Ready to Chop Away at Your Debt? Pay It Off as Quickly as Possible

by Dan Rafter, July 26, 2017 in Credit & Debt

Man paying his bills
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You’ve made the decision to pay off your mountain of debt. But you’d like to see some immediate results. Is this even possible? Can you pay down your credit card and other debt quickly?

That depends on how you define “quickly.” Financial experts have tips for how you can start making an immediate dent in your debt. Don’t expect miracles, though. These tips will help you pay off your debt faster. But remember that building up your debt took time; eliminating it will, too.

Go After Those Credit Cards

Credit cards are often the debt that most weighs us down. It makes sense, then, to pay off your cards as quickly as you can.

Deborah Sweeney, chief executive officer of MyCorporation Business Services in Calabasas, Calif., recommends that consumers follow the stack – often called the debt avalanche – method of paying off credit card debt.

In this method, you first pay off your credit card with the highest interest rate and devote any extra money you have each month to paying down that plastic’s debt, all the while making sure to pay the minimum required monthly payments on your other cards. Once you’ve paid off that first card, now apply that money each month to the card with the next highest interest rate.

Doing this, and eliminating your credit card debt as fast as you can, comes with another financial bonus, Sweeney said. “This method allows you to pay off debt quickly,” she said. “And once your cards are paid off, your credit score will improve.”

Build a Better Snowball

There is another method that financial experts recommend for paying off credit card debt quickly. It works similar to the stack (or debt avalanche) method. Instead, you pay off the credit card with the lowest balance first, sending any extra money you have each month to reducing that balance while making your minimum monthly payments on your other cards. Once that’s paid in full, you then focus on the card with the next highest balance.

This method is called the debt snowball approach. Paying off cards by interest makes more financial sense because you’ll spend less money during the process, but some cardholders need the more immediate satisfaction that comes with paying off a card with the lowest balance first.

Make a Budget

Julio Hoyos, an accountant with Dover, N.J.-based Julio Hoyos & Co., said that people will struggle to pay down debt quickly if they don’t first create a household budget that shows how much money they make each month and how much they spend.

“By tracking every expense, people will be able to identify where the money is going,” said Hoyos. “By knowing where the money is going, they are able to identify which expenses they can reduce and, in some cases, even eliminate altogether.”

You might think that a budget can’t help you pay down your debts at a faster clip, but consider this: When people eliminate certain expenses, this leaves them with extra money each month that they can put toward reducing their debt. With the help of a household budget, you’ll have an easier time pinpointing those expenses that you can eliminate to free up those extra dollars.

Hoyos points to cable TV packages: If you subscribe to cable but don’t actually watch much TV, you can cancel this subscription and save $80 – $100 a month. You can then use these savings to pay down your debt faster.

“When people track their expenses, they are able to identify many money-saving opportunities,” Hoyos added. “It’s very important to stay committed to develop the discipline to stick to the changes. Once you learn and practice, it will become automatic, and you will do it without even thinking about it.”

Set Goals – Don’t Be Afraid To Be Ambitious

For Phil Risher, founder of YoungAdultSurvivalGuide, the key is to set a goal for how quickly you want to pay off your debt. Once you do this and calculate how much you’ll have to pay each month, it’s easier to justify skipping the restaurant meals and trips to the movie theater to save your dollars.

Risher said that he paid off $30,000 in student loan debt in 12 months, all while making $48,000 a year. Risher said that because his goal was to pay off $30,000 in a year, he knew he had to pay off $2,500 in debt each month.

“That leads me to the next step: Live on a budget,” Risher said. “Since I knew I had to pay $2,500 a month and I was making $3,000 a month, I had to figure out how I was going to live off $500 a month. If you want something bad enough, you will find a way. If not, you will find an excuse.”

Boost Your Income

There’s another approach to take: One way to pay down debt quicker is to earn more money to put toward that debt. Harriette Halepis, content manager for Fort Myers, Fla.-based Dellutri Law Group, says that you can take on a part-time job, ask for more hours from your current employer or take on freelance or consulting work to help boost the income you bring home each month.

