Mortgage Interest Rates for Sept. 1, 2022: Rates Climb

Mortgage Interest Rates for Sept. 1, 2022: Rates Climb

Some important mortgage rates increased today. The average 15-year fixed and 30-year fixed mortgage rates both grew. For variable rates, the 5/1 adjustable-rate mortgage also floated higher.

Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat. Interest rates are dynamic and unpredictable -- at least on a daily or weekly basis -- and they respond to a wide variety of economic factors. Right now, they're particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you're looking to buy a home, trying to time the market may not play to your favor. If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it's always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 5.95%, which is an increase of 3 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one -- but usually a higher interest rate. You won't be able to pay off your house as quickly and you'll pay more interest over time, but a 30-year fixed mortgage is a good option if you're looking to minimize your monthly payment.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 5.19%, which is an increase of 11 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will usually be the better deal, if you're able to afford the monthly payments. These include typically being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 4.42%, a climb of 9 basis points compared to a week ago. For the first five years, you'll usually get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. But you could end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. If not, shifts in the market could significantly increase your interest rate.

Mortgage rate trends

Though mortgage rates were historically low at the beginning of 2022, they have been rising somewhat steadily since then. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Though the Fed does not directly set mortgage rates, the central bank's policy actions influence how much you pay to finance your home loan. If you're looking to buy a house in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders across the country:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	5.95%	5.92%	+0.03
15-year fixed rate	5.19%	5.08%	+0.11
30-year jumbo mortgage rate	5.94%	5.93%	+0.01
30-year mortgage refinance rate	5.92%	5.85%	+0.07

Updated on Sept. 1, 2022.

How to find personalized mortgage rates

When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. When researching home mortgage rates, take into account your goals and current financial situation. A range of factors -- including your down payment, credit score, loan-to-value ratio and debt-to-income ratio -- will all affect your mortgage interest rate. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. Apart from the mortgage rate, additional costs including closing costs, fees, discount points and taxes might also impact the cost of your home. Be sure to comparison shop with multiple lenders -- including credit unions and online lenders in addition to local and national banks -- in order to get a mortgage that's the right fit for you.

What's the best loan term?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are set for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (commonly five, seven or 10 years). After that, the rate adjusts annually based on the current interest rate in the market.

One thing to think about when deciding between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your house. Fixed-rate mortgages might be a better fit if you plan on staying in a home for quite some time. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you aren't planning to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. The best loan term is entirely dependent on your personal situation and goals, so be sure to think about what's important to you when choosing a mortgage.

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Compare 15-Year Mortgage Rates for August 2022

Compare 15-Year Mortgage Rates for August 2022

Buying a home is a major financial decision, and interest rate levels have a major impact on how much your mortgage will cost you over the years. When you become a homeowner, you'll want to secure the right type of mortgage at the lowest possible rate. If you can manage a higher monthly payment, a 15-year mortgage is an attractive option if you're looking to pay off your home loan sooner while saving on interest.

Current 15-year mortgage rate trends

Rates for the 15-year mortgage are currently in the mid-to-upper 4% range, having dropped slightly since the Federal Reserve's most recent interest rate hike to combat inflation. Although rates had been steadily increasing since the beginning of 2022, they dropped because the Fed's increase was in line with market expectations. Interest rates typically go up when inflation soars, and the pressure on rates and prices has been most apparent in the real estate industry.

Even though mortgage rates dipped slightly, home prices will remain high in 2022. The more expensive homes get, the bigger the mortgage you'll need to afford that home. Make sure you shop around for mortgage lenders that can make worthwhile rates available to you. You should always meet with multiple lenders to figure out which loan offers make the most sense for your personal financial situation. 

Here's what you need to know to lock in the best mortgage rate possible for a new home.

The pros of a 15-year fixed mortgage

• Shorter loan term: The obvious benefit of a 15-year fixed mortgage is that it takes half the length of time to pay off compared to a 30-year mortgage. You will have higher monthly payments, but you'll pay this home loan off twice as fast, resulting in less interest over time. 
• Lower interest rates: Usually, 15-year fixed interest rates are lower than 30-year rates because the lender does not have to predict rates for an additional 15 years into the future, like they do for a 30-year loan. 
• Build equity in your home much faster: A 15-year fixed mortgage allows you to build more equity in your home faster. This means you can enjoy some of the advantages of homeownership, such as refinancing your home loan when rates go down again, sooner. Typically, to get a good refi rate, lenders like to see at least 20% in home equity.

The cons of a 15-year fixed mortgage

• Higher monthly payments: One downside to a 15-year mortgage is that you're stuck with high monthly payments for the duration of the home loan. For example, say you make a 20% down payment on a $500,000 mortgage at a 4% interest rate with a 15-year fixed mortgage, your monthly payment will be about $3,350, compared to just $2,300 with a 30-year fixed mortgage.
• The maximum mortgage amount you can borrow is smaller: Since you're making high payments every month, lenders will offer you a smaller mortgage amount than they might with a 30-year loan. This reduces the risk to the lender that you will default on the loan.
• Less financial flexibility overall: If you put all of your eggs into a 15-year mortgage, it could limit your opportunity to spend your money in other ways. For example, you may have less available to contribute to investment or retirement accounts. You may also have less of a financial cushion to fall back on if you run into difficulties.

Something to consider 

If you like the idea of paying off your mortgage sooner, but are worried about committing to higher monthly payments, there's an alternative to consider. If you choose a 30-year mortgage over a 15-year mortgage, you can make additional payments throughout the year, which will help shorten your loan term. This allows you to effectively pay off your 30-year mortgage sooner, without locking yourself into the higher monthly payments that are attached to a 15-year mortgage.

Current mortgage and refinance rates

We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country. 

FAQs

What is a 15-year fixed mortgage?

A 15-year fixed mortgage is a loan to buy a house that you will pay off over 15 years with a set interest rate. Since it has a shorter loan term than a 30-year mortgage, the monthly payments are much higher than with a fixed 30-year loan.

Who can qualify for a 15-year mortgage?

You must be able to afford higher monthly payments to qualify for a 15-year loan and confirm your ability to pay. That means your salary, credit score and debt-to-income ratio -- that is, how much debt you carry each month divided by your monthly income before taxes -- play a bigger role in a 15-year mortgage than they do for a 30-year mortgage. So if you have high-interest debt you're trying to pay down, a lender will factor in those payments when considering approving you for the loan.

What is the difference between a 15-year mortgage and a 30-year mortgage?

The main difference between a 15-year mortgage and a 30-year mortgage is that a 15-year mortgage will ultimately cost you less by saving you up to tens of thousands of dollars over the lifetime of the loan. You also pay a lower interest rate for a shorter amount of time, thereby lessening the overall cost of your loan. But paying off the loan in half the time means that your monthly payments can be almost double what they are for a 30-year loan.

