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Apache is functioning normally

September 10, 2024 by Brett Tams

Joanna Gaines has become a household name in the world of interior design, thanks to her warm, inviting style that perfectly blends modern farmhouse charm with timeless elegance. Known for her keen eye for detail, Joanna’s approach to home decor is all about creating spaces that feel cozy, functional, and beautifully personalized.

Whether you’re a longtime fan or new to her style, this Rent. guide details inspired decor ideas to bring a touch of Joanna Gaines magic to your home whether you’re looking at homes for sale in Waco, Texas, thinking about renting a home in Dallas, or looking for your first apartment in Austin, TX.

Rising in the design and DIY world

Joanna Gaines’ journey to design stardom began in Waco, Texas, where she and her husband, Chip Gaines, started their business, Magnolia Market, in 2003. Initially a communications major at Baylor University, Joanna discovered her passion for design while working at her father’s tire shop and experimenting with home renovations.

Her big break came in 2013 when HGTV cast the couple in Fixer Upper. The show became a hit, showcasing Joanna’s creative vision and Chip’s construction skills as they transformed neglected properties into beautiful homes. Joanna’s approachable “modern farmhouse” style — featuring shiplap, neutral palettes, and natural elements — quickly resonated with viewers, redefining home decor for a broad audience. As Fixer Upper grew in popularity, so did the Magnolia brand, expanding into home decor lines, a magazine, best-selling books, and the Magnolia Network.

Gaines’ influence on design today

“Joanna Gaines and the Fixer Upper series crafted our view of interior decorating and helped shape our work at Wachusett Woodworks,” Elizabeth with Wachusett Woodworks emphasizes. “Shaker-style cabinetry cleans up a space and is versatile in a modern farmhouse or a sleek city apartment! We enjoy bringing this look into our clients’ homes through built-ins, stand-alone cabinets, and furniture.”

“Joanna Gaines has had a huge influence on the design world, particularly by helping to popularize the “modern farmhouse” design aesthetic. Featuring strong primary colors on the exterior (think: black, white, navy, etc.), cozy front porches surrounded by magnolia trees, and a warm, inviting feel on the inside: this modern farmhouse movement has extended way beyond Texas, to nearly every state in the country,” explains lifestyle and travel blogger Noelle Bertram. “With a neutral color palette on the inside, Joanna’s design aesthetic also works for French country and more traditional homes. But perhaps her strongest design signature? She always adds a personal touch to the home: whether it’s having the family’s favorite quote engraved on a wall, or framing cherished photos and placing them in a special nook. There’s always something personal for each specific family.”

Joanna Gaines’ influence has become a transformative force in both business and design, making home renovation and decor accessible and relatable. Through the Magnolia brand, she has built a lifestyle empire that includes retail, media, and publishing, inspiring a new generation of designers and entrepreneurs.

Making your home a Magnolia masterpiece

Gaines’ blend of creativity and business acumen has fueled trends like farmhouse-inspired interiors and the rise of DIY home projects, solidifying her status as a trailblazer in the design world. Follow these expert tips to replicate the look, style, and feel that makes Magnolia Home so comforting and classic.

Disclaimer: For those living in rental properties or apartments, please ensure that any significant changes to your living space are approved by your landlord and do not violate your lease agreement. Always check with your property management before making alterations to avoid any potential issues.

1. Embrace a neutral, natural palette

One of the hallmarks of Joanna Gaines’ design style is the use of a neutral color palette to make rooms look bigger and brighter. Shades of white, cream, beige, and soft grays create a calm and soothing foundation. This doesn’t mean the space has to be devoid of color; rather, it sets the stage for subtle pops of accent colors and textures through accessories like throw pillows, rugs, light fixtures, or artwork.

“Joanna Gaines’ design style truly feels like a warm embrace,” Danish with Arhcova Visuals details. “To capture her signature charm, try incorporating reclaimed wood and vintage-inspired pieces that bring a touch of history and comfort to your space. Stick to neutral tones and mix in natural textures like linen and jute to create that cozy, Magnolia Home vibe. Statement lighting and thoughtfully chosen décor can also make your home feel both inviting and stylish.”

2. Mix old and new elements

Joanna is a master at blending old and new elements to create spaces that feel lived-in and full of character. “Joanna Gaines finds a way to beautifully blend materials with the look of classic charm and current trends. One of her kitchen designs featured a Spanish-style floor tile and a modern light fixture with a high-end marble countertop, and it all worked together seamlessly,” shares Kaylin Harris, Interior Coordinator with Affinity Homes LLC.

“She consistently creates spaces that evoke relaxed sophistication. We love her ability to take a modern, sleek-looking console table and pair it with a vintage-looking lamp and a rustic vase filled with faux olive leaf stems to create a beautiful design ensemble. She makes interior design look effortless and intentional at the same time.“ This intentional mix of styles adds depth and interest to your home while telling a unique story, making your home unforgettable and one-of-a-kind.

3. Layer textures for warmth and comfort

To make a room feel warm and inviting, Joanna often layers a variety of textures. “One of the key elements of Joanna Gaines’ design style that I love to incorporate is her use of warm, cozy items that make a space feel inviting and lived-in,” shares Rachel Teodoro, content creator at RachelTeodoro.com. “You don’t have to splurge to achieve that signature Gaines look — think about adding budget-friendly touches like soft throw blankets, textured pillows, or rustic wood accents. Don’t forget to shop at thrift stores for some of the best decor pieces. These small additions can instantly warm up a room and create that welcoming vibe we all crave without breaking the bank. “

4. Lean into the modern farmhouse style

Joanna is often regarded as the queen of modern farmhouse, a legacy that provides a perfect starting point for anyone beginning their interior design journey. “To achieve modern farmhouse home designs inspired by the fabulous Joanna Gaines, try and keep the elements simple,” Amanda Yates with Life Just Right recommends. “Blend neutral colors like soothing greens, shades of ivory and white, with touches of wood and black. This can even be done on a budget by thrifting. Print Pinterest boards and hunt for similar items and then spruce them up with spray paint and other easy touches. Create a table display by combining a few unique items with some greenery for a cozy collection.”

5. Focus on functional spaces

Joanna’s designs are not just about aesthetics — they’re also about practicality. She emphasizes creating spaces that are functional and cater to the needs of those living there. “I’m not a designer but I get to photograph all kinds of interiors. Something that has always drawn me to Joanna Gaines’ style is the way that she creates leading lines in her vignettes while also creating enough movement to keep your eye interested,” shares photographer and videographer, Jordan Brittley. “She does a fantastic job of working with her environment to bring in natural light that highlights the design pieces which create dreamy spaces!”

By focusing on the intention and purpose behind every item, Joanna ensures spaces that are not only beautiful but also make the most of every square inch, blending form with function effortlessly.

6. Use shiplap creatively

If there’s one feature Joanna Gaines is famous for, it’s shiplap. This simple wood paneling adds texture and interest to the walls, creating a rustic yet refined retro look. “Joanna Gaines’ design style emphasizes a balance of rustic charm and modern elegance, often incorporating shiplap, neutral color palettes, and natural materials like wood and stone,” explains Scott Bland, President of Jim Bland Construction. “She excels at creating warm, inviting spaces by mixing vintage finds with clean, contemporary lines. As a custom home builder, we can enhance this look by focusing on open floor plans, large windows for natural light, and thoughtful, personalized touches that reflect the homeowner’s personality while maintaining a cohesive, timeless aesthetic.”

Image courtesy of Kasper Creations

7. Accessorize with thoughtful details

As Scott Bland emphasized above, Joanna often uses thoughtful details to make a house feel like a home. “Whatever style you choose, being strategic with your color selection and photography choices can make the space feel cohesive and polished as well as personal,” shares photographer Katelyn Kasper with Kasper Creations.

