It’s breakfast time, you’re hungry, and I’m offering you two options:
A healthy, adult hen
Two dozen eggs
Your first thought is probably: “Seriously? It’s just breakfast. I don’t want a live chicken running around my house.”
Forget that thought for now.
If you’re like me, your mind next asks, “If I do choose thechicken, how many eggs can I expect over time? What’s the risk the chicken doesn’t get to two dozen eggs? Am I willing to wait for two dozen – or hopefully more – eggs to arrive?”
When we know those answers, we can make a smart decision. It’s a time value of chicken question. It’s why Warren Buffett recites Aesop’s fables.
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A similar mathematical question lies at the heart of financial planning: how do we compare lump sum savings against a stream of income?
The question might sound simple. But people get it wrong all the time, and their financial lives are at stake.
Savings vs. Income: Would You Rather?
Would you rather have $140,000 today or $10,000 yearly for life? David Blanchett and Michael Finke posed that question in a study published by an annuity industry group.
Yes – we should exercise caution. It’s natural for an annuity industry group to publish pro-annuity media, and this study is certainly pro-annuity, as we’ll see. In general, I’m not a fan of annuities. Nevertheless, I think the study’s results are directionally accurate.
This is a hen vs. eggs question! $10,000 per year is like our hen: a steady income stream. The $140,000 is like our eggs: a big lump sum all at once., The study points out that person could use their $140,000 to buy an income annuity and guarantee themselves $10,000 per year for life. In other words, the two options are functionally identical.
However, study respondents don’t see the options as identical. Instead, most respondents prefer the $10,000 per year for life. It’s viewed as safer and more accessible to spend. The logic is:
If someone knows another $10,000 is coming next year, they’re willing to spend the $10,000 they receive this year.
But the lump sum doesn’t inspire that same confidence because it all depends on if or how you invest it. What if I spend down the $140,000 to nothing?! I’d much rather have the $10,000 per year at that point.
This is Loss Aversion 101. If you can guarantee a person won’t lose – just as the stream of income guarantees – that person is biologically biased to see that option as more appealing. Even if it isn’t!
The Big Problem
The problem with this “income vs. savings” logic becomes evident if we tweak our numbers.
What if I offer you a $200,000 lump sum vs. $10,000 yearly?
The pure math tells us it’s a no-brainer. Choose the lump sum! You could use that lump sum to produce an income stream greater than $10,000 annually.
But some would ask, “Can you guarantee that income? Or are you making a bet that you likely can produce more than $10K per year? What if you’re wrong?” And because of that risk of being wrong, they would still choose the $10K per year.
How does someone overcome this bias?
According to the study mentioned above, a simple income annuity would help by converting the $200,000 lump sum into a $14,000 per year guaranteed income stream, crushing the $10,000 per year option.
Note: the study’s ratio of $140,000 lump sum to $10,000 annual income stream suggests internal rates of return of: 0% over 14 years, 3.7% over 20 years, 5.8% over 30 years, and 6.6% over 40 years. This alignswell with Schwab’s guaranteed annuity payouts, as of this writing.
But as I’veexplained here before on The Best Interest: do you want to run the risk of a 0% return for 14 yearssimply to achieve the “nirvana” of 6.6% annually for 40 years?
That doesn’t work for me.
Quick Aside: Dividend Stocks!
The same faulty logic of “income >> lump sum” exists in the world of dividend stocks.
One of the greatest myths about dividend stocks is that they’re inherently superior to other stocks because they produce a dividend income stream. (Here’s a complete breakdown of all the faulty dividend stock logic.)
The income allure of dividend stocks convinces many retirees to stock their portfolios full of them. “You can get a 6% per year dividend AND still own your stock at the end of the day!”
A more diversified stock portfolio might “only” pay a 2% dividend while its price increases 8% a year (over the long run). If a retiree wanted to live off this second portfolio, they would have to sell some of their shares. That selling begs a scary question: What if we sell and sell again and again until we run out of stocks?!
The same question scares people looking at the $140,000 lump sum: what if we spend and spend again and again until we run out of money?! They opt for a steady income stream. They opt for dividend stocks.
Their normal, understandable monkey brains overvalue the income stream and undervalue the lump sum. Don’t be that monkey!
What To Do Instead?
One of my goals here at The Best Interest is to instill confidence. Specifically, the confidence that a diversified portfolio can achieve particular performance goals over sufficiently long periods.
Not without risk, mind you. That’s important. To achieve investment reward, we must assume investment risk. But I want to instill confidence that you can assume some risk (however much is appropriate for you) and good things will happen over long periods of time.
Such a portfolio can translate a lump sum into an income stream or an income stream into a lump sum. We need to fight the urge to overvalue one over the other.
Specifically, we need to have enough confidence in math to overcome our monkey loss aversion that overvalues income and undervalues a lump sum of money.
I’m not sure that confidence can be spoken into existence – at least not in the short-term. But with enough smart evidence and time, confidence builds.
Maybe even enough confidence to choose that chicken over the eggs.
Thank you for reading! If you enjoyed this article, join 8000+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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If you have a whole life insurance policy that pays dividends, you may have the option of purchasing paid-up additions. Paid-up additions in life insurance are small additional amounts of coverage bought with your life insurance dividends.
Paid-up additions let you increase your death benefit — the payout your beneficiaries could receive if you die — without raising your premiums, because your dividends pay for the additional coverage in full. The extra coverage can help your life insurance keep up with inflation.
You’ll need a participating life insurance policy to earn dividends. Participating life insurance policies are available through mutual life insurance companies, which are owned by policyholders rather than shareholders. Dividends are never guaranteed, though some mutual life companies have a long track record of paying them.
If you use policy dividends to purchase paid-up additions (PUAs), you won’t need to provide new proof of insurability. This means you can get the extra coverage even if you’ve developed health problems. The additional insurance you can purchase is based on your age at the time the dividend is issued.
Alternatives to paid-up additions in life insurance
There are several alternatives to using dividends to purchase paid-up additions in life insurance. For example, you could choose to:
Receive the dividend payment as cash.
Use it to reduce your life insurance premiums.
Pay down outstanding policy loans.
If you’re shopping for life insurance and want the flexibility to increase your death benefit, there are several other ways to do so without a paid-up additions rider.
While there is no widespread preferential mortgage, and family mortgages are not available to everyone, developers and banks are launching their own programmes
Photo: Динар Фатыхов
Widespread preferential mortgages have not been available in Russia since Jiuly, and even extending te family mortgage will not radically solve the problem due to its limitations. “In June, developers fulfilled the plan by almost 200%, but within a week and a half in July, many have experienced a negative situation — almost no clients in their offices.” This is how developers are describing the decline in sales of new buildings. According to them, they are forced to create joint programmes with banks — to subsidise rates, instalment plans and so on. The Central Bank is dissatisfied, but “without this, we will get a market decline or stop,” people from the industry are saying.
Family mortgage extended in Russia
Real estate market played discussed how the mortgage market was doing without government support at a business breakfast in Kazan on 10 July. Shortly before it began, it became known about the extension of family mortgages in Russia. The news was greeted with enthusiasm, but it was noted there was no as massive support for families as before. Parents of children under six years of age inclusive, as well as disabled children, will be able to take out a loan at a rate of no more than 6%. And only for the construction of a private house. You can buy an apartment only in small towns with a population of up to 50,000 people and regions with little construction or those with their own development programmes.
“If you look at the number of children under 18 years of age in the republic and compare it with the number of children under 6, this is the main difference from the previous programme, then there are approximately 3-4 times fewer such families today. This also needs to be taken into account,” said Aygul Latypova, executive director of Ak Bars Dom.
“If you look at the number of children under 18 years of age in the republic and compare it with the number of children under 6, there are approximately 3-4 times fewer such families today,” said Aygul Latypova. Dinar Fatykhov / realnoevremya.ru. Динар Фатыхов / realnoevremya.ru
The loan limit in the programme will be 12 million rubles for Moscow, Saint Petersburg and their regions and 6 million for the other regions. You can combine a preferential loan with market programmes (for loans above 6-12 million, interest will be charged at the market rate), in this case, loans are limited to 30 million and 15 million rubles in big and remote regions, respectively.
“With a 21% rate, mortgages and home purchases have become unaffordable”
Only a limited category of citizens will be able to take advantage of a family mortgage. Therefore, in order to keep the market of new buildings from falling, an alternative to the cancelled mass preferential programmes are needed, people in the industry are saying.
“We have come to the point that mortgages began to live according to market conditions. Now the rates are equal to 21%, and there is no need to say that the market is doing well. If we compare monthly payments under preferential programmes and the current rate of 21%, the amounts have tripled. Borrowers who are now taking out a mortgage pay about 95% of their payment only as interest to the bank. Therefore, I consider such rates to be an obstacle; due to them, mortgages and home buying have become unaffordable,” said Rustam Azizov, director of mortgage sales and implementation of financial instruments at A101 Group of Companies.
