Mortgage rates are on track to finish out the week higher than where they started. The upward push was in part due to some global Treasury news and some domestic inflation readings.
We still believe that mortgage rates will continue rising in 2018, so borrowers should consider taking action on a refinance or purchase now. Read on for more details. [embedded content]
Market Recap 1.12.18 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Rates flat today
It’s been a busy week for the bond market with a large spike early on in the week for Treasury yields after some talks about Japan and China cutting back on their Treasury purchases.
Click here to get today’s latest mortgage rates (Jul. 26, 2023).
If we take a look at the yield of the 10-year Treasury note (the best market indicator of where mortgage rates are going), we can see that it jumped over ten basis points early on in the week, came down a little yesterday, but is now back on the rise today after a strong Core-CPI reading.
Mortgage rates typically move in the same direction as the 10-year yield, so rates definitely moved a little higher this week. This is a trend that we’ve been expecting for a while and believe will continue into the near future.
Rate/Float Recommendation
Lock now while rates are low
With mortgage rates expected to move higher over the coming weeks and months, it definitely makes sense for most borrowers to try and lock in a rate sooner rather than later.
You can get started by getting a free rate quote online with our Mortgage Builder or with a quick phone call to a mortgage specialist.
Click here to head to our Mortgage Builder and figure out how much you could save.
Today’s economic data:
Consumer Price Index
The December CPI readings are out today, showing a monthly rise of 0.1%, putting the year over year change at 2.1%. So called core-CPI (less food and energy) rose a notable 0.3%, putting it at 1.8% year over year.
Coming in at 0.3%, that’s one tenth higher than analysts had predicted. That’s enough to excite financial market participants.
Retail Sales
Retail sales for December rose 0.4 from the previous month. Retail sales less autos also increased 0.4%, as did retail sales less autos and gas. The control group rose 0.3%.
Business Inventories
Business inventories for November rose 0.4%. That’s one tenth higher than what analysts had expected.
Get the GreenLight and close in 21 days*
Notable events this week:
Monday:
Tuesday:
Fedspeak
JOLTS
Wednesday:
Import and Export Prices
Fedspeak
EIA Petroleum Status
10-Yr Note Auction
Thursday:
Jobless Claims
PPI-FD
Friday:
Consumer Price Index
Retail Sales
Business Inventories
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Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Last week, HUD Secretary Julián Castro and NAR President Chris Polychron told a room full of realtors that it was exploring alternative credit scoring models to expand access to mortgages.
As it stands, FICO scores are the only game in town, used by pretty much every mortgage lender out there to gauge a borrower’s creditworthiness.
So when you apply for a mortgage, your FICO score is pulled from each of the three main credit bureaus, including Equifax, Experian, and TransUnion.
The problem is that millions of would-be home buyers don’t actually have FICO scores because their credit history is too limited. This doesn’t necessarily make them high-default risks, but without a score it’s impossible to gauge.
This has always been the catch-22 of credit – you need credit to get new credit, but how do you get the ball rolling?
Typically, someone without credit gains access via the authorized user route, or simply gets a chance via a credit card issued from his or her local bank or credit union.
From there it becomes easier to establish a more robust credit history and eventually qualify for a mortgage.
But not everyone wants a credit card, or credit in general, beyond a mortgage, which is often a necessity more than it is a preference.
Enter the VantageScore
Late last year, VantageScore, an alternative to FICO that was created by the three credit bureaus in 2006, revealed that Fannie Mae and Freddie Mac were looking into updated scoring models.
And last month, VantageScore released a study that assessed the social and financial impact of new credit scoring models at Fannie and Freddie.
The company discovered that its VantageScore 3.0 model is able to generate a credit score for an overwhelming 98% of consumers with credit files at the three credit reporting bureaus.
By including an additional 30-35 million consumers who are generally not scored via conventional credit score models (like FICO), roughly 72,000 more households would be able to get a mortgage each year.
This was determined by considering that with the previously unscoreable population, 7.6 million would have credit scores of 620 or higher, the traditional cutoff for a Fannie/Freddie mortgage.
And of those 7.6 million, 72,285 creditworthy households that would want to buy as opposed to rent (and could qualify based on other factors like down payment) would be eligible.
VantageScore believes this influx of new borrowers would offset any implementation costs associated with a new credit score, and could actually lead to a revenue opportunity of $272 annually for the GSEs.
Additionally, the alternative credit scoring model could expand mortgage lending to Hispanic and African American home buyers by 16% as compared to 2013 levels.
This seems to support a NAR analysis of mortgage data from 2007 to 2013 that found the share of rejected loans due to credit score was significantly higher for groups like African Americans.
Interestingly, FICO has been working to revamp its own score lately, announcing a pilot program last week that uses alternative data to identify creditworthy borrowers who are currently without credit scores.
Call this FICO’s response to other companies trying to steal market share.
For the record, a number of third-party companies now offer free VantageScores (Credit Karma, LendingTree, Quizzle, etc.), so if you want to know where you stand, it shouldn’t cost you anything.
Additionally, your score should be fairly similar to your FICO score because the models use similar methodologies, so if you practice standard healthy credit habits, you should have good scores across both models.
In February, the Consumer Financial Protection Bureau issued an advisory opinion addressing how certain mortgage comparison site platforms could potentially be violating the Real Estate Settlement Procedures Act (RESPA) section 8.
According to the advisory opinion, if the mortgage comparison site “provides enhanced placement or otherwise steers consumers” to certain operators based on compensation, an operator would be in violation of the RESPA section 8. And if the operator received a “payment or other thing of value” that is, at least in part, for the referral activity the site provides, a mortgage comparison site will be hit with a prohibited referral fee.
