Mortgage applications for new homes surged in January as a lack of existing homes continued to fuel the demand for new construction.
Mortgage applications for new home purchases rose 19.1% in January on a year-over-year basis, the 12th consecutive month with an annual increase. Applications were up 38% from the previous month, according to the Mortgage Bankers Association (MBA) Builder Application Survey for January.
According to MBA estimates, new single-family home sales were at a seasonally adjusted annual rate of 700,000 units in January, the highest pace since October 2023. The pace was up 16.9% from December’s rate of 599,000 units.
“Applications for new home purchases were strong in January, as newly built homes remained an attractive option for prospective homebuyers who looked to take advantage of lower mortgage rates during the month,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
In January, conventional loans accounted for 64.5% of loan applications for new homes. Federal Housing Administration (FHA) loans accounted for 24.8% of applications, U.S. Department of Veteran Affairs (VA) loans took a 10.3% share and U.S. Department of Agriculture (USDA) loans accounted for 0.4%.
The average loan size for new homes decreased to $401,282 in January, down from $405,368 in December.
Homebuilders are feeling optimistic about the spring buying season. Homebuilder confidence shot up to a five-month high in February, according to the National Association of Home Builders’ most recent survey.
MBA’s survey tracks new home mortgage application volume from mortgage subsidiaries of homebuilders across the country.
I grew up east of Rochester, in Upstate New York’s apple country. New York produces ~30 million bushels of apples per year, second among the 50 states (behind Washington).
But apples start to rot 5-7 days after they’re picked. So how does New York harvest 30 million bushels of apples in September and October without eating 30 million bushels over the following week?
The answer is cold storage.
Apples can be stored near 35°F for 6-12 months without decay. We gain an entire year of “freshness!” But first, we must put forth an effort of time, resources, and money to build that cold storage infrastructure.
Today’s effort allows us to keep more of our harvest in the long run. We get to choose our consumption schedule, not Mother Nature.
Roth Conversions
It might seem like an odd transition, but the same concept applies to Roth conversions. Today’s planning can allow us to keep more of our “harvest” in the long run. We gain control over our tax schedule rather than leaving it entirely up to the IRS.
Roth conversions are among many tools in a good “tax planning toolbelt.” Done correctly, Roth conversions allow an investor to turn high tax rates in the future into lower tax rates today. This article was inspired by Catherine (a listener of The Best Interest Podcast), who wrote me the following email:
Can you please explain the connection between RMDs and Roth conversions? Is this something I should look into? I’m 57, single, and have ~$2.3M in my 401k right now.
An Example: Required Minimum Distributions
Most retirees have heard of required minimum distributions, or RMDs, which are mandatory withdrawals that individuals with tax-deferred retirement accounts, like Traditional IRAs and 401(k)s, must make once they reach a specific age.
RMDs are forced. You must withdraw money from your 401k. Thus, the income tax associated with RMDs is forced. That’s not ideal.
Let’s use Catherine as an example. She’ll start taking RMDs at age 73 (although Congress might change that minimum age, as they’ve done before). That’s 16 years from her current age 57.
We don’t know the rest of Catherine’s scenario. Her Roth assets, taxable assets, Social Security, etc. are a mystery to us. So is her monthly spending need. All that info is essential to proper planning!
But I want to be extreme, so we’ll say Catherine’s lifestyle is wholly supported by her Social Security, taxable assets, and Roth assets. She doesn’t withdraw a single dollar from her 401k. Thus, it will grow from $2.3M today to $6M by the time she’s 73 (the assumption: 16 years at 6% per year).
Now in 2040, it’s time for her first RMD.
To calculate that RMD, we’ll look at Catherine’s year-end account value from the prior year ($6.0M) and divide it by her age-based Life Expectancy Factor. For age 73, that factor is presently 26.5. Here’s the full table of Life Expectancy Factors.
Catherine’s RMD is $6M / 26.5 = $226,415
That entire RMD is taxable as income, so her marginal Federal tax bracket is 32% based on the current tax code.
I’d bet Catherine’s account continues to grow past 2040, despite the RMD withdrawals. Her first 10 RMDs are all in the 4-5% range, and we’d expect her investment growth to outpace that. Her RMDs will grow in size. And that means she’ll be paying higher and higher marginal taxes in the 32% bracket, the 35% bracket, and potentially even the 37% bracket.
How Can Roth Conversions Help?
Paying high tax rates on RMDs is like letting your apples rot during the glut of harvest season. We need a “cold storage” to gain control over our tax rates and spread those taxes over time.
So let’s return to 2024, while Catherine is still 57 and her 401(k) is still at $2.3M. How do Roth conversions work?
First, we need to ensure Catherine’s 401(k) – which is still active – allows “in-service Roth conversions.” If it doesn’t, Catherine will have to wait until she retires and rolls over the 401(k) into an IRA.
Some simple paperwork with Catherine’s custodian will allow her to convert a number (of her choosing) of Traditional dollars into Roth dollars. Since the Traditional dollars have never been taxed, this conversion is taxable, triggering income tax.
Those converted Roth dollars will never be taxed again! That’s fantastic. But did Catherine save money? Was this a smart move?
We’d want to know all of Catherine’s personal financial details to run an accurate analysis, but we certainly need to understand what Catherine’s tax rate is today.
Her 2024 regular taxable income is $100,000, so she’s paying Federal taxes in the marginal 24% bracket. And she has another $90,000 available in that 24% bracket this year.