“For instance, if the room is neutral in tone then add photos with natural tones and light colors on the wall instead of something with clashing, bold colors. If your space has pops of bright color, then have fun with matching bright colors in your displayed photographs. You can take this a step further with the location and outfit choices in your photos (Western wear for a more rustic room, garden setting with light-toned clothes for a modern farmhouse feel, etc.). Your displayed photos add personality and highlight what you love, but they can also strengthen your design style.

Joanna’s designs are never overly styled; instead, they reflect the personalities of those who live there, so don’t be afraid to add your personal brand.

8. Add a farmhouse sink for a timeless touch

Nothing says Joanna Gaines quite like a farmhouse sink. This classic, deep sink is both functional and stylish, making it a standout feature in any kitchen. “Joanna Gaines often features farmhouse sinks in her kitchen designs to evoke a sense of timeless charm and functionality,” Monique Peters with Annie & Oak emphasizes. “These apron-front sinks, with their deep basins and wide, exposed fronts, not only serve as a practical focal point but also embody the cozy, welcoming atmosphere that defines her modern farmhouse style. By pairing farmhouse sinks with natural materials like wood or stone countertops, Joanna seamlessly blends vintage appeal with contemporary functionality, creating kitchens that are both beautiful and highly usable.”

9. Prioritize comfort above all

At the heart of Joanna Gaines’ design philosophy is the idea that a home should be comfortable and lived in. Choose furniture that invites you to sit and stay awhile, such as plush sofas and chairs with deep cushions, then layer in soft throws and ample pillows to create spaces that feel cozy and inviting. Remember, comfort doesn’t have to mean sacrificing style — look for pieces that are both functional and aesthetically pleasing.

Bringing Joanna Gaines’ vision to your home

Joanna Gaines’ design style is beloved for its ability to make any space feel like home. By incorporating these inspired decor ideas, you can create a warm, inviting environment that reflects your style while embracing the best of Joanna’s signature aesthetic. Whether you’re going for a full home makeover or just a few simple updates, these tips will help you bring a touch of that Joanna Gaines magic to your own space.

Source: rent.com

Apache is functioning normally

September 10, 2024 by Brett Tams

The latest monthly national housing survey from Fannie Mae revealed an interesting contradiction.

Last month, a new survey-high 39% of respondents said they expect mortgage rates to go down over the next 12 months.

At the same time, fewer expect home prices to go up over the same period. And more believe home prices will fall.

So despite a home purchase becoming more affordable thanks to a lower interest rate, consumers don’t think prices will increase.

What does this say about home buyer demand as mortgage rates go down?

But We Were Told Bidding Wars Would Return When Mortgage Rates Fell

Fannie’s monthly Home Purchase Sentiment Index (HPSI) did increase very slightly (0.6 points) to 72.1 in August from a month earlier.

But it remains very low, with most of the 1,000 respondents saying it’s a poor time to buy and also an increasingly bad time to sell.

Just 17% said it was a “good time” to buy a home in August, which has remained relatively flat for several months and remains just above all-time survey lows.

Meanwhile, 83% said it was a “bad time” to buy a home, the highest share since the survey’s inception.

At the same time, only 65% say it’s a good time to sell, while 34% say it’s a bad time. Since August 2021, the “net good time” to sell has fallen from 54% to just 31%.

So it appears no one is happy with the current state of the housing market, which continues to be characterized by a mismatch between buyers and sellers.

Sellers are being told they aren’t realistic in terms of what they’re asking, and buyers are saying it’s too expensive. But nobody is budging.

There’s also a lack of inventory in most markets, so there’s little to choose from and often not what a prospective buyer is looking for.

Taken together, we’ve seen a big drop in home sales, especially once you factor in the ongoing mortgage rate lock-in effect.

It’s also odd to see this sentiment given the narrative we’ve heard for some time that the housing market would turn into a frenzy when mortgage rates fell.

Well, they’ve fallen from around 8% a year ago to just above 6% at last glance. You’d think that would be enough to get the ball rolling.

It’s the Economy (and Maybe High Home Prices Too!)

As I wrote last week, it’s no longer a mortgage rate story. Most consumers are on board the “rates are going lower” bandwagon.

Yet they’re also saying it’s not an ideal time to buy. So then you need to look elsewhere for your answer.

Are home prices just too high, even with mortgage rates nearly 2% below their peak a year ago?

Or is the economy becoming more of a concern, with the Fed dancing with a recession and lots of rate cuts now expected over the next year and change?

Most of the consumers surveyed by Fannie Mae said they weren’t concerned about a job loss (78%), which has drifted down from 82% in 2021 but remains high.

But respondents have been more pessimistic about their household income compared to a year ago, with more saying it’s “significantly lower” than “significantly higher.”

This could also reflect the purchasing power of their dollars, which have eroded thanks to the inflation of just about everything.

So you start to wonder if consumer outlook is worsening as the economy shows signs of slowing, all while unemployment is rising.

This is what matters more than rates. And really explains why mortgage rates and home prices don’t have an inverse relationship.

If mortgage rates are expected to fall due to slowing economic conditions, couldn’t you argue that home price growth might also?

I’ve argued that home prices and rates can fall in tandem for this reason, despite nominal declines being rare.

But it at least bucks the idea of a home buyer frenzy when rates fall. Of course, rates have fallen during the slower time of the year. And they’re still markedly higher than they were as recently as early 2022.

So perhaps we just need rates to continue falling and for the 2025 spring home buying season to come about.

Then we’ll have a better idea of where this housing market goes next.

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.

Latest posts by Colin Robertson (see all)

Source: thetruthaboutmortgage.com

Apache is functioning normally

September 10, 2024 by Brett Tams

A substitute check is a legal copy of a check created by a bank from a digital image of the original check. Creating substitute checks allows banks to process checks electronically instead of sending paper checks through the system, which speeds up the process and cuts costs.

Not all copies of checks qualify as substitute checks, though. The images of checks you may get with your bank statement are not substitute checks; nor are the photos you take of a check when making a mobile deposit. As a result, substitute checks are often a source of confusion to consumers. Here, we shed light on what substitute checks are, how they work, and what happens to the original checks you write or deposit into your account.

Defining a Substitute Check

A substitute check is a special copy of an original check that contains all of the same information, including signatures, dollar amount, account numbers, and the MICR (magnetic ink character recognition) line. Banks create these checks by using high-speed scanners that capture the front and back of the original check. These checks are good for the same amount of time as the original check.

Once generated, the substitute check can be sent electronically to the payer’s bank. This process is faster than the old method of physically transporting paper checks. If a paper check is needed for certain processing or record-keeping purposes, a substitute check can be printed from that electronic image.

Banks can use photos of an original check to make a substitute check. But in order to be valid, the duplicate must be made by the bank. When you create an image of a paper check to complete a mobile check deposit into your bank account, your financial institution converts those images into a substitute check using their check-processing software platform.

Recommended: Guide to Outstanding Checks

Substitute Checks vs. Original Checks

A substitute check looks similar to the original but has a few differences: It will be slightly larger than the original and the front of the check will feature this statement: “This is a legal copy of your check. You can use it the same way you would use the original check.”

While substitute checks look somewhat different from the original checks, they are considered legally equivalent. This means that banks are no longer required to keep the original physical checks, as long as they have an authorized substitute check. In some cases, a bank will destroy original paper checks right away; in others they will store original checks for a set period of time and then destroy them.

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Legality and Usage of Substitute Checks

The Check Clearing for the 21st Century Act (often referred to as the Check 21 Act) authorized the use of substitute checks when it was passed in 2003. The act was designed to improve the efficiency of the check-clearing process by allowing banks to use electronic images of checks instead of physical paper. This legislation aimed to reduce costs, expedite check processing, and minimize the risks associated with transporting paper checks.

Thanks to the Check 21 act, checks now typically clear within one or two business days, providing faster access to funds for consumers and businesses. Due to the swift processing speed for checks, you want to be certain you have sufficient funds in your checking account before writing a check.

