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Apache is functioning normally

Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate mortgages to write unbiased product reviews.

Current 30-year mortgage rates are hovering at 6.55%, according to data from Zillow. Rates trended down slightly in June, though they’ve been holding steady over the last week.

According to the National Association of Realtors, home sales are down 2.8% year over year. The number of houses on the market has actually increased 18.5% over the last year, but the median existing-home price in May hit a record high of $419,300.

“Eventually, more inventory will help boost home sales and tame home price gains in the upcoming months,” said NAR Chief Economist Lawrence Yun. “Increased housing supply spells good news for consumers who want to see more properties before making purchasing decisions.”

Your best bet for getting the lowest mortgage rate is comparing offers from multiple mortgage lenders, especially if you’re looking to buy before rates and home prices come down.

Mortgage Rates Today

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Mortgage Calculator

Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.

Mortgage Calculator

$1,161
Your estimated monthly payment

Total paid$418,177
Principal paid$275,520
Interest paid$42,657
  • Paying a 25% higher down payment would save you $8,916.08 on interest charges
  • Lowering the interest rate by 1% would save you $51,562.03
  • Paying an additional $500 each month would reduce the loan length by 146 months

By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.

30-Year Fixed Mortgage Rates

The average 30-year fixed mortgage rate was 6.95% last week, according to Freddie Mac. This is four basis points lower than it was the week before.

The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.

The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates. 

15-Year Fixed Mortgage Rates

Average 15-year mortgage rates were 6.17% last week, according to Freddie Mac data, which is a 12-basis-point decrease from the previous week.

If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.

Are Mortgage Rates Going Down?

Mortgage rates increased throughout most of 2023. But mortgage rates are expected to trend down in the coming months and years.

In the last 12 months, the Consumer Price Index rose by 3.3%. As inflation comes down and the Federal Reserve is able to start cutting the federal funds rate, mortgage rates should fall further as well.

For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.

A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.

Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans. 

How Do Fed Rate Hikes Affect Mortgages?

The Fed aggressively raised the federal funds rate in 2022 and 2023 to slow economic growth and get inflation under control. As a result, mortgage rates spiked.

Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy. 

Now that the Fed has paused hiking rates, mortgage rates have come down a bit. Once the Fed starts cutting rates, which may happen this year, mortgage rates should fall even further.

Molly Grace

Mortgage Reporter

in 2016.Sarah began her journalism career writing about technology for Engadget and Laptop Magazine, jobs which led to international travel for trade shows and conferences and sparked her interest in credit card benefits.Sarah started educating herself on personal finance best practices during her early years struggling to find balance amid New York City’s high cost of living. The money management skills Sarah learned during her years as a self-employed freelance editor also honed her financial acumen, giving her a passion for helping others navigate the financial challenges of small business ownership, taxes, and budgeting. In her personal life, Sarah loves helping her friends level up their credit card strategies to book fancy hotel rooms and flights. She also loves talking about her dog to anyone who will listen.ExpertiseSarah’s areas of personal finance expertise include:

  • Credit scores
  • Credit cards
  • Loans
  • Investing
  • Banking
  • Insurance

EducationSarah is a graduate of Sarah Lawrence College, where she wrote and edited for the college paper. “>

Sarah Silbert

Deputy Editor

Sarah Silbert is a personal finance expert and award-winning journalist. As deputy editor for Personal Finance Insider, she oversees all of the guides and reviews published across banking, credit, credit cards, mortgages, loans, investing, and insurance. ExperienceSarah joined Business Insider as an editor covering credit cards in 2019, and has built multiple Personal Finance Insider verticals from the ground up. Prior to joining Business Insider, Sarah was a senior editor at The Points Guy for more than four years, covering credit cards and award travel. Alongside her team at TPG, Sarah led the launch of coverage for the popular Chase Sapphire Reserve travel rewards credit card in 2016.Sarah began her journalism career writing about technology for Engadget and Laptop Magazine, jobs which led to international travel for trade shows and conferences and sparked her interest in credit card benefits.Sarah started educating herself on personal finance best practices during her early years struggling to find balance amid New York City’s high cost of living. The money management skills Sarah learned during her years as a self-employed freelance editor also honed her financial acumen, giving her a passion for helping others navigate the financial challenges of small business ownership, taxes, and budgeting. In her personal life, Sarah loves helping her friends level up their credit card strategies to book fancy hotel rooms and flights. She also loves talking about her dog to anyone who will listen.ExpertiseSarah’s areas of personal finance expertise include:

  • Credit scores
  • Credit cards
  • Loans
  • Investing
  • Banking
  • Insurance

EducationSarah is a graduate of Sarah Lawrence College, where she wrote and edited for the college paper. 


Source: businessinsider.com

Apache is functioning normally

Top 10 reverse mortgage industry lender South River Mortgage is aiming to focus on its strengths. In addition to offering a proprietary reverse mortgage product option and transitioning last year from a broker to a direct lender, the company is focusing on its core business while staying engaged with the broader industry dynamics.

South River president Tyler Plack recently discussed the elements of business in the current market environment with HousingWire’s Reverse Mortgage Daily (RMD). Now, the conversation turns to the wider industry. Despite the well-documented challenges being faced by the industry, Plack and South River chief strategy officer Matthew Hagen said that the reverse mortgage business is pressing ahead.

Plack also discussed the ramifications of Open Mortgage’s exit from the industry late last year, and how alternative equity products add to the competitive landscape of the reverse mortgage business.

Chris Clow/RMD: In terms of the health of the industry, where we are at the midpoint of 2024, and considering some of the doom and gloom that might have been predicted at the end of last year, how do you think the industry at large is doing?

Tyler Plack: I think the industry has shown incredible resilience. At the end of last year and the beginning of this year, we were anticipating three rate cuts in 2024. As of today, it doesn’t appear that the market is pricing those in as much, meaning that the mortgage market is considerably more difficult than I would have anticipated at the beginning of the year.

With that being said, I am so impressed not just with South River, but with the industry as a whole, and how resilient the space has been and how resilient the originators in the space have been. If you look at the number of originators, we didn’t see the level of fallout in 2024 that we did in 2022 or 2023. It’s been much more stable.

Clow: What do you think is driving that kind of stability?

Plack: I think part of that stability comes from some of the Fed comments about being done raising rates, which is good. But I am really impressed with the rest of the industry and their ability to keep things moving, even though volumes are down. Everyone is still working hard, still originating loans, and a lot of people are still in business, and that’s a really good thing.

Clow: Industry consolidation has certainly been a big topic of conversation. We’ve also seen other forward lending players starting to show more interest in reverse, and I know your company was a big partner of Open Mortgage. First of all, how has their absence affected you? And what do you make of the way that consolidation has progressed in the industry?

Plack: If you look at Open Mortgage, we used to broker a lot of business to them, and they shut down in December 2023. By the time they had shut down, we had already completed our broker-to-lender transition, meaning we weren’t doing any business with them at the time they closed their doors for the reverse business. Frankly, we’ve been a net beneficiary of some of the talent we were able to pick up from Open.

<img decoding="async" width="890" height="1024" data-attachment-id="436075" data-permalink="https://www.housingwire.com/articles/south-river-mortgage-eyes-reverse-growth-transitions-from-broker-to-direct-lender/tylerplack_southrivermortgage/" data-orig-file="https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg" data-orig-size="890,1024" data-comments-opened="1" data-image-meta=""aperture":"0","credit":"","camera":"","caption":"","created_timestamp":"0","copyright":"","focal_length":"0","iso":"0","shutter_speed":"0","title":"","orientation":"0"" data-image-title="tylerplack_southrivermortgage" data-image-description="

Tyler Plack, president of South River Mortgage.

” data-image-caption=”

Tyler Plack

” data-medium-file=”https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg?w=261″ data-large-file=”https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg?w=890″ src=”https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg?w=890″ alt=”Tyler Plack, president of South River Mortgage.” class=”wp-image-436075″ srcset=”https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg 890w, https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg?resize=130,150 130w, https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg?resize=261,300 261w, https://www.housingwire.com/wp-content/uploads/2024/01/tylerplack_southrivermortgage.jpeg?resize=768,884 768w” sizes=”(max-width: 890px) 100vw, 890px”>

Tyler Plack

There were a lot of really good people left out of work as a result of them closing the reverse department, and we were lucky to pick up some great underwriters, a couple of closers and operations team members that would have been difficult to find otherwise. So, certainly, when one door closes, another door opens, and we’re really happy to be able to welcome them here at South River.

