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Much ink has been spilled on the 4% rule, including here on The Best Interest.

The short and sweet definition? The 4% rule is a retirement strategy that suggests withdrawing 4% of your portfolio’s value annually, adjusted for inflation, to ensure your savings last for a 30-year retirement.

If you’d like to dive deeper on some nuance of the rule, read this: Updated Trinity Study and the 4% Rule.

And if you’d like to avoid the common mistakes of using the 4% rule, read this: You’re Probably Using the 4% Rule All Wrong

Today, though, I want to show you some compelling data about the optimism and conservatism built into the 4% rule.

Ultimately, you’ll see that the 4% rule comes with major risks.

All Models Are Wrong

All models are wrong?

No, not that kind of model. I’m talking about numerical models. The idea that you can use numbers and figured to represent or simulate reality. Your numbers will never, ever be a perfect representation of reality – you can’t predict the future. All models are wrong!

…but some are useful. Models are used all over modern society. One hopes that their models can “bound” reality, providing bookend scenarios to how reality might shape up (good vs. bad, optimistic vs. conservative, etc). We can use models to explain how particular variables will or won’t affect reality.

Weather forecasting is a terrific example. Meteorologists use numerical models to simulate the atmosphere by solving complex mathematical equations based on physical laws, such as the conservation of mass, energy, and momentum. These models take in data from satellites and weather stations, then simulate how the atmosphere will evolve over time.

They’re never perfect. In that way, they’re always wrong. But they’re certainly useful.

Further reading: The Madness of Forecasting

Retirement Forecasting

It’s a fool’s errand to predict the future performance of investing markets. But the 4% rule provides a numerical “bookend,” giving direction to retirees.

The hardest pill to swallow about the 4% rule is that we know it’s wrong. We just don’t know which direction it’s wrong in.

Most likely, as you’ll see below, it’s too conservative. It’s important for retirees to internalize that truth!

But there’s a possibility the 4% rule is too aggressive. And that’s a scary possibility. It means you might run out of money in retirement. Yikes.

Visualizing the 4% Rule

I used the terrific 4% rule visualizer from Engaging Data to create the charts you’ll see below. I recommend playing around with that tool yourself.

As with any modeling, the input assumptions are vitally important. I assumed:

  • We’re investing in a diversified 60% stock, 40% bond portfolio. Yes, this varies slightly from the 4% rule’s original assumption of a 50/50 portfolio. But 60/40 is more in line with retirement best practice.
  • I assumed a 30 year retirement timeline. To make the math easy, I assumed a $1 million starting portfolio. Thus, a 4% withdrawal in Year 1 is $40,000, and each future withdrawal is adjusted up for inflation.
  • I assumed that taxes and investment fees are included in annual spending. This is a key assumption, but one that’s often overlooked. In other words:
    • Are you withdrawing 4%, and then paying taxes on those withdrawals (perhaps another 0.4%), and then paying investment fees on those assets (perhaps another 0.2 – 1.5%)? That’s actually more like a ~4.5+% annual withdrawal.
    • Or, are you withdrawing 4%, which includes the requisite taxes and fees. Perhaps you’re only “netting” ~3.5% to spend on your lifestyle, and the other 0.5% pays taxes and fees.
    • I’m using the second scenario, not the first.
  • While the Engaging Data website does look at market history back to 1871, I don’t care too much about anything before World War 2. The American and global economic systems were far different then. I can’t cut that data out of my results, but I recommend focusing on 1950 onward.

Caveats Apply…

I’m beating a dead horse here in the world of retirement planning. There’s an asterisk on everything. But, to pre-empt any guff, let’s be clear:

  • The 4% rule is way more rigid than how any normal human would spend in retirement. Lifestyle variations, taxes, inflation rates, healthcare costs, and the potential for longer retirement periods make any withdrawal rule an imperfect one-size-fits-all strategy.
  • The 4% rule doesn’t account for Social Security, which I think is a huge mistake.
  • The 4% rule uses past market results to make future retirement decisions – it’s a numerical model! We know the risks involved there.

Results – How Does the 4% Rule Hold Up?

In short, the 4% rule is like playing rec league basketball with Lebron James on your team. You’ll win, and it will be overkill.

Out of the 123 unique 30-year periods we can observe, only one of them leads to “failure.” It ran out of money in Year 28 (barely a failure, at that).

The median result not only supported our retiree’s lifestyle, but also left them with $2.8 million at death. Again – that’s the median result. 30 years worth of withdrawals, and still another $2.8 million leftover. That’s overkill!

We’ve made a trade-off using the 4.0% rule. That trade-off is: in order to avoid a ~1% chance of retirement failure, are you willing to accept the 50% chance that you underspend in retirement so severely that you end up with 3x the assets at death as when you retired?”

That’s what we’re talking about here. Severe underspending. Severely not enjoying the fruits of your labor. It’s worth thinking about that trade-off. Personally, I don’t think it’s worth it. I don’t mind increasing my “failure odds” above 1% if it means I get to spend a bit more.

Another crazy stat: let’s compare the 90th percentile result against the 10th percentile result. These two scenarios are equally likely, one being on the good side of fortune and the other on the bad side:

  • 90th percentile: our retiree dies with $6M after 30 years.
  • 10th percentile: our retiree dies $800K after 30 years

The 10th percentile result is pretty close to, “I died with as much money as I started retirement with.”

The 90th percentile result is, “I died with 6x more money than I started retirement with.”

And they’re equally likely to happen. Wild!

While it’s important to acknowledge the one failure of the 4% rule (albeit after 28 years of withdrawals), it’s hard to walk away thinking anything other than, “The 4% rule is overkill.”

Adjust the Rate, Adjust the Timeline

So let’s play around with the numbers a bit.

  • Let’s extend the timeline beyond 30 years.
  • And let’s toggle the withdrawal rate higher.

But we should first ask – what’s an appropriate “failure” metric? The answer, by nature, will be completely arbitrary. After all, we’re using a numerical model that we know cannot be correct. Nevertheless, I vote for the following:

  • If more than 20% of test retirements fail, then I think our scenario is too aggressive, too risky.
  • If the median result spends down more than half of our retirement nest egg (e.g. dies with less than $500K after starting with $1M), then I think our scenario is too risky. Why? Because retirement research clearly shows that retirement failure is a slippery-slope/accelerating problem. If our median result is down 50% after 30 years, then many of those individual scenarios would accelerate toward near-term failure.

