Money Management

Does getting laid off impact your ability to finalize your mortgage? Read on to find out. 

There are different factors mortgage lenders take into account when approving (or denying) home loan applications. One such factor is your credit score, and the higher it is, the more likely you are to gain mortgage approval. Another factor is your income, and that makes sense.

Many people borrow hundreds of thousands of dollars to finance a home purchase. Your lender is apt to want reassurance that you’ll be able to pay back your mortgage over time. And showing your lender that you’re employed is a good way to give it that confidence.

But what if you lose your job after getting approved for a mortgage, but before you’ve closed on it? It’s a scenario some people might be facing this year given the string of layoffs we’ve seen over the past few months. In fact, there have been over 191,000 tech layoffs alone since the start of 2023, according to Layoffs.fyi.

In that situation, you may not lose your mortgage — but it’s a possibility. And so it’s important to reach out to your lender as soon as possible to discuss your options.

Your mortgage isn’t necessarily doomed

It stands to reason that if you’ve applied for a mortgage on your own and no longer have a job, your lender is going to have a hard time letting you finalize that loan until you’re gainfully employed again. But if you applied jointly for a mortgage with a spouse, and their income is enough to support the amount you’re borrowing, then your mortgage may not end up in jeopardy.

As an example, let’s say you earn $60,000 a year and your spouse earns $140,000. Based on your joint income, you might qualify for a $300,000 mortgage. But if you only applied for a $200,000 mortgage, you might still be able to borrow that sum as long as your spouse hasn’t lost their job.

Know your options

Let’s assume that you’ve either applied for a mortgage on your own, or that the loss of your income is such that you no longer qualify for the loan you thought you were getting. In that case, your lender might have different options for you.

One is to pause your mortgage application and pick back up once you have a new job. You may, however, need to get your seller to agree to a delayed closing for this to work, and that’s something you’ll need to negotiate.

Another option may be to modify your mortgage application so you’re borrowing less. If so, and you have a joint application pending, your remaining household income might be enough to cover a smaller loan.

You may also be able to pull out of your home purchase and just cancel your mortgage application outright. Doing so could mean losing the deposit you put down on the home, though, so you’ll need to think things through carefully.

Losing a job can be a blow, especially when you’re in the process of trying to close on a mortgage. You won’t necessarily lose your mortgage if your job goes away, but the only way to know is to reach out to your lender and see what the next steps are.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More 

Saving money can work wonders for your outlook. Read on to learn more. 

A recent SecureSave survey found that 67% of Americans don’t have enough money in their savings to cover an unplanned $400 expense, like a car repair or medical bill. And that’s a problem, because we all need emergency savings to cope with life’s many unknowns, from job loss to home repairs to good old inflation (something a lot of people are struggling with right now).

Of course, it’s easy to see why so many Americans don’t have lots of money in their savings accounts. It’s hard to build savings when bills pile up, and when there’s constant temptation to spend extra.

But it’s really important to get into the habit of contributing to your savings regularly. And while you might assume that doing so will be a painful experience, financial guru Suze Orman says otherwise.

When saving money improves your outlook

It’s clear that to be able to save money, you can’t spend all of your money. You’ll have to give up some things to be able to put cash in the bank. Those things might be a larger home, a nicer car, or even smaller luxuries, like takeout meals when you don’t feel like cooking and clothing items that catch your eye while window shopping.

But Orman strongly feels that it is possible to get as much pleasure out of saving money as spending it. That’s because boosting your savings could work wonders for your general outlook and wellbeing.

In a recent tweet, Orman said, “Saving money is not an act of denying yourself. It’s the means by which you can bring more confidence and calm into your life, because you’re not overextended. Celebrate your savings.”

She’s totally spot on. If you have the knowledge that your savings are in a good place, you can walk around with more confidence and less stress. And as you meet savings goals, whether it’s banking your first $500 or completing your emergency fund, you can feel good about yourself for having accomplished something big.

An effective way to grow your savings

There’s a lot to be gained by getting your savings to a solid place. If you’re not there yet, one really effective way to boost your savings is to put the process on autopilot. Rather than relying on yourself to spend carefully each month and hoping there’s enough money left at the end of it for your savings, set up an automatic transfer from your checking account to your savings account at the start of each month.

