Home prices continued to accelerate in August, rising a seasonally adjusted 0.68% from July and hitting another record high for the fourth consecutive month.
Prices in nearly half of the nation’s 50 largest markets climbed by 0.75% or more. Even on a non-adjusted basis, August’s gain of 0.24% was more than 60% larger than the 25-year average for the month, according to a mortgage monitor report from Intercontinental Exchange, Inc. (ICE).
“Either way you look at it, the increase was sufficient to push annual appreciation up to a stronger-than-expected 3.8%. This marks three months of clear acceleration in the rate of growth at the national level, with annual HPA up from 2.4% in July and just 0.25% back in May,” said ICE’s Vice President of Enterprise Research Andy Walden.
While home affordability recently hit a 38-year low due to spiking rates and home prices, Walden noted that it might yet get worse.
If adjusted home prices were to freeze where they are now, it would result in annual home price appreciation rising above 5% by the end of this year given the strong price increases seen earlier in 2023.
“On the other hand, if the 0.64% per month seasonally adjusted price increases we’ve seen on average in 2023 were to continue, we’d be looking at nearly 8% year-over-year growth by December,” Walden noted.
The high-interest rate environment continues to put downward pressure on mortgage origination activity.
Purchase loans comprised about 82% of overall mortgage lending in 2023 and ICE forecasts purchase lending to continue to dominate the market through next year.
There is modest opportunity in the refinance market although it is defying traditional analysis, according to ICE’s mortgage monitor report.
The profile of cash-out borrowers – who made up roughly 90% of all Q2 refinances – has shifted considerably in recent quarters.
While the average unpaid principal balance of borrowers entering a refinance has fallen from $319K in early 2020 to $183K in August 2023, it is even lower ($165K) among cash-outs specifically.
Alongside rising interest rates, the average equity withdrawal among cash-out refinances has also risen by nearly 90% from its low in 2020.
Today’s candidates are far more focused on tapping equity, and cash-outs may make sense for borrowers with lower balances looking to withdraw large amounts of equity at lower interest rates than what is available via a HELOC, ICE noted.
“With nine of 10 August 2023 refinances involving the borrower raising their interest rate – with an average rate increase of 2.34 percentage points – simple ‘in the money’ analytics are missing this market almost entirely. Granular insight into the before-and-after-refinance picture is key to understanding who is transacting in today’s rate environment – and more importantly, why, ” Walden said.
The average cash-out credit score of 715 is down more than 40 points in less than three years and is among the lowest in the post-Great Financial Crisis era.
Higher credit borrowers who can qualify in today’s market are more likely opting for HELOCs as a way of tapping equity, leaving a lower credit score residual among cash-out refis.
Mobile homes may be more affordable than traditional homes, but purchasing one still often requires a loan. However, the types of mobile home loans offered by each lender may vary. Many companies offer personal loans for mobile homes, while others offer a mortgage loan option for those who qualify.
To help you find the best mobile home financing, we looked at some of the best mortgage lenders and researched their loan offerings. Whether you’re interested in the best home equity loans or loans for investment properties, we looked into the best lenders for each situation.
Our Top Picks for Best Mobile Home Loans
USDA: Best for rural areas Vanderbilt Mortgage and Finance: Best for a variety of loan options Manufactured Nationwide: Best for low credit scores ManufacturedHome.Loan: Best for good credit scores 21st Mortgage Corporation: Best for mobile homes within a community or park eLEND: Best for first-time buyers Guild Mortgage: Best for protection packages Caliber Home Loans: Best for veterans PenFed Credit Union: Best for high personal loan limits AmeriSave: Best for fast approval
Best Mobile Home Loans Reviews
100% financing with no down payment required
Low credit requirement
Income limits and geographic restrictions
USDA-guaranteed loans include a guarantee fee
Why we chose it: The United States Department of Agriculture (USDA) offers Section 502 direct and guaranteed loans and Section 504 home repair loans. Most USDA loans offer 100% financing, requiring no down payment, and are intended to help low- and moderate-income households afford a home purchase.
USDA loans are offered through many of the lenders on our top ten lists, but buyers can also apply through the USDA Rural Development Loan program. These loans can be used to purchase, build, repair, or refinance a primary residence, including a mobile home, and you can borrow 100% of the home’s value, so there is no down payment.
Most USDA loans do not come directly through the USDA, but rather through other lenders, and the USDA backs and guarantees them. Borrowers who apply through third-party lenders will be subject to a guarantee fee, which, similar to mortgage insurance, is generally rolled into the total amount of your loan. USDA loans have some eligibility requirements, including a credit score of 640, a willingness to repay the mortgage and United States citizenship or legal permanent residency.
HIGHLIGHTS
Loan term
30 year
Min. credit score
None
Types of loans
USDA
Max. loan amount
Varies
Lengthy loan terms
Fast approval
Variety of loan options
Down payment required
Limited information available without application
Why we chose it: Vanderbilt Mortgage and Finance (VMF) has been around for almost 50 years and is a Berkshire Hathaway company and a partner with Clayton Homes. We included this company on our list because of the many types of loans it offers as well as its long-term financing and fast approval. The partnership offers loans to borrowers in all 50 U.S. states.
VMF loans are available for mobile homes and manufactured homes. They can also be used for home improvement and to upgrade your home’s energy efficiency through the eScore program. The company offers traditional home loans, FHA-backed loans, variable loans and fixed-rate loans. The company has six types of loans in total:
Pre-owned financing
Home upgrade loans
Land and home mortgages
Fresh start home loans
Portfolio home loans
Biweekly advantage loans
Loan values start at $10,001.00, except in Kansas, where the minimum is $25,001.00. Repayment terms vary, and loans are usually funded within three days of closing. Borrowers also have five options for making monthly payments: money transfer service, money order or check, phone, automatic payment or online payment.
The downside to VMF loans is that a down payment is required, and the company’s website provides limited information about its products and doesn’t post a minimum credit score requirement.
HIGHLIGHTS
Loan term
Up to 30 years
Min. credit score
Not posted
Types of loans
Traditional, FHA, variable, fixed
Max. loan amount
Based on credit score
Loans to borrowers in all 50 U.S. states
Good for those with low to fair credit
No down payment in some cases
No loans for homes in mobile home parks or on rented land
Lengthy closing process
Why we chose it: Manufactured Nationwide is a suitable option for those with low credit scores because there are different credit requirements depending on the desired loan. Borrowers must have a minimum credit score of 620 for VA loans, 640 for manual underwriting and 660 for conventional FHA loans. Down payment requirements vary based on the loan, but in some cases, you don’t need to put any money down.
Owned by The Federal Savings Banks, a federally chartered, veteran-owned organization, Manufactured Nationwide made the list because of its extensive work with government-backed, low-down-payment programs. The company lends in all 50 U.S. states and offers FHA, VA and USDA loans.
Loan terms are set at 15, 20 or 30 years, and it also offers competitive fixed rates guaranteed by government-backed programs. One such program enables consumers to borrow up to $3 million.
Manufactured Nationwide does have a lengthy closing process and doesn’t offer loans for mobile homes on rented land or in parks unless approved by Fannie Mae.
HIGHLIGHTS
Loan term
15, 20 or 30 years
Min. credit score
580
Types of loans
FHA, VA and USDA
Max. loan amount
$3 million
Option to finance mobile homes as a vacation property
Option to finance homes located in mobile home parks
Special programs for first-time home buyers
Website is not user-friendly
Interest rates aren’t posted
Why we chose it: A licensed nationwide mortgage broker, ManufacturedHome.Loan works with eLEND to offer competitive terms to borrowers. Those with higher credit scores may be able to access lower interest rates because the company offers a variety of borrowing options through eLEND.
Even those with low credit scores can borrow through the company’s government-backed programs like FHA and VA loans, and the company offers special programs for first-time home buyers. Loan maximums, interest rates and down payment requirements vary based on credit score.
ManufacturedHome.Loan is unique because it will finance a mobile or vacation home that is situated on leased land. The company finances and refinances both new and used mobile home purchases.
ManufacturedHome.Loan also offers chattel loans for mobile or manufactured homes that are not affixed to the land. For existing homes, terms are set at 23 years, and for new homes, terms are set at 25 years.