When Substitute Checks May Be Used

Banks use substitute checks to facilitate the check-clearing process, as these checks are accepted as legal tender by other financial institutions. While account holders typically don’t use substitute checks to make payments, they can be used as proof of payment. Upon request, your bank can provide you with a substitute check. They may provide one for free or it may involve a fee.

Recommended: Where to Cash a Check Without Paying a Fee

Advantages of Using Substitute Checks

Here’s a look at two of the main benefits of using substitute checks.

Faster Processing of Check Transactions

One of the biggest advantages of using substitute checks is that it allows for more convenient and faster processing of check transactions. Instead of having to send, track, and store the physical checks, banks can use electronic images of substitute checks to facilitate payments.

Easier Handling of Electronic Check Images

Substitute checks make it easier for banks and businesses to manage large volumes of checks without the need to physically transport or store them. Electronic check images can be transmitted, retrieved, and stored more efficiently than paper checks. This digital approach improves record-keeping and reduces the chances of checks getting lost or damaged. If a paper check is required for legal or practical reasons, a substitute check can be printed on demand from the stored image.

Potential Drawbacks of Substitute Checks

While substitute checks benefit banks and customers alike, they come with a few potential drawbacks. Here are two downsides to consider.

Authenticity Concerns

Since substitute checks are created from electronic images, it may be harder to verify their authenticity compared to original paper checks. While the Check 21 Act includes measures to ensure that substitute checks are legally valid, there is still the possibility of errors and check fraud. An inaccurate or altered image could lead to disputes or financial losses. In rare cases, fraudulent substitute checks may be used to manipulate transactions or deceive people.

Readability Issues

The process of converting a check into a digital image and then printing a substitute check may result in a lower-quality reproduction. In some cases, the substitute check may be difficult to read, especially if the original check had poor handwriting, smudges, or damage. This can lead to errors in processing or disputes if the substitute check cannot be interpreted accurately.

Handling Substitute Checks as a Consumer

Since substitute checks are now commonplace, you may occasionally encounter them in your banking activities. As a result, it’s important to understand your rights regarding substitute checks and how to handle any issues that may come up.

Your Rights Regarding Substitute Checks

Under the Check 21 Act, substitute checks are considered legally equivalent to original checks, which means that consumers and businesses can use them as proof of payment or for other legal purposes.

If you experience any errors or problems related to a substitute check (such as a discrepancy in the check amount or a transaction that appears incorrect), you have the right to file a dispute with your bank. The bank is required to investigate the issue and either correct the error or explain why the substitute check is valid.

Disputing Errors Involving Substitute Checks

If you notice an error involving a substitute check, such as an incorrect amount being withdrawn from your account or money being withdrawn for a check more than once, it’s important to contact your bank as quickly as possible. The bank is obligated to investigate and respond to your dispute within a reasonable timeframe. In some cases, you may be entitled to a refund if the substitute check was processed incorrectly, including any fees that may have been charged as a result of the error (such as a bounced check or non-sufficient funds fee) or any lost interest.

The Takeaway

Substitute checks have revolutionized the way checks are processed, making transactions faster and more efficient. By allowing physical checks to be converted into digital images and then reproduced as substitute checks, the Check 21 Act has modernized the check-clearing process.

While substitute checks look slightly different from original checks, they are considered the legal equivalents. If you have any concerns about a substitute check, or if you feel any errors were made in processing a check, it’s important to contact your bank.

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FAQ

What is the difference between a substitute check and an electronic check?

A substitute check is a copy of a check used by banks in place of the original. While a substitute check is usually processed electronically, it is not the same as an electronic check. An electronic check (e-check) is a completely digital version of a check where no paper copy exists. E-checks are processed electronically from start to finish, without any physical checks involved.

Are substitute checks legally valid as proof of payment?

Yes, substitute checks are considered the legal equivalent of the original check and contain all the essential information, including the check number, account information, and payer/payee details. Because substitute checks are considered the equivalent of original checks, they can be used in disputes, for record-keeping purposes, or as evidence of payment.

Can a substitute check be used in place of the original check?

Yes, a substitute check can be used in place of the original check. Under the Check 21 Act of 2003, a substitute check is considered legally equivalent to the original and can be used for all the same purposes, such as clearing transactions, providing proof of payment, or resolving disputes.

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As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% 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 4.50% 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 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.

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Source: sofi.com

Apache is functioning normally

September 9, 2024 by Brett Tams

Looking to buy a manufactured home, a boat, or a piece of equipment for your business? You may need a chattel mortgage.

Chattel mortgages are used to finance movable assets separately from the land they occupy. They come with a higher cost than a traditional mortgage, so manufactured home dwellers who qualify for a standard mortgage will save money by choosing that route.

Here’s what you need to know about how chattel loans work and when you might want to look for alternative financing.

What Is a Chattel Mortgage?

First of all, a chattel mortgage is used for personal property, not real property. Real property includes land and property that cannot be easily removed from the land.

When a chattel mortgage is used for a large, movable asset like a manufactured home — called a mobile home before June 15, 1976 — or a piece of equipment (the “chattel”), the asset is held as collateral on the loan. If the borrower defaults on the loan, the lender can recoup costs by selling the asset.

A chattel loan may have a lower interest rate than an unsecured personal loan but a higher rate than a traditional mortgage.

How Does a Chattel Mortgage Work?

Chattel mortgages are used in two main instances: when an asset can be moved or when the land the asset sits on, or will, is leased. (In fewer cases, a chattel loan may be used when a borrower doesn’t want to encumber their owned land with a loan, as when land is owned jointly in a trust.)

Applying for a chattel loan is similar to applying for other types of loans, such as home equity loans and personal loans. The lender will look at your creditworthiness and ability to repay the loan before making a decision.

Chattel loans are typically small, with relatively short terms, but usually require no appraisal, title policy, survey, or doc stamps (the documentary stamp triggers a tax in certain states).

Recommended: First-Time Homebuyer Guide

What Are Chattel Loans Used For?

Here are some of the most common applications for chattel loans.

Manufactured Homes

Manufactured homes are built in a factory on a permanent chassis and can be transported in one or more sections. Formerly known as mobile homes, they’re designed to be used with or without a permanent foundation, but must be elevated and secured to resist flooding, floatation, collapse, or lateral movement.

Many are titled as personal property. Manufactured housing that is titled as personal property or chattel is only eligible for chattel financing.

When a manufactured home is titled as chattel, you’re also going to pay vehicle taxes to the Department of Motor Vehicles instead of property taxes.

Many consumers may encounter a chattel loan at the sales office of a manufactured home builder. They’re convenient with quick closing times, but come with a higher interest rate and a shorter term than most traditional mortgages.

This makes the financing cost of the manufactured home high, even if the payment is low thanks to the lower cost of a manufactured home compared with a site-built home. Around 42% of loans for manufactured homes are chattel loans, according to the Consumer Finance Protection Bureau.

When you own a manufactured home and rent the land it occupies, such as in a mobile home park, you will need a chattel mortgage, except when an FHA Title I loan is used.

Tiny Houses

A chattel mortgage may be used for tiny house financing when the tiny house is not affixed to a permanent foundation and/or when the land is leased.

Tiny houses are usually too small to meet building codes for a residential home, so even if the home is on a foundation and on owned land, a traditional mortgage is almost always out of the question. Even if Fannie Mae or FHA allows the property, the lender won’t.

Tiny houses on foundations are usually classified as accessory dwelling units.

Vehicles

A chattel loan may finance assets that are not permanently affixed to the property, such as vehicles. Dump trucks and construction vehicles may qualify.

Equipment

A chattel loan can be used to purchase large equipment for a business, such as a forklift or a tractor. Even livestock can be purchased with a chattel loan.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

How Much Does a Chattel Mortgage Cost?

