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Jul

2025

What Are Leveraged ETFs?

By Inyoung Hwang | Growing Wealth, invest, Investing, Terminology | Comments Off

Table of Contents

How Do Leveraged ETFs Work?
What Is “Decay” in Leveraged ETFs?
Types of Leveraged ETFs
Pros of Leveraged ETFs
Cons of Leveraged ETFs
Regulation of Leveraged ETFs
FAQ

Leveraged exchange-traded funds (ETFs) are tradable funds that allow investors to make magnified bets on an underlying index. Leveraged ETFs have been popular among investors looking to amplify their exposure to a market with a single trade. But it’s important to know that leveraged ETFs are much more complicated than traditional ETFs, and they’re also higher risk.

Because they’re constructed to deliver multiples of the daily performance of the benchmark they track, investing in leveraged ETFs can lead to massive losses. And for reasons related to their inner mechanics, they’re not good for investors who may be looking for returns when held for an extended time.

Key Points

• Leveraged ETFs allow magnified bets on an underlying index.

• These funds are popular for amplifying market exposure with a single trade.

• Potential for amplified losses exists due to compounding returns.

• The risk of holding leveraged ETFs longer than a day increases risk of potential losses for most investors. The SEC has also warned that these ETFs are designed to meet daily performance objectives, not necessarily long-term investing goals.

• Higher costs and closure risks are notable concerns.

How Do Leveraged ETFs Work?

Exchange-traded funds, or ETFs, are securities, and can embody a form of index investing. They’re typically baskets of stocks, bonds, or other assets that aim to mirror the moves of an index, though ETFs can have many different aims or goals. Leveraged ETFs use derivatives so that investors may potentially double (2x), triple (3x) or short (-1) the daily gains or losses of the index. Financial derivatives are contracts whose prices are reliant on an underlying asset.

In finance, leverage is the practice of using borrowed money to increase the potential return on an investment. Leveraged ETFs use derivatives to increase the potential return on an investment.

Let’s look at a hypothetical example. Say an investor buys a regular, non-leveraged ETF. Here’s how such an ETF would work. If it tracks the S&P 500 Index and the benchmark gauge rises 1% on a given day, the non-leveraged ETF would also climb about 1%.

If, however, the investor buys a triple leveraged ETF or 3x ETF, their return for that given trading day could be a 3% gain. The reverse scenario could also happen, though. If the S&P 500 fell 1% on a given day, the owner of the triple leveraged ETF can suffer a 3% loss.

Most of these ETFs are designed to try to outperform a benchmark or index’s daily performance, and holding them longer than a day could result in losses, as such. Accordingly, they’re not intended for long-term investing strategies.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

What Is “Decay” in Leveraged ETFs?

There are pros and cons to ETFs themselves. But leveraged ETFs can be particularly problematic for investors due to their design. They are constructed to deliver multiples of an underlying asset’s daily returns, not weekly, monthly or annual returns. Leveraged ETFs don’t deliver the exact magnitude of 2x or 3x if held for longer than a day.

So, if the S&P 500 were to rise 5% in a week, a triple leveraged S&P 500 would not climb 15% in that week. The same would be true for a double leveraged ETF. There’s no guarantee it would return 2x or 10% to its owner.

That’s because of how leveraged ETFs are constructed. In order to maintain their 2x or 3x exposure, leveraged ETFs use derivatives that need to be rebalanced at the end of each day. This process can erode the returns of the ETFs — a process known as “decay” in the market.

Types of Leveraged ETFs

Here are some of the types of leveraged ETFs on the market:

• Double Leveraged (2x) ETFs give investors double exposure to the daily return of an index of stocks, bonds, or commodities. So if an asset or market moves 1.5% in a single day, the fund aims to deliver a return of 3% that day.

• Triple Leveraged (3x) ETFs try to provide investors with 3x amplification. So if the underlying asset or index rises or falls 2% on a trading day, the ETF seeks to rise or fall 6%.

• Inverse (-1) ETFs are also considered to be leveraged ETFs. They move in the opposite direction of the underlying asset they’re designed to follow. So if an index moves -1%, the ETF would aim to climb 1%, and vice versa. Inverse ETFs are essentially a form of shorting a stock. Investors are able to short the underlying market by buying shares of an inverse ETF.

Pros of Leveraged ETFs

Some of the advantages of leveraged ETFs include the following:

Easy Leveraged Trades

Leveraged ETFs have made it easier for investors to make leveraged wagers on the market, which can be a day-trading strategy but not a practice that’s readily available to all investors, particularly retail investors at home who may be trading in smaller increments.

Useful For Quick Leveraged Market Wagers

Leveraged ETFs can be useful for a one-day wager that an investor wants to make on an underlying market, such as technology stocks, high-yield bonds, or emerging markets.

Allow For Easy Shorting

Inverse ETFs can give investors the ability to short, or bet against, an asset. Short sales aren’t easily available to non-professional investors, particularly retail investors at home. Shorting can be a way for investors to hedge or offset the risk in their holdings.

Cons of Leveraged ETFs

Some of the potential disadvantages of leveraged ETFs include the following:

Potential For Outsized Losses

With leveraged ETFs, investors could potentially see outsized losses due to how the products compound returns. For instance, if an index were to tumble 3% in a single day, a holder of leveraged ETFs would experience a plunge of 9% in the shares of their fund.

Increased Investment Risk

Inverse ETFs allow investors to short assets, but because of how there’s no limit to how high an asset can go, that means investors could see their holdings in the inverse ETF go to zero.

Derivative Risks

Leveraged ETFs use derivatives to achieve their amplified returns. Therefore, investors should be aware of the counterparty risk — or the risk from the other parties involved in the derivatives.

Higher Costs

Leveraged ETFs tend to be more expensive than traditional ETFs. Investors who want to understand how fund fees work should look at the ETF’s expense ratio. For instance, some popular leveraged ETFs can have an expense ratio of 0.95%. That compares with more traditional ETFs, which can have an expense ratio of around 0.20%.