The developer gave an example from Moscow where average loan size for an apartment for 12 million rubles is 10 million. At the current level of market mortgage rates of 21-23%, the monthly payment exceeds 180,000 rubles. “At the same time, only 2,500-3,000 rubles from this amount go to repay the loan itself, and the rest goes to interest repayment. Thus, the amount of overpayment for an apartment worth 12 million rubles for the entire loan repayment period is more than 33 million rubles,” the speaker explained.
To replace the public preferential programmes, developers and banks are offer their own programmes: subsidised rates, instalment plans, combo mortgages and so on. In particular, once can take out a mortgage at 8% a year now. The rate for the first few years will be subsidised by the developer. Of course, the apartment in this case will cost more.
“I consider such rates to be an obstacle; due to this, mortgages and home purchases have become unaffordable,” said Rustam Azizov. Dinar Fatykhov / realnoevremya.ru . Динар Фатыхов / realnoevremya.ru
“In general, we probably need to somehow restructure our thinking and try to work without government programmes. It is clear that if we completely remove state programmes now, everything may stop altogether, so they are making some restrictions — now for a family mortgage, they demand the child to be under 6 and so on. But somehow we all worked before the pandemic, and it still worked out. We need it to make it work out now,” urged Anatoly Norshtein, founder of Metr.Club mortgage aggregator.
“The regulator encourages us to make discounts, but this is not always reciprical”
As Realnoe Vremya already reported, a month ago experts predicted a serious decline in sales in the new real estate market — up to 40%. The first days of July and the cancellation of preferential programmes partially confirmed these fears.
“In June, developers fulfilled the plan by almost 200%, and in for one and a half weeks in July, many people had a negative situation, there were almost no clients in the offices,” noted Rustam Azizov. “That’s why banks and developers are now offering some alternative options to reduce the market rate at least in the short term. Let’s hope that the key rate will decrease in 2025-2026 and mortgages with high rates can be refinanced,” he noted.
The Central Bank is closely monitoring the development of the mortgage market and the work of banks with developers to create their own home buying programmes. “The regulator calls them schemes, we still call them a method of purchase: for the developer, it is a method of implementation, for the client, it is a more or less accessible method of purchase,” the developers object. The Central Bank expressed its dissatisfaction calling on credit institutions and developers to better offer discounts to clients. But the industry has noticed that this is not always possible.
“If the Central Bank begins to somehow limit the programmes from developers, this will be quite problematic. The regulator is encouraging us to make discounts, but, unfortunately, this is not always reciprocal. If my discount is 20%, this will not lead to a monthly payment where we will subsidise this 20% according to the programmes. In other words, the payment will still be significantly higher,” explained Aygul Latypova.
“The regulator is encouraging us to make discounts, but, unfortunately, this is not always reciprocal,” the speaker explained. Dinar Fatykhov / realnoevremya.ru. Динар Фатыхов / realnoevremya.ru
The Central Bank is working to create and implement a mortgage standard in Russia. However, while it is not there, all attempts to maintain the development pace of the mortgage market cannot be cancelled, the industry is convinced: “This is wrong, simply because then there will be no alternatives or opportunities for market development. Imagine if the same subsidised rates from the developer did not exist now. Let’s be honest, our monthly payments have tripled according to the market rate, but the real incomes of the population have not increased since q July. What are we talking about then?”
“Mortgage was born in Ancient Greece in the 6th century BC, lived for 2,600 years and will definitely not die after 1 July,” Arkady Bocharnikov, head of the mortgage lending department of Ak Bars Bank, was positive.
The speaker provided general data on the issue of mortgages in Russia. Recent months have shown that about 2 million families annually improve their living conditions through mortgages. The ratio of mortgage debt has, of course, increased, the speaker admitted, but at the same time, our indicators are still lower than in the USA and Germany. Russians have taken out a mortgage for 18 trillion rubles, which is 11% of GDP.
“We have the potential here, we can increase the mortgage debt of the population 4 times, and the economy will do great.” Therefore, I would not say that after 1 July there will be no mortgages. In terms of big numbers, we still have to grow and grow,” the expert believes.
In terms of housing provision, the figure reached 25 square meters per resident of Russia ,and an annual increase is approximately a square metre. We haven’t yet reached the level of other countries; we can double the amount of housing owned by the population, the speaker added. “It should also be taken into account that it is the size of all the Khrushchyov blocks of flats built in the 1960s and 1950s , which, of course, need to be updated.”
We can increase the population’s mortgage debt four times, and the economy will do great, noted Arkady Bocharnikov. Dinar Fatykhov / realnoevremya.ru. Динар Фатыхов / realnoevremya.ru
“Developers are now in such conditions that we do not determine how much we can sell”
Arkady Bocharnikov believes that with the cancellationf of preferential programs, alternative ones will be actively developed — from banks and developers. In his opinion, they will be especially in demand in the next years.
“We launched a mortgage at 8% for a year or two, and at the moment this is salvation. But it also requires costs from the developer. With such market rates, despite all the standards and prohibitions, the market still forced us to create joint programmes with banks. Without this, unfortunately, we will either have a market decline or a stop. Developers are now in such conditions that we do not determine how much we can sell. We have estimated financing, our sales are strictly regulated. Therefore, banks are interested, and we are interested in creating mechanisms to make housing affordable,” Aygul Latypova emphasised.
In the next month, all major players in the mortgage market will present their programmes to support demand for primary housing, says Rustam Azizov: “Banks like developer are also interested in maintaining the pace of house sales and, as a result, the issue of mortgages. Such loans have an extremely low level of overdue debt — 0.02%. In addition, mortgage borrowers have a fairly high LTV rate, that is, readiness to use other banking services.”
According to Anatoly Norshtein, market mortgage rates will not decrease to the numbers that are acceptable for most apartment buyers until mid-2025. “The mortgage market will survive but through special joint programmes with developersas well as programs that were not previously in high demand,” the expert believes.
According to Anatoly Norshtein, market mortgage rates will not decrease to the numbers that are acceptable for most apartment buyers until mid-2025. Dinar Fatykhov / realnoevremya.ru. Динар Фатыхов / realnoevremya.ru
The future demand for housing in the next two months was largely met in June, so the sales figures of July and even August will be irrelevant; the real situation will not be clear until September, experts say.
“Until this moment, the market may see a transition to targeted support for certain categories of citizens (doctors, teachers, employees of core enterprises), which can more effectively resolve important government issues. In addition, it seems appropriate to extend government support for mortgages for young families in order to encourage young people to start families and have children at a younger age, says Rustam Azizov.
One of the options, in his opinion, could be the Youth Mortgage that can be extended to young professionals under 30. It can be implemented within a new Youth of Russia national project. The maximum loan term in the programme can be increased, up to 50 years, this will help reduce the monthly payment. The interest rate in the programme taking into account subsidies from the state can be no more than 3%. At the same time, it is recommended to set the maximum loan amount at 15 million rubles for Moscow, Saint Petersburg and their regions and at 12 million rubles for the other regions.
Martha Stewart Fires Back at ‘Harsh Judgment’ of Maine Home Decor | Us Weekly
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By Laura Rizzo
July 4, 2024
Martha Stewart is defending the transformation of the living room in her Maine vacation home after receiving “harsh” criticism from social media followers.
“I rarely read all the comments that come in after I post, but because I was so happy at the transformation of my Maine living room, I did go through many of the comments and was surprised at the harsh judgment so many displayed!!!” Stewart wrote via Instagram on Wednesday, July 3, to caption a photo of her updated space.
The celebrity chef said she and her “Maine helpers” only spent “three hours” swapping out the furniture, explaining, “We were pleased that the pieces actually fit the room and were proportionate to the large size of the space. [This] was not a ‘decorator’s’ professional installation. It was an attempt to change quickly and efficiently.”
Stewart agreed that a full room makeover would take much more time, promising she would add more details.
“Making a house a home — or a room a beautiful livable space — takes a lot more than three hours,” her post continued. “Of course, there will be color, plants, mirrors, a new rug or two and other art and objects Stay tuned!!!! And by the way, the birds are chromo lithographs by Carroll Tyson known as the ‘6 Audubon of Maine’ — so beautiful!”
The room featured 11 large drawings of various birds surrounding a brick fireplace. Stewart added various cream-colored chairs and couches with black detailing into the sizable space, which featured several smaller seating areas.
Stewart purchased her vacation home, called Skylands, located in Seal Harbor, Maine, in 1997. Originally built in 1925 for auto executive Edsel Ford, the sprawling estate features 12 bedrooms and a pink granite driveway, according to her website.