Halepis recommends that you use the extra money to pay down your debt with the highest interest rate first. She also suggests that you create a spreadsheet listing your monthly expenses, spending expenses and monthly income. You can then analyze these numbers to make changes in your monthly spending. If you discover, for instance, that you are spending too much for utilities each month, call the companies and try to negotiate lower monthly fees.

Maybe you’ll discover that you’re spending too much on frivolous activities such as coffee, clothing and restaurant meals. Cut back on these expenses and use the extra dollars that you save each month to pay down your debts faster.


“Don’t cut so much that you can’t enjoy life, but cut enough to have extra dollars to spend to reduce your debt,” Halepis said.

The Best Finance Apps to Help You Manage Your Financial Goals

by Danielle Forshay, July 12, 2017 in Saving Money

Wouldn’t it be nice if our finances would manage themselves? We may not be quite there yet, but with some of the apps currently available, we’re getting pretty close. No matter what your financial goals are, there are apps out there that can help you meet them.

To develop our list of the best financial apps, we spoke with financial experts about their favorite apps for specific goals. They gave us the lowdown on the apps that get the most use and some of their coolest features. Here are their picks.

The Best App for Saving Money: Qapital

Trying to save up for that big vacation and just can’t seem to make any headway? We’ve all been there. Kevin Han of Financial Panther recommends Qapital, an app that gives you a boost with a variety of “rules” that you can set to streamline your savings.

Kevin’s favorite feature is Qapital’s round-up rule. As he explains, “Qapital will monitor all of your credit card transactions and round up each transaction to the nearest dollar, and save the difference for you.”

Users can also automate their accounts to save a certain amount of money on a daily basis (the “set and forget rule”) or even link it to an event, such as saving $5 every time your favorite football team hits the field. The “guilty pleasure rule” allows you to “charge” yourself (i.e., deposit a certain amount into your savings account) whenever you indulge a guilty pleasure spending habit.

The Best App for Managing Investments: Personal Capital

When it comes to managing your investments, things can get complicated.

Brandon Yahn, founder of Student Loans Guy recommends the Personal Capital app. Its user-friendly interface allows you to add and track all of your investments. He enjoys the ease with which the app allows you to link all of your accounts and keep track of spending and investments.

Personal Capital allows you to track your investment numbers by account, asset class or individual security. It will also show you how your portfolio compares to major market benchmarks so you can keep on track to meet your personal investment goals. The app can also connect you to investment experts who can advise you on your portfolio.

The Best App for Making Payments: Prism

If you’re the owner of multiple credit cards, then you know that keeping on top of all those bill due dates can be tough! But there’s no need to live in constant fear of missing a deadline. When asked about the best app for making payments, Kevin Han promptly said, “Definitely Prism. It’s an app that not a lot of people know about, but it is my most used financial app.”

The beauty of Prism is that it links all of your billing accounts, paychecks and available funds so that you can easily visualize the movement of your finances. Once you connect all of your billing accounts, all your bills and account balances are synced to the app. It keeps track of your bill due dates and makes sure you never miss one. With a function even allowing you to pay those bills directly from the app, the process of managing bills could not be easier.

The Best App for Financial Advice and Overall Financial Management: Mint

When it comes to overall financial management and getting good advice on your spending habits, Deborah Sweeney, CEO of MyCorporation.com, recommends Mint, a well-known budgeting app. Mint helps you understand how your spending breaks down and can even provide advice based on your spending habits to help you meet your financial goals.

As Deborah remarked, “When you use Mint, you can literally see where the money you’re spending is going. It sends you an alert when you’re about to reach the end of your budget, provides advice on how to save even more money, and offers the ability to view your credit score. This app makes it easy to be mindful of your finances and proactive in the process, taking control to reduce your spending on unnecessary purchases now that you know how those purchases add up.”

Down Payment Assistance – How Does It Work?

by Kevin GrahamJune 30, 2017 in Home Buying/Selling

Are you thinking about buying a home but you could use some funding for the down payment. A down payment assistance program might just be the answer you need.

