2021 VA Home Loan Limit: $0 down payment up to $5,000,000* (subject to lender limits) /2 open VA loans at one time $548,250 (Call 877-432-5626 for details).
How to Apply for a VA Home Loan?
This is a quick look at how to apply for a VA home loan in Mono county. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA home loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in Mono County. If you have any questions, you can call us at VA HLC and we’ll help you get started.
Get your Certificate of Eligibility (COE)
Give us a call at (877) 432-5626 and we’ll get your COE for you.
Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
Get pre-approved, to get pre-approved for a loan, you’ll need:
Previous two years of W2s
Most recent 30 days paystubs or LES (active duty)
Most recent 60 days bank statements
Landlord and HR/Payroll Department contact info
Find a home
We can help you check whether the home is in one of the Mono County flood zones
Get the necessary inspections
Termite inspection: required
Well or septic inspections needed, if applicable
Get the home appraised
We can help you find a VA-Certified appraiser in Mono County and schedule the process
Construction loan note: Construction permit/appraisal info
Building permit
Elevation certificate
Lock in your interest rates
Pro tip: Wait until the appraisal lock in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
Close the deal and get packing!
You’re ready to go.
What is the Median Home Price?
As of March 31, 2021, the median home value for Mono County is $494,554. In addition, the median household income for residents of the county is $62,260, which is higher than the national average.
How much are the VA Appraisal Fees?
Single-Family: $600.
Individual Condo: $600.
Manufactured Homes: $600.
2-4 Unit Multi-Family: $850.
Appraisal Turnaround Times: 7 days.
Do I need Flood Insurance?
The VA requires properties are required to have flood insurance if they are in a Special Flood Hazard Area.
In Mono County, there are many flood plains, especially along the rivers. Your agent can help you to check whether a property will require flood insurance.
How do I learn about Property Taxes?
For questions about property tax, you can get in touch with the Mono County Assessor, Barry Beck. His office is reachable at 25 Bryant Street, 2nd Floor, Bridgeport CA 93517 and by calling (760) 932-5510.
Veterans, owner-occupiers, and senior citizens may be eligible for property tax relief. You can find out whether you qualify through the county assessor. In addition, the Assessor’s Office can do re-appraisals to determine property values and flood risks.
What is the Population?
The county’s population of 14,444 is 65% White, 26% Hispanic, and 3% Two or more races.
Most county residents are between 18 and 65 years old, with 17% under 18 years old and 16% older than 65.
In total, the county has about 4,847 households, with an average of two people per household.
What are the major cities?
There are no incorporated cities in Mono county, but Mammoth Lakes is a town with a population of over 8,000. The county seat, Bridgeport, has just under 600 residents. Other notable communities include Crowley Lake and Walker.
About Mono County
Located in the Eastern Sierra region, Mono County is known for its natural beauty. The county becomes a winter wonderland each year and is home to the famous Mammoth Mountain ski slopes. It also has some of the best fall foliage in the state. In spring and summer, residents can explore the 300 miles of trails that make up the Mammoth Lakes Trail System.
The county gets its name from Mono Lake, which has helped make the county a top tourist destination. It is one of the oldest in the Western Hemisphere and is known for its strange and beautiful limestone rock formations, known as Tufas.
In addition to its natural beauty, Mono County is also known for its excellent fishing. Fishing is such a big deal in the area where residents celebrate the fishing season’s opening, “Fishmas,” on April 25. There are also dozens of derbies and fishing events throughout the year where you can try your luck and catch the big one. Plus, there’s free fishing for everyone each Fourth of July.
Veteran Information
Mono county is currently home to 673 veterans.
County Veteran Assistance Information
Mono County Veteran Services Office – 1290 Tavern Road, Mammoth Lakes, CA 93546.
VA Home Loan Information
For more information about VA Home Loans and how to apply, click here.
If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government-guaranteed home loans available.
VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.
VA Approved Condos
There are currently no VA-approved condos available in Mono County. However, it is still possible to get a condo through the approval process all you need to do is call us at (877) 432-5626 and we will help you through the condo approval process.
It’s nearly 2023, which means it’s time for a fresh batch of mortgage and real estate predictions for the new year.
My assumption is everyone wants 2022 to come to an end as quickly as possible, as it hasn’t been kind to anyone.
Much higher mortgage rates have completely derailed the housing market, leading to lots of layoffs and closures across the industry.
And there remains a lot of uncertainty about what next year will bring, though I’m somewhat optimistic.
Read on to see what I think 2023 has in store for the housing market and the mortgage industry.
1. Mortgage rates will move lower in 2023
Let’s start with the elephant in the room; mortgage rates.
They’ve been the story of 2022, without question. Sadly, because they increased at an unprecedented clip and derailed the hot housing market’s decade-long bull run.
Of course, this was by design as the Fed believed the U.S. housing market was in bubble territory and unsustainable.
However, I believe interest rates overshot the mark and are due to see some relief in 2023.
The 30-year fixed has already fallen from its 2022-highs, and could continue to drop back in the 5% range and even the high-4% range.
So that’s something to look forward to. See my 2023 mortgage rate predictions for more details on that.
2. The housing market won’t crash in 2023
Related to lower mortgage rates is the health of the housing market. Ultimately, the housing market only really stalled because of much higher mortgage rates.
It’s not struggling due to questionable mortgage underwriting, dubious loan programs, or massive unemployment.
Ultimately, the Fed saw that demand for housing was too strong and took measures to address it.
If you remove the mortgage rate piece from the equation, we don’t have a big drop in home prices.
So if mortgage rates continue to improve, or even stay flat, home prices don’t plummet and there isn’t a housing crash in 2023.
At the same time, areas of the country that saw massive home price increases may be more susceptible to price declines.
The good news is home prices increased so much in the past couple years that even a 20% decline is just a paper loss for most homeowners.
In other words, your home is still worth way more than you bought it for, but perhaps not as much as it once was.
3. But we’ll see more consolidation in the mortgage market
Sadly, there have been tons of mortgage layoffs and lender closures in 2022, pretty much all thanks to the sharp rise in mortgage rates.
It was the perfect storm of record low mortgage rates meeting the highest mortgage rates in decades, all within half a year.
Simply put, lenders hired and hired to deal with unprecedented refinance demand, but once that ran dry, had to let a lot of staff go to cut costs.
Demand is down so much that many lenders have had to close down permanently, especially those focused solely on mortgage refinances versus purchases.
While more companies exit the mortgage space, we’ll see consolidation at the top as the big players get bigger and gobble up market share.
This means fewer lenders to choose from and a more commoditized product.
4. Home prices will be mostly flat in 2023
While there’s been a lot of doom and gloom lately, there have been bright spots, like a positive CPI report and an easing in inflation.
Perhaps home price declines will also slow as we enter the new year. If the damage already done is enough to re-balance the housing market, we could see falling home prices steady.
After all, we’ve already experienced a big drop in prices from spring until now, so the ice-cold housing market could warm if rates drop and prospective buyers renew their interest.
While I’m not convinced of the NAR (Realtor) prediction of a 5.4% increase in home prices next year, I do believe flat or nearly positive prices is a possibility.
Zillow’s prediction of home values posting 0.8% growth by the end of October 2023 sounds right. The MBA also puts YOY home prices up 0.7%.
Of course, price movements will be local, as they always are, with some markets faring better (or worse) than others.
Get to know your local market to determine the temperature if you’re in the market to buy or sell.
5. The spring home buying market will actually be decent
Despite a lot of recent headwinds, the 2023 spring home buying season will be alright.
No, it’s not going to be riddled with bidding wars and offers above asking. Nor will total home sales be as high as they were in 2022, and certainly not 2021.
But I do think a combination of lower asking prices and improved interest rates will bolster the market.
Remember, there are a ton of prospective, coming-of-age home buyers out there who want and need a house.
If mortgage rates were 7% in 2022, and fall to the high-5% range, that, coupled with a 20% haircut on price could re-energize the stalled housing market.
So much so that home prices could steady in 2023 after seeing some pretty big markdowns in the second half of 2022.
6. Buy downs and ARMs will become more common
As mortgage rates remain elevated, mortgage buydowns and adjustable-rate mortgages will gain in popularity.
The ARM share is already around 9%, but there’s a lot of room for it to grow if lenders continue to offer products like the 5/1 ARM or 7/1 ARM.
That’s the rub though – if lenders don’t offer ARMs, or don’t extend a significant discount on the ARM, most borrowers will be forced to go with more expensive fixed-rate mortgages.
To offset some of the pain related to higher-rate 30-year fixed mortgages, buydowns will become more and more commonplace.
A lot of home builders are already offering buydowns, and even big lenders like Rocket Mortgage have their so-called Inflation Buster.
These buydowns provide payment relief for the first year or two before reverting to the higher note rate.
The question remains whether that’ll be enough time to bridge the gap to lower interest rates.
7. The underwater share of mortgage holders will rise
Because home prices have been under intense pressure lately, there will inevitably be more underwater homeowners soon.
Black Knight recently noted that 8% of those who purchased a home in 2022 “are now at least marginally underwater.”
And nearly 40% of these home buyers have less than 10% equity in their home, which if property values fall a bit more would plunge these folks into negative equity positions.
It’s most pronounced with FHA and VA borrowers, with more than 20% of 2022 of home buyers in negative equity positions, and nearly two-thirds having less than 10% equity.
This illustrates one of the problems with ARMs, buydowns, and other ostensibly temporary financing solutions. They work until they don’t.
If these homeowners are underwater, it’ll be difficult to refinance aside from leaning on streamline refinance programs that allow high loan-to-value (LTV) ratios.
8. Foreclosures and other distressed sales will continue to be rare
Those looking to snap up a bargain will need to be patient. Despite decelerating appreciation and markdowns on existing inventory, prices remain historically high.
At the same time, mortgage defaults and foreclosure starts remain very low, despite recent increases.
Per Black Knight, the national delinquency rate rose to 2.91% in October, well below the 4.54% average seen between 2000-2005.
And the 19,600 foreclosure starts in October were a full 55% below “pre-pandemic norms.”
It’s not to say homes won’t be lost, especially if home prices plummet and unemployment worsens, but it’s not 2008 all over again.
In short, today’s homeowner has a lot more equity to work with and there are better loss mitigation options that were born out of the prior mortgage crisis.
They may also have the option to rent out their property and cash flow positive.
9. Home equity lending and the home improvement trend will stay hot
One bright spot in the mortgage financing space might be home equity lending, including home equity loans and lines of credit (HELOCs).
This plays into the trend of keeping the property instead of selling it, since selling isn’t nearly as sweet as it once was.
There’s also the issue of where to go next if you sell. And because first mortgage rates are so high relative to levels a year ago, most will opt to finance improvements with a second mortgage.
While not a 2-3% interest rate, home equity rates will still be better than most other options, and allow homeowners to freshen things up while enjoying their ultra-low first mortgage rate.
This should be a boon to banks, mortgage companies, and fintechs that are able to sell a compelling product.
It may also benefit the likes of Home Depot and Lowe’s as more folks stick with what they’ve got and make improvements.
Of course, it’ll mean fewer home sales, which is a clear negative for real estate agents.
