What Is a Fixed-Rate Mortgage?

Buying a house is one of life’s most exciting landmarks—not to mention one of the biggest purchases. With the average U.S. home price sitting at nearly $260,000, that usually means acquiring a fixed-rate or adjustable-rate mortgage, whose definitions are inherent in the names.

Welcome to the wide (and slightly wacky) world of mortgages. Whether a consumer is considering a fixed or adjustable interest rate is a big factor when shopping for lenders and the home loans each offers.

Read on to learn about the differences among mortgages.

Fixed Rated Mortgages Defined

A fixed-rate mortgage is, as its name suggests, a mortgage loan whose interest rate is fixed across the lifetime of the loan. The rate is stated at the time the documents are signed and does not change at any point throughout the loan term (provided that all payments are made in full and on time).

This is in contrast with an adjustable-rate mortgage, whose interest rate can move up or down according to the market. With an ARM, the interest rate is calculated according to the index and margin—the index is a benchmark interest rate based on market conditions at large, and the margin is a number set by the lender when the loan is applied for.

Long story short: A fixed-rate mortgage offers you a predictable interest rate and monthly payment, whereas an adjustable-rate mortgage can shift over the course of the loan term according to external factors.

(It is, however, important to understand that your total monthly housing bill can still change, even with a fixed-rate mortgage, if, for example, your property taxes or homeowners insurance rates change or if you miss several payments.)

Pros and Cons of Fixed-Rate Mortgages

Fixed-rate mortgages are more common among homebuyers because of the predictability they offer. Still, there are both drawbacks and benefits to pursuing this kind of home loan.

Benefits of Fixed-Rate Mortgages

Because homebuyers who take out fixed-rate mortgages will know their rates at the time they sign on the dotted line, these loans provide long-term predictability and stability—which can help people who need to fit their housing expenses into a tight budget.

Fixed-interest mortgages, and other types of fixed-rate loans, shield borrowers from potentially high interest rates if the market fluctuates in such a way that the index significantly rises.

Drawbacks of Fixed-Rate Mortgages

Although fixed-rate mortgages are more predictable over time, they tend to have higher interest rates than ARMs—at least at first. Sometimes an ARM might have a lower interest rate but only for a relatively brief introductory period, after which the rate will be adjusted.

If the index rate falls in the future, homebuyers might end up paying more in interest than they would have with an ARM.

Because the principal balance is generally chipped away at more slowly with a fixed-interest rate mortgage than with an ARM, it can take longer for borrowers to build equity in their home.

Because lenders risk losing money on fixed-interest mortgages if index interest rates go up, these loans can be harder to qualify for than their adjustable-rate counterparts.

Heads-Up on 5-Year ‘Fixed-Rate’ Mortgages

While fixed-rate mortgages generally exist in opposition to adjustable-rate mortgages, some lenders sell what’s called a fixed-rate mortgage—but which is actually an ARM in costume.

Some so-called fixed-rate mortgages with a term of only five years turn into ARMs afterward, so if a true fixed-rate mortgage is what you want, be sure to double-check with the lender that the rate will remain fixed for the entire lifetime of the loan.

When Is a Fixed-Rate Mortgage the Right Choice?

Fixed-rate mortgages offer long-term predictability, which can be a must for those who need budget stability.

Furthermore, fixed interest rates can be beneficial for those who plan to stay in their home for a longer period of time—say, at least seven to 10 years.

That way, homebuyers are less likely to miss out on building equity, as they might if they sold the house after making higher interest payments for a shorter period of time.

Finally, if homebuyers suspect that interest rates are about to rise, a fixed-interest loan can be a good way to protect themselves from those increasing rates over time.

That said, there are some instances in which an ARM may be a better choice. If a homebuyer is planning to sell in a short amount of time, for example, the low introductory interest rate on an adjustable-interest loan could save them money.

Distinctions in Types of Mortgages

Now that we’ve covered fixed-interest mortgages, let’s take a brief look at the other types of mortgages buyers may encounter when they’re shopping for a home loan.

Nitty-Gritty of ARMs

While we’ve referred to ARMs throughout this post, there are other factors to understand about these types of loans when making your decision.

