The Pros & Cons of Offering Owner Financing (When You Sell Your Home)

Sometimes, home sellers find a buyer eager to purchase but unable to finance the property with traditional mortgage financing. Sellers then have a choice: lose the buyer, or lend the mortgage to the buyer themselves.

If you want to sell a property you own free and clear, with no mortgage, you can theoretically finance a buyer’s full first mortgage. Alternatively, you could offer just a second mortgage, to bridge the gap between what the buyer can borrow from a conventional lender and the cash they can put down.

Should you ever consider offering financing? What’s in it for you? And most importantly, how do you protect yourself against losses?

Before taking the plunge to offer seller financing, make sure you understand all the pros, cons, and options available to you as “the bank” when lending money to a buyer.

Advantages to Offering Seller Financing

Although most sellers never even consider offering financing, a few find themselves forced to contemplate it.

For some sellers, it could be that their home lies in a cool market with little demand. Others own unique properties that appeal only to a specific type of buyer or that conventional mortgage lenders are wary to touch. Or the house may need repairs in order to meet habitability requirements for conventional loans.

Sometimes the buyer may simply be unable to qualify for a conventional loan, but you might know they’re good for the money if you have an existing relationship with them.

There are plenty of perks in it for the seller to offer financing. Consider these pros as you weigh the decision to extend seller financing.

1. Attract & Convert More Buyers

The simplest advantage is the one already outlined: You can settle on your home even when conventional mortgage lenders decline the buyer.

Beyond salvaging a lost deal, sellers can also potentially attract more buyers. “Seller Financing Available” can make an effective marketing bullet in your property listing.

If you want to sell your home in 30 days, offering seller financing can draw in more showings and offers.

Bear in mind that seller financing doesn’t only appeal to buyers with shoddy credit. Many buyers simply prefer the flexibility of negotiating a custom loan with the seller rather than trying to fit into the square peg of a loan program.

2. Earn Ongoing Income

As a lender, you get the benefit of ongoing monthly interest payments, just like a bank.

It’s a source of passive income, rather than a one-time payout. In one fell swoop, you not only sell your home but also invest the proceeds for a return.

Best of all, it’s a return you get to determine yourself.

3. You Set the Interest Rate

It’s your loan, which means you get to call the shots on what you charge. You may decide seller financing is only worth your while at 6% interest, or 8%, or 10%.

Of course, the buyer will likely try to negotiate the interest rate. After all, nearly everything in life is negotiable, and the terms of seller financing are no exception.

4. You Can Charge Upfront Fees

Mortgage lenders earn more than just interest on their loans. They charge a slew of one-time, upfront fees as well.

Those fees start with the origination fee, better known as “points.” One point is equal to 1% of the mortgage loan, so they add up fast. Two points on a $250,000 mortgage comes to $5,000, for example.

But lenders don’t stop at points. They also slap a laundry list of fixed fees on top, often surpassing $1,000 in total. These include fees such as a “processing fee,” “underwriting fee,” “document preparation fee,” “wire transfer fee,” and whatever other fees they can plausibly charge.

When you’re acting as the bank, you can charge these fees too. Be fair and transparent about fees, but keep in mind that you can charge comparable fees to your “competition.”

5. Simple Interest Amortization Front-Loads the Interest

Most loans, from mortgage loans to auto loans and beyond, calculate interest based on something called “simple interest amortization.” There’s nothing simple about it, and it very much favors the lender.

In short, it front-loads the interest on the loan, so the borrower pays most of the interest in the beginning of the loan and most of the principal at the end of the loan.

For example, if you borrow $300,000 at 8% interest, your mortgage payment for a 30-year loan would be $2,201.29. But the breakdown of principal versus interest changes dramatically over those 30 years.

  • Your first monthly payment would divide as $2,000 going toward interest, with only $201.29 going toward paying down your principal balance.
  • At the end of the loan, the final monthly payment divides as $14.58 going toward interest and $2,186.72 going toward principal.

It’s why mortgage lenders are so keen to keep refinancing your loan. They earn most of their money at the beginning of the loan term.

The same benefit applies to you, as you earn a disproportionate amount of interest in the first few years of the loan. You can also structure these lucrative early years to be the only years of the loan.

6. You Can Set a Time Limit

Not many sellers want to hold a mortgage loan for the next 30 years. So they don’t.

Instead, they structure the loan as a balloon mortgage. While the monthly payment is calculated as if the loan is amortized over the full 15 or 30 years, the loan must be paid in full within a certain time limit.

That means the buyer must either sell the property within that time limit or refinance the mortgage to pay off your loan.

Say you sign a $300,000 mortgage, amortized over 30 years but with a three-year balloon. The monthly payment would still be $2,201.29, but the buyer must pay you back the full remaining balance within three years of buying the property from you.

You get to earn interest on your money, and you still get your full payment within three years.

7. No Appraisal

Lenders require a home appraisal to determine the property’s value and condition.

If the property fails to appraise for the contract sales price, the lender either declines the loan or bases the loan on the appraised value rather than the sales price — which usually drives the borrower to either reduce or withdraw their offer.

As the seller offering financing, you don’t need an appraisal. You know the condition of the home, and you want to sell the home for as much as possible, regardless of what an appraiser thinks.

Foregoing the appraisal saves the buyer money and saves everyone time.

8. No Habitability Requirement

When mortgage lenders order an appraisal, the appraiser must declare the house to be either habitable or not.

If the house isn’t habitable, conventional and FHA lenders require the seller to make repairs to put it in habitable condition. Otherwise, they decline the loan, and the buyer must take out a renovation loan (such as an FHA 203k loan) instead.

That makes it difficult to sell fixer-uppers, and it puts downward pressure on the price. But if you want to sell your house as-is, without making any repairs, you can do so by offering to finance it yourself.

For certain buyers, such as handy buyers who plan to gradually make repairs themselves, seller financing can be a perfect solution.

9. Tax Implications

When you sell your primary residence, the IRS offers an exemption for the first $250,000 of capital gains if you’re single, or $500,000 if you’re married.

However, if you earn more than that exemption, or if you sell an investment property, you still have to pay capital gains tax. One way to reduce your capital gains tax is to spread your gains over time through seller financing.

It’s typically considered an installment sale for tax purposes, helping you spread the gains across multiple tax years. Speak with an accountant or other financial advisor about exactly how to structure your loan for the greatest tax benefits.


Drawbacks to Seller Financing

Seller financing comes with plenty of risks. Most of the risks center around the buyer-borrower defaulting, they don’t end there.

Make sure you understand each of these downsides in detail before you agree to and negotiate seller financing. You could potentially be risking hundreds of thousands of dollars in a single transaction.

1. Labor & Headaches to Arrange

Selling a home takes plenty of work on its own. But when you agree to provide the financing as well, you accept a whole new level of labor.

After negotiating the terms of financing on top of the price and other terms of sale, you then need to collect a loan application with all of the buyer’s information and screen their application carefully.

That includes collecting documentation like several years’ tax returns, several months’ pay stubs, bank statements, and more. You need to pull a credit report and pick through the buyer’s credit history with a proverbial fine-toothed comb.

You must also collect the buyer’s new homeowner insurance information, which must include you as the mortgagee.

You need to coordinate with a title company to handle the title search and settlement. They prepare the deed and transfer documents, but they still need direction from you as the lender.

Be sure to familiarize yourself with the home closing process, and remember you need to play two roles as both the seller and the lender.

Then there’s all the legal loan paperwork. Conventional lenders sometimes require hundreds of pages of it, all of which must be prepared and signed. Although you probably won’t go to the same extremes, somebody still needs to prepare it all.

2. Potential Legal Fees

Unless you have experience in the mortgage industry, you probably need to hire an attorney to prepare the legal documents such as the note and promise to pay. This means paying the legal fees.

