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How College Financial Aid Works

It doesn’t matter whether you’re the student or the parents wading through college application and tuition figures: Going to college is a huge life decision, almost always synonymous with huge sticker shock.

U.S. News & World Report clocks the average tuition cost among public and private institutions as slowly but steadily increasing annually: $36,801 for private schools, $22,577 for public schools as an out-of-state student, and $10,116 for public schools as an in-state student.

Tuition, it should be noted, does not include room and board and other living expenses, so it’s no wonder that as of 2019 there is approximately $1.6 trillion in student loan debt nationwide—it all adds up, quickly.

Fortunately, there are financial aid systems in place for college students to help offset all those accumulating costs. Unless you’re expecting a huge inheritance or some unexpected windfall, going to college will likely mean coming up with a game plan to make it possible.

Here’s a comprehensive guide to help familiarize yourself with the ins and outs of college financial aid.

NOTE: Many colleges and college students are influx due to COVID-19 regarding their upcoming academic calendar, whether classes will be taught face-to-face or online, and how this may or may not impact tuition—which in turn may or may not impact financial aid policies. This article is a general guide to help both students and parents get acquainted with how to get financial aid for college and devising strategies to make college a stronger possibility for those who want to attend and earn degrees.

What Is Financial Aid, Anyway?

Broadly speaking, the term “financial aid” refers to any number of funding channels that are available to assist students to cover the many costs incurred by pursuing a post-secondary school degree.

Financial aid is available from federal and state governments, educational institutions, and private organizations. It can also be awarded in the form of loans, grants, scholarships, and work-study programs.

Schools don’t typically expect enrollees to cover college costs from their savings and income alone. According to the 2019 Sallie Mae/Ipsos survey “How America Pays for College ,” the typical family covered 25% of college costs with scholarships and grants.

This 25% can come in the form of many different potential resources. There isn’t necessarily a “best” option, since selecting the one (hopefully ones) that can help bolster your future college plans comes down to the financial aid’s availability of funds, your goals, and your plans.

Also, the amount of aid a student can potentially receive varies depending on federal, state, and institutional guidelines. Additionally, the type of aid determines whether it will have to be repaid: federal grants don’t need to be repaid, for example, but a loan will.

Should you be fortunate enough to be awarded federal financial aid, you’ll receive a financial aid award letter. These can be confusing to decipher, but this guide to navigating it could come in handy.

In sum: Just because an offer is being made doesn’t mean you have to accept it and there isn’t wiggle room to argue for reconsideration.

This Offer Letter Decoder created by non-profit news site The Hechinger Report could be a helpful tool to help demystify an offer letter. SoFi also has resources with information on financial aid secrets worth reviewing if you’re pursuing college financial aid. And if you are in a position to accept financial aid, here’s a guide on how your financial aid potentially may shift year-to-year as a student.

It is also worth noting that the Sallie Mae/Ipsos survey taps into four strategies that some families may consider to help mediate college costs, even if they aren’t quite ready to apply for financial aid. These include things like enrolling in advanced placement courses, dual-enrolling in community college, or investing in talents to increase the chances of earning a scholarship.

Federal Student Aid

Here’s the first spoonful of alphabet soup: FAFSA®, the Free Application for Federal Student Aid, is often the first step when exploring federal financial aid for college. It’s an application used by many colleges, universities, and state agencies in deciding who gets aid—and how much. (Private colleges use a supplemental form called the College Scholarship Service Profile, or CSS, which is more detailed and can be more time-consuming to complete.)

The form itself is not overly cumbersome, but the US Department of Education includes a guide on what to do if you’re unsure how to fill in any of the blanks on your FAFSA. The important thing to keep in mind with the FAFSA are its deadlines.

The Federal Student Aid office advises filling out its form as soon as possible if you’re even loosely considering applying for federal financial aid.

There’s a run-down of the deadlines here , but the key ones for the 2020-2021 academic year, for example, is June 30, 2021 to submit your FAFSA, and the window for corrections or updates is by 11:59 p.m. Central Time, September 11, 2021. Note that each state and college may have its own deadlines on top of that.

The general recommendation to fill out the form as soon as possible should not be overlooked: Both the federal government and various states award financial aid that may include grants and scholarships which, if you qualify for, won’t have to be repaid.

Some states award aid on a first come basis, so submitting a FAFSA application early could be helpful. Another wrinkle to keep in mind is FAFSA is not an island unto itself. Many colleges use the FAFSA to in turn determine how much financial aid to award to students, if any.

A FAFSA application is also a pre-requirement to be considered for federal grants like the Pell Grant, which is “usually awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor’s, graduate, or professional degree.”

The grant does not need to be repaid, though eligibility is based on a family’s expected family contribution (which is information that is supplied via the FAFSA).