Some ARMs set a cap to limit how high your interest rate can rise, no matter how high the index may go—though this isn’t always the case. Conversely, some ARMs include an interest rate limit on the low end as well, meaning your rates can never go below a certain amount.

An ARM may be easier to qualify for than a fixed-interest mortgage. One reason could be an applicant’s debt-to-income ratio. Someone with a ratio on the high side may be approved based on the lower initial payments of an ARM.

ARMs may also help buyers take advantage of falling index rates without refinancing, as they would have to if they’d taken out a fixed-interest loan.

Conventional Loans vs. Government-Insured Loans

Another important distinction in mortgage types is whether or not the loan is backed by the government.

Conventional loans—those offered by private banks and lenders—are most common, and do not include any kind of government insurance. Government-insured loans, such as Federal Housing Authority or VA loans, are subsidized by the government and may carry more flexible terms and achievable eligibility requirements.

For example, when pursuing a conventional loan from a private lender, the minimum down payment is typically around 5% (and may be higher).

But with FHA loans, applicants may qualify for a 3.5% down payment even with a credit score of 580. (That said, mortgage insurance may be required in both cases, which can significantly increase overall monthly housing expenses.)

Conforming vs. Non-Conforming Loans

Mortgages can also be considered “conforming” or “nonconforming,” depending on whether or not they meet the guidelines established by the Federal Housing Finance Agency (commonly known as Fannie Mae and Freddie Mac). In 2020, the conforming loan limit for one-unit properties was $510,400, or $765,600 in areas deemed “high cost.”

Of course, homes costlier than these limits exist, and it is possible to take out mortgage to buy one. Those loans are considered “nonconforming” and are also sometimes called “jumbo loans.”

Because the loans are so large, eligibility requirements tend to be more stringent, with borrowers needing a down payment of at least 10% and a solid credit score.

A Lender Worth a Look

When you’re in the market for a home, shopping for the right loan is almost as important as shopping for the house itself.

Although there are many mortgage lenders to choose from, including government-insured options, SoFi® offers competitive rates on conventional, fixed-rate mortgages with terms ranging from 10 to 30 years.

SoFi® offers loans with a down payment as low as 10%, and a mortgage loan officer can guide you through what can be a complicated process. Members can rest assured that questions they have will be answered by professionals who are just a phone call away.

Along with offering initial mortgages, SoFi® also helps homeowners who are looking to refinance in order to save money on interest over time or obtain lower monthly payments.

There are no hidden fees.

Ready to learn your rate? Check out SoFi® fixed-interest home loans today.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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How to Afford a Down Payment on Your First Home

Saving for a down payment when you’re simultaneously trying to pay rent, make car payments, and pay down student loans is no easy task—even if you’re making your dream salary. As housing markets get more and more competitive, the cost of down payments has been slipping up, up, and away.

Case in point, say you live in Los Angeles. If you were to put down 20% on a two-bedroom condo for $600,000, that would mean coming up with $120,000 in cash. Again, no easy feat when you’ve got other bills to pay.

Is 20% still the norm when it comes to down payments? For those of us wondering how to afford a down payment, there may be good news: The minimum down payment on a house can be as little as 3.5% if, for example, you qualify for an FHA loan.

You may even be able to buy a home with no money down, in some rare instances. But typically, this is only an option if you are eligible for home loans through the Veterans Association, or if you qualify for a USDA home loan for low-to-moderate income families purchasing homes in rural areas.

In 2019, The National Association of REALTORS® found that the average down payment on a house is only 12% . On the other hand, there are still benefits to putting down a full 20%. You don’t typically have to pay private mortgage insurance, and a 20% down payment may help get you a manageable mortgage payment.

Smart Ways to Save Up for a Down Payment

If you’re saving for a down payment, whether it’s a 5% or a 20% down payment, here are nine ways to save for your dream home.

1. Snowflake Savings Method

The snowflake method is a debt payoff method that involves you putting any extra cash you have, no matter how small, toward your debt. You can use it as a debt payoff method while you save for a house, simply because it’s typically easier to save for a down payment when you have less debt.

But you can also use the snowflake method as a savings method by throwing as much money as you can toward your down payment savings. Essentially, saving with the snowflake method means putting any extra cash away for a down payment.

