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What is UltraFICO?

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FICO credit scores range from 300 to 850. With higher scores typically allowing borrowers to get lower interest rates and qualify for credit with greater ease. In the United States, the average FICO credit score is around 695. This still falls into the “good” range. Still, many people struggle to raise their score out of the poor and fair ranges. Leaving them stuck with subprime borrowing options. However, the launch of a new FICO scoring model – the UltraFICO – is giving consumers the ability to boost their credit by factoring in new financial activities.

What is UltraFICO?

Unlike a traditional FICO score that relies on information provided to the credit bureaus by lenders. The UltraFICO uses an opt in model. Consumers have the option to include data from a variety of accounts.  These include checking, savings, and money market accounts.

After opting in and providing banking details, UltraFICO reviews the accounts to learn more about a consumer’s financial activities. The calculation considers not just the person’s history with lenders.  It also factors in the amount in savings, the age of each bank account, and how actively the person uses their accounts.

Essentially, UltraFICO considers a consumer’s cash-handling activities. Those who keep a healthy balance in their savings account, keep their accounts open for long periods, avoid overdrafts, and regularly pay bills that aren’t factored into a traditional FICO (like utility payments and rent). These factors may be able to boost their FICO score by signing up for UltraFICO.

However, it’s important to note that UltraFICO is still in the pilot phase. Not many lenders are involved in the trial program. There is also no guarantee that the UltraFICO will become a widely accepted approach to evaluating creditworthiness in the eyes of lenders.

Consumers That Can Benefit from UltraFICO

The UltraFICO model primarily benefits two kinds of consumers. First, people with “thin” files – usually those with very little credit history – could see their scores rise by signing up for UltraFICO. By allowing daily banking activities to factor into their scores, these consumers essentially give the model access to more information that could determine their creditworthiness.

The second group that could benefit are those who are struggling with a low credit score. If a consumers activity as a borrower has some blemishes. For example, late payments or an account in collections, the UltraFICO could use the additional data to offset some of the credit score damage.

If your score is in the low 600s or lower, the UltraFICO model could be beneficial, allowing you to work your way up into the “good” range faster. However, that doesn’t mean UltraFICO will make a big difference for everyone in that category. For example, those who regularly overdraft or have less than $400 in savings on average might not see a credit score boost.

Consumers That Won’t Benefit Much from UltraFICO

Along with consumers who don’t have a great banking history, people who already have good to excellent credit may not benefit much from the UltraFICO model. Usually, getting access to credit isn’t much of a challenge in these categories.

Plus, these borrowers usually qualify for competitive interest rates already. While those with excellent credit do the best when it comes to financing terms, the UltraFICO model might not cause a substantial credit score increase for those who already have scores above 670. As a result, borrowers in the good to excellent score ranges might not experience much of a benefit.

The only exception may be consumers who have scores that are just under the number for getting into a higher category. For example, if you have a credit score of 735, which is on the high end of the “good” category,” the UltraFICO scoring model might get you above 740, putting you into the “very good” category instead.

The Drawback of Signing Up for UltraFICO

While the ability to boost your FICO score using the UltraFICO model is enticing, there is one drawback to consider. In order to include bank account activity in your score, you have to give the program access to a substantial amount of personal data.

Along with connecting the bank accounts to the program, which requires entering your username and password, you also hand over transaction records. Many people classify these kinds of details as sensitive, and you have to trust the data is protected adequately.

Ultimately, the UltraFICO has the potential to help borrowers with limited credit histories or poor to fair credit. Just make sure you are comfortable with handing over your banking data before you choose to sign up.

Do you participate in UltraFICO? Did you find it beneficial? Share your thoughts in the comments below.

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Credit Score Misconceptions: Do You Know These 7 Things That Most Consumers Don’t?

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There are a surprising number of credit score misconceptions out there. We all have some familiarity with certain credit score facts like what a credit score is and that we should have a higher number to get good loans. In recent years, most of us have even become more aware of our score, thanks to an increasing number of tools allowing us to access that information. Nevertheless, recent research indicates that most people have no clue about the details of their credit score.

What is a Credit Score?

Your credit score is a three-digit number. It represents your history of loans and repayment. Therefore, it’s the number that most lenders use to determine whether or not to lend money to you.

If you have a good credit score, then you’re more likely to be able to borrow money. Moreover, you’ll get better rates. The worse your credit score, the harder it is to get a loan, and the more you’ll pay in interest when you do find a lender.