FAFSA’s website has a comprehensive list of federal grants offered by the U.S. Department of Education, with options for military veterans and teachers. This one-sheeter has a quick overview of various federal grants available, thoughtfully condensed into an at-a-glance rundown.

Finally, federal work-study programs are available to eligible college students, providing part-time jobs to help pay for education expenses. Such programs usually encourage community service work and work related to the expected course of study. Here’s studentaid.gov’s official site tackling the FAQs of these highly variable programs.

State-Based Student Aid

Depending on where your school is, you’ll have many different options when it comes to getting the money you need to pay for school. SoFi has a state-by-state breakdown of grants, scholarships, and other information like average local student loan debt to keep in mind as your search continues.

Because there is so much variability across each state, one good thing to remember is to read the materials you come across when applying for state-level aid carefully, thoroughly, and repeatedly—including the fine print. Some aid opportunities have residency requirements, and some schools may also offer state-based aid or discounts.

Other Sources for College Financial Aid

A two-sided coin that factors into one of many, many ways to approach financial aid for college is need-based federal student aid versus merit-based aid.

Some federal aid is need-based—like the Pell Grant and Direct Subsidized Loans (more on this loan type below)—meaning eligibility is based solely on the assets and income of the prospective student and their family. Factors like test scores or athletic ability, for example, have no bearing here.

The reverse is true for merit-based scholarships, which can include a wide variety of talents and interests: artistic, academic, athletic, etc.

Publishing an exhaustive list of literally every merit- and need-based aid opportunity would be near impossible, so one of the best options to find information on them is to speak to someone in admissions or to your guidance counselor who can point you to ones that might apply or often apply based on their curricula, programs, school, or state.

There are tons of online scholarship search sites out there, and dedicating some time to finding and applying as many as make sense for you can be a valuable way to spend some time—and can hopefully help you pay for some of your education expenses.

Federal Student Loans

Most students’ federal financial aid packages include federal student loans, which are awarded based on financial need and the cost of attending college. These include Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.

The advantages of federal student loans include low, fixed interest rates, no credit checks required to borrow them, unique borrower protections (like forbearance and deferment), and repayment plans based on income and/or your commitment to eligible public service work post-graduation.

With Direct Subsidized Loans , the government pays the interest while the student is attending school at least half-time. That’s what the “subsidized” means here. These loans are awarded based on financial need.

Direct Unsubsidized Loans are awarded regardless of financial need, but borrowers are responsible for paying the interest on these loans from the moment you get them—or you can defer interest payments and the total that adds up will be added back onto the loan principal (that is, the total base sum you were awarded) for you to repay.

This capitalized interest can lead to you paying substantially more for the money you borrowed, because the total dollar amount of interest you didn’t pay is added onto the total amount of the loan you took out in the first place, and then you have to pay interest on THAT new total.

Direct PLUS Loans are also unsubsidized, and are awarded to either eligible graduate students or parents of undergraduate students and require a credit check to ensure there’s no “adverse credit history.” In short, that means they can be more difficult to qualify for as compared to Direct Unsubsidized Loans.

Private Student Loans

If your federal student aid package and other forms of funding don’t quite cover your cost of attending college, there are also private student loans to consider.

The details on private student loans vary, because the terms and criteria will depend on both the individual lenders and the circumstances of the borrowers.

But if there’s any general way private student loans might be more appealing is because they, unlike some federal loans, can be made up in amounts up to 100% of the cost of college tuition and living expenses. (SoFi offers no-fee private student loans.)

Financial Aid Isn’t Just Loans

There’s a whole rainbow of options available to people who want to go to college and aren’t sure how they’ll ever be able to afford it. There are many more loans and programs that are available than listed here—but a good starting strategy is to see how much financial aid you can receive that does not require repayment, and if you come up short, start weighing your options.

Along with scholarships and state-based grants, start with the FAFSA because federal aid packages will likely have the best terms for students—and because it’s a requirement for many other aid options.

If you wind up coming short even with everything from here, private student loans can help fill in the gap. And, in addition to all these options, SoFi offers competitive, no-fee private student loans for undergrads, grads, and parents.

SoFi can make the process of paying for school and getting aid more stress-free with private student loans.



External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Where to Cash a Check Without Paying a Fee

With the popularity of digital payment apps and credit cards, checks are being used less than ever. According to a Federal Reserve study , for the first time ever in 2018, check payments fell below the number of total ACH (automated clearing house) transfers.

But, whether it’s a birthday gift from a grandparent or a medical reimbursement, checks are still kicking around. Checks are often considered a secure form of payment, and they might be the only form of payment some people (like your landlord) accept.