Chattel mortgages are more expensive than many other different mortgage types. The Urban Institute concluded that chattel loans were substantially more expensive than non-chattel loans. Owners of manufactured homes would spend thousands more per year in interest compared with a traditional mortgage.

These types of mortgages are not being purchased by Fannie Mae or Freddie Mac on the secondary mortgage market. When a conventional mortgage is purchased by one of these entities, the loan originator obtains more liquidity and can provide more loans to more people. This drives the cost of the mortgage down.

A chattel mortgage, on the other hand, must stay on the books of the lender, making the loan riskier and more expensive.
If you qualify, you might want to consider refinancing your chattel mortgage into a traditional mortgage.

Recommended: Home Loan Help Center

Chattel Mortgage vs Traditional Mortgage

To qualify for a conventional or government-backed mortgage instead of a chattel mortgage, you must own the land your home sits on, the home must be permanently affixed to a foundation, and it must have at least 400 square feet of living space (600 for Fannie Mae’s conventional loan for manufactured homes).

Mobile homes built before June 15, 1976, will not qualify for a mortgage loan. A personal loan is about the only option.

You must also meet all other requirements set forth by the lender to qualify for a traditional mortgage. A mortgage calculator tool can help with this.

For some types of assets, a chattel mortgage may be a good option to consider. Take a look at the major differences.

Chattel Loan	Traditional Mortgage
For movable property only	Includes the land and all attached structures
May have a lower interest rate than an unsecured personal loan	Usually has a lower interest rate than a chattel mortgage
Shorter terms (e.g., 5 years)	Longer terms (e.g., 15 years, 30 years)
Lower origination fees	Higher loan fees
Shorter close time	Longer close time
Lender holds the title, which is only given to the buyer when it is paid off	Lender holds a lien on the property, not title

Pros and Cons of a Chattel Mortgage

A chattel mortgage is more expensive than a traditional mortgage, so anyone who can qualify for a traditional mortgage may wish to pursue that option first. It’s not all bad news for chattel mortgages, though, especially for other types of property where a chattel loan is desirable.

Pros	Cons
Lender only has a security interest in the movable property, not the land	If you default on the loan, the lender can take your asset. Also, the lender owns the asset until the loan is paid off
Taxes may be lower on property titled as “chattel” rather than “real” property	Higher-cost loan than a traditional mortgage
Possible faster close and lower loan fees than a standard mortgage	Fewer consumer protections. Chattel loans are not covered by the Real Estate Settlement Procedures Act or CARES Act
Lower interest rate than a personal loan	Higher interest rate than a traditional mortgage
Pays down more quickly than a traditional mortgage	Shorter term may create higher payments
Interest paid is tax deductible	Interest paid is also tax deductible with a traditional mortgage

Consumer Protection and Chattel Mortgages

Chattel mortgages on manufactured homes are a special concern to the Consumer Financial Protection Bureau because that type of housing:

• Serves an important role in low-income housing

• Is typically taken on by financially vulnerable people

• Has fewer consumer protections

Manufactured home sellers often have an on-site lender where borrowers can walk away with a chattel loan the same day as the home purchase. In certain scenarios, though, better financing options might be available.

The Takeaway

Buying a manufactured home or a piece of heavy equipment? A chattel loan could be the answer. If, though, you are buying a manufactured home and own the land, a traditional mortgage makes more sense than a chattel mortgage.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

Where can I get a chattel loan?

Lenders specializing in chattel or manufactured housing loans will offer this type of loan.

How much does a chattel mortgage cost?

The interest rate of a chattel mortgage could be several percentage points higher than that of a standard mortgage loan.

What happens at the end of a chattel mortgage?

When a chattel mortgage is paid off, the borrower receives legal title to the property or asset borrowed against. It’s also possible for landowners with permanently affixed manufactured homes to refinance into a traditional mortgage to end their chattel loans.

Is a chattel mortgage tax deductible?

A chattel mortgage qualifies for the same tax deductions that a traditional mortgage does. This includes a deduction on mortgage interest paid throughout the tax year.

Photo credit: iStock/MicroStockHub

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

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

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

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.

SOHL-Q324-037

Source: sofi.com

Apache is functioning normally

September 8, 2024 by Brett Tams

If you own a small business that frequently issues invoices to customers and vendors, you may have encountered times when an invoice is late or goes unpaid. It can be frustrating and worrisome when expected income is unavailable, leaving your business short on cash flow for necessary expenses.

There are options like business lines of credit or short-term business loans to provide cash flow. But in this case, you might also consider invoice factoring to quickly access cash for your immediate needs. This type of financing allows you to leverage your unpaid invoices without applying for an actual loan.

Let’s walk through what invoice factoring is, how it works, and what business cases are a good fit for this type of funding.

What Is Invoice Factoring?

Invoice factoring, also known as accounts receivable factoring, is a form of small business financing in which you sell your unpaid invoices to a factoring company. The factoring company gives you a percentage of the invoice up front and pays you the rest of the invoice once it’s paid by the customer (minus fees charged by the factoring company).

With this type of financing, you no longer own the invoices — the factoring company does. As a result, it’s important to choose a reputable company that you can trust to treat your customers with respect.

What Is a Factoring Company?

A factoring company is a financial institution that purchases a business’s outstanding invoices at a discount to provide immediate cash flow. The factoring company then takes on the responsibility of collecting payments from the business’s customers.

Factoring companies can be independent firms or divisions within larger financial institutions such as banks or credit unions. They specialize in providing working capital to businesses with long receivables cycles or that need quick cash for operational expenses. By selling your invoices to a factoring company, you can receive up to 90% of the invoice value up front. The company pays you the remaining balance, minus a factoring fee, once the customer settles the invoice.

Factoring companies typically cater to industries with extended payment terms, such as manufacturing, trucking, and staffing agencies. These lenders evaluate the creditworthiness of the business’s customers rather than the business itself, making this an accessible funding option for businesses that have poor or limited credit.

How Does Invoice Factoring Work?

Invoice factoring involves selling your unpaid invoices to a factoring company, which then takes ownership of the invoices. Invoice factoring is technically not a business loan, as you are selling your invoices to the lender.

Factoring companies will pay you a percentage of the invoice amount up front, which reflects the advance rate. Advance rates are typically based on how risky the invoice factoring is for the factoring company.

Some industries, such as the medical industry, may be seen as higher risk, thus offering lower advance rates — often ranging from 60% to 80%. Other types of businesses, such as staffing agencies, may receive advance rates from 80% to 90%.

Once the factoring company receives full payment from your customers, they provide you with the remaining invoice amount minus a factoring fee.

Here’s a quick look at the steps involved in factoring invoices:

1. Choose a factoring company: It’s a good idea to shop around and pick a reputable company to work with.

2. Submit invoices: To apply for factoring, you’ll need to provide invoices for approval.

3. Receive advance: If approved, you’ll get an upfront payment (typically 60%–90% of invoice value).

4. Company collects payments: The factoring company collects payments from your customers.

5. Receive balance: After full payment is collected, you receive the remaining amount minus fees.

Recommended: Getting a Cash Flow Loan for Your Small Business

Recourse vs. Non-Recourse Factoring

You might be wondering: What happens if customers don’t pay their invoices?

With recourse factoring, the business is liable for paying the factoring company for any invoices that are left unpaid. This type of invoice factoring is most common because it’s less risky for the factoring companies.

With non-recourse factoring, the factoring company takes on most of the risk associated with unpaid invoices. Since the invoice factoring company is assuming more risk with non-recourse factoring, they may tack on a higher factoring rate. Carefully consider whether the higher rate is worth the cash advance amount and compare factoring companies to see what terms they offer.

Example of Invoice Factoring

To give you a better understanding of how invoice factoring works, let’s imagine you own a clothing store that sells large quantities of T-shirts to other companies.

