When homebuyers take out a conventional mortgage but don’t have a 20% down payment, they will likely need to get private mortgage insurance. PMI is usually required when the down payment is less than 20% of the home’s value.
In some situations, a lender may arrange for PMI coverage. It then becomes known as lender-paid mortgage insurance. For some homebuyers, LPMI can work in their favor. But for others, having a lender secure private mortgage insurance can end up costing them.
Read on to learn more about LPMI and the pros and cons for homebuyers.
How Does Lender-Paid Mortgage Insurance Work?
Unless 20% or more of a home’s value is paid upon closing, homebuyers can typically expect to be required to purchase private mortgage insurance, or PMI.
While government-back loans tend to have their own insurance programs (for instance, most FHA loans require a mortgage insurance premium for 11 years or the life of the loan), most loans not provided by the government with a loan-to-value ratio higher than 80% require PMI to protect the lender in case of default.
• Along with monthly mortgage and insurance payments
• In one annual premium
• With one large payment and corresponding monthly payments
• By the mortgage lender in a LPMI policy
While it may seem that the last option, LPMI, eliminates a task on a homebuyer’s to-do list, there is some fine print to be aware of.
Having LPMI for a loan doesn’t mean the cost is absorbed by the lender. A homebuyer will still pay for the coverage in one of two ways:
• A one-time payment due at the beginning of a loan.
• A slightly higher interest rate — usually 0.25% — which increases the monthly mortgage payment. This is the more common arrangement of the two.
So while many homebuyers accept an LPMI arrangement in hopes of saving money, that isn’t automatically the case. Sometimes LPMI is more about convenience than savings.
In fact, unless they’re paying a one-time lump sum, homebuyers could end up spending more for LPMI over the life of their loan than if they had chosen a traditional PMI route. That’s a potential home-buying mistake you’ll want to avoid.
LPMI might be a good choice for a homebuyer planning to keep the mortgage for five to 10 years or stay in the home. It usually takes 11 years to build enough equity to cancel a borrower-paid PMI policy.
💡 Quick Tip: SoFi Home Loans are available with flexible term options and down payments as low as 3%.*
A Pro of LPMI
Before a homeowner writes off lender-paid mortgage insurance altogether, it’s best to look at a potential benefit the arrangement offers over traditional monthly mortgage insurance.
More Affordable Monthly Payment
With LPMI, the monthly payment could be more affordable because the cost is spread out over the entire loan term rather than bunched into the first several years.
Here’s an example. If Sarah buys a home with a 10% down payment and it takes her 10 years to get the loan-to-value ratio down to 78% (a lender automatically drops PMI payments at this percentage if the borrower is in good standing), those 10 years of payments could all include several hundred dollars in addition to her premium and interest payments.
While LPMI may not save Sarah money overall, she may have smaller monthly payments because the additional payments for coverage are stretched out equally over the entire life of her loan rather than the start.
In the right situation, LPMI can make sense. But there are potential downsides homebuyers should know about as well.
Rate Never Drops
While having mortgage insurance stretched out over the life of a loan can save some homebuyers money, it can cost others. The higher interest rate — as mentioned, a 0.25% rate increase is common — will never drop, even once the loan balance is less than 80% of a home’s purchase price.
LPMI can end up costing homebuyers more than if they had bought PMI on their own. Much depends on how long the borrower expects to hold the mortgage.
Refi Costs
Some homebuyers navigate toward LPMI because of the initial savings and hope they can refinance in the future.
While this may be a possibility, they must consider the sizable out-of-pocket costs that go along with refinancing, and that refi rates may be higher in the coming years.
No Itemizing
LPMI can’t be itemized if you deduct mortgage interest at tax time.
💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show proof of prequalification to the real estate agent. With SoFi’s online application, it can take just minutes to get prequalified.
PMI vs LPMI
There are several numbers to take into consideration when choosing between traditional PMI and LPMI, including:
• the down payment
• remaining mortgage
• interest rate (for LPMI, a 0.25% rate increase is common)
• average mortgage insurance rate (PMI is typically 0.5% to 1.5% of the loan amount per year)
• anticipated life of the mortgage loan
• monthly budget.