10. iBuyers will offer you lowball prices for your home
In case you’re not aware, your home isn’t worth quite as much as it was.
Of course, you may have never noticed if you didn’t attempt to sell earlier this year. Or obsess over your Zestimate or Redfin Estimate.
What you might see in 2023 is more bargain hunters, especially iBuyers trying to make up for perhaps paying too much in 2022 and earlier.
These companies will give you a cash offer on the spot (basically) for your home without having to jump through hoops or use an agent.
The tradeoff is that the price will likely be a lot lower than what you might fetch on the open market.
This is probably how these types of businesses should operate in theory, but we didn’t see that in a rising home price environment.
You might see more realistic offers from iBuyers and other companies/agents that approach you to buy your home in 2023.
It’s ultimately a reinforcement of the new reality in the housing market. There’s more of an equilibrium where neither buyer or seller have much of an upper hand.
But those who must sell in 2023 might get a raw deal with uncertainty in terms of which way the housing market is headed.
Let’s start at the beginning: What is an HOA and why do communities have them?
According to Investopedia, “a homeowners association (HOA) is an organization in a subdivision, planned community or condominium that makes and enforces rules for the properties within its jurisdiction. Those who purchase property within an HOA’s jurisdiction automatically become members and are required to pay dues, known as HOA fees. Some associations can be very restrictive about what members can do with their properties.”
An HOA is typically established to make and enforce rules regarding the properties within the jurisdiction. And while they play an essential role in maintaining a community’s guidelines, HOAs can, at times, feel overbearing because of the many guidelines and restrictions they put in place.
And since many people wonder what makes living in a neighborhood with an HOA such a pain, we thought we’d share some of the crazy HOA stories people have posted on Quora — and let you decide whether living in a community with an HOA is the best option for you.
Bad experiences with homeowners associations
#1 Ken’s wooden beams, cherry tree and propane tank
“You do give up certain freedoms regarding maintenance of your home and property, as well as having to adhere to certain standards of conduct. For the most part, these rules are for the good of all and serve to enhance the quality of life in the community and help to maintain property values.
However, it all depends on the individuals who run the HOA. Unfortunately, these organizations are often controlled by retired people with a lot of time on their hands who delight in enforcing mindless rules.
I had several negative experiences with these organizations. The first two were in the Pittsburgh area.”
The wooden beams
“My home’s driveway was lined by wooden beams embedded in the ground. I had only lived there for about a year, and these timbers were rotting. I received a letter from the HOA telling me that these timbers must be removed or replaced in two weeks or I would be fined. Two weeks seemed pretty unreasonable for a considerable amount of work. These timbers were really only visible to someone actually on my property, so they weren’t a community eyesore. They had to have been rotting for quite some time, yet the former owners were not asked to replace them. I did agree that the work needed to be done, but two weeks was an unreasonable time frame. I asked for and received an extension to six months.”
The cherry tree
“My next incident was when I was having some trees pruned. There was a cherry tree planted very close to the house. When the worker was about to prune it, he discovered that the tree was basically hollow and infested with carpenter ants. I had actually noticed the occasional ant in my house. The tree was dying. Rather than pruning, I had it removed. The HOA was upset because I had the tree removed without permission. They tried to fine me $100. Apparently, I should have sent my worker home and then requested permission to remove a dying tree from my property, one that was leading to carpenter ants entering and potentially damaging my home. I sent them a rather nasty letter telling them that I would not pay a fine when the need to remove the tree was obvious. I didn’t need permission to get it pruned, and I only had it taken down because it was diseased. Obviously, permission would have been granted to remove a tree in this condition. They backed off the fine.”
The tank
“I’ve since moved to Hilton Head, SC, where most homes are in gated communities with HOAs. I had an recent run-in with them. On the side of my home, there was a propane tank. It had been there at least ten years prior to my buying the house. It was concealed behind some hedges. Someone from the HOA saw this and I was sent a letter informing me that, according to the rules, the tank must be enclosed in a service yard or have some sort of structure around it. Having it behind hedges was not acceptable.
The former owner who installed this tank, who still lives in the community, was once the head of the HOA. No action was ever taken against him. I am the third person to purchase this house since the tank was originally installed. None of the prior owners were fined. The HOA allowed the house to be put up for sale three different times while it was out of compliance with the community rules. Then out of the blue, they decided to fine me for a tank that had been in place for at least nine years and three owners before I ever owned the house.
I tried to protest, as the tank is not at all visible from the road (one of their stated reasons for this rule in the first place), but I was basically told that regardless of its history (and their failure to enforce the rules before), it was my tank now and I had to move it. So I had to pay nearly $300 for the propane company (which actually owns the tank) to move the tank into a service yard.“
Source and link to full comment
#2 Katrina’s grass length and nephew’s bike
Her thoughts on why you should never move in a neighborhood governed by an HOA?
“Because they control everything!
The height of your lawn, the color of your siding, how many cars in your driveway, what plants are grown out front, if you can have a fence, how high the fence is, what color of the fence…. I can go on and on and on. You have limited control of your own property, and you pay dues…. Yea!!”
The cars in the driveway
“My sister and her husband moved to a community with a HOA, she moved 200 miles away from us. Naturally, myself and my parents helped her move.
We decided to spend the night there, my they had a long driveway. It was meant for cars and boats because the community was near the water. So we pulled our 4 cars into the driveway. The last car had about 12 feet extra before reaching the sidewalk.
We were unloading her belongings when the local community police department showed up, they wanted to speak to my sister.
Apparently she broke an ordnance because more than 3 cars were in her driveway, we didn’t get the stuff out the car first…. It was a fine, our first 15 minutes at the property.”
The nephew’s bike
“Another time (same place) my nephew left his bike on the front porch, the same people show up to fine my sister for the bike… Yes a 6 year old’s bike barely visible on a porch was fine worthy.”
The length of the grass
“Grass, in Maryland it is hot and humid and the grass grows so fast, neglect your yard for a week and the grass is knee high. My sister’s husband cut the grass, almost weekly. They would routinely (every week) go on to the property with a ruler and check the grass height.
They were just over a bit and they came on to their property and cut the grass for them, fined them and charged them for the cut.”
Source and link to full comment
#3 Ted and his A/C-less summer
“One spring, found my A/C quit working at my townhouse. The compressor was located off a mini deck built one floor up specially constructed to hold the compressor. Problem is, I had to have it replaced. Another problem, they didn’t make SEER 10 anymore and had to get SEER 13. SEER 13 units are bigger, heavier and wouldn’t fit on the mini deck. I had a structural engineer check it out, would cost me about $13k to have that deck made bigger (long story). Alternative was to move the compressor to the front of my unit.
HOA made me contact three neighbors and have them sign off on my architectural mod. Then they took all summer to approve the job.
Read that part again.
I found the problem in spring, immediately complied by getting the neighbors signatures, and I didn’t have A/C until the job was approved in August.“
The window unit
“Oh, and as a stop gap measure, I bought a window unit to get me by the summer months until they allowed me to install the new unit. It took the edge off, kept it from getting over 90°F inside.
Took about a week before I got a nasty gram telling me to remove the window unit (against the rules) or get a hefty fine. So, I put it in the window where it shared space by the broken a/c compressor (in other words, hard to see). Got a nasty gram within two days threatening a fine.“
The grey front stoop
“Another story – my next door neighbor bought his place with his front stoop painted grey. He didn’t paint it; the prior home owner did. He gets a nasty gram saying painted stoops are against the rules. It’s gray paint, I didn’t even notice it was painted until it was pointed out. Neighbor fought it at the next meeting. Had pictures of other painted stoops throughout the community (a few others did exist). He made sure he also captured unit numbers. It was noted during the meeting that one of the painted stoops happened to be the porch of the HOA president. They dropped the complaint against him.”
Source and link to full comment
Now, we’re not saying that all HOAs are bad. Nor are we encouraging anyone to move to a neighborhood governed by one. But since knowledge is key when making a life-changing decision like buying a home, we thought these stories will give you a better understanding of some of the challenges you might face when moving to a neighborhood with an HOA.
Have any stories you’d like to share? Maybe some stories of how your HOA is doing a great job for your neighborhood? Drop us a line at [email protected]
More helpful tips:
Can You Sell a House and Buy Another at the Same Time? We Explore Your Options How Much Do Modern Prefab Homes Cost? A Step-by-Step Guide to Buying a Property for Airbnb
2021 VA Home Loan Limit: $0 down up to $5,000,000* (Subject to lender limits) /2 open VA loans at one time $822,375* (Call 888-573-4496 for details).
How to Apply for a VA Home Loan?
This is a quick look at how to apply for a VA home loan in San Benito County. For a more detailed overview of the VA home loan process, check out our complete guide on how to apply for a VA home loan. Here, we’ll go over the general steps to getting a VA home loan and point out some things to pay attention to in San Benito County. If you have any questions, you can call us at VA HLC and we’ll help you get started.
Get your Certificate of Eligibility (COE)
Give us a call at (877) 432-5626 and we’ll get your COE for you.
Are you applying for a refinance loan? Check out our complete guide to VA Refinancing.
Get pre-approved, to get pre-approved for a loan, you’ll need:
Previous two years of W2s
Most recent 30 days paystubs or LES (active duty)
Most recent 60 days bank statements
Landlord and HR/Payroll Department contact info
Find a home
We can help you check whether the home is in one of the San Benito County flood zones
Get the necessary inspections
Termite inspection: required
Well or septic inspections needed, if applicable
Get the home appraised
We can help you find a VA-Certified appraiser in San Benito County and schedule the process
Construction loan note: Construction permit/appraisal info
Building permit
Elevation certificate
Lock in your interest rates
Wait until the appraisal lock in your loan rates. If it turns out you need to make repairs, it can push your closing back. Then you can get stuck paying rate extension fees.
Close the deal and get packing!
You’re ready to go.
What is the Median Home Price?
As of March 31, 2021, the median home value for San Benito County is $715,049. In addition, the median household income for residents of the county is $86,958.
How much are the VA Appraisal Fees?
Single-Family: $600.
Individual Condo: $600.
Manufactured Homes: $600.
2-4 Unit Multi-Family: $850.
Appraisal Turnaround Times: 7 days.
Do I need Flood Insurance?
The VA requires properties are required to have flood insurance if they are in a Special Flood Hazard Area.
Due to its location, San Benito County has no significant flood hazard areas with the only potential flood areas being immediately around the Paicines Reservoir.
How do I learn about Property Taxes?
Tom J. Slavich is the San Benito County tax assessor. His office can be reached at 481 4th Street, Hollister, California 95023 and by calling (831) 636-4030.
Veterans, owner-occupiers, and senior citizens may be eligible for property tax relief. You can find out whether you qualify through the county assessor. In addition, the Assessor’s Office can do re-appraisals to determine property values and flood risks.
What is the Population?
The county’s population of 62,808 is 60% Hispanic, 32% White, and 3.9% Asian.
Most county residents are between 18 and 65 years old, with 25.5% under 18 years old and 13.1% older than 65.
In total, the county has about 18,135 households, with an average of 3.3 people per household.
What are the major cities?
There are two cities in San Benito County, including Hollister, which serves as the county seat, and San Juan Bautista’s city.