Matthew Hagen: The other thing I would add there is that Open Mortgage was a very good partner to us as we were building our business. We were really sad to see them leave the marketplace, not only because of the partnership we had with them but also because we were always hoping they would get to a position where they could be a closed loan purchaser of our loans.

They never quite got there, but that was our hope so we could continue to do business with them. In this environment, it’s a terrible outcome when anybody leaves the market. There’s a big available pipeline, and we don’t need fewer people in this industry — we need more. Having Open leave was a real disappointment and we were sad to see them exit.

Clow: It seems like home equity is having a larger stake in conversations, even among forward lenders. They’re more interested in traditional instruments like HELOCs, and there’s also a niche of shared equity investments and sale-leasebacks that are trying to stake a claim in the equity lending market. I’m curious whether this adds to the competitive landscape in terms of what you’re trying to do, or is that just noise that you’re tuning out?

Plack: It’s certainly not just noise that we’re tuning out. We’re working with some home equity product providers and are interested in the space. I think you run the risk of contaminating or misplacing someone who would be best suited for a reverse mortgage into a home equity product. There’s a risk there, but it’s important that the best product wins. If home equity is the product that the consumer needs, then we should give them that home equity investment product rather than a reverse mortgage.

At the same time, one of the great things about those equity products is that many of them don’t have an age restriction. If you’re 18 and can legally enter the contract and have the title to the home, you are eligible for this product. With reverse mortgages, legality varies by state, which complicates things. So, the total addressable market is significantly larger for these home equity investment products. I think any reverse originator should be looking at these products to see how they can add them as another arrow in their quiver.

Source: housingwire.com

Apache is functioning normally

If you’re ready to purchase a new home, you may be wondering just how long the process will take. After all, it’s possible you need to figure out some of the logistics of your move.

For example, you may need to decide whether to ask your landlord for an extension on your lease. Or, perhaps you need to consider your child’s school schedule or how much notice to give your employer. With this in mind, it’s smart to learn and understand how long buying a house usually takes.

The timeline of any home sale can vary based on a broad range of factors. However, each step can be fairly predictable on its own.

Key Takeaways

  • The home-buying process typically takes between two to six months, depending on factors like credit preparation, finding a home, and closing procedures.
  • Key steps include preparing your credit, getting preapproved for a mortgage, finding a home, and negotiating an offer, followed by the closing process which can take 30–50 days.
  • It’s important to keep your credit in good shape and save for a down payment to improve your chances of securing the home of your dreams.

How Long It Takes to Buy a House

Here’s how much time you should expect to wait for each step of your home sale as you plan out the next important steps in your life.

1. Preparing Your Credit for Homeownership: (0–12 Weeks)

The credit score required to qualify for a mortgage can vary depending on the mortgage lender and type of mortgage. However, you will always have a better chance of qualifying for a mortgage loan with the best rates if you have good credit.

According to myFico.com, consumers with FICO scores of 740 or above have the best chance at qualifying for a mortgage with excellent terms and a low interest rate. Meanwhile, consumers with “good credit,” or FICO scores between 679 and 740, are not guaranteed the best terms. The chances of qualifying for one of the best home loans is much lower for anyone with a score below that level.

That’s why, if your credit history isn’t great, you should work on improving it before you apply for a mortgage. The most important steps you can take to improve your credit include:

  • Get a copy of your credit report and check it for errors. You can get a free copy of your report from all three credit reporting agencies — Experian, Equifax, and TransUnion. You get one copy for free each year at AnnualCreditReport.com.
  • Pay all your bills on time. This is important since your payment history makes up 35% of your FICO score.
  • Pay down debt. Many credit-scoring models consider how much debt you have when determining your credit score. So, paying down some of your existing debt may help improve your credit in the short term and the long haul.

If your credit is already good or excellent, you can skip this step altogether. If it’s not, you have some work to do.

2. Get Preapproved for a Mortgage: (1–2 Days)

Your credit is ready for a mortgage, so now what? Before you start house hunting, the next step is checking in with mortgage providers to get preapproved. There are a few reasons you should bother getting preapproved before you start shopping.

A preapproval is a lender’s written commitment to loan you a certain amount of money for a home purchase. It’s based on a review of your credit and financial information and is one way to prove to sellers that you’re a serious buyer. This gives you an advantage over other buyers who aren’t preapproved if you have a letter.

Getting preliminary preapproval for a mortgage will also help you discover how much money the bank is willing to lend you. This figure or range of figures will let you know the price range of homes you should search for.

If you’re in the process of shopping for a new home, it’s important to understand the difference between prequalification and preapproval. Prequalification can help you get an idea of what your budget should be. However, to move forward with a purchase, you’ll need a preapproval.

See also: What Is the Minimum Credit Score to Buy a House?

What Is a Preapproval Letter?

A preapproval letter is a document from a lender stating that a borrower has qualified for a loan up to a certain amount based on their credit history, income, and other financial information.

The preapproval letter is not a guarantee of loan approval, but it does give the borrower an idea of what size loan they may qualify for and the terms of the loan.

Shop Around for the Best Rates and Terms

As you prepare to get preapproved for a home loan, make sure you’re checking with several mortgage lenders so you can compare interest rates and fees. Some websites let you enter your information once to receive multiple offers from lenders who are competing for your business.

What You Will Need to Get Preapproved

Make sure to research lenders and mortgage websites that connect you with multiple home loans before you decide whom to work with.

To get preapproved, you typically need to supply the following:

  • At least one month of pay stubs
  • Employment information for the last two years
  • Two years of W-2s
  • One or two years of tax returns
  • Three months of bank statements
  • Even more information if you’re self-employed.

The lender will then use this information to determine your loan amount and interest rate.

When you apply for a mortgage preapproval, the lender will pull your credit report. This can result in a hard inquiry on your credit report, which can temporarily lower your credit score.

Keep in mind that this step can take a few days or several weeks. Make sure you have a mortgage preapproval letter in your hands before you move onto the next step.

3. Finding a Home and Getting an Accepted Offer: Varies

Once you’re preapproved and have a good idea of how much house you can afford, it’s time to start searching for your dream home. Unfortunately, this is one step that can vary dramatically in length and scope. You might find the perfect home on your first day of searching. However, it could also take months of searching for a home you actually want to buy.

You’ll likely want to work with a real estate agent during this part of your journey. They can help you find homes in your price range. They also set up times for you to enter and inspect homes you’re interested in.

Once you find a home to buy, you can also rely on the help of a realtor to write up an offer. This part of the home buying process can also take days or weeks, depending on how quickly the sellers respond. They might submit a counteroffer that requires you to think long and hard about the home sale for a few days. Heck, you could each submit several counteroffers back and forth, each taking a few days to execute.

4. Closing on Your Home: (30–50 Days)

Once you have reached an agreement with the home’s seller, you’ll begin moving toward the closing process. During this step of the mortgage process, your lender may need more financial paperwork that helps them verify you qualify for the loan.

To prove you are still in the same financial position you were when you were preapproved for your loan, you may need to provide additional bank statements or pay stubs.

Home Inspection

While you’re waiting to close on your home, you’ll also want to hire a home inspector to look over the property to check for needed repairs. The home inspection usually takes a few days to schedule, but only a few hours to inspect. After the home inspection, you may also negotiate back and forth with the seller to agree on who will pay said repairs and if any concessions should be made.

Sometimes closing takes as little as one month, but it can often take a lot longer than that. Either way, it helps to get back with your lender quickly if they ask you to submit additional documentation. You don’t want to leave them waiting and prolong the home buying process unnecessarily.

Once your closing date arrives, you’ll sit down with all parties. This includes lawyers when applicable, buyer and seller’s real estate agent, title company, the closing agent, and perhaps even a representative of the lender.

You’ll sign all the important documents pertaining to your home loan. You’ll also bring money to the table to cover your share of closing costs and your down payment. Once you’re done, the keys and the home are finally yours.

Bottom Line

The details above describe what usually happens when someone purchases a home. However, there are many variables that could throw these timelines out of whack. You may find you have trouble qualifying for a mortgage altogether, for example. Or maybe you spend months or years finding a home you like!

