How to Prepare Your Home for an Appraisal

What you need to know about the process, from a veteran certified appraiser.

Getting your home appraised can often be a nerve-wracking experience. Your home and your handy work will be on display to be judged and valued so that you can move forward with selling your home.

But it doesn’t have to be a stressful experience. With the right tools, tricks and savvy, the appraisal process can not only go smoothly, it can also help you make a giant financial leap toward a future in a new home.

Do your homework

“Just like anything else — for example, if you’re going to select a doctor, dentist, or lawyer — you do your homework to find out the appraiser’s market knowledge of the area,” says Orange County (FL) Property Appraiser Rick Singh.

Ideally, your appraiser will be a local who knows the area well and who has been around long enough to see changes in the market. It’s also crucial to hire an appraiser who is state certified.

Check your maintenance

Whether it’s a loose shingle, chipped paint or dirty carpet, be sure to take care of it before the appraiser comes. Anything obvious that needs work could potentially eat away at your home’s value.

Also, keep a list of maintenance work that has been done on the home. Have a running list of what you have fixed and upgraded in your home as well as the amount of money you have spent.

Maximize curb appeal

When you’re getting your home appraised, remember that your house should look like the nicest one on the block.

“Landscaping plays so much into making a good first impression,” Singh says. “And remember that a first impression is a lasting impression. Make sure [your yard] is tidy and up-to-date. Trim or replace dead plants, and make sure it’s nice and green.”

Ensure appliances work

Do you have a dishwasher that only works when you give it a little kick, or a refrigerator that doesn’t keep your food as cool as it used to? These malfunctioning big-ticket items in a home could be a huge disadvantage to your home’s appraisal value.

Show pride in ownership

Although your home isn’t necessarily valued on the interior decor, it doesn’t hurt to show that it’s well cared for.

This doesn’t necessarily mean you have to trade in your T.J.Maxx finds for a pricey interior makeover, but make sure your home is neat, tidy, and exhibits that you generally have an interest in keeping your home looking its best.

Know your neighborhood

Before you get your home appraised, be sure you know what comparable nearby homes are going for, because that can be a huge predictor of your home’s value.

Also, inform your appraiser of any extraordinary circumstances, like if someone in your neighborhood had to sell their home quickly. Sellers may have to lower the price of their home to get out in a timely fashion in the event of death or job relocation in another state.

It’s extremely important that both you and your appraiser are knowledgeable about your neighborhood to get as accurate a value as possible.

Understand that cost does not equal value

When you make improvements to your home, you hope that everything you’re upgrading will increase your property value — but this isn’t always the case.

“Sellers may think, ‘I spent $60,000 on my home and $20,000 on the pool, so the home should be worth $80,000 more.’ However, the market may say it’s only worth $5,000 more. Find out what the economic investment is, because the rate of return is so important,” Singh says.

If you’re not satisfied, reach out

If you’re dissatisfied with the appraisal value, Singh advises contacting the appraiser about your concerns. Make sure you have data to back up your claims when you call to voice your opinion.

“You can always get a second appraisal,” Singh notes. “If you really think something was done incorrectly, voice your concern to the appraisal board as a last resort. All appraisers are licensed, and they don’t want to jeopardize their license. However, I often recommend going back to the appraiser and showing [him or her] the facts.”

Related:

Source: zillow.com

Why You Should Live in Your Home Until It Sells

Last updated on October 23rd, 2019

A new study from Redfin proved what we probably all assumed was the case; vacant homes sell for less than those filled with stuff.

There’s something slightly unappetizing about a vacant home, whether it’s the emptiness of it all, or the desperation knowing someone is losing money each month it sits on the market.

Homes are also simply more exposed when there aren’t area rugs, couches, tables, and beds covering up minor (or major) defects.

Vacant Homes Sell for Less and Take Longer to Sell

  • Empty homes sold for 3.6% less than occupied ones in 2018
  • That’s about $11,000 less on average
  • They also took an extra six days to sell
  • So you may want to stick around (or at least make it appear that way)

As suspected, vacant homes often sit on the market longer than their occupied counterparts and fetch lower prices.