Granted, you can pass those fees on to the borrower. But that limits what you can charge for your upfront loan fees.

Even hiring the attorney involves some work on your part. Keep this in mind before moving forward.

3. Loan Servicing Labor

Your responsibilities don’t end when the borrower signs on the dotted line.

You need to make sure the borrower pays on time every month, from now until either the balloon deadline or they repay the loan in full. If they fail to pay on time, you need to send late notices, charge them late fees, and track their balance.

You also have to confirm that they pay the property taxes on time and keep the homeowners insurance current. If they fail to do so, you then have to send demand letters and have a system in place to pay these bills on their behalf and charge them for it.

Every year, you also need to send the borrower 1098 tax statements for their mortgage interest paid.

In short, servicing a mortgage is work. It isn’t as simple as cashing a check each month.

4. Foreclosure

If the borrower fails to pay their mortgage, you have only one way to forcibly collect your loan: foreclosure.

The process is longer and more expensive than eviction and requires hiring an attorney. That costs money, and while you can legally add that cost to the borrower’s loan balance, you need to cough up the cash yourself to cover it initially.

And there’s no guarantee you’ll ever be able to collect that money from the defaulting borrower.

Foreclosure is an ugly experience all around, and one that takes months or even years to complete.

5. The Buyer Can Declare Bankruptcy on You

Say the borrower stops paying, you file a foreclosure, and eight months later, you finally get an auction date. Then the morning of the auction, the borrower declares bankruptcy to stop the foreclosure.

The auction is canceled, and the borrower works out a payment plan with the bankruptcy court judge, which they may or may not actually pay.

Should they fail to pay on their bankruptcy payment plan, you have to go through the process all over again, and all the while the borrowers are living in your old home without paying you a cent.

6. Risk of Losses

If the property goes to foreclosure auction, there’s no guarantee anyone will bid enough to cover the borrower’s loan debt.

You may have lent $300,000 and shelled out another $20,000 in legal fees. But the bidding at the foreclosure auction might only reach $220,000, leaving you with a $100,000 shortfall.

Unfortunately, you have nothing but bad options at that point. You can take the $100,000 loss, or you can take ownership of the property yourself.

Choosing the latter means more months of legal proceedings and filing eviction to remove the nonpaying buyer from the property. And if you choose to evict them, you may not like what you find when you remove them.

7. Risk of Property Damage

After the defaulting borrower makes you jump through all the hoops of foreclosing, holding an auction, taking the property back, and filing for eviction, don’t delude yourself that they’ll scrub and clean the property and leave it in sparkling condition for you.

Expect to walk into a disaster. At the very least, they probably haven’t performed any maintenance or upkeep on the property. In my experience, most evicted tenants leave massive amounts of trash behind and leave the property filthy.

In truly terrible scenarios, they intentionally sabotage the property. I’ve seen disgruntled tenants pour concrete down drains, systematically punch holes in every cabinet, and destroy every part of the property they can.

8. Collection Headaches & Risks

In all of the scenarios above where you come out behind, you can pursue the defaulting borrower for a deficiency judgment. But that means filing suit in court, winning it, and then actually collecting the judgment.

Collecting is not easy to do. There’s a reason why collection accounts sell for pennies on the dollar — most never get collected.

You can hire a collection agency to try collecting for you by garnishing the defaulted borrower’s wages or putting a lien against their car. But expect the collection agency to charge you 40% to 50% of all collected funds.

You might get lucky and see some of the judgment or you might never see a penny of it.


Options to Protect Yourself When Offering Seller Financing

Fortunately, you have a handful of options at your disposal to minimize the risks of seller financing.

Consider these steps carefully as you navigate the unfamiliar waters of seller financing, and try to speak with other sellers who have offered it to gain the benefit of their experience.

1. Offer a Second Mortgage Only

Instead of lending the borrower the primary mortgage loan for hundreds of thousands of dollars, another option is simply lending them a portion of the down payment.

Imagine you sell your house for $330,000 to a buyer who has $30,000 to put toward a down payment. You could lend the buyer $300,000 as the primary mortgage, with them putting down 10%.

Or you could let them get a loan for $270,000 from a conventional mortgage lender, and you could lend them another $30,000 to help them bridge the gap between what they have in cash and what the primary lender offers.

This strategy still leaves you with most of the purchase price at settlement and lets you risk less of your own money on a loan. But as a second mortgage holder, you accept second lien position

That means in the event of foreclosure, the first mortgagee gets paid first, and you only receive money after the first mortgage is paid in full.

2. Take Additional Collateral

Another way to protect yourself is to require more collateral from the buyer. That collateral could come in many forms. For example, you could put a lien against their car or another piece of real estate if they own one.

The benefits of this are twofold. First, in the event of default, you can take more than just the house itself to cover your losses. Second, the borrower knows they’ve put more on the line, so it serves as a stronger deterrent for defaults.

3. Screen Borrowers Thoroughly

There’s a reason why mortgage lenders are such sticklers for detail when underwriting loans. In a literal sense, as a lender, you are handing someone hundreds of thousands of dollars and saying, “Pay me back, pretty please.”

Only lend to borrowers with a long history of outstanding credit. If they have shoddy credit — or any red flags in their credit history — let them borrow from someone else. Be just as careful of borrowers with little in the way of credit history.

The only exception you should consider is accepting a cosigner with strong, established credit to reinforce a borrower with bad or no credit. For example, you might find a recent college graduate with minimal credit who wants to buy, and you could accept their parents as cosigners.

You also could require additional collateral from the cosigner, such as a lien against their home.

Also review the borrower’s income carefully, and calculate their debt-to-income ratios. The front-end ratio is the percentage of their monthly income required to cover all housing costs: principal and interest, property taxes, homeowner’s insurance, and any condominium or homeowners association fees.

For reference, conventional mortgage lenders allow a maximum front-end ratio of 28%.

The back-end ratio includes not just housing costs, but also overall debt obligations. That includes student loans, auto loans, credit card payments, and all other mandatory monthly debt payments.

Conventional mortgage loans typically allow 36% at most. Any more than that and the buyer probably can’t afford your home.

4. Charge Fees for Your Trouble

Mortgage lenders charge points and fees. If you’re serving as the lender, you should do the same.

It’s more work for you to put together all the loan paperwork. And you will almost certainly have to pay an attorney to help you, so make sure you pass those costs along to the borrower.

Beyond your own labor and costs, you also need to make sure you’re being compensated for your risk. This loan is an investment for you, so the rewards must justify the risk.

5. Set a Balloon

You don’t want to be holding this mortgage note 30 years from now. Or, for that matter, to force your heirs to sort out this mortgage on your behalf after you shuffle off this mortal coil.

Set a balloon date for the mortgage between three and five years from now. You get to collect mostly interest in the meantime, and then get the rest of your money once the buyer refinances or sells.

Besides, the shorter the loan term, the less opportunity there is for the buyer to face some financial crisis of their own and stop paying you.

6. Be Listed as the Mortgagee on the Insurance

Insurance companies issue a declarations page (or “dec page”) listing the mortgagee. In the event of damage to the property and an insurance claim, the mortgagee gets notified and has some rights and protections against losses.

Review the insurance policy carefully before greenlighting the settlement. Make sure your loan documents include a requirement that the borrower send you updated insurance documents every year and consequences if they fail to do so.

7. Hire a Loan Servicing Company

You may multitalented and an expert in several areas. But servicing mortgage loans probably isn’t one of them.

Consider outsourcing the loan servicing to a company that specializes in it. They send monthly statements, late notices, 1098 forms, and escrow statements (if you escrow for insurance and taxes), and verify that taxes and insurance are current each year. If the borrower defaults, they can hire a foreclosure attorney to handle the legal proceedings.

Examples of loan servicing companies include LoanCare and Note Servicing Center, both of whom accept seller-financing notes.

