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What it’s Really Like to Get a Mortgage Completely Online

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

getting a mortgage online

Drew and April Olanoff had great jobs in Silicon Valley, but even they were discouraged by the house hunting process in the San Francisco Bay Area: all-cash offers, bidding wars, two-bedroom condos listed for $1.5 million. They quickly decided to move their search to Drew’s hometown of Philadelphia — and they conducted the whole process online, from settling on a home to nailing down a mortgage.

The Olanoffs are just two of a growing number of homeowners who obtain a mortgage completely online, uploading documents and e-signing forms with no in-person meetings required. Online direct lenders — that means companies like SoFi, Better Mortgage and Rocket Mortgage by Quicken Loans — typically eschew costs like origination and applications fees. And they focus on speedier processes, which can lead to quicker closing times compared with more traditional mortgages. (Disclosure: MagnifyMoney’s parent company, LendingTree, offers homebuyers an online tool they can use to compare quotes from mortgage lenders.)

These upstart players are pushing the mortgage industry to innovate and become more transparent, experts say. But, they add, a fully online experience isn’t for everyone — and online lenders may not necessarily offer a homeowner a better rate than a traditional lender would.

“I can’t even imagine going into an office, dropping off paperwork, seeing people, and not getting the house at the end of the day,”

In the Olanoffs’ case, they even selected their home unconventionally, at a distance. From the West Coast, they directed a ReMax real estate agent to visit about 10 homes, shoot video and upload the footage to YouTube. They chose their 1916-built South Philadelphia home based on these videos.

Then their agent directed them to GuaranteedRate, one of the largest mortgage lenders in the U.S., which offered them a fully online experience, with the ability to upload and digitally sign documents. The Olanoffs were approved for an Federal Housing Administration (FHA) loan for about $260,000 in July 2016, and closed on the home that September.

“It was way less stressful doing it online,” says Drew, 38, vice president of communications at venture equity firm Scaleworks.

“I can’t even imagine going into an office, dropping off paperwork, seeing people, and not getting the house at the end of the day,” he adds. “The process leading up to and bidding on a home is so stressful, it’s almost like we were automatically removed from the intensity of it by doing it online. And we knew if we got outbid, all of our paperwork would still be there ready to go, which is genius.”

That ease and transparency is attractive not only to smartphone-loving millennials, but to homebuyers of all ages who are tired of complex and confusing mortgage-application processes, says Keith Gumbinger, vice president of the independent consumer-loan site HSH.com.

“The push to online has been underway for years, and it’s finally coming to the forefront with consumers’ widespread adoption of technology,” Gumbinger says.
“The market has now grown into it, too. You don’t think about it as a homebuyer, but there are lots of backend processes and entities involved in a mortgage. The industry has worked to come up with standards and it’s finally gotten there.”

Here’s a look at three of the major online mortgage players, all of which are direct lenders and can complete 100 percent of the process online.

SoFi

SoFi’s mission and advantages: “SoFi’s target market is high-earner, not-rich-yet,” says Helen Huang, its senior director of product marketing. That reflects SoFi’s unique applicant-assessment philosophy: The company looks beyond the traditional factors like credit report and savings, taking into account the borrower’s earning potential.

SoFi gives a lot of weight to job history and career prospects. So a high-demand software engineer who has restricted stock units at Facebook and her choice of Silicon Valley jobs might be more attractive to SoFi, compared with the person with good money saved for a down payment. (It’s no surprise, then, that Huang says a “significant” portion of SoFi customers work in the technology industry.)

SoFi has another edge over traditional lenders: The company requires only a 10 percent down payment with no private mortgage insurance requirement. Most lenders require 20 percent down to skip over PMI. SoFi issues mortgages up to $3 million, and the company has originated $2.2 billion in mortgages since 2014.

SoFi is short for Social Finance — the company offers lots of other services, like student loan refinancing and wealth management — and it lives up to its name with its SoFi Members Facebook page. The group is extremely active, with SoFi customers frequently posting to solicit advice and tips from fellow borrowers or SoFi’s customer service team.

Potential cons: SoFi won’t originate loans below $100,000, so it’s not a good choice for customers in areas where real estate is relatively inexpensive. Borrowers must put down a minimum of 10 percent for new loans. And it takes 72 hours to receive a decision from SoFi, which — while quick — isn’t as speedy as some competitors.

SoFi mortgages also aren’t available nationwide. The company only originates mortgages in 29 states: Alabama, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Maryland, Minnesota, Montana, Nevada, New Jersey, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Washington, Wisconsin, Wyoming and Washington, D.C.

SoFi’s mortgage application, step by step

getting a sofi mortgage
Screenshot of SoFi mortgage application.

Get started: First, you’ll set up a SoFi account by entering your name, state of residence, email and a password. Next comes the “Basic Info” screen: your mailing address, phone number, date of birth, citizenship and current living situation.

Next is School Info, where you’ll fill out information about post-high-school degrees. (SoFi notes on the screen that a “college degree is not required to qualify for a mortgage. While education is not used in mortgage underwriting, this info helps SoFi better understand our members.”) Then it’s time to add Employment Info: your employer name, job title, start date and annual income. For now, you’ll do this just for your current employer, and at the bottom of the page, select your total years of professional work experience.

Mortgage eligibility: Here you’ll complete several questions about what you’re looking for: Do you need a mortgage for a new property, a refinance, a student loan cash-out refinance or a cash-out refinance? You’ll also enter information about where you are in the buying process, and information about your desired area or specific property. You can also add information on this screen about your marital status and whether you have a co-applicant. Check the box to grant SoFi the right to do a soft credit pull to preapprove you for a mortgage. Remember: A soft pull won’t harm your credit score.

Get your rate: Hopefully, the next screen will announce: “Congratulations! You’ve pre-qualified for a SoFi mortgage.” If so, you can calculate your loan amount by entering the home’s price and your down payment. Then you can choose loan terms: 30-year fixed, 15-year fixed, or adjustable rate. To move forward, click “continue with pre-approval.”

Next you’ll fill out employment information for any previous jobs you may have held in the past two years, and if you currently hold two or more jobs you’ll add that information too. Then itemize any non job-related income, like Social Security or rental properties, and finally add any assets you want SoFi to consider in your application (checking, savings, brokerage or retirement accounts; second homes; etc.) and click “continue.”

Get approved: Finish up by answering a series of yes-or-no “declarations,” like whether or not you’re involved in a lawsuit. Finally, add your Social Security number and consent to SoFi’s credit disclosure. The final screen will confirm that SoFi is reviewing your application, and it will ask you to upload income validation documents (two most recent years’ W-2s or the last two years’ year-end paystubs), as well as your two most recent paystubs. You’re done; SoFi says applicants can expect to receive their application decision within 72 hours.

Rocket Mortgage by Quicken Loans

Rocket’s mission and advantages: As the online lender arm of Quicken Loans, Rocket is like a startup backed by a long-established, well-known parent. The company is named for its speed (its 2016 Super Bowl ad used the now-defunct, controversial tagline “Push button, get mortgage”).

