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When you’re looking for a new place to live, you want to find the perfect rental property. But in the Bay Area, you often need an advantage because of the high demand for choice rentals. So how do you get the rental you want?

PRE-QUALIFYING FOR YOUR RENTAL

Working with Sound Investments, Inc., we help you understand the qualification criteria landlords look for from their rental prospects. Have this information completed BEFORE you apply. This definitely gives you an advantage over other prospective renters. So what types of information should you have? Click here to see a delineation of these criteria.

COMMON REASONS THAT GET YOU DECLINED

It’s important to also look at the reasons landlords reject prospective renters. Incomplete application forms, previous evictions or active collections from other landlords and a credit score below 590, are some of the most common reasons to be declined. Also, criminal records may be grounds for denial. Review our complete Tenant Qualification Criteria to learn more.

PETS OR NO PETS?

Although there are always landlords who ban any type of pets, many rentals today allow certain types of pets. Want the upper hand when requesting to have a pet in a rental property? Prepare in advance. Watch the video below for information to help you and your furry, feathered or scaly friends find a new home.

WATCH THIS VIDEO

NON-DISCRIMINATION

It is our company’s mission and process to always conduct our business in accordance with the Federal Fair Housing Law, and we welcome persons of all Race, Color, Religion, Gender Identification, Sexual Orientation, Handicap, Familial Status, or National Origin. We are here to help you.

RECENT HOMEOWNER EQUITY GROWTH

Lately, the impact of Homeowner Equity on wealth accumulation has grown. National homeowner equity grew in the fourth quarter of 2020 by $1.5 Trillion or 16.2% year-over-year based on a CoreLogic analysis. Furthermore, the number of mortgaged residential homes with negative equity in the fourth quarter of 2020 decreased by 8% from the third quarter. Compared to the same quarter in 2019, negative equity decreased by 21%.

Equity is defined as the value of the home less the mortgage owed. Negative equity means that the homeowner’s debt is more than the value of the home. Appreciation is the dynamic that moves homeowner’s equity to the positive position.

On a national basis, according to National Association of REALTORS®, annual price growth for the last ten years was 6.4%. In the last five years, it has grown at 7.3% annually. According to the CoreLogic Home Price Index, home prices in December 2020 rose 9.2% from the year before.

Frank Nothaft, Chief Economist for CoreLogic, is quoted as saying, “The amount of home equity for the average homeowner with a mortgage is more than $200,000.”

EQUITY AS A COMPONENT OF NET WORTH

Equity in a home is a significant component of net worth. The median homeowner has 40 times the household wealth of a renter, $254,000 compared to $6,270. According to the 2019 Survey of Consumer Finances by First American, housing wealth was the single biggest contributor to the increase in net worth across all income groups.

Housing wealth represented nearly 75% of total assets of the lowest income households. For homeowners in the mid-range of income, it represented 50-65% of total assets. For the highest income households, it represented 34% of total assets.

RENT VS. OWN COMPARISON

How does renting property affect homeowner equity and wealth? Renters do not benefit from any housing appreciation. They also don’t benefit from the amortization of a mortgage. These two factors are significant contributors to home equity that results in net worth. Run a “Rent vs. Own comparison for yourself and find out how much a down payment can grow in seven years.

One of the silver linings to filing your income tax return is when you find out that you are going to receive a refund. Your tax refund could literally open the door to owning a home. You can use If you happen to be one of these fortunate taxpayers, your next decision is what to do with it.

With the average tax refund near $3,000, it could be the ticket to buying a home sooner rather than later. Regardless of the size of your refund, it can be used toward the down payment or closing costs of the home.

Most people think it takes 10% or more down payment to purchase a home, but actually, it is much less because of several low down payment mortgages . There are VA and USDA mortgages that allow for no down payment for qualified buyers. FHA has a 3.5% down payment program and FNMA and Freddie Mac have 3% down payment mortgages for qualified creditors as well as 5% down programs.

Closing costs for originating new mortgages can easily range from two to three percent of the purchase price but most lenders will allow the seller to pay part or all of them based on the agreement in the sales contract. If you are using a VA or USDA loan, your refund could go toward paying the closing costs.

On a practical matter, if you are due a refund, have it deposited directly into your account. It is necessary to trace the source of the funds. Cashing a refund check and depositing the cash adds an unnecessary aging requirement.

Maybe you have the money saved for your down payment and closing costs but you have other debt that is keeping you from qualifying for a mortgage. The IRS refund could be used to pay down that debt. However, you need solid advice from a trusted mortgage professional before you do that.

While the average tax refund might not cover the down payment on the median price home, it certainly helps. Your refund could make it a simple as 1-2-3 to get into a home.

Get the hard, cold facts for the homes and mortgages in your area and price range.
Get pre-approved with a trusted mortgage professional.
Start looking at homes.

Download the Buyers Guide and contact me at (510) 244-0085 or email me at [email protected] to get started. Or, click here and fill out our contact form and I’ll get back to you as soon as possible.

Mortgage insurance benefits the lender if a borrower with less than a 20% down payment defaults on their loan. Most conventional mortgages greater than 80% and all FHA loans require the borrower to have this coverage.