Timeline Failure

If we keep our withdrawal rule at 4%, but extend the timeline out to 53 years (!!), then we reach ~20% of our test retirements failing.

The median scenario ends with $5.5M. The best timelines here finish with upward of $65 million.

We’re saying that a 40-year old can retire on the 4% rule and reasonably (~80% odds) expect to still have assets at age 90.

That leads me to a similar takeaway as before: the 4% rule has historically skewed toward overkill!

Withdrawal Rate Failure

Let’s go back to a 30-year timeline, but let’s now dial up the withdrawal rate above 4.0%. When do we reach one of failure criteria?

At 4.85%…

Using a 4.85% withdrawal rate, we see that:

  • 20% of our test cases fail before 30 years, the earliest of which being after Year 20.
  • Our median case still has $1.7M after 30 years – more than we started with!

As a reminder, 4.85% equates to 21% more spending every year than the 4% rule. That’s a big difference in lifestyle.

Let’s Get the Median Below $1M

I want to press our luck and push the limits. What withdrawal rate does it take so that our median result has a retiree with less than $1M at death? In other words, I want to see more than half of our simulations outspending their investment growth.

The answer: a withdrawal rate of 5.2%

In this case, about 28% of our scenarios outright fail, and another 22% finish between $0 and $1M.

Let’s Get Failure to 50%

One more experiment: at what withdrawal rate do 50% of scenarios outright fail? Clearly this is too much risk to bear. But it’s helpful to use numerical models to “define your limits,” and this is just that.

The answer: a withdrawal rate of 6.25%

You’d never want to start retirement knowing that you have a 50% chance of go broke prior to death. But it’s worth understanding where the limits of withdrawal rates lie.

“But I’ve Read About 3.5%, 3%, and Lower Rules…”

Yes, some conservative retirement commentators combine multiple factors that result in low withdrawal rates like 3.5%, 3.0%, and less.

Quite simply, I think 3.5%, 3.0%, or lower withdrawal rates are simply beyond the pale. Those commentators are suffering from the crushing costs of conservative retirement planning.

Simply look at the 3.5% withdrawal rate chart below:

3.5% is a recommendation that someone chronically underspends their potential, knowing that anyone who would have done so in the past would have at worst died with the same $1M they started with (for 3.5% withdrawal rate) or at worst died with $1.6M (for 3.0% withdrawal rate).

It’s like driving at 40 miles per hour on the Interstate. “But I want to be safe!”, they clamor as normal traffic wizzes around them. Their obsession with safety causes more harm than good.

What’s Jesse’s Answer?!

My big takeaway from this fun experiment: I plan on starting higher than 4.0%, and adjusting as I go.

On one hand, I would hate to start at 4.75%, then live through an “unlucky future” and ultimately run out of money.

But I would equally hate to start at 4.0%, then live through a “normal” (or better) future, and ultimately end up with many multiples of my original nest egg at death.

The “adjust as I go” takes this into account. If I need to be more conservative for a few years, I will be. If I can press on the gas for a few years, I’ll do that too.

Quite simply, the biggest risk of the 4% rule is underspending your retirement potential. And it’s biggest flaw is its rigidity.

It’s a numerical model. And a helpful one at that. But it’s not real life.

Thank you for reading! If you enjoyed this article, join 8500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week. You can read past newsletters before signing up.

-Jesse

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Source: bestinterest.blog

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Many landlords will only consider prospective tenants with decent credit scores. However, some private landlords who are eager to fill empty rentals quickly may advertise “no-credit-check” apartments. In other cases, smaller family-owned buildings just don’t have the same documentation requirements as bigger complexes handled by property managers or brokers. Even if the building you’re interested in does require a credit check, there may be ways to get around it.

If you have bad credit or no credit, we’ll explain all the ways you can still rent an apartment.

•  Renting with bad credit or no credit is possible through no-credit-check apartments, which are often managed by private landlords who prioritize consistent rent over credit checks.

•  Strategies include finding a cosigner, paying a higher security deposit, or providing proof of financial stability.

•  Subletting or sharing an apartment can bypass credit checks, as these arrangements often require less documentation.

•  Building credit history by becoming an authorized user on a credit card or paying bills on time could improve rental prospects.

•  Being honest about credit issues and providing references from previous landlords may help secure a rental agreement.

Are There No-Credit-Check Apartments?

A handful of landlords will rent an apartment without a credit check. However, apartment hunters should approach advertised “no-credit-check apartments” with caution. The term can sometimes be code for “these units are problematic,” or “this landlord is difficult,” or even “this is a scam.”

Sometimes, however, private landlords in smaller buildings just don’t see the need for credit checks. They don’t advertise this, but “for rent by owner” (or FRBO) listings can offer a clue.

Instead of pulling a credit report themselves, some landlords will accept a credit reference with the rental application. Credit reference documentation can be a recent credit report that the tenant provides (saving them from paying a fee), or pay stubs and W-2s, or letters from previous landlords or lenders — basically, anything that shows your ability to pay the rent.

Recommended: Trying to Rent in a Tight Housing Market? 4 Steps To Win the Lease

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*

Why Landlords Perform Credit Checks

Landlords perform credit checks for apartment rentals for the same basic reason that employers run credit checks for employment: to help determine whether a prospect is financially responsible.

Landlords want tenants who pay their rent on time. By checking an applicant’s credit report, a landlord can see how reliably the person pays their bills and manages their credit. If someone has a history of late payments or outstanding debts, a landlord may think twice before renting to them.

When landlords run a credit check, it will be a soft credit inquiry, which won’t affect your credit score.

How the Process of No-Credit-Check Apartments Works

Depending on the landlord, the application process for a no-credit-check apartment can be pretty standard or very casual. Landlords generally ask for the following as part of your application:

•  Proof of identity

•  Proof of employment, income, or financial stability

•  Vehicle information, if parking is provided

•  Personal references

•  Application fee

Typically, it takes one to three business days to process an application. Afterward, you’ll be given a lease to sign. At this time, you can negotiate the security deposit, move-in date, and any details such as minor repairs to be made. When you receive the keys, the place is yours.