Whatever hurdles you encounter, make sure to keep your credit in good shape and continue saving for a down payment. The better financial shape you’re in, the better chance you have at winding up with the home of your dreams.

Frequently Asked Questions

How long does it take to buy a house?

Generally, it takes between two and six months to purchase a house. This timeline may vary depending on the complexity of the transaction and the availability of financing.

What factors can affect the timeline for buying a house?

Factors that can affect the timeline for buying a house include:

  • The availability of financing
  • The complexity of the transaction
  • The number of buyers in the real estate market
  • The availability of properties

What are the steps involved in buying a house?

The steps involved in buying a house include:

  1. Researching the housing market
  2. Finding a real estate agent
  3. Getting preapproved for a mortgage
  4. Making an offer and negotiating
  5. Securing financing
  6. Closing on the purchase.

How can I get preapproved for a mortgage?

To get preapproved for a mortgage, you will need to provide documentation such as your income and employment information and your credit report. Your lender will then review your information and provide you with a pre-approval letter.

What is the difference between pre-qualifying and pre-approving for a mortgage?

Pre-qualifying for a mortgage involves providing information to a lender, who then estimates how much you can afford to borrow. Pre-approval involves providing documents to a lender, who then verifies your information and issues a letter of pre-approval that you can use when making an offer on a house.

How can I find a real estate agent?

You can find a real estate agent by asking friends, family, and colleagues for recommendations, or by searching online. You can also look for an agent through the National Association of Realtors or by visiting your local real estate board.

How long does the underwriting process take?

The underwriting process can take anywhere from a few days to a few weeks. The timeline depends largely on the complexity of the loan and the number of documents the lender needs to review.

What is a closing?

A closing is the last step in the home-buying process. It is when the transfer of ownership is finalized and the buyer and seller sign the closing documents. At the closing, the buyer pays the remaining balance of the purchase price and the deed is transferred from the seller to the buyer.

What documents should I bring to the closing?

At the closing, you will typically need to provide a valid photo ID, proof of homeowner’s insurance, a copy of the purchase agreement, and a certified or cashier’s check for the remaining balance of the purchase price.

Should I use a mortgage broker?

Deciding whether to use a mortgage broker largely depends on your unique requirements and preferences. By engaging a mortgage broker, you stand to gain access to a broader range of lenders, thus increasing the likelihood of securing the best mortgage rates and terms.

In addition to providing access to lenders, mortgage brokers can offer valuable guidance and advice throughout the process, which can be especially beneficial if you are unfamiliar with the ins and outs of securing a mortgage. However, it’s worth noting that mortgage brokers do charge a fee for their services, which can add to the overall cost of obtaining a mortgage. Ultimately, it’s up to you to decide whether the benefit is worth the cost.

Can I buy a house with cash?

Yes, you can buy a house with cash. However, the seller may still request evidence of your available funds.

The seller may request to see bank statements or other financial documents that demonstrate that you have the necessary funds to complete the transaction. This process can provide the seller with peace of mind that the sale will go smoothly. It can also help to prevent any misunderstandings or disputes from arising during the purchasing process.

Source: crediful.com

Apache is functioning normally

If you’re ready to purchase a new home, you may be wondering just how long the process will take. After all, it’s possible you need to figure out some of the logistics of your move.

For example, you may need to decide whether to ask your landlord for an extension on your lease. Or, perhaps you need to consider your child’s school schedule or how much notice to give your employer. With this in mind, it’s smart to learn and understand how long buying a house usually takes.

The timeline of any home sale can vary based on a broad range of factors. However, each step can be fairly predictable on its own.

Key Takeaways

  • The home-buying process typically takes between two to six months, depending on factors like credit preparation, finding a home, and closing procedures.
  • Key steps include preparing your credit, getting preapproved for a mortgage, finding a home, and negotiating an offer, followed by the closing process which can take 30–50 days.
  • It’s important to keep your credit in good shape and save for a down payment to improve your chances of securing the home of your dreams.

How Long It Takes to Buy a House

Here’s how much time you should expect to wait for each step of your home sale as you plan out the next important steps in your life.

1. Preparing Your Credit for Homeownership: (0–12 Weeks)

The credit score required to qualify for a mortgage can vary depending on the mortgage lender and type of mortgage. However, you will always have a better chance of qualifying for a mortgage loan with the best rates if you have good credit.

According to myFico.com, consumers with FICO scores of 740 or above have the best chance at qualifying for a mortgage with excellent terms and a low interest rate. Meanwhile, consumers with “good credit,” or FICO scores between 679 and 740, are not guaranteed the best terms. The chances of qualifying for one of the best home loans is much lower for anyone with a score below that level.

That’s why, if your credit history isn’t great, you should work on improving it before you apply for a mortgage. The most important steps you can take to improve your credit include:

  • Get a copy of your credit report and check it for errors. You can get a free copy of your report from all three credit reporting agencies — Experian, Equifax, and TransUnion. You get one copy for free each year at AnnualCreditReport.com.
  • Pay all your bills on time. This is important since your payment history makes up 35% of your FICO score.
  • Pay down debt. Many credit-scoring models consider how much debt you have when determining your credit score. So, paying down some of your existing debt may help improve your credit in the short term and the long haul.

If your credit is already good or excellent, you can skip this step altogether. If it’s not, you have some work to do.

2. Get Preapproved for a Mortgage: (1–2 Days)

Your credit is ready for a mortgage, so now what? Before you start house hunting, the next step is checking in with mortgage providers to get preapproved. There are a few reasons you should bother getting preapproved before you start shopping.

A preapproval is a lender’s written commitment to loan you a certain amount of money for a home purchase. It’s based on a review of your credit and financial information and is one way to prove to sellers that you’re a serious buyer. This gives you an advantage over other buyers who aren’t preapproved if you have a letter.

Getting preliminary preapproval for a mortgage will also help you discover how much money the bank is willing to lend you. This figure or range of figures will let you know the price range of homes you should search for.

If you’re in the process of shopping for a new home, it’s important to understand the difference between prequalification and preapproval. Prequalification can help you get an idea of what your budget should be. However, to move forward with a purchase, you’ll need a preapproval.

See also: What Is the Minimum Credit Score to Buy a House?

What Is a Preapproval Letter?

A preapproval letter is a document from a lender stating that a borrower has qualified for a loan up to a certain amount based on their credit history, income, and other financial information.

The preapproval letter is not a guarantee of loan approval, but it does give the borrower an idea of what size loan they may qualify for and the terms of the loan.

Shop Around for the Best Rates and Terms

As you prepare to get preapproved for a home loan, make sure you’re checking with several mortgage lenders so you can compare interest rates and fees. Some websites let you enter your information once to receive multiple offers from lenders who are competing for your business.

What You Will Need to Get Preapproved

Make sure to research lenders and mortgage websites that connect you with multiple home loans before you decide whom to work with.

To get preapproved, you typically need to supply the following:

  • At least one month of pay stubs
  • Employment information for the last two years
  • Two years of W-2s
  • One or two years of tax returns
  • Three months of bank statements
  • Even more information if you’re self-employed.

The lender will then use this information to determine your loan amount and interest rate.

When you apply for a mortgage preapproval, the lender will pull your credit report. This can result in a hard inquiry on your credit report, which can temporarily lower your credit score.

Keep in mind that this step can take a few days or several weeks. Make sure you have a mortgage preapproval letter in your hands before you move onto the next step.

3. Finding a Home and Getting an Accepted Offer: Varies

Once you’re preapproved and have a good idea of how much house you can afford, it’s time to start searching for your dream home. Unfortunately, this is one step that can vary dramatically in length and scope. You might find the perfect home on your first day of searching. However, it could also take months of searching for a home you actually want to buy.

You’ll likely want to work with a real estate agent during this part of your journey. They can help you find homes in your price range. They also set up times for you to enter and inspect homes you’re interested in.

Once you find a home to buy, you can also rely on the help of a realtor to write up an offer. This part of the home buying process can also take days or weeks, depending on how quickly the sellers respond. They might submit a counteroffer that requires you to think long and hard about the home sale for a few days. Heck, you could each submit several counteroffers back and forth, each taking a few days to execute.

4. Closing on Your Home: (30–50 Days)

Once you have reached an agreement with the home’s seller, you’ll begin moving toward the closing process. During this step of the mortgage process, your lender may need more financial paperwork that helps them verify you qualify for the loan.

