President Joe Biden’s new plan to lower housing costs includes a pilot program that waives the requirement for lender’s title insurance on certain refinance transactions, according to the White House. The plan will be announced during his 2024 State of the Union address on Thursday night.
However, that’s a controversial topic for the mortgage industry and it’s already facing resistance from trade groups. Regulators believe reducing title requirements would cut closing costs, but title and mortgage companies challenge the argument and point to elevated risks.
On Thursday afternoon, the White House announced that the Federal Housing Finance Agency (FHFA) has approved policies and pilots to reduce closing costs, including the pilot to waive lender title requirements.
The program “would save thousands of homeowners up to $1500, and an average of $750,” unlocking “substantial savings for homeowners as mortgage rates continue to fall and more homeowners are able to refinance,” the White House estimates.
Regarding the risks of waiving title requirements, it also mentioned an independent analysis showing that title insurance typically pays out only 3% to 5% of premiums in claims to consumers, compared to more than 70% in other types of insurance.
Following the announcement, FHFA director Sandra Thompson clarified that the pilot only impacts lender’s title policy or legal opinions, focuses on low-risk refinance transactions and will be subject to “robust oversight.”
Government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac’s attempts to launch title waiver programs, which aim to improve affordability by reducing closing costs, have faced resistance from trade groups since 2023 due to allegedly increased risks.
However, according to Thompson, the pilot “does not impact a borrower’s title risk since it only applies to certain refinance loans where the borrower has title to the property already.” The FHFA director added that these are “low-risk refinance transactions where there is confidence that the property is free and clear of any prior lien or encumbrance.”
In addition, Thompson said that lenders will “retain the option to provide evidence of clear title through other options, such as title insurance or an attorney opinion letter (AOL). Meanwhile, homeowners can always purchase their title insurance policy or AOL if they choose.
In March 2023, a report from PoliticoPro showed that Fannie Mae was considering piloting a program to bypass traditional title insurance and AOLs, which drew resistance from trade groups. The introduction of AOLs had already frustrated groups representing the title industry the previous year. In August 2023, Fannie Mae said it was no longer considering the pilot program.
Following the White House announcement, Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit said the trade group has “significant concerns that some of the proposals on closing costs and title insurance could undermine consumer protections, increase risk, and reduce competition.”
In an emailed statement, the American Land Title Association (ALTA) called the program a “purely political gesture offering a false promise of savings for homeowners while exposing consumers, lenders, and taxpayers to greater financial risk.”
“The approval of this waiver is a hollow attempt by the White House to placate Americans’ current economic frustrations,” the statement continued. “By announcing this only hours before the State of The Union address, without outreach to, or engagement with, the title insurance industry, the Administration has reduced the crucial role of the industry to nothing more than a politicized talking point.”
The trade group also noted that federal lawmakers introduced a bill in October 2023 that would require title insurance on all mortgages purchased by the GSEs.
“Since the waiver program was first reported, the FHFA has faced strong bipartisan opposition,” the statement read. “The Administration should not be playing politics with the American Dream.”
In her statement, Thompson said, “As with any pilot undertaken by an Enterprise, this effort will be subject to robust oversight by FHFA to monitor the effectiveness of the pilot in meeting its desired outcomes.”
Fannie Mae announced on Wednesday an enhancement to its desktop underwriting system, which will facilitate the asset, income, and employment verification process through a single data source.
Lenders can use a single 12-month asset verification report to identify recurring deposits in the applicant’s digital bank statement data. The solution will automatically use approved data from third-party vendors to validate income, employment, and assets in one step. It will be available effective March 29.
With the new functionality, the government-sponsored enterprise (GSE) is “exploring new ways to help our lenders open more doors for aspiring homeowners” and “removing a hurdle from the loan application process,” Cyndi Danko, senior vice president and single-family chief credit officer, said in a prepared statement.
Lenders can use the same report to check applicants’ rent payments and cash flow history. This may benefit qualified borrowers with limited or no credit history, potentially increasing the number of applicants approved, the GSE said.
Fannie Mae explained that lenders who opt into the DU validation service and leverage asset verification reports with at least 12 months of data may get “clear to close” faster and achieve Day 1 Certainty, which may reduce repurchase risk. In February, Fannie Mae also announced a “notice of potential defect” functionality in the latest version of its system Loan Quality Connect to address buybacks.
In a survey of pilot lenders, the GSE also noticed that 50% of them had some level of cost savings over their existing third-party report costs with the single asset verification report.
The enhanced verification process comes after the launching of an early assessment tool to determine buyers’ preparedness and mortgage options without the impact of a hard credit check. It also follows the announcement of an income calculator for self-employed borrowers, and a down payment assistance tool.
As I watch it snow here in the Sierra, hey, if you’re going to watch one video this week, watch this 15-second classic (with sound) on how our banking system works. You’ll watch it at least twice, and let your kids figure it out. Since its all-time high of 30,456 in 1921, the bank population in the United States had declined to only 4,377 at the end of 2020, a decline of about 86 percent. Thousands of residential lenders hope they’re not involved in the same trend. I mention this because, speaking of numerical trends, the United States is producing more oil than any country has ever produced in the history of the world: 13 million barrels per day. It’s been economically punishing for the countries in OPEC+, which has seen its global market share drop to a new low of 48 percent. This is an interesting issue when it comes to inflation, which helps drive mortgage rates, and will be a very interesting issue in the next eight months when it is expected that two octogenarians will be vying for the top job. (Found here, this week’s podcast is brought to you by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender. nCino Mortgage Suite’s three core products – nCino Mortgage, nCino Incentive Compensation, and nCino Mortgage Analytics – unite the people, systems, and stages of the mortgage process. Hear an interview with Nerdwallet’s Kate Wood on housing market supply and advice for potential homebuyers.)
Lender and Broker Services, Products, and Software
To access the largest subset of home buyers in the market, lenders are redefining their go to market strategy. Milestones’ homeowner engagement solution goes well beyond a “What’s my home worth?” assessment. It enables lenders to proactively guide consumers through the entire homeownership journey with weekly touchpoints that are relevant and specific to their home. With essential resources for home services, home improvements, home document storage, and a homeowner dashboard to monitor and track their activity in one place, this platform is the one-stop shop for all things home. What sets them apart is its fully white-labeled capabilities that provides a seamless consumer experience that keeps YOUR lending products and partners top of mind. Adopt the ultimate homeowner engagement solution to connect more meaningfully with your prospects and borrowers and uncover new opportunities to boost your revenue. Book a meeting with sales today.
“Innovation-Powered Precision, Time-Tested Excellence! With a foundation built on 43 years of experience, PCV Murcor brings a deep understanding of our clients’ goals that complements appraisal modernization. Over our long history, we have honed our processes to provide reliable and unparalleled appraisal management services, setting the standard for excellence in the industry. Our use of state-of-the-art AI technology ensures precision and efficiency in every aspect of our service. AI’s ability to enhance efficiency, accuracy, and flexibility is reshaping the way properties are evaluated with distinct advantages. To learn more about our future-ready solutions for today’s appraisal management, visit here.”
“PlainsCapital Bank National Warehouse Lending, a subsidiary of Hilltop Holdings (NYSE: HTH), focuses on relationship-driven business with long-term success, by-the-way, have you heard about our BTW Services? We are pleased to offer all customers our Broker-Dealer, Treasury Management and Warehouse Lending (BTW) services. Our Broker-Dealers can help customers hedge their origination pipelines by buying and selling TBAs, specified pools and whole loan trading. Our Treasury Management team helps customers with escrow and cash management. Finally, the Warehouse Lending team provides customers with confidence to meet their loan funding needs. If you are interested in learning more about our BTW Services please contact Deric Barnett or Justin Tannen.”
TPO, Broker, and Correspondent Product News
“It’s been a busy first quarter for the Newrez Correspondent team! Delegated pilot programs for both 2nd Mortgages & Non-QM have been launched with more exciting news on the way. Enhancements to come include HomeReady® & Home Possible® $2500 grant products; FHLMC’s GreenCHOICE; FHA HUD 184/Heritage; Co-Issue offering, along with improvements to our Non-QM Smart Series programs, Enote expansion and more. Soon, our sales team will present our top 2023 clients their Premier Partner Plaques (PPP). This PPP award recognizes the partnership and is awarded to our lenders who finished at the top for loans funded in 2023. There are so many reasons to be aligned with a top tier partner, and Newrez Correspondent is that partner! For those not signed up with Newrez and looking to take advantage of these enhancements, or existing partners who want to become Premier, contact our sales team to learn more.”
Rocket Pro TPO has announced an update to its offerings, including its Credit Upgrade program. This initiative, previously exclusive, is now available to all partners. It provides a no-cost, rapid rescore service for clients with credit scores between 570 and 779, aiming to help them qualify for better loan products and rates. Additionally, Rocket Pro TPO offers a Home Equity Loan product that allows clients to protect their low mortgage rates while tapping into their home’s equity at a competitive rate. This option provides a fixed-rate, lump-sum payment, offering a stable alternative to variable-rate loans. For those interested in learning more about Rocket Pro TPO’s cost-saving products, the replay of their latest IGNITE Live seminar is available on their YouTube channel: IGNITE Live Replay. For more information on Broker or Non-Delegated Correspondent partnerships, contact Rocket Pro TPO to learn more.
Angel Oak Mortgage Solution is now offering Bank Statement Loans tailored specifically for self-employed individuals who have been in business for 1-year.
Reach more clients with LoanStream’s Non-QM Programs with loan amounts up to $4 Million. LoanStream NaNQ / Non-QM Programs are proprietary programs specifically created to fulfill mortgage program options for LoanStream brokers with non-prime programs.
The 5 Cs of Credit
A good trivia question for underwriters, or loan originators, is, “What are the 5 C’s?” The answer is character, capacity, capital, collateral, and conditions. Those are from a simpler time, but the fundamentals still apply despite all the hubbub about credit costs, scores, monopolies, hard pulls versus soft pulls, and… tri-merge versus bi-merge. I bring this up because it appears that the “new” scoring and bi-merge will be done at the same time, at the end of 2025. So, the industry has some to adjust and accommodate.
“Dear Stakeholders,
“Thank you for your continued engagement with FHFA’s Credit Score Initiative. As many of you likely saw, FHFA just announced a series of updates related to the implementation of the new credit score requirements for single-family loans delivered to Fannie Mae and Freddie Mac (the Enterprises). We are also pleased to announce the schedule for upcoming stakeholder forums to be hosted by FHFA, which is outlined below.
“Following valuable and thoughtful feedback gathered from the sessions held in late 2023, FHFA is aligning the implementation date for the bi-merge credit reporting option with the transition from the use of Classic FICO. This aligned transition is expected to occur in the fourth quarter of 2025. We expect this update will reduce cost and complexity for market participants.
“To better support the transition, the Enterprises are accelerating the publication of historical data on the VantageScore 4.0 model. This publication, originally targeted for the first quarter of 2025, is now expected early in the third quarter of 2024. FHFA and the Enterprises continue to work towards providing similar data to support the transition to the FICO 10T model.
“We would like to thank all those who participated in the stakeholder forums for sharing their perspectives on the sequencing of project milestones, as well as the expected uses of the historical data to support the new models. Your input helped inform the latest updates to the Credit Score Initiative.
“FHFA will be hosting the next series of virtual stakeholder forums in the coming weeks. The schedule is planned as follows: Bi-Merge Implementation Considerations (Tuesday, March 12, 3:00-4:00pm Eastern), Bi-Merge Implementation Considerations (cont’d) (Tuesday, March 26, 3:00-4:00pm Eastern), Transition Period Loan Delivery Considerations (Tuesday, April 9, 3:00-4:00pm Eastern), and Transition Period Loan Delivery Considerations (cont’d) (Tuesday, April 23, 3:00-4:00pm Eastern).
