Everyone knows high mortgage rates have been a total drag lately, especially for prospective home buyers facing extremely high asking prices.
But what if I told you that nearly half of those who purchased a home recently still got an interest rate below 5%?
Sounds pretty unlikely, given the fact that the 30-year fixed is back over 7%, and never went lower than 6% for the duration of 2024.
However, that didn’t stop 45% of “mortgage buyers” (non-cash buyers) from obtaining a sub-5% mortgage rate, per a new survey from Zillow.
As for how, the most common reason cited was special financing offered by the seller or home builder.
Special Mortgage Rates from Home Builders
One of the most common ways to get a below-market mortgage rate has been via the home builders.
They often operate in-house mortgage companies to ensure their customers make it to the finish line.
And thanks to a financing tool call “forward commitments,” they’re able to offer super low mortgage rates to the customers who use their captive lender.
Those commitments involve buying low mortgage rates in bulk, ahead of time, and then deploying the low rates to customers who buy properties in select communities.
While some only offer temporary rate buydowns, lately many have offered permanent rate buydowns for the full 30-year loan term.
This probably sounds pretty sweet, but keep in mind you need to buy a newly-built home to get your hands on a special rate.
Some have argued that the discount is built into a higher sales price, so proceed with caution.
Also read my piece on using the home builder’s mortgage lender for more on that.
For the record, individual home sellers can offer sales concessions that can be used to buy down the mortgage rate too.
And together with builder buydowns, that was the most commonly cited reason for a low rate at 35%.
Another 26% said their offer was contingent on a rate buydown from the seller/builder. So more than half of the low rates came from these arrangements alone.
Buying Points to Lower Your Rate
The third most common reason a recent home buyer was able to get a low mortgage rate was due to paying discount points (at 23%).
If you have the available funds, it’s always an option to buy down your rate by paying some money upfront.
This is a form of prepaid interest where you pay today for savings tomorrow. The key though is keeping the loan long enough to experience the savings.
The problem with this is if mortgage rates happen to go even lower before the breakeven point (when the points become profitable), it disincentivizes a rate and term refinance.
Or if you happen to sell the property too soon, same thing. In contrast, temporary buydowns don’t result in lost funds.
If you sell/refinance soon after a temp buydown, the leftover funds are typically applied to the outstanding loan balance.
Long story short, there’s risk when buying points in that you’ll leave money on the table.
The same could be said of temporary buydowns in that mortgage rates might not be lower when the rate reverts to the higher note rate.
A lot of folks have bought the house and dated the rate, assuming the mortgage rates would come down. So far they haven’t.
Got a Mortgage from a Friend or Family Member
Another 23% of buyers said they got a low rate because they borrowed from a friend or family member.
This is pretty surprising to me seeing that it’s such a large share of the population. I can’t imagine that many home buyers getting special financing from mom and dad or someone else.
But per Zillow’s study, this is what the numbers indicate. For me, it’s pretty rare to use intrafamily financing, but it definitely is a thing, especially with rates so much higher today.
An example would be your parents offering to finance your home purchase with a special low rate from the Bank of Mom and Dad, perhaps at a cool 3.99%!
If you’re so lucky, great. But for most this sadly isn’t a reality.
Another common reason folks got a sub-5% mortgage rate was by refinancing after they bought the home.
They must have nailed the timing (and paid points) because rates never officially went below 6% this year.
Lastly, sub-5% mortgage rates were associated with adjustable-rate mortgages, homebuyer assistance, and shorter loans terms, such as the 15-year fixed.
Of course, if it’s not a 30-year fixed, sub-5% doesn’t have quite the same meaning or value.
Still, it’s impressive to see that nearly half of home buyers got creative and found a way to overcome the mortgage rate hurdle.
Problem is there’s still the high home price to contend with, and little way around that at the moment.
The Zillow Consumer Housing Trends Report 2024 study involved 18,500 successful home buyers and was fielded between March and September 2024.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Consider this your election cheat sheet to find out what Vice President Kamala Harris and former President Donald Trump are promising to do as they vie for the nation’s highest office. Here’s where the candidates stand on top economic and personal finance issues.
Both presidential candidates want to lower prices and slow inflation, but whether a president can directly do so is less certain. Inflation, as measured by the consumer price index, has already slowed to 2.4%, well off its pandemic-fueled peak.
Trump:
Place tariffs on imports. Trump wants to place a 10% to 20% tariff on all foreign imports; up to 60% tariff on imports from China; and 100% to 200% imports on automobiles produced in Mexico. He says his tariffs would support U.S. manufacturing and raise revenue. But experts from all over the political spectrum say that his tariff plan is more likely to increase prices in the U.S.
Lower gas prices. Trump has pledged to increase oil and gas production on federal lands. The president’s ability to lower gas prices is limited as the price at the pump is more directly influenced by global market forces.
Weaken the power of the Federal Reserve. Trump says he wants to bring the Federal Reserve under the power of the president; experts say it could weaken the central bank’s credibility in making interest rate decisions.
Cap credit card interest rates at around 10%. The average credit card interest rate is 21.51%, according to Federal Reserve data from May 2024. It would require Congress to enact and would likely face legal pushback.
Nerd out on investing news
A NerdWallet account is the smartest way to see the latest financial news and what it means for your wallet.
Harris:
Ban price gouging. Harris wants to create rules that would prevent corporate grocers from raising prices arbitrarily. The ban would require approval by Congress. Critics say her plan is mainly an election promise rather than a sound economic policy.
Lower prescription drug costs. Harris plans to extend to all Americans a $35 cap on insulin and $2,000 cap on out-of-pocket expenses for seniors. She also wants to make it quicker and easier for Medicare and other federal programs to negotiate prescription drug prices. Experts say her plans could be effective in bringing down costs, but will face pushback from Big Pharma lobbyists.
Increase the minimum wage. Harris says she would push to raise the federal minimum wage to at least $15 per hour, up from the current minimum wage of $7.25. The federal minimum wage hasn’t been touched since 2009 and raising it would require approval in Congress.
The campaign proposals that would most directly impact consumers are tax cuts and credits.
Trump:
Extend tax cuts in his 2017 Tax Cuts and Jobs Act that are expiring at the end of next year. The TCJA includes estate tax cuts and individual income tax cuts.
Replace personal income taxeswith tariffs. His new plan would place a 10% across-the-board tariff on foreign imports with much more for China. More on that above.
Lower the corporate tax rate by one percentage point. Trump wants to cut the corporate tax rate from 21% to 20%.
Implement R&D tax credits for businesses. The tax credits would allow businesses to write off 100% of expenses in its first year, including machinery and equipment. It’s a reversal of his 2017 tax cuts that phased out write-offs for R&D expenses in a business’ first year.
Harris:
Increase taxes for the wealthy. Harris wants to raise the net investment income tax up to 5% on those with incomes above $400,000. She also wants to increase the highest tax rate on long-term capital gains to 28% on taxable income above $1 million.
Increase taxes for corporations.
Expand Child Tax Credit: Harris wants to increase the credit to $6,000 for children under the age of 1; $3,600 for children ages 2-5; and $3,000 for older children.
Permanently extend the expanded premium tax credits for those who purchase health insurance through the health insurance marketplace.
Increase tax incentives for small businesses. An increase in federal tax incentives from $5,000 to $50,000. The deduction would be available to new businesses until they turn a profit. The incentive feeds into her goal of creating 25 million new small businesses in the next four years.
No tax on tips: The candidates’ aims are vastly different, but there’s one proposal they both support: exempting workers from paying taxes on their tips. But experts say it’s just bad policy that doesn’t get to the fundamental needs of tipped workers.
Health care
When it comes to health care, the candidates have been light on the details, although both candidates promise to protect Medicare. Here’s where they differ.
Trump:
Revisit the Affordable Care Act. Trump tried to repeal and replace the Affordable Care Act in his first term, but was unsuccessful. During the presidential debate on Sept. 10, he was asked if he would try again. In response, Trump said he had only “concepts” of a new plan.
Push for vitro fertilization (IVF) coverage. Trump has said the government or insurance companies should cover IVF, though many in the GOP oppose the idea.
Leave abortion laws up to the states. He says he would veto any federal ban on abortion.
Harris:
Expand Medicare coverage to include long-term care including at-home care for seniors and those with disabilities. She also promises to provide vision and hearing benefits for seniors under Medicare.
Work with states to eliminate medical debt.
Lower prescription drug costs. See above.
Protect access to IVF.
Restore federal protections for abortion access under Roe v. Wade. Harris also promises to ensure there will never be a federal ban on abortion.