One of the reasons for that speed is a unique, refreshing lack of paperwork. Rocket pulls from private and public sources to automatically fill in information like employment history and income, as well as financial statements (from the “vast majority” of institutions) — drastically cutting down on the need for uploaded documents or line-by-line typing of information. It’s somewhat similar to how budgeting apps like Mint pull your financial data from several institutions at once.

“Whether it’s car rides or takeout, these days we expect everything to happen immediately with the push of a button,” says Regis Hadiaris, Rocket’s product lead. “The mortgage industry has to catch up to that.”

On average, 60 percent of people using Rocket are doing so on a mobile device, Hadiaris says. Rocket originated $7 billion in loans in its first year, and the company now has nearly two million user accounts. Unlike many of its competitors, Rocket originates loans in all 50 states.

Potential cons: While mortgage consultants are available to help, including via phone or online chat, Rocket is clearly designed more for customers who want a fully digitized experience.

Rocket’s application process isn’t quite as streamlined as some of its competitors. Once you move past the preapproval process, you’ll be directed to Quicken Loans’ MyQL site to complete any needed tasks to purchase the loan, and to download your approval letter. On the plus side, Rocket says that starting in mid to late December 2017, users will be able to complete all possible digital steps within the same application.

Rocket Mortgage application, step by step

getting mortgage with rocket mortgage by quicken
Screenshot of Rocket Mortgage application.

Start by creating an account with your name, username and password. Then you’ll answer questions about your current situation: where you live now, when you started living there, and how much you pay in rent or mortgage. Next, provide information about the home you want to buy, or your desired location. Add information for anyone else who will be a co-signer on the loan, if applicable.

The next section is where Rocket’s automatic filling of information comes in. The system asks for assets and income, which you can choose to type in manually – or you can click “Find My Account” to add the data automatically. Quicken/Rocket connects with the majority of financial institutions, but double check to make sure everything is complete and accurate.

Below that, it’s a similar process for employment data and income: Either add it manually, or let Rocket fill it automatically. The company’s primary source for this employment information is third-party verifier The Work Number, and Hadiaris says it covers just over half of Americans – so again, this is one you’ll want to double check.

Finish up by answering government questions like whether you’re a U.S. citizen, and authorize a soft credit check by entering your birth date, Social Security number and phone number. A countdown clock pops up (“T-Minus 00:06 Seconds”) and then you’ll be sent to a screen with your mortgage options.

Mess around with loan terms and down payment percentages to get different choices, and Rocket will categorize them by lowers monthly payment, lowest upfront costs and balanced costs and payments. You’ll be directed to MyQL.com to complete any needed tasks to purchase the loan, and to download your approval letter.

Better Mortgage

Better’s mission and advantages: Better’s tagline is “The status quo is broken.” The mortgage industry operates as if the Internet doesn’t exist, the company argues, with opaque and overly lengthy practices. So Better’s goal is to provide transparency during every step of the loan process — from crystal-clear FAQs and online resources to a streamlined application and speedy approval.

“We don’t want to just disintermediate for the sake of it,” says Taylor Salditch, Better’s vice president of marketing. “We really are trying to tackle the whole process and rebuild it in a holistic way.”

Better offers a single application platform that borrowers can access anytime to e-sign documents, link bank accounts and securely upload files from any device.

Borrowers can work on the application for a bit, then save their progress and come back later to finish up. It takes three minutes to receive a basic preapproval confirmation, and 24 hours for a “cash-competitive” verified preapproval letter. The entire process is personalized to each user, with different questions popping up based on responses. The company has funded nearly $1 billion in mortgages.

Customers can chat with a loan consultant as early in the process as they would like, to ask questions or get more information even before they begin. Once borrowers are approved for a loan, they are assigned to a “Loan Ranger” who serves as their point of contact.

Better offers home purchase loans for as little as 3% down, as well as a variety of loan types. Borrowers can play around with different fees and discount points to see how it affects their rate. Better also guarantees its loan estimate will be at least $1,000 less in closing costs compared with a competitor offering the same rate and loan terms — or they’ll pay you $1,000.

Potential cons: Better originates mortgages in only Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, North Carolina, New Jersey, Oregon, Pennsylvania and Washington, plus Washington, D.C. The company says it’s working to expand into more states soon. Better won’t offer loans for manufactured mobile homes, cooperatives or multifamily units.

Also, Better doesn’t service mortgages. As a direct lender the company processes the application and underwrites, closes and funds your loan. Once the loan is funded, however, Better’s servicing partner LoanCare services the loan for a temporary period of about 30 days. Then it’s transferred to a “reputable, quality investor that provides the right type of loan and servicing for your situation.”

Better’s application, step by step

getting a mortgage with better mortgage
Screenshot of the Better Mortgage application.

Better’s super-simple preapproval questionnaire is designed to help even customers who might be interested in buying a home sometime soon but don’t know where to start. First, Better asks if you already have an accepted purchase offer. If you do, you’ll enter the address and then Better will prompt you to create an account.

If you don’t have an accepted offer, then you’ll share the zip code where you’re looking and when you plan to make an offer (there’s an option to say “not sure”). Next, select which type of home you’re interested in — primary residence, second home or investment — and the property type (single family or condo/townhouse). At this point Better will ask you to create an account.

Then you’ll give Better permission to do a soft credit check that won’t affect your score, providing your name, current address, phone number and Social Security number. After a moment, Better will present your credit score from TransUnion and ask for a few more details: how you earn money, whether anyone else will be on the home’s title, if you’re working with a real estate agent, whether you currently pay rent or own properties, other assets available and the estimated purchase price of your home plus your maximum down payment percentage.

You’ll find out in a few moments whether you’re preapproved. If you are, you can look at rate options — terms include 30-, 20- and 15-year fixed, as well as a variety of adjustable rates — and select the one you like. Better says that basic preapproval takes about three minutes, and you can receive a verified preapproval letter within 24 hours.

Better wasn’t able to provide a demo after this point, because the rest of the process to loan purchase is a “personalized Q&A” that changes depending on the answers you provide. But Better says you can expect to need two years’ worth of the following documents: personal tax returns, business tax returns (if you own more than a quarter of the business) and W-2s or 1099s; plus two months of bank statements and proof of any alimony or child support payments.

Should you get an online mortgage?

A fully online mortgage process is great for buyers like the Olanoffs, and people who don’t want the hassle of meetings and phone calls. But other homebuyers might be unsettled by a “low-touch experience,” says Gumbinger, the HSH.com vice president.

A recent survey of about 2,000 U.S. adults conducted on behalf of the American Bankers Association showed that 60 percent use the Internet to research their home loans but would rather apply for a mortgage in person.

It’s important to ask yourself which of those groups you fall into. Are you a high- or low-touch shopper? Can you get your financial paperwork in order, or is it much more attractive to you to choose a lender who can automatically fill in that information? Is the ease and speed of the online process more valuable to you than the ability to have in-person meetings with a loan officer?