“As a reminder, these virtual stakeholder forums are open to the public, but they are not intended for media purposes. FHFA will provide agendas, materials, and links to access the sessions as they approach. Thank you again for your continued engagement. If you have further questions or thoughts, please contact us at [email protected].”
After 2023’s jarring price hikes, the credit bureaus and FICO are raising their credit reporting costs once again, passing this on to credit reporting agencies (CRAs). This latest price increase affects both hard and soft pull credit reports. In response, CRAs everywhere have updated their pricing options, allowing the customization of lender’s prequalification options to suit budgets.
And compliance departments noted that the FTC, which has authority to enforce the Equal Credit Opportunity Act (ECOA) against most types of non-depository financial services providers, issued a report in February describing its enforcement actions and related activity under ECOA during 2023: Annual Report on Its ECOA Enforcement and Policy Development Activity.
Capital Markets
The Fed has been preaching patience from markets when it comes to enacting rate cuts, a sentiment that was further bolstered yesterday after the central bank’s preferred price gauge rose in January at the fastest pace in almost a year (2.4 percent). Inflation rose 0.4 percent month-over-month compared to a downwardly revised 0.1 percent increase in December. The core rate increased 2.8 percent year-over-year. Personal Incomes rose 1.0 percent in January, which was also much higher than expected, driven primarily by growth in the annual cost of living increase in social security. Fed policymakers took the data in stride, repeating that easing can begin in the summer and there is room to be patient.
Yesterday also saw the release of a weaker-than-expected Chicago PMI for February and a disappointing Pending Home Sales report which came in down 4.9 percent for January. Initial jobless claims for the week ending February 24 increased to 215k, which is still a relatively low number for this series. Continuing jobless claims for the week ending February 17 increased by 45,000 to 1.905 million, which is the highest level for that series since November. It has become more challenging to find a new job right away, which indicates that the labor market is not running as tight as it once was. The four-week moving average for continuing claims of 1,879,750 is the highest since December 11, 2021
Today’s economic calendar contains no “first tier” scheduled market-moving news but has no fewer than seven Fed speakers scheduled. Go ahead and add in the final February S&P Global manufacturing PMI, ISM manufacturing PMI for February, January construction spending, and Michigan sentiment for February. (Unemployment data, normally released on the first Friday of the month, is next Friday.) After the 10-year yield rose 28 basis points in February, we begin March with the 10-year yielding 4.23 after closing yesterday at 4.27 percent, Agency MBS prices better about .125, and the 2-year at 4.59.
Jobs
Mark Pasternak appointed as the newest SecurityNational Mortgage Company VP to Spearhead Operational Excellence. In a significant move to bolster its leadership team, Security National Mortgage Company has announced the appointment of Mark Pasternak as Vice President of Mortgage Operations. Pasternak joins the company with over three decades of industry experience, including his most recent tenure serving as EVP of Operations at Academy Mortgage. His leadership background in both sales and operational management is sure to provide an operational edge for SecurityNational Mortgage. Andrew Quist, President of SecurityNational Mortgage Company, stated: “Mark is joining us with a wealth of experience and his innovative nature will be highly valuable to our operations team. Even in this challenging mortgage rate environment, SecurityNational is still dedicated to recruiting elite industry talent like Mark that align with our growth focused business objectives. We’re excited to see the impact Mark will have in our operations.” The addition of Mark Pasternak to the SecurityNational team underscores the company’s commitment to recruiting top talent to lead its strategic initiatives. With Pasternak at the helm of operations, SecurityNational is poised to enhance its operational capabilities and achieve new milestones in service and efficiency.
In the Northwest and California, Banner Bank is searching for Mortgage Loan Officers looking to create lasting Realtor and builder relationships at a bank focused on the market today. Banner has opportunities for lenders looking for local decision making with FHA, VA, USDA, state bond and true Portfolio lending opportunities along with servicing retained Fannie and Freddie loans to assist in client retention. Additional highlighted products cover CRA lending with private label no payment down payment assistance to help assist all borrowers with the right opportunity. Banner is the right fit for an established team, or the individual looking to grow their business and take the next step in their career. Please send resumes to Aaron Miller.
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The new functionality, added to the quality control process, “gives mortgage lenders the opportunity to address loan defect concerns earlier in the review process,” Scott Olson, executive director of the Community Home Lenders of America (CHLA), said in a statement.
“We hope it will lead to fewer costly and economically inefficient repurchase demands,” Olson added.
The benefit of providing more time for lender feedback was also noticed by the Mortgage Bankers Association (MBA). President and CEO Bob Broeksmit expressed his appreciation with the agency’s move, which aligns with recommendations made by the MBA.
“But there is further work Fannie Mae can undertake — including exploring a similar pilot program to Freddie Mac‘s — to improve the loan repurchase process and substantially reduce or eliminate repurchases on performing loans,” Broeksmit said.
Broeksmit‘s reference is to a fee-based repurchase program for performing loans announced in November 2023 by Freddie Mac. The goal of the alternative pilot program is to improve the quality of performing loans through a potential replacement of its current repurchase policy by defective performing loans.
Olson said the GSEs’ steps represent “real progress” in addressing the repurchase issue.
“These developments represent a more constructive approach to the dual objectives of maintaining GSE loan quality while not disincentivizing loans for underserved borrowers or eliminating borrower loss mitigation rights under repurchase demands,” Olson said.
Broeksmit added, “We will remain engaged with the GSEs and FHFA to ensure high-quality underwriting and an appropriate rep and warranty framework.”
In October, FHFA Director Sandra Thompson said the regulator expects originators to deliver loans consistent with GSE guidelines. But she added that the enterprises must implement a fair, consistent and predictable process for identifying loan defects and the appropriate remedies.
“After multiple years of record-high loan volume, we have seen an increase in the absolute number of repurchase requests — which is to be expected,” Thompson said at the MBA Annual conference in October 2023.
“The good news is that there has been a large decrease in repurchase requests since their peak in early 2022, as the enterprises have worked through loans originated during the refinance boom.”
I don’t usually dive into odd niche topics like this, but I just spent 12 hours car shopping over the weekend. That’s a lot of test drives and awkward conversations with over-enthusiastic salespeople. Sorry, Clayton, I can’t picture myself driving this car off the lot today…why do you ask?
Long story short, I’ve compared tons of cars recently. Hybrids, as you might know, are always more expensive than their all-gas counterparts. But…aren’t hybrids cheaper to operate? Which means…could they save us money in the long run?! This got my finance brain whirring to life.
I wrote an article in 2020 and updated it in 2023 that covers the real, total cost of car ownership. The cost of car ownership can be broken down into 6 main categories:
Purchase/Depreciation
Financing
Maintenance and Repair
Fuel
Registration/Inspection
Insurance
Financing rates, registration costs, and inspection costs are universal for all cars. There’s no difference between a traditional gas car and a hybrid on those axes.
But we know (or at least suspect) purchase costs, maintenance, fuel, and insurance costs will vary between hybrids and all-gas cars.
A Bird in the Hand…
Aesop wrote in 600 BC that “a bird in the hand is worth two in the bush.” Or, in modern terms, “I’d rather have a dollar in my hand today than two dollars in 20 years.”
Money today is worth more than money in the future. This is called discounting. And we’ve used this idea before to analyze mortgage costs.
We’re faced with a similar problem today.
When we buy a hybrid car, we spend more on the purchase price today. But, ostensibly, we save operating costs each year we own the vehicle. However, those future savings are worth less than the extra dollars spent today.
Do we save enough on long-term operating costs to compensate for the differences in sticker price and depreciation? That’s the question!
To answer it, we need to:
Understand the differences in costs between gas cars and hybrids (sticker cost, depreciation, fuel costs, insurance costs, maintenance costs).
Determine an appropriate discount rate for this analysis and apply it.
An Appropriate Discount Rate
As of 2022, the average age of all cars on American roads is 12.5 years. That said, the average car owner has their vehicle for 8 years before (most often) selling it or (less often) it breaks down completely.
Therefore, a happy medium duration for today’s analysis is 10 years. We’re going to look at the differences between hybrids and gas cars over a 10-year life.
How much less valuable is a dollar in 2034 than a dollar today?
Warren Buffett uses U.S. Treasury bond rates as his discount rate. I’m inclined to agree with him. It’s “the risk-free rate.” In any analysis, we can ask ourselves, “Would I rather pursue [this risky option], or simply invest my money in U.S. Treasury bonds for a decade or two?” Good enough for Warren, good enough for me.
As of February 2024, the 10-year Treasury rate is 4.3%. The table below shows how to apply that discount rate to future savings.
Example: I could take $74.47 today, invest it in a 4.3% annual interest bond, and I’d have $100.00 in seven years. Thus, if a hybrid car saves me $100 in 2031, it’s precisely the same as having $74.47 in my pocket today in 2024. A bird in the hand…
How Much Does a Hybrid Save Us?
We need an example of two cars to analyze. Since Kelly and I are currently active car market participants (we’re soon to have a “Baby on Board”…by the way, what’s the deal with those stickers?), I’ve been researching the Kia Sorento. Let’s dig into the details of the all-gas Sorento vs. the hybrid Sorento.
All these details I’m about to share with you are shown mathematically in this spreadsheet. Please feel free to make a copy and play around yourself.
To make a copy of a Google Sheet: File –> Make a Copy
Sticker Price and Depreciation Rate
The gas Sorento starts at $31,990. The hybrid Sorento starts at $36,990.
According to iSeeCars, both vehicles will depreciate 53% in their first 5 years.
Gas Expenses
To calculate estimated gas expenses, we need to understand:
how far we drive
our miles-per-gallon efficiency of the cars
and the cost of gas
Depending on your source, the average American drives between 13,000 and 15,000 miles per year. We’ll use 14,000 miles per year for this article.
The Kia Sorento hybrid gets 35 miles per gallon (we’re looking at the all-wheel drive model, thanks to snowy Rochester winters). The all-gas Sorento gets 24 miles per gallon.
Average American gas prices are currently $3.27 per gallon.
We combine those numbers to find out:
The Sorento Hybrid incurs $1308 of gas expenses per year.
The all-gas Sorento incurs $1907 of gas expenses per year
Insurance Costs
The average “full coverage” auto policy costs $2000. Your miles may vary (#carjoke).
Insurance is very personal in that nature. Your driving history and desired coverage level significantly affect the insurance premium.
Nevertheless, we’ll use $2000 per year for the all-gas Sorento. Hybrid insurance costs, on average, 7% more than all-gas models; the Sorento Hybrid will cost $2140 per year.
Maintenance
Most sources cite that hybrid maintenance costs are lower than all-gas engines, as hybrids use regenerative braking (fewer brake replacements), don’t use alternators or starters, and tend to have simpler transmissions.
Unfortunately, I cannot find any sources that provide hard numbers to support this claim! If you find something, please let me know.
Therefore, I’m using an average figure of $600 per year for repairs and maintenance and biasing those dollars towards the end of the cars’ lives. Newer cars break down less and are covered by various levels of warranty.
All-In Costs: Hybrid vs. All Gas
Over our 10-year analysis period, the Kia Sorento Hybrid would cost us $55,662(depreciation + gas + insurance + maintenance), as measured in 2024 dollars.
The all-gas model would cost us $56,491.
Pretty darn close, but it’s a slight nod to the hybrid model. Category-by-category, the results are:
The hybrid costs $3000 more in depreciation costs.
The hybrid saves $4997 in gasoline costs.
The hybrid costs $1167 more in insurance.
