MONEY home financing

If You Still Haven’t Refinanced, Now’s a Good Time (Again)

hand turning over house picture on cards
Mark Hooper—Getty Images

Homeowners who missed the last refinancing boom are being given another chance, albeit not quite as sweet as the last one.

Growing fears over the health of the global economy are sending ripples far and wide. Along with Wednesday’s cratering stock market and worrisome bond yields comes another consequence, albeit one that may carry a silver lining for some: Mortgage rates are at their lowest levels since June 2013.

According to mortgage website, the rate on a conforming 30-year-fixed loan has dropped to about 4%, after hovering around 4.25% for most of the summer. That’s still well above the 3.5% some fortunate homeowners snagged back in late 2012, but certainly lower than where many economists expected rates would be today.

What’s behind the drop? “Growing concerns about weak economic growth in Europe caused a flight to quality into U.S. assets last week, leading to sharp drops in interest rates,” Mortgage Bankers Association chief economist Mike Fratantoni noted in a statement. The 30-year fixed rate tends to move in the same direction as 10-year Treasury yields, which fell below 2% on Wednesday morning for the first time in 16 months.

If you are among the homeowners who never took advantage of the historically low rates during the last refinancing boom, now could be your opportunity. Maybe you simply never got around to it (the so-called “failure to refinance” that strikes approximately 20% of homeowners who stand to benefit)—or, more likely, you didn’t qualify then. The good news is, now you might get approved.

“Some people over the last six months may have had things align so they can qualify,” says Keith Gumbinger, vice president of For example, previously you may have had a credit score below 740, the minimum threshold often required for the best rates. Or you didn’t have enough equity in your home; most lenders require a stake of at least 10% to 20%. The median home price nationwide, though, has shot up an average of 42% since its January 2012 bottom, according to the National Association of Realtors. That spike lifted millions of homeowners—nearly one million in the second quarter alone, according to Corelogic—out from underwater loans, meaning they no longer owe more on their mortgage than the place is worth.

Or maybe, like former Fed chairman Ben Bernanke, you’d just changed jobs last time and now have the two-year employment history lenders like to see.

“Is the drop in rates enough to drive a substantial amount of people into the marketplace? No,” says Gumbinger. “But it could open the window to a few stragglers.” offers calculators to help homeowners decide if the savings will be significant enough to make a refi worthwhile. A general rule is that you should aim to shave at least one percentage point off your current rate to benefit, Gumbinger says, although the sweet spot will vary depending on your goals, such as whether you’re aiming for a lower monthly payment or to pay less in total interest over the life of the loan.

Another potential opportunity for savings: refinancing into a shorter loan, such as a 15-year fixed mortgage, which runs about 3.35% today. If you’ve been in your home for a few years, you may find that a 15-year product offers a slightly lower monthly payment, as well as shaves thousands of dollars off the total interest.

Of course, you may be wondering if you should wait in case rates drop further yet. Gumbinger suggests that if you see a deal that works for you today, grab it. “American mortgage borrowers are benefiting from the trouble in the world,” he says. But there’s no telling how long that benefit will continue.

Money 101: What Mortgage Is Right for Me?
Money 101: How Do I Get the Best Rate on a Mortgage?
Money 101: How Much Will My Closing Costs Be?

MONEY Ask the Expert

What You’ll Pay to Keep Your Power On This Winter

For Sale sign illustration
Robert A. Di Ieso, Jr.

Q: I’m sick of candles, flashlights, and spoiled food. How much do I need to spend for a generator that will keep the power on no matter what Mother Nature throws at us this winter?

A: You’re smart to think about this now because by the time the first storm hits, you may find the local home center cleaned out of generators and face a long wait for an electrician. You have three basic generator options at three different price points, says master electrician Matt Tomis of Fairfield, Connecticut.

1) Portable Generator with Extension Cords

The lowest-cost approach is to simply purchase a portable, gasoline-powered machine, which will run $400 to $1,200 for 5,500 to 6,500 watts. You’ll also need several heavy-duty exterior-grade extension cords, which typically cost $30 to $40 each for a 50-foot cord.

Works for: Your fridge (you’ll have to roll it out of its cubby-hole to connect the cord) and some lamps and other plug-in devices.