More mortgage tools and resources

You can use CNET's mortgage calculator to help determine how much you can afford for a house and work out how to manage financially. The tool takes into account your monthly income, expenses and debt payments. In addition to those factors, your mortgage rate will depend on your credit score and the zip code where you are looking to buy a house.

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Inflation, Interest Rates and Jobs: How Today's Economy Compares to Recessions of the Past

Inflation, Interest Rates and Jobs: How Today's Economy Compares to Recessions of the Past

This story is part of Recession Help Desk, CNET's coverage of how to make smart money moves in an uncertain economy.

What's happening

There's still debate about whether the US economy is officially headed into a recession, but the economic downturn is causing widespread stress.

Why it matters

Periods of financial volatility and market decline can drive people to panic and make costly mistakes with their money.

What's next

Examining what's happening now -- and comparing it with the past -- can help investors and consumers decide what to do next.

Facing the aftershocks of a rough economy in the first half of 2022, with sky-high inflation, rising mortgage rates, soaring gas prices and a bear market for stocks, leading indicators of a recession have moderated slightly in the past month. That could mean the economic downturn won't be as long or brutal as expected. 

Still, the majority of Americans are feeling the sting of rising prices and anxiety over jobs. The country has experienced two consecutive quarters of economic slowdown -- the barometer for measuring a recession -- even though the National Bureau of Economic Research hasn't made the "official" recession call.  

At a time like this, we should consider what happens in a recession, look at the data to determine whether we're in one and try to maintain some historical perspective. It's also worth pointing out that down periods are temporary and that, over time, both the stock market and the US economy bounce back. 

I don't mean to minimize the gravity and hardship of the times. But it can be useful to review how the economy has behaved in the past to avoid irrational or impulsive money moves. For this, we can largely blame recency bias, our inclination to view our latest experiences as the most valid. It's what led many to flee the stock market in 2008 when the S&P 500 crashed, thereby locking in losses and missing out on the subsequent bull market. 

"It's our human tendency to project the immediate past into the future indefinitely," said Daniel Crosby, chief behavioral officer at Orion Advisor Solutions and author of The Laws of Wealth. "It's a time-saving shortcut that works most of the time in most contexts but can be woefully misapplied in markets that tend to be cyclical," Crosby told me via email. 

Before you make a knee-jerk reaction to your portfolio, give up on a home purchase or lose it over job insecurity, consider these chart-based analyses from the last three decades. We hope this data-driven overview will offer a broader context and some impetus for making the most of your money today.

What do we know about inflation? 

Historical inflation rate by year

Macrotrends.net

Current conditions: The US is experiencing the highest rate of inflation in decades, driven by global supply chain disruptions, the injection of federal stimulus dollars and a surge in consumer spending. In real dollars, the 8.5% rise in consumer prices over the past year is adding about $400 more per month to household budgets. 

The context: Policymakers consider 2% per year to be a "normal" inflation target. The country's still experiencing over four times that figure. The 9.1% annual rate in July was the largest jump in inflation since 1980 when the inflation rate hit 13.5% following the prior decade's oil crisis and high government spending on defense, social services, health care, education and pensions. Back then, the Federal Reserve increased rates to stabilize prices and, by the mid-1980s, inflation fell to below 5%.

The upside: As overall inflation rates rise, the silver lining might be increased rates of return on personal savings. Bank accounts are starting to offer more attractive yields, while I bonds -- federally backed accounts that more or less track inflation -- are attracting savers, too. 

What's happening with mortgage rates? 

30-year fixed-rate mortgage averages in the US

Current conditions: As the Federal Reserve continues its rate-hike campaign to cool spending and try to tame inflation, the rate on a 30-year fixed mortgage has grown significantly. In June, the average rate jumped annually by nearly 3 percentage points to almost 6%. In real dollars, that means that after a 20% down payment on a new home (let's use the average sale price of $429,000), a buyer would roughly need an extra $7,300 a year to afford the mortgage. Since then, rates have cooled a bit, even dipping back down below 5%. What happens next with rates depends on where inflation goes from here.

The context: Three years ago, homebuyers faced similar borrowing costs and, at the time, rates were characterized as "historically low." And if we think borrowing money is expensive today, let's not forget the early 1980s when the Federal Reserve jacked up rates to never-before-seen levels due to hyperinflation. The average rate on a 30-year fixed-rate mortgage in 1981 topped 16%. 

The upside: For homebuyers, a potential benefit to rising rates is downward pressure on home prices, which could cause the housing market to cool slightly. As the cost to borrow continues to increase with mortgages becoming more expensive, homes could experience fewer offers and prices would slow in pace. In fact, nearly one in five sellers dropped their asking price during late April through late May, according to Redfin. 

On the flip side, less homebuyers mean more renters. Rent prices have skyrocketed, and housing activists are asking the White House to take action on what they call a "national emergency."

What about the stock market? 

Dow Jones Industrial Average stock market index for the past 30 years

Macrotrends.net

Current conditions: Year-to-date, the Dow Jones Industrial Average -- a composite of 30 of the most well-known US stocks such as Apple, Microsoft and Coca-Cola -- is about 8.5% below where it started in January. Relative to the broader market, technology stocks are down much more. The Nasdaq is off almost 19% since the start of the year. 

The benchmark S&P 500 stock index hit lows in June that marked a more than 20% drop from January, which brought us officially into a bear market. Since then, it's bounced back up a little, but some experts warn that a current bear market rally is at odds with expected earnings and we could see even lower stock prices in the near future.

The context: Stock price losses in 2022 are not nearly as swift and steep as what we saw in March 2020, when panic over the pandemic drove the DJIA down by 26% in roughly four trading days. The market reversed course the following month and began a bull run lasting more than two years, as the lockdown drove massive consumption of products and services tied to software, health care, food and natural gas. 

Prior to that, in 2008 and 2009, a deep and pervasive crisis in housing and financial services sank the Dow by nearly 55% from its 2007 high. But by fall 2009, it was off to one of its longest winning streaks in financial history. 

The upside: Given the cyclical nature of the stock market, now is not the time to jump ship.* "Times that are down, you at least want to hold and/or think about buying," said Adam Seessel, author of Where the Money Is. "Over the last 100 years, American stocks have been the surest way to grow wealthy slowly over time," he told me during a recent So Money podcast.

*One caveat: If you're closer to or living in retirement and your portfolio has taken a sizable hit, it may be worth talking to a professional and reviewing your selection of funds to ensure that you're not taking on too much risk. Target-date funds, a popular investment vehicle in many retirement accounts that auto-adjust for risk as you age, may be too risky for pre- or early retirees. 

