Home Blog Page 3

What the Coronavirus Means for Home Refinance Rates (Time To Apply Now?)

0

coronavirus refinance rates

As the outbreak of Covid-19 (Coronavirus) continues to spread around the globe, there is a huge amount of uncertainty in almost every aspect of our lives. How will our jobs be affected? How many will perish due to this novel disease? How will growing restrictions affect the US economy?

Unfortunately, nobody truly knows the answers to these questions – and we likely won’t for months to come. However, there’s an old piece of advice that remains very valuable in today’s uncertain environment: We should all work to improve the things that are within our control. And for homeowners, that means keeping track of changes in refinancing rates to ensure the most savings possible.

 

How is the Coronavirus Affecting Refinance Rates?

Coronavirus refinance rates
Source: NerdWallet

Since the global outbreak of COVID-19 began to accelerate in late January, mortgage and refinance rates have been trending downwards – but not without a whole lot of volatility along the way.

At the beginning of 2020, refinance rates on 30-year fixed terms averaged 3.96%. On March 25th, the average 30-year fixed terms for mortgage refinancing had fallen to 3.29% – a drop of 0.67% APR. In layman’s terms, this means that the average refinance rate has dropped nearly 17% in the last 3 months.

However, the tumultuous period of Q1 2020 saw rates spike upwards and downwards dramatically. In mid-March, rates temporarily spiked to 4.1% – higher than they started the year at. Some mortgage issuers have reported rates of 5.5% or more.

Under normal circumstances, mortgage and refinance rates are typically very stable. They are affected by changes in federal interest rates and movements in the bond market (and particularly in the mortgage-backed securities market), but rarely do terms swing this dramatically.

Matthew Graham, COO of Mortgage News Daily, referenced the spike in volatility in a report from Realtor.com:

[mORTGAGE RATES ARE] “THE MOST VOLATILE THEY HAVE EVER BEEN, BY A WIDE MARGIN”

 

What is Causing the Volatility in Refinance Rates?

The wild swings in refinance rates during March 2020 (and likely beyond) are due to a combination of complex factors. To help you understand, here are the main variables currently affecting mortgage rates:

 

1. Volatility in the Bond Market

When banks issue mortgages, they typically do not keep them for the life of the loan. Most banks will issue a mortgage, then turn around and immediately sell the loans to investors. Dozens or hundreds of mortgages are bundled together and sold as mortgage-backed securities, otherwise known as mortgage bonds.

Mortgage bonds are viewed in a similar light to U.S. Treasury bonds. They are both seen as a safer, but lower-yielding investment than the stock market or other riskier asset classes. When the stock market becomes more volatile, typically investors flock to bonds as a safety net. However, as governments around the world issue hundreds of billions of dollars in treasuries to fund stimulus plans, the market is absolutely flooded with bonds.

With massive amounts of bonds on the market, bond prices are down. Bond yields move in the opposite direction of bond prices. So when the price of mortgage-backed securities on the secondary market goes down, mortgage rates go up. This volatility is bumping up against the gradual lowering of mortgage rates due to interest rate changes, creating an extremely volatile environment.

 

Coronavirus Home Refinance

 

2. The Great Cash-Crunch

When uncertainty floods the financial market, there’s one asset class that everyone wants: Cash. Cash presents the ultimate flexibility during times of financial uncertainty. Everyone – from average Americans to the largest hedge funds in the world – are flocking to cash in huge numbers.

And as investors hoard cash, they are much more hesitant to purchase mortgage-backed securities, which would lock up their funds for years. This further deflates bond prices, edging mortgage and refinance APRs ever higher.

But as the financial situation and market sentiment changed on a daily basis, investors saw huge swings in just about every asset class – including mortgage-backed securities – causing a whipsaw action in mortgage APRs and refinancing rates.