1. Complete sale and issue invoice: You sell $100,000 worth of t-shirts and invoice your customer with a due date in 60 days. If you wait 60 days for repayment, your business could be left with a cash flow shortage, threatening the well-being of your operation. So, you decide to look into options to help manage cash flow.

2. Explore your options: You could use an online business loan or a credit card to get cash quickly. But your customers are reliable and pay invoices in a timely manner, so invoice factoring is a suitable option.

3. Sell to a factoring company: You sell the $100,000 invoice to a factoring company and agree to pay a flat factoring fee (sometimes called a factoring rate) of 5% of the invoice value per month. Within 24 hours, the factoring company provides you with 80% of the invoice amount. You now have $80,000 to supplement cash flow and regular business operations.

80% of $100,000 = $80,000

4. Collection of funds: The customer pays the factoring company within 30 days. Once it receives full repayment, the factoring company pays you for the remaining invoice amount ($20,000) minus the factoring fee of 5%.

$20,000 – $5,000 (5% of $100,000) = $15,000 back to you

Keep in mind that this hypothetical is an example to illustrate how invoice factoring may work in a practical situation. Different invoice factoring services may offer various terms and conditions, which can affect how much money you receive up front and the final payment amount.

Invoice Factoring Rates and Fees

Invoice factoring companies generally make money through the factoring rates and fees they charge. Typically, you will see invoice factoring structured with one of the following:

• Flat rate/fee: You pay a fixed percentage of the invoice to the factoring company. The rate doesn’t usually change — even if the customer pays late. Flat rates are generally less common than tiered or variable rates.

• Tiered or variable rate/fee: A percentage of the invoice amount is regularly charged until the factoring company receives full repayment. The longer invoices go unpaid, the more you’ll owe in factoring fees. For example, a factoring company may charge a factoring fee of 1% every 10 days until the invoice is paid; if it takes your customer 60 days to pay, the factoring company would keep roughly 6% of the invoice amount. Some factoring companies may increase the variable rate the longer repayment takes.

Factoring rates and fees can be affected by:

• The industry your business is in

• Your customers’ ability to pay their invoices

• The number and amounts of the invoices

• Your business’ stability and creditworthiness

Additional Fees

Some factoring companies may also charge additional fees, including:

• Application fees. These are charges for processing your application and setting up the account.

• Invoice processing fees. These fees help cover the cost of things like credit checks and record keeping.

• Service fees. These are charged in intervals to cover costs related to maintaining a current account with your factoring company.

• Automated Clearing House (ACH) or bank wire fees. When funds are transferred between banks, there may be fees passed on to you from the factoring company.

• Early termination fees. Some invoice factoring companies may charge a fee if you cancel your contract before the termination date.

• Due diligence fees. This covers the cost of verifying the creditworthiness of the customers paying the invoices.

Invoice Factoring vs. Invoice Financing

While they sound similar, invoice factoring and invoice financing are two different financial products.

With invoice financing, your invoices are used as collateral to receive a cash advance rather than sold to a factoring company. You receive access to a percentage of the invoice amount either in the form of a line of credit or loan. Like other types of business loans, you pay interest on the amount you borrow.

Another key difference between invoice factoring and invoice financing: With invoice financing, you and your business are still responsible for collecting payment from your customers. As a result, invoice financing allows you to retain control over your invoices and the collections processes, which may be more favorable if you prefer to deal with your customers directly.

Pros and Cons of Small Business Invoice Factoring

Invoice factoring can be a useful tool for business owners in certain situations. However, it’s important to carefully consider the pros and cons of factoring invoices to avoid unnecessary expenses or added stress for your business.

Pros of Invoice Factoring

• No collateral: With invoice factoring, your invoices serve as collateral. In most cases, you do not have to offer additional forms of collateral to be approved.

• Maintain healthy cash flow: You can receive immediate cash to cover expenses and maintain healthy cash flow between invoice payments.

• An option for those with lower credit scores: Even if you don’t have good enough credit to get a business loan, invoice factoring may still be an option. Invoice factoring companies generally focus more on the value of the invoices and the credit scores of the businesses that owe those invoices than on the credit score of your business.

• Outsource invoice collection: FFor some businesses, it may be helpful to pass the responsibility of collecting invoices to a factoring company so they can focus on other responsibilities.

• Spend on what you need: Unlike other types of small business loans (e.g., equipment financing), you aren’t restricted to spending the funds you receive on specific business expenses.

Cons of Invoice Factoring

• Factoring companies have control: After you sell invoices to a factoring company, they may interact with your customers directly. You’ll want to make sure that the company is reputable and behaves ethically in their dealings with customers.

• It’s typically expensive: With various fees and relatively high rates, invoice factoring can be costly — especially if customers delay payment.

• Recourse if unpaid: Since there’s no guarantee that an invoice factoring company will be able to collect on unpaid invoices, they may expect you to pay for or replace the invoice, possibly with additional fees.

• Approval may depend on customers: Invoice factoring companies want to ensure they will receive payment on the invoices they purchase from you. If your customers have a less-than-perfect repayment history, you may have a more difficult time getting approved.

Recommended: Working Capital Loans: Compare Top Options

How Do Businesses Qualify for Invoice Factoring?

Factoring companies evaluate a few different things to determine if a business is eligible for this type of financing.

• Invoices: Businesses must have outstanding invoices to sell to a factoring company, and the invoices should be from reputable clients with a history of timely payments.

• Client creditworthiness: Factoring companies focus on the likelihood of timely payments from your clients rather than the credit history of your business. Therefore, clients that consistently pay their invoices on time are a must.

• Business bank account: An established business bank account is essential to qualify for invoice factoring. Your business bank account will be used for the factoring company to deposit the advance and the remaining balance once the invoice is paid.

• Accounts receivable reports: Detailed and accurate accounts receivable reports are necessary to demonstrate your business’s invoicing practices and the payment behavior of your clients. These reports help factoring companies assess the risk involved.

While the primary focus is on the creditworthiness of clients, factoring companies also look for signs of business stability. They consider factors like time in business, industry, and overall financial health. It’s also important for businesses to ensure there are no existing liens on their receivables. Factoring companies need a clear right to collect on the invoices, so any existing liens or claims can disqualify the business.

You can improve your chances of qualifying by maintaining good relationships with your clients, ensuring they are creditworthy and have good payment histories. Keeping financial records organized and accurate is also important, as it makes the evaluation process smoother and faster.

Alternatives to Invoice Factoring

Invoice factoring is one of many options that can help businesses maintain cash flow and address funding needs. Here’s a look at some alternatives.

• Inventory financing: This type of financing is used to pay for products that will be sold at some time in the future. The inventory acts as collateral for the loan.

• Equipment financing: This is a type of loan used specifically to purchase machinery, vehicles, or other business-related equipment.

• SBA loans: These are small business loans backed by the U.S. Small Business Administration (SBA) and offered by banks and approved SBA lenders.

• Personal loans: An unsecured personal loan is based on your personal credit history (not business credit). Some, though not all, lenders will allow you to use funds from a personal loan for business expenses.

• Commercial real estate loans: This type of business loan is specifically designed for purchasing real estate for business use, such as an office space, warehouse, or storefront.

• Business line of credit: With this flexible form of business financing, you have access to a maximum amount of funding, or credit. You can borrow what you need (up to your credit limit) as you need it, and only pay interest on what you borrow.

• Online business loans: Online lenders offer loan options similar to those traditional banks offer but typically have a faster approval process and may have more options for people with lower credit scores.

• Merchant cash advance: This type of funding allows small businesses (“merchants”) to get a cash advance for business expenses in return for a portion of their future sales or receivables.

If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.

With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.

FAQ

What are the disadvantages of invoice factoring?

The disadvantages of invoice factoring include high fees, potential impact on customer relationships, loss of control over accounts receivable, and the requirement of having creditworthy clients.

