financial

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The Community Home Lenders of America (CHLA) sent a letter to U.S. Rep. John Rose (R-Tenn.) this week that applauds the introduction of a bill to ban mortgage trigger leads outside of certain situations.

The bill, House Resolution (H.R.) 4198, the “Protecting Consumers from Abusive Mortgage Leads Act,” would prohibit trigger leads for mortgages unless one of two criteria are met: either a consumer has given their permission; or “a third party has submitted documentation to such agency certifying […] a current relationship, relating to credit, servicing or other financial services.”

“CHLA applauds you for introducing legislation to enhance consumer protections with respect to so-called trigger leads,” the letter states. “We hope that your introduction of this bill will lead to more rigorous debate in Congress and among federal regulators regarding the best solution to combat abusive trigger leads when a credit report is pulled in order to obtain a mortgage loan pre-qualification or a mortgage loan.”

Trigger leads are essentially mortgage customer leads that are sold by credit bureaus to lenders. When a potential borrower gives a lender permission to pull their credit for a mortgage loan, the lender uses certain codes to identify the purpose of the hard credit pull. Those codes signal to the credit bureaus that a consumer is inquiring about a mortgage, which triggers a potential lead that the credit bureaus then sell to other lenders.

But while the CHLA applauded Rose, the letter outlines suggested amendments to a few of the bill’s provisions, including its third-party submission proposal; eligibility standards saying that “any” financial firm with a current relationship to the consumer be notified of a pulled credit report; and the ways in which a consumer would notify their lender about opting out of trigger leads.

The CHLA letter also makes suggestions for trigger lead eligibility revisions under the bill, including “making a lender that previously originated a loan for that consumer eligible to engage in loan solicitations — and removing eligibility for firms like payday lenders and for banks with non-mortgage relationships with the mortgage loan applicant.”

The bill was introduced into the U.S. House Financial Services Committee in mid-June and is awaiting debate. If the bill is favorably advanced out of committee, it can then be deliberated in the House.

Source: housingwire.com

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Navigating income taxes during retirement can be complex and your golden years are a time to relax and enjoy your hard-earned cash. Your IRAs, pensions, taxable accounts and Social Security distributions create various tax implications. So, it’s vital to understand them and implement strategies to reduce your tax liability and maximize your retirement funds. You may want to speak with a financial advisor to get a more personal look at how your income will be taxed in retirement.

Federal Tax Rates for Different Types of Retirement Income

Federal tax rates vary by income type and level. It’s important to evaluate what each type of income you expect is going to look like so that you can plan for retirement. Here’s a breakdown of the most common taxes during retirement:

IRAs and 401(k)s

Traditional IRAs and 401(k)s offer tax-deferred growth, meaning you don’t pay taxes on the contributions or investment earnings until you withdraw the funds in retirement. Withdrawals from these accounts are generally taxable income. The tax rate depends on your total income, filing status and the federal income tax brackets in effect during the year of withdrawal.

On the other hand, you fund Roth IRAs and Roth 401(k)s with after-tax contributions, meaning you pay taxes on the money before it goes into the account. Qualified withdrawals from Roth accounts, including both contributions and earnings, are tax free.

Taxable Accounts

Taxable accounts, such as brokerage and savings accounts, use after-tax money. Therefore, you’ll pay taxes on any interest, dividends or capital gains earned from investments in these accounts. Specifically, interest income incurs regular income tax rates, while dividends and capital gains receive different rates depending on how long you hold the investments before selling (short-term vs. long-term).

Selling assets after holding them for less than a year creates short-term capital gains taxes, which the government treats as regular income. On the other hand, selling assets after holding them for a year or more creates long-term capital gains taxes, as seen below:

Pension Income

Monthly payments from your employer’s pension program or a private annuity will incur standard income taxes. In addition, if you opt for a one-time lump sum payment that empties your pension, you’ll owe income taxes for the entire amount.

Remember, employer pension payments come to you after having a specific amount of taxes subtracted. This feature means a large tax bill won’t wallop you when you file (provided you haven’t had an unexpected infusion of income from elsewhere that year).

Earned Income

Earned income receives standard tax rates, like many other types of income listed. However, wages from an employer or self-employment are subject to Social Security and Medicare taxes, also known as FICA. FICA taxes incur an additional 7.65% rate on income from a part-time job and 15.3% from self-employment income (you’ll receive half of that back when you file taxes).

Remember, earned income can run up against Social Security benefits if you make too much. Specifically, for 2023, earning more than $21,240 results in a $1 reduction for every $2 earned after the threshold if you’re under what the government considers full retirement age. Once you reach full retirement age, the limit changes to $56,520 and the penalty is a $1 reduction in benefits for every $3 earned.

Social Security

Social Security also receives taxation based on your income level and filing status. The Social Security Administration adds your adjusted gross income with nontaxable interest income and half of your Social Security benefits when calculating income thresholds for taxes. Then, the government charges federal income tax rates on 50% or 85% of your Social Security check.

The chart below outlines the different possible circumstances and tax rates:

Single Filers
Income Percentage of Social Security Income Taxed
$0 – $24,999 0%
$25,000 – $34,000 50%
$34,001+ 85%
Married Filing Jointly
Income Percentage of Social Security Income Taxed
$0 – $31,999 0%
$32,000 – $44,000 50%
$44,001+ 85%

Keep in mind, if you are married and choose to file a separate tax return, it is likely that you will be required to pay taxes on your benefits.