ManufacturedHome.Loan doesn’t post interest rates, so you’ll need to speak to a representative or fill out an application to request more information. Compared to the other sites we studied, the company’s website is somewhat less user-friendly.
HIGHLIGHTS
Loan term
Varies
Min. credit score
Not posted
Types of loans
FHA, VA, construction, 30-year fixed, 15-year fixed, chattel
Max. loan amount
Varies based on credit and income
Good for those with low credit scores
Financing available for new or used mobile homes
Available in most U.S. states
No prequalification option
Lengthy closing process when purchasing land
Why we chose it: 21st Mortgage Corporation stands out as a company that will finance both new and used mobile and manufactured homes on leased land. Loans are available to borrowers in every U.S. state except Alaska, Hawaii, Massachusetts, and Rhode Island.
21st Mortgage Corporation doesn’t require a minimum credit score, and down payments on property range anywhere from zero to 35%. If your credit score is below 570, a 35% down payment is required. Fortunately, this down payment can come in the form of land equity, trade-in, cash or any combination of the three.
Borrowers must have a debt-to-income ratio below 43% to qualify without providing additional documentation or a co-signer. The company will lend up to $16,000 for a mobile home property purchased through a retailer and $25,000 for refinanced properties or those purchased from another individual.
Borrowers can apply online, and the process takes approximately four to six weeks for home-only loans. If land is included in the loan, the processing time may take six to eight weeks.
One drawback to 21st Mortgage Corporation is that it does not offer a prequalification option, so you may not know how much you are authorized to borrow until you’ve already applied.
HIGHLIGHTS
Loan term
Varies
Min. credit score
No minimum credit score
Types of loans
Manufactured and mobile home refinances and loans
Max. loan amount
Varies
Assistance with down payments
Lengthy loan terms
Education programs for first-time buyers
For a mobile home loan, you must own the land
Higher minimum credit score
Why we chose it: eLEND provides loans for new homes, first homes, multi-family homes, investment properties and vacation homes. It’s a good option for first-time borrowers because the down payment requirements are low and the company educates borrowers about loans. eLEND also offers down payment assistance for those who need it.
One of the drawbacks to eLEND is that it only offers mobile home loans in rural zones, as determined by the USDA. The minimum credit score required is 620, but those with a score of 660 or above are eligible for more programs. Down payments can range from zero to 3.5% for those who qualify. Loan terms may extend up to 30 years. To be approved for a mobile home loan from eLEND, you must own the land your mobile home is located on or take out a personal property loan to purchase it.
HIGHLIGHTS
Loan term
30 years
Min. credit score
620
Types of loans
Refinance, investment property, multi-family, vacation and mobile homes
Max. loan amount
Varies
E-closing options
Seamless application and submission process
Variety of loans for investments, second homes and primary residences
Not available in all U.S. states
No home equity lines of credit or loans
Why we chose it: We like Guild Mortgage for its e-closing options, seamless application and submission process, and wide variety of loans for homes and investment properties.
Guild Mortgage offers robust protection packages for borrowers. The Homebuyer Protection program includes Credit Approval Protection, which protects those who are unable to close with a lender, offering up to $5,000 in lost earnest money and $1,000 for certain expenses. It also includes the Homebuyer Express guarantee, which provides a 17-day closing guarantee or the borrower will be reimbursed $500 in closing costs and a Lock and Shop program that locks in your interest rate for 120 days.
Minimum credit score requirements vary based on the type of loan. For VA or USDA loans, you must have a credit score of at least 540. For conventional loans, your credit score must be at least 620, and for jumbo loans, it must be at least 680.
Guild Mortgage works with more than 500 down payment assistance programs to provide support to first-time homebuyers with little savings. The drawback is that it isn’t available in all 50 U.S. states and doesn’t offer home equity lines of credit or loans.
HIGHLIGHTS
Loan term
Varies
Min. credit score
540 (varies by type of loan)
Types of loans
USDA, FHA, VA and conventional
Max. loan amount
Varies
Personalized team for U.S. military members
Down payment assistance programs
Variety of loan options
Interest rates aren’t posted
No home equity loans or lines of credit
Why we chose it: Caliber Home Loans provides a wide range of resources for U.S. military borrowers, including assistance to those who are lacking sufficient funds to make a down payment. The company offers both conventional and government-backed loans with fixed and variable interest rates.
Caliber Home Loans has a special in-house team dedicated to helping members of the U.S. military and provides personalized customer service to those utilizing VA loans. The company has branches throughout the U.S. as well as a mobile app that keeps you updated during the borrowing process.
The drawbacks to Caliber Home Loans are that it doesn’t offer home equity loans or lines of credit and that its current interest rates are not posted on its website.
HIGHLIGHTS
Loan term
Varies
Min. credit score
620
Types of loans
USDA, VA, FHA, adjustable, fixed, jumbo, refinance and purchase
Max. loan amount
Varies
Available to any eligible borrower in the U.S.
Loans funded in as little as one week
Terms ranging from 12 to 60 months
Payments only reported to one major credit bureau
Must maintain a member savings account
Why we chose it: PenFed offers personal loans with a limit of up to $50,000, a high amount for those who choose to use this type of loan to finance a mobile home. It also has various types of loans available: FHA, jumbo, adjustable rate mortgage, conventional fixed, VA and Power Buyer loans. The credit union also provides a home equity line of credit, refinancing options and VA Interest Rate Reduction Refinance Loans.
The second largest credit union in the nation, PenFed was formerly only available to members of the U.S. military but is now open to any eligible borrower. In order to qualify for a loan, borrowers must also maintain a member savings account with PenFed.
Most of the personal loans offered by PenFed have terms of 12 to 60 months. If you qualify for a mortgage loan to finance a mobile home, no down payment is required. Flexible income and credit requirements make it easier for first-time homebuyers and those with no credit to qualify for a mobile home loan.
If you are looking to improve your credit, PenFed may not be the best option because it only reports payments to one major credit bureau.
HIGHLIGHTS
Loan term
Up to 30 years
Min. credit score
Lenient credit requirements
Types of loans
FHA, VA, jumbo, conventional fixed, adjustable rate and Power Buyer
Max. loan amount
Varies
Simple, user-friendly application process can be completed on your mobile device
Variety of loan products and types
No home equity loans
Not available in New York
Why we chose it: If you plan to finance your mobile home with a personal loan, AmeriSave offers approval in just minutes, zero origination fees, fixed rates and loans from $5,000 to $50,000. AmeriSave has a simple, user-friendly application process that can be completed from any mobile device.
AmeriSave offers some of the best mortgage refinance and purchase loans with adjustable and fixed rates. Government-backed loans like VA, USDA and FHA loans are also available in every U.S. state except New York. Cash-out refinances are available, but home equity loans are not.
HIGHLIGHTS
Loan term
Varies
Min. credit score
620
Types of loans
Fixed, adjustable, FHA, VA, USDA, purchase, refinance
Max. loan amount
Varies
Ads by Money. We may be compensated if you click this ad.Ad
Other companies we considered
New American Funding
Offers both adjustable and fixed-rate loans
Offers programs to assist Black and Latino borrowers
Must apply to see fees
Not available in Hawaii
Founded in 2003 and based in California, New American Funding offers home loan options to borrowers in all U.S. states except Hawaii. Borrowers can choose between adjustable and fixed-rate mortgages, and the company has programs to assist Black and Latino borrowers.
Why it didn’t make the cut: New American Funding doesn’t disclose its fees until after you’ve applied for a mortgage.
Rocket Mortgage
Offers a variety of types of loans
Entire process is completed online
No USDA loans or home equity loans
No in-person service option
Formerly known as Quicken Loans, Rocket Mortgage was founded in 1985 and is the largest mortgage lender in the U.S. Borrowers benefit from a completely digital experience and access to jumbo, fixed-rate mortgage, refinance, VA, FHA, ARM and conventional loans.
Why it didn’t make the cut: Rocket Mortgage doesn’t offer USDA loans or home equity loans. There is no option for in-person service, so borrowing is more challenging for those who prefer a personal touch.