Harris wants to increase housing and make it more affordable while Trump has emphasized market-driven solutions. There are two areas that both candidates agree:
Open up federal lands for new housing developments. Neither has specified which lands that would include, but experts say much of the federally held land would not be ideal for creating new housing. There is precedence for using federal land to build housing; most available land is in the West.
Cut red tape. Reducing regulatory burden has bipartisan support, but most housing reform would need to be done at the local level to have an impact.
Harris:
Build 3 million new homes over four years. Experts say her proposals would likely spur additional new housing creation, but building 3 million new homes in that short of a period of time is unlikely.
Add tax incentives for home builders. Harris proposed a new Neighborhood Homes Tax Credit to create 400,000 new owner-occupied homes in lower income communities and a tax break for builders that construct affordable starter homes.
Create a$40 billion innovation fund to incentivize stakeholders — state and local governments, as well as private developers and homebuilders — to find new strategies to expand the housing supply.
Introduce$25,000 in down payment assistance for first-time home buyers. It would be even greater for first-generation home buyers, but has not elaborated how much. It’s unclear how it would be implemented and experts say that without a bigger housing stock, her plan won’t work.
Lower rent and prevent price-fixing among corporate landlords. Experts are skeptical that her plans would lower rent. However, if a significant stock of new housing is created, it could alleviate some price pressures on the rental market.
Trump:
Beyond deregulation and opening up federal lands for home building, Trump’s plans have been sparse when it comes to housing. However, experts say that his plans to deport millions of unauthorized immigrants could drive up housing prices since the construction industry is reliant on immigrant labor.
Student loans
As president, Harris would likely champion student loan relief and free community college. Trump would likely restrict or dismantle loan forgiveness and promote access to non-traditional degrees.
Trump:
Curb debt cancellation. Trump would likely not support broad student loan cancellation or strengthening other forgiveness plans that the Biden-Harris administration has championed. Trump has also said that access to existing loan forgiveness should be restricted, including the Public Service Loan Forgiveness (PSLF) program.
Dissolve SAVE. Trump is likely to strike down SAVE, an income-driven repayment program that is currently caught up in legal challenges.
Support vocational training. Trump’s platform says it would support creating “drastically more affordable alternatives to a traditional four-year college degree.”
Harris:
Support“Plan B” student loan forgiveness. Harris would likely support Biden’s “Plan B” that would reduce or eliminate accrued interest for 23 million borrowers who owe more than they originally borrowed. The plan is currently wrapped up in state legal battles.
SupportSAVE and other income-driven repayment plans. Harris would likely support the SAVE repayment plan through legal battles. She would also support the continuation of other income-driven repayment plans, including PSLF, as well as the borrower defense to repayment program that protects borrowers who are defrauded or misled by their colleges.
Champion free community college and trade school education. She also says she wants to subsidize tuition at Minority Serving Institutions, including Historically Black Colleges and Universities (HBCUs).
Expand the Pell Grant. She plans to expand grants to 7 million students and double the maximum award by 2029. Pell Grants are given to undergraduates from low-income backgrounds and are currently up to $7,395 per year.
Mass deportations
Trump’s plan to deport unauthorized immigrants, en masse, would have unintended, but significant economic consequences including:
Increasing costs economy-wide. Reduced labor supply that would increase costs for businesses and, ultimately, be passed down to the consumer. It would especially impact the hospitality and service industries that rely on immigrant workers.
Driving up food prices. Immigrants make up a large portion of the agricultural workforce. Without that labor, the food supply in the U.S. could tighten, which would drive up prices.
Slowing housing construction since immigrants play a huge part in the creation of housing in the U.S. This could further worsen the nation’s affordable housing shortage.
Listen: Smart Money’s 2024 Presidential Election Series
Hosts Sean Pyles and Anna Helhoski discuss the grand economic promises made by presidential candidates and the intricate realities of presidential influence on the economy to help you understand the real effects on your daily finances.
Photo of former President Donald Trump by Anna Moneymaker/Getty Images News via Getty Images.
Photo of Vice President Kamala Harris by Brandon Bell/Getty Images News via Getty Images.
The SBA Working Capital Pilot (WCP) program offers business lines of credit as part of the SBA 7(a) loan program. Although the SBA also offers lines of credit through the CAPLines program, the WCP program is designed to provide greater flexibility and serve a wider range of small-business owners.
Like other SBA loans, WCP lines of credit provide large funding amounts, competitive interest rates and long terms. These small-business loans can be a good option for established businesses that want access to working capital.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
What is the SBA Working Capital Pilot program?
The SBA Working Capital Pilot program is an SBA loan program that offers business credit lines that are partially guaranteed by the U.S. Small Business Administration. These working capital lines of credit are issued by participating lenders, typically banks and credit unions.
The WCP is a pilot loan program, meaning these products are available from a limited time unless the program is extended or made permanent. Currently, the program is set to run from Aug. 1, 2024 through July 31, 2027
.
Pilot loan programs, including this one, fall under the umbrella of the SBA 7(a) loan program and follow many of that program’s guidelines.
How does the SBA Working Capital Pilot program work?
SBA Working Capital Pilot lines of credit are available up to $5 million and can be used for a variety of working capital needs.
There are two types of credit lines available through this program:
Transaction-based. These business lines of credit can be used for a single or multiple purposes during the term. Transaction-based WCP credit lines may be revolving or non-revolving based on the needs of the business.
Asset-based. These products are revolving lines of credit that are backed by specific collateral, in the form of a monthly borrowing base certificate (BBC). A BBC reports the value of your assets, usually accounts receivable and inventory, that support your credit line amount.
With both types of WCP lines of credit, your lender must perform a review on an annual basis (at a minimum). As part of this process, it will need to document that you are creditworthy, can make your payments and are compliant with the WCP program requirements.
If you can’t meet these criteria, the lender will not be able to approve any further draws nor renew the credit line until the requirements are met.
SBA Working Capital Pilot program features
Terms
The maximum term on a SBA Working Capital Pilot line of credit is 60 months. For this program, the “term” refers to the period of time in which the lender agrees to lend you this credit. Your lender can, however, set independent loan “maturities” (usually on an annual basis) to take place during the term.
In other words, your maturity would dictate your repayment period. If your lender sets a maturity of one year, for example, you would need to make your final repayment on any funds you borrowed by the end of those 12 months.
Interest rates
Interest rates on SBA Working Capital Pilot lines of credit are the same as SBA 7(a) loan rates. This means that rates are set based on the prime rate, plus a spread that’s negotiated between you and your lender. Rates can be fixed or variable, but are subject to SBA maximums, which are determined by the size of your credit line.
Currently, fixed rates range from 13% to 16% and variable rates range from 11% to 14.5%.
Fees
Like other SBA 7(a) loans, your lender can charge a variety of fees on top of interest, including:
Service and packaging fees.
Extraordinary service fees.
Out-of-pocket expense fees.
Late payment fees
The SBA guarantee fee, however, works differently for the WCP program than it does for other loans. For the WCP program, you pay an annual short-term guarantee fee. The lender charges a proportional amount of this fee for each year your line of credit is in use.
The benefit of this structure is that you pay a short-term fee for a one-year term, rather than for a long-term maturity (which is how you would pay it for other types of 7(a) loans).
Pros and cons of the SBA Working Capital Pilot program
Pros
Competitive interest rates.
Large credit line amounts.
Can be used for a variety of working capital needs.
Option for one-on-one counseling with SBA Export Finance Managers.
Cons
Can be hard to qualify.
Slow to fund.
Requires collateral and personal guarantee.
SBA Working Capital Pilot program requirements
Must be a for-profit business, in an eligible industry, operating in the U.S.
Must be able to show your creditworthiness and ability to repay the loan.
Can’t get the desired loan on reasonable terms from other lenders.
Must be able to demonstrate the need for a loan and show the business purpose for which you’ll use the funds.
Cannot be delinquent on any existing government loans.
Owners of 20% or more of the business must provide a personal guarantee.
You’ll also need to meet program-specific requirements, which include the following:
Must have a history of at least 12 full months of operations (i.e. generating revenue from your business operations).
Must be able to provide timely and accurate financial statements, accounts receivable and accounts payable aging reports and inventory reports.
Keep in mind that although the SBA doesn’t define credit score or annual revenue requirements, you’ll need to meet these qualifications as set by your lender. In general, it’s helpful to have good credit (a score of 690 or higher) and strong revenue.