And while I’m focusing only on dollars and cents here, there’s an environmental argument too. I won’t dive into the details. But you should probably place a value on environmental costs and benefits (albeit a difficult value to define in dollars and cents).
Of course, this is a perfect example of “average pilot syndrome.” Averages are useful in theory but rarely in practice. You must re-run this analysis for your unique scenario. The first questions that come to mind are:
Which specific model are you looking into? It might not be the Kia Sorento.
What are the miles per gallon ratios of the all-gas and hybrid models?
What are insurance rates like? Not only for your preferred car, but for you?
What are the typical maintenance costs of your desired car?
How does your car depreciate over time?
Should you adjust the discount rate? (PS – you can play around with the spreadsheet yourself, and you’ll see that the discount rate does not change the outcome significantly in this case.)
Was It Worth It?
We’ve covered a lot of conjecture and “what if” questions, made some assumptions, and created a spreadsheet. Is it all worth it?
First, I think I’m directionally accurate. Will the real world play out as I’ve modeled here? Of course not. For all I know, an asteroid will blast our car into smithereens on its first night in the garage (it’ll be a new kind of hybrid; half shrapnel, half vapor). But I think I have a better factual understanding now than I did before. I hope you agree.
This was ~2 hours of work (mainly on the writing, not the math) to optimize an $800 decision. And because I’ve discounted those future dollars, that’s $800 as measured today. Not bad! For some hybrids, this is likely to be a multi-thousand dollar difference. Nice!
Time to unplug, fill up, and peel out.
Thank you for reading! If you enjoyed this article, join 7500+ subscribers who read my 2-minute weekly email, where I send you links to the smartest financial content I find online every week.
-Jesse
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In today’s volatile housing market, ensuring your home is protected against unexpected repairs and replacements is more crucial than ever. As homeowners seek peace of mind amidst the unpredictability of homeownership, home warranty companies have stepped up to offer a buffer against unforeseen expenses.
5 Best Home Warranty Companies
With so many options available, pinpointing the most reliable and value-packed home warranty company can be daunting. To help you choose, we’ve curated a list of the best home warranty companies to ensure your home’s systems and appliances receive the top-tier coverage they deserve. Take the time to discover which provider aligns best with your needs.
#1 Choice Home Warranty
There are plenty of reasons to go with Choice Home Warranty. First, they are a top-rated business according to ConsumerAffairs.com and have an average rating of 4.8 out of 5.
They have a five-star rating from Trust Pilot, and Inc. 5000 has recognized them as one of America’s fastest-growing private companies.
Choice has customer service available 365 days a year, 24 hours a day, 7 days a week. So if you’ve got a problem, don’t be afraid to pick up the phone and call them.
They are more than happy to answer any questions about your home warranty plan or, if need be, put in a request for a repair. A licensed, pre-screened, and continuously monitored technician will come to your house, usually within one or two business days.
The age of your home, its systems, and appliances is not relevant to Choice Home Warranty. They always cover items that have been properly maintained and were in well-working order when coverage was initiated.
If the item in question needs to be replaced but is no longer available on the market, they will give you a cash payment of the item’s replacement cost.
Another plus is that you don’t even have to get your home inspected before Choice Home Warranty will begin offering you coverage.
Choice also has a very reasonable $85 dollar service call, which makes them among the most competitive warranty providers for service calls.
Plan Options
1. Total Plan ($450 a year)
Includes coverage on the following —
AC
Heating
Electrical
Plumbing
Water Heater
Whirlpool
Refrigerator
Oven
Dishwasher
Microwave
Garbage Disposal
Washer and Dryer
Ductwork
Garage Door Opener
Ceiling and Exhaust Fans
2. Basic Plan ($378 a year)
Includes coverage on everything mentioned above, EXCEPT:
AC
Refrigerator
Washer and Dryer
Items that can be added at additional cost include:
Pool
Central Vacuum
Well and Sump Pump
Limited Roof Leak
Stand Alone Freezer
Second Refrigerator
Septic System
Septic Pumping
Read our full review of Choice Home Warranty
#2 Advanced Home Warranty
Advanced Home Warranty offers comprehensive coverage and a 24/7 claims hotline, making it a strong choice for anyone considering a home warranty.
Home warranties are available nationwide, so you can qualify for a plan, no matter where you live in the U.S. Plus, you can try it out without any risk by signing up to get your first month completely free of charge.
Trade service fees are reasonable at $60. If the cost of the repair is less, you’ll pay the smaller amount. This is one of the lowest service fees available among the providers on our list.
While they don’t offer a wide range of plans, you can get coverage on some of the big-ticket items associated with homeownership.
A low monthly fee can be much more manageable than paying for replacements outright every time an appliance breaks. There are also parts of even larger systems that are included in their coverage.
Here’s a breakdown of the two home warranty plans available from Advanced Home Warranty, how much you’ll pay, and what exactly they include.
1. Basic Plan ($370 a year, plus one month free)
Includes coverage on the following:
Heating System
Electrical System
Plumbing System
Dishwasher
Microwave
Garage Door Opener
2. Total Plan ($450 a year, plus one month free)
Includes coverage on everything above, PLUS:
Air Conditioning
Refrigerator
Washer/Dryers
Do read each home warranty plan for details on exactly how each specific item on the list is covered.
Read our full review of Advanced Home Warranty
#3 Liberty Home Guard
Liberty Home Guard offers a high degree of personalization for your home warranty coverage. For example, you can pick the plan and also how often you want to be billed.
You can choose monthly payments, annual payments, or for the most savings, multi-year home warranty plans.
Liberty Home Guard offers a service call fee of $60, which is a competitive service fee. You can also expect your service call to be delivered within 48 hours of making a claim.
You don’t need a home inspection to qualify for coverage with Liberty Home Guard. There’s also no limit to how many claims you can file within a year.
You can file your claims online for your ease and convenience. And with a 60-day satisfaction guarantee on service, you’re sure to be satisfied with the repair or replacement process.
If for some reason, you want to cancel your plan early, it’s entirely possible because there’s no annual contract. You’ll receive a prorated refund for any time you’ve paid for, except for a small administrative fee.
With Liberty Home Guard, there are three different coverage options you can choose from. You can also include optional add-ons in any plan.
1. Appliance Warranty for $39.99 Monthly or $399.99 Annually
Clothes washer
Clothes dryer
Refrigerator with ice maker dispenser
Built-in microwave oven
Dishwasher
Garbage disposal
Range/ oven/ cooktop
Ceiling and exhaust fans
Garage door opener
2. Systems Guard for $49.99 Monthly or $499.99 Annually
Air conditioning
Heating
Ductwork
Plumbing
Electrical
Water heaters
3. Total Home Guard for $59.99 Monthly or $599.99 Annually
This choice offers the most protection of all the plans and includes everything listed in the two plans above.
4. Optional Add-ons
Pool and spa: $17.00 monthly; $195.00 annually
Sump and pump: $3.00 monthly; $36.00 annually
Central vacuum: $3.00 monthly; $36.00 annually
Well pump: $9.00 monthly; $101.00 annually
Additional spa: $16.00 monthly; $188.00 annually
Septic system and septic sewage ejector pump: $11.00 monthly; $123.00 annually
Stand alone freezer: $4.00 monthly; $44.00 annually
Second refrigerator: $4.00 monthly; $44.00 annually
Read our full review of Liberty Home Guard
#4 Complete Protection
Complete Protection is another excellent home warranty company. Servicing all but nine states, this A+ Accredited Business is open 24/7.
Only slightly more expensive, this once small-scale, family-owned business offers some of the most comprehensive home warranties available in North America.
One of the many benefits offered by Complete Protection is their no-fee service call policy. With most quality providers charging at least $50 per service call, having no service call fee at all is a major perk.
They have five plans you can choose from:
Kitchen/Laundry: $32 a month/ $384 a year — covers your dishwasher, oven, refrigerator, and washer and dryer.
Heating/Cooling: $34 a month/ $408 a year — covers your furnace, AC, and water heater.
Basic Built-ins: $40 a month/ $400 a year — Furnace, AC, water heater, dishwasher, and oven.
Full House: $50 a month/ $600 a year — Furnace, AC, water heater, dishwasher, oven, refrigerator, and washer and dryer.
Full House Plus: $60 a month/ $720 a year — Includes everything mentioned in the first four plans, but also includes electrical wiring and in-bound water pipes.
What makes Complete Protection stand out even more:
There are a few other things that make Complete Protection stand out from its competitors. For one, their home warranties don’t have a deductible. As a result, you don’t have to pay any approved repair costs when something happens — this includes the initial service call, parts, and labor.
Secondly, CP pays for all preventative maintenance. Other home warranty companies mandate that their customers undergo preventative maintenance on items such as HVAC systems, but they won’t even pay for it. Instead, they force their customers to do so!
Thirdly, CP home warranties cover all the parts within an appliance. Most home warranty companies exclude parts like ice makers or washing racks within dishwashers. CP does not pick and choose which parts it will cover.
Lastly, Complete Protection allows you to choose your own service contract provider. So, if you have a certified contractor with whom you work, you can go to them whenever home repairs are needed.
They do this because they feel that their customers should always be comfortable with the person working in their house.
Read our full review of Complete Protection
#5: American Home Shield
The accolades American Home Shield has received are many. In addition to being a Better Business Bureau Accredited Business, they also received the Women’s Choice Award from 2014 to 2016.
On top of that, Home Warranty Reviews gave American Home Shield the Best in Service award in 2014 and ranked them as Top Rated from 2015-2017. Last but not least, they are Consumer Affairs Accredited.
Why so much recognition from the industry? For starters, they’re always open. You can always reach them regardless of what day or time it is. And, when you do, expect a local contractor to be at your home within no more than 24 hours. You don’t even have to get on the phone. You can request home repairs directly from their website.
Another reason American Home Shield is recognized as the best among the best is its versatility with its home warranty plans. They have four to choose from:
Systems Plan: Covers the replacement or repair of your home’s key systems, such as: plumbing, electrical, heating, air conditioning, and smoke detectors.
Appliances Plan: Includes coverage on common, everyday household appliances, such as refrigerators, built-in food processors, dishwashers, and washer and dryers.
Combo Plan: Get coverage on all of your primary home systems and appliances. Saves you $14 a month if you were to rather purchase the systems and appliances plans separately.
Build your own plan: Choose only what you want to be covered by selecting 10 or more items from their list of covered items. This way you get the coverage that you care about the most.
Another element of their customized service is their service fees. American Home Shield allows customers to choose from a service fees range of $75, $100 or $125 per service request. This allows you to get the plan you want without having to account for a high service call fee.
The ability to choose your own service call fee regardless of the plan you’re on separates American Home Shield from most other home warranty companies which carry a standard service call fee.
Additionally, American Home Shield can provide coverage for your pool, spa, well pump, and septic system (at additional costs) and can assist you during the moving process by covering your home while it’s listed. If the new owner decides they would like to upgrade service afterward, it’s an easy switch to do so at closing.
Read our full review of American Home Shield
Methodology: How We Chose The Best Home Warranty Companies
When researching the best home warranty companies, we analyzed over 20 of the most popular home warranty companies. Our team spent hours reviewing each home warranty company. We examined many factors, but mainly focused on the following:
Home warranty plans and options
Pricing
Reputation and trustworthiness
Customer reviews
Pros of Home Warranties
Peace of Mind
One of the major benefits of a good home warranty is peace of mind. A home warranty can bring some real financial security against unexpected home repairs. While getting your home in ideal shape can be tough, maintaining that level can be even more stressful. A good warranty coverage can cut away a big chunk of that worry.
