How much equity is in my home now?

Mortgage-related fees are under a microscope

͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌ ͏‌  No images? Click here May 18, 2024 • Issue #142 Happy Saturday! This week, we’re looking at how much money Americans have in what they see as the best long-term investment — namely, their home. We'll also discuss how President Biden’s war on junk fees is helping to curb unwarranted mortgage fees. Plus, we'll have some stats on how the housing market has been doing this spring. Correction: In last week’s newsletter, I mistakenly identified the brokerage firms involved in commission lawsuits as plaintiffs. They are, in fact, the defendants.

A home is still the best piggy bank

Getty Images The current real estate market is challenging — what with stubbornly high interest rates, exploding home insurance premiums and looming changes to realtor fees. Given these issues and more, has owning a home really been a great investment bet lately? Yes, it has, and how, new data confirms. Owning a home has long been considered one of the best long-term investments because, more often than not, home prices tend to increase, leading to increased homeowner wealth. That trend has been evident of late, even as the overall market has cooled. That’s led to a lot of increased wealth. A report by data analytics firm Intercontinental Exchange (ICE) details how much value those rising home prices have delivered to the bottom line of those who own their homes. In all, American homeowners who held a mortgage during the first three months of 2024 enjoyed home equity that totaled a record-high $17 trillion. That works out to an average of about $206,000 per mortgage holder. Naturally, not everyone will have that much equity. However, ICE estimates that about 48 million households have some amount of equity they can tap into safely (that is, while still keeping at least 20% of their ownership stake in case of an emergency.) Given those figures, it’s no wonder so many homeowners consider owning property to be a smart financial move. According to a recent Gallup poll, 36% of Americans rank owning real estate as the best long-term investment, followed by stocks and mutual funds (22%) and gold (18%). And while cryptocurrencies capture the headlines with some spectacular gains (and equally spectacular losses), only 3% think they’re a good place to park their money long-term (that’s last place in the poll, for those wondering). Indeed, real estate has topped Gallup’s poll since 2014, which is when the dust from the Great Recession (with its housing crisis) settled and home prices began to climb again. Real estate further cemented its investment reputation in 2022, when low mortgage rates sent home prices through the roof: in that year’s poll, even more respondents (45%) ranked real estate as the number-one investment. As Andy Walden, the vice president of enterprise research strategy at ICE, said in the report, homebuyers may face many challenges in today’s housing market, but “for existing homeowners, the picture keeps growing brighter.”

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Mortgage-related fees are coming under fire

Getty Images Since 2021, the Biden Administration has been battling junk fees — the sneaky charges that cost Americans billions of dollars every year. The feds have been targeting everything from bank overdraft charges to fine-print fees charged by hotels, ticket sellers and others (including some retirement advisors). Mortgage (loan) servicers are also in the administration’s crosshairs. A loan servicer is a company that processes your mortgage payment and distributes it to the appropriate parties (loan, homeowners insurance, property taxes, etc.). It also helps you with the loan if you fall behind in your payments or have issues with it. Sometimes, your lender will service the loan, but sometimes, it will sell your mortgage to another company for servicing. According to the Consumer Financial Protection Bureau (CFPB), some servicers charge illegal fees or do not clearly explain charges before imposing them. The CFPB also found other problems, including: Failure to waive late fees and penalties during the COVID pandemic, as was required Missing deadlines to pay local property taxes and insurance bills on the homeowner’s behalf, leaving customers on the hook for late fees even though the mortgage was paid on time Sending homeowners false notices about missed payments and recommending that they sign up for repayment plans. Notifying homeowners in distress that they were approved for a repayment plan even though the servicer hadn’t yet made a decision – with some applicants eventually being rejected. Since the CFPB junk-fee investigation began, mortgage servicers have been changing their policies and clarifying their procedures. The federal agency is also working to get refunds for homeowners who were charged illegal or excessive fees. If you think you’ve been overcharged or have an issue with your mortgage servicer, you can submit a complaint directly to the CFPB.

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Monthly housing statistics — April

Getty Images Mortgage rates for 30-year loans were above 7% in April, adding to the chill of the 2024 spring buying season. Here’s what happened to home prices, inventory and more last month, according to Zillow. The typical U.S. home rose to a value of $359,402. Home prices were up 1.2% month-over-month and 4.4% compared to April 2023. (The rate of price growth slowed, however, which is a good sign for buyers) Inventory continued to tick higher. The housing supply increased by 6.4% compared to March and by 18% on a year-over-year basis. New listings were 11% higher than in March, giving buyers more options to look at. The number of homes with price cuts in April increased by about 22% compared with March. That’s a welcome signal that more home sellers are willing to be flexible and negotiate to complete a sale. On average, homes sold in April were on the market for 13 days. While that’s a relatively short time, it’s longer than the nine-day average during the same month last year.

’Til next time, P.S. Have you seen a unique listing on social media I should feature in this newsletter? Or have a question about housing or mortgages you desperately want answered? Let me know on Twitter at @LeslieLCook or via email at leslie@money.com. P.P.S. Have a friend who loves real estate or is looking for a home of their own? Please forward them this email or send them to the Money Moves subscription page.

Money’s Essential Home Buying Resources: Spring

On the hunt? Check out Money’s Mortgage Calculator, list of The Best Mortgage Lenders and look at the latest mortgage rates. Thinking of refinancing? Our list of The Best Mortgage Refinance Companies can help. You can also use our Mortgage Refinance Calculator or these refi tips. Key question: How much house can I afford?

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