How to apply for the SBA Working Capital Pilot program
To apply for a line of credit through the SBA Working Capital Pilot program, you’ll work directly with a participating lender, like a bank or credit union. If you have a pre-existing relationship with a financial institution, you might reach out to ask if it offers this type of SBA loan.
Although the application process will vary based on your SBA lender, you’ll generally need to provide:
SBA Form 1919, Borrower Information Form.
SBA Form 912, Statement of Personal History.
Business financial statements, such as balance sheets, profit and loss statements and projected financial statements.
Accounts receivable and accounts payable aging reports and applicable inventory reports.
Business certificate or license.
Loan application history.
Income tax returns.
Resumes for each business owner.
Business overview and history.
Business lease.
For this program, the lender will also require a lien on any collateral associated with transactions that you finance using your WCP credit line. This may include inventory, accounts receivable and contract proceeds, among other assets.
Once you submit your application, the underwriting and closing processes can take anywhere from 30 to 90 days. SBA Preferred Lenders may offer faster processing times, as they can issue loans without prior SBA approval.
In reality, Redfin agents report that buyers and sellers are waiting until after the election, which aligns with its survey that revealed nearly one-quarter of prospective first-time buyers are holding off to see what Harris or Trump do next. However, home sales and listings are still holding up. The typical US homebuyer’s monthly mortgage payment … [Read more…]
Spotting an up-and-coming neighborhood before it booms is both an art and a science. Early identification can yield significant benefits, including real estate appreciation, a vibrant and dynamic lifestyle, and potential financial gain. Investors and homebuyers can get ahead of the curve with the right knowledge and tools. . Here’s a comprehensive guide on what to look for, from infrastructure developments to emerging cultural trends, to help you identify these promising areas before they hit the mainstream.
Research Infrastructure Developments and Urban Planning
When a city or municipality invests in infrastructure, it often indicates plans to boost neighborhood growth. Local governments use infrastructure development to attract new residents, increase accessibility, and support economic growth. Key indicators include:
Transportation Upgrades: New subway lines, bus routes, light rail stations, or bike paths can make previously less accessible neighborhoods more attractive. Pay attention to transportation authority announcements, as new projects can signal a potential future real estate hot spot. For instance, neighborhoods along new transit corridors often see property values and demand rise significantly as the projects near completion.
Highway and Road Expansions: New roadways or highways access points can also be a game-changer for previously isolated neighborhoods. Expanded roads make neighborhoods easier to access for commuters and businesses alike, which boosts appeal for potential homebuyers and renters.
Public Space Revitalization: The addition or improvement of parks, green spaces, walking paths, and community centers suggests a shift towards making the area family-and community-friendly. Look for local government announcements and urban planning reports that include plans for enhancing public spaces.
Zoning and Redevelopment Initiatives: Pay attention to zoning changes that allow for more housing units or commercial properties. Local governments sometimes adjust zoning laws and accommodate growth, signaling a forthcoming influx of both residents and businesses.
Action Step: Check city or municipality websites for updates on infrastructure and zoning changes. Many of these initiatives are documented publicly, and attending city council meetings or tracking local planning agendas can provide first-hand insights.
Observe Retail and Business Expansion
Retail and business expansion is a powerful indicator of growth. Retailers, form big brands to independent entrepreneurs, typically conduct thorough market research before opening new locations, so their interest in an area is worth noting. Here’s what to look for:
Anchor Tenants: Large grocery stores or big box retailers can catalyze neighborhood change. Major retailers usually research an area’s demographics and growth potential before setting up shop, and their presence can transform a neighborhood.
Upscale and Trendy Shops: Independently owned boutiques, cafes, and restaurants often signal the start of a neighborhood’s transition. These businesses often appeal to younger, trend-conscious residents and indicate a demand for unique, local products and experiences. Notably, trendy coffee shops, artisanal bakeries, and specialty stores often establish a foothold early in the neighborhood transformation process.
Co-working Spaces and Start-Ups: the presence of co-working spaces, tech startups, or creative workspaces can signal that a neighborhood is attracting entrepreneurs and remote workers. These spaces contribute to a modern, community-oriented vibe, attracting young professionals who value flexible work environments.
Action Step: Regularly visit areas that interest you to see which new businesses are opening. Following local business announcements, community boards, and social media can help you stay up-to-date.
Track Real Estate Trends and Vacancy Rates
Real estate trends provide concrete, measurable insights into neighborhood growth potential, By understanding what’s happening in the local market, you can gain valuable clues about an area’s future. Key factors to consider include:
Property Value Trends: A gradual rise in property values is a good sign that demand is growing. Sudden spikes might indicate speculation, but steady increases usually signal genuine interest. You can use online real estate platforms to monitor property values over time and compare them with city averages.
Declining Vacancy Rates: When vacancy rates decline in a neighborhood, demand outpaces supply, making the area more attractive to renters and buyers. New residents moving in also stimulate demand for services and amenities, creating a virtuous cycle of growth.
Flipping Activity and Renovations: The presence of flipped properties – homes that are purchased, renovated, and quickly sold – often signals investor interest. Developers often target neighborhoods they believe are on the brink of growth, hoping to capitalize on increased demand. Increased renovations or home improvements by current residents can also reflect a community’s sense of stability and long-term appeal.
Action Step: Use online tools to set up alerts on new listings, price changes, and closed sales in specific neighborhoods.
Look for Cultural Shifts and a Younger Demographic
Demographic shifts can transform a neighborhood, particularly if young professionals, artists, and or other creatives are drawn to an area due to affordability or unique community qualities. Here’s how these cultural factors play a role:
Artistic Communities: Artists often seek affordable housing, leading them to less developed neighborhoods. Their presence contributes to a creative culture that attracts other like-minded individuals. Cities like New York and Los Angeles saw neighborhoods like Williamsburg and Silver Lake evolve from artist enclaves to mainstream hotspots.
Local Events and Community Engagement: Farmers’ markets, art walks, street fairs, and pop-up events bring attention to the area and create a sense of community. Such events can indicate a groundswell of local support and interest, often acting as a precursor to further growth.
Nightlife and Social Spaces: Breweries, art galleries, and music venues can also draw a crowd and shape a neighborhood’s culture, leading to further investment in the area.
Action Step: Follow social media channels and local blogs that report on neighborhood events, culture, and lifestyle trends.
Monitor School Ratings and Family-Friendly Developments
As young families increasingly choose urban areas for both convenience and lifestyle, neighborhoods with improving schools and family amenities attract a steady influx of long-term residents. Here’s what to consider;
School Quality Improvements: When school ratings or new schools are built, the surrounding area often experiences higher demand from families. City investments in educational facilities are also an indicator of a neighborhood’s growth potential. Look at school rating websites for information on school performance.
Family-Friendly Parks and Recreational Facilities: Neighborhoods with new or improved parks, playgrounds, sports fields, and libraries become appealing to young families. Investment in these areas shows a commitment to creating a safe, community-friendly environment.
Action Step: Research school ratings and local amenities, focusing on family-oriented areas that may be on the cusp of growth.
Pay Attention to Crime Rates and Community Safety
Decreasing crime rates and improved safety measures can signal positive changes within a neighborhood. Safe, walkable communities attract families and young professionals alike, boosting demand for housing.
Community Policing Initiatives: When cities implement initiatives that engage community members in safety efforts, it can lead to a decline in crime and an increase in resident satisfaction.
Increased Lighting and Street Clean-Ups: Small but impactful changes like improved lighting, litter reduction, and graffiti removal create a more inviting environment, Cities and developers often invest in these details before larger projects take root.
Notice Emerging Online ‘Buzz’ and Media Attention
Sometimes, the first hints of a neighborhood’s potential come from online discussions and social media. Social platforms are invaluable for getting insights from locals and identifying neighborhood trends.
Social Media Influence: Follow neighborhood-specific accounts or hashtags on Instagram and Facebook, where residents share local happenings, events, and businesses. Social media influencers who live in the area may also highlight the neighborhood, generating buzz and drawing new interest.
Local News Features: News outlets often cover up-and-coming neighborhoods when new businesses, events, or infrastructure projects are introduced. Following local real estate blogs and publications can help you stay informed about emerging areas.
Action Step: Set up Google Alerts or other online tools to follow neighborhood-specific new and blogs, ensuring you stay up-to-date on any developments.
Bringing it All Together
Spotting an up-and-coming neighborhood requires consistent research, patience, and a willingness to explore on the ground. By monitoring infrastructure improvements, business trends, demographic shifts, and community safety, you’ll be equipped to identify areas with high growth potential. Whether you’re an investor or a homebuyer, these strategies can guide your search for neighborhoods on the brink of transformation. .