Whatever you do, shop around first

Even if your comfort level with a fully online experience is high, it’s paramount to do your homework when it comes to a decision as major as a mortgage. Compare experiences between both traditional and online lenders, be honest with yourself about your personal needs — and, though it goes without saying, we’ll say it anyway: Always shop around for rates. You can ask individual lenders for quotes (so long as you do them over a short period of time they should only count as one hard inquiry on your credit account) one at a time, or you can compare mortgage rates online from many lenders at once on sites like LendingTree.

“Just because someone has an electronic platform that’s easy and nice-looking, it doesn’t mean you’ll get the best possible price,” Gumbinger says. “On the flip side, the mortgage lender your aunt recommended may not have the best price, either. The fact of the matter is, you always need take a cross-cut of the marketplace to find where you can get the best deal for you.”

Julianne Pepitone
Julianne Pepitone |

Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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College Students and Recent Grads

Applying for Public Service Student Loan Forgiveness: A Step-By-Step Guide

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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Public Service Loan Forgiveness (PSLF) is a program designed to attract workers to jobs in the public sector by wiping clean remaining federal student loan debt after 120 qualifying payments.

Those payments represent 10 years’ worth of work with a qualifying public service employer, so because PSLF began in October 2007, the first applicants are just beginning to submit their forgiveness forms.

Qualifying for PSLF means meeting specific requirements for the employer, the loan type and the repayment plan — and the details can be overwhelming.

With that in mind, here’s a step-by-step guide to applying for PSLF.

Step 1: Figure out if you qualify.

First, it helps to understand why PSLF exists.

“It’s meant to be a light at the end of the tunnel for public service jobs, when people know they could make much more money going private,” says Betsy Mayotte, director of consumer outreach and compliance at the nonprofit American Student Assistance. “A lot of the careers — social workers, teachers, public defenders — require advanced degrees. The problem there is that people would accrue all this debt, then find they couldn’t stay in these public sector careers because they didn’t pay well.”

But the definition of public service is strictly defined, and “it’s not your job that matters, but your employer,” Mayotte adds. “It matters who signs your paycheck. You can be a groundskeeper at a state school and qualify. Conversely, you can feel as if your job is public service, but if your employer doesn’t meet the specific definitions, you don’t meet PSLF requirements.”

Employers that qualify for PSLF, per the U.S. Department of Education

  • A government organization (including a federal, state, local, or tribal organization, agency or entity; a public child or family service agency; or a tribal college or university)
  • A nonprofit, tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code
  • A private, nonprofit organization (though not a labor union or a partisan political organization) that provides one or more of the following public services:
    • Emergency management
    • Military service
    • Public safety
    • Law enforcement
    • Public interest law services
    • Early childhood education (including licensed or regulated health care, Head Start and state-funded pre-kindergarten)
    • Public service for individuals with disabilities and the elderly
    • Public health (including nurses, nurse practitioners, nurses in a clinical setting and full-time professionals engaged in health care practitioner and support occupations)
    • Public education
    • Public library services
    • School library or other school-based services

Employers that DO NOT qualify for PSLF

  • For-profit organizations (this includes for-profit government contractors)
  • Nonprofits that are not tax-exempt under Section 501(c)(3) of the Internal Revenue Code or that do not provide a qualifying public service as their primary function
  • Labor unions
  • Partisan political organizations

You must work full time (whatever your employer characterizes that to be — though it must be an average of at least 30 hours per week by the PSLF definition) for one of these qualifying employers, or part time for two or more as long as it adds up to 30 hours per week, while you make your 120 on-time payments. You’ll also need to be in qualifying employment when you apply for your loan forgiveness.

Because you won’t be able to apply for PSLF until you have completed qualifying payments, it helps to build up a paper trail over the years. You should fill out and send an employment certification form (ECF) to FedLoan Servicing, which handles PSLF, each year and whenever you change employers. You’ll fill out personal information and have your employer sign the form before sending it in. The form isn’t required, but you’ll receive a response detailing your progress toward your 120 payments and confirming your eligibility — great for peace of mind as well as record-keeping.

“While you’re not required to submit the ECF at any point, it’s always a great idea to keep records,” says Adam Minsky, a Boston attorney who specializes in student loan and consumer issues. “An employer could go out of business, or lose the records of your employment. Mistakes can be made with paperwork. So if you find yourself having to make a case for yourself later, it helps to have all of this on record.”

FedLoan Servicing says my employer isn’t eligible. Can I appeal?

If the response to your ECF comes back and someone says your employer does not qualify you for PSLF, that’s generally the final decision, says Mayotte. “You can theoretically appeal, but these employer types are all pretty straightforward,” she adds. “The overarching rule is that there’s no wiggle room: You work for the government, a 501(c)(3) nonprofit or another qualifying nonprofit. The exception might be if you work for one of these other qualifying nonprofits, but you’ll need to make a case.”

To appeal, you can resend your ECF to FedLoan Servicing and ask for another review, or contact the Department of Education’s ombudsman unit. In both cases you should include evidence to show why you think your employer should qualify, Mayotte says.

But barring a clerical mistake by FedLoan Servicing, a change in decision is exceedingly rare.

Ensure your loan type and repayment plan qualify

PSLF provides forgiveness only for federal Direct Loans: Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans and Direct Consolidation Loans. Private loans, including bank loans that are “federally guaranteed,” do not qualify.

Loans made under other federal student loan programs, like Perkins Loans, aren’t eligible for PSLF on their own. They may become eligible, if they’re consolidated into a Direct Consolidation Loan — but it’s important to know that only payments toward that consolidated loan will count toward the 120-payment requirement.

Speaking of consolidation, here’s another thing you should know: If you consolidate qualifying loans, the clock resets to zero payments. A consolidation is considered a new loan, and again, only payments toward the consolidated loan will be counted toward your 120.

Don’t know which types of federal student loans you have? Check the Education Department site My Federal Student Aid. A pro tip from the Education Department: “Generally, if you see a loan type with ‘Direct’ in the name on My Federal Student Aid, then it is a Direct Loan; otherwise, it is a loan made under another federal student loan program.”

Additionally, you must be enrolled in the right type of repayment plan. Qualifying repayment plans include all four of the income-driven repayment plans, which base your monthly payment on your income and family size: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), income-based repayment (IBR); and income-contingent repayment (ICR).

Payments under the 10-year standard repayment plan qualify, but you’ll want to switch to an income-driven plan as soon as possible. If you stick with that 10-year repayment you’ll have paid off the loan, with nothing left to be forgiven under PSLF when you become eligible for it.

Make 120 qualifying payments

You’ll need to make all of those 120 payments during qualifying employment to apply for PSLF, but you don’t need to provide proof of those payments. Again, Minsky advises that it’s wise to keep your own records just in case there’s a clerical issue later — but generally, FedLoan Servicing will confirm the payments itself.