On average, such properties spent an additional six days on the market and went for $11,306 less when they finally did sell.

This is according to a survey of homes listed and sold in 2018, conducted by real estate brokerage (and mortgage lender and iBuyer) Redfin.

The biggest discounts were seen in Omaha, Nebraska and Greenville, South Carolina, where vacant properties sold for 7.2% less than occupied homes on average, a haircut of about $15,000.

Similar discounts were seen in El Paso, Texas, where the average vacant home sold for 6.6% less, or roughly $10,000, compared with occupied homes.

Discounts were smaller in more in-demand metros, including San Jose (just 0.9% less), Las Vegas (-1.5%), and Orange County (-2.3%).

[Why You Should Buy a Home Next to Trader Joe’s or Whole Foods]

How Many Homes Sales Are Vacant Properties?

  • Over a third of home sales in 2018 were vacant properties
  • But share of unoccupied homes varied widely by region
  • 67% of sold homes in El Paso, TX were unoccupied
  • While just 13% were empty in Kansas City, MO

Interestingly, Redfin found that 35.5% of all properties that sold in 2018 were empty at the time of sale.

That’s a lot more than I expected it to be. The share must have been really high during the housing crisis a few years back.

But this varied tremendously from one metro to the next.

For example, 67% of homes in El Paso, Texas were empty when they were listed for sale, whereas only 13% of Kansas City, Missouri homes were unoccupied.

There were a lot of empty homes in Arizona too, with both Tucson (54%) and Phoenix (50%) having large shares of vacant home sales.

Similar numbers were seen in Austin, TX (52%), Tacoma, WA (51%), and Las Vegas, NV (49%).

Meanwhile, empty homes were more of a rarity in Fort Lauderdale, FL (14%), Hampton Roads, VA (17%), and Greenville, SC (20%).

[Homes Next to Starbucks Are Worth More]

Make the Home Look Lived In, But Have Good Taste

  • Not all occupied homes are created equal
  • A poorly decorated home could actually hurt its chances
  • Expect to do some cleaning/renovating/staging if you sell your home
  • Many real estate agents now provide some of these services

While vacant homes mostly sold for less than the occupied ones, results may vary based on how the house itself looks and how it’s decorated.

Redfin agent Billie Jean Hemerson notes that a home seller’s furnishings can have a big impact on sale price.

If the home isn’t empty, but all the furniture looks like it’s from 1980 (in a bad way), or there’s lots of clutter, it’s probably going to do more harm than good.

Conversely, if the home seller has good taste that fits with what today’s home buyer is looking for, it could result in a price increase and perhaps a bidding war.

So just having an occupied home isn’t enough. There’s a good chance you’ll need to put some work into it if and when you list.

Fortunately, many real estate agents these days include some level of home staging in their listing package.

And Redfin themselves offer a so-called “concierge service” for a 2% listing fee (instead of 1%) that includes cleaning, staging, and a custom home improvement plan.

The company also recently partnered with a virtual staging company called roOomy to help decorate vacant properties, ideally so they sell for more in a shorter period of time.

Ultimately, when a home buyer checks out your property, they’ll want to get a sense of what it will be like when they live there.

If it’s empty, or poorly decorated, some prospective home buyers may not be able to look beyond that, even if the home itself is just fine.

Of course, if you’re a savvy home buyer with an eye for design, you might be able to snag a discount on a home that needs just a little bit of TLC to get back to its prime.

As a buyer, you should take note of the fact that vacant properties often sell for less, and use it as a negotiating tool.

While the staged homes will undoubtedly look more appealing, there’s a good chance they’ll sell at the higher end of the market.