A borrower may want to not only consider the monthly payment but also the lifetime loan costs.
The difference between PMI and LPMI is different for every homeowner and situation. Taking the time to crunch the numbers is the only way to fully understand the pros and cons of each option.
LPMI Alternatives
LPMI isn’t always the clear winner when choosing between mortgage insurance options. There are alternatives to consider.
Put More Down
A down payment of at least 20% will eliminate the need for PMI entirely. There are several other benefits that go along with larger down payments as well, such as a better loan rate, making this a great option for those who can afford it.
Shop Around
One main disadvantage of LPMI is that the homeowner has little to no control over the price and provider. So when homeowners are responsible for their own PMI, shopping around for the best price becomes an option.
Piggyback Mortgage
A piggyback mortgage makes it possible to avoid PMI with a combination of loans.
It’s important to understand the pros and cons of a piggyback mortgage before deciding on one as an alternative to LPMI to avoid potential financial pitfalls.
If mortgage insurance is necessary to secure a loan, understanding all the options is the first step any house hunter should take. This includes lender-paid mortgage insurance vs. PMI. While LPMI may serve as an overpriced convenience for some, it can be the financially smarter option for others.
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.
*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.
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.
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 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.
You’ve likely heard that the most important aspect of real estate is “location, location, location.” If that’s true, then the second most important consideration may be size or square footage.
At its most basic, square footage tells you the size of a property. It can also determine whether you’ll be able to squeeze a king-size bed plus your home office into the primary bedroom or your beloved baby grand piano in the family room.
Square footage also plays a major role in how a home that is for sale is priced. Getting square footage wrong when you are buying or selling can be a big headache and an expensive mistake. For instance, you don’t want to pay too much for a home that’s smaller than you thought it was.
Here, you’ll learn more about how square footage is correctly calculated.
Why Measure Square Footage of a House?
Here are some reasons why you may need to know the square footage of a house:
• When selling a house, square footage plays a big role in determining the asking price.
Real estate agents will look at comps in the neighborhood — houses of similar size and style — that have sold recently to help them gauge demand for this new listing and set a price.
Square footage isn’t the only factor in pricing a home. An agent will also look at things like condition and building materials when determining value.
• For those who are buying a home, square footage will play a big part in the price. It’s important that buyers verify that the listed square footage is correct so they know they are getting the space they’re paying for.
When you’re securing a mortgage loan, the lender will need to verify square footage as well, to make sure the house is worth the price the buyer and seller have settled on.
Lenders send an appraiser to conduct a real estate appraisal. This looks at the house to spot anything else that will adversely affect the value of the home, such as cracked walls, leaky foundations, and roofs that need repair.
If a lender’s appraiser finds discrepancies in square footage, there may be issues with a mortgage going through. Lenders may be unwilling to underwrite a loan for a house they think is overvalued for its size.
To save time, buyers should consider doing their due diligence and measure square footage before putting in an offer. Because the size of a house helps determine its value, it also influences property tax assessments.
• You may also need to know the square footage if you want to dispute a high tax assessment or apply for permits to add on to your house.
Homeowners who think their property is overvalued for tax purposes can dispute the assessment. Confirming square footage is a good place to start. If a home is actually smaller than the recorded size, that may put a homeowner in a favorable position to have their property taxes reduced.
There are a number of reasons the assessed size of your home could be off. Assessors may have used an estimate for their initial assessment, builders may have made a calculation error when they were filing for building permits, or a portion of the house in the initial plans may never have been finished.
If you think the square footage in the public record isn’t correct, contact your city’s assessment department and ask for a review. The city may ask you to file an appeal or a grievance.
Finally, if you’re planning on hiring someone to remodel your home or put on an addition, you may need to know your square footage in order to pull a building permit for the work you want to do.