Final Tips for Your Journey
Visit Frequently: Spend time walking around the neighborhood, chatting with residents, and getting a feel for the local culture. Real-life experience can offer insights that data cannot.
Diverse Data Sources: Use multiple research methods – from real estate sites to local news outlets – to paint a well-rounded picture.
Keep Your Long-Term Goals in Mind: Whether you’re investing, buying to live, or considering renting out a property, understand your own goals and timeline for holding the property.
Spotting an up-and-coming neighborhood isn’t an exact science, but by using these tools you’ll be in a prime position to discover hidden gems – before they’re on everyone else’s radar.
Are you looking to enter the real estate market this fall? Give us a call today! One of the experienced agents at Zoocasa will be more than happy to help you through the exciting home-buying process!
Looking for your dream home?
Contact us today to talk to a Realtor in your area
First-time parents can be so preoccupied with the love they feel for their new babies and the constant care required that they may lose sight of their larger financial goals. When you’re busy getting to know your little human, you may not prioritize money management.
But securing your growing family’s finances is an important consideration. You have new needs and goals evolving, such as your child’s education and your retirement. Here’s smart advice to help you manage your money well during this new life stage and beyond.
Key Points
• Parents can avoid overspending on baby gear by considering secondhand items or accepting hand-me-downs.
• Creating a budget using the 50/30/20 rule may help first-time parents manage new expenses like daycare.
• Parents can prepare for unexpected expenses by building an emergency fund in a high-yield savings account.
• New parents should continue to prioritize retirement savings by utilizing employer 401(k) plans or IRAs.
• Parents can start saving early for their child’s education with 529 plans or Coverdell ESAs.
7 Financial Tips for New Parents
Raising a child can cost more than $15,000 a year, according to one recent calculation using U.S. Department of Agriculture data. That can put some serious stress on your finances. Here’s guidance on making your money work for you and your family.
1. Avoid Overspending on Baby Gear
As a first-time parent, you likely have quite a bit of work to do before the baby arrives. You may need to create and furnish a nursery for your child, and stock up on diapers, bottles, clothes, toys, and so much more.
As you’re setting up your new life with a baby, it can feel like buying everything brand-new is the only option, but that can be costly. You might consider taking advantage of used or gifted items so as not to deplete your bank account.
You can buy a lot of items secondhand at a lower cost through online marketplaces or used goods and consignment stores. Or you might see what “freecycle” networks in your area have available at no charge. That’s one way to save money daily.
And if you have friends, family, or neighbors that already have children, they may be looking to unload some of the gear their children no longer use. Families with older kids are often happy to pass on items such as clothes, cribs, playpens, toys, and books. You might check Nextdoor.com and other community sites, which can be a good resource for local families seeking to offload these items.
💡 Quick Tip: Help your money earn more money! Opening a bank account online often gets you higher-than-average rates.
2. Don’t Live Without a Safety Net
As a parent, you have a host of new responsibilities, and expenses you never imagined may pop up. So consider these moves:
• An emergency fund becomes even more important when you have a child or one is on the way. You’re now responsible for all of their needs, and there may be unplanned costs that pop up along the way. Or, if you were to endure a job loss, you’d need to continue to provide for your child.
• Saving for an emergency is a process, and it’s okay to start small — even just $25 a week will add up over time. Some people opt to store their emergency fund in a high-yield savings account or checking account. Earning interest that way will help your money grow faster.
• Review your health insurance. You may want to opt for a different plan now that you have a child. An addition to the family is usually a qualifying life event (QLE) that can allow you to make changes regarding your plan outside of the usual open enrollment period.
• Consider life insurance and disability insurance if you don’t already have it or, if you do, see if you want to update your coverage. When a little one is depending on you, you probably want to protect their future if you weren’t able to earn your usual income. Maybe you can only afford a modest policy at this moment. That can be fine; it’s a start and something you can revisit later as you grow your wealth.
3. Keep a Budget
With a baby on board, you likely have a host of new expenses, from the life insurance mentioned above to daycare to toys (and more toys). Making a budget can help you prepare to pay for the extra expenses.
The word “budget” can conjure up fear, but it’s really just a helpful set of financial guardrails that help you balance how much you have coming in and how much is going out towards expenditures and savings.
• You might try the popular 50/30/20 budget rule which says that 50% of your take-home pay should go toward needs, 30% toward wants, and 20% toward savings.
• You could check with your financial institution to see what kinds of tools they provide for tracking your money. This can be a great resource as you work to improve your money management and hit your goals.
• To make a budget, you might also see what apps or websites offer products that could work for you. Check with trusted friends to see what they may recommend.
[embedded content]
4. Don’t Put Off Retirement Savings
Another financial mistake new parents: Learning to pay yourself first isn’t easy for a lot of parents to do, but it’s vital. (For instance, while you can borrow money for college expenses for your child, you can’t likely borrow for your retirement.)
For retirement saving, one way to start is by enrolling in your company’s 401(k) plan if one is offered. Some employers will match your contribution, up to a certain percentage, and you’ll be able to have your contribution taken directly from your paycheck.
If your employer doesn’t offer a 401(k), you could open an individual retirement account, or IRA, instead. Getting in the habit of saving at least a little for your own future can be important as your focus shifts to your new addition.
It’s never too early to start saving for retirement.
💡 Quick Tip: Most savings accounts only earn a fraction of a percentage in interest. Not at SoFi. Our high-yield savings account can help you make meaningful progress towards your financial goals.
5. Start Savings for Your Child’s College
Saving for your children’s tuition can be an important step for many new parents. That’s because the sooner you start, the better. Your money will have that much more time to grow. College is a big-ticket expense, with estimates of tuition in 18 years being calculated as follows:
• $25,039 per year for a public college
• $48,380 per year for a private college
While a standard savings account may seem like the easy choice, there are other options designed to help you or grandparents save for a child’s education.
• You might opt for the benefits of a 529 college savings plan. There are two types: education savings plans and prepaid tuition plans.
• With an education savings plan, a tax-deferred investment account is used to save for the child’s future qualified higher education expenses, like tuition, fees, room and board, computers, and textbooks. Funds used for qualified expenses are not subject to federal income tax.
• With a prepaid tuition plan, an account holder purchases units or credits at participating colleges and universities for future tuition and fees at current prices for the beneficiary. Money in this fund is guaranteed to rise at the same rate as tuition. Most of the plans have residency requirements for the saver and/or beneficiary.
• A Coverdell Education Savings Account may also be worth looking into. In general, the beneficiary can receive tax-free distributions to pay for qualified education expenses. Contributions to a Coverdell account are limited to $2,000 per year, per beneficiary. The IRS sets no specific limits for 529s.
calculator to check eligibility.
• Adoption Tax Credit: This offers tax incentives to cover the cost incurred if you adopted a child. In 2024, the maximum credit was $16,810 per qualifying child.
You might consult a tax professional to see which of these you can claim.
7. Teach Your Kids About Money
If kids aren’t taught the basics of financial literacy at a young age, they may struggle to make a budget, avoid credit card debt, or save money when they’re older. You can help your children learn what it means to manage money in these ways:
• Kids often love to play store, so go ahead and join in. By exchanging goods for money, they’re already beginning to understand the basic principles of commerce.
• As they get older, you may want to give them an allowance in exchange for chores or homework completion.
• You could even have them make a budget with their earnings, and encourage them to spend, save, and donate.
• You could open a checking account with them, once they are old enough, and teach them how it works.
• You might give them a gift card or prepaid debit card and coach them on sensible spending.
Can You Ever Be Fully Financially Ready for Parenthood?
It’s probably not possible to be fully financially ready for parenthood or for adult life in general. Part of each person’s financial journey is learning how to plan for the unexpected and navigate curveballs. That might mean financing a child’s dance lessons or speech therapy. You might wind up moving to what you consider a better school district and paying more for your mortgage and taxes.
That’s why embracing some of the guidelines above, such as making a budget, stocking an emergency fund with cash (perhaps sending some money there via direct deposit), and saving for the future can be so important.
The Takeaway
Being a new parent is a joyful time but also a challenging one. One priority not to lose track of is your financial health, especially since you are now providing for a little one and their future. By budgeting and spending wisely, saving for the future, and knowing which tax credits you may be able to claim, you can help yourself get on the path to financial security for your family.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.
FAQ
How can you plan financially for parenthood?
Planning financially for parenthood can involve updating your budget, allocating funds to the right insurance policies and long-term goals (such as your child’s education and your own retirement), and creating an emergency fund, if you don’t already have one. Also educate yourself on any tax credits you might qualify for once you become a parent.