About San Benito County
Beyond the beautiful scenery of San Benito County is an area where excitement and activity abound. As part of the San Jose Metropolitan area, residents are near all offered in the big cities of San Jose and San Francisco while simultaneously maintaining the quiet and calm more typically found in small-town America.
The closeness to the big cities provides easy access for veterans to veteran services. San Jose is home to a VA clinic and many smaller veteran support groups.
Additionally, given the multitude of gorgeous fauna and flora native to San Benito County, it should come as no surprise that Benitoite, rare blue titanium, was initially found in the area. The county is so lush in plant and floral life that the Benito, a genus of flowering plants, is named for the county. As the parable goes, where there are plants, there are bugs, exemplified by San Benito County, where a millipede with more legs than any other millipede species was discovered in 1926. This ecological display is prominently featured at the Pinnacles National Park, a federally protected area.
Veteran Information
The county is currently home to 2,619 veterans.
San Benito County is home to two VFW post:
Post 9242 Hollister Post – 649 San Benito Street, Room 204, Hollister, California 95023.
Post 6359 Leslie L. Garratt Post – 58 Monterey Street, San Juan Bautista, California 95045.
County Veteran Assistance Information
San Benito County Veteran Service Office – 649 San Benito Street, Hollister, California 95023.
Apply for a VA Home Loan
For more information about VA Home Loans and how to apply, click here.
If you meet the VA’s eligibility requirements, you will be able to enjoy some of the best government-guaranteed home loans available.
VA loans can finance the construction of a property. However, the property must be owned and prepared for construction as the VA cannot ensure vacant land loans.
VA Approved Condos
At the moment, there are no VA-approved condos available in San Benito County. However, if you’re still interested in getting a condo through the approval process, call us at (877) 432-5626.
The FHFA determines the conforming loan limit each year, basing it on the average U.S. home value over the past four quarters.
They utilize their own Federal Housing Finance Agency House Price Index (FHFA HPI®) to determine how much home prices have risen in the preceding 12 months.
This captures home price movement from the third quarter of 2021 to the third quarter of 2022.
Their latest HPI found that property values had risen 12.21% over the past four quarters, which allowed them to raise the conforming loan limit by the same amount.
As such, home buyers and those looking to refinance will be able to get a mortgage backed by Fannie Mae or Freddie Mac (conforming loan) as large as $726,200 for a one-unit property.
Typically, conforming loans are easier to qualify for than jumbo loans, those which exceed the conforming loan limits.
Additionally, mortgage rates are often lower on conforming loans, though lately it’s been a bit mixed due to adverse conditions in the secondary market.
We’re actually lucky the conforming loan limit for 2023 rose as much as it did, as home prices have decelerated immensely.
Despite experiencing positive annual appreciation each quarter since the start of 2012, home values were up just 0.1% in the third quarter from a quarter earlier.
That meant the 12.21% increase was significantly lower than the 18% increase in loan limits seen a year prior.
And the way things are going, we could see a negative number in the fourth quarter from the third.
As noted, the high-cost loan limits are, well, even higher, exceeding $1 million for the first time ever.
This means existing homeowners and prospective home buyers in places like Los Angeles, the Bay Area, New York City, and even Park City will be able to obtain Fannie/Freddie-backed mortgages for seven figures.
Specifically, the new ceiling loan limit for one-unit properties in these areas will be $1,089,300, which is 150 percent of the 2023 baseline limit of $726,200.
And if we’re talking about a four-unit investment property, loan amounts can exceed $2 million, which is bonkers.
Additionally, in Alaska, Hawaii, Guam, and the U.S. Virgin Islands, the baseline loan limit matches the high-cost loan limit of $1,089,300 for one-unit properties.
The FHFA noted that because of rising home values, the loan limits will be higher next year in all but two U.S. counties or county equivalents.
Prior to this announcement, several mortgage lenders increased their conforming loan limit in anticipation of the higher loan limits.
For example, the nation’s top mortgage lender, Rocket Mortgage, began accepting loan amounts as high as $715,000 back in September via their wholesale division Rocket Pro TPO.
And the nation’s new top mortgage lender (as of the third quarter of 2022), United Wholesale Mortgage, did the same shortly thereafter.
It appears they played it safe, knowing home price appreciation would be sufficient to keep their speculative loan limits below the official ones.
Inside: This guide will teach you about the different factors you need to consider when purchasing a home with a 70k salary.
There are a lot of factors to consider when you’re trying to figure out how much house you can afford. Your income, your debts, your down payment, and the interest rate on your mortgage all play a role in determining how much house you can afford.
Your situation will be different than the person next-door or your co-coworker.
Making 70000 a year is a great salary. You are making the median salary in the United States.
It’s enough to comfortably afford most homes and gives you plenty of room to save money each month.
But how much house can you actually afford?
It depends on several factors, including your down payment, interest rate, income, and credit score.
In this ultimate guide, we’ll walk you through everything you need to know about how much house you can afford making 70000 a year.
how much house can i afford on 70k
In general, you can expect to spend 28-36% of your income on housing.
Generally speaking, if you make $70,000 a year, you can afford a house between $226,000 and $380,000.
How much mortgage on 70k salary?
In general, you should expect to spend no more than 28% of your monthly income on a mortgage payment.
Thus, you can spend approximately$1633-2100 a month on a mortgage.
Just remember this is relative to the interest rate, term length of the loan, down payment, and other factors.
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28/36 Rule
But there’s one factor that trumps all the others: The 28/36 rule.
Also known as the debt-to-income (DTI) ratio.
The 28/36 rule is a guideline that says that your housing costs (mortgage payments, property taxes, homeowners insurance, and HOA fees) should not exceed 28% of your gross monthly income.
And your total debt (housing costs plus any other debts you have, like car payments or credit card bills) should not exceed 36% of your gross monthly income.
You must follow the 28/36 rule.
How to calculate how much mortgage you can afford?
If you’re like most people, you probably don’t know how to calculate how much mortgage you can afford.
This is actually a really important question that you need to ask yourself before beginning the home-buying process.
The answer will help determine the price range of homes you should be looking at. Plus know how much money you’ll need to save for a down payment.
Step #1: Check Interest Rates
Research current mortgage rates to get an accurate estimate. You can also check your credit score and search for average mortgage rates based on your credit score.
Right now, with sky-high inflation, you are unable to afford a bigger house when interest rates are hovering around 6% compared to ultra-low interest rates of 2.5%.
With a 70k salary, this can be the difference between $50-100k on the total mortgage amount you can afford.
Step #2: Use a Mortgage Calculator
Use a mortgage calculator to get an estimate of the home price you can afford based on your income, debt profile, and down payment.
Generally, lenders cap the maximum amount of monthly gross income you can use toward the loan’s principal and interest payment to not more than 28% of your gross monthly income (called the “Front-End” or “Housing Expense” ratio). Then, limit your total allowable debt-to-income ratio (called the “Back-End” ratio) to not more than 36%.
You can use a mortgage calculator to a ballpark range of what house you can afford.
Step #3: Taxes, Insurance, and PMI
When planning for a home purchase, it’s important to factor in all of your monthly expenses, including taxes, insurance, and PMI.
This will ensure that you get an accurate estimate of your home-buying budget based on your household annual income.
Don’t forget to include these payments to get a realistic understanding of your monthly budget.
Step #4: Remember your Living Expenses
When considering how much house you can afford based on your $70,000 salary, you must consider your lifestyle and current expenses.
It is important to factor in other monthly expenses such as cell phone and internet bills, utilities, insurance costs, and other bills.
More than likely, you will be approved for a higher mortgage amount than you would feel comfortable with. This is 100% what lenders will do.
They want to provide you with the most you can afford – not what you should afford.
Step #5: Get prequalified
Prequalifying for a mortgage is an important first step to take when estimating how much house you can afford.
It gives you a more precise figure to work with and helps you make a more informed decision based on your personal situation.
Remember that your final amount will vary depending on a number of factors, especially your interest rate, which will be based on your credit score.
Taking the time to research current mortgage rates helps you secure a better mortgage rate, giving you more buying power.
Home Buying by Down Payment
How much house can you afford?
It’s a common question among home buyers — especially first-time home buyers. Use this table to figure out how much house you can reasonably afford given your salary and other monthly obligations.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 4% interest rate.
Annual Income
Downpayment
Monthly Payment
How Much House Can I Afford?
$70,000
$9,552 (3%)
$1,750
$318,412
$70,000
$16,215 (5%)
$1,750
$324,316
$70,000
$34,058 (10%)
$1,750
$340,581
$70,000
$53,573 (15%)
$1,750
$357,152
$70,000
$75,094 (20%)
$1,750
$375,468
$70,000
$98,933 (25%)
$1,750
$395,731
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Mortgage on 70k Salary Based on Monthly Payment and Interest Rate
How much house can you afford on a $70,000 salary?
This largely depends on the current interest rate of the mortgage loan you’re considering. When interest rates are high, people aren’t actively buying as when interest rates are low.
By understanding these factors, you can better gauge how much house you can afford on a $70,000 salary.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 20% downpayment.
Annual Income
Monthly Payment
Interest Rate
How Much House Can I Afford?
$70,000
$1,750
3.25%
$406,796
$70,000
$1,750
3.5%
$396,231
$70,000
$1,750
3.75%
$386,101
$70,000
$1,750
4%
$375,994
$70,000
$1,750
4.5%
$357,554
$70,000
$1,750
5%
$339,954
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Home Affordability Calculator by Debt-to-Income Ratio
Around here at Money Bliss, we always stress that debt will hold you back.
In the case of buying a house, debt increases your DTI ratio.
Here is a glimpse at what monthly debt can cause your debt-to-income (DTI) ratio to increase. Thus, making the house you want to buy to be more difficult.
Annual Income
Monthly Payment
Monthly Debt
How Much House Can I Afford?
$70,000
$2,100
$0
$440,085
$70,000
$1,900
$200
$404,584
$70,000
$1,800
$300
$382,334
$70,000
$1,600
$500
$337,883
$70,000
$1,350
$750
$282,208
$70,000
$1,100
$1000
$226,582
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Increase your Home Buying Budget
Here are a few ways you can increase your home buying budget when buying a house on a $70k annual income.
By following these steps, you can increase your home buying budget and find a more suitable house for your income.
1. Pick a Cheaper Home
Home prices vary significantly in different parts of the country.
Moving out of a major metropolitan area with notoriously high housing costs can help you find more affordable homes.
There are plenty of ways to find a home that is cheaper than you would normally expect.
Look for homes that are for sale in less desirable neighborhoods.
Find homes that are for sale by owner or have not been listed yet.
Check for homes that are for sale outside of your usual price range and haven’t sold as they may drop their price.
Move to a lower cost of living area.
2. Increase Your Down Payment Savings
A larger down payment can reduce the amount you have to finance, which lowers your monthly payment.
Plus help you get a lower interest rate and avoid paying PMI.
Putting down at least 10-20 percent of the home sale price can help boost your home buying power. You can also take advantage of down payment assistance programs in your area.
3. Pay Down Your Existing Debt
Paying down your debts such as credit card debts or auto loans can help raise your maximum home loan.
Paying down your debts can help you qualify for a higher loan amount.