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The author has kept most of the charm of the original home, which may come as no surprise as the estate was sold with nearly everything included, like the linens and the Fords’ silver and glassware.
“I didn’t have to buy a plate,” Martha told Architectural Digest in 2017 about purchasing Skylands. “Although I’ve certainly added my fair share.”
Despite any internet criticism, Stewart will most likely always keep the classic charm of Skylands, telling AD, “I look at myself as the caretaker of an American treasure.”
Hello! Today, I have a great article to share about how to become an Amazon Vine Reviewer from a reader, Nicole Nicolet. She is a member of the Amazon Vine program and she has received over 100 free products from Amazon and has saved over $4,500 in the last 6 months. If you want to…
Hello! Today, I have a great article to share about how to become an Amazon Vine Reviewerfrom a reader, Nicole Nicolet. She is a member of the Amazon Vine program and she has received over 100 free products from Amazon and has saved over $4,500 in the last 6 months. If you want to learn how to get free products from Amazon, this is a very helpful read!
Did you know that you can get hundreds of free products, worth thousands of dollars every year from the Amazon Vine Program?
It’s surprisingly easy to join, and once you are a member you have access to thousands of everyday items that you can use, gift to friends and family, and even make money from.
Though there are certain rules that you will need to follow to maintain good standing with the program, it is worth all the effort.
So, if you’re looking to save, and maybe even make a little bit of money, the Amazon Vine Program may be a good fit for you.
How To Become An Amazon Vine Reviewer
Below is what you need to know if you want to become an Amazon Vine Reviewer.
Recommended reading: 7 Ways To Get Paid For Amazon Reviews
Here’s a screenshot from Amazon showing how much free stuff I’ve received so far.
How I’ve saved thousands with Amazon Vine
I have been a member of the Amazon Vine Program since November 2023. During this time I have received over 100 products from clothing to home decor, to health and beauty products, and even some electronics.
Just the other day I got a pretty awesome projector that looks and works amazingly! And, I also got a pretty sick electric guitar too!
Because the Vine program allows you to request 3-8 items per day, I have been able to find gifts for friends and family, start new hobbies (like making sourdough bread!), and even find nearly all of the decor I need for my wedding.
Over the past 6 months, the total value of all the items I have requested comes out to a little over $4500.
So, as you can see how easy it is to save money as a Vine Voice.
What is Amazon Vine?
Amazon Vine is a program that Amazon offers to its stores and businesses to help them get product reviews for their products sooner than they would have otherwise.
This helps businesses make more sales since most customers read reviews before they decide to buy.
When a business or store decides to put some of its products into the Vine program, Vine Voices (like myself) will test out the product and leave an honest review.
As a Vine Voice, you get these products for free. However, there are some legal requirements that may affect your taxes, depending on your tax situation. More on this in a moment.
So, who does Amazon choose to become Vine reviewers?
The Amazon Vine program is an exclusive program where they will hand-select people to join the program. These people will need to have written consistent ‘helpful’ and insightful reviews from their previous Amazon purchases.
You may be eligible to be an Amazon Vine Voice Reviewer if:
You have written consistent reviews of your previous Amazon purchases
Your reviews are considered ‘helpful’ to other customers
Your reviews are honest and trustworthy
https://www.amazon.com/vine/about
How do you join Amazon Vine?
If you are eligible to join the program and Amazon has decided they want you to become a Vine Voice, you will receive an exclusive invitation by email.
Once you join the Amazon Vine program, you will have access to the Vine Voice dashboard where you will find thousands of products from houseware to beauty products and more.
All Vine reviewers start in the Silver member status and have the ability to upgrade to Gold member status (that’s where I’m at now!)
Tips to increase the likelihood of receiving a Vine Voice invitation:
Go back into your previous purchases and write a thorough review
Include pictures or videos in reviews of your previous purchases
Provide helpful insight into your reviews (include both pros and cons)
Include tips on how you use the product in your reviews
When Amazon has decided they would like you to join their Vine review program, they will send you an invite through your email. So, keep an eye out for whichever email account you have connected to Amazon.
Check your spam folder if you think you missed the invitation.
Here’s a screenshot of some of my reviews.
How to become a Vine Voice (how to become an Amazon Vine Reviewer)
You can become a Vine Voice once Amazon has decided you provide trustworthy reviews. This is important because they only want members who provide honest, relevant, and insightful feedback.
Anyone is eligible to join the program as long as they have left enough reviews that other customers have rated as ‘helpful’.
So, unfortunately, there is no exact or magic number that I can give you as this varies by the quality and quantity of your reviews, as well as the number of visits those products may get.
However, when I was invited, I had just caught up on about a half dozen reviews and received the invite in my inbox about 2-3 weeks later.
Does it cost anything to be a Vine Voice?
No, there is no membership fee, or one-time fee to join the program. However… it is important that you know that taxes are involved in the process.
While you are never charged for the products themselves, Amazon is required by law to account for the value of products as ‘self-employed’ income. If you have requested products for a total amount over $600, Amazon is required to send you a 1099 form.
You can check in your Vine account dashboard to keep track of your total running amount.
How much are you taxed for the products?
Each product will have an ‘estimated tax value’ that Amazon has to report. This value is totaled up on your 1099 tax form.
However, as for what percentage you are taxed all depends on your specific financial situation. The percentage you are taxed will vary by state and your tax income bracket.
One tip though, to avoid higher taxes, is to request more health-related items that have no estimated tax value. Or, otherwise try to keep your total value down so that you pay less in taxes.
Unfortunately, this can be difficult when you become a Gold Member as the items can be any priced value and are usually better quality. Plus, some products are hard to turn down. Like that projector screen I mentioned earlier.
Here are some of the items I’ve received for free through Amazon Vine.
What are some of the best products you’ve received from Amazon Vine?
Well, for one, a projector that works great for indoor and outdoor entertainment.
But, here’s a list of some other really neat products I’ve gotten from Vine.
3 shade lamp ($90 value)
Shoe rack bench with a cushion ($60 value)
That cool projector I keep talking about ($160 value)
Gorgeous blue electric guitar ($140 value)
Camping gear ($100 +)
Wedding decor and gear ($500 +)
Leather car seat covers ($173 value)
Wing shaped book ends ($40 value) (P.S. these look super cool!)
Brand new silverware
21-piece knifeset ($199 value)
Stationary ($100 +)
Gifts for friends and family ($400 +)
Clothing ($100 +)
Automated pet feeder ($60) (My cat’s an absolute unit, so he eats through his food quickly)
Rainfall showerhead ($55 value)
Christmas projector lights ($60 value)
I could keep going with this list, and I will keep adding to this list as long as I am still a member of Vine. But, needless to say, there are some great finds on here that will save you money on many household items, gifts, and more.
And, if you’re a parent, I will mention that I have seen tons of baby items and things for kids. So, if you’re looking to save money on your kids, becoming a Vine member can be a great way to save some money.
When I searched for “baby”, almost 2,000 items popped up.
How to get free products from Amazon Vine
Requesting free products through the Vine program is both fun and easy. You can select from a list of thousands of products in just about any category.
After becoming a member, you can follow these steps to request products.
Log in to your Vine account, navigate to your dashboard and locate the “Recommended for You”, “Available for all”, and “Additional Items” tabs.
The ‘recommended for you’ items are based on your previous Vine searches. And, if I’m not mistaken, may also be partially based on your regular Amazon purchases and searches.
There was one time that I looked for, and eventually purchased a specific lamp on Amazon. And, not one week later that same exact product showed up on Vine. You win some you lose some, right?
You can also search for a specific product using the search bar. But, if you don’t find what you’re looking for, try broadening your search or using a different but related keyword.
Sometimes a product is ranked under different keywords than you might expect.
Once you have found the item you want, you can look into further detail by clicking through to that link, or by reading the details when selecting the “see details” button. Then, once the product pops up, hit the “request product” button.
Now you just wait for the product to ship to you!
You will find the shipping information in your item orders on your Amazon account or Amazon App. There is no special place for just for shipping information of Vine products. It’s all on your regular Amazon account.
Do you get paid with Amazon Vine?
You do not get paid in cash as a Vine Voice. You do, however, receive free products that you can later sell if you choose.
There are some restrictions as to when you can get rid of the products you have requested.
Amazon requires you to keep the products you request for at least 6 months before you get rid of the product you’ve requested. This means you are not supposed to gift, give away, sell or otherwise toss the product for 6 months.
How Amazon can track this, I don’t know. How strictly do they monitor this, I don’t know.
But, what I do know is that you definitely shouldn’t sell any of your Vine products online within the minimum time frame if you want to remain in good standing as a member of the program.
What countries have this program?
The Amazon Vine program is available in the US and a few other countries.
