Higher mortgage rates sidelined demand for newly built homes in October.
Sales of new homes decreased 5.6% to a seasonally adjusted rate of 679,000 units last month from September’s seasonally adjusted annual rate of 719,000, according to the Census Bureau on Monday. That was much lower than Bloomberg consensus expectations of 725,000 units for October but still 17.7% higher than a year ago.
The slide in sales activity likely underscores the late summer spike in mortgage rates, according to one expert, which spooked budget-conscious buyers.
Read more: Mortgage rates at 20-year high: Is 2023 a good time to buy a house?
“I expect that we’ll see a decline in October. When we look at this data, it reflects the contracts entered into in August and September when rates were still climbing,” RSM US real estate senior analyst Crystal Sunbury told Yahoo Finance ahead of the release. Sunbury noted that closing on a new home takes about 30 to 60 days.
“By December we should see some recovery in new home sales, given the retreat in mortgage rates,” Sunbury said.
Mortgage rates crested 7% in mid-August and stayed about that threshold throughout September before surging even higher in October, hitting 7.79% the last week of that month, according to Freddie Mac. Rates have retreated for four straight weeks since then, dropping by a half-point so far in November.
Similarly, higher borrowing costs provided a monthly blow to existing home sales in October, which dropped 4.1% month over month and down 14.6% from the prior year, according to the National Association of Realtors (NAR).
A lack of inventory on the resale side has also weighed on sales. Many current homeowners are hanging on to their current homes because they remain reluctant to trade up and lose their existing low mortgage rate.
The number of previously owned homes for sale at the end of October was 1.15 million units, per NAR data, the lowest inventory level for that month since 1999.
That had been a boon to new home sales this year even as mortgage rates march higher. Builders have filled in some of the inventory gaps. At the end of October, the number of new houses for sale was 439,000, or a 7.8-month supply at the current sales pace.
To take the edge off rates, many public homebuilders have been offering below-market-rate home loans. For example, in Santa Fe, N.M., PulteGroup (PHM) is developing new communities, offering a 30-year fixed rate of 5.75%.
Read more: Types of mortgage loans: Buying a house in 2023
But smaller builders have been far less sanguine about market conditions. These builders are not as well-capitalized for future projects and don’t have the financial bandwidth to offer the same kind of mortgage rate buydowns as the bigger guys.
In October, 36% of smaller builders reported cutting home prices, up from 32% in the two previous months. Data from the National Association of Home Builders found this is the highest share of builders cutting prices during this cycle.
For instance, the median sales price of new homes sold in October was $409,300, the government reported, down from $422,300 the month before. The average sales price was $487,000, lower than September’s revised figure of $515,400.
That has hurt overall builder sentiment.
The October BTIG/HomeSphere survey, which polls 75 to 125 small and mid-sized builders nationally, found sales and traffic trends worsened despite “easy year-over-year” comparisons, BTIG homebuilding analyst Carl Reichardt Jr. wrote in a note.
“The bottom line: our survey suggests that new home demand trends remain quite sluggish for private builders,” Reichardt wrote.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
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IndyMac said today that it in light of recent events, the value of mortgage securities it holds will likely need to be marked down, causing the mortgage lender to miss its first quarter earnings target.
“As has been widely publicized, the capital markets in recent days have taken another turn for the worse with credit spreads widening significantly due to panic market conditions caused by uncertainty in the U.S. housing and mortgage markets, renewed margin calls by Wall Street repo lenders on mortgage REITs and hedge funds, and other economic and financial uncertainties,” the company said in a statement.
The Pasadena, CA-based Alt-A lender noted “that there are virtually no new non-GSE mortgage securities issuances and the only resale activity is a handful of distressed sales,” and that IndyMac’s MBS portfolio will take a hit as a result.
But the company believes the potential negative impact is unwarranted as the recent trouble in the market has nothing to do with the quality of their actual holdings, and for that reason, should be reversed when the market stabilizes.
“As of December 31, 2007, approximately 17% of the MBS portfolio is classified as ‘Trading’ and any potential unrealized write-down on this portion of the portfolio will directly affect earnings and capital. None of Indymac’s AAA non-agency (Alt-a prime jumbo) MBS (over 86% of our total MBS portfolio) has been downgraded, and the performance of these securities has been reviewed several times in the past year by the major rating agencies.”
“Lastly, Indymac has the intent and ability to continue to hold these assets to recovery as a result of funding its balance sheet with deposits, FHLB advances, long-term debt and equity.”
Analysts covering the stock currently anticipate a loss of 93 cents for the first quarter, according to Thomson Financial.
Shares of IndyMac rose 58 cents, or 12.34%, to $5.28 on news that the Fed planned to provide $200 billion in capital to boost liquidity in the ailing credit markets.
Sales of previously owned U.S. homes fell by the most in nearly a year in October, highlighting the toll elevated mortgage rates and still-high prices continue to take on the resale market.
Contract closings decreased 4.1% from a month earlier to a 3.79 million annualized pace, still the lowest since 2010, National Association of Realtors data showed Tuesday. The figure was weaker than all but one estimate in a Bloomberg survey of economists.
The combination of soaring mortgage rates and stubborn prices has been discouraging buyers and sellers alike. However, with mortgage rates retreating as the Federal Reserve nears the end of its tightening cycle, that’s offering some hope that the housing market may be bottoming out.
“Fortunately, mortgage rates have fallen for the third straight week, stirring up buying interest,” said Lawrence Yun, NAR’s chief economist. “Though limited now, expect housing inventory to improve after this winter and heading into the spring.”
The median selling price climbed 3.4% from a year earlier to $391,800, the highest for any October in data back to 1999. Yun added that nearly a third of homes sold above their list price, indicating that multiple offers are still occurring — particularly on starter and mid-priced homes.
Even though the number of homes for sale ticked up from a month earlier to 1.15 million, it’s still the lowest for any October in the series. At the current sales pace, it would take 3.6 months to sell all the properties on the market. Realtors see anything below five months of supply as indicative of a tight market.
The NAR’s report showed 66% of homes sold were on the market for less than a month. Properties remained on the market for 23 days on average in October, up slightly from September.
Existing-home sales account for the majority of US housing and are calculated when a contract closes. Data on new-home sales, which make up the remainder and are based on contract signings, are due next week.