Convenience
One of the biggest problems people can encounter when faced with unexpected breakdown at home is finding good help. But a home warranty also reduces some of that stress, as your provider can provide you with a relevant licensed expert within their network.
Potential Savings
In many cases, standard home repairs – such as a new boiler, for example – can be a lot cheaper if replaced under warranty. While home warranties can’t guarantee savings, chances are you will see the benefits speak for themselves over time.
Transferable
Many home warranties are transferable, meaning you could carry your plan to a new home if you decide to move. Be sure to check whether transferability is a feature of any warranty before signing if that’s important to you.
Cons of Home Warranties
Wait Times
Unfortunately, wait times for claims can sometimes keep you waiting. If you need a quick fix or emergency repairs at home, you may have to wait longer than you would like. One thing that can help here is looking for a provider that provides an online claims process. This is because online claims are often processed faster than those done over the phone.
Coverage Exclusions
Home warranties don’t cover everything, and it can be hard in an emergency to remember your exact coverage limits. It’s important to read the details carefully before signing up, and put a plan in place if you need work that falls outside your warranty coverage.
Cost
Home warranty coverage isn’t cheap, especially if you want to secure protection across your property. You won’t necessarily be covered by service fees, even if you choose a plan with a high service fee. And of course, some maintenance and repairs can come with further costs on top of your plan. These high costs can make it difficult to discern whether a home warranty is the right thing for you.
Other Home Warranty Companies to Consider
Here are a few other home warranty companies that didn’t make our top 5 that you may still want to look into.
Like so many things in our lives, a home warranty is something that we don’t often think about until we absolutely need it. Sure, you have home insurance, maybe even flood insurance, but that only covers certain situations.
Homeowners Insurance
Homeowners or renters insurance can cover damage to your home from things like fire, theft, storms, and some natural disasters. In addition to your homeowners insurance plan, you should choose to purchase a home warranty to protect your belongings in a way that insurance lacks.
If you’ve ever purchased a large appliance, a computer, or even a television from a retailer, then you’re probably familiar with the concept of a warranty.
However, those are warranties sold at the time of purchase and cover only one product. The benefit of home warranty protection is that it can cover every product in your home and more.
Choosing a Home Warranty Plan
What a home warranty plan covers will depend on the plan you choose, and there are many to choose from. A home warranty can cover anything from your microwave oven to your plumbing and your electrical systems.
Deciding which plan is right for you will determine what items and systems it covers and how much it will cost. Typically, home warranties charge either a small monthly or annual fee that can save you a lot of money in the long run.
How to Choose the Right Home Warranty
Choosing the right home warranty is key. Let’s run through all the details you need to consider before making your decision.
Determine Your Coverage Needs
At the very least, it’s important to get at least an idea of what sort of coverage you need. Take the time to decide which items in your home you want to protect before comparing offers. You’ll find plans that cover appliances, home systems, and plans that cover both.
Compare Quotes
It’s worthwhile to shop around. Try to acquire at least three different quotes from plans that you’re genuinely interested in. And use this time to also prioritize clearing up any questions you have about the policies you’ve been offered.
Don’t forget to pay close attention to the various prices you’ll see for service call fees. Some companies are much more competitive than others, and some even offer a service fees range which you can choose from depending on your needs and budget.
Review Sample Contracts & Liabilities
The next step is to review any sample contracts carefully. You’ll want to identify the limitations and exclusions in the contract, especially.
Furthermore, be sure to double-check cancellation policy just in case you decide your warranty isn’t working for you later on.
Check Reviews
Finding the best home warranty company for you will require some further research. You can read customer reviews online to find a company that provides great customer service as well as competitive plans.
Be sure to look out for any record of previous legal action taken against the company, too.
Home Warranty FAQ
What is a home warranty?
A home warranty is a type of service contract purchased to cover breakdowns, repairs, and replacements of home appliances and systems. Home warranties are designed to cover normal wear-and-tear damage on covered items and systems.
When a covered item breaks down or otherwise requires attention, you file a claim with your warranty provider. They then send a licensed technician to your home to assess the issue. Instead of paying for the full cost of the repair, being under warranty generally means paying only a small service fee for necessary repairs. The price of service fees varies between providers.
Home warranties are popular because they offer homeowners maintenance coverage and emergency repairs without having to rely on savings. The home warranty market today is huge and can provide terms for homes and budgets of many shapes and sizes.
What does a home warranty cover?
Home warranties can cover a whole range of systems and appliances within your home. You can decide how much you want to spend and determine what items will be covered by your home warranty.
Most home warranty companies break down their offerings into good, better, and best options. The good option, and least expensive, is one that covers most if not all of your appliances.
Major Home Systems
More expensive on an upfront basis are plans that cover major home systems. These home warranty plans cover the systems within your home. If you’re renting, this may not be of concern to you. However, if you own your home, you know that a plumber or electrician can cost a lot more than replacing your refrigerator.
If you’re less concerned with appliances and worried about what keeps your home humming along, then you may want to consider a system plan.
Appliances
Appliances like your microwave, washer and dryer, dishwasher, and often a lot more are covered by the best home warranty companies. These are great options for those who are renting or want to spend the least amount of money.
Systems & Appliances
The most expensive plans, of course, offer the most coverage. The best plans cover both systems and appliances. So while they’re the most expensive, they’re also the best value. Covering your systems and appliances together will typically save you around 20% to 30% of your total bill.
Basic plans from the best home warranty companies will cover the majority of systems and appliances in your home but don’t cover everything. If you have a pool, for instance, you may have to choose additional coverage.
Some home warranty companies even allow you to add coverage to cover your homeowners’ insurance deductible. Combining appliance and system coverage may also include these additions.
There are exclusions to what a home warranty will cover. Unfortunately, no plan is a blank check to have every item in your home replaced. These are repair plans and not replacement plans.
What is not covered by a home warranty?
The extent of your warranty coverage will vary greatly between companies and plans available. Having said that, however, here is a list of the ideas that are usually not covered by a home warranty:
Structural issues, paint and flooring
Commercial-grade equipment or systems
Pre-existing conditions
Rust, corrosion and sediment problems
Improper maintenance, installation, design, or manufacturer defect
Detection and removal of asbestos and mold
Building and zoning code violations
How much does a home warranty cost?
Home warranty pricing varies greatly depending on the coverage you choose, the home warranty company, and the area in which you live. In general, though, if you’re just covering appliances, expect to pay around $30 a month.
If you’re looking for only system coverage, you’ll probably pay around $35 a month. However, if you combine your coverage to include both systems and appliances, expect to pay around $45 per month.
Adding things not covered by a typical home warranty plan can also increase your monthly bill. If you have an atypical appliance or system, it’s possible that basic plans do not cover it. Not everyone has a swimming pool, a septic tank, a whirlpool tub, or a spa.
Check with your individual plan to ensure that all systems and appliances you want to have covered are actually included. If they aren’t, see if you can add them separately.
Service Fees
In addition to your monthly fee, you’ll also need to pay service fees for a service call. This cost can vary greatly.
The best home warranty companies offer plans that will cost you around $50 to $125 per repair. This is based on the home warranty company, the plan, and the item that needs to be fixed. While this may seem like a lot, consider the cost of the average repair without a warranty.
What can you expect to pay without a home warranty?
The average repair cost of a refrigerator is $275 to $325. The igniter on an oven or range may only cost $110 to $200 to repair, but a control board could cost you more than $260.
Replacing a rubber gasket on your washer will set you back between $200 to $300. These expenses can quickly add up compared to the fee home warranty companies charge for a visit.
Bottom line: They’ll address the issues with your current item but won’t give you a new one.
Pre-Existing Conditions
Pre-existing conditions are not covered either. Unfortunately, if one of your major appliances breaks, you can’t just sign up for coverage and expect to have it fixed.
Most home warranty companies will cover an unknown pre-existing condition. However, you can’t have an appliance covered if you or the home warranty provider knows that it’s already broken. This is why it’s a good idea to think about purchasing home warranty coverage before your appliances break.
Coverage Waiting Period
Most companies impose a 15 to 30 day waiting period before coverage can begin. There are, however, exceptions to this rule. For instance, if you have a home warranty that is ending soon, you may be able to begin on the date your coverage stops.
It’s important to read the fine print of your service contract. Each home warranty company will have very specific coverage details.
While all will most likely cover your refrigerator, not all of them will cover wear and tear on the gasket that seals it. Typically, the more expensive the plan, the more it covers, but this is not always the case.
What is the process for having an item repaired?
When something breaks, especially if you have a home warranty, you’ll want it fixed as quickly as possible.
Going without a microwave for a week or two may be acceptable, but if it’s your refrigerator, you may not be so patient. When an item malfunctions or breaks, you’ll need to contact your home warranty company’s customer service and explain the issue.
Make sure you report the problem as quickly as possible. The faster you make the call, the faster you’ll get an appointment and have your issue resolved.
Independent Contractors
The home warranty provider will most likely assign an independent contractor to inspect and repair the item. Obviously, system repairs can take longer and be more labor-intensive.
For example, replacing a part on your furnace will be a lot easier than repairing electrical wiring or plumbing inside your walls.
Depending on what is wrong, the contractor may have to order parts or return with specialized equipment. You’ll be required to pay a service fee for each item you wish to have repaired. However, the contractor should ensure that the item returns to working order.
Workmanship Guarantee
Once you’ve had an appliance or system repaired, that item is covered under a workmanship guarantee. Think of it as a warranty within your warranty.
The home warranty provider guarantees the parts and labor of that particular repair for a specified amount of time. This is usually around 90 to 180 days after the repair. So, even if you cancel your plan, they will still cover the repair during that time.
Who should pay for a home warranty?
Many times the seller will buy a home warranty to make the purchase of the home more appealing. Sometimes a real estate agent will even purchase a home warranty as a courtesy to the clients they’re representing. However, buyers, sellers, real estate agents, and current homeowners can all buy a home warranty. It’s also important to note that buying a home warranty can be done at any time, before or after closing.
What should you look for in a home warranty company?
A home warranty can save you a lot of hassle and headaches, not to mention money, down the road—as long as you do your homework and think it through.
A home warranty covers many things that homeowners insurance does not. Having peace of mind knowing that costly home repairs won’t spring up unexpectedly is a great feeling.
Choosing the right type of coverage for you is the next step. When you think about the type of coverage you want, think about the items you want to protect in your home.
Renters
If you’re just renting, then plumbing and electrical work is not a concern for you. Your homeowners insurance should cover things like theft and fire, but you still want to be covered when something breaks that you actually own. Choosing an appliance plan is probably the right option for you.
If you live in an older home that you own, a more comprehensive plan may be the right choice for you. It’s comforting to have your home inspected before purchasing, but things can still go wrong. You can avoid costly maintenance as long as you plan ahead.
Are home warranties worth it?
The answer to this question will depend largely on your unique circumstances. Two of the biggest factors are the age of your home and the quality of your appliances. In addition, your own ability and comfort with repair and maintenance is a factor.
Almost every home appliance and system will eventually require significant repair or even replacement. Depending on your own DIY skills, you might be comfortable taking responsibility for most repairs. Others might want more comprehensive coverage. But even still, there could be plenty of reasons why you would prefer to have a home warranty.
How do I cancel my home warranty?
Your first step should be to review your contract and make sure you understand the cancellation policy. Most companies will charge a cancellation fee that can range from 5% to 10% of the outstanding fee.
Thereafter, you can contact the company and tell them you’re considering cancelling your warranty. If possible, try to speak to a sales rep with whom you’re familiar.
Some companies require you to send a written notice of termination. Remember to cancel any automated payments from your credit card or bank account, if necessary. It might also be a good idea to request a written confirmation of the cancellation for your records.
