Redlining is a form of discrimination in the mortgage industry where lenders avoid giving home loans to applicants based on their race, color or national origin, or the racial makeup of their neighborhoods.

The practice of redlining dates back to the 1930s, when the federal government openly restricted mortgages to applicants from Black or Asian neighborhoods. Redlining was officially outlawed in 1968, but cases as recent as 2023 — one involving a major national bank — make it clear that redlining isn’t dead.

Let’s take a look at how redlining can happen, how to identify redlining, and steps you can take if you think you’re experiencing redlining.

• Types of redlining discrimination
• Signs of redlining to watch for
• What to do if you suspect redlining

Types of redlining discrimination

Modern redlining may resemble redlining from the past, when mortgage lenders would outright deny applicants based on their race, color or national origin.

The Department of Justice (DOJ), accused City National Bank of this type of redlining. Specifically, the DOJ says the lender avoided “providing mortgage lending services to majority-Black and Hispanic neighborhoods … and discouraged residents in these neighborhoods from obtaining mortgage loans.” To settle the allegations, the lender agreed to pay $31 million in relief to the affected communities.

But redlining can take other forms, such as “reverse redlining.” In this scenario, lenders use predatory lending tactics to market unfairly expensive loans to applicants based on their race.

Signs of redlining to watch for

It’s not always obvious when lenders discriminate, especially if you don’t have a way of comparing your experience with applicants from other backgrounds.

Think about the following scenarios as you proceed with your mortgage-shopping journey to help you tune in to possible red flags:

• Does the lender lose interest in your application after seeing you in person? If a lender seems eager to work with you when you call or inquire online, then discourages you from applying or claims to lose your application after you stop by an office, that might mean you’re facing discrimination.
• Does the lender steer you toward applying for expensive loans, even though the eligibility criteria say you should qualify for a better rate? Pressuring you to choose a worse loan or deviating from advertised terms suggest a lender could be treating you unfairly.
• Does the lender reject your application with vague excuses or give reasons for declining that don’t add up? Lenders are obligated to give you specific information about why they turn you down, and skirting this requirement is a strong clue that a lender isn’t acting above board.
• Does the lender offer you rates that are unattractive compared to other offers you’ve received, or that are vastly different from what you expect based on your research? A lender that seems to disregard current market rates might be discriminating.

What to do if you suspect redlining

The two main federal laws that protect you from mortgage discrimination are the Fair Housing Act and the Equal Credit Opportunity Act, or the ECOA.

If you suspect discrimination, you might consider starting by asking a local fair housing nonprofit for help talking through your experience, gathering evidence and submitting your complaint.

To file a report about an ECOA violation, you can go to the Federal Trade Commission’s site at  ReportFraud.ftc.gov — or file a complaint with the Consumer Financial Protection Bureau, which also enforces the ECOA.

To file an FHA violation complaint, you can head to HUD’s Office of Fair Housing and Equal Opportunity (FHEO).You can also talk to an FHEO intake specialist at 1-800-669-9777 or 1-800-877-8339 (TTY).

Consulting with an attorney about your legal options including steps you’d need to take to file a lawsuit might also be a good idea, but could involve some costs.

Keller Mortgage loan at a glance

• Conventional loans: Yes
• FHA loans: Yes
• VA loans: Yes
• Refinancing: Yes
• Jumbo loans: Yes
• Adjustable rates: Unclear
• Fixed rates: Unclear

Keller Mortgage began as an offshoot of the Keller Williams real estate brokerage and is an online-only lender specializing in a variety of home loans. It lends in all 50 states and Washington, D.C.

Pros

• Offers a good variety of home loan types
• Online preapproval process with competitive offers via Offer Ready program
• Lock and Shop program lets you lock your rate for up to 120 days

Cons

• Loan rates, terms and fees aren’t clear
• Process isn’t entirely online

5 things to know about a Keller Mortgage loan

Here are some things to consider before applying for a home loan with Keller Mortgage.

1. A variety of home loans available

Keller Mortgage offers quite a few mortgage options, including conventional loans, FHA loans, USDA loans, jumbo loans and VA loans. Since it’s licensed in all 50 states and the District of Columbia, these loans are accessible to people throughout the country.

Keller Mortgage also offers mortgage refinancing options, including cash-out refinances. The minimum for a home loan is $65,000.

2. Long rate lock potential

Keller also offers a Lock and Shop program, which lets you lock in your mortgage rate for up to 120 days as you shop for your dream home. This is longer than what most other mortgage lenders offer. Most lenders offer a 30- to 90-day mortgage rate lock.

It’s also a major stress reliever if rates on home loans are rising. Plus, Keller gives you the option to reset the rate to the current market rate within 60 days after closing if the market rate is lower than your original one.

3. Homebuying process isn’t totally online

Keller’s application begins online, but you’ll need to work with a mortgage loan officer to complete the homebuying process with Keller Mortgage. This can be good for people who enjoy a more hands-on experience. But it’s less ideal for people who prefer the convenience of digital-only lending.

Once you’ve found your dream home, you’ll also typically work with a real estate agent to make an offer on a house.

4. Competitive preapproval program

Keller Mortgage stands out for its preapproval process. Its Offer Ready program provides an underwritten preapproval certificate, which may help you stand out in a competitive housing market. After receiving all required financial documents, Keller says an underwriter will review the completed application within about 24 hours.

5. Lack of transparency

Keller Mortgage’s website isn’t very upfront about exact mortgage details. If you want specific information about refinancing options, terms or mortgage rates, you’ll need to speak to an agent.

Even then, you may need to provide personal information, such as your contact info, to get the details you need.

Who is a Keller Mortgage loan good for?

If you’re ready to buy a home or refinance an existing loan within the next few months, Keller Mortgage may be a good choice. Its preapproval option and mortgage rate lock help streamline the process and cut down on potential stress.

Keller Mortgage’s low down payment options also make it worth considering, especially if you’re a first-time homebuyer.

Down payment amounts start as low as 3% for conventional loans or 3.5% for FHA loans. If you’re eligible for a VA or USDA loan, you may be eligible to get a home loan without putting down any money at all.

Jumbo loans require a 20% down payment in most cases, though some people may be eligible for a reduced amount.

How to apply for a Keller Mortgage mortgage

Applying for a home loan or refinancing through Keller Mortgage is fairly easy.