What does unemployment tell us? 

US unemployment rates

Current conditions: The July jobs report shows the unemployment rate holding steady, slightly dropping to 3.5%. The Great Resignation of 2021, where millions of workers quit their jobs over burnout, as well as unsatisfactory wages and benefits, left employers scrambling to fill positions. However, that could be changing as economic challenges deepen: More job losses are likely on the horizon, and an increasing number of workers are concerned with job security. 

The context: The rebound in theunemployment rate is an economic hallmark of the past two years. But the ongoing interest rate hike may weigh on corporate profits, leading to more layoffs and hiring freezes. For context, during the Great Recession, in a two-year span from late 2007 to 2009, the unemployment rate rose sharply from about 5% to 10%. 

Today, the tech sector is one to watch. After benefiting from rapid growth led by consumer demand in the pandemic, companies like Google and Facebook may be in for a "correction." Layoffs.fyi, a website that tracks downsizing at tech startups, logged close to 37,000 layoffs in Q2, more than triple from the same period last year. 

The upside: If you're worried about losing your job because your employer may be more vulnerable in a recession, document your wins so that when review season arrives, you're ready to walk your manager through your top-performing moments. Offer strategies for how to weather a potential slowdown. All the while, review your reserves to see how far you can stretch savings in case you're out of work. Keep in mind that in the previous recession, it took an average of eight to nine months for unemployed Americans to secure new jobs.

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What's happening

Home prices overall are up by 37% since March 2020.

Why it matters

Surging home prices and higher interest rates make monthly mortgage payments less affordable.

What's next

Rising mortgage rates will make borrowing money more expensive, which will lessen competition to buy homes and eventually flatten prices.

Home prices continued to skyrocket in March as buyers tried to stay ahead of rising mortgage rates. 

Prices increased by 20.6% this March compared to last year, according to the S&P CoreLogic Case-Shiller Indices, the leading measures of US home prices. This was the highest year-over-year increase in March for home prices in more than 35 years of data. Seven in 10 homes sold for more than their asking price, according to CoreLogic. 

Out of the 20 cities tracked by the 20-city composite index, Tampa, Phoenix and Miami saw the highest year-over-year gains in March. Tampa saw the greatest increase, with an almost 35% increase in home prices year-over-year. All 20 cities experienced double-digit price growth for the year ending in March.

The strongest price growth was seen in the south and southeast, with both regions posting almost 30% gains in March. Seventeen of the 20 metro areas also saw acceleration in their annual gains since February. 

"Those of us who have been anticipating a deceleration in the growth rate of US home prices will have to wait at least a month longer," said Craig Lazzara, managing director at S&P DJI, in the release. "The strength of the Composite indices suggests very broad strength in the housing market, which we continue to observe."

Since the start of the pandemic in March 2020, home prices overall are up by 37%. The current surge in home prices is a result of tight competition between buyers in a low-inventory market as they attempt to lock in lower mortgage rates before rates jump even higher throughout the year, as experts predict they will.

If you're considering buying a new home -- or are actively in the market -- the news isn't all bad. Interest rates are at their highest point in more than 40 years, and one potential benefit of that may, eventually, be downward pressure on home prices. As it becomes increasingly expensive to borrow money, fewer people will seek to do so, and homes for sale may receive fewer offers leading to, eventually, lower prices. In fact, nearly one in five sellers lowered their asking price during a four-week period in May and April, according to Redfin.

"Mortgages are becoming more expensive as the Federal Reserve has begun to ratchet up interest rates, suggesting that the macroeconomic environment may not support extraordinary home price growth for much longer," said Lazzara. "Although one can safely predict that price gains will begin to decelerate, the timing of the deceleration is a more difficult call."

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What to expect from the housing market in 2022: Another sellers' market

What to expect from the housing market in 2022: Another sellers' market

This story is part of The Year Ahead, CNET's look at how the world will continue to evolve starting in 2022 and beyond.

The last 22 months have been some of the wildest in real estate history, as the COVID-19 pandemic accelerated the speed and intensity of recent trends. Home prices surged to record-breaking highs. Interest rates dropped to historic lows. And, amongst it all, the new era of online home buying and selling took further root. On top of that, just about every contemporary macro-economic trend -- from inflation to supply chain woes to labor shortages -- made an appearance in the 2021 housing market, increasing the advantages of existing homeowners, daunting prospective homebuyers and, ultimately, further widening wealth inequality in the US.

Though no one can predict what the next year will bring, we've asked some industry experts to help us read the tea leaves. Perhaps most significantly, home prices are expected to continue to rise, though at a slower rate than last year. As such, the 2022 housing market will present challenges for new buyers looking to get a foothold. For those looking to sell, new technologies like iBuying will continue to streamline and simplify real estate transactions. And existing homeowners will likely have another year to capitalize on rising property values through refinancing -- if they haven't already. 

Experts also predict an extension of two major 2021 trends: low housing inventory and supply chain issues, both of which will continue to hamstring construction and renovations. Meanwhile, there are two new spectres on the scene: inflation and rising interest rates. "For a homebuyer, 2022 is going to require patience and strategy," said Robert Dietz, chief economist the National Association of Home Builders.

"If you think you're going to wait on the sidelines for the market to cool off, that usually doesn't work," cautions Karan Kaul, senior research associate at the Urban Institute. "Timing" the market is a tricky enterprise, and prices seem unlikely to decrease meaningfully any time soon. 

With the caveat that political and virological developments can wreak havoc on this unpredictable corner of the economy, here are some of the major factors experts see influencing the housing market in 2022. 

Still smoking: Home prices continue to rise

If you already own a home, you're more than likely to be in a fortunate position. Skyrocketing home values have continued to increase equity for homeowners in many US regions throughout the pandemic, according to Dietz. 

Combined with historically low interest rates, a record-breaking number of homeowners were able to tap into their home equity in 2020. As property values surged during the first year of the pandemic, cash-out refinancing levels were at their highest since the 2007 financial crisis.

Of course, this creates a much more difficult situation for prospective homebuyers. And that's unlikely to change much in 2022. Although prices are expected to increase at a lower rate next year, they are expected to continue to rise. And that -- in addition to higher interest rates -- will create considerable headwinds for buyers throughout 2022. 

Clogged supply chains cause more delays

Supply chain disruptions caused by the COVID-19 pandemic continue to delay shipments which impedes new construction. That is only making the market that much more competitive along with the rising price of existing homes across the US. And the number of people looking to buy is also increasing, thanks in large part to millennials entering the housing market in growing numbers.