To prove you are still in the same financial position you were when you were preapproved for your loan, you may need to provide additional bank statements or pay stubs.

Home Inspection

While you’re waiting to close on your home, you’ll also want to hire a home inspector to look over the property to check for needed repairs. The home inspection usually takes a few days to schedule, but only a few hours to inspect. After the home inspection, you may also negotiate back and forth with the seller to agree on who will pay said repairs and if any concessions should be made.

Sometimes closing takes as little as one month, but it can often take a lot longer than that. Either way, it helps to get back with your lender quickly if they ask you to submit additional documentation. You don’t want to leave them waiting and prolong the home buying process unnecessarily.

Once your closing date arrives, you’ll sit down with all parties. This includes lawyers when applicable, buyer and seller’s real estate agent, title company, the closing agent, and perhaps even a representative of the lender.

You’ll sign all the important documents pertaining to your home loan. You’ll also bring money to the table to cover your share of closing costs and your down payment. Once you’re done, the keys and the home are finally yours.

Bottom Line

The details above describe what usually happens when someone purchases a home. However, there are many variables that could throw these timelines out of whack. You may find you have trouble qualifying for a mortgage altogether, for example. Or maybe you spend months or years finding a home you like!

Whatever hurdles you encounter, make sure to keep your credit in good shape and continue saving for a down payment. The better financial shape you’re in, the better chance you have at winding up with the home of your dreams.

Frequently Asked Questions

How long does it take to buy a house?

Generally, it takes between two and six months to purchase a house. This timeline may vary depending on the complexity of the transaction and the availability of financing.

What factors can affect the timeline for buying a house?

Factors that can affect the timeline for buying a house include:

  • The availability of financing
  • The complexity of the transaction
  • The number of buyers in the real estate market
  • The availability of properties

What are the steps involved in buying a house?

The steps involved in buying a house include:

  1. Researching the housing market
  2. Finding a real estate agent
  3. Getting preapproved for a mortgage
  4. Making an offer and negotiating
  5. Securing financing
  6. Closing on the purchase.

How can I get preapproved for a mortgage?

To get preapproved for a mortgage, you will need to provide documentation such as your income and employment information and your credit report. Your lender will then review your information and provide you with a pre-approval letter.

What is the difference between pre-qualifying and pre-approving for a mortgage?

Pre-qualifying for a mortgage involves providing information to a lender, who then estimates how much you can afford to borrow. Pre-approval involves providing documents to a lender, who then verifies your information and issues a letter of pre-approval that you can use when making an offer on a house.

How can I find a real estate agent?

You can find a real estate agent by asking friends, family, and colleagues for recommendations, or by searching online. You can also look for an agent through the National Association of Realtors or by visiting your local real estate board.

How long does the underwriting process take?

The underwriting process can take anywhere from a few days to a few weeks. The timeline depends largely on the complexity of the loan and the number of documents the lender needs to review.

What is a closing?

A closing is the last step in the home-buying process. It is when the transfer of ownership is finalized and the buyer and seller sign the closing documents. At the closing, the buyer pays the remaining balance of the purchase price and the deed is transferred from the seller to the buyer.

What documents should I bring to the closing?

At the closing, you will typically need to provide a valid photo ID, proof of homeowner’s insurance, a copy of the purchase agreement, and a certified or cashier’s check for the remaining balance of the purchase price.

Should I use a mortgage broker?

Deciding whether to use a mortgage broker largely depends on your unique requirements and preferences. By engaging a mortgage broker, you stand to gain access to a broader range of lenders, thus increasing the likelihood of securing the best mortgage rates and terms.

In addition to providing access to lenders, mortgage brokers can offer valuable guidance and advice throughout the process, which can be especially beneficial if you are unfamiliar with the ins and outs of securing a mortgage. However, it’s worth noting that mortgage brokers do charge a fee for their services, which can add to the overall cost of obtaining a mortgage. Ultimately, it’s up to you to decide whether the benefit is worth the cost.

Can I buy a house with cash?

Yes, you can buy a house with cash. However, the seller may still request evidence of your available funds.

The seller may request to see bank statements or other financial documents that demonstrate that you have the necessary funds to complete the transaction. This process can provide the seller with peace of mind that the sale will go smoothly. It can also help to prevent any misunderstandings or disputes from arising during the purchasing process.

Source: crediful.com

Apache is functioning normally

Editor’s note: On the evening of June 24, a U.S. federal judge in Kansas blocked the SAVE updates from occurring as planned on July 1. This is a developing story.

A generous federal student loan repayment plan is about to get even more affordable.

On July 1, the Education Department will roll out the last remaining features of the Saving on a Valuable Education (SAVE) plan — and millions of borrowers with undergraduate loans could see their monthly bill slashed by half.

SAVE debuted to borrowers last summer, but only some of the plan’s features were available at that time, like $0 payments for lower- and middle-income borrowers and an automatic interest subsidy. In February, the White House began forgiving SAVE borrowers’ remaining debt after 10 years of repayment if they took out $12,000 or less — compared to 20 or 25 years on other repayment plans. Nearly 8 million borrowers have enrolled in SAVE and 4.6 million qualify for $0 payments, as of May.

If you’re not enrolled in SAVE yet, take another look and see if you can get a lower payment starting in July. You can gauge your payoff journey with the Education Department’s loan simulator; the Community Service Society of New York also offers a SAVE calculator that estimates payments before and after the July recalculation.

“There’s no downside to seeing what’s available to you,” says Devin McCombs, a Denver-based certified financial planner and certified student loan professional. Apply for SAVE on StudentAid.gov/IDR, or reach out to your student loan servicer directly.

And if you’re already enrolled in SAVE, the smaller bills and other changes will be automatic. You also could get a payment pause in July as servicers implement the changes.

SAVE student loan benefits coming in July

Payments cut in half for undergraduate loans

SAVE is an income-driven repayment (IDR) plan, which means that it calculates your monthly payments based on your income, rather than how much you owe. Starting in July, borrowers with undergraduate loans only will see their monthly SAVE payments cut in half, from 10% down to 5% of their discretionary income. So, if you previously had a $400 SAVE bill, that could shrink to $200. Borrowers who enroll in SAVE for the first time will also have access to that new, lower payment.

Borrowers who only have graduate school debt will be unaffected by this change. Their payments will remain 10% of their discretionary income.

Borrowers who have both undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income, based on the original principal balances of the student loans they took out.

For example, if you borrowed $10,000 for your undergraduate degree and $15,000 for your master’s degree, your monthly SAVE payment would be 8% of your income. If you took out $10,000 for undergrad and $10,000 for grad school, your payment would be 7.5% of your income.

Automatic forgiveness credit for forbearances, deferments

Under the SAVE plan, borrowers can get their remaining debt forgiven after 10 to 20 or 25 years of payments, depending on their original loan balance and whether they have undergraduate or graduate school debt. Borrowers eligible for Public Service Loan Forgiveness (PSLF) can get forgiveness after 10 years, regardless of amount or type of debt.

In the past, periods of deferment and forbearance didn’t usually count toward this forgiveness clock. But starting July 1, SAVE borrowers will automatically get forgiveness credit for specific payment pauses — like those related to unemployment, cancer treatment, military service and natural disasters. Credit for deferments also can be retroactive.

Ability to make up for past missed payments

​Borrowers will be allowed to make additional “buyback” payments to get credit for most other periods of deferment or forbearance that don’t qualify for automatic credit.

“If someone was on an income-driven repayment plan, then went into forbearance and then went back into the income-driven repayment plan, they can actually buy back those months, or go back and make those payments,” explains Jantz Hoffman, executive director of the Certified Student Loan Board of Standards, a nonprofit that helps financial planners and their clients make student loan decisions.

This is significant for borrowers eligible for Public Service Loan Forgiveness, who can get forgiveness after 10 years of payments while working a qualifying job. However, there’s currently a PSLF program transfer underway from the servicer MOHELA to the Education Department — so it’s unclear how exactly this buyback process will work in practice, Hoffman says.

“It’s ‘to be determined’ on how it will actually take place,” Hoffman says. “But, in theory, the borrower should be able to make payments which equate to the lower of the two income-driven repayment calculations, either when they went into forbearance or when they came out of it, which creates an opportunity for borrowers to actually have an even lower payment longer.”

