need Archives - Page 6 of 58 - Hanover Mortgages

Apache is functioning normally

November 6, 2024 by Brett Tams

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

The real estate market can be intimidating for anyone, especially those who may be in the market for their first home or who may have less-than-excellent credit. In 2023, the average median down payment on a home in the United States was slightly over $34,000. For many young people, the idea of saving up that much can feel impossible.

Luckily, there’s another option. Rent-to-own homes can be an excellent way for those who need more time to be ready for homeownership. But if rent-to-own is so great, why isn’t everyone doing it? Well, rent-to-own does come with some significant downsides. Keep reading for a comprehensive overview of rent-to-own vs. buying to understand which option is right for you.

What does rent-to-own mean?

The process of rent-to-own is very much what the name sounds like. You start by renting the home but enter into a contract as part of your rental agreement that you intend to purchase the house after an agreed-upon time (usually one to three years).

As long as you buy the home, a specific portion of your rental payments, determined up front, is applied to the price of the house.

A rent-to-own agreement also locks in the price of the home at the time of the contract, so you don’t have to worry about appreciating values putting the house out of your financial reach after a few years.

For example, you can sign a contract saying 25 percent of your rental payments will go toward the home purchase after five years of renting. The agreement values the home at $350,000, which is what you’ll buy it for at the end of the five years. Your rent is $2,000 a month, so you’ll have a “down payment” of $30,000 at the end of the five years.

When you choose rent-to-own, you have to decide if you’ll go with a lease-option or a lease-purchase agreement. A lease option means you can buy the home at the end of the rental period, but you aren’t legally bound to do so. This option gives you some flexibility.

A lease-purchase is a legally binding agreement that you’ll buy the house at the end of the rental period, and you can face fees and other repercussions if you don’t follow through.

Rent-to-own vs. buying: What’s the difference?

If all goes well, the result of rent-to-own is the same as when buying traditionally, but how you get there is a little more complicated.

When you buy a house traditionally, you work with a real estate agent, look at homes that fit your purchase budget and then make an offer on the one you like. As long as the offer is accepted and nothing shows up on the inspection or appraisal, you close on the house and it’s yours.

With rent-to-own, you’ll still likely work with a real estate agent and look at homes. However, when you find one you like, you’ll enter into either a lease-option or lease-purchase agreement and start renting the house. After the rental period, you’ll have to buy the house with a mortgage and the traditional closing procedures.

Rent-to-own can be more expensive because there are usually fees associated with this option. You’ll have to pay those as well as the regular closing costs and fees when it’s time to buy the house. It can also be more costly because there are hidden fees and risks associated with rent-to-own (more on that below).

In most cases, you’ll also be responsible for most of the maintenance on the house while you’re renting. This is essential to consider, as it can be costly and take away one of the typical benefits of renting.

The risks of rent-to-own

There are two main risks involved with rent-to-own situations. The first is that property values in the area might decrease over the rental period, which could leave you paying more than the house is worth. If you signed a contract to purchase the home at $350,000 but at the end of the term the home is worth $250,000, you’ll be stuck paying the original agreed-upon price.

The second risk is that you might lose the house—and usually a decent chunk of your money investment with it. Here are a few scenarios that could happen:

Sometimes, rent-to-own contracts have strict terms, which could risk the entire agreement. For example, the contract might specify that if you’re late or miss a rent payment one time, the rent-to-own contract is void.
If you sign a lease-purchase agreement but can’t fulfill your obligation to purchase the home at the end of the lease term, you’ll likely have to pay a substantial fee.
Rent-to-lease agreements typically come with higher-than-average rents. Additionally, you must pay for all house maintenance expenses. If you don’t purchase the home at the end of the term, you spend years paying more for no reason.
At the end of the rent-to-lease agreement, you must get a mortgage from a lender. If you can’t secure a mortgage approval, you’ll be unable to purchase the home.
If the home can’t pass a home inspection and therefore doesn’t qualify for a mortgage, you may be unable to buy the home.

The advantages of rent-to-own

Doing a rent-to-own option instead of a traditional purchase has several advantages, especially if your credit isn’t great. Rent-to-own lets you pick out a house you want to buy and lock in a price while still giving you time to build your credit or save money for closing costs.

It can also help you build equity instantly when you complete the purchase because of the portion of rent that’s allocated to the purchase.

Should you rent-to-own or buy?

If you’re considering rent-to-own, you’re probably wondering if it’s a better option than buying traditionally. It depends. Every situation is unique, but rent-to-own can sometimes be a better option.

Rent-to-own can give you a better feel for homeownership because you’ll be taking on most of the maintenance of the home. If you have a lease option, you can decide that you don’t like the responsibility of having to pay to fix or maintain things and that renting is better for you.

It can also be a better option for those who know they want to buy their own home but don’t have the credit or money in the bank to do that right now.

Rent-to-own lets you start building equity right away instead of all the money going to your landlord’s mortgage, and it gives you a few years to work on saving money, building a solid credit history and paying down debt.

No matter your reasons for wanting to go the rent-to-own route, it’s important not to try to go through the process alone. A qualified real estate agent with experience working with rent-to-own situations can help you find a suitable property and help ensure you understand what you’re signing up for.

Someone must walk you through the contract so you understand all the terms and potential fees.

They can also suggest and set up things like a home inspection if you want that done before entering into the contract.

For more information on rent-to-own, examples of contracts, red flags to look out for and ways to shop for the best deal, download the Complete Rent-to-Own Guide for Prospective Homebuyers.

Alternatives to rent-to-own homes

If you decide rent-to-own isn’t for you and you can’t get a traditional mortgage, there are still other options. You can wait and spend a year or two working on your credit. Paying down debt, making sure all payments are made on time and building up your savings can put you in a much better position to buy a house and help you qualify for a better interest rate.

You can also look at other loan options such as an FHA or USDA loan. These often have lower credit score requirements and may require less money down than a conventional mortgage.

Lastly, you can also look into getting a cosigner for your mortgage if you have a friend or family member willing to take on the risk.

Bottom line: Rent-to-own can be a great avenue to homeownership as long as you work with professionals, understand what a rent-to-own contract entails and know what to look for in a suitable property.

Regardless of whether you plan to go the rent-to-own route or buy a home outright, your credit health will be important. A strong credit score can help you get mortgage approval, and typically, the better the credit, the lower your interest rate. Get started on improving your credit today by taking Lexington Law’s free credit assessment.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Lexington Law is not an RTO company. Any content provided on this website regarding the topic of RTO is nothing more than a resource Lexington Law believes might be helpful to readers of its website. Lexington did not write this content. It was provided by a third party. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Lexington did not write this content. It was provided by a third party.

Source: lexingtonlaw.com

Apache is functioning normally

November 6, 2024 by Brett Tams

Homeowners’ associations (HOAs) can be a significant part of community living, providing residents with the advantages of shared amenities, neighborhood upkeep, and community rules. However, HOAs have their drawbacks, including fees, regulations, and enforcement issues that do not appeal to every homeowner. Here’s an in-depth look at the pros and cons of HOAs to help you decide if living in a managed community is right for you.

Pros of Homeowners’ Association

Enhanced Property Values

HOAs exist in part to help preserve and even increase the value of homes in the community. By setting standards for property maintenance, landscaping, and other aesthetics, HOAs aim to keep neighborhoods looking appealing. Homes in HOA neighborhoods are typically subject to rules regarding lawn care, exterior paint colors, fencing, and more, which helps keep properties looking uniform and well-maintained. This ‘curb appeal’ can positively impact home values over time.

Access to Amenities

Many HOAs offer shared amenities that residents might not otherwise be able to afford individually. These can range from swimming pools, gyms, and clubhouses to tennis courts, playgrounds, and walking trails. Some HOAs even include shared spaces like parks, lakes, and private beaches. These amenities are maintained through the fees paid by homeowners and provide a community feel without the need for individual upkeep.

Neighborhood Upkeep

HOAs are often responsible for maintaining the common areas within a community. This includes landscaping in shared areas, repairing sidewalks, maintaining lighting, and keeping streets clean. By taking care of these details, HOAs contribute to an organized, attractive, and safe community space.

Conflict Resolution and Rule Enforcement

One of the primary purposes of an HOA is to establish and enforce community rules. This can include policies related to noise, parking, pets, and exterior modifications to homes. If disputes arise between neighbors – such as over loud music or unsightly property additions – the HOA often acts as an arbitrator. This structured approach to conflict resolution can create a smoother, more harmonious living environment.

Sense of Community

HOAs frequently host community events, such as block parties, holiday gatherings, or neighborhood meetings. These activities provide residents with a chance to meet their neighbors, fostering a sense of belonging and community pride. This can lead to safer, more tightly-knit neighborhoods where people look out for each other.

Cons of Homeowners’ Associations

Fees and Assessments

One of the biggest drawbacks of an HOA is the financial commitment required. HOA fees can range from modest to quite high depending on the area, the services provided, and the types of amenities offered. Monthly or annual dues contribute to maintenance and operation costs, but there can also be unexpected assessments for major repairs or improvements. These costs can be difficult to predict and may increase over time.

Strict Rules and Limitations

HOAs typically enforce rules about property appearance and behavior. While some people appreciate this uniformity, others find it overly restrictive. Common restrictions can include limitations on:

Exterior paint colors
Types of landscaping allowed
Fence height and materials
Restrictions on parking and vehicles
Limits on rental and leasing. For homeowners who value personal freedom and the ability to customize their homes, these rules can feel intrusive and limiting.

Lack of Autonomy and Decision-Making

Homeowners may find that they have limited control over HOA policies, even though they pay fees and are affected by the association’s decisions. While some HOAs hold elections and allow residents to voice their opinions, the decision-making process can often feel disconnected from the average homeowner. If HOA leadership is not transparent or open to feedback, it can lead to frustration and a feeling of powerlessness.

Potential for Mismanagement or Corruption

Because HOA boards are often composed of volunteer homeowners, they may lack the experience or skills needed to effectively manage the community’s resources. In some cases, board members may prioritize personal interests over the community’s well-being. Additionally, if funds are not managed properly or accounting isn’t transparent, it can lead to financial instability for the HOA and potential legal or financial repercussions for homeowners.

Fines and Legal Actions

HOAs have the authority to fine residents for violations of community rules. If a homeowner does not comply, the HOA can escalate enforcement measures, which may even include legal action or property liens. Some residents find this level of enforcement too aggressive, while others feel it creates a hostile environment where small infractions lead to significant consequences.

Limited Flexibility for Rentals

Many HOAs have rules about renting properties, which can make it difficult for homeowners to rent their homes when they want to move temporarily or generate extra income. Some associations cap the number of homes that can be rented, while others impose restrictions on short-term rentals or vacation rentals. For homeowners who rely on rental income or plan to invest in rental properties, this lack of flexibility can be a major drawback.

Foreclosure Risks

In extreme cases, an HOA has the authority to foreclose on a home if dues or assessments are unpaid for an extended period. For homeowners facing financial hardship, this can pose a serious risk. HOA foreclosures are relatively rare, but they remain a possibility and a source of anxiety for some residents.

Are Homeowners’ Associations Right for You?

Lifestyle Considerations

If you appreciate the structure, shared amenities, and the security of a community with clear standards, living in an HOA might suit you well. On the other hand, if you prefer greater autonomy, customization, and fewer rules, a non-HOA neighborhood may better align with your lifestyle.

Financial Considerations

Before committing to an HOA community, consider both the HOA fees and any potential assessments that might arise. Weight the benefits of the amenities and services provided against the cost to ensure they fit within your budget.

Community Values and Control

If you are someone who values community involvement and consensus decision-making, take time to understand how your prospective HOA operates. Ask about election processes, community engagement, and transparency to ensure they align with your values.

Conclusion

Homeowners’ associations offer a structured environment that can help maintain property values, provide access to shared amenities, and foster a sense of community. However, they come with fees, restrictions, and potential downsides, including limited personal autonomy and the risk of mismanagement. Whether or not an HOA is right for you depends on your lifestyle, financial situation, and personal values. Carefully researching and understanding your HOA before purchasing a home can help ensure you find a community that aligns with your needs and expectations.

Are you looking to enter the real estate market this fall? Give us a call today! One of the experienced agents at Zoocasa will be more than happy to help you through the exciting home-buying process!

Looking for your dream home?