8. Offer Lease-to-Own Instead

The foreclosure process is significantly longer and more expensive than the eviction process.

In the case of seller financing, you sell the property to the buyer and only hold the mortgage note. But if you sign a lease-to-own agreement, you maintain ownership of the property and the buyer is actually a tenant who simply has a legal right to buy in the future.

They can work on improving their credit over the next year or two, and you can collect rent. When they’re ready, they can buy from you — financed with a conventional mortgage and paying you in full.

If the worst happens and they default, you can evict them and either rent or sell the property to someone else.

9. Explore a Wrap Mortgage

If you have an existing mortgage on the property, you may be able to leave it in place and keep paying it, even after selling the property and offering seller financing.

Wrap mortgages, or wraparound mortgages, are a bit trickier and come with some legal complications. But when executed right, they can be a win-win for both you and the buyer.

Say you have a 30-year mortgage for $250,000 at 3.5% interest. You sell the property for $330,000, and you offer seller financing of $300,000 for 6% interest. The buyer pays you $30,000 as a down payment.

Ordinarily, you would pay off your existing mortgage for $250,000 upon selling it. Most mortgages include a “due-on-sale” clause, requiring the loan to be paid in full upon selling the property.

But in some circumstances and some states, you may be able to avoid triggering the due-on-sale clause and leave the loan in place.

You keep paying your mortgage payment of $1,122.61, even as the borrower pays you $1,798.65 per month. In a couple of years when they refinance, they pay off your previous mortgage in full, plus the additional balance they owe you.

Of course, you still run the risk that the borrower stops paying you. Then you’re saddled with making your monthly mortgage payment on the property, even as you slog through the foreclosure process to try and recover your losses.


Final Word

Offering seller financing comes with risks. But those risks may be worth taking, especially for hard-to-sell properties.

Only you can decide what risk-reward ratio you can live with, and negotiate loan terms to ensure you come out on the right side of the ratio. For unique or other difficult-to-finance properties, seller financing may be the only way to sell for what the property’s worth.

Before you write off the returns as low, remember that your APR will be far higher than the interest rate charged.

Beyond the upfront fees you can charge, you’ll also benefit from simple interest amortization, which front-loads the interest so that nearly all of the monthly payment goes toward interest in the first few years — the only years you need to finance if you structure the loan as a balloon mortgage.

Just be sure to screen all borrowers extremely carefully, and to take as many precautions as you can. If the borrower can’t qualify for a conventional mortgage, consider that a glaring red flag. Seller financing involves risking many thousands of dollars in a single transaction, so take your time and get it right.

Source: moneycrashers.com

Will you get a second stimulus check?

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

By mid-May 2020, the IRS had issued more than $218 billion in stimulus checks related to the CARES Act, and it was still working to ensure all eligible Americans received theirs. But in early August, 2020, almost five months after the CARES Act was passed, many people were wondering if they would receive a second stimulus check. Find out what’s known about stimulus checks and future financial assistance from the federal government in the article below.

Will There Be a Second Stimulus Check?

Judging on the number of bills being passed around Congress, there’s a possibility another stimulus act is coming, and it may come with a second round of stimulus checks. But the details—including how much the check will be worth and who will be eligible—depend on which of the acts ends up making it through.

Bills currently being discussed include:

By mid-May 2020, the IRS had issued more than $218 billion in stimulus checks related to the CARES Act.

The HEALS Act

The HEALS Act comes from the Republicans and is a stimulus package similar to the CARES Act. If this act passes in its current form it will include many of the details described below.

How Much Money Will People Get?

Yes, this act does include stimulus payments to many Americans. The details of how much and who might get what amount are included below.

  • Individuals making less than $75,000 per year will get $1,200.
  • Couples filing jointly and making less than $125,000 per year will get $2,400.
  • People making above those amounts may still get a check. The stimulus is reduced $5 for every $100 of income above those limits until it tapers off completely. So, someone making $80,000 per year would get $950, for example.
  • An additional $500 is also included for every dependent claimed on the person or couple’s tax return, which is different from the CARES Act, which excluded dependents over the age of 16.

Who Would Qualify?

The income and dependent restrictions explained above will determine who would qualify for the stimulus. Qualification would likely be based on tax returns or Social Security benefit statements as was the case with the CARES Act.

What Other Benefits Are Included?

The HEALS Act contains a number of other benefits and stimulus efforts for businesses, schools and workers. Some of the main provisions are highlighted below, but this is not a comprehensive list.

  • Additional unemployment benefits would be provided, but it would be less per week than under the CARES Act.
  • The act would expand the Paycheck Protection Program by another $190 billion and make it easier for businesses to comply with the payroll requirement.
  • A return-to-work bonus may be offered to unemployed workers who find new jobs.
  • Funds to schools to help support reopening efforts would be included.
  • Some protection against lawsuits related to COVID-19 would be provided for businesses.
  • The act also includes $16 billion in coronavirus testing support.

The HEROES Act

This is the stimulus act being proposed by the Democrats. It also includes stimulus payments and other benefits for individuals and businesses.

How Much Money Will People Get?

As with the other bills, the HEROES Act includes a round of stimulus payments for qualifying Americans. The details of the payment amounts being proposed are summarized below.

  • Individuals making less than $75,000 get a $1,200 check under this act.
  • Married people filing jointly making less than $125,000 total annually get a $2,400 check under this act.
  • The stimulus is reduced $5 for every $100 of income above those limits until it tapers off completely.
  • The HEROES Act provides $1,200 per dependent for the first three dependents for an individual or married couple with no age restrictions. So if you claim three children, you would get an additional $3,600 in stimulus funds.

Who Would Qualify?

The qualifications for stimulus checks would be similar to those under the HEALS and CARES Acts as represented above.

What Other Benefits Are Included?

Here are some of the other benefits included in the HEROES Act:

  • This act includes the same enhanced unemployment benefits available under CARES, just extended for a longer period of time.
  • The HEROES Act also includes expanded eligibility for the Paycheck Protection Program and a reduction in the payroll requirement.
  • An expansion and extension of the eviction moratorium and protections for renters is included in the HEROES Act but not the HEALS Act.
  • Funds to support school reopenings are also included in this act.

When Could a Second Stimulus Check Come?

When a second stimulus check might arrive depends heavily on when a bill is passed. Both the House and the Senate must pass the bill, and then it has to be signed by the president. But the hope is that it won’t take as long for the IRS to turn around payments as it did in March and April. Ideally it won’t—the IRS has now done this once already and has probably learned lessons and put a system in place that speeds up the second round.

In fact, Steven Mnuchin, the US Treasury Secretary, said that the IRS could start sending payments within a week of an act being passed. So, if the act is passed anytime in mid-September, for example, the checks could start rolling out before the calendar moved into October.

The Stimulus check process in 4 steps

Will This Be the Last Stimulus Check?

It’s pure speculation at this point to discuss a second, or even third or fourth stimulus check. But it’s not impossible. It likely depends on the state of the economy and job market as the COVID-19 pandemic continues. If future stimulus checks do come, though, they may become increasingly more targeted as time passes. For example, it’s possible stimulus funds might start to go to people who can demonstrate a need.

However, until this second act is passed and lawmakers move on to considering future bills, there’s simply no way to know.

Protecting Your Financial Status During COVID-19 and After

Whether you’re waiting for and relying on a second stimulus check or you’re beginning to see a light at the end of your own personal COVID-19 financial tunnel, it’s definitely important to keep an eye on your personal finances during these trying times. That can include checking your credit report to ensure all the information is accurate and disputing inaccurate items so they don’t drag down your score in the future. It can also include managing your debt, income and investments in the most responsible way. During COVID-19 and beyond, Lexington Law offers information that can help you navigate finances and plan for the future. Check out articles that range from student loans to mortgages, and consider our credit repair services if you need help getting your credit report back to rights.