How have mortgage comparison sites changed since the advisory opinion, and what does that mean for lender marketing?
According to Michael McAllister, president of Empower LO, it means it may be time for individual loan officers to start a Google Ads campaign as costs are lower. He’s already seeing changes reflected in the cost of Google Ads — specifically in pay-per-click direct response marketing, where companies may use pay-per-click campaigns to drive traffic from Google searches to landing pages to generate leads. Some of those landing pages would generate leads by presenting themselves as a mortgage rate comparison or ranking site.
A drop in mortgage comparison sites
To confirm why the cost of Google Ads is cheaper, he looked at the number of mortgage comparison sites that advertised before the CFPB advisory and after — June 1-30, 2022 compared to February 7-March 8, 2023. “Lead costs had dropped and the number of competitors [advertising] dropped substantially,” said McAllister. He wanted to prove the link to the CFPB ruling.
“I broke it down across seven different states,” he said. “In terms of the final averages, we had a 59.5% decrease in cost per click and a corresponding 50% decrease in cost per lead.”
In one market, they even saw cost per lead drop by 166%, according to his analysis.
“For a more concrete link, during that same period of time, we saw an average of 60% drop in the number of competitors advertising in those markets,” he said. “Not only is it the cost per lead dropping, but we can tie that to a drop in the number of people that were advertising. From there, I can take a look at some of the names of the companies that were advertising back in June that are not advertising in the last 30 days.”
What does this mean for lenders?
For most individual loan officers, this hasn’t had an effect unless they’re working with a marketing agency passing those savings onto them.
However, for those lenders wanting to invest in Google Ads, this may be the right opportunity. With fewer competitors and a lower cost per click, it’s a good time to explore your marketing options.
“There are a lot of lenders out there that have considered running Google Ads for their business but feel like it’s too competitive, too difficult, too expensive,” McAllister said. “We’re seeing reason to believe that if it felt like that before, it might not feel that way now.”
Introducing Inside Voices with Kristin Messerli, a new interview video series hosting by Messerli, who’s research on NextGen homebuyers helps to inform tomorrow’s generation. She is also author of NextGen Homebuyer Research and a speaker and educator.
Today, she interviews Yanely Espinal, the Education Outreach Director for NextGen Personal Finance. She shares what every leader needs to know about reaching Gen Z, and the moment that made her decide to devote her career to personal financial education.
As a child from an immigrant family, financial literacy was not something that was discussed at home, and Yanely struggled with personal finance as she entered adulthood. Conversations about personal finance can be something that starts at an early age, she says, to alleviate societal pressure and achieve confidence.
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Yanely: I was really struggling myself with my personal finances because I’m first-generation American. I’m a daughter of immigrants. My parents are from the Dominican Republic. And so we grew up in a very traditional household. They pretty much were cash only for everything. And my parents never really had bank accounts, or debit cards, or credit cards, or anything like that.
And so we never talked about money. And when it was time for me to go off to college, I remember my parents being like, “Okay, sweetie, you better go and get some scholarships because we don’t have any money to give you to pay for college tuition.” And being that we’re low income, I did qualify for a lot of grants and I did qualify for PELL and a lot of different programs that did cover a lot of it, but there was still so much that I didn’t know about the cost of college and how to fill out your FAFSA and how to get additional scholarship dollars. And long story short, I got really lucky and I got a full scholarship to Brown University because they had a special program for low-income students, and there was just a pot of money that was meant for some of the neediest families to be able to graduate without student loan debt.
So I was in that program. Shout out to the Sidney Frank scholarship program at Brown. It was a great experience. And what that meant is that I dodged the whole student loan experience because I never really had to take on student loans, and I never had to compare interest rates or understand what it means to take on loans like that. So when I got to college, I wanted to have a laptop and I wanted to have name brand clothes and shoes, and I wanted to get Starbucks and go to the movies with my friends. And so I got my first credit card when I was in college, and that was my first entry point into the world of personal finance. I didn’t know what it even meant to use a credit card. I had no idea. And yet, I was swiping my little credit card up and down campus, buying everything, and it got out of control really quickly.
I went from $1,500 to $20,000 by the time I graduated, and I didn’t have anybody to explain to me how the compounding interest works, and how it was really growing and getting out of control. So I held onto that secret. And when I graduated and once I became a teacher, I realized this doesn’t make sense. My paycheck is not enough to pay all my bills, help out my family, get transportation to my job, pay for lunch, and also pay off these credit cards. So that was when I picked up a book about money and my real kind of education was a self-education, learning about money myself through reading books. And then later I decided, “You know what? I love teaching, but I think I want to teach specifically about financial literacy because it’s something that I never got myself when I was in school.”
Inside: Need help with do credit cards have routing numbers? This guide teaches you the basics of credit card money management.
Have you ever wondered if credit cards have routing numbers?
If so, you’re not alone.
In fact, this is a question that we get asked quite often here with money management.
The short answer is no, credit cards do not have routing numbers. But there’s a bit more to it than that.
Keep reading to learn more about why credit cards don’t have routing numbers and what other options are available if you need to make a direct deposit or automatic payment using your credit card.
What are Routing Numbers?
A routing number, often known as ABA or Transit number, is a unique nine-digit code that identifies your bank in the U.S. and helps to direct your transactions correctly.
Here’re a few things to take note of:
It is indispensable for online transactions, direct deposits, and financial exchanges.
Banks and financial institutions use it to identify themselves during transactions.
It usually appears at the bottom of your checks.
There may not be a routing number for all financial institutions.
Cherished for over a century, these magic digits aid in a seamless banking experience.
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.
Do Credit Cards Have Routing Numbers?