Source: zoocasa.com

Apache is functioning normally

November 5, 2024 by Brett Tams

When choosing a business structure, you may wonder whether you should form a limited liability company (LLC) or a sole proprietorship. Each has its benefits and drawbacks, with the key differences being how they are set up and how your personal assets are implicated.

Your specific business needs will determine which works best for you. Learn the details here.

Key Points

• An LLC provides personal liability protection, shielding personal assets from business debts, while a sole proprietorship offers no separation between personal and business liabilities.

• Sole proprietorships and single-member LLCs are taxed similarly as pass-through entities, but LLCs can also elect to be taxed as an S-corp or C-corp, offering tax flexibility.

• Sole proprietorships are simple and cost-effective to establish, with minimal paperwork, while LLCs require state registration, fees, and annual maintenance.

• LLCs may have better access to funding, as they’re often seen as more formal business entities, appealing to banks and investors.

• An LLC can continue if the owner changes or sells the business, while sole proprietorships dissolve upon the owner’s exit, affecting long-term planning.

Key Differences Between a Sole Proprietorship and LLC

The most significant differences between a sole proprietorship and an LLC structure come down to the requirements for setting up the kind of business and how your personal assets are treated in each structure.

Basically, you don’t have to do anything to set your business up as a sole proprietorship. However, if you want to form an LLC, you must file paperwork, pay a fee, and wait for your state’s Secretary of State to approve your business as an LLC.

As for your personal assets, with a sole proprietorship, they may be claimed to pay business debt. But if you have an LLC, you and the business are considered separate entities so your personal assets are separate.

What Is a Sole Proprietorship?

When you start a business, you can elect a specific business structure, meaning that you formally register it with your state’s Secretary of State and pay a fee. If you don’t do that, your business is automatically considered a sole proprietorship (or a partnership if you have partners).

In a sole proprietorship, you and the business are considered one entity. You file only your personal taxes, and you claim both business income and expenses on them.

Definition and Basic Characteristics of Sole Proprietorships

A sole proprietorship is a business owned and operated by a single individual. It’s the simplest business structure, with no legal separation between the owner and business.

Basic characteristics of a sole proprietorship include:

• Single ownership: Owned and operated by one individual, with no separate business entity.

• Unlimited liability: The owner is personally responsible for all debts and liabilities of the business.

• Direct taxation: Business income and expenses are reported on the owner’s personal tax return (Schedule C).

• Simple setup: Minimal paperwork and low startup costs, with few legal requirements.

• Full control: The owner has complete decision-making authority over the business operations.

• No business continuity: The business dissolves if the owner exits, retires, or passes away.

Advantages of a Sole Proprietorship

When it comes to the benefits of a sole proprietorship vs an LLC, the biggest advantage is the ease of creation. Your business is a sole proprietorship simply by default.

Taxes are also simple, since you file only your personal income taxes and don’t have to file taxes separately for the business.

There are no fees required to be a sole proprietor, either.

Recommended: Small Business Loans for Sole Proprietors

Disadvantages of a Sole Proprietorship

There are, however, some drawbacks to sole proprietorship to consider.

First, because there is no delineation between you and your business, your personal assets could potentially be seized should the business have debts or legal fees that it can’t cover. That could jeopardize not only your business, but also your personal life if, for example, your home or vehicle is taken to cover business debts.

You may have difficulty if you try to get a small business loan through a bank or attract an investor when you are a sole proprietor. You could also struggle to sell your business if you haven’t elected a business structure like an LLC or corporation. Because the LLC is separate from its owner, it may be more appealing to lenders, investors, and potential buyers due to the limited risk.

If you have a sole proprietorship but don’t want to do business under your own name, you’ll usually have to file your DBA (Doing Business As) name. Let’s say your name is Jane Doe but you want your company to be called Dr. Knowhow’s Resume Writing Service. That’s fine, but it will generally require extra paperwork to file that DBA name. The filing fee can cost between $5 and $150, depending on your state.

Recommended: How Much Does It Cost to Start a Business?

What Is an LLC?

LLC stands for limited liability company. To use this business structure, you must elect and apply for it. If a company is an LLC, it’s separate from the business owner (or owners, if there are multiple owners), meaning that the owner or owners aren’t held personally responsible for the business’ liabilities.

Here, a look at the pros and cons of LLCs.

Advantages of an LLC

When it comes to an LLC, your personal assets can’t be taken to cover business debts. You have, as the name indicates, limited liability.

In contrast to another business structure, the corporation, the LLC requires less paperwork to set up and maintain, since a corporation requires annual meetings and annual reports.

LLCs can choose how they’re taxed. They can take advantage of what’s referred to as pass-through taxation, in which the business doesn’t file and pay its own taxes. Instead, its income and expenses are passed through to the owners’ personal tax returns. This equates to the LLC being taxed like a sole proprietor, and may mean it can be referred to as a “disregarded entity.”

Alternately, an LLC can also be taxed like a corporation at a lower corporate rate for the first $75,000.

Another benefit is that an LLC has no limit on the number of members (or shareholders) it can have. An S corporation, by way of comparison, is limited to no more than 100 shareholders.

And finally, you may find it easier to qualify for financing or to sell your business if it’s an LLC.

Disadvantages of an LLC

So what are the drawbacks of an LLC? First off, to start a limited liability company, you have to apply with your state’s Secretary of State department, which may require a fee and take time for the paperwork to be processed. You may also have to pay an annual or biannual fee to keep your LLC in good standing. As of 2024, those fees (in states that require them) range from $9 in New York to $800 in California.

Additionally, you may have to pay unemployment insurance for yourself and any partners, although you wouldn’t have to do so for a sole proprietorship. Costs for unemployment insurance vary by state.

Recommended: How to Calculate Cash Flow

How to File an LLC

To file an LLC, start by reviewing the requirements set out by your state’s Secretary of State. Each state has a slightly different process. Some let you apply online, while others may require you to mail in your application.

You will likely be required to file articles of organization, which is a document outlining information about your business and its members. You may also be required to file other forms as well as pay a filing fee, which may range from $35 to $500. Some states may require you to have certain business licenses or permits to qualify as an LLC, too.

Working With a Registered Agent

If you think the process of setting up an LLC yourself sounds overwhelming, you have another option. You can employ the services of a registered agent. This is an individual or company who can set up your business structure on your behalf, as well as ensure that you keep up with annual fees and paperwork deadlines. Registered agents charge a fee for their services.

Key Comparison Factors

When comparing sole proprietorships and LLCs, key factors include:

• Liability protection: LLCs offer limited liability, safeguarding personal assets, whereas sole proprietors are fully liable for business debts.

• Tax implications: Tax implications differ as both allow pass-through taxation, but LLCs can opt for S-corp or C-corp taxation, adding flexibility.

• Setup and maintenance costs: These are higher for LLCs due to state fees and annual reports, unlike the minimal costs for sole proprietorships.

• Operational flexibility: Operational flexibility is greater for sole proprietors, who have full control, while LLCs require more formal structures.

• Credibility: LLCs often appear more professional, appealing to clients and investors.

How to Choose a Business Structure for Your Company

When it comes to choosing a business structure for your company, consider how much effort you’re willing to put into setting up your business structure and the fees you’re willing to pay. An LLC does require some effort to prepare, and it may require an annual fee and/or paperwork to be filed.

You may also want to factor in how likely it is that your business might ever be sued. If you run a writing business out of your home, that risk might be minimal. But if you have a fitness training business, you might incur more risk of being sued, if, for example, a customer is injured during training.

Finally, think about how likely you are to want to get investors or a type of business loan. An LLC will likely be more appealing to potential investors or lenders than a sole proprietorship. And it may also be easier to sell an LLC.

Recommended: The Basics on How Umbrella Insurance Works

The Takeaway

When you’re looking at a sole proprietorship vs an LLC, the most important thing is to carefully consider which will provide the biggest benefit to your business. How you file and pay taxes, whether you separate your personal assets from the business’s assets, and whether you’re willing to go through the process and paperwork of setting up and maintaining a legal business structure should weigh into your decision.

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

Can an LLC be a sole proprietorship?

No, an LLC cannot be a sole proprietorship. While a single-member LLC allows one person to own the business, it is legally distinct, providing liability protection not offered by a sole proprietorship. A sole proprietorship is an unincorporated business without separate legal status from its owner.

What are the tax filing differences between sole proprietorships and LLCs?

A sole proprietorship reports taxes on the owner’s personal tax return via Schedule C of Form 1040. A single-member LLC does the same, but multi-member LLCs must file Form 1065 as a partnership or elect corporate taxation. LLCs offer flexibility to choose between pass-through or corporate tax structures.

Can I change my business structure later?

Yes, you can change your business structure later. Many businesses start as sole proprietorships or partnerships and later transition to LLCs or corporations as they grow. Changing structures involves registering with the state, updating licenses, and notifying the IRS, often for tax benefits, liability protection, or funding opportunities.

Photo Credit: iStock/SolStock

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-Q424-059

Source: sofi.com

Apache is functioning normally

November 5, 2024 by Brett Tams

When it comes to saving money, there are several strategies to choose from, each with benefits and potential drawbacks. One popular choice is a certificate of deposit, or CD. CDs can be an attractive option for most savers—particularly in a higher-interest-rate environment.

Determining whether CDs are worth it for you, however, depends on several factors, including your financial goals, the inflation rate, your timelines for your savings goals, and your personal savings preferences, including if you prefer to have ready access to your funds. These variables can make the decision-making process more challenging, leaving many people wondering whether CDs are the right choice for them.

But by understanding the advantages and disadvantages of CDs, you can make an informed decision about whether they align with your financial objectives. Here, we take a closer look at CDs and outline the factors you should consider when deciding whether they’re a good option for you.

Certificates of deposit are secure medium- to long-term savings vehicles that many banks and financial institutions offer. When you open a CD, you agree to leave your money in the account for a set period—Discover® terms range from three months to 10 years. CDs offer a guaranteed return with a fixed interest rate in exchange for committing your funds for this set period. More accessible savings tools, like savings accounts, have variable rates that can change over time, and CDs may offer higher rates of return than these types of savings tools. And compared to more volatile investment types, the returns collected are predictable and virtually risk-free.

CDs differ from savings accounts, checking accounts, and money market accounts in a few important ways. First, funds in CDs must remain in the account for a set period versus other accounts that allow ongoing access to funds. If you need to access the funds in a CD before its maturity date, you may pay a penalty for early withdrawal.

Second, unlike traditional checking or savings accounts, you can’t add money to an existing CD account once it has been funded (although you can open a new CD to invest additional funds).

Finally, opening a CD could require a higher minimum opening deposit than a savings account, which might have no minimum. There is no minimum deposit required to open a Discover CD. You have 45 days after opening the CD to fund the account.

What are the benefits and tradeoffs for CDs?

Like any investment, CDs have pros and cons to consider. Here are some of the main advantages of CDs:

Security: CDs are Federal Deposit Insurance Corporation (FDIC)-insured, if the bank is an FDIC member. FDIC insurance protects up to $250,000 per depositor, per insured bank, per deposit ownership category. This means your money is safe—even if the bank holding the CD fails.
Higher interest rates: CDs typically offer higher interest rates than savings accounts.
Predictability: When you open a CD, you know exactly how much interest you’ll earn during its lifespan and when you can access your money. Stocks, mutual funds, and even bonds can be volatile and much harder to predict.
Flexible time spans: CDs are available in a range of terms, from a few months to several years, so you can choose the one that best fits your financial planning needs.

CDs also have some tradeoffs to be aware of:

Restricted access to funds: Once you put money into a CD, you won’t be able to access it until it matures—unless you’re willing to pay a penalty for early withdrawal. Try aligning your CD timelines with goals—for example, a three-month CD ahead of a vacation versus a multiple-year CD when saving for a home. Discover CD terms range from three months to 10 years.
Potential opportunity loss: CDs usually offer higher interest rates than savings accounts, but they might not have the return potential of other investments like stocks or corporate bonds. Of course, they also have less risk, and combining CDs with other assets may be a good way to ensure your portfolio is diversified.
Reinvestment risk: If you choose a longer-term CD and interest rates rise, you could miss out on higher yields. Alternatively, if you choose a shorter-term CD and rates fall, you might see lower renewal rates on CDs compared to what you were earning. Consider dividing your funds via a CD ladder strategy—see more about this below—which allows you to take advantage of different rates while also providing occasional access to some of your cash.

Are bank CDs worth it?