Down payment assistance can be a helpful resource during your home buying process. Let’s discuss what down payment assistance is and a couple of different ways you might go about getting it in order to give you a leg up in buying your home.

Down Payment Assistance Basics

Down payment assistance occurs when part of your down payment is funded by the government – most commonly at the state or local level – by a nonprofit charitable organization or other public entity, by a labor union or even by an employer. Sometimes lenders have programs to provide a form of down payment assistance.

One requirement for using a grant or other type of down payment assistance is that the assistance must be available (via an application process) for the general public, not created just to help you.

Getting Help from Sellers

In the past, sellers were able to contribute to the buyer’s down payment through an intermediate service that kept an account for the buyer. This practice ended with a law change that took effect in 2008.

Just because the seller can’t help you with the down payment directly doesn’t mean you can’t negotiate with sellers for other items as part of the transaction. The seller can contribute to things like attorney fees, fees for real estate tax services and title insurance. They can also help pay for points paid up front to lower your interest rate and contribute to property taxes.

There are limits to how much a seller can contribute based on the type of loan you’re going with. Be sure to discuss these limits and your options with your Home Loan Expert.

Finding Down Payment Assistance

The following apply to traditional down payment assistance beyond seller concessions. Some programs may be available in your area if you know where to look.

Publicly Available Assistance and Grants

Some publicly available grants may have specific groups they’re aimed at and you’ll have to track these down, but if may be well worth your time. A good place to start is the Department of Housing and Urban Development. It has a curated list of programs available in each state. Where available, they also list programs that are unique to the city in which you’re looking to buy.

The 1% Down (but 3% Equity) Program

Quicken Loans has a grant program for well-qualified home buyers purchasing a single-unit primary residence, condo, planned unit development (PUD) or townhouse. You can to put 1% down and get a 2% equity grant from Quicken Loans.* You’ll need to meet the following qualifications:

• In the majority of cases, you can’t make more than 100% of the median income in your area. Use this search engine to check your eligibility. If you live in an area that Freddie Mac considers underserved, these limits may not apply.
• Your median FICO score must be 680 or higher.
• For the best chance of approval, your debt-to-income (DTI) ratio should be no higher than 45%.

Those are the basics, but here’s some more detail on our Quicken Loan's % down program.

Get That High Interest Debt Under Control

by Brianna Budny, June 5, 2017 in Credit & Debt

Figuring out how to pay off debt can be daunting. The more money you owe, the more overwhelming tackling the amount can be.

When trying to become financially free, you need to have a plan. There’s a saying that goes, “you can wander into debt, but you can’t wander out of debt.”

One plan is to pay everything off in order of interest rates. Paying off your debts in order of highest to lowest interest rates will cause you to pay the least amount of interest. When following this plan, you will focus on paying off the one with the highest interest and then making minimum payments on everything else.

“Tackling the highest rate balances first can motivate you to take charge and cross the ultimate goal of crushing all of your debt,” said Sarah M. Place, CEO of Place Trade Financial Inc.

In order to clean up your finances, the first thing you need to do is not add any more debt. It helps to create the habit of spending wisely. Cut up the credit card, don’t go buy another pair of shoes and you don’t need to go out to dinner every time a friend invites you. Now, this doesn’t mean that you can’t buy or do anything, but you should budget everything and pay for them in cash while you are getting out of debt. Paying with cash will help you not spend more then you budgeted.

Your second order of business might be to list your balances in order of highest to lowest interest rates.

Your list of debts could look like this:

• Credit card 1 – $5,000 at 13% interest
• Credit card 2 – $3,700 at 11.25% interest
• Car loan – $11,000 at 6.5% interest
• Credit card 3 – $2,500 at 5.3% interest
• Student loan – $15,000 at 3.6% interest

The first debt you will focus on paying off will be the one with the highest interest rate. In the example list above, you would pay off the credit card with the 13% interest rate first and make only minimum payments on everything else. After the first one is paid off, you will move to the one with the second highest interest rate. You keep moving down your list until all of the balances are at $0.