Reviewed by Kenton Arbon, an Associate Attorney at Lexington Law Firm. Written by Lexington Law.

Kenton Arbon is an Associate Attorney in the Arizona office. Mr. Arbon was born in Bakersfield, California, and grew up in the Northwest. He earned his B.A. in Business Administration, Human Resources Management, while working as an Oregon State Trooper. His interest in the law lead him to relocate to Arizona, attend law school, and graduate from Arizona State College of Law in 2017. Since graduating from law school, Mr. Arbon has worked in multiple compliance domains including anti-money laundering, Medicare Part D, contracts, and debt negotiation. Mr. Arbon is licensed to practice law in Arizona. He is located in the Phoenix office.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

9 Things You Need to Know About Renting with Pets

There’s good news and bad news when it comes to renting with pets. The bad news is: while many landlords will allow you to have fish, frogs and turtles without batting an eye, they are more likely to say no to your furry pets.

The good news is: there are many pet-friendly apartments that offer more generous accommodations, and simply learning a few “tried and true” strategies of your own, will set you on your way to finding your dream rental. 55% of landlords allow pets, so the odds are slightly in your favor.

We’ve put together a list of nine of the most important things you need to know about renting with pets.

Many landlords advertise pet-friendly apartments

You might find the perfect apartment and then stumble upon the landlord’s “no pets policy.” You might even consider moving in with man’s best friend without disclosing his presence to the landlord. Not recommended!

Your life will be much easier if you apply for rented pads where pets are welcomed, and this is usually plainly stated in the property listing. Not disclosing your pet to the landlord where a “no pet policy” exists constitutes a breach of contract and can result in eviction.

You can ask the landlord to reconsider

While searching for a pet friendly apartment is the easiest way to go, some landlords are fairly lenient and are willing to negotiate on their policy. Address the landlord’s concerns about pets with empathy and explain how you plan to prevent common pet-related issues, such as: damage to property, infestations, like fleas and ticks, and behavioral disturbances, including incessant howling. Ultimately, you want to portray your pet in the best light as an another tenant in the unit.

Provide pet references

Most landlords want to see references before they agree to rent an apartment. Landlords want to know in advance that a prospective renter is a good risk, and the same thing goes for his or her pet. Showing up with a reference letter or two from your current landlord or neighbor may help inspire confidence.

A pet resume may help your cause

Ease the mind of your landlord by preparing a pet resume. This document can contain any information that will show your pet in the best possible light. Include the letter of reference from your current or previous landlord as well as proof of spaying or neutering. Information proving that your pet is up to date on their vaccinations and flea/heartworm control. If you have a dog who has been to obedience school, documentation of that may help as well.

Likewise, it may help your cause to provide a copy of your plan on dealing with problems, such as fleas or worms.

Renting with pets often translates into extra fees or deposits

Be aware that a pet deposit and a pet fee are two very different things. A pet deposit will be part of your security deposit and may be returned at the end of your lease.  A pet fee is non-refundable. It may be paid up-front all at once or paid monthly as part of a higher rental rate. The landlord holds these extra fees in reserve to help defray the costs of any damages your pet may cause.

Likewise, these fees can be applied to any extra cleaning your apartment needs after you move out. The good news is pet deposits are typically refundable, so if your pet is a model tenant, you can get your money back after you move out. If a landlord is on the fence about accepting you and your pet as a package deal, offering a pet deposit may tip negotiations in your favor.

Landlords may want to meet your pet

If a landlord is unsure about accepting your pet, arranging a “meet and greet” may help. Taking a pet to meet your prospective landlord allows him or her to see firsthand how well-behaved, clean, and well-groomed your pet is. However, be sure to ask before you take Fido along with you. This is especially useful if you are coming up against breed restrictions in your apartment search.

Your landlord may require you to buy renter’s insurance

Many tenants purchase renter’s insurance to provide financial protection against damage to personal property, burglary and injury. It may also include liability protection that covers you in the event that your pet injures someone. Some landlords may insist that you to purchase renter’s insurance to satisfy guidelines written in the rental contract.

Get everything in writing

If your landlord agrees to renting to you and your pet, make sure you get it in writing. The costs of your pet deposit and any pet fees should also be spelled out in your lease. Make sure you review it carefully and have your landlord initial any changes to the text in the lease at the time of signing. After they are signed by both parties, leases are contracts and cannot be changed without both you and your landlord agreeing. If you get an additional pet or your pet changes, you should make sure your landlord is aware and approves of it. Get these approved changes in writing as well.

Keep your pet well-behaved

Once your landlord has approved your pet and your lease has been signed, make sure the landlord never has any reason to regret it. If you have a dog, make sure Fido doesn’t bark or whine while you’re away and prevent any unwanted chewing. If you have a cat, make sure to prevent destructive scratching or any litter box issues.

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Finding a pet-friendly apartment for your cat or dog may require a bit more work, but with a little effort, you’re sure to find new digs for you and your furry friend. The key is to look for rentals specifically advertised as pet-friendly, and show up prepared to demonstrate that both you and your pet are sure bets. For rentals that aren’t advertised as pet friendly, be prepared to negotiate with landlords.

What’s the top feature you want in an apartment rental? Share your answers with us below or tag @AptGuide on Twitter and use Apartment Guide to find the rental of your dreams.

Photo by Courtney Prather on Unsplash

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Source: apartmentguide.com

Apartment Lease Agreement Lingo 101

New renter reviewing their apartment lease agreement with pen in handTalk about nerve wracking! Applying for an apartment and reading over the lease or rental agreement can definitely bring beads of sweat to your forehead. Lease agreements are contracts that define tenant-landlord relationships and often use confusing “legalese.” Even the simplest apartment leases can use some pretty uncommon terms and phrases. Do you really know what everything means? It may be good to double check your lease know-how before signing on the dotted line. Here are some quick and easy definitions for common lease terms to help you understand what you’re signing.

The basic lingo: What you need to know to get started

Landlord/Owner: Pretty straight forward. This is the person you are renting the apartment from. The owner of the property.

Lease Term: This is the length of time that the leasing agreement is in effect. Usually one year, but some landlords will agree to a short-term lease for six months, three months, or even month-to-month. Read more about different types of lease terms.

Premise: The property being leased in the agreement. In other words, the apartment, condo, duplex, studio, or bedroom you’re looking to call home!

Tenant: That’s you! The future resident of the property being leased.

Lessee: You again! The person signing the lease as the tenant.

Leasor: The person renting the apartment to you. It’s probably the same as the landlord, but it could also be a property manager or someone else in charge of leasing the apartment to renters.

Eviction: Oooo, this is a scary word. This means that your landlord is kicking you out of the apartment or ending your lease before the lease term is up. Your landlord typically has to notify you in writing before evicting you, and often only under certain circumstances such as failure to pay rent. Find out what the eviction laws are in your state.

Default: This is a failure to meet the requirements of the lease. For example, you might be in “default” if you fail to pay rent or if you try to move before the lease term is up.

Liability: Legalese for “problem.” You might have seen it on signs in locker rooms, waiting rooms, and parking lots that say things like, “Management is not liable for lost, stolen, or damaged property.” Translation: If your stuff gets messed up or stolen, it’s not their problem.

Speak fluent legalese: Know that lease agreement like the back of your hand

Possession: The lawful occupation and use of land. As a tenant, paying rent gives you “possession” of the land but not “ownership” of it.

Quiet Enjoyment: Quiet enjoyment means that tenants in possession of a property have the right to privacy. In other words, the landlord can’t come barging in whenever they want to check up on you.

Abatement of Rent: This basically means you don’t have to pay rent under certain conditions that make the premise unlivable, like if the roof caves in or there’s a fire.