Closure Risks

There’s a high risk of closure. Investors who don’t sell out of their leveraged ETF shares before the delisting date could be left with positions that are difficult or costly to liquidate.

💡 Quick Tip: How to manage potential risk factors in a self directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

Regulation of Leveraged ETFs

Regulators’ rules on leveraged ETFs have varied in recent years. And they continue to change.

Most recently, in early 2023, the Securities and Exchange Commission (SEC) issued a bulletin about leveraged ETFs, warning investors about the particular risks associated with them.

In October 2020, the SEC made a rule change that would make it easier to launch leveraged ETFs, while capping the amount of leverage at 200%. The move was a break away from prior announcements that sought to slow down the creation of new leveraged ETFs. The SEC had previously allowed existing leveraged ETFs to be continued to be traded, while putting restrictions on the approval of new such funds. The SEC issued an alert about leveraged funds to retail investors in 2009.

In May 2017, the SEC approved the first quadruple (4x) leveraged ETF, only to halt its decision soon after.

Some investment firms and ETF providers have pushed for the term “ETF” to not be applied to leveraged and inverse funds. They argue that the term “ETF” is used for a range of products that can lead to significantly different outcomes for investors.

The Takeaway

Leveraged ETFs use derivatives in their construction to try to deliver amplified returns for an investor. Relative to index funds, ETFs can allow entire markets to be more easily traded, similar to how shares of a stock are traded. Leveraged ETFs are not safe for all investors, particularly inexperienced ones.

These ETFs can cause massive losses because of how they may magnify returns and losses. In addition, market observers and regulators have said that leveraged ETFs may be better suited for professional or experienced investors to be used within a single trading session. The use of derivatives in such funds causes their performance to veer from the underlying market if the ETFs are bought and held. As always, it’s important to do your research about any ETF or investment before investing.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

FAQ

What are examples of different types of leveraged ETFs?

There are several types of leveraged ETFs, including double leveraged (2x) ETFs, which give investors double exposure to the daily return of an index of stocks, bonds, or commodities. There are also triple leveraged (3x) ETFs that try to provide investors with 3x amplification. Inverse (-1) ETFs are also considered to be leveraged ETFs. They move in the opposite direction of the underlying asset they’re designed to follow.

What are some drawbacks of leveraged ETFs?

Leveraged ETFs allow for the potential of outsized losses, introduce additional investment and derivative risks, and may have higher associated costs than traditional ETFs.

Are leveraged ETFs good for beginning investors?

Leveraged ETFs are not intended for beginning investors, as they’re more complex, and have additional risks. As such, traditional ETFs may be a better option, depending on the specifics of an investor’s situation.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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.

¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Dollar Cost Averaging (DCA): Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual circumstances.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

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.

SOIN-Q225-145

Jul

2025

How to Use the Risk-Reward Ratio in Investing

By Brian O'Connell | Growing Wealth, invest, Investing, Terminology | Comments Off

Table of Contents

What Is the Risk-Reward Ratio?
How to Calculate Risk-Reward Ratio
Pros and Cons of the Risk-Reward Ratio
Three Risk-and-Reward Investor Types
FAQ

The risk-reward ratio in trading is a way of assessing the potential gain from a trade versus the potential risk of loss. This ratio is also useful for comparing the relative risk and reward potentials of different trades.

For example, a risk-reward ratio of 1:3 means that an investor is prepared to risk losing $1 for the possible gain of $3. A risk-reward ratio of 1:1 means that the risk of loss is about the same as the potential gain.

The risk-reward ratio is a valuable analytical tool available to investors. Since no investment is genuinely risk-free, the risk-reward ratio helps calculate the potential outcomes of any investment transaction — good or bad.

Key Points

• The risk-reward ratio is a useful tool for investors, capturing potential gains against the risks involved in an investment transaction.

• Calculating the risk-reward ratio requires dividing net profits by the maximum risk of an investment, providing a straightforward evaluation of investment potential.

• Utilizing the risk-reward ratio aids in informed decision-making, helping investors assess whether potential rewards justify the risks taken, given their own risk tolerance.

• Investors demonstrate different levels of risk tolerance: conservative, moderate, and aggressive.

• Despite its utility, the risk-reward ratio has limitations. It is not predictive, and it cannot account for market volatility or external factors that may impact investment outcomes.

What Is the Risk-Reward Ratio?

As noted, the reward-to-risk ratio is a way to assess how much money an investor might gain versus how much they’re risking in order to generate that potential gain. Although the risk-reward ratio is chiefly an analytical tool, it can be particularly important for those with small portfolios, and it may be helpful to review tips on risk for new investors.

Typically, the more risk involved in an investment — when trading stocks, for example — the more ample the reward if the investment turns out to be a winner. Conversely, the less risk you take with an investment, the less reward will likely be earned on the investment.

For example, when buying bonds, investors take on relatively low risk for a relatively low return.

Compare that scenario to a stock market investor, who has no guarantees that the money they steer into a stock transaction will be intact in the future. It’s even possible the stock market investor will lose all of their investment principal if the stock turns sour and loses significant value.

Correspondingly, this investor is presumably looking at a greater reward for the risk taken when buying a stock. If the stock climbs in value, the investor is rewarded for the risk they took with the investment.

💡 Quick Tip: Are self-directed brokerage accounts cost efficient? They can be, because they offer the convenience of being able to buy stocks online without using a traditional full-service broker (and the typical broker fees).

How to Calculate Risk-Reward Ratio

The reward-to-risk ratio formula is a fairly straightforward calculation.

Risk-Reward Ratio Formula

To calculate risk-reward ratio, divide potential net profits (which represent the reward) by the cost of the investment’s maximum risk.