"We've seen so much interest in buying homes over the past year and a half, it's a bit difficult to project when that is going to lose some steam," according to Robert Heck, vice president of mortgage at Morty, a mortgage-tech start-up. But it's clear there are still plenty of buyers trying to enter the market despite prices continuing to creep up.

"Despite the fact that builder confidence is pretty strong right now, in the short run there is a lack of building materials, higher cost of building materials like lumber, appliances, windows and doors, and even garage doors," said Dietz. And further complicating the picture is a sustained labor shortage, particularly for skilled construction workers.

Delivery delays can extend build time by as much as four to eight weeks for a typical single family home. And if there aren't enough contractors on hand to use those materials once they show up, it's clear that demand will continue to outweigh supply for some time to come.

Macro headwinds: Interest rates and inflation 

Prospective homebuyers will want to keep their eyes on some wonky stuff in 2022. The Federal Reserve announced that it will wind down bond purchasing and look to raise interest rates next year. And higher interest rates will only make things more difficult for those looking to buy, as they raise both the average monthly payment and the total lifetime cost of a mortgage. 

 And don't forget about inflation! That will almost certainly increase both the cost of home building materials and skilled labor. In fact, the National Association of Realtors' anticipates that annual median home prices will increase by 5.7% in 2022.

And yet it's not all doom and gloom. Mortgage interest remains are still quite low. And there are pockets of affordability in many regions of the US, creating a key opportunity for those fortunate enough to be able to work remotely. 

"Mortgage rates are still at historical lows, and it's been harder than ever to predict where things are going thanks to the ongoing COVID-19 pandemic," said Heck.

Tech innovations reshape home buying

Digital lending has already impacted the way Americans shop for homes. The rapid rise of online real estate brokerages and mortgage marketplaces has made it easier than ever to browse properties and finance a home. That's unlikely to change: Almost 40% of millennials said they would feel comfortable buying a home online in a recent Zillow study. 

"Consumers like the ability to bid remotely, and to really take a look at properties and neighborhoods online," said Miriam Moore, division president of default services at ServiceLink, a mortgage transactional services provider. This will likely impact both sides of transactions, as sellers learn to adapt their home's curb appeal to someone looking at it on their phone and buyers (and agents and investors) look for ways to arbitrage the market.

An evolving challenge: Climate change

Perhaps the biggest unknown in real estate is how soon climate change will become the dominant factor. According to experts across the industry, every part of the homebuying process will eventually be affected by changing weather patterns, encroaching shorelines, shifting flood zones and an increasingly complicated insurance marketplace. Case in point: Moore, who is in the mortgage business, has seen an increase in inspections due to weather and fire over the last year.

New construction may prove to be both more energy efficient and more durable in the face of extreme weather. "People want to live in energy efficient homes, but they can only buy them if they exist," said Kaul, at The Urban Institute.

The stakes couldn't be higher. Buying a house remains one of the most reliable ways to build wealth and has long been a key milestone for Americans in establishing long-term financial security. And although interest rates remain as low as ever, given all of the other trends impacting the real estate market in 2022, the balance of power is likely to remain in the hands of sellers.

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How to save, invest and earn more for a better 2022

How to save, invest and earn more for a better 2022

This story is part of The Year Ahead, CNET's look at how the world will continue to evolve starting in 2022 and beyond.

Trying to forecast the future can be a fool's errand, but recent trends in the money world and expert financial predictions offer a window into what 2022 may have in store for us. From rising interest rates to inflation pressures to new IRS rules, here's an overview of what we can expect - and how to make the most of our money.

1.) In debt? Make pay down a priority

If you're saddled with high-interest debt, the new year may be a smart time to prioritize knocking down those balances, as the threat of rising interest rates looms.  

"The U.S. Federal Reserve lowered interest rates in response to the pandemic to help stimulate the economy, which made borrowing money far less expensive for consumers. But as the economy continues to improve and the inflation we're seeing now becomes more of a concern, it's likely the Fed will raise interest rates, which will make borrowing more expensive... which can affect everything from mortgages to credit card debt," says Stefanie O'Connell Rodriguez, host of Real Simple's Money Confidential podcast. 

"If you have credit card debt, this might be a good time to prioritize getting that balance down as much as possible so you're not just paying the minimums and subject to higher interest rates on your remaining balance as rates rise," she advises.

To ease the rate burden, you may want to consider transferring card balances to cards offering 0% introductory interest rates but only if you can pay down the balance before the promotional rate expires, which is often between 12 and 18 months.

Finally, the threat of rising rates may give some homeowners incentive to refinance. If your current mortgage has a variable interest rate -- which means it could periodically adjust with the market -- 2022 may be a wise time to consider switching to a fixed rate mortgage.  

2.) Focused on saving? Shop around  

In recent years we saw the personal saving rate in this country reach record highs - and for good reason. The uncertainties and life shifts brought upon us from the pandemic led those of us fortunate to still have income streams to save more. The stimulus checks also helped in some cases.

Now, if inflation continues to rear its head as it has in recent months, we may need our savings to pay for the increases in groceries, gas, homes and cars. Mapping out a budget for the new year to factor in some of these price hikes can prove essential, as could parking a little more money in the bank if you've yet to build up savings.  

"If you do not have an emergency fund, aim to save at least three to six months of necessary living expenses in a high-yield savings account," recommends Cindy Zuniga-Sanchez, founder of Zero-Based Budget Coaching LLC in New York. "The emergency fund serves as your financial cushion in the event of a job loss, decrease in income or other life change." 

Start with as little as you can but commit to saving consistently. An app like Digit is popular for helping users save small amounts incrementally. It uses machine learning to figure out the easiest amount you can save here and there and makes the transfers for you. Digit's website says the average user saves $2,200 a year through its app. Membership is $5 per month after a free 30-day trial.

And it's a good time to save, theoretically. While rising rates can spell bad news for those carrying debt, it's typically encouraging for those looking to earn more than the near zero percent rate or return they've been accustomed to in their bank accounts. And as more digital-only financial institutions with higher savings rates enter the marketplace vying for our deposits, more consumers may be incentivized to switch banks.

3.) Behind on retirement savings? Bank on new contribution limits  

If 2022 is the year you want to bump up your retirement savings, good news: In November the IRS announced that savers can set aside an extra $1,000 in their workplace retirement account. This includes the 401(k), 403(b), most 457 plans and Thrift Savings Plans. The new contribution limit - which is tax deductible - will be $20,500.

As a reminder to those who may have taken advantage of the CARES Act and taken a coronavirus-related withdrawal from their retirement plan in 2020 at no penalty, you can repay the full amount in 2022 and claim a refund on the taxes you paid. If you haven't done so already, remember that this may be the last eligible year to repay your retirement account to earn back the taxes you may have paid. 