Your credit score is based on a variety of factors, including:

  • The length of your credit history
  • Your on-time payments vs. late payments
  • The types of loans that you have
  • The amount of money that you owe on those loans
  • How much credit you have

There are actually many different credit scores – more than you might think as you’ll discover below. But for the most part, you get a three-digit number that’s between 300 and 850. The higher it is, the better your credit.

If that’s all that you know about credit scores, then you’re in the same position as many people. But if you think that you know more then you might want to check out the following seven credit score misconceptions. Your information might be incorrect.

Credit Score Misconceptions

Credit Card Insider recently published the results of a 1000+ person survey about credit scores. The results indicate that there are a lot of credit card misconceptions out there. People think that they know things about credit scores and may be surprised to learn just how wrong they are.

1. There Are Hundreds of Different Credit Scores

If someone asked me how many credit scores I have, I’d probably say three. Like many Americans, I’ve been well-trained to think immediately of “the big 3” credit reporting agencies: Experian, Equifax, and TransUnion. I’m not alone in this belief. Nearly half of those surveyed thought that we each have three credit scores. Another 30% thought it was less than that – either 1 or 2 credit scores.

However, we actually each have hundreds of different credit scores. There are both big and small credit scoring agencies out there. There are different tools used to calculate credit scores: FICO and VantageScore are the primary methods. Although your scores should be similar across all tools, they can differ some from one to the next.

2. Your Income Doesn’t Impact Your Credit Score

Almost 60% of people surveyed believe that your income impacts your credit score. However, that’s not the case. The reason people get confused about this is because income does play into whether or not a lender will offer you a loan. After all, if you don’t earn enough money to repay your loan, then it’s a huge risk for them to lend you that money. Therefore, the lender will look at your income as well as your credit score and other factors.

However, the score itself doesn’t take your income into direct consideration. If you have no income at all but use a credit card that someone else pays off for you, then you might have a great credit score. If you have a seven-figure income but lots of late payments, then you might have a terrible credit score. The only way that income matters is that of course, it’s easier to make on-time payments in full if you have a steady, good income. But the number of your income itself is irrelevant to your credit score.

3. Applying for New Cards Does Affect Your Credit Score

I was surprised to learn that more than one-quarter of respondents didn’t know this. When you apply for a credit card, the institution you’re applying to makes a hard inquiry on your credit report. That decreases your credit score. The decrease is minimal and doesn’t last long in terms of your credit history. However, if you’re teetering on the edge between a “fair” and “good” score (or any two scores) or you are working hard to build your credit then you might want to avoid applying for new cards for a while.

4. Your Debit Card Doesn’t Help Your Credit Score

Your credit score is a reflection of your credit history. Remember: your debit card is basically cash. It doesn’t count towards your credit history. Therefore, if you use your debit card to pay for things, then you’re not building your credit. If you want to improve your credit score, then you need to use your credit card (and pay it off on time). Even if you select “credit” at checkout, your debit card is still a debit card, and it doesn’t change your credit score.

5. Closing Accounts is Not Good for Your Score

More than one-quarter of people surveyed thought that canceling a credit card would improve their credit score. I’m guessing that the thinking behind this is as follows:

  • If I cancel my account, then I can’t use the credit card.
  • If I don’t use the credit card, then I can’t accrue more debt.
  • Moreover, I won’t potentially make late payments because I won’t owe anything.
  • Therefore, it’s better for my credit to cancel the card.

It’s certainly true that having no card is better than having a card you run up a high balance on and then pay late. However, canceling the card altogether isn’t your best course of action. It can decrease your credit score. Instead, just put those cards out of reach, avoiding the problems without compromising your credit.

Notably, if you don’t use your card for a long period of time, then the credit card company might cancel it or reduce your available credit. This isn’t great for you either. Therefore, you should pull the card out periodically, charge something inexpensive on it, and immediately pay it off.

6. No Debt Isn’t Necessarily the Same as a Good Credit Score

One of the keys to maintaining a high credit score is to utilize your credit regularly. You have to use it, but then pay it off quickly. You do want to keep your overall debt low. The ratio of your debt to your available credit is one factor in your credit score. However, having zero debt doesn’t necessarily mean that you’ll have a good credit score.

Consider this: if you’ve never had any debt before then you don’t have a credit history at all. Therefore, you can’t have good credit. This is what teenagers face when they first try to get loans. So, although more than one-quarter of people surveyed assumed that having no debt means you’ll have a good credit score, that’s not necessarily true. It may be true, but it may not be. There are other factors to consider.