And all those beautiful furnishings will be gone once it’s time for you to move in…

Read more: 12 home selling tips for 2019

Source: thetruthaboutmortgage.com

Purchase Applications Grab Majority Share of Mortgage Market in July as Refinances Fade Away

Posted on August 22nd, 2013

There’s been a lot of fuss about the refinance market drying up lately, and we now know it’s not just noise.

Last month, purchase-money mortgages gobbled up the majority share of the overall mortgage market, according to the latest Origination Insight Report from Ellie Mae.

The company noted that purchases accounted for 53% of applications in July, up from 49% in June and 42% a year earlier.

During 2012, the purchase share averaged a paltry 38% as refinances took center stage, helped on by ridiculously low mortgage rates and the expansion of the successful HARP initiative.

The worst month for purchases in recent history occurred during January of this year, when they accounted for just 27% of the mortgage market.

Since then, they’ve steadily climbed higher into the traditional home buying season, while refinances have retreated amid higher rates.

Refinances Peaked in January with 73% Share

purchase share

What a difference half a year makes. Refinances snagged an astonishing 73% of the mortgage market in January, but since then have seen sequential declines just about every month.

The only bright spot for refis was HARP-related, with high loan-to-value loans (95%+) rising three percent from a month earlier.

However, market watchers expect the overall numbers to move in much the same direction for a while, with refinances eventually slipping to a sub-40% share in 2014.

Unfortunately, most homeowners have already taken advantage of the low rates, with only 55% of existing mortgages currently at above-market rates (not all stand to benefit from a refinance).

[When should you refinance a mortgage?]

Then there’s those who procrastinated and missed the boat, with many presumably considering adjustable-rate mortgages as an alternative.

That’s not just speculation – the ARM-share increased to 5.2% of closed loans in July, up from 4% in June and 2.1% back in January.

Meanwhile, the somewhat en vogue 15-year fixed is beginning to lose its luster, with only 15.5% of borrowers opting for a short-term fixed loan, down from 16.5% a month earlier and 16.9% at the start of the year.

This market shift is also obliterating the mortgage industry, with layoffs beginning to make the headlines seemingly every day.

The latest causalities come from top mortgage lender Wells Fargo, which announced another 2,323 job cuts nationwide, including 365 in Birmingham, 330 in offices around Orange County, CA, and another 292 in Phoenix.

These layoffs are on top of additional job cuts announced last month.

Many other banks have been slashing mortgage workforces as well, which is no surprise given the sharp drop-off in origination volume.

It’s so bad that it almost feels like 2007 all over again, with the bad news forcing me to work on my list of layoffs and closures much more these days.

Credit Is Easing in Mortgage Land

credit quality

Despite that, credit conditions seem to be easing for home loans. Last month, the average FICO score for a closed loan was 737, down from 742 a month earlier and 749 in January. The average FICO score for all of 2012 was a very high 748.

Additionally, only 75% of closed loans in July had FICO scores of 700 or higher, compared to 83% a year ago.

In other words, credit standards seem to be falling as mortgage lenders grapple with lower production numbers, whether that’s correlated or not.

For denied applications, the average FICO score was 702 last month, which probably wasn’t the sole reason the loan was declined.

Lastly, both LTVs and DTI ratios increased in July, signaling credit easing and/or a lower quality borrower. But it certainly helps now that both mortgage rates and home prices are much higher than they once were.

Of course, this shift also kind of reminds me of the previous crisis, though nowhere near that same level…yet.

Read more: A Lack of Qualified Buyers Could Hit the Real Estate Market

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

COVID-19 Completely Transformed the Way We Buy Homes—but Will It Stick?

Remember lazy Sunday afternoons when home buyers could leisurely hop from open house to open house, partaking of wine and cheese laid out to reel in more foot traffic—the more the merrier.

Much can change in a year.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, triggering a wave of lockdowns that dramatically changed our lives in countless ways—including how we buy and sell homes.

Still, now that vaccines are becoming more widely available and life soon promises to resume some semblance of pre-COVID-19 normalcy, home buyers and sellers might be wondering: Will the old ways of real estate return, too?