How to Minimize Your Tax Liability in Retirement

Most people have the very similar goal of trying to reduce the potential tax liability during retirement. While the income you bring in and where you live are going to play a huge role in the taxes you pay, there are some things you can do to improve your situation. In fact, the tips below can help reduce your tax burden during retirement.

1. Remember To Withdraw Your Money From Your Retirement Accounts

Once you reach the age of 73 (or 70½ if you were born before July 1, 1949), you must begin taking required minimum distributions (RMDs) from most retirement accounts, such as traditional IRAs and 401(k)s. Failing to withdraw the RMD amount results in a 25% penalty on the neglected sum plus the income tax it would have incurred.

However, if you have multiple retirement accounts, you have some flexibility in choosing which account(s) to withdraw from. By strategically planning your withdrawals, you can control the timing and amount of taxable income and optimize your tax situation.

2. Understand Your Tax Bracket

Understanding your tax bracket is crucial for retirement planning. You can minimize your tax liability by managing your taxable income to stay within a lower tax bracket. So, it’s best to use the tables above and the federal income tax brackets for the year to calculate a comfortable amount of income without exposing your money to higher rates.

3. Make Withdrawals Before You Need To

You can plan your withdrawals strategically if you have a mix of taxable and tax-advantaged accounts, such as a 401(k) and a Roth IRA. Making withdrawals from taxable accounts or tax-free accounts like Roth IRAs before you need the funds can help reduce your future RMDs and potentially lower your overall tax burden in retirement.

4. Invest in Tax-Free Bonds

Tax-free bonds, such as municipal bonds, can be an attractive investment option for retirees seeking tax efficiency. Interest income from municipal bonds is usually exempt from federal income tax and sometimes from state and local taxes.

5. Invest for the Long-Term, Not the Short-Term

Holding investments for the long term, particularly in taxable accounts, can be advantageous from a tax perspective. Specifically, when you sell investments held for more than one year, you qualify for long-term capital gains tax rates, which are typically lower than ordinary income tax rates. By avoiding frequent buying and selling, you can minimize the realization of short-term capital gains, which receive the standard federal income tax rates.

For example, say you’re a single filer with a $44,000 income. Part of that income is from capital gains. However, if the capital gains are short-term, your marginal tax bracket is 12%, while your long-term capital gains bracket is 0%.

6. Move to a Tax-Friendly State

Some states have lower or no state income taxes, which can significantly impact your overall tax burden in retirement. If feasible, consider relocating to a tax-friendly state. However, before making such a decision, it’s essential to assess various factors like cost of living, healthcare and personal preferences. Remember, the states that don’t charge personal income taxes are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.

The Bottom Line

The type of income that you receive in retirement could change the way that it is taxed. Many can avoid some of this by moving to a tax-friendly state, but most people can’t avoid it entirely. It’s important to understand what your personal tax liability could potentially become and to plan accordingly so that you’re prepared for retirement when it comes.

Tips for Being More Tax-Efficient

  • The road to financial stability in retirement looks different for everyone. Your investment account types, medical conditions and desired lifestyle can present unique challenges but a financial advisor can help. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

    • Photo credit: ©iStock.com/courtneyk, ©iStock.com/Inside Creative House, ©iStock.com/AndreyPopov

    Source: smartasset.com

    Apache is functioning normally

    Malik Lee, a Georgia-based certified financial planner and managing principal of Felton & Peel Wealth Management, thinks back to being accepted to Morehouse College in 1999 and facing around $20,000 per year in college costs.

    While his friends’ parents took out loans to cover education costs, Lee’s grandmother — his legal guardian — declined.

    Her response may seem harsh, but looking back with his perspective as a financial professional, Lee describes it as one of the best decisions she’s ever made.

    Many of those parents who took out loans for their kid’s education struggled to repay them, Lee says. In some cases, the children are covering the loan payments because the parents can no longer afford them.

    Lee imagines his grandmother, now 90 years old, still paying on a loan for his education when retirement should be her priority. Her saying “no” was an amazing decision, he says.

    Parent PLUS loans can be harder to repay

    Federal parent PLUS loans are available to parents of dependents attending college and are intended to fund education expenses not covered by other federal student aid.

    But these loans differ from federal loans taken out by student borrowers in ways that make them harder to repay:

    • Higher interest rates. The interest rate on parent PLUS loans is 8.05%, compared with 5.5% for federal student loans. 

    • No grace period. Federal student loan borrowers have a six-month grace period before they begin repayment. Repayment for parent PLUS loans begins after the loan is fully paid out.

    • Fewer repayment options. Parent PLUS loans don’t qualify for the government’s more generous income-driven repayment programs — like Revised Pay As You Earn, Pay As You Earn and Income-Based Repayment. Parents can apply for Income-Contingent Repayment after consolidating to a Direct Loan.

    When you couple the tougher loan terms — compared with federal student loans — with the racial wage and wealth disparity that impacts Black families, you get a double-edged sword that limits the economic growth of some of the most vulnerable borrowers, according to a recent brief by the Education Trust, a higher education research and advocacy group based in Washington, D.C.

    On average, Black workers earn 22% less than white workers, based on March 2023 weekly earnings data from the Bureau of Labor Statistics. And, regardless of income, Black households are less likely to own financial investments, according to a January 2023 report from the Treasury Department. Black families who do invest hold significantly less value in their assets, compared with white families, the same report concludes.

    Black borrowers are dipping into their retirement plans to repay parent PLUS loans, says Brittani Williams, senior policy analyst in higher education for the Education Trust. And that’s undercutting their ability to save for their own futures.

    If your child is heading off to college soon, there are ways to support them without falling into a debt trap.