While they might be less popular now, at the end of the day, they’re still money. Don’t make the mistake of cashing a check just anywhere, read further for a few suggestions for where you could be able to deposit a check, fee-free.

How to Cash a Check

Before running off to the bank or ATM around the corner, a person may want to ensure they have what they need to successfully deposit their check. Generally, in order to cash a check, the following information is required:

•  Bank account. You’ll generally need an account to deposit a check. Most banks will allow you to cash a check, but if you don’t have an account with them, they may charge a fee.
•  ID or debit card. Depending on the means used to deposit the check, a person might also need a form of ID or their debit card to successfully complete the transaction.
•  PIN number. Whether banking by ATM or teller, oftentimes a person will be required to enter their PIN number to confirm the transaction.
•  Completed deposit slip. Each bank has a variation in the deposit slip, but most ask for a person’s name, account numbers, and the amount of cash and check the customer is depositing. This typically needs to be completed for the transaction to go through.

Another thing to keep in mind is the timing of the deposit. Personal checks are valid up to six months after they’ve been issued, but it’s generally agreed that they should be deposited as quickly as possible. Otherwise, the issuer might forget about the check, and the person depositing the check could be doing so with insufficient funds in the issuer’s account—leading to high fees on both sides from a bounced check .

The only exception to the above rules is US Treasury checks, traveler’s checks, or USPS money orders. US Treasury checks are valid for a year after issuing. Traveler’s checks and money orders never expire.

Branch Bank

Perhaps the most old-school way to cash a check is going into a bank branch or credit union and depositing the check with a teller in-person. This can be faster because the amount being deposited is confirmed on-site—there’s less likely to be a delay in the funds hitting a person’s account.

To deposit a check at a bank branch, a person will need to complete a deposit slip, and endorse their check. To endorse a check for a teller, a person needs to sign the back of the check, where indicated.

With a deposit slip and endorsed check in hand, customer’s might also be asked for their bank’s corresponding debit card or a photo ID for verification. From there, the check is validated and funds will be available in the account once the check clears, which can take up to two days.

While depositing to a bank branch can be fast, people are limited by the branch’s hours and locality. If a person has an account with an online-only financial institution, visiting a brick and mortar location to deposit a check may not be an option.

Similarly, they might be in an area where there are no nearby retail locations. If that’s the case, there are other methods to cash a check.

ATMs

Depositing a check via ATM has its advantages and disadvantages. Unlike bank branches, many ATMs are open 24-hours and with smaller square footage, they can be more common than brick and mortar ATMs.

Depositing a check by ATM varies by the technology it uses. Older ATM models may ask a customer to fill out a deposit slip envelope before inserting the check into the machine. Other, more modern models simply use on-screen prompts and scanning to verify the deposit amount. Regardless, customers are generally required to endorse the check with their signature before depositing it in an ATM. Using an ATM also typically requires someone to enter their pin number before accessing the account. Reading the on-screen prompts can help clarify the steps at the specific ATM you are using.

On the downside, checks deposited via ATM may take longer to be available in the bank account. This is because ATMs are only serviced at specific times, and while people enter the amount they’re depositing, it often needs to be verified in person by a teller at the bank . Customers are also limited to depositing checks in the ATMs of banks that they are a member of.

Additionally, because the extra step of validation is required, there is a possibility of human error incorrectly validating the correct amount or losing the check altogether . Some ATMs now have scanning capabilities, allowing them to instantly read checks which can alleviate some errors. However, an individual might want to keep a close eye on their bank statements in the days following an ATM deposit.

Mobile Deposit

Using mobile deposit to cash a check is as simple as taking a photo. Some financial institutions, including SoFi, allow the mobile deposit of checks through their app. Customers take an image of the front of the check, then the back so the financial institution can create a “digital copy” of the check. Instead of endorsing the check with only a signature, customers may be required to write “For Mobile Deposit Only” or a similar message on the back of the check.

Once the bank or financial institution accepts the images, the funds can sometimes immediately become available in the customer’s account. However, depositors should keep the check on hand for up to two weeks, or until the amount is cleared. Otherwise, they could end up over-drafting in the event that the funds are pulled.

Mobile deposits come with many advantages. As long as a phone has charge, checks can be deposited. Additionally, money is almost immediately available in a checking account. However, most mobile deposits only allow for one deposit at a time, and some accounts may have daily or monthly deposit limits. And if the handwriting on the check is unclear, the app might not recognize it.

Mail-In

Another option a depositor might choose is to mail the check into their bank. This will likely take the most time to become available in a bank account, but most banks will offer this option.

To mail a check in for deposit, first, check with your bank to confirm its mailing address. Depending on the size of the bank, there may be multiple addresses where the check can be sent.