💡 Quick Tip: Mortgage loans are available with flexible term options and down payments as low as 3%.*
How to Measure Square Footage
There are no hard and fast rules about what parts of your house should be included in a square footage measurement.
The American National Standards Institute provides the generally accepted guidelines about how to calculate square footage, but there are no laws governing the issue, and standards may vary by region or even by listing agent. These discrepancies are another good reason to double-check square footage yourself.
That said, the gross living area is what most people mean when they discuss square footage. Here’s an easy way to calculate it yourself.
• First, get prepared to brush off your drawing skills, and bust out a pen and paper — preferably graph paper. Each square of the graph paper can represent one square foot.
• Next, moving one room at a time, measure the walls with a tape measure or laser measure, rounding to the nearest half-linear foot. As you measure each wall, draw it out on your paper and write the measurement next to the line.
• For regular rectangular rooms, you will be able to calculate the square footage by multiplying the length of the room by its width.
• If the room you are measuring is an irregular shape, break it down into small rectangles, triangles, or other shapes and measure those separately. Add up the square footage of these small areas to get the room total.
• Add on to your floor plan room by room, and don’t forget to include hallways and closet spaces that may be between rooms. Stairways are also usually counted in gross living area.
• Do this for every floor of the house, and once you have a complete floor plan, tally the square footage of all the rooms in the house to get total square footage. Round the result to the nearest square foot.
• If you have a two-story house, you may be tempted to simply measure the square footage of one floor and multiply that by two. The danger with this approach is that not every floor will have the same footage.
For example, if you have any double-height rooms, you can’t count that square footage as part of the second floor.
Note: ANSI guidelines measure square footage from the exterior of the house. This method does not subtract interior walls from the square footage, so it may not give a completely accurate sense of a home’s living space.
Living space that is above the land line and has heating, lighting, and ventilation is included in the gross living area. Garage space does not make the cut. In general, neither do basements, even if they’re finished (although appraisers will include the space in their appraisal valuation).
A good rule of thumb is that anything that is built below grade, i.e. underground, does not count toward gross living area. Other buildings, including guesthouses and pool houses, that require you to go outside to them can’t be included in the gross living area either.
Finished attic space may be included in the gross living area as long as it has enough clearance — generally a ceiling of at least seven feet. Enclosed porches can be included if they are heated by the same unit that heats the rest of the house.
That said, it can be helpful to measure the square footage of these areas for your records, and they can be included separately in a sales listing
If you’re in the market for a new home, the first thing you can do to verify square footage is take a look at the city’s building department records.
When homes or condominiums are built, plans submitted for a building permit include square footage.
Many of these records are available online and provide a way to check whether the listed square footage is at least in the ballpark of city records.
Note that houses that have unpermitted additions will not have that extra space show up in official records.
In fact, add-ons built without going through the proper city channels can add uncertainty to the real estate process, and may not even be included in the gross living area advertised in a real estate listing. And appraisers may not include these additions in the value of the home.
If it’s hard for you to get information on the home you’re interested in from the city and you don’t have the opportunity to measure the home yourself, you can hire an appraiser who can do the measuring for you.
Real estate agents also have a lot of experience determining the square footage of houses. They can give a quick estimate of size or help you measure the square footage more carefully.
Would you prefer a smaller house in tip-top condition or a larger one that needs some TLC? Do you like the design and layout or would you be looking at major renovation work to have it be your dream home? Is the location right? Is it near schools, your work, businesses you like to go to, or parks? Is it in your price range?
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.
*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 Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
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.
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.
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.
Instead of carrying around wads of cash or stuffing your life savings under your floorboards, a savings account gives you a safe place to store your money. Opening a savings account is a great way to start building healthy savings habits to help you save toward your goals, build an emergency fund, or plan for retirement. Plus, many savings accounts are interest-bearing, so you can help your money grow.
Whether this is your first savings account or you’re switching from another financial institution, you’ll learn how to open a savings account and what you need to know before you open one.
Here are the steps you need to take when you open a savings account.