This is because when you have lower amounts of debt, your credit score is higher and your debt-to-income ratio is less. This means you are less likely to be rejected for a home loan.
4. Improve Your Credit Score
A higher credit score can lead to lower rates and more affordable payments.
You can improve your credit score by:
Paying your bills on time
Paying down your credit card balances
Avoiding opening new credit before applying for a mortgage
Disputing any errors on your credit report
This is very true! We had an unfortunate debt that wasn’t ours added to our credit report right before closing. While the debt was an error, it still cost us a higher interest rate and forced us to refinance once the credit report was fixed.
5. Increase Your Income
Asking for a raise, seeking a higher-paid position, or starting a side gig can help you increase the amount of home you can afford.
While you need two years of income from a side gig or your own online business to count as income, the extra cash earned helps you to increase the size of your downpayment. Plus it lowers your debt-to-income ratio with the savings you are setting aside.
What factors should you consider when deciding how much you can afford for a mortgage?
How much house can you afford on your current salary and with your current monthly debts?
This is a question that we are often asked, and it’s one that we love to answer.
We’ll walk you through all the different factors that go into this decision so that you can make an informed choice.
1. Loan amount
The loan amount is a key factor that affects the total cost of a mortgage.
If you have no outstanding debt, a 20% down payment, a high credit score, and a 3.5% interest rate from an FHA loan, you could be able to afford up to $508,000.
However, if you have debt, a smaller down payment, or a lower credit score, the loan amount you can qualify for will be lower.
Similarly, if you choose a 15-year fixed-rate loan, your monthly payments will be higher, but you will end up paying less in interest over the life of the loan than with a 30-year fixed-rate loan.
Ultimately, your loan amount will affect the total cost of your mortgage, so it’s important to consider all the factors when making your decision.
2. Mortgage Interest rate
Mortgage interest rates can have a significant impact on the cost of a mortgage. The higher the interest rate, the more expensive the loan will be.
For example, a difference between a 3% and 4% interest rate on a $300,000 mortgage is more than $150 on the monthly payment.
Remember, in the first few years of a mortgage, the majority of the payment goes toward interest rather than trying to reduce the principal amount.
3. Type of Mortgage
The primary difference between a fixed and variable mortgage is the interest rate and the amount of your payment
Fixed-rate mortgages offer the stability of having the same interest rate for the life of the loan.
Adjustable-rate mortgages (ARMs) come with lower interest rates to start, but those rates can change over the life of the loan. ARMs are often a riskier choice, as if the economy falters, the interest rate can go up.
Fixed-rate loans are typically the most popular choice, as the monthly payment amount is more predictable and easier to budget for. The terms of a fixed-rate loan can range from 10 to 30 years, depending on the lender.
Adjustable-rate mortgages (ARMs) have interest rates that can increase or decrease annually based on an index plus a margin. ARMs are typically more attractive to borrowers who plan on staying in the home for a shorter period of time, as the lower initial interest rate can make the payments more manageable.
The Money Bliss recommendation is to choose a 15-year fixed-rate mortgage.
4. Property value
Property value can have a direct effect on how much you can afford for a mortgage.
As the value of the property increases, so does the amount of money you will need to borrow to purchase it. This, in turn, affects the monthly payments and the amount of interest you will pay over the life of the loan.
This is especially important as many people have been priced out of the market with the rising home prices.
Additionally, higher property values can mean higher taxes, which will add to the amount you need to budget for your mortgage payments.
5. Homeowner insurance
Homeowner’s insurance is a requirement when securing a loan and it can vary depending on the value and location of the home.
Additionally, certain areas that are prone to natural disasters or are located in densely populated areas may have higher premiums than other locations and may require additional insurance like flood insurance.
As a result, lenders typically require that you purchase homeowners insurance in order to secure a loan, and may have specific requirements for the type or amount of coverage that you need to purchase.
Before committing to a mortgage, it is important to consider the cost of homeowner’s insurance and make sure it fits into your budget.
This is something you do not want to skimp on as the cost to replace a home is very expensive.
6. Property taxes
Property taxes are calculated based on the value of a home and the tax rate of the city or county where the property resides.
The higher the property taxes, the more you will have to pay in your monthly mortgage payment.
In states with high property taxes, the property tax bill can be a large sum of the mortgage payment.
It is important to consider these costs when comparing different homes and locations to ensure you can afford the home without stretching your budget too thin.
7. Home repairs and maintenance
It’s important to also consider other factors such as the age of the house, since some properties may require renovation and repairs that can cost more than the house price itself.
Beyond the cost of purchasing a home, homeowners will likely have other expenses related to owning and maintaining the property.
Also, many homeowners prefer to do significant upgrades to the home before moving in, which comes at an additional expense.
These can include ordinary expenses such as painting, taking care of a lawn, fixing appliances, and cleaning living spaces, which can add up.
Additionally, it’s advisable to buy a home that falls in the middle of your price range to ensure you have some extra money for unexpected costs, such as repairs and maintenance.
8. HOA or Homeowners Association Maintenance
This is often an overlooked factor by many new homebuyers, but extremely important as some HOAs add $500-800 per month to the total housing budget.
The purpose of a homeowners association (HOA) is to establish a set of rules and regulations for residents to follow as well as maintain the community or building.
These fees are typically used to pay for maintenance, amenities, landscaping, and concierge services.
HOA fees are used to finance community upkeep, including landscaping and joint space development, and can range from $100 to over $1,000 per month, depending on the amenities in the association.
9. Utility bills
When switching from renting to buying a home, you will have to factor in the costs of your monthly utility bills such as electricity, natural gas, water, garbage and recycling, cable TV, internet, and cell phone when calculating how much mortgage you can afford.
In addition, the larger the home, the higher the costs to heat and cool your new home.
Make sure to ask your realtor for previous utility bills on the property you are interested in.
10. Private Mortgage Insurance
The purpose of private mortgage insurance (PMI) is to protect the lender in the event of foreclosure. It is typically required when a borrower is unable to make a 20% down payment on a home purchase.
PMI allows borrowers to purchase a home with less upfront capital, but also comes with additional monthly costs that are added to the mortgage payment. These fees range from 0.5% to 2.5% of the loan’s value annually and are based on the amount of money put down.
PMI can also be canceled or refinanced once the borrower has achieved 20% equity in the home or when the outstanding loan amount reaches 80% of the home’s purchase price.
11. Moving costs
Moving is expensive, but also a pain to do. So, consider the moving costs associated with relocating from one location to another.
Typically fees for packing, transportation, and possibly storage, and can vary depending on the size of the move and the distance the move needs to cover.
Also, consider if by buying a home, you will stop having moving costs associated with moving from rental to rental.
FAQ
When determining how much house you can afford, it’s important to consider several factors.
These include your income, existing debts, interest rates, credit history, credit score, monthly debt, monthly expenses, utilities, groceries, down payment, loan options (such as FHA or VA loans), and location (which affects the interest rate and property tax). Also, think about the costs of maintaining or renovating a home.
Additionally, you should also evaluate your own budget and assess whether now is the right time to purchase a home. Taking all of these factors into account can help you set the maximum limit on what you can realistically afford.
A mortgage calculator can help you determine your home affordability by providing an estimate of the home price you can afford based on your income, debt profile, and down payment.
It works by inputting your annual income and estimated mortgage rate, which then calculates the maximum amount of money you’re able to spend on a house and the expected monthly payment.
Additionally, different methods are available to factor in your debt-to-income ratio or your proposed housing budget, allowing you to get a more accurate estimate of your home buying budget.
The debt-to-income ratio or DTI is used by lenders to assess a borrower’s ability to make mortgage payments.
This ratio is calculated by taking the total of all of a borrower’s monthly recurring debts (including mortgage payments) and dividing it by the borrower’s monthly pre-tax household income.
A high DTI ratio indicates that the borrower’s debt is high relative to income, and could reduce the amount of loan they are qualified to receive.
Generally, lenders prefer a DTI of 36% or less, which allows borrowers to qualify for better interest rates on their mortgages.
To calculate their DTI, borrowers should include debt such as credit card payments, car loans, student and other loans, along with housing expenses. It is important to note that the DTI does not include other monthly expenses such as groceries, gas, or current rent payments.
Closing costs can have an enormous impact on how much home you’re able to afford.
From application fees and down payments to attorney costs and credit report fees, these costs can add up quickly and affect your overall budget. Unfortunately, most of these closing costs are non-negotiable, but you can ask the seller to pay them.
When buying a house, it is important to research the different mortgage options available to you.
You can typically choose between a conventional loan that is guaranteed by a private lender or banking institution, or a government-backed loan. Depending on your monthly payment and down payment availability, you may be able to select between a 15-year or a 30-year loan.
A conventional loan typically offers better interest rates and payment flexibility.
While a government-backed loan may be more lenient with its credit and down payment requirements.
For veterans or first-time home buyers, there may be special mortgage options available to them.
Ultimately, it is important to talk to a lender to see which loan type is best for your personal circumstances.
When it comes to saving for a down payment, it’s important to understand how much you’ll need and how much it will affect your budget.
Generally, you’ll need 20% of the cost of the home for a conventional mortgage and 25% for an investment property. When you put down more money, it gives you more buying power and may help you negotiate a lower interest rate.
For example, if you’re buying a $300,000 house, you’ll need a down payment of $60,000 for a conventional mortgage. On the other hand, if you put down 10%, you can still afford a $395,557 house. But, you will have to pay for private mortgage insurance.
In addition, there are other ways to help you cover these upfront costs. You can look into down payment assistance programs.
Ultimately, the size of your down payment will depend on your budget and financial goals. You should never deplete your savings account just to make a larger down payment. It’s important to factor in emergency funds and other expenses when deciding on the best option.
Eligibility requirements for loan lenders can vary, but in general, lenders are looking for borrowers with a good credit score, a reliable income, and a history of employment or income stability.
For most loan types, borrowers will need to show a history of two consecutive years of employment in order to qualify. However, lenders may be more flexible if the borrower is just beginning their career or if they are self-employed and do not have W2 forms and official pay stubs.
Income verification also needs to be done “on paper”, meaning that cash tips that do not appear on pay stubs or W2s can not be used as income. The lender will look at the household’s average pre-tax income over a two-year period before determining the amount that can be borrowed.
In order to make sure that the borrower is financially secure, lenders will also pull the borrower’s credit report and base their pre-approval on the credit score and debt-to-income ratio. Employment verification may also be done.
For certain government-backed loan types, such as FHA, VA, and USDA loans, there may be additional or different requirements for eligibility. For instance, for FHA loans, the borrower must intend to use the home as a primary residence and live in it within two months after closing. VA loans are more lenient, and may not require a down payment.
The qualifications for VA loans vary based on the period and amount of time the borrower has served. There are many ways to qualify, whether the borrower is a veteran, active duty service member, reservist, or member of the National Guard. For more information on eligibility requirements for VA loans, borrowers can visit the U.S. Department of Veteran Affairs.
A good credit score will mean you have access to more lending options, better interest rates, and more purchasing power.
On the other hand, a poor credit score could mean you are approved for a loan, but at a higher interest rate and with a smaller house.
