The down payment has been a big obstacle in recent years for renters looking to buy their first homes. A new mortgage offering aims to ease the burden.
Home Partners of America, a rent to own company, is offering a new mortgage product to tenants that applies some of the appreciation in their home’s value during the time they have lived there toward reducing the down payment. In areas with even modest home-price appreciation, that could reduce the down payment requirement to almost nothing.
To qualify, tenants must have paid their rent on time for two consecutive years and be considered first-time buyers, meaning they haven’t owned a home in the last three years.
The program harkens back to the housing bubble, when millions of Americans received mortgages for homes they couldn’t afford with little or no down payment.
Bill Young, co-founder and chief executive of Home Partners, said a critical distinction with his company’s program is that prospective buyers have been paying their monthly rent on the same home over a long period, demonstrating they can afford it and are committed to staying there.
“Their skin in the game is they’ve proven they can pay their rent on time for 24 months,” Mr. Young said.
Check the latest mortgage rates on Home Partners, which was started about five years ago and has purchased nearly 8,000 homes in more than 50 metropolitan areas, plans to offer the product to current tenants and those who sign a lease over the next two years, the duration of the pilot program. The company won’t make the loans itself, but is working with New Penn Financial, a Pennsylvania-based lender.
The loans will be backed by mortgage company Fannie Mae, which recently has been experimenting with programs designed to ease credit for young buyers who are missing out on a recent surge in home prices because they haven’t saved enough for a down payment. Other pilots include a program under which Lennar Corp. will pay off a significant chunk of the student loan of a borrower who purchases a home from the Miami home builder. In another, buyers can receive up to $50,000 for a down payment if they agree to rent a room in their home on Airbnb.
Rent-to-own companies have a poor reputation in the housing industry for taking nonrefundable deposits from tenants who clearly won’t ever be able to qualify for a mortgage or afford a home. Home Partners doesn’t take a nonrefundable deposit, so if the home’s value declines or they decide not to buy for any other reason renters can simply walk away.
By Laura Kusisto | Wall Street Journal
Every human being makes up each morning thinking that they are the center of their own personal universe. Do you think that sounds cynical? Well let’s play through the following scenario.
You are driving to work listening to the radio and suddenly you hear about an accident on the route you're taking to get to your destination. Is your first thought, “Oh my God, I hope those poor people are alright?”
More likely your reaction is, “Now I’m going to be 30 minutes late for my first meeting!” That's because we all see life through our unique set of lenses in which we're the star of our own show.
In order to build positive strategic relationships, we need to turn human nature on its head. Instead of thinking about what’s in it for me, great relationship managers focus their thoughts and efforts on what’s in it for the people with whom they work.
It’s rare to come across people who don’t have their own personal agenda. Truth be told, we all do. However, great leaders and great relationship managers are willing and able to subjugate their personal agenda for the good of their teams and their stakeholders. Some people refer to this as "servant leadership."
Early in my tenure, I told my teams that they didn’t work for me, but rather that I worked for them. Of course, I got the expected smirks and eye rolls when I uttered those words. But over time, many of them came to realize that I meant it. My goal was their success. My focus was on supporting their efforts.
When we collaborate with our business colleagues and partners, are we thinking about our objectives or theirs?
How many of us have made calls with sales executives who were clearly focused on selling their product or making their quota? How did that feel? And how did it feel on the rare occasions when you encountered a sales executive whose focus was on helping you solve a business problem? How different did that feel?
True servant leaders focus on the needs of their clients, their team, their management and their shareholders. They look at life through the prism of helping others succeed. These leaders realize that all ships rise with the tide.
They also realize that it’s very rare for a player on a last-place team to win the MVP award in their sport. These awards are usually given to the players whose teams have won championships.
Perhaps the greatest athlete of all time (certainly the greatest in my lifetime) is Michael Jordan. One of the most important things people always said about him was that he made everyone around him better.
Are we focused on making others better and helping them succeed? Or are we focused on hitting our personal bonus metrics? Remember, the question we should ask in all personal engagements is not, "What's in it for me?" but "What’s in it for them?"
By Larry Bonfante, CIOInsight.com
Even though they’re becoming more optimistic about their financial situations, more people who rent their homes are foregoing buying a house.
One in five renters now say they have no interest in ever owning a home, up from 13% in January 2016, according to a report released this week by Freddie Mac. And nearly 60% of current renters expect to rent their next property when they make their next move, up from 55% in September.
This shift toward renting versus buying is occurring despite a relative improvement in the financial situations for many renters: 41% of them say they have enough funds to go beyond each payday, as opposed to living paycheck to paycheck or not having enough money for basic necessities, the highest level since October 2015, Freddie Mac found. Harris Poll surveyed more than 4,000 adults on Freddie Mac’s behalf, of which 1,282 were renters, to help produce the report.
And yet a sizable chunk of people are unhappy with renting. Nearly 40% of people Freddie Mac surveyed were dissatisfied to some extent with their rental experience, with young and urban renters — who are likely to be living in smaller, more expensive spaces — more likely to be displeased.
So why are they not buying? People’s attitudes toward affordability, which cut across generations, is a big factor. “Although their finances are better, renters are comfortable with continuing to rent with many believing renting will be more affordable or stay the same for them in the next 12 months,” Freddie Mac noted.
In particular, rising home values have hurt many would-be homebuyers. A recent report from real-estate website Zillow found that more than two-thirds of renters cite the down payment as the biggest obstacle in home a home. Indeed, it can take more than a typical year’s salary in some markets to be able to afford one.