We can fill that ~$90,000 space in her 24% bracket with Roth conversions. Catherine would pay 24% Federal tax on those dollars today to prevent 32% (or higher) marginal tax rates once her RMDs hit. That’s the essence of Roth conversions.
Not Too Much Roth Conversion
Catherine needs to be careful not to overdo it. And so should you.
If you’re in your high-earning years and paying high marginal taxes, the odds are Roth conversions don’t make sense for you right now. There’s no reason to move extra income into your current high tax years.
But! You might have a few low-income years as soon as you retire. Your W2 income will disappear. Your financial plan might dictate you delay Social Security for a while.
Your only income might be dividends and income from your Taxable accounts and small withdrawals from your Traditional accounts. If so, fill up those low tax brackets with Roth conversions! This is a very common strategy for new retirees.
What If…?
But even as I write this article, “What if…” questions are bombarding my head.
Retirement planning withdrawal strategies are far from one-dimensional, and what I’m describing today is a one-dimensional view. I’m only focusing on a few details to provide an example of Roth conversions. Other nuanced planning questions include:
Roth conversions and (more generally) tax planning are essential aspects of retirement planning. But just two of many aspects.
A cold-stored apple a day keeps the IRS away.
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
Want to learn more about The Best Interest’s back story? Read here.
Looking for a great personal finance book, podcast, or other recommendation? Check out my favorites.
Was this post worth sharing? Click the buttons below to share!
It’s the most wonderful time of the year. No, we’re not talking about the holiday lights and wreaths in the lobby of your apartment building (but those are fun, too). It’s World Cup time!
Thirty-two nations are competing for the title of the world’s best soccer team in the tournament, which runs through December 18 in Qatar. And this thing is a big deal. More than a billion people watched the World Cup final in 2018, making it arguably the most popular sporting event on the planet.
Many renters here in the U.S. will be cheering on the Stars and Stripes, but there are a handful of other great nations to support in this year’s event. If you’re looking for a second favorite country to support, or just want to root for someone other than your home team, we’ve got you covered.
Answer a few simple questions based on your apartment and renter lifestyle and we’ll tell you which nation you should be cheering for in the World Cup.
[wp_quiz id=”784064″]
Score your next apartment with Rent.
Regardless of which team you’re matched with, you’ll always win with Rent. Start your next apartment search with us today.
The Minnesota-based airline Sun Country has its own credit card for frequent fliers of the budget carrier. The Sun Country Visa credit card, issued by First National Bank of Omaha (FNBO), has an annual fee but also some perks that may make the card a worthwhile investment. Certainly, this card could make sense for people who fly Sun Country’s relatively limited routes: The airline is in more than 100 airports across the U.S., Mexico, Central America, Canada and the Caribbean.
But if Sun Country airline doesn’t satisfy your travel plans, then the Sun Country credit card won’t do much for you, either. In that case, a general travel card or another airline card would be a better fit.
1. It has an annual fee
You’ll pay $69 a year for the Sun Country credit card, placing it within the mid-tier travel card category. Compared with similar cards, the Sun Country falls a little short in terms of value. For example, for a slightly higher annual fee, the Capital One Venture Rewards Credit Card offers 5x miles on hotels and rental cars booked through Capital One Travel, 2x miles on everything else, a $100 credit for Global Entry or PreCheck every four years, and perhaps most importantly, the ability to transfer miles to Capital One’s 15 travel partners.
2. Perks can help offset the fee
Sun Country cardholders get the following benefits, some of which can help recoup some of the annual fee:
Priority boarding on Sun Country flights every time you fly.
One free premium drink per flight.
50% off seat selections and first checked bag for you and your travel companions when traveling on the same itinerary. Seat selections and bag fees must be prepurchased to receive the discount.
The ability to get 10,000 bonus points if you spend at least $10,000 over 12 consecutive billing cycles beginning with the account anniversary. Points are worth 1 cent each, so 10,000 bonus points are worth $100 toward Sun Country flights.
3. It has a decent sign-up bonus
New Sun Country Visa cardholders can get 25,000 points if they spend at least $1,000 in the first three billing cycles after account opening. Because 1 point is worth 1 cent, the sign-up bonus is worth $250. Note that the bonus can only be redeemed toward more Sun Country flights.
The Sun Country card’s welcome offer is fine, but it’s hardly the best. The Chase Sapphire Preferred® Card, widely recognized as the gold standard among mid-tier travel cards, has a $95 annual fee, but the sign-up bonus is far superior to the Sun Country card’s. New Chase Sapphire Preferred® Card holders get the following welcome offer: Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 toward travel when you redeem through Chase Ultimate Rewards®.
4. The card pairs well with Sun Country’s loyalty program
The Sun Country card earns the most points on Sun Country bookings, but it has some good everyday spending categories, too. The card earns:
Unlimited 3 points for each $1 on Sun Country purchases.
Unlimited 2 points for each $1 on gas and groceries. (Wholesale clubs are ineligible.)
Unlimited 1 point for each $1 on everything else.
Even better, rewards earned with the credit card are stackable with Sun Country’s loyalty program, Sun Country Rewards. Members of the Sun Country Rewards Program get:
2 points for every $1 spent directly with Sun Country, either online at suncountry.com or by calling Sun Country Reservations.
1 point for every $1 spent on bookings made through a travel agent or other travel websites.
That means if you have the Sun Country credit card and are enrolled in the Sun Country Rewards Program, which you can do at www.suncountry.com, you’ll earn 5 points per $1 on Sun Country purchases.
Rewards don’t expire as long as the account is open and in good standing.
