offers from multiple mortgage lenders. While it’s tempting to go with the first lender you find, it pays to do your homework and see what other options are available.
This can help you get a better rate and more favorable terms on your loan. It’s a good idea to get quotes from at least three different lenders, and to consider both traditional banks and online lenders.
Tips for Getting the Best Rates and Terms
One of the most effective strategies is to improve your credit score. Lenders look closely at credit scores when deciding whether to approve a loan. Those with higher scores are typically offered better terms. You can improve your credit score by paying your bills on time, reducing your debt, and correcting any errors on your credit report.
Another tip is to make a larger down payment, which can help you secure a lower interest rate and reduce the size of your monthly payments. Finally, consider working with a mortgage broker, who can help you shop around and find the best deal.
Bottom Line
As you can see, there are many home loans for you to choose from. The type of mortgage that’s best for you will depend on your current income and financial situation.
If you’re not sure where to start, consider working with a qualified loan officer. They can assess your situation and recommend the option that will be best for you.
While the holidays tend to be a reflective time, the definitive flip of the calendar into a new year can inspire you to set your sights high.
Go to the gym more. Be on your phone less. And — if you’re like many Americans — get your credit card debt under control, once and for all.
Summer 2023 marked a new high for Americans’ total credit card debt, with balances passing $1 trillion for the first time in history, according to the Federal Reserve Bank of New York.
This type of debt can feel uniquely stressful, like something you can’t get ahead of no matter how hard you try. Though there’s no quick fix for credit card debt, consolidation can be a smart financial strategy that simplifies your debts and lowers the amount of interest you pay.
Here are five signs that consolidation may be the right financial move to make in 2024.
1. You have a pretty good credit score
Your credit score is one of the most important factors when consolidating credit card debt, because strong credit will help you qualify for a debt consolidation product.
Tiffany Johnson, a certified financial planner based in Athens, Georgia, says the first step she takes with her clients is to have them pull their credit reports from the three major credit bureaus (Experian, Equifax and TransUnion) and check for any errors. You can get your credit report weekly for free at AnnualCreditReport.com.
“If they have a reasonable credit score, I would say at least 600, that’s when we’ll start looking at debt consolidation options for them,” she says.
Though some consolidation products are available to borrowers with credit scores below 600, interest rates tend to be similar to or even higher than their current debts, so it probably won’t make sense to consolidate, Johnson says. A similar rate means you’ll miss out on interest savings, and you may not be able to get out of debt faster.
2. You’re juggling multiple credit card balances
If you’re struggling to wrangle many balances, consolidating can help because it combines multiple debts into one, usually via a balance transfer card or a debt consolidation loan.
With a balance transfer, you roll all of your credit card debts onto the balance transfer card, so you’re left with only one balance. If you go with a debt consolidation loan, you use the loan funds to pay off your credit cards, leaving you with just the monthly payment on the loan.
This can make a pile of unruly debts seem more manageable, since you only have one payment instead of multiple.
Johnson says she looks for whether her clients have more than three credit cards with different payment dates, minimum payment amounts and interest rates before recommending consolidation.
3. You’re making minimum monthly payments, but seeing no progress
If you feel like you can’t get out from under your credit card debt, that’s because you’re not just dealing with the debt itself, but also the interest that accumulates when you carry a balance.
In 2022, consumers were charged $130 billion in interest and fees — the highest amount ever measured by the Consumer Financial Protection Bureau, which released the report in October 2023. Interest accounted for $105 billion of that sum.
Consolidation can help break the high-interest trap, especially if you go with a balance transfer card, since these cards have zero-interest promotional periods that can last up to 21 months. You’ll pay no interest during this time even if you carry a balance.
Debt consolidation loans do charge interest, but if you qualify for a lower interest rate than the average rate across your credit cards, you’ll still save money.
If your debt is half or more of your gross income, or it’ll take you longer than five years to pay it off, you may want to explore debt relief options instead of consolidation. For example, working with a reputable credit counseling agency to enter a debt management plan can help you pay down your debts at a reduced interest rate.
4. You’re motivated by a clear finish line
The psychology behind paying off debt is just as important as the logistics, says Allison Sanka, an accredited financial counselor based in Berwyn, Pennsylvania.
