While not all of Gen Z may be financially ready or old enough to buy a home, many are exploring their options, making it essential to understand the basics of real estate to navigate these decisions wisely. Here’s our guide to the basics you should know about the home-buying process, once you’re ready to make the plunge.
When Is The Best Time To Buy?
Choosing the best moment to buy might be difficult. The financial turmoil of the 2007-2008 housing crisis and the dangers of purchasing a home at the wrong time —and with inadequate funds—are vivid memories for a large number of Millennials and Gen Zers. But instead of letting that deter you from making a purchase, it’s crucial to take some time to consider your unique situation and gain as much knowledge as you can about the process.
The best time to buy a home largely comes down to individual circumstances and your financial readiness. Ensure you have a stable income, manageable debt levels, and a good credit score before browsing for homes.
You’ll also want to stay on top of local market conditions. Some useful questions to ask a real estate professional include how recent trends in interest rates might impact mortgage affordability, what the current competition is like for homes in your desired area, and what the typical closing costs and timelines are for home purchases in your city. These factors can all influence the timing and success of your home purchase.
Employment History
From the standpoint of the lender, as well as to make sure you’ll be prepared for the financial demands of homeownership, a consistent work history is crucial. Even though a lot of lenders demand two years of prior work experience, keep in mind that a college education can contribute to that ideal pattern. Past tax returns and profit and loss statements are necessary for self-employed or gig workers to prove a steady income.
Credit Scores
Make sure your credit score is as high as it can be if you haven’t already. Get copies of your credit report as soon as possible from all of the main reporting organizations. Pay your debts off, pay your obligations on time, and make sure your credit report is accurate.
Evaluate Your Expectations
A good real estate agent will help you determine what is essential and what is optional. Recall that your first house is just a place to start when building equity; it doesn’t have to be your permanent residence. Being flexible with your expectations and keeping an open mind can give you an advantage when looking for a home. You could also think about less expensive places, out of big cities and wealthier communities. This will likely decrease your cost of living as well, even by just a bit. Even a slightly lower monthly mortgage payment can make a significant difference in your budget and overall affordability.
Tax-Free Savings Account
Invest in a TFSA to increase your tax-free savings for a down payment on a house. There is no tax on any interest, dividends, or capital gains received within the account. To increase your savings in a tax-efficient manner, take advantage of employer-sponsored retirement programs like RRSPs (Registered Retirement Savings programs). On payday, schedule automatic transfers from your bank account. Ten percent of your wage, for example, is a good starting point, and you can raise it gradually over time. By doing this, you’ll be able to monitor your development and keep the money for other needs.
Are you looking to enter the real estate market this summer? Give us a call today! One of the experienced agents at Zoocasa will be more than happy to help you through the exciting home-buying process!
Looking for your dream home?
Contact us today to talk to a Realtor in your area
And with home prices rising more than double the pace of inflation since the 1960s, making the place you live look great is as important as ever, whether it’s a rental or your expensive dream abode.
Here are the 10 decor mistakes she hates to see in other people’s homes.
Advertisement
Moreira said she always notices when a room has a rug that’s too small
“Select a rug as big as possible for the space, allowing it to anchor the furniture in the room,” Moreira said. “This will also make the space feel bigger and help with the acoustics.”
Your rug should also be flat enough that it fits under the gap of doors as they swing open and closed, she added.
Nightstands should never be way taller or shorter than the bed they’re next to
Your nigthstand shouldn’t be much lower or higher than your mattress.
Woko / 500px / Getty Images
She also dislikes when nightstands are not the right size for the bed they’re anchoring
“The height of the nightstand should be within 2 inches from the top of your mattress,” Moreira told BI. “This allows for easier reach and looks more proportionate.”
Advertisement
A blank ceiling is a missed opportunity
Always consider the ceiling when designing your space.
“Adding wallpaper or contrast paint to the ceiling allows you to add height, depth, and draw the eye up,” she said.
Related stories
The ceiling is also an opportunity to add another texture to the room.
By thinking of light fixtures only as functional, you’re missing out on decor opportunities
A lamp isn’t just a light source — it can also be a decorative element in your space.
sellbetter/Getty Images
According to Moreira, thinking of light fixtures strictly as functional is a big mistake.
Advertisement
“Light fixtures are a great way to add an artful element to a room,” she told BI. Choose fixtures that are sculptural, but also complement the architecture.
By hanging drapery hardware too low, you’re sabotaging your own space
Draperies should be at a height that allows them to just kiss the floor, the designer explained. This gives them a very custom look.
“The drapery rod should be hung as high up as possible, close to the ceiling,” Moreira said. “This adds height to the window.”
Repeating too many of the same wood tones can make the room look one-dimensional
It’s not ideal to buy furniture in matching wood tones when decorating a room, Moreira told BI.
Advertisement
In fact, your furniture should never look like you purchased it all at once or that it’s part of one set.
“Consider staying within the same hue but playing with the tone or texture of the woods to add dimension and look curated,” the designer said.
A boring powder room is a missed opportunity to make a statement
A funky mirror can give a bathroom personality.
Fiordaliso/Getty Images
“A powder room is a great place to get creative, take risks, and go bold,” she told BI. “Use wallpaper, paint the millwork, and/or the ceiling.”
Special details, like a really cool light fixture or an interesting mirror, can make a statement and be something that your guests will talk about.
Advertisement
A space with warm and cool light temperatures will look busy
The designer hates to see warm- and cool-toned light bulbs within a single space.
“It’s important to make sure the color temperature of the light bulbs or architectural lights are all the same within the space,” Moreira said. “Otherwise, it will look like the lights were an afterthought and look very busy.”
Buying the wrong-sized furniture for a space can make it feel too empty or crowded
The scale of your furniture is so important. When shopping, she said, consider the floor space you’re working with as well as the architecture of the room.
“You should have good traffic flow within the space, but it should never feel like it’s missing a piece or feel empty,” Moreira told BI.
Advertisement
Try to avoid completely matching metal finishes within a space
“Many people are very afraid of mixing metals and prefer all of the finishes to match exactly,” she said. “I always encourage my clients to mix metals.”
This allows the space to evolve over time and gives you more flexibility when introducing new items into the space.
Mortgage rates have been elevated as of late. Driven by the Federal Reserve’s attempts to curb inflation with federal funds rate hikes, the average 30-year mortgage rate peaked at 7.79% on October 26, 2023, according to the Federal Reserve Bank of St. Louis. And, while mortgage rates have seen quite a bit of movement since, they seem to be cooling.
In fact, the current average 30-year mortgage rate is at a 2-month low. And, that could be a signal that now is the time to buy a new home. After all, low mortgage rates typically result in lower monthly payments and a lower overall cost of homeownership.
Accounting for the new change in rates, we asked multiple experts if now is the right time to buy a house. And, those we asked agreed that it could be. Find out why below.
Compare mortgage rates among leading lenders now.
Why you may want to buy a house now
There are multiple factors to consider when you decide if it’s time to buy a new home. Here’s why now could be a smart time to act, according to the experts we spoke with:
Lower mortgage rates can give you more options
Lower mortgage rates can decrease the cost of homeownership. “Mortgage rates have decreased since the highs in late 2023,” explains Ronnie Thompson, investment advisor representative and owner of True North Advisors, a financial planning firm. “The interest costs on a mortgage for a home are currently at a two-month low.”
And, a reduced cost of ownership could open the door to more options. “Lower interest rates improve housing affordability and increase buying power,” explains Michael Ross, area manager at Mutual of Omaha Mortgage. That increased buying power may mean you have access to options that you couldn’t afford previously.
But, lower mortgage rates aren’t the only reason now may be the time to shop for a new home.
Take advantage of today’s reduced rates by locking in your mortgage now.
Increasing inventory could lead to lower prices
Supply and demand play a meaningful role in the price of just about anything – homes are no different. And, inventories are increasing in some markets, which can work in your favor.
“Many markets are experiencing longer market times and higher inventory levels,” says Ross. This means buying now could result in “more choices and potentially better negotiating power.”
“Inventory for homes is increasing, which has led to them staying on the market longer and, in turn, market prices are decreasing,” says Thompson in agreement with Ross.
Further potential negotiation leverage
The average homeowner in the United States has more than $200,000 in tappable home equity. And, that high equity average may mean that now is the time to buy.
“Many homes are equity rich,” explains Dutch Mendenhall, CEO of RADD Companies, a conglomerate of financial services companies. He says that high amounts of equity could provide negotiation leverage.
After all, a homeowner may be more likely to negotiate the selling price of their home if they have quite a bit of equity to work with. Conversely, there may be less room for negotiations if the homeowner owes nearly what they list the house for.
Buying a home isn’t just a financial move
While all the factors above suggest that it’s a good time to buy a home, you should consider more than finances when you house hunt. “I always tell clients that buying what should be your ‘dream home’ is more than a financial move,” explains Steve Azoury, ChFC and owner of the financial planning firm, Azoury Financial. “You are there every day of your life, and you want to love it, not just like it.”
So, it may be a good idea to put interest rates, inventory levels and equity levels aside. If you find the house of your dreams, it may be time to buy – regardless of the current market conditions. “There’s really no perfect time to buy a house,” says Azoury. “But if you purchase a new home now, you’ll likely want to refinance if and when interest rates go down.”
Get pre-approved for a mortgage to make an offer on your dream home.
