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Seeing your credit score fall by 70 points without warning can be alarming. But there are a number of reasons for a dip, including late or missed payments or changes in your credit mix.

Keep reading to learn about what causes a credit score to drop and what you can do to help boost your numbers.

Why Did Your Credit Score Drop 70 Points?

Some changes in your credit score over time are to be expected. The three-digit number reflects the most recent available credit information reported by lenders and collections agencies.

However, if your score has dropped by 70 points, there’s likely a good reason why. And it’s a smart idea to investigate what prompted the dip.

Reasons Your Credit Score Went Down

It’s not always easy to uncover why your credit score fell by 70 points, but there are some common scenarios that could be to blame.

•   Your credit utilization has increased. Your credit utilization ratio is the percentage of credit you’ve used, based on your total available credit. It makes up 30% of your FICO® Score, which most lenders rely on. If you’ve maxed out the credit limit on one or more credit cards, your credit utilization ratio will likely increase. And your credit score may take a hit as a result.

•   You’re late with a payment. How well you stay on top of payments accounts for 35% of your FICO Score, and a payment that’s more than 30 days late can put a noticeable dent in your score. If you have trouble keeping up with due dates, consider enlisting the help of a money tracker app.

•   Your account has been sent to collections. Typically, accounts that are more than 180 days past due are sent to collections. This will impact your credit score, but just how much depends on your history. For instance, if you have an otherwise clean credit record, you might see a steeper drop than someone who already has a poor credit score and a spotty payment history.

•   You’ve closed a credit card. There are a couple of reasons why canceling a credit card can hurt your credit score. First, you no longer have access to the card’s credit line amount, which could increase your credit utilization rate. And second, if you close a card you’ve had for a long time, the length of your credit history goes down. The good news is, there are ways to cancel a credit card without negatively impacting your credit score.

•   There’s an error on your credit report. Mistakes happen — and if one ends up on your credit report, it could negatively impact your score.

•   You’re a victim of identity theft. Whether someone opened up a line of credit in your name or racked up charges on your credit card, identity theft can wreak havoc on your credit score.

Examples of Credit Score Dropping

Sometimes, a simple action can cause your credit score to drop without you even realizing it.

Let’s say you have a new credit card that offers a temporary 0% APR for 12 months and a credit limit of $4,000. You’re moving into your first apartment on your own and need to buy new furniture and essential home goods. You spend $3,000 on the card, and plan on repaying the debt in installments over the promotional APR period.

Financially, this might be a smart strategy. After all, you might’ve put your other savings toward the first-month’s rent and security deposit. And paying $250 each month for the next year might be more manageable than repaying $3,000 at once.

However, the move also puts your credit utilization rate at 75%, which is substantially higher than the recommended 30% or below. It can also take some time before you’re able to pay down enough of the balance so the rate drops.

Another example is if you pay off a personal loan. Once you make your final payment, the account is considered closed on your credit report. As a result, your credit mix, which accounts for 10% of your credit score, may also change.

What Can You Do If Your Credit Score Dropped by 70 Points?

Your credit score isn’t a fixed figure. If yours has fallen, there are ways to help it bounce back.

A good first step is to regularly review your credit report and look for errors. You can check your credit report for free each week from the three main credit bureaus: TransUnion, Equifax, and Experian. Visit AnnualCreditReport.com to get started.

Paying your bills on time is another smart strategy. If you need help managing bill paying, consider setting up automatic payments so the money is automatically deducted from your bank account on time each month. Creating a budget, either on your own or with the help of a spending app, can also help ensure you have enough each month to cover your bills.

Recommended: How Long Does It Take to Build Credit?

Should You Be Worried About Your Credit Score Dropping?

While a 70-point drop in your credit score can sting, its impact depends largely on where your score stood before the fall. For example, if your FICO Score was 669, dropping 70 points would still keep you under a “fair” credit rating. However, if you have good to exceptional credit, a 70-point dip could cause your score rating to slip down a rung.

What Factors Impact Credit Scores?