    Dive into the financial aid process

    The more you can learn about financial aid and funding options, the less likely you’ll overextend yourself and be left with debt you can’t repay.

    “Immerse yourself in the financial aid process as much as you’re immersing yourself in the college choice,” says Jackie Cummings Koski, an Ohio-based certified financial planner and financial educator. Koski says financial aid offices can often show you program-specific funding or other need-based dollars available to those who ask.

    Making sure your child submits the Free Application for Federal Student Aid, or FAFSA, is a great starting point. But before you or your child accept any money, be sure to visit studentaid.gov to understand the type of federal aid awarded and the terms that come with it.

    Set limits on how much you borrow

    You can borrow up to the cost of attendance minus any federal aid your child receives. That could mean being asked to foot a pretty hefty bill, depending on what’s awarded to your child.

    But you don’t have to borrow the full amount requested.

    “Consider not paying for everything,” says Angela Ribuffo, an Alaska-based certified financial planner and president and financial advisor for Raion Financial Strategies. Parents can pay for one year — ideally year four, so they have at least three years to put away money, Ribuffo says. Giving yourself time to save can minimize how much you borrow, if you choose to borrow at all.

    You can set limits on how much you borrow based on your income and other financial goals. Use a parent PLUS loan calculator to see how different loan amounts can impact your monthly payment given an 8.05% interest rate.

    Always prioritize your retirement savings

    As hard as it might be, try not to place funding your child’s education over saving for retirement.

    “We’re not saying retirement is more important than your child’s future,” Lee says. “It’s that your retirement has no fail-safe.”

    If you must choose between contributing to your child’s education or saving for retirement, Lee recommends being realistic about how the two scenarios can play out. There are more options for a child who cannot pay for college than there are for a retiree who is short on income, Lee says.

    Committing to your retirement savings over paying for college could mean your child must find alternative ways to fund their education, and that is OK. Helping them research how to pay for college is still supporting your child on their journey and showing them that their future is important.

    Source: nerdwallet.com

    Apache is functioning normally

    Federal student loan interest rates for the 2023-24 academic year are live, and they are the highest they’ve been in at least a decade. Interest rates for undergraduate direct subsidized loans, for example, haven’t been this high since hitting 5.6% for the 2009-10 school year.

    The new rates apply to all loans taken out from July 1, 2023, to June 30, 2024, according to the Education Department. The interest rate for an undergraduate direct loan is 5.5%. Graduate students taking out direct loans will face a 7.05% interest rate. PLUS loans for graduate students and parents come with an 8.05% interest rate. Here’s how the new student loan interest rates compare with the 2022-23 academic year:

    • Direct subsidized and unsubsidized loans for undergraduate students: 5.5% for the 2023-24 academic year; up from 4.99% for the 2022-23 academic year.

    • Direct unsubsidized loans for graduate students: 7.05% for the 2023-24 academic year; up from 6.54% for the 2022-23 academic year.

    • PLUS loans for graduate students and parents: 8.05% for the 2023-24 academic year; up from 7.54% for the 2022-23 academic year.

    “For students and families considering new federal loans, it’s crucial to carefully evaluate the implications of these rate changes,” the National Foundation for Credit Counseling, a nonprofit consumer advocate agency, said in a statement.

    What higher interest rates mean for incoming and current students

    As interest rates rise, you pay back more on the amount you borrow.

    For example, a $5,000 unsubsidized federal direct undergraduate loan on a standard 10-year repayment term would cost you $1,361 in total interest at the 2022-23 interest rate of 4.99%. If you borrow the same amount for the 2023-24 school year at the new 5.5% rate, assuming the same repayment term, you’ll pay an additional $150 in interest.

    Keep in mind that the new federal interest rates apply to federal student loans taken out for the 2023-24 academic year only. Existing federal loans aren’t impacted by the new rates.

    The federal student loan interest rate bump comes as the cost of borrowing increases for consumers across the board, in areas like car loans, mortgages and even private student loans.

    Fixed rates on private student loans have generally trended upward over the past year, according to an April 2023 NerdWallet analysis. If you’re supplementing financial aid with private student loans, you’ll likely feel the impact of higher interest rates a little more.

    Comparing federal and private student loan interest rates

    Though federal student loans are getting more expensive, they’re still usually a better deal than private alternatives, and borrowers should use federal loans before they consider private loans. Fixed interest rates advertised by private lenders range from 5.99% to 13.78%, and variable interest rates are around 5.61% to 13.27%, based on a May 2023 NerdWallet analysis.

    Federal student loans have a fixed interest rate that is set by Congress annually. Interest rates for private student loans can be fixed — locked in for the life of the loan — or variable.

    Also, the rate offered by private lenders can vary based on income, credit score and other factors used to determine a borrower’s ability to repay. Federal student loan interest rates don’t depend on those factors. All eligible borrowers will receive the same predetermined rate.

    But in addition to comparing interest rates, there are also other factors to consider.

    Federal loans come with benefits that protect borrowers, like repayment programs based on income and loan forgiveness for those who qualify. Private loans lack these options.

    It can also be harder to qualify for favorable loan terms with a private lender. You’ll typically need a credit score of 600 or higher, or a co-signer with strong credit, to get the lowest advertised rates. Most federal student loans don’t require a credit check or co-signer.

    How to minimize student loan costs

    Even when interest rates are high, there are still ways to minimize the amount that you borrow.

    Submit the FAFSA. The Free Application for Federal Student Aid is your ticket to federal financial aid — including money you don’t have to pay back, like grants, scholarships and work-study programs.