5. Redemption is limited
Points earned with the Sun Country card are only redeemable for travel booked directly with Sun Country including flights, seats, checked bags and vacation packages. Again, consider a general travel card or another airline card if you want more redemption options.
Guild Mortgage has struck a deal to acquire retail lending rival Academy Mortgage Corp.,which could result in an additional 600-plus loan officers for Guild across the country, multiple sources told HousingWire.
During an all-hands call Tuesday morning, Academy’s leadership informed employees about the M&A deal. Academy CEO Adam Kessler told staffers that he had been seeking either private capital or a buyer due to the challenging mortgage landscape. He said that Guild was a good fit to acquire the company, according to staffers who attended the Tuesday morning call.
Separate calls occurred after the meeting; one group was informed that their positions were being terminated, while the other were given details of a transition to Guild.
Representatives at both companies did not immediately reply to a request for comments.
Academy’s sales workforce and management will receive job offers and work as a division of Guild. Most operations and recruiting staff will not be joining the acquirer but will stay employed until April 15, when the deal is expected to close, sources said.
In a statement issued after this story was first published, a spokesperson for Guild said Academy’s operations staff and recruiters “are mostly joining Guild” and the “deal will close in the first quarter.”
“Academy boasts approximately 200 branches and more than 1,000 employees who will transition to Guild, including more than 600 licensed mortgage originators,” the companies said in a news release.
Guild believes it can add to acquired companies by reducing back-office costs, CEO Terry Schmidt recently told HousingWire. “If it’s a smaller organization that maybe can’t afford the back office any longer, maybe that’s [M&As] a value added to them,” Schmidt said.
Founded in 1988, Academy originated $5 billion in mortgages over the year ending in January, per mortgage tech platform Modex. Of the total, 61% were conventional loans and 80% were purchase loans. During this period, 15% of its volume was in Washington, 13% in Utah and 7.6% in Idaho.
Academy was not on the Inside Mortgage Finance (IMF) list of the 100 owned mortgage servicing firms as of third-quarter 2023 (No. 100, Primary Residential Mortgage in Utah, had $9.47 billion in MSRs).
Meanwhile, Guild’s volume reached $12.85 billion in the same period. It also focused on conventional loans (57.8% of its total) and purchases (81%), according to Modex data. But the company’s leading states in terms of origination were California (9.8%), Texas (9.4%) and Washington (9.3%).
Guild is also one of the country’s largest servicers, with $84 billion in MSRs as of first-quarter 2024, per IMF.
According to Guild, “Academy’s loan volume represents an approximate 25% increase in annual origination volume for Guild, based on results from both organizations through the third quarter of 2023.”
It added that, “The combined company would be the 8th largest nonbank retail lender in the country. Guild is currently the 10th largest nonbank retail lender.”
Publicly traded Guild has an ambitious plan of becoming a top 10 lender in the markets in which it has a presence. In 2023, it acquired Legacy Mortgagein February, Cherry Creek Mortgage in March and First Centennial Mortgage in August.
This story was updated Tuesday afternoon to include comments from Guild Mortgage.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
The average student loan debt is $37,557.60 per borrower, though the exact amount varies significantly from person to person.
Conversations around student loan debt forgiveness have called to attention a staggering statistic: in the middle of 2023, Americans held a collective $1.63 trillion in federal student loans spread amongst more than 43 million borrowers.
The average student loan debt is $37,557.60 per borrower, though the exact amount varies significantly from person to person depending on age, gender and education level, among other characteristics.
The following chart captures the staggering rise of average student loan debt since 2007 by displaying the average debt, total debt and total number of borrowers and how they have changed over time.
Average student loan debt over time
Year
Average debt
Total debt
Borrowers
2007
$18,233.22
$516 billion
28.3 million
2008
$19,297.66
$577 billion
29.9 million
2009
$20,467.29
$657 billion
32.1 million
2010
$21,865.89
$750 billion
34.3 million
2011
$23,232.88
$848 billion
36.5 million
2012
$24,751.96
$948 billion
38.3 million
2013
$26,262.63
$1.04 trillion
39.6 million
2014
$27,764.13
$1.13 trillion
40.7 million
2015
$29,086.54
$1.21 trillion
41.6 million
2016
$30,732.86
$1.30 trillion
42.3 million
2017
$32,159.62
$1.37 trillion
42.6 million
2018
$33,566.43
$1.44 trillion
42.9 million
2019
$35,198.14
$1.51 trillion
42.9 million
2020
$36,596.74
$1.57 trillion
42.9 million
2021
$37,096.77
$1.61 trillion
43.4 million
2022
$37,471.26
$1.63 trillion
43.5 million
2023
$37,557.60
$1.63 trillion
43.4 million
Source: U.S. Department of Education
After accounting for inflation, the average student loan debt has increased by more than 50 percent since 2007. According to the Pew Research Center, the median purchasing power of Americans has hardly risen in the past four decades, so it stands to reason that student loan debt is an ever-increasing source of financial burden.
Student loan debt has ballooned over the past 15 years. At the beginning of 2007, just 28 million borrowers held around $500 billion in student loan debt—or an average of $18,233 per borrower. In 2023, the number of borrowers increased to about 43 million, who collectively hold more than $1.6 trillion in debt, which amounts to an average of $37,557.60 per person.
Although average student loan debt is more than $37,000, this figure is somewhat skewed since some students have extraordinarily large sums of debt that raise the overall average. The greatest number of borrowers owe just $10,000 to $20,000 in student loans, but more than 3 million are over $100,000 in debt from federal student loans.