If you prefer knowing an exact date you’ll be out of debt, consolidation can give you a clear endpoint, particularly if you go with a debt consolidation loan. These loans have fixed interest rates and repayment terms, so as long as you make the payments on time, you’ll know the exact date you’ll be debt-free.
But a loan isn’t the only option. Sanka says most of her clients have success without consolidating by using the snowball or avalanche methods, in which you tackle debts one-by-one, starting with either the smallest debt (snowball) or the one with the highest interest rate (avalanche).
“I have my clients pay off the lowest balance first if they can knock it out really fast,” Sanka says. “It’s pretty psychologically rewarding to see the debt being tackled in its original form.”
5. You’ve gotten to the root of your debt
Both Sanka and Johnson emphasize addressing the origin of your debt before consolidating. If you skip this step, consolidation won’t matter since you’ll likely find yourself in debt again, they say.
Sanka recommends working backward to figure out what led to your debt in the first place. For example, if you struggle to manage unexpected expenses, it’s important to build up an emergency fund. Even $500 can mean the difference between being able to cover a surprise bill or having to reenter the debt cycle, she says.
Johnson advises clients to not use their credit cards for discretionary expenses like eating out since those costs vary month-to-month and are hard to budget for. Instead, tie fixed expenses to your credit card so that you’re charged the same amount each month. You’re then less likely to be caught off guard by your credit card statement, she says.
“You just need something to keep you off the hamster wheel of using the credit card for everything that comes your way,” Sanka says.
Investing is more than just saving for the future. It’s about creating a wealth-building strategy to truly make your nest egg grow. That’s because investing typically earns you a higher interest rate than if you put all of your money in a traditional savings account.
While historically low rates are great for when you need to borrow money, they’re pretty dismal when you’re ready to start saving. Investing does come with a higher risk, but you can generally mitigate it with diversified holdings and long-term positions. Plus, it’s easier than ever.
You’re not limited to working with an expensive brokerage or saving a huge amount to reach a minimum investment threshold. Now you can even invest by using an app on your smartphone with the leftover change from your checking account.
Ready to learn how to invest? We’ve got you covered with everything you need to know.
What is investing, and why is it important?
Investing is the act of putting money into financial instruments, such as stocks, bonds, or mutual funds, with the expectation of earning a profit. It allows individuals to save and grow their wealth over time, and can provide a financial cushion for the future, such as during retirement.
The Benefits of Investing
The reason money grows so aggressively through investing is that it’s powered by compound returns. Investments are typically meant for a long-term strategy, rather than taking out money every few months.
When you leave your money untouched in an investment vehicle that offers greater returns than a savings account, your gains continue to compound.
No matter what age you are, it’s a good time to start investing. If you’re younger, you can create a strong foundation to truly accumulate wealth over the coming years.
Even if you’re older, you may be able to catch up faster because of those higher returns. Don’t worry about getting started — even if you can only contribute a small amount each month, you’ll set up the infrastructure and challenge yourself to contribute more as you begin to earn more.
How to Reduce Your Risks in Investing
When investing long-term, you can’t think about your everyday gains and losses; instead, think about how your allocations are performing in the long run. You do want to review your investment choices as you reach different stages in your life; in particular, becoming less aggressive as you get older.
In fact, most investors don’t partake in volatile day trading. They spread their money over diversified investment types to help reduce risk and maximize returns over time.
There will always be economic cycles with highs and lows. But even downturns can be mitigated in your investment portfolio by spacing out your money over different product categories as well as different economic sectors. This can go a long way in protecting your money over time.
If you do want to try out some riskier investments, make sure you view that money as discretionary risk capital, meaning your livelihood and well-being won’t be impacted if you lose it all.
How to Invest Your Money
Diversification is essential, as is setting reminders to review the performance of your picks, such as a quarterly review. It also helps you adjust your asset allocation based on your own financial goals. Are you trying to retire earlier than you initially planned? Are you able to contribute more each month?
With these strategies in mind, here is a comprehensive review of different investment vehicles you can take advantage of to accumulate wealth over time.
Retirement Accounts
Retirement accounts are probably the most common and accessible types of investment accounts. You may be able to open a retirement account through your employer or open one on your own. Each type comes with a different tax treatment, so review the details carefully.