4.) Eyeing a new house? Avoid knee-jerk reactions to rising rates

Prospective homeowners concerned about rising interest rates may be inclined to either sit back on the sidelines or speed up a purchase. But, as always when considering what's probably going to be the biggest financial purchase of your life, consider all of your expenses - and have some perspective. 

"Rates will tick up," says Kathy Braddock, Managing Director of William Raveis NYC. "But most younger buyers need to know that in the late 1970s and early 1980s, rates were close to 20 percent and people still bought homes."  

Braddock's advice to homebuyers is to first do the math to see which move - renting or buying - offers more financial and lifestyle benefits. If you do decide to buy in 2022, it's all the more important to have a strong credit score to bank on the best possible rate. Shop around for a quality loan, and to help ride out market fluctuations, lock your rate and have at least a three-year commitment to staying in the home before needing to sell, says Braddock. Our CNET mortgage calculator can also help you better determine how much house you can afford.

If it's any comfort, the National Realtors Association predicts more housing supply in the next year based on expectations of new construction and the expiration of the mortgage forbearance program prompting some owners to sell. This could help to reduce the rising pace of home prices in the previous year and lessen the sting of rising rates.

5.) Want to make more money? Engage your employer

With 2021's Great Resignation leaving some companies scrambling for new talent, the new year may be a fertile time for you to finally get that promotion or raise. That is, assuming you've been adding value and plan to stay with your company. 

While higher pay may be top of mind, don't forget that there are other financial benefits your employer may be able to address. Financial wellness programs that provide credit counseling and help workers budget and save are increasingly becoming a valuable employer benefit that prospective workers are seeking out. In fact, close to 70 percent of workers say it's their employer's responsibility to help them become financially healthy and secure, according to a 2021 survey by the Employee Benefit Research Institute.  

If you have student loan debt or are considering going back to school, remember that a lesser-known provision in the CARES Act temporarily allows employers to provide up to $5,250 in tax-exempt student loan repayment contributions or tuition assistance each year, through the end of 2025. "With four full years remaining, it's the perfect time for employees to be proactive by asking if their employers are aware of their ability to offer this financial wellness benefit and whether they are willing to do so," says Patricia Roberts, financial aid expert and author of Route 529.   

In summary, 2022 poses some unique financial challenges and opportunities led by the likelihood of inflation and rising interest rates. They're worth considering, as we aim to manage our money well and achieve our short and long-term goals. If you've yet to knock down high-interest credit card debt, start there, then focus on bulking up your emergency fund. Rising mortgage rates may fuel more anxiety in the housing market, but prospective homeowners should have a long-term view and consider all their expenses. Finally, if you're hoping to make more money or get some financial assistance, don't forget: talking to your employer may be a great place to start. 

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https://smartfrenu.costa.my.id/

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Are USDA Loans Available to Everyone? How to Know if You Qualify

Are USDA Loans Available to Everyone? How to Know if You Qualify

USDA home loans offer a path to homeownership for those with lower incomes and for people who are looking to buy a home in certain areas of the country. 

These mortgages are backed by the US Department of Agriculture as part of its Rural Development program, which promotes homeownership in smaller communities nationwide. If you don't have enough money saved for a down payment or if you've been denied a conventional loan, you may have a good chance of qualifying for a USDA loan. 

Don't rule out a USDA loan for yourself even if you aren't moving to an especially rural region, as many suburban areas qualify, too. This means even if you're moving just outside of a city to get more square footage and land, chances are pretty high that you're moving to a USDA-designated area. 

Here is everything you need to know about USDA loans, how to qualify for one and whether it's the right type of home loan for you.

What is a USDA loan? 

USDA loans are insured by the Department of Agriculture and have interest rates that are often lower than rates for a traditional mortgage. In contrast to conventional loans and FHA home loans, which both require a down payment, you can qualify for a USDA home loan with 0% down. USDA loans can also be easier to qualify for, even if you've been turned down for a traditional mortgage. 

So why have you never heard of them? There's one major downside: These loans are only available to lower-income buyers in designated USDA rural and suburban locations. And while most of the US landmass is technically considered rural, over 80% of the population live in the 3% of cities and urban areas that are excluded from this loan program.

Types of USDA loans

USDA-guaranteed loans are the most common type of USDA mortgage, but there are also two other types of USDA loans: direct and home-improvement home loans. The lowest-income buyers who may be unable to get a conventional loan might be eligible for a USDA direct loan, financed by the USDA with rates as low as 1%. If you're looking to improve a home you already own, you can also apply for a USDA home-improvement loan or grant.

USDA-guaranteed loans are obtained through a private lender -- like a conventional loan -- but are backed by the government. This offers a major benefit for private lenders because if you default on your loan, the USDA vouches to repay the lender. Just like a conventional loan, if you put down less than 20%, you'll need to pay for mortgage insurance. Because of that government backing, USDA mortgage insurance is cheaper than other mortgage types.

What are the USDA loan requirements?

There are three main factors the USDA considers when determining your eligibility. First, you must buy a home in a designated area. Next, your household income cannot exceed USDA income thresholds for your place of residence: 15% above the local median income. Finally, you'll need a credit score of at least 640, though contributing some cash toward a down payment can negate this requirement. If you meet the first two specifications but have a low credit score, you might still qualify for a USDA direct loan or FHA loan.

Otherwise, the requirements are straightforward. You must be a US citizen, green-card holder or noncitizen national. Your mortgage payment cannot exceed 29% of your monthly income, and your debt-to-income ratio must be no more than 41% of your monthly salary. You'll also need to use the home as your primary residence, have no history of breaking mortgages or commitments to other federal programs, and meet any other lender-specific requirements.

How to apply for a USDA loan

When applying for a USDA loan, you'll need to submit documentation to prove your identity and income levels, just as you would for any financing agreement. Plan on submitting a copy of your driver's license or passport, your Social Security card, your previous two years' tax returns and pay stubs, and recent bank statements.

You may also be asked to turn in additional documentation if you do not have a credit score, apply with nontraditional credit or have unpredictable income. You can review the complete list of requirements on the USDA website.

Advantages of USDA loans

No down payment requirements

If you can't afford a down payment, you can still qualify for a USDA mortgage.

Lower Interest Rates

You can lock in a lower interest rate with a USDA loan than a conventional loan, especially if you have a good to excellent credit score. This could save you tens of thousands of dollars in interest over the lifetime of the loan.

Less expensive mortgage insurance

Although USDA loans do require mortgage insurance called a guarantee fee, it's much more affordable than private mortgage insurance and FHA insurance. You'll pay an upfront fee at closing equal to 1% of your loan amount and 0.35% of the loan amount annually (as of 2021). 