Should I Sell My House Now or Wait?

Be Honest

No one likes an unhappy surprise. If you haven’t established credit yet, say so. If you have credit problems, say so. Have a conversation with the landlord before you apply to gauge their flexibility and warn them of red flags in your credit history. Then include a cover letter with your application repeating your explanations. Glowing reference letters also help offset a poor credit score.

Recommended: What Is a Tri-Merge Credit Report?

Get a Roommate

Finding a roommate with good credit can help make the deal go through. A landlord may accept using their name alone on the lease (assuming the roommate is OK with taking full responsibility for rental payments). Or you may be able to put both of your names on the lease.

Look for Sublets and Shares

Sometimes, a leaseholder will “sublet” their apartment while they pursue opportunities elsewhere. This allows them to return to their former home in the event they want to move back. Rather than paying rent to the landlord, the subletter will often pay the leaseholder, so financial documentation may not be required. This is a common arrangement in big cities, especially among leaseholders of rent-stabilized apartments.

In share situations, roommates who are on the lease may sublet an extra room without requiring much, if any, documentation. As long as you make a good impression, they may give you a chance.

Find a Cosigner

A cosigner is someone who promises the landlord to cover your rent if you cannot pay — usually a good friend or family member with great credit. Cosigners may or may not live in the apartment.

Pay a Higher Security Deposit

If you’re brainstorming how to rent an apartment with bad credit and no cosigner, consider laying some cash on the line. Whether you dip into savings or build up your reserves with an online budget planner, putting down several months’ rent as a security deposit can reassure the landlord.

Show Financial Proof

Perhaps you make a decent income that will make it easy to pay your rent. Or you saved up some money as a cushion. Share proof with the landlord in the form of pay stubs and bank statements.

Use Previous Landlords as References

If you’ve rented from other landlords and made those payments on time, bring a reference letter or two to prove it. Ideally, the reference should be on letterhead or at least look neat and professional. That might mean creating the letter yourself and having your previous landlord sign it.

Promote Yourself

Have superior presentation skills? You can use them to persuade your landlord what a great tenant you’ll make. Turn on the charm. Bring homemade baked goods. It works.

Build Your Credit History

If there’s somewhere you can stay for now — with a friend or family member — spend that time building your credit history. To build up poor credit, focus on paying bills on time and paying down credit card balances. During this time, it may help to sign up for free credit monitoring. What qualifies as credit monitoring varies by service, but look for one that offers alerts whenever your score changes.

When you have no credit, you can start to establish your history by becoming an authorized user on a credit card or putting a utility in your name. Just be aware that it may take six months or more for the system to generate your credit score. You may be able to check your credit score for free through your bank, credit card company, or credit counselor.

The credit score needed to rent an apartment varies by location and landlord. But according to FICO®, a credit score of at least 670 is usually enough to rent an apartment.

The Takeaway

If you haven’t yet established credit or have a problematic credit history, no-credit-check apartments are one option. However, there are many other ways to secure a rental, from finding a sublet or share situation to paying a higher security deposit. Beware of shady no-credit-check apartments: There’s no reason to settle for an unsafe or unhygienic environment just because of your credit score.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What happens if you don’t have credit but want to rent an apartment?

Let the landlord know up front and ask what you need to do to rent the apartment. Their suggestions may include getting a roommate or cosigner with good credit, or putting down a larger security deposit. If you’ve rented in the past and made payments on time, ask your previous landlords for reference letters and build a case about why you’ll make a great tenant.

Can I rent an apartment with collections?

If you’re planning to rent a no-credit-check apartment, then the landlord won’t consider issues on your credit report. If your credit will be checked, talk to the landlord up front to see if renting with collections on your report is somehow possible.

What’s the minimum score to rent an apartment?

It’s up to the individual landlord. If a landlord requires a “good” credit score, FICO considers that to be in the range of 670-739.

I’m wondering how to pay rent with a credit card, no fee. What can I do?

If you’re renting right now, ask your landlord. If you’ll be seeking an apartment to rent, ask prospective landlords if this is possible. Each landlord has their own policy about credit cards.

Photo credit: iStock/StefaNikolic

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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Once you’ve found the place you’d like to rent, you need to go through the entire rental process from filling out the application, providing proof of income, background and credit checks, and more before you can sign the lease. All of these tasks can be daunting, but it’s all part of the leasing process. You may also need to provide personal references, which can cause additional stress. You’re eager to get the apartment and want your reference to reflect you in the best light. So, who do you choose as your personal references? Whether you’re hoping to move into an apartment in Dallas, TX or eyeing a Raleigh, NC rental, we’ll walk through who to include (or exclude) when it comes to choosing a personal reference for your apartment.

Who to choose as your personal reference for an apartment application

Most landlords or property managers will request a list of personal references as part of the application process. This is another way for them to verify who you are, get to know your character, and gauge if you’ll be a reliable tenant. Likewise, you may want to check out who your future landlord is.

Because personal references can influence a landlord’s decision to rent to you or not, you want to choose your references wisely. Here are some people who make for good references on a rental application.

1. Past landlords

The best choice for a personal reference is a past property manager, assuming you left on good terms. Previous landlords will know how you were as a tenant, how you left the apartment when you vacated it, and your ability to pay rent on time. If you can include your previous landlord as a personal reference, their words will carry a lot of weight.

2. Managers or coworkers

While you may be friends with your manager or coworker, they’re your professional colleagues first and foremost. This relationship allows them to speak to your professionalism and conduct, which is what a landlord is looking to better understand. Your manager will be able to speak to your reliability and work ethic.

3. Coaches or mentors

Coaches and mentors are also good options when it comes to choosing a personal reference. They’ll likely know your goals, values, and strengths, and will be able to speak to your landlord about those things.

4. Professors or teachers

If you’re a student or recent graduate, academic professors or teachers can be good personal references because they’ll also know your work ethic and drive. If a student is dedicated to their work, it’s a good indicator they’re dedicated and motivated in other areas of their lives, like maintaining an apartment.

Who not to choose as a personal reference

Keep in mind, a landlord is using your personal reference as a way to understand if you’re reliable and will make a good future tenant. Landlords are looking for red flags so they don’t sign a lease with someone who will end up causing stress and problems in the future. While the people listed above are all good options of who to choose as your personal reference, there are people you’ll want to exclude as well.