 

3. Changes in Demand for Refinancing & New Mortgages

As mortgage rates began to trend downwards earlier in the year, demand for mortgage refinancing spiked. As thousands of Americans applied for refinancing, mortgage issuers were swamped with applications. As a way to slow the onslaught, some issuers proactively raised their rates.

But as the health crises worsened, the number of new home buyers applying for mortgages dropped off significantly. As state-wide shelter-in-place restrictions were enacted, many buyers decided to wait it out. And just as increased refinancing demand caused a spike in rates, the decreased interest in new mortgages caused a decline in mortgage APRs.

 

4. Interest Rate Changes

As part of their efforts to prop up the economy, the US Federal Reserve slashed the benchmark interest rate to as low as 0%. This federal funds rate impacts everything from the cost of small business loans to mortgage and refinances rates.

Many Americans expected that a significant drop in the federal benchmark rate would lead to a similar drop in mortgage rates. However, most fixed-rate mortgages are barely effected by changing interest rates. Adjustable-rate mortgages (ARMs) are much more sensitive to interest rates. So, we saw a dip in ARM rates, but little movement in fixed rates due to the federal rate cut.

 

5. Monetary Stimulus by the Federal Reserve

The Federal Reserve has implemented several policies aimed at propping up the economy, and specifically at stabilizing credit and bond markets. This includes a pledge to purchase $200 billion in mortgage-backed securities (MBS) every month – a limit which has now been lifted to “unlimited” purchasing of bonds and MBS.

This bond-buying by the Federal Reserve provides a backstop to the value of mortgage-backed securities, preventing them from a complete sell-off. By buying mortgage bonds on the secondary market, the Fed’s actions have been helping to keep mortgage rates from spiking even higher (again, mortgage APRs move in the opposite direction of mortgage bond prices).

 

6. Risk Premium

Banks are in the business of managing risk. As economic uncertainty grows, the risks of issuing mortgages increase. Since the future of the global job market is uncertain, many banks are tightening their lending policies to hedge against risk. This also causes rates to tick upwards, as banks factor in a “risk premium” on new debt issuance.

 

Where are Mortgage Refinance Rates Going from Here?

We’ve explained how the coronavirus has affected home refinancing rates so far, but what direction are they heading now?

While nobody can predict the future during these uncertain times, it’s likely that refinance rates will stabilize soon, and the volatility will decrease. This will hopefully make it easier for homeowners to secure a favorable rate.

The most likely scenario is that rates continue to trend downwards. The Federal Reserve will continue its bond-buying program, which will increase liquidity and drive rates down.

To be clear, the goal of the Federal Reserve is not specifically to decrease mortgage APRs. Rather, the Fed aims to improve liquidity, preventing credit markets from freezing up, as they did in 2008.

But of course, by buying mortgage-backed securities, the Fed is also helping to keep interest rates down. When banks and investors are hesitant to purchase these bonds – locking their money up for years to come – the Fed is stepping in as a sort of lender of last resort.

In other words, the Fed is making it easier for banks to lend at favorable rates. Banks will be more willing to issue mortgages and refinancing packages at low rates because they know that the Federal Reserve will buy the mortgages if investors are unwilling or unable to do so.

 

How Low Could Refinance Rates Go?

While nobody knows for certain, many experts anticipate rates on the 30-year fixed mortgage to settle in the range of 3%.

Joel Naroff, president of Naroff Economics, noted that based on bond yields,

[mortgage rates will likely be] “in the 3% range, plus or minus 25 basis points”

A likely estimate is somewhere between 2.75% and 3.25% on the 30-year fixed mortgage. Typically, rates for new mortgages and refinances are similar if not identical.

The relationship between the coronavirus and mortgage rates has caused a lot of confusion – and there’s still a lot of uncertainty moving forward.

We don’t know how long the Fed will continue its bond-buying program. We don’t know how the Coronavirus will affect the overall economy. And we don’t know how financial markets will respond to the growing uncertainty.