Automatic enrollment for borrowers with default risk

Borrowers with payments at least 75 days late will be automatically enrolled in the SAVE plan if they previously agreed to give the Education Department access to their tax information.

Many borrowers in this situation may qualify for $0 SAVE payments, based on their income. A borrower must have an income below $32,800 as an individual or $67,500 as a household of four to qualify for $0 payments.

Why some SAVE borrowers don’t have payments due in July

If you’re already enrolled in SAVE, you might be allowed to skip your July bill without consequences.

The Education Department directed federal student loan servicers to place some SAVE borrowers into an administrative forbearance in July as they apply the smaller payment amounts to borrowers’ accounts, according to the department.

“While borrowers are in this specific forbearance, no payment is required, their interest rate will be set to 0%, and they will receive credit toward IDR forgiveness and Public Service Loan Forgiveness (PSLF),” a department spokesperson said in a statement.

Borrowers put into the July forbearance will begin making their recalculated SAVE payments in August. All other SAVE borrowers will start making their recalculated SAVE payments in July.

However, a July payment pause isn’t guaranteed if you’re enrolled in SAVE. Affected borrowers received emails from their servicers earlier this month with the subject line: “Your Student Loans Have Been Placed into A Forbearance,” according to a copy of the email reviewed by NerdWallet.

Contact your student loan servicer if you’re on the SAVE plan and haven’t received a notification about administrative forbearance, says Nichole Coyle, a certified financial planner and certified student loan professional based in Westlake, Ohio.

Source: nerdwallet.com

Apache is functioning normally

Editor’s note: On the evening of June 24, a U.S. federal judge in Kansas blocked the SAVE updates from occurring as planned on July 1. This is a developing story.

A generous federal student loan repayment plan is about to get even more affordable.

On July 1, the Education Department will roll out the last remaining features of the Saving on a Valuable Education (SAVE) plan — and millions of borrowers with undergraduate loans could see their monthly bill slashed by half.

SAVE debuted to borrowers last summer, but only some of the plan’s features were available at that time, like $0 payments for lower- and middle-income borrowers and an automatic interest subsidy. In February, the White House began forgiving SAVE borrowers’ remaining debt after 10 years of repayment if they took out $12,000 or less — compared to 20 or 25 years on other repayment plans. Nearly 8 million borrowers have enrolled in SAVE and 4.6 million qualify for $0 payments, as of May.

If you’re not enrolled in SAVE yet, take another look and see if you can get a lower payment starting in July. You can gauge your payoff journey with the Education Department’s loan simulator; the Community Service Society of New York also offers a SAVE calculator that estimates payments before and after the July recalculation.

“There’s no downside to seeing what’s available to you,” says Devin McCombs, a Denver-based certified financial planner and certified student loan professional. Apply for SAVE on StudentAid.gov/IDR, or reach out to your student loan servicer directly.

And if you’re already enrolled in SAVE, the smaller bills and other changes will be automatic. You also could get a payment pause in July as servicers implement the changes.

SAVE student loan benefits coming in July

Payments cut in half for undergraduate loans

SAVE is an income-driven repayment (IDR) plan, which means that it calculates your monthly payments based on your income, rather than how much you owe. Starting in July, borrowers with undergraduate loans only will see their monthly SAVE payments cut in half, from 10% down to 5% of their discretionary income. So, if you previously had a $400 SAVE bill, that could shrink to $200. Borrowers who enroll in SAVE for the first time will also have access to that new, lower payment.

Borrowers who only have graduate school debt will be unaffected by this change. Their payments will remain 10% of their discretionary income.

Borrowers who have both undergraduate and graduate loans will pay a weighted average between 5% and 10% of their income, based on the original principal balances of the student loans they took out.

For example, if you borrowed $10,000 for your undergraduate degree and $15,000 for your master’s degree, your monthly SAVE payment would be 8% of your income. If you took out $10,000 for undergrad and $10,000 for grad school, your payment would be 7.5% of your income.

Automatic forgiveness credit for forbearances, deferments

Under the SAVE plan, borrowers can get their remaining debt forgiven after 10 to 20 or 25 years of payments, depending on their original loan balance and whether they have undergraduate or graduate school debt. Borrowers eligible for Public Service Loan Forgiveness (PSLF) can get forgiveness after 10 years, regardless of amount or type of debt.

In the past, periods of deferment and forbearance didn’t usually count toward this forgiveness clock. But starting July 1, SAVE borrowers will automatically get forgiveness credit for specific payment pauses — like those related to unemployment, cancer treatment, military service and natural disasters. Credit for deferments also can be retroactive.

Ability to make up for past missed payments

​Borrowers will be allowed to make additional “buyback” payments to get credit for most other periods of deferment or forbearance that don’t qualify for automatic credit.

“If someone was on an income-driven repayment plan, then went into forbearance and then went back into the income-driven repayment plan, they can actually buy back those months, or go back and make those payments,” explains Jantz Hoffman, executive director of the Certified Student Loan Board of Standards, a nonprofit that helps financial planners and their clients make student loan decisions.

This is significant for borrowers eligible for Public Service Loan Forgiveness, who can get forgiveness after 10 years of payments while working a qualifying job. However, there’s currently a PSLF program transfer underway from the servicer MOHELA to the Education Department — so it’s unclear how exactly this buyback process will work in practice, Hoffman says.

“It’s ‘to be determined’ on how it will actually take place,” Hoffman says. “But, in theory, the borrower should be able to make payments which equate to the lower of the two income-driven repayment calculations, either when they went into forbearance or when they came out of it, which creates an opportunity for borrowers to actually have an even lower payment longer.”

Automatic enrollment for borrowers with default risk

Borrowers with payments at least 75 days late will be automatically enrolled in the SAVE plan if they previously agreed to give the Education Department access to their tax information.

Many borrowers in this situation may qualify for $0 SAVE payments, based on their income. A borrower must have an income below $32,800 as an individual or $67,500 as a household of four to qualify for $0 payments.

Why some SAVE borrowers don’t have payments due in July

If you’re already enrolled in SAVE, you might be allowed to skip your July bill without consequences.

The Education Department directed federal student loan servicers to place some SAVE borrowers into an administrative forbearance in July as they apply the smaller payment amounts to borrowers’ accounts, according to the department.

“While borrowers are in this specific forbearance, no payment is required, their interest rate will be set to 0%, and they will receive credit toward IDR forgiveness and Public Service Loan Forgiveness (PSLF),” a department spokesperson said in a statement.

Borrowers put into the July forbearance will begin making their recalculated SAVE payments in August. All other SAVE borrowers will start making their recalculated SAVE payments in July.

However, a July payment pause isn’t guaranteed if you’re enrolled in SAVE. Affected borrowers received emails from their servicers earlier this month with the subject line: “Your Student Loans Have Been Placed into A Forbearance,” according to a copy of the email reviewed by NerdWallet.

Contact your student loan servicer if you’re on the SAVE plan and haven’t received a notification about administrative forbearance, says Nichole Coyle, a certified financial planner and certified student loan professional based in Westlake, Ohio.

Source: nerdwallet.com

Apache is functioning normally

Mortgage applications rose for the second consecutive week as interest rates inched higher following the latest inflation data and Federal Reserve meeting. https://t.co/mvXkBLTTVs — Mortgage Professional America Magazine (@MPAMagazineUS) June 19, 2024 That’s not necessarily the right move, Harris said, mainly because prices are likely to accelerate at a brisker clip than their current pace … [Read more…]

Apache is functioning normally

Mortgage interest rates trended lower across all terms from a week ago, according to rate data collected by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans all declined.

Inflation has cooled somewhat, but homebuyers are still being challenged by high prices and rates. At the close of the Fed meeting on June 12, policymakers again held off on changing interest rates. The next Fed meeting concludes July 31.

“With [the June 12] announcement, the Fed confirms its higher-for-longer position on interest rates,” says Dr. Selma Hepp, chief economist at CoreLogic. “But the stance is looking more untenable as more American households continue to pull back on spending. As more economic indicators begin to confirm this and unemployment begins to rise, the Fed will then look to cut rates. What’s not clear yet is when exactly the disinflation signs will be consistent enough for the first rate cut — we hope it’s still this year.”

Often, though, the decision to buy a home isn’t based on what’s happening in the economy — it’s more personal. Depending on your situation, it might make sense to take a higher rate now and refinance later. This way you can start building equity, rather than waiting for a time when rates and prices are more favorable.

