The Biggest Mistakes People Make When Shopping for a Mortgage Loan
There’s nothing like the moment when you’ve found your dream home. It’s easy to get caught up in the excitement and make moves to finalize everything as quickly as possible. And while timeliness is important, it can lead to mistakes that end up costing you thousands. Here are the four biggest mistakes people make when securing a mortgage loan. Mistake #1—Not Shopping Around for Mortgage Offers It's tempting to go with the first mortgage offer you receive, especially when you're eager to close the deal on your new home. According to a LendingTree study, the majority of people (54%) do just that—they only get one offer. Jacob Channel, Lending Tree senior economist, explains why this is a mistake. “Different lenders can offer different rates to the exact same borrower. With that in mind, the first rate you’re offered may not be the lowest one you can get. The more offers you can look at, the better.” Think about it: if you only go to one store to compare prices, wouldn't you miss out on potential savings? The same goes for mortgages! Different lenders offer different rates, and even a small difference in interest rate can translate to significant savings over the life of your loan. The same LendingTree study found that 45% of those who did shop around for a mortgage ended up with a better offer. This means almost half of the buyers who took the time to compare multiple offers saved money. Mistake #2—Relying Solely on Recommendations It's great to trust your real estate agent's recommendations. After all, we work to build strong relationships with lenders and vendors to best serve our clients. However, if your agent only recommends one lender, it can limit your options. Each lender will have different options and tools for securing a mortgage. Aim to get at least two different mortgage offers to compare. Diversifying your lender options can help you find competitive rates and better terms. Mistake #3—Ignoring Different Loan Types Not all mortgage loans are created equal. Beyond the typical 30-year fixed-rate mortgage, there are various loan types like adjustable-rate mortgages (ARMs), FHA loans, VA loans, and USDA loans, each with its benefits and drawbacks. Ignoring these options might mean missing out on a loan that could better suit your financial situation. This is another reason that it’s important to shop around. Each lender may have access to different types of loans. Discussing all of them will help you understand which one aligns best with your circumstances. Mistake #4—Not Considering Future Financial Plans When choosing a mortgage, consider your long-term financial plans. Are you planning to stay in the home for a long time, or might you move before 10 years is up? This can influence which type of mortgage loan (i.e., fixed vs. ARM) is a better option for you. Additionally, think about how your income might change over time and whether you might want to make extra payments to pay off the mortgage faster. Aim to align your mortgage choice with your future financial goals to ensure you're making the most strategic decision. Conclusion Securing a mortgage loan is a significant step in the home buying process, and avoiding these common mistakes can save you time, money, and stress. Remember—it all starts with shopping around! By doing so, you'll be well on your way to getting the best mortgage deal possible.
America's Favorite Long-Term Investment: Why So Many Love Real Estate
When it comes to long-term investments, Americans have a clear favorite: real estate. According to a recent Gallup poll, 36% of Americans believe real estate is the best long-term investment, outpacing stocks (22%), gold (18%), savings accounts (13%), bonds (4%) and cryptocurrencies (3%). Why is that the case? Let’s dive into why so many people believe that owning property is the ultimate way to build wealth over time. The Popularity of Real Estate as a Long-Term Investment For 11 years running, real estate has consistently topped the list of preferred long-term investments in Gallup’s annual Economy and Personal Finance survey. This preference for real estate is driven by several factors: Tangible Asset: Unlike stocks or bonds, real estate is a tangible asset that you can see and touch. This physical presence provides a sense of security that is hard to match. Appreciation Over Time: Historically, real estate values have shown steady appreciation. From the 1990s to the 2020s, home prices have consistently increased, making real estate a reliable investment. Dual Benefits: Owning a home provides not only potential financial returns but also a place to live. This dual benefit is unique to real estate and adds to its appeal. Gallup’s poll found this preference holds true across all income levels, with 33% of lower income households stating they believe real estate is the best long-term investment, along with 36% of middle income households and 40% of upper income households. Real Estate vs. Other Investments While real estate is the top choice for many, it’s important to consider how it stacks up against other investments. Stocks, for example, have historically offered higher returns. From 1990 to April 2024, the