 

What Should Homeowners Do?

If you’re a homeowner weighing a refinance, what should you do?

Use a Refinance Calculator – To understand how much you could potentially save by refinancing, use a refinance calculator. These calculators factor in the difference between APRs, while also considering the significant costs of refinancing.

Consider Refinancing Costs – While refinancing to a rate that’s even slightly lower than your current one may seem wise, it’s important to remember that refinancing comes with significant out-of-pocket expenses. Refinancing costs vary depending on the value of your loan and other factors, but most homeowners can expect to pay $4,000 to $6,000 or more to facilitate a refinance.

Seek Preapproval – You can typically get pre-approved for a mortgage or refinance package without locking yourself into anything. By applying early, you can find out what your actual interest rate will be, and if it’s worthwhile to refinance. There may be some costs involved, so be sure to ask the issuer for details.

Stay Informed – The coronavirus outbreak is a rapidly developing situation which is changing every day. Likewise, the financial industry’s response to the growing economic disruption is evolving daily. To make the most of the uncertainty, it’s best for homeowners to stay informed of changes in the refinance market.

Tesla Employee Discount (Is It Worth Working at Tesla to get a Discount?)

0

Tesla Employee Discount

Tesla is one of the most exciting companies in the United States. Few companies inspire as much change and forward progression as the likes of Tesla. But while Tesla and CEO Elon Musk are always making headlines, one might start to wonder: How does Tesla treat their employees?

In a time when many companies are coming under fire for not providing adequate pay or benefits, Tesla is considered to be a quality employer overall. They offer good health insurance, employee stock purchasing programs, paid time off, and more. And for true Tesla fans working for the company, there is one juicy benefit that has people talking: The Tesla employee discount!

 

What is the Tesla Employee Discount?

Tesla employee discount

As part of their suite of employee benefits, Tesla offers many employees a discount on Tesla goods – both on accessories and on Tesla vehicles themselves.

The Tesla Employee Discount is not publicly advertised, so we do not know full details of what discounts are offered. However, we can look to a handful of reports from past employees to see what sort of employee discount has been offered in the past.

In a round-up of employee benefits, Futurefuel.io lists the Tesla Employee Discount at up to 35%. But before you get too excited about scoring a Model S for a huge discount, recognize that the highest discounts are likely reserved for accessories, clothing and swag. It’s highly unlikely that Tesla is handing out vehicles at such as a huge discount, particularly considering that many models have been back-ordered for months. If Tesla has customers lining up to purchase vehicles at full price, they have little reason to offer steep discounts on car purchases to their employees.

 

Do Tesla Employees Get Discounts on Tesla Vehicles?

There is a Tesla Employee Discount for things like accessories and services, but is there any discount on the vehicles themselves?

Most likely not.

Multiple threads on Quora have showed many Tesla employees reporting that there is NO employee discount on Tesla vehicles. It appears that company policy restricts the use of discounts for anybody. Even Elon Musk’s own family members have had to pay full-price for their Tesla vehicles.

With that said, some people have reported that Tesla employees may get preferential treatment in terms of their place in line for new Tesla vehicles. Since many models are back-ordered, this could be a significant perk for those looking to score a new Tesla as soon as possible.

It’s also possible that Tesla may offer beneficial financing terms for their employees. This information is not publicly available, however.

 

What About Other Employee Benefits?

So, the Tesla Employee Discount on vehicles may be a little underwhelming. What about other benefits of working for Tesla?

Overall, Tesla offers an impressive suite of benefits for employees:

  • Quality insurance including health, dental and vision
  • Stock purchase plan with employee discounts on Tesla stock
  • Short & long term disability insurance
  • Life insurance (Better than JP Morgan Chase?)
  • Paid time off
  • Much more

Of course, benefits vary significantly depending on your position at the company. Executives obviously have more benefits than factory workers. If you’re interested in applying for a position at Tesla, be sure to fully look into the benefits available to you.