Using the most recent available data from the U.S. Department of Education, we’ve compiled detailed statistics about the average student loan debt for Americans. Read on to see more, or use the links below to jump to a specific section.
Average student loan debt:
Average student loan debt by state
While student loan debt is a national concern, the effects are felt differently in various states across the country. Many states have average student loan debt that hovers around the $37,645 national average, but there are several notable outliers. North Dakota, for instance, has the lowest average student loan debt at $30,000, while Maryland has the highest average student loan debt at $43,115.
Though they are not technically states, the District of Columbia has a very high average student loan debt of $54,347, and the U.S. territory of Puerto Rico has a relatively low average student loan debt of $29,577.
Here’s a list of U.S. states along with their average student loan debt, total student loan debt and total borrowers using data as of June 30, 2023.
Average student loan debt by state
State
Average debt
Total debt
Borrowers
Alabama
$37,265.17
$24.2 billion
649,400
Alaska
$34,493.45
$2.4 billion
68,700
Arizona
$35,543.01
$32.5 billion
917,300
Arkansas
$33,508.38
$13.4 billion
399,900
California
$37,343.36
$149 billion
3.99 million
Colorado
$36,939.31
$29.4 billion
795,900
Connecticut
$36,055.35
$18.5 billion
513,100
Delaware
$38,173.65
$5.1 billion
133,600
District of Columbia
$54,347.83
$6.5 billion
119,600
Florida
$39,037.04
$105.4 billion
2.7 million
Georgia
$41,529.41
$70.6 billion
1.7 million
Hawaii
$37,995.15
$4.7 billion
123,700
Idaho
$33,139.27
$7.4 billion
223,300
Illinois
$39,437.50
$63.1 billion
1.6 million
Indiana
$33,105.92
$30.3 billion
918,300
Iowa
$30,758.71
$13.5 billion
438,900
Kansas
$33,127.89
$12.9 billion
389,400
Kentucky
$33,110.42
$20.3 billion
613,100
Louisiana
$34,777.39
$23.2 billion
667,100
Maine
$33,854.42
$6.5 billion
192,000
Maryland
$43,115.60
$36.7 billion
851,200
Massachusetts
$34,922.69
$32.3 billion
924,900
Michigan
$36,928.57
$51.7 billion
1.4 million
Minnesota
$33,953.31
$27.2 billion
801,100
Mississippi
$36,904.50
$16.5 billion
447,100
Missouri
$35,536.60
$30 billion
844,200
Montana
$33,690.66
$4.4 billion
130,600
Nebraska
$32,449.54
$8.2 billion
252,700
Nevada
$33,996.68
$12.3 billion
361,800
New Hampshire
$34,341.36
$6.7 billion
195,100
New Jersey
$35,416.67
$44.9 billion
1.2 million
New Mexico
$34,022.39
$7.9 billion
232,200
New York
$37,960.00
$94.9 billion
2.5 million
North Carolina
$36,857.14
$51.6 billion
1.4 million
North Dakota
$30,000.00
$2.7 billion
90,000
Ohio
$35,000.00
$63 billion
1.8 million
Oklahoma
$31,874.88
$16.1 billion
505,100
Oregon
$37,415.59
$20.5 billion
547,900
Pennsylvania
$35,000.00
$66.5 billion
1.9 million
Puerto Rico
$29,577.05
$10 billion
338,100
Rhode Island
$32,885.91
$4.9 billion
149,000
South Carolina
$38,360.14
$29.1 billion
758,600
South Dakota
$31,746.03
$3.8 billion
119,700
Tennessee
$36,557.93
$32.5 billion
889,000
Texas
$33,447.37
$127.1 billion
3.8 million
Utah
$33,125.00
$10.6 billion
320,000
Vermont
$38,071.07
$3 billion
78,800
Virginia
$39,818.18
$43.8 billion
1.1 million
Washington
$36,176.03
$29.1 billion
804,400
West Virginia
$32,159.93
$7.4 billion
230,100
Wisconsin
$32,231.85
$23.8 billion
738,400
Wyoming
$30,357.14
$1.7 billion
56,000
Source: U.S. Department of Education
Total student loan debt for each state correlates strongly with population, so California ($149 billion), Texas ($127.1 billion) and New York ($94.9 billion) have the largest amount of debt among all states. The smallest amount of debt belongs to Wyoming, which holds just $1.7 billion among 56,000 borrowers—though that is nearly 10 percent of the state’s population with some sort of student loan debt.
Average student loan debt by age
Student loan debt varies significantly by age, with those ages 50 to 61 holding the highest average debt at $45,584.62. On the other hand, the greatest number of borrowers are ages 25 to 34 (14.9 million total borrowers), and the greatest amount of debt is held by those ages 35 to 49 ($613 billion total debt). Those 62 or older represent less than 6 percent of total borrowers who hold just $92 billion—less than any other age group.
The following chart shows the average student loan debt, total student loan debt and number of borrowers for each major age group.
Average student loan debt by age
Age
Average debt
Total debt
Borrowers
24 and younger
$14,383.35
$97.8 billion
6.8 million
25 to 34
$32,801.32
$495.3 billion
15.1 million
35 to 49
$43,000.00
$632.1 billion
14.7 million
50 to 61
$45,584.62
$296.3 billion
6.5 million
62 and older
$42,518.52
$114.8 billion
2.7 million
Source: U.S. Department of Education
The average debt for each age group is skewed slightly upward by a small number of people who hold a significant amount of student loan debt—in some cases $200,000 or more. Across borrowers ages 25 to 61, it is most common to have between $20,000 and $40,000 of student loan debt, whereas those under 25 generally have between $10,000 and $20,000. Most borrowers above age 62 have less than $5,000 in debt.