By focusing on paying off one at a time, it will help you stay motivated to accomplish your goal.

One of the biggest advantages of starting with the highest interest rates first is that you will end up paying less because the highest interest debts will be gone first. The quicker you pay off the highest interest debts, the slower your balance will grow.

“You slow the rate of growth on your overall debt portfolio by getting rid of the debt that was growing at the highest/fastest rate. Allowing the same amount of money to stretch farther and help you pay off lower interest rate balances faster,” said Place.

Tips to pay off debt faster and stay on track

1. Have a $1,000 emergency fund for things that may come up like a flat tire or an urgent care visit.
2. Eat dinner at home. Cooking at home is cheaper and healthier for you
3. Pack a lunch. You can save up to a few hundred dollars a month by bringing your lunch instead of eating out.
4. Get an extra job. Adding $1,000 or more a month to your income can help speed up this process.
5. Shop for clothes on the clearance rack or resale shops.
6. Use coupons at the supermarket. Look for coupons in ads, mailers, emails and coupons apps.
7. When you do go out to eat, use a coupon or find a deal.
8. Use cash. People tend to spend less if they use cash.
9. Do a written budget. This will help you stay focused and organized with your money.
10. Have an accountability partner. This will help you get back on track when you want to go on a shopping spree or take out a new credit card.

Paying off the highest interest rates first makes the most financial sense. If you’re the type of person that needs more motivation and quicker “wins,” you may want to look at how paying off the highest interest rates first compares to other ways of getting out of debt.


No matter how much you owe, paying everything off can be a hard journey. It’s important to stay focused and remember why you want to do this in the first place. Your reason for paying off your debt may simply be to be financially free or it may be so that you can qualify to buy a home you love. Whatever your motivation, it is important to stay focused on your reason why. The process of becoming financially free will not be fun or easy, but it is always worth it in the end.

Tips for a Successful Outdoor Party

by Malcolm BeanMay 29, 2017 in Homeowners Tips

The weather is getting warmer and the days longer. That means it’s time to gather the crew and enjoy the sunshine together. Of course, there’s nothing more symbolic of summer than a good old-fashioned cookout. Having a plan can make sure you’re able to truly relax. Here are a few tips so that you and your guests will truly enjoy the summer experience.



A Quick Note About Rain

It’s important to remember that outdoor parties happen outdoors. I’ve never read a forecast I believed, so keep an eye on the weather to make sure all your hard work isn’t ruined by a few rain drops. Have a backup plan in case the weather takes a turn for the worse.

Crank Up the Tunes

The soundtrack of your party is what’ll take it to the next level. A playlist of classics is guaranteed to make sure everyone enjoys the music. Even the most beloved song gets old the fourth time the playlist restarts. Make sure the list is long enough to last. At a minimum, it should be half the length of your party.

Mosquitoes

These little pests can turn the most enjoyable evening into a struggle. Make sure they’re not invited by using these tricks to make your space a mosquito-free zone. Most importantly, remove any standing water, as that’s where they lay their eggs. Next, lighting some citronella candles will do wonders to keep bugs off your guest list. Providing bug sprays can also offer personal relief to your guests.

Outdoor Lighting

Once the sun starts to dip, you might enjoy cooler summer temperatures, but you don’t want to lose sight of the party. Literally. Maybe you already have some outdoor lights, but make sure they’re softer ones, not blinding flood lights. If you have a safe space for it, a fire is a great way to provide some illumination. If not, string lights can bring a charming touch to your event. Have them set up ahead of time so you’re not fumbling around in the dark.

Yard Games

The constant buzzing of phones is a quick way to dampen the party mood. One way to keep people from checking their social media nonstop is with yard games. Kids and adults are both likely have a great time with these fun activities. A beanbag toss (also called cornhole in some parts of the country) is a yard game classic, and you can even make your own set!

Think of Your Guests When Planning the Menu

If it were just you eating at this party, you’d know exactly what to serve. But your guests should be your first thought when planning the menu. On a very important level, you don’t want to trigger any allergies. But it’s also important to make sure your vegetarian and vegan friends will leave just as satisfied as your carnivorous ones. Reach out to your guests before the party to get info about your guests’ allergies and preferences.