Mobile Home Loans Guide
Main things to know before choosing a mobile home loan
The type of loan you need will largely depend on your income, credit score, the lender you choose and the amount you want to borrow. For some borrowers, a personal loan may be sufficient, while others may opt for a mortgage loan to finance a mobile home. In most cases, a mortgage loan is preferable to a personal loan because the loan amounts are higher, the repayment terms are longer and the credit requirements are more flexible.
Before applying for a mobile home loan, consider doing the following:
Check your credit score: If it’s less than 600, research ways to raise your credit score.
Save for a down payment: While some loans don’t require a down payment, many offer lower interest rates and better terms to those who put some money down.
Research loan types: Most lenders offer conventional loans, FHA loans, VA loans and USDA loans. Some even offer investment property loans and LLC loans.
What are the different types of mobile home loans?
In addition to personal loans, there are three primary types of mobile home loans:
Construction mortgage: Enables you to borrow specific amounts of money at different times if you purchase your mobile home and land separately
End mortgage loans: Provides financing for a residence that has already been built
Chattel mortgage: Used to finance a residence that doesn’t include land, such as those situated in a mobile home park or on leased land
Traditional mortgage loans include the following:
Adjustable-rate mortgages (ARM loans): Involves interest rates that fluctuate throughout the life of the loan
Conventional loans: Not backed by the government and available as both non-conforming (jumbo loans) and conforming (loans that meet the guidelines of Fannie Mae and Freddie Mac) loans
Jumbo loans: Ideal for borrowers with good credit who need a substantial loan
Government-insured loans: Ideal for those with low credit scores and no down payment; for example, FHA, VA and USDA loans
Fixed-rate mortgages: Determines a fixed, predictable monthly payment for the life of the loan based on the mortgage rates at the time the loan is originated
What are the requirements for a mobile home loan?
The requirements for a mobile home loan depend on the lender you choose. Most lenders offer loans to those with a credit score of 600 or above, and many offer 100% financing so you don’t have to provide a down payment. Some require collateral, which is property that is used to secure the loan.
How to get a loan for a mobile home?
The first step to securing a loan for a mobile home is to check your credit score and improve it as much as possible. Then save for a down payment and choose a lender that offers the flexibility and benefits you need. Finally, research the lender’s interest rates, loan terms, loan amounts and any other borrower qualifications.
Mobile Home Loans FAQs
What are the current interest rates for mobile home loans?
chevron-down
chevron-up
The current interest rate for a mobile home loan is determined by the Federal Reserve interest rate, other economic factors and each lender’s policies. You can lower the rate by choosing shorter terms. The 10-year fixed rate on a mobile home will be lower than the 30-year fixed rate. A lower interest rate can lower your total cost.
Who qualifies for a mobile home loan?
chevron-down
chevron-up
Those with a credit score of 580 or above and a debt-to-income ratio that matches the lender’s requirements can usually obtain a mobile home loan. In some cases, you must also provide evidence that you have a place to put your mobile home.
What are the maximum loan amounts for a mobile home?
chevron-down
chevron-up
This depends largely on the type of loan you choose. Many personal loans have a maximum of $50,000, while mortgage loans have much higher limits. Maximum loan amounts depend on your income, down payment, credit score and the mobile home’s value.
What is the difference between mobile and manufactured home loans?
chevron-down
chevron-up
The terms mobile home and manufactured home are often used interchangeably. However, when the U.S. Department of Housing and Urban Development updated its safety standards in 1976, it established a higher standard for manufactured homes. Structures built today are still sometimes called mobile homes but would more correctly be called manufactured homes.
The same types of loans are used for both mobile and manufactured homes. These include personal, chattel, VA, FHA and conventional loans.
How We Found the Best Mobile Home Loans
To find the best mobile home lenders, we studied a few crucial elements of each company:
Loan types and terms: We checked the loan limits, the repayment terms and the types of mortgage loans each lender offers.
Options for different types of borrowers: We researched the best loans for people in various situations, such as those with no cash for a down payment, those with low credit scores and those looking for the best mortgage refinance terms.
Financing for homes with or without land: We investigated banks that finance mobile homes on purchased land and others that finance homes situated in mobile home parks or on leased land.
Borrowers with low credit requirements: To help those with poor credit or no credit history, we also identified mortgage lenders willing to work with lower-than-average credit scores.
Summary of the Best Mobile Home Loans of 2023
USDA: Best for rural areas Vanderbilt Mortgage and Finance: Best for a variety of loan options Manufactured Nationwide: Best for low credit scores ManufacturedHome.Loan: Best for good credit scores 21st Mortgage Corporation: Best for mobile homes within a community or park eLEND: Best for first-time buyers Guild Mortgage: Best for protection packages Caliber Home Loans: Best for veterans PenFed Credit Union: Best for high personal loan limits AmeriSave: Best for fast approval
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations.
The cash envelope system is a budgeting tool that helps you develop self-discipline by only spending the allotted amount of cash from labeled envelopes each month. It can help reduce overspending and impulsive purchases.
Budgeting is one of the best ways to keep track of your spending, pay down debt, and build wealth. Unfortunately, many Americans don’t take advantage of preparing a monthly budget. Our team at Credit.com surveyed over 1,000 Americans, and 27 percent said they don’t think a budget is necessary.
We also found that 15 percent of people don’t want to feel restricted by a budget, and 24 percent simply don’t think they will stick to it. Fortunately, with the cash envelope system, it’s easy to do both.
Today, you will learn about this simple budgeting method that can help you save money, lower your debt, and potentially help raise your credit score.
Key takeaways:
You can use cash envelopes as a monthly budget by putting cash in different envelopes for spending categories.
The system is ideal for people who have a habit of impulsive spending or overspending.
It allows you to monitor your money rather than guessing how much you’re spending.
The cash envelope system is often called “cash stuffing” on social media apps like TikTok.
What Is the Cash Envelope System?
The cash envelope system, also known as “cash stuffing,” is an easy-to-use budgeting tool that helps track how much money you have to spend. You’ll put the cash in labeled envelopes and check each envelope throughout the budgeting period to see how much money you have left to spend.
Different budgeting systems work for different people. For some, having a monthly budget template on their computer is the best option. Others may benefit more from being able to physically see how much money they have left for purchases like groceries, gas, and entertainment.
How the Cash Envelope System Works
Before cash stuffing, you will need to organize your money envelopes into different categories. If it helps, you can start with a spreadsheet budget template, or you can write down the categories in a notebook. Some of the top budget categories to consider include:
Utilities
Fuel or transportation costs
Groceries
Healthcare and medications
Savings
Debt
It’s also beneficial to ensure you have cash envelopes for areas where you typically overspend. This may be eating out, buying clothes, or online shopping. You can allocate money toward these areas, but the goal is to ensure you don’t overspend.
During the month, whenever you spend money in one of these categories, you only use the money from the appropriate envelope. For example, if you enjoy buying a $5 cup of coffee on your way to work and allocate $100 to that envelope, take $5 out of it each morning.
The cash envelope system is a way to hold yourself accountable for your spending. This means that once the money is gone from an envelope, it’s gone. If you miscalculated how much you need in a certain category, revisit your budget the following month and tweak the amounts.
You can refill your envelopes at the start of each budgeting period or after each paycheck.
The Benefits of the Cash Envelope System
There are pros and cons that come along with every budgeting strategy, so it’s helpful to know the benefits and drawbacks and find the one that’s right for you. The cash-stuffing envelope system is great for people who don’t check their bank account daily or are better with their money when using cash.
Additional benefits include:
Avoiding overdraft fees
Minimizing overspending
Increasing accountability
Helping with disciplined spending
By sticking to cash, the system also helps reduce the frequency with which you use your credit card, minimizing interest fees.
The Downsides of the Cash Envelope System
The cash envelope system isn’t for everyone, and it may create some additional challenges. The primary downside of this budgeting system is that you need to go to your bank or an ATM whenever you need to refill your envelopes. It’s also beneficial to consider that carrying large amounts of cash has the risk of losing it for the money being stolen.
Some of the other downsides include:
It’s time-consuming.
You get no credit card rewards.
You can only spend the amount contained within each envelope.