Note that the 120 payments do not have to be consecutive (nor, then, must be your employment with a qualifying public service employer). If you had periods of deferment or forbearance and stopped paying your loans, the count will pick up where you left off once you begin paying anew. Even defaulting on your loan payments doesn’t disqualify you, but you’ll need to rehabilitate the defaulted loan with your servicer before the payments can count toward your 120 again.

The payments do need to be on time, defined as “those received by your federal loan servicer no later than 15 days after the scheduled payment due date.” If your payment isn’t on time, or you pay less than what you’re required to that month, it won’t count toward your 120. You may make multiple smaller payments, but they must add up to at least the minimum payment amount for that month.

Step 2: Apply for loan forgiveness

After you’ve completed your 120 payments — phew, you did it! — go to the PSLF application here. The form is six pages long, but the actual application is only two. And you, the employee, must fill out only the first page: basic personal information like your date of birth, Social Security number and contact details. You’ll also need to certify under penalty of law that the information you’re submitting is truthful.

The second page is for detailing the employer’s information, and either you or your employer can fill out the top part. Here’s what it requires:

  • Employer’s name
  • Federal Employer Identification Number (FEIN, which can be found on your W-2 — or ask your HR department)
  • Your dates of employment
  • Whether you were a full- or part-time worker
  • Which category of public service your employer falls under

At the bottom of the page, there’s a section for your employer to sign, certifying that the information above is accurate.

You’ll need to repeat that process for every qualifying employer. (That’s why it’s smart to keep track of it all by submitting ECF forms annually and whenever you change employers.)

The remaining four pages of the application form reiterate the details of what it takes to qualify for PSLF. They also explain where to send the completed application form:

  • You can mail to

    U.S. Department of Education, FedLoan Servicing
    P.O. Box 69184
    Harrisburg, PA 17106-9184

  • Fax to 717-720-1628; or
  • Upload to MyFedLoan.org/FileUpload, if FedLoan Servicing is already your servicer.

In rare cases, you may not be able to obtain employers’ certification. There’s a checkbox on page 1: “Check this box if you cannot obtain certification from your employer because the organization is closed or because the organization has refused to certify your employment. The Department will follow up to assist you in getting documentation of your employment.”

“That’s another reason it’s prudent to send the ECF forms every year, because you’ll already have a signature on record,” Mayotte says. “I’ve heard of a few cases where employers were not comfortable filling out the form for privacy reasons, but usually if you show them the form and explain a bit, you can change their mind.”

Mayotte says borrowers should contact FedLoan Servicing for alternatives if they find themselves in this situation.

FAQ and other things to know

The process is estimated to take up to 60 days, a Department of Education spokesman confirmed to MagnifyMoney.

Yes. If you’ve made your 120 payments and are looking to switch to an employer who isn’t eligible, be sure to file your PSLF application first. You must also be employed full time at a qualifying employer or employers at the time the forgiveness is granted, according to the Department of Education.

“No concrete proposal seems imminent, but whenever something happens, there’s a general view among experts that a change to PSLF won’t be retroactive to existing borrowers,” Minsky says.

The payment count restarts, back at zero. The consolidated loan is considered a new loan, and only payments toward it will count.

Here are the employer certification form and the PSLF application.

While studentaid.ed.gov has all of the official information, it’s spread across different pages and can be unwieldy. American Student Assistance offers an excellent guide that breaks down the basics and also links to official webpages and forms.

Alternative loan forgiveness programs

Beyond PSLF, there are other federal programs to forgive or discharge federal student debt. These include:

Industry-specific forgiveness programs

  • Perkins Loan Cancellation and Discharge: This applies to people who perform certain types of public service or are employed in certain occupations. According to the Department of Education, for each complete year of service a percentage of the loan may be forgiven. That percentage varies by job/employer type, and the following workers qualify:
    • Volunteer in the Peace Corps or ACTION program (including VISTA)
    • Teacher
    • Member of the Armed Forces (serving in area of hostilities)
    • Nurse or medical technician
    • Law enforcement or corrections officer
    • Head Start worker
    • Child or family services worker
    • Professional provider of early intervention services
  • Teacher Loan Forgiveness: Teachers who work full time for five complete and consecutive academic years (in certain elementary and secondary schools and educational service agencies that serve low-income families, and meet other qualifications) may be eligible for forgiveness of up to a combined total of $17,500 on Direct Subsidized and Unsubsidized Loans and Subsidized and Unsubsidized Federal Stafford Loans. (Those who have only PLUS loans are not eligible.) Read more about loan forgiveness programs available to teachers, including TEACH Grants and state forgiveness programs.
  • Programs for lawyers: Lawyers with at least $10,000 in federal student loans may qualify for the Department of Justice Attorney Student Loan Repayment Program (ASLRP). Additionally, the John R. Justice Student Loan repayment program provides assistance for state and federal public defenders and state prosecutors for at least three years and is renewable after 3 years. Benefits cannot exceed $10,000 in a calendar year and cannot exceed $60,000 per attorney total. .) Read more about programs for lawyers, including forgiveness programs through specific law schools and certain states.
  • Programs for doctors and health professions: Several programs are available, including multiple military doctor loan forgiveness options through the Army, Navy and Air Force. Other options include state-specific forgiveness and the National Health Service Corps (NHSC), which can provide up to a $50,000 to repay a health profession student loan in exchange for a two-year commitment to a NHSC site in a high-need area.

Income-based repayment plans

  • This isn’t a traditional cancellation program like what’s above. These four federal income-driven repayment plans base your monthly payment on your income: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), income-based repayment (IBR) and income-contingent repayment (ICR).The payment terms vary, and your outstanding balance is forgiven after your repayment term of 20 to 25 years is complete. Because the monthly amount you owe will fluctuate based on your income, you could end up repaying your loans before your term is up, or you could have a balance that will be forgiven. However, if you receive student loan forgiveness this way, the canceled debt is taxable. (Only borrowers whose loan forgiveness stems from their employment are exempt from paying taxes on canceled student loan debt.)

Loan discharges for special circumstances

There are a few other times you may be able to get your student loans forgiven, but they’re relatively rare, and they’re generally because of bad circumstances. You can find out more about these discharges on the Department of Education’s website:

Julianne Pepitone
Julianne Pepitone |

Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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College Students and Recent Grads, Featured, News

With the Fate of Public Service Loan Forgiveness Uncertain, Here are Tips for Confused Borrowers

The editorial content on this page is not provided by any financial institution and has not been reviewed, approved or otherwise endorsed by any of these entities.

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More than half a million Americans are working toward Public Service Loan Forgiveness (PSLF), a program that eliminates federal student loan debt for people with jobs in the public sector. But the proposed 2018 White House budget reportedly calls for ending PSLF for future borrowers — and even current participants’ status could be in doubt, with a lawsuit claiming the government has reversed previous assurances given to certain borrowers that their employment qualifies.

Final decisions have not yet been made in either scenario. But even with this uncertainty, there are steps both current borrowers and interested potential future PSLF participants can take to make themselves as secure as possible.