Here’s the deal, no, credit cards do not have routing numbers.
So, when you’re making a payment or doing a transaction, you won’t need any routing number.
You just enter your credit card’s account number, and you’re good to go.
Confusing it with routing numbers? Learn how to read a check.
Why Credit Cards Don’t Have Routing Numbers?
Your credit card and bank accounts are two completely different methods of paying.
While routing numbers are nine-digit codes that identify your bank. They’re used to process payments and deposits, and they appear on the bottom of your checks.
So, naturally, you might assume that credit cards have routing numbers. But they don’t—and there are a few reasons why.
1. Debit Cards Do Not Need Routing Numbers
Primarily, routing numbers are for bank transactions like wire transfers, checks, and direct deposits. When you use a debit card, you’re not performing these actions.
Hence, there is no routing number involved.
Your debit card is directly linked to your bank account, and that’s how transactions are processed.
For kids… Using a Greenlight debit card is a great way to teach responsibility.
2. Credit Cards Do Not Need Routing Numbers
Credit cards function entirely differently from your usual bank account! Here are the key points:
A credit card has a unique 16-digit account number, not a routing number.
It’s not about moving funds from your account to another when you’re using your credit card. Instead, you’re essentially borrowing bucks from your card issuer, sort of like a personal money-lender.
In short, your credit card enjoys its own exclusive payment processing lane, no routing numbers required!
Understanding Credit Card Numbers
Credit card numbers, much like routing numbers, hold critical account information that extends beyond just a unique identifier.
Each series of digits serve a purpose – revealing the card network, issuer, and your specific account number, and even acting as a key validation tool.
Understanding the structure of credit card numbers can help you not only identify your card type but also the financial institution it’s associated with.
1. Account number
An account number on your credit card is a unique 16-digit identifier. Think of it like your card’s fingerprint.
For example, if you’re holding a Mastercard, your account number likely starts with the number “5”. This number is different from your card security code or pin. It’s crucial for processing transactions and differentiates your card from others. Each time you transact, this account number comes into play.
So, knowing what it represents adds to your financial literacy!
2. Brand identifier
American Express, Discover, MasterCard, and Visa all have different systems for generating credit card numbers.
A routing number is not used in the credit card number generation process. Therefore, a credit card does not have a routing number.
Think of credit card numbers like a secret map. That first digit? It’s the Major Industry Identifier (MII), a fancy name for the network your credit card belongs to:
3 for American Express
4 for Visa
5 for Mastercard
6 for Discover.
The next handful of numbers is your Issuer Identification Number (IIN), the ‘who’s who’ of banks showing the issuer of your card. For example, a card starting with 475050 is a Visa from JPMorgan Chase.
The remaining digits are your unique account number with a check digit for validation.
3. CVV number
CVV stands for Card Verification Value.
Your credit card’s CVV number is that extra little bit of security magic for online shopping. This 3-digit (or 4, for you Amex users) number hangs out on the back of your card—except for American Express, where it lounges on the front.
It’s an anti-fraud champion, making sure the wizard behind the curtain really has the card itself, not just the number.
Remember, this little number works best when kept a secret, so keep it under wraps!
4. Cardholder name
The cardholder name on your credit card is just your own name — simple as that. It’s printed right on your card.
This is to help the retailers verify that you, the cardholder, are indeed the legit owner of the card when making a purchase.
So, it’s just another security step to keep your card safe from theft!
Credit Card Example Number
Here is a quick example of how credit card numbers are used in real life.
Imagine card number 4298 6512 9087 6543.
That ‘4’ indicates it’s a Visa. The ‘2986’ might say it’s from Bank XYZ, and the ‘5129087654’ is just you! Now, isn’t that a cool language to learn?
How Credit Card Transactions Work
When you use a credit card, you are borrowing money from the card issuer. It is not a “free” unlimited supply of funds.
If you pay your credit card in full by the payment date, you don’t owe interest. However, if you don’t pay the balance in full, you will start to accumulate interest and possibly feed.
Here are some key points of knowledge to know:
The billing cycle refers to the period, about thirty days, where all your financial transactions are tracked. This period generally lasts for an entire month.
The statement balance is the amount of money you owe at the end of your billing cycle. Once this amount is determined, you’re given a due date, which is typically 25 days after the end of your billing cycle, to repay the full amount. If you’re able to pay off your entire statement balance by this due date, you’ll avoid any interest charges on your credit card. However, if you fail to pay, you’ll have to incur an additional fee.
The outstanding balance consists of all your transactions from your grace period statements. This is the sum that you need to pay off in order to have a zero balance on your credit card.
Did you know you can use a Visa Gift Card on Amazon?
Now, You know the Account Number for Credit Card
We hope this guide has helped you understand a little more about credit cards and how to use them wisely.
Remember, a credit card is a powerful tool that can help you build your credit and improve your financial status.
Use it wisely and always pay your balance in full and on time to avoid costly fees and interest charges.
So next time you pull out your card, impress your friends with this cool trivia on credit cards!
Now, learn how many bank accounts should I have…
Know someone else that needs this, too? Then, please share!!
Located just southeast of Tacoma, Puyallup is a charming city known for its flower fields, farming history, and the iconic Washington State Fair. If you’re considering moving to Puyallup, then you may be wondering whether to rent versus buy a home in the area.
If you’re looking to buy a home in Puyallup, the current median sale price for a home is $523,500 as of July. On the other hand, if you’re considering renting an apartment in Puyallup, the average monthly rent for a two-bedroom apartment is $1,808. Depending on your budget and current mortgage rates, it may be that renting is less expensive than buying a home. However, it still may be the right decision for you to buy a home this year.