The bottom line
30-year mortgage rates are currently at a 2-month low. That, combined with increasing inventories and higher equity amounts could make now a good time to buy a home – especially if you consider the financial aspects of doing so. But, buying a home isn’t solely a financial decision. It’s also important to ensure that the home you purchase is one you’d like to live in.
Find out how affordable your home purchase could be now.
Joshua Rodriguez
Joshua Rodriguez is a personal finance and investing writer with a passion for his craft. When he’s not working, he enjoys time with his wife, two kids and two dogs.
The home-buying process can be especially nerve-wracking if you’re worried about having less-than-ideal credit. Luckily, some lenders will consider applicants with bad credit — or no credit at all.
CNBC Select rounded up the top lenders that consider applicants with credit scores lower than the typical 620 requirement. We evaluated each based on the types of loans offered, customer support, the required minimum down payment amount, and other factors (see our methodology below).
Keep in mind that while you may be approved for a mortgage with a lower credit score, you’ll likely receive an interest rate on the higher end of the lender’s rate range.
Best mortgage lenders for bad credit
Best for flexible terms
Rocket Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and jumbo loans
Terms
15- and 30-year conventional loans, 30-year VA and FHA loans, custom mortgages with fixed-rate terms from 8 to 29 years.
Credit needed
Typically requires a 620 credit score but will consider applicants with a 580 as long as other eligibility criteria are met.
Minimum down payment
3.5% if moving forward with an FHA loan
Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards
Pros
Largest home lender in the U.S.
Offers 1% down conventional mortgage
High scores for customer satisfaction
Shorter-than-average closing time
Rebate of up to $10,000 for buying with Rocket Homes
Cons
No USDA mortgages, construction loans or HELOCs
Hard credit check required for customized rate
Higher origination fees than competition
No retail branches
Who’s this for? Rocket Mortgage stands out if you’re seeking flexibility. While most lenders tend to require a minimum credit score of 620, Rocket Mortgage accepts applicants with credit scores as low as 580.
Standout benefits: Rocket Mortgage offers a free program called Fresh Start to help potential applicants boost their credit scores before applying. Its proprietary low down payment option, the ONE+ mortgage, allows borrowers to put as little as 1% down.
[ Jump to more details ]
Best for veterans
Navy Federal Credit Union
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans, adjustable-rate mortgage
Terms
10 – 30 years
Credit needed
Not disclosed but lender is flexible
Minimum down payment
0%; 5% for conventional loan option
Terms apply.
Pros
0% downpayment for most loan options
flexible repayment terms ranging from 10 years to 30 years
Offers refinancing, second-home financing and loans for investment properties
No PMI required
Fast pre-approval
RealtyPlus program allows applicants to receive up to $9,000 cash back
Cons
Must be a Navy Federal Credit Union member to apply
Who’s this for? Navy Federal Credit Union is ideal for current or retired members of the Armed Forces with a Navy Federal Credit Union membership (immediate family members are also eligible). While this lender doesn’t disclose its required minimum credit score, it works with members to analyze their circumstances and find the right mortgage fit for them, making Navy Federal Credit Union a potentially more flexible lender if you have a lower credit score.
Standout benefits: You can use the RealtyPlus program to buy a home and receive up to $9,000 in cash back. Private mortgage insurance (PMI), is also not a requirement for a low down payment on a mortgage through this lender.
[ Jump to more details ]
Best for no PMI
CitiMortgage®
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and Jumbo loans
Terms
15 – 30 years
Credit needed
Minimum down payment
Terms apply.
Pros
Citi’s HomeRun Mortgage program allows for a downpayment as low as 3%
Citi’s Lender Assistance program gives eligible homebuyers a credit of up to $5,000 to use toward closing costs
Ability to choose between fixed-rate and adjustable-rate mortgages
New and existing Citi bank customers can qualify for closing cost discounts based on their account balance
HomeRun mortgage program allows for a downpayment of less than 20% without PMI
Provides homeownership education and counseling
Cons
No options for a 0% downpayment
Existing customers need high account balances to receive some of the highest interest rate discounts
Who’s this for? CitiMortgage is great if you want to put less than 20% down but avoid the monthly PMI bill. If you apply for a mortgage through Citi’s HomeRun program, you can make down payments as low as 3% without PMI. If you’ve already purchased your home, this program can also be used to refinance your mortgage.
Standout benefits: Existing Citi customers with an account balance between $1 and $49,999.99 can be eligible for a $500 closing credit. Those with higher balances can receive an interest rate discount. Qualified borrowers can use the Lender Paid Assistance program to get up to $7,500 in credits toward closing costs. Homeownership counseling and education are also available.
[ Jump to more details ]
Best for no credit score requirement
Guild Mortgage
Annual Percentage Rate (APR)
Fixed-rate and adjustable-rate available, apply online for rates.
Types of loans
Conventional loans, construction loans, FHA loans, VA loans, USDA loans and Jumbo loans
Terms
15-year to 30-year
Credit needed
Some loans require a 620 credit score, some require a 540 credit score or no credit score at all.
Minimum down payment
0% if moving forward with a USDA loan; 0% if moving forward with an Arrive Home™ or Zero Down mortgage (a 3% to 5% down payment is financed through a second mortgage with these options) ; 1% on conventional loans for some qualifying borrowers
Pros
Offers several low down payment mortgage options available
Wide variety of loans
Accepts applicants with credit as low as 540 or no credit at all with some loans
Provides lots of information online about the homebuying process
Robust brick-and-mortar and online presence
Cons
Rates are not available to view on the website
Mortgages may not be available for every home type
Who’s this for? Guild Mortgage can provide options even if you don’t have a credit score or have a score as low as 540 — a lower threshold than the typical 620 credit score lenders usually require to even look at an applicant. Instead, Guild uses proof of on-time payments such as rent checks, utility bills and insurance payments to verify an applicant’s credit. It also boasts a variety of loans and down payment assistance programs if you want to make a small down payment.
Standout benefits: Guild Mortgage’s Zero Down allows borrowers with a credit score of 600 or greater to take out an FHA loan with 0% down — the lender will provide an additional repayable loan to the borrower as a second mortgage to supplement the FHA’s traditional 3.5% down payment requirement. Qualifying borrowers who make up to 160% of the area median income can also take out Guild Mortgage’s Arrive Home™ loan, which allows borrowers to put 0% down by taking out a repayable second mortgage with the company.
[ Jump to more details ]
Best for a quick closing
CrossCountry Mortgage
Annual Percentage Rate (APR)
Fixed-rate and adjustable-rate available, apply online for rates.
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans
Terms
Apply online for terms
Credit needed
620 for conventional loans, 500 to 580 for some government-insured loans
Minimum down payment
Pros
Provides down payment grants
FastTrack Credit Approval program allows some borrowers to close on mortgage within 10 days
Website provides a variety of tools, including a mortgage calculator, homebuying guide, and refinancing guide
Available in all 50 states
Cons
Higher-than-average rates
Rates are not online
Who’s this for? CrossCountry Mortgage is great if you want a lender with faster-than-average closing times. It offers conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans. While most of its conventional loans require a 620 credit score, some federally insured options accept borrowers with a credit score as low as 500.
Standout benefits: CrossCountry Mortgage offers down payment grants for qualified buyers. With its FastTrack Credit Approval, CrossCountry says its borrowers have an edge in the home buying process with a reapproval process that allows borrowers to get the funds in as little as 10 days.
[ Jump to more details ]
More on our top lenders for those with bad credit
Rocket Mortgage
Rocket Mortgage — the largest home loan provider in the country — has a variety of loan options available — especially for those looking to make a small down payment. It accepts borrowers with credit scores as low as 580 and provides a large number of educational resources on its easy-to-use website. Rocket has consistently scored above average on customer satisfaction surveys.
Minimum credit score
580
Types of mortgage loans offered
Fixed-rate, adjustable-rate, FHA loans, VA loans, jumbo loans, HomeReady and Home Possible loans
Down payment minimum
1% with the ONE+; 3.5% with FHA loan
[ Return to summary ]
Navy Federal Credit Union
Navy Federal Credit Union is the largest provider of VA loans and provides many benefits to veterans, and their immediate families. With a VA loan, you have the option to pay 0% down and the seller can contribute up to 4% of the home’s value toward closing costs. Navy Federal also offers the Military Choice mortgage, which has similar guidelines to the VA loan, such as no PMI and a 0% minimum down payment, but allows sellers to contribute up to 6% of the home’s value toward closing costs.
Minimum credit score
Not disclosed.
Types of mortgage loans offered
Conventional loans, VA loans, Military Choice loans, Homebuyers Choice loans
Down payment minimum
0%; 5% with conventional loans
[ Return to summary ]
CitiMortgage
CitiMortgage allows homebuyers to make a small down payment without worrying about PMI. Citi offers qualifying existing customers closing cost aid or interest rate discounts.
Minimum credit score
580 if taking out an FHA loan.
Types of mortgage loans offered
Conventional loans, FHA loans, VA loans and jumbo loans
Down payment minimum
3%
[ Return to summary ]
Guild Mortgage
Guild Mortgage provides many loan types for borrowers with much lower credit than lenders usually require. In some cases, a credit score is not even needed. Guild also provides several low down payment options.
Minimum credit score
540 for some mortgages; no credit needed for some mortgages
Types of mortgage loans offered
Conventional loans, construction loans, FHA loans, VA loans, USDA loans and Jumbo loans
Down payment minimum
0% with a down payment assistance loan as a second mortgage.