When deciding if CDs are worth it, there are a few key factors to keep in mind:

Interest rates

The interest rate environment is among the most important factors when considering opening a CD. In many environments, the longer the term of the CD, the higher the interest rate. But rates on CDs follow the general interest rate environment, so if interest rates rise, CD rates will likely follow. If interest rates are falling or are expected to fall, longer-term CDs might have lower rates.

And sometimes banks will offer higher promotional rates on shorter CD terms. Some banks might also offer special rates for new customers, or a bank may require a higher minimum deposit to access the best rates. As with any money matter, you should compare rates to ensure you get the best deal.

Choose your term, lock in your rate, and watch your CD grow

Discover Bank, Member FDIC

Rate of inflation

Inflation is the rate at which the prices for goods and services become more expensive. If the inflation rate is higher than the fixed interest rate on your CD, the actual purchasing power of your money can decrease over time. Say a 5-year CD earns 4% interest, but annual inflation rises to 5%—the real value of your money will decrease 1% over the years that your funds are locked in a CD. Consider the current and projected inflation rates when deciding whether to purchase a CD (especially a longer-term one).

Access to funds

CDs are designed to be held until maturity, and most banks impose penalties if you withdraw your money before the term ends. Penalties can be substantial and could erase any interest earned, so it’s crucial to understand the terms of your CD and ensure you most likely won’t need to access the funds early. If there’s any chance you’ll need to withdraw the money before the end of the CD’s term, consider a shorter-term option or a more liquid option like a savings account.

Tip: Many banks provide a choice to withdraw the interest earned on a CD or reinvest it back into another CD.

Michelle Schroeder-Gardner, founder of the financial blog Making Sense of Cents, offers an additional suggestion: “You may want to put money in a CD when you have a lump sum that you don’t need immediate access to.” She also says that CDs might be a valuable tool for retirees to generate extra risk-free income. “Younger people who have more time to invest might prefer stocks or bonds, which can have higher returns and be easier to access.”

Making a decision and taking the next steps

Still asking yourself, “Are CDs worth it?” Here are a few additional tips to help you make the most of your money:

Factor in your financial goals

CDs can be a good choice if you have a specific financial goal, such as saving for a down payment on a house or a child’s education. By aligning the term of your CD with your goal’s timeline, you can ensure your money will be available when you need it.

Evaluate your risk tolerance

CDs are considered a low-risk asset because they offer a guaranteed return and are usually FDIC-insured. Schroeder-Gardner says if you have a low risk tolerance or are retired or nearing retirement, CDs can be a good choice to shelter your principal while still earning some interest.

Assess the current economic environment

The interest rate environment and other economic conditions can impact the attractiveness of CDs. In a low-interest-rate environment, CDs might not offer a limited yield advantage over other savings options. However, locking in a fixed rate via a CD can be a smart move when interest rates are elevated or rising.

Consider a CD ladder

The CD ladder strategy involves purchasing multiple CDs with different maturity dates. For example, you can open CDs maturing in six months, 12 months, and 36 months. After the first CD matures, you can decide whether to renew, withdraw, or find another investment.

The ladder approach allows you to take advantage of higher interest rates typically associated with longer-term CDs while still having periodic access to some of your money. By staggering maturity dates, you can also reinvest a portion of your money at potentially higher rates as each CD matures.

Read the fine print

Before opening a CD account, compare rates, terms, and conditions to find the best deal. Make sure you understand all the details, including minimum opening deposit requirements, early withdrawal penalties, and any fees associated with the account.

So, are CDs worth it? They can be a smart choice for those looking for a low-risk, predictable way to save money. By understanding the pros and cons and considering factors like interest rates and early withdrawal penalties, you can decide if CDs are right for you. And if you choose to purchase CDs, strategies like CD laddering can help you make the most of your money.

Ready to start saving with CDs? Open a Discover CD account today and earn more on your money.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover Bank or its affiliates.

Source: discover.com

Apache is functioning normally

November 5, 2024 by Brett Tams

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

Your credit score is a three-digit number that’s meant to reflect how reliable you are as a borrower. Lenders and creditors use this number to determine if you should be approved for loans or credit and at what interest rate and terms. You often hear about the importance of maintaining a healthy credit score, but you may not be clear on why.

A high credit score opens new financial (and other lifestyle) opportunities. Additionally, good credit can save you money—often large amounts when it comes to bigger loans such as mortgages. Keep reading for the seven most influential good credit score benefits you should know.

What is a good credit score?

There are two major credit scoring models: FICO® and VantageScore®. When a lender or creditor needs to evaluate your credit score, they’ll pull it based on one of these models. While FICO scores and VantageScores are determined by similar factors, such as payment history, each scoring model gives different weight to each factor. This means a person’s credit score might differ depending on the scoring model used.

A FICO score ranges from 300 to 850. The good and higher credit score rankings for FICO are:

670 – 739: Good
740 – 799: Very Good
800 – 850: Exceptional

A VantageScore score also ranges from 300 to 850. The good and higher credit score rankings for VantageScore are:

601 – 660: Fair
661 – 780: Good
781 – 850: Excellent

If your score falls into one of these ranges, the following good credit score benefits may apply to you. And if your score is below these ranges, don’t worry—you can work your way up to a better credit score over time.

7 good credit score benefits

Here are the seven most influential benefits of maintaining a good credit score:

1. Better loan terms

The most significant benefit of having a great credit score is often getting more favorable interest rates. The higher your credit score is, the lower your interest rate will be on loans and credit, including mortgages, credit cards, auto loans and personal loans.

Let’s look at an example. According to FICO, someone with an exceptional FICO score in the range of 760 to 850 could have secured an average mortgage interest rate of 6.19 percent in December 2023. During the same time, a person with a fair FICO score between 620 and 639 could only secure an average mortgage interest rate of 7.78 percent.

Let’s assume both people took out a $400,000 mortgage for 30 years. The individual with an exceptional credit score would have a monthly payment of $2,428 and would pay $474,080 in interest over the life of the loan. In comparison, the person with poor credit would have a monthly payment of $2,841 and would pay $622,665 in interest over the mortgage term. That’s a noteworthy difference of over $148,585 in interest alone.

In addition to better interest rates, a good credit score can secure better loan terms in other ways. For example, you might be able to negotiate to have loan fees waived or receive more leniency when making late payments.

2. Higher credit card limits

Individuals with better credit are often offered higher credit limits. Higher credit limits can help individuals make big purchases or cover emergency expenses if necessary.

Additionally, a high credit limit can also help keep a person’s credit utilization low. Credit utilization is one of the five factors that make up your credit score, accounting for 30 percent of your FICO score. Your credit utilization ratio is the amount of credit available to you versus the amount you’ve used.

Someone with a $500 balance on a credit card with a limit of $1,000 will have a credit utilization of 50 percent, which will likely bring their credit score down. In comparison, someone with the same balance and a $5,000 credit card limit will only have a credit utilization of 10 percent and may see their credit health benefit as a result.

3. Better credit card rewards and perks

Along with better interest rates and higher credit limits, a good credit score can help you access more prestigious cards with better perks and reward programs. Some of the credit cards with the best reward or cashback incentives require a minimum credit score—often a score of 650 or higher.

The right credit card program can mean hundreds in cash back over the year, free goods, gift cards or even a fully funded vacation. You just want to make sure to take advantage of any credit card rewards available to you.

4. More housing options

Your credit can play a role in helping you secure housing—both when buying and renting. When it comes to renting, some landlords run a credit check and only approve tenants with a strong credit score. If you have poor credit, your landlord may worry that you’ll have trouble making rent payments on time and deny your application.

A strong credit score also plays a significant role in acquiring a mortgage approval. Having good credit can help your mortgage loan in the following ways:

Help ensure you’re approved for the loan
Help you get approved faster
Help you get approved for a larger amount
Help you get a lower interest rate and better loan terms

5. Better insurance rates

Insurance companies review your credit score when deciding if they’ll accept you as a customer and what rate they’ll give you. Solid credit can help you save money on your homeowner’s insurance, renter’s insurance or car insurance.

One study found that having poor credit increases a driver’s insurance rates more than if they have a speeding ticket, get in an accident or have a DUI. On average, drivers with bad credit see their rates increase by 76 percent annually. In comparison, a driver who receives a speeding ticket will only see a 21 percent annual rate increase.

Note that using credit scores to determine insurance packages has been deemed an unfair practice in some states. California, Hawaii, Massachusetts and Michigan have all banned insurance providers from using credit scores to set car insurance rates.

6. More job prospects

Some states let employers request a credit check from job applicants. No job prospect is ever guaranteed, but your credit score might be the deciding factor against you for a potential employer. Someone with a low score, missed payments and delinquencies may be seen as a risky hire. This is especially true for specific industries like banking and the financial sector.

The good news is that you’ll know when a potential employer runs a credit check, as they need your approval to do so. We recommend you check your scores and reports beforehand to know what they might see.

7. Easier access to utilities

When you sign up for utilities, such as electricity and water, the company will often run a credit check to see your track record with payments. If you have good credit, you can get utilities turned on quickly and potentially avoid utility deposits.

In contrast, those with poor credit may find it more challenging to get their utilities turned on, be asked to pay a deposit or even be asked to provide a cosigner who’ll be responsible for missed payments.

How can you improve your credit?

There are several steps you can take to improve your credit. These include:

Keeping credit utilization low
Making payments on time
Being patient and consistent with your efforts
Checking your credit score and credit reports often
Addressing any inaccurate negative items you see—and using the help of a credit repair organization like Lexington Law Firm when challenging these items

A healthy credit score can save you money and open the door to many financial opportunities. While it may take a while to see some improvements, building better credit habits will be an asset that will help you in the long term. Try to prioritize improving your credit as soon as possible so you can start seeing the benefits sooner. You don’t have to do this alone if you’re unsure where to start. Consider using the professional credit repair services Lexington Law Firm offers to get assistance with your credit repair journey.

Note: The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Apache is functioning normally

November 5, 2024 by Brett Tams

If you recall, Chase took over troubled First Republic Bank back in May 2023.

Prior to First Republic going under, they were the leading jumbo home loan lender in the  United States.

They catered to very wealthy homeowners and businesspeople. And it was ironically their ultra-low rate mortgages that eventually took them down.

Today, Chase is the top jumbo loan lender in the nation, with production of more than $8 billion in the first half of 2024, per Inside Mortgage Finance.

Like First Republic, they too are wooing high-net worth individuals with special mortgage rate discounts.

Up to 1% Off Mortgage Rates If You Bring Money to the Bank

In 2023, Chase was the third largest mortgage originator in the country, per HMDA data. And the largest depository issuer of home loans.

They were only beaten out by two nonbanks, United Wholesale Mortgage and Rocket Mortgage.

Their acquisition of troubled First Republic has only made them bigger, and put an even stronger emphasis on jumbo loan lending at the bank.

In essence, they are carrying on some of the same principles, though likely with added guardrails to avoid the same fate.

One of those practices is offering mortgage rate discounts to their wealthiest customers, namely those willing to park lots of money at the bank.

The NYC-based bank’s so-called “Relationship Pricing Program” offers mortgage rate discounts ranging from 0.125% and 1% based on new and existing balances at the bank.

These apply whether you’re buying a home or refinancing an existing mortgage.

As seen in the chart, those who can muster $37,500 in new money or investments can receive a 0.125% rate discount.

While that’s nothing big, customers who are able to bring in $300,000 in new money or investments can get a full 1.00% discount on their interest rate.

For example, if the offered mortgage rate were 6.5%, they could give you a rate of 5.5%. And that could be hard to beat by outside lenders.

On a large loan amount, we’re talking about some significant savings.

Using a $1,500,000 loan amount, the difference would be roughly $965 per month. Or $11,580 annually.

They also offer a rate discount of up to 0.25% for existing balances at the bank (0.125% for $500k-$999k, 0.25% for $1M+).

How the Relationship Pricing Program Works

To receive the interest rate discount, new money must be deposited in the customer’s Chase account at least 10 calendar days prior to the scheduled mortgage closing date.

Note that certain accounts don’t qualify, including business, deferred compensation, student, custodial, 529b college savings, donor-advised funds, select retirement accounts, and non-vested RSUs.

So make sure the new funds will actually count toward the discount.

Customers will be underwritten via the actual note rate before the discount, per Inside Mortgage Finance.

In other words, it doesn’t appear that you can qualify at the lower rate, assuming you needed to.

And note that funds that settle in a customer’s deposit and/or investment accounts 14 calendar days or more prior to the completion of a mortgage application aren’t eligible for the new money discount.