At the end of the day, making the decision between buying a house or renting an apartment in Puyallup depends on a variety of factors. In this Redfin guide, we will delve into the advantages and disadvantages of both renting and buying in Puyallup, so you’ll have the knowledge to make an informed choice. Let’s get started.
Advantages of buying a home in Puyallup
Investment opportunities
The first advantage of buying in this market is to consider it as an investment. If you do, you’ll likely make money. Appreciation is real, and even if the market slows down, appreciation grows. Equity can be used as a step towards a bigger house in the future, it can be used as cash when refinancing for medical costs, college costs, or just as a long-term retirement to subsidize your 401k.
Tax benefits
Homeownership has benefits, including potential tax benefits. In many instances, it can be a tax write-off, and may reduce your taxable income. Make sure to speak with a tax professional to understand the benefits you may qualify for.
Growth in the area
Puyallup is growing and expanding. What may feel like living in a smaller community now, may not be in a few years.
Disadvantages of buying a home in Puyallup
Low inventory and rising prices
A key disadvantage of currently buying a home in Puyallup, Washington, is the combination of few homes for sale and rising prices.Sellers aren’t selling, creating very low inventory in the market, and as a result, home prices are not decreasing. Many people are waiting for home prices to drop, but what we’re seeing is that prices are still rising.
Not finding your “dream home”
With a high demand for housing and a limited supply of available properties, buyers often find themselves having to settle for a home that may not meet all of their preferences or requirements. The intense competition in the market can lead to bidding wars, driving up prices and putting added pressure on buyers to make quick decisions.
Additionally, low inventory can make it challenging to find a home within a certain budget range or desired location. As a result, buyers may have to compromise on certain aspects, such as the size of the property, home features, or proximity to schools or other amenities, which can be a significant disadvantage when looking for a long-term investment in a home.
Determining if you are ready to buy a house in Puyallup
Depending on your current goals, there are a few additional factors that you may want to consider before deciding if now is the right time to buy a home.
1. Housing market conditions: One of the main factors to consider when buying a home in Puyallup is the housing market. Currently, the housing market in Puyallup is very competitive meaning that you’re likely to see bidding wars and multiple offers. As a result, it’s important to know how much you can afford in today’s market. To gain a better understanding, utilize a home affordability calculator.
2. Financial stability: Before you begin your homebuying journey, it’s important to have a good credit score and a stable income. Make sure you set aside funds to cover your down payment, closing costs, and other costs related to buying a home. It’s also a good plan to have an emergency fund set aside should you have any unforeseen expenses.
3.Long-term commitment: Buying a home is a significant investment compared to renting an apartment – especially when it comes to making a long-term commitment and financially. Therefore, if you’re not planning on living in Puyallup for more than a few years, it may make more sense to continue renting.
4. Personal goals: Finally, you’ll want to evaluate your priorities and figure out your personal goals before beginning the homebuying process. Do you want a home that’s close to amenities or in a more secluded location? Are you looking for a large kitchen or simply more space?
If you’re unsure whether you’re ready to buy, consider consulting with your real estate agent or financial advisor to fully understand your options.
Is it competitive to buy a home in Puyallup?
Yes, the housing market in Puyallup is very competitive. Multiple offers and bidding wars are common, and buyers are quick to write offers as they’ve spent time navigating the current market. Be ready and start working with an agent as soon as you can.
Advantages of renting a home in Puyallup
No maintenance costs
There’s no hassle if the stove stops working – your landlord has to pay for it. The roof is leaking and needs repairs, your landlord has to fix it, and that’s a large out-of-pocket expense you don’t have to consider.
Flexibility
Renting an apartment or house in Puyallup offers the advantage of flexibility. If you’re uncertain about your long-term plans or prefer the freedom to explore different neighborhoods, renting provides the flexibility to move more easily. Whether it’s for career opportunities, personal preferences, or simply a desire for change, renting allows you to adapt your living situation without the long-term commitment of homeownership.
Potential for lower monthly payments
Renting a home in Puyallup may allow you to have lower monthly payments. With the average rent for apartments in the area being around $1,800, it may be more affordable to rent compared to buying a home. To gain a better understanding of your circumstances and make an informed decision, you can utilize a mortgage calculator. You can get an idea of what your monthly mortgage payment may be, allowing you to better compare between renting vs buying a home.
Disadvantages of renting a home in Puyallup
Risk of rent increases
Besides losing out on appreciation and tax benefits, the main disadvantage to renting is that the rent price is out of your control and doesn’t last forever. Your landlord can raise the rent each year. Ask yourself, do you want to move every year because the landlord is raising rent or would you rather live in a home for 30 years with the same mortgage payment with no fear of it raising? As a homeowner, this stable income may help you save money for future events like trips, retirement, and more.
Lack of updates
Another disadvantage to renting is that your landlord may not keep the home updated with new and modern features. Homeownership gives you control to buy and install new features like a smart refrigerator, gas fireplace, new carpet, and eco-friendly flooring.
Renting vs buying in Puyallup: A real estate agent’s final thoughts
I believe that now is a great time to consider buying a home in Puyallup. With available homes that offer negotiation possibilities, you may not have to compete with multiple offers, making the process less competitive. At the end of the day, whether you rent or buy in Puyallup, the area is a wonderful place to call home. If you’re just starting to think about buying a home, make sure you’ve looked through your finances to understand what you can afford now and in the years to come.
Just outside of Chicago is the picturesque town of Naperville, where you’ll find beautiful natural scenery like the DuPage River. If you’re considering moving to Naperville, then you may be wondering whether to rent versus buy a home in the area. Even in today’s real estate market, there are pros and cons to consider if you’re renting or buying a home in Naperville, making it that much harder to decide what fits your goals.