Curiously, however, new residential home sales surged in September while existing home sales all but completely froze because owners are reluctant to move and buy another home at a far higher mortgage rate. New-home sales rose 12.3% to an annual rate of 759,000 in September, up from 676,000 in the prior month, the Commerce Department said Wednesday.
Since there are so few existing homes on the market, buyers find themselves having almost no choice but to buy new. Builders, also under pressure from high interest rates, are sweetening the pot, however, by offering discounted mortgages and other incentives. In fact, Devyn Bachman, senior vice president of research with John Burns Research and Consulting, credits these enticements as the “number one” driver for the rising new home sales figure last month.
“‘Incentive’ is just a big fancy word for discount, and what we’re seeing on that front is that it’s what’s creating a competitive advantage for the new-home market,” she tells Fortune. The mortgage rate buydown, the industry term for discounted mortgage rates, is the most “desired and most effective” incentive offered in the new-home market today, she adds.
Independent sellers usually cannot match these types of incentives, typically offered by large builders like Lennar and Toll Brothers, Erin Sykes, chief economist at residential real estate brokerage firm Nest Seekers International, tells Fortune.
Mortgage rate buydowns explained
As high as mortgage rates may seem now, there’s little indication that they’ll drop significantly anytime soon—meaning in the next two to three years. Capital Economics, for example, released a report this week saying not to expect 6%-and-below mortgage rates until the end of 2025.
Mortgage rates hovering around 8% are a stretch for many borrowers, which is why a mortgage rate buydown can be an enticing option for eager prospective homebuyers. There are a few different types of mortgage rate buydowns, Bachman explains, with full-term buydowns and temporary buydowns being the most popular options among builders.
A full-term buydown is the more desirable option for buyers because the builder buys down the mortgage rate for the entire life of the loan. In other words, builders pre-pay the difference in interest between the market mortgage rate and the mortgage rate they’re offering, Bachman says.
Currently, some builders are offering buydowns as low as 5%, mostly in “peripheral, emerging” markets, Sykes says. This includes places like Loxahatchee, Fla., and Boynton Beach, Fla., which are both within 30 minutes of Palm Beach.
During the past week, mortgage rates hovered around 8%, “so when you’re talking about buying into the [5% range] that’s a huge advantage for the new construction market,” Bachman says. For a temporary rate buydown, the builder still buys down the rate, but it’s not for the entire life of the loan. Rather, the builder would pay a lump sum to reduce the mortgage rate for the first one to three years of the loan. After that, buyers would be subject to higher mortgage rates. Many builders that offer these programs have partnerships with certain mortgage companies or have their own mortgage arm.
Other builder incentives
Builders are also offering other incentives, including covering up to tens of thousands of dollars in closing costs, which can be particularly helpful for first-time homebuyers who struggle to save up enough.
“That gets at the heart of the affordability issue that we’re seeing in the marketplace today,” Bachman says. “Like, I just can’t close because I don’t have the cash to do so.”
Builders have also started building more “spec” construction as opposed to “to-be-built” homes. This is important because rate locks can be “incredibly expensive,” Bachman says. Rate locks mean that the mortgage rate between the time of offer on the newly built home won’t change between the offer and the closing. However, a rate lock can cost 0.25% to 0.5% of a mortgage, amounting to potentially thousands of dollars in extra costs for buyers in the form of a cash deposit.
The to-be-built model, in which buyers choose their plot of land and all of the finishes on the home before construction starts, is traditional in homebuilding. The issue is that when it’s finally time to close the deal months down the line, mortgage rates may have risen. Rate locks can prevent this.
However, with spec construction, builders start construction without having a buyer, and once finished (or near finished), they put the home on the market. That gives buyers a better idea of what their mortgage rate will be at the time of purchase.
“Honestly, to remain competitive in today’s new construction landscape, most builders are offering mortgage-rate buyouts paired with other incentives,” Bachman says. “Now, I will caveat this whole thing by saying, if we get to a place where the market starts to kind of halt, this is a riskier business model.”
She continued: “Why? Because the builders are starting homes that there’s not necessarily a contract or a consumer attached to.”
While mortgage rate buydowns and other incentives may be responsible for rising new-home sales today, Dan Green, CEO of first-time homebuyer mortgage company Homebuyer.com, tells Fortune that there are other factors at play—including low existing home inventory. With so few existing homes on the market, buyers have few options but to pursue new construction.
“Incentives and buydowns may be playing a role, but the more likely reason why new construction home sales are surging is that it’s all that buyers can buy,” he says. “It’s too tough to find a home resale.”
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Nonbank mortgage lenders and brokers collectively shed more than 7,000 positions between August and September as they headed into seasonally weaker months, according to Bureau of Labor Statistics estimates.
Job numbers in these employment categories fell to 331,300 from 338,400 during the period. Industry employment was last this low in June 2020. Broker job numbers have been slightly more resilient than positions at lenders in recent months, but both categories fell in September.
While the reduction in jobs to levels last seen at the beginning of the pandemic suggests progress has been made in adjusting capacity for current loan volumes, the Mortgage Bankers Association recently estimated that the industry is only about two-thirds done with its cuts.
And how well employment is correlated with business volumes at lenders depends on where interest rates are headed.
Employers in the broader economy, which the bureau reports with less of a lag, added 150,000 positions in October. Unemployment inched up to 3.9% from 3.8%.
Investors initially read the overall job gains as relatively low and likely to signal an eventual drop in rates, but economists’ interpretation of the numbers varied.
“The key benchmark 10-year Treasury yield slid down to 4.55% and is below a recent high of 5%. That means mortgage rates will be coming down,” Lawrence Yun, chief economist at the National Association of Realtors, said in an emailed statement sent around 9:30 a.m.
But CoreLogic Chief Economist Selma Hepp considers the latest additions to employment a sign the economy remains resistant to the pressure the monetary policymakers have been putting on it in an effort to slow inflation.
“Today’s jobs report confirms the nation’s economy is still resilient despite rapid and appreciable tightening of financial conditions,” Hepp said in an email.
Monetary policymakers put rate actions on hold Thursday but indicated that could change in response to strong employment numbers.
Federal Reserve Chair Jerome Powell warned the market yesterday that future signs of “tightness in the labor market … no longer easing could put further progress on inflation at risk and could warrant further tightening of monetary policy.”
Some economists issued statements interpreting the latest job numbers as an indication the Fed’s actions are having a limited impact but one in line with its goals.