What it won’t power: No hardwired equipment, meaning it doesn’t plug-in, such as the heat or ceiling lights. “And no sensitive electronic device, such as a TV or computer, because emergency generators produce dirty power, meaning it’s prone to mini-surges, sags, and spikes that can damage your equipment,” says Tomis. (If you want to safely plug in electronics, you would need to invest in what’s known as an inverter generator, which runs $2,000 to $4,000.)

Inconvenience factor: High. You need to keep plenty of gas on hand (with gas treatment added to keep it from going stale), and you need to start the generator each month all year round and run it for a few minutes to keep it at the ready. Then when an outage strikes, you have to wheel out the generator, pull-start it, and run your cords—taking care to keep the generator 10 feet from the house to avoid letting carbon monoxide inside. You may also want to chain the generator to a tree if you think someone might take it in your area.

Total cost: $600 to $1,400.

2) Portable Generator with Transfer Switch

This approach combines a slightly more powerful gasoline-powered portable generator with a minor electrical rewiring project that allows you to jack the generator right into the side of your house and run certain, pre-selected household circuits. Figure the stronger 6,500 to 7,500 watt machine will run $600 to $1,500, plus you’ll spend $1,200 to $1,500 for the electrical work.

Works for: Your electrician will help you choose circuits for hallway and kitchen lights, heat, hot water, microwave, refrigerator, and sump pump—and tell you exactly what size generator you need to power them.

What it won’t power: Unless you spring for an inverter generator, the electricity still isn’t clean enough to safely operate computers, televisions and other delicate electronics. Also the portable generator isn’t powerful enough to operate your air conditioning, something you may care about if you live in a warm climate.

Inconvenience factor: Moderate. Similar to the first, less expensive option, you need to wheel out your gasoline powered generator (which you’ve been starting monthly all year long), keep fresh gas handy, and lock it for security. But attaching it to the house inlet is far simpler than running extension cords.

Total Cost: $1,800 to $3,000.


3) Automatic Whole-House Generator

Your best yet priciest option is a natural gas or propane powered generator that’s large enough—and produces clean enough energy—to run every single circuit in your house, and automatically takes over when you have a power outage. You’ll pay around $11,000 to $15,000 for one fit for a 3,000 square foot house, including the generator, wiring, and gas-line connection, or perhaps $22,000 to $26,000 for a large manor house.

Works for: The clean, steady power can run everything in your house—plus all of your neighbors’ phone chargers.

What it won’t power: Even with all of your electronics up and running, this generator can do nothing, of course, about phone, cable, and Internet service interruptions.

Inconvenience factor: None. There’s no gasoline to buy, no pull-cord to yank on, and the unit even starts itself every week and conducts a self check. You can even get a text if there’s any problem that requires a visit from a technician. Of course that convenience comes at a price.

Total Cost: $11,000 to $15,000.


Got a question for Josh? We’d love to hear it. Please send submissions to

MONEY Face to Face

Here’s What to Say When a Nosy Friend Asks How Much Your House Cost

what to say when someone asks how much your house cost
mattjeacock—Getty Images

Keep these three responses in your back pocket to get you off the hook.

More than 3 million homes have been sold in the U.S. so far in 2014, according to the National Association of Realtors. And if you’re among those who recently purchased, you’re likely still celebrating and decorating your new digs.

Before you’ll have even hung pictures on the walls, however, you’ll surely have to deal with this awkward question from some prying family member, friend or neighbor: “How much did you pay for this place?”

People pose the question for different reasons. For example, it may be that your friends from the city are thinking of moving to the suburbs, and want to get a sense of what they could get for their money, says clinical psychologist and financial coach Eric Dammann.

Or it may simply be good old-fashioned competition.

“A lot of times nosy questions have to do with low self-esteem and how we measure up,” says Dammann. “From childhood on, we’re always comparing ourselves to other people. In adulthood, one of the ways to compare ourselves is money.” In such cases, sharing numbers may heighten tension and envy between friends.