[ Return to summary ]
CrossCountry Mortgage
CrossCountry Mortgage offers a wide variety of loans and says it can give its borrowers a leg up in the homebuying process through its FastTrack Credit Approval which allows borrowers to close on a loan in as little as 10 days.
Minimum credit score
580 or 500 for some government-insured loans.
Types of mortgage loans offered
Conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, manufactured home loans
Down payment minimum
3%
[ Return to summary ]
FAQs
What is pre-approval and how does it work?
Pre-approval is a statement or letter from a lender indicating how much money you qualify to borrow to purchase a home and your potential interest rate. You’ll likely have to provide bank statements, pay stubs, tax forms and employment verification, among other requirements, and once pre-approved, you’ll receive a mortgage pre-approval letter, which you can use to begin viewing homes and making offers. It’s best to get pre-approved at the start of your homebuying journey before you start looking at homes.
How do mortgages work?
A mortgage is a loan you can use to purchase a home. It’s also an agreement between you and the lender that essentially says you can purchase a home without paying for it in full and upfront — you’ll just need to put some of the money down — usually between 3% and 20% of the home price — and pay smaller, fixed monthly payments over a certain number of years, plus interest.
How is my mortgage rate decided?
Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. While the Federal Reserve doesn’t set mortgage rates, they do tend to move in reaction to actions taken by the Federal Reserve on its interest rates.
While market forces may influence the general range of mortgage rates, your specific rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.
What is a conventional loan?
A conventional loan is a loan that’s funded by private lenders and sold to government enterprises such as Fannie Mae and Freddie Mac. It’s the most common type of loan and some lenders may require a down payment as low as 3% or 5%.
What is an FHA loan?
A Federal Housing Administration loan, or FHA loan, typically allows you to purchase a home with looser requirements — for example, you may get approved with a lower credit score or be able to get away with having a higher debt-to-income ratio. You’ll typically only need to make a 3.5% down payment.
What is a USDA loan?
A USDA loan is offered through the United States Department of Agriculture and is aimed at individuals who want to purchase a home in a rural area. Best of all, USDA loans require a minimum down payment of 0% — in other words, you can use it to buy a rural home without a down payment.
What is a VA loan?
VA mortgage loans are provided through the U.S. Department of Veterans Affairs, meant for service members, veterans and their spouses and require a 0% down payment with no mortgage insurance.
What is a jumbo loan?
Borrowers who need a mortgage for more than $766,550 to purchase a single-family home (in most areas) will need to take out a jumbo loan. Note that these types of loans typically have stricter credit score and debt-to-income ratio requirements in part because they do not meet the Federal Housing Finance Agency’s (FHFA) conforming guidelines.
What is the difference between a 15- and 30-year term?
A 15-year mortgage gives homeowners 15 years to pay it off in fixed, equal amounts plus interest, while a 30-year mortgage gives 30 years to pay it off. With a 30-year mortgage, your monthly payments will be lower since you’ll have a longer period to pay off the loan, however, you’ll wind up paying more in interest over the life of the loan since it is charged every month. A 15-year mortgage, on the other hand, lets you save on interest but you’ll likely have to make a higher monthly payment.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every mortgage review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of mortgage products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best bad credit mortgages.
Subscribe to the CNBC Select Newsletter!
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Our methodology
To determine which mortgage lenders are the best for bad credit, CNBC Select analyzed dozens of U.S. mortgages offered by online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best mortgages, we focused on the following features:
Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender can cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list can offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances in which a particular lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.
Note that the rates and fee structures advertised for mortgages are subject to fluctuate per the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee the interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Inside: These festive money saving ideas you need to have a magical frugal Christmas! Rediscovering a Christmas with no money is still possible with a little bit of planning, fun, and creativity.
Just like throughout the year, the word frugal can have a bad connotation. When you put the two words together – Frugal Christmas, most people think of a sad holiday with no joy or excitement.
However, just like with a frugal lifestyle, being frugal means you are looking to stretch your dollar to the fullest.
A frugal Christmas means to be economical with the spending of your Christmas funds. You prudently set money aside for Christmas ahead of time, but remember your overall money goals. When it is time to buy Christmas gifts and decor, you are not wasteful with your money and make your money go further.
Everyone’s level of frugality is different.
The same holds true at Christmas. Your frugal Christmas will look different than your neighbor’s or a friend’s. There is no reason to trap yourself in a comparison mode.
Why a Frugal Christmas Traditions Matter?
If you are looking at Christmas with no money, don’t despair! There are plenty of money saving tips in this post to make sure you still enjoy a festive season.
If you want to stay on course to pay off debt or reach FI, then a frugal Christmas would be part of your innate nature to do. You just need some frugal living tips related to Christmas.
You can create a magical frugal Christmas.
More importantly, these frugal money saving ideas for Christmas will help you stick with your budgeting goals and lower your stress level.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
How to Survive Christmas with No Money
Before we just into the Christmas frugal living tips, let’s discuss the big elephant in the room… what if you can’t afford Christmas gifts?
First of all, that is an unfortunate circumstance that you are in right now. I say “right now” because you have the power to dictate your future.
And it all starts with your mindset… you are focused on surviving Christmas with no money.
Not the fact that you are surrounded by your loved ones. With the chance, to enjoy time together, laugh together, create traditions, and make memories.
That is what Christmas is about.
So, before you move forward, you need to change your mindset. Your current money mindset is focused on having no money, being poor, and being broke.
If you want to change your financial future, then it all starts with your thoughts consuming your mind.
Start with writing down three positive things that happen in each of your days. Make sure one of them is related to money.
Frugal Christmas Tips & Money Saving Ideas
Okay, now, we are going to dig into specify ways to make a frugal Christmas a reality.
These are frugal traits that will improve your money management throughout the holiday season, but you can also start to carry these over to all aspects of your life.
To keep in the spirit of Christmas, let’s dig in and learn how to create a frugal Christmas that won’t leave you broke!
1. Focus on the Important Things
When you make the conscious decision to become more frugal, your center of attention is on the bigger picture.
For a frugal person, they view Christmas as part of a bigger puzzle. Their spending at Christmas needs to align with their money goals and desires.
This is the point when you must ask yourself the hard questions… Would you rather stay on track to pay off debt faster? Keep on saving money so you can take some time off next summer.
These are where you decide what is important in your life.
Just to be clear, I am not saying Christmas isn’t important because it definitely is. I am saying the Christmas that has been defined in our culture that focuses on gifts may not be the overarching focus of Christmas.
2. Plan to Spend Half of “Normal”
Did you know most people plan to spend an AVERAGE of $800-900 on Christmas?
For most folks, that will break any budget with a lot of debt hangover coming in January.
Challenge yourself to a Frugal Christmas of $400 or less.
When you create your frugal Christmas budget, plan to spend half of what you did the previous year. Don’t know how much you spent previously, then stick to the $400 or less.
If you are tempted to overspend, then set your budget at $200.
Now, you need to use Christmas budget template to plan your gifts into your budget.
3. Make Your Frugal Christmas Plan
Now, that you know how much you can spend on Christmas, you must make your budget line up with your gifts, Christmas decors, parties, etc.
This step is often overlooked and we typically fly by the seat of our pants.
However, one of the best money management tips is to plan how you will spend your money before you start spending anything!
In our free printables areas, we have worksheets and spreadsheets to help you.
Also, this is the chance, to be honest with friends and family about your desires for a frugal or no money Christmas. You have the time to plan a no gift holiday, gift exchange of unwanted items, etc.
4. Ask Around for Gifts
Oh my goodness! This is seriously my favorite money saving idea all year round.
Ask around and see what others don’t want anymore.
Another man’s trash is the next man’s treasure.
A recent example in my life… Someone posted in our NextDoor group that they were looking for fly fishing equipment. I politely responded that once the original poster got what they needed I would be interested in anything leftover since my hubby took up this hobby. A neighbor messaged me and we got a bunch of fly fishing equipment for a fraction of the price.
You can always find Christmas decorations and maybe even gifts for no money.
Don’t be afraid to post in Facebook groups or NextDoor. Search Craigslist or thrift stores. You will be AMAZED by what people are happily willing to get rid of.
5. Shop Based on Price
This is where you go into the store and look for gifts that can suit those on your list – more importantly, at your price level.
This is a great chance to pick up items on clearance or deeply discounted sale.
For instance, my son loved LEGOS (okay, what boy doesn’t go through that phase) and they can get quite expensive. Throughout the year, I would always look for LEGOS when they were on sale or being discontinued. This is one example of enjoying a frugal Christmas
6. Creative with Gift Exchanges
With gift exchanges, you don’t need to go out and buy a brand new present. This is a chance to find something in your house that will make a great gift for someone else.
Here are various types of gift exchanges that cost little or no money:
White elephant gift exchange
$5 gift exchanges
Unused item gift exchange
Cookie Exchange
Used toy, puzzle, or book exchange
Coffee mug exchange
Charity donation exchange
Craft supply gift exchange
Dollar Store Finds Gift Exchange
Fabulously fashionable clothing exchange
Dropped that hobby gift exchange
There are just a few ideas on how you can get creative with holding gift exchanges. Not everything must be expensive to be an awesome winner!
7. Buy in Bulk and Divide Up for Gifts
A frugal trait is buying things in bulk to save money. When the holidays roll around, this is where you use your DIY skills to come up with frugal Christmas gifts.
If you find a lot of people on your list to buy small gifts for, you can create nice packages of presents to give. Typically, these holiday gifts are ideal for teachers, neighbors, co-workers or other special people that you want to wish a Merry Christmas.
