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You Don’t Need 20% Down and Seven Other Myths That Are Getting in the Way of Homeownership

Think you need to come up with 20% for a down payment in order to buy a house? It might surprise you to know that the median down payment for first-time buyers last year was just 7%, per the National Association of Realtors®. And there are plenty of loan programs out there that require far less. The 20% myth is just one of the things that’s keeping homeownership out of reach. We’re digging in to seven others.

You need to be well-established in your forever career
There has been a lot of discussion about how millennials are waiting longer and longer to purchase homes. “As a result of their consequent struggle to save, millennials are delaying major life milestones like getting married and buying a home,” said Business Insider.

Nonetheless, there are still millennials jumping into the market because, even know their name isn’t yet on the door, they’re excited to have a home in their name. Having a stable job, a comfortable salary, and the desire to own a home may just be enough.

Sure, you might not be ready to buy the house of your dreams or move to the neighborhood where you can imagine raising kids and, someday, retiring, but that doesn’t mean you’re completely out of the game. A smaller place closer to work or an attached property can, quite literally, get your foot in the homeownership door and allow you to start earning equity.

You have to be completely out of debt
Recent data shows that nearly half of all undergraduates are delaying homeownership because of student loans. “According to a recent Federal Reserve study, a $1,000 increase in student loan debt lowers the homeownership rate by about 1.5%, equivalent to an average delay of about 2.5 months in attaining homeownership,” said Clever Real Estate. “For the average college debt holder with $37,000 in debt, that ends up being about a 7.7-year delay in their path homeownership.”

Regardless of your debt, whether it’s from student loans or credit cards, it may still be possible to qualify for a mortgage and afford the payments, especially because rents are often comparable to mortgage payments. Mortgage underwriters don’t expect homebuyers to be debt-free; In fact, having no debt might actually work against you. They like to see responsible credit use and management.

You need to have a family
Yes, many would-be homebuyers hold off until parenthood is looming, because they’re not ready to move to the suburbs, get married, and have kids. But, a third of today’s new homeowners are unmarried, according to CITYLAB. “The shift is detailed in a new working paper from Harvard University’s Joint Center for Housing Studies, in which researchers crunched demographic data from HUD and from American Housing Surveys taken every other year between 1997 and 2017. Perhaps the most notable departure from 20 years ago is the marital status of new homeowners. According to the paper, the share of married buyers declined from 61 percent in 1997 to just over half by 2017. Meanwhile, 35 percent of first-time homebuyers in 2017 had never been married.”

You need a 30-year conventional loan
There are tons of different loans that can help you purchase your first home, make payments more affordable and/or give you the flexibility you need to make homebuying affordable. FHA loans are among the most well-known and most popular loans for first-time buyers because they require just 3.5% down and have low credit score requirements. Other loans worth looking into depending on your circumstances include: government VA loans for veterans; USDA loans for properties in rural areas; and loans like Fannie Mae’s HomeStyle Renovation loan, which gives buyers bundled funds to purchase and make improvements to their home.

You need to have great credit
If your score isn’t in the 800s, or even the 700s, it doesn’t mean you’re going to be living that apartment life forever. You might be surprised to see the credit score minimums for some loans. “While there is no official minimum credit score for a home loan approval, the minimum FICO credit score for conventional loan approval tends to be around 620,” said Credit.com.

It has to be your primary home
“Some rich urban millennials are choosing to rent in the city and buy a vacation home instead of a primary residence,” said Business Insider. Meanwhile, some other savvy investors are continuing to rent and plunking down money to purchase homes in tourist-friendly locations so they can take advantage of the AirBNB craze. “According to Priceonomics, hosts on Airbnb are earning more than anyone else in the gig economy and are raking in an average of $924 a month,” said Travel & Leisure. “Airbnb hosts make nearly three times as much as other workers…with some hosts making more than $10,000 per month.”

Position Realty
Office: 480-213-5251

Because It’s Ugly, and 3 Other Big Reasons Your Home Isn’t Selling

Ever wonder why some homes sell and others don’t? There is no magical fairy dust that can turn a loser of a house into a palace. And, in fact, if there were such a think as magical fairy dust, sprinkling it in your home would make a big mess, and that’s a big no-no if you want to sell.