It’s also possible to receive a post-close rate discount if funds are received and settled within 30 days of loan closing.

But it might be lower than discounts available prior to closing, and the customer must sign a rate change modification.

These customers will also not receive a refund of any interest already paid prior to the rate change taking effect.

And while new and existing balance discounts can be combined, the total rate discount can’t exceed 1%.

Lastly, for adjustable-rate mortgages, the rate discount will apply during the initial rate period only.

For example, the first five years on a 5/6 ARM, or first seven years on a 7/6 ARM.

Good Deal or Not?

As with any of these types of deals, you need to compare what you could receive elsewhere.

I always look at the all-in cost of the mortgage. That includes both closing costs and the interest rate received.

A discount means nothing if another bank or lender can offer a lower mortgage rate with fewer closing costs.

For example, 1% off a rate of 7% is 6%. If another lender can give me 5.875%, who cares if it’s 1% off?

And how much do I need to pay to get that interest rate? Points, origination fees, etc.?

So take the time to compare offers, and also consider how much your money is expected to earn while parked in a Chase account.

There’s opportunity cost to consider here as well, which can cloud the comparison when expected returns aren’t guaranteed.

But if Chase is blowing the competition out of the water, then it might be a no-brainer and further reason to use them versus another mortgage company.

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

November 5, 2024 by Brett Tams

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode:

Learn the pros, cons, and methods of rolling over retirement accounts to simplify your finances so you can avoid costly mistakes.

How can you budget smarter for the holidays? Does it make sense to combine retirement accounts from previous jobs into one? What are the benefits and drawbacks of different rollover options? Hosts Elizabeth Ayoola and Sara Rathner begin the episode with a discussion of holiday budgeting, offering tips and tricks on avoiding impulsive spending, setting clear financial priorities, and the importance of delayed gratification.

Then, hosts Sean Pyles and Sara Rathner discuss retirement account rollovers and key considerations to help you streamline your retirement savings and avoid penalties. They begin with a discussion of rollover basics, with tips on direct vs. indirect rollovers, how to avoid unexpected costs, and how to choose between an IRA and a Roth IRA. Credit Card Nerd Jae Bratton joins Sean and Sara to discuss her own experiences with retirement rollovers. They discuss the pros of consolidating accounts, the financial security it can offer, and how to choose the right investment options to suit your retirement goals.

Check out this episode on your favorite podcast platform, including:

NerdWallet stories related to this episode:

Auto loans from our partners

Episode transcript

This transcript was generated from podcast audio by an AI tool.

Elizabeth Ayoola:

Who hit fast forward on 2024? How are we in November already? Sara, am I alone in feeling like this year was on turbo speed?

Sara Rathner:

You’re not. I still think 1975 was 20 years ago.

Elizabeth Ayoola:

I like the end of the year for two reasons. Now one, I’m a self-reflective journaling chick, and I enjoy doing my year-in-review exercises. And for two, I’m a December baby. Shout out to all my Sagittariuses. But anyway, we’re going to be delving more into the former today. Welcome to NerdWallet Smart Money Podcast. I’m Elizabeth Ayoola.

Sara Rathner:

And I’m Sara Rathner, and for the record, I do not journal.

Elizabeth Ayoola:

We’ve got to talk about that more later.

Sara Rathner:

Elizabeth Ayoola:

Alright. This episode, we answer a listener’s question about combining retirement accounts from different jobs. But first, Sara and I are going to talk about the worst budgeting or financial mistake that we have made this year. Now, if we want to add a splash of festivity to the topic, we can focus on holiday spending mistakes. It’s your call, Sara. And yes, that means you’re going first.

Sara Rathner:

Yeah, no pressure. Well, we could apply this to holiday spending, but we could also apply it to spending year-round, and for me, it’s so easy—way too easy—to try to solve problems by buying stuff online. I can’t count the number of times I thought I had a problem to solve and threw money at some small thing, and I thought it would be the solution to my problem. Then the package arrived a few days later, and I’m like, “Why did I buy this?” It’s like death by a thousand Amazon purchases.

Elizabeth Ayoola:

I’m certain that so many people feel seen right now, Sara, because you shared that. And you know what? I hate to say that I can relate, but I must say that I’m proud of a new habit that I’ve developed. I have started returning things to Amazon that I do not need. Yes, before, I was too lazy to return them, so they would just sit around my house. Now, I think the option to drop items at Whole Foods—shout out to Amazon for that—has been a source of motivation. Nothing beats saving money by returning things I don’t need and picking up a few healthy food items in the process.

Sara Rathner:

And if you want to think about your overall environmental impact, it’s always better not to buy the item in the first place than to buy it and return it. But none of us are perfect, and returning it is also a great idea if it’s something you do not actually need. So, Elizabeth, I’ve shared my own personal shame, one of many shames, but we’re only picking one today, so we don’t have to list all of them. What has been your big budgeting fail of the year?

Elizabeth Ayoola:

Oh my gosh. Listeners, please just stick with me, okay? I am going to have a little vent now. I’m going to go with my general biggest budgeting mistake this year because it’s going to affect my holiday spending too. As some listeners may be aware, because I spoke about it earlier this year, I have moved to a different state, and it’s my first time moving states since I moved back to the U.S. from London. Now, while I did budget a lump sum that I needed to move, which included rent, damn that first security deposit, new furniture because my old furniture sucked, a $2,000 U-Haul, first-quarter private school fees for my son, and so much more. But anyways, what was the mistake? I should have set a harder limit for how much I would spend and prioritized in terms of what could wait. But in the spirit of wanting my house to feel like a home, I purchased things that honestly could have waited even until next year.

What I don’t regret is buying quality furniture this time around, and I’m hoping that it’s going to last for years to come. And yes, that includes the white sofa that I bought with a six-year-old boy in the house. I know, you guys are screaming. Overextending my budget means I’m now on a tight budget for the rest of the year, and most people will be getting hugs for Christmas. I’m currently avoiding large purchases, and I’m just focusing on what I need versus what I want. But I do have one highlight, though. All of that spending got me lots of air miles on my travel credit card.

Sara Rathner:

Well, maybe next holiday season you could go somewhere for free.

Elizabeth Ayoola:

Sara Rathner:

And I will say, as somebody with three pets and a toddler, I’m amazed anyone buys white sofas.

Elizabeth Ayoola:

I know, I know. But honestly, I am not an interior decor girl, but it really went with my walls because my walls are gray. And anyway, I’m enjoying living on the edge. So, for anyone planning on making a big move in 2025, please be as specific as you can about your budget. Moving can be extremely expensive, and settling into a new city or environment can be hard enough as it is, so you don’t want to add financial stress to the mix. And also, a lesson in delayed gratification here. Some things honestly can wait, and it can be worth the wait when you have financial peace as a result.

Sara Rathner:

Yeah, I think it’s really common to underestimate how much it costs to move. You’ve got the packing materials and the professional movers, and once you’re in your new space, you want to make it feel like home. And yes, I said professional movers, because when you’re 22, you could pay your friends and pizza to move your stuff. When you’re 32 and you have real furniture and your friends are busy, they don’t want to help you move your stuff for the cost of pizza. So, just hire some professionals and save your friendships.

Elizabeth Ayoola:

Say it again. And I did exactly that actually, Sara, I did exactly that.

Sara Rathner:

You hired professional movers…

Elizabeth Ayoola:

Sara Rathner:

…Or you paid your friends with pizza?

Elizabeth Ayoola:

No. What friends? Nobody was helping me move all that stuff out that you haul. I paid a professional, okay?

Sara Rathner:

Listen, if you have white couch money, you can hire a professional. That’s it. That’s my financial rule.

Elizabeth Ayoola:

Oh my gosh. And I have a little confession. My son has finally put a little stain on the white couch, so here goes the cost, right? Because now I’m going to pay for a professional cleaner to clean the sofa, and I was just thinking I didn’t think of the ongoing maintenance costs. But anyway. With that said, let’s give listeners a couple of budgeting tips for the last two months of the year. Now, I know it can be easy to ignore your budget because you’re busy having fun, spending time with loved ones, and also unwinding from what has been a long, chaotic year. All those happy hormones can also trick you into living in the moment and blowing up your budget. So, what’s one tip that you have for listeners, Sara, to hopefully avoid doing this?

Sara Rathner:

Well, this is the time of year where everyone’s going out and spending a lot of money in the spirit of festivity, but talk to your loved ones and suggest alternate plans if the plans they are recommending cost a lot of money and are going to blow your budget. Let’s say your friends want to go out for an expensive dinner or your family insists on buying everybody a mountain of presents. It’s okay to say, “Listen, that’s just not in my budget right now.” Like you mentioned, giving people hugs for the holidays is their gift because you just spent so much money on moving. Don’t just complain. Offer up an alternative. Maybe you skip the dinner with your friends, but you meet up with them later on for a cheaper outing. Or maybe you talk with your family about doing a gift exchange where everybody draws up one name out of a hat and you only buy one gift and you set a hard budget for that gift. Your loved ones aren’t going to know that you’re struggling unless you speak up, and honestly, oftentimes once you speak up, you realize that you’re not the only one in your circle who’s struggling. So, other people want an excuse to take a break too.

Elizabeth Ayoola:

I love that so much, and I think it takes a lot of vulnerability to be open and tell people that you just ain’t got it. And I do know that some people feel embarrassed to say that, but I think feeling embarrassed might be a little bit better than not having enough money, especially going into the new year.

Sara Rathner:

Yes, your embarrassment is not worth not being able to make your rent payment in January. Think of it that way. It could be that serious for you.

Elizabeth Ayoola:

Sara Rathner:

I would rather tell somebody who cares about me about what’s going on with me than have to talk with my landlord about the fact that I have to pay a late payment because I can’t afford rent on time.

Elizabeth Ayoola:

Absolutely. And this is a little bit off-topic, but I’ve been seeing things going around social media, like if you don’t show up to your friend’s birthday dinner… I’m sure there are a lot of December babies having some birthday things that you might have to pay for. Are you a bad friend? And putting that out there. If anybody gets upset with you because you can’t attend because it’s not in your budget, then you might want to reassess that relationship as well.

Sara Rathner:

Okay. Elizabeth, you’ve got more tips for us.

Elizabeth Ayoola:

My more formal tip now is to start thinking about what you want your finances to look like in 2025. Now, doing this can help you stay focused and it can also give you the discipline that you need to ensure you start 2025 off strong financially. For example, with interest rates trickling down, you may be hoping to finally buy a home next year. Housing market is another story, but it’s going to be hard to do that if you blow your savings or hurt your credit score by maxing out your credit cards during the holidays.

Sara Rathner:

I like that. I think it’s helpful to list a few things that you want to accomplish over the next few months so you’re not just thinking about the holidays now, but rather how the holidays might affect what you want to do next year.

Elizabeth Ayoola:

Exactly. And as someone who sometimes can fall prey to impulse spending, I know this task especially helps me. One of my goals for 2025 is to finally start my traveling on points journey or rather take it to the next level by getting more travel credit cards, and that requires me maintaining good credit and not overspending.

Sara Rathner:

Well, luckily you’re surrounded by coworkers who can help you with that. Including yours, truly.

Elizabeth Ayoola:

Oh, shout out to my coworkers. Love that.

Sara Rathner:

All right, listeners, we want to hear from you. What are your strategies for getting through the holiday season financially unscathed, and I don’t know, still speaking terms with your relatives? So, text us or leave a voicemail on the Nerd Hotline… I’m serious. At 901-730-6373. That’s 901-730-N-E-R-D. Or email us at [email protected].

Elizabeth Ayoola:

Oh my gosh. Just a sidebar. I think some people might end up in a group chat about how cheap they’re being this holiday because they say, “No,” but we don’t care. We’re saving money.

Sara Rathner:

I’m here for all of your group chats where you talk about how cheap you have to be. You can invite me to that group chat and I’ll just silently sit there and applaud you.

Elizabeth Ayoola:

Exactly. All right, now let’s turn to this episode’s money question segment, where we get deep into retirement benefits. That’s coming up in a moment. Stay with us.

Sean Pyles:

We’re back and answering your real-world money questions to help you make smarter financial decisions.

This episode’s question comes from a listener’s text message. They wrote, “Does it make sense to amalgamate all of my retirement accounts from different jobs into one place or does it not matter?”

Sara Rathner:

First of all, bonus points to this listener for typing the word amalgamate into a text message.