Assuming the person who’s asking is someone you know—as opposed to a nosy neighbor over the hedgerow—you probably have a sense of what’s motivating the question, and whether you feel comfortable answering. If you don’t feel comfortable, you shouldn’t feel pressured to divulge. Here are three ways you can avoid revealing what you paid, without leaving the person feeling dissed:

USE YOUR SPOUSE FOR BACKUP: “Jim and I decided that we wouldn’t talk about the price.”

One option is to use a non-disclosure pact with your partner as an excuse, says Laurie Puhn, a professional couples mediator and author of Instant Persuasion: How to Change Your Words to Change Your Life. This takes a bit of the pressure off you, laying some of the blame instead on your partner (who is hopefully not present in the moment). Also, your unified front will seem more impenetrable to a pushy pal.

“You don’t want to come off as dishonest,” says Puhn. “So discuss in advance with your husband or wife what you’re going to tell other people, and in the moment, use your partner as an ally.”

KEEP IT LIGHT: “How much did we pay? More than I would have liked!”

A joke can do double duty, diffusing tension and tacitly conveying that you’d prefer not to respond. While this response is more subtle, “most people will pick up on the cue,” says Dammann.

Still, since it’s not direct, you might want to change the subject quickly.

An easy way is to use your joke as a jumping off point for a conversation about the real estate market. For example, “I just read that the price of existing homes year-over-year has been on the rise for 30 consecutive months. Can you believe that? And there’s so much competition in our little town—our realtor was telling us about a house that got four offers after the first open house!”

TELL THE TRUTH: “I’m sorry, I’m not really comfortable talking about the cost.”

If your friend really presses you, you don’t need to be dodgy. Just be honest. This comes off as authentic, since you’re talking about your feelings. And you’re putting the questioner in a bind—by pushing for a response, he or she knows that he will be making you even more uncomfortable since you’ve already said so.

Keep in mind that if your friend really wants to know what you paid, there are other ways of finding out, since real estate transaction information becomes public record. But that doesn’t mean you need to discuss the cost. “Just because you’re asked a question doesn’t mean you have to answer it,” says Puhn.

MONEY Budgeting

Guess Which U.S. City Is the Most Expensive


Hint: It's not NYC.

On average, American households spend the largest share of their annual expenditures on housing. The average family spends $16,887 on housing per year, equating to 33% of the average household’s annual expenditures. But how much do those expenses vary from city to city, and which places are the most expensive?

Well, the Bureau of Labor Statistics recently released a report (link opens PDF) detailing Americans’ average annual expenditures on housing and related items. And contrary to popular belief, New York City is not the most expensive city to live in. Two U.S. cities have overtaken it.

A breakdown of housing costs

The BLS took a deep dive into all the costs of housing, rather than simply comparing the cost of rent or average mortgage payments. Their analysis also took into account utilities (electric, water, and natural gas), household furnishings and equipment (textiles, furniture, floor coverings, appliances, and the like), housekeeping supplies, and other household expenses. What they found was that average annual expenditures on housing were far higher in both Washington, D.C., and San Francisco than in New York.

Source: Bureau of Labor Statistics.

The data is current as of 2012, and housing costs in the District of Columbia and San Francisco have risen since then. In D.C., the rise in housing costs is being led by the redevelopment and gentrification of the downtown area, which in turn is being triggered by the high relative number of government and government-related jobs, particularly in the defense contracting sector. Baby boomers are also moving from the suburbs into the city.

In San Francisco, housing costs have always been high, but they’re spiking because of a confluence of factors. The continued boom in technology companies in Silicon Valley — most notably Apple, Google, and Facebook — means that a growing cadre of high-paid employees want to live in the area. Add in a longtime lack of housing development in the city, and you have a rise in housing prices that has become a contentious issue in the San Francisco Bay area as longtime renters are priced out of the city. TechCrunch’s Kim-Mai Cutler provides a great, in-depth piece on San Francisco’s housing problem.

The difference in annual housing costs between the two most expensive cities and the national average is a staggering $10,000. Excluding New York City, the difference between the two most expensive cities and other major U.S. metropolitan areas is over $5,000 annually. If you’re thinking of moving, it’s smart to compare costs carefully before moving to one of the most expensive cities in the U.S.

National differences in housing cost

While the above data is just from major U.S. cities, we have other data from the Bureau of Economic Analysis showing the real value of housing dollars in each state compared with the national average.