If you’re looking to buy a home in Naperville, the current median sale price for a home is $587,201 as of July. Or if you’re checking out apartments for rent in Naperville, the average monthly rent for a two-bedroom apartment is $2,263. Depending on what you can afford and today’s mortgage rates, it may be that renting is cheaper than buying. But, there are many reasons why buying a home now may be more beneficial for your needs than renting. In this Redfin article, we will delve into the pros and cons of renting and buying in Naperville, helping you make an informed decision based on your unique circumstances. Let’s get started.
Advantages of buying a home in Naperville
Increase in investment opportunities
The home prices in Naperville, and the surrounding areas, have been steadily increasing year over year. This trend shows market growth and a greater possibility in investment return. Becoming a homeowner is more likely to offer a good financial gain in the future.
Money in your own pocket
The question, “Why rent when you can own?” applies much to our market. Owning a property allows you to stop paying another to live and start building equity into your own asset. In addition, the rental market in Naperville is typically lucrative, leaving a great opening to become an investor if you wanted to rent your home to another in the future.
Disadvantages of buying a home in Naperville
Interest rates
The increase in interest rates has made home buying more expensive. Home prices have still stayed strong and lenders are finding new creative ways to help with the rate increase, but buyers are still up against finding the right affordability. This increase in interest rates has made buyers have to adjust their monthly budget to fit their home buying wants or make exceptions in their home search to better fit their budgetary needs.
Low inventory
If you consider yourself more of a picky buyer, you may have a difficult time finding the perfect home as we have low inventory in the Naperville area. With low inventory, you’re more likely to run into multiple offers and bidding wars. In addition, buyers are having to make exceptions for some of their home wants or compete in those multiple offers, especially when homes are updated or renovated.
Determining if you are ready to buy a house in Naperville
There are several factors to consider if you’re deciding whether to rent vs buy in Naperville this year. Here are five points to look at:
1. Time of year: Naperville is a highly seasonal market. Time of year is a huge factor to consider when both selling and buying. You’ll typically see more inventory available in the spring and summer. During this time, homes usually sell faster, at a higher price, and you’ll have more competition. Less inventory is typically available in the fall and winter. However, there is typically less competition during that time and more likely to get a home at a lower price.
2. Financial stability: Before starting your homebuying journey, it’s important to understand your finances – including having a good credit score and a stable income. Be sure to set aside some additional funds for down payment, closing costs, home inspection fees, and additional expenses that are part of the homebuying process. It’s also good to build an emergency fund in case you incur any unforeseen costs.
3. Personal goals: You’ll also want to evaluate your personal goals and priorities before deciding to buy a home in Naperville. Are you looking for a move-in ready home or a renovation project? Do you want a home with modern upgrades or historic charm? Determining what’s important to you in a home can help you figure out if buying a home in Naperville aligns with those goals.
4. Long term commitment: Compared to renting an apartment, buying a home is a significant financial investment and time commitment. So, if you’re not sure you’ll be living in the area for more than a few years, it may be better to continue renting vs buying in Naperville.
5. Housing market conditions: When considering buying a home in Naperville, it’s essential to evaluate the current housing market conditions and how they impact how much house you can afford. Understanding whether it’s buyer’s or seller’s market can help you gauge competition – and help adjust your expectations. Currently, Naperville is in a seller’s market, meaning there are more buyers looking to purchase a home than there are homes on the market.
If you’re unsure whether you’re ready to buy, consider consulting with your real estate or financial advisor to fully understand your options.
Is it competitive to buy a home in Naperville?
We’re seeing less inventory in the Naperville market, making home buying competitive. It’s common to see multiple offers on properties, and a home’s time on the market to be short before it goes under contract. This is especially true when it comes to homes that are under 20 years old or were recently renovated to trending styles. Offers typically include over list price, appraisal waivers, and as-is or waived inspections. With high interest rates, we have also seen an increase in cash or large down payment buyers.
Advantages of renting a home in Naperville
Maintenance costs and availability
Just as home prices have risen, so have the costs of contractors and materials. If you have home maintenance that you want to complete, it can be more costly and take a while to find a contractor. Renting helps you avoid these additional costs, as many of these costs will be covered by your landlord.
Easier to move on from a property
Leases typically have an end date and tenants can choose to leave when following the cancellation terms of the contract. This allows tenants a little more flexibility to “get up and go” without the uncertainty of selling their investment as they don’t own the property.
Disadvantages of renting a home in Naperville
Renewal changes and rent increases
Typical leases have a set time of expiration, whether it’s 6-months, 12-months, or month-to-month. When your lease ends, your landlord has the ability to end the lease, make modifications to the lease, or change the charges of the lease. This can leave you having to find new living options or increase in your monthly expenses to continue to live in the property. In addition, some leases allow cancellations prior to the lease ending, which may have a renter trying to find a new option of living quicker than they anticipated.
Limitations to design
When renting, you’re paying to live in the landlord’s property. Therefore, there are typically more restrictions to using their property. This usually includes many limitations on personalizing the space such as type of flooring, painting, light fixtures, etc. This makes it more difficult if you want to add your own touches to make the home feel more like your own.
Renting vs buying in Naperville: A real estate agent’s final thoughts
I personally believe there is never a “bad” time to buy a home. The biggest focus should be to review your main goals for buying to identify if it’s a good time for you specifically. Ask yourself – How long do I see myself in this home? Do I have an interest in renting it in the future?; and if so, is the property rentable? Does this home fit all of my needs? Can I take on the disadvantages of buying a home? If you’re finding answers to be more yes than no, it’s a great time for you to buy.