Across all age groups, a total of 11.7 million borrowers owe more than $40,000 in student loan debt—meaning around 25 percent of total borrowers have more debt than average.
Average student loan debt by race and gender
Student loan debt is not distributed equally among races and genders, as borrowing patterns tend to vary substantially. While Asian students tend to borrow the least amount of money to fund their education, Black students tend to borrow the most. In general, a smaller percentage of white students (67 percent) and Asian students (43 percent) took out loans for their education than Hispanic students (70 percent) and Black students (86 percent).
Here is a full look at how students of different races and genders funded their education using student loans.
Average student loan amount borrowed by race and gender
Race or ethnicity
Gender
Average borrowed
White
Male
$29,862
Female
$31,346
Black or African American
Male
$35,665
Female
$37,558
Hispanic or Latino
Male
$27,452
Female
$27,029
Asian
Male
$25,507
Female
$25,252
Source: American Association of University Women
Many women take loans out for four-year for-profit universities, which tend to charge higher tuition, leading to larger student loan burdens after graduation. The American Association of University Women found that women hold nearly two-thirds of student loan debt, and many women manage debt payments while also managing housing, food or childcare costs on an average post-graduation salary of about $35,000.
Among Black women, 57 percent of college graduates report difficulty repaying student loans despite earning a bachelor’s degree or higher. A 2022 study by The Education Trust also found that 12 years after enrolling in college, Black women find themselves owing 13 percent more than the amount they initially borrowed, whereas White men have managed to reduce their debt by 44 percent in the same time frame.
Average student loan debt by repayment status
The average student loan debt varies according to repayment status, as student loans are treated differently for students in school, throughout the post-graduation grace period, amid repayment or during deferment, forbearance or default. For students in school and during the post-graduation grace period, no payments are required—though interest may continue to accrue for unsubsidized loans. Deferment and forbearance are similar, though no interest accrues with deferment as it typically does with forbearance.
The following chart shows the average student loan debt for those with different repayment statuses. Keep in mind that the below chart is based on data from Q3 2023. Prior to that, in March 2020, many major shifts occurred in loan statuses due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
The following chart shows the average student loan debt for those with different repayment statuses.
Average student loan debt by repayment status
Status
Average debt
Total debt
Borrowers
In school
$17,903.85
$93.1 billion
5.2 million
Grace
$23,923.08
$31.1 billion
1.3 million
Repayment
$33,000.00
$9.9 billion
300,000
Deferment
$36,571.43
$102.4 billion
2.8 million
Forbearance
$40,260.07
$1,099.1 trillion
27.3 million
Default
$21,844.44
$98.3 billion
4.5 million
Source: U.S. Department of Education
While temporary government action has offered reprieve to millions of student loan borrowers, a looming financial crisis still threatens as high-interest loans prevent many people from accumulating wealth, purchasing homes or starting families.
Total student loan debt has tripled over the past 15 years—and in that time, it has passed both auto loans and credit card debt for the greatest share of non-housing debt in the United States, according to data from the Federal Reserve Bank.
With student loan debt on the rise, many people were struggling to make payments before the CARES Act. Now that payments have restarted as of October 2023, you’ll want to make sure you’re making payments on time. Student loan debt and payments can have an impact on your credit, so getting a handle on that debt is crucial.
If you need help with cleaning up your credit report or getting your credit back on track, our services at Lexington Law Firm could help. The combination of debt from student loans, credit cards, mortgages and auto loans can be overwhelming and make it hard to maintain good credit, but professional support can provide the boost you need to overcome these temporary obstacles.
Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Reviewed By
Alexis Peacock
Supervising Attorney
Alexis Peacock was born in Santa Cruz, California and raised in Scottsdale, Arizona.
In 2013, she earned her Bachelor of Science in Criminal Justice and Criminology, graduating cum laude from Arizona State University. Ms. Peacock received her Juris Doctor from Arizona Summit Law School and graduated in 2016. Prior to joining Lexington Law Firm, Ms. Peacock worked in Criminal Defense as both a paralegal and practicing attorney. Ms. Peacock represented clients in criminal matters varying from minor traffic infractions to serious felony cases. Alexis is licensed to practice law in Arizona. She is located in the Phoenix office.
When looking for a place to live, a variety of factors come into play like location, size and cost. Everyone wants to find and move into an apartment that fits their needs and is affordable. While the cost of living is getting more and more expensive across the country, there are some neighborhoods across America that are inexpensive.
If you’re looking for a studio, one-bedroom or two-bedroom apartment, we’ve built a list of the cheapest neighborhoods in America for renters.
Jump ahead:
The cheapest neighborhoods for studios
Studio apartments are open concept living spaces where the kitchen, living room and bedroom are in one larger room and only the bathroom is in its own room with walls and a door. Studios give off an urban vibe and are great for people who are singles or couples.
While studios are often smaller in square footage, they aren’t necessarily cheaper to rent. For example, a studio apartment in San Francisco can cost upwards of $3,300 for roughly 650 square feet!
If you’re looking for an eclectic studio apartment but don’t want to break the bank with rent, there are some neighborhoods worth considering.
5. St. Matthews (Saint Matthews, KY)
Average price per square foot: $1.34
The neighborhood of St. Matthews is a desirable pocket of Kentucky where homes are in high demand and businesses are growing within the community. Residents love the parks, walking paths and playgrounds.
Also, housing is very affordable in this neighborhood and it’s the fifth-cheapest neighborhood for studio apartments with average rent at $748 per month.