Getting your home sold is not all that hard if you stick to the basics. But if you’ve got some of the problems below, you may just be sitting on that unsellable home for a while.

Problem No. 1: Because your home is ugly
Yes, your home is ugly. If your Realtor didn’t tell you that, let us go ahead and say what he should have. And just so we’re clear, “ugly” can also stand in for:

• Cluttered
• Outdated
• Dirty
• Messy
• Tacky

Very few people – investors looking for a deal aside – can walk into an untidy mess of a house and see the potential. If you’re not willing to clean it up, clean it out, and maybe make a few overdue updates, you may not get it sold. That goes double for over-personalization that is so in your face buyers can’t see past it.

“Everybody’s taste is different, so less is more when it comes to decor at sale time. Loud patterns and bold colors can be big distractions,” said MSN.

Solution:

You need to de-ugly-fy that house but quick. Pretty places around you are selling. If you have similar plans, similar features, similar lots and they’re selling while you’re sitting, it’s not hard to figure out why.

Take a good long look. If you don’t see anything wrong, bring in a few friends for their opinions. But only the ones who might actually tell you the truth.

Problem No. 2. Because your price is unrealistic
This is the No. 1 most common problem with homes that are not selling, says MSN. “If you’re guilty of having “a ‘what the heck are they thinking?’ price tag,” they say, you can expect to sit on the market for a while.

“Price is usually the overriding factor in any home that doesn’t sell. Whatever its problem, it can usually be rectified by adjusting the price.”

Adds U.S. News: “Without question, the No. 1 reason a home doesn’t sell is price. Sellers have an emotional attachment to their homes and tend not to be objective about the true value.”

Solution:

If it is an emotional attachment that’s getting in the way, take the emotion out of the equation and think of it simply as a business transaction. Many times the issue is a seller owes more than the home is worth or simply wants a higher price. But it’s the market that sets the price. And if it’s telling you your price is too high, it’s probably best to listen.

When all else fails, listen to your agent, who should have provided you with comparables that spell out recent sales and market trends. (Also See: It’s The Price That Sells a Home)

Problem No. 3: Because it’s a ‘project’ house
Maybe you’ve made the decision to sell and you just don’t want to put any money into a house that’s no longer going to be yours. But a house that looks like it’s going to take too much work – or too much money – to fix up is a turnoff.

“If a home looks as if it’s going to cost half as much to repair or renovate as it does to purchase, it’s going to take a long time to move,” said MSN. “Today’s buyer is a lot more reluctant to take on a ‘project,’ especially if there are houses around it that don’t need as much work. Ditto for homes that have strong pet or mold smells.”

The Solution:

“Fix it, or prepare to lop a large amount off the price,” said MSN.

Problem No. 4: Because you’re not cooperating
This is also the No. 1 reason houses end up overpriced. Uncooperative sellers also tend to ignore other advice from their agent, about keeping the home tidy (see No. 1), being available when needed, being open to price reductions, being able to make the house available for open houses, and agreeing to terms when there is a contract discussion.

“No offense, but maybe you aren’t showing your house off enough? If you aren’t using a real estate agent and work away from your home, your time might be limited, of course. But you should try to make your house as accessible and available as possible for a Realtor and a potential homebuyer to easily drop by and take a tour (which means having the place clean, too),” said U.S. News. “Having your home be shown only by appointment or only at designated times will severely cut down on the number of showings you get, and if the house isn’t getting shown, it isn’t going to get sold.”

The Solution:

Get in or get out. Or get in to get out. You have to commit yourself to a process that, quite frankly, can be inconvenient and a hassle in order to get your home sold, especially in more competitive markets. Being agreeable and available, however painful, for this finite amount of time, will pay off in the end.

Position Realty
Office: 480-213-5251

How Lenders Set Mortgage Rates

Ever wonder how mortgage lenders set interest rates for their loan programs each and every business day? Wonder why some lenders quote the exact same rate for the exact same program? Maybe why one lender is lower than others? Here’s some insight on how mortgage lenders set their rates each day.

