In this age of content proliferation, we all have heard of the story of the Powerball lottery winner who scored $300 million overnight. Or we may even know
someone on Facebook who went to school with someone who won the supposedly impossible-to-win Powerball lottery. Just as easily, we can come across
a post on our social media feed about the brother-in-law of a colleague who
won a bidding war by paying $50,000 over the asking price for a house, only to
turn around to sell that same property for $100,000 more — a handsome profit.
Unfortunately, the nation’s household debt this past fourth quarter grew at
the fastest pace since fourth-quarter 2007, which was during the tail end of the
housing bubble. This is all fine, so long as there is a safety net. But, not everyone
has one, especially many of the homebuyers who made an offer sight unseen,
or bypassed an inspection or paid cash without an appraisal. In the event they
confront a significant financial hurdle ahead, their exuberance and confidence
may start to dwindle and make way for a different kind of emotion.
Trulia conducted a study that found 44 percent of Americans regret their real
estate decisions. In addition, 71 percent of millennial homeowners regret the
home they bought. Some of them could be the same buyers who made home
offers sight unseen.
When it comes to the biggest financial decision most Americans will ever
make, why are some homebuyers so careless? The truth is that they probably
were not careless. Their carefully deliberated decisions — which 44 percent of
them now regret — were likely affected by circumstances, supply-demand calculations and over-inflated confidence. They likely did lots of research and took
a deep dive into the information buffet. Many likely did not have the trusted
counsel of an industry professional, however, to help them with the analysis and
In the same study, Trulia also learned that one American homeowner in five
( 21 percent) said their real estate purchases are now holding them back from
purchasing something else. In an age where we are accustomed to changing
iPhones every two years, it could be daunting to find yourself stuck in a 30-year
mortgage on a home you regret purchasing.
Joe Melendez is CEO and founder of ValueInsured, a provider of
downpayment protection for modern homebuyers. Reach him at
“For millions of confident
Americans who bought their
homes in this record-breaking
market, however, what is
their safety net?”
<< Homebuyers continued from Page 82
Believe it or not, being stuck might just be one of the best-case scenarios.
While some homeowners remain stuck in a home that they feel holds them back,
others have no choice but to sell at a loss when they are unexpectedly required
to move for a variety of reasons, including job relocations, job losses, a growing
family or a sick family member. For millions of confident Americans who bought
their homes in this record-breaking market, what is their safety net?
For the eternal optimist, American homebuyers’ confidence is always a glass
half full, and the housing market is always going to thrive over time. Still, there
is great value in having a safety net in place to protect against downturns in the
market cycle. That safety net creates space for people to stay optimistic.
Mortgage originators play a valuable role in advising their clients and helping
them to take steps to ensure they have a sense of long-term security. That safety net can encompass something as fundamental as preserving the value of a
homeowner’s downpayment, for example. After all, it can take years to save for
a downpayment for a house. And that equity, when preserved, also can become
the primary source of funds to pay for that next home as the family grows —
and the home after that, and the home after that.
Simply put, the downpayment — and the home equity it helps to build — is
the foundation of American family wealth. So, it makes sense for mortgage originators to discuss options around preserving that equity in the event of a market
downturn. Downpayment-insurance protection does just that by protecting the
full amount of the initial downpayment in the event the homeowner has to sell
at a loss in a souring market.
n n n
Americans’ confidence has always been one of the driving forces of the housing industry and our nation’s progress, as is our ability to envision a future that
does not yet exist. Mortgage originators advise Americans during their biggest
financial decision: buying a home. They are in a position to help homeowners
pursue the American Dream with confidence — and to minimize buyers’ regret.
In doing so, they can help build homeowners’ wealth and drive the longevity
and success of their own businesses in the process. n