At the same time, rental markets have stabilized recently. “Rents have been relatively flat over the last year and we don’t expect them to rise much in the next year in most areas,” Svenja Gudell, chief economist at Zillow, said. “That urgency that once existed is not there anymore.”
Affordability is just one factor though — the availability of homes also plays a role. “Even if you were to go out and try to buy a home, inventory is so constrained you’ll have trouble to find one,” Gudell said. “If there’s not much advantage to owning a home versus renting, people will feel comfortable in the decision to continue to rent.”
If you have a moment, we would like to give you a quick breakdown on the importance of changing the air filter in your home’s HVAC system, as well as tell you how often your filter needs to be changed.
But question is: Why is Changing Your Air Filter so Important?
There are a number of different types of filters available on the market, each offering different benefits, but the fact remains that all types of filters need to checked, maintained and changed in order to function properly and safely.
To that end, why is changing your air filter so important?
First of all, a clogged air filter can cause extensive damage to your system. Thus, if you check your air filter’s condition regularly, you ensure the longevity of your system — saving yourself thousands in possible repair and replacement costs. Dirt and neglect are one of the leading causes of heating and cooling systems failing, yet such failure is completely avoidable.
Secondly, changing the air filter in your system ensures cleaner, fresher, healthier air. This is better for everyone in your home, particularly children and the elderly, and most especially for those suffering from allergies and/or asthma. In referring to the latter, a clean air filter means you are not constantly circulating dust, dust mites, pollen and other small particles in the air. Instead, your system will be able to purify the air, leaving it clean and healthy.
Thirdly, aside from protecting the HVAC system from unnecessary damage, cleaning out or changing a clogged air filter will also save you a significant amount on operating costs. In simplest terms, a dirty air filter uses much more energy than a new, clean air filter, which means a much higher electricity bill for you. You can, by keeping your air filter clean and in good condition, save up to 15% on utility costs.
To the above point on energy wastage, failing to clean and replace your air filter on a regular basis is failing the environment. An air filter that is clogged means a harder working HVAC system, thus it also means a lot of carbon monoxide and other greenhouse gasses by extension being released. Going green and running your home in an eco-friendly manner need not necessarily mean bending over backwards and giving up all forms of comfort. Something as simple as changing an air filter regularly can go a long way in making a difference.
Thus, to conclude, changing your HVAC system’s air filter is important in every which way. Economically, health-wise and environmentally it simply makes sense!
To that point, how often should your air filter be changed? It differs depending on the different types of filters, but anywhere between 1 and 3 months is advised, with the former being preferable and the latter being the absolute maximum you should allow between changes.
If you’re in the process of buying a home, or will be in the near future, one of the costs you’re likely considering is a home warranty. But, as this is an optional expense, you have to decide if it will really be worth it to you.
“Home warranties [typically] cost between $300 and $700 a year and have a service call fee that ranges from $60 to $100, depending on the company,” Whitney Bennett of Landmark Home Warranty in Salt Lake City said.
What is a home warranty?
Before you decide if you want one, you should understand what a home warranty really is and what it can do for you. “A home warranty will repair or replace…covered systems and appliances when they break down from normal wear and tear,” Bennett said. “Most often, home warranties cover the mechanical components of these appliances.” Bennett pointed out that these warranties are often part of a real estate transaction, but can be purchased by a homeowner at any time.
Is it worth it? that depends…
For a “buyer to renew or for a homeowner to purchase their own warranty is a total waste of money,” Adriana Mollica, a Realtor for Teles Properties in Beverly Hills, California, said. However, she added that it depends on the situation, as it may be “a great idea for a seller to purchase [a warranty] for a buyer when selling their property” as an added feature to sell their home. On the flip side, Bennett said these warranties can be great — and save you money — when they’re used correctly. “As long as you hold up your end of the home warranty contract by making sure your systems and appliances are clean and taken care of, when they fail from normal wear and tear, a home warranty will cover the repairs and replacements,” Bennett said. “Even if a home warranty doesn’t cover all parts of the system or appliance that needs to be replaced, the out-of-pocket costs that a homeowner pays versus what they would pay out of pocket without a home warranty translates to huge cost savings.”
Bennett did agree with Mollica, however, that for those who purchase a newly built home with new appliances, “getting a home warranty probably doesn’t make much sense.” She said that a “home warranty makes the most sense when you have moved into a new home and the systems and appliances have been used previously” or when you’ve had your own items for two or more years. “Before you buy a home warranty…make sure to read through the contract,” Bennett advised. “Home warranties will explain in detail which parts of their systems and appliances they cover and which they don’t within their contract. In order to get value out of a home warranty it’s vital to know and understand what the plan covers and doesn’t cover.”
Deciding what you want the warranty for
According to Deb Tomaro, a broker associate for Re/Max Acclaimed Properties in Bloomington, Indiana, it’s all about perspective. If you’re looking to get a warranty that will land you brand new items if yours break, you may be severely disappointed. But if you’re using it as a safety net, you may find comfort in your warranty.
“I look at home warranties as a way to buy insurance [so] that you have time to rebuild your emergency fund after purchasing your home,” Tomaro said. “It can give you peace of mind that you will have heat all winter and hot showers for a year. But it is rare that a homeowner hits the jackpot and gets a new furnace from it, although I’ve seen that. If you do get a new furnace, it is going to be similar to the old one in terms of efficiency, so that won’t save you money either.”
Paying for home repairs
Unexpected home repairs can certainly do big damage to your bank account — which is one of the reasons it’s important to regularly feed that emergency fund. If you’re faced with a pressing expense, a balance-transfer credit card, low-interest personal loan or home equity line of credit could help you cover costs (and possibly spare you some interest.)
By Brooke Niemeyer, Marketwatch