Traditional IRA
A traditional IRA is a tax-advantaged account that allows you to deduct your contributions each year. Once you start making retirement withdrawals, you’ll pay the IRS based on the tax bracket you’re in at that time.
They do have annual contribution limits. For 2024, it’s $7,000 unless you’re 50 years or older, in which case you can contribute up to $8,000.
If you want to take a distribution before you reach the age of 59 ½, you’ll have to pay a 10% penalty on top of your taxes. There are a few exceptions to the penalty, such as when you use the funds for a down payment on a house or qualified college expenses.
Another plus is that there is no income limit for qualifying, unlike other IRA options.
Roth IRA
A Roth IRA is another tax-advantaged retirement account. However, it comes with a few key differences compared to a traditional IRA. You don’t get a tax deduction when you make your contributions, but you do get to deduct your withdrawals once you reach retirement age.
If you think you’ll be in a higher tax bracket once you hit retirement, this could be a useful tool to save on your taxes later in life. For Roth IRAs, the contribution limit is between $7,000 and $8,000, depending on your age.
However, there’s another qualification you’ll have to meet: the income limit.
The more you earn, the less you’re able to contribute. Your contribution limit is reduced when you earn more than $230,000 for those married filing jointly and more than $146,000 for those filing single or as head of household.
Rollover IRA
A rollover IRA is one way to transfer an existing 401(k) from your employer once you decide to leave the company. Sometimes an employer lets you leave it there or transfer your funds to a retirement plan at your new place of work. Whether those two scenarios don’t apply to you or you prefer the flexibility of an IRA, a rollover may be a suitable option for you.
Both traditional and Roth IRAs generally allow you to bring in transfer retirement accounts. Just be sure to check your eligibility for either type, as well as any relevant fees you may incur during the transfer process.
SEP IRA
This type of IRA is designed specifically for self-employed individuals. While traditional and Roth IRAs are often used to supplement retirement savings accrued through employer plans, a SEP IRA allows for higher contribution limits when you work for yourself. The contribution is the lesser of either 25% of your income or $69,000.
Its tax treatment is the same as traditional IRAs. If you have employees, however, you must provide each one with their own SEP IRA and contribute the same salary percentage as you contribute to your own. Still, this can be a strong option to speed up your retirement investments, particularly if you don’t have employees or only have a few.
Stocks
Investing in stocks is typically best for active investors, and ideally, someone who already has experience in the stock market. If you’re just getting started, consider your stock investments as play money rather than something you need to rely on to meet your future financial goals. Because individual stocks are riskier, be sure to diversify the ones you choose to invest in.
Buying and selling stocks can result in hefty commission fees. Consider a buy-and-hold approach to avoid accumulating too many expenses, especially when you’re first getting started.
While you no longer need an established broker to execute trades, you can instead create a brokerage account with one of the larger brokerage firms. Your best bet is to compare fees as well as available research to help you make informed trading decisions.
Mutual Funds
Mutual funds combine your money with other investors to purchase securities for the entire group. The portfolio is professionally overseen by a manager, who then selects different types of stocks, bonds, and other securities on your behalf.
You can gauge the performance of a particular mutual fund by comparing it to its chosen benchmark, such as the S&P 500. If it regularly performs better over the course of a three to five-year period, then it could be a good investment choice.
Mutual funds are a popular choice because you generally don’t need a lot of money to get started. You can often choose one within your retirement account to get around any minimum requirements, or even set up a recurring investment amount.
Plus, mutual funds are extremely diversified, often holding as much as 100 securities in each one. This helps to minimize your risk as well as the amount of time you spend managing your portfolio.
Index Fund
An index fund is a popular type of mutual fund that follows a predetermined investment methodology rather than having a portfolio manager pick the included securities.
For example, you could choose a Dow Jones Industrial Average index fund, which includes 30 powerhouse companies in the U.S. Whiles that’s a large-scale example, different investment firms create their own index funds for investors to conveniently choose from.
Another benefit of investing in an index fund is that transaction costs are often lower, as are their mutual fund expense ratios. Many index funds are also geared toward investors with lower balances. While some firms have high minimum opening balances of $100,000 or more, you can get started with much less when you pick an index fund.
Exchange-Traded Funds (ETFs)
An exchange-traded fund, or ETF, trades the same way a stock does while tracking a certain basket of assets. There are countless types of ETFs to choose from based on your investment goals.