    Prioritize “free money.” Outside of federal aid, you can apply for scholarships and grants through nonprofit organizations or with your school directly. These alternative funding options can alleviate the burden of student loans, advised the NFCC.

    Max out federal student loans before borrowing from private lenders. Federal loans will likely be the most affordable route, and you’ll have access to income-driven repayment programs and other protections to make paying your student loan bills more manageable

    Factor in future earnings. Investing in education can be a wise long-term decision. But it’s essential to compare the cost to potential future earnings, according to the NFCC. One rule of thumb is to avoid borrowing more than your expected starting salary once you graduate.

    Consider making in-school payments on your loans. Payments on federal loans and many private loans can be deferred while you’re in school. So you don’t have to pay while in school, but you can.

    If you have a federal unsubsidized loan, interest will accrue while you’re in school. Making payments while in school will decrease the amount of interest that’s added to your loan once you begin repayment. In-school payments to subsidized loans will go straight to the principal. Both strategies will decrease your overall loan costs.

    For private loans, making on-time, in-school payments can result in a potentially lower interest rate, said Chris Ebeling, head of student lending at Citizens, a private financial institution. It can also help you build credit, which can be helpful for post-graduate life when you’re looking to rent an apartment or buy a car.

    Source: nerdwallet.com

    Apache is functioning normally

    Filing for bankruptcy is a tactic often used to erase large amounts of debt, but nondischargeable debts can prevent that clean slate.

    Certain kinds of debt, including child support, student loans, and some tax bills, typically survive a bankruptcy filing.

    Some 403,000 Americans filed for bankruptcy in the 12-month period ending March 31, 2023. For one reason or another they found themselves in debt situations complex enough to seek bankruptcy as a means of relief.

    Though on the surface bankruptcy may appear to produce an opportunity for a fresh start, nondischargeable debts prevent it from being a true end-all solution.

    What Does Nondischargeable Debt Include?

    Nondischargeable debts can include home mortgages, certain taxes, child support, and student loans, and can vary based on the chapter of bankruptcy filed.

    A debt may also be considered nondischargeable if a creditor formally objects to a discharge in court and wins.

    When a debt is discharged through bankruptcy, the debtor is relieved of any legal obligation to pay it back, and the creditor is prevented from taking any further action to collect that debt. This includes contacting the debtor or filing a lawsuit.

    Personal loans, credit card debt, and medical bills are types of debt generally considered dischargeable.

    Nondischargeable debt, on the other hand, does not dissolve in a bankruptcy filing. The debtor remains liable for payment even after the filing is complete. These are types of debt that Congress has deemed unforgivable due to public policy.

    Recommended: Understanding Bankruptcy: Is it Ever the Right Option?

    Types of Nondischargeable Debt

    Nineteen categories of nondischargeable debt apply for Chapters 7, 11, and 12 of the Bankruptcy Code. (A more limited list of exceptions applies to cases under Chapter 13.)

    Except in unique circumstances, if a debt falls under one of these categories, it is not considered dischargeable.

    1. Debt incurred from U.S. taxes or a customs duty.

    2. Debt for money, property, or services obtained fraudulently or under false pretenses.

    3. Any debt excluded from bankruptcy filing paperwork (unless the missing creditor received prior notice and had ample time to respond to the filing).

    4. Debt acquired due to fraud, larceny, or embezzlement while working as a fiduciary.

    5. Debt contracted for a domestic support obligation, including child support and alimony.

    6. Debt from intentionally harming another person or their property.

    7. Tax debt as a result of a fine, penalty or forfeiture that is, at minimum, 3 years old.

    8. Student loan debt (unless not discharging the debt would impose an “undue hardship”).

    9. Debt incurred due to the death or injury of someone caused by the debtor while operating a vehicle, vessel, or aircraft while intoxicated.

    10. Any debts that were or could have been listed in a prior bankruptcy filing, and the debtor waived or was denied a discharge.

    11. Debt obtained by committing fraud or misappropriating funds while acting as a fiduciary at a bank or credit union.

    12. Debt incurred for the malicious or reckless failure of a debtor to fulfill any commitment to a federal depository.

    13. Debts for any orders of restitution.

    14. Debt incurred by penalty in relation to U.S. taxes.

    15. Any debt to a spouse, former spouse, or child that is incurred through a separation or divorce.

    16. Debts incurred due to condominium ownership or homeowners association fees.

    17. Legal fees imposed on a prisoner by a court for costs and expenses related to a filing.

    18. Debts owed to a pension, profit-sharing, stock bonus, or another retirement plan, as well as any loans taken from an individual retirement annuity.

    19. Debt obtained for violating federal or state securities laws, common law, or deceit and manipulation in connection with the purchase or sale of any security.

    How Will Nondischargeable Debt Affect Me?

    Nondischargeable debt is just like any other debt in the sense that it must be paid off on time to avoid negative consequences.

    If a debt is left unpaid for too long, the creditor may sell the debt to a collection agency, which then may result in any number of the following repercussions:

    •   Significantly lowering a credit score

    •   Flagging a borrower as “high risk” to future lenders

    •   Decreasing the odds of approval for future credit offerings

    •   Increasing high-interest rate offers with less favorable terms

    •   Adding negative remarks to your credit history

    •   Activating a lien against a property or asset

    •   Prompting creditors to pursue legal action

    •   Enacting wage or asset garnishment

    How Can I Resolve Nondischargeable Debts?

    Making plans to resolve any outstanding debts as soon as possible is key to managing a credit history and salvaging future credit opportunities. Here are a few strategies to consider for paying off debts.