• You’ll need a credit score of at least 620 to qualify for a home loan.
• In the application process, there are a series of prompts to follow, including creating an account and choosing the type of loan you want.
• Be prepared with your financial documents, such as bank statements, pay stubs and recent tax returns. After you submit an application, a loan officer will contact you to discuss your options.

Not sure if Keller Mortgage is right for you? Consider these alternatives.

Whether your application was denied or you want to shop around for other home loan lenders, remember this: You only have a limited period of time where multiple hard credit inquiries only count as one. In most cases, you’ll have around 14 days, though some scoring models give you a few more weeks.

With that in mind, here are a couple of lender options to consider.

• SoFi: SoFi may be worth considering for a home since it also has a longer mortgage rate lock.
• Better Mortgage: This online-only lender also has a streamlined application process and no origination fees.

PNC Virtual Wallet Spend checking account at a glance

PNC Bank offers a Virtual Wallet Spend account, which combines checking features with digital tools to help you manage your money.

PNC offers three levels of Virtual Wallet accounts, but for this review, we’ll focus on the base level.

5 things to know about a PNC Virtual Wallet checking account

Here are some things you should consider if you’re thinking about opening a Virtual Wallet checking account with PNC Bank.

1. Customizable account with savings tie-ins

The Virtual Wallet Spend account is a checking account, but you can customize it to meet your needs. PNC allows you to tie in savings account options to your account: Reserve and Growth.

Reserve works like a short-term savings account for short-term planning and saving. And while it earns interest on balances over $1, the rate is lower than the Growth account — but both are low. Reserve can also function as overdraft protection for your checking account.

2. An account packed with fees

The Spend account charges a $7 monthly service fee, but there are ways that you can avoid the fee. To avoid the fee, you must meet one of the following three requirements:

• Keep an average minimum monthly balance of at least $500 combined in your accounts
• Have monthly direct deposits of $500 or more
• Be 62 years or older

But there may be other fees associated with your account. For example, while many banks have opted to remove overdraft fees for customers, PNC isn’t one of them. PNC still charges $36 if your account is overdrawn by $5 or more.

Plus, there are other fees to contend with. You’ll have to pay extra if you want a paper statement for your account — and the fee increases for statements with check images.

Incoming domestic wires will cost you $15 and returned deposit items cost $12 each.

3. Thousands of physical branches and ATMs

PNC Bank has thousands of branches across the country, which gives many customers easy access to in-person banking.

PNC also recently opened “Solution Centers” in some cities. These locations allow you to consult with PNC banking experts about your financial goals and banking needs — and there are plans to add these centers to new markets in the future.

PNC doesn’t offer fee-free ATM withdrawals at non-PNC ATMs. You’ll pay at least $3 for using a non-PNC ATM, but PNC currently reimburses charges for two non-PNC ATM transactions per month (though it looks like that will change after Oct. 23, 2022).

4. Spending rewards

PNC offers purchase rewards for its checking customers. By using the PNC Visa debit card connected to your Spend account, you may earn cash back on certain purchases included in PNC’s Purchase Payback offer. Simply activate available offers in your mobile app, use your PNC Visa card at the retailer and earn rewards.

​But keep in mind that the basic Spend account doesn’t allow you to earn interest on the money in your account. Some brick-and-mortar banks do offer interest on checking accounts. But if you want to earn interest on your money with PNC, you’ll need to move to a different checking account tier or add a savings account to Spend that offers interest.

5. Account management tools

PNC offers some useful account management tools with its Virtual Wallet Spend account. The app and online account features include budgeting and savings tools that let you set goals for your money. You can also use other unique tools, such as Low Cash mode, which limits fees and gives you additional time to get your balance back to $0.

Does PNC have free checking?

That depends on your perspective. While the Spend account from PNC Bank charges a $7 monthly service fee, you can avoid the fee and make this similar to a free checking account by meeting one of three requirements: maintaining a combined monthly balance of $500 or more, having a direct deposit each month for $500 or more or being age 62 or older.

Not sure if PNC Virtual Wallet Spend is right for you? Consider these alternatives.

• Bank of America: Bank of America offers numerous checking accounts, including the Advantage Banking account, which offers a robust set of digital tools for account maintenance.
• TD Bank: TD Bank is a good option to consider if you’re a student looking for a checking account with no monthly maintenance fee.

Alliant Credit Union high-yield checking account at a glance

Alliant Credit Union offers an online checking account that lets members earn interest while cutting out fees such as overdraft penalties. 

It’s fairly simple to get started with a checking account from Alliant. But it’s important to note that this credit union is fully online, so in-person banking is not an option. You’ll also have to meet minimum requirements to earn interest, which Alliant refers to as a dividend rate.

4 things to know about an Alliant Credit Union high-yield checking account

This checking account from Alliant Credit Union offers a number of perks for account holders, but it’s important to understand the full picture before opening an account. Let’s take a closer look at what it’s like to bank with Alliant Credit Union.

1. Competitive APY

It can be difficult to find a traditional bank or credit union that offers a competitive APY on checking accounts — and not all banks or accounts offer interest-bearing checking accounts at all.

Alliant Credit Union, on the other hand, offers a relatively high annual percentage yield (APY) on its checking account compared to national averages. But you can find higher APYs at other bank if your main goal is finding the highest APY.

And Alliant requires you to opt for e-statements and have at least one electronic deposit per month in order to qualify for this rate, which it refers to as a monthly dividend.

2. A fee-friendly credit union

Alliant Credit Union charges almost no fees for its checking account. Alliant doesn’t charge overdraft fees, monthly service fees or ATM fees — whether in network or out of network.

Keep in mind that you may still face a fee from the operator of the out-of-network ATM. But Alliant offers account holders up to $20 each month as a reimbursement for fees charged by other banks when you use their ATMs — deposited at the end of each day.

Plus, international ATMs are included in Alliant’s ATM-free structure, so you are able to withdraw cash overseas or in other countries without paying a stiff penalty. Alliant will still charge you a 1% International Service Assessment fee for purchases though.

3. Wide network of ATMs

Some people may be wary of credit unions for fear of being unable to find an ATM when they need one. Alliant Credit Union offers a wide range of in-network ATMs to customers, with more than 80,000 fee-free ATMs nationwide. This may give you options for getting quick access to cash.

You can find an ATM locator tool on the Alliant website.