The other challenge with the cash envelope system is making online payments or automatic payments. Automatic payments are a great way to avoid forgetting about a payment and accruing late fees. You can still use the cash envelope system, but you will need to keep track by writing on the back of the envelope, similar to balancing a checkbook.
Should You Use the Cash Envelope System?
This budgeting system is ideal for people who are quick to pull out their debit or credit card and have trouble with overspending. It can be difficult to track your money electronically, but using physical cash can help many people stick with a budget.
The system is also a great way to budget for beginners. It’s a simple system, and you can start with just a few categories. If you know you have a problem with overspending on ordering food or going out, use this system to allocate a specific amount of cash for these activities.
FAQ
Although the cash stuffing system is a simple method, there are some common questions people have when getting started.
Can the Cash Envelope System Work If You Make Online Payments?
The most common method is to create a physical envelope while keeping the money in your bank account for online payments. You can keep track by writing on the back of the envelope each month.
What If an Envelope Runs Out of Cash?
If you run out of cash from the envelope, stay disciplined and avoid borrowing money from other envelopes. Revisit your budget and find ways to save in different categories, earn extra money, or reduce your spending.
How Do You Use the System When Emergency Expenses Happen?
Emergencies happen, and in these cases, you can shift money around from your envelopes and budget accordingly the following month. It’s also helpful to build an emergency fund for these situations, and you can also keep a credit card for emergency funds.
What Do You Do If There’s Money Left Over in Your Cash Envelope?
Money left over in cash envelopes means you’re doing a great job with your budget. You can use this to treat yourself or add to your personal spending money envelope the next month. You may also want to use this extra money to make extra debt payments or put it in your savings account.
How the Cash Envelope Budget System Can Help Improve Your Credit
Creating a budget is a great way to get your finances under control and create quality spending habits. The cash envelope system is also helpful for reducing your debt and improving your credit. One of the key factors of your credit score is credit utilization, so allocating an envelope toward paying down your debt and using leftover money for additional payments can help increase your score.
For additional credit resources, you can sign up for Credit.com’s free credit report card or our ExtraCredit service.
As home affordability decreased, sellers reduced asking prices more frequentlythis September, with the pace coming in above typical seasonal patterns.
Approximately 6.5% of homes on the market saw asking prices reduced during the four-week period ending Sept. 27, according to new research from Redfin. The rate corresponds to approximately one in 15 properties on the market and represents an increase from 5.8% a month earlier. That is a sharp rise from what has been reported in past years over the same time frame, the real estate brokerage said.
The uptick in price cuts comes as low inventory and rising interest rates take a bite out of affordability, according to several recent reports. Conditions contributing to the current state of the market appear set to continue leaving their mark on affordability over the next several months, leading analysts said at this week’s Digital Mortgage conference in Las Vegas.
Redfin found the median sales price rose 3.1% year-over-year, coming in at $372,500, even with “relatively low” demand. A recent rise in the volume of new listings, also atypical for the time of year, is giving home shoppers more leverage.
“Buyers are using things like inspection negotiations and high insurance premiums to back out of deals,” said Heather Kruayai, a Redfin agent in Jacksonville, Florida, in a press release. “They’re holding a lot of the cards; today’s sellers need to concede on some details to close the deal.”
The latest affordability data from the Mortgage Bankers Association offers few signs of improvement for aspiring homeowners. In its monthly purchase-applications payment index released this week, the trade group reported the average monthly amount applied for by new home buyers increasing by a fraction to $2,170 in August, from $2,162 in both June and July. The current figure is higher by 18% compared to the mean level of a year ago — $1,839.
“Prospective homebuyers’ budgets continue to be impacted by the combination of high home prices and mortgage rates that remain higher than 7%,” said Edward Seiler, MBA’s associate vice president, housing economics, and executive director, Research Institute for Housing America.
The latest PAPI report does not factor in September’s surge in mortgage rates, with the 30-year conforming average landing at 7.41% at the end of last week among MBA members — the highest point since late 2000. Similarly, Freddie Mac reported a consistent rise in the 30-year rate throughout September after a pullback in August.
Within individual segments, borrowers of Federal Housing Administration-backed mortgages saw their average payment hit a record of $1,901, jumping 2.5% from $1,854 in July and 29.4% from $1,469 in August 2022.
But even with the overall PAPI increase, conventional-loan borrowers saw a fall in the mean to $2,187 from $2,197 between July and August. But the number was still well above $1,901 a year ago.
The MBA’s national payments index for new purchase applications inched up 0.4% to a reading of 175.4 in August compared to 174.7 a month earlier. An increase in the number reflects declining affordability. Strong income earnings of over 4% over the past 12 months helped offset the steep climb upward in payment amounts.
The states showing the smallest degree of affordability were concentrated in the Western U.S., according to the MBA. Idaho led the country with a PAPI score of 269.6, followed by Nevada and Arizona at 265.7 and 238.6.
Inside: Are you looking for an affordable budgeting app that offers a range of features? YNAB may be the perfect choice for you! This guide will compare YNAB vs Mint, highlight their key features, and help you decide which is best for your needs.
Are you trying to make a choice between Mint and YNAB for managing your financials?
Here’s a comprehensive overview that would definitely point you in the right direction.
Both Mint and YNAB have proven to be efficient and reliable online budgeting tools, but their offering varies in some aspects.
While Mint shines with its free budgeting tools and comprehensive credit score and report management capabilities, YNAB stands distinguished with its robust features and specialist credit management options, making it worth its fee for some users.
Herein, we dive into the similarities, differences, and unique functionalities of both platforms to help you decide which one best aligns with your financial management needs and lifestyle.
As a finance expert, I’ve seen both YNAB and Mint apps work wonders for different people.
In my opinion, both have unique value. Novices may find Mint’s overview helpful, while more determined budgeters might prefer YNAB.
Remember, it’s perfectly fine to use both if it aids your long-term money management.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What is YNAB?
YNAB is a budgeting software I’ve utilized that provides detailed financial tracking and education for effective money management. Also, known as you need a budget app.
Adhering to its unique Four Simple Rules for Successful Budgeting, every dollar is assigned a specific task. YNAB operates via an online account or a mobile app, involving color codes and features like ‘The Inspector’ for efficient budget overview. However, it’s important to note that YNAB caters only to the zero budgeting style and charges a monthly subscription fee.
This is a great budgeting method as it gives you a cash flow budget plan for your money.
Overall, YNAB helped me gain control over my finances by setting realistic goals, getting one month ahead on bills, and focusing on each dollar’s purpose.
What is Mint?
Mint is a free, all-in-one finance platform owned by Intuit that can be used to easily manage my money.
It links all accounts in one place for easy tracking and includes features such as budgeting, credit score monitoring, and bill tracking.
For instance, Mint categorizes transactions, monitors changes in my credit score, and sets up budgetary limits.
With over 30 million users, Mint is a leading free tool in personal finance management.
A step up from Mint would be Intuit’s Quicken platform or Simplifi budget app.
Comparison of YNAB and Mint Apps
Mint is a comprehensive, free budgeting app, that provides an overall view of your finances. It links to your accounts, tracking and categorizing spending, while also offering savings tips. Conversely, YNAB, a paid app, focuses on giving users control over budgeting. It will link to your accounts and encourage a proactive role in handling finances.
These are two of the budget apps available on the market.
1. YNAB vs Mint: Features
YNAB and Mint are both renowned budgeting apps, but they possess some notable differences.
While both support account linking, goal setting, and spending tracking, Mint pulls ahead with its investment and credit score tracking features.
YNAB distinguishes itself with a forward-thinking, zero-based budgeting strategy and benefits like manually adding transactions. Think budget by paycheck style.
From the ease of use standpoint, both are equally user-friendly.
2. YNAB vs Mint: Budgeting Snapshot
YNAB offers a rigorous, manually updated budgeting snapshot that employs a zero-based budgeting philosophy. This feature provides a detailed outlook, encouraging users to assign every dollar a job.
On the other hand, Mint has an automated tracking system that offers an all-in-one snapshot of all financial accounts and spending categories.