First, note that mortgage lenders set their rates on the same basic set of indices. There are some exceptions, primarily mortgage lenders who issue their own loan programs that intend to keep the loans internally and collect interest on the loan rather than selling the note.

Adjustable rate mortgages and fixed rate mortgages are priced a bit differently. An adjustable rate mortgage, or ARM, is tied to a specific, universally tradeable index, such as the 1-Year Constant Maturity Treasury. Each morning, the “secondary” departments of these mortgage companies look up the current price of an ARM index and then add a margin to it. If, for example, the index came in at 1.75% and the margin was set at 2.00%, the new rate for that specific program would come in at 3.75% and stay there until the next adjustment.

Fixed rate mortgages, at least for most of them, are set in another manner but also use a specific index. Currently, the index used for most fixed rate conforming loans is the Universal Mortgage Backed Security, or UMBS. This is the index lenders use when setting fixed mortgage rates scheduled to be sold to either Fannie Mae or Freddie Mac.

Okay, so if most lenders use the same index when setting fixed rates, why are they sometimes different? That can depend upon different factors. Lenders compete for mortgage business in different ways, but they all want to compete based upon a competitive rate. The rate doesn’t always have to be the lowest rate but should be in the ballpark.

Maybe a customer has a long-lasting banking relationship with a bank and also has quite of bit of cash sitting in different checking and savings accounts. That customer might be offered an extremely competitive rate based upon loyalty of the customer as well as the amount of assets the bank holds. The rate in this instance doesn’t have to be the lowest because the borrower is focused more on trust and relationships than the rock-bottom rate.

On the flip side, for mortgage companies that don’t have such an established relationship, rates take on a more serious note. A mortgage company with less media exposure compared to established banks might need to entice a potential borrower with some very competitive mortgage rates. But again, they set their prices on the same set of indices.

Sometimes a mortgage lender has taken an aggressive approach and priced their loans very low and suddenly their pipeline is full. They’re overbooked and overworked. Their marketing campaign is working but now their loan processing times have slowed to a crawl. It’s not unheard of for a mortgage company to raise rates temporarily to turn off the spigot. It happens. Lenders certainly want to make a profit, otherwise the mortgage market would dry up, but they want to be smart about it.

Position Realty
Office: 480-213-5251

How to Screen a Tenant Who Does Not Have a Social Security Number

Landlords to Take a Different Tact with Tenant Screening Without a Social Security Number

Some states, such as California, prohibit a landlord from inquiring about a tenant’s or prospective tenant’s immigration status or citizenship and requiring proof of legal residency or citizenship as a prerequisite to renting.

A SOCIAL SECURITY NUMBER IS NOT REQUIRED TO RUN A TENANT SCREENING REPORT. With Position Realty we don’t only pull a credit report but we also run a tenant screening report. Call us Today!

The law does not prohibit a landlord from requiring documentation necessary to verify a prospective tenant’s identity or financial qualifications to rent, it may be necessary for a landlord to find other ways to screen a prospect who has no credit.You may want to decide to screen using personal references, and independent income verification.

According to a spokesperson for a national screening company, a social security number is not mandatory for a credit check. You can order a credit report with a name and address. However, when the prospect does not have a social security number, you are highly likely to get a “no hit” or “no report available” response. Before a person is noted by the credit bureaus, a file has to be created. The landlord’s act of requesting a report may be the very thing that initiates this person’s credit history. Still, ordering a tenant credit check may be worth a try to see what information might have been reported earlier.

Other Reports Available

  • A tenant background checks does not require a social security number. A full name and date of birth are crucial for determining if you have the right information.
  • Eviction reports are available without a social security number.

Unfortunately, you cannot receive a PATH report, the address history, which could create a hardship when cross-checking criminal and eviction reports. There is no doubt that a social security number is an important identifier when weeding out duplicate names.

Position Realty
Office: 480-213-5251

Tenant Rights to Smoke Cigarettes or Marijuana in Rental Units

There Is No Absolute Right to Smoke

Tenants don’t have a universal right to smoke in their rentals. There is no law, either state or federal, that provides people with the freedom to smoke when and where they want. Nor are bans on smoking discriminatory: State and federal laws prohibit discrimination on the basis of certain attributes (such as age and national origin), but being a smoker isn’t one of them.

