Money Management

Monthly mortgage payments hit an all-time high. Learn how much the typical home buyer is paying and get some advice on whether your mortgage is affordable. [[{“value”:”

If you own a house, or are thinking of buying a house, you may be wondering what your mortgage payment will look like, or what a reasonable mortgage payment is. Looking at what your fellow Americans are paying can help you gain some perspective.

So, how much are people paying monthly for their home loans? Here’s the typical mortgage payment for a U.S. home buyer right now.

This is how much U.S. home buyers are paying for their home each month

In August 2023, the typical monthly mortgage payment for home buyers was $2,866, according to Redfin.

This is the highest average monthly mortgage payment on record. It’s 20% higher than the typical monthly payment for a first-time buyer just a year prior, when payments averaged $2,395. And it’s almost double the typical monthly mortgage payment of $1,581 that new home buyers paid during August 2020, when the COVID-19 pandemic sent mortgage rates plummeting.

The monthly mortgage payment that home buyers are faced with right now is high because homes remain very expensive to buy and mortgage rates remain higher than most home buyers have dealt with in recent years up until the last few months.

A limited supply of houses has driven the median price of properties up to $420,000 while mortgage rates have been hovering around 7% or even higher compared to below 3% during the pandemic — and compared to around 3% to 5% where they’ve hovered since after the 2008 financial crisis.

More expensive homes plus more expensive loans is a recipe for a really high payment.

How to decide if a monthly mortgage payment is affordable for you

Writing a check for $2,866 per month to a mortgage lender is not something everyone can or should do. In fact, that’s too high a price for many people to pay.

Home buyers, in general, should not spend more than 30% of their income on housing costs, and that includes not just a mortgage payment but also taxes, insurance, and HOA fees. If you spend much more than that amount, you’d be classified as “house poor” and could end up devoting so much of your income to your mortgage that you can’t afford to save for retirement or other goals — or even to buy furniture for that house you’re paying so much to live in.

If you’re shopping for a home, look at the total costs you’re going to incur to see if you’ll be above this number. You can get mortgage quotes online to see what your principal and interest payment will be, and look at property records to see what your taxes and HOA dues will cost you. You can even get homeowners insurance quotes to find out if you’ll get stuck paying a lot to insure the property once you own it.

If you find that you can’t afford what most people are paying — or that you can’t afford the amount you’d need to spend to get a home in your area — you should put off buying until you’re in a better financial position. Otherwise, you could regret your choice as you struggle to make your mortgage payment every month.

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The loss of a job can be a huge blow. Read on to see if it will affect your credit. [[{“value”:”

Losing a job can be a major blow — not just financially, but also emotionally. For many people, losing a job is like losing a bit of themselves and their identity. And from a financial angle, not having a paycheck coming in can be extremely stressful.

If you’ve recently lost a job, you may be wondering how that might impact your credit score. The good news is that your employment status is not a factor in calculating your credit score. Neither is your income. But the loss of your job and income might impact your credit score indirectly.

When you’re unable to pay your bills

There are five different factors that go into calculating a FICO® Score, which is the most commonly used credit scoring model in the U.S.:

Payment history, which makes up 35%Credit utilization, which makes up 30%Length of credit history, which makes up 15%New credit accounts, which make up 10%Credit mix, which makes up 10%

As you can see, none of the above factors directly relate to being employed or having a certain income. So it’s more than possible to lose a job without seeing your credit score drop in the weeks or months that follow.

That said, when you lose a job and the paycheck you’ve long relied on, paying bills becomes more difficult. If you fall behind on your bills and stop paying them on time, that could impact your payment history for the worse. Since that factor carries more weight than any other in your credit score calculation, late payments could cause that number to take a dive.

Similarly, your credit utilization speaks to how much of your available credit you’re using at once. The higher your credit card balances, the more negatively it’s apt to impact your credit score. But if you’re out of work and without a paycheck, you may be forced to run up higher credit card bills until you’re employed again. So that’s another way the loss of your job could indirectly affect your credit score.

Always have savings on hand

It’s not always easy to predict when you’re about to get laid off. But one thing you should try your best to do is have a fully loaded emergency fund at all times.

If you maintain a savings account balance that can cover three months or more of essential bills, you’ll be less likely to wind up being late with payments or having to charge expenses on credit cards during a period of unemployment. And that could be your ticket to protecting your credit score in that situation.

RELATED: Emergency Fund Calculator

The loss of a job won’t immediately send your credit score plummeting, so if you’re out of work, that may be one less thing to worry about initially. But it’s important to understand how credit scores are calculated so you know whether your actions might cause yours to drop. And it’s definitely important to arm yourself with emergency savings in case you’re unable to collect a paycheck for a period of time through no fault of your own.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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Own a business and aren’t sure what to do with it? Read on to see if it pays to keep going or consider shutting down. [[{“value”:”

It would be more than fair to say that 2023 was a great year for small businesses. A record-breaking 5.5 million new business applications were filed in 2023 alone, making it the strongest year of new applications on record, according to the Small Business Administration.