4. Teen checking account option

Alliant also offers a teen checking account option that is available to members between the ages of 13 and 17. It aims to help teens learn responsible financial habits. The account is jointly owned by the teen and a parent.

This account comes with many of the same perks as the high-yield checking account, including no minimum balance requirements, no monthly service fees, access to more than 80,000 fee-free ATMs and $20 per month in ATM fee rebates. Teens can also earn interest on the money in their checking accounts by meeting two requirements: opting into e-statements and having at least one electronic deposit made to the account each month.

Who can open an Alliant Credit Union account?

Alliant is a credit union, which means it is owned by members. However, unlike some credit unions, Alliant Credit Union’s membership requirements are fairly flexible. It’s open to most U.S. residents who are 18 years or older. You can join with a $5 donation to Foster Care to Success, which Alliant will make on your behalf.

How do I order Alliant checks?

Ordering checks is simple with an Alliant checking account. Customers who want to order physical checks can order them in their online banking portal. Alliant says checks typically arrive within five to seven business days.

Not sure if Alliant Credit Union is right for you? Consider these alternatives.

• Chime: Chime may be worth considering if you want a checking account with the potential for early access to your paycheck with direct deposit.
• PNC Bank: PNC Bank’s Virtual Wallet account is worth considering if you live near one and would prefer a bank with physical locations.

Fiscal responsibility is a vital life skill.

When you know how to budget, earn and save money, you’re better prepared for the real world. Get a jump-start on your financial future with this short glossary of essential terms as a reference.

Annual percentage rate (APR)

Your interest rate (and any applicable fees) stated as a yearly rate. An APR can give you a good idea of how much you’ll pay to take out a loan, or how much interest you’ll pay on credit card purchases if you don’t pay off your full statement balance by the monthly due date.

Annual percentage yield (APY)

APY is the annual rate of return earned on a savings deposit or investment. APY takes compounding interest into effect when it’s calculated, and that’s why the account balance and the interest paid on the balance get bigger every period. Depending on your bank, your interest may compound at different time periods — daily or monthly, for example.

Bankruptcy

The process of being released from having to pay debt in exchange for being forced to lose certain assets. Bankruptcy can remain on a credit record for up to 10 years, and those who file for personal bankruptcy are often required to undertake credit counseling and learn about personal financial management before filing.

Checking account

A bank account with funds that are typically used for living expenses and other bills. Checking accounts typically pay little to no interest, though some high-interest checking accounts are an exception.

Compound interest

The addition of interest to the principal and previously earned interest of a loan or deposit.

Credit card

A small plastic or metal card issued by a financial institution. This card allows the holder to borrow money to purchase goods or services from the creditor, with the promise to pay it back at a later date with interest. With most credit cards, you can avoid paying interest on purchases if you pay off your full statement balance by the monthly due date.

Debit card

A small plastic or metal card issued by a financial institution. This card is typically linked to your checking account and can be used to make purchases or withdraw money from a point-of-sale, or POS, terminal or automated teller machine. When you use your debit card to buy something or withdraw money, money is deducted from your checking account.

Gross income

The total pay from an employer or other sources of income before taxes or deductions are taken out.

Inflation

The overall, ongoing increase in the price of goods and services in an economy over time.

Insurance

An arrangement in which a company or agency protects the purchaser from unexpected financial losses. Insurance can help manage the risk associated with damage to big purchases like a car or home. It can also financially protect the purchaser and their loved ones in the event of a death, injury or other health issue.

Interest

The cost of borrowing money. With credit cards and many types of loans, your interest rate is included in an annual percentage rate. But note that annual percentage rates can also include fees in addition to interest.

Interest rate

The amount or proportion of a loan that is charged as interest to the borrower.

Mortgage

A long-term loan used to buy or refinance real property, such as a home.

Net worth

The measure of a person’s financial condition. This amount is equal to a person’s assets minus their liabilities.

Principal

The principal is an amount of money that is invested or borrowed. The principal is distinct from interest, which is the cost of borrowing the money.

Simple interest

Interest calculated periodically on only the loan principal or investment principal and not on previously earned interest.

Tax deduction

A reduction in the amount of income you pay taxes on, which means you could pay less in taxes.

Divorce can be a painful and financially complicated process, even for those who are separating on relatively good terms.

Ideally, a couple’s assets are simply divided fairly between both parties. But what about assets that aren’t easily split, such as a home and mortgage?

Let’s look at some options for dealing with a mortgage when couples go their separate ways.

• The law: Community property states vs. common law states
• Selling the home together
• Removing one party from the mortgage
• Keeping the home and using it together as income property

The law: Community property states vs. common law states

The first thing to understand about dividing up property in a divorce is that your options may vary depending on whether you live in a “community property” state or a “common law” state.

In a community property state, assets acquired during a marriage are typically considered community (or shared) property — and therefore during a divorce are divided 50-50. Community property states include Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington and Wisconsin — along with U.S. territories Guam and Puerto Rico.

All other U.S. states are common law states, where each spouse is considered generally responsible for any individual debt and property acquired during the marriage. This means that if one spouse bought a home on their own, for example, the home generally will belong to that spouse in the event of a divorce (unless both names are on the deed/title or other agreements have been made).

This is just a basic look at the scenarios for community property states and common law states. The details can get complicated, so it’s a good idea to have a divorce lawyer help sort through it all and advocate for your best interests.

Selling the home together

One of the simplest ways of dealing with a mortgage in a divorce is to sell the home together, pay off the mortgage and other costs, and split any profits.

This route requires some cooperation between separating spouses. You’ll have to make joint decisions about things like price-setting, when to sell and how to pay for things like staging the home or other details around the sale.

Selling the home and dividing any remaining proceeds can benefit all involved in many ways: Couples have a chance to make a cleaner break from both the mortgage and each other — along with each getting their share of funds from the sale.

One heads-up: If you sell the home, capital gains taxes on income from the sale could be a concern at tax time. However, if you meet certain conditions, you can likely offset much of the tax impact. Before deciding whether to sell, it’s a good idea to talk things through with a tax pro.

Removing one party from the mortgage

Another way to deal with a mortgage during divorce is to remove one spouse’s name from the loan. A couple of ways to do this might be through refinancing or a loan assumption.

Refinancing

Refinancing a mortgage involves taking out a new loan to pay off the original mortgage loan. If two borrowers are on the original loan, you can try to refinance in the name of just one of the borrowers — effectively releasing the other from responsibility and claim.