For example, you can buy scented candles in bulk and wrap a beautiful bow on the glass jar. That is an easy way to divide them up for multiple gifts.
Another idea is to buy Christmas treat bags and divide up assorted miniature candies to quickly put together many small presents.
These are ideal gifts because they are thoughtful, but also budget-friendly.
8. Plan At-Home Parties
One of the most expensive areas for any budget is entertainment and eating out. The same holds true at Christmas.
To combat extra costs, plan at-home parties where you can control the prices of food, drinks, and decor. And as a bonus, your friends and family may be relieved to spend less as well!
You can hold a potluck or cookie exchange for a fraction of the price of a night out or booked Christmas party.
There are plenty of ways to make it fun. You can still have cocktail hour with the festive dresses that are already in your closet. Don’t have something to wear – pretend you’re a teenager and shop your friend’s closets!
9. Stop Christmas Shopping
When you are done, you are done Christmas shopping. Block your eyes and ears from all of the last minute shopping and stocking stuffers.
One of the frugality traits is to make a plan for your money and stick to it.
Remember, marketers are good at their job of getting you to open up your wallet and spend money. Be stronger and stop shopping for the holidays.
Don’t go over your Christmas budget and your plan.
10. Track How Much You Save
Every frugal person likes to know how much they save.
Not everyone likes numbers, but it is pretty motivating to see how much you save.
With a financial freedom mindset, you know that every penny saved is a penny earned.
This is where you realize your out-of-the-box thinking to create a frugal Christmas is worth the time and effort. You can see your savings on the gifts, decor, and thinking adds up.
Bonus Tip: Eliminate the Stress
One of the traits of becoming frugal comes with learning to live with less. It doesn’t have to be full minimalism. A better term is living simply.
The more you do around Christmas (buying gifts, putting up decor, hosting parties, attending parties, participating in cookie exchanges, cleaning for guests, traveling for events, the list can go on and on) will cause stress.
Look for ways to take a step back and focus on what is most important to you.
That was the first tip mentioned in this post because it is the one that is overlooked the most often. You don’t decide what you want Christmas to look like. You let others and life decide how your month of December rolls out.
Eliminate the undue stress surrounding the Christmas season.
Frugal Christmas Ideas for Kids When You Have No Money for Gifts
Okay, we are going to spend a little more time around one area that causes us the most stress around the holidays – giving gifts.
There is extreme pressure to provide the Pinterest-perfect, movie-ready, Insta story each and every year.
Regardless of what you spend on Christmas, you will never be able to live up to the self-created expectations you put on yourself.
Just remember that statement when you have no money for gifts.
This is where you get super creative and honest with your loved ones.
Be Honest with Your Finances
The first step is to be completely honest with your financial situation at the moment. You aren’t looking for handouts. You just want a dose of empathy and maybe a hug.
Just like everyone else, you want to give your family the world and shower them with gifts.
However, the center of Christmas is coming together as a family and spending time together. You don’t need money for that.
Time for Creativity and Maybe a Little DIY Christmas
This is where you get creative and start digging to find gifts.
Unfortunately for society, we are flooded with materialistic items. (Just look at any donation center or walk around on trash day.) There are plenty of gifts floating around that would cost you no money.
Post in a No Buy Facebook group or Nextdoor and see if anyone is getting rid of what you want.
More than likely, you will find Christmas gifts for no money. Sometimes, you may have to a fraction of the retail price.
Another option is to use your DIY skills – learn to sew, knit, bake, etc. Give away some of your treasured handmade gifts.
No-Spend Christmas Activities
For frugal individuals, like me, the key enjoyment of the festive season does not rely on these costly aspects, but rather on the spirit of unity, shared experiences, and thoughtful gestures. This is where the concept of ‘No Gift Christmas‘ comes in, emphasizing value-driven festivities that foster warmth and happiness without the need to break the bank.
The good news is you can enjoy the holidays with plenty of things that don’t cost money.
Fun and Frugal Christmas Activities at Home
Enjoying a festive holiday season doesn’t have to break the bank. In fact, there are several fun and frugal Christmas activities you can do at home!
Roast marshmallows: Whether you have a fireplace or a stove, roasting marshmallows at home can be a delightful way to savor the season.
Christmas movie night: Why not curl up on the couch with some popcorn and a Christmas movie? Consider a crowd-pleaser like The Christmas Chronicles on Netflix.
Bake cookies: Get the whole family involved in baking and decorating Christmas cookies.
Make a popcorn garland: This is a festive and fun craft you can enjoy together and later use to decorate your Christmas tree.
Play Christmas Charades: Searching Google for free printable charade cards can give you a night of fun that is sure to create hilarious memories.
Hot Chocolate Night: Warm up and gather around with the sweet treat of homemade hot cocoa.
DIY Christmas Cards: Create and send handmade Christmas cards to local nursing homes or soldiers abroad. A personal touch to your season’s greetings will mean a lot to the recipients.
Christmas Light Scavenger Hunt: Turn your Christmas light viewing into an adventure! Print out a free scavenger hunt, bundle up, and enjoy a hands-on game during your neighborhood stroll. Remember, the true spirit of the holidays can be found in the joy of being together—not the amount of money spent.
Taking Advantage of Free Christmas Events in Your Town
There are usually plenty of free Christmas events in your town or city if you know where to look. Here are some festive events you can attend without spending a penny:
Visit the Christmas tree in your town square: Most towns have a community tree lighting ceremony that often includes free musical performances too.
Check out community holiday parades: Many towns host Christmas parades that are open and free to the public.
Look for free events at local libraries and community centers: Many libraries and community centers host free Christmas-themed activities for children, from story readings to crafts or even visits from Santa!
Go Caroling in your neighborhood: Gather your friends and family for a simple and heartwarming tradition of spreading Christmas cheer through carols.
Visit Church ceremonies: Attend church services or watch local choirs perform their favorite Christmas hymns.
Volunteering: Use the season of giving to volunteer at a local food bank, soup kitchen, or charity. It’s free and can be a rewarding experience.
Christmas Lights Tour: Drive around or take a leisurely evening stroll to enjoy the holiday light displays in your local neighborhoods. Remember to check your city or town’s events website for a complete schedule and details. The holiday spirit is abundant and can be found without breaking the bank.
For more ideas, check out the Christmas bucket list that has plenty of fun holiday-filled events.
Shopping Strategies for a Frugal Christmas
While we have plenty of tips for shopping smart on our website, we are going to focus on two areas when preparing Christmas for the frugal.
Tip #1 – Start Buying Christmas Stuff in January
Starting your Christmas shopping in January means you get to spread the cost over the whole year, taking advantage of these deep discounts.
It’s very budget-friendly and helps control the infamous last-minute Christmas shopping spree.
Now, it’s important to note that you should only buy items you are reasonably sure you will use the following Christmas, to avoid clutter or unneeded spending.
Expert Tip: make a list during the holidays of the items you need, so you know precisely what to look for in the January sales.
tip #2 – Using Money-Saving Apps for a Frugal Christmas
To save money while shopping for Christmas presents, consider using money-saving apps. These apps give you cash back, coupon codes, and discounts while you shop, reducing the overall cost of your purchases, and essentially making you “earn” while you spend.
Here are some trusty tools to help you achieve a frugal Christmas:
Rakuten (formerly Ebates): This cash back app provides discounts on purchases from thousands of retailers when you shop through its site or the app.
BeFrugal: This app offers coupons, promo codes, and cash back offers to save on everything you buy. Sign up here for your $10 bonus.
Ibotta: Ibotta allows you to earn cash back on everyday purchases online and in-store with a snap of your receipt.
Honey: Honey automatically searches and applies the best coupons when you shop online.
Hip2Save: This deal website and app posts about a wide range of heavily-discounted products, from toys to housewares. One of my favorites!
Bonus: Paribus: Although not exactly a cash back app, Paribus is worth mentioning as it scans your digital purchases, seeking price drops and getting you a refund if an item you’ve bought goes on sale or if it finds the same product cheaper elsewhere.
By keeping these apps at your fingertips and using them proactively, you can stretch your Christmas budget further and end the year on a high note, financially.
Ready to a Magical Frugal Christmas?
The best part of being frugal is focusing on what is most important and saving money along the way.
That is why frugal living tips are so very helpful!
As a frugal person, there are some years that we can have Christmas on very little money, and in other years, we choose to spend a little bit more. Never ever have we spent close to the average Christmas spending.
That right there my friend defines a frugal Christmas.
If you are still on the fence about a frugal Christmas and spending $400 or less, then let’s think about it like this…
For 20 years, you spend half of the average spending at Christmas time, you will save over $8000. That amount doesn’t include inflation.
So, you need to ask yourself, how much are you willing to spend on the Pinterest perfect Christmas? That spending must be able to be paid in cash in full – not charged to a credit card.
We have shared many frugal living tricks to make your Christmas magical. What else would you add to the list?
Happy frugal Christmas!
More Christmas Gift Ideas:
Know someone else that needs this, too? Then, please share!!
Did the post resonate with you?
More importantly, did I answer the questions you have about this topic? Let me know in the comments if I can help in some other way!
Your comments are not just welcomed; they’re an integral part of our community. Let’s continue the conversation and explore how these ideas align with your journey towards Money Bliss.
Mortgage rates in the United States continue to show some fluctuations, with a slight upward trend observed in the past week. Here’s an analysis of current averages and expert predictions for the next two years. As of June 16th, the national average 30-year mortgage fixed rate is 7.00%, a drop of 3 basis points since the same time last week. Mortgage rates dropped this week.