    Stop Using Credit

    The first step toward debt resolution is to stop collecting it.

    The average American consumer has 3.84 credit cards, and the average balance is $5,910 in 2022, according to data from Experian.

    Making a point not to purchase anything that can’t be bought with cash outright can help curb unnecessary expenses. This includes larger purchases that may require financing. Leaving credit cards at home and removing their information from online payment systems can also help remove the temptation of using them.

    Create a Budget

    According to a 2022 Debt.com survey, 85% of Americans said making a budget helped them get out of or stay out of debt.

    A monthly plan including income and expenses can help reveal where extra money might be coming in and where you can cut back on unnecessary spending. A plan will provide a holistic view of spending habits, allowing for larger decisions to be made about how to change habits in order to fit new, debt-focused priorities.

    Cutting back on expenses and carefully tracking spending can help reveal extra dollars and cents needed to pay down debts.

    Start a Part-Time Job

    When paying down debt is a top priority, taking on another job or picking up additional hours at your current one can be extremely helpful.

    An extra check here and there can provide funds to make additional payments on debts, helping to dissolve them more quickly. Consider options such as working weekends at a local coffee shop, picking up a temporary gig in food delivery, or freelancing for additional income.

    Recommended: 19 Jobs That Pay Daily

    Consolidate Debt

    Applying for a personal loan is a strategy for managing several debts simultaneously. Though it may seem counterintuitive to take on another loan, a personal loan can be used to pay off multiple existing lines of credit, such as credit cards, and consolidate them into one loan with a single monthly payment and, possibly, a lower interest rate.

    In addition to comparing rates, it’s important to make sure you understand how a new loan could benefit you in the long run. For instance, if your monthly payment is lower because the loan term is longer, it might not be a good strategy, because it means you may be making more interest payments and therefore paying more over the life of the loan.

    However, a debt consolidation loan could help streamline payments and ease the anxiety that comes with being responsible for managing numerous lines of credit.

    The Takeaway

    Nondischargeable debts require more than bankruptcy to be resolved, and without proper management, they could worsen your current financial situation. Like any other debt, nondischargeable debt must be paid off on time in order to avoid negative repercussions. Creating a plan to handle outstanding debts as soon as possible is a smart choice.

    Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

    SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

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

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

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

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    Source: sofi.com

    Apache is functioning normally

    Living in Tennessee has tons of perks, from enjoying the dynamic music scene in Nashville to the delicious Southern cuisine. But, if bigger, better-known cities like Nashville and Memphis are out of your budget, you may want to turn your attention to Knoxville.

    Located in the eastern part of the state along the Tennessee River, this city of around 192,648 has a rich history, higher education and access to the spectacular great outdoors of the nearby Great Smoky Mountains National Park. In the revitalized downtown area, residents and visitors can shop, dine, drink craft beer and explore while surrounded by 19th-century buildings.

    As the home of the University of Tennessee’s flagship campus, Knoxville has a distinct college-town feel with active arts and culture. Thanks to the local U of T Volunteers sports teams, collegiate athletics are a big deal here, as well. Finally, being the gateway to the nearby national park and the Appalachian Mountains makes Knoxville a great base camp for outdoor adventures from canoeing to hiking. With all these accolades, it’s no wonder that Knoxville ranks as one of the best places to live in Tennessee.

    Furthermore, Knoxville boasts an affordable cost of living that’s appealing to everyone from students to families. With an overall cost of living that’s 16.8 percent lower than the national average, it’s even one of Tennessee’s most affordable major cities to live in. Let’s dive into the different cost of living expenses here to see if Knoxville could be the right fit for your budget and lifestyle.

    Knoxville housing prices

    At 31.7 percent below the national average, housing prices in Knoxville are among the most affordable in the state. The cost of housing here is down 1.6 percent from last year. In comparison, housing costs in the capital city of Nashville are 4.4 percent higher than the national average.

    But, those low housing costs are clearly catching people’s attention. Both the rental and homeowning markets have seen significant growth over the past year. The average monthly rent for a one-bedroom apartment is up 20 percent from last year to $1,310. Two-bedroom rental rates are up 30 percent to $1,474. While rates remain reasonable for now, that could change with the steady upward growth.

    If you want to own a house in Knoxville, prices are also on the rise. The median sale price for a house here is $319,900, which is 23.1 percent higher than last year. For context, the national median sale price for a house is $406,074.

    Food prices

    One of the best parts of living in a Southern state is the fantastic food, and Knoxville is no exception. At restaurants around town, you can enjoy Tenneessee’s signature state barbecue, as well as other Southern staples like rich mac and cheese, collard greens, fried chicken and fried green tomatoes.

    Along with the affordable housing, broke college students and budget-savvy families living in Knoxville will find that food costs here are also on the low side. Food prices are 9.6 percent below the national average, which is 1.6 percent higher than last year.

    To put those figures into perspective, let’s look at the average food costs of some basic grocery items. Picking up a dozen eggs costs $1.80, a half-gallon of milk is $2.31 and a loaf of bread is $3.80. Proteins come out to $4.19 for a pound of ground beef and $12.98 for a nice steak.

    Although Knoxville has some of the lowest food prices compared to the national average, individual prices in different cities are actually pretty similar. In Nashville, whose food prices are 4.4 percent below the national average, a dozen eggs are one cent cheaper at $1.79. A half-gallon of milk goes down to $2.22, but a pound of ground beef is more expensive at $5.33.

    Utility prices

    Of all the different cost of living categories, the cost of utilities in Knoxville is the closest to the national average, falling just 3.6 percent below. This is just 0.2 percent less than last year.

