This Generation Is Spending the Most of Its Income on Housing

It’s not unusual for housing to be a person’s largest monthly expense. Often, owning a home is a far more expensive prospect than renting one. That’s because homeowners have to cover costs outside of their mortgage payments, like property taxes, insurance, maintenance, and repairs.

It’s important to not overspend on housing, as doing so could lead to financial struggles and unhealthy debt. But according to a recent Hometap report, millennials may be going overboard on housing. And that could really be hurting them financially.

Millennials are stretching their budgets

Hometap reports that millennials spend more of their income on housing than any other generation. But what’s more alarming is that an estimated 33% of millennials spend over 26% of their income on their mortgage payments.

This article originally appeared on MotleyFool. Read the full article here. 

Hometap: Jeff Glass’s Big Idea That Might Change the World

As a part of my series about “Big Ideas That Might Change The World In The Next Few Years” I had the pleasure of interviewing Jeff Glass the president, CEO and co-founder of Hometap, which has introduced an entirely new paradigm that allows homeowners to access the equity they’ve built in their homes to do more in life.

Thank you so much for doing this with us! Before we dig in, our readers would like to get to know you a bit. Can you please tell us a story about what brought you to this specific career path?

My entrepreneurial career began at age 17, when I started going door-to-door selling office furniture to make money for college. I began by canvassing the Empire State Building, top to bottom, and I’ve really been an entrepreneur ever since. Over the years, I’ve had the opportunity to run and create multiple companies. The satisfaction that comes from seeing how hard work can create something new and important continues to motivate me.

This article originally appeared on Authority Magazine. Read the full article here. 

Loan alternative firm’s growth fueled by $60 million cash infusion

Hometap – provider of a smart, new loan alternative for tapping into home equity without taking on debt – recently raised $60 million of new operating capital to help fuel its growth, bringing its cash infusion to date to $95 million to help fuel company growth.

The latest funding round was led by American Family Ventures along with new and existing investors that including Bain Capital, ICONIQ Capital, LLC, G20 Ventures, Pillar, and General Catalyst, company officials said. The windfall will be used to continue hiring top talent across all functional areas (sales, marketing, human resources, engineering, and the like); to scale a robust channel partner program; to introduce additional alternative financing products and services to support homeowner needs; and to expand operations nationwide, officials said.

In a telephone interview, CEO Jeffrey Glass described the funding rounds as two pockets of capital in four buckets, the latter repositories for departmental growth priorities. “Number one, we’ve begun to build out and create good momentum to support a robust set of partnerships,” Glass said. “We’re a business that aspires not only to deliver products and services but deliver them in an innovative way.”

This article originally appeared on MPA Mag. Read the full article here. 

Survey Suggests New York Homeowners Unlikely to Know Their Home Equity

Manhattan entryway steps

With its contrasting landscapes of city, suburbs, and rural areas, the New York real estate market has always been one that’s a bit hard to characterize when it comes to overarching takeaways, but the past two years have revealed some clearer emerging trends. 

Lingering Effects of the Pandemic

City-dwellers who fled to suburban and rural areas in search of more space in the early days of the COVID-19 pandemic drove up demand — and prices — in those regions, a phenomenon that is still evident when looking at the market there.

For example, the Syracuse and greater central New York areas are still experiencing the issue of many prospective buyers and a limited number of homes. “When buyers came into the market, they didn’t have an increase of supply, so the prices just went up,” Chip Hodgkins, real estate agent at Hunt Real Estate, told CNY Central. “We’re having 7, 10, 14, we had 53 offers on one house. I mean you only hear about that in California, not in Syracuse,” he continued.

The Manhattan market is also in the midst of a resurgence, particularly when it comes to luxury properties — in fact, 2021 saw the largest amount of luxury contracts in New York’s history. “Leading up to the pandemic, the high end of the market was the weakest segment of the market. However, since the end of the lockdown, it’s inverted – where the weakest segment of the market is the lower end, entry level,” said Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel.

The typical value of a New York City home in September 2021 was $728,404, a 5.6% increase year over year, and a figure that’s at least partially reflected in the results of Hometap’s 2021 homeowner survey, which found that 26.7% of New York home values were reported to be more than $500,000. In contrast, just 12.9% of homes fell into this range across the seven states with sufficient data for analysis. However, the largest cohort of New York homeowners surveyed (33.3%) had home values between $100,001 and $249,999, with nearly as many (28.9%) reporting home values of $250,000–$499,999, in line with the national average home price of $374,900.