Before sending the check to the approved address, depositors should generally endorse the back of their check with their signature. Some financial institutions also recommend including a note that says “For deposit only” with the endorsement. Depositors may also be required to fill out a deposit slip to include with the check. Confirm the specific requirements with your bank or financial institution.

To be safe, people might want to take a picture of the check or make a photocopy of it for proof in case it goes missing in the mail. It may also be beneficial to use certified mail so tracking the check is an option. Mailing a check is a relatively safe manner to deposit a check, however, it will likely take longer than the above alternatives.

Fee-Free Deposit with SoFi

Whether it’s a refund, birthday gift, or payment for watching the neighbor’s cat, checks still fall into our hands every once in a while. While you may not get them frequently, there are numerous ways to deposit them, all with their own unique benefits and drawbacks.

SoFi Money® makes accessing your cash easy with fee-free access to 55,000+ ATMs worldwide and online mobile check depositing. SoFi Money makes it easy to manage your finances with a mobile-first experience where members can access their money anytime, anywhere.

Learn more about how SoFi Money® can simplify your money.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Should You Consider Pet Insurance?

Owning a pet comes with an array of costs, and medical care can be one of the big ones. Does that mean you should get health insurance for your pet? Is buying pet insurance worth it?

Insurance policies for pets are more worthwhile for some pet parents than others. While a policy that covers general pet wellness and preventive care may not make economic sense (since the cost of the premiums can be similar to cost of care), a policy that covers accidents and illness can be a smart money move, particularly for pet parents who would have trouble covering a hefty vet bill should Fluffy or Fido suddenly get sick or injured.

But plans vary significantly on what they cover—and what they cost. Here are some key facts to consider when shopping for a pet insurance plan.

Average Cost of Pet Healthcare and Emergencies

Between food, daily care, equipment and toys, the cost of owning a pet can be high. The cost of veterinary care can also stack up pretty fast.

Pet healthcare costs vary widely, depending on region and what kind of care your pet may need. But, according to the American Pet Products Association , dog owners spend an average of $212 per year on routine vet visits, while cat owners shell out an annual average of $160 on routine care.

Heartworm tests and prevention can tack another $35 to $132 to the annual healthcare bill, while flea and tick prevention can cost $40–200 per year.

Even a healthy pet may need emergency care, ranging from a few hundred dollars to well over $1,000 Wound treatment and repair, for example, can run as high as $2,000 for a dog. Emergency surgery for a large dog can cost between $2000 and $5000.

What is Pet Insurance?

Once a niche product, pet insurance policies have been steadily gaining in popularity. Indeed, many employers now offer pet plans as part of their benefit packages. But what exactly is pet insurance—and how does it work?

Like health insurance for people, pet insurance companies help ease some of the costs of keeping your pet healthy. You can choose from different levels of coverage, with each plan costing a monthly or annual premium based on how much coverage you choose.

Some plans cover basic scenarios like accidents and injuries, some only cover accidents, and others include wellness/preventative care. The more comprehensive the coverage, the higher you can expect the cost to be.

As with health insurance for people, pet policies include exclusions, various levels of coverage, co-pays, deductibles (a certain amount you must pay out of pocket before coverage kicks in), and payment limits.

Most pet insurance policies exclude pre-existing conditions and hereditary or congenital conditions. Some carriers will not accept pets younger than eight weeks or older than 12 years, and many policies have waiting periods before benefits for injury, illness and orthopedic care begin.

Pet insurance typically uses a reimbursement model: You pay the full amount due when you take your pet in for care, then submit a claim to the insurance company afterwards.

What Pet Insurance Covers

As with human health insurance, pet health insurance offers several different types of coverage, each with its own list of coverage options and costs. Although the names used vary by insurer, the three most common types of coverage are:

•  Accident and illness This typically covers treatments and tests for accidents and illnesses.
•  Accident-only This coverage generally takes care of accidental injuries, such as poisoning or ingestion of a foreign object, being hit by a car, cuts, and other physical injuries. Accident-only coverage is often preferred by owners of older pets that have aged out of comprehensive coverage.
•  Wellness plans Wellness plans tend to cover preventive-care visits, such as check-ups and routine vaccinations, and you can buy one as a stand-alone policy or as an add-on to an accident and illness policy.

Before deciding whether you want to buy a pet insurance policy, it’s a good idea to download sample policies from insurers. You can then carefully review each policy for limitations, exceptions, and co-payments. You can also reach out to a rep with questions.

What Pet Insurance Doesn’t Cover

It’s just as important to know what a pet insurance option doesn’t cover as it is to know what it does.