You can see that generally, coastal states are more expensive than non-coastal states, as many people enjoy living near the ocean. You can also see that the Northeast on average is more expensive than the rest of the country except for California. These high costs, coupled with better weather and low to no income taxes, are why many retirees move south to Florida, Texas, etc.

If considering moving to a more expensive city, you should be sure the benefits will be worth the extra expense. For instance, while I pay a high cost of living to live in New York City, the quality of life that I get in the city makes it well worth it, in my opinion. While New York state is ranked poorly in terms of the happiest states in the U.S., New York City is ranked in the top quartile by happiness among U.S. cities, according to the Gallup-Healthways Well-Being Index.

The most important thing is to live in a place where you are happy. While the main determinants of happiness are the same for everyone, the specifics vary. Be sure that an increased cost of living comes with an increased quality of life.

MONEY home improvement

5 Easy Home Improvements for Less than $1,000

Not every worthwhile upgrade requires years of savings. These ideas will enhance your home without breaking your bank account.

It’s understandable if you, like many Americans, associate home improvement projects with money flying out your door. After all, the average bathroom remodel tops $16,000, according to Remodeling Magazine’s 2014 Cost Vs. Value Report. Replacing your windows runs $8,000 on average. Kitchens and master bedroom projects usually run many times that amount.

Turns out, though, that some smaller projects can add instant curb appeal, make living in your abode more pleasant, and come with a manageable price.

Here are some simple enhancements to consider.

  • 1. Update lighting.

    Courtesy of Porch

    Remember that good modern lighting can make a room look larger and warmer. Thus switch out any old-fashioned fixtures and update them with new energy efficient models. To find stylish replacements, home retailer websites will update you on the latest lighting trends, such as copper or bronze fixtures. Pendants or chandeliers in attractive metals and designs can change the look and feel of a room more than you might think.

    Expected cost: Fixture prices vary widely, and can range from $20 to $1000. If you need to hire an electrician, you may want to choose less expensive lighting to offset your costs. Simply spray painting your current fixtures can cost as little as $20.

  • 2. Remake your entrance.

    Front porch with columns
    Courtesy of Porch

    One of the best ways to improve the look of your home from the street is to make your front entrance livelier and more attractive. Replacing the front door is an obvious way to achieve that goal. Perhaps try a new solid door with contemporary fittings or locks. Or update your existing door with paint and new handles (keep in mind you may still need to budget for a handy man even if you’re only switching the knobs).

    If your front door is in good condition and you simply want to spruce up the porch, potted plants, a new exterior light, new house numbers and a new rug can instantly add charm, and be done quickly.

    Expected cost: a new front door will run about $1,000 (a fiberglass door will likely run more). Expect to pay around $30 to $100 for supplies if you paint it instead.


  • 3. Modernize the bathroom.

    bathroom counter
    Courtesy of Porch

    Since bathrooms are generally small rooms, $1,000 can go a long way. For example, you can replace the toilet and sink- plus pay a plumber to install them- for less than $1,000. You’ll find the best prices on discontinued models. Another possibility: painting the room, which can typically be done in one weekend. If you like to DIY, and have a plain, frameless mirror, called a builder’s grade mirror, try updating it with a frame or learn how to tile.

    Expected cost: New toilets and sinks can be found for around $100 to $300 each. Vanities run about $500 to $900.

  • 4. Hire professional cleaners.

    Courtesy of Porch

    A thorough cleaning not only enhances the look of your home, but also makes living it in more pleasant. While you can certainly do it yourself, there are good reasons to sometimes hire a professional. Carpet cleaners, for example, use high tech and powerful machines that suck out more dirt and water than you could get with a hand-held version. As for windows, they can be difficult to clean yourself when they’re in hard-to-reach locations, tempting you to skip some. Professional pressure washers can clean moss and mold off of driveways and walkways, making them cleaner in appearance and safer for walkers.

    Expected cost: Professional carpet cleaners can do the job for around $200 to $500, depending on the size of the area. Professional pressure washing machines can be rented for $100 to $200, or you can hire someone to tackle the job for less than $1000.

  • 5. Decorate the walls.