1. Compare Banks and Accounts
Fees, interest rates, minimum balance requirements, and other benefits like mobile banking can vary by the bank you choose. So, exploring your options before deciding where to open a savings account can help you determine the most suitable savings solution for your needs.
You’ll also want to explore the different saving account options available. For example, looking at high-interest savings accounts might be an attractive option for people wanting to grow their money.
2. Gather Personal Information and Documentation
Next, you’ll want to gather all of the necessary information. Doing this beforehand will streamline the application process. Here’s what you’ll need to open up a savings account:
• Government-Issued ID, likely with a photograph, such as a passport or driver’s license
• Date of birth
• Social Security number
• Proof of address, such as a utility bill or bank statement
• Phone number and email address
If you’re opening a joint account, ensure the co-account owner provides the same information and documentation. Remember, requirements vary by bank, so check with your financial institutions to verify the necessary information.
3. Check Eligibility
Credit unions and banks may have eligibility requirements for specific accounts. For example, account holders must be over 18 to open a savings account. Also, some savings accounts may have a minimum balance requirement to open the account. Understanding the requirement beforehand will ensure you’re prepared when completing your application.
4. Complete the Application
Here’s the next step in how to open a savings account: You can complete the application now that you have your personal information. Some brick–and-mortar banks and credit unions may require you to visit a bank branch to open an account, while others let you complete the application online.
If your bank requires a minimum balance deposit, ensure you have the cash in hand or the account to which you want to transfer the money.
Earn up to 4.00% APY with a high-yield savings account from SoFi.
No account or monthly fees. No minimum balance.
9x the national average savings account rate.
Up to $2M of additional FDIC insurance.
Sort savings into Vaults, auto save with Roundups.
• Traditional savings account. This type of account is a simple savings option. Usually, basic savings accounts don’t have the highest interest rates, and the bank or credit union may charge a monthly fee.
• High-yield savings accounts. This type of account usually offers a higher interest rate than traditional savings accounts. While you can find these accounts as brick-and-mortar banks, they are most common with online banks. If you choose to open a savings account with an online bank, you may have to pay fewer fees.
• Kids’ and student savings account. Just like the name suggests, these accounts are tailored to kids and students so they can start building healthy savings habits. Some of these accounts are interest-bearing. However, there are usually age cut-offs, and there may be parental involvement.
• Specialized savings accounts. This type of savings account helps you save for a specific goal, like a down payment on a home. However, it’s important to note that this type of account may come with restrictions. For example, if the account is designed to save for the cost of the winter holidays, you might only be able to pull money out once a year, like right before the holidays.
• Money market account. This type of account lets you earn interest and withdraw up to the bank or credit union’s limits. Usually, the interest rates on money market accounts are higher than those on a traditional savings account.
A savings account is a deposit account that lets you park your cash to save toward short-term goals and savings objectives. For example, you may use your savings account to save money for your dream vacation or to start building an emergency fund. Unlike a checking account, savings accounts are not meant to be used for everyday transactions.
In fact, in the past, Federal Reserve Board Regulation D limited the number of withdrawal transactions you could complete in a month. While restrictions were lifted in April 2020, banks still have the right to limit the number of withdrawals you can take in a month. Examples of withdrawal transactions include overdraft transfers to checking accounts, wire transfers, debit card withdrawals, check withdrawals, and phone or computer transfers.
How Savings Accounts Work
Savings accounts work like this:
• You open a savings account.
• You deposit money into the savings account.
• You earn interest on the balance in the savings account.
• Then you can continue to accumulate interest as you contribute to your balance.
If you’re using the savings account to save for a specific goal, you’ll likely withdraw funds once you have reached that objective. So, if you’re saving money for a new car, you will take the money out when it’s time to pay for your new ride.
The interest rate and annual percentage yield (APY) attached to a savings account depends on the bank and type of account. The higher the APY, the more interest you’ll earn and your account will grow faster.
For example, let’s say your savings account has a $2,000 balance, you contribute $100 monthly, and have 4.00% APY. At the end of the first year your account balance will be $3,303.73. That’s a little over $100 worth of interest.