New York home values

When it came to the impact of the pandemic, our survey revealed that the state also had the most homeowners who were positively affected (or not affected at all) by the pandemic, at 15.6% versus 10.7% nationally.

Get your copy of the report to see how American homeowners compare across regions, generations and race when it comes to home equity and home costs. 

2021 Homeowner Report

Dealing With Debt, Rising Homeownership Costs

Yet, despite this, nearly 80% of New York survey respondents are saddled with some sort of debt. Homeowners who reported having mortgage loan debt and credit card debt were nearly neck and neck (51.1% and 48.9%, respectively) with auto loan debt close behind at 35.6%. 

Debts and Financial Liabilities for New York Homeowners

When it comes to homeownership costs, the highest cohort of New York homeowners surveyed (48.9%) reported spending less than 15% of their gross monthly income on their mortgage. Still, more than a quarter (26.7%) reported spending between 16% and 25% per month, suggesting that homeowners in the state are increasingly at risk of becoming house-rich and cash-poor in the future if spending continues to creep up.

Gross Monthly Income Spent on Mortgages in New York

New York homeowners also spend the biggest portion of their monthly income on non-mortgage costs like repairs and insurance, with 11.1% spending more than 25% versus the 3.6% of homeowners nationally who spend more than 25%. 

Gross Monthly Income Spent on Other Homeownership Costs in New York

Knowledge of Goals and Debt…but Not Equity

Overall, New York state homeowners surveyed were at least somewhat aware of how much debt they owe, with 62.9% answering that they had a general sense and 37.1% saying that they knew down to the dollar.

New York Homeowners’ Understanding of How Much Debt They Owe

They also have a wide variety of financial goals they’d like to achieve in the coming year, but most (46.7%) are prioritizing paying off credit card debt, 40% want to grow their retirement savings, and 31.1% have their sights set on renovating their homes — the highest percentage across states with respect to this goal, and 7% more than the national average. An unusually high proportion of New York state homeowners surveyed (17.8%) are also looking to start or grow their business in the next year compared to the national average of 11.3%.

Financial Goals for New York Homeowners

There’s just one issue: A majority of those surveyed are unaware of how much cash is tied up in their home, which has the potential to help them achieve these goals. New York had the highest percentage of homeowners surveyed — 53% — who didn’t know how much equity they have in their home. Of those who didn’t know, a third reported that they didn’t feel they needed to know. Relatedly, New York had the most homeowners surveyed who didn’t consider their home to be an asset (57.8% versus 51.6% nationally).

New York Homeowners’ Knowledge of Amount of Home Equity

Finally, New York represented the largest cohort of homeowners who answered that they didn’t want to sell their homes or take out a loan, and 34.6% of New Yorkers (versus 24.4% nationally) believe that those are the only ways to access their equity. 

You can learn more about the state of homeowner finances in our free report, Are Homeownership Costs Hindering Other Financial Goals? If you own a home in New York and you’re seeking a way to make the most of its value, a Hometap Investment could be a great option. 

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

After Forbearance: A Return to Normalcy

As a mortgage provider, you may find yourself working with customers who have exited mortgage forbearance and are facing difficulties paying back what they owe, especially during the past year. As a result of the COVID-19 pandemic, total outstanding U.S. consumer debt skyrocketed $800 billion, reaching around $14.9 trillion in total in 2020. It’s also estimated that the average American has $90,460 in debt. This includes all types, from credit cards and personal loans to student loans and mortgages. 

Credit Karma survey of more than 1,000 homeowners in forbearance in April 2021 found that 31% used the extra funds for groceries, medical costs, and pandemic-related expenses like homeschooling supplies, and 32% saved the extra money by putting it into an emergency fund or savings account 

When it comes to COVID-19-related forbearances specifically, 591,000 of the 5.7 million homeowners who have exited the program were delinquent on payments as of June 2021, a number that’s only expected to rise, as this figure is already three times the pre-pandemic rate.  

This article originally appeared on DS News. Read the full article here. 

Survey: High Home Costs Make Unique Money Goals a Reach in California

California homes on cliff

California has sun, surf, and some of the highest home values in the country — as of October 2021, the average is $722,406, a 21% increase from the same time in 2020 and an amount nearly twice the median national home price of $374,900. And costs are only continuing to climb: Sacramento was recently named the least affordable market for new homes in the country with a median cost of $650,000, and in the southern part of the state, the median sales price increased 1.3% to $688,500 from August to September 2021 alone.