As mentioned above, Just about every pet insurance policy excludes coverage of pre-existing conditions. Some pet insurance options also may have breed-specific exclusions, or it could cost extra to cover specific breeds. Many plans also limit the amount you can claim, either annually or over your pet’s lifetime.

As for each individual option, wellness plans likely will not cover any treatments having to do with accidents, common injuries, or any other emergency treatments.

Accident-only plans will likely not cover any cost associated with illness, while accident-illness plans will likely not cover any preventive care or any care related to pre-existing conditions.

An accident-illness plan with a wellness add-on provides the most comprehensive coverage. But again, it will likely not cover any care for a pre-existing condition, and the coverage could come with some breed-specific restrictions. That’s why it’s essential to read through the fine print of every policy option before making the decision on which one is right for each pet.

How Much Pet Insurance Costs

The cost of pet coverage varies widely, but the average accident and illness premiums cost $585 a year for a dog and $350 for a cat, according to the North American Pet Health Insurance Association.

Costs, however, can rise depending on your pet’s breed (purebreds may cost more to insure because they are more susceptible to some hereditary conditions), age (plans tend to cost more as your pet ages), region (the higher cost of vet care in some areas is factored into your premium), and the coverage you choose.

Pros and Cons of Pet Insurance

Pet insurance can make pet treatments and services more affordable—by paying annual or monthly premiums, the insurance company bears the brunt of covered expenses.

Pet insurance also protects the emergency funds in your cash management account. If your pet is young or healthy, or you choose a lower tier, you can get accident and illness coverage for a fairly low cost, which pet owners may find well worth the security of knowing your pet can get the help it needs.

But it’s key to read the fine print. Many plans limit the amount you can claim, either annually or over your pet’s lifetime. If your pet is unfortunate enough to suffer a major medical problem, you could quickly max out your plan’s limit and find yourself paying the difference.

Depending on the cost of the premium, wellness-only and wellness add-ons may not be worth the price, since they can end up costing about the same, or potentially more, as paying out of pocket for routine care.

Alternatives to Pet Insurance

Again, like humans, unexpected expenses can come up from time to time, but that doesn’t mean they need to hurt your pocket.

Another way a pet-owner can pay for both expected and unexpected medical bills that come with pet ownership is to have an emergency fund specifically earmarked for your pet. Stashing just a little bit of cash each month into your pet care fund can slowly add up to a significant financial cushion.

Whether you do or don’t spring for pet insurance, you can lower the cost of pet care by monitoring your pet’s diet and exercise and staying up to date on needed vaccines. This can help keep your pet from needing emergency care—and prevent getting hit with an outsize medical bill. Even knowing the most common ailment associated with your pet can prevent a minor problem from turning into something major.

The Takeaway

Buying pet insurance that covers accidents and illness can be a reasonable hedge against a multi-thousand dollar vet bill. The payoff for wellness coverage, however, is less clear, as the amount you pay may be close to the amount you would have paid anyway.

If you decide to take out pet insurance, do your homework and make sure you’re aware of all the policy’s limits and exclusion.

Ready to adopt a new fur baby? Setting up an emergency fund for Mittens or Rex can be a smart money move. SoFi Money® makes it easy to set aside just a little money each month to cover unexpected pet care expenses.

Learn more about SoFi Money today.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How to Buy and Sell a House at the Same Time

Whether relocating down the block or across the country, there is a lot of work and planning that goes into moving. For current homeowners, there may be more logistics when simultaneously buying and selling houses.

If you’re figuring out how to sell and buy a house at the same time, there are some options to choose from based on your own budget, situation, and tolerance for risk.

Although this situation can be complex, it is not uncommon. In fact, 71% of repeat home buyers owned their previous residence.

To help you navigate this juggling act, this guide will go over potential challenges and outline some alternative options and tips to close on both deals.

Evaluating the Local Housing Market

Everyone’s situation is different. But even if you’re in a time crunch, taking stock of the local housing market can help inform how to sell and buy a house at the same time. Not only does the market influence home prices, it can also impact the length of closing on a sale or purchase.

You may be faced with a housing market that favors buyers over sellers or vice-versa. Researching your local housing market ahead of time can help guide your efforts in finding a new house.

When it’s a Buyers’ Market

A buyers’ market has more houses for sale than people actively looking to purchase a home. Generally, finding a new house in areas with higher concentration of sellers can be easier than selling. At the same time, an accurate listing price and contingencies can factor into the equation.

Since there is less competition in the market, buyers can consider requesting an extended closing to allow time to sell their own house or include other contingencies in their offer. For instance, a home sale contingency can be included in a contract to coordinate a purchase with the sale of the buyer’s house.

A home sale contingency asks patience of a seller depending on their situation. Complications may arise in the event that all parties involved are simultaneously buying and selling homes.