On July 14, 804,000 longtime student loan borrowers began receiving word that their $39 billion in remaining debt would be forgiven as the result of the Education Department’s income-driven repayment (IDR) account adjustment. This one-time program, first announced in April 2022 to repair past missteps in the IDR system, is counting more past repayment periods toward income-driven repayment (IDR) forgiveness. Many borrowers will be at least three years closer to IDR forgiveness — and some will automatically see their loans forgiven altogether.
“At the start of this Administration, millions of borrowers had earned loan forgiveness but never received it. That’s unacceptable,” Department of Education Under Secretary James Kvaal said in a July 14 press release announcing the news. “Today we are holding up the bargain we offered borrowers who have completed decades of repayment.”
This is just the tip of the iceberg. More than 4.4 million borrowers have been repaying their loans for at least 20 years, and 2.3 million of these borrowers have never defaulted or been delinquent on their loans, according to April 2021 Education Department data provided to Sen. Elizabeth Warren. However, there’s not yet a final count of total borrowers who will receive the IDR account adjustment forgiveness, says Mike Pierce, executive director of the Student Borrower Protection Center (SBPC).
“If I were a borrower, I would feel pretty good about this happening, but you know, we never say never,” Pierce says. “This is something that has never been put in front of a federal judge, and we have not seen any signs that it’s going to.”
All this is occurring as borrowers gear up for student loan payments to resume in October. Here’s what you need to know about the next waves of loan forgiveness under the IDR account adjustment and what qualified borrowers can do to prepare for it.
When will IDR adjustments be made?
The Education Department said it will notify waves of loan forgiveness recipients about every two months. Since the first major batch was announced on July 14, borrowers can expect the next announcement by mid-September.
The department plans to apply the account adjustment by the end of 2023 to all borrowers who’ve reached enough payments for forgiveness; all other borrowers will receive at least three additional years of credit toward IDR loan forgiveness in 2024.
Will I get IDR account adjustment forgiveness?
To find out whether you’ll receive loan forgiveness under the one-time IDR account adjustment, you must count your past payments yourself.
Generally, borrowers with undergraduate loans will receive loan forgiveness if they’ve made at least 240 monthly student loan payments, and those with some graduate loans will reach forgiveness if they’ve made at least 300 payments, Pierce says.
From July 1994 onward, the adjustment counts the following periods toward the 240 or 300 payments needed to reach forgiveness:
Any month a borrower was in repayment, even if the payments were late or partial. The type of repayment plan also doesn’t matter.
Time spent in forbearance, either periods lasting 12 or more consecutive months or a cumulative 36 or more months.
Any month spent in deferment other than in-school deferment before 2013.
Any month spent in economic hardship or military deferments on or after Jan. 1, 2013.
Any months in repayment, forbearance or a qualifying deferment before a loan consolidation.
Months spent in default will generally not be included in the recount, though borrowers who enroll in the temporary Fresh Start program to get out of default will get IDR credit from March 2020 through the date they leave default.
Log in to your Federal Student Aid (FSA) account at StudentAid.gov to see how long you’ve been in repayment. To see detailed information, including descriptions of the specific forbearance or deferment periods, request your account history from your servicer.
How to prepare for the IDR account adjustment
The loan forgiveness will be largely automatic for most eligible federal borrowers with older direct loans, federally held Federal Family Education Loan Program (FFELP) loans and parent PLUS loans. These borrowers don’t need to take any action to qualify or receive loan forgiveness.
“The good news is, for most people, you don’t actually need to be an expert on this program to benefit from it,” Pierce says. “If you have a loan that’s owned by the Department of Education, it’s just gonna work for you.”
But there are some small steps you can take to be proactive.
Update your contact information
Regardless of the type of federal student loans you have, check that your current contact information is listed in both your FSA and servicer accounts. While you’re at it, make sure you still have the password to these accounts, and reset your login credentials if needed.
Forty-four percent of federal borrowers were transferred to a new servicer during the pandemic payment pause, according to a June estimate from the Consumer Financial Protection Bureau, so now is also a good time to see if your servicer changed.
You’ll likely be notified by email if and when your loans are forgiven under the IDR account adjustment, but student loan communications may also arrive by mail.
Consolidate commercially managed federal loans
Some federal loans are not held by the government, but by a private entity. Borrowers with these commercially managed federal loans won’t benefit from the recount automatically — they’ll need to consolidate these loans to qualify. The account adjustment will count periods of repayment prior to consolidation toward IDR forgiveness.
Commercially held loans include certain FFELP loans, Perkins loans and Health Education Assistance Loan (HEAL) Program loans. You can see what type of loans you have on the dashboard of your FSA account or servicer portal.
You have until the end of 2023 to consolidate commercially held loans, but don’t delay. The full consolidation process can take from 30 to 60 days, Pierce says. Get started by submitting a direct loan consolidation application on the Federal Student Aid office website.
Consolidate newer parent PLUS loans
Parent PLUS loans are included in the IDR account adjustment. If you reach 300 payments — or 120 payments if you’re eligible for PSLF — your parent PLUS debt will be discharged automatically this year, regardless of whether or not your PLUS loans are consolidated.
But if you have fewer payments than that, you’ll need to act. Consolidate your parent PLUS loans before the end of 2023 to benefit from the adjustment, and enroll in an IDR plan called Income-Contingent Repayment to continue making progress toward forgiveness.
Apply for Public Service Loan Forgiveness
Borrowers eligible for PSLF are also eligible for the account adjustment; they can receive IDR loan forgiveness after just 10 years, or 120 eligible payments. PSLF-eligible borrowers with direct loans, including parent PLUS loans, will benefit automatically. Those with either federally or commercially managed FFELP loans must consolidate them into a direct consolidation loan by the end of 2023 to get PSLF credit under the account adjustment.