If you want to course-correct a 70-point drop and build your credit, it helps to pay attention to all of the factors that make up your score:

•   Payment activity. Accounting for 35% of your score, this factor looks at your repayment habits across all debt types, such as credit cards, home loans, installment loans, and retail cards. Derogatory marks like bankruptcies and collections are also factored in here.

•   Debt owed. Thirty percent of your score looks at the balances you owe on your accounts, how many accounts have a balance, and your credit utilization.

•   Account age. How long you’ve had your oldest and newest accounts and the average combined age of all your accounts are considered in your score.

•   Credit diversity. A healthy credit mix shows you can be responsible for managing different types of credit. This factor accounts for 10% of your score.

•   New accounts. The details of new accounts under your credit file make up the last 10% of your credit score calculation. Here, credit scoring models evaluate hard credit inquiries and when you last opened a new account.

Recommended: What Affects Your Credit Score?

How to Build Credit

While you can’t build credit overnight, there are steps you can take to help boost your credit score. Here are a few to consider:

•   Pay your bills on time. As we mentioned, payment history can have a major impact on your credit score. Even if it’s just the minimum amount, be sure to send in your payments on time each month.

•   Ask to become an authorized user on someone else’s credit card account. This allows you to benefit from the primary cardholder’s good credit and, if the account was managed responsibly, could bolster your credit score.

•   Request a credit limit increase. You may lower your credit card utilization by increasing your available credit — and keeping your balance in check. Contact your creditor about an increase, and ask if it’s possible to avoid a hard inquiry. That could ding your credit score.

•   See if you can add rent and utility bills to your credit report. Rent-reporting services will report on-time rent payments to the credit bureaus. Similarly, Experian Boost will add on-time payments from other accounts to its credit reports.

Allow Some Time Before Checking Your Score

It can be tempting to see how a small tweak in your repayment and borrowing habits might have changed your credit score. However, checking in too soon might not provide enough time for the impact of the change to take effect.

Instead, let the changes you make take root over a few months before checking your score. And consider checking your credit before a major purchase or if you think you’ve been exposed to a high fraud risk, such as using your credit card or ATM card abroad.

At a minimum, check your score annually to see how much it’s changed.

How to Monitor Your Credit Score

You can pay to access your latest credit score directly from the credit scoring model that you’re interested in. However, many banks, card issuers, and lenders provide complimentary access to your credit score.

For example, Chase lets you see your VantageScore for free,, while Wells Fargo customers can access their FICO score at no additional cost. Log in to your account online to see if your lender or card issuer provides credit score monitoring through its portal, or contact them directly.

Credit score monitoring tools also keep you informed about changes to your score.

The Takeaway

Seeing your credit score drop 70 points can understandably put you on edge. But keep in mind there’s an underlying reason for the decrease, even if it’s not obvious. A change in your credit utilization, a shift in your credit mix, or a string of late payments can all take their toll on your score. Fortunately, over time you can take meaningful steps to recover from the 70-point drop, including checking your credit report and disputing any errors, paying bills on time, and managing how much available credit you use.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Why did my credit score randomly drop 70 points?

There are many reasons your score might unexpectedly drop 70 points, including an increased credit utilization ratio, late or missed payments, or a closed credit card or loan accoun.

Why did my credit score go down when nothing changed?

Credit scores can fluctuate even if it seems like you didn’t do anything out of the ordinary with your credit accounts. If you recently applied for a new loan or credit card, for example, a hard inquiry might temporarily knock your score down a few points.

Why is my credit score going down if I pay everything on time?

Paying your credit cards and loans on time positively impacts your credit score, so keep this habit going! However, if you’re making on-time minimum payments and not repaying each statement balance in full, your credit utilization might be increasing. To prevent the negative effect on your credit, keep your utilization under 30% — and ideally lower than 10%.

Photo credit: iStock/svetikd

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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 .


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.

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.

SORL-Q324-015

A drop of 50 points in your credit score can be alarming, especially if you haven’t changed your financial behavior. While it’s not always clear what causes a drop, several factors could cause a decrease, including your history of debt payments, mix of credit, and age of your accounts. It’s also possible that your scores dropped as a result of a credit reporting error or identity theft.