For instance, for a risk-reward ratio of 1:3, the investor risks $1 to hopefully gain $3 in profit. For a 1:4 risk-reward ratio, an investor is risking $1 to potentially make $4.

Example of a Risk-Reward Ratio Calculation

Let’s say an investor is weighing the purchase of a stock selling at $100 per share and the consensus analyst outlook has the stock price topping out at $115 per share with an expected downside bottom of $95 per share.

The investor makes the trade, hoping the stock will rise to $115, but hedges their investment by putting in a stop-loss order at $95, ensuring the investment will do no worse by automatically selling out at $95.

A stop loss order is a type of market order in which the order is placed with a stockbroker to buy or sell a specific stock once that security reaches a predetermined price level. The mechanism is specifically designed to place a limit on an investor’s stock position.

The investor can also lock in a profit by instructing the broker to automatically sell the stock, if it reaches its perceived apex of $115 per share.

In this scenario, the “risk” figure in the equation is $5 — the total amount of money that can be lost if the stock declines and is automatically sold out at $95 (i.e., $100 minus $95 = $5).

The “reward” figure is $15. That’s the amount of per-share money the investor will earn once the share price rises from buying the stock at $100 per share and selling it if and when the stock rises to $115 per share.

Thus, with an expected risk of 5 and an expected reward of 15, the actual risk reward ratio is 1:3 — the potential to lose $5 in order to gain $15.

Pros and Cons of the Risk-Reward Ratio

There are pros and cons to using the risk-reward ratio when investing.

As for the upsides, it’s a relatively simple formula and calculation that can help investors gauge whether their strategy makes sense.

On the other hand, it’s a relatively simple formula and calculation that may not be terribly accurate, and doesn’t necessarily deliver a lot of additional insight into a strategy. That’s something investors should take to heart, and why they may not want to only rely on risk-reward ratio to guide their overall strategy.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Three Risk-and-Reward Investor Types

Investors have their own comfort levels when assessing risk and reward ratios with their portfolios, with some proceeding cautiously, some taking a moderate dose of investment risk, and still others taking on more risk by investing aggressively on a regular basis.

The investment portfolios you build, either by yourself or with the help of a money management professional, reflect your personal risk tolerance. When doing so, it also helps to know stock market basics.

Typically, there are three different types of investor when it comes to risk tolerance:

• Conservative investors. These investors focus on low-risk, low-reward investments like cash, bonds, bond funds, and large-company stocks or stock mutual funds.

• Moderate investors. These investors look for a blend of risk and reward when constructing their investment portfolios, putting money into lower-risk investment vehicles like bonds, bond funds, and large-company stocks and funds with more broadly based categories like value and/or growth stocks and funds, international stocks, and funds.

They may also consider a small slice of alternative funds and alternative investments like real estate, commodities, and stock options and futures.

• Aggressive investors. This type of investor may completely bypass conservative investments and elect to build an investment portfolio with higher-risk stocks and funds (like foreign stocks or small company stocks), along with higher-risk assets like gold and oil (commodities), stock options and futures, and more.

How Investors May View Risk vs. Reward

Each of the above investors recognizes the realities of risk and the potential of reward and balances them in different ways. Even conservative investors will accept a little risk to gain some reward.

For example, a conservative investor may invest in a corporate bond or municipal bond, knowing that in return for a guaranteed profit (in the form of paid interest) and upside asset protection (the bond’s principal being repaid), they take on the small risk that the bond will default.

An aggressive investor understands that by placing money in a high-risk stock, they are potentially risking some or all of the investment if the stock goes under, or significantly underperforms. In return for that risk, the more aggressive investor may reap the financial rewards of a booming stock price and a resulting major return on his investment, but there are no guarantees.

The Takeaway

The risk-reward ratio is helpful in allowing investors to get an idea of how much they stand to gain versus how much they stand to lose in a given investment situation. Any risk-reward engagement depends on the quality of the research undertaken by the investor and/or a professional money management specialist.

That research should set the proper expected parameters of the risk (i.e., the money the investor can lose) and the reward (i.e., the expected portfolio gain the investment might make.) Once the risk and reward boundaries are set, the investor can weigh the potential outcomes of the investment scenario and make the decision to go forward (or not) with the investment.

Invest with as little as $5 with a SoFi Active Investing account.

FAQ

What is a good risk-reward ratio?

Generally speaking, a good risk-reward ratio is one that skews toward reward, rather than risk. But that range will depend on each investor’s tolerance for risk, as well as other means of assessing the potential outcome of a trade.

What is a poor risk-reward ratio?

A poor risk-reward ratio would be one that is higher or greater than 1, as that would indicate that an investment involves more risk relative to the potential reward. But again, it depends on the individual and the investment in question.

What are some things that the risk-reward ratio doesn’t take into account?

The risk-reward ratio doesn’t take several factors into account, and some of those include external and current events, market volatility, and liquidity in the markets.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q325-028

Jul

2025

How Much Will a $350,000 Mortgage Cost per Month?

By Emma Diehl | Home Ownership, mortgage | Comments Off

Considering taking out a $350K mortgage to purchase a home? It’s important to understand the upfront cost associated with a mortgage and to factor the monthly payments associated with it into your budget.

So how much will a $350K mortgage cost per month? This will vary based on factors such as interest rate, the terms of the loan, and more.

Table of Contents

Total Cost of a $350K Mortgage
Estimated Monthly Payments on a $350K Mortgage
How Much Interest Is Accrued on a $350K Mortgage?
$350K Mortgage Amortization Breakdown
What Is Required to Get a $350K Mortgage?
How Much House Can You Afford Quiz

Key Points

• The monthly cost of a $350,000 mortgage depends on factors like interest rate, loan term, and down payment.

• Using a mortgage calculator can help you estimate monthly payments and determine affordability.

• Factors like property taxes, homeowners insurance, and private mortgage insurance (PMI) can also affect the overall cost.