7. Your Credit Score is Not On Your Credit Report

More than three-quarters of people surveyed believed that if they ordered their credit report today, then they would see their credit score. They would be surprised once they got that report, then. Your credit score is based on the information in your credit report(s). However, you won’t find the score itself anywhere on your credit report. These are two related, but entirely separate, things. You can get your credit score from a variety of different places, often for free, but you can’t get it from your credit report.

How did you fare? Did you know the right answer to these seven credit score misconceptions?

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Don’t Use a Balance Transfer to Pay Off a Personal Loan: Here’s Why

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If you are struggling to pay off your debt, landing a lower interest rate on what you owe can make a big difference. Usually, balance transfer rates on credit cards can look very attractive. Plus, they might even be lower than what you have on your current personal loan. However, using a balance transfer to pay off a personal loan isn’t typically a great idea. There are risks with that approach, and terms might not remain favorable over time. If you are wondering why you shouldn’t use a balance transfer to pay off a personal loan, here’s a look at why it’s a bad idea.

That Introductory Rate Won’t Last Forever

In the vast majority of cases, balance transfer introductory interest rates don’t last indefinitely. You may have access to the promotional rate for just six months, 12 months, or 18 months, which isn’t a lot of time.

After the introductory balance transfer rate expires, you are stuck with the credit cards regularly interest rate, which is commonly much higher than the rate you’d have on a personal loan. The average credit card interest rate falls near 17 percent.

If your personal loan interest rate is lower than your credit card interest rate after the promotional rate expires, you could find yourself paying more in interest as you pay down the balance or hit with a higher payment down the road. Most credit card payments are a percentage of your balance along with the interest charges. When the interest rate kicks in, your monthly payment will almost certainly go up, and this can have a major impact on your budget.

By sticking with your personal loan, you get a level of predictability. Personal loans tend to have fixed payments over the life of the loan, so you know exactly what you’ll need to pay each month until the debt is gone. Plus, personal loans are finite. You know how many payments are left and when the last one happens, giving you a precise date as to when you’ll clear the debt.

Balance Transfer Fees

Balance transfers come with fees, usually 3 to 5 percent of the amount of the balance you are transferring. The exact amount varies from one bank or credit union to the next.

This fee isn’t spread out over time. Instead, it is added to the balance you owe the moment the balance transfer goes through. As a result, you significantly increase your debt immediately, and that isn’t always a smart move.

If you stick with your personal loan, you aren’t accruing any more debt. Any fees associated with the loan are already part of your balance, barring particular (and somewhat rare) exceptions, such as early payoff penalties that a limited number of lenders levy.

Credit Score Impact

Paying off a personal loan with a balance transfer impacts your credit score. First, once the balance transfer fee goes onto your account, your debt load increases. This can negatively affect your credit score.

Second, when you pay off the personal loan, that account usually closes. As a result, the average age of your credit accounts shifts. If the balance transfer credit card is a new account, your average account age will likely go down, negatively impacting your credit score.

Finally, moving a personal loan debt to a credit card also hurts your debt-to-credit ratio. That ratio is a reflection of the amount you owe on your credit cards as compared to your credit limit. The higher the percentage of your available credit limit that you use, the worst that ratio is in the eyes of the credit bureaus. As a result, your credit score can take a pretty big tumble depending on the amount of debt you transfer.

While the exact impact on your credit score will depend on your unique situation, it is important to understand that it could be both noticeable and negative. If you may need to open another credit account in the relatively near future, doing a balance transfer to pay off your personal loan could make that harder, not easier.

Qualifying Isn’t Always Easy

If you don’t have a balance transfer credit card and were considering opening one to address your personal loan debt, it’s essential to understand that this isn’t a guaranteed option. Many balance transfer cards require borrowers to have at least “good” credit, usually with scores of at least 680 or 700. Some won’t approve anyone with less than “excellent” credit scores, typically around 750 or higher.

Even if you can get a balance transfer card with fair credit, the terms usually don’t work in your favor. The promotional interest rate may only be available for six months. Plus, the credit card’s regular interest rate after that will apply, and it’s commonly pretty high.

Additionally, opening a new card also impacts your credit score. You’ll have a “hard pull” on your credit report (too many of which can hurt your score), a lower average account age, an adjustment to your total available credit, and more shifts that all cause your credit score to change.