S&P 500 surged by 1,325%, while the S&P CoreLogic Case-Shiller U.S. National Home Price Index rose by 308%. However, stocks come with higher volatility. Real estate, on the other hand, tends to provide more stable growth. Even during economic downturns, such as the Great Financial Crisis of 2008, real estate has shown resilience and recovery. This is highlighted when you look back at U.S. home price growth by the decade. (Note: link to this article on your website if you posted previously). U.S. home price growth by decade: 1990s: +30.1% 2000s: +47.3% 2010s: +44.7% 2020-2024: +47.1% Locally, home prices have risen XX% over the past year, and XX% since 2020. Is Real Estate the Right Investment for You? Real estate can be a fantastic long-term investment, especially in a growing market like [Market]. But before diving in, consider your individual situation: Long-Term Commitment: Buying a home is a long-term play. If you plan to move in a few years, it might not be the best fit. Financial Strength: Real estate requires a down payment, closing costs, and ongoing maintenance expenses. Make sure you have a solid financial foundation. Investment Goals: Consider your overall investment goals. If you prioritize high returns and easy access to your money, another investment might be a better fit. And keep in mind that diversification leads to a balanced investment strategy. Financial experts recommend spreading investments across various assets to hedge against different market forces and increase the odds of a net profit over the long term. This means integrating real estate within a broader portfolio that includes stocks, bonds, and other investment vehicles. Bottom line: While poll results show that Americans prefer real estate as a long-term investment, there is no one-size-fits-all answer. Always consult with your financial advisor when planning to invest for your future, as the best option depends on your financial goals, risk tolerance, and investment timeline.
194% ROI?! Unveiling the Home Remodeling Projects That Actually Pay You Back
Thinking about sprucing up your home? Whether you're planning to sell soon or just want to enhance your living space, remodeling can be a great investment. But not all projects offer the same return—especially since home repair costs have risen 40% since 2019. I know remodeling costs today can be disheartening, but the experts at Zonda, a housing market research firm, just released their 2024 Cost vs. Value Report, and it's packed with insights to help you maximize your return on investment (ROI). Curb Appeal is King When it comes to boosting your home’s value, exterior improvements are where it's at. According to Zonda, eight out of the top ten projects with the highest ROI are exterior upgrades. Why? Because first impressions matter. A home with great curb appeal can stand out in the market, attracting more buyers and potentially selling for a higher price. According to Clay DeKorne, Zonda’s chief editor, exterior replacement projects continue to make the most sense when it comes to adding resale value. In today’s market, characterized by higher mortgage interest rates and homeowners with significant equity, these projects stand out for their high ROI. Cost vs. Value: National Average for Home Remodeling Projects Below are all of the home remodeling projects that Zonda analyzed for its report, ranked by highest return on investment. Top 3 Projects with the Highest ROI This year’s report shows that the hottest projects for maximizing your ROI are actually the "unsexy" ones – the things that maybe don't grab headlines but definitely grab buyers' attention. Just take a look at the top three on the list, each of which has an ROI well over 100%. Garage Door Replacement: 194% ROI. This project tops the list, almost doubling its return from last year. A new garage door can dramatically improve your home’s exterior look, making it more attractive to buyers. Steel Entry Door Replacement: 188% ROI. Replacing your front door with a steel one doesn’t just boost security; it also enhances the overall appearance of your home. It’s a simple upgrade with a significant payoff. Manufactured Stone Veneer: 153% ROI. Adding stone veneer to your home’s exterior can give it a luxurious and durable look. This upgrade is not only stylish but also highly valued by homebuyers. For those looking for small projects with a big impact, doors are a great place to start. "A new garage door or new entry door can make a pronounced difference," says Todd Tomalak, principal of Zonda Advisory. "It could be the thing that makes one house stand out against all the others, making the home worth a higher price." Of course, there are other not-so-glamorous upgrades that can add value. Things like a new roof, windows replacement, and HVAC conversion also made Zonda’s list. Key Takeaway While a luxurious kitchen remodel might be your dream, the data suggests it won't necessarily pay off as much when it comes to resale value. That doesn't mean you can't enjoy a new kitchen! But if you're focused on maximizing your return on investment, target those exterior improvements and strategic interior updates first.
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