What is the average rate for invoice factoring?

The average rate for invoice factoring ranges from 1% to 5% of the invoice value per month.

Who can use invoice factoring?

Generally, any business with outstanding invoices and creditworthy clients can use invoice factoring. However, this type of financing tends to be more common in industries like manufacturing, trucking, and staffing.

Photo credit: iStock/Jirapong

SoFi’s marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

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.

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

SOSMB-Q324-023

Source: sofi.com

Apache is functioning normally

September 8, 2024 by Brett Tams

When looking for funding for your small business, there are plenty of types of loans to consider, including term loans. A term loan provides a borrower with a lump sum of cash they repay on a fixed repayment schedule.

Term loans can be helpful for businesses looking to expand, buy more real estate, update equipment, or purchase more inventory in advance.

So, what are term loans exactly? Read on to learn more about small business term loans, their advantages and disadvantages, and the different types of term loans available.

What Is a Business Term Loan?

A business term loan is a type of small business financing that provides a lump sum of money up front you then pay back over a set period of time, called a term. Payments are often monthly but could be weekly, bi-weekly, or even quarterly.

Part of each payment goes toward the principal, lowering the remaining loan balance, and part goes toward interest. Interest rates on business term loans may be fixed or variable. Repayment terms can range anywhere from 12 months to 25 years, depending on the loan amount, lender terms, and the borrower’s creditworthiness.

Term loans aren’t just used for small businesses, though. Mortgage loans, auto loans, and student loans are also all types of term loans.

What Can a Term Loan Be Used For?

Common uses of term loans for businesses include:

• Buying real estate or upgrading property you already own (the real estate would likely serve as collateral)

• Buying new equipment or repairing equipment you already own (the equipment could serve as collateral)

• Restocking inventory

• Buying vehicles for work

• Meeting payroll and other expenses

• Covering employee wages

What Are Different Types of Business Term Loans?

Most small business owners factor in two things when considering term loans — the purpose of the loan and the term length (there are short-, intermediate-, or long-term business loans).

Payments may be higher with short-term loans than long-term loans, though this depends on how much the business borrows. When considering what your business can qualify for and pay back with its available cash flow, remember to factor in how the length of your loan term affects the payment amount.

Short-Term Loans

Short-term loans typically have a length of less than one year but can extend up to 18 months. Businesses that don’t qualify for a line of credit might find short-term loans helpful. Though these loans are typically easier to qualify for, they tend to have higher interest rates.

It’s important to note that short-term loans may come with a balloon payment, meaning the last payment is much larger than the rest. Keep this in mind when deciding whether a short-term loan is right for your business.

Recommended: The Cost of Capital

Intermediate-Term Loans

Intermediate loans typically have terms between one and three years. Because of their slightly longer payoff time, they may be an option if you’re hiring a new salesperson, for instance, and know there might be some lag time before they start bringing in revenue.

Like short-term loans, intermediate business term loans may also have a balloon repayment structure.

Long-Term Loans

Long-term loans typically have terms of five to 10 years, but they may extend up to 25 years. They typically require collateral, such as real estate or equipment, and may come with lower interest rates than short- and intermediate-term loans.

Long-term loans are often more difficult to qualify for, requiring proof of revenue and a solid credit history. However, they can provide helpful capital for business investments, making them a valuable option for established businesses planning for growth.

Recommended: Merchant Cash Advance for Bad Credit

How Do Business Term Loans Work?

Once you’ve determined the amount you need to borrow and the purpose, you can approach financial institutions to explore their available programs, interest rates, and loan terms.

You’ll also want to find out what documentation you’ll need to apply, what collateral might be required, and whether they can supply the funds on your timeline. Be sure to check what small business loan fees may apply.

Once you’ve evaluated the above factors, compare multiple lenders and choose the one that suits your needs. The loan application process typically happens online, but you may be able to apply in person if the loan is through a bank.

Rates and terms offered vary based on the lender, your personal and business credit history, your time in business, and your financial health and history. Pay particular attention to whether the loans you research are secured and how the interest rates are structured:

• Secured vs. unsecured loans: Secured loans require collateral or a personal guarantee, meaning that your assets will be used as payment if you can’t pay your loan. Unsecured loans do not require this collateral and are therefore riskier for the lender, so they often have higher costs and shorter terms than secured loans.

• Fixed vs. variable interest rates: A fixed interest rate remains stable over the entirety of the term loan. A variable interest rate fluctuates throughout the life of the loan, depending on the prime rate — the rate that commercial banks charge their most creditworthy borrowers.

If you’re approved for the loan, you are free to use the funds once disbursed. From there, you’d make regular payments based on the loan agreement.

Recommended: How to Check Your Credit Score for Free

Deciding If a Business Term Loan Is Right for You

It can be challenging to decide which kind of loan is the right fit for your business. There’s a lot to consider. Here are a few questions to ask before applying:

• Why do I need funding?

• How does this help me reach my business goals?

• How healthy are my business finances?

And if any of these apply to you, it may not be time to consider term loans just yet:

• Your business is new

• You have poor credit

Business Term Loans: Pros and Cons

Like any other loan, business term loans have advantages and disadvantages that are important to consider when deciding whether they’re right for you. Below, we’ve outlined the pros and cons of term borrowing to help you determine whether term loans are a good fit.

Advantages of Business Term Loans

Pros of term loans include:

• You may be able to borrow a large amount of money.

• Multiple types of term loan programs may be available when you look at different lenders.

• Interest rates are typically lower than credit cards, payday loans, and other short-term funding options.

• As you pay the term loan back on time, you can boost your business credit score.

Note: Check with your accountant or tax professional to see what tax benefits you may realize. Term loan interest may be tax-deductible.

Recommended: What Are the Tax Benefits of a Limited Liability Company (LLC)?

Cons of Term Loans

As with any financial product, there are downsides to consider, as well. Cons of term loans include:

• You may be able to borrow a large amount of money.

• Multiple types of term loan programs may be available when you look at different lenders.

• Interest rates are typically lower than credit cards, payday loans, and other short-term funding options.

• As you pay the term loan back on time, you can build your business credit score.

Note: Check with your accountant or tax professional to see what tax benefits you may realize. Term loan interest may be tax-deductible.

Recommended: What Are the Tax Benefits of a Limited Liability Company (LLC)?

Disadvantages of Business Term Loans

Cons of term loans include:

• You may be entering into a long-term debt.

• The loan application process may take longer than you’d like.

• Some business term loans come with prepayment penalties, which means you can’t prepay to reduce the amount of interest paid over the loan’s life.

• If your credit isn’t the best, the interest rates you’re offered may not be, either.

Recommended: Debt-to-Income Ratio

How to Apply for a Business Term Loan

Assess your business goals and lenders’ eligibility requirements as you choose the best option for your company. Here’s how:

1. Compare Small Business Term Loans

Comparing lenders’ terms can help improve your chances of qualifying for a loan. That way, you don’t spend valuable time applying for options for which you’re not eligible. On top of that, it helps keep you from overpaying on rates and fees or endangering your business cash flow with a repayment schedule that’s too aggressive.

2. Look at Each Lender’s Eligibility Requirements

It’s helpful to examine these requirements side by side:

• Personal and business credit

• Time in business

• Annual revenue

• Collateral

• Down payment

• Personal guarantee

3. Scrutinize the Lender’s Fees

Also look at the fees side by side:

• Interest rate and APR

• Origination fees

• Late payment fees

• Early payoff penalty

4. Review the Repayment Schedule

Important questions to ask:

• Are payments made daily, weekly, monthly, or quarterly?

• Are payments automatically deducted from a business bank account?

Many lenders have strict repayment terms for their business term loans, meaning you need to make sure you can meet those standards. That way, you don’t overdraft your accounts, accrue late fees, or damage your credit score.