First, a quick primer on PSLF: The program began in October 2007 under George W. Bush, and it wipes clean the remaining federal student debt for qualifying borrowers who have made 120 payments, or 10 years’ worth (more information is available at StudentAid.gov/publicservice). So the earliest any public service worker could receive loan forgiveness under PSLF is October 2017.

“The idea is to avoid making debt a disincentive to choosing public service,” explains Mark Kantrowitz, a student loan expert and publisher at college scholarship site Cappex.com. “Think about a public defender. They might make $40,000 a year, but they’ll incur $120,000 in debt for law school. That debt-to-income ratio is impossible, so PSLF makes that career path possible — and attracts people who might have otherwise taken high-paying private-sector jobs.”

Public Service Loan Forgiveness — on the chopping block?

At this time, the biggest threat to the future of PSLF is President Donald Trump’s 2018 White House education budget proposal. The budget proposal would eliminate PSLF — citing costs — and replace all current income-based repayment/forgiveness plans with a single income-driven system. While existing borrowers would be grandfathered into PSLF, any new students who take out their first federal loans on or after July 1, 2018, would not qualify. Still, all of this can happen only if Congress passes the budget — and it remains to be seen whether this section will pass as currently written in the proposal.

If you’re one of the more than 550,000 borrowers who is already working toward forgiveness — that is, you have already taken out at least one federal loan and/or you’ve completed school and are working in public service — the proposed cancellation of PSLF won’t affect you. Again, if the program is cut, it will impact only students who take out their first federal loans on or after July 1, 2018.

But even existing borrowers working toward PSLF can’t fully relax. As first reported by The New York Times, the Department of Education added a serious wrinkle by sending letters to people saying their employment was no longer eligible for PSLF, after the borrowers had confirmed with their loan servicer that they qualified. Four borrowers and the American Bar Association have filed a lawsuit against the department, and the case is currently in progress.

That may leave many workers questioning whether or not they will ultimately be eligible for loan forgiveness after all — even if they work in the nonprofit or public sector. MagnifyMoney has spoken to experts and reviewed the rules of the program to help.

How Can I Be Sure I Qualify for Public Service Loan Forgiveness?

Qualifying for PSLF depends on meeting several specific requirements, so the first step in determining your eligibility is to make sure your loans and employment check all the boxes.

1. Your student loan must qualify for forgiveness.

PSLF provides forgiveness only for federal Direct Loans:

  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans—for parents and graduate or professional students
  • Direct Consolidation Loans

Note that loans made under other federal student loan programs may become eligible for PSLF if they’re consolidated into a Direct Consolidation Loan, but only payments toward that consolidated loan will count toward the 120-payment requirement. And, according to ED, parents who borrowed a Direct PLUS Loan “may qualify for forgiveness of the PLUS loan, if the parent borrower—not the student on whose behalf the loan was obtained—is employed by a public service organization.”

2. You must be enrolled in the right type of repayment plan.

You must be enrolled in one of the Direct Loan repayment plans, some of which are income-based. The umbrella term for these plans is income-driven repayment plans, which include the Pay As You Earn and Income-Based Repayment plans. While payments under other types of Direct Loan plans, like the 10-year Standard Repayment Plan, do qualify and count toward your 120 payments, you’ll want to switch to an income-driven plan as soon as possible — because if you stick with a standard 10-year repayment, you’ll have paid off your loan in full after 10 years with nothing left to be forgiven under PSLF. Check the official PSLF site for more details. And note that private loans, including bank loans that are “federally guaranteed,” do not qualify.

3. You must make 120 on-time payments while employed full time by an eligible employer.

If you drop to part-time work, those payments won’t qualify. You must also be employed full time in public service at the time you apply for loan forgiveness and at the time the remaining balance on your eligible loans is forgiven. After you make your 120th payment you’ll need to submit the forgiveness application, which the Department of Education says will be available in September 2017.

4. Your employer must count as a public service organization.

This is the big one, and the most complicated step of the process for some borrowers to figure out. While the Education Department does address types of employers that fit under the PSLF program, there are some gray areas. Broadly, the types of employers that qualify include governmental groups, not-for-profit tax-exempt organizations known as 501(c)(3)s, and private not-for-profits. That last category includes military; public safety, health, education, and library services; and more.

Pro tip: Certify that your employer is included in the program every year.

Each year and whenever you change employers, you should fill out and send an Employment Certification form to FedLoan Servicing. The form isn’t required to be submitted on an annual basis, but it’s highly recommended to fill it out annually so there are no unhappy surprises down the road. It also helps you keep track of progress toward your 120 payments and gives you a chance to find out whether there is any change to your eligibility status.

What if you fear your job’s eligibility is unclear?

The validity of that FedLoan Servicing certification form is at the center of the lawsuit against the Department of Education. Although it’s important to have your employer’s eligibility certified by the department, the Education Department has said the form isn’t necessarily binding and the eligibility of employers can possibly change. As The New York Times put it, the department’s position implies “that borrowers could not rely on the program’s administrator to say accurately whether they qualify for debt forgiveness. The thousands of approval letters that have been sent … are not binding and can be rescinded at any time, the [DOE] said.”

That puts existing borrowers in a tough spot, says Joseph Orsolini, CFP and president of College Aid Planners: “[PSLF] is sort of an all-or-nothing in that you can’t apply for the forgiveness until you’ve already done your 120 payments. So to have someone choose this career path and work for years only to be told, ‘never mind, you no longer qualify even though we said you did,’ it would be hard for them not to see that as reneging on a deal.”

That possibility is “terrifying” for Frances Harrell, 35, a preservation specialist who works for a nonprofit that supports small and medium-size libraries in caring for their collections. She completed a library graduate school program in 2013 and emerged with a total of about $125,000 in debt, including her undergraduate loans.

“Everyone I know is in public service, and we all saw the Times article [about the PSLF lawsuit] and flipped out,” says Harrell, who currently lives in Gainesville, Fla. “I felt like I had been dropped in a bucket of ice. We’re making life decisions based on this understanding, and it feels so precarious not to have any true confirmation that we’ll get the forgiveness in the end.”

Christopher Razo, 22, who this month will begin classes at Chicago’s John Marshall Law School, plans to take advantage of PSLF while working toward his dream of becoming a state attorney. (Photo courtesy of Christopher Razo)

Harrell has also dealt with confusion from loan servicers and other experts — and based on incorrect advice, she nearly consolidated her loans in a way that would have reset the clock on her years of payments.

Christopher Razo, 22, who this month will begin classes at Chicago’s John Marshall Law School, is relieved that he is enrolling before the 2018 uncertainty begins. Razo is one of Orsolini’s clients, and he plans to take advantage of PSLF while working toward his dream of becoming a state attorney.

“[PSLF] is complex as it is, so my initial thought was, ‘Wow, great timing for me that I’m starting in 2017,’” Razo says. “But I understand the program affects way more than just me. [PSLF] gives you comfort to pursue public-service goals without having to make your employment about the money. I’m optimistic that [lawmakers] will see the good in the program so it can continue.”