More thorough appraisal

Lenders order an appraisal to determine a property's value before finalizing your loan. This ensures they are not lending you more money than the home is worth, protecting their investment. USDA appraisals have stricter guidelines than conventional loans, which could save you from pulling the trigger on a home requiring expensive repairs.

Designed for low-income buyers

If a conventional lender has turned you down because of your income, a USDA loan can still offer you a path to homeownership. 

USDA loan limitations

Strict income eligibility requirements

USDA loans are not for everyone. They are designated for low-income Americans who cannot qualify for a traditional mortgage. 

Limited to properties in rural areas

If you live in a city or outside a designated area, you won't be eligible for a USDA loan.

Longer buying process

Guaranteed USDA loans typically have longer application and closing processes since the loans are underwritten twice -- once by the private lender and then by the USDA. 

Pay more over time

Although USDA loans are designed to make homeownership more affordable, the mortgage insurance requirement could mean that you pay more over the lifetime of your home loan.

No option to cancel mortgage insurance

You can cancel PMI on conventional mortgages (and even sometimes on FHA loans) once you reach a certain equity level. The guaranteed fee on USDA mortgages might be cheaper, but it lasts for the lifetime of the loan.

Is a USDA loan right for you?

These mortgage programs are more affordable than traditional mortgages, but they're only possible if you do not exceed the income limits and are buying a home in a designated rural area. If you're just above the income threshold or want to live in a city, you'll need to explore other mortgage options.

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https://ratuanbajoc.kian.my.id/

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Are We in a Recession? Here's What You Should Know About Layoffs, Debt and Investing

Are We in a Recession? Here's What You Should Know About Layoffs, Debt and Investing

This story is part of Recession Help Desk, CNET's coverage of how to make smart money moves in an uncertain economy.

What's happening

Based on the latest numbers, the US is in a period of decline -- possibly even a recession.

Why it matters

Recessions are historically marked by a period of widespread layoffs, bankruptcies, higher borrowing costs and turbulence in the stock market.

What's next

Gather facts to protect your financial position. No one can predict the future, and it's important to move calmly and deliberately.

A recession is top of mind for many Americans. But how do we know if we're in one? Technically, the country is in a recession when gross domestic product, the value of all goods and services produced during a specific period, falls during two quarters back to back. Last week's results proved this was the case: GDP dropped by 1.6% in Q1 and 0.9% in Q2, according to the advanced estimate by the Bureau of Economic Analysis.

While all signs point to a recession, in the US, this is determined by the National Bureau of Economic Research -- and it has not called a recession yet. 

But whether we can call this period a recession or not feels like a game of semantics. 

Ultimately, everyday Americans are struggling as prices continue to soar, the cost of borrowing rises and layoffs increase across the country. Here are some recent questions I answered for my So Money podcast audience about how best to prepare, save, invest and make smart money moves in these uncertain times. 

What can we expect in a recession?

It's always helpful to go back and review recession outcomes so that we can manage our expectations. While every recession varies in terms of length, severity and consequences, we tend to see more layoffs and an uptick in unemployment during economic downturns. Accessing the market for credit may also become harder and banks could be slower to lend, because they're worried about default rates. 

Read more: The Economy Is Scary. Here's What History Tells Us 

As the Federal Reserve continues to raise rates to try to clamp down on inflation, we'll see an even greater increase in borrowing costs -- for mortgages, car loans and business loans, for example. So, even if you qualify for a loan or credit card, the interest rate will be higher than it was in the prior year, making it harder for households to borrow or pay off debt. We're already seeing this in the housing market, where the average rate on a 30-year fixed mortgage was recently approaching nearly 6%, the highest level since 2009. 

During recessions, as rates go up and inflation cools, prices on goods and services fall and our personal savings rates could increase, but that all depends on the labor market and wages. We may also see an uptick in entrepreneurship, as we saw in 2009 with the Great Recession, as the newly unemployed often seek ways to turn a small business idea into reality.

Will layoffs become more common?

With the unemployment rate sitting at 3.6%, the job market may appear to be, at least right now, the only stable part of the economy. But that's likely to be temporary, as companies battling with the current financial headwinds -- including inflation, rising interest rates and weakening consumer demand -- have already begun to announce layoffs. According to Layoffs.fyi, a website that tracks job losses at tech startups, there were close to 37,000 layoffs from startups in the second quarter of 2022. This week, Shopify announced reducing its workforce by about 10% or roughly 1,000 layoffs. CEO Tobi Lutke said the e-commerce company's pandemic-driven growth plans "didn't pay off."

In the Great Recession, unemployment peaked at 10%, and it took an average of eight to nine months for those out of work to secure a new job. So now could be the time to review your emergency fund if you think there's a shortfall. If you won't be able to cover a minimum of six to nine months' worth of expenses, which is hard for most people, see if you can accelerate savings by cutting back on spending or generating extra money. It's also a good time to make sure your resume is up to date and to establish contact with influential individuals in your professional and personal network. If you are laid off, make sure to apply for unemployment benefits right away and secure your health insurance. 

If you're self-employed and worried about a possible downturn in your industry or a loss of clients, explore new revenue streams. Aim to bulk up your cash reserves as well. Again, if previous recessions taught us anything, it's that having cash unlocks choices and leads to more control in a challenging time.

Will interest rates on my loans and debts go up?

As the Federal Reserve continues to raise interest rates to try to curb inflation, adjustable interest rates are set to increase -- ratcheting up the APRs of credit cards and loans, and making monthly payments more expensive. Ask your lenders and card issuers about low-interest credit options. See if you can refinance or consolidate debts to a single fixed-rate loan.

In past recessions, some financial institutions were hesitant to lend as often as they did in "normal" times. This can be troubling if your business relies on credit to expand, or if you need a mortgage to buy a house. It's time to pay close attention to your credit score, which is a huge factor in a bank's decision. The higher your score, the better your chances of qualifying and getting the best rates. 

Should I stop investing in my 401(k)?

With stocks in a downward spiral, many want to know how a recession could impact their long-term investments. Should you stop investing? The short answer is no. At least, not if you can help it. Avoid panicking and cashing out just because you can't stomach the volatility or watch the down arrows during a bear market. 

My advice is to avoid making knee-jerk reactions. This may be a good time to review your investments to be sure that you're well-diversified. If you suddenly experience a change in your appetite for risk for whatever reason, talk it through with a financial expert to determine if your portfolio needs adjusting. Some online robo-advisor platforms offer client services and can provide guidance. 

Historically, it pays to stick with the market. Investors who cashed out their 401(k)s in the Great Recession missed out on a rebound. Despite the recent downtick, the S&P 500 has risen nearly 150% since its lows of 2009, adjusted for inflation.