That way, you’ll have money land in your savings off the bat, before you get a chance to spend it. And then, if you realize you have extra money toward the end of the month after having covered your essential bills and met your savings goals, that money will be yours to spend without worry.

A robust savings account could not only help you financially — it could help you feel better about yourself on a whole. So if your savings need a boost, try automating the process and seeing if that leads to great results. Chances are, it will.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More 

Swapping your existing mortgage for a new one? Read on to see why it’s important to keep your credit score in good shape. 

These days, refinancing a mortgage doesn’t make a whole lot of sense. That’s because mortgage rates are higher now than they’ve been in years. And if you can’t lower your loan’s interest rate in the course of a mortgage refinance, then there’s really little sense in going through the process.

But let’s say mortgage rates do drop over time and you decide you’re ready to refinance. If so, it’s important to go into the process with a solid credit score. But it’s also important to maintain that score until your new loan closes. If your score takes a hit before your refinance is finalized, it could result in a higher borrowing rate on your new loan. And you might even lose that new mortgage altogether.

Your credit score really matters

Your credit score tells your lender — any lender — how risky a borrower you are. A higher credit score sends the message that you can be trusted to make your payments as you’re supposed to. The lower your score, the more a lender might worry about your ability to keep up with your payments.

That’s why it’s in your best interest to go into a mortgage refinance with great credit. Doing so not only increases your chances of getting approved for a mortgage, but snagging a favorable borrowing rate, too.

But here’s something you may not realize. It’s common for lenders to check your credit more than once in the course of writing you a mortgage. They’ll check your credit before approving your application for sure. But they might also opt to check your credit before your closing date, just to make sure nothing’s changed for the worse. So if your score is lower than it was when you applied to refinance, you could end up putting your loan at risk.

Let’s say you started out with a credit score of 750 when you started the process of refinancing your mortgage. That’s considered very good, according to Experian. But what if a late payment lands on your record between the time of your refinance application and the week of your closing? That could push your score down to, say, 660. But a credit score of 660 is only considered fair, which is a far cry from very good.

Now in that situation, your lender may not withdraw your refinance offer completely. But you might get stuck paying a higher interest rate on your new loan due to your score dropping.

Keep your credit score in good shape

Between the time you apply to refinance a mortgage and the time you close on it, it’s important to keep your credit score in top shape. That means paying all bills on time, not adding to your credit card debt, and checking your credit report for errors. Also, avoid closing long-standing credit card accounts during that time, as that could actually cause a drop in your score, too.

Similarly, avoid applying for new credit cards while you wait for your refinance to be finalized. Any new credit card application will result in a hard inquiry on your credit report and a minor hit to your score.

Chances are, a hit of five to 10 points, which is what you’re likely looking at for a single hard inquiry, won’t impact a pending mortgage refinance. But you’re better off waiting and playing it safe.

Our picks for the best credit cards

Our experts vetted the most popular offers to land on the select picks that are worthy of a spot in your wallet. These best-in-class cards pack in rich perks, such as big sign-up bonuses, long 0% intro APR offers, and robust rewards. Get started today with our recommended credit cards.

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.

 Read More 

The economy is slowing, a banking crisis seems imminent, and the government could default. Read on to learn why you should still stay invested. 

It’s a natural reaction: When something unexpectedly hurts you (like a burn or a bee sting) you instinctively respond. Your nervous system is telling you, “Yo! Look out!” and you almost can’t help but retaliate by removing whatever is causing you pain.

Something similar happens inside investors when stocks become a bear market. For those who watch their portfolios daily it can hurt so bad to see. All that hard work — money invested and time building up to this point — erased in a matter of weeks. The natural reaction, activated by greed and fear, is to sell your holdings on the way down, before it falls too far.

That might seem logical. But, according to a recent study by Fidelity, frequent selling could cost you an opportunity to gain from the market’s best days.

How selling could cost you hundreds of thousands

Fidelity investigated what would happen if we take a hypothetical initial investment of $10,000 in the S&P 500 index and remove the market’s best days between Jan. 1, 1980 and Dec. 31, 2022.

The results were pretty startling.

If you had invested for the full 43 years, then you would have $1,082,309 today. Yes, you would be a millionaire, all because you invested $10,000 in the S&P 500 and never touched your initial investment.