When in doubt: Follow the ‘3 phone call rule’

While borrowers may think their loan servicer has all of the answers, Harrell’s situation isn’t uncommon, says Orsolini. He recommends “the three phone call rule”: Call three times and ask the same question, documenting whom you spoke to and when.

“These programs are complicated — which is one of the issues that critics [of PSLF] bring up — and you don’t always get the right information,” Orsolini says. “Before you plan your whole life around the [first] answer you get, you have to double- and triple-check that it’s right.”

If you’re taking out your first qualifying loan on or after July 1, 2018, Orsolini says “there’s not much to do besides hurry up and wait” to see what happens with the White House budget as it relates to PSLF.

“The important thing to remember is that a proposal is just a proposal, and these don’t always see the light of day,” Orsolini adds. “It doesn’t do any good to be overly worried, but you’ll want to keep a close eye on the news.”

Other types of loan forgiveness, cancellation, or discharge:

PSLF isn’t the only option. But not all types of federal student loans offer the same forgiveness, cancellation, or discharge options. See the chart below and check out StudentEd.gov pages here and here for more details.

Still, borrowers should know Trump’s desire to streamline federal programs into a single option means some of these loan types and forgiveness plans could be changed or canceled as well.

Julianne Pepitone
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Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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Meet 2 Families Who Earn Six Figures and Still Feel Broke

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Although they have lived in the Washington, D.C. metro area all their lives, Lauren Orsini and her husband, John, don’t feel they can raise a family there, despite their six-figure income.

Lauren Orsini and her husband, John, live in Arlington, Va., and both grew up in the greater Washington, D.C. metro area. They attended all levels of schooling here, and their families still live close by. But as the couple looks toward a future with children, they don’t see how they can afford to stay in their hometown — even though they bring in more than $100,000 annually.

“The life that I’m living is unsustainable, and I know it,” says Lauren, 30. “But I’m so deeply rooted here. I can’t imagine living anywhere else, even though I know this won’t last forever.”

Their plight is reflected in the findings of a recent MagnifyMoney report, which analyzed the best and worst cities for a family earning six figures. On the list of 381 metro areas, the Washington, D.C.-Arlington-Alexandria, Va., region is dead last.

“I’m not surprised at all,” Lauren says. Though she and John, a government contractor, make just above $100,000 “it doesn’t go far here even though it sounds like a lot. And you can forget about buying a place.”

The couple shells out $1,700 monthly on their one-bedroom apartment, located in a 1960s building with no thermostat or washing machine. But Lauren loves the life that Arlington affords her, particularly its proximity to D.C. proper.

She takes Japanese lessons at the embassy. Her running club recently took a route to the Lincoln Memorial and back. She can hop on the metro to visit either of her two sisters. And she and John have always enjoyed commutes of less than 20 minutes.

“If you don’t live in Arlington, I can understand how outsiders would say, ‘Well, that’s a selfish decision — you can’t have everything,” Lauren admits. “But my world is here. I’m still close with my high school friends. John’s family is 90 minutes away. We can go see a show in D.C. or watch the fireworks in just a few minutes.”

Six-Figure Incomes and Still in the Red

But the convenience and excitement of D.C. life come with hefty costs, as the MagnifyMoney study showed. The analysis — which factored in basic expenses like taxes, housing, and transportation — was designed to see where a family earning $100,000 has the most wiggle room. The estimates assume a two-income household with two adults and one child, and cities are ranked by worst (least amount of money left over at the end of each month) to best (the most amount of money left over at the end of the month).

After the D.C. area, rounding out the bottom three are Bridgeport-Stamford-Norwalk, Conn., and San Jose-Sunnyvale-Santa Clara, Calif. By contrast, Tennessee is clearly the best state for six-figure households to stretch their dollars: Johnson City, Morristown, and Cleveland are the top three cities on MagnifyMoney’s list.

The differences are stark. In Johnson City, Tenn., total monthly expenses make up just 62% of total post-tax income, leaving a $2,400 surplus. In the D.C. area, expenses come to 105% monthly — meaning households making $100,000 are $315 in the red on average at the end of the month.

“We’re doing just fine for now, but when I think about a baby and buying a house, it’s not going to work,” Lauren says. “I check Redfin every day, as if some magical condo is going to spring up. We go through this cycle of house-hunting where we lower our standards more and more, and we still can’t find anything.”

Lauren and John have found homes they think they can afford: two bedrooms, maybe 980 square feet or so, for about $650,000. But these are often condos and townhouses with high homeowners association fees, which puts the homes far above budget.

It’s frustrating. And it’s why Lauren has seen friends, one by one, scuttle out to the suburbs in search of slightly more affordable real estate and space for a family. But as with the city, the ‘burbs come with a cost: a commute to D.C. of an hour or more. Lauren fears that would be untenable for John.

She wants to see her husband stay happy at his job, where he has worked for seven years. John is also slated for a promotion soon, which could help ease some of their worries. But Lauren doesn’t expect any windfall to solve the deeper barriers of raising a child in her hometown.

“We make six figures, we responsibly put money in savings and retirement, and it’s not enough,” Lauren says with a sigh. “What I think will happen is that we won’t be able to delay having a baby any longer, and life will become about what’s best for them. But for now, it’s hard to swallow any decision that will make our lifestyle worse.”

Finding the Free in Pricey Places

D.C.-area residents like Lauren and John — and city-dwellers all over the nation — are willing to pay sky-high rents because of all that cities have to offer. While some of those offerings are trendy restaurants and pricey shows, cities are also home to loads of free fun like museums, festivals, and block parties.

That’s part of why Shanon Lee, a mother of four living in D.C.-adjacent Alexandria, Va., isn’t “really feeling the crunch with my family. It’s easy to spend money [in the D.C area], of course, but it’s also easy not to, thanks to all of these events.”

Beyond free events for her kids — who range in ange from 4 to 21 — Shanon herself also scores frequent invitations to outings in her role as a filmmaker, artist, and writer. What’s more, Shanon’s live-in partner works in IT, and he can easily pick up side jobs like refurbishing computers.

“I know we’re lucky that we’re doing well, and he can make $2,000 in a heartbeat by grabbing a quick job if he wants,” Shanon says. “But lots of people I know are living with roommates even when they don’t want to. And in our last neighborhood, a bunch of families packed in grandparents too.”

Still, Shanon says she and her family are “always looking for ways to reduce our expenses.” She opted not to enroll her youngest in a preschool that would have cost $380 weekly, instead balancing her work-at-home life with caring for her child. The family currently pays $2,600 monthly to rent their townhome in Alexandria, though they’re looking to move a few blocks away where homes can rent for $1,900. After that? Unlike Lauren Orsini, Shanon doesn’t feel tied to the D.C. metro.

“It’s a transient area, and I’ve found it can be hard to form lasting relationships,” Shanon explains. “We don’t necessarily feel at home.”

Shanon isn’t sure where her family’s forever home will be, but she plans to choose a spot based on the basics.