 

Is It Worth Working at Tesla for the Employee Discount?

Is it worth getting a job at Tesla for the employee discount?

No, probably not. The discount likely applies only to accessories, and not vehicles themselves.

With that said, Tesla is a good employer overall. On Indeed, employees of the company have rated their Benefits and Compensation at 3.7 out of 5 stars.

On the other hand, Tesla has a reputation for demanding a lot out of their employees. In the end, working for Tesla makes the most sense for those who are dedicated to their root cause: advancing the future of sustainable transportation.

 

Empower Retirement Reviews (Ultimate Guide)

0

Saving for retirement is something that everyone should be doing. There’s really no better way to plan for your future than to set aside some money every month. At the same time, retirement saving can be a confusing topic. Which investments do you choose? How much do you need? And what company should you choose to administer your retirement plan?

There are hundreds of companies that you can use to start retirement accounts and save for your future. However, if you’re like most Americans, you main option will be whatever company your employer has contracted with. Most companies choose a financial institution or brokerage to provide investment accounts for their employees. One of the largest of these institutions is called Empower Retirement. If you’re looking for Empower Retirement reviews, or just more information on this company, you’ve come to the right place.

 

What Is Empower Retirement?

Empower Retirement reviews

Empower Retirement is a financial services provider and record keeper. They are one of the largest retirement plan companies in the US, with more than 9.4 million individual participants and 40,000 organizations.

Empower Retirement contracts with large corporations, state- and municipal-run benefits providers, and more. Although you can sign up for an individual plan from Empower Retirement, the majority of plan participants will be employees of one of their corporate or governmental clients.

As a retirement plan record keeper, Empower Retirement handles the behind-the-scenes of retirement plan administration. This includes setting up each individual and company retirement plans, filing paperwork with the IRS and state revenue departments, and providing access to investment products like mutual funds and investment-grade bonds.

 

Empower Retirement Reviews

If your employer contracts with Empower Retirement, or if you’re looking into providers for your own individual plan, you may be wondering about Empower Retirement reviews. How do people tend to rate the company?

Overall, Empower Retirement reviews are not great. Many customers complain of high fees, poor customer service, and other issues with the company.

On Yelp, the company has scored 1.5 out of 5 stars, with over 200 reviews.

Empower Retirement’s parent company, Great-West Financial, has an A+ rating with the Better Business Bureau. However, the company has 51 BBB complaints filed, and has a review score of 1/5 from user-submitted BBB reviews.

 

Pros and Cons of Empower Retirement

We analyzed Empower Retirement reviews to determine what are some of the main advantages and disadvantages of this service provider.

Pros

  • A legitimate company trusted by 40,000+ organizations
  • Provides tools to make a customized retirement plan
  • Access to 130+ mutual funds for investment
  • Ability to roll-over existing plans from past employers
  • Offers a wide range of retirement accounts, as well as Health Savings Accounts (HSAs)
  • Offers both traditional and ROTH accounts

Cons

  • Asset-based fees charge you every year based on the value of your investments
  • This is in addition to management fees on all mutual funds available from Empower Retirement
  • Empower Retirement charges a variety of other fees, including transfer fees, withdrawal fees and more
  • Many users report slow payouts and missing checks
  • Many report that Empower’s customer service is slow or lacking
  • Many report that it is difficult to accurately track investment performance

 

Empower Retirement for Employees

If you are an employee of a company that contracts with Empower Retirement, you’re likely already participating in a retirement plan through Empower. If this is the case, here’s what we’d recommend doing:

First, familiarize yourself with everything Empower Retirement has to offer. The default funds that you are invested in may not be your best option. There are around 130 mutual funds that you can choose from, each of which charges varying fees and tracks different investment classes.

Second, pick investments that suit your goals. If need be, Empower Retirement offers investment consultation services to help you choose – although some reviews complain about this optional service.