Now that we’ve passed the one-year mark, we thought it fitting to look at all the ways the pandemic has changed residential real estate transactions—and why many of these adjustments are likely to stick around for good.

Over: Large, lavish open houses

Pre-pandemic, holding an open house was often akin to throwing a party, with some brokers spending tens of thousands of dollars to throw buzz-worthy events complete with Champagne, live music, and more.

Yet once COVID-19 precautions prohibited large gatherings in enclosed spaces, this glitzy breed of open house quickly disappeared. Instead, buyers weren’t even allowed to visit homes; but if they were, they did so individually, by appointment only—encased in masks, gloves, and booties.

While poking heads in closets and checking water pressure was once par for the course, pandemic buyers were discouraged from touching doorknobs and faucets, lest they leave traces of the coronavirus behind.

While the legendary open houses before COVID-19 were certainly fun, they aren’t likely to return in their usual splendor—which is fine by many real estate agents, since these epic events attracted tons of looky-loos who had a low probability of actually making an offer.

“To me, it’s a gift,” says Michelle Schwartz of The Agency in Los Angeles. She adds that most agents agree that individual showings are a far safer and efficient use of time, as it narrows down visitors to those who are more serious about buying.

Schwartz adds that this more modest approach has also tamped down on people entering the home for more nefarious purposes, like stealing belongings,

“This has reduced the sellers’ fear of putting their most prized possessions on display to the public,” she explains.

More subdued open houses will likely return as pandemic precautions are removed, but “don’t touch” provisions and requirements of always having a real estate agent or representative with you are likely to stay in place.

Here to stay: Virtual home tours

Given home buyers couldn’t tour homes in person easily during the pandemic, technology ramped up to allow them to check out homes in other ways. They include video tours (where a real estate agent shows a home remotely to buyers on a live video steam), virtual open houses (same as above, but to numerous buyers simultaneously), and 3D virtual tours (where buyers click through an interactive, 360-degree view of a home on their own).

A year ago, virtual viewings were a safety precaution. But since then, they’ve become a beloved convenience among buyers who adore checking out homes from the comfort of their couch. As such, this relatively new technology is no doubt here to stay, and will only become more sophisticated over time. (Think: virtual reality headsets with which you can “walk” through a house.)

“Virtual showings through 3D videos have revolutionized the way our industry does business and likely will continue to do so,” says Kirste Gaudet, broker for @properties in Chicago. “The 3D tours are so realistic that we may be able to put open houses to rest. I find that my clients now want them as part of the marketing effort.”

Aside from the convenience, virtual tours help home buyers quickly and easily narrow their options to a few houses they might like to actually visit.

“Ideally, most people want to see a home in person before they buy, but virtual home tours certainly help them reduce the number of homes they have to spend time and effort touring,” says Josh Judge of Berkshire Hathaway HomeServices/Verani Realty in Southern New Hampshire.

Here to stay: Greater comfort with sight-unseen offers

Most people used to shudder at the thought of making an offer on a house without seeing it in person, and most experts advised against it. But the pandemic has persuaded many to take that leap of faith.

“Now the average home buyer is more inclined to buy a property sight-unseen,” says Lance Kalfeltz, a broker with LV RE Services in Las Vegas. “Being able to work from home allows them to live almost anywhere, and it’s not always convenient to tour a home before buying it.”

Kalfeltz points out that in hot markets like his—where many buyers are making an exodus from Orange County and Los Angeles—by the time a would-be buyer got on a plane (which many were reluctant to do over the past year) or made the drive, the property would be gone.

Besides, unless they agree to an “as is” contract, buyers are most often allowed to back out of a sale if the property doesn’t pass inspection. As such, sight-unseen offers aren’t as risky as they might seem, which is helping more buyers feel comfortable enough to go for it on homes they’re admiring via the many virtual viewing options they now have at their disposal.

Here to stay: Remote closings

In the past, closing on a house was one moment when all parties gathered together in an office to sign paperwork, swap keys, shake hands, and be off on their merry way. But no more!