Pros and Cons of Opening Up a Savings Account
While savings accounts are a great place to park your money to save for the future, they also have some downsides. Here are the pros and cons of opening a savings account.
Pros of Opening Up a Savings Account
Cons of Opening Up a Savings Account
Interest-bearing
Potential monthly services fees
Access to banking online and in-person
Withdrawal limits
Direct deposit available
Withdrawal limit fees
Insured by either the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) (up to $250,000 per depositor)
Can You Be Denied a Savings Account?
Banks or credit unions may deny you a savings account if you have a track record of misusing bank accounts. Some examples of misuse include:
• Leaving an account with an unpaid overdraft fee
• Applying for many accounts in a short amount of time
• Bouncing checks
• Misusing debit cards or ATMs.
You may also get denied if you were a victim of fraud.
Once you apply for a bank account, banks use the ChexSystems report, which is a consumer reporting agency for financial institutions, to spot any red flags that demonstrate you wouldn’t be a suitable account holder. If the bank uncovers harmful activities and denies opening an account, it must provide a reason for the denial.
Here’s what to do if you’re denied:
• Ask the bank to reconsider. It never hurts to ask the bank or credit union to reconsider their decision.
• Request the ChexSystems report. If the bank or credit union holds firm on their decision, request a copy of the ChexSystems report. All consumers are entitled to a complimentary copy of the report every 12 months. You can visit ChexSystems’ website or call 800-428-9623 to request a report.
• Review the report for discrepancies or errors. Closely review the ChexSystems report. Look for errors or discrepancies, such as an incorrect Social Security number. If you spot an error, you can contact the reporting agency. Make sure to provide all supporting documentation to validate your claim.
• Clean up your report. If you didn’t spot any errors, you’d want to start fixing any negative actions in the report. For example, if you have an unpaid overdraft fee, contact the bank and pay it off. Once you resolve any issues, they are removed from the report. On the other hand, if you have unresolved issues lurking, they will remain on your report.
• Explore second-chance accounts. Some banks offer second-chance bank accounts, which don’t review the ChexSystems report. However, since these accounts cater to those with less than ideal banking backgrounds, they may charge higher fees or have more restrictions. So, look into the account requirements before moving forward with one.
Opening a SoFi Savings Account
So, if you’re wondering should I open a savings account, the answer is likely “yes.” Opening a savings account is a great way to build strong saving habits and earn interest. Then, when you need the money later, you can access your cash effortlessly. Furthermore, opening a savings account is simple; you only need to compare accounts and banks, gather the correct information, and fill out the application.
If you’re looking for a new savings account, see what SoFi offers. When you open an online bank account with SoFi, you get benefits that help simplify money management. Plus, you can grow your money with a competitive APY and no account fees.
SoFi Checking and Savings: Helping you bank better and smarter.
FAQ
What do you need to open a savings account?
You must usually provide personal information like your Social Security number, date of birth, and home address. You will also need supporting documentation like a government-issued ID and a utility bill to prove your address. Additionally, depending on the bank account, you may need to deposit the minimum balance requirement to open the account.
How much money do you need to open a savings account?
Usually you’ll need between $25 and $100 to open a savings account at a bank or credit union. However, once the account is open, the institution may require you to maintain a minimum account balance. So, make sure to check the requirements.
Can you just open a savings account without a checking account?
Yes, you can open a savings account without a checking account at most institutions. However, having both can help you better manage your money since each account has different functionality.
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.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
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.
Attending an open house is a common step as you shop for your dream home. Of course, it lets you see a property (often after it’s been styled and staged to look its best), which can trigger “I love it!,” “hard pass,” and every possible reaction in between.
But an open house also gives you information beyond just the surface appeal of a home. It can give you clues to structural issues, the level of home maintenance it’s received, and how popular it is with potential buyers. That is, if you know what to look for as you walk through, rather than just admiring some great use of subway tile or a charming farmhouse sink.