• It’s important to consider your budget and financial goals when determining the affordability of a mortgage.

• Working with a lender or mortgage professional can provide personalized guidance and help you understand the costs involved.

Total Cost of a $350K Mortgage

Monthly mortgage payments are a recurring expense homebuyers should include in their budget, but there are also some one-time and long-term costs they should keep in mind when determining how much home they can afford.

Upfront Costs

The largest upfront cost associated with a mortgage is likely the down payment on the property. The median down payment on a home is 18%, but if a buyer wants to avoid fees, including private mortgage insurance, they may have to put at least 20% down.

If a buyer puts 20% down and takes out a $350K mortgage, they’re likely putting down around $87,500.

On top of a down payment, buyers are expected to pay for some or all of the following before closing, including:

• Abstract and recording fees: $200 to $1,000 and $125, on average, respectively

• Application fees: up to $500

• Appraisal fees: $300 to $600

• Attorney fees: $150 to $$500/hour or with a project fee

• Home inspection fee: $185 to $511

• Title search and title insurance fees: $75 to $200 and 0.5%-1.0% of the mortgage, respectively

These may all be non-negotiable costs, but it’s also worth keeping in mind your wants for a new home, including furnishings and the cost for professional movers.

💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you from start to finish.

Long-Term Costs

Payments on a $350K mortgage are due every month, but there are also long-term costs on the horizon for homeowners. It’s important to factor in the costs of maintenance and repair to a property over time.

In general, it’s good to follow the 1% savings rule. That means a homeowner should aim to set aside 1% of the home’s purchase price annually and earmark it for repairs or maintenance.

Saving this upfront can keep homeowners from dipping into emergency funds for repairing the HVAC or fixing a leaky roof.

Recommended: First-Time Homebuyer Guide

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.

Estimated Monthly Payments on a $350K Mortgage

The cost of monthly payments on a $350K mortgage will come down to a few factors:

• Down payment: How much the buyer puts down initially

• Loan term: Including the length of the loan (15- vs. 30-year) and the structure of the payoff schedule (fixed-rate or adjustable-rate mortgage)

• APR: The annual percentage rate of the mortgage

Monthly Payment Breakdown by APR and Term

The APR a homebuyer gets when applying for a $350K mortgage will vary based on market rates as well as the borrower’s financial history.

APR and the mortgage term will impact the total mortgage paid each month. As you can see, the monthly payments for a 15-year loan can be much higher than the payments for a 30-year loan. Remember, though, that over its lifetime, the 30-year mortgage is typically more costly because interest costs are higher.

Interest rate	15-year term	30-year term
5%	$2,767	$1,878
5.5%	$2,860	$1,987
6%	$2,953	$2,098
6.5%	$3,049	$2,212
7%	$3,146	$2,329
7.5%	$3,245	$2,447
8%	$3,345	$2,568
8.5%	$3,447	$2,691
9%	$3,550	$2,816

Keep in mind these estimates do not include insurance or property tax estimates, which may be rolled into monthly payments.

Consider using a mortgage calculator to determine monthly mortgage estimates based on APR and loan terms.

Recommended: The Cost of Living by State

How Much Interest Is Accrued on a $350K Mortgage?

Though there are different types of loan, for them all, the total interest a homeowner will accrue on a $350K mortgage depends on the interest rate and loan length. An owner will pay more in interest the higher the rate and the longer the loan length.

On a $350K mortgage at 7.50% interest and a 30-year loan term, you would accrue around $531,010 in interest over the life of the loan. Borrow the same amount at the same rate for a 15-year loan term, and you would accrue $234,018 in interest.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

$350K Mortgage Amortization Breakdown

Another helpful way to contextualize monthly payments on a $350K mortgage is through an amortization schedule, which breaks down payments by interest and principal.

For example, if a buyer secures a $350K mortgage with a 6.50% APR over a 15-year loan, their monthly payment will be roughly $3,049. With a longer loan term, an owner has lower monthly payments. However, it takes longer for a homeowner to pay down the principal, and over the life of the loan, the borrower with a 30-year term will pay more interest. Here’s an amortization scenario for a $350K mortgage with a 6.50% APR and a 30-year loan term, showing how the payment breaks down between interest and principal each year:

Year	Beginning balance	Interest paid	Principal paid	Ending balance
1	$350,000.00	$22,634.82	$3,912.04	$346,087.96
2	$346,087.96	$22,372.82	$4,174.04	$341,913.93
3	$341,913.93	$22,093.28	$4,453.58	$337,460.35
4	$337,460.35	$21,795.01	$4,751.84	$332,708.50
5	$332,708.50	$21,476.77	$5,070.08	$327,638.42
6	$327,638.42	$21,137.22	$5,409.64	$322,228.79
7	$322,228.79	$20,774.93	$5,771.93	$316,456.86
8	$316,456.86	$20,388.37	$6,158.49	$310,298.37
9	$310,298.37	$19,975.93	$6,570.93	$303,727.44
10	$303,727.44	$19,535.86	$7,011.00	$296,716.44
11	$296,716.44	$19,066.32	$7,480.54	$289,235.90
12	$289,235.90	$18,565.33	$7,981.52	$281,254.38
13	$281,254.38	$18,030.80	$8,516.06	$272,738.32
14	$272,738.32	$17,460.46	$9,086.40	$263,651.92
15	$263,651.92	$16,851.93	$9,694.93	$253,956.99
16	$253,956.99	$16,202.64	$10,344.22	$243,612.78
17	$243,612.78	$15,509.87	$11,036.99	$232,575.79
18	$232,575.79	$14,770.70	$11,776.16	$220,799.63
19	$220,799.63	$13,982.03	$12,564.83	$208,234.81
20	$208,234.81	$13,140.54	$13,406.32	$194,828.49
21	$194,828.49	$12,242.69	$14,304.16	$180,524.33
22	$180,524.33	$11,284.72	$15,262.14	$165,262.19
23	$165,262.19	$10,262.58	$16,284.27	$148,977.91
24	$148,977.91	$9,172.00	$17,374.86	$131,603.05
25	$131,603.05	$8,008.37	$18,538.49	$113,064.57
26	$113,064.57	$6,766.81	$19,780.04	$93,284.52
27	$93,284.52	$5,442.11	$21,104.75	$72,179.77
28	$72,179.77	$4,028.68	$22,518.17	$49,661.60
29	$49,661.60	$2,520.60	$24,026.26	$25,635.34
30	$25,635.34	$911.52	$25,635.34	$0.00

These monthly payments do not take into account additional costs, like taxes and insurance, that may be bundled into the monthly payment.