Recommended: Long-Term Small Business Loans

5. Gather the Required Documents and Apply

When applying for a loan, documents often requested by lenders include:

• Bank statements (personal and business)

• Tax returns (personal and business)

• Business legal documents, including licenses and permits

• Personal identification

• Business plan

• Revenue statements

• Accounts receivable reports

• Accounts payable reports

Because the exact documentation required varies by lender and loan type (and whether collateral is involved), you’ll need to clarify what the lender you choose will need.

Also, it can be worthwhile to explore business grants since those do not need to be paid back.

Recommended: What Are Small Business Grants?

The Takeaway

When businesses seek funding, term loans are worth considering. With a business term loan, the company borrows a certain amount of money in a lump sum and then pays it back in regular installments at either a fixed or variable interest rate. Terms can range from short (even under a year) to long (perhaps as long as 25 years), with the funds used for a variety of purposes.

If you’re seeking financing for your business, SoFi can help. On SoFi’s marketplace, you can shop top providers today to access the capital you need. Find a personalized business financing option today in minutes.

With SoFi’s marketplace, it’s fast and easy to search for your small business financing options.

FAQ

What does “term loan” mean for a business loan?

Like other term loans, a business term loan provides a borrower with a lump sum of cash they repay on a fixed schedule over the set period of time, or term. The interest rate can be either fixed or variable.

What is an example of a term loan?

An example of a term loan is a small business loan of $50,000 from a bank that has to be paid over three years in monthly payments, with fixed interest.

What are the three main types of term loans?

There are short-term, intermediate-term, and long-term loans.

Photo credit: iStock/pikselstock

SoFi’s marketplace is owned and operated by SoFi Lending Corp. See SoFi Lending Corp. licensing information below. Advertising Disclosures: SoFi receives compensation in the event you obtain a loan through SoFi’s marketplace. This affects whether a product or service is featured on this site and could affect the order of presentation. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider.

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.

SOSMB-Q324-020

Source: sofi.com

Apache is functioning normally

September 7, 2024 by Brett Tams

Interest rates on personal loans have steadily increased since early 2022, coinciding with the Federal Reserve’s efforts to curb inflation by raising the federal funds rate.

But anticipated Fed rate cuts before the end of this year may not bring personal loan rates down right away.

“Typically, we don’t see personal loan rates drop as a result of those rates dropping,” said Jean Hopkins, director of consumer lending at WeStreet Credit Union in Tulsa, Oklahoma.

Changes to the federal funds rate have a greater impact on variable-rate credit products, such as credit cards or home equity lines of credit, she said. Personal loan rates, on the other hand, are driven by larger economic factors, such as inflation and unemployment.

Your exact personal loan rate is most influenced by your creditworthiness and income. If you’re planning to borrow this year, here are a few things you can do to get a low rate on a personal loan.

Maintain a high credit score

Lenders rely heavily on credit scores to determine how likely an applicant is to repay a loan. Generally, those with high scores get the lowest rates.

“If you have a high credit score, banks think that you’re a good risk to take,” says Spencer Betts, certified financial planner at Massachusetts-based Bickling Financial Services.

He says borrowers should check their credit report before applying for a personal loan and take note of any past-due credit accounts or accounts you don’t recognize, which could indicate identity theft.

Potential borrowers looking to maintain or boost their credit scores should make on-time payments toward credit cards and other loans, Hopkins says, because payment history is the most important factor in your credit score calculation. She also says borrowers should maintain a low credit utilization, which is the percentage of available credit you’ve used on revolving accounts like credit cards.

“Make sure if you’re borrowing money on credit cards that you’re not borrowing more than, say, 30% or 40% of your balance on that line of credit,” she says.

Keep a low debt-to-income ratio

Another factor lenders consider when underwriting a personal loan is the percentage of your monthly income that goes toward debt payments.

“You want to make sure your debt-to-income ratio is low,” says Jen Hemphill, a Kansas-based accredited financial counselor and host of the Her Dinero Matters podcast. “The lower it is, you’re going to have a better chance of a lower interest rate.”

Debt-to-income ratio, or DTI, is calculated by dividing your total monthly debt payments by your monthly income. Multiply that figure by 100 to get the ratio expressed as a percentage. Hemphill suggests keeping your DTI around 30% or less, though some lenders will accept higher ratios.

If your DTI is high, consider paying down debt before applying for a personal loan for a chance at a better rate.

Hopkins suggests paying off smaller debts first to quickly eliminate those monthly payments and consequently lower your DTI.

Raising your income — which would also lower your DTI — may be a difficult task, but be sure to include all sources of income on a loan application. Many lenders count alimony, child support and Social Security payments when calculating DTI. You might even be able to include a partner’s salary as household income.

Compare offers to find the best deal

When you’re preparing to apply for a personal loan, it pays to compare offers from multiple lenders. Each lender has its own qualification requirements and underwriting process, so you could get a different APR from one lender to the next.

You can compare costs by pre-qualifying online. This process lets you preview your potential APR, monthly payment, loan amount and repayment term with only a soft credit pull, so your credit scores won’t be affected.

Pre-qualifying gives you “an idea of what interest rates are available for you based on your own situation,” Hemphill says. “That helps you shop around.”

She suggests paying special attention to the repayment terms you’re offered and how they affect the amount of interest you’ll pay over the life of the loan. Long terms may be appealing because they lower your monthly payment, she says, but they increase the total cost of the loan.

You can use a personal loan calculator to see how the given loan amount, term and interest rate affect monthly payments and interest costs.

If you have two competitive loan offers, compare perks and features to determine which is the right fit for your plans, Hemphill says. For example, some lenders provide a rate discount for setting up autopay or for having the lender directly pay off your other debts when you get a debt consolidation loan. Others may provide credit-building assistance so you can boost your score while you repay the loan.

Source: nerdwallet.com

Apache is functioning normally

September 7, 2024 by Brett Tams

Gross domestic product Gross Domestic Product, or GDP, is a metric which takes into account the value of end-user goods and services in a given survey period, whether quarterly or annual. It can be calculated in three ways by focusing on production, incomes, or expenditures and it is used to provide insight to the size … [Read more…]

Apache is functioning normally

September 7, 2024 by Brett Tams

You probably like your home to be clean, but when it comes down to breaking out the mop and bucket, the vacuum cleaner, the wood polish, sponges, and bleach, do you really have the time or inclination to dive in?

If you feel like groaning just reading about tidying up, it could be worthwhile to hire a cleaning person or service.

There are many factors to consider when thinking about hiring out this task, and that’s where this guide will come in handy. Read on to learn:

• What’s the difference between a cleaning person and a cleaning service?

• How much does hiring a cleaning person or service cost?

• What are the pros and cons of hiring a cleaning person vs. a cleaning service?

• What are the alternatives to hiring a cleaning person or cleaning service for your home?

What Does a Cleaning Person or Service Do?

A cleaning person or service takes care of basic tasks such as dusting, vacuuming, sweeping, mopping, disinfecting the toilets, cleaning the sinks and bathtub/shower, and taking out the garbage.

There are typically add-on services available: laundry, changing the sheets, and doing the dishes for starters. Some of these could be included in the cost depending on the cleaning person or service.

“But, I can (or should) do all that myself!” you may be thinking. In which case, you are likely wondering: Is hiring a cleaning person worth it?

If a spic-and-span home is high on your checklist for maintaining a house, a little research can help determine if a cleaning person or service is right for you. Read on for more detail which can assist you as you make your decision.

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How Much Does a House Cleaner Cost?

The cost for hiring a cleaning person (or independent contractor) will depend on where you live, the size of your home, and how often they will come, but individual cleaners typically charge between $50 and $100 an hour.

Going with an individual generally costs less than hiring a cleaning service. However, they may not offer as many guarantees as a large company.

How Much Do Cleaning Services Cost?