    Courtesy of Porch

    A room can feel much larger if you add some wall decoration. Aim to use your walls from the floor to the ceiling, giving the eye a reason to move up and down, tricking it into thinking the space is larger than it is.

    Adding decor such as open shelving gives you a place to pop in splashes of color and decorative or meaningful objects. Try installing simple shelves in a symmetrical pattern, or moving your artwork from one room to another. If you’re lacking items to hang, take a vintage piece of fabric and stretch it over a canvas, or frame bits of your favorite designs on paper. Both are easy, inexpensive ways to add pizazz to your home.

    Expected cost: Expect to pay anywhere from $20 – $100 for a single shelf or decent-sized frame from a big box retailer.

  • Related:

    More from Porch:

    Spring Bulb Planting 101

    October Maintenance Guide

    4 Ways to Create a Party Perfect Kitchen


    Anne Reagan is the editor-in-chief of home website

MONEY Housing Market

Cities Where the Housing Market Heats Up In the Fall

Autumn colors on North Shore of Big Bear Lake.
Autumn colors on North Shore of Big Bear Lake, where housing searches pick up in the fall. Brent Winebrenner—Getty Images/Lonely Planet Image

The start of the slow season for home search in most of the country began last month. But autumn is prime time for shopping in certain regions, mostly vacation areas in the mountains and forests.

House hunting is largely considered a seasonal sport, with springtime ranking as the best time to play. March typically kicks off the busy season, which extends through Labor Day, and is when the largest number of buyers circle, and the most homes go up for sale.

But depending on where you are house hunting, you may not realize that autumn can be an excellent time to buy and sell. Instead of slowing down in the fall, many regions of the country buck the national trend and experience high levels of activity, according to a new report on the seasonality of house hunting. The research reveals the cities where home buying and selling peaks, as well as significantly slows, during this time of year.

Fall Slow Down

Home shopping majorly slows in many warm climates and beach areas during the fall months. For example, in September and October Hawaii and Florida see a 10% dip below their annual averages. When looking at major metro areas, search activity drops the most in the South and Southwest. In the Cape Coral/Fort Myers, Florida, area, for example, it declines 18% in September and October compared to the annual average. Searches plummet 12% in Austin, Texas, and Phoenix, Arizona. In Charleston, South Carolina, hunting goes down 11%.

Big vacation destinations that see search activity slow include Punta Gorda, Naples/Marco Island and Key West.

The study also found that college towns have some of the lowest rates in the country for home searching during the autumn season – making it all the more important to lock in your housing before classes begin. College Station/Bryan, Texas, Columbia, Mo., and Iowa City, Iowa, are three university towns that see a big reduction in activity during this time of year.

Bucking the Trend

There are several areas of the country where activity actually picks up in the fall, and autumn is the busy season. These regions are typically near ski resorts in mountain and forest areas.

The county of Lincoln, NM, which is close to winter resort Ski Apache, sees a 16% jump in search activity during the fall when compared with the annual average. The area around Ellsworth, ME, known for a fun winter carnival, boasts 13% more searches.

Big Bear/Lake Arrowhead, a ski region located east of Los Angeles, also has a high number of house hunters in the fall, presumably preparing themselves for fun weekend days on the slopes and dinners by bustling fireplaces.

Other parts of the country don’t necessarily see a large increase in the fall, but instead chug along at their same springtime pace. This pattern emerges in some New England metro areas, including Peabody, Mass., and Worcester, Mass. Search activity in San Francisco also doesn’t change much in the fall, possibly because it includes some of the warmest months for the City by the Bay.

To read more of Katie Morell’s work on, click here.


How do you know if it makes sense to itemize?

MONEY mortgages

Wells Fargo Settles Charges It Refused Mortgages to Moms

A woman walks past teller machines at a Wells Fargo bank in San Francisco, California.
Wells Fargo promised to enact new Temporary Leave Underwriting Guidelines and educate their loan officers. Robert Galbraith—Reuters

A woman says a mortgage loan officer told her, "Moms often don’t return to work after the birth of their little ones."

Wells Fargo Home Mortgage agreed Thursday to pay $5 million to settle allegations that its home loan officers discriminated against pregnant women and women on maternity leave out of fear that the mothers would not return to work, potentially jeopardizing their ability to repay the loans.