Which home warranty company has the lowest service call fee?
Service call fees can vary widely between companies, but it’s important to try to find the most competitive service call fee available to you. Service fees generally range from $50 to $150 per service call.
The trick with finding a competitive service fee call is making sure you don’t sacrifice the quality of service calls. Some of the top-rated home warranty companies charge a higher service fee. However, it could be worth it to have the security and confidence of quality home service.
Final Thoughts
To find the best home warranty company, you will need to read the contract thoroughly. Every company that you investigate will have a contract. In that contract, they’ll spell out exactly what they do and do not cover.
They’ll also explain the cost, who will fix your items if they break, and more. Comparing two or more home warranty companies can give you a sense that you’ve made the right decision. Always make sure you do your homework.
Furthermore, check to see if a home inspection is required before qualifying for a home warranty with a specific company. Many don’t require this extra step, but it’s wise to be prepared in case they do. You definitely want to consider both cost and convenience as part of your ultimate decision.
Full Reviews of Home Warranty Companies
Looking for more options? Check out our other home warranty reviews below.
“As expected, the Federal Reserve maintained the holding pattern for the federal discount rate that has been in place since the Fed last raised rates in July of 2023,” Green told MPA. “Like a pilot landing a plane in fog, the Federal Reserve is being very patient and deliberate before taking additional action to reduce … [Read more…]
Looking for the best fun jobs that pay well? Many people dream of having a job they love that also pays well. I completely get it – you don’t want to hate working a job that you’ll be at 40 hours a week! I’m very grateful to have a job that I love. I don’t…
Looking for the best fun jobs that pay well?
Many people dream of having a job they love that also pays well. I completely get it – you don’t want to hate working a job that you’ll be at 40 hours a week!
I’m very grateful to have a job that I love. I don’t dread any day of the week, and I genuinely love what I do. Due to that, I hope everyone gets to feel the same about their job as well.
Thankfully, it’s easy to find a job that lets you do what you enjoy and still pays you a good paycheck. Whether you love working online or driving fast cars, there are many job options that let you have fun while also making good money.
Whether you want to make extra income or find a full-time job, there are many fun jobs that pay well that may interest you.
Fun Jobs That Pay Well
When you’re looking for a job, it’s great to find one that you find fun and that also pays well. Here are some top choices to start with:
Bloggers work from anywhere and write about topics such as family, recipes, personal finance, travel, and more. This is what I do, and I think it’s a ton of fun. Plus, it pays very well!
Art therapists use creativity to help others. They draw or paint as a way to support people’s emotional health. This job requires a master’s degree, but it combines art with helping people, which can be very rewarding.
A Ferrari driving instructor teaches others how to drive a luxury sports car. It’s not just exciting; it can also pay between $90,000 and $120,000 a year.
If you like spotting mistakes in content, then finding a proofreading job may be perfect for you. Proofreaders act like an extra set of eyes to read articles, papers, books, ads, and other written content.
Below are over 40 other fun jobs that pay well that I recommend learning more about.
1. Blogger
If you want to find a fun job that pays well, my favorite way is to start a blog. That’s exactly what I do for a living!
A blog is content written on a website. It usually includes articles like what you’re reading here.
You can blog about something you’re passionate about or something you know a lot about. Or even a topic you want to learn more about (people love following others’ firsthand journeys!).
I began Making Sense of Cents in 2011, and since then, my blog has earned me over $5,000,000 over the years.
I started my blog on a whim to share my own money journey. At first, I didn’t even know people could earn money from blogs or how to make a successful one. And now, it’s my full-time job!
There are many ways to make money blogging such as:
Advertising revenue (banner ads that you see in blog posts)
Sponsored blog posts (when a blogger partners with a company to promote a specific item or company)
Affiliate marketing (when a blogger receives income for referring readers to a product)
Selling digital products or services (such as courses, clothing, books, and more)
You can learn how to start a blog with my free How To Start a Blog Course (sign up by clicking here).
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Want to see how I built a $5,000,000 blog?
In this free course, I show you how to create a blog, from the technical side to earning your first income and attracting readers.
2. Printables designer
Making and selling printables can be a fun way to earn money. When you create printables on Etsy, you only need to make one digital file for each product. After that, you can sell it many times to make more money.
Printables are things you can find online and print at home.
These can be things like a planner, coloring pages, wall art prints, greeting cards, gift tags, and so much more.
I buy printables frequently, and so do others all the time. Recently, I bought a printable for my daughter and it was a useful tool to help teach her the alphabet. I love that I can easily search what I’m looking for and get exactly what I want – plus I can print it right at home quickly!
Recommended reading: How I Make Money Selling Printables On Etsy
Do you want to make money selling printables online? This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
3. Voice actor
A voice-over actor is someone you hear but don’t usually see in things like videos on YouTube, documentaries, radio ads, TV ads, corporate talks, online courses, audiobooks, video games, movies, and cartoons.
Voice actors don’t necessarily need experience for this job (although it can be helpful later on). What’s important is having a voice that matches what the company is searching for.
Recommended reading: How To Become A Voice Over Actor
4. Photographer
As a photographer, you get a special chance to capture moments and tell stories with your camera. Photography has many different areas where you can focus, and they can be both satisfying and financially rewarding.
Here are some examples:
Photojournalist – You document events for media outlets, such as National Geographic.
Wedding Photographer – Your role would be capturing wedding moments in couples’ lives.
Stock photo photographer – Photographers can sell their pictures on stock image sites, which are really popular. These sites let customers purchase pictures for things like websites, TV shows, books, and social media.
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
5. Buy and sell flipper
Being a buy-and-sell flipper means you’re into flipping items for profit.
This includes getting undervalued things from flea markets, garage sales, or online places and then selling them for more money.
This could be things like clothing, electronics, furniture, cars, and so much more. Basically, anything and everything!
Your success depends on how good you are at finding good deals, knowing the values in the market, and selling things again for a profit.
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This free workshop will teach you how to get into the flipping business. It will teach you how to resell furniture, electronics, appliances, and anything else you can find.
6. Proofreader
As a proofreader, your careful attention to detail can become a rewarding career. Proofreading means going through texts to fix grammar, spelling, and punctuation mistakes before they get published. This job is important to make sure written content is clear and doesn’t have errors.
Many people, like authors, website owners, and students often hire proofreaders to make their work better. There’s a big need for proofreaders, and you can find jobs on various platforms.
Even the best writers can make mistakes in grammar, punctuation, and spelling. That’s why getting a proofreader can be really helpful for almost everyone.
In fact, although I have written over 2,000 articles, I have a proofreader who will have proofread this very blog post.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year)
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This free 76-minute workshop answers all of the most common questions about how to become a proofreader, and even talks about the 5 signs that proofreading could be a perfect fit for you.
7. Freelance writer
Freelance writers create content for clients, like blog posts and advertising. Freelance writing usually involves working independently. Clients give you a topic, you write about it, and then you might receive feedback, like suggestions to improve or add paragraphs.
You can write about any topic that you want to – such as travel, money, home, and so on.
How much you make as a freelance writer depends on your experience and the topics you write about. When you start, you might earn around $50 to $75 for a 500-word article. As you get better, you can charge more. For a 1,000-word article, you could make between $100 and $150. If you do well over time, you can ask for even higher rates.
I was a freelance writer for many years before transitioning to full-time writing here on Making Sense of Cents. It’s a great career where you can mostly work from home on your own.
Recommended reading: 14 Places To Find Freelance Writing Jobs
8. Graphic designer
A graphic designer is someone who makes designs for people and businesses. As a digital designer, you might create images, social media graphics, printables, T-shirt designs, business cards, stickers, logos, and more.
As a graphic designer, your main job is to communicate through visuals. You use a mix of typography, images, color, and layout to convey messages and brand identities. This field gives you the freedom to express your creativity in different ways, whether it’s through digital designs or print materials.
Recommended reading: How To Make Money As A Digital Designer
9. Social media manager
Being a social media manager is an exciting career choice and your main job is to take care of how a company or person appears online on different platforms. Your tasks include interacting with followers, selecting content, and planning social media posts.
Here are the key areas you typically need to focus on:
Content creation – Create fresh, original posts tailored to each platform.
Engagement – Interact with the audience by responding to comments and direct messages.
Strategy planning – Use data analytics to drive social media strategies, aiming for increased engagement and reach.
The salary can vary, and you can choose to do this job either part-time or full-time.
10. Social media influencer
Related to the above, you can make money with your own social media accounts as well.
Have you ever followed someone on Instagram or TikTok and thought to yourself that it would be fun if you could do something similar?
Social media influencers use different online platforms to create, share, and connect with content that their audience likes. Your success depends on growing a big group of followers and establishing yourself as a trusted voice in your specific area.
As an influencer, you’ll create your brand by sharing your interests, pictures, and opinions on social media platforms such as Instagram, TikTok, Facebook, and others.
You can earn money through sponsored posts (when brands pay you to promote their products or services in your Instagram posts), affiliate marketing (earning commissions from sales through your referral links), and by creating digital products like ebooks or online courses.
I’ve been a social media influencer for years, monetizing my Instagram and Facebook accounts. It’s a great experience as I get to collaborate with companies I love and promote products I already use.
11. Veterinarian
If you have a passion for animals, then becoming a veterinarian may be a great fit for you.
Veterinarians have a skilled and fulfilling role dedicated to animal health and welfare. The main responsibility is to provide medical care to animals, diagnose health problems, and perform surgeries.
Vets work in private clinics, animal hospitals, research facilities, zoos, and more.
The veterinarian career path is rewarding as it lets you blend a love for animals with the chance to make a positive impact on their lives.
To become a veterinarian, you must complete a Doctor of Veterinary Medicine (DVM) program and obtain a state license to practice. This usually involves:
A bachelor’s degree
A four-year veterinary program
The national average salary for veterinarians is around $100,000 per year.
12. Marine biologist
One job that I dreamed of as a kid was to become a marine biologist. It always sounded like so much fun to work with water and sea animals.
Marine biologists study marine organisms and how they behave and interact with the environment. Your work might take you from coastal wetlands to the deepest parts of the ocean.
Here are some of the things they do:
Conduct research on marine wildlife and ecosystems
Monitor the health of marine habitats
Develop conservation plans
Educate the public and policymakers
Marine biologists are important for understanding marine life and contributing to ocean conservation efforts.
13. Mystery shopper
Retailers, restaurants, and financial institutions need mystery shoppers for detailed feedback to improve their customer service and products.
This might not be a full-time job, but it can provide you with some extra money each month.
I remember when I first learned about mystery shoppers. I was working at a clothing store, and we would have mystery shoppers come in to see how we were doing. We never knew who the mystery shopper was, but we would get to read their report afterward and see what they thought of us.
After learning about mystery shopping, I found a website where I could become one as well. It sounded like fun to get paid to shop.
I would make about $150 to $200 per month through mystery shopping, and I also got free items and services, like $100 to spend at restaurants (where I had to provide feedback while I was there), makeup, and more.
Recommended reading: How To Become A Mystery Shopper
14. Architect
Architects have a special mix of creativity and technical skills, allowing them to design buildings that are not just attractive but also functional and safe.
Their role includes making detailed plans, and considering factors like sustainability, budget, and client needs.
To become an architect, you typically need a bachelor’s or master’s degree in architecture and you’ll need state licensure, which is obtained by passing the Architect Registration Examination (ARE).
15. Stunt person
A stunt person is a cool job where you use your physical skills to create exciting action scenes for movies, TV, and live shows. It’s a big part of making the action look real and thrilling.
To do this job, you might need lots of training in things like martial arts, gymnastics, or extreme sports. You also have to be good at handling pressure and follow safety rules closely.