What are the biggest unforeseen expenses of parenthood?
Some of the unforeseen expenses of parenthood include your child’s medical, dental, and mental health costs; academic support (such as tutors and prep classes); hobbies (taking tae kwon do classes, perhaps, or traveling with their soccer club); and funding any family travel and vacations.
How much does a child cost per year?
The cost of raising a child per year can vary widely, depending on such factors as medical needs and whether they are attending public or private school. That said, recent studies suggest the current average figure is around $15,000 to $17,500 per year per child.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
SoFi members with direct deposit activity can earn 4.20% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.20% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.
Denied credit card applications can be frustrating. It’s a common experience, but understanding why it happens is the first step to improving your chances in the future. Whether it’s due to your credit score, income or other factors, there are steps you can take to address the issues and build a stronger financial profile.
We’ll break down the common reasons why credit card applications get denied, explore what you can do after a rejection and offer tips to increase your chances of approval next time.
Key takeaways:
Knowing why your credit card application got denied is key to fixing it.
Building good credit habits, such as paying bills on time and keeping low credit utilization, can significantly improve your chances of approval.
There are alternative credit-building options available, like secured credit cards or becoming an authorized user if you’ve been denied.
Why was your credit card application denied?
Several factors can influence a credit card issuer’s decision, from your credit score and history to your income and debt levels. Understanding these factors can help you take steps to improve your chances of approval in the future.
Your credit history isn’t ideal
Your credit history, a record of how you’ve managed credit in the past, is another key factor in credit card approvals. Creditors carefully examine this history to assess your financial responsibility, namely:
Age of credit history: The length of your credit history matters; a longer history often indicates a more established credit profile. However, consistent on-time payments can positively impact your chances, even with a shorter history
History of on-time payments: Your payment history is arguably the most important component of your credit history. Late or missed payments can significantly damage your credit score. Defaulting on accounts, such as credit cards or loans, is a severe negative mark.
Public records: Bankruptcies or collections can negatively affect your creditworthiness and make it harder to get approved for a credit card.
Your credit score is too low
Your credit score is a crucial factor in determining whether your credit card application is approved. Creditors view your score as a measure of your financial reliability. A higher score generally indicates a lower risk of defaulting on payments, making you a more attractive applicant. On the other hand, a low credit score might raise red flags for creditors.
The type of credit card you qualify for is often tied to your credit score. Here’s a general breakdown of credit score ranges and the corresponding card tiers:
Excellent (800-850)
Premium rewards cards
Very good (740-799)
General rewards cards
Good (670-739)
Student or secured cards
Fair (580-669)
Secured or starter cards
Poor (300-579)
Secured or specialized cards
Your debt-to-income ratio is too high
Your debt-to-income (DTI) ratio compares your monthly debt payments to your gross monthly income. It gives creditors a snapshot of your financial obligations and ability to manage new credit. A lower DTI generally indicates a healthier financial situation and increases your chances of approval for a credit card or loan.
A good DTI ratio varies depending on the lender, but a ratio below 36 percent is generally considered favorable for credit card approvals. This means that less than 36 percent of your monthly income goes towards debt payments. However, many creditors prefer a DTI below 30 percent. The lower your DTI, the better your chances of getting approved for a credit card with favorable terms.
Your credit utilization rate is too high
How much of your available credit you use can significantly impact your credit card application. Your credit utilization rate measures how much of your available credit you’re currently using. For example, if you have a credit limit of $1,000 and a balance of $300, your credit utilization rate is 30%. Creditors prefer to see low credit utilization rates as it suggests responsible credit management.
A good credit utilization rate is generally considered to be below 30%. Keeping your balances well below your limits can significantly improve your credit score.
You’ve made too many credit inquiries
Applying for too many credit cards, loans or lines of credit within a short time period can also impact your credit card application. Every time you apply for a new line of credit, the lender or creditor pulls a copy of your credit score and history. This is called a “hard inquiry.”
Hard inquiries can temporarily lower your credit score. While a single hard inquiry usually has a minimal impact, multiple inquiries within a short time can raise red flags for lenders, suggesting you may be experiencing financial difficulties.
To avoid a negative impact on your credit score, it’s recommended to limit the number of credit applications within a short period. If you’re shopping around for a credit card, consider applying for multiple cards within a few weeks. Pre-qualified offers can also help you explore options without affecting your credit score.
The card you chose has application restrictions
Application restrictions can be another reason for a denied credit card application. These restrictions are specific criteria set by credit card issuers to manage their risk and target specific customer segments. Some common application restrictions include:
Income requirements
Minimum age limits
Geographic eligibility
For instance, premium rewards cards often have high income requirements to ensure cardholders can afford the annual fee and maintain a high spending level. Additionally, some types of credit cards may only be available to residents of specific states or countries.
Other factors that could affect your approval
Beyond the factors already discussed, several other elements can influence your credit card approval, like:
Employment status
Income stability
The type of income you earn
While they don’t directly impact your credit score, these factors give lenders a broader financial picture. Your age can also indirectly affect your credit history length, which, as mentioned earlier, is an important factor.
You’ll also want to take a look at the specific credit card issuer’s underwriting guidelines. Some creditors may have stricter requirements for certain card types. Understanding the issuer’s criteria can help you choose the right card and increase your chances of approval.
If you apply for a credit card and get denied, does it affect your credit?
Getting denied for a credit card doesn’t directly impact your credit score. However, the application process itself does leave a footprint. When you apply for a credit card, a hard inquiry will appear on your credit report – this is true whether you are approved or denied.
While a single hard inquiry typically has a small, temporary effect, multiple inquiries within a short period can negatively impact your score. So, while the denial itself won’t hurt your credit, the application process might cause a slight short-term dip.
Why would you be denied a credit card with good credit?
Even with a good credit score, you can still be denied a credit card. While your credit score is a significant factor, it’s not the only one. Like we mentioned above, credit card issuers consider various aspects of your financial profile, including:
Income
Debt-to-income ratio
Credit history
If your income is relatively low compared to your existing debt or if you have a history of managing high credit balances, you might be denied even with a good credit score. Additionally, some premium cards have specific income or spending requirements that may not align with your financial situation.
What should you do after a denied credit card application?
A credit card denial can be frustrating, but it’s not the end of the road. Understanding why a lender rejected your application is the first step to improving your chances in the future. By taking proactive steps, you can identify the issues hindering your approval and develop a plan to address them.
1. Understand the reason you were denied
To figure out how to improve your chances of getting a credit card, you need to know why you were denied in the first place. The denial letter you receive might not explain everything. If you’re not sure why you were turned down, contact the credit card issuer and ask.
This information will help you pinpoint areas for improvement, such as increasing your credit score, reducing debt or addressing specific issues on your credit report.
Once you know the exact reasons for the denial, you can create a targeted plan to address those issues.
2. Check your credit report
Checking your credit report should be the next step after a credit card denial. This essential document provides a detailed overview of your credit history, including information on your payment history, credit utilization and public records.
Review your credit report to gain valuable insights into what may have contributed to your denied credit card application. While you’re at it, take note of any errors or inaccuracies that might be negatively impacting your credit score and file a dispute.
3. Create a game plan
Once you know why your credit card application was denied, you should figure out a plan to fix the problems. This means deciding which issues to tackle first. For example, if you owe a lot of money or are using most of your credit, pay down your debt and try not to open new accounts for a while.
By making a clear plan and sticking to it, you can improve your finances and get approved for a credit card later on.
4. Consider alternative cards
If you’ve been denied a credit card, exploring alternative options can be a smart move. There are various types of cards designed for different credit profiles.
For instance, a secured credit card might be a good starting point if you have fair or poor credit. These cards require a security deposit, but they can help build your credit history over time.
Additionally, some credit unions and community banks offer cards with more lenient approval criteria compared to major banks. By considering these options, you can increase your chances of finding a credit card that suits your needs while working on improving your credit score.
Can you be denied a secured credit card?
Yes, it’s possible to be denied a secured credit card. While they generally have less stringent approval requirements compared to traditional credit cards, creditors still assess applicants. Common reasons for denial include:
Insufficient funds for the required security deposit
Providing inaccurate or incomplete information on the application
A history of financial mismanagement that raises concerns about your ability to repay the card
Can you reapply for a credit card?
Yes, you can reapply for a credit card after being denied. However, you should consider the reasons for the initial denial before reapplying.