The one caveat is if you desperately need the money you have in the stock market to pay for an emergency expense like a medical bill, and there's no other way to afford it. In that case, you may want to look into 401(k) loan options. If you decide to borrow against your retirement account, commit to paying it back as soon as possible.

Should I wait to buy a home?

With mortgage rates on the rise and housing prices not cooling nearly fast enough, owning could be more expensive than renting right now. A report from the John Burns Real Estate Consulting firm looked at the cost to own versus renting across the US in April and found that owning costs $839 a month more than renting. That's nearly $200 greater than at any point since the year 2000.

Fixed rates on 30-year mortgages have practically doubled since last spring, which has helped slow down offers and cool housing prices -- but competition among buyers is still stiff due to historically low inventory. All-cash offers and bidding wars continue in plenty of markets. If you've been shopping for a home in recent months or the past year to no avail, you may feel exhausted and defeated.

As I stated in my newsletter: Don't be hard on yourself. You're not doing anything wrong if you have yet to offer the top bid. While it's true that a fixed-rate mortgage can offer you more predictability and budget stability, as long as inflation continues to outpace wages, there could be some bright sides to renting right now. For one, you're not buying a home in a bubble market that some economists are saying is soon to burst. If you have to unload the home in a year or two -- during a possible recession -- you may risk selling at a loss.

Secondly, renting allows you to hold onto the cash you would have spent on a down payment and closing costs, and will help you stay more liquid during a time of great uncertainty. This allows you to pivot more quickly and secure your finances in a downturn. Remember: Cash is power.

Read more: Should You Buy a Home in 2022 or Wait? 3 Factors to Consider

My final note is that it's important to remember that recessions are a normal part of the economic cycle. Long-term financial plans will always experience some declining periods. Since World War II, the US has had about a dozen recessions and they typically end after a year or sooner. By contrast (and to give you some better news), periods of expansion and growth are more frequent and longer lasting. 

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https://residencej.costa.my.id/

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What Are Closing Costs For a Mortgage and How Much Are They?

What Are Closing Costs For a Mortgage and How Much Are They?

When buying a new home, many people focus on how much of a down payment they'll need to secure a mortgage. But you also need to factor in the additional expenses that come with the transaction -- including closing costs. 

Closing costs refers to the assortment of fees you must pay to your mortgage lender when closing on your home. They're due when you finalize your mortgage and take over the property title. They usually range from 2% to 5% of the amount you're borrowing, and will add up to thousands of dollars. Most are paid by the buyer, but the seller may be on the hook for a few charges, too. 

Closing costs can be significant and should be included in your homebuying budget. Here's everything you need to know about closing costs, how much they will cost you and how to avoid any last-minute surprises when closing on your new home.

What are mortgage closing costs? 

Closing costs refer to the upfront fees charged to secure a loan and transfer the ownership of a property, according to the Consumer Financial Protection Bureau. Sometimes they're referred to as settlement costs.

They cover a lot of behind-the-scenes transaction costs that your realtor, bank, title company, appraisers and document-drafting lawyers all need to be paid. Some common closing costs include title insurance, government taxes, appraisal fees, tax service provider fees and prepaid expenses, according to a list published by the Consumer Financial Protection Bureau.

The buyer usually ends up paying most of these costs -- but standard arrangements vary among states and from deal to deal. Sometimes, a buyer can negotiate to have the seller pick up some of the closing costs in exchange for a higher overall sale price, though in the current competitive housing market most buyers are picking up their own closing costs. Buyers may also have a lender chip in on closing costs, but that could result in a higher loan amount or interest rate.

What do closing costs pay for? 

Your closing costs will depend on your particular transaction and can be impacted by interest rates, local insurance fees, tax rates, local appraisal fees and other factors. But here's a general breakdown of some of the common expenses covered by closing costs: 

Title insurance: This protects lenders from financial losses stemming from problems related to a property title, such as liens or ownership conflicts.    

Taxes: These could include the property tax on the home, local government fees -- such as one for recording the sale of the property -- and a tax for transferring the title from the seller to the buyer. 

Appraisal fees: These are charged by an appraiser for coming to the property and assessing the home's value to determine an appropriate loan amount. 

Tax service provider fees: These help pay for third parties to keep track of property tax payments and other tax monitoring duties. 

Prepaid expenses: These are items like homeowners insurance, property taxes and interest until the first payment is due. 

How much are closing costs? 

Most lenders and industry watchers will tell you that your closing costs, on average, will cost you somewhere between 2% and 5% of the amount borrowed. 

The national average closing costs for a single-family property were $6,905 in 2021, according to ClosingCorp, which analyzes closing cost data for the industry. 

For a more specific estimate, we used a closing cost calculator from banking service BBVA to show what these fees might look like for a $250,000 loan. After entering a 20% down payment, 30 years for the term and a 4% interest rate, the total amount of closing costs was calculated at $7,042.

What are closing documents? 

One of the key documents you'll get before the final signing is the closing disclosure, which outlines the details about your loan, including your closing costs. The lender should provide you with that document three business days before the scheduled loan closing.

It's important to review this document to make sure all the information is correct and that the terms of the loan are accurate and clear. This closing disclosure explainer can help you as you review the document. You want to make sure your closing costs match the most recent loan estimate. 

Other important closing documents include:

Promissory note: A legal document stating that you will repay your mortgage.

Mortgage, security instrument or deed of trust: Gives the lender the right to take your property by foreclosure if you do not pay your mortgage according to the terms you've accepted.

Initial escrow disclosure statement: Details the charges that you pay into an escrow each month.        

Right to cancel form: Outlines the rules for when and how you can cancel your loan, usually used as part of the refinancing process.

If you have questions about any of these, ask your lender, broker, or lawyer for help. 

Are closing costs tax deductible?

The only closing costs you can deduct are the points you pay to reduce your mortgage interest rate and real estate taxes you're required to pay upfront, according to the IRS. If you itemize, you can deduct these costs during the year you buy your home.

The IRS also has a list of closing costs you can add to the basis of your home. They include things like legal fees, recording fees and surveys. Tax rules are always changing, which is why we advise talking to a tax professional about what you can and can't deduct from the closing of your house. 

Tips and tricks for saving on closing costs 

Saving all your cash for the down payment is a home buying mistake to avoid. Closing costs will run you thousands of dollars on top of your down payment, so you need to be prepared to save for them too.

"In a seller's market, we have offered to reimburse borrowers for their appraisal cost, have a network of title companies that will reduce title fees and provide grant programs for qualifying borrowers to cover down payment and some closing costs," says Steve Twyman, branch manager with Mortgage Experts. "There are options for lender credits as well."

It never hurts to ask the seller to pay for closing costs. "This is a common occurrence so don't feel shy about asking for this. Remember the worst that can happen is they can say no," says Orlando Miner, principal at Miner Capital Funding, LLC.