These figures represent a snapshot of the current state of the mortgage market, which is influenced by a myriad of economic factors, including inflation, Federal Reserve policies, and the global financial climate. The Federal Reserve’s recent forecast suggests potential rate cuts in 2024, which could bring some relief to homebuyers in the coming months.
30-year fixed: The average rate for this popular option sits around 7%.
15-year fixed: Offering a faster payoff strategy, the 15-year fixed rate averages at 6.45%.
5/1 adjustable-rate mortgage (ARM): If you have a shorter-term homeownership timeline (5-7 years), ARMs with a lower introductory rate might be an option. The current average on these is around 6.61%.
Expert Mortgage Rate Predictions for Next Two Years (2024-2026):
Most experts expect rates to remain elevated for the foreseeable future, with a possibility of some decrease.
Freddie Mac: Their forecast sees rates remaining above 6.5% at least through the second quarter of 2024.
Fannie Mae: Their revised outlook anticipates a 30-year fixed rate reaching 6.4% by year-end, slightly higher than their previous estimates.
National Association of Realtors: Chief economist Lawrence Yun suggests rates will likely hover between 6% and 7% for most of 2024. He cites factors like inflation and the budget deficit as contributing influences.
Looking ahead, the predictions for mortgage rates over the next two years suggest a gradual decline. Experts from various financial institutions and housing associations have weighed in, providing a consensus that, while the rates may not see a dramatic drop, there is an expectation of a downward trend.
The Mortgage Bankers Association (MBA) forecasts that the 30-year fixed-rate mortgage will end 2024 at 6.1% and reach 5.5% by the end of 2025. This aligns with the sentiment from other industry analysts, who anticipate that the Federal Reserve’s potential rate cuts could ease the mortgage rates slightly.
The National Association of Realtors echoes this outlook, projecting that mortgage rates will average around 6.8% in the first quarter of 2024, with a gradual decrease to 6.1% by the year’s end. Similarly, Fannie Mae’s mortgage rate forecast suggests that the 30-year mortgage rate will end in 2024 at 6.4%, up from a previous forecast of 5.9%. These projections are subject to change as they are contingent upon various economic indicators and policy decisions that could alter the course of the mortgage rate trajectory.
This chart shows the trend of the 30-year & 15-year FRM Averages from June 2023 to June 2024. The 30-year fixed-rate mortgage has increased by 0.26% while the 15-year FRM has increased by 0.07%.
Source: Freddie Mac
Factors Influencing Mortgage Rates Over the Next 2 Years
As we look toward the next two years, several key factors are poised to influence the direction of mortgage rates in the United States.
Federal Reserve Policies: The Federal Reserve’s monetary policy is a primary driver of mortgage rates. Decisions on interest rates, influenced by economic data and inflation targets, directly impact the cost of borrowing. The Fed’s signaled interest rate cuts could lead to a decrease in mortgage rates, fostering a more favorable borrowing environment.
Inflation: Inflation remains one of the most significant factors affecting mortgage rates. Efforts to curb inflation could result in adjustments to interest rates, with higher inflation typically leading to higher mortgage rates to counteract the economy’s overheating.
Economic Growth: The overall health of the economy plays a crucial role. Strong economic indicators might push rates up as demand for credit increases, while signs of a slowdown could lead to decreases in an effort to stimulate borrowing and investment.
Housing Market Dynamics: The balance of supply and demand in the housing market will also impact rates. A surplus of homes could lead to lower rates to encourage buying, whereas a shortage might drive rates up as competition for available homes increases.
Global Events: International events, such as geopolitical conflicts or global economic downturns, can affect investor confidence and lead to fluctuations in mortgage rates as investors seek safer assets like U.S. Treasury bonds, influencing yields and borrowing costs.
Government Policies: Fiscal policies, including tax laws and housing regulations, can influence mortgage rates. For example, policies that stimulate housing construction can increase supply, potentially leading to lower mortgage rates.
Consumer Behavior: The demand for mortgages is also shaped by consumer confidence and demographic trends. Changes in homebuyer preferences or shifts in population growth can affect the demand for mortgages and, consequently, the rates.
Bond Market Movements: Mortgage rates are closely tied to the bond market, particularly the 10-year Treasury yield. As investors’ perceptions of risk change, so do bond yields, which can lead to corresponding changes in mortgage rates.
Banking Sector Health: The financial stability and lending practices of banks can influence mortgage rates. A robust banking sector may offer more competitive rates, while a struggling one might tighten lending and increase rates.
Technological Advancements: The rise of fintech and online lending platforms has introduced more competition into the mortgage industry, which could lead to more favorable rates for consumers as companies vie for business.
Summary: Experts from various financial institutions and housing associations have weighed in, providing a consensus that, while the rates may not see a dramatic drop, there is an expectation of a downward trend in the next two years. While forecasts can provide a general direction, the actual rates will depend on how these factors evolve.
RELATED POSTS:
Mortgage Rates Predictions 2024: Will Rates Go Down?
Mortgage Rate Predictions for Next 3 Years: Double Digit Rise
Mortgage Rate Predictions for Next 5 Years
Mortgage Rate Predictions for the Next 2 Months
Will Mortgage Rates Go Below 7% in 2024? Latest Predictions
Mortgage Rates HIT NEW LOW: Predictions &: What it Means for You
Bonds are a cornerstone of smart investing, providing a dependable way to balance the ups and downs of the stock market. These financial instruments, though not entirely risk-free, offer a steadier income stream and a sense of financial security that can be particularly appealing during uncertain times.
By understanding how bonds work and their potential benefits, investors can make more confident and informed decisions. Whether you’re a seasoned investor or just starting out, incorporating bonds into your portfolio can help achieve a more stable and balanced investment strategy.
Definition of a Bond
A bond is a loan between a borrower and a lender. As the investor, you would essentially buy an I.O.U. note from a borrower. The note will include the term of the loan, the payment schedule, and any other relevant details.
The bond boils down to a promise from the borrower to the lender to pay you back in full, plus interest.
Who issues bonds?
Any organization can issue them. The typical institutions that issue bonds are large companies, the federal government, cities, and states.
The issuer of the bond will often explain why they need the money. For example, the government may need it to build new roads, or a company may need it to fund new research. The reason behind the issuance of bonds varies, but for one reason or another, the organization needs money.
Types of Bonds
There are several types of bonds, including:
Corporate bonds: These are issued by companies and can be traded on public markets. They are used to raise capital for business operations, expansion, or to refinance debt.
Municipal bonds: These are issued by cities, states, and other local governments to finance public projects such as schools, highways, and utilities. They are tax-exempt, which means the interest paid to investors is not subject to federal income tax.
Treasury bonds: These are issued by the federal government and are considered to be among the safest investments because they are backed by the full faith and credit of the U.S. government.
High-yield bonds: Also known as “junk bonds,” these are issued by companies with lower credit ratings and therefore carry a higher risk of default. They offer higher interest rates to compensate for this risk.
Convertible bonds: These are bonds that can be converted into a predetermined number of shares of the issuing company’s stock. They offer the potential for capital appreciation in addition to the interest paid to bondholders.
Zero-coupon bonds: These are bonds that do not pay periodic interest to bondholders. Instead, they are issued at a discount to their face value and the bondholder receives the full face value at maturity.
Floating-rate bonds: These are bonds whose interest rate is tied to a benchmark rate, such as the London Interbank Offered Rate (LIBOR). The interest rate on floating-rate bonds adjusts periodically based on changes in the benchmark rate.
Are all bond issuers the same?
No. It may be obvious, but some issuers are more trustworthy than others.
Generally, U.S. government bonds are considered the safest possible bond. Many deem these bonds as practically risk-free. Of course, there is always risk involved, but it is rather unlikely that the U.S. government would default on its loan to you. Less trustworthy issuers are shady companies that you don’t trust.
A risky bond issuer will be forced to offer a higher interest rate than a stable issuer. That is because it is less likely that they will be able to repay the loan of the investor. If that happens, then the investor will lose their money. Bonds that offer high interest rates are considered junk bonds. That is because it is likely that the issuer will be unable to repay their investor.
The U.S. government offers the lowest interest rate on its bonds. That is due to the fact that they are most likely to repay the investor. Stable private companies will fall somewhere in between. Bonds that offer lower interest rates are considered investment-grade bonds.
How does a bond work?
When an organization needs money, it will issue bonds with the terms already set. As an investor, you will need to accept the terms or pass on the bond. The details of the bond will include the exact terms of the bond. Let’s look at what will be included in each bond offering.
Issue price – The issue price is the price that the investor will have to pay for the bond.
Face value – Typically, the face value of a bond is a nice whole number like $100 or $10000. It is unlikely that you would find a bond available for $99.47.
Coupon rate – A coupon rate is equivalent to the interest rate that is on the bond. The issuer of the bond will pay this rate of interest to the investor.
Coupon date(s) – Throughout the lifetime of the bond, the issuer may be required to make payments to the investor. The coupon dates will outline the amount of these payments and when they need to be made.
Maturity date – A maturity date is basically the end of the bond. On this date, the issuer of the bond must pay the face value of the bond to the investor.
When you have all the information, you will be able to make an informed decision about a bond purchase.
What impacts bond prices?
Many things go into the price of a bond, but these are the most common.
Issuer’s credibility. If a shady company is offering a high yield bond, it will likely be classified as a junk bond. The risk will be reflected in the price of the bond.