Now, let’s say you decided to pull your money out during the market’s best five days during that 43-year stretch. If you had missed those five days, you would have lost the opportunity to earn $411,258. That’s right: Your initial investment of $10,000 would grow to $671,051, not the million and some change you could have earned.

Let that sink in for a second: If you weren’t invested in the S&P 500 for five key days out of the 15,706 days that make up 43 years, you would have missed out on earning more than $400,000. That’s roughly $80,000 per day!

But let’s continue. Let’s say you had missed the S&P 500’s 10 best days since Jan. 1, 1980. In that situation, your initial investment would have grown to $483,336 — less than half what you could have earned if you had just stayed invested.

Likewise, missing the S&P 500’s 30 best days would leave you with $173,695, while missing 50 of its best days would have left you with $76,104.

That’s wild: The difference between staying invested for 15,706 days and staying invested for 15,656 is more than a million dollars.

Now, I know what you’re thinking — you would have to be very unlucky to pull out only on the market’s 50 best days in 43 years. Like, the kind of person who merely looks at a casino and all at once their wallet is empty.

But the point isn’t just to stay invested during the market’s best days (that’s a given). The point is to stay invested — period. The point is to let your money sit for long periods of time, such that those 50 best days, which no one knows when will happen, will grow your initial investment by 10,823%, from $10,000 to a million or more.

Afraid of where the market is headed? Don’t be

So if you’re scared of where the market is headed, remember these numbers. Because, when it comes to earning the most on your initial investment, pulling out at any time from fear or greed is the wrong move. Keep your investments in your brokerage account, and, if you can, keep contributing. The S&P 500 is still below its all-time high of $4,793. Now might be a good time to buy some shares in an S&P 500 index before the market becomes a bull.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

 Read More 

Does the idea of losing your job make you nervous? Read on to see how you can address that fear. 

When you look at U.S. unemployment data, the numbers seem to paint a pretty rosy picture. In April, the national unemployment rate fell to 3.4%. And last month, 253,000 jobs were added to the economy.

In spite of that, a recent CFP Board survey says that 27% of Americans are very concerned about job security. And it’s actually pretty easy to see why.

For one thing, many large employers have announced or implemented layoffs since the start of the year. And while a lot of those layoffs came out of the tech sector, they haven’t just been limited to tech jobs.

Also, many financial experts continue to warn of a recession. In fact, the Federal Reserve says that it anticipates a recession at some point in 2023, albeit a mild one.

If you’re worried about potentially losing your job, it can make for a very unpleasant existence. Concerns about job security can interfere with your productivity and your general wellbeing. So if you’re worried about job loss, take these steps as soon as you can.

1. Grow your job skills

Sometimes, even highly skilled employees wind up on the chopping block when layoffs come into the picture. But the more job skills you’re able to develop, the more protection you can buy yourself. After all, who would your employer rather let go of if push comes to shove — someone with the minimal skills needed to do the job, or someone who’s clearly gone above and beyond to be great at what they do?

2. Start networking

Building a professional network of contacts could give you peace of mind as recession warnings continue. The more people you develop relationships with, the more resources you’ll have at your disposal should you lose your job and need to find a new one. You can meet new people within your industry by attending networking events and conferences, or by seeing what online and social media groups you can join.

3. Boost your savings

If you had millions of dollars in your savings account, would you be worried about the loss of a job? Maybe not. At that point, you’d have ample cash reserves to pay your bills while looking for work.

The good news is that you don’t need millions of dollars in savings to protect yourself in the event of a layoff. What you do need, though, is a strong emergency fund — one with enough money to cover at least three months’ worth of bills, and ideally, more like six to 12 months’ worth.

Take a look at your expenses and figure out how much you spend monthly on essentials like your car payments, mortgage, food, and utilities. Multiply that figure by a minimum of three, and that’s how you establish your emergency fund goal. If you’re not quite there yet, make an effort in the coming weeks and months to boost your savings so you can walk around confident that should your job disappear, you still have a way to cover your expenses.

READ MORE: Emergency Fund Calculator

It’s easy to see why job security, or a lack thereof, is a problem for so many people right now. But if you take these steps, it might really help you improve your outlook.

Alert: highest cash back card we’ve seen now has 0% intro APR until 2024

If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.

In fact, this card is so good that our experts even use it personally. Click here to read our full review for free and apply in just 2 minutes.

Read our free review

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.

 Read More