Risky Move

Ultimately, using a balance transfer to pay off your personal loan can be a very risky move. Unless you can guarantee that you can pay off the entire balance (including the balance transfer fee) before the promotional rate expires, it typically isn’t worth pursuing. And, even then, there is always an impact on your credit report, and your score might go down. If you can’t ride out a period with a lower score, then this approach isn’t right for you even if you can pay off the balance during the promotional period.

Instead, do your best to pay off your personal loan quickly. If you aren’t dealing with a potential early payoff penalty, you can save yourself a ton by making additional payments and working diligently to rid yourself of that debt while leaving it where it is, all while preserving your credit score.

Have you ever used a balance transfer to pay off a personal loan? Do you think it was a mistake? Share your thoughts in the comments below.

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1 in 4 Cancer Survivors Face Financial Hardship

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One-fourth of cancer survivors under the age of 65 are drowning in medical debt and one-third of them say they’ve stressed about medical expenses at some point in the past. According to the latest Morbidity and Mortality Report, cancer survivors also typically have higher annual out-of-pocket spending for healthcare than those who have never had cancer.

Financial Hardship Hits Survivors Hard

There are approximately 16.9 million cancer survivors living in the United States. The report, which is published each year by the U.S. Centers for Disease Control and Prevention, found financial hardship hits survivors harder than you’d think.

“The population of cancer survivors is growing and many struggle to pay for costs of medical care,” said Donatus Ekwueme, a senior health economist at the CDC. “As a result, some survivors are worried about paying and have problems paying for medical care, and some are even forced to file for bankruptcy.”

The financial burden is only expected to continue to increase in the coming years. Because the number of people diagnosed will increase, so will the financial hardship.

Cancer Survivors Pay Out of Pocket

To construct the report, the CDC, the American Cancer Society, and the National Cancer Institute analyzed data about the out-of-pocket expenses and financial hardships of cancer survivors in the U.S. Those involved in the data analyzed were between the ages of 18 and 64 between 2011 and 2016.

For the average survivor, out-of-pocket spending each year for healthcare was about $1,000. The average American without a history of cancer spends just $622. On top of that, 25.3 percent reported material hardship associated with their diagnosis.

Material hardship, in this case, means ever having to borrow, rack up debt, or file for bankruptcy, as a result of medical costs. Additionally, more than 34 percent report suffering from psychological financial hardship. This means many of them worried about the ability to pay their medical bills and get the treatment they needed.

One-quarter of the individuals involved in the observations also reported struggling and even failing, to pay their medical bills.

More Likely to Seek Follow Up Care

Of course, the care for cancer patients during treatment is exorbitant. However, it also seems cancer patients’ cost of care doesn’t end when they go into remission. Most cancer survivors are more likely to go to the doctor on a regular basis.

In that respect, cancer “seems to be the gift that keeps on giving,” said Dr. Rachel Adams Greenup, a breast cancer surgeon at Duke University.

Greenup, who was involved in the study pointed out, “Cancer survivors, even if they’re cured, they interface with the health care system more frequently — and so it is more costly to them and to the health care system than someone who’s never had cancer. It’s devastating to these patients.”

How Much Cancer Costs

Depending on your diagnosis, treatment could cost between $5,000 (minor skin cancer) to $108,000 (brain cancer). And those figures are only for the first year of treatment. Not to mention, the indirect medical costs like needing the assistance of specialists or complications with their medication.

The cancer survivor’s family takes on a good bit of these medical costs as well. Families are twice as likely to have more than 20 percent of their income taken up with out-of-pocket medical costs.

Insurance vs. No Insurance

Some cancer patients are without insurance. If they are diagnosed without coverage, it can absolutely ruin them financially. Although they spend less altogether, a greater portion of their families’ income than individuals with insurance.

Even survivors who carry insurance reported borrowing money, accruing debt, inability to pay their medical bills, and even filing for bankruptcy.

How to Help

This year, it is predicted that nearly 1.8 million Americans will be diagnosed with cancer. So, how do we help guard cancer survivors from financial hardship?

First, the authors of the report suggest that making health care more affordable will help improve the long-term survival of those who have survived cancer.

Another way to help prevent such tremendous hardship is educating patients by discussing costs before they begin treatments. Doctors play a huge role in providing guidance regarding out-of-pocket expenses with their patients.

It isn’t really surprising that cancer patients face financial hardships. As Dr. Georges Benjamin pointed out, there are other factors to consider as well. “The other thing we know is there is a correlation between health care costs and people’s mental health,” he said. The inability to pay health care bills can increase risk of sadness and depression.