Unfortunately, the products that are available are only the products that ship within that country or may be stored in local distribution centers.
Some larger items may also only be shipped very locally to where they are stored.
So, if you live outside the U.S. you may still be able to join the program but may be much more limited on what products you have access to request.
Process of reviewing Amazon Vine products
In your Amazon Vine dashboard, you will be able to find products recommended specifically to you, products for all Vine reviewers, and any other product that is available to request for all members.
It’s best to check back frequently for any items you want as this changes daily, and sometimes hourly.
There have been times when I’ve found an item I wanted several weeks or even a month or two later than when I first checked. Give it time and most likely what you want will become available.
Once you find the items you want, go ahead and request the products. Most products will be shipped to you in a couple of days, or within a month.
Being an Amazon Prime member does not change how quickly something is shipped to you though. But, there are tons of other great benefits as a Prime Member other than free 2-day shipping.
Step-by-step process to review Vine products:
Request the product you want
Test the product within a thorough, but timely period
Write a complete and honest review of the product (include pictures, video, and/or other information you feel is ample for that product). Real reviews are great, they aren’t just looking for positive reviews
Submit the review and wait for it to be approved (usually a few days to a week)
Update the review if you feel this is necessary
If you struggle to find the products you want to review, try using different keywords. Rather than looking up “bridal shower gifts” try just looking up “bridal” or “wedding”.
This will greatly broaden your search as some items may be ranked under a certain keyword, but not another.
If this does not work, try also using another term for the product.
For example, when I type in ‘tumbler’, I see an insulated thermos, and I also see some stickers that go on thermoses. When I type in ‘cup’ I see thermoses again.
Contrary, when I type in ‘bookends’ with no space, I find a dozen products. But when I type in ‘book ends’ with a space, I only get one product. This is because of how businesses add their products to Amazon when using keywords.
What is required to maintain Amazon Vine membership?
To be in good standing with the Amazon Vine program you will need to write reviews in a timely manner. For some products, a thorough review may require several weeks of testing, whereas other products can be reviewed almost right away.
Some products I really try and include an image of. Things like electronics, clothing, and other things that are difficult to see in scale from a product image alone. Real life images work best for buyers to make an informed decision.
As a Silver Status Member, you will be able to request up to 3 items per day and up to $100 value each. You will need to review at least 80 items, and 90% of your items by or before the end of your evaluation period. After your evaluation period, you can get upgraded into the Gold Status.
As a Gold Status Member, you will be able to request up to 8 items per day with any price value. The review requirements are the same with at least 90% of 80 products reviewed by the end of the evaluation period.
You will need to have at least 60% of your products reviewed at any time to stay in good standing. However, this will take some time while you are getting enough products to review, so don’t worry too much about this in the beginning.
If you do not keep up with your reviews, your account may be placed under review (no pun intended here). I had this happen to me at one point around last Christmas when I became too busy for a while to write any reviews.
But, I got caught back up and was able to return to good standing status as a member. And, I was still able to request items during this period, just in case you were wondering.
I have noticed there is some confusion among many Vine Voice members as to when you get upgraded to Gold Status. At one point I thought if I reached the minimum requirement of 80 products with 90% of reviews I would be upgraded.
But, you will not be upgraded until the end of your evaluation period, unless you are somehow an exception to this rule.
I recommend catching up on your reviews about once a week. Or, more often if you would like. This helps you to avoid getting behind.
How to make money from Amazon Vine
According to the rules of the program, you cannot sell, gift, or otherwise give away your Vine products for a 6-month period. After this period, you may do with the items as you wish.
At this point, you may turn or flip the products and sell them for profit. However, if you decide to make some extra cash with this, please do not sell a product for more than it is valued on Amazon.
This is wrong, deceitful, and may cause bad blood among those involved. So, it is best to sell the items for less than the original value.
You may also use any products you get in your business if you wish. They are still just products, so if you use a Vine product in your business to make money, then more power to you.
Example: One item I had requested was an off-brand KitchenAid mixer attachment. I could easily use this to make money from baking.
When can you sell the products you get?
There is a required 6-month waiting period before you get rid of any products by any means. It is best to wait this period before you decide to gift or sell any product.
If you decide to gift or sell any products sooner than this period, you can and may be removed from the program. So, if you are concerned about this, make sure to date the products you receive so you don’t forget.
You can also look in your account to check on those dates.
It’s best to not sell any products for more than the taxable value. You also should not market any products as any brand other than what they actually are.
So, when I mentioned I got an off-brand KitchenAid attachment, it would be wrong and deceitful for me to market it as an ‘official’ brand attachment.
Can you gift the products you get?
Yes. After the 6-month waiting period required by Amazon. If gifting an item is necessary for a thorough review, however, and the product is within your family, in most cases this should not be too much of an issue.
But, this does not guarantee that you aren’t breaking the program rules. So, do this at your own risk.
Can you be both an Amazon Affiliate and a Vine Voice?
As a blogger, I am also a member of the Amazon Affiliate program, and I am also a member of the Amazon Voice program.
As of June 2024, I am not aware of or have been informed of any restrictions that an Amazon Affiliate can’t also be a Vine Voice. Nor, have I found any information that states otherwise.
So, I say the more the merrier!
Final thoughts on how to become an Amazon Vine Reviewer
The Amazon Vine program is a great program for companies, customers, and Vine Voices alike. It’s actually a fairly easy program to join and can be a great way to save and even make money.
While there are some important requirements you’ll have to follow as a Vine Voice, the benefits far outweigh any negatives.
So, if you’re looking to save some money this year, start reviewing your previous Amazon purchases to increase your chances of becoming a Vine Reviewer, and keep an eye out for that email!
Did you know that there was a way to get free stuff from Amazon?
Author bio:
Hey there! My name is Nicole Nicolet and I am a blogger at Let’s Make Life Great. When I first learned that blogging could make you money full-time I was skeptical, but decided to give it a try as a way to make passive income on the side. So, after taking Michelle’s free blogging course, I jumped in!
I started writing and researching different ways to save money, make money, and budget better. I also tried different side hustles like making digital printables, online courses, and more. Even though I’m still learning and growing, I enjoy writing posts about my blogging journey to help me document the tricks and tips I’ve learned since I started.
I aim to help my audience make more money, grow a business, and reach their financial goals through the content I create. And I even have a free resource page on my site, because who doesn’t love free stuff?
So, one day, when I stumbled upon the Amazon Vine program I decided to try it and see if I was eligible. And, sure enough, I was.
I’m inspired to share my journey with you in hopes that you too can learn different ways to save thousands each year as an Amazon Vine Member.
Making Sense of Cents Note: I hope you enjoyed this article on how to become an Amazon Vine Reviewer. This invitation-only program looks for high-quality reviews to help improve a product’s visitibility. This can be a great way to get free stuff from Amazon and save some money! I’ve read that there are around 5,000 to 10,000 Amazon Vine reviewers currently, and it looks like they are still accepting many new product reviewers.
If you’re like many Americans, your home is the single most valuable asset in your portfolio. That six-figure investment doesn’t just keep a roof over your head — it can provide a source of wealth and stability for years, and potentially generations, to come.
But sometimes, you need access to that wealth now — preferably in the form of cold, hard cash. And while refinancing can be one way to access your home’s value, you may not want to change your interest rate or other mortgage terms. Fortunately, there are ways to take equity out of your house without refinancing — though many of them do come with their own costs and risks. Below, we’ll dive into all the details so you can make an informed decision.
Can You Pull Equity Out of Your Home Without Refinancing?
The short answer: Yes, there are ways to get equity out of your home without refinancing (though cash-out refinancing is also a way to do so). From home equity loans to a home equity line of credit (HELOC) and reverse mortgages, there are a lot of ways to turn your home’s value into cash money — though they all come with their own pros and cons to consider. Let’s take a closer look.
Ways to Get Equity Out of Your Home Without Refinancing
Here are five ways to get equity out of your home without refinancing.
1. Home Equity Loan
A home equity loan is, as its name suggests, a loan that draws from the value of your home equity — which is the amount of your home’s value that you actually own (i.e., what you have paid back to your mortgage lender). You can take out a home equity loan without refinancing, and if you’ve been building equity for a while, doing so can be a relatively low-cost way to access a large lump sum of money in one fell swoop.
A home equity loan is sometimes known as a “second mortgage,” since it’s secured by the same asset as your original mortgage — your home. And just like your mortgage (and many other types of loans), a home equity loan is usually repaid in regular, fixed installments over a predetermined period of time, or term. This might be 10 or 20 years long.
Of course, home equity loans do come with drawbacks to consider. For one thing, your home will be at risk of foreclosure if you fail to repay the “second” mortgage, just as it is with the first. And although interest rates may be relatively low, closing costs apply, which can amount to thousands of dollars.