A cash-out refinance might be a good way for one spouse to refinance a mortgage solely in their name and access the cash they need to buy out the other party.

Keep in mind that if you want to take sole responsibility for a loan through a refi, you’ll need to have the income and credit to qualify. The amount of equity you have in the home will also be a factor in the refinancing lender’s decision and terms offered. And remember, refinancing is essentially applying for a new mortgage loan, with the associated costs, like origination fees.

You can shop around to check current mortgage rates and compare refinance rates on Credit Karma against the terms of your existing loan. Knowing the current rates, what you can afford, and different types of loans and terms can help you find the best mortgage refinancing options. A mortgage refinance calculator can also help you figure out what type of refinancing and terms you may qualify for.

Loan assumption

If your lender allows it, you may be able to seek a loan assumption. Unlike refinancing, a loan assumption does not involve taking out a new loan. Instead, it allows one borrower on a mortgage to assume full responsibility for the loan — with no change in terms — releasing the other borrower from their obligation.

Again, the borrower assuming full responsibility for the loan will have to meet the lender’s qualifying requirements.

Keep in mind that a loan assumption isn’t usually an option for conventional mortgages — but certain government-backed mortgages, under certain conditions and with lender approval, may be eligible. 

Keeping the home and using it together as income property

Keeping the home — with both spouses on the mortgage — and turning the property into a rental is another way to deal with a mortgage in a divorce. For this to work, both parties would have to move out and settle on how to share expenses and income from the home.

Whether a divorced couple can make this option work depends on those involved, but no matter how you proceed, such an arrangement should be worked out in a legally binding agreement.

What’s next?

Refinancing a mortgage, selling a home or transferring ownership in a divorce can affect the credit scores of both parties in the divorce as well as their taxes. Consulting with a divorce lawyer and a tax professional can help you understand the pros and cons of all your options and guide you in identifying the best choices for your particular situation.

When you’re looking into renting or buying a home, it’s easy to get preoccupied with everything involved in the application and decision-making process — from debt-to-income ratios and down payments to location and budgeting.

You might get so overwhelmed with weighing all the pros and cons of a situation that you miss a real estate scam coming at you. 

But if you learn how to identify scams and are careful about who you give your money and sensitive data to, you’ll be in a better position to protect yourself from fraud.

• Who’s at risk for housing scams?
• Recognizing a housing scam
• Types of homebuying scams
• Types of home-selling scams
• Types of rental scams
• Types of foreclosure relief and refinancing scams
• Avoiding and reporting housing scams  

Who’s at risk for housing scams?

The short answer? Practically anyone. If you’re looking to buy, sell, rent or refinance a home, you might be targeted by a scammer at some point. Housing scams may include rental scams, illegal property flipping, or “non-disclosed” silent second mortgages, for example.     

Scammers might make false promises of helping you maintain or save your mortgage. Some may try to lure homeowners into “special” financing offers — other scammers will target renters and trick them into wiring a deposit for a property that’s actually unavailable. In each case, the scammers try to take advantage of you during what can be a complex and emotional situation involving one of the most important things in your life: your home.

Recognizing a housing scam

Housing scammers may call, text or email you, claiming to be a legitimate representative from a real company or agency asking for money, access to your account or other financial information. 

Some target homeowners who are behind on mortgage payments. During this stressful time, scammers hope they can prompt you to send money or give them financial details that they can use for fraudulent purposes. 

Threatening you with legal action, repossession of property or even jail are also common tactics in housing scams. 

Here are some common scenarios to watch for:

• You’re asked to pay a fee to prevent foreclosure: This “fee” will end up going straight into the pocket of a scammer — legit lenders or housing counselors don’t request fees to stop foreclosure on your home. 
• They “guarantee” loan modification: Scammers will make big promises — real lenders and counselors approved by the Department of Housing and Urban Development will not guarantee that you qualify for a home loan modification or refinance. 
• You’re asked to stop or redirect your mortgage payments: No legitimate lender or housing counselor will ask you to stop mortgage payments or begin transferring payments to a third party.

Housing scams can target people in the process of homebuying, home selling, renting or refinancing.

Types of homebuying scams

A homebuying scam specifically targets those looking to buy a home or to apply for a mortgage. A scammer may contact you while you’re looking for lenders, applying for grants or down payment assistance, or dealing with other services associated with your mortgage.

Wire transfer or mortgage closing scams

Homebuyers may be contacted through a fraudulent email that looks authentic and seems to come from a lender, real estate agent or escrow or title company asking you to send account information or wire a down payment, for example. 

If you get an email soliciting your info or money …

• Check for things like spelling and grammatical errors or generic greetings (“Dear customer”). Also check the sender’s email address — it might be similar to that of a well-known, legitimate company but off by a number of characters. All of these are red flags that the message may have come from a scammer.
• Confirm instructions with your real estate agent or lender to make sure any payment request is genuine.
• Do your homework. If you know when and how your closing payments will be handled, fraudulent requests will be easier to spot. Ask your mortgage lender about specific wiring instructions so you’ll know exactly where you’ll be sending your funds.

Types of  home-selling scams

Home-selling scams target property owners who are trying to sell their real estate. Sometimes scammers who claim to be buyers will bring you or your agent bogus offers. 

If you’re selling property, here are a couple of scenarios to watch for.

Cash for homes

This type of scam can go by different names, but the basic premise is this: You are approached by a third party who wants you to sign the deed of your home over to them, often under the guise of helping you sell quickly. 

With this type of scam, the owner loses the deed and control of the home but is still on the hook for mortgage payments.

Fake real estate representatives

While specific requirements and qualifications may vary by locality, you can check with your state or local government database to verify that a real estate agent you are working with is licensed and in good standing. 

If a real estate rep is reluctant to disclose information on their experience, training or license, it’s a good idea to avoid doing business with them.

Types of rental scams

Renters can be scammed in a variety of ways. Over-promised amenities and false advertising can deceive prospective tenants.

Hijacked ads and phantom rentals

You may find online ads posted to entice potential renters with promises of low rent and terrific amenities — but they can be fake. Scammers may target renters with no credit or bad credit with these too-good-to-be-true rental opportunities.