“Our primary considerations are factors like cost of living, safety, and good school districts,” Shanon says. “You have to stay focused on the important things.”

Julianne Pepitone
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Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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This Family Spent $6,000 to Save Their Home and Still Wound Up Facing Foreclosure

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Lageshia Moore of Far Rockaway, N.Y. says her family spent $6,000 in hopes it would save them from foreclosure. “Some people might say, ‘OK, just get a new house.’ But it wasn’t that simple,” says Moore.

When Lageshia Moore and her husband found their home in 2006, they thought it would be a perfect place to raise their family. The $549,000 Far Rockaway, N.Y., duplex even had future income potential if they could find a reliable tenant and rent out one half of the house.

In order to purchase the property and avoid primary mortgage insurance, the couple took out two mortgages to cover the costs.

Like millions of Americans who purchased homes at the peak of the housing bubble, their timing could not have been worse. Moore, a teacher, left her job in 2007. It soon became impossible to meet their $4,000 total monthly mortgage payments. By the summer of 2008, they were deep in default, and the recession sent their home value plummeting.

They were officially underwater on their house, and the family was living solely on Moore’s husband’s income as a driver. Eventually, they were notified that their lenders had begun the foreclosure process.

“Some people might say, ‘OK, just get a new house.’ But it wasn’t that simple,” Moore said. “This was the house where we were raising our family. My husband is very proud and homeownership means a lot to him — so we weren’t going to just let it go.”

Instead, Moore and her husband did what many families facing foreclosure do: They began looking desperately for “foreclosure relief” companies, law firms, and groups who promised help. A nonprofit connected them to a court-appointed attorney, but it didn’t stop the foreclosure process. So they turned to companies that advertised foreclosure relief on radio stations and online.

Over the course of six years, the family handed over thousands to a handful of relief groups they thought could stop the foreclosure. “We were desperate, and we thought, ‘OK, we’ll hand over this money to someone and they’ll just fix it,’” Moore said.

One of those foreclosure relief companies was Florida-based Homeowners Helpline, LLC. In 2015 the family gave the company a total of $6,000: an initial $2,000 down payment, and then $1,000 in four monthly installments. By that time Moore had found a new job, but the family hadn’t paid the full mortgage amount in years.

Moore shared the contract with MagnifyMoney, in which Homeowners Helpline says it will “perform a mortgage loan review and audit,” including actions like sending a cease-and-desist letter and a “Qualified Written Request” for information about the account to the family’s lenders.

Here’s what Moore says happened: Homeowners Helpline connected her family with a New York City lawyer who “kept asking for endless paperwork, month after month after month,” and who eventually stopped answering their calls, she claims. They finally got in touch with him just before the house was set to go up for auction, she said, and he told them the efforts to stop the auction had failed.

“We were horrified,” Moore said.

Homeowners Helpline told MagnifyMoney a different story. Sharon Valentine, a processor at Homeowners Helpline who worked on Moore’s husband’s case, said the family was slow to hand over needed paperwork and “unrealistic about their expectations.”

Crucially, Valentine said, the family didn’t tell Homeowners Helpline the house was actively in foreclosure until they mentioned the auction. “And then it was like, ‘Wait, what?’” Valentine said. The company would have taken different actions had they known about the foreclosure proceedings, she added.

“We can’t help you effectively if you don’t give us all of the information and the paperwork,” Valentine said. “In general, some clients come in and they hear their friend was able to get a 2% [mortgage] rate or cut their payments in half, and it’s like, ‘Well, that’s a very different situation.’ We try to help educate, but sometimes you can’t change that expectation.”

The Best Help is Free

But there is a free resource to educate panicked homeowners about expectations and provide foreclosure assistance — as well as help them avoid scam companies that will steal their money. NeighborWorks America runs LoanScamAlert.org, which aims to be a one-stop shop for people with questions about or problems with their mortgages.

The Loan Modification Scam Alert Campaign launched in 2009, when Congress asked NeighborWorks America to educate and help homeowners. LoanScamAlert.org offers resources including information about how to spot and report scams, and lists of trusted authorities who can help. Its main goal: Drive people to call the Homeowner’s HOPE Hotline, at 888-995-HOPE (4673), which is staffed 24 hours a day by counselors who work at agencies approved by the U.S. Department of Housing and Urban Development (HUD).

“We provide them with a single, trusted resource,” said Barbara Floyd Jones, senior manager of national homeownership programs at NeighborWorks America. “It gets confusing when you see companies with all of these similar names advertising on the radio or TV, and then you have to research them. We want to let people know they don’t have to pay a penny for assistance.”

Anyone — regardless of income or other factors — can contact the counselor network to receive free advice and help. Homeowners aren’t always aware of the myriad government-affiliated groups that can provide assistance, or of the federal and state programs created to speed loan refinances and modifications, Floyd Jones said.

“We can never promise that everyone will be able to save their home; there are a variety of circumstances,” Floyd Jones said. “But we can promise a trusted counselor will listen, take a look at your paperwork if you want, and tell you all of your options.”

In fact, if a homeowner grants permission, the counselor can contact the mortgage lender directly to discuss options to stop the foreclosure, modify the terms of the loan, or otherwise make a deal. If need be, homeowners will also be connected with vetted legal assistance — although Floyd Jones noted not every situation requires a lawyer.

True to LoanScamAlert.org’s name, the hotline counselors also take complaints about mortgage-related scams: third-party companies that take the money and run, or slip in paperwork that unwittingly gets homeowners to sign over the deed to the house.

The Federal Trade Commission received nearly 7,700 complaints about “Mortgage Foreclosure Relief and Debt Management” services in 2016 — down from almost 13,000 in 2014, but still a significant figure.

“Stopping phony mortgage relief operations continues to be a priority” for the FTC, said spokesman Frank Dorman.

Both the FTC and LoanScamAlert.org offer tips to avoid scams — and to make sure you’re taking advantage of all federal and state programs that could help.

Red Flags:

  • They ask you to pay before any services are rendered.
  • Pressure to pay a fee before action is taken, sign confusing paperwork, or hire a lawyer off the bat. As with any scam, fraudulent mortgage relief services rely on high pressure to push vulnerable homeowners into taking action. Companies shouldn’t ask for “processing fees” or “service fees” early in the process, Floyd Jones said, as early foreclosure-stoppage efforts don’t cost anything. Be wary of signing any document, as you could unwittingly surrender the home’s title or deed to a scammer.
  • They make promises they can’t keep. 

    Promises or guarantees they’ll save your home from foreclosure — or even claims like “97% success rate!” No one can guarantee results.

  • They say they’re affiliated with the U.S. government. 

    Companies that claim to have an affiliation with a government agency. Some scammers may claim to be associated with the government, charging fees to get you “qualified” for government mortgage modification programs like Hardest Hit Fund. You don’t have to pay for these government programs — and lenders, particularly big banks like Wells Fargo and Bank of America, may be able to offer you their own modification options directly.

  • They want you to send your mortgage payments to them.