    So, why are utility prices some of the highest cost of living expenses here? During the hot and humid summer months, those air conditioning units definitely get a workout. While winters are chilly and generally mild, it actually can get cold enough for snow to fall. So, Knoxville sees all four seasons, which leads to variations in utility usage throughout the year. But, in general, the average monthly energy bill is around $167.86.

    Utility prices in Knoxville are actually among the most expensive in the state. In Nashville, the average monthly energy bill is $138.74 and utility costs are 10.7 percent below the national average. One of the few towns with higher utility prices than Knoxville is Morristown, which is one percent above the national average. There, the average monthly energy bill is $175.45.

    Transportation prices

    With a low walk score of 30 and an even lower bike score of 28, it’s a good idea to have a car when living in Knoxville. Not only does this make it easier to get around, but you can easily head out of town for adventures in the Great Smoky Mountains National Park and other parts of the scenic and the wild Appalachian Mountains. Some areas like downtown and the college campus are great to explore on foot, though.

    Similar to other cost-of-living areas, transportation costs here are lower than the national average at 7.8 percent. This has gone up over the past year by 6.3 percent.

    One benefit of having a car in Knoxville and Tennessee, in general, is that there are no toll roads. If you don’t want to use a car to get around Knoxville, you can use the local Knoxville Area Transit (KAT) bus system. Residents have 23 different routes to choose from that crisscross both the city center and branch out to the surrounding areas. A one-way pass costs $1, a full-day pass is $2 and a monthly 30-day pass costs $30.

    Residents can also take advantage of the free trolley that offers rides around downtown Knoxville and the University of Tennessee campus area.

    Healthcare prices

    At 8.4 percent below the national average, healthcare costs in Knoxville are on the more affordable side. Rates here are down 0.4 percent from the previous year. Many other major Tennessee cities are in a similar ballpark. Nashville is 10 percent below the national average and Memphis is 9.4 percent below. Cookeville is 15 percent below the national average, so Knoxville sits nicely in the middle for healthcare costs. The university also has a well-regarded health sciences program.

    It’s important to note that since healthcare needs vary by person and insurance, the average costs of different healthcare services in Knoxville won’t always apply to everyone. Your costs are higher or lower depending on your needs. For a rough overview, though, going to the doctor’s office for a check-up is $112. Getting your teeth checked out at the dentist is around $91.60 and having an eye appointment at the optometrist is $91.

    For over-the-counter meds like ibuprofen, expect to pay around $9.38. If you need prescription medications, you’ll definitely want the benefit of having insurance since average prescriptions cost around $510.10.

    Compared to other Tennessee cities, healthcare costs in Knoxville are pretty middle-ground. A doctor’s visit in Nashville is $99.14. But in Jackson, heading to the doctor’s office will set you back $137.33.

    Goods and services prices

    Living in a fun city like Knoxville, you want to take advantage of everything it has to offer. That means going out to the movies, meeting friends for pizza or doing other things out on the town. That’s where miscellaneous goods and services come into your monthly budget. This area of expense covers everything from fun activities and goods to necessary goods or services you need on a semi-regular basis like getting a haircut.

    Goods and services are one of the lowest cost of living areas in Knoxville, falling 13.7 percent below the national average. This is 0.1 percent lower than last year, so prices have remained pretty consistent over the past year. In comparison, goods and services in Nashville are only 4.5 percent below the national average.

    Getting your haircut in Knoxville is around $16 compared to $21.80 in Nashville. Movie tickets come out to $11.06 and taking your clothes to the dry cleaners sets you back $15.45.

    Taxes in Knoxville

    In Tennessee, the general state sales tax is 7 percent. Counties and cities have the option to add an additional local sales tax on top of the statewide rate. In Knoxville, the sales tax is 9.25. To put that in perspective, say you spend $1,000 throwing a giant backyard barbecue party. You’ll pay an additional $92.50 in sales tax.

    Other cities in Tennessee have higher sales taxes, though. The highest sales tax is in Memphis and several other cities at 9.75 percent. The lowest sales tax is 8.5. So, Knoxville sits at a good middle point for sales tax rates.

    How much do I need to earn to live in Knoxville?

    In order to figure out if you can comfortably afford to live in Knoxville, you need to work backward from your biggest monthly expense. Housing costs like rent are typically your biggest expense each month. To ensure that you still have enough money for other expenses like food and utilities, experts recommend that you only spend 30 percent of your monthly income on rent.

    Considering that the average one-bedroom apartment in Knoxville costs $1,299, you’ll need to make $4,330 each month. That comes out to $51,960 annually. The median household income in Knoxville is $41,598, which potentially gives you the option to scope out some of the cooler, more popular neighborhoods to live in.

    If you’re unsure what you can afford in rent, use our rent calculator to do some calculations and figure out what fits your budget.

    Free things to do

    Although Knoxville is overall a fairly affordable place to live, it never hurts to take advantage of fun and free things to do around town.

    If you love being outdoors, the Ijams Nature Center on the outskirts of town is a popular option with 10 miles of hiking trails and scenic boardwalks along wetlands and the Tennessee River. The Knoxville Botanical Garden and the University of Tennessee Gardens are other great places to get outdoors and learn about nature for free.

    If you prefer more in-town fun, hit up the local farmer’s markets or wander around downtown looking for cool murals. History buffs can dig into genealogy records at the McClung Collection or visit the Marble Springs State Historic Site. The Knoxville Museum of Art also offers free admission to some exhibits.