“Today’s report shows a healthy but slowing labor market, and, especially given the decelerating job growth figures, this is not a report that we would consider consistent with robust inflationary pressures,” Fannie Mae Chief Economist Doug Duncan said Friday.
Meanwhile, other industry-specific numbers in the jobs report bode well for builders, which have become increasingly important in a housing market where the recent runup in mortgage rates has limited resale supply, according to the MBA.
“Construction hiring increased for the seventh consecutive month, and the sector has added 148,000 jobs so far this year,” said Joel Kan, a vice president and deputy chief economist at the association, commenting on October numbers for the sector.
Policymakers’ recent decision to put rates on initially boosted builder and real-estate investment trust stocks, according to Bloomberg.
A higher resale value of your home is one of the many rewards for carrying out home improvements and renovations. But remodeling projects cost money, and financing them can be expensive, depending on the amount you borrow and the type of loan you use.
Options for home improvement financing include home equity loans (HELOCs), home equity lines of credit, and cash-out refinancing. These types of financing allow homeowners to borrow against the equity they have built up in their home. Other financing options are personal loans, credit card financing, and government programs. Any of these could be the best option depending on the circumstances.
Here’s what homeowners need to know about the different types of home improvement loans and what factors they should consider before settling on a lender.
1. Home Equity Loans
If you have built up equity in your home, which means you have paid off a portion of your mortgage, a home equity loan could be the right choice to finance home improvements. To find out how much equity you have, subtract the balance due on your mortgage from the assessed value of your home. For example, if your home is worth $400,000 and you owe $200,000 on your mortgage, you have $200,000 in equity. A bank will let you borrow up to a certain percentage of that amount — up to 100% in some cases.
A home equity loan acts like an additional mortgage, where the homeowner pays back the loan in monthly payments. The payments are in addition to the original mortgage payments. Home equity loans often have low fixed interest rates because the home is used as collateral for the loan. However, there are closing costs to consider that could be between 2% to 5% of the loan amount.
On the plus side, home equity loans usually qualify for the mortgage interest tax deduction as long as the funds are used to substantially improve the home.
If you have plenty of equity and need a sizable amount to finance a big project, a home equity loan could make sense. You will receive a lump sum payment, and the improvements you make may increase the value of your home.
Advantages of a Home Equity Loan
Disadvantages of a Home Equity Loan
Low interest and terms from five to 30 years
There are origination fees and closing costs
You can borrow up to 100% of your home’s equity
Funds are disbursed as one lump sum, so borrowers need to budget carefully
The interest is tax deductible
The monthly payments add to existing mortgage payments
💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.
2. Home Equity Line of Credit (HELOC)
A home equity line of credit also borrows against the equity you have built up in your home. But the funding works more like a credit card and is not distributed as a lump sum payment. A bank will allow a qualified homeowner to borrow up to a preapproved limit and then pay it back. HELOC loan terms are typically between five and 20 years.
Interest rates differ for HELOCs because they are adjustable and rise and fall over the life of the loan. However, interest is only due on the outstanding balance — the amount borrowed — not the full credit limit.
The amount you can borrow through a HELOC depends on your credit score, income, and the value of your home. Your lender can change the loan terms, too. For example, if your credit score drops during the loan term, your lender may reduce the amount you can borrow.
One advantage of a HELOC is that you can use funds from the line of credit, make payments, and then borrow again. A HELOC is a better option if you have smaller projects to do over a longer term. You can borrow as you go, only pay interest on how much you use, and avoid paying closing costs.
Advantages of a HELOC
Disadvantages of a HELOC
No closing costs
Interest rates may go up and down
Interest payments are tax deductible
Interest rates are typically higher than those for a home equity loan
You only pay interest on the amount you use
Your lender can change the amount you can borrow and the repayment terms
3. Cash-Out Refinancing
Another option to fund home improvements is cash-out refinancing. In the case of cash-out refinancing, a homeowner takes out a new mortgage that is higher than their original mortgage. The borrower then pays off the original mortgage and uses the leftover cash to fund home improvements. The amount of cash they can access depends on the equity they have in the home.
For example, let’s say the homeowner currently owes $100,000 on a $300,000 mortgage. They take out a new mortgage for $350,000, pay off the old mortgage ($300,000), and now have $50,000 left to spend on home improvements. The catch is that their new monthly mortgage payments will be higher because they have increased the size of the loan, and they will have to pay origination fees and closing costs.
Money from refinancing does not have to be used to improve a home; it can be used to consolidate debt, pay for school, or anything else the borrower wants to use it for. Also, the cash is not considered income from the IRS and is not taxable.
Cash-out refinancing may be a good option if interest rates have dropped since you took out your original mortgage. You can take out cash and pay a lower interest rate on the new loan. You might also be able to reduce the term length of your original mortgage and pay off your home loan sooner. This will be the case if the total cost of your new loan including closing costs is less than the total cost of your original mortgage.
Advantages of Cash-Out Refinancing
Disadvantages of Cash-Out Refinancing
You will still have one monthly mortgage payment
Your new mortgage will have a higher balance
You might be able to lower your interest rate and loan term
Your loan term will start from the beginning, so you will be paying off your mortgage for longer
You can use the cash for anything
If interest rates have gone up, your monthly payments may be higher
4. FHA 203(k) Rehab Loan
An FHA 203(k) rehab loan is a loan taken out at the time of the home’s purchase. These loans are typically used for a fixer-upper, when the owners need funding right away for improvements. This could be the best type of loan for home improvements for big projects. The advantages of this type of loan for the borrower are that they have funds available for improvements from the outset, and they only have to pay back one loan with one set of closing costs.
These loans are also backed by the government and come with benefits. Borrowers can qualify with a less-than-stellar credit score (typically, a minimum of 620), and the down payment expected is lower than it would be for a traditional mortgage loan (as low as 3.5%).
Two things to remember are that the renovation costs must exceed $5,000 for the borrower to qualify for this type of loan, and the closing process can take a long time. Lastly, work covered under an FHA 203(k) loan must start within 30 days of closing, and projects must be completed within six months.
This type of loan may be worth considering if you are buying a fixer-upper that requires significant work, and your credit score qualifies you for this type of loan.