In some cases, scammers will urge you to wire money — sight unseen — for an application fee, deposit or first month’s rent — perhaps saying they are out of town and unavailable to show you the property. After transferring the money, the prospective renter will find that the property they are supposedly moving into doesn’t exist or is already occupied.

Types of foreclosure relief and refinancing scams

Just about any homeowner — but particularly those experiencing financial difficulty paying their mortgages — can be a target for mortgage relief or refinancing scams.

Foreclosure rescue

Scammers know that if you’re worried about foreclosure, you might be more inclined to grasp at promises of relief. They may claim to be a legitimate company (such as a bank, lender or other financial entity) or even a government housing agency. 

Sometimes these scammers ask for a fee for their services or may offer to buy off the outstanding debt in exchange for assuming temporary ownership of the house deed. The scammer might then charge the homeowner rent to stay in the house, or else offer to sell the home back at a higher price.

Other mortgage relief scams

You may be contacted by someone pretending to represent a mortgage relief, refinance or lending organization. 

How can you tell if it’s a scam? If you have been contacted by a third party that you didn’t reach out to first, that’s the first red flag. And if you’re told to stop making mortgage payments, or to redirect funds that should go to your loan servicer, it’s a good idea to speak to a trusted financial resource before agreeing to do this.

Avoiding and reporting housing scams

Here are some steps you can take to help avoid falling victim to housing scams.

• Use secure payment methods. Always verify your lender’s account information and money transfer details for making wire transfers securely. This can help ensure the money goes to the correct entity and that your personal financial information is not compromised.
• Partner with real estate professionals and work closely with them. Ask for referrals, and work with your lender to make sure you are working with a reputable, licensed agent.
• Watch out for scare tactics. Be wary if a third party or someone unknown to you is threatening you with repossession, eviction, legal action or other measures. While it could be legitimate, it’s always worth asking for credentials before taking such threats seriously.
• Verify. If someone contacts you with any kind of offer, take extra time to validate who they are and speak to multiple representatives.

If you are a renter, homeowner or potential homebuyer and think you have been scammed online, you should file a report with the FBI’s Internet Crime Center (IC3). You can also report scams to your local FBI field office. 

Is there anything more annoying than a roommate who leaves their dirty dishes in the sink?

You’ve asked them to wash their dishes before, and they said they would do it, yet they don’t. Then they forget again and a few more dishes are added to the sink. By this point, you’re frustrated, but not as angry as when they then do it a third consecutive time. Ultimately, you move out and tell all of your friends what a horrible roommate they were, and your old roommate’s reputation is ruined.

Dirty dishes might seem irrelevant to your credit reports, but what if the dirty dishes symbolized late credit card payments? Imagine that you’re the annoying roommate to your creditors, who are becoming increasingly frustrated with your delinquency. They might tolerate one late payment and give you a second chance. But if you keep making mistakes, you can ruin your relationship with them, in addition to maiming your credit scores.

What is a delinquent credit card account?

In the credit card industry, any account past due is a delinquent account. But many creditors won’t report an account as delinquent to credit bureaus until at least 30 days after the missed due date. And if you’ve previously had a clean payment history, your creditor might not report the delinquent account until after two consecutive missed payments.

Additionally, there are multiple levels of delinquency that may be reported on your credit reports. A debt can be reported as 30, 60, 90 and then 120 days late. Multiple delinquencies or a longer period of delinquency can affect your credit scores much more negatively. For example, your credit scores could drop as much as 125 points after numerous missed payments are posted to your credit reports.

Also, even after you’ve fully paid off these debts, the missed payment information on your credit reports may still remain for up to seven years, signaling potential irresponsibility to future creditors.

How do I remove a delinquent account from my report?

As previously stated, delinquent accounts are typically removed seven years after the date of the original delinquency. Even if the debt is sold to a collection agency, the original date of delinquency is normally when you defaulted on the original creditor. Unfortunately, these accounts don’t always disappear on schedule, so you may have to put in a little extra work to take them off.

If you realize that a reported delinquency wasn’t removed when it should’ve been, you should retrieve a copy of your credit reports from the three major credit bureaus.

The credit reports might not be identical, so it’s a good idea to know if the delinquency hasn’t fallen off one or all of them. If you believe a credit bureau has included a delinquency that is inaccurate or outdated, you can file a dispute with the credit bureau.

Whether you’re nearing retirement age, already retired or many years away, retirement can be an exciting stage of life to contemplate. Some want to travel the world. Others hope to take it easy and settle down. You might feel like downsizing, relocating or updating your current home to better accommodate your changing lifestyle.

Depending on your circumstances, you might also consider buying a new home when you retire. If that’s the case, it’s not a bad idea to start thinking sooner rather than later about the pros and cons, and about how a mortgage could affect your golden years.

• How much mortgage can you afford?
• Should you have a mortgage during retirement?
• Figuring out where to settle

How much mortgage can you afford?

Your financial picture can change a lot in retirement, depending on your savings, other assets and income. And how much money you need to retire depends, among other things, on the lifestyle you want during that time.

If you’re thinking of buying a house when you retire, one key thing to figure out is how much of a mortgage you’ll be able to qualify for (and afford) without a regular salary.

You can start by looking at your debt-to-income ratio — comparing your monthly debt with any money you expect to be coming in during that time. This number is a key factor lenders use to evaluate your ability to pay a mortgage. While standards vary by type of loan and lender, qualifying for a loan with a DTI ratio of more than 43% is unlikely.

To ensure that you choose the best mortgage for you, it can be helpful to meet with a lender to talk about what you can afford and what is realistic. You’ll want to keep in mind that paying for a mortgage on a home means paying for property taxes and insurance along with your principal balance and interest.

You can shop and compare mortgage rates on Credit Karma. It can be tempting to start looking for your dream home and try to get approved for a loan once you’ve found it, but getting preapproved can help you determine what’s realistic for you before you start house shopping.

Should you have a mortgage during retirement?

Some people aim to pay off their mortgages before retirement to lower their cost of living. Others are OK with a mortgage, as long as it’s practical for their situation. It’s ultimately a matter of personal and financial preference and ability. Here are some pros and cons about having a mortgage during retirement.

Pros

• Tax benefits — Having a mortgage may be helpful at tax time. For example, you may be able to deduct your mortgage loan interest. But tax laws can change from year to year, so be sure to check with a tax pro to learn what the allowable deductions might be for any given year.
• Stability — Owning your own home in retirement means you don’t have to worry about your rent going up, losing your lease or dealing with a landlord.