Base Rent: This tricky little term means that there are certain conditions under which your landlord could raise the rent within the lease term. Usually, landlords have to wait for the lease to end before raising the rent. Make sure you are clear on when and how your landlord might increase the cost of your rent.

Arrears: Sounds like “a rear.” If you get behind on the rent, this is legal term for all the back rent you owe.

Parties to a Lease: Nope, this isn’t referring to the next seriously awesome bash you’re throwing. This term refers to anyone who agrees to a lease. This includes you, the landlord, the property management, and any roommates also living with you.

Waiver: Agreeing to give up something that you are entitled to according to the law.

Severability: This means that if part of the contract you are signing (in this case the lease) is later found to be illegal or invalid, the rest of the contract is still binding. Essentially, any invalid parts can be cut out without affecting the rest of the contract.

And the hunt begins! Time to apartment search like a pro

Now that you know how to read common terms found in lease agreements, you’re ready to look for your next home on ApartmentSearch.com. Start searching, save your favorite properties, and find your next apartment on ApartmentSearch.com. You could receive up to $200 in rewards. Seriously!

Source: blog.apartmentsearch.com

How to Choose a Property Manager for Your Rental Home

Happy owners, happy tenants — it all starts with the right property manager.

You would never turn your home over to a stranger, so choosing a property manager shouldn’t be any different — finding one you trust is vital. 

“You are entrusting probably one of the biggest investments you’ll make into the hands of someone else, so you want to make sure you feel confident that they’ll handle things the way you want them to,” says Grace Langham, CEO of Nest DC, an award-winning boutique property management firm in Washington, D.C.

Dependability and trustworthiness are two key points all homeowners should keep in mind when assigning their home or condo to the loving care of a third party. But before handing over the keys, consider these six other factors to help you find the right property manager.

Communication

With so many players involved — owner, tenant, and manager — communication is critical. Some owners prefer lots of updates, while others want few. Regardless of your desired amount of communication, the quality of it is crucial.

A property manager’s availability and response rate get to the very heart of their job. In your initial contact, look for clues about their speed, courtesy, and availability.

“Once signed on, a good manager will do what it takes to keep you in the loop, whether you prefer emails, phone calls, or texts,” Langham says.

Residents

When it comes to renters, a property manager’s duty is twofold: Find quality residents, and ensure they are treated fairly.

Happy renters often stay in a residence longer, and are more reasonable when things break. That said, finding good residents requires legwork.

“Bad tenants can be one of the most costly things for an owner,” says Nathan Miller, president and founder of Rentec Direct, a property management software company.

Evictions are expensive, especially when owners are forced to forgo several months’ rent, and damage can be costly. That’s why running a credit check and performing a background screening for criminal and eviction reports are musts, according to Miller.

Fees

Property management fees tend to be fairly standard, Miller says — usually between seven to 15 percent of a month’s rent, but most often around 10 percent. Sometimes, a condo may cost slightly less than a stand-alone house because there’s less home and yard to maintain.

The owner is also on the hook for maintenance costs, and often pays a finder or leasing fee — up to a full month’s rent — when a new resident moves in  Ask if you will still be charged, even if the unit stands empty.

Some property managers also charge a lease renewal fee and sometimes tack on a project management fee when dealing with excessive bureaucracy or paperwork, such as insurance claims. Verify the fee structure and services provided before signing any contract.

House visits and other specs

When it comes to inspections, a property manager should be proactive. That means taking a peek at your property no less than once (and maybe even twice) a year to ensure that everything is in good shape.

Such time-consuming tasks mean it’s important for a property manager to maintain a reasonable caseload. Miller says his ideal property manager oversees between 500 to 1,000 properties. “Once they get above that size and they’re managing many, many thousands of units, you’ll lose the personal touch,” he says.

Finally, you want to find a property manager that specializes in a type of unit: single-family homes, apartment complexes, or high-end houses, for example.

Earning potential

To maximize a home’s earning potential, property managers should know how to deftly market a unit so that it doesn’t stay empty long. This includes everything from posting it on well-known rental websites to taking quality photos that make it pop.

Miller says the property manager should also ensure a home is leased at market rent, and analyze that rate semiannually. You want to know you’re not being shorted income by charging too little.

Technology

Finally, the proper software can indicate that a management firm has what it takes to succeed. “We’re lucky to be a company that’s eight years old,” Langham says. “We started with all this technology that’s really friendly to the millennial generation, which is a lot of the renter base.”

Collecting rent and submitting maintenance requests via an online interface makes interactions between all parties a breeze, meaning owners and tenants can move on with their busy lives. After all, at the end of the day, that’s what having a property manager is all about.

Get more tips for managing your rental property

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Source: zillow.com

Will Pausing Payments Affect My Credit Score?

The views in this article are broad in nature and it’s likely each person’s situation will differ during our current environment. Reminder: SoFi is not a credit repair company.

An unexpected layoff or a job loss could make keeping up with debt payments more challenging. The unemployment rate peaked at 14.8% in April 2020, as the COVID-19 pandemic forced businesses across the country to close their doors. There are an estimated 10 million Americans unemployed as of February 2021.

When your budget is stretched thin, having the option to pause payments on credit cards, car loans, or other debts may be appealing.

Taking a break from financial obligations temporarily can offer some financial breathing room, but it’s important to understand how deferred payments may affect your credit score.

Which Payments Can Be Paused?

With COVID-19 affecting so many Americans financially, the government has introduced measures (which we’ll get to in a moment) to provide some relief from certain debt payments.

In addition, many lenders, credit card issuers, and utility service providers have also taken the initiative to offer programs allowing customers to pause payments.

Depending on each individual situation, U.S. residents may be able to get relief (federal or otherwise) from paying these expenses temporarily:

•  Rent
•  Mortgage
•  Federal student loans
•  Private student loans
•  Credit cards
•  Utility services, including water, electric, and gas
•  Car loans
•  Personal loans

It’s also possible to voluntarily pause or cancel smaller payments or expenses, such as unnecessary subscription services, memberships, and other recurring costs.

The more a person can streamline their monthly budget, the easier it may be to manage expenses.

Federal Programs That Allow Deferred Payments

For those who own or rent homes or have student loan debt, there are three federal relief options that may be available to defer payments.

COVID-19 Mortgage Forbearance

First, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) allows eligible homeowners to pause making mortgage payments for up to 180 days. An additional 180-day extension can be requested if homeowners need to pause payments a little longer.

This relief applies to eligible homeowners who have federally backed mortgages, including:

•  Loans owned by Fannie Mae and Freddie Mac
•  FHA loans
•  VA loans
•  USDA loans

During the 180-day period, eligible homeowners can’t be charged any fees, penalties, or additional interest (on top of what’s already scheduled for payment), and late payments can’t be reported to the credit bureaus.

It’s important to note that this is a mortgage forbearance program, not mortgage forgiveness. That means payments that are missed will need to be made up.

Depending on the lender, loan terms may be modified, the missed payments could be added onto the end of the home loan, or a lump sum payment may be required.

As of March 2021, borrowers with a mortgage backed by HUD/FHA, USDA, or VA have until June 30th to make an initial request for forbearance.

Deferred Payments for Federal Student Loans

The CARES Act also extends a forbearance period automatically for eligible federal student loan borrowers . Previously, qualified students could defer student loan payments through deferment or forbearance due to hardship or other factors, but there are some changes due to the CARES Act.

Now, those with an eligible federal student loan can pause student loan payments through Sept. 30, 2021. The interest rate for federal student loans is set to 0% during this time, and any payments made would be applied only to loan principal.

Deferred payments still count toward required payments for Public Service Loan Forgiveness (PSLF) for those still employed full time, regardless of whether they pay anything toward their loans. Since payments are being suspended automatically, credit score won’t be affected.