16. Professional video gamer
Yes, if you like video games, you may actually be able to make money as a professional video gamer.
While the amount of money you can make will definitely vary, top gamers have the potential to earn from tournament prizes, sponsorships, and streaming content for fans:
Tournaments: Prize pools can be large, reaching into the millions for top-ranking competitions.
Streaming: Platforms like Twitch and YouTube pay through ads, subscriptions, and donations.
Sponsorships: Companies may endorse you and pay you with sponsorships or free items.
You could maybe even find a job working for a video game designer, testing out video games so that companies can improve their video game design.
Recommended reading: How Much Do Twitch Streamers Make?
17. Chocolatier
Many people at some point in their lives want to become the person who makes chocolate and candy – sounds amazing after all, right?
A chocolatier is someone who uses cooking and art skills to make chocolates. It’s a job that needs creativity, precision, and a good sense of taste.
You might work for yourself, making chocolates, or you may even work for a large chocolate company. I know people who do both!
18. Personal trainer
If you want to find a job that you’ll love, becoming a personal trainer may be it.
Personal trainers play an active role by combining fitness with motivational skills to help people reach their health and fitness goals. This job includes:
Assessing clients’ fitness levels and health conditions
Developing personalized workout and nutrition plans
Demonstrating exercises and routines to clients
Tracking clients’ progress and adjusting plans as needed
How much you earn as a personal trainer can change a lot based on where you work, your qualifications, and the clients you get. Personal trainers usually make an average of $40,000 to $70,000 per year.
19. Supercar driving instructor
Supercar driving instructors have an exciting job where they help people learn how to drive fast cars on racetracks.
The role includes teaching safety and giving an exciting experience as well as explaining how to handle the vehicles, follow track rules, and use advanced driving techniques.
You can usually earn a high income doing this, plus you get to drive some of the world’s most exotic supercars.
20. Toy designer
Being a toy designer is probably most children’s dream career. After all, who hasn’t loved toys at one point in their life?
The toy industry is always looking for creative designers to make new toys that will grab kids’ attention and imagination.
Toy designers have a cool job where they mix creativity with making things work well. The main aim is to create toys that are fun and help kids learn and grow. This special job combines artistic skills with knowing about how children think and learn.
21. Restaurant critic
Restaurant critics evaluate dining establishments and share their experiences through written reviews. Their main responsibility is to provide an unbiased review of the food quality, service, ambiance, and overall dining experience.
To gain experience and get started, begin by developing your taste buds and learning about different cuisines. This can involve:
Going to cooking workshops
Exploring different food places when you travel
Creating your own blog or starting an Instagram dedicated to food
22. Brewmaster
If you love craft beers and enjoy understanding how fermentation works, becoming a brewmaster could be a fun and rewarding career.
Brewmasters manage the brewing process, such as creating recipes, choosing ingredients, and making sure the quality is top-notch during production.
To start, you might need formal education, such as a degree in brewing science or a related field. However, some brewmasters climb the ladder from roles like brewing assistants, gaining experience through on-the-job learning.
23. Fashion designer
Fashion designers make clothing, accessories, and shoes, and they draw designs, pick fabrics and patterns, and guide how the products designed should be made.
Fashion designing can be a fulfilling career if you love fashion and enjoy creating. It gives you a chance to express yourself personally and can even lead to getting noticed in the industry.
24. Food stylist
Food stylists combine culinary art with aesthetics, making sure that dishes not only taste good but also look delicious and perfect for photographs.
Their duties include choosing ingredients thoughtfully, preparing the food, and presenting it in a way that’s visually attractive. This is important for different media like advertising, packaging, cookbooks, and film.
25. Event planner
Event planners organize events, from big corporate conferences to small weddings. Their main job is to make sure every part of the event matches the client’s vision, fits the budget, and meets the goals.
According to Glassdoor, the average pay for an event planner is around $50,000 per year. Your salary can change based on things like your experience, where you work, and the size and type of events you handle.
26. Animator
If you’re looking for fun jobs that pay well, then becoming an animator may be it!
Animators make visual creations, and their main focus is on designing characters, environments, and entire worlds in 2D or 3D formats.
Here’s what you may work on:
Character design: Create and develop characters for various media.
Story development: Collaborate on storyboards to plan out visual narratives.
Animation: Work with digital tools to animate drawings and models.
The animation industry values creativity and technical skills and also pays competitive salaries with the opportunity to contribute to exciting storytelling processes. Whether you’re involved in creating animated TV shows, movies, or video games, being an animator can be both enjoyable and financially rewarding.
27. Real estate agent
Real estate agents are professionals who help people buy and sell properties, such as houses and commercial buildings.
I know a few real estate agents, and they all seem to love their jobs. They get to see beautiful new homes and properties and help their clients find their dream property.
Plus, they usually set their own schedule, which can help you create a better work-life balance.
28. Private investigator
Private investigators conduct investigations on various matters, including legal, financial, and personal issues.
This may include doing things like surveilling someone to get information, interviewing people to get details, researching public and legal documents, as well as gathering evidence for cases.
Here are some steps to becoming a private investigator:
Have a high school diploma or equivalent. Perhaps even get a degree or certification in criminal justice or a related field.
Gain experience in a related field such as law enforcement or the military.
Acquire a private investigator license, as required by your state.
29. Romance novelist
Starting a career as a romance novelist can bring both fulfillment and income. If you love storytelling and especially romance, this can be a fun one to think about.
Recommended reading: How to Make Money Self-Publishing Short Romance Novels
30. Interior designer
Interior designers mix creativity with practicality to decorate the insides of properties. Their job is to design and put in place the aesthetic and functional aspects of residential or commercial spaces.
Your job would be to create an environment that looks good and is comfortable for your clients.
31. Airline pilot
Airline pilots have a career that is both exciting and has the potential to make a lot of money. Their main job is to pilot commercial aircraft, flying from one place to another, and making sure everyone on board, including passengers and crew, stays safe.
Some of their daily duties include:
Conduct pre-flight inspections
Navigate the aircraft
Communicate with air traffic control
Monitor weather conditions and aircraft systems
Lead the crew and manage any in-flight issues
32. Drone pilot
Drones have gained popularity lately, not just for recreational use but also for jobs requiring aerial photos and videos. This creates a growing opportunity for individuals to start small businesses and make money with their drones.
Your job as a drone pilot may be to:
Take high-quality images and videos from unique perspectives, such as for real estate, construction, or events.
Perform inspections, surveys, and mapping for various industries like mining or agriculture.
Analyze data and images to give insights to clients.
Recommended reading: How To Make Money With A Drone
33. Sommelier
Sommeliers have a lot of knowledge of wine and can share it in a fun way.
This job is usually found in upscale restaurants, and this role involves suggesting wines that go well with customers’ meals, conducting wine tastings, managing wine service, and taking care of the wine cellar.
34. Chef
Chefs, of course, play an extremely important role in a restaurant kitchen, crafting menus and overlooking meal execution. Their primary responsibilities include tasks like:
Menu Design: They create food menus for a restaurant.
Food Preparation: They oversee and sometimes partake in the detailed preparation of ingredients.
Cooking: They cook the restaurant meals and oversee other cooks in the kitchen.
35. Cruise director
Cruise directors make sure passengers have an unforgettable experience aboard a cruise ship. This job requires a fun personality and excellent skills in managing both entertainment programs and a team of staff members.
Their responsibilities include planning and supervising all onboard entertainment, such as shows, events, and activities.
We went on an around the world cruise recently and had an amazing cruise director. It looked like such a fun job, and they got to travel everywhere that we did (of course!).
Recommended reading: How To Get Paid To Travel The World (18 Realistic Ideas!)
36. Astronomer
Astronomy is a field that combines the excitement of exploring the cosmos with the satisfaction of solving complex problems. As an astronomer, you enter a world dedicated to understanding celestial phenomena and the principles of the universe.
Usually, a Ph.D. in astronomy or a closely related field is needed to conduct independent research or work at a university. However, with a bachelor’s or master’s degree, you might find opportunities at planetariums, observatories, or assisting with research.
37. Netflix tagger
If you’re seeking a fun yet rewarding job, becoming a Netflix tagger could be an interesting option. In this job, you watch Netflix content and assign specific labels to shows and movies, influencing the platform’s recommendation algorithm.
To get started, you will need to apply through the Netflix jobs portal, where available positions are listed. Experience in film and media studies, while not mandatory, can give you an advantage.
Recommended reading: 7 Best Ways To Get Paid To Watch Netflix
37. Geologist
Geologists explore and study the earth’s composition, processes, and history.
Their job can lead to finding valuable resources like minerals, oil, and gas, and they also have an important part in environmental conservation and predicting natural disasters.
38. Dog walker
If you love pets, then this is the fun paying job for you!
Dog walkers do exactly that – walk dogs while their owners are busy, such as at work or on vacation. If you like dogs, then this can be a fun way to spend time with animals and get paid for it.
To become a sought-after dog walker, you should be reliable, good with animals, and you should have excellent customer service skills to build connections with clients. Dog walking allows you to enjoy the fresh air, bond with different dogs, and make money doing something you love.
Recommended reading: 7 Best Dog Walking Apps To Make Extra Money
39. Ethical hacker
Ethical hackers think and operate like malicious hackers but with a specific goal: identifying and fixing security vulnerabilities before they can be exploited.
They act as safeguards, testing and securing systems to prevent potential breaches for companies.
This job involves a lot of problem-solving skills, as you are looking for possible security problems.
40. Travel agent
If you like planning trips, then becoming a travel agent may be a great way to have a fun high-paying job.
Travel agents craft and sell travel experiences. They help advise clients on different travel destinations and arrange transportation, hotels, tours, and more. It’s a job that not only pays well but allows you to help others travel.
You may help people plan their honeymoon, a trip to Disney World, an around-the-world cruise, and so much more. There are travel planners for every kind of trip that you can think of.
Your knowledge and skill in handling the challenges of travel planning make you a very important help to travelers who want their experiences to be stress free.
The average annual salary can vary by a lot, and this can be either a part-time or full-time job. There is a lot of job growth too, as more and more people are going on vacations!
41. Personal shopper
Personal shoppers give a shopping service for clients who either lack the time or the style to select their own stuff. As a personal shopper, your job may range from picking clothing to finding the perfect gift.
You may work at a high-end retail store, or you may be a freelance personal shopper – there are many jobs in this field!
42. Park ranger
Have you ever been to a beautiful place like Yosemite National Park and wondered what it would be like to work there?
Park rangers work in places like beautiful national parks and get to enjoy the scenery every single day. Their responsibilities include protecting and managing parks, wildlife, and historical sites and making sure that both the natural resources and the visitors exploring them are safe.
To become a park ranger, you usually need a combination of education in fields related to conservation, environmental science, or wildlife management, and relevant work experience.
Recommended reading: 15 Outdoor Jobs For People Who Love Being Outside
43. Tour guide
Being a tour guide gives you a chance to share your love for travel or history with others, all while making a living. You’ll get to be in different places like historical sites, museums, or outdoor adventures.
This can be a low-stress job with a big fun factor – as you get to explore places that you probably already love and are an expert at.
Recommended reading: How to Make Money as an Airbnb Experience Host
44. Yacht crew
Working on a yacht can be a thrilling job that mixes travel, adventure, and the chance to meet new people, along with the possibility of earning good money.
If you work on a yacht, your job could be as a captain, mechanic, server, cleaner, chef, and more. If you’re on a smaller boat, you might even handle all these tasks.
Jobs on a yacht or big sailing boat are usually hard work, but the perk is that you get to travel with most expenses covered, while also earning a high income.