Cons

• Long-term debt — Your mortgage (and associated costs, such as taxes and insurance, on top of it) will be an ongoing monthly obligation that you might not want in retirement.
• Property taxes — Potentially another big financial commitment. And if you don’t stay current on your property taxes, you might have to deal with collection actions, which in some cases can include the tax collector seizing your home to sell it.
• Home maintenance — These costs aren’t always predictable and can run from minor fixes to major projects like roof repairs or replacement.

Figuring out where to settle

While some choose to simply downsize in the same area, others will move to a new location with better weather, lower taxes or improved quality of life overall. Whatever the reason, it’s a good idea to get to know an area before uprooting your life.

Think of it like test-driving a car. Setting some time aside to experience what it’s like in your chosen location at different times of the year — and to see what the cost of living is like day to day — can give you a more realistic idea of what it might be like to live there more permanently.

Considering family and friends

Though it can seem enticing to pick up and resettle somewhere else for retirement, moving away from family and friends can complicate relationships.

Will your loved ones be able to visit as often as you want, or will you be able to visit them? Think again about the costs of such travel. Can you afford to buy a new home with enough space to accommodate visitors?

Consider mobility and accessibility

At some point — though perhaps much further down the road — many older adults have to deal with mobility issues. That’s an important consideration if you’re thinking of buying a “forever” home to enjoy during your retirement years. You may want to downsize from your current home to save money on property taxes, insurance, utilities or maintenance costs — but also possibly to eliminate stairs that could become difficult to navigate, for example.

In this sense, it’s important to think about buying a home you can grow into, not out of. Here are some examples of features you might want to think about being able to have or incorporate into your home, if needed:

• Open floor plans and wide hallways, doorways and entryways to allow for things like wheelchair access or other equipment
• Wheelchair ramps and low countertops
• Step-in showers
• Slip-resistant flooring
• Home security and monitoring systems
• Swing doors

Bottom line

Whether to buy a home for your retirement years is a decision you’ll want to make based on your particular financial and personal priorities. If you’re realistic about your current and future needs and resources, you’re more likely to make a better choice about buying. Listing the financial and personal pros and cons for your situation can help you sort it out.

After your time in military service, you may be eligible for numerous veteran benefits. The United States Department of Veterans Affairs, or VA, offers a range of services and assistance for eligible U.S. veterans and qualifying family members to help transition into civilian life. Read on to understand the different benefits and loans available through the VA.

• VA housing and homebuying assistance
• VA disability benefits and programs
• VA education, training and employment benefits

VA housing and homebuying assistance

One of the most well-known veteran benefits is VA housing assistance. It is meant to help veterans, service members and surviving spouses buy or build a home, refinance a home or make home improvements. Below are some of the specific programs and insights into each one.

VA home loans

A VA home loan is a type of mortgage loan that is backed by the Department of Veterans Affairs. Note that just because the loan is backed by the VA doesn’t mean it’s risk free. The VA backs the loan to protect the lender, not the borrower. If you miss payments, you still risk getting hit with late fees, decreased credit scores or — worse — possible home foreclosure. VA loans can be used to …

• Buy a home
• Build a home
• Buy a home and fund improvements
• Make energy-efficiency improvements to an existing home
• Refinance an existing loan

Specific eligibility requirements can vary based on when you served. But veterans, surviving spouses and those joining the military today must generally meet one of the following eligibility criteria to qualify for a VA loan:

• Served 90 total days of active service during wartime
• Served 181 continuous days of active service during peacetime
• Served six years of service in the National Guard or the Reserve
• The applicant is a surviving spouse of a service member who died in the line of duty or passed away from ­a disability that resulted while serving.

Additional eligibility requirements apply in some circumstances, so check with the VA for specifics.

The VA offers just one type of direct loan — through its Native American Direct Loan program for purchases on qualifying tribal lands. Otherwise it offers borrowers indirect, VA-backed loans from private lenders that participate in the VA loan program. Be sure to shop around and compare mortgage rates to choose the best mortgage for you. Ask friends and family for lender recommendations and be sure to look at online reviews.

VA loan programs specify that the home purchase being financed must be for a property used as a primary residence. Here are some other rules to keep in mind:

• Property requirements: VA loans are for single-family residences with one to four family units and must be primarily residential in nature.
• Qualifying income considerations: VA loan rules on using rental income as qualifying income for the loan include having cash reserves for at least three months’ worth of mortgage payments and providing the previous two years of tax returns showing the rental income.

There are some key differences between VA loans and other types of mortgages that make VA loans so appealing. These differences are:

• No down payment may be required: Most types of home loans generally require some form of down payment. The VA loan typically requires nothing down — although you can make a down payment if you want to try to lower your total loan amount and monthly payment. If your home is appraised at a lower value than the listing or asking price — or if the lender needs it to meet secondary market requirements — you may have to make a down payment.
• The VA has no minimum credit score requirement: There are no credit score requirements set by the VA — however, the specific lender you go through to apply for a VA loan may have their own credit requirements.
• You may not be subject to loan limits: Unlike FHA loans, VA loans of more than $144,000 do not have a borrowing limit, as long as you have full VA loan entitlement — meaning you have not already taken out a VA home loan, or you have fully repaid a previous VA loan.
• You do not need mortgage insurance: Unless you put 20% down, lenders typically require mortgage insurance to protect themselves in case you don’t pay your mortgage. Since a VA loan is backed by the VA, you are not required to pay for mortgage insurance.
• VA loans have a funding fee: VA loans may require a one-time funding fee. This fee can range from 0.5% to 3.6% of your loan, depending on a number of factors, and can be wrapped up in your loan if you’re unable to pay it outright.

Types of VA home loans

There are several types of VA loans that are designed especially for the varying borrowing purposes listed above. These are:

• VA purchase loans: A loan program that qualifying individuals use to buy, improve or build a home
• VA cash-out refinance loans: A loan program that allows qualifying veterans, service members or surviving spouses to replace an existing loan with a new one, allowing them to borrow against equity in their home or refinance a non-VA loan into a VA loan
• VA interest rate reduction refinance loan (IRRRL): A program that allows qualifying individuals to refinance your VA loan under new terms, potentially allowing you to reduce your monthly mortgage payments or interest rate.