If your credit score was the primary issue, it’s wise to wait a few months to allow for potential improvements. Reapplying too soon could generate additional hard inquiries, negatively impacting your credit. Generally, you’ll want to wait at least six months before reapplying, but the optimal time frame depends on your individual circumstances.
4 tips for getting approved for a credit card
Building good credit takes time, but there are steps you can take to improve your chances of approval. While everyone’s financial situation is different, here are a few general tips for getting your next credit card application approved.
1. Improve your credit score
A good credit score is like a golden ticket for credit card approvals. Lenders use it to assess your financial reliability. Improving your credit score can significantly increase your chances of getting approved for a credit card.
By paying bills on time, keeping credit card balances low and limiting new credit applications, you can boost your score over time. A higher credit score often leads to better interest rates and more card options.
2. Increase your income
Earning more money can definitely improve your chances of getting a credit card. Credit card companies want to make sure you can pay your bills. A higher income shows them you’re more likely to be able to handle the payments.
This is especially important if you have a lot of debt. By increasing your income, you can lower your debt-to-income ratio, making you a more attractive applicant to lenders.
3. Decrease your debt
Keeping your credit card balances low is key to getting approved. Creditors look at how much you owe compared to your credit limit. Using a lot of your available credit can make you look like a bigger risk.
Paying off your loans can also improve your debt-to-income ratio without having to make more money.
4. Choose the right card
Picking the right credit card can make a big difference. Some cards are easier to get approved for than others.
If you have good credit, you might qualify for a card with great rewards. But if your credit isn’t so good, you might want to opt for a starter card or a secured card. By choosing a card that matches your financial situation, you’ll increase your chances of getting approved and making the most of your card.
Can becoming an authorized user help your credit?
Becoming an authorized user can potentially help increase your credit score. When you’re added as an authorized user to a credit card account with a positive payment history, your credit report may reflect this positive activity. This can help build your credit history and improve your credit score over time.
However, it’s important to note that the primary account holder is responsible for all charges made on the card, so trust is essential. Additionally, while it can be a helpful tool, it’s not a guaranteed path to building credit. You’ll still need to learn how to handle your finances responsibly to improve your credit.
Learn more about what’s keeping you from getting approved
Taking control of your financial health is the first step toward getting approved for a credit card. By understanding the factors that impact your creditworthiness, you can boost your chances of approval. Remember, building good credit takes time and consistency.
If you need additional support on your credit journey, consider exploring resources like Lexington Law Firm to better understand your credit rights and options. Take advantage of Lexington Law Firm’s free credit assessment today.
Note: The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.
Seems pretty clear now that it doesn’t matter what economic data shows up between now and next week.
Mortgage rates aren’t going to improve by any significant margin this week or until after the election.
Unfortunate for those who need to lock their rate and/or close this week. And the past month for that matter.
Lenders are essentially in a holding pattern and continuing to price defensively until at least next Wednesday. Likely longer…
Simply put, the outcome of the election matters more than the data right now.
Biggest Presidential Election in Years
We all know next week’s presidential election is a big one. One of the bigger ones in years. Aside from it being very contentious, a lot is at stake regarding the direction of the economy.
Thus far, the markets have priced in a Trump victory, at least in a defensive type of way.
Without getting political here (I never have any interest in doing that), it doesn’t appear that either candidate winning is helping 10-year bond yields at the moment.
The best way to track mortgage rates is via the 10-year bond yield, which works well historically because 30-year fixed mortgages often last about a decade too.
Despite being offered for 30 years, most are paid off earlier due to a refinance or a home sale.
Lately, the 10-year yield has climbed higher and higher, with most market pundits pointing to increased government spending as the culprit.
Long story short, with more government spending expected, any way you slice it, yields have gone up. Investors want to be compensated when they buy government debt (bonds).
But one could argue that this was already known several months ago, when yields were closer to 3.50% vs. about 4.35% today. What gives?
Bond Yields Are Higher Because the Worst of Everything Is Baked In
Without getting too technical here, bond yields have basically priced in the worst of everything lately. Just look at the chart above from CNBC.
Whether it’s the election outcome, possible government spending, economic data, it’s all priced in in the worst way possible.
This is why we’ve seen the 10-year yield climb nearly a full percentage point since the Fed cut rates back in mid-September.
And despite a very weak jobs report this morning, the 10-year yield climbed up another ~6 basis points.
Yes, it was a report affected by hurricanes and labor strikes, but on a normal first Friday of the month you’d likely see yields drop and mortgage rates improve given the immense weakness.
That’s not happening this week and it’s no real surprise at this point. As noted, there are bigger things on investors’ minds.
The good news is we should get clarity next week once the votes are tallied and we hopefully have a clear winner.
Of course, if things drag on, that could be bad for bond yields too. Essentially, anything and everything is bad for bond yields, and thus mortgage rates, right now.
[How Do Presidential Elections Affect Mortgage Rates?]
Mortgage Rates Could See a Relief Rally
Now the good news. Because there’s been absolutely no good news for about a month and a half, a major mortgage rate relief rally could be in store.
Similar to any other trend, once it runs out of steam, a reversal could be in store. Think about a stock market selloff. Or a short squeeze.
After a few bad days or weeks in the market, you often see stocks rally. The same could be true for bonds, which have been pummeled for over a month now.
Eventually they get oversold and there is a buying opportunity.
If bonds prices do in fact rally once this election is decided, simply due to finally getting some clarity, bond yields could sink in a hurry.
The defensive trade could unwind and mortgage rates may finally get some relief as well.
It’s never a guarantee, but given that basically everything has worked against mortgage rates for over a month, they could experience a big win as soon as next week.
Of course, economic data will continue to matter. But importantly, it will matter again after basically being kicked aside during election season.
Remember, weak economic data is generally good for mortgage rates, so if unemployment continues to rise, and inflation continues to fall, rates should come down over time as well.
Read on: Mortgage Lenders Take Their Time Lowering Rates
(photo: Paul Sableman)
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process. Follow me on Twitter for hot takes.
Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:
Learn how women can excel at investing, overcome financial challenges, and build wealth with practical strategies.
What does it mean to invest like a girl? How can women start investing and overcome financial challenges? Hosts Sean Pyles and Kim Palmer discuss gender differences in investing and practical strategies for women to build wealth. Kim interviews Jessica Spangler, author of Invest Like a Girl: Jump into the Stock Market, Reach Your Money Goals and Build Wealth, about the ways women tend to excel at investing, including taking time to make investment decisions, avoiding rash choices during market downturns, and focusing on long-term goals. They discuss strategies for eliminating high-interest debt, creating a budget that works for your lifestyle, and choosing the right mix of stocks and bonds for personal goals.
Check out this episode on your favorite podcast platform, including:
NerdWallet stories related to this episode:
Auto loans from our partners
Episode transcript
This transcript was generated from podcast audio by an AI tool.
Sean Pyles:
Welcome to NerdWallet’s Smart Money podcast. I’m Sean Pyles.
Kim Palmer:
And I’m Kim Palmer.
Sean Pyles:
On Smart Money, we are all about answering your money questions, and today we’re tackling an intriguing one. What does it mean to invest like a girl? Investing might seem like a topic that needn’t be gendered, but it turns out there are some gender differences, and that’s part of what we’ll dive into today. Kim, in her role as the host of our regular book club series, is here to guide the conversation. So Kim, who are you talking with?
Kim Palmer:
I’ll be talking with Jessica Spangler. She’s the author of Invest Like a Girl: Jump into the Stock Market, Reach Your Money Goals and Build Wealth. Jess is also a popular money educator on Instagram and she has a lot of ideas to share on women, investing and personal finance.
Sean Pyles:
Sounds great. Well, we also want to remind listeners that you can enter for a chance to win our book giveaway at nerdwallet.com/bookclub for our next book club pick. And with that, Kim, I’ll let you take things from here.
Kim Palmer:
Great, thank you. Jess, welcome to our show.
Jessica Spangler:
I’m so happy to be here. Thanks for having me.
Kim Palmer:
Let’s start with what really feels like the most awkward question. Why do women need their own investing book? I mean, don’t we all have the same basic rules that apply to us all?
Jessica Spangler:
Absolutely. The title of this book is intentionally ironic, right? Invest Like a Girl. What does that mean? Well, it’s really twofold. First of all, when you walk into any big box store, you’re pretty much bound to find ballpoint pens for women or razors for women or even laxatives for women. Really, there’s nothing fundamentally different about these products. They function just the same for people of all genders. There are differences about investing when it comes to women, even though the fundamentals of investing are the same for everyone.