Rates accurate as of June 21, 2024.

These rates are averages based on the assumptions indicated here. Actual rates listed across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Friday, June 21st, 2024 at 7:30 a.m. ET.

30-year fixed-rate mortgage falls, -0.08%

The average rate you’ll pay for a 30-year fixed mortgage today is 6.92 percent, a decrease of 8 basis points from a week ago. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.08 percent.

At the current average rate, you’ll pay principal and interest of $659.94 for every $100,000 you borrow. That’s $5.36 lower, compared with last week.

15-year mortgage rate slides, -0.08%

The average 15-year fixed-mortgage rate is 6.35 percent, down 8 basis points over the last seven days.

Monthly payments on a 15-year fixed mortgage at that rate will cost approximately $863 per $100,000 borrowed. The bigger payment may be a little more difficult to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.

5/1 ARM rate drops, -0.12%

The average rate on a 5/1 ARM is 6.59 percent, ticking down 12 basis points since the same time last week.

Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

Monthly payments on a 5/1 ARM at 6.59 percent would cost about $638 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

Jumbo mortgage eases, -0.15%

The average rate for the benchmark jumbo mortgage is 7.02 percent, a decrease of 15 basis points over the last seven days. Last month on the 21st, the average rate on a jumbo mortgage was above that at 7.17 percent.

At the average rate today for a jumbo loan, you’ll pay $666.65 per month in principal and interest for every $100,000 you borrow. That’s down $10.11 from what it would have been last week.

Mortgage refinance rates

Today’s 30-year mortgage refinance rate moves down, -0.06%

The average 30-year fixed-refinance rate is 6.93 percent, down 6 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was higher at 7.09 percent.

At the current average rate, you’ll pay $660.61 per month in principal and interest for every $100,000 you borrow. That’s $4.02 lower, compared with last week.

Where are mortgage rates going?

The rates on 30-year mortgages mostly align with the 10-year Treasury yield, which changes with the market, while the cost of variable-rate home loans more directly mirrors the Fed’s moves.

If and when the Fed cuts interest rates depends on evolving economic data, such as inflation and the jobs market. While inflation is down from its peak in 2022, it’s still well above the Fed’s target rate of 2 percent. Unemployment is still low, though in May it hit 4 percent for the first time since 2022.

“Much like that flight where departure keeps getting delayed 15 minutes at a time with no end in sight, the timetable for when the Fed begins to cut rates is equally uncertain,” says Greg McBride, CFA, Bankrate chief financial analyst.

While the Fed bases its decisions on rate changes due to broader economic factors, your rate is also affected by personal finances. Depending on your credit score, down payment, debts and income, you could be quoted a rate that’s higher or lower than the trend.

What today’s rates mean for your mortgage

Mortgage rates fluctuate daily, but it appears that, for now, they will remain above the historical lows of recent years. If you’re shopping for a mortgage, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.

You could save serious money on interest by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.

“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”

More on current mortgage rates

Methodology

Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).

The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.

Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.

Source: bankrate.com

Apache is functioning normally

The amount of money a couple needs for retirement can depend on several factors, including age, health, life expectancy, location, and desired lifestyle. There’s no exact number that represents what is a good monthly retirement income for a couple, as every couple’s financial needs are different.

Creating a retirement budget and considering what might affect your cost of living can help you narrow down how much monthly income you’ll need. You can use that as a guide to decide how much you’ll need to save and invest for retirement.

How Being a Couple Affects Your Income Needs

Being the main breadwinner in a couple usually increases the amount of income you’ll need for retirement, since you’re saving for two people instead of one. The money you save has to be enough to last for your lifetime and your spouse or partner’s, so that neither of you is left without income if you outlive the other.

Aside from differences in life expectancy, there are other factors that affect a couple’ income needs, including:

•   Lifestyle preferences

•   Estimated Social Security benefits

•   Target retirement dates for each partner

•   Part-time work status of each partner in retirement

•   Expected long-term care needs

•   Location

All of those things must be considered when pinpointing what is a good monthly retirement income for a couple. The sooner you start thinking about your needs ahead of retirement, the easier it is to prepare financially.

It’s also important to keep in mind that numbers to be used for the sake of comparison can vary widely. Consider this:

•   According to the Pension Rights Center, the median income for fully retired people aged 65 and older in 2023 was $24,190.

•   The average income after taxes for older households in 2022 was $63,187 per year for those aged 65–74 and $47,928 per year for those aged 75 and older, according to U.S. News Money.

💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.

What to Consider When Calculating Your Monthly Income

One couple’s budget for retirement may be very different from another’s. A budget is simply a plan for spending the money that you have coming in.

If you’re wondering how much to save each month, it’s helpful to start with the basics:

•   What do you expect your retirement expenses to be each month?

•   How much income will you have for retirement?

•   Where will this income come from?

It’s also important to consider how your retirement income needs may change over time and what circumstances might impact your financial plan.

Spending May Not Be as Low as You Think

Figuring out your monthly expenses is central to determining what is a good monthly retirement income. According to the Bureau of Labor Statistics, the typical household age 65 and older has annual expenditures of $72,967. That breaks down to monthly spending of about $6,080 per month. The largest monthly expense is typically housing, followed by transportation and food. If you’re planning to live frugally in retirement, spending, say, under $50,000 a year may sound achievable, but it’s not a realistic target for every couple.

For one thing, it’s all too easy to underestimate what you’ll spend in retirement if you’re not making a detailed budget. For another, inflation during retirement can cause your costs to rise even if your spending habits don’t change. That fact needs to be recognized and budgeted for.

Spending Doesn’t Stay Steady the Whole Time

It’s a common retirement mistake to assume spending will be fixed. In fact, the budget you start out with in retirement may not be sustainable years from now. As you get older and your needs or lifestyle change, your spending habits will follow suit. And spending tends not to be static from month to month even without events to throw things off.

You may need less monthly income over time as your costs decrease. Spending among older Americans has been found to be highest between ages 55 and 64 and then dip, according to Social Security reports.

It’s very possible, however, that your monthly income needs may increase instead. That could happen if one of you develops a serious illness or requires long-term care. According to Genworth Financial’s 2023 Cost of Care survey, the monthly median cost of long-term care in a nursing facility ranged from $8,669 for a semi-private room to $9,733 for a private room.

Expenses May Change When One of You Dies

The loss of a partner can affect your spending and how much income you’ll need each month. If you decide to downsize your home or move in with one of your adult children, for example, that could reduce the percentage of your budget that goes to housing. Or if your joint retirement goals included seeing the world, you may decide to spend more money on travel to fulfill that dream.

Creating a contingency retirement budget for each of you, along with your joint retirement budget, is an opportunity to anticipate how your spending needs might change.

Taxes and Medicare May Change in Your Lifetime

Taxes can take a bite out of your retirement income. Planning for taxes during your working years by saving in tax-advantaged accounts, such as a 401(k) or IRA, can help. But there’s no way to predict exactly what changes might take place in the tax code or how that might affect your income needs.

Changes to Medicare could also change what you’ll need for monthly income. Medicare is government-funded health insurance for seniors age 65 and older. This coverage is not free, however, as there are premiums and deductibles associated with different types of Medicare plans. These premiums and deductibles are adjusted each year, meaning your out-of-pocket costs could also increase.

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Common Sources of Income in Retirement

Having more income streams in retirement means you and your spouse or partner are less reliant on any single one to pay the bills and cover your expenses. When projecting your retirement income pie-chart, it helps to know which income sources you’re able to include.

Social Security

Social Security benefits may be a central part of your income plans. According to the Social Security Administration (SSA), a retired worker received $1,845 in benefits and the average spouse of a retired worker netted $886 during the most recent year reviewed.

You can expect Social Security to cover some, but not all, of your retirement expenses. It’s also wise to consider the timing for taking Social Security benefits. Taking benefits before your full retirement age, 65 or 67 for most people, can reduce the amount you’re able to collect.

Retirement Savings

Retirement savings refers to money saved in tax-advantaged accounts, such as a 401(k), 403(b), 457 plan, or Thrift Savings Plan (TSP). Whether you and your partner have access to these plans can depend on where you’re employed. You can also save for retirement using an Individual Retirement Account (IRA).

Tax-advantaged accounts can work in your favor for retirement planning, since they yield tax breaks. In the case of a 401(k) plan, you can also benefit from employer matching contributions that can help you grow your savings faster.