All in all, the best way to cure the financial hardships of those diagnosed with cancer is early detection and prevention. Early detection will lead to easier, less costly treatment and ease the financial burden of the terrible disease.

It should be noted there were some limitations in the CDC report. All data was self-reported. No information was gathered about the stage or types of cancer. 

Readers, what do you think about the financial hardships faced by cancer survivors? 

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Can Senator Warren Really Really Wipe Out $640 Billion in Student Loan Debt?

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student loanAs April 2019 drew to a close, Senator Elizabeth Warren revealed an ambitious plan to help American families overcome student loan debt. If the plan was implemented, about 75 percent of Americans with student loans would see their debt vanish. For another 20 percent, at least some of their student loan obligation would disappear. But can Senator Warren really pull it off?

Senator Warren’s Student Debt Cancellation Plan

Senator Warren – who is also campaigning to be the next president of the United States – has a bold plan for tackling the student debt crisis in the United States. She wants to cancel up to $50,000 in student loan debt for any American household earning up to $100,000 a year. For approximately 75 percent of student loans holders in the U.S., that would mean cancellation of all of their remaining student loan debt.

However, 95 percent would at least get some degree of relief. If a household earning less than $100,000 had over $50,000 in debt, the plan would dismiss at least $50,000. For example, if a qualifying family had $65,000 in student debt, only $15,000 would remain after $50,000 worth was canceled through Senator Warren’s plan.

Additionally, partial debt cancellation for households that earn between $100,000 and $250,000 a year would also be available. The value of the cancellation would decrease by $1 for every $3 earned over $100,000. For example, households with incomes of $160,000 would get $30,000 of their student debt canceled. At the $190,000 annual income mark, the family would see $20,000 of their student loan debt wiped away.

Households with federal student loans wouldn’t even have to take action. Since the government has access to their loan and income data, it could be handled without the family having to take any steps. Private student loan debt would also be eligible in the plan, but the government would need to work with borrowers to get the loan details and coordinate the debt elimination with the lenders.

Many lower- and middle-class families struggling with student debt would get some relief, especially since the debt elimination wouldn’t be taxed as income. Senator Warren equated the plan to “an enormous middle-class stimulus that will boost economic growth.” And she didn’t stop there. If her plan was implemented, about 42 million Americans would at least get partial relief from their student loan debt.

Senator Warren’s Free College Plan

Another part of Senator Warren’s policy that could have a massive impact on American families is her plan for universal free college. She wants to make two- and four-year public colleges available without any tuition or fees, significantly limiting how much a person would have to spend while pursuing higher education.

While that plan might not bring the cost of college to zero – as it does not address other expenses like room and board or supplies – to say it would make a substantial difference would likely be considered an understatement.

The Drive for College Degrees

Many Americans believe that a college education is critical for their future success. One 2012 Pew study showed that 94 percent of parents with children under the age of 17 expected their kid to go to college.

Additionally, it is widely known that individuals with college degrees generally earn more than those who stop going to school after receiving their high school diploma. Those who have a four-year degree earn about 26 percent more than those with two-year degrees and college graduates bring in 56 percent more than high school graduates.

Employers are also increasingly seeking out workers with college degrees. One study by Georgetown indicated that 65 percent of jobs in the US would require at least some level of higher education by 2020.

Paying for Senator Warren’s Plan

Most who oppose Senator Warren’s plan first point to the price tag, which is estimated at $1.25 trillion over 10 years for both the debt elimination ($640 billion) and universal free college components. To put it simply, eliminating that much student loan debt and making college free wouldn’t be cheap. However, Senator Warren says she has a plan for that too.

She would like to fund her plan through an “Ultra-Millionaire Tax.” Families with $50 million or more in wealth – a total of about 75,000 households – would be subject to a 2 percent annual tax, which Senator Warren says would cover universal free college and the debt cancellation.

However, many legislators believe that Senator Warren’s plan is just too expensive. Additionally, some think it would be unfair to erase student loan debt when so many others have already paid off their hefty loans.

Concerns about ensuring schools would control their costs have also been expressed. Since 2001, tuition at four-year institutions has risen over 100 percent (including after being adjusted for inflation).

Can Senator Warren Wipe Out Billions in Student Loan Debt?

In her position as Senator, she does not have the power to move ahead with this plan alone. She would need significant backing from Congress and the President to turn this vision into reality, as it would have a massive impact on the budget.