Sean Pyles:

Sara Rathner:

I don’t know what your bonus points are worth in real life, but you should know that you have them.

To answer this question on this episode of the podcast, we are joined by NerdWallet credit card writer Jae Bratton.

Welcome to Smart Money, Jae.

Jae Bratton:

Thanks for having me.

Sara Rathner:

Now, Jae typically writes about credit cards but has experience managing retirement account rollovers, so we’re going to talk with her about that. But, let’s start by talking about what our listener describes as “amalgamating” their retirement accounts, which is known conversationally as rolling retirement accounts over. Before we dive in, we just want to reiterate that we are not investment advisors. Sean, do you want to give us a quick explanation of what a retirement account rollover looks like?

Sean Pyles:

Sure. Rolling over a retirement account is when you take the retirement account from maybe an old employer and, you guessed it, roll it into the retirement account of your new employer or another retirement account you have, like an IRA.

There are two main ways that you can do a rollover. One is a direct rollover where your former retirement account administrator connects to your new administrator and transfers the funds from your old account to your new account. Or in the case of an IRA, the institution that manages your account transfers it to another IRA or retirement plan, like a 401k.

The second way to do a rollover is called an indirect rollover or a 60-day rollover, where you get a check with the entire balance of your retirement account, and then you move it into the new account yourself. This second option can give you a little more flexibility with how you manage the rollover, but it does have some drawbacks, too.

Sara Rathner:

Yeah, let’s talk about those drawbacks. A big one is the cost. When you do an indirect rollover, the IRS automatically withholds 10% or 20% of your account balance depending on the type of account you have. And here’s the thing: you have to contribute the entire amount of your original cash balance to the new account or you face penalties, and that could put people in a pretty serious cash crunch.

Sean Pyles:

And also, you are given a check with your retirement account balance, again, which can be a little scary to see and hold in your hand.

Sara Rathner:

Yeah, it’s your life savings.

Sean Pyles:

I want to give a quick example of what an indirect rollover looks like and this cash withholding from the IRS, because it can get a little confusing. For example, say I want to roll over a 401k balance of $10,000. The IRS withholds 20% or $2,000, so I only get a check for $8,000.

Then, I need to come up with an additional $2,000 so I can deposit that original balance of $10,000 to the new retirement account, and if I don’t do that, if I can’t find that $2,000, I will face penalties from the IRS, which is not ideal.

And we should say that you will get that withheld money back from the IRS, but not in time to replace it within the 60-day period.

Sara Rathner:

So, that sucks. No… There’s no other way I could say that. That’s really rough, and you’re taking something that is already really administratively complicated and then making it expensive, which is no fun. Jae, that being said, let’s get to your story. What was your rollover adventure like?

Jae Bratton:

The year was 2022. I had just been hired by NerdWallet, and I decided that it was time to get all of my retirement accounts from my former employers into one. I had two old ones from, like I said, two previous employers, and I wanted to move them into one financial institution, the one that was already holding my husband’s and my Roth IRAs. I used a service which facilitates the rollover process for free, and even though I didn’t need this particular feature, it also helps you find old 401ks that you may have forgotten about.

Sean Pyles:

That’s handy. So you were doing an indirect rollover, but you had a company helping you out as sort of an intermediary.

Jae Bratton:

Sean Pyles:

And you did two rollovers, so walk us through the first one.

Jae Bratton:

The first rollover I would say was a little bit more straightforward. I moved about $21,000 from a Roth 401k from a former employer into that Roth IRA that I said I had already had at that particular financial institution. I was able to roll that $21,000 in my old Roth 401k into my current Roth IRA because both investment accounts are after-tax, and that means I had already paid tax on the contributions, and the big benefit of that is I get to make withdrawals in retirement tax-free. Now, when you do rollovers, it is possible to roll over a traditional 401k into a Roth IRA, but you will have to pay taxes. Accounts have to be tax-compatible if you want to avoid paying penalties.

Sara Rathner:

One thing that’s nice about rolling into a Roth IRA like you did is that you could ignore the contribution limits on these types of accounts. For the 2024 tax year, Roth IRA contributions are limited to $7,000 a year, or $8,000 a year for those who are 50 or older, but rollovers don’t count toward those contribution limits. And Jae, that’s why you were able to roll $21,000 from that Roth 401k into the Roth IRA in one go. Right?

Jae Bratton:

Exactly. I was able to grow the balance in my Roth IRA while still playing by the rules that govern annual contribution limits, and the contribution limit for Roth IRAs is pretty low comparatively, especially when you compare it to a 401k. That was just a nice perk.

Sean Pyles:

That’s pretty handy. Let’s talk about your second rollover. What was the deal with that one?

Jae Bratton:

For the second rollover, again from another former employer, this time I was moving about $25,000 from a 403(b) into a traditional IRA.

Sean Pyles:

And for those wondering, a 403(b) is generally what employees of public schools and nonprofits get instead of a 401k, but they’re pretty similar. Jae, was rolling the 403(b) into your IRA as easy as rolling over the 401k?

Jae Bratton:

Yeah, actually. The process was just as simple. Again, that service that I used facilitated the rolling over process and made it pretty seamless. The only difference is that in this particular rollover, my 403(b) was traditional, not a Roth, meaning I hadn’t paid tax on those contributions yet. So, I rolled over the money from the 403(b) into a traditional IRA, not a Roth IRA, and whenever I go to withdraw those funds in retirement, I will have to pay taxes on that money then.

Sean Pyles:

Was the second rollover direct or indirect?

Jae Bratton:

It was direct, and that means that I did not have to pay any financial penalty on this particular rollover.

Sean Pyles:

Did you find that to be easier than the indirect or not?

Jae Bratton:

I don’t have experience doing an indirect rollover, so I can’t really compare, but I would just say overall the experience was fairly easy just because I had the assistance of this particular service to walk me through it.

Sean Pyles:

Why was it important to you to do these rollovers? To get to our listener’s question, why did it make financial or personal sense to you?

Jae Bratton:

As I mentioned earlier, I initiated this rollover process in 2022 right when I had been hired at NerdWallet. I knew that I was going to have a retirement account with NerdWallet, a 401k, and I knew I had these two other retirement accounts hanging out in the ether. I didn’t want three retirement accounts in separate financial institutions, so in 2022, I decided now is the time to streamline everything. Come our retirement, I didn’t want to be hunting down retirement accounts at X number of financial institutions. I want that time to be for leisure.

There is a financial component behind the motivation to roll over. I wanted to move that money from those old accounts and invest them into mutual funds of my choice.

Sean Pyles:

Sara, I know that you have done rollovers, or at least one in the past. Was your motivation similar?

Sara Rathner:

Yeah, I’ve done two rollovers in the past from former employers. I had traditional 401ks with both, and I rolled them into one traditional IRA at the same financial institution where I also have a Roth IRA and I also have a taxable brokerage account. So, really for me, it was about simplifying my finances and having more of my finances in one place. Even if there are several different accounts, they are still under one roof, too, and that to me is administratively easier. The more complicated your life gets financially, the more you want to simplify some stuff and have it be a little bit more under your control.

Sean Pyles:

And Sara, was your rollover process as easy as it seems Jae’s was?

Sara Rathner:

To be honest, I blacked out a lot of it because it was so annoying. Really—

Sean Pyles:

So that’s a no.

Sara Rathner:

Yeah. I think I started by calling customer service from both the financial institution that had my old account and then the financial institution I was going to transfer it into. I will say all of the banks and institutions I dealt with had incredible customer service, so if you have any questions, start by just calling them. They will walk you through the process. That was probably the best part, was just talking to people on the phone, which is usually not the best part. Usually, that’s the worst part, but really they were incredibly helpful. And then they directed me to forms I had to fill out and I had to get them notarized, send them in. It was a series of tasks that were just annoying. It wasn’t just fill out an online form and hit submit and then you get your money transferred. It’s not that simple.

Sean Pyles:

How long did the process take you, if you remember?

Sara Rathner:

It depends. I didn’t really realize this at the time, but I think one of the transfers was indirect, and so one day my doorbell rang and it was FedEx with an overnight envelope that contained a six-figure check from an employer I had been at for almost a decade. So you can imagine how much money I had set aside over the years, and they were just like, “There you go.”

Sean Pyles:

Sara Rathner:

Then I had to mail it to the next institution, so you’re terrified because your money is just floating out there into the ether at the behest of various shipping companies and yeah, I didn’t love that.

Sean Pyles:

Yeah, that’s scary. There’s got to be a better way.

Sara Rathner:

Yeah, one process was all electronic. I never saw a check with the money. The other one, for whatever reason, was not. You just don’t know what you’re going to get.

Sean Pyles:

Sara Rathner:

That’s what I don’t like about it.

Sean Pyles:

Let’s talk a little bit more broadly about some of the pros and cons of rollovers.

Our listener got to one pro with their question, and it seems like this relates to Jae and Sara, your experiences too. Having all your retirement funds in just one or two places makes it easier to manage.

Jae, can you speak to any other upsides that made this process appealing to you, even if it isn’t maybe the most straightforward sometimes?

Jae Bratton:

Definitely. But before I do that, I want to go back to something that Sara was saying. Sara was talking about how her process of rolling over some of her old retirement accounts was not as easy as maybe my experience, and I want to say that mine was maybe a little bit easier than hers and maybe other people listening, because I only was rolling over two accounts. I’ve mentioned this before, but I used a service to help walk me through that process. And also, like Sara, I had a baseline knowledge of retirement accounts.

So, I say all that to say, I don’t want to put out this impression that rolling over retirement accounts is easy. It’s not. It is a complicated process made easier by some services, so I don’t want the listeners to think this is something that I can do in 15 minutes, and it’s not. The task of rolling over retirement accounts… We don’t have to do it, but there are benefits which I will talk about. This is just another example of how the onus is on us to make sure that we are making all the right decisions to safeguard our future in retirement.

Sean Pyles:

It might sound counterintuitive, but weirdly, I’m okay with a retirement account rollover not being the easiest thing to do. It maybe shouldn’t be a 15-minute exchange to put all of your retirement savings from one account to the next. It’s a pretty significant amount of money oftentimes, and it’s a very serious allocation of funds for a very important goal, funding your retirement.

Sara Rathner:

Yeah, but that being said, I could move tens of thousands of dollars into a brokerage account in two business days.

Sean Pyles:

Maybe that also isn’t great. I don’t know.

Sara Rathner:

Yeah, but at the same time, you have to think about how democratized personal finance has become because of this technology, and you no longer have to be 100% knowledgeable, 100% connected, have… You have a guy behind a mahogany desk who can put in a phone call and he does stuff for you. You don’t have to live that life. You can be your average person who switched jobs a couple of times and just wants to keep their finances as organized as possible.

On the one hand, putting a little friction into some financial processes definitely prevents people from making mistakes or from spending money unnecessarily. At the same time, some processes… We could utilize technology to make things less onerous than they used to be.

Sean Pyles:

Totally agree. I think the certified mail route that you described having to go through is pretty outdated.

Sara Rathner:

Yeah, what if I wasn’t home to answer the door? Were you just going to leave that check in my mailbox?

Sean Pyles:

It’s scary, but we want to make sure that people understand the gravity of what they’re dealing with at the same time.

Jae, I want to go back to any other upsides around rollovers that did make this intimidating process appealing.

Jae Bratton:

The first one I’ve already mentioned before, but it’s worth repeating again because this is probably the main motivation for many people doing rollovers, and that is just simply simplicity. For people who have held multiple jobs like myself, that’s reason enough. Many of us are going to have many jobs in our lifetime before we get to retirement, and without rolling over those accounts, you’ll have to pull money in retirement from multiple pots, and I wanted mine in one big one.

The second draw for rolling over retirement accounts is financial security. Many of us have had multiple jobs, and the more jobs we have, we’re increasing the likelihood that we’ll forget about that 401k that we’ve had with an employer we had 20 years ago and definitely don’t want to forget about that money. And lastly, I would say that your 401k with an employer usually has limited investment options that are preselected by that employer. If you’re not satisfied with those investment options or the fees attached to those funds, one way to get around that is to roll over your retirement funds into an IRA where you have much more freedom to select the investments that you want.

Sara Rathner:

We should also note that funds in a 401k sometimes have lower expense ratios, which basically means they cost less to invest in, and if you like the funds you’re invested in but you’re considering consolidating your various retirement accounts, you may want to compare the expense ratios of the funds you’re invested in with your current retirement account and the funds you’d invest in through the IRA.