Advantages of a FHA 203(k) Rehab Loan
Disadvantages of a FHA 203(k) Rehab Loan
One loan and one set of closing costs
Only old homes or homes in bad repair may qualify
Federally-backed with low interest rates and low closing costs
You are likely to be charged costly monthly mortgage insurance
You can qualify with a lower credit score
Cash must be used for specific home improvements
5. Personal Loans
If you don’t have sufficient equity in your home to take out a home equity loan or a HELOC, a personal loan is an option. A personal loan will come with a higher interest rate, adjustable or fixed, because this type of personal loan is unsecured. Your home is not used as collateral. These loans are processed much quicker than home equity loans or HELOCs, sometimes the same day.
Personal loan terms are shorter, from two to five years, which will mean higher monthly payments, and you’ll have to pay closing costs.
These loans may work if you lack equity or if you have an emergency, such as a broken water heater or HVAC system. That said, they are probably one of the most expensive borrowing options.
Advantages of a Personal Loan
Disadvantages of a Personal Loan
Higher interest rate than mortgage loans
You can qualify for a good interest rate even with an average credit score
Shorter terms, which increases monthly payments
Your home is not used as collateral and is not at risk
Fees and possible prepayment penalties
6. Credit Cards
A credit card can be used for financing, and it’s a fast, simple way to access funds. The amount you can spend on improvements will depend on your credit limit (although you could use multiple cards), and the interest charges are likely to be much higher than other financing options.
A credit card can be a good option if you think you can finish your renovations quickly and pay off the balance on the card. Look for cards with an introductory 0% annual percentage rate (APR). Some cards allow you up to 18 months to pay back the balance at that introductory rate. If you can pay off the balance by the deadline, that’s interest-free financing. However, check for fees and other hidden costs.
The danger here is that if you don’t pay off the balance by the end of the interest-free rate, the interest charges can skyrocket. That’s why credit cards should not be used for long-term financing.
A credit card can be a great option for home improvement financing if you can find one with a low introductory rate, low fees, and you are confident you can pay off the balance within the introductory rate period.
Advantages of Credit Card Financing
Disadvantages of Credit Card Financing
High interest rates, particularly after a low introductory interest rate period has expired
Some cards offer 0% introductory rates
Possibly low credit limits
7. Government Assistance Programs
The federal government has grants and programs that can help homeowners pay for renovations. Two home renovation loan options are Title I loans and Energy Efficient Mortgages. Lenders for Title I property improvement loans for your state are listed on the U.S. Department of Housing and Urban Development’s website.
Title I Loans
An FHA Title 1 loan is a fixed-rate loan used for home improvements and rehabilitation. Loans under $7,500 are usually unsecured, but bigger loans may use your home as collateral. These loans may be used in conjunction with a 203(k) rehabilitation mortgage.
The maximum loan terms are between 12 and 20 years, and loan amounts are $7,500 to $60,000, depending on the home’s size and type.
The loan must be used for property improvements, and an FHA mortgage insurance premium of 1% of the loan amount will be added to your interest rate. There is no minimum credit score required, but your debt-to-income ratio may factor into your loan terms.
Energy Efficient Mortgage
FHA’s Energy Efficient Mortgage program (EEM) finances energy-efficient improvements with their FHA-insured mortgage. The borrower must qualify for the loan amount used to purchase or refinance a home. However, they’re not required to be qualified on the total loan amount that includes the amount used to finance energy-efficient improvements. The FHA insures the loan to protect the lender against loss in the event of payment default.
Starting in 2023, homeowners can also get tax credits for some energy-efficient updates, including windows, insulation, new doors, heat pumps, and air conditioners.
These types of programs will reduce the cost of financing for home improvements and are great options if you meet the criteria.
Advantages of Government-Assisted Financing
Disadvantages of Government-Assisted Financing
Low interest rates
Financing must be used for property improvements.
Broad range of loan terms
Strict qualification standards
Larger loans may require your home as collateral.
How to Decide the Best Type of Home Improvement Loan for You
If you’re trying to decide what home improvement loan is best for you, consider the following factors:
Are You Purchasing a Fixer-Upper?
If you are buying a fixer-upper, check if you qualify for either an FHA 203(k) rehab loan or a government-assisted program. You may get cheaper financing this way.
Do You Need Funds Right Away?
If you need funds quickly — for example, you have a broken heat pump or HVAC system — a personal loan or credit card financing are options to explore.
Do You Have Equity Available?
If you have built up equity, a home equity loan or line of credit will provide cheaper financing than a personal loan and over a longer term, so that your monthly payments will be lower. A cash-out refinancing loan might also mean that you could lower your payments and reduce your term if interest rates have dropped significantly since you took out your original mortgage.
How to Get a Home Equity Loan
The first step in getting a home equity loan is to decide which loan is best for your situation. Next, find a lender with the best terms and fill out an application to see if you qualify.
1. Check Your Financial Health
The better your credit score, the better the loan terms will be. If you can boost your credit score before you apply for financing, you’ll boost your chances of getting a better deal. Lenders will also look at your debt-to-income ratio when setting the interest rate and term, so lowering your debt before you apply for a home improvement loan can help lower the cost of your financing.
2. Compare Lenders
You should contact a few different lenders to compare their rates and loan terms. Look for benefits, such as rate discounts for enrolling in autopay, and watchouts, such as late payment fees and minimum loan amounts.
3. Gather Documentation
You will need to submit a few basic pieces of information when you apply for a loan. As a general guide, you will need:
• Proof of income, such as W-2s or 1099s, bank statements, pay stubs, or tax returns.
• Proof of residence, such as your Social Security number and utility bills.
Your current debts, housing payment, and total income will also play a role. Be sure to have all the information your lender may need on hand when you apply to speed up the application process.
💡 Quick Tip: With home renovations, surprises are inevitable. Look for a home improvement loan with no fees required — and no surprises.
4. Apply for Prequalification
Some lenders will prequalify you, which will tell you your interest rate and how much your monthly payments will be. Prequalification should not affect your credit score, whereas a formal loan application could. Applying for too many loans in a short space of time could lower your credit score.
5. Complete the Loan Application Process
Your loan application might be fully online, via phone and email, or in person at a local branch. In cases where you are borrowing against equity, your lender may require a home appraisal. Provided your finances are in good shape, the lender should approve your application, and you’ll receive funding.
How Your Credit Affects Your Home Improvement Loans
Your credit score will affect the total cost of a home improvement loan. The higher your score, the less of a risk you pose to a lender, so the better the loan terms will likely be for a mortgage or long-term loan. The same goes for credit cards and personal loans. Also, if you have good credit, you’ll probably have an easier time securing a home improvement loan.