In fact, states, cities, and the federal government can place restrictions on all types of smoking. However, the laws regarding how, what, and where people can smoke vary.

Federal Smoking Laws

The federal government has the power to regulate almost any substance you might consider smoking, including tobacco and controlled substances such as marijuana.

Tobacco. Smoking tobacco is legal under federal law. The federal government doesn’t restrict its use in private rentals but does restrict it in public housing. The U.S. Department of Housing and Urban Development (HUD) requires all public housing agencies (PHAs) to prohibit certain tobacco products:

  • in all indoor areas (including individual units) and
  • all outdoor areas within 25 feet of a building.

HUD makes all PHAs ban the use of cigarettes, cigars, pipes, and water pipes but allows PHAs to decide whether to prohibit e-cigarettes. Each PHA can also decide to be entirely smoke free or create stricter anti-smoking rules than HUD’s. No matter what, if you live in public housing, you won’t be able to smoke in your unit.

Marijuana. Using and possessing marijuana for any purpose (including medical reasons) is illegal under federal law. Because it is a banned substance, using it anywhere—even in the privacy of your rental unit—exposes you to the possibility (even if remote) of being charged with a federal crime.

State and Local Smoking Laws

States and cities have the power to pass laws and ordinances that protect the health and safety of the public. This power includes the ability to restrict or ban smoking in rental properties.

Many states and cities have laws that prohibit or limit smoking in or around multiunit buildings due to the fact that smoke migrates so easily across shared spaces. In some areas, even buildings with as few as two units are considered multiunit for these purposes. Often, if the law doesn’t ban smoking altogether, it prohibits it in a certain percentage of units or in shared spaces such as common areas and parking lots. It’s also possible for a state or city to pass a law banning smoking in all rental properties—even single-family homes.

Most state and local anti-smoking laws clearly define what activities are considered smoking. For instance, a law might prohibit the use of pipes, cigars, and cigarettes. When a law is unclear about the definition of smoking, though, it’s probably safe to assume that it applies to anything that involves lighting or heating and inhaling the substance. Many anti-smoking laws also apply to vaping and using electronic smoking devices such as e-cigarettes.

Marijuana. If marijuana is illegal in your state, state and local anti-smoking laws definitely apply to it. If, on the other hand, marijuana for medical or recreational purposes is legal in your state, you’ll need to look at the relevant statute or ordinance for guidance. Some anti-smoking laws carve out an exception for smoking medical marijuana. Others define “smoking” as involving, or even define “tobacco” itself as, any plant matter that can be smoked. Many others are silent on the matter. To find out what the law is in your area, do an Internet search for “anti-smoking laws” or “smoking ban” where you live, or contact your city manager’s office.

Although landlords who manage properties subject to laws that limit or prohibit smoking should attempt to inform tenants of the rules, it’s the tenant’s responsibility to be aware of and comply with the law.

Landlords Have the Right to Restrict Smoking

Even when there’s no applicable anti-smoking law, landlords can limit or prohibit smoking anywhere on the rental premises, including individual units. Health concerns about secondhand smoke aside, landlords often prohibit smoking in an effort to limit fire hazards on the property, reduce fire insurance premiums, and avoid stains and odors. Landlords might also prohibit smoking to avoid lawsuits—tenants have sued landlords who allow smoking on various legal grounds, such as:

  • nuisance (for example, odors from smoking annoy other tenants) and
  • breach of the duty to keep the rental habitable (for example, units subject to secondhand smoke being uninhabitable because of health concerns).

Landlords typically inform tenants of a no-smoking policy or smoking restrictions through a clause in their lease or rental agreement. Most likely, such a clause applies to smoking of any sort, not just tobacco, but if you’re not sure, ask your landlord—preferably before you sign anything. However, even if your lease or rental agreement doesn’t mention smoking, you should familiarize yourself with any state and local smoking laws, as they might apply regardless of what’s in your lease.

Can a Landlord Evict a Tenant for Smoking?