    Living in Knoxville

    Whether you’re a sports fan or a nature lover who spends all your time hiking, Knoxville’s blend of mid-sized city fun and outdoor access appeals to a wide range of interests and lifestyles. Top it off with its affordable cost of living and it’s easy to see why everyone from young students to families enjoy the quality of life here.

    The Cost of Living Index comes from coli.org.
    The rent information included in this summary is based on a calculation of multifamily rental property inventory on Rent. as of October 2022.
    Rent prices are for illustrative purposes only. This information does not constitute a pricing guarantee or financial advice related to the rental market.

    Source: rent.com

    Apache is functioning normally


    Washington
    CNN
     — 

    US mortgage rates jumped higher last week as uncertainty about the debt ceiling standoff sent bond yields rising.

    The 30-year fixed-rate mortgage averaged 6.79% in the week ending June 1, up from 6.57% the week before, according to data from Freddie Mac released Thursday. Rates jumped higher last week for the third week in a row. A year ago, the 30-year fixed-rate was 5.09%.

    Mortgage rates tend to be pegged to US Treasury yields, which had been heading higher as America grows ever closer to default. A deal to raise the debt ceiling and avoid default is moving forward after a bill to suspend the nation’s debt limit through January 2025 overwhelmingly passed in the House.

    A little over a year ago mortgage rates topped 5% for the first time since 2011 and have remained over 5% for all but one week during the past year. Since then they have gone as high as 7.08%, last reached in November. Since mid-March, rates have gone up and down but have stayed under 6.5%. Until a week ago when they tipped over 6.5%.

    In addition, data shows the economy is strong, resurfacing concerns about inflation remaining too high and raising the prospect of another rate hike at the Federal Reserve’s June meeting. Although the Fed doesn’t have direct control over mortgage rates, higher interest rates tend to push bond yields higher, which also can nudge mortgage rates up.

    “Mortgage rates jumped this week as a buoyant economy has prompted the market to price-in the likelihood of another Federal Reserve rate hike,” said Sam Khater, Freddie Mac’s chief economist. “Although there has been a steady flow of purchase demand around rates in the low to mid six percent range, that demand is likely to weaken as rates approach seven percent.”

    A strong economy and debt ceiling standoff push rates up

    The rate for a 30-year mortgage climbed this week as the debt ceiling standoff remained uncertain for much of this week.

    “The fear of debt default affects mortgage rates through government-backed bonds,” said Jiayi Xu, and economist at Realtor.com. “If the U.S. defaults on its debt, bond investments become riskier, resulting in increased yields and potentially higher mortgage rates. With a debt deal pending, the likelihood of default remains very low.”

    Once the deal is signed by President Joe Biden, the U.S. government is expected to quickly increase issuance of Treasury bills, said Xu. This, “has the potential to cause short-term liquidity challenges at banks, as businesses and households may reallocate their funds towards higher-yielding and relatively safer government debt.”

    “In order to keep attracting depositors, banks might be compelled to raise interest rates, thereby squeezing profit margins,” she said. “This could lead to further rate increases across various loan products offered by banks, including both business loans and personal loans.”

    However, the debt ceiling standoff isn’t the only thing troubling the markets or the economy.

    Economic data this week highlight continued strength in the economy, said George Ratiu, chief economist at Keeping Current Matters.

    The number of job openings rose in April to 10.1 million, exceeding market expectations and 3.8 million employees left their jobs during the month, with many finding better opportunities.

    “Markets are keeping a close eye on Friday’s payroll employment report, looking for additional cues about the labor landscape,” Ratiu said. “The data are expected to inform the Federal Reserve’s rate decision at the June meeting.”

    A cooler spring home selling season this year

    Fewer homes to buy and higher interest rates are making for a cooler spring market than typical.

    Mortgage applications declined for the third straight week, as higher rates, ongoing economic uncertainty, and declining affordability continue to dampen borrower demand, according to the Mortgage Bankers Association.

    “The lack of homes for sale remains a headwind for the housing market this year, leading to elevated home prices and households deciding to delay buying a home,” said Bob Broeksmit, MBA president and CEO.

    But if mortgage rates remain elevated, sellers looking to wrap up a move during the summer months may be motivated to cut prices.

    “We may see a potential decrease in asking prices during the upcoming summer season,” said Xu.

    While a decline in home prices would be welcome to first time home buyers who lack existing equity to leverage, said Xu, it could potentially erode some of the equity of current homeowners and pose risks to the financial system.

    “However, thanks to today’s near-record high home equity levels, even in the event of a substantial 10% decline in home values from their level at the end of the fourth quarter, whether occurring suddenly or over two years with a climbing mortgage debt – this is an incredibly unlikely scenario,” Xu said. “Home equity as a share of total real estate value would still exceed 60%, offering a significant cushion for existing homeowners in aggregate.”

    Source: cnn.com

    Apache is functioning normally

    One mortgage lender making a big splash of late is NewRez, short for New Residential Investment Corp.

    Thanks to their 2019 acquisition of Shellpoint Partners LLC, which was the parent company of New Penn Financial, they now have a robust loan origination platform to flank their expansive loan servicing business.

    They are a publicly-traded company worth billions of dollars that has quickly become a top-20 mortgage lender nationwide.

    The company also has joint ventures in place, including one with Shelter Mortgage known as Homeowners First Mortgage.

    It provides mortgage financing to home buyers represented by real estate brokerage First Team Real Estate in Southern California.

    NewRez and Shelter also have a partnership in place with a San Francisco-based company called Landed, collectively known as Landed Home Loans, which offers down payment assistance to teachers and other school employees.