1. Partner or spouse

Your significant other may know you the best, but they’re likely biased, and the future landlord will know that. Avoid listing a partner or spouse as your rental reference because a landlord will likely take their opinion with a grain of salt.

2. Close family members

For similar reasons, family members are not your best choice as a personal reference. Obviously, your family members want the best for you, so they may not give the landlord an honest opinion on your rental eligibility. If the landlord can’t get an unbiased opinion from a reference, they’ll likely disregard what they have to say.

3. Close friends

Just like family members or romantic partners, a close friend is not the optimal choice as a personal reference. Property owners are looking for references who can vouch for your ability to pay your bills on time or your reliability as a potential tenant.

Why do landlords ask for personal references?

Landlords assume a degree of risk whenever they lease an apartment to a tenant. The last thing they want to do is approve a renter who doesn’t pay their rent on time (or at all) or causes problems for themselves or other tenants. References give the landlord a window into the character and reliability of a potential tenant.

Information they might want to learn includes potential tenant’s income and ability to pay rent, reliability, ability to take care of the property. If a tenant has any potential red flags such as a low credit score or prior evictions, references can provide additional context or assure the property manager that steps are being taken to resolve these issues.

Best practices for choosing references for an apartment

Now that you have a list of who to choose as a personal reference, here are a few best practices to keep in mind.

1. Always notify your references beforehand

If you’re going to use a previous landlord or professor as a reference, it’s common courtesy to ask if they’re willing to be a reference and let them know you’ll be giving out their contact information. It can look unprofessional if a landlord were to call a reference and they had no idea what was going on.

2. Provide multiple options in case someone isn’t available

It’s smart to provide a list of at least two personal references in case the first person is unavailable. Landlords want to speak to personal references, and if they can’t get a hold of anyone, they may pass on your application.

3. Clearly identify your references

To make things easier for the landlord, clearly annotate your references’ relationship to you in the apartment application. This helps the property manager understand who they’ll be calling and what to expect on the call.

Source: rent.com

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Home decor is an extension of your personality, and astrology can offer intriguing insights into your design preferences. Whether you’re gravitating toward the simplicity of minimalism for your Raleigh, NC home, an artistic statement in your Chicago, IL apartment, or layered aesthetics of maximalism for your Charlotte, NC rental, your zodiac sign might be influencing your choices. Here’s what the stars say about your style in the ongoing debate of minimalist vs maximalist decor.

Minimalism vs maximalism explained

Minimalist vs Maximalist decor represents two contrasting design philosophies. Minimalism is all about simplicity, clean lines, and a clutter-free space. Focusing on function and intentionality. It uses neutral tones, sleek furniture, and emphasizes open, airy environments. On the other hand, maximalist design embraces boldness-vibrant colors, eclectic patterns, and layered textures. It’s about filling a space with personality and creating a visually stimulating environment. While minimalist thrives on “less is more”, maximalist decor celebrates “more is more” allowing for creative freedom and expressive design choices.

1. Aries (March 21 – April 19): Bold maximalism

Aries, known for their boldness and high energy, are naturally drawn to maximalist decor that reflects their dynamic personality. Julia from wellness lifestyle brand, The Mantra Collective in Laguna Hills, CA notes, “Aries, with their bold and energetic nature, may lean toward maximalism, embracing vibrant colors and dynamic statement pieces.” 

Similarly, Brindha Dhanabalan, CEO of All Cotton and Linen highlights that “Aries love decor that makes a statement. Items like  red-and-white checkered tablecloths  are a perfect fit for their bold home.” Daniel Shuttleworth of Life StyleBrew & Tattoo Build adds that, “Aries may lean toward a vibrant gallery wall featuring an eclectic mix of art pieces, mirrors, and personal mementos, creating a lively focal point that matches their bold energy.”

2. Taurus (April 20 – May 20): Cozy, nature-inspired maximalism

Taurus prefers a grounded, nature-inspired environment with a focus on comfort. Julia from The Mantra says, “Tauruses value comfort and luxury, making them ideal candidates for a maximalist approach. Think cozy textiles like plush throws and velvet cushions that add warmth and a touch of indulgence to their home. Katja Rottinger of vintage furniture store, Vintarama, adds that, “Taurus prefer robust wooden furnishings with rustic elements, perfectly aligned with a maximalist approach. Their decor often includes natural materials like wool, fur, and driftwood, creating a warm, down-to-earth atmosphere.”

3. Gemini (May 21 – June 20): Playful maximalism

Geminis are known for their playful and curious nature, making eclectic maximalism a great match for them. Julia from The Mantra explains, “Geminis enjoy variety and playfulness, which translates well into a maximalist home featuring mix-and-match patterns and colors.” A gallery wall filled with diverse art pieces is an ideal reflection of Gemini’s ever-changing interests. Meisy Tunay of home decor brand, Fenlo Shop, also mentions, “A Gemini might enjoy a playful, eclectic decor style, bringing in elements that mirror their big-eyed personality.”

4. Cancer (June 21 – July 22): Cozy minimalism

Cancers, ruled by the Moon, seek comfort and security in their surroundings, making them a natural minimalist in the minimalist vs maximalist decor debate. Lisa Marinkovich, blogger of Gal Pal Lifestyle, points out that Cancers prefer a cozy, minimalist approach. “Cancers should focus on soft furnishings and meaningful decor to create a nurturing environment,” shares Marinkovich. A light sofa paired with a cozy throw blanket can create a serene atmosphere, perfectly suited to Cancer’s nurturing spirit. Julia from The Mantra also emphasizes, “Minimalism allows Cancer to foster the peaceful, secure space they crave.”

5. Leo (July 23 – August 22): The maximalist showstopper

Leos are known for their love of drama and self-expression, making them the natural maximalists of the zodiac. Bradley Hebdon, founder of Vintage Shopper in Crowley, TX explains, “Maximalist decor, with its bold layering of vibrant colors, patterns, and textures, perfectly matches the energy of a Leo.” They gravitate toward spaces filled with oversized plants, vintage furniture, and luxurious accents like golden mirrors and velvet chairs. Hebdon adds, “Adding patterned rugs, mismatched throw pillows, and unique lighting fixtures enhances the dramatic, curated feel of the room.”