2. Home Equity Line of Credit (HELOC)
A home equity line of credit, or HELOC, works in a similar way to a home equity loan — but instead of a lump sum payment, you’ll get access to a flexible line of credit based on your home equity, which you can tap into as needed. You can think of it a little bit like a credit card, except your “credit limit” will be based on the equity you’ve built in your home.
HELOCs may be offered at a fixed or variable interest rate and usually consist of a draw period followed by a repayment period — so you’ll have a certain amount of time to draw from the HELOC and then a certain amount of time to pay it back. Most HELOCs allow borrowers to take out up to 80% or even 85% of their home’s value, minus whatever they owe on their mortgage — in other words, up to 80% of their home equity. Keep in mind that HELOCs may also be subject to origination fees and other upfront costs that can increase their overall expense.
3. Reverse Mortgage
A reverse mortgage is similar to a home equity line of credit. One type, a Home Equity Conversion Mortgage (HECM), is backed by the Federal Housing Administration (FHA) and is specifically for homeowners age 62 and over. Rather than making regular monthly repayments on the loan, the total doesn’t come due until you no longer live in the home.
Since interest and fees are added each month, the loan total goes up over time, while your home equity in turn goes down — and if you (and any coborrowers) die, the reverse mortgage is due immediately. Thus, this option might not be the right choice for those hoping to leave their home to their surviving family members. If the idea of an HECM appeals to you, you can meet with an HECM counselor to learn more.
Home Equity Investment
Otherwise known as Home Equity Agreements (HEAs), a home equity investment allows an investor to essentially buy some of your home’s future equity. This gives you access to cash up front without requiring you to pay back a loan over time — which many would call a win-win situation. Of course, in the long run, if your home appreciates substantially in value, you may end up paying a high rate of return to the investing company — and having less of your home’s value to create long-standing wealth for you and your family. Furthermore, not everyone can qualify for this relatively new financial arrangement.
Personal Loan
You might already know about personal loans — which, yes, can be taken out even by non-homeowners. But if you do own your home, you may be able to put down the deed as collateral, which could reduce the cost of the loan (since a secured loan is less risky to lenders) while also offering you the flexibility to use the borrowed money in just about any way you want.
Pros and Cons of Refinancing to Pull Out Home Equity
Of course, even with all the options described above, refinancing is still an option for those hoping to pull equity out of their homes. Here are some of the drawbacks and benefits of refinancing to pull out home equity, at a glance.
Refinancing Pros
Refinancing Cons
Access to a large lump sum of money
You’ll owe closing costs
Potentially lower interest rate than credit cards or unsecured loans
If the market is less favorable than when you took out your original home loan, your overall interest rate may be higher
Possible tax deductions if you use the money to make eligible home improvements
Your overall owed amount will be higher and unless you choose a very short loan term, you could be paying down the loan for decades to come
When Is It Worth Refinancing?
If your financial situation and market conditions have changed such that you’d likely qualify for a lower overall interest rate and better loan terms, refinancing a mortgage may be worthwhile — and if you need short-term cash, a cash-out refinance might be an option worth considering. That’s especially true if you plan to use the money for home improvements, in which case you may qualify for additional tax deductions.
The Takeaway
While cash-out refinancing offers a readily available way for many homeowners to access their home’s equity value as cash, there are plenty of other options worth considering. A home equity line of credit (HELOC), secured personal loan, and even a reverse mortgage can all help homeowners put some extra money in their pockets — so long as they know the potential drawbacks of each method.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 95% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
FAQ
Is it possible to withdraw home equity without refinancing?
Yes! There are many ways to take equity out of your home without refinancing. Some of the most popular options include home equity loans, home equity lines of credit (HELOCs), and reverse mortgages. It’s important to understand that each of these options comes with its own costs and associated risks, however.
What is the best way to take equity out of your home without refinancing?
There’s no one easy answer to this question, because the “best” way depends on your personal financial situation and how much cash you need access to. That said, Home Equity Lines of Credit (HELOCs) offer unparalleled flexibility when it comes to the amount you withdraw, which could save you from paying back money you didn’t need to borrow in the first place. Personal loans secured with your home’s deed may also be a relatively inexpensive and very flexible option.
Is taking equity out of your house a good idea?
Like any debt, taking equity out of your home could be a good decision or a bad one, depending on what you’re planning to use the funds for and how that action will shape your future finances. For instance, if you plan to use your home equity loan to make home improvements that might increase the property’s value substantially, doing so might be a smart investment. On the other hand, taking out a reverse mortgage — which will decrease your home’s equity over time — to go on a lavish vacation might be less advisable.
Photo credit: iStock/boggy22
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.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*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.
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.
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.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
²To obtain a home equity loan, SoFi Bank (NMLS #696891) may assist you obtaining a loan from Spring EQ (NMLS #1464945).
All loan terms, fees, and rates may vary based upon individual financial and personal circumstances and state.
You may discuss with your loan officer whether a SoFi Mortgage or a home equity loan from Spring EQ is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit brokered through SoFi. Terms and conditions will apply. Before you apply for a SoFi Mortgage, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and loan amount. Minimum loan amount is $75,000. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria.
SoFi Mortgages originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org). Equal Housing Lender. SoFi Bank, N.A. is currently NOT able to accept applications for refinance loans in NY.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.
Buying a home in Alaska is increasingly challenging for residents, as home prices are higher than during their 2022 and 2023 peaks and mortgage rates have risen by more than 50 percent in the past six years, according to a new study by the Alaska Housing Finance Corporation (AHFC).
Read more: What Is Mortgage Refinancing? How Does It Work?
Between 2018 and 2024, the average principal and interest payment for homes purchased in Alaska increased by 52 percent, the study released on June 19 found. Newsweek contacted AHFC for comment by phone on Wednesday morning.
Higher mortgage rates are likely to be another factor in making homes unaffordable for many aspiring buyers in the state, on top of relatively high home prices.
A summer view of large wooden residential houses in Ketchikan, Alaska. Between 2018 and 2024, mortgage rates rose by more than 50 percent in Alaska, according to a recent study. A summer view of large wooden residential houses in Ketchikan, Alaska. Between 2018 and 2024, mortgage rates rose by more than 50 percent in Alaska, according to a recent study. Getty Images
According to the latest Redfin data, the median sale price of a home in Alaska was $388,400 in May, up 2.2 percent compared to a year earlier. In May 2022, it was $363,000. Anchorage, the state’s largest city, was the number one metropolitan area in the state with the fastest-growing sale price, up 3.8 percent in May compared to a year earlier.
Read more: How to Calculate How Much House You Can Afford
Prices are still climbing despite inventory growing significantly in the past year, with 2,230 homes for sale in Alaska in May, up 19.8 percent year-over-year. Newly listed homes were up 21.3 percent compared to a year earlier. But the average month of supply is only two months—far from the six months that is considered enough for the market to turn in favor of buyers.
The situation isn’t any easier for people renting in the state. Since 2018, average rents have increased by 24 percent, reaching an average of $1,325 statewide in 2024, up from $1,250 a year earlier.
All seven communities analyzed by the AHFC experts saw rents increases, including the Municipality of Anchorage (+7.84 percent), Fairbanks North Star Borough (+4.17 percent), Juneau (+3.85 percent), Kenai Peninsula Borough (+4.71 percent), Ketchikan Gateway Borough (+8.41 percent), Kodiak (+20.83 percent), and Matanuska Susitna Borough (+6.38 percent).
Daniel Delfino, the director of planning and program development for AHFC, told Alaska News Source that the housing situation in Alaska is complicated, with “a lot of things moving at the same time.”
“We don’t have a ‘it’s this’ or ‘it’s that’ answer anymore to some of the housing challenges that people are facing,” Delfino said. “It’s an expensive place to build, Alaska. Most of our communities are expensive to build, and before the pandemic and the challenges after the pandemic, inflation and interest costs of land made those challenges harder.”
Are you an Alaska resident trying to get a mortgage, or struggling to buy a home? Have you been affected by the recent increases in mortgage rates? Tell us about your experience by contacting [email protected].
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Bank reserves refer to the amount of funds a financial institution must have on-hand at any given time. These reserves are a percentage of its total deposits set aside to fulfill withdrawal requests, and comply with regulations and can also provide a layer of trust for account holders.
Bank reserves act as assurance to depositors that there is always a certain amount of cash on deposit, so the scenario mentioned above doesn’t happen. No one wants to ever withdraw some cash and be left empty-handed. As a consumer with a bank account, it can be important to understand the role bank reserves play in the financial system and the economy.
What Are Bank Reserves?