Third, if you are unhappy with what Empower offers, speak with your company Human Resources department. It’s possible that you may be able to transfer your retirement account to another provider.

 

Empower Retirement for Individuals

If you are an individual looking to set up your own retirement fund (outside of your employer’s offering), you have many choices. In most cases, you likely have better options than Empower Retirement.

If you’d like a provider with low fees and wide investment opportunities, we recommend picking one of the big brokerage firms:

  • Fidelity Investments
  • Vanguard
  • Charles Schwab
  • E-Trade

These large companies are known for offering the widest range of investment products. Most do not charge management or set-up fees (although most investment funds will charge some sort of fee). Some providers, such as Fidelity, now even offer zero fee ETFs and mutual funds.

 

Final Thoughts

As you can see, Empower Retirement reviews are not great overall. Most users who have taken the time to submit a review have complained about the service. If you have the choice, you’re likely better off going with another provider.

With that said, Empower Retirement is a legitimate company with thousands of high-profile institutional clients. It’s certainly not a scam – it’s just that their fees and higher than some competitors.

What do you think about Empower Retirement? Let us know in the comments!

Capital One Auto Enroll Service Review (CapitalOne.com/AutoEnroll)

0

CapitalOne.com/AutoEnroll

Newly minted Capital One account holders will want to sign up for auto-enrollment with Capital One (CapitalOne.com/AutoEnroll).

Simply visit www.CapitalOne.com/AutoEnroll and follow the on-screen instructions.

In order to obtain a Capital One auto loan you must be 18 years of age or older and a legal resident of the United States.

In order to enroll the Capital One Auto Loan will need to provide their SSN, DOB, and last six digits of their VIN (or the monthly payment amount associated with the auto loan).

If you do not have an SSN or Tax ID number, you will have to call a Capital One Auto Finance Customer Service at 1-800-946-0332.

 

CapitalOne.com/AutoEnroll Notes

  • Once enrolled the customer can make payments online (setting up auto payments is recommended)
  • Once enrolled you will visit capitalone360.com going forward to make payments and manage your auto loan online
  • In order to sign up for the Capital One 360 service, you must agree to the Online Banking Terms and Conditions Opens a new window for servicing the Auto Loan
  • Banking and lending products and services are offered by Capital One, N.A. NMLS ID 453156, and Capital One Bank (USA), N.A., Members FDIC, and a proud Equal Housing Lender

Any questions in regards to CapitalOne.com/AutoEnroll can be directed to 1-800-946-0332 between the hours of 8 a.m. to 9 p.m. ET Monday to Friday.

Not interested in an auto loan?  Need a credit card?  Check out these credit card offer reviews:

The Capital One corporate office can be reached at 1680 Capital One Drive, McLean, VA 22102, United States or by calling 703-720-1000 (please do not call this number in regards to the Capital One 360 account program or the Capital One Auto Enroll account service.

 

Capital One ID Verification

You will not need to register if your a returning user but if you are new Capital One may ask you to verify.

 

Capital One Bank Locations?

Having trouble finding a location in your neck of the woods? Don’t worry bruh we got you covered.

Simply head on over to www.locations.capitalone.com.

 

Capital One Customer Service

 

Enrollment Website

How to Use Your Airline Miles During the Coronavirus Outbreak (Non-Travel Options)

0

Airline Miles Coronavirus Outbreak

As COVID-19 (otherwise known as the Coronavirus) continues to spread around the globe, travelers everywhere are having to cancel their upcoming trips and hunker down. Many of us who have accumulated airline miles and credit card points are wondering: what should we do with these miles if travel is not currently possible?

This article will explore some of the ways to use airline miles and credit card points during these uncertain times.

 

1. Make Travel Plans for the Future

future travel plans

While traveling during the COVID-19 outbreak is next to impossible, that doesn’t mean we can’t make future plans. In most cases, you can book flights up to a year in advance. So, if you feel so inclined, you can start making travel plans for the future. Nobody really knows how long the virus outbreak will last, but if you start making plans now, it’s probably a good idea to plan 6+ months in advance.