45. Flight attendant
Being a flight attendant is important for making sure passengers are comfortable and safe. You’re like the friendly face of the airline during flights, taking care of different needs and keeping service standards high.
Plus, you get to enjoy the unique perk of discounted or free travel, which is a big perk of becoming a flight attendant.
Flight attendants can earn a good income, and the benefits are excellent. They usually make between $50,000 to over $100,000 a year. The training to become a flight attendant usually takes around 1 to 2 months.
Recommended reading: How To Become A Flight Attendant And Make $61,640 Each Year
46. Art therapist
Art therapists combine the creative process with psychological healing to provide a unique kind of mental health therapy. They conduct one-on-one or group therapy sessions, and being an art therapist can be very fulfilling as you help people discover their voice and heal through art.
Art therapists work at schools, psychiatric hospitals, veterans associations, and more. Usually, you need a master’s degree to enter this field.
They use art therapy to assist people in expressing their emotions, dealing with complex feelings, and enhancing self-awareness. Their job isn’t just about being artistic; it’s deeply connected to therapeutic practices that help a variety of clients.
Another job similar to this is becoming a music therapist.
Frequently Asked Questions
Below are answers to common questions about how to find fun jobs that pay well.
What is the most high-paying fun job?
The most high-paying fun job can vary based on your skills and interests. Some high-paying fun jobs include being a blogger, pilot, stunt person, and romance book author.
What are random jobs that pay well?
There are many unique jobs, such as a private island caretaker, yacht captain, or a voice-over artist.
Which is the most exciting and highest paying job in this world?
This will depend on who you ask! Maybe it’s being a pilot, a stunt person, an actor, or something else.
What are some fun jobs that pay six figures?
Some fun jobs that pay over $100,000 may include becoming a blogger, selling printables, photographer, architect, and more.
What are some low-stress fun jobs that pay well?
Jobs like a yoga instructor or a massage therapist can be low stress and fun, and they provide a good income, especially when experienced or working in more affluent areas.
What are some fun jobs that pay well without a degree?
You can pursue jobs such as a social media influencer, a real estate agent, or a personal trainer, which can pay well and be rewarding without requiring a traditional four-year degree.
Best Fun Jobs That Pay Well – Summary
I hope you enjoyed this article on the best fun jobs that pay well.
There are many fun careers that pay a part-time or full-time income.
Careers like voice acting, managing social media, and ethical hacking not only pay well but also let you have a good balance between work and life. The key is to know your talents and find the right fit in these exciting jobs.
I have been working a fun job for many years now, and I really really love it. It makes each day enjoyable and I actually look forward to work. I hope that you get to one day say the same as well.
What do you think are the best fun jobs that pay well?
Buying life insurance is a big decision — one that is often a long-term commitment — so you are probably wondering how much it will cost. You want to know your family will be financially stable when you are no longer around, but you may be concerned that the premiums will take a big bite out of your budget. The truth is, there is no one single number for a life insurance premium.
The price varies based on an array of factors, including the kind of policy you buy, the amount of coverage you want, your age, your health, and other attributes, as well as which provider you select. Even if you have a twin, you and your sibling may well be quoted different prices. Life insurance policies are that personalized.
But that doesn’t mean you can’t get a good ballpark! Let us help you get a handle on the range of possible prices.
Average Cost of Life Insurance
To get started, let’s do a quick overview before we get to the dollars and cents. Though rates will vary, some of the key criteria used in calculations include:
• Age. Generally, the younger you are when you sign up for life insurance, the cheaper it will be. The older you are, the shorter your life expectancy is, meaning your insurer is more likely to have to pay your beneficiaries upon your death (sorry! We don’t like saying it either, but that’s the bottom line of life insurance).
• Gender. Women tend to have longer life expectancies, so females almost always have lower premiums than males even if their age and health status is the same. The latest CDC figures put the average life expectancy for men at 73.2 years and women at 79.1 years.
• Smoking status. While the rate of cigarette smoking among U.S. adults is declining, there’s no denying it’s a health risk. In fact, it’s the leading cause of preventable death in America, according to the CDC. Approximately 480,000 deaths (that’s one out of every five deaths) is attributable to the habit.
• General health history. Overall, the healthier a person is deemed to be, the cheaper the premiums tend to be. This means factors like your height and weight, blood pressure, cholesterol levels, and pre-existing conditions will be considered.
How much you’ll pay also depends on whether you get term or permanent life insurance.
As the name implies, term life insurance covers you for a discrete period of time, and then you are no longer insured. This kind of policy can work well for those who want to know their loved ones are financially secure as a mortgage is paid off or a child pays college tuition.
On the other hand, permanent life insurance guarantees that whenever you may die, your designated beneficiaries will receive a lump-sum payment. Permanent life insurance policies also act as a savings vehicle; more on that in a moment.
Okay, here are some numbers to ponder. These rates are based on the healthiest category of applicants taking out a $500,000 policy. In the case of the term policies, the length is 20 years.
Age
Female, Term Insurance per year
Male, Term Insurance per year
Female, Whole Life Insurance per year
Male, Whole Life Insurance per year
30s
$183
$220
$4,015
$4,652
40s
$281
$220
$5,937
$7,028
50s
$641
$817
$9,443
$11,163
60s
$1,656
$2,361
$15,943
$19,150
70s
$8,204
$9,297
$28,093
$33,325
A word about those life-insurance premiums: They are typically paid monthly, though you may be able to save if you pay annually, up front. It’s important to keep up with your life insurance payments so your policy doesn’t lapse and you and your loved ones receive that halo of protection you are paying for. 💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.
Average Cost of Term Life Insurance by Age
Term life insurance tends to be the more affordable option. Permanent life insurance can cost considerably more – from five to 15 times as much. However, the costs will vary based on many factors. One obvious one is that a longer policy will have higher premiums than one with a shorter term. Why? Because it’s more likely that the insurance company will need to pay out on a longer one.
When Business Insider gathered rates, they found that a 30-year old could take out a 30-year term policy for $33.65 per month. The average rates climbed by age — from $33.65 per month at age 30 to $56.21 at age 40, $125.12 at age 50, and $252.26 at age 60.
As you see, you may get much better rates, the younger you sign up.
Average Cost of Whole Life Insurance by Age
Now, let’s take a look at whole life insurance, which will pay a death benefit even if you live to be over 100. One kind of permanent life insurance is whole life. It also accrues “cash value,” which can be a source of funding for future needs. Providers may offer unguaranteed dividends, depending on the particular policy you purchase.
Let’s look at how much this kind of life-insurance policy can cost. Recent annual costs for a $500,000 policy averaged $352 for a 30-year-old female and $394 for a male, and $506 for a 40-year-old female and $564 for a male.
Recommended: 8 Popular Types of Life Insurance for Any Age
Average Cost of Life Insurance Without a Medical Exam
Usually, part of the application process for life insurance involves a medical exam. A medical history is taken, and then there’s a brief visit to a healthcare practitioner (or they may come to you). Your height, weight, pulse, and blood pressure are typically recorded; blood and urine samples may be collected, too. The results allow the life insurance company to gauge your health and contribute to the calculation of the premium you will pay.
Some people, however, don’t want to invest the time in this step; signing up can take 4-8 weeks. Or perhaps they just don’t like medical appointments and blood draws. Others may worry about what will turn up in their testing and worry that they won’t qualify for coverage. Regardless of the reason, there are insurance policies that let you sidestep the medical exam. These are referred to as no-exam policies.
Typically, these types of policies offer lower coverage limits than those that do include medical testing. For instance, they might offer from $5,000 to upwards of $3 million in coverage. To acquaint you with how much this could cost, let’s review some prices, per Policygenius
• For a 30-year-old woman, it would be $22.99 per month for $500,000 in coverage.
• For a 30-year-old man, the cost would be $29.33 per month for $500,000 in coverage.
If you are interested in this type of policy, it is also sometimes called simplified-issue insurance or guaranteed-issue insurance.
Average Cost of Term Life Insurance by Health
Here’s another angle on life insurance: looking at how much it will cost you based on your health. As we mentioned above, the insurance industry uses different terms to describe how healthy a policyholder is. Here are some common terms you may hear as you’re researching policies:
• Super preferred (or preferred plus): This is the healthiest category to be in; statistically, you’re more likely to live a long life, and you will get the best rates. Typically, to qualify, one needs no family history of death from cancer or heart disease before age 60 or 65; no tobacco use in recent years, nor a history of substance abuse; healthy blood pressure and cholesterol levels; no personal history of cancer or heart disease; a clean driving record; and your height and weight must fall in a certain range.
• Preferred: This category is typically a bit more liberal in terms of the height/weight limits, cholesterol numbers (perhaps a total limit of 240), and when one might have last used tobacco. This category also encompasses those who have had a close relative die of cancer or heart disease before the age of 60. Rates will be higher than those in the super preferred category.
• Standard: This is the next category and tends to include those with a history of substance abuse as well as those who use tobacco.
So, now you are probably curious how rates stack up based on these categories. Let’s take a look at costs for $500,000 coverage of 20-year term life insurance:
• For a woman who is age 30, the annual premium for standard health could be $417, with preferred costing $235, and super preferred at $174. At age 40, the annual costs would be approximately $641, $350, and $277 in the same categories.
• For a man who is age 30, the annual premium for standard health could be $506 for standard, $292 for preferred, and $219 for super preferred. At age 40, the premiums would be $778, $421, and $327 in those categories.
Average Cost of Life Insurance by Term Length
As you think about buying life insurance, you may be pondering different versions of term insurance. Perhaps you just took out a 30-year mortgage and want to be sure those payments will be covered if a worst-case scenario happened and you weren’t around to write checks. Or maybe you are about to marry someone with a 10-year-old, and you want to be sure the child’s college expenses will be covered, no matter what may happen.
Term insurance can be the perfect vehicle in situations like these. Term life insurance has a straightforward goal: to provide the policyholder with a certain amount of coverage during a designated time period — perhaps 15, 20, or 30 years. If a person dies within the time frame, then beneficiaries typically receive the payout of the policy. If a person does not die during the time frame, no one receives the death benefit.
As you might expect, the longer the term, the higher the premium. You’re buying into more coverage, so that will cost more. Let’s see how some numbers stack up.
For a 30-year-old man with a preferred health rating, here’s how much a monthly premium would be for $500,000 in coverage:
• 10 years of coverage: $21.13
• 20 years of coverage: $29.32
• 30 years of coverage: $42.45
As you see, extending your coverage term from 10 to 20 years doesn’t mean you will pay twice as much. That’s good news in the affordability department! 💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.
What Factors Determine the Cost of Life Insurance?
You may wonder why rates vary as you price and compare life insurance policies. Let us break down for you some of the most important factors that influence to cost of a policies:
• The kind of insurance: As we have mentioned above, there are two main kinds of life insurance, term (coverage for a specific period of time) and permanent (life-long coverage). Permanent is pricier.
• The amount of coverage: If you buy $250,000 of coverage, it will of course cost less than a policy that pays a death benefit of, say, $2 million.
• Length of a term policy: If you are shopping for a term policy, expect to pay more for a longer period of coverage. If you buy a 20-year policy, for instance, it will be higher in price than a 10-year policy.
• Age and gender: Younger people in general get lower quotes than older people because it is less likely that the insurer will need to pay out in the near future. Women tend to live longer than men, so females can get a lower premium when all other factors are equal.
• Health status: At a minimum, the insurance application will ask health-related questions. Many life insurance companies also require a medical exam, along with the ability to review health records before a policy can be issued. Certain health conditions, such as cancer and heart disease, can increase premiums and may also prevent coverage from being issued. Weight, blood pressure, and cholesterol levels can also play a role. Plus, even if the applicant is healthy, a family history of health issues can impact premium pricing or policy eligibility.