Birthday check from your great aunt? It goes into savings. Made $300 from selling old textbooks on eBay? Put it in your down payment fund.

2. Asking for a Raise

Of course, you can’t walk into your boss’s office and demand a raise because home prices are rising in your area. Don’t get us wrong, in an ideal world, we’d all be able to do that, but it’s just not realistic.

Instead, start thinking about when the last time you got a raise was, and whether you’re honestly due for one. Talk to your manager about steps you need to take to qualify for a raise, and then get to work on those action items.

This can be more of a slow play, but it can also have a big payoff if you get a substantial raise. When you get a raise, you may want to avoid scaling up your lifestyle. Instead, you can use some or all of the extra take-home pay for your down payment savings.

3. Starting A Side Hustle

If boosting your income at your current job isn’t an option, you can still increase your take-home pay by taking matters into your own hands. You could start side hustling in the evenings or on weekends. Side hustles aren’t all about glamour—it’s not all travel blogging and doing sponsored Instagram posts.

Sometimes it just means getting a side job at your local coffee shop, or being a dog walker. Who knows, if you’re a good enough dog walker, it might ultimately lead to Instagram fame. The point is, choose a side hustle that works for you, so you can redirect that cash into your “house fund.” (More on that in a moment.)

4. Asking For Contributions To Your “House Fund” At Your Wedding

If you’re getting married, and hoping to buy property afterward, you can consider asking for donations to a “house fund” instead of registering for things to fill your potential house. And there’s no rule that says you can’t register for some nice sheets and a cast iron skillet while also offering a house fund as an option.

Guests at your wedding want to invest in your future—that’s why they’re at your wedding in the first place. Showing them that you’d like to use their gift toward starting a home for your new family can be meaningful to your guests, and to you and your spouse.

5. Lowering the Cost Of Your Student Loans

Making huge student loan payments each month certainly isn’t helping you set aside cash for your future home. But at the same time, aggressively paying down your student loan debt can help you as a homeowner in the long run. However, if the end of your student loan debt tunnel isn’t in close sight, there are ways to reduce the amount you pay toward student loans every month, in order to set aside some funds for a future downpayment.

One popular option – you can refinance your student loans at a potentially lower interest rate. Alternatively, you could lengthen the repayment timeline for your student loans when you refinance, which can help lower the amount you pay every month to free up some cash. One note of caution: if you have federal student loans, refinancing means you’re forfeiting certain benefits and protections offered by the federal government, like loan forgiveness programs and deferment options, so consider this option carefully.

Qualifying for a lower interest rate when you refinance, even if you keep the same terms and don’t extend your repayment timeline, should save you over the life of your loan and, possibly, even a little bit off your monthly payment. If you’re already making every extra dollar count via the Snowflake Method, you could use even a few extra dollars here and there to contribute more to your down payment savings.

6. Paying Off Credit Card Debt

Putting more money toward your credit card debt might seem counterintuitive if you’re trying to save for a house. But think about it this way: Credit card debt is widely regarded as the costliest debt, because interest rates on credit cards are so high compared to other forms of consumer debt.

If you can wipe your credit card debt out, it could free up some cash to help boost your savings in the long run. Perhaps you could focus on paying it down aggressively for several months, then once you’re done, you can redirect the money you were putting toward your credit card debt toward your savings.

One way to speed up your credit card debt payoff is with a loan with a lower interest rate or more attractive, fixed term. Commonly called credit card loans, these are essentially just unsecured personal loans that may offer more agreeable terms than your credit card accounts.

Similar to refinancing a student loan, an unsecured personal loan may give you the option to pay off your existing high-interest debt using a new loan, and then making payments on the new loan over a fixed period of time at, hopefully, a lower interest rate. . By doing so, you may be able to not only get out of your debt faster, but also allocate cash into your savings each month once the debt has been repaid.

7. Using a CD

A certificate of deposit (CD) is an investment with the potential to gain interest. Although not risk free, the benefit of a CD is the interest rate is set when you invest. While you might not earn as much on your money as you would if you adopted an aggressive investment strategy, you’re also not subject to as much risk. Although, factoring in the inflation rate, the cash you invested may not be as valuable when you take it out as when you first invested it, so that’s something to keep in mind as well.