What Is Required to Get a $350K Mortgage?

The mortgage process can be confusing, but here are a few requirements to expect during the process:

• Your credit score will impact your APR. Borrowers need a score of at least 500 for some mortgages, but most lenders require a score of 620 or more.

• Prequalification can be an important tool in the buying process. You will provide some basic information and the lender will do a soft credit inquiry. You’ll emerge with a sense of what rate the lender might offer.

• Once you know how much money you need to borrow, getting preapproved for a mortgage is an important step. You’ll fill out a mortgage application and provide documents, such as proof of income, tax returns, and bank account statements. If you’re preapproved, you’ll receive a letter granting conditional approval to borrow the amount within a certain window, typically 60 to 90 days. SoFi’s Home Loan Help Center offers more information on this process.

“If you have multiple debts, you want to make your minimum payments so you don’t hurt your credit score,” Kendall Meade, a Certified Financial Planner at SoFi said. “If you have cash left over after that, you should develop a strategy for which debts to pay off first,” she suggested.

How Much House Can You Afford Quiz

The Takeaway

A home is a serious purchase, and creating a budget beforehand is important. Understanding monthly payments on a $350K mortgage could help you determine if you can afford the home in the long run and help you budget for future expenses.

Factors like the loan length and APR will impact the monthly mortgage payment, and it’s worth considering different types of loans to determine which is the best fit for your finances.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What’s the monthly payment on a $350,000 mortgage?

The monthly payment on a $350K mortgage could range from $1,879 to $3,550 or more, depending on the loan’s interest rate and term. And that’s not including some fees that may be incorporated in the loan payment, such as insurance payments.

How much down payment do I need for a $350,000 mortgage?

To make a 20% down payment on a property with a $350,000 mortgage, you would need $87,500. Many buyers make lower down payments, however – some as low as 3%.

Can I afford a $350,000 mortgage on a $95,000 salary?

It would be difficult to cover the monthly payments for a $350,000 mortgage on a $95,000 salary — you would be better off borrowing less. Use an online mortgage calculator to zero in on the amount you can truly afford to comfortably borrow.

Photo credit: iStock/Joe Hendrickson

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

SOHL-Q325-006

Jul

2025

How Soon Can You Refinance a Mortgage After Closing?

By Jody McMaster | Home Ownership, mortgage | No Comments

Are you ruminating about a refi? How soon you can refinance your home depends on the kind of mortgage you have and whether you want cash out.
The type of mortgage you have plays a major role in determining how soon you can refinance a mortgage after closing. You can typically refinance a conventional loan as soon as you want to, but you’ll have to wait six months to apply for a cash-out refinance. The wait to refinance an FHA, VA, or USDA loan ranges from six to 12 months.

Before any mortgage refinance, homeowners will want to ask themselves: What will the monthly and lifetime savings be? What are the closing costs, and how long will it take to recover them? If I’m pulling cash out, is the refinance worth it?

Key Points

• The timeline for when you can refinance a mortgage depends on the loan type and refinance purpose.

• Conventional loans can be refinanced anytime, but refinancing with the current lender may require a six-month wait.

• Cash-out refinances typically need at least a six-month waiting period.

• If you’re wondering how soon you can refinance an FHA mortgage, FHA loans mandate a 210-day wait for a Streamline Refinance.

• VA loans require a 210-day interval between refinances, with some lenders needing up to a year.

How Soon You Can Refinance Your Home by Mortgage Type

How soon after you buy a house can you refinance? The rules differ by home loan type and whether you’re aiming for a rate-and-term refinance or a cash-out refinance.

A rate-and-term refi will change your current mortgage’s interest rate, repayment term, or both. Cash-out refinancing replaces your current mortgage with a larger home loan, allowing you to take advantage of the equity you’ve built up in your home through your monthly principal payments and appreciation.

Here are more details about how soon after you buy a house you can refinance with different kinds of loans.

How Soon Can You Refinance a Conventional Loan?

If you have a conventional loan, a mortgage that is not insured by the federal government, you may refinance right after a home purchase or a previous refinance — but likely with a different lender.

Many lenders have a six-month “seasoning” period before a borrower can refinance with them. So you’ll probably have to wait if you want to refi with your current lender.

How Soon Can You Cash-Out Refinance?

Here’s how cash-out refinancing works: You apply for a new mortgage that will pay off your existing mortgage and give you a lump sum. A lower interest rate may be available at the same time.

How soon you can refinance your home with a cash-out refinance depends on the kind of loan, but you normally have to wait at least six months before refinancing a conventional mortgage. An FHA cash-out refinance requires that you have owned the home for at least one year and that your mortgage is at least six months old with a record of on-time payments. Getting a cash-out refinance on a VA loan involves a waiting period of 210 days from the closing date on the original mortgage or six months of on-time payments, whichever comes later.

How Soon Can You Refinance an FHA Loan?

An FHA Streamline Refinance reduces the time and documentation associated with a refinance, so you can get a lower rate faster. (That said, how soon you can refinance an FHA mortgage is still not as soon as with a conventional loan.)