Note that once the automatic forbearance ends, payments would become due again. Borrowers would need to reach out to their lenders if they wish to continue forbearance or take a deferment instead.

As of this writing, borrowers who stop paying their student loans altogether after the forbearance period is over could end up in default once payments are 270 days late.

Federal Relief for Renters

If a U.S. resident is renting a home versus owning one, they may be able to temporarily stop making rent payments without risking eviction.

The Centers for Disease Control and Prevention (CDC) issued a temporary moratorium on evictions through March 2021.

Most of the protections for renters under the CARES Act have expired.

Some states have local programs or bans on evictions, which may apply to you.

Deferring Payments Outside of Federal Relief

Federal forbearance programs can help provide a break from certain payments, but they don’t offer blanket coverage to everyone. For those negotiating deferred payments outside of these programs, it’s important to keep one’s credit score in sight.

Pausing Mortgage and Rent Payments

If a mortgage or rental property isn’t covered by the CARES Act, borrowers could still reach out to their lender to discuss what options, if any, may be available for putting payments on hold.

Those options might include:

•  Loan modification
•  Forbearance
•  Mortgage refinancing

Modifying a loan or requesting a forbearance could help protect a credit score if the borrower hasn’t fallen behind on the payments. But any late or missed mortgage payments would still be included on their credit report.

On the renting side, the CARES Act temporarily prohibited adverse credit reporting for rent in cases where the landlord has agreed to forbearance, as long as payments weren’t already delinquent.

But if a tenant and their landlord don’t have an agreement in place and the tenant isn’t covered by federal forbearance, it’s possible that late or missed rent payments could be reported to the credit bureaus.

Deferring Payments on Private Student Loans

Private student loans aren’t covered by the CARES Act. It’s up to individual lenders to decide what options, if any, they’ll offer to allow borrowers to ease payment burdens during this time.

That might include:

•  Deferment
•  Forbearance
•  Student loan refinancing

SoFi offers Unemployment Protection, which provides up to 12 months of forbearance in three-month increments for eligible borrowers who lose their job through no fault of their own.

Similar to a traditional student loan forbearance for federal student loans, private student loan forbearance wouldn’t affect the borrower’s credit score. Not all lenders offer forbearance on private student loans, so a borrower would need to check with their loan servicer.

For those with SoFi private student loans or refinance who are experiencing hardship due to COVID-19, SoFi is offering payment deferral for those who are qualified. Click here to learn more.

If a private student loan lender doesn’t offer forbearance as an option, the borrower may want to look into refinancing their private student loans. SoFi can work with private student loan borrowers to come up with possible options.

Student loan refinancing allows borrowers to pay off an existing loan with a new loan, ideally at a more competitive interest rate. Refinancing could also help to lower monthly payments, making loans more manageable for a specific budget.

However, since the CARES Act has suspended all payments for federal student loans, and made all interest on them 0% through Sept. 30, 2021, it might be a good idea to wait out that period before making any decisions on the refinancing or forbearance.

Putting Utility Payments on Hold

If someone is unable to pay their electric, water, or other utility bills, they may be able to work with their service providers to defer those payments.

While many utility companies suspended disconnects during COVID-19 and were allowing customers to make those payments up at a later date, some utility moratoriums have ended .

Generally, utility service payments (or non-payments) aren’t reported to a person’s credit unless their account is sold to a debt collector after default.

If you are struggling to make utility payments, it might be a good idea to work out a payment plan with the utility company. Additionally, some states have relief programs for qualifying individuals and families who are struggling to make utility payments.

Deferring Credit Card Payments and Other Loans

For those with credit cards, car loans, or personal loans, making sure to stay on top of those payments can be critical to a credit score. Remember, payment history accounts for 35% of a FICO® Score .

Pausing Credit Card Payments

Worried about falling behind on credit card payments? Credit card companies may be able to help.

Many credit card issuers offer hardship programs for customers who are having trouble making payments. Depending on the terms of the card issuer’s program, cardholders may be able to:

•  Reduce the card’s annual percentage rate (APR) temporarily
•  Reduce the minimum monthly payment due
•  Waive late fees and other penalties
•  Pause payments temporarily

Cardholders could call their credit card company to find out what hardship options might be available. When negotiating deferred payments for credit cards or any other type of debt, they might want to be prepared to explain why they can’t pay and the nature of their hardship.

If the cardholder is able to get enrolled in a hardship program, they might want to be sure to understand the terms. If they’re expected to make a payment, for example, even if it’s a nominal one, it’s still important to pay on time to avoid a negative mark on their credit history.

Pausing Loan Payments

If a borrower owes money on a car loan or personal loan, they could reach out to their lenders to see whether a forbearance is possible.

For instance, a car loan lender might offer a skip-a-payment program. Instead of making a regular payment, they might let a borrower skip it and have it added on to the end of their loan term.

Personal loan lenders may offer similar options or allow borrowers to reduce their monthly loan payments temporarily. For example, SoFi offers payment deferral options on personal loans for those who qualify.

Staying on Top of Credit Scores During a Crisis

Credit scores are an important part of financial life, and preserving it during a crisis like the COVID-19 outbreak may be a top priority. Using deferment and forbearance periods to pause payments could help protect a credit score.

However, bear in mind that while a credit score itself may not change, a forbearance can still appear on a credit report and could affect future lending decisions.

On March 3, 2021, the three main credit reporting agencies, Equifax, Experian, and TransUnion, announced that they will continue providing weekly free credit reports through April 2022. This is an extension of the program, which was announced in April 2020, at the start of the COVID-19 pandemic.

In a joint statement , the CEOs of all three companies stated their intentions, saying that, “Access to financial information and records on a more frequent basis helps people plan for their future while also taking care of the present during these challenging times. We strive to make credit more accessible and available to people every day and we hope continuing to make free credit reports available each week is helpful to consumers.”

The credit agencies also added that staying vigilant with credit is of great importance during this time of uncertainty.

The Takeaway

The COVID-19 pandemic has caused unprecedented financial stress for millions of Americans. For those facing uncertainty, there are a number of different relief programs designed to provide temporary relief. Current programs can help borrowers defer their federal student loan payments and some borrowers may be eligible to pause mortgage payments. Those struggling to make payments can consider talking to their lender to see what types of plans are available.

Staying on top of credit is an important part of weathering financial uncertainty. A resource like SoFi Relay could help monitor credit on a daily basis. This tool allows users to track weekly changes to their credit so they can see what’s helping or potentially hurting their score. The tool is complementary and won’t hurt your credit score—no matter how many times they’re checking on their credit.

Access SoFi’s credit score monitoring tool right from the app with SoFi Relay.


Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite .
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Source: sofi.com

Streamlined Mortgage Relief Program Could Mean No Payments for 12 Months

Last updated on April 7th, 2020

A group of mortgage industry heavyweights have sent a letter to the Federal Reserve, HUD, FHFA, CFPB, Treasury Department, and the White House advocating for a uniform, streamlined mortgage relief program in the wake of the coronavirus outbreak.

It could result in waived mortgage payments for up to 12 months for millions of Americans, without the need for much paperwork if any.

However, they did stress that “those who can pay their mortgage, should pay their mortgage.”

How a Uniform Mortgage Relief Program Could Work

  • Same assistance across all government agencies and the GSEs
  • Limited documentation requirements
  • Available to owner-occupants and investors
  • Payment forbearance for 90 days initially
  • Payment relief can be extended up to 12 months if necessary
  • Followed by either a loan modification or the resumption of regular mortgage payments
  • No credit hit, fees, penalties, etc.
  • Nationwide foreclosure and eviction moratorium

The mortgage relief proposal would allow all homeowners with a mortgage to receive an initial forbearance of 90 days, in which monthly payments would not be due.

This would apply to those with conventional loans backed by Fannie Mae or Freddie Mac, along with those who hold a government loan, such as an FHA loan, USDA loan, or VA loan.