Maturity date. The longer you have to commit your money to the bond, the higher the yield you will receive. The bond issuer is paying for the long-term use of your money.
Interest rates. Interest rates have the largest impact on bond prices. Higher interest rates will lead to lower bond prices.
Are bonds a risk-free investment?
No. Some bonds are significantly riskier than others. If a bond offers a high yield, then it is likely a risky investment.
Some people associate bonds with guaranteed returns. That is just not the case. You can lose money through bond investment. However, if you choose your bonds carefully, then this may be less of a worry. For example, if you choose to stick with U.S. Treasury bonds, then it is likely that your money will stay safe.
How does an investor make money with bonds?
When you purchase a bond, you can make money in a couple of ways.
First, you will receive interest payments regularly based on the coupon rate of the bond.
Second, you can sell the bond for more than you paid for it. If interest rates go down, then bond prices will rise. At that point, you will have the option to sell your bond for a profit before maturity.
How to Buy Bonds
There are several ways to buy bonds:
Directly from the issuer: Some bonds, particularly municipal and Treasury bonds, can be purchased directly from the issuer. This may be a suitable option for investors who want to hold the bonds until maturity and receive the full face value.
Through a broker: Investors can also purchase bonds through a brokerage firm. Brokers can help investors find the bonds that best match their investment goals and risk tolerance, and handle the transaction on their behalf.
On a bond exchange: Some bonds, such as corporate bonds, are traded on public exchanges, similar to stocks. Investors can buy and sell these bonds through a brokerage account or through a bond exchange-traded fund (ETF).
Through a mutual fund or ETF: Investors can also invest in bond mutual funds or bond ETFs that holds a diverse portfolio of bonds. This can be a convenient way to gain exposure to a variety of bonds without having to purchase them individually.
Before buying any bonds, carefully consider the issuer’s creditworthiness, as well as the terms and conditions of the bond. It’s also a good idea to diversify your bond holdings to reduce risk.
Final Thoughts
Investing in bonds is one way to diversify your portfolio.
Remember, bonds are not entirely risk-free. Do not assume that you will make money on a bond investment. It is entirely possible to lose money by investing in bonds.
Before you make any decisions about investing in bonds, research your options. It is important to understand all the risks involved before you choose to invest your hard-earned money.
Are you wondering what the best low-maintenance businesses are? Looking for a business that doesn’t need much work? You’re not alone. Many people want to find ways to make money without having to spend all their time managing things. There are plenty of low-maintenance businesses that can provide good income with less effort. You just…
Are you wondering what the best low-maintenance businesses are? Looking for a business that doesn’t need much work? You’re not alone. Many people want to find ways to make money without having to spend all their time managing things.
There are plenty of low-maintenance businesses that can provide good income with less effort. You just need to know what options are out there and how they can fit into your busy life.
So, what makes a business low-maintenance?
This will vary from person to person, but businesses that are low maintenance are usually simpler to run because they use automation to handle work automatically. This means you don’t have to spend as much time and effort managing and growing your business.
These kinds of businesses usually have fewer things that need attention, which makes them easier to manage. For example, a vending machine business mostly involves refilling machines and collecting money. Another example is owning rental property, where you might only need to deal with tenants and handle repairs from time to time.
Running a low-maintenance business has many benefits. It reduces stress and workload for the business owner, allows for easier growth because work is simplified, and lets you concentrate on long-term planning instead of daily tasks. This approach can improve work-life balance and give you more time for hobbies and personal interests outside of work.
For me, I run a fairly low-maintenance business. It took some time to get to this point, but I now work around 10 hours a week. I can use my free time to do what I want and pursue my passions. So, I personally know how helpful these are.
Best Low Maintenance Businesses
Below are the best low-maintenance businesses to start:
1. Printables
Printables are a great low-maintenance business idea. You create digital files that people can print at home, and these can be things like journals, planners, calendars, or coloring pages.
One of the best places to sell printables is on Etsy. You make the design once and then you can sell it over and over again, and this means you don’t have to keep making new products.
Another benefit is that you don’t need any inventory. Customers download the files and print them themselves, and this saves you time and money on shipping and storing products.
To start, you’ll need some basic design skills. There are many free tools online you can use like Canva, and with some practice, you can create professional-looking products.
By focusing on quality digital products and good customer service, you can build a steady stream of income with printables. It’s a fun and creative way to make money with low upkeep.
You can learn more at How I Make Money Selling Printables On Etsy.
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
2. Affiliate marketing
Affiliate marketing is a great low-maintenance business idea. You can promote products and services of other companies. When someone buys through your link, you earn a commission. It’s like getting paid for recommending things you like.
I do affiliate marketing through this blog (you can learn about starting a blog here in my free blogging course), Making Sense of Cents, and I think it’s a great way to make money – whether you are looking for a full-time income or a part-time side hustle.
Setting up isn’t hard and you can use blog posts, social media, or a YouTube channel to share your links. I recommend choosing products related to things you love or know a lot about. That way, it feels natural and fun to share, plus you know that you are helping the people who are clicking on your referral links.
One thing I really love about affiliate marketing is that you don’t need much money to start. Joining affiliate programs is almost always free (I’ve actually never been asked to pay to join one, and I have never seen one that has a fee). Many companies have referral programs, such as Amazon, eBay, and even smaller brands.
The best part is, you don’t handle inventory or customer service. The company does all that and you just focus on getting people to click your links.
Affiliate marketing can be done from anywhere with internet access. It’s a flexible way to make money, especially if you have a busy schedule. Just put in some initial effort to set everything up, and it can almost run by itself.
For me, I spend less than 10 hours usually on my blog, and it earns me a full-time income. I put in a lot of work in the beginning, and now things run mostly by themselves with just a little maintenance from me, such as updating blog posts and sending out emails.
You can learn more at Affiliate Marketing Tips For Bloggers – Free eBook.
3. Vending machines
Vending machines are a great low-maintenance business idea because they don’t take a lot of time to manage and can bring in extra cash. You place them in high-traffic areas and just need to restock them every so often.
You can sell all kinds of items in vending machines. Snacks and drinks are popular choices; some people even sell toys or beauty products. The key is to pick items that your target customers (the people who are already at the location where you will place your vending machines) will want to buy.
One of the best parts about vending machines is the low start-up cost. You can start with just one machine and grow your business from there. Plus, you don’t have to hire a lot of staff or deal with a complicated setup.
Running a vending machine business also means you can earn passive income. Once your machine is set up and stocked, it can make money while you do other things. You just need to check on it and refill it when needed.
Learn more at How To Start A Vending Machine Business.
4. Real estate rental
Real estate rental is a popular way to earn passive income with low maintenance.
You can start by buying a property and renting it out. This could be a single-family home, a condo, or even an apartment.
Many people use platforms like Airbnb to rent properties to tourists, and this can be a good way to make money if you live in a popular area.
If managing the property seems overwhelming, you can hire a property management company. They handle things like finding tenants, collecting rent, and doing maintenance. Hiring a property management company can be a good way to make this a more low-maintenance business.
Learn more about low-maintenance real estate ideas at 23 Best Real Estate Side Hustles To Make Extra Money.
5. ATM business
We’ve all used ATMs, but did you know that someone like you or me is making money from them?
An ATM business can be a great low-maintenance business choice. You place ATM machines in busy locations where lots of people need cash.
You earn money from the fees people pay to use your machines, and these small fees can add up quickly.
The start-up cost is your main expense, as ATMs usually cost around $2,000 to $3,000 each or more, and you will have to buy these yourself.
Managing ATMs doesn’t take much time either because once the machines are set up, they mostly take care of themselves. You just need to refill them with cash and make sure they are running well.
Overall, this business can provide a steady flow of income with a low effort once everything is in place. As long as you pick good locations and keep your machines running, you can make money with less day-to-day work.
6. Laundromat
Starting a laundromat business is a popular low-maintenance business. People always need clean clothes, so there is a steady demand.
A laundromat often needs less day-to-day management because you just need to make sure machines are working and maintain a clean environment.
You can set up your laundry service in a busy neighborhood where people need quick and easy laundry solutions. This will help you attract more customers.
With a laundromat, most of the work is done by machines. You just need to make sure the machines are working properly and help customers if they have questions.
Learn more at Are Laundromats Profitable? How Much Do Laundromats Make?
7. Self-storage units
Self-storage units are one of the best low-maintenance businesses you can start. People need extra space to store their belongings, and you can provide that for them.
You don’t need to be there all the time, and you can set up a system where people can access their storage unit with a code or key card. This means fewer hours spent managing the business.
The demand for storage units is high in many areas. People are always looking for a place to keep their stuff – whether they are moving, downsizing, or just need extra space.
Once your storage units are rented out, you can earn passive income each month.
Maintenance is minimal for self-storage units. Most of the work involves keeping the area clean and making sure everything is secure. You might need to fix a door or handle paperwork occasionally, but it’s not time-consuming.
You can sell climate-controlled units to attract more customers and charge a higher rate too. Some items need to be stored in specific conditions, and providing this option can set your business apart.
You can also add features like 24-hour surveillance cameras and secure fencing to make your customers feel safe. People are more likely to rent from you if they know their belongings are protected.
For me, I personally have used a storage unit a few times – for my personal belongings such as boxes and even for an RV and boat. They always had crazy long waits, and some towns even had waitlists of years long – so there is a lot of demand!
Learn more at How To Invest In Self-Storage For Beginners.
8. Car wash
Starting a car wash business can be a smart idea. You can choose to open a self-service car wash or an automated one, and both options require less daily work compared to a full-service car wash.