A clear no-smoking policy prohibits all forms of smoking, including smoking marijuana for medical reasons. A landlord who has included a no-smoking policy in a lease or rental agreement can terminate the tenancy of or evict a tenant who smokes. When the no-smoking policy is part of the rental’s rules and regulations (but not incorporated into the lease or rental agreement), the landlord might only be able to terminate the tenancy or evict if the tenant repeatedly violates the rules.

Landlords might also be able to end a tenancy or evict based on a lease’s or rental agreement’s “illegal activity” clause. Again, under federal law, possessing and using marijuana is a crime. Whether a landlord will be able to evict a tenant for smoking marijuana based solely on the illegal activity clause depends on the circumstances. Many judges won’t evict when the tenant doesn’t have a history of breaking the law and the illegal act is relatively minor (especially if marijuana is legal under state law).

If you plan to smoke in your unit, it’s best to find out the smoking policies before you sign a lease or rental agreement. If a landlord tells you that you’ll be able to smoke in your unit, make sure you get that statement in writing. Otherwise, don’t enter into a lease or rental agreement knowing that you’re going to violate the no-smoking rule. Hold out for a rental that meets your needs—the risk of legal hassles or even eviction just isn’t worth it.

In the last election in Arizona, it was approved for adults 21 and over to possess up to one ounce of marijuana and for adults 21 and over to grow up to six plants per household.

Position Realty
Office: 480-213-5251

Landlords’ Guide to Navigating The Extended CDC Eviction Ban

Congress just passed a COVID-19 stimulus package that extends the federal eviction ban until Jan. 31, 2021, and provides rental assistance. The president signed it into law Dec. 28. The Centers for Disease Control and Prevention (CDC) halted residential evictions in September in an effort to stop the spread of COVID-19. The order was set to expire at the end of the year.

What do landlords need to know about the CDC’s order?

  • Landlords cannot evict “covered persons” from residential properties in any jurisdiction to which this order applies through Jan. 31, 2021.
  • It doesn’t apply in any state, local, territorial or tribal area with a residential eviction ban that provides the same or greater level of public health protection.
  • It does not relieve a tenant’s obligations to pay rent, make housing payments or comply with other obligations the tenant may have under contract.
  • It does not bar landlords from charging or collecting fees, penalties or interest based on the tenant’s failure to make timely payments.
  • Landlords can still file evictions for reasons other than non-payment of rent.
  • Violations of the CDC order can result in criminal penalties.

How can tenants get the order’s protections?

To invoke the protections of the order, tenants must provide an executed copy of a declaration that meets certain requirements. Each adult on the lease must complete a declaration that states under penalty of perjury that:

  • The tenant has used best efforts to obtain all available government assistance for rent or housing.
  • The tenant either:
    1. Expects to earn no more than $99,000 in annual income for 2020 (or $198,000 if filing jointly)
      Was not required to report any income in 2019 to the IRS
      Received an Economic Impact Payment (stimulus check) through the Coronavirus Aid, Relief and Economic Security Act

  • The tenant is unable to pay the full rent due to substantial loss of household income, loss of compensable hours of work or wages, a layoff or extraordinary out-of-pocket medical expenses.
  • Eviction would likely render the tenant homeless or force the tenant to live in close quarters in a new shared living setting because the tenant has no other housing options.
  • The tenant is using best efforts to make timely partial payments that are as close to the full payment as the tenant’s circumstances permit.

If tenants don’t meet these conditions, are they still protected from eviction?

Landlords should note that tenants who do not meet the criteria for protection under the federal ban might still be protected under state or local orders.

Landlords should also stay up to date with other federal tenant protections:

  • The Federal Housing Administration (FHA) extended its ban on evictions from properties secured by FHA-insured single-family mortgages through Feb. 28, 2021.
  • Government-backed mortgage buyers Freddie Mac and Fannie Mae have barred landlords of single-family properties with Freddie Mac- and Fannie Mae-backed mortgages from evicting tenants until at least Jan. 31, 2021.
  • Certain owners of multifamily properties backed by Freddie Mac and Fannie Mae can extend their loan forbearance. If they do so, they cannot evict tenants during the term of the forbearance.

Position Realty
Office: 480-213-5251

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