On the flipside, sellers in a buyers’ market could benefit from setting a competitive asking price and getting ahead of inspection by buttoning up any lingering home maintenance issues.

When it’s a Sellers’ Market

If there are more buyers in the housing market than there are homes for sale, it’s considered a sellers’ market. Often, selling a house where there’s a high percentage of homebuyers takes less time and can fetch a higher price.

Sellers may be able to take advantage of the housing scarcity and go with a more ambitious asking price. If this pays off, the extra cash could be especially useful if you are shopping for houses in a sellers’ market yourself. Making a competitive offer may be helpful if you are trying to beat out other bidders and quickly secure a home.

It’s also not uncommon for houses to receive multiple offers in a sellers’ market. If this is the case, sellers may have more success negotiating favorable terms that suit their sell and buy situation.

For example, a rent-back agreement allows sellers to lease their former house from the new owners for a set period of time. This gives them more time to find their new home, but may not be an acceptable condition for every prospective buyer.

Calculating Home Equity

Getting your finances in order to buy and sell a home isn’t just about counting savings and building budgets. Home equity is another important consideration.

To calculate home equity, you subtract the money owed on a mortgage loan from the current market value of a house. For example, if your home is worth $250,000 and you still owe $150,000 on your mortgage loan, you have $100,000 of equity in your home.

Depending on your financial situation, home equity may be necessary to buy a new home. Keep in mind that equity does not become available until the closing is complete. Generally, lenders will limit borrowers to 80% to 90% of their available equity, depending on factors such as credit history and income, among others.

Unless you’re selling a home shortly after buying it, the market value of a home could likely differ from the initial purchase price. These changes could either increase or decrease your home equity.

Generally speaking, the average home sale price in the United States increases year-to-year, barring notable exceptions like the 2008 financial crisis and subsequent recession. Yet, these trends don’t account for regional housing booms and busts.

Getting an official valuation from a real estate appraiser, which typically costs between $300 and $400, is one way to get a more accurate idea of your home equity and a feasible sale price. Researching comparable homes that recently sold in your community can give you a ballpark estimate too.

Pre-qualification vs. Pre-approval

Being aware of your own financial situation is useful for a variety of reasons, especially when buying a house. But if you’re among the majority of buyers who finance their home purchase, your mortgage lender will consider factors besides your own number crunching and goals when deciding their loan total.

For many prospective homebuyers, pre-qualifying is the first step to getting an estimate of how large a loan they would likely qualify for. Lenders generally evaluate factors like a buyer’s debt, assets, and income when determining their pre-qualification, which may take just a matter of days.

Becoming pre-qualified does not lock buyers into a set mortgage rate. Rather, it gives buyers a more accurate picture of their financing options and what houses are in their price range. Before making an offer, it is generally advisable that buyers are pre-qualified, which can be demonstrated with a letter from your lender. This can signal to the sellers that you are a serious buyer.

To ultimately obtain a mortgage loan, buyers still need to go through pre-approval. In doing so, lenders perform a more thorough credit and financial background check to arrive at a specified pre-approved loan amount.

Sellers may consider offers from pre-approved buyers to be more favorable than those with just pre-qualification since there is less concern about a rejected mortgage application pending a deal. It may also get you to the closing table faster, which can be a big plus if you’re in a competitive market.

Selling Before Buying

Whether by intention or pure circumstance, you could face a choice of selling your house before buying your next home.

Selling first can potentially be beneficial for qualifying for a mortgage loan. After the sale closes, you may be able to use that money to finance a down payment on a new home, as well as having a lower debt-to-income ratio.

Yet, selling before buying may create complications for finding a place to stay until you purchase a new home. If the new buyers are not willing or able to do a rent-back agreement, you may end up having to find temporary housing in the meantime.

Apartments and rental properties may require signing up to a 12-month lease. For prospective homebuyers, a lengthy rental commitment with penalties for leaving early may be costly. Instead, finding a month-to-month rental option can grant more flexibility and sync up with a storage unit lease if needed.

Buying Before Selling

When you find your dream home, you may want to pull the trigger and make an offer right away. But what does that mean if your house hasn’t sold yet?

If your budget allows you to buy a home with cash vs. a mortgage, you may be in a position to move forward with the offer.

For some, making a down payment or home purchase before selling with savings alone is not feasible. In other cases, your debt-to-income ratio and credit may prevent you from getting a second mortgage.

There are several options available if this is the case. A Home Equity Line of Credit (HELOC) can let prospective buyers borrow against the equity of their current home. A buyer’s credit and existing home equity are taken into account to qualify for a HELOC.

If approved, buyers can use the HELOC to access money for a down payment, which could then be paid off when their house sells. Take note of the repayment terms and interest rate on the HELOC, as these can vary from lender to lender.