One other drawback to a CD is that you may not be allowed to withdraw your money early. So if your dream house comes along a year before your money can be taken out of a CD, it might be hard to access that cash.

8. Asking Your Family Members for a Loan

Asking family for money is never fun, but there’s also no shame in gathering cash so you can build up a better down payment.

In a competitive housing market, putting down a bigger down payment might be the difference between locking in your dream house, or looking for another three months.

Looking for a place to store your down payment? Check out a cash management account like SoFi Money®. And if you’re in the market for a mortgage, check out a mortgage loan with SoFi, too.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank.
SoFi Student Loan Refinance
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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Tips for Buying in a Hot House Market

Buying a home in a competitive real estate market isn’t for the faint of heart.

It can mean seeing more homes than usual, putting in many offers, and doing more legwork than if the market were softer.

That doesn’t mean, though, finding the perfect home and getting a great deal can’t be done. Here’s what shoppers, first-time buyers or not, need to know to navigate a hot market and win their dream home in a sea of competition.

What Exactly Is a Hot Market?

To put it in its simplest terms, a “hot market” is one when real estate inventory is low and demand is high, meaning many other buyers are looking to purchase a home as well.

It can often mean that homes enter the market and stay only briefly before selling at or above asking price. In general, if homes remain for sale for four to six months, it’s a balanced market of buyers and sellers.

However, if homes are selling faster than that, say in mere days or weeks, it’s typically considered a hot—or seller’s—market. If homes are sitting for longer than that, it’s regarded as a buyer’s market.

A hot market can come and go pretty quickly, fueled by job growth, new construction, and appeal to millennials, according to Realtor.com ’s 2019 Top Markets for Homebuyers report. Destinations that made that list included Lakeland, Florida; Grand Rapids, Michigan; El Paso, Texas; Chattanooga, Tennessee; Phoenix; Bridgeport, Connecticut; Las Vegas; Boise City, Idaho; Miami; and Boston.

A hot market may sound tough to enter, but there are a few ways buyers can stand out from the pack and, with luck, win over a seller.

Check out our local real estate market trends to
discover popular neighborhoods,
market demographics, and more.

Hot House Market Buying Tips

1. Hiring a Non-Tepid Agent

Hot market or not, a great agent can make all the difference in the homebuying process. An agent can help a buyer navigate choppy waters and will be the person buyers can turn to with questions about the market, the homes they are looking at, and much more.

A buyer’s agent is legally bound to help the buyer. A good agent will know what to look for in a home, may be able to recommend new neighborhoods buyers haven’t thought of, and can steer shoppers to good deals and away from bad ones.

2. Listing Musts and Wants

In a hot market, buyers may need to be more flexible about their ideal home and location. Before looking at homes, it might be wise to create a list of “must-haves” vs. “nice to have” items.

If buyers know they can’t live without at least two bedrooms and two bathrooms, they should put that on their “must have” list. If they would like to have an in-home office but don’t need it, they can add that to the “nice to have” list.

It will probably help buyers to go through every item—garage, square footage, yard space, fireplace, schools—and draw their line in the sand. If a home doesn’t have everything on their “must” list, they can move on quickly. But if a property meets all the “musts,” perhaps it can have the “nice to have” items later via renovations.

3. Adding Sweeteners to an Offer

In a hot market, adding a few perks to a home offer can further tempt the seller because every little bit helps when there is the potential for multiple offers.

For example, sellers eager to move on could be enticed to go with buyers who can act quickly. To offer a quick close, buyers can ask their real estate agent to find out the standard closing time for the home and add to their offer that they are willing to close faster.

4. Offering All Cash

This most certainly isn’t an option for everyone, but if a buyer can offer all cash for a home, this may be the thing that tips the odds in their favor of winning a bid.

Sellers typically prefer all-cash offers because they present fewer hurdles than buyers who are going with a lender. Financing issues account for 27% of delays in closing contracts, according to the 2020 Realtors Confidence Index Survey .

“Cash is king,” maybe you’ve heard. With a cash offer, there is no waiting for pre-approvals or approvals.

5. Waiving Contingencies

Looking to stand out further? Buyers could try waiving contingencies where they can.