Common options include market, bond, commodity, foreign market, and alternative investment ETFs. They’re bought and sold like stocks throughout the day, but a major difference is that ETFs can issue and redeem their shares at any point.
There are many benefits that go along with an ETF. For starters, you have more control over when you pay your capital gains tax. There are also lower fees, although you’ll still pay brokerage commissions. Finally, while mutual funds can only be settled after the stock market closes for the day, an ETF allows you to trade at any time.
Bonds
Bonds are a good tool to have in your investment portfolio because they are a low-risk option. Different types of bonds include corporate, municipal, and Treasury bonds. Bonds are fixed-income investments, so you know exactly what to expect when those payout dates come throughout the year. Such predictability does come with a few downsides, though.
First, bonds come with a fixed investment period. If you invest in a longer-term bond, then you’re stuck with it until it matures — unless you decide to sell. But there’s a bit of risk involved there, involving the interest.
Bond rates aren’t locked in, so yours could be devalued if the same issuer bumps up the interest rate at a later time. So if new investors get a better interest rate than you did, you’re still locked into your lower rate. In general, bonds generally come with lower growth than other investments, but that’s considered the trade-off for a lower-risk vehicle.
Real Estate
People always need a place to live, so real estate investing can be an attractive option for investors. There are several ways to do this that account for your desired risk tolerance as well as your desired level of involvement.
Investment Properties
If you feel the drive to own property, an investment property is one way to make a real estate investment. Depending on how you choose to manage your property, this can amount to a steady stream of passive income.
Over time, you could also benefit from market appreciation, although that’s not necessarily guaranteed. There are risks involved with investment properties. Unlike investing in a stock or fund, a physical property involves expenses, such as upkeep, marketing, and a management firm if you want a hands-off experience.
You’ll also need some cash to get started, since most investment property loans require at least a 25% down payment. Moreover, the mortgage is considered part of your debt-to-income ratio, which could affect your future financing opportunities.
If you ever want to cash out on your investment, you’ll be subject to the market value of that moment. Plus, it’s a cumbersome, illiquid way to invest money. Still, the returns can be much greater than traditional investments, making investment properties an attractive option to some people.
REITs
If you would like to invest in real estate without the hassle of acting as a landlord, consider a real estate investment trust, or REIT. These are traded on the stock exchange and can also be offered in the form of a mutual fund or ETF.
Returns can increase as property values rise and generally focus on a portfolio of commercial properties. Shareholders also benefit because REITs don’t pay corporate tax, which helps boost returns as well.
You can pick what sector you want to invest in, such as healthcare, residential, hotel, or industrial REITs. Each comes with separate risks that should be weighed thoughtfully. REIT shares can be purchased through a broker, and each one will have its own fee structure to review as well.
Crowdfunding
Real estate crowdfunding is a type of peer-to-peer lending that is growing traction among investors of all levels. New fintech companies are popping up to compete with REITs, claiming better returns. So, what’s the difference between REITs and real estate crowdfunding sites?
The most significant difference is that instead of choosing a portfolio of properties within a certain asset class, you can choose specific commercial properties in which to invest. While individual investors traditionally wouldn’t be able to invest directly in projects like these, crowdfunding lets you enter these markets with a much smaller amount of cash.
One of the benefits is that you can do much more specialized research to determine what property to invest in. The process is much less passive than REITs. On the downside, however, the risk potential could be higher since your money is riding on one single building rather than a diversified portfolio.
See also: How to Build Generational Wealth
Platforms for Investing Your Money
There are many ways to start investing your money. A financial advisor, though charging extra fees, may provide you with much-needed guidance and education, especially if you’re a beginner. But if you prefer a little less hand-holding, you can consider two other options as well.
Online Brokers
Online brokerages give you the convenience of investing online with the added benefit of controlling what you invest in. So, it’s definitely a more hands-on process than the robo-advisor. Like robo-advisors, however, most online brokers don’t have a minimum balance requirement, so they’re still quite accessible to all types of investors.
Instead of paying a percentage of your funds, online brokers usually charge transaction fees for trades, as well as one-off fees. On the plus side, you’re not limited to your choosing certain funds, as you are with a robo-advisor. If you’d like, you can even select individual stocks. Online brokers and robo-advisors cater to two different types of investors, so the best choice depends on your specific goals.