Getting to the bottom of why your credit score dropped 50 points can help you address the situation and take steps to improve your score.

Why Did Your Credit Score Drop 50 Points?

You checked your credit scores and noticed a big decline. Now you’re wondering, “Why did my credit score drop 50 points when nothing changed?”

Credit scores often fluctuate as the credit bureaus receive new data from creditors. A drop of 50 points is significant, though, and there’s a reason behind the change. Some common explanations include late payments on loans, an increase in your credit utilization, or the closure of an old credit card or other account.

Reasons Your Credit Score Went Down

If your credit score dropped seemingly out of nowhere, one or more of these reasons might explain why.

•   You were late on a loan or credit card payment: If you’re 30 or more days late on a payment, your creditor will likely report it to the credit bureaus. And late payments can hurt your score. If you need help managing bills, consider using a tool like a money tracker app.

•   Your credit utilization went up: Your credit utilization is the amount of credit you’re using compared to what’s available to you. Using more than 30% of your available credit can cause your score to drop. Creating a budget with a spending app can help you keep tabs on where your money is going.

•   Your credit limit went down: Even if you’re not charging more to your credit cards, your credit utilization could increase if your credit limit goes down. For instance, a credit card company could decrease your credit limit from $10,000 to $5,000, which would increase your credit utilization rate even if your balance stayed the same.

•   You closed an old account: The age of your credit accounts influences 15% of your credit score. Closing an old account in good standing could cause your score to drop.

•   You paid off a loan in full: Paying off a loan is healthy for your finances, but it could ding your credit score, as it reduces your “credit mix.”

•   There’s a mistake on your credit report: If none of the above reasons applies to you, the drop in 50 points could be due to an error on your credit report.

•   Your identity was stolen: In the worst-case scenario, your credit score could be dropping because you were the victim of identity theft.

Should You Be Worried About Your Credit Score Dropping?

Seeing a big drop in your credit score is worrisome, and it’s important to get to the bottom of what happened. A low credit score can make it difficult to qualify for a loan or rent an apartment. Even if you can get a loan, you could get stuck with a higher interest rate and fees.

A sudden drop of 50 points or more also indicates a potential issue with your finances. Maybe you forgot about a balance on an old credit card that’s now racking up interest and fees. Or perhaps you’re late on loan payments and need to address the situation before the debt goes into collections.

As mentioned, a decline in your credit score could also suggest a mistake on your credit report or identity theft. Whatever the case may be, you’ll want to take action to fix the situation.

What Can You Do If Your Credit Score Dropped by 50 Points?

If your credit score dropped by 50 points, your first order of business is to find out why. Check your loan and credit card statements to see if you’ve missed any payments.

Review your credit card balances and limits to estimate your credit utilization. Reducing your credit utilization by paying down balances or requesting a credit limit increase could help improve your score.

Review a free copy of your credit report from AnnualCreditReport.com for derogatory marks or reporting errors. If you spot an error, submit an official dispute with the credit reporting company.

If you discover that someone stole your identity, place a fraud alert on your credit profile. You can freeze your credit as well to prevent scammers from opening new accounts in your name.

Finally, file an identity theft report with the Federal Trade Commission, and dispute any inquiries on your credit report that someone else made in your name.

Recommended: Why Did My Credit Score Drop After a Dispute?

How to Build Credit

There are several steps you can take to improve your credit score after a drop. Here’s how to build credit:

•   Make on-time payments on your loans: Your payment history makes up 35% of your score, so making on-time payments on all your loans and credit cards can help build your score back up over time.

•   Pay down credit card balances: If you’re carrying a high balance on your credit cards, pay it down as much as possible to decrease your credit utilization and improve your credit score.

•   Request a credit limit increase: Asking your creditors for an increase to your credit limit could also reduce your credit utilization without much extra effort on your part. It’s still important to pay down balances, though, to avoid hefty interest charges.

•   Avoid several hard inquiries at once: Try not to apply for lots of new credit at once, as all those hard credit checks could ding your score and be a red flag to lenders.

•   Considered a secured credit card or credit-builder loan: If your credit score is poor, consider opening a secured credit card or taking out a credit-builder loan to improve it. Both of these products are designed to help you build credit over time with on-time payments.