There are lower risk contingencies people can waive, such as homeowner association contingencies, but there are also higher risk ones for buyers that could convince a seller to choose their offer.

For example, buyers can waive their right to an inspection. This means they will not require a professional inspector to check over the home for potential repairs. By waiving this contingency, though, buyers will be purchasing a home with many unknowns and taking on the full risk of a home that may need hidden repairs.

Nearly 20% of successful offers submitted by Redfin agents in select major U.S. markets waived the inspection contingency in mid-2020, and nearly the same percentage waived the appraisal contingency, Redfin reported.

Before waiving any contingency, it’s a good idea for buyers to have a long talk with their agent to ensure they are still protecting their rights and feel comfortable with any consequences.

6. Giving It a ‘Best and Final’ Offer

In a hot market, odds are buyers won’t win any bids that are under asking price. If the house is right when it comes time for the best and final offer, buyers may want to consider trying to give it their all. That would mean coming in at asking, and sometimes going over.

This is an important consideration when looking at homes in a hot market. Buyers may want to look at homes under their very top budget so they have room to negotiate up to, or over, asking.

Again, like contingencies, buyers should never go into a price range they are uncomfortable with or cannot afford in the long run. (Want to see how much a home could cost over the lifetime of a loan? Check out SoFi’s mortgage calculator to get an idea.)

7. Writing an Epic Letter

There is one more way to try to win a seller over: by pulling on their heartstrings.

When putting in an offer, many real estate agents advise their clients to write a short letter to the seller on why they want to purchase the home.

Remember, selling a home can be emotional, and letting go of all the memories built in the space can be hard on the seller. But if they know that the next person to live in the home will love it as much as they do, they may be more willing to part with the property.

Buyers might want to express what they love about the home and how they plan to continue making happy memories there. As a bonus, buyers can try including a picture of their family with the letter so the seller thinks of them as people rather than just an offer.

8. Not Getting Discouraged

In a hot market, it’s important to stay patient. Going through the process could mean putting in multiple offers on multiple properties and losing out more than once.

According to Realtor.com, the average homebuyer visits 10 potential homes in 10 weeks before finding the right one. Give it time and stay focused on the prize.

Having Your Finances in Order

Before putting in an offer on a home in a hot market, it’s a good idea for buyers to have all their fiscal ducks in a row. That could mean shopping for the lender that’s right for them and/or getting a pre-approval letter to show they are serious buyers.

Different lenders will likely offer different rates, terms, and perks, which buyers can weigh to decide which mortgage lender is right for them.

With SoFi® a buyer could qualify for a home loan with as little as 10% down, get a competitive rate, and seal the deal.

It takes just two minutes to get pre-qualified online.

Shopping for your dream home? Looking into a SoFi® mortgage is a great place to start.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.


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The Top Home Improvements to Increase Your Home’s Value

Thinking about installing a new deck, replacing a front door, or even adding an entire master bedroom to your home to help increase its resale value? Considering that your home is one of the biggest investments you’re likely to ever make, it makes sense that you’d be interested in increasing its value through remodeling.

This is especially true if you have plans to eventually sell your home, whether immediately or further into the future. But as you probably guessed, not all remodeling projects are created equal when it comes to their anticipated return on investment (ROI).

There’s no perfect formula for increasing your home’s value through remodeling. However, you can make an effort to choose financially beneficial projects if your primary concern is getting the best return on your investment.

Using Remodeling Magazine’s Cost vs. Value 2020 report , which compares the average cost of 22 remodeling projects in 101 housing markets, we’ll cover some of the most popular home improvements, based on estimated ROI. And we’ll include a breakdown of the estimated time and costs involved in each project.

For additional information on remodeling project ROI, use this https://www.sofi.com/home-project-value-estimator/ to get an idea of what value each project could add to your home.

Things to Consider Before Starting a Home Improvement Project

Before diving in, it’s important to understand that the decision to remodel requires more consideration than relying on what national averages for remodeling ROI tell us. For one, both costs and preferences for amenities and styles vary by geographic location.

You might also want to consider hiring a general contractor, real estate agent, or an appraiser to come to your house and give an opinion on what remodels could provide the most value for your money spent.