Make It Customizable

A nice way to put the power in the hands of guests is have a condiment bar. This lets your picky eaters decide what they do and don’t want. Spice things up by using Popsicle sticks as labels for the condiments. Provide a good spread, but make sure to stock up on the go-to items, like ketchup and mustard. Take it even further by providing a s’mores bar with all the fixings. Some unexpected items like peanut butter can bring new life to this summer classic.

A Cool Way to Cool

A cooler is just as important as a grill for the success of your party. Keeping your drinks chilled is the best way to keep your guests happy and hydrated. Bring in the summer vibe by freezing partially full frozen water balloons to serve as ice for your cooler. The pop of color is a fun addition, and as the water melts, it can be a great activity, too.

Clean Grill, Clean Fun

If you don’t clean the residue off your grill, the ghosts of meals past will end up haunting your guests. Mix of ¼ cup of baking soda and ¼ cup of water together to scrub the grate and let it sit. After 15 minutes, wipe it off with a cloth and run it at high heat to burn off any excess, and you’re good to go!

Leave No Meat Behind

As you’re grilling, you might notice the little bit of meat that gets stuck on the hot grill. It’s the worst. Luckily, it’s easy enough to avoid, and the solution can even add some flavor to your dish. Use olive oil to keep your meat from sticking. Use a paper towel soaked in olive oil to apply a coat of oil to the grill. It’s important that the grill already be hot and the meat be close behind so the oil doesn’t simply burn away.

The More Plates, the Merrier

It’s so tempting to keep just one plate at the side of the grill to plop everything on and sort it out later. But if you’re grilling vegetables, sometimes you don’t want those flavors to mix. A separate plate for each type of grilled goody will make sure all combos are intentional.

Patience: It’s What’s for Dinner

Fight your inner micromanager and trust your grill to cook your meat. When you’re checking for doneness, don’t poke, flip or stab anything. When in doubt, let the pros tell you how long to grill all the different items in your meal. Leaving your food alone will allow a premium sear and picture perfect grill marks.

What About the Children?

If your guest list includes some people born this side of the turn of the millennium, they’re going to want some activities to keep them busy. This is where those lawn games can come in handy. And having some specifically kid-themed games, like a water gun range, will make your party a hit with kids and their parents.

Think About the Drink

If you plan to serve alcohol at your party, having everyone’s favorite drink can be a real hassle. Instead of trying to please everyone, consider providing a house drink like outlaw lemonade. Providing an alcohol-free option is important, too. Checking with your guests beforehand will ensure everyone enjoys their time. Of course, you can still let guests bring their own drinks if so inclined.

With planning, your party can be a good time for your guests and for you. Kick back and enjoy the delicious fruits of your labor while soaking up some sun. You deserve it. 

Signs That You’ve Outgrown Your Home (and What to Do Next)

by Allison Hendricks April 25, 2017 Home Buying/Selling

Families grow, careers change and unexpected life events can cause you to realize that you’re running out of room in your home. The situation you were in when you purchased your first home may have drastically changed, no longer making your space comfortable or compatible for your current needs. Whatever your unique situation is, you may currently be realizing that you’ve outgrown your home and need to upsize for more space for you or your family.

We’ve got your back with personal and professional insights from real estate agents and home financial specialists who have outgrown their homes and who’ll share the determining factors that influenced them to upsize their space.

Running Out of Room

The most obvious indicator that you’ve outgrown your home is the realization that you simply need more space. The “starter home” that you moved into as a single person or newlywed might be getting a little tight as time goes on.

More Kids than Bedrooms

Perhaps your home was ideal for a single person or small family, but now you have more kids than your bedrooms can comfortably hold. Not to mention, you may find yourself tripping over toys and sports equipment because you’ve run out of storage space.

Carolina Barefoot, a REALTOR® at Illustrated Properties, experienced this when she had her first set of twins. The family moved from a tight one-bedroom apartment, barely able to fit a stroller, to a two-bedroom apartment with ample storage and perks for kids, like a pool and playroom.