This means your budget will be more limited and you may not be able to buy as much home as you had hoped for. Additionally, lenders will also look at other factors, such as your debt-to-income ratio, employment history, and loan term, in order to determine your overall affordability.
What House Can I Afford on 70k a year?
As a borrower, you need to consider the interest rate, down payment, credit score, debt-to-income ratio, employment history, and loan term when determining how much house you can afford.
A higher credit score can often mean a lower interest rate, and a larger down payment can bring down the monthly payments.
All of these factors can have an effect on the amount of money you can borrow and the home you can afford.
Ultimately, understanding the impact of different factors can help borrowers make the best decisions when it comes to getting a mortgage.
Now that you know how much house you can afford, it’s time to start saving for a down payment.
The sooner you start saving, the sooner you’ll be able to move into your dream home. But you may have to wait if you are considering a mansion.
By taking into consideration this guide into account, you can make a more informed decision about the cost of a mortgage for your new home.
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In Best Low-Risk Investments for 2023, I provided a comprehensive list of low-risk investments with predictable returns. But it’s precisely because those returns are low-risk that they also provide relatively low returns.
In this article, we’re going to look at high-yield investments, many of which involve a higher degree of risk but are also likely to provide higher returns.
True enough, low-risk investments are the right investment solution for anyone who’s looking to preserve capital and still earn some income.
But if you’re more interested in the income side of an investment, accepting a bit of risk can produce significantly higher returns. And at the same time, these investments will generally be less risky than growth stocks and other high-risk/high-reward investments.
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Determine How Much Risk You’re Willing to Take On
The risk we’re talking about with these high-yield investments is the potential for you to lose money. As is true when investing in any asset, you need to begin by determining how much you’re willing to risk in the pursuit of higher returns.
Chasing “high-yield returns” will make you broke if you don’t have clear financial goals you’re working towards.
I’m going to present a large number of high-yield investments, each with its own degree of risk. The purpose is to help you evaluate the risk/reward potential of these investments when selecting the ones that will be right for you.
If you’re looking for investments that are completely safe, you should favor one or more of the highly liquid, low-yield vehicles covered in Best Low-Risk Investments for 2023. In this article, we’re going to be going for something a little bit different. As such, please note that this is not in any way a blanket recommendation of any particular investment.
Best High-Yield Investments for 2023
Table of Contents
Below is my list of the 18 best high-yield investments for 2023. They’re not ranked or listed in order of importance. That’s because each is a unique investment class that you will need to carefully evaluate for suitability within your own portfolio.
Be sure that any investment you do choose will be likely to provide the return you expect at an acceptable risk level for your own personal risk tolerance.
1. Treasury Inflation-Protected Securities (TIPS)
Let’s start with this one, if only because it’s on just about every list of high-yield investments, especially in the current environment of rising inflation. It may not actually be the best high-yield investment, but it does have its virtues and shouldn’t be overlooked.
Basically, TIPS are securities issued by the U.S. Treasury that are designed to accommodate inflation. They do pay regular interest, though it’s typically lower than the rate paid on ordinary Treasury securities of similar terms. The bonds are available with a minimum investment of $100, in terms of five, 10, and 30 years. And since they’re fully backed by the U.S. government, you are assured of receiving the full principal value if you hold a security until maturity.
But the real benefit—and the primary advantage—of these securities is the inflation principal additions. Each year, the Treasury will add an amount to the bond principal that’s commensurate with changes in the Consumer Price Index (CPI).
Fortunately, while the principal will be added when the CPI rises (as it nearly always does), none will be deducted if the index goes negative.
You can purchase TIPS through the U.S. Treasury’s investment portal, Treasury Direct. You can also hold the securities as well as redeem them on the same platform. There are no commissions or fees when buying securities.
On the downside, TIPS are purely a play on inflation since the base rates are fairly low. And while the principal additions will keep you even with inflation, you should know that they are taxable in the year received.
Still, TIPS are an excellent low-risk, high-yield investment during times of rising inflation—like now.
2. I Bonds
If you’re looking for a true low-risk, high-yield investment, look no further than Series I bonds. With the current surge in inflation, these bonds have become incredibly popular, though they are limited.
I bonds are currently paying 6.89%. They can be purchased electronically in denominations as little as $25. However, you are limited to purchasing no more than $10,000 in I bonds per calendar year. Since they are issued by the U.S. Treasury, they’re fully protected by the U.S. government. You can purchase them through the Treasury Department’s investment portal, TreasuryDirect.gov.
“The cash in my savings account is on fire,” groans Scott Lieberman, Founder of Touchdown Money. “Inflation has my money in flames, each month incinerating more and more. To defend against this, I purchased an I bond. When I decide to get my money back, the I bond will have been protected against inflation by being worth more than what I bought it for. I highly recommend getting yourself a super safe Series I bond with money you can stash away for at least one year.”
You may not be able to put your entire bond portfolio into Series I bonds. But just a small investment, at nearly 10%, can increase the overall return on your bond allocation.
3. Corporate Bonds
The average rate of return on a bank savings account is 0.33%. The average rate on a money market account is 0.09%, and 0.25% on a 12-month CD.
Now, there are some banks paying higher rates, but generally only in the 1%-plus range.
If you want higher returns on your fixed income portfolio, and you’re willing to accept a moderate level of risk, you can invest in corporate bonds. Not only do they pay higher rates than banks, but you can lock in those higher rates for many years.
For example, the average current yield on a AAA-rated corporate bond is 4.55%. Now that’s the rate for AAA bonds, which are the highest-rated securities. You can get even higher rates on bonds with lower ratings, which we will cover in the next section.
Corporate bonds sell in face amounts of $1,000, though the price may be higher or lower depending on where interest rates are. If you choose to buy individual corporate bonds, expect to buy them in lots of ten. That means you’ll likely need to invest $10,000 in a single issue. Brokers will typically charge a small per-bond fee on purchase and sale.
An alternative may be to take advantage of corporate bond funds. That will give you an opportunity to invest in a portfolio of bonds for as little as the price of one share of an ETF. And because they are ETFs, they can usually be bought and sold commission free.
You can typically purchase corporate bonds and bond funds through popular stock brokers, like Zacks Trade, TD Ameritrade.
Corporate Bond Risk
Be aware that the value of corporate bonds, particularly those with maturities greater than 10 years, can fall if interest rates rise. Conversely, the value of the bonds can rise if interest rates fall.
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4. High-Yield Bonds
In the previous section we talked about how interest rates on corporate bonds vary based on each bond issue’s rating. A AAA bond, being the safest, has the lowest yield. But a riskier bond, such as one rated BBB, will provide a higher rate of return.
If you’re looking to earn higher interest than you can with investment-grade corporate bonds, you can get those returns with so-called high-yield bonds. Because they have a lower rating, they pay higher interest, sometimes much higher.
The average yield on high-yield bonds is 8.29%. But that’s just an average. The yield on a bond rated B will be higher than one rated BB.
You should also be aware that, in addition to potential market value declines due to rising interest rates, high-yield bonds are more likely to default than investment-grade bonds. That’s why they pay higher interest rates. (They used to call these bonds “junk bonds,” but that kind of description is a marketing disaster.) Because of those twin risks, junk bonds should occupy only a small corner of your fixed-income portfolio.
High Yield Bond Risk
In a rapidly rising interest rate environment, high-yield bonds are more likely to default.
High-yield bonds can be purchased under similar terms and in the same places where you can trade corporate bonds. There are also ETFs that specialize in high-yield bonds and will be a better choice for most investors, since they will include diversification across many different bond issues.
5. Municipal Bonds
Just as corporations and the U.S. Treasury issue bonds, so do state and local governments. These are referred to as municipal bonds. They work much like other bond types, particularly corporates. They can be purchased in similar denominations through online brokers.
The main advantage enjoyed by municipal bonds is their tax-exempt status for federal income tax purposes. And if you purchase a municipal bond issued by your home state, or a municipality within that state, the interest will also be tax-exempt for state income tax purposes.
That makes municipal bonds an excellent source of tax-exempt income in a nonretirement account. (Because retirement accounts are tax-sheltered, it makes little sense to include municipal bonds in those accounts.)
Municipal bond rates are currently hovering just above 3% for AAA-rated bonds. And while that’s an impressive return by itself, it masks an even higher yield.
Because of their tax-exempt status, the effective yield on municipal bonds will be higher than the note rate. For example, if your combined federal and state marginal income tax rates are 25%, the effective yield on a municipal bond paying 3% will be 4%. That gives an effective rate comparable with AAA-rated corporate bonds.
Municipal bonds, like other bonds, are subject to market value fluctuations due to interest rate changes. And while it’s rare, there have been occasional defaults on these bonds.
Like corporate bonds, municipal bonds carry ratings that affect the interest rates they pay. You can investigate bond ratings through sources like Standard & Poor’s, Moody’s, and Fitch.
Fund
Symbol
Type
Current Yield
5 Average Annual Return
Vanguard Inflation-Protected Securities Fund
VIPSX
TIPS
0.06%
3.02%
SPDR® Portfolio Interm Term Corp Bond ETF
SPIB
Corporate
4.38%
1.44%
iShares Interest Rate Hedged High Yield Bond ETF
HYGH
High-Yield
5.19%
2.02%
Invesco VRDO Tax-Free ETF (PVI)
PVI
Municipal
0.53%
0.56%
6. Longer Term Certificates of Deposit (CDs)
This is another investment that falls under the low risk/relatively high return classification. As interest rates have risen in recent months, rates have crept up on certificates of deposit. Unlike just one year ago, CDs now merit consideration.
But the key is to invest in certificates with longer terms.
“Another lower-risk option is to consider a Certificate of Deposit (CD),” advises Lance C. Steiner, CFP at Buckingham Advisors. “Banks, credit unions, and many other financial institutions offer CDs with maturities ranging from 6 months to 60 months. Currently, a 6-month CD may pay between 0.75% and 1.25% where a 24-month CD may pay between 2.20% and 3.00%. We suggest considering a short-term ladder since interest rates are expected to continue rising.” (Stated interest rates for the high-yield savings and CDs were obtained at bankrate.com.)
Most banks offer certificates of deposit with terms as long as five years. Those typically have the highest yields.
But the longer term does involve at least a moderate level of risk. If you invest in a CD for five years that’s currently paying 3%, the risk is that interest rates will continue rising. If they do, you’ll miss out on the higher returns available on newer certificates. But the risk is still low overall since the bank guarantees to repay 100% of your principle upon certificate maturity.
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7. Peer-to-Peer (P2P) Lending
Do you know how banks borrow from you—at 1% interest—then loan the same money to your neighbor at rates sometimes as high as 20%? It’s quite a racket, and a profitable one at that.
But do you also know that you have the same opportunity as a bank? It’s an investing process known as peer-to-peer lending, or P2P for short.
P2P lending essentially eliminates the bank. As an investor, you’ll provide the funds for borrowers on a P2P platform. Most of these loans will be in the form of personal loans for a variety of purposes. But some can also be business loans, medical loans, and for other more specific purposes.
As an investor/lender, you get to keep more of the interest rate return on those loans. You can invest easily through online P2P platforms.