A recent report also found that the top five least affordable cities in the country, where home prices are growing faster than incomes, include San Jose, San Francisco, San Diego, and Los Angeles.

While Buying Activity Is Steady, Prices Are Slowly Dropping

In the Bay Area specifically, homebuyers are still on the hunt and sales activity has remained fairly consistent throughout the pandemic in comparison to other regions. “We were really expecting, at this point, for sales to be lower,” CoreLogic economist Selma Hepp told The Mercury News. “Demand is still there.” 

The state’s reputation for high home values is also reflected strongly in the results of Hometap’s recent homeowner survey. Of respondents in California, 37.3% reported home values of $750,000 or more, and 27.9% reported values of $250,000–$499,999, the largest cohort of homeowners across the seven states with sufficient data for analysis.

California home values

However, there are recent, encouraging signs of a slowdown in terms of price hikes: namely, that year-over-year price appreciation in September showed the smallest growth since January.

2021 Homeowner Report

Homeowners Facing Debt, Financial Impact from Pandemic

The vast majority of homeowners surveyed in California (58.8%) are dealing with mortgage debt versus 53.9% nationally and nearly half (47.1%) also have credit card debt versus 45.4% nationally. California homeowners were also the most negatively impacted financially by the COVID-19 pandemic, with 58.8% versus 46.5% nationally. 

California debt

Pandemic financial impacts California

When it comes to home costs, results were a mixed bag. The highest percentage of California homeowners (44%) said that they spend less than 15% of their gross monthly income on their mortgage, but more than a quarter (26.5%) spend between 16 and 25%.

And expenses are comparably higher when looking at additional homeownership costs like home repairs and insurance: the vast majority of those surveyed in California (54.4%) spend between 6 and 15% of their gross monthly income, while 25% spend less than 5%. Combined mortgage and maintenance costs over 30% of gross monthly income can begin to spell trouble and lead homeowners to be house-rich and cash-poor.

Mortgage costs for California homeowners

California homeownership costs

High Home Equity — and High Awareness of It

When it comes to home equity, California homeowners are very aware of how much they have in their homes, with 69.1% reporting that they knew the current amount of equity they’d built versus 57% nationally.

However, not as many realize that they can use their home equity as a source of cash. Exactly half of those surveyed in California said that they considered their home to be an asset they could take cash out of as needed, while the other half did not. Interestingly, though, homeowners in the state were the most likely homeowners surveyed to have applied or considered applying for a traditional financing option like a loan, HELOC, refinance, and reverse mortgages, with 36.8% versus 26.9% nationally.

How Calif. homeowners feel about home loans

California homeowners have a combination of short- and long-term financial goals, with the highest cohort (42.6%) looking to grow their retirement savings in the next year and homeowners hoping to pay off credit card debt (41.2%) close behind. Compared to the national average of those surveyed, homeowners in the state had the largest percentage that wanted to diversify their portfolio (17.6% versus 13.3% nationally) and buy a second home (14.7% versus 4.7% nationally).

Despite significant knowledge of their equity, though, a notable portion of California homeowners remain in the dark about the fact that they may be able to leverage it — as potentially their largest asset — to chip away at debt and work toward their financial goals.

To learn more about homeowner finances in California (and elsewhere), read our free report, Is Homeownership Hindering Other Financial Goals? If you own a home in California and mounting costs are holding you back from financial freedom, a Hometap Investment might be able to help. 

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

Hometap Review: Access Your Home Equity

Some people have a home that has gone up in value, but they’re unable to take advantage of it. This might be because of bad credit or too much debt.

Taking out a home equity loan has similar requirements to taking out a traditional loan. So those with less-than-stellar credit may not be able to access the equity in their home. Others, may want to avoid taking out a home equity loan because they don’t want to add another monthly payment obligation to their financial lives.

This article originally appeared on the College Investor. Read the full review here. 

Here are the best CEOs at small and midsize companies, according to employees

Comparably just published its ranking of the most highly rated CEOs, following its award for companies with the best company culture.

“Job seekers place value on these particular rankings because they want to learn from and be inspired by exceptional CEOs who have these attributes,” Jason Nazar, Comparably co-founder and CEO, told Insider in an email.

To find the top CEOs at companies with no more than 500 employees, or small and midsize companies, Comparably used anonymous employee ratings. These ratings using questions regarding the company CEO were collected from around the end of November 2020 to around the end of November 2021.

This article originally appeared on Business Insider. Read the full article here. 