You will have to wait 210 days (and make at least six on-time payments) before using a Streamline Refinance to replace your current mortgage.

How Soon Can You Refinance a VA Loan?

When it comes to VA loans, the Department of Veterans Affairs offers an Interest Rate Reduction Refinance Loan (IRRRL), also known as a “streamline” refinance.

It also offers a cash-out refinance for up to a 100% loan-to-value ratio, although lenders may not permit borrowing up to 100% of the home’s value.

How fast you can refinance a home loan from the VA is the same in both cases. The VA requires you to wait 210 days between each refinance or have made six on-time monthly payments, whichever comes later. Some lenders that issue VA loans have their own waiting period of up to 12 months. If so, another lender might let you refinance earlier.

How Soon Can You Refinance a USDA Loan?

The Streamlined-Assist refinance program provides USDA direct and guaranteed home loan borrowers with low or no equity the opportunity to refinance for more affordable payment terms.

Borrowers of USDA loans typically need to have had the loan for at least a year before refinancing. But a refinance of a USDA loan to a conventional loan may happen sooner.

How Soon Can You Refinance a Jumbo Loan?

You may be wondering, “When can I refinance my house if I have a jumbo loan?” For a jumbo loan, even a rate change of 0.50% may result in significant savings and a shorter time to break even.

Here’s the good news about how fast you can refinance a home loan that’s a jumbo loan: You can refinance your jumbo mortgage at any time if you find a lender willing to do so.

Top Reasons People Refinance a Mortgage

If you have sufficient equity in your home, typically at least 20%, you may apply for a refinance of your mortgage. Lenders will also look at your credit score, debt-to-income ratio, and employment.

If you have less than 20% equity but good credit — a minimum FICO® score of 670 — you may be able to refinance, although you may not receive the best rate available or you may be required to pay for mortgage insurance.

Remember, too, that home equity increased for many homeowners in recent years as home values rose. That’s attractive if you want to tap your equity with a cash-out refinance.

Here are some of the main reasons borrowers look to refinance.

Lower Interest Rate

For many homeowners, the point of refinancing is to switch to a loan with a lower rate. Just be sure to calculate your break-even point – the moment when the closing costs will have been recouped: To do this, divide the closing costs by the amount you’ll save in payments every month. For example, if your closing costs will be $5,000 and you’ll save $100 a month, it will take 50 months to break even and begin reaping the benefits of the refi.

Two points to remember if you’re considering a refi for this reason. First, if you purchased your home around 2020, it may be hard to capture a lower interest rate than you currently have, as rates then were particularly low compared to historical mortgage rates. And second: Closing costs can often be rolled into the loan or exchanged for an increased interest rate with a no-closing-cost refinance.

Shorten Loan Term

Refinancing from a 30-year mortgage to a 15-year loan usually saves you a substantial amount of loan interest, as this mortgage calculator shows. Or you might want to refi to a 20-year term, if you’re years into your mortgage already, since resetting to a new 30-year term may not pay off.

Reduce PMI

If you put down less than 20% on a conventional mortgage, you’re probably paying primate mortgage insurance (PMI) on the loan. This typically costs between 0.5% and 1.0% of the total loan amount annually, though it can be higher. When your mortgage balance is down to 78% of the home’s original value (or the loan reaches the halfway point of the term schedule) the lender will automatically cancel the insurance, and you can request to have it removed when the balance is down to 80%, but until then, you’re on the hook for these monthly payments. One potential way to get rid of or reduce them is to refinance. For this to be worth considering, rates will have to be lower and you’ll need to find a lender willing to let you refinance with less than 20% equity. But especially if your home has gone up in value, this may be a possibility.

FHA loans require a similar insurance payment, called mortgage insurance premiums. After the upfront fee you’ll pay at closing, you pay monthly installments on a charge that’s annually between 0.15% and 0.75% of your loan amount for 11 years or the life of your loan, depending on when you took out the loan and the size of your down payment. The only way to get rid of those fees early may be to sell your home or refinance the mortgage to a conventional loan once you have 20% equity in the home — in other words, when your new loan balance would be at least 20% less than your current home value.

Switch to an ARM or Fixed-Rate Loan

Depending on the rate environment and how long you expect to keep the mortgage or home, refinancing a fixed-rate mortgage to an adjustable-rate mortgage (ARM) with a low introductory rate could be a strategic move. Similarly, if you’re uncomfortable with unpredictable payments and want to lock in a stable rate, switching from an ARM to a fixed-rate loan may make sense.

The Takeaway

If you’ve been asking yourself, “When can I refinance my house?” the answer is that it depends. If it’s a conventional loan, whenever you want to, although probably not with the same lender if that’s within six months of closing. Otherwise, if you must bide your time before refinancing or you’re waiting for rates to drop, that gives you a lull to decide whether a traditional refinance or cash-out refi might suit your needs.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

A new mortgage refinance could be a game changer for your finances.

FAQ

Do you need 20% equity to refinance?

Some lenders will allow you to refinance with less than 20% equity in your home, but you may not get the best available interest rate, or you may need to pay for private mortgage insurance. You’ll want to do the math to make sure you’re saving money with the refinance.

Does refinancing hurt your credit score?

There may be a temporary dip in your credit score after a refinance, but if refinancing helps you lower your monthly debts you may find that it is actually helpful to your credit score over the long term.

Should I refinance soon after buying a home?

How soon you can refinance your mortgage after closing is secondary to whether refinancing soon is a good idea. That will depend on your specific loan, how much you put down, whether rates have changed, and many other factors. You’ll also want to take into account both the advantages you hope to get from refinancing as well as the costs.

How do I know when to refinance my mortgage?

The time to think about refinancing your home is when the benefits of a refi outweigh potential costs (like closing costs). If you can get a significantly lower interest rate, switch to a more advantageous loan type, or access a sum you need from a cash-out refinance, for example, it may be worth looking into a refinance.