Allow Some Time Before Checking Your Score

Fixing a damaged credit score doesn’t happen overnight. You might see some improvement in about a month at the earliest. However, it can take several months to a year to see a significant change. While a credit score monitoring service can help you track your progress, it will take some time to see your credit-building efforts pay off.

Recommended: How Long Does It Take to Build Credit?

What Factors Impact Credit Scores?

Your credit score is based on the following factors:

•   Payment history (35%): How you pay off your loans is the most important factor in your credit score. On-time payments help build a score, while late payments drag it down.

•   Amounts owed (30%): The amount you owe also impacts your score. Try to keep your credit utilization below 30%.

•   Length of credit history (15%): Having a longer credit history generally has a positive impact on your credit score.

•   Credit mix (10%): Having a mix of credit, such as credit cards and installment loans, can help your credit — as long as you keep your credit utilization low and pay your bills on time.

•   New credit (10%): Opening several new accounts at once can harm your score, especially if you don’t have a well-established credit history.

Closing a Credit Card Account Can Hurt Your Score

Your length of credit history makes up 15% of your score, and the more established your history, the better. That’s why closing an old credit card account can harm your credit score, as it could reduce the age of your accounts.

If your old credit card is charging you an annual fee, consider asking the credit card company to downgrade you to a card without a fee. Switching to a different card with the same company shouldn’t impact your credit score.

How to Monitor Your Credit Score

There are several ways to check your credit score without paying, though buying a service is also an option. Here are some ways to keep tabs on your credit score:

•   Use a free credit monitoring service: You can monitor your credit score with a free service, such as SoFi’s Relay, Experian’s free credit monitoring, or CreditWise from Capital One.

•   Pay for a credit monitoring service: There are also paid credit monitoring services out there, which may come with additional identity theft tracking features.

•   Check with your credit card company: Some credit card companies also offer free credit scores when you sign into your account.

•   Order scores from myFICO.com: You can track your FICO® scores for free or with a paid plan directly from the source at myFICO.com.

Along with getting credit score updates, review your credit report periodically. Although your credit report won’t reveal your credit score, it will give you a bird’s-eye view of your accounts and payment history.

Pros and Cons of Tracking Your Credit Score

Credit monitoring can help you preserve your financial health, but it can also have some downsides. Here are some pros and cons of tracking your credit score.

Pros

•   Instant notifications for changes to your credit score and report

•   Updates on new inquiries and potential fraud

•   Features to protect you from identity theft, such as Social Security number tracking

•   Analysis of factors that are affecting your credit score

•   Potential assistance with disputing errors on your credit report

Cons

•   May charge monthly or annual fees

•   Could cause stress or frustration with too many real-time notifications

•   May not track your reports from all the major credit bureaus

•   Will not guarantee that you don’t become a victim of identity theft or fraud

•   May show you different types of scores (for instance, some services track your VantageScore, which could be different than the FICO Score that most lenders rely on)

The Takeaway

Seeing your credit score drop by 50 points overnight is stressful, but there are steps you can take to figure out what happened. Understanding what affects your credit score can help you root out what the issue is and take steps to fix the situation. If someone has opened accounts in your name, you’ll also want to act ASAP to place a fraud alert and freeze your credit. As you take steps to build your credit back up, consider using a credit-tracking service.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

FAQ

Why did my credit score drop 50 points out of nowhere?

There are several reasons why your credit score may have dropped 50 points out of nowhere. Some common culprits include a late loan payment, increased credit utilization, or closure of an old account. A mistake on your credit report or identity theft could also cause your credit score to drop.

Why has my credit score gone down when nothing has changed?

Even if you haven’t changed your financial behavior, your credit score could go down if your creditors decreased your credit limit. That would cause your credit utilization to go up. It’s also possible that you forgot about a loan payment or have been charging more than usual to your credit cards. Some consumers may also see their credit score go down due to identity theft or a reporting error on their credit report.

Why is my credit score going down if I pay everything on time?

