Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Shmuel has over two decades of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. Shmuel provides a uniquely holistic approach to comprehensive real estate and financial matters that goes well beyond any single transaction. Shmuel is an award-winning financier recognized for maximizing the short-term and long-term objectives of his client. As a contributing writer to many local and regional newspapers and publications, his insights have been featured in the media for many topics, including mortgages, personal finance, appraisals, and real estate trends.
We are a consumption society built around consumerism. For most, checking out cars and always upgrading to a new model every few years seems to be a standard. House hunting and real estate talk is a constant when couples get together or walk around the neighborhood. Vacations and getaways are always on everyone’s priority list. The latest and greatest Apple i-product or comparable device is sought out regularly. Modernized gadgets and accessories are on everyone’s birthday wish list. I am sure I can fill this article with products, destinations, and services that you would want—but here’s one thing that won’t make the list: a mortgage. No one wants a mortgage.
I very much recognized my place “in the marketplace” early in my career. So closely associated with such a highly sought-out possession, but I provide more of a tool than a product. A house carries memories, milestones, and merit. Owning a home is the “American Dream” and likely the most valuable asset that a person will acquire in their lifetime. A mortgage, which is often necessary to purchase that house, is perceived to be the most substantial debt that a person will attain in their lifetime—something to avoid. No one wants a mortgage.
These days, with Americans spending so much of their time in their homes, the home improvement industry is soaring. Stores such as Home Depot and Lowe’s are busier than ever, with people making interior and exterior enhancements to their house that has been deferred for years. Spending money to fix or improve a home is an investment. Conversely, a “construction loan” or “cashing-out” to finance improvements is frightening, overwhelming and expensive. No one wants a mortgage.
This week, I participated in intense and emotional conversations with a family and their attorneys. We were trying to figure out the best financial strategies to allow an elderly parent who needs full-time care the ability to remain in their home of over 40 years. They were concerned that moving him elsewhere would not allow him the proper environment to feel safe, secure and adequately recover. They said, “This is the place he knows and recognizes, and we cannot take him away from his home now. He has lost everything else.” We were trying to figure out practical financial solutions to use the home’s equity to allow the children to finance the necessary care to accomplish this. One family member remarked to the attorney, “So you are saying our only option is to get a mortgage; who wants that?!” As I said, no one wants a mortgage.
I spoke with a client of mine who has over $50,000 in credit card debt with several prominent creditors who offered him extraordinary rates to transfer his balances. Some have 0% introductory periods of 12 months, some for three to six months, and most have rates between 2.99-3.25% for extended periods. He proudly told me stories about how he was finally able to roll over all his debt after six months of research and negotiations. In theory, it was impressive to see so much credit card debt with such a small minimum required payment. When I mentioned that he would be better suited to cash-out on his current mortgage and consolidate that debt, he said, “I have spent over two years paying off principal; why would I want to increase my mortgage?” No one wants a mortgage.
This week, Black Knight, a financial research and analytics firm, published a report noting over $4.5 billion per month of potential savings in the marketplace for people to refinance. Assuming rates of 3.01%, they said that about 15.6 million homeowners—or one out of every three homeowners—could lower their monthly payment by almost $300 per month if they were to refinance now. Additionally, “tappable equity” rose nearly 10% with over $6 trillion (with a “T”) available in equity for people to explore financial options. While mortgage demand is at record levels, the number of people who are not opting to consider a refinance option confirms that no one really wants a mortgage.
One cannot help but notice banner ads and social media posts touting low mortgage rates. Comments from family or friends touting how they just locked in for “under 3% with no fees” is undoubtedly the talk of the town for many. For most, however, the daunting task of having to think about a new mortgage is paralyzing. For those people, I suggest that they reach out to someone like me who realizes and recognizes that you do not want a mortgage. You need a mortgage. You need someone who will be able to incorporate your short-term and long-term financial conditions into consideration and present the best-solutions possible for your situation.
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