6. Virgo (August 23 – September 22): Functional minimalism

Virgos are known for their practicality and organization, making them naturally drawn to minimalist decor. Dennis from Star-Naming highlights, “Virgos prefer uncluttered shelves and calming, earth-toned accents that reflect their organized nature.” Meisy Tunay of Fenlo Shop agrees, stating that, “A Virgo might appreciate minimalist design and decor that emphasizes clean lines and organization. Every detail serves a purpose, and their space is always designed for functionality.”

Photo courtesy of Katja Rottinger of vintage furniture store, Vintarama

7. Libra (September 23 – October 22): Balanced minimalism

Charming and sociable, Libras seek beauty and balance in every aspect of their lives, including their home decor. Peter Stockinger from Stars and Stones points out, “Libras love to experiment, often blending contemporary sophistication with minimalist aesthetics.” Twinkle from artisan home decor brand, Mianzi, also weighs in. “An Opium Pendant Lamp or something similar that has a refined design is perfect for a Libra’s harmonious and sophisticated taste reflecting their love for balance in decor,” says Twinkle.

8. Scorpio (Oct. 23 – Nov. 21): Mysterious minimalism with maximalist touches

Scorpios are drawn to moody, transformative spaces, often incorporating rich, mysterious textures like deep velvets and dark colors. Michelle Saya, a writer and blogger, says, “Scorpios create spaces that are intimate and transformative where every piece tells a story.” While they might prefer minimalist layouts, Scorpios often infuse their spaces with egocentric statement pieces that reflect their deep, passionate nature. “Scorpios are drawn to the industrial look with darker colors and egocentric statement pieces,” emphasizes Katja Rottinger of vintage furniture store, Vintarama.

9. Sagittarius (Nov. 22 – Dec. 21): Curated maximalism

Sagittarius expresses their adventurous spirit with a curated maximalist style. Meisy Tunay from Fenlo Shop explains, “Sagittarius gravitates toward spaces filled with carefully selected, eclectic pieces that reflect their love for travel and exploration.” Peter Stockinger of Stars and Stones adds, “Sagittarians favor decor that highlights ‘collected treasures,’ making maximalism an ideal way to capture their bold, well-traveled nature.”

Photo courtesy of Elisa Szymanski of ESY Arts

10. Capricorn (Dec. 22 – Jan. 19): Sleek, functional minimalism

Capricorns are disciplined and ambitious, favoring sleek, minimalist spaces that prioritize functionality. “They’re drawn to modern Scandinavian trends with chic, functional, and cozy elements,” explains Katja Rottinger of Vintarama. Elisa Szymanski of ESY Arts in Poughkeepsie, NY, providing wall art and clothing to express your individuality, echoes this, stating, “Capricorns favor well-crafted, timeless pieces —like a minimalist walnut bookshelf which suits their pragmatic nature. Capricorns value organization and simplicity, favoring fewer items focused on utility.”

11. Aquarius (Jan. 20 – Feb. 18): Eclectic minimalism

Aquarians are known for their individuality and often embrace an eclectic yet minimalist decor style. Peter Stockinger of Stars and Stones describes, “Aquarians as free spirits who are inclined to do the unexpected in their home decor. They appreciate smooth surfaces and clear lines but also love incorporating unique, standout pieces.” Brindha Dhanabalan adds, “Aquarians enjoy unique and eco-friendly decor, making sustainable minimalism and underconsumption an ideal choice for their creative homes.”

12. Pisces (Feb. 19 – Mar. 20): Dreamy maximalism

Pisces are known for their dreamy and sentimental nature, making them natural maximalists who prefer soft, whimsical decor. Julia from The Mantra suggests, “Pisceans should invest in Bohemian-style designs to reflect their adaptive and imaginative spirit.” Brindha Dhanabalan of All Cotton and Linen adds, “Pisces love soft, dreamy decor with items like light blue napkins or luxury towels adding a magical, tranquil touch to their home.”

Jyotisha and the home

In addition to Western astrology, the Hindu system of astrology, known as Jyotisha, offers a unique perspective on home decor. As Devala Rees of the Hindu American Foundation explains, “We primarily look at which astrological bodies occupy which of the twelve houses in a person’s birth chart, most especially the fourth house, which corresponds to the home.” Rees also shares, “Individuals with the Sun in their fourth house may gravitate toward sunny, open spaces, while those with Saturn might prefer darker, somber rooms.” These subtle intricacies in Jyotisha show how astrological influences can deeply shape an individual’s home environment, offering a more personalized approach to decor.

Minimalist vs Maximalist decor: Which is right for you?

Your zodiac sign can offer fascinating insights into your home decorating style, whether you favor the simplicity of minimalism or the rich layers of maximalism. From Leo’s love of bold, dramatic spaces to Virgo’s clean, functional designs, astrology shows how our star signs influence our design choices. So, where do you fall in the minimalist vs maximalist decor debate? Let your zodiac sign guide your next decor decision.

Source: apartmentguide.com

Apache is functioning normally

Buying a home is exciting, but coughing up the down payment can be a downer. That’s where down payment assistance enters the picture. Government and nonprofit programs help unlock the door to homeownership for qualified buyers.

It makes sense to put down as much as you can comfortably afford on a down payment. The more you put down, the less you’ll be borrowing, which translates to lower monthly payments and less interest paid over the life of the loan. But many people put down less — in some cases far less — than 20% of the home’s purchase price, the amount often recommended to buyers.

In an April 2024 SoFi survey of 500 people intending to purchase a home, almost a third of respondents (30%) said they were planning to put down between 11% and 20%. Almost one in five (19%) said they would put down 6% to 10%. Ten percent of buyers were aiming for a 5% down payment or less, and fully 7% of people were exploring no-down-payment options. First-time buyers who finance their home are especially likely to have a lower down payment, according to data from the National Association of Realtors®.

Down Payment Defined

Depending on their financial situation, homebuyers may qualify for down payment assistance from the government or a private entity.

Down payment assistance programs come in several forms. Some offer homebuyers loans and grants that can be applied directly to down payments and, in some cases, help with closing costs, too.