Bank reserves are the minimum deposits held by a financial institution. The central bank of each country decides what these minimum amounts must be. For example, in the United States, the Federal Reserve determines all bank reserve requirements for U.S. financial institutions. In India, as you might guess, the Reserve Bank of India determines the bank reserves for that country’s financial institutions.
The bank reserve requirements are in place to ensure the financial institution has enough cash to meet financial obligations such as consumer withdrawals. It also ensures that financial institutions can weather historical market volatility (that is, economic ups and downs).
Bank reserve requirements are typically a percentage of the total bank deposit amounts determined by the Federal Reserve Board of Governors. Financial institutions can hold their cash reserves in a vault on their property, with the regional Federal Reserve Bank, or a combination of both. This way, the financial insulation will have enough accessible funds to support their operational needs while letting the remaining reserves earn interest at a Federal Reserve Bank.
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How Do Bank Reserves Work?
Bank reserves work to ensure that a certain amount of cash, or percentage of overall deposits, is kept in a financial institution’s vault.
Suppose you need to withdraw $5,000 to purchase a new car. You understand savings account withdrawal limits at your bank and the amount you need is within the guidelines, so you head to your local branch. When you arrive, you’re told they don’t have enough money in their vault to meet your request.
This is what life could be like without bank reserves. The thought of not being able to withdraw your own money might be upsetting, worrisome, and deeply inconvenient. To prevent this kind of situation is exactly why banks must have a certain percentage of cash on hand.
In addition to ensuring consumers have access to their money, bank reserves may also aid in keeping the economy functioning efficiently. For example, suppose a bank has $10 million in deposits, and the Federal Reserve requires 3% liquidity. In this case, the bank will need to keep $300,000 in its vault, but it can lend the remaining $9.7 million to other consumers via loans or mortgages. Consumers can use this money to buy homes and cars or even send their children to college. The interest on those loans is a way that the bank earns money and stays in business.
Bank reserves are vital in helping the economy control money supply, interest rates, and the implementation of what is known as monetary policy. When the reserve requirements change, it says a lot about the economy’s direction. For example, when reserve requirements are low, banks have more opportunity to lend since more capital is at their disposal. Thus, when the money supply is plentiful, interest rates decrease. Conversely, when reserve requirements are high, less money circulates, and interest rates rise.
During inflationary periods, the Federal Reserve may increase reserved requirements to ensure the economy doesn’t combust. Essentially, by decreasing the money supply and increasing interest rates, it can slow down the rate of investments.
There are two types of bank reserves: required reserves and excess reserves. The required reserves are the percentage of deposits the institution must have in cash holdings and deposit balances to abide by the regulations of the Federal Reserve. Excess reserves are the amount over the required reserve amount that the institution holds.
Excess reserves can provide a larger safety net for the financial institution and enhance liquidity. It can also contribute to a higher credit rating for institutions. On the other hand, excess reserves can also result in losing the opportunity to invest the funds to yield higher returns. In other words, since the extra money is sitting in cash, it will not generate the same returns it might yield by lending or investing in the market.
Recommended: What Is Quantitative Easing?
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History of Bank Reserves
Reserve requirements first came about in 1863 during the passing of the National Bank Act. This act intended to create a national banking system and currency so money could flow easily throughout the country. At this time, banks had to hold at least 25% reserves of both loans and deposits. Bank reserves were necessary to ensure financial institutions had liquidity and money could continue circulating freely throughout the nation.
But despite the efforts to establish a robust banking system, banking troubles continued. After the panic of 1907, the government intervened, and in 1913, Congress passed the Federal Reserve Act to address banking turmoil. The central bank was created to balance competing interests and foster a healthy banking system.
Initially, the Federal Reserve acted as a last resort and a liquidity grantor when the banks faced trouble. During the 1920s, the Federal Reserve’s role expanded to playing a proactive role in the economy by influencing the credit conditions of the nation.
After the Great Depression, a landmark in the history of U.S. recessions and depressions, the Banking Act of 1935 was passed to reform the structure of the Federal Reserve once again. As part of this act, the Federal Open Market Committee (FOMC) was born to oversee all monetary policy.
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How the 2008 Crisis Impacted Bank Reserves
Prior to the global financial crisis of 2008, financial institutions didn’t earn interest on excess reserves held at a Federal Reserve Bank. However, after October 2008, the Federal Reserve was granted the right to pay interest to banks with excess reserves. This encourages banks to keep more of their reserves. The Board of Governors establishes the interest on reserve balances (IORB rate). As of July 2024, the IORB was 5.4%.
Then, after the recession subsided in 2009, the Federal Reserve turned its attention to reform to avoid similar economic disasters in the future.
Recommended: Federal Reserve Interest Rates, Explained
How Much Money Do Banks Need to Keep in Reserve?
Reserve requirements vary depending on the size of the financial institution. As of July 2024, reserve requirements are 0%, where they’ve been since early 2020 and the onset of the COVID-19 pandemic.
Prior to this revision, banks with between $16.9 to $127.5 million in deposits were required to have 3% in reserves, whereas banks over this amount had to have at least 10% in bank reserves.
Recommended: Investing During a Recession
What Is Liquidity Cover Ratio (LCR)?
Bank reserve requirements aside, financial institutions want to ensure they have enough liquidity to satisfy the short-term financial obligations if an economic crisis occurs. This way, they know they will be able to weather a crisis and not face complete bankruptcy. Therefore, financial institutions use the Liquidity Coverage Ratio (LCR) to prevent financial devastation resulting from a crisis.
The LCR helps financial institutions decide how much money they should have based on their assets and liabilities. To calculate the LCR, banks use the following formula:
(Liquid Assets / Total Cash Outflows) X 100 = LCR
Liquid assets can include cash and liquid assets that convert to cash within five business days. Cash flows include interbank loans, deposits, and 90-day maturity bonds.
The minimum LCR should be 100% or 1:1, though this can be hard to achieve. If the LCR is noticeably lower than this amount, the bank may have liquidity concerns and put the bank’s assets at risk.
The Takeaway
Financial institutions must have a certain amount of cash on hand, referred to as bank reserves. These assets are usually kept in a vault on the bank’s property or with a regional Federal Reserve Bank. These cash reserves ensure financial institutions can support consumer withdrawals and withstand a financial crisis.
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FAQ
Are bank reserves assets or liabilities?
Bank reserves are considered an asset since they’re an item the bank owns. Other bank assets can include loans and securities.
How are bank reserves calculated?
Bank reserve requirements are calculated as a percentage of the institution’s deposits. So, if the reserve requirement is 3% for banks with $10 million in deposits, the bank would have to hold $300,000 in its reserves.
Where do banks keep their reserves?
Financial institutions usually keep a certain amount of their cash reserves in a vault to meet operational needs. The remaining amount may be kept at Federal Reserve Banks so the balance can generate interest.
Photo credit: iStock/Diy13
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Best Efforts Trading, DPA Options, Marketing, Dashboard, Online App Tools; Correspondent and Wholesale Products
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Best Efforts Trading, DPA Options, Marketing, Dashboard, Online App Tools; Correspondent and Wholesale Products
By: Rob Chrisman
Wed, Jul 10 2024, 11:48 AM
“The only time I get asked for sex is on application forms.” Ba-dum-ching! Speaking of applications, most lenders will agree that the loan officer should be the first point of contact for a home buyer, not the real estate agent. But over the years real estate agents have done a great job of becoming the starting point of a homebuyer’s quest. But heck, how much house can they afford, what with current rates, homeowner’s insurance, utilities, etc.? Yes, good originators know the psychology of their clients under the “Know your borrower” basic tenant, especially first time home buyers: most homebuyers remain homeowners and the FHFA tells us that the persistence has increased over time across all homeowner demographics like race or ethnicity, regions of the country, and mortgage lending submarkets. (Today’s podcast is found here and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender, uniting the people, systems, and stages of the mortgage process. Hear an interview with attorney Peter Idziak on last week’s Supreme Court vote to overturn the Chevron doctrine that called on judges to rule in favor of government agencies in instances where the law is ambiguous, and its impact on the mortgage industry.)
Lender and Broker Software, Services, and Products
Curious about what’s new in Encompass® by ICE Mortgage Technology®? ICE recently shared an article which dives into new innovations within the platform that are enabling the lending community to improve both productivity and efficiency. Read the full article here.
nCino and Talk’uments team up to provide lenders with multilanguage tools to more effectively reach more borrowers! Talk’uments, the premier digital language and limited English proficiency (LEP) technology provider for the mortgage industry, announced its integration with nCino’s Mortgage Suite technology solution. At a time when emerging markets like LEP continue to grow, this new partnership enhances multi-language resources to nCino’s users to provide borrowers with seamless, multi-language resources from originations to the final closing. Ben Miller, EVP of U.S. Mortgage for nCino, summed it up best. “We are proud to continue pioneering transformation in the financial services industry with the addition of Talk’uments to our Mortgage Solution, using multilanguage tools to help our customers and their applicants understand, access and trust the process and overcome a key challenge in buying a home.” For more information on Talk’uments’ capabilities, visit talkuments.com.