During the pandemic, “drive by” or “drive up” closings became common, where you’d sign papers sitting in your car, while a masked and gloved runner delivered papers back and forth.

Odds are, remote closings are here to stay, and may even be doable from home. In some states where remote online notarizations are permitted, all documents can now be signed through an approved online notary platform (e.g., Notarize) or audiovisual portal (e.g., Microsoft Teams).

And in the many states where only professionally witnessed ink signatures will do, lending officials may send a notary public to the buyer’s residence or place of business. Although this convenience might cost extra, many buyers seem happy to pay for it.

“I have one client who lives about two blocks from the escrow office, but still opted to pay the $125 extra to have a notary come to his house,” says Kalfeltz.

Over: Desktop appraisals

For all the changes that seem here to stay, there are some aspects of residential real estate transactions that will likely revert to the way they were done before the pandemic, like desktop appraisals. This is where a home appraiser assesses the value of a home merely by looking at it online. However, banks, buyers, and sellers don’t seem to be consistently happy with this practice, as important details can easily be missed this way.

“It’s impossible to assess the value of the neighborhood and the position of the house within it when you’re doing a remote appraisal,” says Schwartz.

Also, one bad camera angle on an online photo can unduly influence an appraisal by thousands of dollars, and keep a loan from going through. No one wins in a situation like that.

Source: realtor.com

The Most Crowded Cities in America

ALL the people.

You expect big cities to have busy streets, lots of businesses and crowds. Lots of crowds. But when you dig a little deeper, this stereotype isn’t always accurate. It seems the largest towns aren’t always the most crowded cities in the country.

Finding the most crowded cities

It all comes down to population density, which looks at the number of people living per square mile. The higher that number, the more crowded a city actually is.

We looked at every city with at least 10 square feet of land, and a population of over 50,000. We then divided that number by each city’s land area to find the population density. It may come as no surprise that New York City appears on our list. But some of the other most crowded cities might surprise you.

10. Berkeley, CA

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  • Residents per square mile: 11,591
  • Total Population: 121,363

Once a hub for hippies, Berkeley today offers an inviting vibe that’s all-inclusive. There’s plenty of culture, art, entertainment and education. It also doesn’t hurt that the weather is almost always amenable to spending time outside.

Situated across the bay from San Francisco, this crowded city still manages an intimate feel. Home to the University of California Berkeley, it attracts plenty of college students, who maintain the city’s vibrant and eclectic scene.

With plenty of diverse and distinct neighborhoods, you’ll have options when picking the perfect place to live in Berkeley. Expect a one-bedroom to average out at $2,044 per month, in rent.

9. Newark, NJ

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  • Residents per square mile: 11,658
  • Total Population: 282,011

With only a 15 minute commute into New York City (on public transportation), Newark is an affordable alternative to living in The Big Apple. You have easy access without the high rent costs.

Its proximity to the “big city” isn’t all Newark has going for it. The city holds its own as both a college town and a thriving community. Big industries in the area include finance, law and healthcare. There’s also opportunity in academia, with Rutgers University – Newark and the New Jersey Institute of Technology within city limits.

Residents love to come together to celebrate everything from nature to culture to the arts, and there is an endless list of things to see.

Living in Newark means paying about $2,143 on average for a one-bedroom apartment.

8. Philadelphia, PA

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  • Residents per square mile: 11,812
  • Total Population: 1,584,064

History, art and a modern vibe commingle in the streets of Philadelphia. With such a rich story, living here puts you in the same space as our Founding Fathers without trapping you in the past. A welcoming city for young professionals and families alike, the City of Brotherly Love offers up plenty of green space and no shortage of restaurants and bars. You can devote an entire day to exploring the piers along the Delaware River, snap a picture in front of the Liberty Bell or run up Rocky’s famous stairs.

Living in Philly isn’t as expensive as you’d think. A one-bedroom apartment will cost you $2,152 per month, on average.