Private mortgage insurance on conventional loans can range from 0.5% to 2.25% based on the loan-to-value and the credit worthiness of the borrower. A $350,000 mortgage would have a monthly mortgage insurance premium of $146 a month at the low-end of the scale and over $600 on the high-end.

You may request that your mortgage servicer cancel the PMI when the principal balance reaches 80% of the original value at the time the loan was made. You should have received a PMI disclosure form when you signed the mortgage documents stating the date. If you have made additional principal contributions, it will accelerate the date.

Other criteria considered to cancel the PMI on your loan is:

The request must be in writing.
You must be current on your payments with a good payment history.
The lender may ask that you certify there are no junior liens in effect.
If the lender is concerned that the value has declined, an appraisal may be required to show that it is eligible.
Conventional loans are supposed to remove the mortgage insurance when the unpaid balance is 78% of the original purchase price.

Another possibility is that the lender/servicer must end the PMI the month after you reach the midpoint of your loan’s amortization schedule. For a 30-year loan, it would be after the 180th payment was paid. The borrower must be current on the payments for the termination to occur.

With the rapid appreciation that many homes have enjoyed in recent years, homeowners may be able to refinance their home and if the new mortgage amount is less than 80% of the current appraised value, no mortgage insurance would be required.

The owner would incur the cost of refinancing but eliminate the cost of the mortgage insurance. To calculate the savings, subtract the new principal and interest payment from the old principal and interest with PMI. Then, divide the savings into the cost of refinancing to determine the number of months necessary to recapture the cost.

FHA loans have two types of mortgage insurance premium: up-front and monthly. For loans with FHA case numbers assigned on or after June 3 2013 with LTV% greater than 90%, the MIP will be paid for the entire term of the loan. If that is the case, refinancing on a conventional loan is the only way to eliminate the MIP. For loans with original LTV% less than 90%, the MIP is collected for 11 years until the balance is 78% of the original amount.

When buying a home, purchasers may not have enough resources for a large down payment. It is understandable to use the best mortgage available to buy the home. The next goal should be to manage the mortgage to lower the overall costs. In this article, we explored eliminating the private mortgage insurance.

Many homeowners with mortgages pay for both types of insurance but only one of them protects the owner.

Homeowner’s insurance covers damage to your property and losses from fire, burglary, vandalism, and other named natural disasters. When an insured has a loss, they file a claim with the insurance carrier which would be subject to the deductible mentioned in the policy.

If the homeowner has a mortgage on the property, the lender will require that the borrower carry adequate insurance on the property and name the lender as an additional insured. This protects the lender that the home will continue to be sufficient collateral for the loan in case of a loss.

Mortgage insurance is not like homeowner’s insurance in that it is solely for the protection of the lender if the borrower defaults on the loan. Usually, lenders require mortgage insurance on any loan greater than 80% loan-to-value. Occasionally, they may require it on some loans less than 80% based on their underwriting requirements and possibly, from anticipated risk from the borrower.

VA loans do not require mortgage insurance. Conventional lenders must remove the mortgage insurance when the loan amortizes below the stated percentage. FHA loans require mortgage insurance for the life of the loan.

When a property appreciates so that when the owners refinance, the loan-to-value ratio is less than 80%, no mortgage insurance would be required. This can be a strong motivation for some owners to refinance to save the cost of the mortgage insurance.

Mortgage insurance premiums are not regulated by law like homeowner’s insurance is in most states. Most buyers are concerned about the interest rate on their mortgage, but few question the amount of the mortgage insurance premium.

The homeowner can select the carrier for his homeowner insurance, but the lender determines the carrier for the mortgage insurance. When you are interviewing lenders, the type of insurance that will be required and the price of the mortgage insurance should be included in the discussion.

A solid FICO Score helps optimize your ability to obtain a better home loan. And, since the overwhelming majority of us don’t have the ability to purchase a new home with a cash payment, getting a good loan with great terms is essential to our ability to purchase a new property. It also can have a major impact on your finances going forward over many years.

A FICO score is the credit score created by the Fair Isaac Corporation (FICO). Lenders use borrowers’ FICO scores, along with other details on borrowers’ credit reports, to assess credit risk and determine whether to extend credit. Having a strong FICO Score positions you favorably for quicker approval and better lending rates.

There are several ways you can optimize your score. The main “levers” or contributors to your score are:

• Your Payment History
• The Amount of Money You Owe
• The Length of Time of Your Established Credit
• Any New Credit You Have Applied for and/or Received

You can improve your FICO Score, and therefore increase your ability to qualify for favorable home loans by managing these levers. For example, you can:

• Pay all your bills on time.
• It’s important to avoid going to collections because an account that goes to collections stays on your credit report for 7 years. This is true even if you pay it off.
• Keep your credit card balances low. Having higher AVAILABLE credit improves your FICO Score.
• Pay off your debts. Lower levels of outstanding debt helps your score. Also, consolidating your debt so you have fewer accounts may also help.
• The number of credit inquiries you make do affect your score. So, don’t make inquiries you don’t really need.
• Don’t open accounts you don’t need.
• Make sure you show you have managed credit responsibly. Responsibly managed levels of credit will result in you being rated as a better risk than if you had no credit or debts at all.

Watch the short video below:

Check out more helpful hints to make buying a home easier on our Home Buying Tips category page. Click here to learn more.