After the adjustment is applied to your account, you’ll see credit toward PSLF for any month after October 2007 during which you were in repayment and had qualifying employment.
“If you’ve applied or will apply for PSLF and certify your employment, you may see the benefits of this adjustment to your qualifying payment count,” writes the office of Federal Student Aid. Do so as soon as possible to ensure you benefit from the recount.
Check your state’s tax policy
The federal government won’t tax any debt forgiven as a result of the IDR account adjustment.
However, certain states, including Indiana and Mississippi, treat forgiven student loans as taxable earned income, and thus may tax the amount of forgiven debt you receive. The vast majority of states don’t do this, so check the rules in your state.
If you’re concerned about a state tax bill, you can opt out of loan forgiveness. You have 30 days to do so after you receive notice that your remaining debt will be forgiven under the IDR account adjustment.
Every year, Vanguard publishes a mammoth report called, “How America Saves,” sharing data from Vanguard’s 4.9 million employee retirement accounts (401(k), 403(b), etc).
Let’s take a peek at the data and see how you compare. Are you saving enough?
Savings Rate
The median deferral rate in 2022 was 7.4% of salary from the employee, plus another 3.9% from the employer.
Not bad! Remember, this data does not account for any other types of savings (IRA, taxabale brokerage, HSA, etc).
Ideally, a total savings rate is at least 15%. Even better at 20%. Anything above that and you’re killing it! So, 11.3% into a retirement account is a solid savings rate. Good work, America!
Based on Vanguard’s subjective (but quite reasonable) opinion, roughly 40-50% of Americans are “saving effectively” via their employer-sponsored retirement accounts.
Average Balance
The average (mean) participant balance in 2022 was $112,572, and the median balance was $27,376. That’s down ~20% from 2021 – not a big surprise, considering market performance in 2022.
This skew of mean >> median happens a lot in financial data! A few big fish drag the average up, but affect the median much less. About 60% of participants have an account less than $40,000, while 12% have accounts larger than $250,000.
But wait! Despite this “skew,” we still need to face the fact that the average person only has $112K saved for retirement?! That’s way too low. And scary! …right?
We need to pause. This is a prime example of the famous quote:
There are three kinds of lies: lies, damned lies, and statistics.
Why? Because significant retirement savings exist outside of 401(k) and 403(b) accounts. The median participant in this study is 43 years old and the median account age is seven years old. Those numbers don’t jive! How can a 43-year-old only have a seven-year-old 401(k)?
Answer: they’ve switched jobs and rolled their old 401(k) into IRA accounts. That’s what I did!
I would appear in this study as a 33-year-old with an 18-month-old 401(k), with an approximate balance of $15,000. The study would not be aware I used to have a 6-figure 401(k) at my old job that I rolled over into an IRA when I switched careers at the end of 2021.
Participation
While plan participation is growing year after year (nice!), the sore spots are obvious: poorer, younger, and less tenured workers are saving less than their richer, older, more experienced counterparts.
This isn’t surprising at all. But it’s all the more reason for widespread financial education. Share The Best Interest with a friend in need!
Target Date Funds
A whopping 83% of all participants used target-date funds, and 71% of them had their entire account invested in a single target-date fund in 2022. In total, 63% of all invested dollars were invested in target date funds.
Target-date funds are a good (sometimes great) solution for 99% of you. They are typically priced fairly (I’d like them priced lower, but I won’t quibble) and the automatic age-based allocation removes many potential allocation errors.
In fact, if a Vanguard investor holds only one fund in the 401(k) or 403(b), it’s almost guaranteed to be a target date fund. On the whole, that’s a good thing.
And to an amazing degree, participants are using age-appropriate target-date funds exactly as Vanguard would have intended.
Gliding Toward Retirement
Are investors holding the right amount of stock exposure as they age?
Yes! It’s reasonable for investors to glide down from ~80-90% stocks in their 30s to ~50% stocks near retirement.
But the most enlightening aspect of this table is how fearful investors were in 2005 (in the aftermath of the Dot Com bubble bursting) and 2010 (after the Great Financial crisis). Young investors were only 60% stocks!
Market history would tell us that’s unwise. But written history would remind us of the pain investors feel when they lose money, and the conviction they feel to “not get burned again.”
It’s an important reminder for all you readers. Don’t put yourself in a position where your amygdala convinces you to “sell to survive.”
Getting the “Match”
The “match” in a 401(k) plan is free money from your employer, and virtually always worth pursuing. The majority of participants are getting their full match (left), and even more so when the retirement plan automatically bumps up savings rates year after year.
Automatic Enrollment
The #1 reason people don’t save in their 401(k) plans is because they don’t sign up in the first place. Gah! There is no substitute for lost time!
Thankfully, more and more employers are utilizing automatic enrollment, so their employees start saving from Day 1.
Trading
The best investors are either dead or have forgotten their passwords.
The next best are single women. Then married women, dragged down by their husbands. Then married men, dragged up by their wives. And last are single men, left alone to their devices.
Why?
Trading. Men trade more than women, jumping on winners and abandoning losers after it’s too late. Hence, they underperform.
But on the whole, investors are doing a good job “staying the course.” The data below shows that most investors are looking at their 401(k) balances less than once a quarter. The more you obsess, the more likely you are to act…and shoot yourself in the foot.
If you’re a man, invest more like a woman. If you’re a woman, invest more like you’re dead. Stop trading!
If you have any questions about your workplace retirement plan, send in a question to The Best Interest!
Thank you for reading! If you enjoyed this article, join 6500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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If you’ve been seeking life insurance coverage, it is likely that you have seen ads from several of the large life insurers such as New York Life.