Annuities

An annuity is a contract in which you agree to pay money to an annuity company in exchange for payments at a later date. An immediate annuity typically pays out money within a year of the contract’s purchase while deferred annuities may not begin making payments for several years.

Either way, an annuity can create guaranteed income for retirement. And you can set up an annuity to continue making payments to your spouse for the duration of their lifetime after you pass away.

Other Savings

The other savings category includes money you save in high-yield savings accounts, money market accounts, and certificate of deposit accounts (CDs). You could also include money held in a taxable brokerage account in this category. All of these accounts can help to supplement your retirement income, though they don’t offer the same tax advantages as a 401(k) or an IRA.

Pensions

A pension is an employer-based plan that pays out money to you based on your earnings and years of service. Employers can set up pension plans for employees and make contributions on their behalf. Once you retire, you can take money from your pension, typically either as a lump sum or a series of installment payments. Compared to 401(k) plans, pensions are less commonly offered, though you or your partner may have access to one, depending on where you’re employed.

Reverse Mortgages

A reverse mortgage can allow eligible homeowners to tap their home equity. A Home Equity Conversion Mortgage (HECM) is a special type of reverse mortgage that’s backed by the federal government.

If you qualify for a HECM, you can turn your equity into an income stream. No payment is due against the balance as long as you live in your home. If your spouse is listed as a co-borrower or an eligible non-borrower, they’d be able to stay in the home without having to pay the reverse mortgage balance after you die or permanently move to nursing care.

Reverse mortgages can be used to supplement retirement income, but it’s important to understand the downsides as well. Chief among those are:

•   Interest will accrue: As interest is applied to the loan balance, it can decrease the amount of equity in the home.

•   Upfront expenses: Funds obtained from the loan may be reduced by upfront costs, such as origination, closing, and servicing fees, as well as mortgage insurance premiums.

•   Impact on inheritance: An HECM can cause the borrower’s estate to lose value. That in turn can impact on the inheritance that heirs get.

How to Plan for Retirement as a Couple

Planning for retirement as a couple is an ongoing process that ideally begins decades before you’ll actually retire. Some of the most important steps in the planning process are:

•   Figuring out your target retirement savings number

•   Investing in tax-advantaged retirement accounts

•   Paying down debt (a debt payoff planner can help you track your progress)

•   Developing an estate plan

•   Deciding when you’ll retire

•   Planning for long-term care

You’ll also have to decide when to take Social Security benefits. Working with a financial advisor can help you to create a plan that’s tailored to your needs and goals.

Maximizing Social Security Benefits

Technically, you’re eligible to begin taking Social Security benefits at age 62. But doing so reduces the benefits you’ll receive. Meanwhile, delaying benefits past normal retirement age could increase your benefit amount.

For couples, it’s important to consider timing in order to maximize benefits. The Social Security Administration changed rules regarding spousal benefits in 2015. You can no longer file for spousal benefits and delay your own benefits, so it’s important to consider how that might affect your decision of when to take Social Security.

To get the highest benefit possible, you and your spouse would want to delay benefits until age 70. At this point, you’d be eligible to receive an amount that’s equal to 132% of your regular benefit. Whether this is feasible or not can depend on how much retirement income you’re able to draw from other sources.

Recommended: Does Net Worth Include Home Equity?

The Takeaway

To enjoy a secure retirement as a couple, you’ll need to create a detailed financial plan with room for various contingencies. First, determine your retirement expenses by projecting costs for housing, transportation, food, health care, and nonessentials like travel. Then consider all sources of retirement income, such as Social Security, retirement accounts, and pensions, and budget well.

If you want a simple way to track your progress, SoFi can help.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What is the average retired couple income?

Figures vary. According to the Pension Rights Center, the median income for fully retired people aged 65 and older in 2023 was $24,190. The average income after taxes for older households in 2022 was $63,187 per year for those aged 65–74 and $47,928 per year for those aged 75 and older, according to US News Money.

What is a good retirement income for a married couple?

A good retirement income for a married couple is an amount that allows you to live the lifestyle you desire. Your retirement income should also be enough to last for your lifetime and your spouse’s.

How much does the average retired person live on per month?

According to the Bureau of Labor Statistics, the typical household age 65 and older has annual expenditures of $72,967. That breaks down to monthly spending of about $6,080 per month. Many factors, however, can impact a particular household’s spending and the amount of money they need to feel secure.

Photo credit: iStock/yongyuan

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

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Source: sofi.com

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Loan Trading, Bank Lending, Bank Statement, HELOC, ROV Products; Disaster and Catastrophe News

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Loan Trading, Bank Lending, Bank Statement, HELOC, ROV Products; Disaster and Catastrophe News

By:
Rob Chrisman

1 Hour, 41 Min ago

“I saved a bunch of money on my car insurance by… switching to reverse and leaving the scene.” The word on the street is that Guaranteed Rate is changing its name to “Rate,” but of greater concern to lenders is insurance. Homeowner’s insurance costs are no joke, nor are insurance companies stopping business entirely in states and counties. If you have a current homeowner whose bill just went up by $500 per month, know that this is $500 a month that won’t be spent in the general economy buying meals, going to movies, going on vacation… Not only that, but LOs and AEs and capital markets staffs do their darndest to get the best rates for their clients, and saving $50 or $100 a month are a victory, only to have the deal blown out of the water by monthly insurance costs. Insurance, of course, is a state-level issue; certainly, the CFPB does not oversee it. Some state groups are doing something about it. For example, the California MBA would like to point to real-life examples of the consequences across California: Here is a link to a fillable form to enter any helpful information or examples.) Today’s podcast is found here and this week’s is sponsored by Candor. Candor’s authentic Expert System AI has powered more than 2 million flawless, hands off underwrites. Every credit risk decision Candor makes is backed by a warranty, eliminating repurchase worries. Hear an interview with Move Concierge’s Sajag Patel and Gabe Abshire on the home services set up industry.

Software, Products, and Services for Lenders and Brokers

On May 1, 2024, Fannie Mae and Freddie Mac, along with the FHFA, announced new requirements for reconsiderations of value (ROVs), which go into effect Aug. 29, 2024. The requirements help create uniform industry expectations for how lenders should manage ROVs. Now is the time to prepare and implement solutions to help streamline your ROV processes. With ValidateROV™ from ICE, you can provide your borrowers with a quick and transparent solution that helps guide them through the ROV process via a white-labeled mobile app. Learn more today.

“Looking for scalable Growth? We know the industry is slowly recovering from the challenges of 2023, but it’s not quite smooth sailing yet. Every dollar spent on marketing counts, especially when it can make the difference between being in the red or turning a profit. And let’s not forget, there’s another green field opportunity on the horizon. We have a strategy that’s booking 15 to 35 percent cheaper than usual plays. That’s significant, even more in today’s market. Want in on the action? Whether you’re ready to reach out or prefer us to contact you, we’re here to help.”

HELOC Borrowers can now PAYOFF DEBT TO QUALIFY and still close in as little as 1 day! NFTY and Homebridge Financial have deployed the “Debt Eliminator” enhancement to their EQUITY ACCESS Digital HELOC. Debt Eliminator allows borrowers to select which debts they to pay off as part of the user-friendly automated application process. With loan amounts up to $400k, Equity Access is designed for fast easy closings. Highlights include: instant income verification for most W-2 borrowers, automated analysis of bank statements to determine Income for both W-2 and Self-employed borrowers, AVMs up to $400k, and a banker or broker portal with robust functionality and real-time loan status. Minimum FICO 640 and CLTV up to 80 percent. The hybrid platform is digitally fast with a full staff of customer service professionals to solve real-life complexities and close more loans. Ultra-fast fee payout utilizing ACH. Correspondent white label and broker solutions are available with full branding capabilities to showcase your company/MLO. For more information, contact your Account Executive at REMN or Homebridge Wholesale, or email Joe Sheridan.