• Lifestyle: Do you have a high-risk job (say, a pilot or police officer) or hobby (skydiving would be a classic example)? Or do you smoke, which carries health implications? Do you have a history of substance abuse or a recent DUI on your record? These factors can raise your insurance rates.
It’s notable that life insurance companies can have different underwriting policies — so questions asked during the application process may vary from provider to provider.
One key point to keep in mind: Obtaining a life insurance policy when younger and healthier could impact the cost of a policy quote in a very good way. With some life insurance companies, the consumer can lock in a set monthly premium upon signing up — in which case the life insurance premiums would remain stable throughout the entire term of policy.
Recommended: Is Employer Life Insurance Enough?
What Factors Don’t Impact Your Life Insurance Rates?
So, that’s quite a list of things that do impact the cost of life insurance. Now, let’s look at what doesn’t influence the price tag:
• Ethnicity, race, and sexual orientation. Insurers can’t discriminate based on these factors.
• Credit score. Yes, your insurer may look at how you rate over the last seven years, but whether you are a 500 or a 700 shouldn’t make a difference. That said, if you have a bankruptcy on your record, that could influence your perceived risk and may affect premiums.
• Marital status. This doesn’t raise or lower your rates (though, yes, it does matter to car insurance quotes).
• How many beneficiaries you have. It won’t impact your rate if you name one person or several.
When Is the Best Time to Buy Life Insurance?
It’s typically a good idea to buy life insurance as soon as you feel you need it. As we’ve discussed, rates are lowest when you are younger, before health issues typically crop up.
In terms of timing it right, many people buy a policy when they know they will have dependents who’ll rely on their earnings. For instance, getting engaged to be married is a good time to consider purchasing a life insurance policy. You would want to know your spouse is taken care of financially if anything were to happen to you.
Similarly, if you are expecting a child, that is another classic trigger moment for buying a life insurance policy. Knowing that you have protection for your kids, from birth through college, can let you rest a lot easier.
There’s another angle to consider: the half-birthday aspect of insurance premiums. If you apply for life insurance six months or more past a birthday, your insurer will round up to the next birthday. This can wind up locking you into a higher rate for the entirety of your policy. So look at the calendar before you commit to a purchase, and check in with your insurer if there’s a way to back-date your policy if you are past your half-birthday.
How to Choose the Best Policy for You
Armed with all of this intel, you’re ready to go shopping. Here are some considerations as you get acquainted with your options, whether you work with an agent or use the easy, one-click options online.
• You’ll need to decide whether term life insurance or permanent coverage best suits your needs and budget.
• You’ll want to determine the amount of coverage to buy. Some people say to multiply your annual salary by 10; others use the DIME method. There’s also the DIME method to calculate the amount of debt, lost income, mortgage payments, and educational expenses that would need to be covered if you weren’t here to pay them. (This could leave you overinsured, so you could subtract your assets from the figure you calculate.)
• You’ll want to check rates from different, well-rated insurance companies to see where you’ll get the most enticing quote. You can look into the details and evaluate whether the premiums are fixed or if they will increase (if the latter, why and by how much?). You can also decide if you want a policy that requires or waives a medical exam, and consider whether a term policy offers renewal options and how costly they would be.
These factors will help you find a policy that says, “Yup, I’m The One!”
The Takeaway
As you have seen, there’s a galaxy of options when it comes to buying life insurance. Not only are there different kinds of insurance (term versus permanent, and many permutations), but there are also a range of rates to suit many budgets. Factors that can impact rates include how much coverage you want, for how long, your age, your health, and other attributes.
Only you can know what policy will be the perfect, personalized fit for you, but do make sure you seriously consider investing in a policy as soon as possible. This kind of protection is a key element of your financial life, and helps give you peace of mind, no matter how uncertain the times.
SoFi has partnered with Ethos to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.
Explore your life insurance options with SoFi Protect.
Social Finance Life Insurance Agency, LLC (SoFi Agency) does not issue or underwrite insurance. SoFi Agency is compensated by Ethos for each issued term life application submitted.
The policies offered are from Ethos Technologies Inc. Coverage and pricing is subject to eligibility and underwriting criteria. Ethos Technologies Inc. (Ethos) operates in some states as Ethos Life Insurance Services. CA license #0L28949; AR license #100164629. Ethos offers policies issued by the carriers listed at www.ethoslife.com/carriers. Products and their features may not be available in all states. To help avoid requiring a medical exam, the Ethos application asks certain health and lifestyle questions.
SoFi Agency does not guarantee the services of any insurance company. Once you reach Ethos, SoFi is not involved and has no control over the products or services involved.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Broker, Fulfillment, Servicing Software Products; Housing for the Aging Population
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Broker, Fulfillment, Servicing Software Products; Housing for the Aging Population
By: Rob Chrisman
Thu, Dec 28 2023, 10:54 AM
If someone reports their company for tax evasion in the U.S., he or she will receive 30 percent of the amount collected. Have you ever loaned someone money and had them not pay you back? Here’s one thing that you can do to them (IRS’ 1099-C). While we’re on the general topic, despite strong retirement savings, Fidelity Investments’ Q3 2023 analysis reveals a surge in hardship withdrawals and 401(k) loans, addressing short-term financial challenges. By the numbers: 3 percent took hardship withdrawals (up from 1.8 percent in 2022). 8 percent tapped into 401(k) loans (compared to 2.4 percent last year). The silver lining? Retirement balances are on the rise, and savings rates remain steadfast. For those planning retirement, consider suggesting reverse mortgages as a game-changer. They offer an alternative, allowing access to funds without swiftly depleting hard-earned savings. If you haven’t set up reverse division at your shop, well, 10,000 people a day turn 62. Today’s podcast can be found here, and this week’s is sponsored by Gallus Insights. Mortgage KPIs, automated at your fingertips. Gallus allows you to go from data to actionable insights. If you can use Google, you can use Gallus. Hear an Interview with attorney Brian Levy on the NAR lawsuits and the implications for housing finance moving forward.
Broker and Lender Software, Products, and Programs
Are you a compliance nerd? A group of mortgage industry veterans has launched a software company for loan servicing that is getting a lot of attention. Keep your eyes and ears open for MESH software (Mortgage Enterprise Servicing Hub), which is their brand name for a series of software products aimed at loan servicers. The first product runs hundreds of compliance rules on loan portfolios daily, so servicers have a daily review of all loans against everything the CFPB, Agencies and States can throw at them. Look up “MESH Auditor”.
It’s time to start planning for the year ahead! Join the Computershare Loan Services (CLS) team from January 22 – 24 in The Big Easy for MBA’s Independent Mortgage Bankers Conference. With CLS’ originations fulfillment, co-issue MSR acquisition, subservicing, and mortgage cooperative, IMBs can streamline their operations, minimize expenses, and maximize profits. Contact the CLS team today to schedule a meeting in New Orleans.
Ring in the new year with a kinder outlook by joining us for the highly anticipated “Kind Mindset” event presented by Kind Lending. Taking place on January 16th, 2024, at The Buckhead Club in Atlanta, GA, this immersive event is designed to empower attendees with valuable insights on growth, success, and mindset. With an impressive lineup of speakers, including Kind Lending’s CEO/Founder, Glenn Stearns, and special guest Captain Charlie Plumb, 6-year Prisoner of War and former Fighter Pilot, this event promises to be a transformative and inspirational experience. Get ready to cultivate a “Kind Mindset” and embark on a journey of transformation and success. Register today.
Aging, Down Payments, and Housing Demographics
Do you think getting old is hard? The U.S. Census Bureau released a report showing that about 4 million U.S. households with an adult age 65 or older had difficulty living in or using some features of their home. About 50 million, or 40 percent, of U.S. homes had what were considered to be the most basic, aging-ready features: a step-free entryway into the home and a bedroom and full bathroom on the first floor. About 4 million or 11 percent of older households reported difficulty living in or using their home. The share increased to nearly 25 percent among households with a resident age 85 or older. Over half (about 57 percent) of older households reported their home met their accessibility needs very well, but only 6 percent of older households had plans to renovate their home in the near future to improve accessibility.
In general, Zillow expects home prices to remain roughly flat in 2024, with only a 0.2% increase in its housing market index. Existing home sales are expected to fall further to 3.74 million. Zillow does mention that this forecast does not take into account the latest forecast from the Fed, and the expectation for big rate cuts in 2024.
Falling mortgage rates have put some spring in the step of the homebuilders, according to the latest NAHB / Wells Fargo Housing Market Index. As one would expect, with mortgage rates down roughly 50 basis points over the past month or two, builders are reporting an uptick in traffic as some prospective buyers who previously felt priced out of the market are taking a second look. With the nation facing a considerable housing shortage, boosting new home production is the best way to ease the affordability crisis, expand housing inventory and lower inflation. But builders have lagged production for so many years…
Non-builder loan officers find the builder world a tough nut to crack. Many, if not most, big builders are dealing with the mortgage rate issue by subsidizing buy-downs. Builders generally build free upgrades into their models, and these funds are being used to buy down the rate. The builder gets full price for the house, loses a few points on the mortgage, which might have instead gone to upgraded countertops or something else.
Even if one can get approved for a loan, buying can still be prohibitively expensive. Receiving help from family and friends for that crucial down payment can be a major turning point for many consumers. In fact, nearly 2 in 5 homeowners (39 percent) have received down payment assistance, according to LendingTree’s Mortgage Down Payment Help Survey, of nearly 2,000 U.S. consumers. 78 percent of Gen Z homeowners reported some financial support for a down payment, mostly from their parents. 54 percent of millennials have received down payment help, followed by 33 percent of Gen Xers.
Almost a third (31 percent) of Americans think putting down 20 percent for a down payment is obligatory. However, 59 percent of current homeowners say their down payments were less than 20 percent of the home’s purchase price, and just 29 percent put down 20 percent or more. One in 10 Americans never took out a mortgage, while 15 percent had a mortgage but have since paid it off. Baby boomers are the most likely to have paid off their mortgages, at 29 percent.
As anyone shopping for a home can tell you, it’s slim pickings out there. For many years we have been seeing the biggest squeeze in the starter home category. It appears that for years part of the problem is a lack of confidence to move up to the next category. People in starter homes are staying put, which is keeping homes off the market.
Capital Markets
It was another slow news day yesterday without any meaningful economic data or news to move sentiment. However, investors are laden with optimism as a soft-landing for the economy comes into view and seem to be throwing caution to the wind with over 150 basis points of Fed Funds easing fully priced in for next year. In accordance with that, benchmark bonds rallied to fresh highs yesterday after the U.S. Treasury sold $58 billion in 5-year notes to excellent demand. The strong auction exposed some short positioning, and it invited additional late buying. That followed Tuesday’s $57 billion 2-year Treasury auction that attracted a record number of indirect buyers to snap up high yields before the Fed’s anticipated rate cuts, which are fully priced in to begin at the March meeting in just over 80 days. Yields on benchmark treasuries have dropped to levels not seen since the summer.
Today has a fuller calendar than the past two sessions in regard to economic news. We are under way with initial jobless claims (+12k to 218k, a little higher than expected), continuing claims, advanced economic indicators for November (goods trade balance, retail inventories, and wholesale inventories), none of which moved rates. Later today brings the NAR’s Pending Home Sales Index for November, Freddie Mac’s Primary Mortgage Market Survey, and another large amount of supply from the Treasury, headlined by $40 billion 7-year notes. We begin the day with Agency MBS prices worse a few ticks (32nds), the 10-year yielding 3.81 after closing yesterday at 3.79 percent, and the 2-year is down to 4.25.
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