A self-service car wash lets customers wash their own cars. This means you don’t need many employees, and you just need to keep the place clean and maintain the machines.
For an automated car wash, cars go through a machine that does the washing. You only need to check the equipment and refill supplies like soap and water.
Car washes can be profitable. Many people prefer to have a clean car but don’t have the time to wash it themselves, so this keeps the demand high.
You can also offer extra services like a vacuum that customers can use for an additional fee. This can boost your income without much extra work.
With some planning and the right setup, a car wash can be a great low-maintenance business idea. Plus, it can provide a steady income once it’s up and running.
9. Create an online course
Creating an online course is a great low-maintenance business idea. You can share your knowledge and skills with people all over the world. Once you create and upload the course, it can keep making money even while you sleep.
I started my first online course around 8 years ago and have earned over $2,000,000 from it over the years. Much of the work was done up front, and I am still able to help students today. I update the course all the time, but most of the legwork was done years ago, which has been so nice.
You can start this low-maintenance small business idea by thinking about what you are good at.
Online courses can be made on all types of subjects, such as gardening, baking, musical instruments, business, finance, travel, and more.
Another plus is you can always update or add new content to keep your course fresh and relevant. This can attract new learners and keep current ones coming back for more.
An online course is a fantastic way to earn passive income with some upfront effort and minimal ongoing maintenance.
Note: I recommend signing up for this free training – How Anyone Can Create an Online Course That Sells – In this free training, you will learn the 7-step process to create, market, and launch a profitable online course.
10. Stock photo photography
Stock photo photography is a great low-maintenance business idea where you can get paid to take pictures. You can take pictures in your free time and upload them to stock photo websites. Each time someone downloads your photo, you earn money.
All you need is a decent camera. You can even use your smartphone if it has a good camera!
You don’t have to worry about managing inventory or dealing with customers directly, and you can just focus on taking high-quality photos that people want to use.
Popular subjects include landscapes, cityscapes, and everyday objects. Seasonal themes and holiday photos also do well.
Once you’ve uploaded your photos, they can keep earning money for years, and that’s why it’s considered a passive income source.
11. Dropshipping
Dropshipping is a popular business model for many beginners. You sell products online, but you don’t need to keep them in stock. Instead, your supplier ships the products directly to your customers. This means you don’t need to spend money on storing inventory.
Once your website is set up and products are listed, it can handle sales automatically. As orders come in, you can streamline shipment processes, allowing your business to handle more customers without much added effort.
Another great thing about starting a dropshipping business is that it is affordable. With little or no start-up capital, you can list products on your website and start selling. You only buy the products from your supplier when you make a sale.
Another positive about dropshipping is the low risk involved. You’re not stuck with unsold inventory. Plus, you don’t need to worry about packing and shipping items. This makes dropshipping a low-maintenance business idea.
12. Print-on-demand
Print-on-demand is a great low-maintenance business idea. You can create custom designs for items like T-shirts, mugs, and phone cases.
You don’t have to worry about storing inventory. When someone buys a product, the print-on-demand company prints it and ships it directly to the customer, and this makes the process very hands-off for you.
Printful and Printify are popular print-on-demand companies. They offer many different products and work with various platforms like Shopify and Etsy. You can sell your designs in multiple stores, reaching different audiences.
What’s nice about print-on-demand is you can start small and grow. You only pay for the products customers buy. This means low upfront costs and reduced financial risk for your business.
Starting a print-on-demand business can be a great way to make money with minimal effort.
13. Parking lots
Parking lots can be a great low-maintenance business. If you have a space in a busy city, it’s a prime spot as a lot of people probably need parking, and they’re willing to pay a good price for it.
Once you set up a parking lot, there’s not much you need to do. You might have to repaint lines or put up new signs occasionally, but these tasks are easy and don’t take much time.
Owning a parking lot has other benefits too, with the main ones being that you don’t have to manage a lot of employees, and the maintenance costs are pretty low. Plus, you don’t need to be there every day to keep it running smoothly.
Starting a small parking lot with just 20 spaces can already bring in good money. If you charge $20 per day per space, you could see an annual revenue of around $146,000, with a high profit margin.
14. Billboards
Billboards are a great low-maintenance business. Once you set them up, they don’t need a lot of work. You can rent out advertising space to companies that want to advertise.
Starting a billboard business means finding good locations. Busy streets and highways are best and you need to rent or buy the space. After that, the billboard does the work for you.
Frequently Asked Questions
Starting a low-maintenance business can be a great way to earn income with minimal effort. Below are some common questions and answers about low-maintenance business options.
What is the cheapest business with the most profit?
The cheapest business with the most profit to start includes businesses like selling printables on Etsy, affiliate marketing on a blog, creating an online course, and dropshipping.
What is the easiest business to start and maintain?
The easiest business to start and maintain includes printables, self-storage units, stock photo photography, and parking lots.
What kinds of businesses can I start that don’t require a lot of time to manage?
Vending machines are a great option. Once placed in high-traffic areas, they require little maintenance. Just stock them up and collect your earnings.
Which businesses can really run by themselves?
Real estate rentals can run mostly by themselves, especially if you hire a property manager. They take care of the day-to-day tasks like rent collection and maintenance.
What are the best business choices for earning passive income?
ATM businesses can generate passive income. You earn money from surcharge fees every time someone uses your machine. Place your ATMs in busy locations to maximize earnings.
What is the least riskiest business?
Self-storage facilities are low risk. People always need storage, and once set up, these facilities require minimal management. You collect rental fees without much daily involvement.
How do you find low-maintenance businesses for sale?
To find a business that runs itself for sale, check listings on websites like BizBuySell and LoopNet, or contact business brokers. Before purchasing, thoroughly research and vet any business to make sure it meets your needs and expectations.
What are the best businesses to buy for passive income?
Buying existing laundromats or storage facilities can be great for passive income. These businesses already have cash flow and customers, reducing your initial workload, and you can purchase them to get started quicker.
Best Low Maintenance Businesses – Summary
I hope you enjoyed this article on the best low-maintenance businesses.
There are many types of businesses that run themselves and are low maintenance as you learned above. These include selling printables, affiliate marketing, vending machines, rental real estate, running a laundromat, renting storage space, and more.
Some key traits of low-maintenance businesses include:
Few routine tasks
Easy to manage
Low maintenance or repair needs
One of the biggest benefits is the reduced time and effort required. Many low-maintenance businesses can be set up to run smoothly with minimal daily involvement. This frees you up to focus on other important tasks, like spending time with family or pursuing hobbies.
Low-maintenance businesses are also highly scalable. Since you spend less time on daily tasks, you can concentrate on growing your business. As it grows, you can duplicate your model and open more locations or move into new markets.
What do you think are the best low-maintenance businesses?
Empower, formerly Personal Capital, is a client-centric robo-advisor offering investment and wealth management services. The company distinguishes itself from the competition by combining automation with personal service. With over 2.7 million users, Empower currently holds $16 billion in assets under management.
Unlike many financial apps designed to make investing more accessible, Empower is a robo-advisor for those who already have some established wealth. They’ve gone back and forth on the minimum investment required, which is now set at $100,000.
Get started with Empower
on Empower’s secure website
Its goal is to provide a more transparent and affordable investment platform. However, its wealth management service does target clients with larger assets, with higher fees being assessed with the fewer assets you let the company manage.
In this Empower review, we’ll get into the specifics shortly, but the upside to potentially paying higher fees is the access you get to financial advisors to help with your investment strategy.
The company utilizes five principles for investing:
the modern portfolio theory
personalized asset allocation
tax optimization
equal sector and style weighting
disciplined rebalancing
No matter how much in assets you’re looking to invest, consider Empower if you prefer a hands-on experience or if you have a large portfolio to open or transfer. Either way, we’ll take you step-by-step through the different types of accounts you can have with Empower, as well as the fees you’ll pay at different asset levels.
You’ll also learn about the special features that make Empower unique, including financial tools and expertise. If you’re looking for an online advisor for any or all of your wealth management, see if Empower is right for you.
Available Plans at Empower
There are three different plans available at Empower, which are divided up based on the amount of investable assets you have. If you know how much you’d like to invest, find the correct category to learn about the benefits and services you’d receive from Empower. Then keep reading to learn more about the fee structure.
Investment Service Plan
The first plan is targeted for those with up to $200,000 in assets to be invested. Services include access to a financial advisory team, a tax-efficient ETF portfolio, dynamic tactical weighting, 401k advice, and cash flow & spending insights.
You’ll also get to use Empower’s free wealth management tools. You do, however, need a minimum of $100,000 to get started investing with Empower.
Wealth Management Plan
The next option is the Wealth Management plan, for those with investable assets between $200,000 and $1 million. You get access to all the benefits from the Investment Service plan, plus several others.
The Wealth Management service includes two dedicated financial advisors, customizable stocks and ETFs, a full financial and retirement plan, college savings and 529 planning, tax-loss harvesting and tax location, and financial decisions support.
The financial decisions support refers to help with insurance, home financing, stock options, and compensation. Also, note while your financial advisors can help you plan for investment accounts like a 401k for retirement or a 529 for college savings, Empower doesn’t actually offer these accounts.
Private Client Plan
If you invest more than $1 million, you qualify for the Private Client Plan. Again, you receive all the perks of the previous two plans, in addition to several more.
To begin, you’ll get priority access to CFP, financial advisors, investment committee, and support, plus an investment portfolio mix of ETFs, individual stocks, and individual bonds (in certain situations).