The down payment — which covers the upfront “out of pocket” cost of getting a mortgage — is usually made at the mortgage closing and can be paid with a check, cashier’s check, or electronic payment.

The down payment covers a reasonable percentage of the total home purchase price, with the mortgage covering the remainder. Lenders typically won’t approve a mortgage loan unless the borrower pays upfront cash — anywhere from 3.5% to 20% in most cases — against the total price of the property.

💡 Quick Tip: Thinking of using a mortgage broker? That person will try to help you save money by finding the best loan offers you are eligible for. But if you deal directly with an online mortgage lender, you won’t have to pay a mortgage broker’s commission, which is usually based on the mortgage amount.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Homebuyer Assistance Programs and Qualifications

If a first-time homebuyer can’t afford a down payment, that opens the possibility of financial assistance.

The programs that tend to provide the most financial assistance to homebuyers — state and federal governments and local, regional, and national nonprofits — will likely need an applicant to clear hurdles in order to qualify for down payment help.

These criteria usually lead that list:

•   The three-year rule. The buyer must not have owned a home in the past three years. In most scenarios, government agencies and private charities deem anyone who hasn’t owned a home in the previous three years, even a repeat buyer, a “first-time home buyer.”

•   Must be for a primary home. Homebuyers should be clear if the money is going to the purchase of a primary residence. If the home is an investment property designed to draw rent, financial assistance providers usually won’t issue a green light on funding.

•   Income limits. First-time homebuyers may have to meet income limits. The buyer may also have to keep the home price below a specified limit.

•   Funding caveats. Depending on the funder, the first-time homebuyer may have to take a homebuyer education course and may be asked to contribute some money to the down payment.

New homebuyers looking for financial help — and who qualify for that help — can get financial aid from a variety of sources, both public and private.

The help can be substantial.

According to a report from the Urban Institute, up to 51% of potential homebuyers residing in the report’s U.S. metropolitan areas studied would qualify for some form of home down payment assistance. Upon applying, those homebuyers would be in line to receive between $2,000 and $39,000.

Yet in SoFi’s recent survey, only 38% of potential homebuyers who said not having an adequate down payment was their biggest challenge had explored down payment assistance programs. Actively looking for down payment assistance could be a good move. When that search begins, the following funding sources may be a good place for homebuyers to start.

Recommended: First Time Homebuyer Guide for 2023

HUD, the Gatekeeper

A good source for state and nonprofit home down payment assistance is the Department of Housing and Urban Development, or HUD.

HUD is a federal gatekeeper, steering homebuyers to various state and nonprofit programs and offering home buying and down payment advice from HUD home assistance counselors.

Each state may have different rules and requirements, so it’s a good idea to talk to either the state agency directly or to a qualified advisor through the HUD housing counselor portal.

Federal, State, and Local Government Grants

Government grants might be the optimal form of down payment assistance, as it’s free money. Grants usually come from federal, state, or local governments and nonprofit groups.

Each government agency or charitable group has its own rules for down payment assistance grants, but in general, you have to pass an eligibility test (the common criteria are listed above) to qualify.

Again, HUD does not offer direct grants to individuals but works through local governments and nonprofit organizations to make financial assistance and counseling available.
💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Federal Government Loans

While technically not deemed direct down payment assistance, U.S. government-insured housing loans consist of low-interest loans to new homebuyers that enable them to make lower down payments, thus making it easier to afford both a home loan and a down payment.

Federal home loans usually come from three agencies:

The Federal Housing Administration. The FHA provides loans from private lenders to qualified homebuyers. The primary qualifier is a FICO® credit score of 580 or above. A borrower with a credit score of 500 to 579 who brings a 10% down payment to the table may also qualify for an FHA loan. In SoFi’s survey, only 49% of homebuyers had heard of FHA loans, yet these can be a great solution for buyers.

U.S. Department of Agriculture. The USDA offers direct home-buying assistance to rural homebuyers. Loans enable qualified homebuyers to purchase a home with no down payment. The home must be in a qualified rural area, and borrowers’ adjusted annual income cannot exceed 115% of the median income in the area, among other criteria. These loans, too, can fly under the radar with shoppers. In SoFi’s survey, only 4 in 10 buyers (41%) had heard of USDA loans.

There is no minimum credit requirement for a USDA loan, but applicants with a credit score below 640 are subject to more stringent guidelines to qualify.

Department of Veterans Affairs. The VA provides home purchasing assistance to current members of the armed forces, military veterans, and eligible spouses of deceased U.S. military members. Similar to a USDA home loan, a VA loan requires no down payment.

Applicants must meet the VA’s — and the lender’s — standards for credit and income, and be purchasing a primary home.

Forgivable Loans

These loans come from lenders, usually in two forms: deferred payments and forgivable loans.

Forgivable loans are basically second mortgages that borrowers don’t have to repay if they remain in the primary home for a specific time period (for example, 10 years).

Forgivable loans usually have a 0% interest rate, making it easier to afford a home down payment.

State Down Payment Assistance

Assistance programs vary by state. Still, some commonalities exist — especially the urgency to help economically struggling homebuyers afford a home down payment.

These states are examples of that:

Arizona. By and large, homebuyers in most Arizona counties can apply for home down payment assistance through the state’s Department of Housing Home Plus Program.

Homebuyers will need a FICO® credit score of 640 or higher and an annual income of $126,351 or less. Additionally, the purchase price of the home can’t be higher than $371,936.

Florida. The Sunshine State offers home down payment assistance programs via Florida Housing Finance Corp.

•   HFA Preferred and HFA Advantage PLUS Second Mortgage. These down payment and closing cost programs offer 3%, 4%, or 5% of the total loan amount in a forgivable five-year second mortgage.

•   Florida Assist. Eligible homebuyers receive up to $10,000 through an interest-free second mortgage. The money doesn’t have to be paid back unless the homeowner sells or refinances the property.

Recommended: Guide to Buying, Selling, and Updating Your Home

The Takeaway

Government and nonprofit funding are the primary vehicles for down payment assistance, but homebuyers may also seek down payment help from family and friends, retirement and investment funds, or even microlenders.