But whether you started your small business in 2023 or earlier, you may be at a point where you’re thinking about shutting it down. Ask yourself these questions to see if that’s the right move this year.

1. Am I still in the red?

It can take quite a bit of time for a small business to turn a profit. If you started your business last year and your bank account balance isn’t looking so robust, that’s understandable. But if you started your business in 2021, for example, and you’ve yet to turn a profit after almost three years, that’s a different situation.

Think about why your business hasn’t been profitable to date. If it’s a situation you see improving, then you may want to keep pushing. Otherwise, you may want to nip things in the bud before you sink more time and resources into your business, all the while going without an income.

Also, think about your personal financial situation. If your lack of business profit has pretty much depleted your savings account, and you can’t afford to continue on that road, then it may be time to close up shop. However, if you think some changes to the way you run your business will result in a profit at some point, and you have very deep cash reserves, then you may decide to carry on.

2. Am I enjoying what I do?

Maybe your small business isn’t as profitable as you’d have hoped for. Or maybe it’s not yet profitable at all. If you can afford to keep going and you’re enjoying your run as a small business owner, then that could be reason enough to continue making an effort. You never know when things might take a turn for the better.

On the other hand, even if your business is doing well financially, if you’re miserable, then it may be time to stop. It’s hard to stay motivated to run a business when you’re unhappy and perpetually stressed. And in time, your feelings are apt to impact your performance — and, in turn, your company’s.

3. Have I lost all sense of a work-life balance?

Maybe your business is making money and you find the work engaging and fulfilling. That’s all fine and good. But if you’re in a place where you’re working 90 hours a week and there’s zero time for family, relaxation, or sleep, then it may be time to rethink your situation.

Now, this doesn’t automatically have to mean shuttering your business. Bringing in more help may be viable. But if you’ve gone that route already and it hasn’t changed your workload, then it’s time to take a serious look at your life and ask yourself whether your current situation is really what you want.

Running a business can do a lot of great things for you — financial and otherwise. But there may come a point when it no longer makes sense to keep a business going. So if you’re not sure whether 2024 is the year you should call it quits and try something else professionally, run through these key questions to find out.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Checking up on my credit thoroughly didn’t take long at all, and it gave me peace of mind. Find out how you can do your own year-end credit review. [[{“value”:”

Your credit report is one of those things you may not think to check very often. After all, if you’re not about to apply for a big loan or a new credit card, what’s the point?

But actually, it’s important to check your credit report not just from a potential borrowing perspective. Reviewing your credit report could also alert you to fraud so you know to take action.

These days, you’re entitled to a free copy of your credit report from each of the three major reporting bureaus on a weekly basis from AnnualCreditReport.com. Initially, weekly credit reports were made available as a pandemic-era benefit, but that change has since become permanent.

For most people, checking a credit report weekly isn’t necessarily. But it’s a good idea to do so once a quarter or so.

I usually make a point to check my credit report at the end of the year to do a thorough review. And that’s one thing I made time for in December.

Thankfully, the process didn’t take long at all. And it left me feeling more secure about my financial situation.

A 30-minute investment

Requesting free copies of my credit report from Experian, Equifax, and TransUnion, the three major reporting bureaus, took only a few minutes. It then took me a little more time to review each report and compare it to the other two.

But all told, I’d say I spent about 30 minutes doing my year-end credit report review. And while that’s time I could’ve spent working, cleaning my house, or baking for the holidays, it was worth making the effort to read those reports.

Your credit report is basically a snapshot of your borrowing history. Ironically enough, you won’t see your actual credit score listed on your credit report. To get that number, you’ll usually have to log into a bank or credit card account that offers a free credit score service.

But your credit report should list your open loans and credit card accounts as well as your various balances. It should also show whether you’re current on your accounts and how much credit you’re using.

This is all important information for a few reasons. First, it’s good to see what your debts look like and how current you’ve been on them. But also, it’s helpful to see a list of your open accounts so you can make certain you recognize all of them.

Sometimes, what’ll happen is that a criminal will get a hold of your personal financial data and use it to open a loan or credit card in your name. That’s the sort of thing you’ll see on your credit report, and from there, you’ll know to report that fraud.

Time well spent

I won’t pretend that reviewing my credit reports was the most fun thing I did in late December. But I’m also happy I did that deep dive, because in a short amount of time, I was able to walk away with peace of mind knowing that my open accounts all matched up across my three reports and that I didn’t spot any suspicious activity requiring me to follow up.

If you can’t remember the last time you reviewed your credit reports, access your free copies and give them a read. Spending a few minutes doing so every few months could spare you a world of financial upheaval in the event that you’ve been the victim of fraud. And either way, it’s always good to keep tabs on your open credit accounts.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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