4. East Louisville (Louisville, KY)
Average price per square foot: $1.34
Whether you’re a baseball fan or a horse racing fan, Louisville has something to offer for everyone. From shopping to dining to watching a sporting event, you’ll find lots to do in the largest city in the state.
And while it’s a major metro city, studios are still very affordable for renters. If you’re looking to rent a studio apartment in one of the cheapest neighborhoods, check out East Louisville where rent is $748 a month.
3. West San Antonio (San Antonio, TX)
Average price per square foot: $1.09
West San Antonio is the third city in Texas that offers affordable rent for studio apartments. Again, the average cost of rent for a studio is $647. If you’re looking to move to Texas and live in a studio, you have plenty of the cheapest neighborhoods to consider.
2. Far West Side (San Antonio, TX)
Average price per square foot: $1.09
Another cheap neighborhood for studios in San Antonio is Far West Side. This neighborhood is full of fun studios for rent that are both affordable and chic. You can rent one for $647 and live in this city full of rich history, which is home to the historic Alamo.
1. Lackland Terrace (San Antonio, TX)
Average price per square foot: $1.09
Wide-open spaces — that’s what Texas has to offer. Lackland Terrace is a neighborhood in San Antonio full of parks, trails and outdoor spaces. This is a great place to be if you want a city vibe plus lots of open land. Lackland Terrace boasts studio apartments available for rent for as cheap as $647 a month.
The 25 cheapest studio neighborhoods
While these are the top five cheapest neighborhoods for studios, there are cities in America that have studios for rent at a great price. Check out the 25 cheapest studio neighborhoods.
The cheapest neighborhoods for one-bedroom apartments
One-bedroom apartments are great for renters who are single, couples or even small families. You’ll be equipped with a kitchen, living room and a separate bedroom and bathroom.
Prices can vary from city to city, but one-bedroom apartments can cost anything from $500 to $5,000. If you’re looking for a one-bedroom apartment, you can rent in some of the cheapest cities in America.
5. Eastside (Tulsa, OK)
Average price per square foot: $0.87
Oklahoma is more than just the name of a musical. And in Tulsa, you’ll find yourself in the second-largest city in the state. This city has lots of places to shop and eat, as well as green space and parks. Eastside is among the third-cheapest neighborhoods in the state, too, with rent as low as $0.87 per square foot for a one-bedroom apartment.
4. North Baton Rouge (Baton Rouge, LA)
Average price per square foot: $0.85
The neighborhood of North Baton Rouge is great for rent prices granted it’s located in the capital city. If you want to live in the heart of Louisiana but don’t want to pay a fortune for rent, check out this neighborhood where rent is $718 a month for a one-bedroom apartment.
Baton Rouge is located on the Mississippi River and has a plethora of fun things to do — from sightseeing to checking out historic monuments, this is a great city to call home.
3. The Falls (Tulsa, OK)
Average price per square foot: $0.85
The Falls is another neighborhood in Tulsa, OK, where you can find inexpensive one-bedroom apartments to rent. Rent is cheap, yet you’re situated in the heart of a large city full of fun things to do.
2. Parkway Village (Memphis, TN)
Average price per square foot: $0.84
Memphis means “Established and Beautiful,” and that’s what this city is. Here, you can find lots of shops, restaurants, museums, parks and more. Memphis is home to rock ‘n’ roll legend Elvis Presley, so you can find some cool musical memories here, too.
Also, you’ll find rent for as cheap as $585 a month in the charming neighborhood of Parkway Village. You can live in this big city and have affordable housing.
1. South Montgomery (Montgomery, AL)
Average price per square foot: $0.71
Montgomery, AL, is home to the Civil Rights Movement, so you’ll find a city full of rich history and lots of historic sites to visit. But in addition to the historical monuments, you’ll find some charming neighborhoods that are affordable for one-bedroom renters. The average rent for a one-bedroom is $491 in the neighborhood of South Montgomery.
The 25 cheapest one-bedroom neighborhoods
These five cities have the cheapest neighborhoods for one-bedroom apartments, but there are 25 other cities that made our list of the cheapest neighborhoods for renters. Check them out below.
The cheapest neighborhoods for two-bedroom apartments
Two-bedroom apartments are great for families or renters who need a little extra space. While more room equals higher rent, you can still find two-bedroom apartments in some of the cheapest neighborhoods across the country. Here are some of the most affordable housing options in America.
5. Fort Smith Eastside (Fort Smith, AR)
Average price per square foot: $0.63
One of the cheapest neighborhoods in the country for two-bedroom apartments is Fort Smith Eastside in Arkansas. Fort Smith is the second-largest city in the state, so you’ll find plenty of things to do and places to go when living here. Also, you’ll have great rent prices in a medium-sized city — win, win!
4. North Parkway Village (Memphis, TN)
Average price per square foot: $0.63
Located in the heart of Memphis, TN, is a neighborhood called North Parkway Village. Renters can find a variety of two-bedroom apartments with 960-plus square feet for rent for as little as $613 a month. That’s less expensive than some studio apartments with much less space!
3. South Montgomery (Montgomery, AL)
Average price per square foot: $0.63 cents
Montgomery, AL, is a historic city for the Civil Rights movement, but it also is a city that offers great rental prices for both one- and two-bedroom renters. Here, you can find apartments for rent for $600 a month, and you’ll get close to 1,000 square feet to live in. South Montgomery is the neighborhood to look in when looking for some of the cheapest apartments around.