Can You Use Home Equity Loans for Non-Home Expenses?
Home equity loans and HELOCs are flexible and can be used for anything, not just home expenses or renovations. However, these loans are best suited for long-term, ongoing expenses like home renovations, medical bills, or college tuition.
The types of loans for home improvements include loans based on the equity you have built up in your home, such as a home equity loan, a HELOC, or cash-out refinancing. You can also use personal loans, credit card financing, and government programs. Loans based on equity tend to cost less over the loan’s lifetime, but they also tend to have longer loan terms. Equity-based loans also tend to be best when you need to borrow a larger amount, because you can spread out the cost over a longer period.
A personal loan will have a higher interest rate and a shorter term, but the higher your credit rating, the better the interest rate tends to be. Alternatively, credit card financing is favorable if you need funds quickly, the amount you need is not too high, and you can take advantage of a 0% introductory rate and pay off the balance before the rate expires.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.
What type of loan is best for home improvements?
The type of loan that is best for home improvements depends on your finances and how much you need to spend. If you hold a fair amount of equity and need a sizable amount of cash, a home equity loan, HELOC, or cash-out refinancing may be good options. Cash-out refinancing might be particularly appealing if interest rates have dropped, and you can refinance with better loan terms.
If, on the other hand, you have a smaller project that you expect to complete in a short timeframe, using a credit card that gives a 0% interest rate for a period could be the way to go.
What is the best renovation loan?
If you’re taking on a big project, buying a fixer-upper or planning to renovate an older home, you may want to consider the FHA 203(k) mortgage. The 203(k) rehab loan lets you consolidate the home and renovation costs into a single remodel home loan and avoid paying double closing costs and interest rates.
If your home is newer or higher-value and you have equity, cash-out refinancing can be a good option, particularly if interest rates have dropped.
Should I use a personal loan for home improvements?
Personal loans are a more expensive option for home improvements, especially if your credit score is average. However, using a personal loan for home improvements might be the best option if you don’t have a lot of equity to borrow from.
Are home improvements tax deductible?
Home improvement loans are generally not tax deductible. However, if you use a refinance or home equity loan, some of the costs might be tax deductible. Check with a CPA or tax specialist.
What credit score is needed to get a home improvement loan?
Credit score requirements for a home equity loan depend on the lender. A credit score in the mid-600s might be enough to be approved by some lenders, while others might not approve you with a score above 700. Lenders consider many factors, including your debt-to-income ratio and equity in the home, when considering you for a home equity loan.
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Want to learn how to make money on maternity leave? Parental leave can be a time of joy and excitement with a new baby around, but it can also mean money stress for parents. While you spend time taking care of your newborn, you may also need to find ways to make extra money to…
Want to learn how to make money on maternity leave?
Parental leave can be a time of joy and excitement with a new baby around, but it can also mean money stress for parents. While you spend time taking care of your newborn, you may also need to find ways to make extra money to pay for your expenses.
I had a baby not too long ago (she is currently 1.5 years old – time flies!), and being able to work while taking care of her has been a lifesaver. So, I understand why you’re reading this article – because I also had to work with a newborn.
The good news is that there are plenty of ways to make extra money while still being present for those early months with your new baby.
Why You May Need Extra Money On Maternity Leave
Many families have to take unpaid maternity leave, and others may find their leave is simply not long enough and want to extend it longer (many families in the U.S. get 3 months or even much less time).
Not only that, but maternity leave is an expensive time with medical bills coming in, the cost of baby essentials (diapers aren’t free!), and everyday living costs.
Also, there might be unexpected costs that weren’t part of your maternity leave budget. Perhaps your baby needs special formula or medication, or maybe your car broke down. These unplanned costs can put a dent in your finances, especially when your income may already be reduced during your maternity leave.
Or, you might also be looking to create a financial cushion for the future such as by saving for vacations or even starting a college fund for your baby. So, finding ways to make extra money during your maternity leave can be very helpful.
How To Make Money On Maternity Leave
When trying to earn money during maternity leave, here are three things to think about:
Flexibility is key – Choose work that can adapt to unexpected baby-related needs. It should let you manage your time effectively.
Think about earnings and growth – Think about how much you can make, how quickly, and if there’s room to grow.
Pick something you like and fits your goals – Do you enjoy the work? You may want to find work that matches your interests, skills, and future plans.
Read further to learn how to make money on maternity leave.
Top ways to make money on maternity leave
There are 27 ways to earn extra money on maternity leave listed below. If you want to skip the list, here are some jobs that you may want to start learning more about first:
1. Start a blog
Blogging is my favorite way to make money from home, and this is what I do while also raising my daughter.
Being a blogger involves creating content for online readers. You have the freedom to write about a topic you’re interested in (such as finance, travel, lifestyle, or family,) and freedom to decide how you want to make money on your blog – there are many different ways available such as affiliate marketing or displaying ads.
Blogging is my main source of income, and it has completely changed my life. I have the freedom to travel whenever I want, set my schedule, be my own boss, and I can spend all day with my daughter.
Learn more at How To Start A Blog FREE Course.
2. Sell printables on Etsy
Creating and selling digital printables on Etsy is a great way to work on your own schedule and earn money.
Plus, it is fairly passive income as you only have to make one digital file for each printable, and you can sell it as many times as you like. Another positive is that you can start it very affordably because you only need a laptop and internet.
So, what is a printable? They are digital items that you can download and print at home, such as grocery shopping checklists, budget planners, wedding invitations, wall art, and more.
I recommend signing up for Free Workshop: How To Earn Money Selling Printables. This free training will give you great ideas on what you can sell, how to get started, the costs, and how to make sales.
Recommended reading: How I Make Money Selling Printables On Etsy
Other than printables, there are many other things you can sell on Etsy as well, such as soap, candles, jewelry, and more.
3. Transcription work
Transcription jobs are flexible and can be done from home. By turning audio files into text, you can earn money when it’s most convenient for you.
An online transcriptionist listens to audio or video recordings and writes down exactly what is being said. This process is called transcribing. The goal is to do this without any errors in spelling, grammar, or punctuation.
If you want to learn how to make money on maternity leave, this can be a great option as you can do this at home.
I recommend watching Free Workshop: Is a Career in Transcription Right for You? to learn more.