While paying your loans on time makes up a big portion of your credit score, it’s not the only factor. Some other factors that can influence your score include your credit utilization, credit mix, and age of your accounts. Applying for new credit can also impact your score if the creditor runs a hard inquiry to check your credit.

Photo credit: iStock/SrdjanPav

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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 .

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.

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.


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.

SORL-Q324-008

A blanket mortgage is a special type of real estate financing that can be helpful when someone wants to buy multiple properties at once. Developers, investors, and house flippers may find blanket loans beneficial.

Note: SoFi does not offer blanket mortgages at this time.

Here’s more about how they work and their pros and cons.

What Is a Blanket Mortgage?

A blanket loan is a single mortgage loan that uses more than one piece of residential or commercial real estate as collateral.

The borrower can sell one of the properties while keeping the rest under the loan. Then the mortgagor can sell a second property, a third one, and so forth while still keeping the financing intact for the loan’s entire term.

You may be able to negotiate a blanket mortgage that lets you buy, sell, or substitute properties with minimal angst.

Recommended: Investment Property Guide

How Does a Blanket Mortgage Work?

A developer, for example, may find a large lot to subdivide into smaller ones, creating a new housing subdivision, under a blanket loan financing structure.

As general contractors or families buy the individual lot or lots they want to build on, those lots could be released from the developer’s blanket mortgage, with unsold lots remaining under the blanket loan.

As another example, someone who buys fixer-uppers, renovates them, and sells them for a profit may buy several properties of interest and finance them with a blanket mortgage. Each property that is refurbished and sold can be released from the blanket mortgage loan.

If a blanket mortgage comes with a release clause, the proceeds from a property the borrower sells can be used to buy another property.

Lenders can create their own terms, so it’s important to be clear about a loan’s parameters. They will want to know about each of the properties involved, their intended use, where they’re located, and their condition. If a housing development is being planned, the lender will want proof of the borrower’s experience.

Recommended: How to Buy a Multifamily Property With No Money Down

Pros and Cons of a Blanket Mortgage

Each of the different types of mortgages comes with pros and cons. That’s true of a blanket mortgage, too.

Recommended: Home Loan Help Center

Should You Consider a Blanket Mortgage?

Possibly. If you’re qualified and you want to buy multiple properties with one mortgage, selling them and releasing them from the loan as they are individually sold, then a blanket loan may make sense.

Blanket mortgages can be elusive. If a blanket loan seems like a good choice, you can inquire about one with banks that offer commercial loans or talk to a mortgage broker.

Any lender or broker you contact should be able to answer your mortgage questions.

The Takeaway

Blanket mortgages are a specialty type of loan used by developers, real estate investors, and house flippers when they want to put multiple properties under a single loan. Blanket loans have pros and cons. Qualifying for one isn’t for the faint of heart.

FAQ

What is an example of a blanket mortgage?

If someone wants to buy fixer-upper homes to rehab and resell, they may use a blanket loan to purchase several of them at once. As a home gets refurbished and sold, that property is released from the blanket loan while the other properties are still funded.

Is it hard to get a blanket mortgage?

Lenders will typically want a borrower to have sizable assets and excellent credit, and the down payment can range from 25% to 50%. So blanket loans are limited to more established borrowers with solid financials.

Who would most likely obtain a blanket mortgage?

Businesses may apply for a blanket loan to buy commercial property. Landlords, both commercial and residential, may also utilize this type of loan. So can construction companies and people who flip homes.

Is a blanket loan a good idea?

Under certain circumstances, a blanket loan can be a useful form of financing. When purchasing multiple properties with one loan, just one approval is needed. Closing costs may be lower. Interest rates and payments may be more attractive, too. That said, requirements to qualify for this type of loan can be significant, with down payments ranging from 25% to 50%.

Photo credit: iStock/oatawa

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.

Considering a condo? A condo could be a good choice as a starter home, a retirement nest, an investment property, or a residence for anyone who wants amenities but little maintenance.

You’ll want to weigh the upsides and potential downsides and take these steps before committing to a condo.

What Is a Condo?

When a person buys a condo, as opposed to buying into a co-op, they own the unit in the building or complex, but they don’t own anything outside those four walls. That includes the structure of the building, the roof, and the ground the building sits on.