There are both fixed-rate and adjustable-rate VA mortgages. With fixed-rate mortgages, you lock in your interest rate for the life of the loan. With adjustable-rate mortgages, your interest rate fluctuates according to the index of interest rates. The VA no longer prescribes specific interest rates — adjustable-rate loan changes depend on whether the loan is a standard or hybrid adjustable rate mortgage. Be sure to talk with your lender about which option is best for you, and learn how often these rates are subject to adjustment.

Homeowners insurance for veterans

Like almost any type of mortgage, institutions offering VA loans will typically require the borrower to purchase homeowners insurance. Additionally, the VA requires borrowers to have a hazard insurance policy where appropriate (flood insurance, for example, in known flood zones), which may be included in the conventional homeowners policy required by your lender. It may be worth asking your insurer or agent about possible military discounts for these types of programs.

State-specific veterans benefits

If you do not qualify for a VA loan or you are simply looking for additional housing benefits, there are generally state-specific organizations and programs designed to help veterans and others with housing at the state level. Be sure to check with your local VA office to help point you in the right direction.

VA disability benefits and programs

If you became sick or injured while serving in the military, or have an existing condition that got worse as a result of military service, you may qualify for VA disability compensation. You can file a claim for VA disability compensation online or at your local VA regional office — or send the appropriate information via mail to the address below.

Department of Veterans Affairs

Claims Intake Center

P.O. Box 4444

Janesville, WI 53547-4444

You will need the following documentation to submit your claim:

• Military discharge papers (DD214 or any other separation documents you may have)
• Any service treatment records
• Medical treatment records that show proof of disability (for example, doctor reports, X-rays, test results, doctor orders/recommendations for treatment, mental status examination or operative reports)

Be sure to apply for disability compensation as soon as possible since the claims process can take a while — generally in the neighborhood of four to five months. The VA site regularly updates the average time it takes to approve or deny a claim — it was 134.4 days as of June 2021 and 139.6 days as of July 2021.

VA benefits for disabled veterans

• Disability compensation: This is a tax-free monthly benefit paid to disabled veterans who are considered 10% disabled or higher. The exact dollar amount you receive each month fluctuates based on the degree of your disability and if you have dependents.
• Clothing allowance: This is an annual allowance for eligible veterans and service members whose clothing has been damaged by prosthetics/orthopedic devices or topical medication for a skin condition.
• Service-disabled veterans’ life insurance (S-DVI): This insurance benefit is for eligible veterans who may have service-connected disabilities but are in good health otherwise. The amount of premium you pay depends on your age, the type of plan and the amount of coverage you need.

The eligibility requirements and application process for each benefit can change, so be sure to check with your local VA center to determine whether you qualify and how to access the benefit.

VA disability housing programs

• Home Improvements and Structural Alterations (HISA): The HISA program provides up to $6,800 in funding for home improvements and structural alterations to a disabled veteran’s primary residence. The intent behind the program is to improve home accessibility.
• Specially Adapted Housing grants (SAH): The SAH grant helps certain veterans and service members with disabilities work toward independent living by creating barrier-free environments.
• Temporary Residence Adaptation grant (TRA): The TRA grant may be available as part of the SAH program described and linked above. It is used to help veterans and service members make accommodations when living temporarily in a family member’s home that needs changes to meet their needs.

Automobile allowance for veterans

Although the VA does not offer specialized car loans for all veterans, it does provide an automobile allowance for veterans and service members with qualifying injuries. This is a one-time allowance for disabled veterans and service members to help them purchase a vehicle that better accommodates their needs.

Qualifying individuals can use this allowance to purchase a new or used vehicle that is already equipped with adaptive equipment, or they can purchase and install adaptive equipment to an existing vehicle.

VA education, training and employment benefits

The VA offers several education, training and employment benefits to veterans, service members and their qualified dependents to help with education costs, finding a training program or career guidance and counseling. Below are the different VA education and training benefits.

• Veteran Readiness & Employment (VR&E): The VR&E program is designed to help veterans and service members with service-related disabilities with job training, employment accommodations, resume developments and job-search coaching. In some cases, these benefits may extend to dependents.
• Personalized Career Planning and Guidance (PCPG): The PCPG program offers education/training, career, academic, resume and goal-planning counseling to eligible service members, veterans and dependents.
• Dependents and Survivors Educational Assistance: This is a specialized program for spouses and children of veterans or service members who died or received permanent disabilities while serving. The program helps with tuition, housing, books and school supply costs.
• Veteran Employment Through Technology Education Courses (VET TEC): The VET TEC program helps veterans with training and educational courses in high-demand areas of the tech industry. The training is for computer software, computer programming, data processing, information science and media applications.
• VetSuccess on Campus: This program is designed to help veterans and service members transition from life in service to life on campus. Each school that is a part of the program has a VA Vocational Rehabilitation Counselor to help support veterans with assistance needed to pursue their educational and employment goals.
• Montgomery GI Bill Selected Reserve (MGIB-SR): The MGIB-SR program pays for up to 36 months of education or training benefits for qualifying reservists and members of the Army National Guard or Air National Guard.
• The National Call to Service Program: This program offers a choice between a $5,000 cash bonus, up to $18,000 of student loan repayment, or educational assistance for eligible veterans who performed a period of national service. 
• Veteran Rapid Retraining Assistance Program (VRRAP): The VRRAP is a temporary program that provides up to 12 months of tuition and schooling fees as well as a monthly housing allowance for qualified veterans who became unemployed because of the COVID-19 pandemic. Eligibility for other unemployment and education benefits can impact eligibility for this program.

Next steps

To find out if you are eligible for VA home loan programs, visit the VA website or your local VA regional office to discuss the programs and your service record.

If you qualify, you can start researching local lenders to find an institution you can work with to apply for a VA home loan and begin the process of financing the purchase of a home.

The VA provides a lot of services and benefits to America’s military veterans, and for some it may be key to unlocking affordable homeownership.

Calculate your VA loan

Find out what your estimated monthly payment and other loan terms could be with our VA loan calculator.

Credit card utilization — or just credit utilization, for short — refers to how much of your available credit you use at any given time.

You can figure out your credit utilization rate by dividing your total credit card balances by your total credit card limits. The resulting percentage is a component used by most of the credit-scoring models because it’s often correlated with lending risk.

Most experts recommend keeping your overall credit card utilization below 30%. Lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too heavily on it, so a low credit utilization rate may be correlated with higher credit scores.