Recommended reading: 18 Best Online Transcription Jobs For Beginners To Make $2,000 Monthly
4. Freelance writing
Freelance writers write articles, website content, social media posts, or even ebooks for clients.
I was a freelance writer for many years before switching to working full-time at writing here on Making Sense of Cents. It is a great career path where you can work from home and make your own schedule, such as writing while your baby is sleeping.
Recommended reading: 14 Places To Find Freelance Writing Jobs For Beginners
5. Virtual assistant
One of my first side hustles was working from home as a virtual assistant. This is a great way to work from home and have your own schedule.
Virtual assistants do many different kinds of tasks for clients, such as answering emails, scheduling appointments, managing websites, sending invoices, and so much more. It simply depends on what the person who is hiring you needs done.
If you want to become a virtual assistant, I recommend watching the free training 5 Steps To Become a Virtual Assistant.
Recommended reading: Best Ways To Find Virtual Assistant Jobs
If you’re good with numbers, you could sell bookkeeping services online or for small businesses, either on a freelance or part-time basis.
Bookkeepers are individuals responsible for managing financial things for businesses. This includes recording sales, tracking expenses, and generating financial reports.
If you want to become a bookkeeper, I recommend watching the free training How To Become A Bookkeeper.
Recommended reading: How To Find Online Bookkeeping Jobs
7. Freelance graphic design
With design skills, you can create logos, website designs, business cards, marketing materials, and more for clients and make money even during your maternity leave.
Recommended reading: How To Make Money As A Digital Designer
8. Data entry
Data entry clerks are like computer organizers. They enter, update, and double-check information in lists or tables. They type things like numbers and names to keep everything neat and organized.
Data entry jobs pay around $15 to $20 an hour, on average.
9. Create Canva templates
A Canva template is a pre-made design you can sell for things like social media graphics, ebooks, and presentations. It’s a handy starting point if a person is not great at designing from scratch.
Businesses, advertising professionals, social media influencers, and more all buy Canva templates all the time.
Canva templates have blank spaces where you can add your own words and pictures. You can also change colors and fonts to suit your preferences. They’re really useful for making things look good without spending a long time on it.
With Canva templates, you can sell a single design an unlimited amount of times. If you are looking for something passive, this is a great way to learn how to make money on maternity leave.
Recommended reading: How I Make $2,000+ Monthly Selling Canva Templates
Tutoring students can be a great way to make money while on maternity leave, as there are many options to tutor from home. You may be able to create your own schedule and pick how much or how little you would like to work.
You can find online tutor jobs on websites such as Tutor.com. If you’d prefer to do in-person tutoring, you can call or email local tutoring companies in your area or share your tutoring services on social media or in local Facebook parent groups for your area.
Recommended reading: 11 Best Places To Find Online Tutoring Jobs (Make $100+ an hour)
11. Rent out your baby gear
Since you have a baby, you probably have a lot of baby gear.
Did you know that you can make extra money by renting it out?!
Renting out your baby gear on sites like BabyQuip can be a game changer when it comes to making extra income during maternity leave. This site allows you to share your baby items with families in need (such as a person on vacation), turning your baby gear into a source of income.
From strollers and cribs to high chairs and toys and more, you can list many different items on BabyQuip’s site.
Plus, you don’t need to have a lot of baby gear in order to get started – you can start with as little as a crib (which is the most commonly rented item).
According to BabyQuip, the average person can earn around $1,000 a month, and some are able to make over $10,000 per month.
12. Baby sleep consultant
As you already know, sleep is so important for a baby (and for the parents!).
You can earn a living while on maternity leave by becoming a sleep consultant. This is where you help other parents by helping them improve their baby’s sleep habits and routines.
Pediatric sleep consultants are experts in helping children sleep better and they make a big difference in families’ rest.
Read more at How To Become A Sleep Consultant And Make $10,000 Each Month.
13. Deliver groceries
If you want a flexible side gig while on maternity leave (and you also have someone to watch your child), then you may want to look into delivering groceries and food.
This can be a flexible side hustle because you can choose your hours and how much you’d like to work each week.
Services like Instacart need grocery shoppers, and the average shopper makes $15 to $20 an hour to deliver groceries. Drivers are paid per order, and you get to keep 100% of your tips. With Instacart, you would be physically going into grocery stores, picking out the food items yourself, checking out, and then delivering the groceries to your customer.
You can also learn more at Instacart Shopper Review: How much do Instacart Shoppers earn?
There are other food delivery gigs that you can do as well, such as GrubHub, Uber Eats, and DoorDash.
14. Airbnb host
If you have a separate space to rent in your home, such as an in-law’s quarters or an apartment above a garage, then you may be able to make money during your maternity leave by renting this space out.
You can learn more about this at What You Need To Know About Renting A Room In Your House.
15. Pet sit
If you are a pet lover, consider pet sitting for friends, family, or through an online service. It’s a great way to make some extra cash while you’re home and can be a fun addition to your day if you already have pets and babies at home.
If you’re interested in watching pets or dog walking, Rover is a platform where you can list your services and find clients.
16. Answer surveys
While answering online surveys and focus groups isn’t a way to make a ton of money, it can be a way to earn some extra money with whatever spare time you have from your newborn (such as when they are sleeping).
You simply share your opinions and answer simple questions, and in return, you can get cash or rewards like Amazon gift cards.
The survey companies I recommend include:
American Consumer Opinion
User Interviews – These are the highest paying surveys with the average being around $60.
Recommended reading: 18 Best Paid Survey Sites To Make $100+ Per Month
17. Affiliate marketing
If you want to learn how to make money while on maternity leave, one of my favorites is affiliate marketing.
I have been an affiliate marketer for years through this blog, and it is what allows me to stay at home with my daughter.
Affiliate marketing means making money by sharing a referral link on your website, YouTube channel, social media account, and more. When people use your referral link to purchase something, you then earn money.
For instance, consider sharing books from Amazon on your blog. You give your readers a link to a particular book and encourage people to buy it through your affiliate link. Companies like Amazon value affiliates who bring in high-quality traffic because they appreciate the extra support in helping them make more sales.
If you want to learn more about affiliate marketing, I recommend Affiliate Marketing Tips For Bloggers – Free eBook.
18. Proofread and edit
If you have an eye for detail, you may be able to sell your services as a proofreader or editor for different types of content.