    Companies that tell you to start paying your mortgage directly to them, rather than your lender. They may promise to pass the money along, but they could pocket it and disappear.Companies that ask you to pay them through unconventional methods: Western Union/wire transfers, prepaid Visa cards, etc., instead of a check. They’re trying to get your money in a way that’s hard to trace.

As for Lageshia Moore and her husband, the family ultimately filed for bankruptcy — a move that can stop the foreclosure process, but only temporarily — and are now working with a law firm on a loan modification she hopes will reduce their payments to a manageable monthly sum. In giving advice to others, she reiterates the simplest but most important tip: “Just do your research.”

“You’re panicked, but you have to do your due diligence,” she added. “Really sit down and weigh the pros and cons: foreclosure, short sale, etc. What does this process or contract really mean? It’s an emotional time, but you have to try to keep the emotion out of it. That’s what I would tell myself.”

What to Do if You’re Facing Foreclosure:

  • Call a HUD-certified counselor at 1-888-995-HOPE. You’ll get advice and help for free, and while counselors can’t ever promise to save a home, they’ll be happy to take a look at any paperwork or information about your case, contact your lender about options if you grant permission, and connect you with vetted legal assistance if need be.
  • If you’re not facing foreclosure yet, but you’re worried that you’re about to run into trouble, contact your mortgage lender’s loss litigation department. They may be willing to work with you. Your lender can also tell you whether you’ll qualify for government programs.
  • Overall, don’t let desperation stop you from taking the time to research any potential actions, including signing on with a relief company. Explore the company’s background and track record. Check online for reviews from other homeowners — and be sure to look up phone numbers too. Many scam companies simply shut down, reopen under a new name, and retain the same phone number.
Julianne Pepitone
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Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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High Rent Drove This NYC Couple to Move to 12 Apartments in 12 Months

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Couple is Moving to 12 New York City Apartments

Photo by Roderick Aichinger

For most people, moving day is a dreaded day – especially in a busy, crowded place like New York City. But Felix Zeltner, 34, and his wife Christina Horsten, 33, are planning to move 12 times in 12 months, all in the pursuit of the perfect (and affordable) New York apartment.

The couple, who are parents to 20-month old daughter Emma, are calling the adventure 12×12. The idea to try a dozen neighborhoods in as many months grew out of their own frustration at the rising cost of living in the city. The average one-bedroom apartment in Manhattan rents for an $3,359 per month, according to the latest Manhattan Rental Market Report.

The couple moved to New York City from Berlin, Germany four years ago when Horsten’s employer, the German newswire service Deutsche Presse-Agentur, named her its New York correspondent. Horsten grew up in Germany but was born in New York.

“At first we went to [Manhattan’s] Upper East Side, where my family had lived, and then we got priced out,” said Horsten. “Then we moved to Park Slope, [Brooklyn,] and we got priced out there. It was tiring. We didn’t want that to keep happening.”

When their Park Slope landlords announced a $400 monthly rent hike, they felt overwhelmed by the prospect of finding  a new apartment.

“We looked around and thought all of these different neighborhoods were so interesting,” Horsten said. “At first it was this crazy idea, that maybe we could try so many of them.” Their German friends thought they were crazy. New Yorkers, on the other hand, were far more enthusiastic.

“[Our New York friends] had such enthusiasm and so many contacts. So all of a sudden we thought, maybe we can do this,” said Zeltner.

They’re hoping to live in a dozen different neighborhoods across all five of New York City’s boroughs thanks to the kindness of New Yorkers and some serious downsizing.

‘This might not work.”

In preparation of their big move, the couple took a hard look at their possessions and went immediately into purge mode.

“We arrived in New York with one suitcase each, and somehow we ended up with so much stuff over the years,” Horsten said. They donated many of the things they no longer needed to New York City nonprofit Housing Works.

Meanwhile, Zeltner, who is self-employed and works on a variety of media and startup projects, told his wide swath of professional contacts about his family’s plan.

The couple lucked out with their first apartment — a free loft trendy Long Island City apartment building East of East.
The couple lucked out with their first apartment — a free loft trendy Long Island City apartment building East of East.

His friend and collaborator, Amol Sarva, made the family a generous offer: For the first month of their experiment, Sarva offered to let them stay rent-free at East of East, an apartment building in trendy Long Island City, Queens. Sarva, a startup founder and architect, designed and constructed the building in 2012. In exchange for a month-long stay in one of Sarva’s vacant lofts, the couple agreed to pay for utilities and supply their own furniture. When they move to their next spot, they will leave their furniture behind for Sarva to use to stage apartments.

“Felix is a dreamy adventurer,” Sarva told MagnifyMoney. “When he told me he was going to just unhook from his terrible apartment and go peripatetic like Socrates, I thought … let me give them a place to crash for a few weeks while we renovate this apartment.”

The couple hasn’t completely decided which neighborhoods they will move to from month to month. As of now, only August is a sure thing. They found a place to rent in Chinatown. As for the next 10 months, “We are not really sure,” Zeltner said.

“This has been so freeing, so liberating. But the fact that we don’t know where we’re going to live in September, that’s not such a cool feeling,” he added. “This is an experiment. It might not work.”

Finding mostly-free digs for their first month was a lucky break they don’t reasonably expect to replicate. They plan to keep working full-time and pay their way the rest of the year, looking for furnished apartments that rent for $3,000 a month. Through a newsletter they launched with their website, they’re hoping to crowdsource tips about affordable rentals from their subscribers.

“This is like a crowdfunded project, without the funding,” Zeltner said. “We need more New Yorkers reaching out to us, whether it’s recommending a neighborhood, telling us about a place their auntie rents, or helping us move. We can only do this if people continue to help.”

After a reporter at local news site DNAinfo wrote about their project, a woman contacted the couple to offer to let them house-sit her Upper West Side, Manhattan, apartment for free in March 2017.

Other help has come in the form of discounted services, including an offer from moving box rental company Gorilla Bins.

The couple is “deeply appreciative” of the assistance and support they have received, Zeltner said, and they plan to give back in several ways.

bright times ahead #chinatown #loft #apartmenthunt #nyc #nyc12x12 thank you @teget

A photo posted by NYC12x12 (@nyc12x12) on


At every 12×12 apartment, they will host a large dinner party for their temporary neighbors. The couple are also planning to launch a podcast series about their neighborhood experiences and discoveries, featuring many interviews with locals.

Ideally, the couple said, they will find enough apartments to keep the project going for all 12 months and ultimately settle on the perfect neighborhood to raise their daughter.  But, for now, the project is really about exploring the city.

“[We] can wake up and have a Uruguayan breakfast, go to a Nigerian neighborhood for lunch, have coffee with Italians, and end the day at an old American diner with a burger and a milkshake,” Zeltner said. “You can’t get that diversity of experience in any other city. We want to experience as much as that as possible.”

Follow the 12×12 project on Twitter and Instagram.

Julianne Pepitone
Julianne Pepitone |

Julianne Pepitone is a writer at MagnifyMoney. You can email Julianne here

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