Importantly, it would provide universal relief regardless of loan type, without the stringent documentation typically required.

If we learned anything from HAMP and HARP, the last thing the industry needs is paperwork delays and bureaucratic procedures, especially with social distancing and lockdowns in place.

Anyway, the payment forbearance would eliminate the possibility of foreclosure, negative credit reporting, collection calls/letters, and late fees.

In terms of qualifying for relief, borrowers would simply need to make a “statement of hardship,” with no additional validation required.

Loan servicers could also identify customers eligible for COVID-19 assistance and offer deferred payments and other forbearance options.

Even those delinquent prior to the March 13th declaration date (the date the coronavirus emergency was declared) could receive payment forbearance.

As for homeowners with jumbo loans or loans not backed by one of these agencies (portfolio mortgages), they’d likely need to inquire with their bank or loan servicer.

What Happens After the Mortgage Relief Runs Out?

  • Those who are able can simply return to making their mortgage payments
  • Those in need of more relief can receive a permanent loan modification without cost or penalty
  • This might include a partial claim for government home loans
  • And a Flex Mod for those with a conforming home loan

For some, it would be as simple as allowing homeowners to resume their previous mortgage payments, without any additional costs or penalties.

The accrued interest piece is unclear here, but freezing mortgage payments and the interest could certainly help a lot of people out. And could be argued as fair given the current situation is no one’s fault.

Those in greater need could receive an appropriate loan modification, which might vary based on the housing agency involved.

For example, a stand-alone partial claim for FHA loans and USDA loans, which is an interest-free second mortgage that includes the missed payments, due at sale or payoff.

Or a streamlined loan mod (Flex Mod) for Fannie Mae and Freddie Mac loans that brings the loan current with things like an extended term or reduced mortgage rate.

This payment relief would also be delivered without additional cost or penalty.

Tip: How is mortgage forbearance paid back?

Relief for Loan Servicers Needed to Make It All Work

At the same time, loan servicers will need relief to make it all work, especially non-depository mortgage servicers that don’t rely on cash deposits from customers like big banks.

“As background, when a borrower fails to make their monthly mortgage payment, the mortgage servicer must still pay the principal and interest to investors, as well as pay the real estate taxes, homeowners’ insurance, and mortgage insurance on their behalf.”

Loan servicers maintain liquid reserves to cover such advances, but with millions of Americans experiencing expected to see income disruption related to COVID-19, it will likely “strain and possibly overwhelm some servicers’ liquidity reserves, all of which were calculated and set aside for more ordinary times.”

The group estimated that if just 25% of the nation receives forbearance for three months, servicers will need to cover roughly $36 billion in missed payments.

That number would exceed $100 billion if this same number of homeowners were to miss nine monthly mortgage payments.

They propose a backstop liquidity source for these independent mortgage servicers, including two suggestions, one being Ginnie Mae’s Pass-Through Assistance authority, and the other the Federal Reserve’s 13(3) authority.

What About Refinances and Home Purchase Loans?

They also addressed new loan originations, which have faced some uncertainty given the closure of government offices and the limiting of face-to-face interactions.

To combat the appraisal issue, they have recommended waiving appraisals on rate and term refinances.

For other loans, they suggest a hybrid approach that uses external property review by the appraiser combined with a desktop review, along with interior photos from the real estate agent or seller.

For verification of employment, they question the reliability of employment confirmation at the moment, and for rate and term refinances, argue that being current on the loan could suffice.

The idea being to provide payment relief without the typical hoops to jump through, as a lower interest rate theoretically should reduce the probability of mortgage default.

They also note that title searches and recording deeds could be impossible unless local government offices reopen or find alternative solutions.

And are looking for solutions beyond remote closings to solve the face-to-face dilemma.

In other words, there seem to be more questions than answers, so new mortgages face some headwinds as well, even if mortgage rates are low.

Source: thetruthaboutmortgage.com

What to Do If You Have an Eviction on Your Record

The best way to deal with an eviction is to fight it before you’re forced to leave your home.

Not everyone who fights will win, though. And after you’re evicted, the nightmare isn’t over. Having an eviction on your record can create hardships into the future, right as you’re trying to get back on your feet.

Even in these difficult circumstances, there are some steps you can take to mitigate the damage of an eviction.

Is There a Permanent Record of My Eviction?

Yes, there will be a permanent record of your eviction. If your case made it to court, it will show up in civil court records.

More importantly, your eviction is likely to show up when your future landlord orders a rental history report on you from tenant screening services or credit reporting bureaus. It’s likely to include three components:

  • Rental history report
  • Credit report or credit score
  • Criminal background check

The rental history report itself will contain information about where you’ve lived, including any evictions. Usually, information falls off of this report after seven years.

As for your credit report, technically an eviction doesn’t show up there. However, if your landlord has been reporting late rent to the credit bureaus, that will show up. Your landlord could also report any money a judge orders you to pay as part of the civil case associated with your eviction.

Consequences of an Eviction

Attorney Patience Kaysee-Saydee of Kaysee Legal Group says that any landlord can potentially pull your rental history as a part of the application process. If the landlord is a large property management company, they are particularly likely to check.

“But it’s not impossible to rent after you have a negative item on your rental history,” says Kaysee-Saydee.

Some landlords will allow you to explain your eviction situation. If you’re willing to pay a higher security deposit, they may still be willing to let you lease.

That’s not exactly easy, especially if you owe back rent. Many people who have experienced an eviction move in with family for a while in order to right their finances. This gives you time to save up for that initial security deposit.

How to Move Forward with an Eviction on Your Record

There are a few additional things you should be doing during this interim period, too.

Pay Rent

Yes, you’re staying with friends or family to save money. But paying even a nominal amount of rent to your host can help you get your foot in the door with future landlords.

Kaysee-Saydee says it’s important to have a written record of both your informal rental agreement and payments you are making to your friend or family member. This paperwork can be used to demonstrate your responsibility to potential landlords further down the line.

Work on Your Credit

Negative line items will fall off your credit report within seven years. But you don’t necessarily have to wait that long.

If you’re able, attempt to make financial amends with the landlord who evicted you. Once you’ve started to make good on your arrangement, you can write a goodwill letter. This letter requests that any late rents or other items reported by your landlord to the credit bureaus be removed.

You can attempt the same process for your rental history report.

The landlord is not under a legal obligation to grant your request. But it’s worth a shot.

Even if your credit report and rental history cannot be immediately repaired, making things right with your former landlord serves another purpose. If you‘re on good terms, you can ask them for a letter of reference.

This letter of reference may speak to the fact that although you ran into financial difficulties, you either have or are in the process of making things right. The fact that the person who evicted you is vouching for your character can go a long way.

Secure a Job

When you have an eviction on your record, your landlord is particularly likely to want proof that you make enough money to cover your rent.

Kaysee-Saydee says most landlords will want to see at least three months of paystubs. Build in a buffer for this three-month period when you are discussing living arrangements with your interim host.

If you’re having trouble finding a job during the pandemic, be sure to check out our work-from-home job listings and consider a bridge job to keep some money coming in.

Identify a Cosigner

Kaysee-Saydee notes that some landlords may require a cosigner after finding an eviction on your record. Having a cosigner could also help you dodge increased security deposits in some instances.

“The ideal cosigner could be your partner, spouse, parent or other friend or family member,” says Kaysee-Saydee. “They will need to have a clean record and be able to prove their income.”

Your cosigner is taking on financial responsibility should you fall short on rent. It’s a big responsibility, and not everyone you ask will be willing or able to take it on.

Coming Out On the Other Side of an Eviction

Losing your home is a traumatic experience. As you’re going through it, you might feel like you’re walking through a fog even as you’re being asked to make decisions that impact your future housing opportunities.