Taking out a bridge loan is another possibility. These short-term loans are usually structured to cover a down payment and become due after several months. Bridge loans also generally have high interest rates and may require an origination fee. Sellers who cannot unload their house in time may need to request an extension or begin repaying the loan while still paying their mortgage.

Choosing a Real Estate Agent

A savvy real estate agent can help reduce the stress and uncertainty of selling and buying a house at the same time. Their expertise can come in handy for setting an accurate listing price, scheduling showings, and staging a home.

If you had a positive experience with the agent you worked with to buy your home, their familiarity with your property could help expedite the process and give you peace of mind in case you have to move out of the area before selling.

To find a new realtor, checking if they and their agency are accredited through the National Association of REALTORS® is one place to start. NAR’s 1.4 million members are subject to a code of ethics and standards that protect clients’ interests.

There are benefits to using the same agent for buying and selling when geography allows. For instance, they can simplify the lines of communication and more easily coordinate the closing of both homes with your ideal timeline.

Sometimes it may not be possible to use the same realtor. The obvious case is when you’re moving a significant distance to a new area.

The need to use two realtors could arise if you’ve chosen a reputable realtor who exclusively works with buyers or sellers alone. If you decide to hire such a realtor, they may be able to recommend a trusted colleague in their agency to handle your other deal.

Timing Your Closing Dates

There is a lot to consider when selling and buying a house at the same time. The timing of both deals can impact everything from financing options, having to find temporary housing, and figuring how to store or move your belongings.

Setting a closing date is part of the negotiating process for any real estate deal, and coordinating closings for the same date can streamline the process.

Still, closings can be delayed due to reasons outside your control. Having a back-up plan, such as a rent-back agreement can keep you in your home while you find a new house.

Putting additional contingencies in a contract can help with rescheduling closings as needed or even walking away without much financial loss.

Obtaining a Mortgage

Buying and selling houses at once may not always be easy, but it is doable.

If you cannot purchase a house with cash or home equity, you’ll need to figure out how much you can borrow.

Getting pre-qualified for a home loan with SoFi is free and takes just a few clicks. Qualified borrowers may be able to put as little as 10% down on their new house.

Find out how you could qualify for an affordable home loan with SoFi.



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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Common Money Fights

Fighting about money is one of the top causes of strife among couples, and one of the main reasons married couples land in divorce court.

Married or not, it’s important for couples to address the problems at the heart of their financial disagreements and start communicating. Otherwise these issues may fester and grow.

Instead of judging each other’s spending habits or fighting over money, couples can learn how to diffuse the tension that can quickly erupt–and then escalate–when they are talking about money, and start working on financial issues together as a team.

Here are some ways to help you start making conversations about household finances productive, and not a fight.

Common Causes of Couple Money Fights

While there are countless variations of money fights that can occur, these are a few common causes of money fights that couples tend to have that may sound familiar.

Sharing important account information

For some couples, there is a disconnect regarding sharing and organizing important financial account info.

Some couples struggle with privacy limits and may disagree upon what level of access their partner should have to their financial accounts. If one partner feels they don’t have fair access to financial accounts, passwords, and paperwork, resentment can build.

Married couples in particular may find it confusing and challenging to not have a full picture of their financial health or to not have clear access to important accounts and documentation.

Determining budgeting and spending limits

He likes to spend and enjoy his life. She likes to save for a rainy day because it’s hard to see what’s coming around the corner.

It happens all the time. Not all couples see eye to eye on how much they should be spending and this can lead to anger and tension.

Dealing with debt

If part of a couple brings debt with them to the relationship, it isn’t uncommon for the couples to disagree about who is responsible for paying off the debt.

Tackling debt can be stressful under the best circumstances, but it can really lead to turmoil and fighting if a romantic partner feels that the debt is an unfair burden on the relationship.

Savings and investing

Similar to disagreements relating to spending, some couples can’t come to agreement on how much money they should save and how they should be saving it.

One partner may feel investing their savings is the better path to a stronger financial future, whereas the other partner may find investing too risky and want to keep the money in a high yield savings account. This can cause turmoil if both partners’ chosen path forward is the only one they are comfortable with.

Retirement planning

For young couples, retirement may feel impossibly far away, but preparing for retirement can’t start too early. When balancing a lot of different expenses, however, deciding as a couple how much money to save for retirement and what age they may want to retire can be challenging.

But couples who don’t have a plan for slowly and consistently saving for retirement can find themselves continually fighting about retirement savings. This is especially true if one partner is particularly worried about not being financially prepared for retirement.

How to Stop Fighting About Money

Chances are that quarrelling over finances isn’t anyone’s idea of a fun date night. Before the next money fight erupts, check out these tips for learning how to stop fighting about money.

