July 19, 2024
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July 19, 2024
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Linking Northern and Central NJ, Bronx, Manhattan, Westchester and CT

“More or Less” and “More for Less”

I was driving with one of my children, and I commented about how expensive gas prices were as we were pulling into a gas station. The attendant came over, we exchanged pleasantries, and I said, “$60 cash, regular, please.” (Note, I tend to often pay by cash at fuel stations because I have had several friends and clients whose identity and credit cards were stolen from a gas station visit.) They finished their task, took the money, and we were on our way…

As we were driving, my daughter asked, “why did you say gas prices when up so much? You always pay $60” I showed her my fuel indicator and noted how even though I paid the same amount of money as I often do, I got much less gas because of the price increase. Welcome to the world of inflation! Unfortunately, this new reality of spending ‘more money’ for ‘less benefit’ is everywhere we turn.

I heard a new expression this week that was disheartening. In a pre-purchase consultation, a client I was speaking with mentioned that another mortgage professional he was working with said they were pre-approved for a loan of $650,000, “more or less.” I asked him to clarify what he meant, to which he acknowledged, “I guess that’s not something I should be comfortable with.” (Mind you, we are one of the few lenders that require a comprehensive consultation before we issue a pre-approval.)

In the competitive real estate marketplace, especially in the unprecedented one we are experiencing now, being told that you can “more or less” qualify for a loan is a huge disservice to everyone. The seller, the buyer, the Realtor, the attorneys – and the other myriad of buyers that might lose out on this house because you inaccurately think you are qualified to buy it. Imagine everyone going through the motions and being unable to close the transaction because you fall a few dollars short.

Unfortunately, the more-for-less theme continues to play itself out in all aspects of the market. These days, with interest rates over one-percent higher from where they were a few short months ago, a home buyer is now paying more for less of a home. The buying power for someone looking to purchase a $650,000 is now over $80,000 less because of higher rates. The average increase on a loan payment is over $300 per month.

Speaking of more – despite rising mortgage rates, home prices continue to increase. Using the same example as above, a mere 5% increase in home appreciation means a $30,000-40,000 increase in home cost. Homebuyers are faced with the challenge of getting less of a home, or paying more in price, for no additional benefits.

Along these lines, what I am finding across the industry is that consumers are getting worse service and guidance in their home buying pursuits, more often than not. According to a survey by Zillow, more than 75% of recent home buyers said they regretted at least one part of their home purchase. Most of the feedback of their remorse had to do with the guidance and expectations of the home they were purchasing.

There is no question that the recent remarks by the Federal Reserve, along with the direction that the U.S. economy is heading, will have a significant impact on asset prices. As we contend with potential hyperinflation, some are starting to warn about “stagflation.” Now more than ever, this is the time when the guidance and advice of a skilled real estate and financial professional are more valuable than ever. Take the necessary steps to find the right expert to help you obtain more for less!

Shout out and happy birthday to Tova Bashevkin, Debbie Botwinick, Zvi Fischer, Susan Heideman, Daniel Herrmann, Aaron Karoly, Avi Kaye, Michelle Kohn, Brahna Layman, Michal Olshan

Ida Plotzker, Eli Polak, Rosa Rojas, Dr. Robert Sholomon, Yannick Weill and Eric Wein.


Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected].

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