You can speed up the recovery process by being proactive both before and after the eviction. Lawyer up. Find a friend or family member who can offer you a place to stay for a while. While you’re there, actively take steps to improve your financial situation.

This will undoubtedly still be a difficult time in your life. But taking active steps to improve what you can makes a comeback a whole lot more likely.

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Source: thepennyhoarder.com

How To Remove A Judgment From Your Credit Report

Judgments can have a huge, lasting impact on your credit score, giving you major difficulty in obtaining credit cards or loans.

scales of justice

Perhaps you received a judgment from a lawsuit concerning old debt or even a former eviction. Whatever the reason, they cause long-lasting damage, even years after the incident occurred.

Luckily, it is possible to have them removed before the usual end date. Find out everything you need to know about judgments, how they affect your credit score, and how you can get them removed even before they expire.

What is a judgment?

A civil judgment refers to a ruling made by a court during a lawsuit. In many cases, people have judgments because of unpaid collections or other financial obligations. These judgments show up on your credit report as a public record placed there by the credit bureaus.

Public records can be seen by anyone and are collected by the credit bureaus in order to show future lenders your credit history. It’s basically a decision by the court describing the result of the lawsuit.

How does a judgment affect your credit score?

A judgment is one of the most damaging things to have on your credit report. Unlike collections, which involve a dispute between two private parties and are almost always handled privately, a judgment occurs when there is a court-ordered mandate to repay a debt.

This can occur in situations such as failure to pay child support, alimony, or civil and small claims lawsuits.

If you have a judgment on your credit reports it will lower your credit score. Potential creditors will be hesitant to loan you money because they can’t trust that you’ll repay the debt. Even if you are able to get a new credit card or loan, you can expect some of the highest interest rates on the market.

How long does a judgment stay on your credit report?

A judgment remains on your credit report for seven years from the date it was filed. That means it will negatively affect your credit for seven years. However, the negative impact weighs less and less as time goes on.

If you’re still unhappy about having to wait that long, it is possible to have judgments removed from your credit report.

If you can get the judgment removed, you won’t have to wait up to seven years before being able to get a mortgage, car loan, or any other type of credit again. Keep reading for my story below to see how I got my judgment deleted from my credit reports.

Different Types of Judgments

While all judgments are listed in the Public Records section of your report, there are a few different types to be aware of.

Each one results from how you handle the initial judgment and can impact your credit score in different ways. Read through each description carefully so you know which situation could apply to you.

Unsatisfied Judgments

Unsatisfied judgments do the most damage to your credit. It means that you have not addressed the result of the lawsuit whatsoever and the debt you owe has neither been paid nor settled.

The judgment creditor (who sued you to get the funds) has the right to forcibly collect the money if you refuse to pay or work out a settlement in a timely manner.

Otherwise, the unsatisfied judgment will stay on your credit report for the full seven years. You might receive notice from the creditor at some point, or it may go untouched until it drops off; there’s just no way to know. In some states, you may run the risk of having an unsatisfied judgment re-filed, which we’ll discuss shortly.

Satisfied Judgments

Satisfied judgments are those that have either been paid or settled, rather than remaining unsatisfied. It’s ideal to get your judgment satisfied as soon as possible because it’s another type of debt that accrues interest. The amount you owe can quickly balloon.

So how can you satisfy a judgment? There are a few different ways. First, you can pay the judgment in full. If that’s not possible, you can also negotiate a settlement, similar to any other way you would for any other type of debt.

In extreme circumstances, you can get the judgment discharged by filing for bankruptcy. Finally, you can do nothing and eventually have the judgment collected forcefully, usually involving wage garnishment.

Once one of these options has been completed, your judgment will switch from unsatisfied to satisfied on your public record and credit report.

While a satisfied judgment is better for your credit than an unsatisfied one, it still stays on your report for seven years from the date it was filed. Many people think that once it’s paid, it will be removed from their report; however, that is not the case.

Vacated Judgments

A vacated judgment is essentially one that is dismissed through an appeal. Vacated judgments should no longer appear on your credit reports. If it does, you can have it disputed as incorrect reporting from the credit reporting agencies.

There are several ways to get your judgment vacated. The first way is to file a motion appealing the original ruling. It’s quite common to successfully appeal the verdict if the plaintiff didn’t follow the proper legal procedure in the original lawsuit.

Procedural reasons might include not receiving a summons to court or receiving a judgment without a hearing.

Most motions for appeal must be completed in person. So, if you no longer live in the jurisdiction where the lawsuit took place, you’ll need to travel there to submit your paperwork and potentially attend another hearing.

If you win the appeal, you’re entitled to a court document stating the dismissal of your case. You can send a copy to the credit reporting agencies to expedite the removal process of the vacated judgment from your credit reports.

If it’s not removed, you should file a dispute, either on your own or through a credit repair company. Vacated judgment should never be listed on your credit report, but it’s up to you to ensure that all the information is updated accurately.

Re-filed Judgments

Judgments are typically removed after seven years, but unfortunately, that’s not always the end of the story. Depending on the state in which you live, the judgment may be renewed, which means it can reappear on your credit report for another seven years.

In some states, judgments can be renewed indefinitely, meaning they’ll keep showing up for years and years beyond the original filing date.

Check out the laws in the state where you live to find out whether or not your judgment can be revived. From there you can figure out the best course of action to satisfy your judgment and have it removed for good.

What should I do next time if a debt collector sues me?

If you get sued, you will need to either pay the debt quickly or else appear before a judge in court. The worst thing you can do is ignore the lawsuit. However, that’s precisely what most people do, so usually, the creditor wins by default as the defendant doesn’t show up for court.

If you don’t show up or if you lose your case in court, a civil judgment will be issued against you. Typically you will be penalized by having a tax lien placed upon your house (if you own your house), or having your wages garnished.

In some cases, you may even be forced to forfeit your belongings. These side effects are even more severe than the damage done to your credit score, so you really need to address the lawsuit, get legal help, and show up in court. Otherwise, you have a long, hard road to financial recovery ahead of you.

It never hurts to talk to a legal professional ahead of time to explore your options. At the very least, you need to attend your hearing, so you don’t automatically give up your rights to a fair trial.

How to Remove a Judgment from Your Credit Report

Ready to get a judgment removed from your credit report before seven years? Here are three steps you can start today.

Step 1: Get the Court to Validate the Judgment

Start off by contacting the court directly. This means you need to actually write a validation request letter to the court that issued the civil judgment. The purpose is to have them verify that the judgment — and all the relevant details listed on your credit report — are accurate.

If the court can’t do this, or simply doesn’t bother, as is often the case, you can request to have the listing removed by the credit reporting agencies. Just be sure to keep copies of all your correspondence sent and received so you can back up your case.

Step 2: Confirm Any Information from the Court

In the event that you do receive information back from the court verifying the details of your civil judgment, take the time to make sure that it’s all accurate.

All of this information goes through so many different touchpoints that there’s a good chance some of it was reported inaccurately.

Everything must be error-free. That includes your name, balance, account numbers, dates associated with the account and judgment, and your account and payment statuses.

If you find anything that’s incorrect, you can send a dispute letter to the credit bureaus and request that the judgment entry be updated or removed altogether.

Step 3: Get Professional Help from a Credit Repair Company

If disputing a judgment seems like a long and tedious process, you’re unfortunately right. That’s why many people opt to hire a credit repair company to do the dirty work for them.

There are plenty of reputable companies that have high success rates in getting serious entries removed.

Get Your Judgment Removed Today!

If you’re looking for a reputable credit repair company to help you remove a judgment from your credit report and repair your credit, we HIGHLY recommend Lexington Law.

Call them at (800) 220-0084 for a free credit consultation. They have helped plenty of people in your situation and have paralegals standing by waiting to take your call.

Judgments Removed

judgments removed from TransUnion

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