Sean Pyles:

I want to turn now to a couple cons. Sara and Jae, I think you described some just through your experiences, but really one that stands out to me is that doing a rollover requires you to take action and be really on top of your finances. If you are in your prime working years, you’re maybe a little bit lazy, but decently organized, and you don’t want to have to wrangle your old accounts. Jae, going through what you described or Sara, what you described, might not be appealing, and I think that’s totally fair.

As long as people are making sure that the money in these accounts is actually invested, maybe check on it a few times a year, then it can be fine to leave old accounts where they are. Again, just do not forget about them. Though, as we’ve been talking about, people might want to think about consolidating accounts as they get closer to retirement so they have fewer accounts to manage, because in general, as we get older, it can be a good idea to consolidate accounts, so your finances are just easier to account for.

Sara Rathner:

Yeah, and I’ll also say if you’re in your prime working years and you’re decently organized, it might not even be laziness. You’re just busy. You’re busy…

Sean Pyles:

Sara Rathner:

You’re tired, you’ve got so much other stuff to deal with, this is just another thing.

Sean Pyles:

That’s fair.

Sara Rathner:

It’s always something. All right, listeners, if you are interested in rolling over your own funds, we’ve got a handy resource for you. I recommend you check out NerdWallet’s roundups of the best IRA accounts and best Roth IRA accounts. Our investing writers broke down the best IRA accounts for hands-on or hands-off investors, and the best Roth IRA accounts categorized by online brokers or robo-advisors. And we’ll link to those roundups in today’s show notes. You can also just search for NerdWallet best IRA or Roth IRA accounts.

Sean Pyles:

Jae, any final thoughts about rollovers for our listeners who might be looking to amalgamate their accounts?

Jae Bratton:

I would just say if you’re considering a rollover, speak with your particular retirement plan custodian and ask them to help you roll over the money in a way that won’t incur any financial penalties.

Sean Pyles:

Yeah. Find some way to make this easier for you, whether you work with your custodian or you find a service like you used previously, Jae.

Jae Bratton:

That’s right.

Sean Pyles:

Well, Jae, thank you so much for coming on and sharing your story with us.

Jae Bratton:

Thank you for having me.

Sean Pyles:

And that’s all we have for this episode. Remember, listener, to send us your money questions. You can call or text us at 901-730-6373. That’s 901-730-N-E-R-D. You can also email us your questions or leave us a voice memo at [email protected].

Sara Rathner:

Also, visit nerdwallet.com/podcast for more info on this episode and remember to follow, rate, and review us wherever you’re getting this podcast. And remember, you can follow the show on your favorite podcast app, including Spotify, Apple Podcasts, and iHeartRadio to automatically download new episodes.

Sean Pyles:

Here’s our brief disclaimer: We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

Sara Rathner:

And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Apache is functioning normally

November 5, 2024 by Brett Tams

A four-year college degree is a minimum requirement for many jobs, and more education can translate to higher earnings. It’s possible, however, to find jobs that make good money without college.

When comparing good jobs you can get without college experience, it’s helpful to consider earning potential and the skills you might need.

Definition of a Good Paying Job

There is no standard benchmark for what constitutes a good paying job. According to the Bureau of Labor Statistics (BLS), the average annual wage in March 2021 was $58,260. That’s across all occupations, regardless of education level.

Whether that’s a good paying job for you depends partly on your lifestyle. Some people can live comfortably on $58,000 or less, while others might struggle. A single person living in an area with a low cost of living may feel rich. But someone supporting a spouse and children in a high-rent area could easily disagree.

Jobs that don’t require college can pay more or less than $100,000, depending on the industry. Perhaps a better question is what kind of trade-offs are involved in working a good paying job, in terms of time commitment and flexibility.

Check your score with SoFi

Track your credit score for free. Sign up and get $10.*

Good Paying Jobs vs Highest Paying Jobs

The highest paying jobs have a median pay of around $200,000 a year, according to the BLS. People who work in the highest paying jobs may require advanced education, certifications, or specific job skills.

Does that mean good paying jobs aren’t worth considering? Not at all. The highest paying jobs can also be some of the most stressful jobs. Many of the highest paying jobs are in the healthcare field, which can require long hours, dealing with emotional or mental stress, and working in potentially hazardous surroundings.

Good paying jobs can still pay the bills, even if you don’t make a $100,000 salary. And the job itself may be less stressful and allow for more work-life balance, which some people prefer over a bigger paycheck.

Recommended: Does Net Worth Include Home Equity?

Pros and Cons of Jobs That Don’t Require a College Degree

As with all jobs, better paying ones have advantages and disadvantages. Whether it makes sense for you to consider jobs that make good money without college can depend on your financial and career goals.

Here are some of the main pros and cons to weigh when deciding whether to pursue a good paying job and forgo college.

Pros	Cons
Avoid the potentially high costs associated with a four-year degree	Some employers are reluctant to hire candidates who don’t have a degree
Start off your career without student loan debt	Certain career fields require a college degree for entry
Earn a steady income right out of high school	Good paying jobs that don’t require college can be hard to find, and hiring may be competitive

Why It’s Hard To Find Jobs Without a Degree

Finding good jobs without a college degree is often difficult because many employers have come to expect that job candidates will have a bachelor’s degree at a minimum. Additionally, many professions require four-year college degrees to be considered for entry-level positions.

There are lots of jobs you can get without a degree, or with an associate degree, but they may not pay as well as jobs that do require higher education. A college degree can make you a more attractive candidate for a position because it demonstrates to employers that you’ve taken steps to prepare for a successful career.

Does a four-year college degree or higher guarantee that you’ll be successful or make a lot of money? No, and some industries that require a degree pay very little. That’s another reason to consider good jobs that pay well without college being a requirement.

Tips for Finding Jobs Without a College Degree

If you’re interested in getting good paying jobs without college, it’s important to do your homework. Specifically, it’s helpful to understand:

• Which industries or career fields generally require a degree and which ones don’t

• What skills, experience, or expertise may be substituted for a college degree when searching for good paying jobs in specific industries

• Whether it may be to your advantage to get an associate degree or a postsecondary non-degree certification

• What is competitive pay for any good paying jobs you’re interested in, based on industry standards and trends

• The difference between salary vs. hourly pay and why it matters

You should also consider the types of jobs you’re interested in. If you’d like to do something hands-on, for instance, then you may be curious about what trade makes the most money and whether you’ll need an associate degree to enter that field.

Or if you’re the introverted type, you might be focused on finding the best paying jobs for antisocial people that don’t require a degree.

Recommended: 30 Low-Stress Jobs for Introverts Without a Degree

25 Good Paying Jobs Without a College Degree

Wondering which jobs pay the most without a college degree? We analyzed BLS data to find good paying jobs that don’t need a four-year degree and compiled the following list based on:

• Median annual pay

• Minimum education level required (high school diploma or equivalent, postsecondary non-degree award, or associate degree)

• Expected job growth through 2031

Read on for 25 good paying jobs you can get without college.

1. Makeup Artist, Theatrical and Performance

Median pay: $134,750/year

Job growth outlook: 7%

Job description: Makeup artists apply cosmetic and special-effects makeup to performers in theatrical and other entertainment settings.

Job duties and requirements:

• Create and apply makeup looks to performers

• Complete touch-ups as needed to keep makeup looking fresh throughout the performance

• Postsecondary non-degree award is usually required

How to get started: Makeup artists may attend cosmetology school or earn professional certifications in makeup artistry before applying for jobs. Some artists, however, are self-taught and start their careers by showcasing their makeup skills on TikTok or other social media.

Pros:

• Makeup artists can make excellent money without a college degree

• This is a highly creative job that often involves meeting new people

• Makeup artistry can offer flexible hours and opportunities to travel

Cons:

• Higher pay isn’t guaranteed

• Working environments can sometimes be harsh, and artists may be subject to criticism

• Not ideal for people who aren’t comfortable in a fast-paced work environment

2. Commercial Pilot

Median pay: $134,630/year

Job growth outlook: 6%

Job description: Commercial pilots fly planes and other aircraft, and can work for major airlines, charter companies, or private individuals.

Job duties and requirements:

• Operating flight equipment to safely transport cargo or passengers

• Checking the condition of the aircraft prior to takeoff

• Associate degree and on-the-job training may suffice for pilots who don’t plan to fly for major airlines

How to get started: Flight training and FAA certification are essential for commercial pilots. On-the-job training may be substituted for an associate or a bachelor’s degree.

Pros:

• Commercial pilots can make a lot of money, even without a degree

• Pilot jobs offer opportunities to travel to new places

• Work can be flexible

Cons:

• Requires extensive flight and on-the-job training

• Flying for a living is generally a higher-risk occupation

• Private pilots may have to contend with demanding clients

3. Air Traffic Controller

Median pay: $129,750/year

Job growth outlook: 1%

Job description: Air traffic controllers help to guide aircraft from one destination to another. They can work at major airports or smaller airfields.

Job duties and requirements:

• Monitor the movement of aircraft in the air and on the ground

• Communicate with pilots during takeoff, while in-flight, and during the landing

• Sufficient work experience and on-the-job training

How to get started: If you’re interested in becoming an air traffic controller, you’ll need to first meet the minimum requirements. Typically, that means at least three years of work experience, a mix of work experience and education, or training through an FAA-approved program.

Pros:

• Air traffic control jobs can pay exceptionally well

• A college degree isn’t always required if you have appropriate work experience or training

• Job growth is not spectacular but demand is expected to hold steady

Cons:

• High-pressure job

• May require working long hours, including weekends and holidays

• Room for advancement may be limited

4. Nuclear Technician

Median pay: $99,340/year

Job growth outlook: -17%

Job description: Nuclear technicians work in nuclear facilities to assist physicists, engineers, and professionals in maintaining those facilities and conducting nuclear research.

Job duties and requirements:

• Monitoring nuclear facility equipment

• Measuring levels of radiation and collecting air, soil, and water samples to test for contamination

• Associate degree or equivalent military service

How to get started: Anyone interested in working as a nuclear technician may first want to obtain an associate degree in nuclear science or a related field. Job applicants may be able to substitute military experience for an associate degree if they had nuclear training while enlisted.

Pros:

• Nuclear technicians can be compensated well for their time and skills

• An advanced science degree is not necessarily a requirement

• Nuclear tech jobs may offer opportunities to work independently

Cons:

• Working in a nuclear facility is generally a high-risk job

• Job outlook is declining, which means there may be fewer nuclear technician jobs to go around in the future

• Advancement opportunities may be limited without a higher degree

5. First-Line Supervisor of Police and Detectives

Median pay: $99,330/year

Job growth outlook: 3%

Job description: First-line supervisors are responsible for overseeing the conduct of subordinate officers, managing investigations, and ensuring that all law enforcement protocols are properly applied.

Job duties and requirements:

• Assisting in criminal investigations as needed

• Managing daily operations of police and detective personnel

• High school diploma or equivalent

How to get started: Becoming a first-line supervisor begins with completing the necessary training to become a police officer. That usually means attending the police academy. Once hired as a rookie officer, individuals can work their way up the ranks to a supervisory position.

Pros:

• First-Line supervisors can earn a salary that’s close to six figures

• High school education may be enough to get started in a law enforcement career

• Additional room for advancement

Cons:

• Entry-level salaries may be relatively low

• It can take years to work your way up to a supervisor position

• Police work in general tends to be a dangerous profession

6. Transportation, Storage, and Distribution Manager

Median pay: $98,230/year

Job growth outlook: 8%

Job description: Managers are responsible for planning and coordinating transportation, storage, and distribution services or activities. Logistics manager is one job title that can fall under this occupational heading.

Job duties and requirements:

• Overseeing and organizing operations related to the transportation, storage, and distribution of movable goods or commodities

• Ensuring that all activities are completed in accordance with local, state, and federal law

• High school diploma or equivalent, plus relevant work experience

How to get started: Since this is a managerial role, it’s generally necessary to start off in an entry-level position in the transportation, storage, and distribution industry. On-the-job training and experience, as well as time on the job, can be key in earning advancement with this type of job.

Pros:

• Suitable for organized and detail-oriented individuals

• Well-above-average earning potential

• Industry is experiencing above-average job growth

Cons:

• May require long working hours

• Can be a high-pressure job

• Certain aspects may be more challenging, including working with a wide range of customers

7. Elevator and Escalator Installer and Repairer

Median pay: $97,860/year

Job growth outlook: 3%

Job description: Elevator and escalator installers and repairers assist with the installation, maintenance, and repair of elevator and escalator systems in commercial and residential properties.