Have you been using expensive third-party tools for sales automation or paying your CRM extra money? Usherpa just changed all that with Pipelines, exciting new functionality that offers built-in, best-practice marketing and lead generation workflows that can easily be customized. Usherpa users get Pipelines at no extra cost and can build as many as they want. “The nation’s top LOs consistently outperform their peers because they have a better sales process. Now, every LO can have a winning process and win more business,” said Usherpa CEO Chris Harrington. Corporate stakeholders can create Pipelines with call scripting and push to their LOs. Usherpa delivers the daily tasks to loan officers via in-platform dashboard, email, and mobile app, and provides detailed reporting on each LO’s usage for management purposes. Schedule a demo with Usherpa to see this groundbreaking new tech.
You know how annoying it is when you have to create an account to buy something online? That’s how “Checkout as Guest” was born. Now imagine how annoyed your prospective borrowers are when you force an account on them as the FIRST STEP of an online mortgage application. So annoyed they might not do it? Probably, and it’s costing you business. Check out the world’s most borrower-friendly online application with LiteSpeed. Beautifully integrated with Encompass® by ICE Mortgage Technology™, no more account creation headaches or lost business.
“Are you trying to do more with less? Leverage a business intelligence platform to see how you’re performing in vital production and operational areas in comparison to your peers and highlight where you can reduce costs. For half the cost of a full-time employee, with RM Analyze + Peer View Ops you’ll gain access to a strong bench of mortgage industry experts and a suite of pre-built dashboards completely customizable to your needs. Our latest enhancements allow you to schedule email reports, so the most relevant KPIs are delivered straight to your inbox on a regular cadence so you don’t miss a beat. Use our valuable industry data to understand where to focus your efforts to be more effective and achieve sustainable growth. Empower your efforts, contact Spencer Smoot today!”
“With Total Expert, it’s significantly faster and easier for our loan officers to develop outreach emails and find flyers and social media posts for the individualized marketing they do on behalf of Castle & Cooke Mortgage,” said Scott Kirkessner, Castle & Cooke Mortgage Vice President of Marketing and Business Development. And that’s just scratching the surface of how Total Expert is helping Castle & Cooke build deeper customer relationships, uncover more loan opportunities, and drive growth in a stubborn market. Read our full Castle & Cooke Mortgage case study to learn more.
During Disability Pride Month in July, Down Payment Resource challenges lenders to help more home buyers with disabilities and their family caregivers qualify for a mortgage with the help of down payment assistance. Eighteen programs within DPR’s extensive database of 2,300+ offer funds ranging from $2,000 to $117,000 to help people with disabilities fund down payments, closing costs, pay down their interest rate or make accessibility modifications. Many can be combined with other homebuyer assistance programs, providing individuals with disabilities with additional financial support and resources. DPR can help you unleash this power with its suite of lender tools that provide easy access to DPA programs in your footprint. Schedule a demo today to learn more.
Wholesale and Correspondent Products
“Citi Correspondent Lending is thriving in 2024! While remaining dedicated to the support of diverse markets and continued responsible, sustainable growth, we’re seeing record production volume. With a growing product suite that includes expansion of our Community Lending platform, a robust set of CRA incentives, and a quality-focused pre-purchase loan review process, Citi is well positioned to help you grow your business. Complete our Prospective Correspondent Questionnaire or schedule some time with a Citi Account Executive at the Western Secondary Market Conference coming up next month. We would welcome the opportunity to chat with you about all that Citi Correspondent Lending has to offer.”
LoanStream wants you to heat up your pipeline this summer with specials on Prime with 25 BPS price improvement on all Conventional loans >= to $400,000 including High Balance/Super Conforming and 25 BPS Price Improvement on FHA/VA/MaxONE (DPA) loans 620+ FICO (excludes CalHFA), plus 50 BPS price improvement on Non-QM Purchase (excludes Non-QM select), and a 25 BPS price improvement on all Closed End Seconds. Restrictions apply, specials are valid for loans locked 7/1/24 through 7/31/24. Talk with your AE for details. Non-QM Specials also available through our Correspondent lending channel, Home – LoanStream Mortgage Correspondent (lscorrespondent.com), contact your Regional Sales Executive for more information. Plus, make a Splash by closing more Non-QM loans, join LoanStream’s NEW Bank Statement and P&L Webinar. Reserve your spot for this informative webinar for you or your entire team.
FHA, VA, Government Program and Policy Updates
As the USDA Mortgage Recovery Advance (MRA) is a federal lien, USDA Rural Development issued a bulletin on 07/03/2024 providing guidance for servicers completing foreclosures impacted by the 8th Circuit “Show Me” ruling.
USDA is offering up “Top Tips for Successfully Navigating Appraisal and Property Requirements” tomorrow. “Don’t miss this LIVE, virtual training opportunity! This training is available at no cost to all USDA Single Family Housing Guaranteed Loan Program (SFHGLP) lenders and real estate agents.”
The Federal Housing Administration (FHA) is announced updates to its FHA Connection (FHAC) system and an industry stakeholder briefing webinar as part of the implementation of its Appraisal Review and Reconsideration of Value Updates Mortgagee Letter (ML) 2024-07 published on May 1, 2024. The ML established standards for appraisal reviews and FHA’s Reconsideration of Value (ROV) policies, including requirements for a process by which borrowers may request an ROV if they identify a problem with the appraisal. The ML required mortgagees to offer a borrower-initiated ROV process meeting certain minimum requirements, including delivery of disclosures to borrowers at loan application and upon delivery of the appraisal with instructions on how to request an ROV.
Recall that the FHA issued a proposal, in the form of a draft mortgagee letter, to update its origination defect taxonomy to include fraud or misrepresentation involving sponsored third-party originators. The FHA suggested that if the FHA determines a mortgagee knew or should have known that an employee of the mortgagee or its third-party originator was involved in fraud or should have questioned red flags in a loan file, it will be considered a Tier 1 severity and subject to penalties of that severity level. “Based on this update, FHA will seek life-of-loan indemnification from mortgagees when there is evidence of fraud or material misrepresentation involving a sponsored TPO, regardless of whether FHA identifies specific red flags that should have been questioned at underwriting.”
FHA is updating guidelines to expand and clarify requirements and expectations for gift funds transferred prior to settlement and gift funds transferred at settlement. These changes may be implemented immediately but are required for casefiles assigned on or after August 19, 2024. Pennymac is aligning with these changes effectively immediately, view Pennymac Announcement 24-66 for more information.
Capital Markets
An exclusive Conforming investor is joining the MAXEX loan exchange next week, but that’s just the start. On July 15, MAXEX sellers will have access to multiple investors offering up to 90 percent LTV for agency-eligible second home loans, and 85 percent LTV on NOO loans, without being subject to punitive Agency LLPAs. MAXEX offers best efforts flow trading, mandatory bids and works with many popular hedging platforms to give you plenty of ways to trade. Take a closer look at the MAXEX Conforming program and get better execution today.
No one owns a crystal ball… Without any market-moving economic data yesterday, Fed Chair Powell’s semi-annual testimony before the U.S. Senate took center stage. His appearance was a rather lackluster affair, as he was careful not to send any signals about the timing of future monetary policy actions. Sticking to the recent Fed script, he stated that while he was encouraged by recent signs of disinflation, there needs to be further evidence before the FOMC pivots towards a more accommodative monetary policy. He was careful not to offer a timeline for rate cuts, which investors are currently betting will begin in September.
Overall, inflation remains on a downward trajectory through the month-to-month noise. It dovetails nicely with the cooling employment picture in the overall narrative that the Fed is almost ready to cut rates. Average employment growth over the last three months slowed to the lowest since the start of 2021, there has been a sharp decline in job openings this year, and a growing number of people filing for unemployment benefits.
Measures of consumer confidence remain low and are tied largely to uncertainty surrounding this year’s presidential election. Small business sentiment remains sour amid a downshift in economic momentum. We learned yesterday that the NFIB Small Business Optimism Index improved modestly in June. However, high uncertainty and poor economic outlooks have cemented the index below its 50-year average.
Chair Powell is back on the Hill today, this time before the House Financial Services Committee. Other Fed speakers around the country include Governor Bowman, Chicago President Goolsbee, and Governor Cook. The economic calendar began with mortgage applications decreasing 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association. Last week’s results included an adjustment for the July 4th holiday. Later today brings wholesale inventories and sales and a couple of Treasury auctions that will be headlined by $39 billion reopened 10-year notes. We begin the day with Agency MBS prices a few ticks better than Tuesday’s close, the 10-year yielding 4.28 after closing yesterday at 4.30 percent, and the 2-year down to 4.61.