One popular example is Prosper. They offer primarily personal loans in amounts ranging between $2,000 and $40,000. You can invest in small slivers of these loans, referred to as “notes.” Notes can be purchased for as little as $25.
That small denomination will make it possible to diversify your investment across many different loans. You can even choose the loans you will invest in based on borrower credit scores, income, loan terms, and purposes.
Prosper, which has managed $20 billion in P2P loans since 2005, claims a historical average return of 5.7%. That’s a high rate of return on what is essentially a fixed-income investment. But that’s because there exists the possibility of loss due to borrower default.
However, you can minimize the likelihood of default by carefully choosing borrower loan quality. That means focusing on borrowers with higher credit scores, incomes, and more conservative loan purposes (like debt consolidation).
8. Real Estate Investment Trusts (REITs)
REITs are an excellent way to participate in real estate investment, and the return it provides, without large amounts of capital or the need to manage properties. They’re publicly traded, closed-end investment funds that can be bought and sold on major stock exchanges. They invest primarily in commercial real estate, like office buildings, retail space, and large apartment complexes.
If you’re planning to invest in a REIT, you should be aware that there are three different types.
“Equity REITs purchase commercial, industrial, or residential real estate properties,” reports Robert R. Johnson, PhD, CFA, CAIA, Professor of Finance, Heider College of Business, Creighton University and co-author of several books, including The Tools and Techniques Of Investment Planning, Strategic Value Investing and Investment Banking for Dummies. “Income is derived primarily from the rental on the properties, as well as from the sale of properties that have increased in value. Mortgage REITs invest in property mortgages. The income is primarily from the interest they earn on the mortgage loans. Hybrid REITs invest both directly in property and in mortgages on properties.”
Johnson also cautions:
“Investors should understand that equity REITs are more like stocks and mortgage REITs are more like bonds. Hybrid REITs are like a mix of stocks and bonds.”
Mortgage REITs, in particular, are an excellent way to earn steady dividend income without being closely tied to the stock market.
Examples of specific REITs are listed in the table below (source: Kiplinger):
REIT
Equity or Mortgage
Property Type
Dividend Yield
12 Month Return
Rexford Industrial Realty
REXR
Industrial warehouse space
2.02%
2.21%
Sun Communities
SUI
Manufactured housing, RVs, resorts, marinas
2.19%
-14.71%
American Tower
AMT
Multi-tenant cell towers
2.13%
-9.00%
Prologis
PLD
Industrial real estate
2.49%
-0.77%
Camden Property Trust
CPT
Apartment complexes
2.77%
-7.74%
Alexandria Real Estate Equities
ARE
Research Properties
3.14%
-23.72%
Digital Realty Trust
DLR
Data centers
3.83%
-17.72%
9. Real Estate Crowdfunding
If you prefer direct investment in a property of your choice, rather than a portfolio, you can invest in real estate crowdfunding. You invest your money, but management of the property will be handled by professionals. With real estate crowdfunding, you can pick out individual properties, or invest in nonpublic REITs that invest in very specific portfolios.
One of the best examples of real estate crowdfunding is Fundrise. That’s because you can invest with as little as $500 or create a customized portfolio with no more than $1,000. Not only does Fundrise charge low fees, but they also have multiple investment options. You can start small in managed investments, and eventually trade up to investing in individual deals.
One thing to be aware of with real estate crowdfunding is that many require accredited investor status. That means being high income, high net worth, or both. If you are an accredited investor, you’ll have many more choices in the real estate crowdfunding space.
If you are not an accredited investor, that doesn’t mean you’ll be prevented from investing in this asset class. Part of the reason why Fundrise is so popular is that they don’t require accredited investor status. There are other real estate crowdfunding platforms that do the same.
Just be careful if you want to invest in real estate through real estate crowdfunding platforms. You will be expected to tie your money up for several years, and early redemption is often not possible. And like most investments, there is the possibility of losing some or all your investment principal.
Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency
10. Physical Real Estate
We’ve talked about investing in real estate through REITs and real estate crowdfunding. But you can also invest directly in physical property, including residential property or even commercial.
Owning real estate outright means you have complete control over the investment. And since real estate is a large-dollar investment, the potential returns are also large.
For starters, average annual returns on real estate are impressive. They’re even comparable to stocks. Residential real estate has generated average returns of 10.6%, while commercial property has returned an average of 9.5%.
Next, real estate has the potential to generate income from two directions, from rental income and capital gains. But because of high property values in many markets around the country, it will be difficult to purchase real estate that will produce a positive cash flow, at least in the first few years.
Generally speaking, capital gains are where the richest returns come from. Property purchased today could double or even triple in 20 years, creating a huge windfall. And this will be a long-term capital gain, to get the benefit of a lower tax bite.
Finally, there’s the leverage factor. You can typically purchase an investment property with a 20% down payment. That means you can purchase a $500,000 property with $100,000 out-of-pocket.
By calculating your capital gains on your upfront investment, the returns are truly staggering. If the $500,000 property doubles to $1 million in 20 years, the $500,000 profit generated will produce a 500% gain on your $100,000 investment.
On the negative side, real estate is certainly a very long-term investment. It also comes with high transaction fees, often as high as 10% of the sale price. And not only will it require a large down payment up front, but also substantial investment of time managing the property.
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11. High Dividend Stocks
“The best high-yield investment is dividend stocks,” declares Harry Turner, Founder at The Sovereign Investor. “While there is no guaranteed return with stocks, over the long term stocks have outperformed other investments such as bonds and real estate. Among stocks, dividend-paying stocks have outperformed non-dividend paying stocks by more than 2 percentage points per year on average over the last century. In addition, dividend stocks tend to be less volatile than non-dividend paying stocks, meaning they are less likely to lose value in downturns.”
You can certainly invest in individual stocks that pay high dividends. But a less risky way to do it, and one that will avoid individual stock selection, is to invest through a fund.
One of the most popular is the ProShares S&P 500 Dividend Aristocrat ETF (NOBL). It has provided a return of 1.67% in the 12 months ending May 31, and an average of 12.33% per year since the fund began in October 2013. The fund currently has a 1.92% dividend yield.
The so-called Dividend Aristocrats are popular because they represent 60+ S&P 500 companies, with a history of increasing their dividends for at least the past 25 years.
“Dividend Stocks are an excellent way to earn some quality yield on your investments while simultaneously keeping inflation at bay,” advises Lyle Solomon, Principal Attorney at Oak View Law Group, one of the largest law firms in America. “Dividends are usually paid out by well-established and successful companies that no longer need to reinvest all of the profits back into the business.”
It gets better. “These companies and their stocks are safer to invest in owing to their stature, large customer base, and hold over the markets,” adds Solomon. “The best part about dividend stocks is that many of these companies increase dividends year on year.”
The table below shows some popular dividend-paying stocks. Each is a so-called “Dividend Aristocrat”, which means it’s part of the S&P 500 and has increased its dividend in each of at least the past 25 years.
Company
Symbol
Dividend
Dividend Yield
AbbVie
ABBV
$5.64
3.80%
Armcor PLC
AMCR
$0.48
3.81%
Chevron
CVX
$5.68
3.94%
ExxonMobil
XOM
$3.52
4.04%
IBM
IBM
$6.60
5.15%
Realty Income Corp
O
$2.97
4.16%
Walgreen Boots Alliance
WBA
$1.92
4.97%
12. Preferred Stocks
Preferred stocks are a very specific type of dividend stock. Just like common stock, preferred stock represents an interest in a publicly traded company. They’re often thought of as something of a hybrid between stocks and bonds because they contain elements of both.
Though common stocks can pay dividends, they don’t always. Preferred stocks on the other hand, always pay dividends. Those dividends can be either a fixed amount or based on a variable dividend formula. For example, a company can base the dividend payout on a recognized index, like the LIBOR (London Inter-Bank Offered Rate). The percentage of dividend payout will then change as the index rate does.
Preferred stocks have two major advantages over common stock. First, as “preferred” securities, they have a priority on dividend payments. A company is required to pay their preferred shareholders dividends ahead of common stockholders. Second, preferred stocks have higher dividend yields than common stocks in the same company.
You can purchase preferred stock through online brokers, some of which are listed under “Growth Stocks” below.
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Preferred Stock Caveats
The disadvantage of preferred stocks is that they don’t entitle the holder to vote in corporate elections. But some preferred stocks offer a conversion option. You can exchange your preferred shares for a specific number of common stock shares in the company. Since the conversion will likely be exercised when the price of the common shares takes a big jump, there’s the potential for large capital gains—in addition to the higher dividend.
Be aware that preferred stocks can also be callable. That means the company can authorize the repurchase of the stock at its discretion. Most will likely do that at a time when interest rates are falling, and they no longer want to pay a higher dividend on the preferred stock.
Preferred stock may also have a maturity date, which is typically 30–40 years after its original issuance. The company will typically redeem the shares at the original issue price, eliminating the possibility of capital gains.
Not all companies issue preferred stock. If you choose this investment, be sure it’s with a company that’s well-established and has strong financials. You should also pay close attention to the details of the issuance, including and especially any callability provisions, dividend formulas, and maturity dates.
13. Growth Stocks
This sector is likely the highest risk investment on this list. But it also may be the one with the highest yield, at least over the long term. That’s why we’re including it on this list.
Based on the S&P 500 index, stocks have returned an average of 10% per year for the past 50 years. But it is important to realize that’s only an average. The market may rise 40% one year, then fall 20% the next. To be successful with this investment, you must be committed for the long haul, up to and including several decades.
And because of the potential wide swings, growth stocks are not recommended for funds that will be needed within the next few years. In general, growth stocks work best for retirement plans. That’s where they’ll have the necessary decades to build and compound.
Since most of the return on growth stocks is from capital gains, you’ll get the benefit of lower long-term capital gains tax rates, at least with securities held in a taxable account. (The better news is capital gains on investments held in retirement accounts are tax-deferred until retirement.)
You can choose to invest in individual stocks, but that’s a fairly high-maintenance undertaking. A better way may be to simply invest in ETFs tied to popular indexes. For example, ETFs based on the S&P 500 are very popular among investors.
You can purchase growth stocks and growth stock ETFs commission free with brokers like M1 Finance, Zacks Trade, Wealthsimple.
14. Annuities
Annuities are something like creating your own private pension. It’s an investment contract you take with an insurance company, in which you invest a certain amount of money in exchange for a specific income stream. They can be an excellent source of high yields because the return is locked in by the contract.
Annuities come in many different varieties. Two major classifications are immediate and deferred annuities. As the name implies, immediate annuities begin paying an income stream shortly after the contract begins.
Deferred annuities work something like retirement plans. You may deposit a fixed amount of money with the insurance company upfront or make regular installments. In either case, income payments will begin at a specified point in the future.
With deferred annuities, the income earned within the plan is tax-deferred and paid upon withdrawal. But unlike retirement accounts, annuity contributions are not tax-deductible. Investment returns can either be fixed-rate or variable-rate, depending on the specific annuity setup.
While annuities are an excellent idea and concept, the wide variety of plans as well as the many insurance companies and agents offering them, make them a potential minefield. For example, many annuities are riddled with high fees and are subject to limited withdrawal options.