Mint integrates your accounts, offering useful tips and an overview of your finances. Conversely, YNAB requires a manual categorization of income and expenses but affords more budgeting control. Similar to using the ideal household budget percentages.
The budgeting snapshot in Mint is best suitable for individuals seeking a hands-off approach, while YNAB is ideal for those who prefer an in-depth, hands-on budget strategy.
A great way to move digital from your budget binder with envelopes.
3. YNAB vs Mint: Goal Setting
The Goal Tracking feature in YNAB allows users to set various budgeting goals such as saving targeted amounts of money or conversely working towards getting out of credit card debt. This in-built functionality provides a structured pathway for users to stick to and pursue their financial objectives effectively.
Your interaction with your YNAB account through the goal-tracking tool ties back to YNAB’s four Simple Rules for Successful Budgeting, aiding in fiscal responsibility.
This innovative feature assists individuals in staying focused on their planned budgets, ensuring they are empowered to make strides toward their unique financial goals.
Mint however doesn’t offer this feature.
4. YNAB vs Mint: Interface
While YNAB is ideal for meticulous budgeters prioritizing forward planning, Mint is perfect for those seeking an easy-to-use, comprehensive glimpse of their financial standing.
YNAB’s interface is focused on budgeting, featuring tools for expense tracking, goal setting, and manual transaction input.
In contrast, Mint offers a comprehensive overview of your financial health, automatically categorizing expenses, tracking investments, and offering set-up alerts.
5. YNAB vs Mint: Categorization
Mint offers automated categorization of transactions, which eases the process of budgeting for the user. However, it doesn’t allow the removal of default categories, and the addition of new ones might take time due to server communication.
On the other hand, YNAB allows a deeper level of categorization, with an option to visually nest categories, and more effortless editing of these categories.
In my opinion, Mint’s categorization feature suits a casual budgeter looking for automation, while YNAB would be ideal for those desiring granular control over their personal budget categories.
6. YNAB vs Mint: Mobile App & Cross Platforms
Both YNAB and Mint offer comprehensive personal finance management via mobile apps, compatible with iOS, Android, and desktops.
YNAB stands out with its Apple Watch integrations and a slightly better syncing experience based on user reviews on Trustpilot1.
YNAB also syncs across a desktop app as well.
7. YNAB vs Mint: Alerts
Mint provides a wide selection of alerts, including low balances, upcoming bill payments, over-budget warnings, ATM fees, and unusual expenditure notifications.
These comprehensive alerts from Mint give a more thorough financial pulse check but can be overwhelming for some.
On the other hand, YNAB recently added live push notifications based on your preferences.
8. YNAB vs Mint: Syncing
YNAB leads the game when it comes to synchronization, outshining Mint. While Mint supports numerous banks, issues with synchronization often lead to grievances among its users. YNAB, on the other hand, offers smoother syncing and fewer complaints, proving its superiority.
Many users find YNAB’s syncing consistent and reliable.
Personally, I believe that if you prioritize seamless syncing and don’t mind spending $14.99 a month, YNAB becomes a clear choice.
However, if you’re okay with potential sync issues and prefer free usage, Mint could be more suitable.
It’s crucial to pick according to your priorities and needs.
9. YNAB vs Mint: Savings Accounts
Mint offers automatic expenditure tracking and classifies my spending into categories, providing a comprehensive view of where my money is going.
YNAB, on the other hand, empowers me to manually budget my net income each month, ensuring I don’t overspend and promoting a proactive approach to saving.
10. YNAB vs Mint: Investment Tracker
Mint offers investment tracking features, allowing users to view their investment portfolio and monitor performance.
In contrast, YNAB lacks this feature, not providing any investment tracking at all.
As a user, if you highly prioritize tracking investments in one place, you may lean towards using Mint. Conversely, if investment tracking is less important to you than budgeting, YNAB’s strong budgeting emphasis, despite its lack of investment tracking, makes it a considerable option.
11. YNAB vs Mint: Learning Curve with your Finances
YNAB has a steeper learning curve, necessitating a proactive approach to money management by assigning every dollar a purpose. Thus, YNAB gives you a free 34-day free trial to understand how to use the app.
Mint, however, requires minimal user input post-account linkage and auto-categorizes your spending. For sheer ease of use, Mint might appeal to novices looking for automated budget tracking.
On the other hand, users wishing to take charge of their finances might appreciate YNAB’s proactive, behavior-altering approach. Despite having a steeper learning curve, YNAB offers an abundance of online tutorials and customer support, making the learning process manageable and rewarding.
The same is true when you are learning to use the biweekly budget template.
12. YNAB vs. Mint: Data Security
Data security is a paramount concern when utilizing online budgeting apps as they deal with sensitive financial information.
Apps like YNAB and Mint incorporate stringent security measures to protect user data.
For instance, YNAB uses a one-way salted and hashed password system and data encryption.
Mint, on the other hand, employs two-factor authentication and a Touch ID sensor for iOS for enhanced security.
Nonetheless, it’s important to note that while these apps provide bank-level security, Mint does anonymize and sell user data to advertisers.
13. YNAB vs Mint: Advertising
YNAB derives income primarily from subscription fees offering an ad-free experience, holding a straightforward revenue model. In contrast, Mint generates income through affiliate commissions by advertising financial products to users and selling anonymized user data!
Mint, contrastingly, is a free app reliant on ads and sells anonymized user data for third-party advertisements.
From my perspective, if avoiding ads and preserving data privacy matters to you, YNAB’s approach might be more appealing. However, if you prefer a free service and don’t mind the ads, Mint would be suitable.
14. YNAB vs Mint: Customer Support
When evaluating the customer support of Mint and YNAB, it’s evident that YNAB takes a more well-rounded approach.
With a commitment to respond to email queries within 24 hours, YNAB also provides educational resources such as the “get started” class, their blog, and user forums. This is in contrast to Mint, which, despite offering live chat support, has had reports of slow response times.
Both platforms offer online training materials, but YNAB seems more comprehensive and responsive in its support-providing role. Overall, YNAB appears to be the preferred choice when customer support is a primary consideration.
15. YNAB vs Mint: Cost
Mint is a free, ad-supported budgeting app while YNAB is a subscription-based model of $14.99 monthly or $99 annually.
However, for individuals seeking in-depth surgical budgeting capabilities without concerns for associated costs, YNAB’s price might represent a great investment.
Given the claimed average user saves $600 in two months and $6,000 in the first year.2
For those budgeting with minimal funds, the free price tag of Mint might be more attractive, but you are giving away your privacy.
Pros and Cons of YNAB vs Mint
Our Favorite
Key Features:
YNAB offers a comprehensive approach to budgeting, helping you plan monthly budgets based on your income. It also offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
YNAB’s superior synchronization skills make it the winner in this area. YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners
YNAB provides an option to manually add and upload transactions from accounts each month, a feature that Mint does not offer.
YNAB prioritizes user privacy, requires an opt-in to access budgeting data, and doesn’t sell user data.
Key Features:
Mint offers a centralized platform for monitoring all your financial accounts, including credit cards and bank accounts.
It provides a complete financial overview at a glance through the auto-population of data from linked accounts.
Mint’s features include detailed reporting in multiple categories, free credit score access, and exceptional compatibility with financial institutions.
The service is free, funded by ads and offers, and it best serves those who wish to categorize spending, budget their monthly expenses, and access all financial details from one place.
Lack of investment tracking feature
Customer service is only accessible via email, which might not be ideal for urgent queries
Steep learning curve which requires time and effort to navigate through.
Mint, which belongs to Intuit, automatically accesses all data and sells the data. Thus, an intrusion of privacy.
Budgeting feature doesn’t enable effective planning of future expenses.
Mint suffers from more technical glitches and synchronization issues.
Ads included in the free version of Mint can be obtrusive and may deter users.
$14.99 monthly or $99 annually
Free to Use, But Served Ads and They Sell your Data.
Offers a 100% money-back guarantee at any point of use.
Does not require credit card information to signup, a departure from the usual free trial model)
Our Favorite
Key Features:
YNAB offers a comprehensive approach to budgeting, helping you plan monthly budgets based on your income. It also offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
YNAB’s superior synchronization skills make it the winner in this area. YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners
YNAB provides an option to manually add and upload transactions from accounts each month, a feature that Mint does not offer.