But for most people just figuring out the average ROI isn’t the only consideration. Many folks remodel their homes because they want to upgrade or add a specific feature or amenity for their own immediate needs, with the hope that it will increase a home’s value in the long run.

If this is the case for you, you’ll want to consider the trade-off between what you want and need, how much you are willing to spend, and what the potential ROI could be.

For example, if you really need to add an additional bathroom, it could be worth the cost even though the Cost vs. Value report we’re using to estimate ROI for this article says that you’ll only recoup 54% of your expenses for your project.

Top Home Improvement Projects to Help Increase Your Home Value

Garage Door Replacement

Average Cost: $3,695

Costs Recouped: 94.5%

General Time Commitment: A few days

Removing an old garage door and replacing it with an attractive, sturdy new one could return nearly every dollar of your initial investment, according to the Cost vs. Value report. It’s an effective way to improve your home’s appearance from the outside while increasing your home’s functionality for years to come.

With an average cost of $3,695, which includes the door and the cost of labor, it’s also a relatively affordable renovation. While most folks would likely hire someone to help install the new garage door, it is something that you could potentially do on your own (with the help of a friend).

This would be a project you could do in a weekend. If you hire someone to install the door for you, they will likely come to your home twice: First, to take measurements and give you a quote, and then again to install the door.

Manufactured Stone Veneer

Average Cost: $9,357

Cost Recouped: 95.6%

General Time Commitment: One month

Removing the vinyl siding and adding a stone veneer to the bottom third of your home’s street-facing façade is an effective way to help increase the value of your home, returning 95.6% of the cost of renovation. First impressions matter when it comes to selling a home, and stone veneer is a popular look right now.

Whether you tackle this project yourself or hire a handyperson to help with the installation, this project will take several days to complete. If you hire someone, understand that the construction days might not be successive, so the exterior of your home could be under construction for several weeks to a month.

Minor Kitchen Remodel

Average Cost: $23,452

Cost Recouped: 77.6%

General Time Commitment: Four to eight months

Whereas the Cost vs. Value study reports that major kitchen remodels ($68,490-$135,547) recoup only 58.6%-53.9% of costs ($40,127-$72,993), a smaller remodel appears to do a better job at retaining the value of the dollars put into the project.

A minor remodel includes things like replacing cabinet fronts with new shaker-style wood panels and drawer fronts, replacing the cooktop, oven range, and refrigerator with new models, replacing the countertops and floors, and installing a new sink and faucet. To stay on budget, consider using mid-priced appliances.

It would be very difficult to make it through a kitchen remodel without the help of experts, such as electricians, plumbers, and contractors, so you may have to put some extra effort into coordinating. You’ll also want to be realistic about how long you can devote to the project — and be without a working kitchen. Expect several months at minimum for a kitchen remodel.

Wood Deck Addition

Average Cost: $14,360

Cost Recouped: 72.1%

General Time Commitment: Three to six months

Nothing beats enjoying family and friends on a deck in your backyard on a sunny day. Potential buyers are typically rightfully happy to pay extra for a deck, and a wooden deck installation could recoup 72.1% of what you spend.

Ideally, you’ll also get the chance to enjoy the deck before you sell your home.

Understandably, a deck installation is a pretty large project, by both dollar cost and the cost of effort. You’ll likely want to hire the help of a designer or architect to map out an initial plan, and a contractor to do the building work.

You can attempt to do the project yourself, but be certain that you know how to build a deck that will pass an inspection and adhere to your city’s building codes. In considering whether this is a good investment, remember that building a deck may increase your property taxes and home insurance.

Check out this Home Improvement Cost Calculator to find out an estimate on how much each renovation project could cost.

Entry Door Replacement (steel)

Average Cost: $1,881

Cost Recouped: 68.8%

General Time Commitment: One week

A new, safe front entry door is an attractive quality to prospective homebuyers. Replacing your entry door and jambs with a steel door, “including clear dual-pane half-glass panel, jambs, and aluminum threshold with composite stop,” should get you a good bang for your buck, according to the Cost vs. Value report.

Of all the projects covered by the Cost vs. Value report, this one should take the least amount of time and effort. You can do it yourself (preferably with an extra set of hands) or hire an installation expert. If you go this route, you can have them come to your home to do the initial measurements and return for the installation, or you can measure and order the door yourself, and just get help with installation.