2. John Barrow (Little Rock, AR)
Average price per square foot: $0.59
Little Rock is another city in Arkansas that provides a variety of options for renters looking to save. The neighborhood of John Barrow has large, two-bedroom apartments for rent for roughly $650 a month. This neighborhood has some of the largest apartments for rent for a great price. Enjoy living in the capital city at an affordable rate.
1. Fort Smith Southside (Fort Smith, AR)
Average price per square foot: $0.57
The city of Fort Smith helped settle the “Wild West” and was a western frontier military post back in the 1800s. This city is the second-largest city in the state and while it has a sizable population, you can still find some cheap neighborhoods scattered throughout for two-bedroom renters. Fort Smith Southside is the cheapest neighborhood for two-bedroom apartments with an average rent price of $518 per month.
The 25 cheapest two-bedroom neighborhoods
Looking for another city with cheap neighborhoods for two-bedroom apartments? Here is a list of 25 of the cheapest neighborhoods across America.
Finding affordable housing across the country
Across America, housing prices vary greatly. There are expensive neighborhoods and some of the cheapest neighborhoods scattered throughout the same cities. Finding affordable housing is possible, and you can rent in some of the cheapest neighborhoods in any city in America if you do your research.
Whether you’re looking for a studio, one-bedroom or two-bedroom apartment, there are inexpensive neighborhoods that offer great places to live and call home.
Methodology
We found the cheapest neighborhoods by taking the average rent prices in specific areas and dividing them by the average square footage for each unit type in the area to determine a price per square foot. Neighborhoods with insufficient inventory were excluded.
Rent prices are based on a rolling weighted average from Apartment Guide and Rent.’s multifamily rental property inventory of one-bedroom apartments. Data was pulled in November 2020 and goes back for one year. We use a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.
When are interest rates going to come down? Where should mortgage rates be before I buy or refinance my home? How much home can I afford today? These are just a few of the questions independent mortgage brokers get asked on a daily basis.
The reality is, borrowers are rate sensitive because it’s what they’re exposed to. Mainstream media often emphasize fluctuations in rates, which causes uncertainty and apprehension among borrowers. Furthermore, the average consumer is likely unaware of the variety of loan options available to them through the wholesale channel. This is why it’s more important than ever for independent mortgage brokers across the country to establish themselves as an expert and trusted advisor in the mortgage industry.
However, to do this, consumers need to know and trust that you’re the expert before they’re even going to consider you. So how do you build that trust and credibility? And how can you confidently talk to clients and potential clients about their mortgage needs?
Building trust
First, you need to establish trust and credibility. A mortgage is one of the biggest financial decisions someone makes in their lifetime. It can also be quite emotional and stressful. If they view you as someone who doesn’t know what they’re talking about, or someone who just wants to get a commission check, you’re not likely to get their business, or if you do, it’s unlikely to result in any future or referral business.
Trust starts with your online presence. The way you present yourself across digital platforms can make or break that first initial layer of credibility. When’s the last time you made a purchase or did business with someone without Googling them or checking reviews first? You need to make sure everything that comes up when someone Googles your name or business makes a good first impression, whether that be your social media or Google Business Profile.
Once you get a borrower in the door, continue building trust by building a relationship with them. Your conversations with clients should extend beyond mortgages. Get to know them on a more personal level. Do they have kids? Are they passionate about their job? What about sports? Find something to connect with them on and extend the relationship past the transaction.
Breaking down the misconceptions about interest rates
The big question we’re all getting is, “When will interest rates come down?” As much as I would love to have a definite answer, I don’t, and no one else does either. Realistically, it could happen tomorrow, two weeks from now or six months from now. Rates are something we can’t control, so instead of trying to time the market, focus them on what you can control — finding the best option for your borrower that meets their expectations today.
When borrowers ask you about mortgage rates, you first need to understand why they’re asking. The consistent media chatter and click-bait headlines around mortgage rates have caused hesitation among consumers when it comes to buying, selling and refinancing. It’s up to you to shift their mindset from just the rate to the overall financial goal for their mortgage.
Are they looking to save money on a monthly basis? Do they need to tap into their equity to pay off other debts? Do they want to pay off their mortgage faster? Are they interested in buying, but worried about down payment and closing costs? Once you have a better grasp on their goals and financial situation, you can make a recommendation and work through the best option together.
For example, say you have a borrower who is living paycheck to paycheck. After reviewing your product offerings, you find a refinancing option that could save this borrower $80 a month. To you, that may not seem significant, but for this borrower, that $80 could make a huge difference. If they refinance, they also won’t have to make the payment until a month after the loan closes, which could provide some additional relief. The reality is most Americans have $1,000 or less in savings, and they are unaware of the savings options that may be available to them through a refi.
Let’s take a look at a fast-track borrower. This borrower wants to pay off their mortgage faster. After looking at their budget, you can determine what loan is best for them, and give them some options. If resetting their term is an issue, maybe use a flex term loan. If they’re able to make a higher payment, perhaps a 15-year or 20-year loan would work. Once a borrower is open and honest with you about their goals and financial expectations, you’ll be able to give them options that make sense, and together, move forward with a plan of action.
When you change the focus from rates to financial goals, you’ll be surprised how much more productive a conversation can be with your borrower. It’s also important to keep in mind that what works for one borrower may not work for another, but the key is to dispel their misconceptions and concerns and present them with options they may not even knew existed.
Becoming the expert
You have to know the ins and outs of the products you can offer your clients. Touch base regularly with the account executives at your lenders and make sure you understand the variety of offerings that are available to your clients. Read up on industry news every day. Connect with others in the industry and share best practices.