YNAB prioritizes user privacy, requires an opt-in to access budgeting data, and doesn’t sell user data.
Lack of investment tracking feature
Customer service is only accessible via email, which might not be ideal for urgent queries
Steep learning curve which requires time and effort to navigate through.
$14.99 monthly or $99 annually
Offers a 100% money-back guarantee at any point of use.
Does not require credit card information to signup, a departure from the usual free trial model)
Key Features:
Mint offers a centralized platform for monitoring all your financial accounts, including credit cards and bank accounts.
It provides a complete financial overview at a glance through the auto-population of data from linked accounts.
Mint’s features include detailed reporting in multiple categories, free credit score access, and exceptional compatibility with financial institutions.
The service is free, funded by ads and offers, and it best serves those who wish to categorize spending, budget their monthly expenses, and access all financial details from one place.
Mint, which belongs to Intuit, automatically accesses all data and sells the data. Thus, an intrusion of privacy.
Budgeting feature doesn’t enable effective planning of future expenses.
Mint suffers from more technical glitches and synchronization issues.
Ads included in the free version of Mint can be obtrusive and may deter users.
Free to Use, But Served Ads and They Sell your Data.
Who should use YNAB?
From my experience, YNAB works best for those who are ready to seriously manage their money and spend some time learning a new budgeting approach. Its use of the zero-based budgeting system not only makes you more intentional with your money but also demands active participation in decision-making.
YNAB’s ability to link to your accounts and its multitude of educational resources available are admirable features I’ve used.
YNAB offers detailed financial tracking and built-in education, but its monthly subscription fee and suitability for a specific budgeting style may be limiting for some.
However, it comes with a monthly or annual cost – a worthy investment for those searching for a robust, hands-on, and future-focused budgeting tool. Most YNAB budgets agree they save multiples of the subscription cost.
However, it can be less suitable for those not ready for a hands-on approach or those sensitive to subscription pricing.
Who should use Mint?
On the other hand, Mint is an all-in-one app that automatically tracks and categorizes your spending.
Based on my experience, Mint is an excellent tool for novice-level budgeters seeking to track their expenses, set budgets, and manage their finances with ease. This budgeting app allows a comprehensive view of all your financial accounts, which differentiates it from YNAB.
If you’re comfortable seeing ads and not needing investing features, Mint could be a perfect fit. However, if you require the ability to assign multiple savings goals to one account or a bill pay feature, YNAB may be more suitable for you.
Therefore, Mint is most applicable for beginners seeking a free and user-friendly budgeting platform.
YNAB vs. Mint: Which is better for you?
As a content writer and budgeting app user, I find Mint and YNAB are unique in their offerings.
Mint automatically tracks and categorizes your spending, providing an intuitive picture of where your money goes, ideal for beginners in budgeting.
In contrast, YNAB promotes a proactive approach, helping to set and monitor budgets, hence perfect for those with specific financial goals. To sum up, Mint offers a simplified, passive overview, while YNAB is excellent for a detailed, forward-thinking approach to managing finances.
Personal preferences and needs really influence the choice here. Do you need intricate control and don’t mind paying a fee? YNAB might be your fit. Prefer automation and want a free option? Mint could work for you.
YNAB vs Mint: Verdict
As an expert in personal finance tools, I’ve explored both YNAB and Mint.
In my experience, there are distinct differences between YNAB and Mint. For my readers, I recommend YNAB.
YNAB, with its laser-focused approach towards budgeting, is a boon for individuals needing extensive assistance in the budgeting arena. You learn to assign every dollar with intention, thereby gaining a higher degree of control over your finances.
This proactive approach will help you to be financially independent faster.
To sum up, if detailed budgeting is your priority, choose YNAB.
YNAB
Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.
Pros:
Comprehensive approach to budgeting, helping you plan monthly budgets based on your income.
Offers expert advice, making it suitable for those who require an in-depth, forward-thinking budgeting strategy.
Superior synchronization skills make it the winner in this area.
YNAB has extra features like goal setting for budgeting, shared budgeting tools for partners.
Option to manually add and upload transactions from accounts each month.
YNAB prioritizes user privacy.
Start 34 Day Free Trial
However, for a more holistic financial insight with less emphasis on budgeting, Mint might be the better choice.
Now, make sure to check out our Quicken Review.
Source
TrustPilot. “YNAB Review.” https://www.trustpilot.com/review/ynab.com. Accessed on September 27, 2023.
YNAB. “YNAB Pricing.” https://www.ynab.com/pricing/. Accessed on September 27, 2023.
Know someone else that needs this, too? Then, please share!!
Very few of us can freshen our home design on an endless budget. But you don’t have to feel constrained by your wallet. That’s because not every piece needs to be the highest quality.
We asked Dallas interior designers where they splurge and where they save to help you stretch your home-decorating fund.
Advertisement
Invest in key parts of your bedroom.
No surprises here. We spend a third of our lives sleeping, so your bedroom matters — even though it’s an area guests may not see.
Advertisement
“Your main bedroom is where you should splurge on yourself,” advises Denise McGaha, owner and principal of Denise McGaha Interiors. “A lot of my clients leave that to the last, and I think it’s so important for you to have a really luxurious, amazing night’s sleep. If you don’t sleep well, you’re not fun to be around the next day.”
Get updates from Abode
Sign up for the Abode newsletter for a weekly roundup of the latest home, design and real estate stories.
McGaha says the mattress is key, but linens are too. So that’s where to concentrate your funds. What about the rest of your bedroom design? Consider buying lower-tier antiques or quality used pieces instead of brand-new furniture.
Advertisement
You can also look for deals on lamps, rugs and throw pillows, creating a designer-approved look that is budget friendly. “Every time you walk in that space,” McGaha says, “I want it to make you smile.”
Chairs trump table in your dining room.
What about the star of the show in the dining area: the table? McGaha says don’t spend a lot, even though it’s one of the biggest pieces, size-wise, in your home.
“I want to encourage people to buy vintage or used tables, because the chairs are where it’s at. People are paying attention to the chair and they’re going to see the back of the chair. Do they even see the base of the table? Especially if you love to entertain, you’re going to put a tablecloth over it a lot. So let’s get you a beautiful antique or vintage table, or use your grandmother’s table, and get new chairs.”
Advertisement
When it comes to what’s over the table, that’s another place to go all out. “Lighting is where you want to spend money,” says Nikki Watson, founder of The Design Quad. “Especially with a new build, people will put in basic fixtures. But if they want to update the space and make it look awesome, then lighting makes a big difference.”
Advertisement
How to redecorate your house for free — using items you already own
In the living room, spend money where people sit.
The living room is all about the return on investment — or in designers’ terms, “seat time.” The more time someone is likely to sit there, the more you should invest in the piece, says McGaha.
Advertisement
So spend time and money picking out a great sofa that will last a long time, but go for less expensive pieces when it comes to to accent furniture. “Like a lounge chair that goes in the room with your really great sofa, you don’t have to spend nearly as much money on that. That way if you get tired of it, you can change it out,” McGaha notes.
“I wouldn’t spend tons of money there because people don’t sit in a lounge chair as long as they relax on a sofa.”
Watson agrees that a sofa is really worth investing in — a neutral sofa, in particular. Bargain accent pillows and throws can be incorporated to stay on trend.
A living space can also be a good choice for spending on lighting, wallpaper and custom upholstery. After all, this room is where we spend many of our waking hours.
Advertisement
“I love to splurge on upholstery,” McGaha shares. “By upholstery I mean getting a piece that’s custom for you, meaning it’s deeper or it’s got a different fill on the cushion, so that every time you sit down you say, ‘I just love this sofa.’”
Where can you save in a living room? Look under your feet. “Rugs are something trendy, so they can be replaced pretty often,” points out Watson.
“I wouldn’t say spend a lot of money, because that trend will change. I know we have faded antique rugs that have been the style for about three to four years now, but now geometrics are coming back in.”
Advertisement
Limit what you spend in your guest room.
It can be tempting to go big in the guest room to really make an impression on people who stay with you, but resist the urge, says McGaha. Your investment in a space should relate to how much time you, the homeowner, spend there.