For example, women are more likely to be the primary caretakers in the home, whether that’s taking career breaks or stepping down to part-time to help raise children or even to take care of our aging parents. On top of that, we are more likely to live longer. And so we have longer periods of retirement and higher health care costs as we age. Those factors compound together to equate to lost savings over time. This investing gap needs to be made up so that we can fund these factors that really differentiate us in retirement.
One might think then, the second half of the irony of the title, Invest Like a Girl, there’s similar sayings, hit like a girl, punch like a girl. Well, the thing about investing actually is that women are very good at it. When you look at the data, Fidelity did an unbelievable, wonderful study called the Women in Investing Study that actually showed that women, while we often hesitate to start investing and while our numbers are growing, we hesitate to get started. But actually, when we do, we wind up earning higher returns on average than men.
Kim Palmer:
That is so fascinating to me and that really jumped out at me from your book. What explains that?
Jessica Spangler:
There are some differences that were noted in the study. In particular, women were more likely to take their time when making investing decisions. In fact, the stereotype that women are probably going to be more emotional investors and might be more likely to make rash decisions, well, in fact, it’s quite the opposite. We actually do more research. We are less likely to make split-second decisions. We’re less likely to sell in a market downturn that is likely just a temporary fluctuation. And we’re more likely to have long-term goals and plans that we see to and stick through even when times get tumultuous.
Kim Palmer:
Given the importance of investing for women for all the reasons you just laid out, how can women get started with investing and make it a little bit easier?
Jessica Spangler:
This book, Invest Like a Girl, it’s really designed to be a guideline that will walk you through step-by-step exactly how to get started investing, and it’s really divided into two parts. The first half is really laying the framework for all of the investing lingo, breaking down all of the background information that you need to know about stocks and bonds and index funds and really getting into the finer details about informed decision-making so that when you get to the second half of the book, you have a whole bunch of sample investment portfolios laid out for you so that you can find one that seems to align the most with your goals, and then you can sort of tweak and tinker with those portfolio samples so that they’re really customized to you using all of the information that you learned in the first half of the book.
Kim Palmer:
You’re also a big advocate of the idea that you don’t have to have a trust fund or a lot of money to get started. Do you have to have a certain amount? I mean, when should you get started?
Jessica Spangler:
There is no denying that people that grow up with money absolutely have a leg up. There’s no denying it. But those people are already going to be investing. They’re already going to be utilizing these age-old tools that they’ve known about for generations, whether we do it or not. No matter how much money you have or what background you come from, there is real power in getting some skin in the game.
And you don’t have to have any amount of money, really. Nowadays, you can start with as little as a dollar to purchase fractional shares of a stock. I think that’s a really common misconception about this barrier of entry. Of course, I want to acknowledge that there is very real wealth inequality and there are people who absolutely have a leg up, but it is possible to improve your financial footing no matter where your starting point is with any amount of money using the tools that are in this book.
Kim Palmer:
Do you think that it’s important, just to take a step back, at someone’s overall personal finances? If you also have a lot of high-interest credit card debt, for example, or you don’t yet have an emergency savings fund, should you focus on that first before you think about investing, or do you suggest kind of just doing everything all at once?
Jessica Spangler:
There’s a great section in the first half of this book called Out of Debt and Into the Game. One of the things that we talk about is differentiating between high-interest debt and low-interest debt. When we think about high-interest debt, these are essentially interest rates that are going to exceed the average returns that you can expect in the stock market. And so, when we have really high-interest debt like credit card debt that can be much higher than 7%, going all the way up into 20%, 30% interest rates, it’s going to be really hard to benefit from investing when that interest rate on the debt is going to be taking two steps back every time you take one step forward.
We do talk about the strategies to eliminating high-interest debt in this book, because that really is important before you get started with investing. And of course, like you said, having an emergency fund is absolutely essential so that you’re not digging into your savings when life throws curveballs at us, as it always does.
Important to say that I do think often we feel as if we need to have no debt at all in order to start investing. This idea of you can’t have any student loans whatsoever, you’ve got to pay off your mortgage, that’s just not the case. If we can optimize our debt so that we are eliminating high-interest debt and still maintaining things that hopefully have a lower interest rate, something like federal student loans, whereas we may pay off our private ones if those have higher interest rates, we can really optimize our personal finances so that we can still benefit from the great wonderful compound interest of investing.
Kim Palmer:
Let’s dive into some of your other specific strategies. I know there’s a lot to unpack, but a few things that jumped out at me that maybe you could give us an overview of. You talk about how important it is to figure out your net worth and think about your cash flow. Could you just help us understand what that means exactly?
Jessica Spangler:
The gist of it is that your net worth is really everything that you own minus everything that you owe. It’s really just a snapshot. It’s a picture in time of what your assets are looking like versus what your liabilities are looking like. It really says nothing about necessarily the future of your financial standing or how successful or not you may be at investing. It’s really just a snapshot of where you’re at right now, how much money do you have in assets that you own, and how much money are you spending on liabilities or debt. We just calculate net worth by subtracting your outstanding debt and the money that you owe from your assets and the money that you own.
Assets may be cash. That’s an easy one. It could also be the value of your home if you own a home. It could be valuables, jewelry, furniture, things that have value, things that you could sell for cash. Whereas liabilities, the money that you owe, often we’re talking about loans here, the value of your student loans, the value of the mortgage on your home. If you have the value of credit card debt, you would subtract that number from your assets to get your net worth, and that’ll give you just a snapshot in time of where you are in terms of what you owe versus what you own.
Kim Palmer:
Perfect. And then you can work on growing that.
Jessica Spangler:
Exactly. It’s important to know where you’re at so that you can figure out where you’re going.
Kim Palmer:
And with the cash flow idea, is that basically you’re trying to get a handle on your budget just to understand your money going in and out before you start making any investing decisions?
Jessica Spangler:
Exactly. I think budgets can be really boring and dry and bland kind of conversation for a lot of people, and it’s something that even I just naturally feel kind of averse to because oftentimes it feels so strict and so stringent that it’s just really hard to find something that fluctuates with daily life as it does. But having a good budget means taking a look at all of your money, where it’s coming in, where it’s going, so that you can make room for things that you value. I think that’s really what differentiates a good budget from just an Excel spreadsheet that isn’t really doing anything for you.
A good budget helps you see what is going on with your money so that you can prioritize spending it on things that you love, whether that’s vacations or time with your family or investing. It’s being able to have an idea of the full clear picture so that way you can set aside that extra money for investing.
Kim Palmer:
And then when you are ready to turn to investing, you talk about picking the right mix of stocks and bonds and other investing vehicles. And obviously the best choices are going to vary so much by person. Can you give us an overview of how someone makes those choices for themselves?
Jessica Spangler:
Like you said, it really is such a personal decision. There are a lot of factors that go into why someone may lean more stock-heavy in their portfolio versus bond-heavy in their portfolio. Generally, we’re thinking about a couple different things. First of all is your risk tolerance. This is how much you can deal with fluctuations in the market.
Stock market crashes are normal. It’s a normal part of the market cycle. Even just normal fluctuations in the market, it’s very normal. Some people are totally comfortable with those fluctuations, and they don’t mind seeing their portfolio drop by 30% one year and be up by 30% the next. That person would be more likely to choose a stock-heavy portfolio where equities can fluctuate more rapidly on a regular basis.
A person who wants less risk in their portfolio, that person may be more likely to purchase something like bonds, where the value is less likely to fluctuate, and as long as you purchase government bonds, you are going to get what you put in at the end plus interest. Those ratios in your portfolio can change accordingly.
The other part of the equation is time horizon. How long you have before you need to access the money can really greatly impact what kinds of decisions you decide to make. For example, if you’re relatively young, you have 30-plus years before retirement, you may be very comfortable investing more heavily into stocks and equities because you have 30 years between now and the time that you have to actually think about withdrawing some of that money in retirement. So whatever kind of roller coaster the stock market takes you on in between now and then is really inconsequential so long as 30 years from now you actually net positive. Whereas somebody who’s retiring in the next couple of years and has built up this really solid nest egg, they might be a lot more cautious when investing 80% or 90% of their money into stocks and equities because when their retirement party is 50-something weeks away, they’re going to want to make sure that their money isn’t fluctuating heavily right before they get to retire and sit on a beach somewhere and enjoy the fruits of their labor.
There’s lots of other things to think about, but those are two of the main factors when it comes to selecting your ratio of equities and bonds and all the other different types of securities that we talk about in the book.
Sean Pyles:
More of Kim’s conversation with Jessica Spangler is coming up in a moment. Stay with us.