Because there is still a lot of uncertainty about the duration and severity of the Coronavirus outbreak, it’s a wise idea to book travel that will be refundable, in case you need to cancel. For flights, we recommend checking airline cancellation policies (usually there is a small fee of around $50-$150 to cancel or change a ticket booked with miles). Most airlines also have special policies in place due to the Coronavirus outbreak – Here’s a breakdown of current airline policies.

 

2. Redeem Airline Miles for Gift Cards

Redeem miles for gift cards

Many people don’t realize this, but most airline and credit card reward programs allow you to redeem miles/points for gift cards. The image above comes from United Airline’s MileagePlus program, which offers gift cards from over 250 retailers.

To be clear: This is often not a very good use of miles, as the redemption rates are poor. As you can see above, a $100 Domino’s Pizza gift card will cost you 15,625 miles. That same quantity of miles could likely get you around $150-$300 worth of flights in the future. On the other hand, if you’re wanting to burn up your miles, this is a good option to get some free gift cards with airline miles.

One last note: Be sure to do the math before choosing a gift card. Each retailer has a different cost in miles. For example, a $100 Walmart gift card costs a whopping 33,333 miles, while $100 to Domino’s costs less than half that amount at 15,625 miles.

 

3. Redeem Miles & Points for Cash

How to Cash Out Airline Miles

Some reward programs offer a way to redeem your miles for actual cash. This is usually an option with rewards programs like Amex Membership Rewards, Chase Ultimate Rewards, etc, but it’s often not possible with actual airline miles. We wrote a detailed guide on how to cash out your airline miles.

Terms, redemption rates, and other details vary significantly from program to program. It’s best to check your individual rewards program for details.

 

4. Donate Your Miles to Charity

donate miles to charity

Many airline programs allow you to donate miles to various charities. There are options to donate “miles”, which the airline converts into cash for the charity. In other cases, it may be possible to directly donate the miles to charities that will actually use them for flights and other travel expenses. We wrote a detailed guide on donating miles to charity – read through it for more details.

 

5. Online Shopping with Airline Miles

Online shopping with airline miles

Many rewards programs allow you to redeem your miles or points for physical products. You can often choose between electronics, household goods, clothes, and much more. Redemption rates vary hugely, so it’s important to do some math to see if you’re getting a good deal for your miles.

  • To figure out the math, divide the approximate retail value of the item (check Amazon or similar) by the number of miles. For example, the Garmin GPS unit pictured above retails at $399. Doing the math, this means you’re getting approximately $0.0075 per mile, which is a decent rate.

The image above is from the United MileagePlus program, which offers a huge range of products available for mileage redemption. As you can see, the program offers some good options in the electronics category, as well as products in beauty, golf, travel, clothes, and accessories, and much more. There are products available for as little as a few thousand miles, all the way up to 100,000 miles or more.

 

6. Use Airline Miles for Magazine Subscriptions

airline miles for magazine subscriptions

Since we’ll all likely be spending more time at home in the coming months, having things to read and keep us entertained will be important. And here’s something most people don’t know: Many airline programs allow you to use your miles to subscribe to certain magazines and even newspapers!

Using airline miles for magazine subscriptions can offer good value, as it requires very few miles. However, keep in mind that they are short introductory subscriptions that will transition into normal cash-paid subscriptions. If you don’t want to pay cash, you’ll have to cancel the magazine before it transitions to a normal subscription.

 

As you can see, there are actually many different ways to use airline miles without traveling. However, always remember this: In most cases, using miles for flights will offer the best value per point. If you’re looking to maximize the value of your miles or credit card points, it’s best to wait this all out until you can travel again. But if you’d rather burn through some miles right now and get some free stuff, the methods listed above are great options.