Here, learn about what to expect at an open house and how to get the most out of attending one.
Benefits of Attending an Open House
At an open house, a property can be viewed by potential buyers. You can eyeball the house, the street, the neighbors’ places. You might even consider it a homebuyer’s guide to what it’s really like to live somewhere.
There are several benefits to attending an open house as you move through the steps of buying a house. These include:
• You can hone your house-hunting skills by taking detailed notes and comparing them to past and future listings.
• It’s a face-to-face opportunity to make a good impression on the listing agent and ask as many questions as necessary (without having to wait for a reply).
• Sometimes listing photos simply don’t do a house justice. The in-person lighting might be brighter, the hardwood floors shinier, or the primary bedroom larger than it seemed online.
• Similarly, strategically hidden flaws, red flags, and nuances that can only be detected in person are exposed so you (and other potential bidders) can make a truly informed decision.
Some open houses are literally open, meaning they’re posted on a real estate listing or a sign out front and members of the public are allowed to stop by.
In other cases, an open house is available only by appointment and arranged by the seller’s broker.
Typically, the sellers won’t be on the scene at an open house. It’s likely their listing agent will handle the event, guiding potential buyers around the dwelling and answering questions.
There could be other house hunters or visitors (nosy neighbors, perhaps?) attending the open house.
Most homebuyers will be provided with a booklet or pamphlet featuring details about the property, which could include the year it was built, heating and cooling information (oil vs. natural gas, etc.), the square footage, how many bedrooms and bathrooms there are, the size of the lot, types of appliances, and exterior features like decks, porches, pools, and sheds.
From there, house hunters will fill out a sign-in document that records their information for follow-up (unless this was already done in advance) and tour the property. This could occur with the listing agent in tow or by themselves, saving questions for the end.
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Open House Etiquette
Figuring out what to do at an open house isn’t always intuitive, but a crisp, respectful approach can go a long way:
• Bringing along food, drinks, pets, or unruly children could be considered disrespectful and distracting.
• Following the house rules can be crucial, so buyers might be prepared to remove shoes, steer clear of personal property, and ask permission before snapping photos.
• Being polite and personable to the hosting agent can put potential homebuyers in a more favorable light.
• Maintaining a poker face can be helpful during the open house process. If homebuyers spill the beans about how much they love the property, it could make negotiations tougher if and when they make an offer.
If you stay focused and zoom in on details, you can learn a lot during an open house. Perhaps there’s an initially inconspicuous flaw on the exterior of the house or there’s no closet in the fourth bedroom.
• Visible signs of neglect or damage (more on that soon).
• Proximity to the neighbors and whether there’s sufficient privacy. A poke around the premises can also reveal what those new neighbors are like. Do they have a half-built skate park? A forever-barking dog? A chicken coop? A forever-barking dog? A chicken coop?
• Closet and storage space and whether it’s enough to suit your needs.
• What other potential buyers are up to. If they’re in and out quickly or lingering in one area in particular, perhaps it’s an indication of an issue that might have otherwise gone unnoticed.
Potential Red Flags
Aside from standard considerations like the ones above, some red flags to look for at an open house could include:
• An abundance of sweet aromas from candles or air fresheners. This could signal hard-to-fix smells (perhaps caused by mildew or another issue) lurking under the surface.
• Unevenly spaced tiles or crooked electrical outlets, which could signify sloppy DIY renovations that might require costly repairs down the line.
• Issues with the foundation of the house like large gaps, doors that stick, windows with visible cracks, or uneven floors.
• Proximity to water. Checking a FEMA flood map can also help potential buyers know whether there’s the risk of flooding and if flood insurance will be required.
• Signs of lax property maintenance, including faded or chipped paint, leaky faucets, water damage, or overgrown grass and brush. These issues could signify that the owners have neglected other vital home maintenance tasks, which could mean a buyer needs extra funds to cover home repair costs.
• Signs of mold: small black or gray spots in bathroom closets or cabinets, on the ceiling, or around showers, tubs, and faucets.