Job duties and requirements:

• Develop and implement plans for elevator or escalator installation

• Maintain, service, and repair elevator and escalator equipment

• High school diploma or equivalent

How to get started: The typical path to becoming an elevator and escalator installer and repairer begins with completing an apprenticeship. Apprentices may join a program approved by a union or trade industry to learn the necessary skills.

Pros:

• No advanced degree needed to get started

• Great earning potential for high school grads who are interested in a hands-on technical job

• While job growth is slower than for other occupations, there continues to be high demand for workers with these skills

Cons:

• May need to work on-call, which can complicate work-life balance

• Elevator installers and repairers generally need to be comfortable working in close or cramped conditions

• The work can sometimes be hazardous

8. Power Plant Operator, Distributors, and Dispatchers

Median pay: $94,790/year

Job growth outlook: -15%

Job description: Power plant operators, distributors, and dispatchers oversee systems that generate and distribute electric power. Nuclear power reactor workers can also fall within this job category.

Job duties and requirements:

• Control and maintain equipment that’s used in power generation

• Routinely conduct safety checks to ensure equipment is functioning properly

• High school diploma or equivalent and on-the-job work experience

How to get started: A college degree is not required to work as a power plant operator, though it may benefit you to have an educational background in engineering or a related field. This job emphasizes extensive on-the-job training, though it’s possible you may need to obtain certain professional certifications for career advancement.

Pros:

• No degree is needed to qualify for this job

• Much of what you need to know can be learned on the job

• Power plant operators earn a competitive salary

Cons:

• Can involve hazardous working conditions

• May require working long hours or on-call

• Job growth is on the decline as use of renewable energy increases

9. Radiation Therapist

Median pay: $82,790/year

Job growth outlook: 6%

Job description: Radiation therapists administer radiation to people being treated for cancer and may work hand-in-hand with medical dosimetrists, medical physicists, and oncology nurses.

Job duties and requirements:

• Explain treatments to patients and answer any questions they might have

• Administer doses of radiation in a safe environment and at the levels specified by the patient’s treatment plan

• Associate degree or certificate program

How to get started: If you’re interested in a career in radiation therapy, you may need an associate degree in nursing or a certificate in nursing to qualify. State law may also require you to be licensed or certified and complete ongoing education requirements.

Pros:

• Earning potential is solid and there may be room for advancement

• Demand for radiation therapists appears to be holding steady

• Good for people with strong soft skills

Cons:

• May require working long hours

• Can involve a lot of standing

• Working with people who are severely ill can take a toll emotionally and mentally

10. Subway and Streetcar Operator

Median pay: $81,180/year

Job growth outlook: 4%

Job description: Subway and streetcar operators are responsible for the safe operation of subway trains, streetcars, and similar methods of transportation in compliance with local, state, and federal laws.

Job duties and requirements:

• Operate subway or elevated trains or streetcars to convey passengers from one location to another

• Some subway or streetcar operators may be charged with collecting fares

• High school diploma or equivalent and on-the-job experience

How to get started: You’ll need a high school diploma or GED to apply for subway or streetcar operator jobs. That’s typically sufficient to get most entry-level positions and from that point on, you’ll largely learn what you need to know to do the job through hands-on training and experience.

Pros:

• Pay scale is great for a job with no degree

• Not required to sit at a desk all day

• Working hours may be flexible

Cons:

• May involve dealing directly with the public

• There is some risk, as subway and streetcar accidents can happen

• No hard physical labor but may be mentally and emotionally draining

11. Signal and Track Switch Repairer

Median pay: $80,570/year

Job growth outlook: 4%

Job description: Signal and track switch repairers are responsible for keeping track switch systems used on rail lines functioning properly. They primarily work within the railroad system, though they may also be employed by state and local government agencies.

Job duties and requirements:

• Install and inspect track switches and signal equipment

• Test, maintain, and repair gate crossings along railroad lines

• High school diploma or equivalent and on-the-job training

How to get started: Getting an associate degree in electrical repair could give you an edge if you’re interested in getting hired as a signal and track switch repairer. However, it’s possible to break into this field with just a high school diploma because much of what the job requires is learned in a hands-on way. Completing an apprenticeship with an electrician could also be helpful.

Pros:

• No degree is required to enter this industry, though it’s something to consider

• Room for advancement

• Above-average pay

Cons:

• Generally requires good communication skills

• Work has the potential to be hazardous

• May require working on-call hours or long shifts

12. Postmaster and Mail Superintendent

Median pay: $80,250/year

Job growth outlook: -5%

Job description: Postmasters and mail superintendents oversee the operation of postal service branches and offices. This is technically not a federal job, but postal workers are entitled to the same benefits as federal employees.

Job duties and requirements:

• Plan, direct, and coordinate administrative, operational, management, and support services at U.S. post office locations

• Oversee the activities of employees working at post office branches

• High school diploma or equivalent and on-the-job training

How to get started: If you’re interested in postal service jobs, you can apply for them online through the post office website. You’ll need to complete the Postal Battery Exam, but no degree or prior experience is required in order to get hired. This could be a good way to continue working after retirement.

Pros:

• Room for advancement

• Competitive pay and great benefits, including paid leave and health insurance

• Full-time postmasters generally have weekends off

Cons:

• Seasonality can make this job more hectic at certain times of the year

• May involve dealing with the public from time to time

• Job growth is on a slight decline, though there continues to be demand for postal workers

13. First-Line Supervisor of Firefighting and Prevention Workers

Median pay: $80,890/year

Job growth outlook: 4%

Job description: First-line supervisors oversee the activities of firefighting and prevention workers. They’re responsible for coordinating the operation of fire departments and may be referred to as a fire chief or fire captain.

Job duties and requirements:

• Respond to fire calls and assign firefighters specific tasks to extinguish fires and rescue persons who may be trapped in affected buildings

• Assess fire damage and write reports summarizing fire calls

• Postsecondary non-degree certificate and on-the-job training

How to get started: A high school diploma may be sufficient to apply for a firefighter job, though it may benefit you to earn a degree in fire science if you’re hoping to obtain a managerial or supervisory role. You’ll need to be physically fit, attend fire academy, and complete a written exam as part of the application process.

Pros:

• Opportunity to give back to your local community and do work that’s rewarding

• Solid earning potential with room for advancement

• Firefighting jobs include a solid employee benefits package

Cons:

• Can involve working long hours and on-call hours, which can make achieving work-life balance difficult

• Job may be physically demanding

• Firefighting can also be mentally and emotionally taxing

14. Dental Hygienist

Median pay: $77,810/year

Job growth outlook: 9%

Job description: Dental hygienists typically work in dental offices and perform basic preventative care for patients, including visual exams and cleanings. They may work on a part-time or full-time basis.

Job duties and requirements:

• Perform dental cleanings and take X-rays

• Educate patients on proper dental hygiene techniques

• Associate’s degree and licensing, when required by the state

How to get started: High school graduates who have taken courses in health or science may have a good framework for pursuing an associate degree in dental hygiene or enrolling in a dental hygiene training program. Licensing and certification may be required by the state before you can work in a dentist’s office.

Pros:

• May offer the flexibility of part-time or full-time work

• Potentially a great job for people who enjoy interacting with others

• Dental hygienists typically have nights and weekends off

Cons:

• Some patients may be more challenging to work with than others

• May require lots of standing and bending which can take a toll physically

• Training and licensing can take time and money to complete

15. Police Officer and Detective

Median pay: $66,020/year

Job growth outlook: 3%

Job description: Police officers enforce the law and protect people and property. Detectives investigate crimes, which can include collecting evidence, interviewing witnesses and potential suspects, and testifying in criminal court cases.

Job duties and requirements:

• Police officers respond to emergency and non-emergency calls, patrol assigned areas, make arrests, and execute search warrants

• Detectives investigate crimes in order to identify victims and suspects, and collect evidence for cases that may be referred for prosecution

• High school diploma or equivalent and on-the-job training

How to get started: A high school diploma may be all you need to apply for police officer training at a local accredited academy. Some departments may require an associate or bachelor’s degree. You’ll need to be physically fit and successfully complete a psychological evaluation.

Pros:

• Opportunity to serve in your local community and give back

• Room for advancement, particularly if you’re interested in detective work or a supervisory role

• Opportunities for specialization if you’re interested in becoming a game warden or eventually pursuing a career in federal law enforcement

Cons:

• Entry-level pay may be on the lower end

• While a degree is not necessarily required, getting hired can be a rigorous process

• Work involved can be mentally, emotionally, and physically taxing, and in some cases dangerous

16. Aircraft and Avionics Equipment Mechanic and Technician

Median pay: $65,550/year

Job growth outlook: 6%

Job description: Aircraft and avionics equipment mechanics and technicians maintain and repair aircraft. They can work at airports, repair stations, or hangars, and some may have previous experience serving planes in the military.

Job duties and requirements:

• Diagnose mechanical or electrical problems with aircraft and make repairs

• Test aircraft instruments to ensure that they’re in good working order

• High school diploma, though an associate’s degree doesn’t hurt

How to get started: People who are interested in working in avionics may be able to enter the field with just a high school diploma, though some employers may look for an associate degree or higher. Technicians may need to complete FAA-approved training.

Pros:

• The work itself might be interesting to someone who’s fascinated with planes or mechanical engineering

• Above-average pay

• Job growth outlook suggests that these jobs will continue to be in demand

Cons:

• Working around airplanes and other aircraft can lead to hearing loss

• FAA certification is required, which can take time to complete

• Work schedules may be less flexible than other jobs

17. Claims Adjuster, Examiner, Appraiser, and Investigator

Median pay: $64,710/year

Job growth outlook: -6%

Job description: Claims adjusters, examiners, appraisers, and investigators handle various aspects of insurance claims filings. They typically work full-time and help insurance companies decide when to pay claims, based on the information they gather.

Job duties and requirements:

• Investigate, evaluate, and settle insurance claims, including determining how much an insurer should pay

• Review claims information to look for signs of insurance fraud

• High school diploma or equivalent

How to get started: If you’re interested in insurance jobs, the path you follow can depend on what type of role you’re interested in. If you’d like to be an appraiser, for instance, you might complete a postsecondary non-degree award program and gain experience by working in an auto body shop.

Pros:

• While job growth is expected to decline, demand for adjusters and related roles is set to rise as currently employed professionals age into retirement

• Depending on which role you’re interested in, your work may take you outside the office versus keeping you at a desk all day

• Work may be interesting for people who have an inquisitive nature

Cons:

• Gathering information and writing reports can be tedious

• A bachelor’s degree may be required for certain jobs

• Work schedules may be less flexible than other jobs

18. Fire Inspector

Median pay: $63,080/year

Job growth outlook: 6%

Job description: Fire inspectors are responsible for visiting commercial and residential buildings and ensuring that they’re observing proper fire safety protocol. They can also specialize in fire prevention education or forest fire management.

Job duties and requirements:

• Inspect buildings to look for fire hazards and ensure that structures are aligned with local, state, and federal fire codes

• Review building plans with developers to ensure that new construction meets fire code standards

• High school diploma or equivalent and previous experience as a firefighter

How to get started: Typically, fire inspectors first work as firefighters, though that isn’t necessarily a requirement for candidates who have other suitable education or training. A high school diploma may be sufficient for the job, though it may benefit you to earn a degree in fire science or attend a fire academy.

Pros:

• Fire inspection is typically less hazardous than firefighting

• Above-average pay with room for higher earnings if you decide to complete a degree program

• Can be a rewarding job for people who want to do work that serves the public good

Cons:

• Previous experience as a firefighter may be a requirement to get hired

• Working hours may be long and irregular

• Fire inspectors may potentially be exposed to hazardous materials or substances during the course of their work

19. Water Transportation Worker

Median pay: $62,760/year

Job growth outlook: 1%

Job description: Water transportation workers operate vessels that transport goods or people over bodies of water. Ferry operators, barge operators, and ship captains are all examples of water transportation workers.

Job duties and requirements:

• Operate and maintain marine vessels in accordance with local, state, and federal laws

• Ensure the safety of people or cargo on board marine vessels

• High school diploma or equivalent and relevant work experience

How to get started: There are different requirements for each type of water transportation role. Sailors, for instance, typically don’t need formal education, but you might need Coast Guard-approved training to captain a ship or helm a barge. Certain water transport workers may need to obtain Merchant Mariner credentials or Transportation Worker Identification credentials.