However, after her second set of twins arrived, her family had to move once again, this time to a large home that would fit the entire family.

“Perhaps your yard space feels tight, and you need another garage bay for the hulk of a minivan that you needed to buy once the second set of twins arrived,” Barefoot jokes. “Not to mention all the bikes and scooters that come with raising a tribe of toddlers.”

Furniture Fiasco

Toys might not be the only things you’re tripping over. How many times have you stubbed your toe on a piece of furniture or bumped your hip into the corner of your counter? Or as Barefoot phrases it, “Your once clear hallway is becoming a veritable minefield.”

Additionally, over the years you may have stuffed furniture or other miscellaneous items into storage and find yourself running out of storage space.

Are You Not Entertained?

You may also want to entertain friends and family at parties or during the holidays but realize that you lack the space for larger events and adequate seating. Families are constantly growing with new relationships and new children. If Thanksgiving is already a tight squeeze and you prioritize entertaining, you may need a new venue.

Unexpected Family Factors

In addition to the lack of space, there are some unplanned events that might occur in your life that would require more space.

Boomerang Kids

If you have “boomerang kids,” young adults who move back home after previously living on their own, you might go from a little bit of breathing room to waiting in line for the bathroom every morning.

While to some, this might be a huge blessing (or worst nightmare), the fact remains that you might have to make room for your returning child. You’ll also have to adjust your empty-nest mindset along with your space; if you turned your child’s bedroom into a yoga studio, you’ll have to move your meditation sessions to a different room.

Aging Relatives

You may have aging parents or other relatives who need health assistance and might not have the financial means to age in place or stay at an elder care facility, ensuring that they might need to move in with family members.

Should you experience this, you’ll not only need to make room for the person or people, but any necessary medical equipment or specialized furniture they may need, and your home may need to include wheelchair accessibility.

All things considering, if you want your boomerang child or aging loved one to move into your home, you may need to upsize in order to make room.

Economic Factors

Not all factors for outgrowing your home are going to be obvious.

In fact, one important perspective to consider is purely financial, suggests John Bodrozic, co-founder of HomeZada, a personal finance platform designed to manage all aspects of your home.

“You might live in a neighborhood where the forecasted home values are not growing and perhaps even shrinking in value,” Bodrozic explains. “The desirability factor of your neighborhood might be decreasing, and therefore, you might want to get out now where you can sell the house for a decent price, but if you wait a few more years, the value might be even less.”

Bodrozic asserts your home is a real state asset, and depending on a combination of economic and neighborhood factors, the estimated value can go up or down. Your city or town might be growing with more people wanting to live there, or shrinking as more people move elsewhere.

“This is part of the real estate asset value you as a homeowner don’t really have control over, but you really want to pay attention to this neighborhood trend on a continual basis,” he explains. “If values are going up, you are growing your equity and net worth because of these market conditions, but if values are going down, your equity is shrinking and you might want to sell sooner before it continues to shrink more.”

Personal Factors

You may also have personal reasons to move to a new home that aren’t based on size.

Long Commutes

If your area is booming or you’ve experienced a recent career change, your commute to work might be a few more miles or minutes than you’d like it to be. This can add up on your car, financially and physically, and you may not want to rack up a hefty gas or maintenance bill on your automobile.

Not Knowing Your Neighbors

There might come a day when you look around your neighborhood and realize you don’t know any of your neighbors, which might have a few different effects on your level of comfort. You may want more people around in similar situations – you might want (or already have) children and are looking for a kid-friendly environment.

You’re Never Home

If you enjoy the city but live in the country, you may want to make the move to somewhere more your speed. On the contrary, you may want peace and quiet and the sounds of horns honking and music blaring might get to you over time.

If you find that you’re rarely home, consider the locations where you spend the bulk of your time. Perhaps you want to live closer to work or your favorite nighttime scene? If you have kids, you might want to live closer to their schools.

In Barefoot’s case, her family opted for a home on a country club facility that provided tons of common space with outdoor activities for her kids like tennis, a pool and easy access to great parks and beaches.