• Exposed pipes with visible rust or leakage.
• Drafts around windows, doors, and electrical outlets that could be a sign of neglect and a hefty heating bill come winter.
• Stained or warped baseboards (especially in the basement) that could indicate a prior flood. A sump pump can also indicate that flood damage has occurred in the past.
• Cosmetic damage like stains from pets that are strategically hidden by area rugs.
• Condensation or peeling paint around windows, which could signify ventilation problems and moisture issues.
Knowing what to ask is an essential element of attending an open house; it can help you make the most of the experience.
Here are a few key questions homebuyers can ask the selling agent:
• What year was the house built?
• Why is it being sold?
• How long has it been on the market, and were there any asking price fluctuations?
• Are there any offers?
• Are there any problems the seller can disclose about the property? These are issues that could come up in an inspection but are made transparent between the seller and buyer, e.g., health and safety hazards, structural defects, mechanical issues, previous water damage, pests, or renovations.
• Is the property part of a homeowners association? Are there monthly fees associated with it?
• What is the local school system like? How about the neighborhood?
• Is the sewer system handled by the town, or does it run on a private septic tank?
• What fixtures and appliances are part of the purchase: washer/dryer, stove, refrigerator, lighting fixtures, and window treatments?
Next Stop: Buying That Dream Home
After every question has been asked, every surface has been scoured, and every disclosure has been made, it might be time to bid and hopefully snag your new home. Another important step will then be securing a home loan.
With a SoFi Mortgage, you’ll get a competitive rate, flexible terms, and low down-payment options. Plus, our online application process is quick and easy.
SoFi Mortgages: The smart way to secure a home loan.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
We won’t sugarcoat it: Music festivals can cost a lot. Weekend passes are often several hundred dollars and don’t include travel expenses and other extras. That doesn’t mean you should skip music festivals altogether. The events are a great way to sample many different artists, meet people, and enjoy time outdoors.
Keep reading to learn more about music festival costs and money-saving moves. You’ll find out:
• What are the average costs of a music festival?
• What are the main expenses to consider when going to a music festival?
• How can attending a music festival be more affordable?
What Is the Average Cost of a Popular Music Festival?
The average cost of music festival tickets — typically for a weekend-long event — ranges from $200 to $600. If travel is required, expenses can shoot up quite quickly: Spending $2000+ in a weekend is not unusual. Transportation and lodging are often premium-priced during a festival, since businesses know they can get top dollar.
Music festival costs also depend on where the festival is located and the type of experience the attendee is looking to have. Camping out will save you money, as will skipping the VIP experience for basic tickets bought at early-bird pricing.
Main Expenses to Consider When Going to a Music Festival
Because everyone’s music festival experience looks different, costs can vary. That said, these are the common music festival expenses worth planning for.
Tickets
Tickets for a multi-day event can cost hundreds of dollars. For instance, in 2023, general admission to Bonnaroo in Tennessee was $380 and up for four days. And passes for Coachella, in California, began at $540 for three days.
Costs will vary depending on when you buy tickets (they get more expensive closer to the actual performance date), and whether you decide to shell out for the VIP options.
Travel
Don’t forget to budget for travel for out-of-town events. Driving may cost less than flying, and some festivals offer camping passes that can save you money on hotels.
Even if you live nearby, you may need to pay for a rideshare or shuttle pass to get to the event. At the very least, remember to account for gas and parking.
Lodging
Music festivals attract large crowds and visitors from around the world. That means local hotel and home rental costs can become inflated. Book early to avoid overpaying once pickings are slim.
Meals
Because music festivals have their attendees held somewhat captive for the day or days of the event, the food and drinks for sale there can be quite expensive. Think about what you pay at a concert or in an airport to get a sense of what you might need to pay.
Clothing
Part of the fun for many festival-goers is planning what you’ll wear. Sure, some people are happy in their usual jeans and a T-shirt, but if you want to buy some new clothes or accessories before a music festival — be honest! — add those costs to your budget.