However a buyer approaches home down payment assistance, the keys are planning, research on available programs, and a disciplined approach to budgeting.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

SOHL-Q324-107

Source: sofi.com

Apache is functioning normally

Nebraska, often associated with its expansive prairies and agricultural roots, has plenty of rural charm to enjoy. With friendly Midwestern communities, a growing economy, and a diverse range of outdoor activities, Nebraska can be the perfect fit for many lifestyles. But is Nebraska a good place to live? To help you weigh your options, here are the pros and cons of living in Nebraska.

Is Nebraska a good place to live?

Nebraska’s two largest cities, Omaha and Lincoln, are the state’s cultural and economic hubs. Omaha is known for its booming business sector, home to Fortune 500 companies like Berkshire Hathaway and Union Pacific. Meanwhile, Lincoln, the state capital, has a thriving college town atmosphere, thanks to the University of Nebraska. The state has a strong agricultural backbone, contributing to its job opportunities.

Beyond its cities, moving to Nebraska means settling into friendly Midwestern communities, a slower pace of life, and a variety of outdoor recreational opportunities. From camping in the Sandhills to exploring Chimney Rock, the state has various activities that celebrate its natural beauty. However, life in Nebraska comes with its own set of challenges, from unpredictable weather to limited entertainment options in rural areas.

Nebraska state overview

Population 1,961,504
Biggest cities in Nebraska Omaha, Lincoln, Bellevue
Average rent in Omaha $1,225
Average rent in Lincoln $1,223
Average rent in Bellevue $1,120

1. Pro: Strong job market in agriculture and technology

Nebraska’s economy is deeply rooted in agriculture, with the state being one of the top producers of beef, pork, and corn. However, it’s not just farming that drives Nebraska’s economy—Omaha and Lincoln have diversified with strong business and technology sectors. In Omaha, industries like finance and insurance are prominent, and the city is home to major corporations like Mutual of Omaha and TD Ameritrade. Lincoln offers opportunities in education, government, and healthcare, thanks to the University of Nebraska and other local institutions. 

2. Con: Severe weather and tornadoes

While Nebraska enjoys all four seasons, the weather can be extreme. The state sits in “Tornado Alley,” meaning severe thunderstorms and tornadoes are a real risk, particularly in the spring and summer months. The unpredictability of the weather can make it difficult to plan outdoor activities, and residents must be prepared for sudden storms. For those who prefer milder climates, the harsh weather conditions could be a significant downside to living here.

Insider scoop: Many locals recommend keeping a weather app with storm alerts handy and preparing an emergency kit with essentials like flashlights, batteries, and a first aid kit.

3. Pro: Affordable cost of living, especially in smaller towns

Nebraska has a lower cost of living compared to the national average, making it an good place to live for those looking to stretch their dollar. While cities like Omaha and Lincoln offer affordable housing options, the state’s smaller towns are even more budget-friendly. For example, in cities like Grand Island or Kearney, rental rates can be as low as $747-$1,199 for a one-bedroom apartment. By contrast, Omaha’s average rent for a similar unit sits around $1,225. The low cost of utilities and groceries also contributes to the overall affordability, allowing residents to maintain a comfortable lifestyle.

4. Con: Limited public transportation options

Nebraska’s rural landscape makes public transportation a challenge, especially outside of Omaha and Lincoln. The state’s vast distances between towns mean that having a car is practically a necessity. Even in Omaha, public transportation options are limited, with the city primarily relying on buses that have infrequent routes in suburban areas. In smaller towns, public transportation is virtually nonexistent, leaving residents with few alternatives to driving.

5. Pro: Friendly communities

One of Nebraska’s standout qualities is the friendliness and hospitality of its residents. In smaller towns and even in its larger cities, you’ll find people willing to lend a hand or strike up a conversation. The state’s community pride makes it easy to form close relationships with neighbors and get involved in local events. This makes Nebraska an ideal place for those seeking a slower pace of life with strong community ties.

6. Con: Bugs and pests can be a nuisance

Nebraska’s vast open spaces and agricultural landscapes are a haven for a variety of insects, especially in the summer months. Mosquitoes, flies, and ticks can become bothersome, particularly near rivers and rural areas. Farmers and rural residents often contend with swarms of insects, and even city dwellers in Omaha and Lincoln aren’t immune to the bug problem. For those who love spending time outdoors, the insect population can make summer hikes or evenings on the porch less enjoyable.

Insider scoop: To better enjoy your outdoor time, consider adding citronella plants to your patio or using natural bug repellents like essential oil sprays.

7. Pro: Low traffic and easy commuting

One of the pros of living in Nebraska is the lack of major traffic congestion, even in the state’s major cities. While rush hour in Omaha and Lincoln can slow things down slightly, it’s nowhere near the gridlock seen in larger metropolitan areas. Commuting times are generally short, with most residents able to get to work within 20 to 30 minutes. 

8. Con: Lack of major entertainment and nightlife

For those seeking a vibrant nightlife or major entertainment options, Nebraska may feel lacking. While Omaha and Lincoln offer a selection of bars, restaurants, and cultural events, the options are relatively modest compared to larger cities. In smaller towns, entertainment is often limited to local high school sports or community events. Residents looking for high-end shopping, concerts, or diverse dining options may need to travel out of state to places like Kansas City or Denver.

Insider scoop: Plan ahead for popular annual events like the College World Series or the Nebraska State Fair, which bring in larger crowds and festivities.

9. Pro: Abundance of outdoor recreation

Nebraska’s open spaces provide great opportunities for outdoor exploration. From hiking and camping to hunting and fishing, there’s plenty to do in the state. The Niobrara River is a popular spot for kayaking and tubing, while the state’s many lakes, like Lake McConaughy, are perfect for boating and swimming. Residents can also explore the scenic Sandhills, the historic Oregon Trail, or Chimney Rock. Nebraska’s landscape might not be mountainous, but its rolling prairies and rivers offer plenty of ways to connect with nature.

Insider scoop: For some of the best camping and stargazing, check out the Fort Robinson State Park in the northwest part of the state. 

10. Con: Snowstorms and sub-zero temperatures in the West

Living in western Nebraska means dealing with harsh winter conditions, including frequent snowstorms and sub-zero temperatures. The region experiences heavy snowfall during the winter months, often leading to road closures and hazardous driving conditions, especially in rural areas. Snow accumulation can pile up quickly, and without the same extensive snow removal infrastructure found in larger cities, residents in smaller towns may be more isolated during storms. 