Consider these personal factors when thinking of your current home. If you find your current location doesn’t mesh with your lifestyle or needs, it might be time to move.

You’ve Outgrown Your Home, Now What?

If your home starts to feel crowded, Barefoot advises to act quickly, saying, “You don’t want to move when you can’t bear it any longer.”

She also mentions that a new home might require compromises, like moving to a new neighborhood, having a longer commute to work or moving to a new school district.


“The bottom line is, don’t be afraid to educate yourself on what is on the market,” she suggests. “Talk to a professional REALTOR® and lender to understand what you can afford.”

Lack of Down Payment the Top Hurdle Holding Back Would-Be Home Buyers

By Svenja Gudell, Zillow Chief Economist on 4/12/2017

• Saving for a down payment was a barrier to home ownership for more than two-thirds of renters surveyed in a new Zillow survey, topping other hurdles including qualifying for a mortgage and job security.
• Still, more than half (63 percent) of renters said they are confident they will be able to afford a home someday, with 25 percent saying they plan on buying in the next three to five years.
• The majority of respondents (66 percent) said they believe owning a home is necessary to live The American Dream, and 72 percent said they believe owning a home increases their standing in the local community.

Saving a sufficient down payment is the biggest obstacle for renters looking to transition to home ownership, regardless of their age, income, gender or geography – a hurdle likely to get worse for many before it gets better.

Two-thirds of renters nationwide (67.9 percent) cited saving for a down payment as the biggest hurdle to buying a home, according to the first Zillow Housing Aspirations Report (ZHAR),[1] a semi-annual survey of 10,000 Americans seeking insight into their views on home ownership and their housing plans.

Thanks largely to low mortgage interest rates, monthly mortgage payments are generally more affordable than monthly rent payments, making home ownership an attractive financial option for many current renters. But the sometimes hefty down payments required to buy in the first place are preventing many renters from taking advantage of the savings. And rapidly rising home values, combined with interest rates that have also begun to creep up, mean that savings window could close before many are able to take advantage of it.

Down Payments: A Widespread Concern

Difficulty in affording a down payment was universally cited as the top barrier to home ownership by renters in virtually all major demographic groups. It was the top barrier cited by respondents from all 20 major metro regions surveyed. More women (72.2 percent) than men (62.2 percent) cited down payment difficulties as a barrier, but both genders noted down payment affordability as a barrier more than any other factor.

Millennial renters (aged 18-34) were more likely than older Gen X (35-54) and Baby Boomer/Silent Generation renters (55 and older) to note down payment woes – 69.2 percent, 68.5 percent and 64.3 percent, respectively – but all three groups noted down payment challenges more than other choices. Down payment concerns were surprisingly more prevalent among those in the highest income bucket[2] than in the lowest,[3] but again, renters in low (65.9 percent of respondents), middle (70.4 percent) and high (67.3 percent) income brackets all cited down payment struggles more than other factors.

Behind down payment woes, the next-most-commonly cited barriers to home ownership among U.S. renters were qualifying for a mortgage (53.2 percent of respondents said this was a concern) and debt burdens (50 percent). Other factors cited as barriers to home ownership included job security (38.5 percent), the renter not being in a position to settle down (20.1 percent) and complaints about not enough homes being for sale (11.2 percent).

Given the many hurdles that need to be cleared before successfully buying a home even in the best market conditions, it might be somewhat surprising that down payment concerns resonated so strongly with respondents. But in the order of operations that is buying a home, it all starts with securing a down payment, which will help determine a final budget, which will lead to actually finding a home within that budget to purchase, and finally to securing a mortgage and going to closing.

A Closing Window?

Home values nationwide have been growing at a rapid pace for well over a year now – February marked the 55th consecutive month of annual U.S. home value growth and the 18th month in a row in which annual appreciation exceeded 5 percent. But while that growth is generally positive for the U.S. economy overall and for current homeowners in particular, for renters trying to save for a down payment on a home, it can often feel like trying to hit a moving target. A renter saves up enough to put a decent amount down on a home in their price range, perhaps only to find out that home has appreciated in value beyond their means.