Writers, business owners, and more hire proofreaders and editors to improve their work. There’s a big need for these types of positions, and you can find jobs through many different platforms.
If you want to become a proofreader, I recommend joining the free 76-minute workshop – Learn How to Become a Proofreader…and Start a Freelance Proofreading Business.
Recommended reading: 20 Best Online Proofreading Jobs For Beginners (Earn $40,000+ A Year)
19. In-home childcare
One great way to make money while on maternity leave is to provide childcare services for other families in your area, either part-time or full-time.
This is one of the best stay at home jobs for someone on maternity or paternity leave because it allows you to stay home with your kids while making money at the same time.
Depending on your location, you might need specific licenses. But you could potentially begin without the extra legal steps by working with just one or two children. Just be sure to verify with your local city or state regulations beforehand. It’s also very important to make sure that your home is safe for children and that you are CPR certified.
20. Sell baked goods
Do you like to cook? You may be able to make money at home by starting a home bakery for people and/or pets. You can sell homemade baked goods at local farmers’ markets or online too.
You can read more at How To Make Extra Money By Starting A Home Bakery. Here, you’ll learn about the equipment you need to start a home bakery, food laws, how much to price your baked goods at, and more.
If you are interested in baking goods for pets, then I recommend reading How I Earned Up to $4,000 Per Month Baking Dog Treats (With Zero Baking Experience!).
21. Stock photo photography
Selling stock photo photography can be a great way to learn how to make money on maternity leave. This is because you would be working for yourself and can take pictures in your free time.
Stock image sites are popular sites for photographers to sell their photos. These sites allow customers to purchase pictures for various uses like websites, TV shows, books, and social media.
One great thing about stock photo sites is that they can be a great form of passive income. You can take pictures, upload them, and earn money from an older photo for months or even years in the future.
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
22. Social media manager
Social media managers handle businesses’ social media accounts with the goal of attracting new customers and helping a business grow.
They might share images or videos showcasing products or the company, take part in popular social media trends (like on TikTok) to increase visibility, and respond to common customer questions.
23. Book reviewer
Book reviewers read books and share what they think through paid reviews.
Yes, there are websites where you can receive payment (as well as a free book) for sharing your thoughts about books. Some companies that pay for book reviews are Online Book Club, Kirkus Reviews, and BookBrowse.
Recommended reading: 16 Best Ways To Get Paid To Read Books
24. Flea market flipper
A flipper buys items from places such as garage sales, Facebook Marketplace, or thrift stores and resells them online for a profit.
You may be able to earn extra money by flipping items for resale or possibly earn a full-time income! You can even be able to make this a more flexible gig, such as only working during nap times.
A helpful free training that I recommend is Turn Your Passion For Visiting Thrift Stores, Yard Sales & Flea Markets Into A Profitable Reselling Business In As Little As 14 Days.
25. Rent out storage space
If you have unused space in your home, you can sell it as storage for rent to people in your local area. This can be a garage, driveway, closet, basement, or even an attic.
You can use a site called Neighbor to list any extra space you have available for rent and have the potential to make up to $15,000 per year.
You can sign up at Neighbor for free here and list your space.
You can also learn more about Neighbor at Neighbor Review: Make Money Renting Your Storage Space.
26. Sell an online course
Selling an online course is a great option for stay-at-home moms and dads who want to have control over their schedule and earn a somewhat passive income.
Some topics that you can teach in a course are:
Fitness and exercise programs
Time management and productivity hacks
Arts and crafts
Photography and photo editing
Plants and gardening
Baking and pastry making
And so much more!
You can sell a course in many different ways, such as through Udemy or Teachable.
27. Rent out your unused RV
Instead of letting your RV sit in your driveway unused, you can list it on RVshare and make some semi-passive income. My sister has rented a few RVs from this site, and she has had a great experience each time!
Renting out an RV can earn you anywhere from a couple hundred dollars to a couple thousand dollars each month.
How To Manage Your Money On Maternity Leave
Managing your money while on maternity leave can be tough at times. If you are looking for more things that you can do other than only learning how to make money on maternity leave, you do have some options.
Below, I will be talking about how to cut your budget so that you can save money, as well as your rights and benefits on maternity leave.
Cut your budget
During parental leave, cutting your budget can be a great way to manage your finances while adapting to life with a newborn.
Here are a few ideas to help reduce your expenses during this time:
Evaluate your current spending habits to determine where you can make adjustments – This might involve tracking your spending for a month or looking back at bank statements. You’ll likely find areas where you can save, such as dining out, entertainment, or shopping.
Cut back on subscriptions and memberships – Assess each subscription and determine the must-haves and those you can temporarily suspend or cancel.
Batch cook freezer meals before the baby comes – This is where you make a bunch of meals before the baby is born and freeze them. This can give you an easy meal to pop in the oven before the baby comes.
Cook at home – Getting food delivered can be convenient, but it’s usually more expensive than making your meals at home. Plus, cooking allows you to control ingredients and portion sizes.
Buy in bulk – When possible, get the items you use most frequently in bulk. Items like diapers, baby wipes, and nonperishable foods have a longer shelf life, and buying them in larger quantities can offer considerable savings.
Get secondhand and borrowed items – Instead of buying new baby gear and clothing, try borrowing from friends or family, or shopping at thrift stores like Once Upon A Child. Babies grow quickly, and they often outgrow items before they wear out.
Negotiate medical costs – If you have medical bills, you can try to negotiate them. Medical providers may be open to setting up payment plans or giving discounts for paying up front.
Short-term disability insurance
You may want to look into short-term disability insurance options before your maternity leave starts to help cover lost wages during your time off.
In some cases, your employer may provide this benefit, or you can purchase a policy separately. These policies typically cover around 60% to 80% of your regular income and may have a waiting period before benefits start (so, you will need to have the policy before you get pregnant).
Government assistance programs
There are government assistance programs that could help you during your maternity leave. For example, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) has nutrition education, breastfeeding support, and healthy food benefits for eligible families.
You can also check to see if you qualify for financial assistance from your state or other programs related to maternity and family support.
Find charities for help
During maternity leave, managing money might be tricky, but there are places that can help, like charities and groups that want to support new parents. You can find them online or at local community centers. Libraries, online parent groups, and special organizations are also great places to get help.
Remember, asking for help is a strong and smart thing to do, and there are lots of resources out there to help parents during this special time.