Now that we’ve defined our terms, let’s look more closely at how your credit utilization relates to your credit scores.

Why does my credit card utilization affect my credit scores?

Your credit utilization rate is an important indicator of lending risk. In the eyes of most lenders, a person who constantly charges all the money they can — hitting or going over their credit limit on a regular basis — is more likely to have difficulty repaying that money.

Conversely, someone who charges smaller amounts may be more likely to be able to pay off their balance in full each month, so they represent a lower risk to the lender.

How does my credit card utilization affect my credit scores?

There are many different credit-scoring models, so it’s difficult to calculate exactly how credit utilization will affect your credit scores.

With that said, there’s a strong correlation between a consumer’s credit card utilization rate and their credit scores. Though individual cases may vary, those who keep their utilization percentage low generally have higher scores than those who habitually max out their credit cards.

If you don’t want your credit utilization to negatively affect your credit scores, consider your spending habits. Factors such as your credit history and the number of cards in your wallet matter, too.

High utilization on a single credit card could especially hurt your credit scores if you have a short credit history and only one card. On the other hand, you may feel the effects less if you have a long and excellent credit history and spread your utilization across multiple cards.

Though it’s an important factor in calculating your credit scores, try not to focus just on this one aspect. Keep the big picture in mind.

How can I lower my credit card utilization?

Here are three tips that may help you lower your credit utilization.

• Make credit card payments more than once a month. This way, your balance never gets too high. Your credit card issuer will typically report your credit activity to the credit bureaus once a month. So, if you pay off a portion — or even all — of your credit card bill before that date, you can lower your credit utilization.
• Spread your charges across multiple cards each month. Using multiple cards will result in multiple accounts of low credit utilization rather than one account with high utilization. But keep in mind that certain credit-scoring models will look at your overall credit utilization and/or the utilization on individual credit cards, so this technique may not always work.
• Increase your available credit. If your income has increased, you’ve maintained an amazing credit history or you have little debt, it doesn’t hurt to ask for a credit limit increase. Just remember that this can sometimes result in a hard inquiry on your credit.

Bottom line

You don’t have to carry a credit card balance or pay interest every month to show credit card utilization. Even if you pay your credit card balances in full every month, simply using your card is enough to show activity.

While experts recommend keeping your credit card utilization below 30%, it’s important to note that creditors also care about the total dollar amount of your available credit. This means that if you have a low credit limit, it’s not necessarily a huge deal if your credit card utilization rate is slightly higher than recommended.

While homeownership was once a common milestone in the lives of young adults, research shows that millennials are moving away from buying homes.

A 2019 survey by Fannie Mae found that 55% of millennials and Generation Z believe that homeownership is “out of reach financially.” Several factors, including the rising cost of housing and preexisting debt (often from student loans), present barriers to homeownership for these generations — and new obstacles continue to emerge.

• High cost of housing
• Carrying high levels of debt
• Tighter lending standards
• They may not need the space

High cost of housing

According to the National Association of REALTORS®, the median existing home price was $329,100 in March 2021. Only a few months later that price rose to $350,300, which NAR said was an all-time high.

Home prices have generally increased at a steady pace since 1963, according to data from the Federal Reserve Bank of St. Louis. Though inflation contributes to the rising cost of a home, it’s not the sole factor. Other factors that are contributing significantly to rising home prices include …

• Housing shortages
• Low interest rates
• Rising prices for building materials

The housing affordability index, published monthly by the National Association of REALTORS, features data that reveal whether a typical family has sufficient income to qualify for a mortgage loan on a typical home based on aggregated national and regional data on home prices and income. This index could help you get a sense of whether your income could support a mortgage.

Carrying high levels of debt

According to the 2020 Better Money Habits® Millennial Report from Bank of America, nearly three-quarters of millennials are saving for life milestones and future goals — with some putting money away for a house. But the same report found that more than three-quarters of millennials are weighed down by debt. And carrying too much debt could make it difficult to save enough to put a down payment on a house.

Other factors, including credit scores, can play a key role in determining whether you’ll be able to get a mortgage.

You have a number of credit scores, which can differ across the three major credit-reporting agencies — Equifax, Experian and TransUnion. But most mortgage lenders look at your FICO® scores.

Lenders use credit scores as a factor to determine your eligibility for a loan — and potentially even your interest rate. In general, the higher your credit scores, the lower your potential interest rate. While it’s sometimes possible to get a home loan with bad credit, these loans could come with high interest rates or may require a larger down payment.

Tighter lending standards

Though mortgage rates are currently low, lending standards have tightened considerably since the 2007-09 recession. The Mortgage Bankers Association reported in July that mortgage credit availability decreased in June 2021. The Mortgage Credit Availability Index, a report from the Mortgage Bankers Association that analyzes data from Ellie Mae’s AllRegs® Market Clarity® business information tool, fell by 8.5% in June, indicating tightening lending standards.

To apply for a mortgage you may need to present the following documents and information:

• Tax return
• Proof of income
• Bank statements and other assets
• Credit history
• Down payment gift letters

To help you find the best mortgage for your needs, consider applying for mortgage preapproval and comparing rates. You can compare current mortgage rates on Credit Karma.

Getting preapproved can help you understand how much a lender may be willing to lend to you — but keep in mind that preapproval is not a guarantee of approval, and loan terms may change after you complete a formal loan application.

Getting preapproved with a few lenders will allow you to compare offers and identify the loan that best meets your needs. If you apply for preapproval and aren’t preapproved, ask the lender why so you can take the necessary steps to try to qualify in the future.

They may not need the space

Millennials are getting married at lower rates than previous generations, and the median age at first marriage has edged up gradually in recent decades. Millennials who have completed more formal education are less likely to live with a family of their own (spouse and children), and millennials have more formal education than previous generations overall. Because of this, millennials may have less need for additional living space.

Next steps

With high housing costs and stricter lending standards, you may want to do some prep work before you begin shopping for a home and mortgage. Check your credit reports to make sure they don’t contain any errors that are negatively affecting your credit scores. If they do, you can take steps to try to get the errors fixed. Determine how much house you can afford, and research different types of mortgages, including FHA loans or USDA loans, that may make home ownership more accessible to you.

Estimate the effects of inflation

Use our inflation calculator to see how much money from the past is worth today — or the other way around!