Many such life insurance companies have been in the business for a century or more – which is a good sign, as it can signify financial strength and staying power, as well as the ability to pay its claim obligations.
New York Life Insurance Company has been in business for nearly 170 years. The company traces its history to 1845, when its first life insurance policy was sold with a face amount of $5,000.
Fast forward to the present time, and as of year-end 2013, New York Life had in excess of $425 billion in assets under management, and the company has continued to set records over the past several years – even during a volatile market and economic times.
Why Consider Life Insurance Coverage Through New York Life?
While there are many life insurers to choose from in the market place, New York Life Insurance is a strong contender. First, this company is quite solid when it comes to its credit outlook – especially in terms of its financial ratings. The insurer has earned top ratings from A.M. Best (A++), Standard & Poor’s (AA+), Fitch (AAA) and Moody’s (Aaa). This means that the company is extremely strong in terms of its ability to meet both its current and future financial obligations – including paying its policyholder claims.
When it comes to product offerings, New York Life provides a nice variety, including all of the major forms of life insurance.
Including:
Term
Whole
Universal
Variable
Along with all the product offerings, all of the industry-standard life insurance coverage products are provided as well, including:
Cash Surrender Option: Returns a policyholder’s balance after cancellation
Survivorship Policy Option: Extends coverage to a second party
Other policy options available include, one for a return of premium and a term conversion option that provides the company’s term life insurance policyholders with flexibility. These policies only go up to $1,000,000 of life insurance coverage.
Additional options can be found with mortgage life insurance, as well as whole life vanishing premium options that provide protection for homeowners with mortgage balances and who wish for their life insurance premiums to decrease as their mortgage balance goes down.
For younger individuals who may have smaller budgets – but who still need coverage – New York Life offers some policies that start with an initial face amount of $5,000. These can provide a great way to get a plan started and then grow with it over time.
With its permanent policies, New York Life offers access to cash value via loans and/or withdrawals, as well as many plans that have guaranteed interest rates, and periodic dividends with paid-up addition options.
Policyholders may also choose plans that include flexible death benefits – which may include level and/or variable options. There are also a wide variety of additional riders that can be chosen to add more flexibility and customization to one’s coverage.
New York Life also offers a nice variety of how policyholders are able to make their premium payments. In addition to setting up automatic payments from a checking or other type of bank account, customers may alternatively opt to pay via credit card (hello airline points credit card for a free trip somewhere). They can also pay online or pay premiums over the phone.
In addition to the products that it offers, New York Life also provides excellent customer service. There are numerous options for getting in touch with a representative, including phone and email, as well as online chat, click to call, Twitter, and Facebook. This shows that the company is very up to date in terms of its communications strategies – and it also makes itself available to its customers in a variety of ways, making it easy for clients and policyholders to get their issues resolved. This could be one reason why the company has very few complaints on file.
At this time, one of the few drawbacks with regard to company communication is that New York Life does not offer mobile access to their clients’ accounts or documents, nor does the company provide a mobile website for smartphone web browsers. This means that customers are required to call into the company’s customer service center during business hours if they want specific account related information.
Other Considerations When Purchasing Coverage
In addition to the insurer, there are a number of other factors to consider when you purchase life insurance coverage.
These can include the following:
Type of Coverage
One of the biggest factors in narrowing down your life insurance choice is the type of coverage that you need.
For example, there are two primary categories of life insurance.
These are term and permanent.
With term, you obtain pure death benefit protection, whereas permanent life insurance offers a death benefit component along with either a cash value or investment feature, too. Because term life is considered to be plain vanilla coverage, it is oftentimes the most affordable type of coverage – especially for those applicants who are young and in relatively good health. Term life, however, is offered for only certain periods of time – or terms – such as 10 years, 15 years, 20 years, or 30 years.
Permanent life insurance coverage, however, as its name implies, provides permanent protection for the remainder of the insured’s life, provided that the premium is paid. For those who have “temporary” needs such as paying off a 30-year home mortgage, term life insurance is often the best choice. On the other hand, for those who have an indefinite need for coverage, a permanent policy may be the better option.
Amount of Death Benefit Protection
The right amount of death benefit protection is also important. Having too little coverage could leave survivors in a financial predicament, still having to pay expenses of the decedent and/or struggling with ongoing expenses following the insured’s death, that in itself is good reason to look into a burial insurance policy to help protect your family.
Length of Term
For those who are purchasing term life insurance, buying the proper length of coverage is also essential. If, for instance, the need is short-term, then a 10-year plan will likely be sufficient. However, it may be necessary to purchase a 20 or 30-year option for long term obligations.
Need To be Covered
The need that is being insured for is another factor in choosing which type of life insurance will be best.
For example, is your goal to cover lost income, or are you insuring to pay off a particular debt balance?
This makes a big difference in the amount and the type of coverage that you purchase.
It may also prompt you to increase or decrease your coverage amount on a regular basis as your life changes.
Premium Cost
The cost of your life insurance premium can also make a difference.
Here is where comparing different life insurance policies and companies will serve you well, as the cost of identical coverage can oftentimes be priced vastly different by differing carriers. Therefore, be sure to shop and compare before making your final decision.
Underwriting Guidelines
The underwriting guidelines can sometimes make the difference between getting coverage or being declined.
This is especially the case for someone who has certain health issues. Therefore, be sure to check the company you are applying through regarding their underwriting guidelines.
How and Where to Obtain the Life Insurance Coverage You Need
In obtaining the life insurance coverage that you need quickly, it is oftentimes best to first compare several different policies and premium quotes.
This way, you will be able to review exactly what is available to you – as well as what you may be charged for this coverage.