Full-service cleaning companies can charge between $175 and $300 per visit. You can typically get a customized quote based on the size of your home and services you want before you hire a cleaning service. Some companies may have a minimum fee per visit. Generally the more frequently a service comes, the lower the cost per cleaning.

You can also hire a service for specialized, one-time cleaning services, such as after an event or before moving out or moving into a home.

Things to Consider When Hiring a Cleaning Person or Service

When deciding if hiring a house cleaner or cleaning service is worth it, you’ll benefit from addressing a few questions about your monetary situation, schedule, and level of desired cleanliness.

Your Budget

The first step in determining if you can afford a cleaning person or service is to set up a basic budget if you don’t already have one up and running.

If you’re wondering how to make a budget, consider using the 50/30/20 rule. This means putting 50% of the household income toward necessities or musts (which typically includes housing, utilities, food, and debt); 30% towards wants (like dining out and entertainment); and 20% on saving (including retirement) and debt payments beyond the minimum.

Once you see how much cash you have coming in and going out, you’ll be better able to assess if you can afford to pay for cleaning from that 30% that covers “wants.”

Recommended: What is the 50/30/20 Budget?

How Valuable Is Your Time?

A good way to decide whether hiring a house cleaner is worth it is to remember this saying: Time is money. If paying a professional $50 an hour frees you up to make $65 an hour while working, the cost might be worth it, since you’ll come out ahead financially.

Schedules (How Often Are You Home?)

If you work long hours at an office or other workplace, outsourcing your house cleaning will allow you to enjoy your time at home without having to clean. And if the cleaning person or team comes while you’re at work, you won’t have to worry about staying out of their way.

However, if you are someone who works from home, or you or your spouse are a stay-at-home parent, a cleaning person or service can potentially be disruptive.

How Often You Need Your House Cleaned

Frequency of cleaning will matter. While a service may charge less per cleaning if they come weekly vs biweekly or monthly, you’ll still likely save money by having your home cleaned less frequently.

Worth noting: Do you sometimes list your house for renters? If you rent out on Airbnb, you’ll be asked to adhere to Airbnb’s cleaning protocol standards. A cleaning crew is helpful for a quick turnaround between renters.

Cleaning Requirements

The price of a house cleaner or cleaning service can go up depending on what is required of them:

• Level of mess. Do you entertain frequently or have small children? It may take longer to clean up the aftermath. Or maybe you haven’t done a deep-clean in ages. That too may make cleaning take longer.

• Area of mess. Does the whole house always have to be cleaned? You can save money by only having the common areas and bathrooms tidied up.

• Pets. Vacuuming dog and cat hair can add many minutes to a cleaner’s timesheet.

• Are you a neat freak? A deep-clean or super detailed job will cost more than basic dusting, vacuuming, and mopping.

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How Good You Are At Cleaning

If you are a disciplined and effective cleaner who loves getting your place spotless, there may be no need to hire someone. That said, there might be times you get too busy to clean or want some help tidying up before the holidays or a houseguest’s arrival.

If you’re the kind of person who ignores dust bunnies or the sight of a broom stresses you out, perhaps you should outsource household tasks and enjoy some time elsewhere.

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Cleaning Services vs Individual Cleaners: What’s the Difference?

An individual cleaning person typically costs less than a cleaning service. A cleaning person often works alone, while a cleaning service can be a crew of two, three, or more who clean simultaneously.

An independent cleaner generally keeps 100% of the earnings, while a portion of the money for a cleaning crew goes to the service provider.

There are other key differences between individual cleaners and cleaning services:

Pros of Hiring a House Cleaning Person

Here are some of the perks that can make a cleaning person worth it:

• Lower costs. An independent contractor can be less expensive than a cleaning service. Fewer workers can mean cheaper rates.

• Price flexibility. You may be able to negotiate cleaning add-ons more easily (and affordably) with an individual.

• Familiarity. The same person comes to your home every time. This can provide a sense of comfort and trust for you and your family.

• Personal recommendations. You can get referrals from someone you trust — a friend or a neighbor.

Recommended: 15 Creative Ways to Save Money

Pros of Hiring a Cleaning Service

If you’re considering getting help tidying up around the house, a cleaning service can be worth it. They come with several benefits:

• Vetted employees. Full-service cleaning companies typically check their employees’ backgrounds, so you don’t have to.

• Set standards. Many companies train their employees to uphold a certain level of cleaning criteria.

• Faster service. Since cleaning services are composed of crews, a team of workers can get the job done faster than an individual house cleaner.

• Customer service. If a job isn’t up to snuff, professional companies will deal with any complaints you may have.

Cons of Hiring a House Cleaning Person

• You’ll do the vetting. The responsibility of getting references and background checks on the cleaning candidate will fall to you.

• Longer cleaning time. Since a house cleaner usually works solo, they might not be as fast as a cleaning service with multiple workers.

• Unpleasant boss duties. If your cleaning person is not meeting your expectations, it will be up to you to address the problem and, possibly, terminate the arrangement.

• Inflexible schedule. If the contractor has a lot of clients, there could be fewer timeslot options available.

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Cons of Hiring a Cleaning Service

• Higher prices. A cleaning service generally costs more than an independent maid.

• Lack of familiarity. The company could send different people every time.

• Add-ons can be costly. Since the company sets the prices, you could spend a lot for a deep-clean of the fridge. A cleaning person, on the other hand, might not charge extra if they can get the job done within their hourly time frame.

Alternatives to House Cleaners or Cleaning Services

House cleaners and cleaning services are generally the route people take when hiring help, but there are a few other options:

• Gig-based workers. Apps and online services such as Taskrabbit and Fiverr feature a variety of folks willing to do odd jobs, including house cleaning. Whether they pursue this full-time or as a side hustle, you may well find affordable options.

• College students. If you live near a campus, check the online or physical job boards. Students are generally eager to make extra dough.

• Your kids. Shelling out for an allowance can be a lot cheaper than a cleaning service.

Tips for Saving Money on Cleaning Services

There are a few things you can do to potentially reduce the cost of a cleaning person or service:

• Shop around. It’s a good idea to interview more than one house cleaner or get estimates from multiple cleaning services.

• Make the terms clear. You’ll want to clarify exactly what tasks need to be done, so you won’t get charged for any unexpected add-ons.

• Consider a trial run. It can be a good idea to try out a house cleaner or cleaning service for a month or so before committing to a long-term agreement.

• Inquire about fees. It’s a good idea to ask about any potential extra fees so you don’t hit with any surprises. Some cleaning services may tack on a processing fee if you pay with a credit card vs. direct deposit.

• Look for promotional deals. Cleaning services will occasionally run specials. They may also offer package deals and referral bonuses.

• Tidy up before they come. Keeping your house orderly in between appointments allows the hired cleaner to perform more efficiently.

Recommended: How to Set and Reach Savings Goals

The Takeaway

If your messy home is stressing you out, a cleaning person or service can take some of the weight off your shoulders. As long as you can justify the extra expense, hiring a professional can make your home look great and improve your mood, plus leave you with more free time to enjoy your favorite pursuits.

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FAQ

Are individual house cleaners better than cleaning services?

Both are good options if you need help cleaning your house. Typically, a cleaning person can be cheaper and is someone you see regularly and can build a relationship with. A cleaning service, on the other hand, may be able to get the job done faster and may have more professional training and customer service.

Is it safe to hire a cleaning person or service?

To feel secure, it’s a good idea to get recommendations and references (and check them) for an individual cleaning person. Cleaning service companies generally vet their employees for you.

Should you hire a house cleaner if your house is not very dirty?

Whether to hire a cleaning person or not depends on how clean you want to keep your home, and how much time you are willing to personally spend on it. Even if you’re a regular duster, a house cleaner can help with larger tasks like cleaning the fridge and oven, heavy-duty vacuuming, and/or window washing.

Photo credit: iStock/Tatiana