I recommend reading:
Know your state and federal law rights
I recommend learning about relevant state and federal laws governing maternity and family leave. The Family and Medical Leave Act (FMLA) allows eligible employees to take up to 12 weeks of unpaid, job-protected leave for the birth or adoption of a child. The law also says that you cannot be replaced or overlooked for pay raises and other promotions during your leave.
However, paid maternity leave policies differ by state and company. Some employers may offer a certain amount of paid leave, while others may offer none. Make sure to review your state’s laws and your employer’s policies to understand your rights during your maternity leave.
By knowing your rights, insurance options, and the benefits available to you, you can better plan your financial strategy during your maternity leave.
Frequently Asked Questions About How To Make Money on Maternity Leave
Below are commonly asked questions about how to make money while on maternity leave.
Can I make money while on maternity leave? Are you allowed to make money while on maternity leave?
If you are in the U.S., then yes, you should be able to make money on maternity leave. If you are unsure, check your employment contract or talk to your employer’s human resources department to be positive.
Before starting any side income streams, if you’re worried about whether or not you are allowed to make extra money while on maternity leave, then double-check your company’s policies and your leave agreement to make sure that earning money during your time off is permissible. Some employers may have restrictions on outside work or income during your leave.
How do I survive financially during maternity leave?
To survive financially during your maternity leave, you may need to find ways to cut your budget as well as learn how to make money on maternity leave.
Does unpaid maternity leave qualify for unemployment? Can you collect unemployment after having a baby?
This depends on why you are no longer working at your job. If you simply stopped working because of your pregnancy, then you may not be able to receive unemployment pay.
However, if you are pregnant or recently had a baby and were fired or laid off, then you may qualify for unemployment pay.
What are some ways to make money while on maternity leave? How can I make money while taking care of my baby?
There are many ways to make money while on parental leave, such as by working online, selling photography, renting out storage space or an RV, and more.
How can new mothers use their time efficiently while working from home?
Time management is important for new moms working from home. I recommend creating a routine, setting realistic goals (if you are working and watching your baby, it won’t always go perfectly), and designating work hours during the baby’s nap time to help manage work alongside childcare responsibilities. It’s also important to take regular breaks to avoid burnout and feeling stressed. Working while also taking care of a child can be very tiring.
How to Make Money on Maternity Leave – Summary
Federal law, specifically the Family and Medical Leave Act (FMLA), does not require employers to give paid maternity leave. Eligible employees are allowed to take up to 12 weeks of unpaid leave, and because of this, you might be worried about money during your maternity leave or feel like you can’t afford to take the full 12 weeks.
There are many ways to make money while on maternity leave, which may help you to pay your bills without sacrificing quality time with your new baby.
For example, you can sell handmade items or even sell consulting services. Remote jobs and work-from-home jobs are also an option (and my favorite), allowing you to use skills like graphic design or writing to make money.
Remember, it is possible to make money while on maternity leave. Yes, it will most likely be very hard at times and even feel impossible. But, you do have many options to try and make it work.
Do you want to learn how to make money on maternity leave?
“I think you just have to figure out how to weather the storm and get to the next good market, which a lot of people think is 18 months to 24 months away. We’ll get there,” Meena affirmed. “I’m not really worried about that, but we’ll get back to the next good market and yeah, … [Read more…]
Are foreclosures going the way of the dodo? Not quite, but they certainly aren’t as common as they once were, if a new report from DataQuick is any judge.
The company, which tracks home purchases nationally and in many large metros across the country, noted that foreclosures accounted for just 16.3% of the Southland resale market in October.
While still a sizable chunk of home sales in the hard-hit area, it’s nowhere close to the 32.8% share seen a year earlier.
In fact, last month’s level was the lowest since October 2007, just after the housing boom went bust.
The highest monthly percentage total recorded was a staggering 56.7%, seen back in February 2009. The word “yikes” comes to mind.
Yes, more than one in every two resales used to be a foreclosure in SoCal, which explains the rapid decline in home prices.
But now that foreclosures are becoming less and less common, home prices are marching higher, and are now at levels not seen since August 2008.
We’ve still got a long way to go to hit those insane 2006 and 2007 numbers, but things appear to be on the mend. Even home flipping is up, rising from 3.7% last year to 6.1% last month. Watch out for bad granite countertops, laminate floors, and cheesy fixtures.
The median price paid for a home in the Southland last month was $315,000, steady compared to September, but up 16.7% from October 2011.
DataQuick attributed the rise to highly favorable mortgage rates, along with a change in the mix of homes selling.
In short, heavily discounted foreclosures are being replaced by a larger share of move-up home sales, which pushes the median higher.
Home sales in the $300,000 to $800,000 range have jumped 41.5% annually, while sales above $500,000 are up 55.2%.
And last month, home sales over $500,000 accounted for 23.3% of all SoCal sales, up from 17.9% a year ago.
Short Sales and Foreclosures Still Hold a Large Share
Overall, it’s still not very pretty. Short sales still hold more than a quarter of the resale market (26%), down slightly from 25.4% a year ago.
So combined with foreclosures, distressed sales make up nearly half the entire market, which clearly does not exude “healthy.”
The word “recovering” is probably more appropriate. But it certainly beats “declining.”
The good news is that investors seem to be on-board, despite the rise in home prices. Absentee buyers, which purchase both investment properties and second homes, bought 28% of Southland homes in October.
That number is up from 27.7% in September and 25.4% in October 2011. The record was set earlier this year when absentee buyers snatched up 29.9% of sales in February.
Seeing that the monthly average is 17.6% going back to the year 2000, there are clearly some deals to be had out there still.
Cash Is King
Unfortunately, for everyday homebuyers, the investors are making it increasingly difficult to snag a property on the cheap, or at all for that matter.
About a third of all purchases in October were paid for with greenbacks (32.1%), up from 30% last year, and not far from the record of 33.7% set in February of this year.
Cash offers easily trump those looking to finance a deal with a mortgage, which explains why buyers are having to come in with sizable down payments if they want to be considered.
It’s clear if you look at the FHA loan numbers – last month, they accounted for just 25.2% of all purchase mortgages, down from 31.9% a year ago.
The FHA-share is now at its lowest point since July 2008, because let’s face it; a 3.5% down payment doesn’t beat a 100% down payment.
Put simply, if you want a house in a desirable area, be prepared for a bidding war.