Six families alleged that loan officers employed by Wells Fargo, the biggest provider of home loans, made discriminatory comments during the mortgage application process, made loans unavailable to them, and even forced mothers to end maternity leave early and return to work before finalizing the loans. One of the six complainants was a real estate agent who alleges he lost a commission due to discrimination against one of his clients.

Lindsay Doyal, one of the women who filed a complaint with the Department of Housing and Urban Development, says that she was denied a mortgage despite providing several letters from her employer confirming that she intended to go back to work, the Washington Post reports. Doyal says she received an e-mail from a Wells Fargo loan officer that said, “moms often don’t return to work after the birth of their little ones.”

Since 2010, HUD has received 90 maternity leave discrimination complaints, 40 of which have been settled, with a total of almost $1.5 million going to loan applicants. The families in the Wells Fargo case will receive a total of $165,000, and Wells Fargo will create a fund of up to $5 million for other affected mortgage applicants.

“The settlement is significant for the six families who had the courage to file complaints, and for countless other families who will no longer fear losing out on a home simply because they are expecting a baby,” HUD Secretary Julián Castro said in a statement. “I’m committed to leveling the playing field for all families when it comes to mortgage lending. These types of settlements get us closer to ensuring that no qualified family will be singled out for discrimination.”

Wells Fargo promised to enact new Temporary Leave Underwriting Guidelines and educate their loan officers.

“We resolved these claims to avoid a lengthy legal dispute so we can continue to serve the needs of our customers,” Wells Fargo said in a statement. “Our underwriting is consistent with longstanding fair and responsible lending practices and our policies do not require that applicants on temporary leave return to work before being approved. The agreement resolves claims related to only five loan applications from a period when Wells Fargo processed a total of approximately 3 million applications from female customers.”

[Washington Post]


4 Myths About the Home Office Tax Deduction

Man in home office
Make your home office work for you. Thomas Barwick—Getty Images

Misconceptions about the home office deduction cause Americans to lose out on significant savings.

One of my favorite tax perks available to real estate investors as well as many other professionals is the home office deduction. It allows you to shift what would otherwise be personal non-deductible expenses into legitimate business write-offs. Although the break is not going to rank as your largest, it can provide you with a worthwhile amount of savings when used correctly.

For example, if you repainted your entire house for $8,000, and your home office accounts for 20% of your space, $1,600 ($8,000 x 20%) is now a legitimate tax deduction.

I am still surprised by how many people I meet who qualify for the deduction but do not take it, I suspect because of incorrect information.

Here are four common myths about the home office deduction, and why they should not deter you from nabbing the savings.

1. You need a room where you work solely on business activities- and nothing else.

It is true that you need a part of your home that is used exclusively for business purposes. That said, it doesn’t have to be a full room. If you have an area within a room where you review your property management reports, that should qualify. Just make sure the separation is clear, perhaps with a partition.

What doesn’t work: if you use your dining table to run your businesses, since its primary function is to eat. Some people tell me they never dine at the table and only work from it. Still, even in that case, I recommend not claiming your dining room or dining table as your home office. The IRS has successfully challenged in court homeowners who have tried that argument.

Related: What Can I Deduct? The Answer That Will Save You on Real Estate Taxes

2. Your home must be the only place you do business.

Often people don’t take the deduction if they have another office where they can work from time to time. Yet the IRS specifies that your home office must be the “principal” place of business, but not the only one. Thus even if you have access to other offices you’ll still qualify, assuming you do most of your work in your home.

Here is an example: I met recently with a client who owns some out-of-state rental houses, which are cared for by a local property management company. As an investor, he simply reviews the management reports and deals with the professional caretaker from his home office. Previously he never took a home office deduction because he was told that his home did not count as the primary place of business, since a property management company cared for the homes and it was located outside the state. But he got bad information. As long as you are managing your properties from your home office, the fact that you have property managers out-of-state won’t disqualify you.

3. Taking the deduction is complex.

Starting in 2013 the IRS simplified the method for calculating home office write-offs. Anyone who fails to keep precise records will appreciate the new rules.