Pros:

• Water transport jobs may appeal to people who love being on open water or want to work outdoors

• A bachelor’s degree isn’t always necessary but it could lead to higher earnings and promotions

• More new openings are expected over the next decade as existing water transport workers retire

Cons:

• Work schedule may be highly irregular and require you to spend extended periods of time away from home

• Work hours may be long, with little time for breaks

• Operating marine vessels can be a hazardous occupation

Recommended: Should I Sell My House Now or Wait?

20. Electrical and Electronics Installer and Repairer

Median pay: $61,760/year

Job growth outlook: -1%

Job description: Electrical and electronics installers get paid to install and repair electrical or electronic equipment. They may work in repair shops or factories and usually work on a full-time basis.

Job duties and requirements:

• Inspect and test equipment to diagnose potential issues

• Disassemble, reassemble, clean, and repair equipment

• Training and education at the trade school level

How to get started: Electrical and electronics installers and repairers are typically expected to complete a training program through a trade, vocational, or technical school. Hands-on training, either through a school program or apprenticeship, can also be highly useful when seeking these types of jobs.

Pros:

• No bachelor’s degree required

• Could be ideal for people who enjoy hands-on work

• Licensing and certification may not be required, but it could help to open up opportunities for advancement or higher earnings

Cons:

• Job growth is stable but not spectacular

• Working around electricity and electronics is not a risk-free job

• Can be a physical job that requires lots of standing, squatting, bending, and lifting

21. Occupational Therapy Assistant and Aide

Median pay: $61,520/year

Job growth outlook: 25%

Job description: Occupational therapy assistants and aids work in healthcare settings, including hospitals, doctor’s offices, and nursing care facilities. They help patients to develop necessary skills for daily living and working.

Job duties and requirements:

• Occupational therapy assistants provide therapy services to patients

• Occupational therapy aides provide support services to occupational therapy assistants

• High school diploma for aides; associate degree for assistants

How to get started: If you’re interested in becoming an occupational therapy assistant aide, then a high school diploma may be all you need. You could pursue an associate degree if you’d like to advance into an occupational therapy assistant role. Certifications in CPR and basic life support may also be required for these types of jobs.

Pros:

• One of the fastest growing jobs in healthcare with excellent demand for qualified candidates

• Great earnings potential for people with a high school diploma

• May allow for travel or flexible work schedules

Cons:

• Can be a physically demanding job

• Flexible working hours are not always guaranteed, and you may need to work nights or weekends

• Certain patients may be more challenging to care for than others

22. Court Reporter and Simultaneous Captioner

Median pay: $60,380/year

Job growth outlook: 1%

Job description: Court reporters transcribe official court proceedings, including trial proceedings, hearings, and depositions. Simultaneous captioners provide transcription services for video recordings that require closed captioning.

Job duties and requirements:

• Court reporters attend court proceedings and transcribe the details word-for-word

• Captioners transcribe dialogue for video recordings, including television shows and films, that are used to create captions for viewers

• Certificate or associate degree

How to get started: Becoming a court reporter or captioner may start with completing a certificate or associate degree program at an accredited trade school. Court reporters may need to complete additional training to learn how to use transcription software. States may require certification or licensing for court reporters and captioners.

Pros:

• Good-paying job for people without a four-year degree

• Opportunities exist to do court transcription or captioning work on a freelance basis

• While job growth is steady, rather than fast, demand is stable overall

Cons:

• Work may involve sitting for long periods of time

• Working hours may be long and might necessitate taking work home with you

• Could be stressful as there’s no room for errors or mistakes

23. Telecommunications Equipment Installer and Repairer

Median pay: $60,370/year

Job growth outlook: 8%

Job description: Telecommunications and equipment installers and repairers are responsible for installing, maintaining, and repairing telecommunications equipment, including phone lines, cable lines, and wireless communication equipment.

Job duties and requirements:

• Install telecommunications equipment in commercial and residential structures

• Inspect, service, and repair telecommunications equipment

• Certificate or associate degree

How to get started: Telecom equipment installation and repair jobs typically require some form of education beyond high school. Depending on the employer, that might mean a certificate or associate degree. Once hired, you can expect to complete on-the-job training.

Pros:

• May involve travel or working in different settings, which is great for people who get bored easily

• Salaries are above-average, with room to advance and increase earnings

• Affords opportunities to meet new people and flex your problem-solving skills

Cons:

• Average salaries are not as high as what you might get with other good paying jobs that don’t require college

• Additional education may be required for certain jobs

• This kind of work has the potential be dangerous; for example, there is a risk of falls associated with servicing cell phone towers

24. Commercial Diver

Median pay: $60,360/year

Job growth outlook: 15%

Job description: Commercial divers can work in a number of capacities, but generally they’re paid to use their scuba skills. For example, divers employed by the oil and gas industry may be charged with inspecting underwater drilling structures to check for damage or structural issues.

Job duties and requirements:

• Some commercial divers are paid to inspect and repair underwater structures and equipment

• Other commercial divers may earn a living by photographing marine life

• Postsecondary non-degree award and scuba training

How to get started: Becoming a commercial diver starts with deciding what type of work you want to do. For instance, if you want to get paid to photograph marine life, then you may want to complete a photography certificate program at an accredited school. If you’re interested in using your diving skills to repair underwater structures, then you may need to learn a specialized skill like welding.

Pros:

• Diving for a living can be a fun job for people who like being in the water

• Advanced education or training may not be a requirement for entry-level jobs

• Diving jobs can offer flexibility and great earning potential

Cons:

• Can be physically demanding

• Work may not always be steady or consistent if you’re hired as a contract worker

• Diving is an inherently dangerous activity

25. Drafter

Median pay: $60,290/year

Job growth outlook: -3%

Job description: Drafters use software programs to convert engineering and architectural designs into technical drawings. They may work in a variety of fields, including architecture, engineering, manufacturing, and construction. This could be a lucrative work-at-home job for retirees.

Job duties and requirements:

• Use Computer Aided Design (CAD) software to design plans, working from sketches done by architects or engineers

• Specify dimensions and materials for new building projects

• Certificate, diploma, or associate degree

How to get started: Drafters may continue their high school education by attending a trade school to obtain a certificate or associate degree. They may also opt to obtain certifications in their field, though that isn’t always necessary to get hired.

Pros:

• Drafting may be a good career for someone who’s artistic or creative

• Getting certification or earning a four-year degree could boost your earning potential

• Job growth is projected to slow but there will still be demand for drafters as current employees retire

Cons:

• Requires exceptional attention to detail with no room for error

• Economic disruptions, such as recessions, may reduce demand for drafters if construction slows

• Certain aspects of the job can be repetitive or tedious

Recommended: What is The Difference Between Transunion and Equifax?

The Takeaway

Finding a good paying job without college is possible. Some require technical education, military training, or on-the-job experience. Industries that welcome high school grads include transportation, law enforcement, power plants, telecoms, the postal service, and healthcare. Perks can include the opportunity to travel and flexible hours. Some jobs pay more than $100K.

Using a spending app can help you stay on top of your financial situation once you finally begin collecting a paycheck. SoFi’s money tracker app can simplify the way you manage your income, budgets, and savings goals. See all of your money in one place, and even track your credit score as you work on improving your financial health.

Track your finances like a champion.

FAQ

What good jobs can you get if you don’t go to college?

Some good paying jobs you can get without college include air traffic controller, law enforcement, and certain healthcare roles. Trade jobs and jobs in transportation can also pay well and don’t necessarily require a college degree.

How can I get 6 figures without going to college?

If you’re interested in making six figures without a college degree, you’ll need to either find a good paying job or start a successful business. It’s possible to make six figures online as a freelance writer or blogger, if you have good writing skills and are motivated to grow your business.

How do people make a living without a college degree?

Plenty of people make a living without a college degree by using their skills and experience to land good paying jobs. Others can earn a good living, including making six figures a year, by starting their own business, which doesn’t necessarily require a degree.

Photo credit: iStock/MesquitaFMS

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

SORL1022004

Source: sofi.com

Apache is functioning normally

November 4, 2024 by Brett Tams

The Offer

Capital One is offering a 20% transfer bonus to British Airways Avios. Normally the transfer rate for British Airways Avios is 1,000:1,000, with this transfer bonus it is 1,000:1,200

The Fine Print

Valid until 12/1/2024

Our Verdict

Not a bad deal, we usually see this once a year at around this time of year. Useful if you need Avios.

Source: doctorofcredit.com

Apache is functioning normally

November 4, 2024 by Brett Tams

Everyone knows high mortgage rates have been a total drag lately, especially for prospective home buyers facing extremely high asking prices.

But what if I told you that nearly half of those who purchased a home recently still got an interest rate below 5%?

Sounds pretty unlikely, given the fact that the 30-year fixed is back over 7%, and never went lower than 6% for the duration of 2024.

However, that didn’t stop 45% of “mortgage buyers” (non-cash buyers) from obtaining a sub-5% mortgage rate, per a new survey from Zillow.

As for how, the most common reason cited was special financing offered by the seller or home builder.

Special Mortgage Rates from Home Builders

One of the most common ways to get a below-market mortgage rate has been via the home builders.

They often operate in-house mortgage companies to ensure their customers make it to the finish line.

And thanks to a financing tool call “forward commitments,” they’re able to offer super low mortgage rates to the customers who use their captive lender.

Those commitments involve buying low mortgage rates in bulk, ahead of time, and then deploying the low rates to customers who buy properties in select communities.

While some only offer temporary rate buydowns, lately many have offered permanent rate buydowns for the full 30-year loan term.

This probably sounds pretty sweet, but keep in mind you need to buy a newly-built home to get your hands on a special rate.

Some have argued that the discount is built into a higher sales price, so proceed with caution.

Also read my piece on using the home builder’s mortgage lender for more on that.

For the record, individual home sellers can offer sales concessions that can be used to buy down the mortgage rate too.

And together with builder buydowns, that was the most commonly cited reason for a low rate at 35%.

Another 26% said their offer was contingent on a rate buydown from the seller/builder. So more than half of the low rates came from these arrangements alone.

Buying Points to Lower Your Rate

The third most common reason a recent home buyer was able to get a low mortgage rate was due to paying discount points (at 23%).

If you have the available funds, it’s always an option to buy down your rate by paying some money upfront.

This is a form of prepaid interest where you pay today for savings tomorrow. The key though is keeping the loan long enough to experience the savings.

The problem with this is if mortgage rates happen to go even lower before the breakeven point (when the points become profitable), it disincentivizes a rate and term refinance.

Or if you happen to sell the property too soon, same thing. In contrast, temporary buydowns don’t result in lost funds.

If you sell/refinance soon after a temp buydown, the leftover funds are typically applied to the outstanding loan balance.

Long story short, there’s risk when buying points in that you’ll leave money on the table.

The same could be said of temporary buydowns in that mortgage rates might not be lower when the rate reverts to the higher note rate.

A lot of folks have bought the house and dated the rate, assuming the mortgage rates would come down. So far they haven’t.

Got a Mortgage from a Friend or Family Member

Another 23% of buyers said they got a low rate because they borrowed from a friend or family member.

This is pretty surprising to me seeing that it’s such a large share of the population. I can’t imagine that many home buyers getting special financing from mom and dad or someone else.

But per Zillow’s study, this is what the numbers indicate. For me, it’s pretty rare to use intrafamily financing, but it definitely is a thing, especially with rates so much higher today.

An example would be your parents offering to finance your home purchase with a special low rate from the Bank of Mom and Dad, perhaps at a cool 3.99%!

If you’re so lucky, great. But for most this sadly isn’t a reality.

Another common reason folks got a sub-5% mortgage rate was by refinancing after they bought the home.

They must have nailed the timing (and paid points) because rates never officially went below 6% this year.

Lastly, sub-5% mortgage rates were associated with adjustable-rate mortgages, homebuyer assistance, and shorter loans terms, such as the 15-year fixed.

Of course, if it’s not a 30-year fixed, sub-5% doesn’t have quite the same meaning or value.

Still, it’s impressive to see that nearly half of home buyers got creative and found a way to overcome the mortgage rate hurdle.

Problem is there’s still the high home price to contend with, and little way around that at the moment.

The Zillow Consumer Housing Trends Report 2024 study involved 18,500 successful home buyers and was fielded between March and September 2024.

Latest posts by Colin Robertson (see all)

Source: thetruthaboutmortgage.com