Can you refinance more than once in a year?

There’s no legal limit on how often you can refinance. However, lenders and loan types may require waiting periods which will limit how many times you can refinance in a year. And don’t forget that you’ll generally need to pay for closing costs each time, as well.

What documents are needed to refinance a mortgage?

Requirements will vary by lender, but typically you’ll need to have documents that establish your income (W-2s for the past two years and paystubs; 1099s and/or tax returns if you’re self-employed), records establishing your financial reserves (account statements, including investment accounts), proof of homeowners insurance, and the most recent monthly statement for any mortgages or home equity loans you have.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

SOHL-Q325-031

Jul

2025

Property Tax and Your Mortgage: Everything You Need to Know

Is Property Tax Included in Mortgage Payments?

By Alene Laney | Home Ownership, mortgage | Comments Off

As you explore your home loan options, you may wonder, “Is property tax included in mortgage payments?” Typically it is, often along with insurance. Though many mortgage calculators don’t include property tax in their estimates, it is likely that expense will be rolled into your mortgage payment.

Having your property tax included in your mortgage is convenient, but it’s not the only way to pay taxes. Read on to learn more about paying property taxes and your mortgage.

Table of Contents

What Are Property Taxes?
Why Do You Need to Pay Property Taxes
How Are Property Taxes Paid
How to Calculate Property Tax
Property Tax Rate
Does a Mortgage Include Property Tax?
What Happens to Property Tax If You Pay Off Your Mortgage?
What if You Can’t Afford Property Tax?
FAQ

Key Points

• Property taxes are typically included in mortgage payments, often alongside homeowners insurance.

• Many mortgage calculators do not account for property tax, although it is usually part of the mortgage payment.

• Property taxes fund local services such as schools, police, and road maintenance.

• Typically, a homebuyer pays money for property taxes with their monthly mortgage payments and the funds are put into an escrow account from which the mortgage servicer pays the bill when it’s due.

• If a mortgage is paid off, the homeowner must manage property tax payments directly.

What Are Property Taxes?

Property taxes are taxes paid on real property owned by an individual or entity. Property taxes are based on an assessed property value and are paid whether or not the property is used. When you become a new homeowner, you’ll pay property taxes for the first time.

The money you pay will be put to use toward the local school system, police and fire departments, sanitation, road work, and other services.

💡 Quick Tip: SoFi’s mortgage loan experience means a simple application — we even offer an on-time close guarantee. We’ve made $9.4+ billion in home loans, so we know what makes homebuyers happy.‡

Why Do You Need to Pay Property Taxes?

Local governments rely on property taxes as a revenue source. About 75% of local funding from tax collections come from property taxes.

As noted above, property taxes pay for government services like schools, roads, law enforcement, and emergency services. If you have a mortgage, a portion of your payment will generally go into your escrow account to be paid when your taxes come due.

How Are Property Taxes Paid?

Every month you’ll pay one-twelfth of your tax payment into an escrow account, if you have one, and most loans do.

When it’s time to pay taxes, a notice will be sent to your mortgage servicer. You’ll likely see one in the mail, too, but your mortgage servicer is the one responsible for paying your property taxes. (A review of your mortgage statements should reflect that you are paying these taxes.)

When are property taxes included in mortgages? Usually, but if you make a down payment of 20% or more on a conventional loan, your lender may waive the escrow requirement if you request it. USDA and FHA mortgages do not allow borrowers to close their escrow accounts. If you own your home outright, you’ll pay taxes on your own.

How to Calculate Property Tax

Property tax is calculated by your local taxing entity. The methods and rates for calculating property taxes vary widely around the country. In general, your property is assessed and you pay taxes as a percentage of that value. (Keep in mind that the assessed value may be different from the market value.)

To get the amount of taxes you will pay, multiply the assessed value of your home by the tax rate. Some states allow for an exemption to reduce the taxable value. Florida, for example, offers a homestead exemption of up to $50,000 on a primary residence.

If your home was assessed at $400,000, and the property tax rate is 0.62%, you would pay $2,480 in property taxes ($400,000 x 0.0062 = $2,480).

If you qualify for a $50,000 exemption, you would subtract that from the assessed value, then multiply the new amount by the property tax rate.

$400,000 – $50,000 = $350,000
$350,000 x 0.0062 = $2,170

With an exemption of $50,000, you would owe $2,170 in property taxes on a $400,000 house.

Property Tax Rate

The property tax rate is determined by the local taxing authority and is adjusted each year. In general, taxing entities aim to collect a similar amount as in the prior year. If property values go up, the effective tax rate might go down a little. You will receive a notice in the mail informing you of the new rate.

Factors That Can Affect Property Tax Rates

Local government bodies set property tax rates in their areas, depending in large part upon their funding needs. If you live in a city or county that invests heavily in its educational system, you might pay a higher rate than you would in an area that doesn’t prioritize excellent schools, for example. What’s more, some states have higher income taxes or other taxes that may be used to help fund local services, in which case the property taxes may be lower.

What you will pay is also affected by the assessed value of your property (which is not necessarily the same as your home’s market value).

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Does a Mortgage Include Property Tax?

Property taxes will be listed on your mortgage statements if you have an escrow account for homeowners insurance and property taxes. (When you’re shopping for a home loan, whether you’ll need an escrow account is one of many mortgage questions to ask a lender.)

The mortgage servicer deposits the portion of your mortgage payment meant for taxes in the escrow account. When your tax bill is due, the servicer will pay it.

Understanding Escrow Accounts

In general, an escrow account is an account in which a third party holds funds to fulfill a contract when certain conditions are met. In the context of your mortgage, what this means is that many lenders set up an escrow account out of which they pay your homeowners insurance and property tax bills. They do this to make sure these bills get paid and protect their investment. There are strict rules about how much they can collect (typically 1/12 the cost of your yearly insurance and tax bill, if you are up to date on your payments) and how the escrow account is administered.

💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

What Happens to Property Tax If You Pay Off Your Mortgage?

If you pay off your mortgage, your property tax stays the same. The difference is that you no longer have a mortgage servicer administering the escrow account for you. If you do have money left in your escrow account, it will be refunded to you once the mortgage is paid off.

Now that you no longer have an escrow account, you need to contact the taxing entity and have the tax bill sent directly to you to pay.

What if You Can’t Afford Property Tax?

If you’ve paid off your house or have closed your escrow account, you may feel the full force of ever-increasing property taxes. This is particularly true for older adults on a fixed income.

The trouble with not paying your property taxes is that your taxing entity can place a lien against your property or even start foreclosure proceedings. You do have several options to explore if you’re having trouble with your property taxes.

• Payment options. Your locality may be open to establishing a payment system for collecting your taxes. There are also relief programs you may be eligible for.

• Challenge your home’s assessed value. Since your taxes are based on your home’s assessed value, you can challenge it to potentially reduce your taxes. You generally need to do this soon after you receive your tax bill. You have to show that the assessed value of your home is inaccurate or unfair.

• Talk to a HUD housing counselor. A housing counselor can point you in the direction of programs that can reduce your tax bill or offer some other relief, such as a deferral or payment plan. They can also help you find mortgage relief programs, should you need them.

The Takeaway

Are property taxes included in a mortgage? With most home loans, yes. Typically, you pay one-twelfth of the amount owed every month into escrow, and your servicer is then responsible for paying the property tax bill for you. Property taxes are a significant part of your home-buying budget, so be sure to include them in your budget as you work towards securing a mortgage.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is included in my monthly mortgage payment?

What exactly is included in your monthly mortgage payment can vary, but typically it includes principal, interest, property taxes, homeowners insurance, and any mortgage insurance.

Is it better to pay your monthly tax with your mortgage?

It’s certainly more convenient to have your tax included in your mortgage payment. For the duration of your mortgage you won’t have to worry about your taxes being paid or coming up with a large payment when they come due. On the other hand, if you would rather manage the tax payment yourself, you may be able to cancel your escrow account and pay the taxes on your own.

How do I know if my property taxes are included in my mortgage?

You can check your monthly mortgage statement or closing documents if you’re a new homeowner. For most types of loans, taxes are included in your mortgage payment.

Do you pay property tax monthly?

The monthly mortgage payment you send usually includes a share of the annual property tax bill that your mortgage servicer will pay. If you pay your taxes directly, you’ll pay them annually or semiannually.

What happens if you miss a property tax payment?

If you miss a property tax payment to your tax authority, there will be a lien on your property, making it more difficult to sell. Ultimately, if the situation is not resolved, you could lose your home, though that may take as long as one to three years.

Photo credit: iStock/MStudioImages

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

^‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOHL-Q325-024

What Are Leveraged ETFs?

How Do Leveraged ETFs Work?

What Is “Decay” in Leveraged ETFs?

Types of Leveraged ETFs

Pros of Leveraged ETFs

Easy Leveraged Trades

Useful For Quick Leveraged Market Wagers

Allow For Easy Shorting

Cons of Leveraged ETFs

Potential For Outsized Losses

Increased Investment Risk

Derivative Risks

Higher Costs

Closure Risks

Regulation of Leveraged ETFs

The Takeaway

FAQ

What are examples of different types of leveraged ETFs?

What are some drawbacks of leveraged ETFs?

Are leveraged ETFs good for beginning investors?

How to Use the Risk-Reward Ratio in Investing

What Is the Risk-Reward Ratio?

Get up to $1,000 in stock when you fund a new Active Invest account.*

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How to Calculate Risk-Reward Ratio

Risk-Reward Ratio Formula

Example of a Risk-Reward Ratio Calculation

Pros and Cons of the Risk-Reward Ratio

Three Risk-and-Reward Investor Types

How Investors May View Risk vs. Reward

The Takeaway

FAQ

What is a good risk-reward ratio?

What is a poor risk-reward ratio?

What are some things that the risk-reward ratio doesn’t take into account?

How Much Will a $350,000 Mortgage Cost per Month?

Total Cost of a $350K Mortgage

Upfront Costs

Long-Term Costs

First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.

Estimated Monthly Payments on a $350K Mortgage

Monthly Payment Breakdown by APR and Term

How Much Interest Is Accrued on a $350K Mortgage?

$350K Mortgage Amortization Breakdown

What Is Required to Get a $350K Mortgage?

How Much House Can You Afford Quiz

The Takeaway

FAQ

What’s the monthly payment on a $350,000 mortgage?

How much down payment do I need for a $350,000 mortgage?

Can I afford a $350,000 mortgage on a $95,000 salary?

How Soon Can You Refinance a Mortgage After Closing?

How Soon You Can Refinance Your Home by Mortgage Type

How Soon Can You Refinance a Conventional Loan?

How Soon Can You Cash-Out Refinance?

How Soon Can You Refinance an FHA Loan?

How Soon Can You Refinance a VA Loan?

How Soon Can You Refinance a USDA Loan?

How Soon Can You Refinance a Jumbo Loan?

Top Reasons People Refinance a Mortgage

Lower Interest Rate

Shorten Loan Term

Reduce PMI

Switch to an ARM or Fixed-Rate Loan

The Takeaway

FAQ

Do you need 20% equity to refinance?

Does refinancing hurt your credit score?

Should I refinance soon after buying a home?

How do I know when to refinance my mortgage?

Can you refinance more than once in a year?

What documents are needed to refinance a mortgage?

Is Property Tax Included in Mortgage Payments?

What Are Property Taxes?

Why Do You Need to Pay Property Taxes?

How Are Property Taxes Paid?

How to Calculate Property Tax

Property Tax Rate

Factors That Can Affect Property Tax Rates

First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

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