And not only is it difficult to determine the right amount to save, renters also have the added challenge of trying to save when they’re already paying more of their income to rent in the first place. As of the end of 2016, the typical home buyer nationwide buying the median-valued home could expect to pay about 15.8 percent of their household income to a mortgage. A typical U.S. renter, unable to take advantage of low mortgage interest rates, should have expected to pay 29.2 percent of their income to their landlord each month – and close to half their income in a handful of very pricey markets. And as the share of income spent on rent rises, saving money for anything – let alone tens of thousands of dollars set aside for a down payment – becomes increasingly difficult.

Finally, even as owning a home retains its financial advantages over renting, those advantages are beginning to narrow. In 2016, typical U.S. household incomes grew 2.2 percent, a slowdown from growth of 3.3 percent in 2015. The mortgage payment on the average U.S. home, on the other hand, grew by 9.9 percent in Q4 2016, up from 6.7 percent in Q4 2015. In other words, rising mortgage interest rates and continued home value growth helped make mortgages less affordable by the end of 2016 than they’ve been in half a decade – a trend likely to get worse.

More than 100 economists and real estate experts nationwide recently surveyed by Zillow said they expect home values to rise another 4.4 percent in 2017 and 17.3 percent, cumulatively, through 2021 (on average). And Federal Reserve projections suggest a 100 basis point increase in the Federal Funds Rate (which influences mortgage rates offered by lenders) over the next year, putting conventional, 30-year, fixed mortgage rates in the 4.75-5 percent range by the end of 2017. This rate is still low by historical standards, but high enough to give some buyers sensitive to small changes in monthly payments pause. So while mortgages look set to remain more affordable than renting for the foreseeable future, the time to lock in as much savings as possible before the gap narrows is right now – as if renters already struggling to save a down payment didn’t have enough to worry about.

Millennial Confidence

Still, the first ZHAR isn’t all doom and gloom. Results suggest a great deal of confidence in the housing market, despite challenges, and an encouraging amount of faith in the importance of home ownership to achieving the American Dream.

Here are some additional highlights from the report:

• Almost all respondents (90 percent) said they are confident they will be able to stay in their current home for as long as they want. Respondents in Atlanta and Detroit were the most confident.
• More than half (63 percent) of renters are confident they will be able to afford a home someday, with 25 percent saying they plan on buying in the next three-to-five years.
• Millennial renters are more confident than any other generation that they will be able to afford a home someday.
• The majority of respondents (66 percent) said they believe owning a home is necessary to live The American Dream, and 72 percent said they believe owning a home increases their standing in the local community. Millennials believe these two statements more than any other generation.

Recommended:

• A Penny Saved: How High Rent Burdens Impact Savings Rates
• Q4 2016 Housing Affordability: Accelerating Home Values, Rising Rates Cause Rapid Deterioration
• Experts: 2017 Looks to be the year in Which Rising Mortgage Rates Finally Impact Home Value Growth

[1] The Zillow Housing Aspirations Report is computed from an IPSOS poll which combines sample of 10,000 U.S. adults from 20 U.S. core-based statistical area (CBSA) metropolitans (Atlanta, Boston, Chicago, Dallas, Denver, Detroit, Los Angeles, Las Vegas, Miami, Minneapolis, New York, Philadelphia, Phoenix, St. Louis, San Diego, San Francisco, San Jose, Seattle, Tampa, and Washington, D.C.) age 18+, surveyed online in English. The survey has a credibility interval of plus or minus 1.1 percentage points for all respondents from the 20 U.S. metropolitans and approximately 5.0 percentage points for an individual U.S. metropolitan. Post-hoc weights were made to the population characteristics on gender, age, region, and race and ethnicity. This version of the survey was conducted March 1st – 15th, 2017. For more information about conducting research intended for public release or Ipsos’ online polling methodology, please visit the Public Opinion Polling and Communication page.

[2] Earning $70,000 or more per year

[3] Earning less than $35,000 per year