Because they contain so many moving parts, any annuity contracts you plan to enter into should be carefully reviewed. Pay close attention to all the details, including the small ones. It is, after all, a contract, and therefore legally binding. For that reason, you may want to have a potential annuity reviewed by an attorney before finalizing the deal.
15. Alternative Investments
Alternative investments cover a lot of territory. Examples include precious metals, commodities, private equity, art and collectibles, and digital assets. These fall more in the category of high risk/potential high reward, and you should proceed very carefully and with only the smallest slice of your portfolio.
To simplify the process of selecting alternative assets, you can invest through platforms such as Yieldstreet. With a single cash investment, you can invest in multiple alternatives.
“Investors can purchase real estate directly on Yieldstreet, through fractionalized investments in single deals,” offers Milind Mehere, Founder & Chief Executive Officer at Yieldstreet. “Investors can access private equity and private credit at high minimums by investing in a private market fund (think Blackstone or KKR, for instance). On Yieldstreet, they can have access to third-party funds at a fraction of the previously required minimums. Yieldstreet also offers venture capital (fractionalized) exposure directly. Buying a piece of blue-chip art can be expensive, and prohibitive for most investors, which is why Yieldstreet offers fractionalized assets to diversified art portfolios.”
Yieldstreet also provides access to digital asset investments, with the benefit of allocating to established professional funds, such as Pantera or Osprey Fund. The platform does not currently offer commodities but plans to do so in the future.
Access to wide array of alternative asset classes
Access to ultra-wealthy investments
Can invest for income or growth
Learn More Now
Alternative investments largely require thinking out-of-the-box. Some of the best investment opportunities are also the most unusual.
“The price of meat continues to rise, while agriculture remains a recession-proof investment as consumer demand for food is largely inelastic,” reports Chris Rawley, CEO of Harvest Returns, a platform for investing in private agriculture companies. “Consequently, investors are seeing solid returns from high-yield, grass-fed cattle notes.”
16. Interest Bearing Crypto Accounts
Though the primary appeal of investing in cryptocurrency has been the meteoric rises in price, now that the trend seems to be in reverse, the better play may be in interest-bearing crypto accounts. A select group of crypto exchanges pays high interest on your crypto balance.
One example is Gemini. Not only do they provide an opportunity to buy, sell, and store more than 100 cryptocurrencies—plus non-fungible tokens (NFTs)—but they are currently paying 8.05% APY on your crypto balance through Gemini Earn.
In another variation of being able to earn money on crypto, Crypto.com pays rewards of up to 14.5% on crypto held on the platform. That’s the maximum rate, as rewards vary by crypto. For example, rewards on Bitcoin and Ethereum are paid at 6%, while stablecoins can earn 8.5%.
It’s important to be aware that when investing in cryptocurrency, you will not enjoy the benefit of FDIC insurance. That means you can lose money on your investment. But that’s why crypto exchanges pay such high rates of return, whether it’s in the form of interest or rewards.
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17. Crypto Staking
Another way to play cryptocurrency is a process known as crypto staking. This is where the crypto exchange pays you a certain percentage as compensation or rewards for monitoring a specific cryptocurrency. This is not like crypto mining, which brings crypto into existence. Instead, you’ll participate in writing that particular blockchain and monitoring its security.
“Crypto staking is a concept wherein you can buy and lock a cryptocurrency in a protocol, and you will earn rewards for the amount and time you have locked the cryptocurrency,” reports Oak View Law Group’s Lyle Solomon.
“The big downside to staking crypto is the value of cryptocurrencies, in general, is extremely volatile, and the value of your staked crypto may reduce drastically,” Solomon continues, “However, you can stake stable currencies like USDC, which have their value pegged to the U.S. dollar, and would imply you earn staked rewards without a massive decrease in the value of your investment.”
Much like earning interest and rewards on crypto, staking takes place on crypto exchanges. Two exchanges that feature staking include Coinbase and Kraken. These are two of the largest crypto exchanges in the industry, and they provide a wide range of crypto opportunities, in addition to staking.
Invest in Startup Businesses and Companies
Have you ever heard the term “angel investor”? That’s a private investor, usually, a high net worth individual, who provides capital to small businesses, often startups. That capital is in the form of equity. The angel investor invests money in a small business, becomes a part owner of the company, and is entitled to a share of the company’s earnings.
In most cases, the angel investor acts as a silent partner. That means he or she receives dividend distributions on the equity invested but doesn’t actually get involved in the management of the company.
It’s a potentially lucrative investment opportunity because small businesses have a way of becoming big businesses. As they grow, both your equity and your income from the business also grow. And if the business ever goes public, you could be looking at a life-changing windfall!
Easy Ways to Invest in Startup Businesses
Mainvest is a simple, easy way to invest in small businesses. It’s an online investment platform where you can get access to returns as high as 25%, with an investment of just $100. Mainvest offers vetted businesses (the acceptance rate is just 5% of business that apply) for you to invest in.
It collects revenue, which will be paid to you quarterly. And because the minimum required investment is so small, you can invest in several small businesses at the same time. One of the big advantages with Mainvest is that you are not required to be an accredited investor.
Still another opportunity is through Fundrise Innovation Fund. I’ve already covered how Fundrise is an excellent real estate crowdfunding platform. But through their recently launched Innovaton Fund, you’ll have opportunity to invest in high-growth private technology companies. As a fund, you’ll invest in a portfolio of late-stage tech companies, as well as some public equities.
The purpose of the fund is to provide high growth, and the fund is currently offering shares with a net asset value of $10. These are long-term investments, so you should expect to remain invested for at least five years. But you may receive dividends in the meantime.
Like Mainvest, the Fundrise Innovation Fund does not require you to be an accredited investor.
Low minimum investment – $10
Diversified real estate portfolio
Portfolio Transparency
Final Thoughts on High Yield Investing
Notice that I’ve included a mix of investments based on a combination of risk and return. The greater the risk associated with the investment, the higher the stated or expected return will be.
It’s important when choosing any of these investments that you thoroughly assess the risk involved with each, and not focus primarily on return. These are not 100% safe investments, like short-term CDs, short-term Treasury securities, savings accounts, or bank money market accounts.
Because there is risk associated with each, most are not suitable as short-term investments. They make most sense for long-term investment accounts, particularly retirement accounts.
For example, growth stocks—and most stocks, for that matter—should generally be in a retirement account. While there will be years when you will suffer losses in your position, you’ll have enough years to offset those losses between now and retirement.
Also, if you don’t understand any of the above investments, it will be best to avoid making them. And for more complicated investments, like annuities, you should consult with a professional to evaluate the suitability and all the provisions it contains.
FAQ’s on High Yield Investment Options
What investment has the highest yield?
The investment with the highest yield will vary depending on a number of factors, including current market conditions and the amount of risk an investor is willing to take on. Generally speaking, investments with the potential for high yields also come with a higher level of risk, so it’s important for investors to carefully consider their options and choose investments that align with their financial goals and risk tolerance.
Some examples of high-yield investments include:
1. Stocks: Some stocks may offer high dividend yields, which is the annual dividend payment a company makes to its shareholders, expressed as a percentage of the stock’s current market price.
2. Real estate: Investing in real estate, either directly by purchasing property or indirectly through a real estate investment trust (REIT), can potentially generate high returns in the form of rental income and appreciation of the property value.
3. High-yield bonds: High-yield bonds, also known as junk bonds, are bonds that are issued by companies with lower credit ratings and thus offer higher yields to compensate for the added risk.
4. Private lending: Investing in private loans, such as through peer-to-peer lending platforms, can potentially offer high yields, but it also carries a higher level of risk.
5. Commodities: Investing in commodities, such as precious metals or oil, can potentially generate high returns if the prices of those commodities rise. However, the prices of commodities can also be volatile and subject to market fluctuations.
It’s important to note that these are just examples and not recommendations. As with any investment, it’s crucial to carefully research and consider all the potential risks and rewards before making a decision.
Where can I invest my money to get high returns?
There are a number of places you can invest your money to get high returns. One option is to invest in stocks, which typically offer higher returns than other investment options. Another option is to invest in bonds, which are considered a relatively safe investment option.
You could also invest in real estate, which has the potential to provide high returns if done correctly. Finally, you could also invest in commodities, such as gold or silver, which can be a risky investment but can also offer high returns.
What investments can I make a 10% return?
It’s difficult to predict exactly what investments will generate a 10% return, as investment returns can vary depending on a number of factors, including market conditions and the performance of the specific investment. Some investments, such as stocks and real estate, have the potential to generate returns in excess of 10%, but they also come with a higher level of risk. It’s important to remember that past performance is not necessarily indicative of future results, and that all investments carry some degree of risk
Studies show that landscaping can add 12 to 15 percent to the value of your home. All you need is a green thumb to put some extra green in your pocket.
Landscaping is more than flowers and shrubs. Upgrades can involve things like patios and decks, flowerbeds, barbecue pits, watering systems, and plants of all sorts. As you enter into a landscaping project, you have plenty of choices about what kinds of upgrades to make.
The trick is to make improvements that prospective buyers want. If you do, then your property value will rise.
What Do the Experts Say?
Though experts agree that landscaping improvements usually raise a property’s value, it can be difficult to predict exactly what kind of gains you’ll see in individual circumstances. Estimates vary by home and note that the lasting effect of landscaping requires ongoing maintenance.
Virginia Tech horticulturist Alex Niemiera concluded that landscaping can add 12.7 percent to the value of a home — in his research six years ago. That translates into an extra $16,500 to $38,100 in value on a $300,000 home. In extreme cases, property values can more than double, and conversely, they can actually decrease if the landscaping contains undesired features that the local market doesn’t support.
The American Society of Landscape Architects (ASLA) recommends that homeowners invest 10 percent of the home’s value in landscaping. Landscape architecture goes beyond plantings, or softscaping, to include structural features like lighting, fences, garden paths, fire pits, swimming pools, and ponds.
Outdoor rooms, terraces, and decks are also high-yield structural or hardscaping investments. A landscape architect can work with the client to generate a detailed plan. Typically, the homeowner then hires a general contractor, landscape contractor, or subcontractor to perform the installation.
Landscaping on the Cheap
Of course, it’s quite easy to spend more on installation and ongoing maintenance than the landscaping benefits the value of your home.
A professional landscaper might seem like an extravagance, but they can help you gain equity in your home and save money by recommending features and plantings that will appeal to buyers and are cheap to maintain.
For example, perennials and bulbs can add color and style to your property all year long. Other cost-effective improvements include aesthetically pleasing architectural improvements, such as stone walkways and terracing that require little or no maintenance.
Another important factor to consider is the contractors who do your landscaping upgrades. Many companies vie for this kind of business, and choosing the right contractor can make a lot of difference.
Find a contractor with whom you are comfortable, who is honest and patient, and who can show you a good track record. Lastly, pay attention to the details. A subtle, small change, such as curving the edges of your flowerbeds, can by itself increase your home value by 1 percent.
How Does Curb Appeal Impacts Home Value?
Appealing landscaping can measurably increase the appraised value of your property.
“If a landscaping change is positive, it can often enhance price and reduce a home’s time on the market,” says Appraisal Institute President Richard L. Borges.
“But if the change is negative, it can lower the price and lengthen the time a home remains for sale.”