Pros and cons of living in Nebraska: Overview

Pros Cons
Strong job market in agriculture Severe weather and tornadoes
Affordable cost of living, especially in smaller towns Limited public transportation options
Friendly communities Bugs and pests can be a nuisance
Low traffic and easy commuting Lack of major entertainment and nightlife
Abundance of outdoor recreation Snowstorms and sub-zero temperatures in the West

Source: rent.com

Apache is functioning normally

JAL has launched a new credit card with two tiers (basic & premium). Details are as follows:

  • Annual fee (waived first year)
    • $35 annual fee for basic tier
    • $85 annual fee for premium tier
  • Sign up bonus:
    • 5,000 bonus miles after $3,000 in spend (basic & premium)
    • Additional 5,000 bonus miles when you spend an additional $2,000 within three months (premium only)
  • Card earns at the following rates:
    • Spend on JAL airlines (2x for premium)
    • All other spend (0.5x for basic, 1x for premium)
  • No foreign transaction fees
  • 5,000 bonus miles when you you book your first JAL flight (one time use only, even if you apply for a second card)
  • 10% sector bonus miles for every flight
  • 5% discount at HND and NRT duty free, 10% discount at JAL in-flight purchase and wifi
  • 5k bonus mile after you use international flight by JAL
  • no annual fee in the first year, but $35/$85 from the second year respectively
  • SUB: 5k after spending 3k within 3month for Basic, additional 5k if you spend 2k more for premium within 3 month
  • Earn 5 JAL life status points every $1,500. (Theoretically, this makes 470k spending on this card gives you JGC status a.k.a. lifetime one world Sapphire as long as you hold this card and pay 2k mile annually). Combination with tier run can reduce the cost of getting this too.
  • Miles expire after 3 years of earning unless you are in JGC premiere or JAL diamond status holder.

Our Verdict


Doesn’t really look worth it unless you fly JAL a lot, but better than the previous offering.

Hat tip to reader Daisuke K

Source: doctorofcredit.com

Apache is functioning normally

With mortgage rates surging higher again, somewhat unexpectedly, a thought came to my mind if you’re currently home shopping.

A couple years ago, I threw out the idea to adjust your maximum purchase price lower when looking for a property.

That post was driven by the many home sales that were going way above asking at the time. In other words, a home may have been listed for $600,000, but eventually sold for $700,000 in a bidding war.

That was all to do with a very hot housing market, driven in large part by a combination of record low mortgage rates and very low for-sale supply.

Today, we still have relatively low inventory, but the cheap mortgage rates have come and gone.

And now that they’re so volatile, you may want to input a higher rate into your mortgage calculator to ensure you don’t get caught out.

Mortgage Rates Are Highly Volatile Right Now

At the moment, mortgage rates are super unpredictable. While they had enjoyed a very good 11 months, falling from as high as 8% to nearly 6% in early September, they’ve since reversed course.

The 30-year fixed was nearly back into the high 5% range before the Fed cut rates and a better-than-expected jobs report arrived.

Sprinkle in some doubting about the Fed’s pivot and the upcoming uncertainty regarding the election outcome and home buyers are now facing a rate nearly 1% higher.

Per MND, the 30-year fixed has risen from a low of 6.11% on September 17th to 6.92% as of October 23rd.

Talk about a rough month for mortgage rates, especially since many expected the Fed’s rate cutting campaign to be accompanied by even lower mortgage rates.

It’s a good reminder that the Fed doesn’t control mortgage rates, and that it’s better to track mortgage rates via the 10-year bond yield.

Also, those yields are driven by economic data, not what the Fed is doing. By the way, the Fed makes moves based on the economic data too. So follow the economic data for crying out loud!

Anyway, this recent move up serves a great reminder that mortgage rates don’t move in a straight line. And to expect the unexpected.

Err on the Side of Caution By Inputting a Higher Mortgage Rate

If you’re currently looking to purchase a home, it’s generally a good idea to get pre-qualified or pre-approved upfront.

That way you’ll know if you actually qualify for a mortgage, and at what price point, including necessary down payment.

The thing is, these calculations are only as good as the inputs. So if your loan officer or mortgage broker puts in overly favorable numbers, it could skew the affordability picture.

In other words, you almost want to ask them to put in a mortgage rate that is 1% higher than today’s market rates.

That way you can absorb a higher payment if rates happen to worsen during your property search, which can take months and months to complete.

If rates happen to fall during that time, wonderful, it’ll just be the icing on the cake. Your expected monthly PITI will be even better than expected.

But like those bidding wars that took place, which resulted in higher asking prices, unexpected spikes in rates should also be anticipated.

And if they are, you might look at properties that are more within your price range, as opposed to homes that only work if everything is just right.

Given that homeowners insurance and property taxes are also on the rise (with just about every other cost), it can pay off to be prudent with your proposed home buying budget.

Adjust the Mortgage Rate on the Property Listing Page

If you’re using a site like Redfin to browse listings, there’s a handy mortgage payment calculator on each listing page.

It provides default amounts based on typical down payments, mortgage rates, property taxes, and homeowner insurance.

Let’s say that interest rate is 6.77% today, which is pretty reasonable given current market rates.

If you click on the little pencil icon, you can change it to anything you want. You can also select a different loan type while you’re at it.

Once you do, it tends to save your inputs, so when you look at other properties, the rate you selected earlier should apply to other homes.

This can give you a faster, perhaps more realistic estimate of the monthly payment, instead of a rate that might turn out to be too good to be true.

So you could put in 7.75%, or maybe 7.50%. That way if rates go up, or you qualify for a higher rate thanks to some loan-level price adjustments, you won’t be caught off guard.

You’re basically playing it more conservatively in case pricing worsens, which is the prudent approach.

While you’re at it, you may want to review the other inputs to ensure they are reflective of your proposed loan.

Are you really going to put 20% down on the home purchase, or just 3% to 5%?

Overestimating these costs instead of potentially underestimating them can help you avoid being house poor. Or worse, missing out on your dream home entirely due to inaccurate estimates.

Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
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Source: thetruthaboutmortgage.com