Rather than holding onto receipts and calculating your actual expenses, you can instead opt for a standard deduction of $5 per square foot, up to 300 square feet, for a total annual write-off of up to $1,500. So you have no tasks over the course of the year.

Related: 7 Common Tax Mistakes of New Real Estate Investors

4. You’re more likely to get audited.

One of the most common myths is that taking the deduction flags to the IRS that you should be audited. But that isn’t true today. Changes to the rules, including the new simplified method introduced in 2013, have made it easier for people who truly work out of their homes to qualify. What’s more, research shows that close to half of Americans have home offices that they work from at some point during their lifetime.

Missed taking the deduction last year? Even if you already filed your tax returns and only now realize that your home office is eligible, simply file an amended return for last year to claim your refund.


More from BiggerPockets:
4 Foolproof Steps to Painlessly Resolve Tenant Complaints

10 Surefire Ways to Fail As a Beginning Real Estate Investor

5 Secrets to Increasing the Profit of Your Rental


Another version of this article originally appeared on BiggerPockets, the real estate investing social network. © 2014 BiggerPockets Inc.

MONEY mortgages

Even Ben Bernanke Can’t Refinance His Mortgage

The former Fed chair revealed that he was recently turned down in an attempt to refinance his mortgage.

MONEY mortgages

As Ben Bernanke Knows, Low Rates Don’t Mean Easy Mortgages

Former U.S. Federal Reserve Chairman Ben Bernanke.
Former Federal Reserve chair Ben Bernanke. Jonathan Ernst—Reuters

The former Fed chairman isn't the only one having trouble taking advantage of rock-bottom interest rates these days.

Yesterday former Federal Reserve Board chief Ben Bernanke drew a lot of you-gotta-be-kidding-me news coverage when he confessed, during a conference panel, that he was recently turned down for a mortgage refinancing.

His point: Maybe bank’s lending standards are a bit too tough these days. Despite very low interest rates and the accommodative Federal Reserve policy he engineered, it’s still not easy for many people to get a mortgage.

The New York Times has a reasonable-sounding theory for why Bernanke, a guy who definitely should be able to make his payments, might have run into trouble. He’s changed jobs recently, which the automated software banks increasingly rely on tends not to like. And these days banks, under close scrutiny from regulators, are less willing to bend when the computer models say no.

Nevermind former super-powered central bankers with million-dollar book deals. What’s it really like out there for everyday home owners and would-be buyers?

“For a lot of borrowers, rock-bottom interest rates are an attractive nuisance—they can’t get through all the hurdles to get them,” says Keith Gumbinger of, which tracks data on mortgages. Access to the most affordable mortgages, says Gumbinger, currently starts at a relatively high credit score of 740. In the loosest environment, back when the bubble was blowing up, that number was 680.

According to the Mortgage Credit Availability Index, published by the Mortgage Bankers Association trade group, lending standards have been steadily easing over the past couple years. The index, which gets higher as loans become easier to get, stands at about 116, compared to 100 in 2012. But the MBA also says the index would have stood at above 800 had it been calculated back in 2006. So we are a long way from the old, easy standards.

Gumbinger says today’s standards should be seen in a longer historical perspective. Though they are much tighter than they were during the boom, they aren’t so different from standards seen in the 1980s and mid-1990s.

And people can get loans. The market for jumbo loans, which all but disappeared, is steadily coming back, says Gumbinger, as banks seek to add new loans to their own portfolios, and then cross sell other financial products to the affluent customers who qualify. Some required down-payments have fallen from above 20% to as low as 15%

And Gumbinger says people with a credit score as low as about 600 are often able to qualify for FHA loans.

Bernanke’s problems make for a funny anecdote, and speak to a frustration lots of would-be be borrowers are feeling. But things will likely continue to loosen up. Now that banks have largely gone through the low-hanging fruit of customers with impeccable credit, they’ll have to compete for a pool of somewhat-less-perfect borrowers. According to data from the mortgage software company Ellie Mae, the typical completed loan had a credit score of 727, compared to 742 in spring of last year.

Of course, the really big question is how much easier lending really ought to be. The easy credit of the 2000s created the housing disaster Bernanke spent his time at the top of the Fed racing to fix.

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