Curb appeal is essential when selling a home, Borges says, noting it’s the homeowner’s opportunity to make a great first impression. A home with lackluster landscaping or an exterior in desperate need of a fresh coat of paint will likely be unappealing to prospective buyers and ultimately could affect the home’s potential resale value, he said.
Borges says homeowners should ask themselves the following questions when it comes to the quality of their home’s green space:
Is the landscaping attractive enough to make the prospective buyer walk through the front door? Keep the design contemporary and in line with comparable properties in the area.
Could the landscaping provide cost savings? Landscaping that requires little or no water to maintain could be desirable depending on the geographic area.
Is the landscaping energy-efficient for the home overall? For example, it’s a good idea to plant trees in a place where they block the sun in locations with year-round hot climates.
Are the trees planted at a safe distance from the home and are they healthy and well maintained? Weak, old or damaged trees planted too close to a home or building could pose dangers to the home’s structure and will need to be removed. Consumers should also be sure that mulching or beds don’t get too close to wood around foundations to avoid wood-destroying organisms.
Home renovation guru Bob Vila counsels that perhaps the biggest mistake homeowners make is a piecemeal approach to landscaping.
“Homeowners begin projects, start to clear areas, put in a mix of plants, and proceed without a plan. The result is a hodgepodge of plantings and gardens that give the property a disorganized feel. An implemented professional landscape design provides a polished look. Following a professionally prepared plan will lead the homeowner to a beautiful property while remaining within a pre-established budget.”
Vila cautions homeowners to remember that everything doesn’t have to happen at once. Consider a five-year plan that has plantings maturing at varying rates and adds various features each year.
This way you can remain within your budget—time-wise and cost-wise—while still progressing toward a complete landscape renovation.
33,000 Lucky Borrowers May Get Their Mortgage Balances Reduced
Well, it took a lot longer than anticipated, but Fannie Mae and Freddie Mac have finally unveiled the so-called “Principal Reduction Modification” program for underwater homeowners still struggling to make monthly mortgage payments.
Perhaps most importantly, we know the program will be significantly smaller in scale than related relief initiatives such as HARP and HAMP. Apparently only 33,000 homeowners will be eligible for principal forgiveness under the new program.
For those who are, it will be welcome relief that seemed as if it would never come. I’m surprised myself, I assumed it was never going to happen.
The plan was recently approved by the Federal Housing Finance Agency, which oversees Fannie and Freddie, and is meant to be the “final crisis-era modification program” released to help borrowers with negative equity.
It is essentially an add-on to the Streamlined Modification program already in existence.
Nearly Five Million Homeowners Were Underwater in 2011
By the end of 2011, some 4.6 million homeowners with a mortgage backed by Fannie Mae and Freddie Mac were underwater, according to a speech given by FHFA director Mel Watt at a public policy luncheon in D.C. yesterday.
Most of these borrowers were able to keep up with monthly mortgage payments, but over 580,000 were at least 90 days in arrears, representing about half of all late paying Enterprise (Fannie/Freddie) borrowers at the time.
Fast forward to today and the number of underwater homeowners with an Enterprise loan has plummeted by more than 80% since peaking in 2011. And most of these remaining underwater borrowers happen to be current on their mortgages, with only around nine percent seriously delinquent.
This dwindling number has complicated the launch of a principal reduction plan, per Watt, because a smaller number of candidates might not outweigh the costs “and significant operational complexity” for the FHFA and loan servicers to implement such a program.
But apparently there are still enough at-risk borrowers to go ahead with it, even if it’s only some 33,000 homeowners.
Must Be a Win-Win for Borrowers and Fannie and Freddie
Ultimately, Principal Reduction Modification program is meant to be a “win-win” for both borrowers and Fannie/Freddie.
So if it doesn’t benefit both parties a principal reduction won’t be offered. In order to determine this, lenders will need to do the math to see which option, principal reduction or foreclosure, results in a smaller loss.
If it turns out foreclosure is still the best option in terms of financial loss for the companies involved, they will proceed with foreclosure. But if a principal reduction can reduce losses, it will be offered.
The new program will also be limited to loans with a principal balance of $250,000 or less, and borrowers must be owner-occupants that are at least 90 days behind on the mortgage as of March 1, 2016.
So it appears as if they’re targeting smaller loans as opposed to those in more affluent areas that have already bounced back from the mortgage crisis. And only delinquent borrowers.
Principal Reduction Remains Extremely Controversial
The reason this nuclear option wasn’t offered earlier is due to the controversy involved. Ultimately, the FHFA didn’t want to set a precedent in which borrowers could expect to be bailed out if things didn’t pan out as expected.
This explains why they opted for programs like HAMP and HARP instead, which modified loans using extended loan terms and/or lower mortgage rates.
If they had offered principal reductions back when home prices bottomed, they may have overcompensated homeowners who have since seen their property values rise back to prior levels or even new highs.
It likely would have been too costly back then, while also sending the wrong message to homeowners. And, let’s not forget that taxpayers are on the hook here, seeing that Fannie and Freddie are in government conservatorship, so the decision to forgive has to be an extremely thoughtful one.
Because this program is being launched so late, its impact will likely be muted, but maybe that’s the point.
If your loan is owned by Fannie or Freddie and you’re underwater and behind on your mortgage, keep an eye out for details that might offer you new hope.
Fannie/Freddie Principal Reduction Modification Program
[checklist]
Limited to around 33,000 homeowners
First mortgage must be owned by Fannie Mae or Freddie Mac
Must be underwater on your mortgage
Must be delinquent on your mortgage (90+ days as of March 1, 2016)
Maximum unpaid principal balance of $250,000
Mark-to-market LTV must exceed 115 percent
Principal reduction will be offered only if foreclosure proves more costly
Loans already approved for a short sale/deed-in-lieu not eligible
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How the Principal Reduction Modification Works
You should receive a Streamlined Modification solicitation letter no later than July 15th, 2016 if you are potentially eligible (though the FHFA says loan servicers may still solicit eligible borrowers until December 31st, 2016).
Assuming you qualify, which isn’t a guarantee just because they reach out, a trial modification will begin if you wish to take part. You have to make three timely payments in order to get the principal amount forgiven.
The modification will also reduce your mortgage payment by including an interest rate reduction and loan term extension to 40 years. You will receive principal forbearance that will eventually be converted to forgiveness if you meet the terms of the modification program.
It’s important to note that you must already be 90 days late as of March 1st, 2016. You can’t just default on your mortgage now to gain eligibility.
If you’re attempting to avoid foreclosure immediately, before the Principal Reduction Modification is rolled out, you still have the option of applying for a Streamlined Modification now to halt proceedings and obtain payment relief.
Then once the Principal Reduction Modification program is fully implemented and it is determined you’re eligible for principal relief, it will be granted.
For the record, if you’re not interested in a principal reduction, but still want your payment modified, you have the choice to opt-out once forgiveness is offered.
There may be tax consequences to accepting principal forgiveness and the FHFA says themselves that borrowers “may be able to benefit from the exclusion of forgiven mortgage debt from taxable income.”
It’s unclear if they’re still working on this exemption with the IRS so tread carefully. In the meantime, check your mailbox or reach out to your servicer for details if you want to be proactive.
If you’ve heard that the housing market crashed, consider this.
Nearly 40% of markets nationwide have returned to peak home prices on a seasonally adjusted basis, per a new report from Black Knight.
These markets are primarily located in the Midwest and Northeast, along with Southern Florida.
And another six markets are within 1% of last year’s peak, meaning about half the country is still around all-time highs.
Of course, there are some markets on the opposite end of the spectrum as well.
The Housing Market Hasn’t Crashed Yet
While the housing bears are licking their chops at any tidbit of potential bad news, the data continues to tell a different story.
Black Knight’s latest Mortgage Monitor revealed that home prices rose during the month of March on both a non-adjusted and seasonally adjusted basis.
Property values increased a seasonally adjusted 0.45% in March (+1.38% non-adjusted), marking the third consecutive month of increases.
And 92% of housing markets nationwide saw prices increase during the month.
However, prices increased just 1.0% on a year-over-year basis, as the rate of appreciation (which was clearly unsustainable) continues to slow.
This rate of appreciation has been falling by about 1.3-1.4% each month since the start of 2023, per Black Knight.
A few months ago, home prices were falling month-to-month on a seasonally adjusted in 92% of U.S. metros.
In March, home prices were climbing in 92% of markets from a month earlier, a veritable 180.
But the company expects the annual growth rate in home prices to hit “roughly 0% by April.”
Low Supply Is Driving Home Prices Higher and Limiting the Downside
The housing market narrative continues to be one driven by inventory, or a lack thereof. The bears argue that home prices are unaffordable.
And while they’re not necessarily wrong, the lack of supply has allowed home prices to remain at lofty levels and even eek out some monthly gains.
This same lack of supply is limiting downside movement, with the supply of active for-sale listings falling for the sixth straight month.
It’s now at its lowest level since April of last year, driven by 30% fewer new listings hitting the market in March compared to pre-pandemic norms.
That puts current available inventory at mere 2.6 months of supply on a seasonally adjusted basis, which Black Knight says tips “the scale back toward sellers.”
So the buyer’s market we saw in 2022 might have already come and gone, though it could return if mortgage rates remain elevated and supply increases as the year goes on.
Where Home Prices Remain at Their Peak
First, at the national level, home prices are just 1.7% off their June 2022 peak (seasonally adjusted).
That’s an improvement from the -2.6% decline seen back in December.
But amazingly, about 40% of the nation’s housing markets are at their peak levels, this in spite of mortgage rates near 7%.
And Birmingham, Detroit, Houston, Orlando, New York, and the District of Columbia are all within 1% of their all-time highs.
Even more impressive, some metros are still chalking near-double-digit home price increases annually.
Take Miami, where home prices are up 9.5% from a year earlier, or Hartford, CT (+7.7%), Kansas City, MO (+5.5%), Cincinnati, OH (+5.2%), and Virginia Beach, VA (+5.0%).
Pretty incredible to see these types of year-over-year gains given the fact that the 30-year fixed climbed from ~3% to around 6.5% today.
Where Home Prices Are Falling the Most
Of course, it’s not all good news. And real estate is always going to be local. On the other end of things, home prices are off 11.6% in San Jose compared to a year ago.
Similar declines can be seen in Austin, TX (-11.2%), San Francisco, CA (-11.1%), and Seattle, WA (-10.8%).
Property values have also been hit in once-hot metros like Sacramento, Phoenix, Las Vegas, Salt Lake City, San Diego, and Los Angeles.
The city of Austin, Texas has had it the worst, with home prices now down 15.5% from their 2022 peak.
This might explain the negative sentiment from housing bears in that region of the country.
Double-digit declines can also be seen in San Jose, San Francisco, Seattle, Phoenix, and Las Vegas.
But given how much home prices increased in these metros, especially in such a short period of time, it’s not a major surprise.
For this same reason, the shift in prices feels more like a correction than a crash given the massive gains prior to the fall.
To sum things up, real estate is local. Some markets are still thriving, others are correcting.
And the housing market is weathering the mortgage rate storm thanks to continued lack of supply.
If and when that changes, the narrative might change as well.