The price tag for a music festival experience can be steep, but it can also be an amazing and memorable experience. Here are some ways to bring the costs down so you can be part of the fun.
Another way saving money can help you that’s worth mentioning: Do a great job cost-cutting, and maybe you can attend an additional festival.
Project Your Expenses
From tickets to transportation to food, plan out what the day or weekend will entail cost-wise and make a budget. This can be done in a journal, on a piece of paper, or in an app. You can also learn how to make a budget in Excel. If you can plan for this outing months in advance, you can slowly save up for it so your overall budget doesn’t take a major hit.
Once you know the total amount needed, you can divide that by the number of months until it’s time to pay for your expenses. The figure you see is how much you should save monthly to afford the festival.
Take a Pass on VIP Tickets
Music festivals often have different tiers of tickets and offer some sort of VIP experience for a much higher price than the cost of general admission. Skip these overpriced tickets, and spend the money on food or transportation instead.
Buy Tickets Early
Some music festivals offer cheaper tickets for people who book early, so don’t sleep on those good deals. If possible, save up before tickets go on sale to take advantage of early booking deals.
Book Travel Far in Advance
It can be possible to save on travel and lodging by booking those things sooner rather than later as well. (This is a wise move when trying to save money for a trip of any kind.) Once tickets are booked, try to find some travel deals. When flights and hotels get down to the last few available options, prices tend to soar.
BYO Food and Water
If allowed, pack food and lots of water to avoid overspending on food and drinks at the event. Bonus: You’ll spend less time in line and more time enjoying the music. Some music festivals won’t allow attendees to bring in their own food, but most allow water from outside sources. Not overspending on water is a great way to save money and stay hydrated while out in the sun all day.
Volunteer
Some music festivals offer volunteers the chance to trade work for access to the festival. It’s always worth seeing whether such opportunities are available — they may very well be worth the trade-off.
Walk Whenever You Can
If staying nearby, try walking to the event. Parking is often expensive at music festivals, and ride-share prices surge as well due to high demand.
Camp Out
Because it can be hard for the many attendees of music festivals to find affordable lodging nearby, some music festivals are held at campgrounds. Camping is a great way to save a lot of money versus hotel costs, and it can add to the fun of the weekend.
The Takeaway
Music festival costs can vary greatly, but the major ones are undeniably expensive. Planning ahead for these events is one of the best ways to manage costs. By booking early, camping instead of staying at a hotel, and considering volunteer opportunities on-site, you may be able to listen to your fill of music and still have money in the bank.
Need to save up for a music festival or other short-term goal? SoFi has you covered. Open a bank account online with direct deposit, and your SoFi Checking and Savings won’t charge you any account fees, will offer you automatic savings features, and pay you a competitive APY.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.00% APY on SoFi Checking and Savings.
FAQ
Why are music festivals so expensive?
Attending music festivals can be expensive. The tickets for weekend-long events are pricey (the organizers have to cover the bands’ fees, the space, set-up, advertising, and more). Plus, if you travel to get there, you have transportation and lodging costs to contend with as well, plus food costs are part of the experience, too.
How much does it cost to hold the festival?
One reason that tickets for music festivals are so expensive is that it can cost a lot of money to host these events. It can cost millions upon millions of dollars to host a music festival — especially when top-tier musical talent is performing; their fees can be steep, in keeping with their stature.
Should I use my emergency fund for a festival?
Emergency funds are a type of savings fund specifically earmarked for unexpected expenses that interrupt daily life, such as a car repair, medical bill, or loss of one’s income. Since a music festival is a planned expense, you should not tap your emergency fund for this. Instead, it’s better to gradually save up for the cost of the festival in advance.
Should you layaway your festival tickets?
Whenever possible, it’s best not to make a purchase using a layaway arrangement, especially for an unnecessary expense like a music festival. While layaways don’t come with interest like credit cards, they do typically charge fees for spreading out the cost of the purchase. It’s best to create a budget for attending a music festival and to save up for festival tickets in advance.
SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
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Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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