But again, this will be harder to negotiate when it's a seller's market, as it is right now in many regions of the US.

Keep in mind, the timing for closing on your house is also important because closing at the end of the month will save you on prepaid interest. "You have to pay prepaid interest from the date you close to the end of that month," says Miner. "So the closer you close to the end of the month, the less money you pay."

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Is the US Job Market Still Strong? Answers to Your Questions About Employment

Is the US Job Market Still Strong? Answers to Your Questions About Employment

This story is part of Recession Help Desk, CNET's coverage of how to make smart money moves in an uncertain economy.

What's happening

The job market appears to be holding with a 3.5% unemployment rate, but more layoffs are happening.

Why it matters

If the Federal Reserve continues to raise interest rates to slow the economy, we may face a recession, prompting more businesses to downsize or shutter.

What it means for you

Knowing the factors driving the job market now can help you decide your next career and money moves.

Earlier this summer, during a live television interview, a news anchor asked me point-blank if we could have a recession with such a low unemployment rate. 

Being quick on my feet, I said, "That's a good question," and deflected by talking about the state of inflation. (I'm such a pro.)

Many key indicators suggest the economy is on the verge of a recession, including high inflation, a drop in consumer sentiment, a volatile stock market, rising interest rates and a tight housing market for both buyers and renters. The latest monthly jobs report is still at odds with those figures, with the unemployment rate dipping slightly to 3.5%, which is a pre-pandemic low. Nonetheless, layoffs are starting to become more widespread. And if you ask most Americans, they'll tell you a downturn is already here.

That question from the news anchor puzzled me for days. It speaks to how perplexing the US economy is at this moment, even for someone like me, who's been covering personal finance for over two decades. 

I went searching for answers. Here's what I learned about recession fears, interest rate hikes, layoffs and more employment-related questions. 

I'm hearing about more layoffs and hiring freezes. Is the unemployment rate still low?

News about layoffs is definitely trending. Job losses are primarily concentrated in the tech, mortgage and housing industries, which have slowed considerably due to a drop in consumer spending or rising interest rates. In recent weeks, major companies, including Wayfair, Apple and Walmart, have announced downsizing and cutbacks. 

And still, across the spectrum, the number of job openings is almost double the number of unemployed job seekers. In June, there were 10.7 million jobs available, with widespread job growth. Recorded layoffs have remained steady, between 1.3 million and 1.4 million each month since the beginning of 2022. 

That could change, of course, and there are signals that the job market is cooling a bit. Filings for unemployment benefits have been going up, recently reaching their highest level this year.

It may just take longer for the unemployment rate to catch up to other lagging data points we're seeing at the moment. "The labor market is one of the last indicators to show real stress," said Liz Young, head of investment strategy for SoFi. 

Many big employers earned record profits during the pandemic, providing them with a larger buffer than in previous business cycles to absorb inflation or a slowdown in spending, Young pointed out. Additionally, companies will first try other cost-saving measures like reducing spending on marketing and hiring freezes. "They're going to try to cut costs when they can before having to lay off the workforce," she said.

How do interest rate hikes weigh on the job market?

When the Federal Reserve raises interest rates, as it has several times since the start of the year, borrowing becomes more expensive for everyone, including businesses relying on credit financing to grow. When the cost to carry debt jumps, businesses may decide to reduce operating costs -- that is, cutting staff -- to afford the higher interest burden. 

In short, steeper interest rates can lead to more financial challenges for business owners, which can then lead to layoffs and higher levels of unemployment.

I took time out of the workforce during the pandemic. How good are my job prospects?

Certain industries are hiring more than others but, generally, this is a job-seeker's market. Leisure and hospitality, professional and business services and healthcare added most of the jobs in July. 

If you're a woman, it's not surprising that you took time out of the workforce during the pandemic. Employers should understand gaps on resumes dating back to 2020. More women lost their jobs that year than men: Between January and December of 2020, 2.1 million women left the labor force, nearly half of whom were Black and Latina, based on an analysis by The National Women's Law Center.

And although some women are still struggling to return due to family constraints and difficulties with work-life balance, a promising new paper suggests that women have made quite a comeback. In her research for the Brookings Institution, Lauren Bauer, a fellow in economic studies, discovered that women between the ages of 25 and 44, most with a college degree, had returned to their pre-COVID labor participation levels.  

"There is something to be said for women taking the past couple of years on the chin and not accepting that this was going to change the trajectory of their lives," Bauer told me. Given how hard their lives have been, they've been "much more proactive about staying on track for themselves and their children in a way we couldn't have predicted."

Can I ask for a raise in these uncertain times?

This depends on the financial health of your company, but given the fact that there are so many job openings compared to job-seeking applicants, the power could be tilted a bit more toward workers. 

"My guesstimate is that wages have some momentum and that … workers still do have a fair amount of bargaining power," says Jesse Rothstein, professor of public policy and economics at the University of California, Berkeley.

About half of workers say they've received a pay bump in the last year, although it's not been enough in the face of inflation.  

Here's my take: Rather than worry about the uncertainty in the economy, focus on the financial health of your company to gauge whether making more money would be possible this year. If your company implemented a hiring freeze or has cut back on expenses, this may be a precarious time to ask for a raise. On the other hand, if your employer has had a profitable 2022 so far (you can look up the earnings reports if it's a public company or ask a colleague in finance or accounting for insights), this may be a ripe opportunity to petition for a salary bump. 

Read more: Is Now a Good Time to Ask for a Raise?

If I get laid off, how long will it take to find a new job?

The average amount of time that someone was collecting unemployment insurance in June was 22 weeks. In theory, that means some job seekers were able to find new employment in about four and a half months. Still, this is an imperfect measure since some job seekers are cut off from jobless benefits before they've landed a new job. Experts say many long-term unemployed workers are undercounted in official employment numbers.

How should I prepare for a potential layoff? 

Focus on the decisions that are within your control, including communicating with your employer now about how you can continue to help add more value, productivity and possibly revenue in these tricky times. Mind your own personal finances by saving and paying off high-interest debt, reviewing your goals and doing your best to create security in both good times and bad.

Can there be a recession if the job market is relatively healthy?

The National Bureau of Economic Research makes the official call of a recession, taking into account the health of the job market in addition to other economic indicators, such as retail sales, industrial production and personal income growth. Historically, the most severe recessions have been marked by widespread layoffs and cyclical unemployment, which is a slump in hiring demand. 

Nonetheless, deciding if, when or how the recession will play out is not the best use of someone's time. "I think this is mostly a semantic argument," said Rothstein. 

Alas, this is what I wish I'd said on the television appearance. I did better the second time around.

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