Kim Palmer:
A lot of people are also concerned about the social and environmental impact of the companies they’re investing in. Is that a good thing to consider? And if you do want to think about that, what’s the best way to evaluate it?
Jessica Spangler:
That is definitely something that we talk about in the book. Environmentally sustainable investing is a topic of growing importance and growing conversation. And more and more data is really coming out about it. It’s often hard to know what a company is reporting in terms of their financials and how that actually holds up on the back end with what they’re doing to be sustainable. There are some markers that we can look for when it comes to more equitable and sustainable investing, whether or not the companies are really transparent in their reporting process, whether that’s emissions or how they are having their products tested and rated for environmental grading groups.
In the book, you’ll read about various certifications that companies can go through to do that. There’s also the topic of diversity and equity and inclusion in the actual upper ranks of the company and whether or not they’re following through in some of their mission statements to include various groups into the higher levels of the executive company. But that said, and we talk about this in the book as well, it’s important to also look out for greenwashing or this concept of appearing to be particularly sustainable or equitable by using terms that don’t really have a clear definition, terms that make a product perhaps seem as if it may be sustainable when in fact it’s not.
I always encourage investors who are interested in sustainable and equitable investing to look into some of the documents and the literature that each individual company will post as part of their annual report and their reporting documents to the SEC, and those are mentioned in more detail in the book, but it really does require a pretty substantial amount of research to really determine whether or not a company is following through on their promises.
Kim Palmer:
Can you share some of the lessons you’ve learned yourself as an investor? Have you personally changed your strategy at all or made mistakes along the way?
Jessica Spangler:
I think that one of the biggest things that I’ve learned is that more complex is not necessarily better. And what I mean by that is I think there’s this tendency, the more you learn about investing and the more you learn about personal finance, to feel like you have to do these increasingly complicated investing maneuvers like, “Okay, I’ve got to have 4% this and 6% this and 12% that, and I should probably incorporate a little bit of this,” when frankly, most of the data suggests that those of us who invest primarily in a well-diversified balanced index fund that represents either the total stock market or the S&P 500, so the top 500 companies in the United States, we typically statistically outperform some of these major professional hedge fund managers who spend all of their time and money manipulating all of these different ratios and portfolios to find the perfect investment. Really keeping it simple can actually be more profitable, and that’s definitely something that I’ve learned over the years.
Kim Palmer:
In the book, you also say a lot of choices around investing really circle back to what your goals are. What are some examples of a short-term goal and a long-term goal that maybe investing could help us achieve?
Jessica Spangler:
When we think about financial goals, I tend to separate them into three different categories: short-term goals, medium-term goals, and long-term goals. Now, when I think about a short-term goal, I’m talking about one to two years, generally. And for a very short-term goal, like maybe you’re saving for a down payment on a house and a high-yield savings account, that might not be something you actually even want to invest for at all. If a goal is so short that it’s right around the corner and you really want to have that money flexible and available to you, a high-yield savings account might be the perfect place to put that money so that you still have access to it in cash, but you’re getting a higher interest rate than you would in a standard run-of-the-mill savings account.
Now a medium-term goal, which now we’re thinking between three to seven or maybe even as far out as 10 years in the future, this might be something that you’re saving for in the long-term. Maybe you are investing to make a major payment on a loan that you already have. Maybe you are looking to invest in some other property. Maybe you’re looking to invest for retirement or for a really great wonderful vacation or a backpacking trip or something that’s still three to seven years down the road. Once we start to think in that kind of time horizon, that’s when we start to focus a little bit more on investing.
Of course, for longer time horizons—10, 15, 20, 30 years out—that is when investing really shines because the longer your money is able to stay in the market, the longer you are able to take advantage of compound interest and really watch your money grow. It’s a lot harder to say that you will certainly make money in the stock market in a one to two year span when fluctuations are almost certain than it is to say that you’ll make substantial profit three to seven to 10 to 30 years out in the future where you have plenty of time to accumulate that nest egg and really work towards more far-out financial goals.
Kim Palmer:
If you do have money invested, it can be so stressful if there’s a news day where suddenly the stock market is just plunging. Putting it in the context of the fact that some of these goals are long-term, do you recommend we pay attention to these daily swings?
Jessica Spangler:
Personally, absolutely not. I mean, that’s just so stressful. And for what? If your long-term goals are far enough out in the future that it’s really not something you need to pay attention to, the only thing that really matters is that 20 years from now, 30 years from now, whatever that longer-term time horizon is for you, the only thing that matters is that in the future you walk away with more money than you put in today and not less. What happens on the day-to-day is just noise, and there’s really no reason to get caught up in it. If you’ve got your long-term vision in mind and you’ve got your goal at the end, you don’t need to get caught up in all of the market mumbo jumbo.
Kim Palmer:
For anyone listening who’s wondering why it’s so important to learn how to invest and create financial security for yourself, you share a really powerful story at the beginning of the book about your family and what you experienced growing up, what really inspired you to take control of your finances. Do you mind sharing that story here?
Jessica Spangler:
Absolutely. I grew up in a middle-class family. My dad worked in construction as a carpenter and my mom was a stay-at-home mom. When I was seven years old, my dad passed away very suddenly from a heart attack, and nobody saw it coming. He was this tall, manual labor job, slender dude. It was totally out of left field, and it was a life-defining moment for me and for my mom. We lost my dad, which was obviously emotionally devastating on its own, but we also lost our only source of income. And neither of my parents went to college. My mom didn’t have a degree where she could just go out and pick up a good-paying job. She really had to figure it out for herself and for her kids. And as women do when they’re faced with any trying situation, she just got it together. She pulled through. She took some classes and started working in real estate, and went on to become this amazing award-winning realtor. She is my biggest inspiration.
But through this whole time, I really learned by osmosis. I went to listing appointments with her. I went to settlements. I walked through open houses. And as fate would have it, in 2008, the housing market wound up crashing. And once again, we really lost our sense of financial stability. It taught me at a really young age, I don’t want to rely on anyone for money. I want to have my own source of income. I want to be able to provide for myself financially and I want to have a sense of control and choice and power in my own financial life.
Neither of my parents went to college, so of course my first instinct in all of this was that of course, I should go to college. I should go all the way and get a doctorate, which is what I wound up doing. But it wasn’t until so many years later when I learned that my paycheck was enough to survive. It was enough to live. And for that, I’m grateful, so grateful because absolutely not everyone can say that. But it wasn’t really enough to retire. It wasn’t enough to really set away a nest egg and to make sure that I was comfortable forever.
What I really had to start thinking about was investing. How do I actually provide for myself so that I never need to rely on anyone, not now or not in the future? I taught myself to invest. I learned everything I could online about investing and got started doing it myself. And here we are all these years later, writing a book and trying to help in some way so that other women feel empowered and feel that they have agency in their own financial future so that they have the choice to leave a job that doesn’t fulfill them or leave a relationship that isn’t safe or just retire on a beach somewhere. Whatever it is that your goal is, it’s possible to have financial independence and it’s something that I spent my whole life looking to achieve, and here we are.
Kim Palmer:
Thank you so much for sharing that. It is definitely so inspiring. Do you have any closing thoughts to share with our listeners?
Jessica Spangler:
I am a huge proponent of women having the agency and the ability to make their own choices in any capacity. And being financially independent, being financially educated gives you that choice. It gives you access, it gives you agency, and it gives you real independence. I just want women to know that if there’s any doubt that they can’t, they absolutely can. There is an entire book of data and numbers and strategies and step-by-step guidance that will show you that you are more than capable. You are great at it.
Kim Palmer:
I love that. Jessica Spangler, thank you so much for joining us on Smart Money.
Jessica Spangler:
Thank you so much for having me.
Kim Palmer:
Yes, that is all we have for this episode. To share your thoughts on money, shoot us an email at [email protected]. This episode was produced by Sean Pyles and myself. Tess Vigeland helped with editing. Megan Maurer mixed our audio. And a big thank you to NerdWallet’s editors for all their help.
Sean Pyles:
Visit nerdwallet.com/podcast for more info on this episode. And remember to subscribe, rate and review us wherever you’re getting this podcast. You can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.
Here’s our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.
Kim Palmer:
And with that said, until next time, turn to the Nerds.
Piggyback mortgages, which allow buyers to take out a second loan to reduce their initial down payment, have gained renewed interest as buyers look for ways to sidestep high costs in today’s housing market. While these loans were common before the 2008 housing crash, they were often linked to adjustable rates and risky borrowing practices. … [Read more…]