“LoanStream wants you to Make a Splash this Summer by closing more Non-QM Bank Statement loans. Join the upcoming webinar on Bank Statement & P&L! Plus, we’ll dive into the intricacies of calculating income to qualify borrowers! Register now. Don’t Miss Summer Specials! Includes Specials on Prime, Non-QM and Closed End Seconds now through 6/30/24. Includes 25 BPS Price Improvement on FHA/VA loans 620+ FICO (excludes DPA and CalHFA) and a 25 BPS Price Improvement on all Non-QM loans (excluding our ‘Select’ credit grade). Get another 25 BPS Price Improvement on Closed-End Seconds. Restrictions apply – contact your LoanStream AE to learn more. Specials valid for loans locked 6/1/2024 through 6/30/2024. Offers subject to change at any time, terms and conditions apply. Non-QM Specials also available through our Correspondent lending channel, Home – LoanStream Mortgage Correspondent (lscorrespondent.com) now through 6/30/24, contact your Regional Sales Executive for more information.”

“Webinar: Thriving in a new market: How banks are shifting their mortgage strategy to succeed. Join us for an exclusive webinar presented by Maxwell on Wednesday, June 26 at 12:00 p.m. CT. In this session, you’ll discover powerful tactics to leverage your mortgage platform that retain and increase consumer deposits, enhance transaction speed by aligning delivery channels with your customer segments, and bring cutting-edge technology to your customers and loan officers without lengthy, costly projects. Plus, you’ll learn how our variable cost model can help you generate profit on every loan you originate. Click here to save your seat today, and if you can’t make the live event, you can still register for the on-demand recording!”

Disaster Updates Continue

FEMA’s Disaster Declarations set the stage for servicers, lenders, and investors to change policies and procedures for loans in process or for existing borrowers in those areas. In the last week or two we’ve had Iowa (DR-4784-IA), Florida (DR-4794-FL), and New Mexico (DR-4795-NM).

Waters in the tropical portion of the Atlantic Ocean, around the Caribbean, are hotter than they have been for any other late May on record. The area is averaging around 84.7 degrees Fahrenheit, a temperature the waters usually don’t hit until August and September after a summer of warming up. This is bad for a lot of reasons, including the future of coral reefs, which are already experiencing a fourth global bleaching event this year, according to NOAA. The previous record-breaking May for sea temperatures in the area was in 2005, a notorious year that brought one of the most destructive and active hurricane seasons ever for the U.S.

The USDA recently released a new plant hardiness zone map as much of the country has, on average, gotten warmer. The new 30-year minimum temperature average was 2.7 degrees Fahrenheit warmer than the previous average. The map classifies the U.S. into zones based on an area’s average annual minimum temperature and is most useful for knowing which perennial outdoor plants will possibly not die in your area if you keep them outside. You can and will still kill your plants even if you plant according to the map, since it does not factor in how wet, dry, or volatile your area’s climate is. It also won’t tell you if your plants can actually survive the extreme heat of summer.

On 6/14/2024, with Amendment No. 1 to DR-4784, FEMA revised the Incident Period End Date to May 31, 2024, for Iowa counties affected by severe storms, tornadoes, and flooding from 5/20/2024 to 5/31/2024. See AmeriHome Mortgage disaster announcement 20240614-CL for inspection requirements.

On 6/17/2024, with DR-4794, FEMA declared federal disaster aid with individual assistance to Florida county, Leon. See AmeriHome Mortgage disaster announcement 20240616-CL for inspection requirements.

With DR-4795, FEMA declared federal disaster aid with individual assistance to New Mexico’s Lincoln County affected by the South Fork Fire and Salt Fire from 6/17/2024 and continuing. See AmeriHome Mortgage disaster announcement 20240618-CL for inspection requirements.

Capital Markets

“In 2016, MAXEX changed the face of the secondary market with the establishment of the industry’s first digital mortgage exchange and clearinghouse. More than $36 billion in loan trades later through our unique marketplace, we’re giving our 350+ sellers even more unprecedented liquidity across the non-agency and conforming markets. Coming mid-July, MAXEX sellers will be given exclusive access, only through MAXEX, to a major buyer of Conforming investment and non-owner-occupied loans. MAXEX allows sellers to avoid punitive LLPAs on NOO, second-home and high-balance loans via best efforts or mandatory flow, bulk and forward trading. With MAXEX, sellers sign a single standardized contract, face a single counterparty and have turnkey access to over 30 of the market’s leading buyers. Contact us today to learn how you can gain access.”

Last week’s economic releases didn’t pack the same market moving punch as data released earlier in June but did point to a gradual softening in certain areas. Retail sales moderated in May to 0.1 percent, lower than market expectations of a 0.2 percent increase. Additionally, the prior month’s data was revised lower. A frugal U.S. consumer is a helpful development for the Federal Reserve. Consumers kept spending through the pandemic but are now pinching pennies. Industrial production rose more than market expectations and was driven by a surge in manufacturing output; however, the interest rate environment and credit conditions remain restrictive. Housing continues to struggle as housing starts fell to their lowest annualized pace in four years in May. Both housing starts and building permits were expected to be higher in May, continuing their recovery after a big dip in the spring months. Builder confidence fell to its lowest reading since mortgage rates peaked in December.

Speaking of the tight housing market, we all know that high mortgage rates are keeping people from giving up mortgages they secured before or during the early days of the pandemic. Existing-home sales slipped 0.7 percent in May, as expected, to a seasonally adjusted annual rate of 4.11 million. Sales descended 2.8 percent from one year ago. However, the median existing-home sales price jumped 5.8 percent from May 2023 to $419,300, the highest price ever recorded and the eleventh consecutive month of year-over-year price gains.

The inventory of unsold existing homes grew 6.7 percent from the previous month to 1.28 million at the end of May, or the equivalent of 3.7 months’ supply at the current monthly sales pace versus 3.5 months’ supply in April and 3.1 months from a year ago. The market is not likely to see any meaningful relief in both supply and affordability until mortgage rates subside.

Inflation will take the spotlight in this final week of June, with market participants looking ahead to Friday’s U.S. personal income and outlays data for May. That report contains a reading on the core personal consumption expenditures (PCE) price index, which is widely seen as the Federal Reserve’s preferred inflation gauge. Economists expect core PCE to rise 0.1 percent month-over-month and 2.6 percent year-over-year, marking a deceleration on both counts from April. The bulk of the week’s economic releases are tomorrow (Philly Fed services for June, House Price Indices for April, consumer confidence for June, Richmond Fed manufacturing & services for June, and Dallas Fed services for June), though other highlights this week include new home sales for May, advance economic indicators for May, durable goods for May, final Q1 GDP, Chicago PMI for June, final June consumer sentiment, and the aforementioned core PCE price deflator for May. There is also the $183 billion mini-Refunding consisting of $69 billion 2-year notes on Tuesday, $70 billion 3-year notes on Wednesday, and $44 billion 7-year notes on Thursday.

This week has a quiet start today, with the sole economic release due out later this morning being Dallas Fed manufacturing for June. Markets will also receive Fed remarks from San Francisco President Daly and Governor Waller. We begin the week with Agency MBS prices unchanged from Friday’s close, the 10-year yielding 4.26 after closing Friday at 4.26 percent, and the 2-year at 4.74.

Employment

loanDepot continues to demonstrate its commitment to growth with another key retail leadership hire in Justin Andrews, a 25-year veteran of home finance who most recently served as National Director of Branch Partnerships at another top IMB. Andrews is an Area Sales Manager who will focus on driving continued market share growth in and around Seattle. He was inspired by the company’s continued investments in its platform, saying “loanDepot has best-in-class systems that make life easier, faster and smoother for both the originator and the customer. That level of efficiency means I have more time to support our team and develop our people.” This is the third win for loanDepot in recent months, coming on the heels of two other significant additions: Jeff Wilkish as RVP for New England and David Rossiello as Area Sales Manager in the mid-Atlantic. Sales leaders who are interested in learning more can reach out to Shane Stanton.

Congratulations to Radian’s Shelly Schwieso-Kramarczuk who, after 35 years in the biz, announced her retirement slated for the end of the month. “Wow, the changes we have seen. Costs just continue to rise to produce a loan, even with all the tech, AI, BOTs etc. I can’t wait to watch the future of mortgage banking. There is so much more to come! It’s been the people along the way that have made the difference. We have so many passionate professionals in our industry who truly care about the borrower, their journey, and moving the puck forward with technology and improving the customer experience. I have been fortunate to have spent my last 6+ years at Radian: Steady through the storm of late!”

(Remember: job seekers can post their resumes for free on www.lendernews.com where employers can view them for several months for a nominal charge.)

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Source: mortgagenewsdaily.com