You also receive family tiered billing; private banking services; estate, tax, and legacy portfolio construction; and donor-advised funds. Empower also offers private clients a private equity and hedge fund review, deferred compensation strategy, as well as estate attorney and CPA collaboration.
Get started with Empower
on Empower’s secure website
Fee Structure and Accounts
The more money you invest through Empower, the more money you’ll save in fees. If you invest up to $1 million, your fee comes to 0.89% of the assets being managed. If you invest more than $1 million, your first $3 million in assets are only charged a 0.79% fee. Then, your next $2 million is charged 0.69%.
The $5 million after that are charged 0.59% and the next $10 million are charged 0.49%. However, there aren’t any charged beyond the account management fees, so you don’t have to worry about annual, transfer, or closing fees.
So what types of investment accounts are supported through Empower? There are many: both individual and joint non-retirement counts; Roth, traditional, SEP, and rollover IRAs; and trusts.
Through your Empower investments, you can expect a healthy range in your portfolio. For example, when buying U.S. equities, they buy a diversified sample of at least 70 individual stocks that epitomize their tactical weighting approach and optimize your account for tax purposes.
Empower also only purchases liquid securities, so that if you ever need to access cash quickly, you can receive funds within a settlement period of just one to three days.
Funds are held by Pershing Advisor Solutions, a Bank of New York Mellon Company. It is one of the largest U.S. custodians and currently holds more than a trillion dollars in global client assets.
Tax Optimization Strategies
Empower uses several techniques and strategies to ensure clients are optimizing their taxes on investments. First, they entirely avoid mutual funds, which they regard as inefficient for tax purposes. Their asset location is personalized whether you have taxable accounts or retirement accounts.
For example, Empower typically places high-yielding accounts and fixed income into a tax-deferred or exempt account. REITs are also generally placed in a retirement account because they pay nonqualified dividends.
Finally, Empower utilizes tax-loss harvesting, meaning they use individual securities that realize losses and can, therefore, offset gains or provide a tax deduction.
Special Features
You can take advantage of some of Empower’s online resources without even becoming a client. Just by creating a Empower account, you can link all of your financial accounts for an investment checkup.
The program analyzes your bank accounts, credit cards, and investments to create recommendations on your asset allocations. You can then choose whether to make those adjustments to your investments.
Additionally, you can check holistically on how your investments are performing by considering how much you’re charged in fees. You can do this in one of two ways.
The first is through the Mutual Fund Analyzer, which you can compare performance (with fees) against the broader markets. Then you can use the general Fee Analyzer to see what you’re being charged on your non-taxable retirement accounts.
You can also use Empower for a budget check-up that analyzes your saving and spending. You can even incorporate their Retirement Planner for long-term savings projections.
You’ll be provided with several scenarios, including best-case, worst-case, and most likely. It gives you a good idea of what you could potentially expect when you’re finally ready to retire.
All of these features run through the Empower financial dashboard, so you can get a holistic view of your entire financial picture. You can use them on their mobile app or website.
Some of their investment management tools include a 401(k) Analyzer, Retirement Planner, Investment Checkup, Net Worth Calculator. Moreover, you still have the ability to contact a personal financial advisor.
As we mentioned earlier, Empower implements five distinct strategies for investing. Learn a bit more about each one to get a better grasp of how your money would be managed by this advisor.
Modern Portfolio Theory
The prime directive here is to create an efficient portfolio for clients while yielding the highest possible return for the lowest possible risk.
Empower works with six asset classes to provide this equilibrium, which are all meant to be liquid and broadly investible. These asset classes are U.S. stocks and bonds, international stocks and bonds, alternatives (including ETFs and commodities), and cash for liquidity.
Personalized Asset Allocation
There’s a reason the company is called Empower: they understand that no two investors are exactly alike. That’s why they look at your individual data and financial goals to balance your portfolio’s risk and growth.
They use a proprietary Retirement Planner software that analyzes your spending and savings habits in addition to your projected income. This helps you determine what your financial future looks like and what you may need to change to reach your future goals.
Tax Optimization
We mentioned earlier that Empower optimizes your taxes by using tax-loss harvesting and asset location, as well as avoiding mutual funds.
In fact, these steps could boost your annual returns by as much as 1%. While many financial advisors use one or two of these tactics, Empower offers a truly robust strategy to make your portfolio more tax efficient.
Equal Sector and Style Weighting
Empower’s strategy for diversification involves equalizing the composition of your portfolio by sector, size, and style.
The goal is to prevent bubbles and other volatile conditions from adversely affecting your investments too much. Likewise, they don’t rely on a few large companies, but instead spread out U.S. stock investments between 70 and 100 different stocks.
Disciplined Rebalancing
Your portfolio receives a daily review for any potential rebalancing needs. For high-level assets, they’re typically rebalanced when they deviate more than a few percentage points from the target.
Specific securities receive a smaller margin and are reviewed after just a 0.5% move from the target. Having a systematic review allows you to maximize your ability to buy low and sell high.
Who is Empower best for?
Empower offers truly extensive services for high net worth investors, particularly considering the low percentage of fees charged. This is especially true if you’re an investor with several million dollars in assets and who likes to have easy access to a dedicated financial advisory.
After all, in the Private Client tier of $1 million+, you can get advice on just about anything related to your finances, whether it’s about retirement, real estate, or anything in between.
That’s on top of the personalized asset management, so you have a one-stop-shop of both automated algorithms and a human point of contact who understands the larger picture concerning your finances.
Empower also makes it easy for this type of investor to remain passive. If you appreciate their investment management and like how the allocation and review processes, then you don’t have to do much on your own.
National mortgage rates were mostly lower compared to a week ago, according to rates data compiled by Bankrate. Average rates for 30-year fixed, 5/1 ARMs and jumbo loans declined, while rates for 15-year home loans increased.
Inflation has cooled somewhat, but homebuyers are still feeling limited by high prices and rates. At the close of the Fed meeting on June 12, policymakers again held off on changing interest rates. The next Fed meeting concludes July 31.
“With [the June 12] announcement, the Fed confirms its higher-for-longer position on interest rates,” says Dr. Selma Hepp, chief economist at CoreLogic. “But the stance is looking more untenable as more American households continue to pull back on spending. As more economic indicators begin to confirm this and unemployment begins to rise, the Fed will then look to cut rates. What’s not clear yet is when exactly the disinflation signs will be consistent enough for the first rate cut — we hope it’s still this year.”
Often, though, the decision to buy a home isn’t based on what’s happening in the economy — it’s more personal. Depending on your situation, it might make sense to take a higher rate now and refinance later. This way you can start building equity, rather than chancing that buying a home will become more affordable in the future..
Rates as of June 25, 2024.
The rates listed above are Bankrate’s overnight average rates and are based on the assumptions here. Actual rates available within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Tuesday, June 25th, 2024 at 7:30 a.m. ET.
Current 30 year mortgage rate drops, -0.02%
The average rate for a 30-year fixed mortgage for today is 7.00 percent, down 2 basis points over the last seven days. Last month on the 25th, the average rate on a 30-year fixed mortgage was higher, at 7.13 percent.
At the current average rate, you’ll pay principal and interest of $665.30 for every $100,000 you borrow. That’s lower by $1.35 than it would have been last week.
Use our mortgage calculator to approximate your monthly payments and see how much you’ll save by adding extra payments. The tool will also help you calculate how much interest you’ll pay over the life of your loan.
15-year mortgage rate trends upward, +0.03%
The average rate for the benchmark 15-year fixed mortgage is 6.46 percent, up 3 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost $869 per $100,000 borrowed. That may squeeze your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.
5/1 adjustable rate mortgage declines, -0.03%
The average rate on a 5/1 ARM is 6.66 percent, ticking down 3 basis points from a week ago.
Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.66 percent would cost about $643 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Jumbo mortgage interest rate falls, -0.01%
The current average rate you’ll pay for jumbo mortgages is 7.16 percent, down 1 basis point over the last week. A month ago, the average rate was higher at 7.22 percent.
At the current average rate, you’ll pay a combined $676.08 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $0.68 lower.
Refinance rates
30-year mortgage refinance goes unchanged
The average 30-year fixed-refinance rate is 6.96 percent, unchanged since the same time last week. A month ago, the average rate on a 30-year fixed refinance was higher at 7.15 percent.
At the current average rate, you’ll pay $662.62 per month in principal and interest for every $100,000 you borrow.
Where are mortgage rates heading?
The rates on 30-year mortgages mostly align with the 10-year Treasury yield, which changes with the market, while the cost of variable-rate home loans more directly mirrors the Fed’s moves.
If and when the Fed cuts interest rates depends on evolving economic data, such as inflation and the jobs market. While inflation has dropped from its height in 2022, it’s still well above the Fed’s target rate of 2 percent. Unemployment is still low, though in May it hit 4 percent for the first time since 2022.
“Much like that flight where departure keeps getting delayed 15 minutes at a time with no end in sight, the timetable for when the Fed begins to cut rates is equally uncertain,” says Greg McBride, CFA, Bankrate chief financial analyst.
While the Fed bases its decisions on rate changes due to broader economic factors, your rate is also affected by personal finances. Depending on your credit score, down payment, debts and income, you could be quoted a rate that’s higher or lower than the trend.
What current rates mean for you and your mortgage
Mortgage rates adjust daily, but it appears that, for now, they will remain above the historical lows of recent years. If you’re shopping for a mortgage, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at current market rates.
To help you uncover the best deal, get at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.