“I love to use artist prints instead of originals in hallways or guest bedrooms or bathrooms. I’m always going to tell you not to spend all your dollars in those secondary spaces,” says McGaha. “And while I love my guest rooms to be luxurious and really elegant for guests, let’s not put something in there that only that one person gets to enjoy. They’re only there for a few nights.”
To save in a guest room, you could paint instead of doing high-end wallpaper. Your window coverings can be sale items; so can guest linens and bedding. When you look for deals, you can more easily change out those elements for a style update.
Advertisement
Go for cost-effective pieces in kids’ rooms.
Keep in mind that kids tend to be harder on furnishings, and their tastes will change as they grow up — so feel free to choose lower-cost, trendier pieces for their spaces. McGaha says the bed is a particular place you can save in a child’s room. Use a metal bed frame and score a fun and comfy upholstered headboard.
Don’t neglect your entryway.
You might not think about splurging on the entry to your home, but hear us out. It’s often the first thing you see when you return home and the last thing you see before you leave. And it’s the first and last impression of your home that guests have, too.
Advertisement
This is where you want to go for original art, amazing lighting and the wallpaper of your dreams. And best of all, it’s a small space compared to other areas in your home, so you can choose just a few things and still have a big impact.
Though FICO® and VantageScore® ranges start at 300, most new credit users don’t start this low. In fact, if you’ve never taken out credit or applied for a loan, you might not have a credit score at all.
When applying for credit cards and loans, you begin to build credit, but you may be wondering—what does your credit score start at? Most people’s initial credit scores are between 500 and 700 points, depending on the steps taken when establishing credit. However, you won’t have a credit score to report if you’ve never opened a credit account.
Read on to learn more about your starting credit score and how to build your credit over time.
What Credit Score Does an 18-year-old Start with?
Contrary to popular belief, you don’t automatically receive a credit score the day you turn 18 years old. However, you need to be at least 18 years of age to apply for credit and start building your score. Remember that if you haven’t used credit yet, you likely won’t have a score at all.
Once you start using credit, you will get a score roughly three to six months after opening your first credit account. Your credit score will be calculated based on a variety of factors outlined in the next section.
How Are Credit Scores Calculated?
So, how are credit scores determined if everyone doesn’t receive the same default credit score? According to FICO, they use the following five factors to calculate your credit score:
Payment history: The most important factor to determine your credit score is your history of paying credit accounts on time.
Accounts owed: While owing money on credit accounts isn’t necessarily bad, using a majority of your available credit can lead to lenders viewing you as higher-risk.
Length of credit history: Generally, the longer your credit history, the better it is for your score since lenders have a more accurate assessment of your risk.
Credit mix: The different types of credit you have, such as credit cards, installment loans, and finance company accounts, are your credit mix.
New credit: Opening too many credit cards in a short period of time can hurt your score since doing so signals to lenders that you’re a greater risk.
How to build credit
If you’re new to credit, you may be wondering how to start building your credit in the first place. Receiving a loan without a credit score might be difficult, so FICO suggests the following ways to start building credit:
Become an authorized user on a family member’s credit card. You can be added to a card owner’s account, which allows you to make purchases with their credit card. Keep in mind that this method doesn’t have a large effect on your score but can be a good stepping stone to building credit.
Apply for a secured credit card. As a person with no credit, your risk to lenders is considered very high. A secured credit card requires you to pay a refundable security deposit to mitigate risk.
Report rent and other service providers. Credit and loans aren’t the only factors that affect credit. While landlords and utility companies typically don’t report to the credit bureaus, you can request that they do so to start building your credit.
How long does it take to build a 700 credit score?
According to FICO, a credit score of 700 or above is considered good. And since the national average credit score is 716 as of April 2022, it certainly is achievable, although it will take time. If you’re starting with no credit, you can expect building a 700 credit score to take at least six months of practicing positive credit habits.
Keep in mind that there are steps you can take to increase your initial credit score and reach your credit score goal of 700 or higher credit.
How to improve your initial credit score
So, how can you help make sure that you start out with a good credit score? Follow the tips below to improve your credit score.
Review your credit report. Once you open a credit account, be sure to view your credit report and look for any inaccuracies.
Be on time with your payments. Since payment history is the most important factor that influences your credit score, be sure to pay your bill on time and avoid missing payments.
Limit applying for multiple lines of credit in a short period of time. Applying for credit results in a hard inquiry, which may slightly lower your credit score. Too many of these hard inquiries in a short period of time can cause your credit score to drop.
Keep your credit utilization ratio under 30 percent. Credit utilization refers to the amount of credit you’re using divided by the amount that is available to you. For example, if your monthly credit limit is $1,500, aim to use under $450 each month.
Be patient. Again, the length of credit history is an important factor that contributes to your credit score. The more time that passes since you opened your account, the better for your score.
FAQs
Below, we’ve answered some common questions regarding your first-time credit score.
Does your credit score start at 0?
Your credit score doesn’t start at zero. In fact, the lowest credit score possible is 300. However, you likely won’t start at this score unless you’ve made actions that have damaged your credit score.
Does everyone start with the same credit score?
Everybody doesn’t start with the same credit score. As mentioned above, your individual credit score is based on a number of factors.
Is no credit worse than bad credit?
No credit means you lack a credit history, whereas bad credit means you’ve made credit-damaging mistakes, such as multiple late payments. While both scenarios can cause limitations, building credit from scratch is generally easier than rebuilding a bad credit score. As a result, it’s worse to have bad credit than no credit.
What’s a good credit score for young adults?
A good credit score is 670 and up. According to Experian®, the average credit score for young adults ages 18-25 is 679, so any score above that is considered above average for the age group.
How to check your credit score for free
Once you begin building credit, it’s crucial to follow responsible financial practices that will help you raise your credit score over time. And don’t forget to regularly monitor your credit to make sure you’re on the right track.
ExtraCredit by Credit.com gives you tools to manage your credit at an affordable monthly price so you have information you need to help you achieve your financial goals. Get started today.
Here’s an interesting little piece of mortgage news.
According to an internal presentation obtained by Bloomberg, top mortgage lender Wells Fargo plans to incentivize loan officer pay based on loan quality.
While I wasn’t able to track down the presentation, the publication noted that mortgage salespeople would receive extra compensation for submitting “complete loan applications” to loan processors and mortgage underwriters within a five-day period.
In return for their speed and organization, Wells Fargo would pay salespeople an additional 0.03% on each loan that meets the requirements for the new rule.
On the example $400,000 loan included in the article, it would bump pay up another $120, on top of the $1,720 they reportedly earn before the bonus.
For the record, that $1,720 equates to 0.0043%, in case you were wondering how much Wells Fargo reps make for originating your home loan.
Of course, that’s just an example, and it could well vary quite a bit depending on a number of factors, such as the type of loan, volume, position, etc.
Sign of the Times
The move by Wells is clearly a sign of the times, which is a mix of both extraordinary demand for mortgages and much more stringent underwriting guidelines.
Back in the day, before the boom turned to crisis, many lenders provided incentives to loan officers who originated the riskiest types of loans, largely because they were sold off on the secondary market in a game of hot potato.
So loan officers and mortgage brokers who chose to throw a borrower in an option arm, or tack on a five year hard prepayment penalty, were given the largest yield spread premium (commission).
Clearly this led to one of the worst economic downturns we’ve seen in years, which is why the mortgage game has changed as much as it has.
Now it appears as if the San Francisco-based bank is focused on quality and turn times, as opposed to the type of loan originated.
For one, there aren’t really any risky types of home loans left, and most borrowers opt for fixed mortgages nowadays.
It’s also illegal to steer borrowers into higher-priced loans, so the focus has shifted to getting the loan closed properly in a short window.
Complete Loan Files Key
It’s clear that with demand so high, and personnel so low, mortgages are taking a very long time to close.
In order to speed up this process, submitting complete loan packages is key to closing in a timely manner.
This is actually a good lesson for borrowers as well – you need to get all your ducks in a row long before applying for a mortgage.
That means organizing income and asset documents, ensuring your credit score is where it should be, and addressing any potential red flags if you’ve got anything funky going on.