The parts of the property not owned directly by the condo residents are managed by a homeowners association. The HOA maintains the property with fees collected from residents.

If you’re weighing a condo vs. townhouse, it helps to understand these key differences.

Recommended: Mortgage Prequalification vs Preapproval

What Are the Pros and Cons of Buying a Condo?

Ultimately, the choice to buy a house or condo will be based on the buyer’s preferences and budget.

Pros of buying a condo include:

•   Affordability. Generally, a condo will cost less than a detached single-family home so your monthly home loan payment may be more affordable.

•   Amenities. If it’s important to have access to a pool, gym, dog park, or parking garage, a condo might fit the bill.

•   Lower home insurance and property taxes. Because condo owners aren’t directly responsible for the exterior of the building, home insurance is less than for a single-family home.

•   Low maintenance. Beyond maintaining the immediate residence, condo owners don’t have to worry about mowing the lawn or replacing the roof on their own.

•   Lower utility bills. As condos are generally smaller than single-family homes, there are lower utility bills.

•   City settings. Condos are more likely to crop up in densely populated areas, making them an affordable entry point for owning property in an urban setting.

Is a particular condo within your means? Check out this home mortgage calculator.

There are plenty of upsides when someone buys a condo, but here are some downsides:

•   Privacy. Condos are shared residences with communal space. If buyers value privacy and their own outdoor space, a condo might not be a good fit.

•   Building rules. Condo boards dictate how a building is run, including if units can be rented, what colors can be used on exteriors, and whether pets are allowed.

•   HOA fees. Since maintaining the building is a collective responsibility, condo owners pay monthly or quarterly fees to the HOA. The fees are likely to rise every year. A sizable special assessment may be charged for major repairs.

•   Smaller space. Condos vary in size, but they’re unlikely to be as large as most single-family homes.

•   Slow appreciation. Condos tend to appreciate more slowly than single-family homes, but appreciation is also based on location and the market.

Things to Do Before Buying a Condo

Still not sure if a condo is the right fit? Before figuring out how to purchase a condo, consider these eight steps.

1. Consider Your Lifestyle

A condo could be a perfect fit for highly social people who prioritize proximity over privacy. Since condos tend to be smaller, the ideal condo owner should enjoy the communal offerings of the building, including everything from pools to pickleball.

As condos are often in cities, it could be the right fit if being close to the hustle and bustle is important to a buyer.

People who are downsizing often find a condo a good choice. Buyers who dread upkeep can own a home without mowing a lawn or maintaining a roof.

On the other hand, if a buyer values privacy and space, a condo might clash with their sensibilities. A condo won’t give them that opportunity if they want storage or a garden.

2. Work With an Agent Who Has Experience in Condos

Buying a condo with an agent specializing in single-family homes is like going to the dentist for an earache. Finding the right agent is about personality fit and experience. When interviewing agents, ask about what types of properties they buy and sell regularly. An agent with a lot of experience in condo sales will be more familiar with buildings in the area and their HOAs, amenities, and property management.

3. Consider the Pros and Cons

The perfect property doesn’t exist, so it’s worth weighing the pros and cons of condo living compared with a single-family home that’s not in an HOA community:

4. Decide What Type of Amenities You Want

If a condo feels like the right fit, it’s time to decide which amenities are musts and which are simply nice to have.

Amenities could include:

•   Pool

•   Dog park

•   Fitness center/spa

•   Tennis, pickleball, or basketball courts

•   Covered parking or parking garage

•   Business center/party rooms

•   Rooftop deck

•   Landscape management/gardens

•   Valet

•   Onsite programming or events

Once buyers understand what they need and what they don’t, they can more efficiently narrow down condos in the area based on amenities. Of course, the more amenities, the higher the maintenance fee will be.

5. Find an Approved Condo Community

Condo buyers who qualify for a Federal Housing Administration loan will need to find an FHA-approved condo community, one that meets requirements set by the U.S. Department of Housing and Urban Development. Buyers can search for these properties using HUD’s database.

Buyers wanting to use a VA loan can check a different database.