Remodeling Projects With the Lowest Potential ROI

Master Bedroom or Bathroom Addition

Average Cost: $136,739 for midrange, $282,062 for upscale

Cost Recouped: 58.5% for midrange, and 51.6% for upscale

General Time Commitment: Four to eight months

The Cost vs. Value report considers master bathroom and bedroom additions in both midrange and upscale homes, and neither returns much more than half of the initial investment. While not a great return, a home addition project of this size does offer a larger overall change to the value of your home.

For example, a $300,000 home that adds a master suite for $136,739 could potentially return about $80,000 on the investment. A home that sells for $380,000 instead of $300,000 is a 26% increase in the home’s value. If you were to get enough use from the addition to justify the other cost you can’t recoup, it could still be a fine investment.

Again, these figures are purely hypothetical, and the value of expanding your home can depend on a multitude of factors.

Bathroom Addition

Average Cost: $49,598 for midrange, $91,287 for upscale

Cost Recouped: 54% for midrange, 54.7% for upscale

General Time Commitment: Four to eight months

A regular bathroom remodel is not as costly as a master bathroom addition, and it boasts a slightly better potential ROI. Again, a bathroom addition or any large remodeling project should be considered in terms of both ROI and what you want to get out of your home while you are living in it.

And that’s a calculation that only you and your family can make — consider your potential usage and whether it makes the difference between staying and having to relocate to a larger home, which would also come with its own set of costs.

Making it Happen

As you can tell, determining the best home improvements for your personal situation usually requires more consideration than simply looking at current home remodeling ROI trends, though ROI numbers can definitely help inform your decision.

You also have to consider what you need and want out of your current home, and whether both the relative and absolute cost of taking on a big project is worth it.

Your time and personal efforts should be considered as well. In an ideal world, you’d settle on a project that will allow you to maximize the enjoyment you get out of your home while also adding ROI value.

Ready to go on a remodeling project for your home? With SoFi’s Home Improvement Loans, you could make your home improvement dream a reality.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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How to Make an Offer on a House

You looked at a lot of houses. And we mean a lot. Some came close to checking off all your boxes, but none of them made you feel like you were home. Then your real estate agent said, “I know this house wasn’t on your radar, but let’s just go check it out.”

You go, maybe just to humor them, or maybe because your spidey sense starts to tingle. And the second you pull up to the property, you fall in love.

Hello, unicorn!

You’re ready to put in an offer #rightnow, but buying a home isn’t quite as easy as heading to the cash register with an amazing store find.

For both parties, buying and selling real estate can be a stressful, emotional transaction that makes it difficult to find the sweet spot. Here’s a guide for how to put an offer in on a house that can take you from homebuyer to homeowner.

Steps to Making an Offer on a Home

1. Determine Your Offer Price

A home’s listing price is often determined by comparing it to similar homes in the area that are for sale, then adjusting up or down depending on additional amenities or detrimental issues. But as the old saying goes, “A home is generally worth what someone is willing to pay for it.”

You might find a property that’s well priced. But chances are, when making an offer on a house, you’ll want to make some price adjustments if you feel that it’s priced too high or needs a lot of work.

There are lots of things to consider when trying to find the right offer price. While on your own personal home-buying journey, you might want to look into these common factors:

•   A common way to break down a listing amount is by price per square foot, but that often includes only the heated, livable spaces. It can (and should) be higher than average for the area if the home includes extra rooms, such as garages or attics, outbuildings, or land. Sometimes workmanship or permitting can play into these factors.
•   Check the home’s history on the Multiple Listing Service (MLS) . It records every single transaction related to the house, including previous buy and sell dates, price fluctuations, and how long the home has been on the market. It can give you a good idea of where the sellers are coming from.
•   Take a look at the other listings in the area that have recently sold. Is the price per square foot more or less? One key to an accurate read on the local market is to ensure you’re comparing apples to apples when it comes to the number of bedrooms, bathrooms, square footage, garage space and other amenities.

2. Incorporate All the Fees

It can also be important to take a look at other factors not directly related to the price of the property that could affect your overall cash flow. One big consideration is closing costs, which average around 2 to 5% of the total cost of your home depending upon location and other factors and include all the things that go along with the process, such as transfer tax, inspections and real-estate agent commissions.