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Borrowing against home equity can put cash in your hands when needed. But how soon can you pull equity out of your home after purchasing it?
You might be surprised to learn that there’s no minimum waiting period to access your home equity. You’ll need to meet a lender’s other conditions and requirements to qualify for a loan against your equity, but you can decide when it makes sense to borrow against your home.
What Is Home Equity?
How is home equity explained? Equity is the difference between your home’s value and the remaining amount due on the mortgage. In simpler terms, equity represents the portion of the home that you own.
Home equity accumulates as your mortgage balance goes down and your property’s value goes up. As of March 2024, the average equity value among 48 million U.S. homeowners with mortgages was $206,000, according to the ICE Mortgage Monitor.
It’s possible to have negative equity in a home. That scenario can occur when you owe more on the mortgage than the home is worth. This is also referred to as being upside down or underwater on the mortgage. That’s important to know if you’re calculating how home equity counts in your net worth.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
Ways to Access Home Equity
There are several options for borrowing against your equity. The most common are a home equity loan, a home equity line of credit, and a cash-out refinance.
Home Equity Loan
A home equity loan allows you to withdraw your equity in a lump sum. Home equity loans typically have fixed interest rates and your repayment term may last up to 30 years. A home equity loan is a type of second mortgage that doesn’t affect the terms of the loan you took out to purchase the property. Your home serves as collateral for the loan. If you default on the payments, the lender could initiate a foreclosure proceeding against you.
Home equity loans offer flexibility since you use the money any way you like. Some of the most common uses for home equity loans include:
• Home repairs and maintenance
• Home improvements
• Debt consolidation
• Medical bills
• Large purchases
Interest on a home equity loan may be tax-deductible if the proceeds are used to “buy, build, or substantially improve the residence,” according to IRS tax rules. This rule applies through the end of 2025.
Home Equity Line of Credit
A home equity line of credit (HELOC) is a revolving line of credit that you can draw against as needed. HELOCs tend to have variable interest rates, though some lenders offer a fixed-rate option.4 When you take out a HELOC, you have a draw period in which you can access your line of credit and a repayment period when you pay it back. You pay interest only on the portion of your credit line that you use.
HELOCs can be used for the same purposes as a home equity loan. A HELOC may offer a lower interest rate than a home equity loan, depending on the overall rate environment. However, your payment isn’t always predictable if you have a variable interest rate.
Cash-Out Refinance
Cash-out refinancing replaces your existing mortgage loan with a new one while allowing you to withdraw some of your equity in cash at closing. A cash-out refinance loan isn’t a second mortgage; it takes the place of your original purchase loan. The balance due is higher to account for the amount of equity you withdraw in cash.
A cash-out refinance loan may have a fixed rate or an adjustable rate. Fixed-rate loans typically have repayment terms extending from 10 to 30 years. If you choose an adjustable-rate mortgage (ARM), you might be able to select a 3/1, 5/1, 7/1, or 10/1 ARM.
The first number represents how long you have to enjoy a fixed rate on the loan; the second number is how often the rate adjusts on an annual basis. So, a 10/1 ARM would have a fixed rate for the first 10 years. Then the rate would either increase or decrease once a year annually for the remainder of the loan term.
Requirements to Tap Home Equity
Qualification requirements for a home equity loan, HELOC, or cash-out refinance loan vary by lender. In most instances, you’ll need to have:
• A credit score of 660 or better
• At least 20% equity, though some lenders may go as low as 15%
• A debt-to-income (DTI) ratio below 43%
Essentially, lenders want to make sure that you have sufficient income to make the payments on a home equity loan and that you’re likely to pay on time.
Lenders use your combined loan-to-value (CLTV) ratio to measure your equity. Your loan-to-value (LTV) ratio measures your home’s mortgage value against the property’s appraised value. The current loan balance divided by the appraised value equals your LTV.8 Combined LTV uses the balance of all loans, including first and second mortgages, to measure equity. This number can tell you how much of your equity you can borrow. Most lenders look for a CLTV in the 80% to 85% range, though it’s possible to find lenders that allow 100% financing.
Recommended: Understanding Mortgage Basics
Factors That Impact Timing
How soon can you get a home equity loan? Technically, right away. But the more important question to ask is whether it makes sense to access your equity sooner or later.
If you’ve just purchased a home, you may not have much equity built up yet. You may need to wait a few months for some equity to build up before borrowing against it. Your choice of lender could also make a difference. If a lender requires a home equity waiting period, you might have to wait until it ends to borrow.
Here are some questions to ask when deciding if the time is right to withdraw equity:
• What will you use the money for?
• How much do you need to borrow?
• Which borrowing option makes the most sense?
• How much can you afford in additional monthly mortgage payments?
Risks of Borrowing Too Soon
Just because you can get a home equity loan or HELOC right away doesn’t mean you should. There are some risk factors to consider if you’re thinking about an equity withdrawal.
• Having less equity in the home can mean a higher LTV, which could make it harder to qualify.
• Should your home’s value drop after borrowing, you could end up underwater on the mortgage.
• If you only recently bought the home, you may not have a firm idea of your maintenance and utility costs, which could make it difficult to estimate how much you can afford in additional mortgage payments.
• Your credit score may need time to recover so you can qualify for the best rates if you just signed off on a purchase mortgage loan.
Using a home equity loan or HELOC calculator can help you estimate what your payments might be. You can then add that to your existing mortgage payment to get an idea of what you’ll pay overall and what’s affordable for your budget.
Alternative Options
If you need to borrow money for home repairs, home improvements, or any other purpose, your equity isn’t the only option. You might consider these alternatives instead.
• Personal loan. A personal loan allows you to borrow a lump sum and repay it with interest over time. Personal loans are typically unsecured, meaning you don’t need collateral and your home isn’t at risk if you’re unable to pay for any reason.
• Credit card. Credit cards can be a convenient way to pay for large purchases, home improvements, or emergency expenses. Choosing a card with a 0% introductory APR on purchases can give you time to pay them off interest-free.
• 401(k) loan. If you have a retirement plan at work, you might be able to borrow against it. However, that’s usually not ideal since any money you take out won’t benefit from compounding interest, which could shortchange your retirement.
• Home equity conversion mortgage (HECM). Eligible seniors 62 and older can get a home equity conversion mortgage to withdraw equity. You can also use an HECM for purchase loan to buy a home. A home equity conversion mortgage requires no payments as long as the homeowner lives in the property, with the balance due when they sell the home or die. Compare an HECM vs. reverse mortgage to see if you’re eligible.
You might also ask friends and family for a loan or sell things you don’t need to raise funds. Taking on a side hustle or part-time job could also bring in extra income so you don’t need to borrow.
The Takeaway
Withdrawing equity from your home can give you access to cash when you need it. In addition to getting the timing right, it’s also important to shop around and find your ideal lender. Comparing rates, terms, credit score requirements, and CLTV requirements can help you find the best loan for your needs.
SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 95% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.
Unlock your home’s value with a home equity line of credit brokered by SoFi.
FAQ
How long after purchasing a home can you pull out equity?
There’s generally no set period for how soon you can take equity out of your home after purchasing it. Your ability to borrow can depend on your credit scores, debt-to-income ratio, and how much equity you’ve accumulated in the home.
Are there fees to tap home equity?
Home equity loans, HELOCs, and cash-out refinance loans can all have closing costs just like a purchase loan. Some of the fees you’ll pay can include appraisal fees, inspection fees if an inspection is required, attorney’s fees, and recording fees. You’ll need to pay certain fees out of pocket but your lender may allow you to roll other closing costs into the loan.
How fast can I get a home equity loan?
It’s possible to get a home equity loan as soon as you purchase your home. You’ll need to meet a lender’s minimum requirements to qualify for home equity financing. Getting approved may be challenging if you have a low credit score or only a small amount of equity in the home.
Photo credit: iStock/DjelicS
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.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*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.
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.
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
²To obtain a home equity loan, SoFi Bank (NMLS #696891) may assist you obtaining a loan from Spring EQ (NMLS #1464945).
All loan terms, fees, and rates may vary based upon individual financial and personal circumstances and state.
You may discuss with your loan officer whether a SoFi Mortgage or a home equity loan from Spring EQ is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit brokered through SoFi. Terms and conditions will apply. Before you apply for a SoFi Mortgage, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and loan amount. Minimum loan amount is $75,000. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria.
SoFi Mortgages originated through SoFi Bank, N.A., NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org). Equal Housing Lender. SoFi Bank, N.A. is currently NOT able to accept applications for refinance loans in NY.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.