Most conventional mortgage lenders will require a “limited review” of most condominiums in the form of a questionnaire sent to the HOA. Among the criteria: Ten percent of HOA dues must be allocated to reserves, less than 15% of units must be in arrears with dues, and more than half the units must be owner-occupied.

Want to learn more about mortgages? Visit a help center for home loans.

6. Research the Property Management Company

Diving deep into property management is an important step of what to look for when buying a condo.

Before settling on a property, it’s important to research the property management company hired by the HOA to maintain the building. Consider double-checking on its licensing, reviews, and if there’s any ongoing litigation against the management company.

7. Review HOA Fees and Regulations

Hand in hand with researching the property management company is reviewing the HOA fees and regulations. HOA fees may be charged to condo owners monthly or quarterly, and range from a couple hundred a month to thousands. The fees could cover:

•   General upkeep and maintenance

•   Shared amenities

•   Some utilities

•   Security

•   Future upgrades

•   A master insurance policy to cover liability and repairs for common areas

If possible, request minutes from HOA meetings or inquire about recent hikes in fees. If the HOA doesn’t have much in reserves or is anticipating increases in fees, that can affect a buyer’s monthly housing budget.

In addition to researching fees, take a close look at the covenants, conditions, and restrictions, known as the CC&Rs. HOAs can impose regulations regarding:

•   Pets in the building

•   Renting out property

•   Use of common areas

•   Renovation or maintenance of owner units

Some HOAs have stricter regulations than others. For example, investors may want to avoid buying a unit in a building where rentals, or short-term rentals such as Airbnbs, aren’t allowed.

8. Ask About Special Assessments

Special assessments are one-time payments required of condo owners when reserves won’t cover a major expense. The HOA may require a special assessment if an elevator breaks or the roof unexpectedly begins leaking.

It’s a good idea for any condo hunter to ask when the last special assessment was collected. If there’s a history of frequent payments, it may be a sign of HOA mismanagement. Ideally, the HOA should have money set aside in case of an emergency.

If possible, ask the listing agent for the HOA’s financial statements to reveal how much the building has in reserves. If it’s low, there’s a chance of a special assessment in the future.

Recommended: Tips to Qualify for a Mortgage

The Takeaway

Condo living offers amenities, city living, and affordability. But buying a condo requires research. Working with the right agent and doing due diligence on the condo complex, its HOA, and its management company can help direct your home search.

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.

FAQ

What should you avoid when buying a condo?

Red flags to look for when buying a condo include issues with the HOA and ongoing litigation with the property management company. Condo buyers would be smart to review the building’s financial records for reserve funds, lawsuits, and delinquencies.

Are condos hard to resell?

A condo that’s a good value for the current market and that is in a desirable area will likely not be hard to sell. In general, condos don’t appreciate as quickly as single-family homes, however.

Should you invest in condos?

Investing in condos will generally be less expensive than investing in single-family homes, but it’s worth examining the HOA bylaws to ensure that the condo can be rented out, and for how long at a time.

Photo credit: iStock/Sundry Photography

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.

There are a couple ways to pay off a 30-year mortgage in 15 years, including making extra payments toward the principal, making biweekly payments, and more. And paying off a home loan early can save a boatload of interest.

But before you become a mortgage-paying overachiever, there are a few things you need to know about how to pay a 30-year mortgage in 15 years and what to consider before you do. Let’s take a look.

Paying Off a 30-Year Mortgage Faster

When you start paying on a 30-year mortgage, most of your payment will go toward interest rather than the principal (the amount you borrowed). This makes paying down your mortgage and building equity a slow process.

Over time, the percentage of your payment that goes toward interest vs. principal will change. Toward the end of your 30-year loan, you will pay more toward the principal than interest. This is what’s known as mortgage amortization.

Instead of following the amortization schedule, paying more on your mortgage loan — in one way or another — will reduce the principal more quickly, which means you’ll pay less interest overall.

Should You Pay Off Your Mortgage Faster?

Paying off your mortgage faster may give you a sense of accomplishment and save you a lot of money in interest charges, but if it takes you further away from your financial goals, it may not be worth it to you. Consider what you value most before deciding to put extra money toward paying off your mortgage.