Some of these costs are traditionally split by the buyer and seller, but if you’re short on cash, you may consider a higher offer price as long as the seller pays your portion of the closing costs.

It’s also important to estimate the amount of money you’ll spend making repairs or changes to the property once you move in.

That, again, costs money, so as long as the repairs are not related to health or safety issues which could have an impact on financing, one tactic could be to lower the offer price (and your monthly mortgage payments) in order to free up cash for future upgrades.

3. Determine Your Earnest Money Deposit (EMD)

Earnest money is a good faith deposit that the buyer places with the offer upfront, usually amounting to around 1% of the offer price, to show that they are serious. It’s held in escrow by the title company, and showing purchase intent is one way to help a buyer get to the top of the seller’s list.

Also referred to as “Earnest Money Deposit,” or EMD customs and laws can vary from state to state, even from county to county so it’s important to understand the laws surrounding EMDs in your state that determine when the money is (and isn’t) refundable.

4. Protect Yourself With Contingencies

The time between a signed offer and closing day is called the due diligence period, and it’s when the buyer will set up a home inspection, appraisal, and possibly a land survey or other inspections for specialty items, such as septic or pools.

But, since the contract is signed prior to any inspections taking place, including contingencies within the offer gives you an out in case you discover something during the process that’s a deal-breaker.

Here are the most common contingencies :

•   Financial: This lays out the specifics of the financing that will be used by the buyer, which must be fully approved by the lender within the contingency period. This protects the buyer in case financing falls through.
•   Appraisal: If the appraisal comes back lower than the agreed-upon price, the seller and buyer may find themselves renegotiating. In this instance, longer contingency periods are better in order to ensure that the home is really the right one for you.
•   Inspection: The buyer usually has 10 days after signing the contract to order an inspection, and the contingency remains in place until it comes back without uncovering any major issues with the property that were previously unknown.
•   Title: This is a legal document that shows the home’s past and present owners, as well as any liens or judgments against the property. If any title disputes are unable to be resolved before closing, you have the option to leave the sale.

In some situations, the list of other potential contingencies can be long. But once they’re all satisfied and lifted during the given timeframes, the option to buy turns into a binding commitment to purchase the home.

5. Submit a Written Offer

In real estate, the best way to make an offer official is to put it in writing. If you’re working with a real estate agent, they will have a form that you can fill out together that lists the offer price, contingencies, and covers all the state rules and regulations.

If you’re flying solo, it’s important to work with a real-estate attorney or title company in order to make sure your offer covers all the necessary legal language and is legally valid.

This concept goes both ways, too. As the buyer, it’s a smart idea to make sure all correspondence, counter-offers, and property disclosures are put in writing by the seller as well.

6. Move Ahead, Move On, or Move Things Around

Once you submit your written offer, one of three things is likely to happen. The seller can either sign the document as-is and enter a binding contract, reject the offer outright, or submit a counter-offer.

In this last case, the seller might counter back with changes that are better suited to them. (If your offer includes a price reduction to accommodate for repairs, for example, the seller might ask for the full asking price and offer a credit back at closing instead.)

This puts the ball back in the buyer’s court for approval, rejection, or another counter-offer, and it keeps going back and forth until both parties agree to the terms and sign the document. From there, the due diligence period begins.

What If You Change Your Mind?

The contingencies are there to give you a way out in the event of some unforeseen issue, but what if you just decide you don’t want the house?

Although the laws vary by state on this topic as well, in most instances a buyer is allowed to withdraw an offer right up until the moment the offer is accepted, However, once the offer document is signed by both parties, it’s considered a binding agreement.

At that point, the sellers may be well within their rights to walk away with your earnest money, it is recommended that you consult with your agent or attorney to understand the full consequences of changing your mind.

Get the Most Out of Your Mortgage

Getting approved for a home loan is one of those things that can add to the stress of buying a home, but it doesn’t have to be. That’s why mortgage loans offer competitive rates, no hidden fees, and as little as 10% down.

They also come with discounts for SoFi members and access to mortgage loan experts who can help along the way, so you can buy with confidence.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.


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