Assuming you handle all these issues prior to application, your loan process should be relatively quick and painless.
And now that your loan officer is on board, incentives are finally properly aligned, which is surely a good thing for the under-fire industry.
When you’re looking to purchase your first home, it’s a good idea to familiarize yourself with the different first-time homebuyer programs available in your area. They can help you afford this major purchase.
Programs vary in terms of their eligibility requirements and the types of assistance they offer, but all offer some form of financial aid. But what are these programs, and how do they work? Here’s what you need to know.
What Is a First-Time Homebuyer Program?
A first-time homebuyer program is a government-sponsored program designed to help people purchase their first home. Programs vary from state to state, but generally, they offer financial assistance in the form of low-interest rates, down payment assistance, and other incentives.
A few examples include:
The Federal Housing Administration (FHA)
The Veterans Affairs Homebuyer Assistance Program
The National Association of Realtors® (NAR)® Homebuyer Assistance Program
State-sponsored programs, such as the California New Home Grant Program, can also offer assistance.
Who Is Eligible for a First-Time Homebuyer Program?
Each program has its own eligibility requirements, which vary depending on the program and the state in which it is located.
However, generally speaking, you’re eligible if you purchase your first home and meet the criteria set by the program. These criteria can range from being newly divorced, a military veteran, or widowed to having a low income and getting ready to buy your first home. You may be eligible for other programs if you’ve already owned a home. Still, first-time homebuyer programs will automatically disqualify applicants attempting to purchase second homes or investment properties.
Get matched with a personal
loan that’s right for you today.
Learn
more
Related read: What Credit Score Do I Need to Buy a House?
How Do First-Time Homebuyer Programs Work?
Once you’ve determined that you’re eligible for a first-time homebuyer program, the next step is to find a program compatible with your needs. Programs typically offer a variety of incentives, such as low-interest rates or down payment assistance, to help you purchase your home. Once you have found a program you’re eligible for, you’ll need to submit an application and meet eligibility requirements.
Once you have been accepted into the program and met eligibility requirements, you’ll need to begin preparations for your home purchase. This may include searching for a qualifying home and making any necessary financial commitments. Finally, once all of the paperwork has been completed, and your financing has been approved, you can go ahead and purchase your home.
How Can I Use a First-Time Homebuyer Program?
There’s no one definitive answer to this question, as each program has different requirements and guidelines. However, if you’re approved for financial assistance, then the money will be given to help you purchase a home. Typically, these programs aren’t for rehabbing a home or house flipping. If you need help making repairs, consider instead getting a personal loan to finance home improvement. You’ll have a higher likelihood of getting approved for help covering repairs than a homebuyer’s program would offer.
The Bottom Line
A first-time homebuyer program can help you get into the market quickly and easily. They offer many benefits, including reduced interest rates and fees, waived closing costs, etc.
Outside of buying a home, purchasing a vehicle can be one of your most costly expenses. Early this year, as the cost of new cars reached new heights, many drivers held off on signing on the dotted line.
But the industry is finally shifting as vehicle inventory stabilizes and manufacturers offer more incentives. Brian Moody, executive editor at Autotrader, says it’s good news for those looking to buy. Consider how the industry’s current state might make this fall season a fine time to finance a new set of wheels.
New vehicle prices are holding steady
The average price Americans paid for a new vehicle in August was almost flat compared to one year ago, according to data from Kelley Blue Book (KBB). It now stands at $48,451, an increase of less than $50 from last year. Growing vehicle inventory and incentives helped make prices more accessible.
Even more remarkably, new vehicle transaction costs are down 2.4 percent compared to January, which KBB called “the most significant decrease in the past decade.” But despite prices’ downward trend, high interest rates have made many hesitant to set out to the dealership. These rates offset any wins that a lower price tag carries.
“The other costs associated with buying a new car specifically are higher,” Moody says.
According to recent Bankrate data, new car buyers getting a 60-month car loan received an average interest rate of 7.51 percent in late September. Without a down payment, a rate like this can mean a monthly payment of up to $970 for the average new car.
Interestingly, though, higher interest rates have positively impacted the bottom line for car buyers, Moody explains.
“In a way, they’re playing to the consumer’s benefit because ultimately you have to pay what you have to pay, but it is helping the prices stay steady because the dealers and the people who are pricing these know they can’t just keep raising the price,” he proposes.
Dealerships know the challenges shoppers face and aim to avoid pricing out entire populations before arriving at the dealership. With this in mind, many dealers have adjusted by upping dealer incentives.
Increase in dealer incentives
A dealer incentive is a perk offered to buyers by the dealership. These can be cash rebates, lower rates or vehicle upgrades. Last year, incentives were low due to supply chain issues. With demand high and supply low, dealers had little reason to offer generous incentives.
But these buyer perks jumped for the eleventh consecutive month in August, KBB found. The average incentive package was 4.9 percent of the entire price, up 2.3 percent at the same time last year. But still, these incentives remain historically low.
For context, incentives back in August 2020 averaged 10.8 percent of the average transaction price (ATP). However, some vehicle sectors offer incentive rates close to pre-pandemic levels. Of the sectors with the highest incentives, the high-end luxury segment provided the most for its buyers, reaching 10.1 percent of ATP.
Vans, small and midsize pickup trucks and high-performance cars held the lowest available incentives in August.
A high down payment also helps to offset the price
Another way to save money on your monthly payment is to put down a large down payment — ideally, at least 20 percent. Calculate how much more money down can save you.
Available vehicle inventory has grown
The pandemic resulted in supply chain issues across industries, including the automotive sector.
That meant fewer new vehicles were produced, resulting in higher prices. Even those who could afford higher-priced vehicles could not find their desired car.
But there has finally been a shift in the market. Data from Cox Automotive in early September, ahead of the ongoing United Auto Workers strike, reported 2.06 million in total inventory, which has not happened since April 2021.
“There’s tons of supply versus, say, a year or so ago, when we were talking about not much inventory in terms of new cars, especially,” explains Moody. But now, he says, “There’s an abundant supply.”
On top of overall inventory growth, a larger variety of vehicle types has also positively shifted the market. The EV sector, for example, had vehicle availability above the industry average in early September, according to KBB. The sector boasted incentives averaging 8.1 percent of ATP.
Moody explains that an increase in electric car models leads to increased competition, which is favorable even for those not looking to drive green.
“That’s the story that I think people miss about electric cars. Everyone gets all hung up on, ‘Well, I don’t want to drive an electric car, and why are they forcing us,’” Moody quips.
But more choices mean more competition across automakers and thus more consumer benefits, Moody concludes.
Not all vehicles cost the same
For example, purchasing a compact car will save you additional money over a larger truck. Check out Bankrate’s best-value cars before shopping for the best deals.
How to save for future vehicle purchases
Although vehicle prices have remained steady, and the increase in inventory bodes well, prices are still very high. And growing inflation and moves made by the Federal Reserve will make financing your vehicle more expensive.
Consider the following tips to get the best deal on your next auto loan purchase.
Buy electric. While EVs tend to carry a higher initial cost, they can cost less throughout ownership. On top of this, August data showed a continued decline in electric vehicle prices, driven by Tesla’s price cuts.
Consider shopping with a credit union. With high interest rates, it is wise to compare multiple lender options. Check out credit unions, as they often offer lower rates than dealerships and online lenders.
Improve your credit. The stronger your credit score is, the more competitive your rates will be. Before applying for a loan, try improving your credit to secure the best rate.
Apply for loan preapproval. While not all lenders offer this perk, loan preapproval will give you a firm idea of the expected cost and leverage for negotiation.
Outside of these tips, Moody has straightforward advice for those who might purchase a car this year: “Just don’t overextend yourself.”
While purchasing a flashy luxury vehicle can be tempting, it is not worth the risk if it pushes your budget over the edge. Take the time to calculate the true cost of ownership, including any additional costs, and consider how your terms will impact your monthly payments.
Moody says a successful purchase requires three things. Buyers should be realistic about the price, look for the most attractive incentives and have a strong credit score.
With those in mind, Moody thinks drivers “can find a good deal and can potentially be paying less from here on out going forward.”