What Is the Difference Between Disposable and Discretionary Income?

woman with tea and dog

Disposable income is defined as the amount of money an individual or household has to spend or save after income taxes have been deducted. It’s often used interchangeably with the term “discretionary income,” but the two are quite different. Disposable income is net income, whereas discretionary income is the money that remains after all necessities (food, housing, etc.) have been addressed.

So, if you’re talking about the money you spend on vacations, electronics, or concert tickets, you’re referring to discretionary income, but the two generally go hand in hand: typically, the more disposable income you have, the more discretionary income you have as a result. From June to July of 2021, disposable personal income in the U.S. increased from $17,850 billion to $18,048 billion.

Payments and Priorities

While it’s certainly nice to have, there are many day-to-day expenses that can take precedence over discretionary income, like mortgage payments, car loans, and credit card debt, and these necessities can eat away at a huge chunk of one’s disposable income.

Hometap’s 2021 Homeowner Survey found that 53.9% of homeowners surveyed have mortgage debt, 45.4% have credit card debt, 33.9% have auto loan debt, and 13.7% have student loan debt.

Homeowner Debts in 2021

More than 32% of these homeowners have named increasing their disposable income as a financial priority in 2021, behind growing their retirement savings (39.6%) and paying off credit card debt (39%).

Homeowner financial goals chart

More Spending, Less Saving

Recent trends in spending look a bit different than those in previous years due to shutdowns and shifting priorities spurred by the COVID-19 pandemic. For example, a MassMutual survey of 1,000 U.S. adults in July of 2021 found that their spending increased an average of $765 per month compared to the summer of 2020, largely on discretionary expenses like dining out and taking trips. Along with this increase in spending came a predictable decrease in savings, with 48% of respondents saying that they saved less than $500 in the past three months.

2021 Homeowner Report

And according to a recent Wallethub study, consumers spent less of their discretionary income in 2020 in favor of paying down credit card debt. However, in the second quarter of 2021, with spending increasing once again, consumers added $47.5 billion in credit card debt — a quarterly record that highlights the ongoing challenge to stay on top of life expenses.

How to Increase Disposable and Discretionary Income

If you’re hoping to increase your disposable income, there are a handful of options. The most obvious ones include working more hours if you have a wage-based position, seeking a job with higher pay, or even adding new streams of revenue through another part-time job or side hustle. If you can get a raise in your current job, this will help you make more money and avoid the stress and strain that comes with working multiple jobs and/or long hours, but be aware that if you enter a higher income bracket, you’ll also be subject to higher income taxes.

Investing is another avenue that can help you earn passive disposable income; this includes stocks, bonds, and real estate. However, if you’re looking to quickly increase your disposable income, this is probably not your best bet. Investing is a long game that may or may not see big returns, so you’ll need to be patient if you go this route.

Cutting costs where possible is also a great strategy to increase discretionary income: if you already have a budget where you keep track of expenses, it should be fairly simple to see where you can reduce spending. Of course, eliminating any outstanding sources of debt, like credit card debt or student loans is often a smart first step in making strides toward more financial freedom and discretionary income as well. If you want to get a better idea of how long it might take you to become debt free at your current rate, our Debt Calculator is a great place to start — just plug in your current balance, interest rate, and monthly payment amount, and we’ll do the rest.

Hometap's cost of debt calculator

If paying off debts sounds like it’s the best fit for your financial plan, your home equity could help you get there.

Take our five-minute quiz to see if a Hometap Investment might be able to help you handle life expenses so you can work on increasing your disposable and discretionary income and enjoy life a bit more.

YOU SHOULD KNOW…

We do our best to make sure that the information in this post is as accurate as possible as of the date it is published, but things change quickly sometimes. Hometap does not endorse or monitor any linked websites. Individual situations differ, so consult your own finance, tax or legal professional to determine what makes sense for you.

Top Small and Midsize Companies with Excellent Company Cultures

Current employees and unemployed workers are taking notice of just what it’s like to work at a company. Employees are quitting jobs they aren’t passionate about or where the benefits aren’t up to par. The new list from Comparably can be a resource for those looking to figure out just where the companies with top company culture are before they move on to their next job.

Comparably, a workplace culture and company review site, just put out the first list of the last quarter of the year, giving companies and employees a sense of top-rated companies before the popular job hunting season at the beginning of a year.

To find the small and midsize companies — companies with no more than 500 employees — with the best company culture, Comparably collected responses from its site over 12 months starting with November 26, 2020.

This article originally appeared on Business Insider. Read the full article here.