Robo-Advisors
Enlisting the help of a robo-advisor can be helpful for beginning investors or anyone who wishes to utilize a “set it and forget it” mentality for their portfolio.
Robo-advisors don’t use human financial advisors; instead, they rely on computer algorithms to determine your portfolio allocations. Many of them also use tax harvesting strategies to decrease your tax burden at the end of the year.
Service fees are low and generally charged as a percentage of your invested funds. The transparency is excellent for new investors, and you can also benefit from the low minimum balances. Different robo-advisors offer different investment vehicles you can choose from. You can also pick one based on their investing strategy; most, for instance, pick from ETFs and index funds.
Bottom Line
There are a slew of intricacies for building your investment strategy and making your money work for you. Start with a plan that makes sense for your risk tolerance while still leaving room for growth.
You can access countless resources, from free online tutorials to paid financial advisors, to ensure you have a robust investment plan that will generate a passive income strategy to meet your goals.
How to Invest FAQs
What are the different types of investments?
There are many types of investments. The most popular investments include stocks, bonds, mutual funds, exchange-traded funds (ETFs), and real estate. Each type of investment carries its own level of risk and potential return.
What are the risks of investing?
Investing involves risk, including the potential for loss of principal. The value of investments can fluctuate and may be affected by market conditions, economic events, and other factors.
It’s essential to understand the risks associated with any investment and to consider your risk tolerance before making any investment decisions.
How do I choose the best investments for me?
The best investments for you will depend on your financial goals, how much risk you can tolerate, and other personal factors. It can be helpful to consult an investment advisor or do your own research to determine which investments are suitable for you.
It’s also wise to diversify your portfolio, or invest in various assets, to spread risk and potentially maximize returns.
How much money do I need to start investing?
There is no minimum amount required to start investing. In fact, you can get started investing with $500 or less. However, you should first have a sufficient emergency fund in place before investing. Some investments may have minimum investment requirements, such as mutual funds or certain types of brokerage accounts.
What is a brokerage account?
A brokerage account is a type of investment account that allows you to buy and sell assets such as stocks, mutual funds, ETFs, and bonds. When you open a brokerage account, you typically do so with a financial institution, such as a bank, a credit union, or an online brokerage firm.
To open a brokerage account, you will generally need to provide some personal information, such as your name, address, and Social Security number. You will also typically need to make a deposit of money into the account, which you can use to buy investments.
Once you have a brokerage account, you can place orders to buy or sell investments online, over the phone, or through a broker. The brokerage firm will execute the trades on your behalf and will typically charge a commission or fee for the service.
Brokerage accounts offer a convenient way to manage your investments and to buy and sell assets easily and quickly. They also provide a range of tools and resources to help you make informed investment decisions, such as market research, news and analysis, and educational materials.
Can I invest in stocks with just $100?
Yes, it is possible to invest in stocks with a relatively small amount of money, such as $100. Many brokerage firms have no minimum initial deposit requirement and allow you to start investing with whatever amount of money you have available.
How do I diversify my investment portfolio?
Diversification is the process of investing in various assets to spread risk and potentially maximize returns. This can be achieved by investing in different types of assets, such as stocks, bonds, and real estate, or by investing in different sectors or industries within a particular asset class. To maintain a diversified portfolio, review and adjust it periodically.
What is a financial advisor and do I need one?
A financial advisor is a professional who provides advice on financial matters, such as investing and saving for retirement. Whether you need a financial advisor will depend on your financial goals, risk tolerance, and investment experience. Some people may prefer to handle their own investments, while others may benefit from the guidance of an investment advisor.
How do I determine my risk tolerance?
Risk tolerance is an individual’s willingness to accept financial risk in pursuit of potential returns. Factors that may affect how much risk you’re willing to take include age, financial goals, and personal comfort level with risk.
Can I lose money by investing?
Investing always carries some level of risk, as the value of your investments can fluctuate and be impacted by various market conditions and economic events. It’s crucial to understand the risks associated with any investment and to consider your risk tolerance and investment objectives before making any investment decisions.
Diversifying your portfolio and not investing more money than you can afford to lose can help mitigate potential losses. Always be sure to do your research and consider seeking investment advice from a financial advisor before making any decisions.