Become the expert so you can confidently help your clients with their questions about mortgages, interest rates and the market. That, paired with strong relationships, will take your business to the next level.
Alex Elezaj serves as chief strategy officer at United Wholesale Mortgage. Before joining UWM, he was CEO of Class Appraisal.
Amanda Phillips, EVP of Compliance, ACES Quality Management
In the current mortgage landscape, ensuring the highest standards of loan quality is paramount not only during the origination process but also over the life of the loan. As the mortgage industry grapples with a changing market and regulatory complexities, we sat down with Amanda Phillips, Executive Vice President of Compliance at ACES Quality Management, to discuss how lenders can foster long-term success through a robust servicing QC process.
HousingWire:What were some of the challenges faced by lenders in 2023, and what is the outlook for 2024?
Amanda Phillips: 2023 was a year of trials and tribulations for financial institutions. Mortgage applications hit their lowest level since 1996, and lenders were faced with the compounding challenges of dwindling origination volume, soaring home prices, rising interest rates and inadequate housing inventory.
Thankfully, the tune of the housing industry has changed over the last few weeks. Analysts predict 2024 will bring a rise in mortgage origination volume and, potentially, several cuts to interest rate. While the challenge of low housing inventory persists across the country, I have a feeling loan officers will be busier. While the industry basks in the much-needed optimism for 2024, one thing is for certain, quality control (QC) and compliance are still important and worthy of lenders’ attention. An uptick in origination volume tends to bring an uptick in QC defects.
HW:Why is quality control (QC) crucial for lenders in the mortgage industry, and how can lenders maintain QC effectively?
AP: QC is crucial for lenders to ensure loan quality and mitigate risk. A well-rounded QC program can catch loan defects before regulators arrive for exam or investors send loans back for re-purchase. Operational capacity and the staggering cost to originate are challenges lenders will continue to face, leading many lenders to offset this hurdle by maintaining mortgage servicing rights (MSR). To maintain profitability through MSR, lenders also needa robust servicing QC program.
Maintaining QC begins with regularly assessing the integrity of both servicing portfolios and staff to ensure they adhere to all relevant servicing rules, guidelines and regulations. Fortunately, QC is a crucial area where lenders can see immediate returns from easy-to-implement audit and compliance technology. Lenders are advised to regularly review and update operational/compliance procedures and quality control frameworks, conduct self-assessments to test those updates, and, of course, remediate findings.
To mitigate and manage inherent servicing risks, your risk management team must identify your institution’s specific risk areas. From there, your internal audit team should ensure the proper processes and procedures are in place to address those risks. Subsequently, the QC team is responsible for verifying, from a transactional perspective, that your organization aligns its actions with its declarations and takes necessary measures regarding associated risks. Traditional methods, such as manual tracking and spreadsheets, make this process all the more prone to mistakes. This is why utilizing audit technology is so powerful; mistakes are significantly reduced, and efficiencies gained through less manual entry needed from the QC team.
The CFPB’s priorities signal the importance of self-assessment and remediation. Dot your I’s and cross your T’s with a paper trail. Lenders should review their in-house practices to ensure they meet the standard and compare with the recommendations from regulators.
HW:What role does the Consumer Financial Protection Bureau (CFPB) play in the mortgage servicing landscape, especially concerning compliance with the CARES Act and servicing regulations?
AP: The CFPB continues to emphasize compliance with the CARES Act and other servicing regulations, particularly in areas like fair lending, fair servicing, and forbearance. Over the last several years, they have clearly stated the priorities of fair lending and achieving equitable and fair housing programs. The CFPB has actively stated that strictly relying on artificial intelligence (AI) and automated complex credit models will not be tolerated. If a borrower was denied, the lender needs to be able to accurately speak to and explain why and how the decision was made.
This is just another area of how implementing a robust QC process can help lenders avoid these regulatory pitfalls. With audit technology, lenders will have this process documented and ready to pull up in the event of a regulatory audit or discrepancy.
HW:What steps should servicers take to identify and manage inherent servicing risks?
AP: Servicers should identify specific risk areas, establish proper processes, and conduct audits against policies and procedures. An example of a process improvement could be a Call Monitoring program. Consumer telephone interactions are an essential aspect of servicing that is easy to overlook from a quality perspective. No matter how many controls are in place, the need for human interaction, especially as it relates to collections and loss mitigation efforts, can result in an increased risk of non-compliance. Lenders can leverage a robust Call Monitoring program to identify where improvements are needed to protect the organization from regulatory and reputational risk. ACES Quality Management has a pre-built, configurable Call Monitoring audit pack that enables servicers to establish an additional layer of protection quickly and seamlessly within your QC program.
As financial institutions navigate the intricate web of compliance requirements and market fluctuations, ACES not only enables adherence to regulatory standards but it elevates the entire loan quality paradigm. By fostering a culture of continuous improvement while equipping professionals with powerful data-driven insights, ACES becomes an invaluable ally in mitigating risks and enhancing operational efficiency.
The significance of robust quality control and management in the mortgage sector cannot be overstated. In an environment where precision and compliance are non-negotiable, ACES stands as a testament to innovation and adaptability. For more tactical ways to improve QC, download ACES’ free playbook: Three Lines of Defense for Maintaining Servicing Loan Quality.
Not all is gloomy in the housing market. Redfin’s Homebuyer Demand Index has been on an upward trend since mid-January. The number of home tours has also seen a 16% increase since the start of the year, outperforming the growth observed last year during the same period. In addition, there’s been a 7% year-over-year increase … [Read more…]