    In July 2020, NewRez created its 16th joint venture with Berkshire Hathaway HomeServices Verani Realty, which will be known as “Home Sense Lending LLC.”

    It will serve home buyers throughout New England via 500 licensed real estate agents that work at the brokerage.

    In September 2020, they launched “Sanctuary Home Mortgage,” a collaboration between NewRez and Shelter Mortgage Company, and Atlanta Fine Homes Sotheby’s International Realty.

    Then in December 2020 created “Mission Mortgage,” which will be headquartered in Washington, D.C. and service clients there and in Maryland and Virginia.

    The pair’s newest joint venture is called “Coast One Mortgage,” a partnership with the Schmidt Family of Companies, a family-owned real estate brokerage.

    NewRez Fast Facts

    • Founded in 2008, originally known as New Penn Financial
    • A direct-to-consumer mortgage lender based in Fort Washington, PA
    • Also runs a correspondent lending and wholesale division
    • Licensed to lend in 49 states and DC (pending approval in NY state)
    • Funded $61 billion in 2020 (a top-20 lender nationwide)
    • 2,600+ employees and 616,000+ customers served

    How to Get a Mortgage with NewRez

    They say they’ve got cutting-edge technology and proprietary systems, including the NewRez app and “ezhub,” which is their digital mortgage offering.

    It allows you to document income and assets electronically and take advantage of various automated underwriting tools.

    Their smartphone app lets you to apply for a mortgage and make monthly mortgage payments once your loan is closed, assuming they service it too.

    It’s also possible to get the loan process started online by filling out a short form on their website, at which point a loan advisor will make contact to guide you along.

    You can also simply call them up directly or use their loan advisor directory to get in touch with someone specific if you’ve been referred.

    Either way, you’ve got options when it comes to applying for a loan with NewRez.

    Loan Types Offered by NewRez Mortgage

    • Home purchase and refinance loans (rate/term and cash out)
    • Home renovation loans and construction loans
    • Conventional, FHA, VA, USDA loans
    • Specialized products for self-employed borrowers
    • Jumbo loans that exceed the conforming loan limit

    NewRez offers home purchase loans, refinance loans, and construction loans on all property types, including primary homes, vacation homes, and investment properties.

    The company’s 2019 volume consisted of roughly 85% mortgage refinance and 15% home purchase, with 37% of their loans involving cash out to the borrower.

    This is probably due to their massive loan servicing portfolio that allows them to get in contact with their many existing homeowners.

    They offer both conventional loans backed by Fannie Mae and Freddie Mac, along with government home loans including FHA loans, USDA loans, and VA loans.

    You can also get a jumbo home loan from NewRez if the loan amount exceeds the conforming loan limit for your county.

    Nearly 60% of their 2019 retail loan volume was conventional, with 25% FHA loans, 15% VA loans, and the remainder jumbo and USDA.

    Those looking for a construction loan are in luck because they offer both FHA and VA construction loans, such as FHA 203k, and conventional construction loans like Fannie Mae HomeStyle.

    You can get a fixed-rate mortgage, such as a 30-year fixed or 15-year fixed, and possibly other terms in between.

    They also offer a variety of adjustable-rate mortgage options, including 5/1, 7/1 and 10/1 ARMs for those looking for a cheaper monthly payment.

    NewRez Mortgage Rates

    NewRez does not openly advertise its mortgage rates, which is a shame because it’s difficult to know how they stack up relative to other lenders.

    You’ll only know their pricing if you fill out a mortgage quote request and/or speak with a loan specialist. Until then, you’re basically in the dark pricing-wise.

    That doesn’t mean they aren’t competitive, it just remains an unknown at the moment until more data is collected on that front.

    As such, be sure to take the time to shop around – do this regardless of whether they advertise their mortgage rates. You never know if there’s a better rate out there unless you put in the time.

    The same goes for lender fees – it’s unclear how much or what they charge, so compare interest rate and fees (mortgage APR) when shopping your loan.

    NewRez Mortgage Reviews

    Unfortunately, NewRez mortgage reviews are scant at the moment, perhaps because they only recently launched after acquiring New Penn Financial.

    The only information I could find was on Yelp, where they had 1.5 stars out of 5, which is obviously pretty dire.

    However, if you go to Zillow and search their lender directory by inputting “NewRez” into the bank name field, you’ll see lots of individual reviews for NewRez loan officers.

    From there, you can sift through the many names to find the loan officer with the best reviews, then contact that person directly if you want to work with NewRez.

    This might be the best way to go for any large mortgage lender because ultimately customer experiences will vary widely when dealing with thousands of different employees.

    I took a look at the NewRez loan officer reviews and found that several had perfect 5 out of 5-star ratings or very close to it. Many also indicated that mortgage rates and fees/closing costs were lower than expected.

    Let me add that the company has been accredited with the Better Business Bureau since 2009, and has an A+ rating at the moment.

    Their customer reviews on the BBB website aren’t favorable, with a star rating just over 1 out of 5. Of course, the BBB customer review rating system is based on complaints, so the rating is typically never very good.

    Pros and Cons of NewRez Mortgage

    The Good

    • Digital mortgage process
    • Expansive suite of loan programs to choose from
    • They have a free smartphone app
    • Lots of mortgage calculators on site
    • Loans are serviced by NewRez instead of being sold off

    What to Watch Out For

    • Do not advertise mortgage rates
    • No information on lender fees or closing costs
    • Very limited review information (unclear how well-liked they are)
    • Not licensed in the state of New York

    Source: thetruthaboutmortgage.com