Recommended: Is it Smart to Pay Off a Mortgage Early?

Pros and Cons of Paying Off Your Mortgage Early

Paying off a 30-year mortgage in 15 years has benefits, but in some cases, it may not make sense to. Consider these pros and cons.

Factors to Consider Before Paying Off Your Mortgage Faster

While paying off your mortgage early — a few zealous borrowers aim to pay off a mortgage in five years — can save you tens of thousands of dollars in interest, the lost opportunities from not having money readily available for other things could be more valuable. Think about:

•   Have I been contributing enough to my retirement plans as an employee or funding retirement as a self-employed person?

•   Do I have three to six months of expenses, or more, if my personal situation calls for it, in an emergency fund?

•   Am I able to secure a lower rate or shorter term for a refinance to pay off my mortgage faster? Would a cash-out refinance make sense?

•   Do I have higher-interest debt like credit card debt or student loans I should tackle first?

•   Have I set up a college fund (if kids are in the picture)?

•   Does my mortgage carry a prepayment penalty? (This is unlikely for loans originated after January 2014)

How to Pay Off a 30-Year Mortgage Faster

There are at least three methods to pay off a 30-year mortgage in 15 years if that’s your goal.

Make Extra Principal Payments

Paying more toward principal is the primary way to pay off a 30-year mortgage early.

Here’s an example of how interest adds up: Assuming you buy a $350,000 house and put 10% down on a 30-year mortgage at 5.5%, this mortgage calculator shows that total interest will be $328,870. Even by the 120th payment, you will have paid only $55,000 of the $315,000 principal and will have paid nearly $160,000 in interest.

Putting just $200 more per month toward principal, you’d save $80,837 in interest and pay off the mortgage six years and four months earlier.

To pay off this same mortgage in 15 years, however, you would need to put an extra $787 per month from the outset of the mortgage. That’s a substantial additional expense for many homeowners. You would, however, save more than $180,000 in interest over the life of the loan.

Switch to Biweekly Payments

Biweekly payments are half-payments made every two weeks instead of a full payment once a month. Making biweekly payments instead of monthly payments results in one additional payment each year.

Using the example above, making one full, extra mortgage payment each year will reduce the amount of time it takes to pay off your 30-year mortgage, but only by five years.

Look Into Refinancing

Refinancing your loan into one with a lower interest rate and/or a shorter term (such as a 15-year mortgage) can help you pay off your mortgage faster. A shorter term usually comes with a lower interest rate, so you’re saving on interest while also paying your mortgage off sooner than 30 years.

Refinancing to a lower interest rate will reduce your monthly mortgage payment, so if you continue to make the higher payment, you’ll pay your mortgage off faster.

Recommended: Mortgage Questions for Your Lender

The Takeaway

There are a couple ways to pay off a 30-year mortgage in 15 years. Paying off your mortgage early will result in substantial interest savings, but the tradeoff for many borrowers is not having extra money to put toward retirement and other purposes.

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.

FAQ

Is it cheaper to pay off a 30-year mortgage in 15 years?

The amount of interest you’ll save by paying off your mortgage in 15 years instead of 30 is substantial.

Why shouldn’t you pay off your mortgage early?

Homeowners who haven’t fully funded their retirement accounts, who don’t have an emergency fund, or who have other debt with high interest rates may not want to pay off a mortgage early. Also, those who think they can earn a better return on their money with investments may not want to pay off their mortgage early. (They need to keep in mind that past performance is not necessarily indicative of future returns.)

How do you pay off a 30-year mortgage in half the time?

Paying more toward the principal early in the mortgage can help you cut the amount of time you spend paying on your mortgage in half. The good news is you don’t have to make double payments to cut the amount of time you pay on your mortgage in half. Because each payment will reduce the principal, you will pay less overall.

Are biweekly mortgage payments a good idea?

Biweekly mortgage payments, or half-payments made every two weeks, will add a full mortgage payment every year. Using this method can take a few years off your mortgage.

Photo credit: iStock/everydayplus

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.

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