Changing the way you talk about money

Honing your couple communication skills can help keep financial discussions from devolving into arguments.

When you’re discussing money, or any hot-button issue for that matter, the main goal of a productive talk is to really listen to each other and try to understand each other’s point of view, as opposed to jumping to conclusions or making accusations.

By empathizing with each other, partners can give themselves permission to admit past mistakes, and openly plan for the future.

One technique that can help with this is using “I” instead of “you” in your statements. For example, one partner might say, “I get frustrated when the bills aren’t paid on time. Can I help you out with that?” rather than, “you never pay the bills on time.”

Another is trying to avoid using the words “always” and “never” when discussing money matters, since these terms tend to come from emotions rather than reality, and can put the other partner immediately on the defensive.

Setting up a budget together

To help establish saving goals and monthly spending targets, a couple might begin by figuring out what their joint net worth is, then tracking income and expenses for a defined period (such as one or several months).

Once you know what you’re spending on (and if that’s what you want to be spending on), then you can work out a flexible budget, with short-term and long-term savings goals.

Planning ahead helps both partners agree on how much needs to be set aside for retirement or a down payment on a house, and how much you each can allocate to spend as you individually see fit.

Being open and honest

When we want to avoid conflict, it’s easy to omit key information. But even if a partner doesn’t outright lie about an expensive purchase or lending money to a family member, failing to share significant financial information can make the other partner feel like they’re being lied to and misled. This can breed distrust and cause unneeded financial stress.

It’s possible to nip these problems by being honest about financial decisions that may upset the other party in the relationship. As reluctant as you may be to bring these topics up, it can be better in the long run than hiding it from them or outright lying.

Establishing some boundaries

One way to avoid the need to cover up pricey purchases is to agree to a few simple rules about what spending decisions should be shared and what spending decisions are okay to make solo.

For example, one couple may decide they don’t need to alert each other about a purchase if it’s under $500. Another couple may agree to lend money to siblings when they need it, but only if the amount is under $5,000. Some couples may together decide to never lend money to friends or family under any circumstances.

Every couple will have different boundaries and limits, but by setting them (and then respectfully adhering to them) couples may stop feeling like they have to report their every financial move.

Setting up a joint account

One of the main pros of opening a joint checking account as a couple is that doing so can provide a clear financial picture.

A joint account allows couples to track spending and can make sticking to a budget easier, while also helping to foster openness and teamwork.

On the downside, sharing every penny can sometimes lead to tension and disagreements, especially if partners have different spending habits and personalities.

One solution might be to have a joint cash management account, as well as two individual accounts with a set amount of money to play with every month. This can give couples some freedom to spend on themselves without having to explain or feel guilty about their expenditures.

Teaming up against debt

Working together on a reasonable plan to start getting out of debt can help couples alleviate a major stress on their marriage.

One strategy for debt reduction might be making a list of all your debts by order of interest rate, from the highest percentage to the lowest. Then, while continuing to make all your minimum monthly payments on existing debts, the couple might decide to put as many extra payments as possible to the highest interest rate loan.

Or, they might decide to simply eliminate the smallest debt first, or look into converting various debts into a single loan.

Whatever plan you agree on, working on debt reduction can give you a shared goal to work toward together as a couple.

Scheduling a monthly financial check-in

Even if one partner takes on a bigger role in managing finances, paying bills, and keeping on top of the budget, both parties need to stay up to date on what is going on in their financial life.

Rather than only talking about your finances when you’re stressed about bills, a better strategy might be to set a specific time on your calendar each month to sit down together and review your recent spending, income, savings, bills, and how their investments are doing.

When couples know there’s a specific time to go over money issues, there can be less chance for resentment to build, and for one partner to attack another for a higher-than-usual credit-card statement.

If you can’t swing monthly meetings, then aim for quarterly, biannual, or at least annual financial sit-downs.

Getting help from an advisor

While spending more money may seem like an added stressor, couples who pay for a financial coach may find that they actually save more than the fee down the road.

And, it can be easier to talk about an emotionally charged subject like money with an unbiased third party, who can help diffuse tension and help couples agree on a smart spending and savings strategy.

The Takeaway

Fighting over money, or finding it hard to talk openly and constructively about it, is a common source of friction between couples. Some strategies that can help include learning how to communicate about financial issues more productively, setting up monthly money check-ins, and letting each partner have some financial privacy.

For couples who are ready to integrate their finances, SoFi Money® makes it easy to create a joint account that gives couples shared access to their money.

Prefer to keep your finances separate? The SoFi Money app makes splitting bills and expenses easy by allowing you to send money directly from the app.

Learn more about SoFi Money today.



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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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