If Senator Warren was elected in 2020 to become the next President, she could also then try to push this plan forward. However, since it would involve updates to the tax code (to implement her Ultra-Millionaire Tax), changes in the US educational system and funding dedicated through the federal budget, putting it into motion without the support of Congress would incredibly unlikely.

Now, if Senator Warren did garner enough support – either while in Congress or if she becomes President – then wiping out that student loan debt isn’t impossible. Similarly, making public college tuition and fee free is technically something that could happen. It’s just important to understand that there is a long road ahead if that is a plan she wants to implement and, without the proper support from other key government officials and legislators, it probably won’t become a reality.

Are you struggling with student loan debt? Do you think Senator Warren’s plan is a good idea? Tell us about your experience an share your thoughts in the comments below.

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Is Putting a 20% Down Payment on a House Realistic?

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I understand the argument behind the advice of putting at least a 20% down payment on a house purchase. No one wants to pay private mortgage insurance and the idea of getting two different loans to avoid it isn’t that great either. I imagine if you are a previous homeowner and have some equity from a previous house to put down on a new one, a 20% down payment is very feasible, but what about first time home buyers?

Saving Up The 20% Down Payment has Huge Opportunity Costs

In the area that I currently live, the average home price is about $175,000 for a decent starter home. That’s actually a pretty low price compared to where I grew up across the state, where you can’t get a decent starter home for under $275,000. Let’s say someone wanted to buy a home for the first time. A 20% down payment for an average house in each area would be $35,000 and $50,000 respectively (and that doesn’t even include closing costs) Who has that kind of cash readily available? Not many people. So the advice many are given is to save up and wait.

Let’s look at what that would look like. Say you are able to save $500 a month towards your down payment. You are able to knock down your costs and pull aside that much every month. It would take you almost 6 years of saving $500 a month in order to afford the 20% down payment in the less expensive city and over 9 years to afford the one in the pricier area.

What if you were able to save $1,000 a month? Then it would take you 3 years and 4.5 years respectively. But saving $1,000 a month is quite difficult when you are trying to fund a retirement account and live day to day. Especially for up to 9 years. Most first home buyers are younger – probably in their 20s. In the best case scenario, you need to save for 3 years – in the worst case, it would be 9 years (this is assuming you already have a sizable emergency fund to take care of unexpected expenses).

It is even harder when you start looking at this from a market standpoint. House prices will rise. I don’t care what the housing market looks like now – eventually, the values will rise again. Let’s say values rise at a conservative 1% per year. In 3 years, each “average” house will cost at least $5,500 and $8,500 more, respectively. In 9 years, each house will cost at least $16,000 and $25,000 more, respectively.

Everyone who finally reached their 20% down payment goal will now need more money than originally thought for the down payment of a home that is now more expensive. Not to mention the money lost on throwing away rent rather than building equity (however small that amount may be in the first few years). Add to that the tax deductions missed and the missed opportunity to profit from the market’s increasing values. Ouch! Those numbers aren’t pretty. You have to spend money on housing either way – why not get some benefits from it?

Chances are, if you are saving a huge chunk of money each month for a large house down payment, you aren’t contributing the max to your retirement account. Your early investing years are the most critical for your future because of the wonderful concept called compounding interest. You could lose some very valuable interest time by waiting to invest (or increase your investment amount).

It Is Perfectly Reasonable To Buy A Home For Less Than 20% Down

Perhaps there are some people for which putting a 20% down payment on a house is not only possible but also a perfect fit for them. I personally don’t know any of those people and am not one of them. We chose to buy our house with no money down and use our monthly extra to invest more, stock up our retirement fund, fund our emergency savings, and make improvements to our house that will increase the value when we go to sell.

The funny thing is that our mortgage is not outrageous, we are not struggling to keep up with our payments and we are not in jeopardy of defaulting on our loan. The fact of the matter is that there are people who are a high risk to mortgage companies who will likely default on their loan if they get into a house with no money down. But there are also responsible people who will pay their mortgage on time every month who just want to have a choice of what to do with their extra money and how to best use it.

Can You Get A Mortgage For Less Than 20%?

Yes. You can get a mortgage for less than 20% down. The best way to find out if you can do this is to start making calls. You’ll want to talk with a mortgage broker. Probably you’ll want to talk with several. A good starting place might be USAA (they have great customer service) as well as your local credit union. Stay away from the bigger banks, they sometimes have incentives that are perverse (for example, by pushing low money down loans or adjustable rate mortgages).