7. Chicago, IL

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  • Residents per square mile: 11,835
  • Total Population: 2,693,976

Whether you call the city home or live out in the suburbs, Chicago has plenty of neighborhoods worth exploring. Living in the Windy City means plenty to see and do. Walk along the Chicago River in the heart of the city or stick to the shops on Michigan Avenue. Shoot into the burbs and check out Northwestern University’s campus. Sit in the stands in the iconic Wrigley Field and enjoy a true Chicago Dog

Chicago offers so much activity that you’ll never run out of places to go. Although it’s easy to keep busy, the city offers a more laid-back feel than other large urban centers, you just have to prepare for the snow (and the cold.)

With over 70 different communities to live in, and excellent public transportation, you’ll easily find an affordable place to call home, but expect rent to average out at $2,232 for a one-bedroom apartment.

6. Santa Ana, CA

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  • Residents per square mile: 12,186
  • Total Population: 332,318

One of Orange County’s many attractive and appealing cities, Santa Ana, is a community with heart. Sitting beside the Santa Ana River, watery views are different than those closer to the coast, but none of the locals are complaining. With an artsy downtown area, Santa Ana pays homage to the past while honoring today. Museums sit beside funky art galleries and relaxing sidewalk cafes.

For a truly unique sight, take the whole family to the Discovery Cube Orange County. This structure is the most recognizable in the city as it’s a tall black cube made entirely of solar panels.

5. Miami, FL

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  • Residents per square mile: 13,046
  • Total Population: 467,963

The beach, the bars, the clubs — what’s not in Miami to entice you to call it home. Even if it’s a little compact, the neon lights and vibrant vibe make living here worthwhile. With a variety of neighborhoods, where you live will impact what you pay in rent, but on average, a one-bedroom will set you back $2,497 each month.

A big draw for young professionals, Miami offers job opportunities in a variety of industries, including tourism, finance and media and telecommunications.

When not at work, there are always the sandy shores of the Atlantic Ocean. With 248 sunny days each year, on average, every day is a beach day.

4. Boston, MA

The city of Boston on the water with its cityscape.

  • Residents per square mile: 14,345
  • Total population: 692,600

Boston is a huge college town and home to cultural institutions, top-notch universities and cutting-edge tech companies.

The city, which has almost 700,000 people (and 150,000 coeds), is known for Red Sox Nation, big city living and confusing roads. Boston is home to one of the oldest and best public transportation systems in the country with a designated commuter rail that typically runs on time.

The cost of living in Boston is infamously expensive. It’s more pricey to live in Boston than Chicago or L.A. The average cost of rent in Boston is $3,461.

But, living in Boston means you’ll experience modern life in a booming metro area, balanced by a historic perspective into our nation’s history.

3. Jersey City, NJ

jersey city nj

  • Residents per square mile: 17,720
  • Total Population: 262,075

Living just outside New York City has its perks, and most of them are in Jersey City. Not only is the location great, but public transportation also makes it so you might not even need a car. You can pick between the rapid transit system, light rail, buses or even the ferry.

The city has no shortage of quaint and authentic places to enjoy with friends. Rivaling what’s in NYC, you’ll find boutiques, wine bars, breweries and restaurants. Weekly farmer’s markets get you outside when the weather is right as well.

Another gem within Jersey City is Lincoln Park. With over 273 acres, this outdoor space offers visitors play areas, historic monuments, natural features and recreational amenities.

Living among all this activity and green space — that’s within viewing distance of NYC — means paying for it. A one-bedroom apartment averages around $2,742 per month.

2. San Francisco, CA

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  • Residents per square mile: 18,808
  • Total Population: 881,549

Another city many visualize as crowded, with its winding streets and steep hills is San Francisco. But, living here means nothing is ever that far away. From work to shopping, restaurants to nightlife, this West Coast town really has it all.

While it’s up there with certain East Coast cities when it comes to renting — one-bedroom averages out to $3,560 per month — its laid-back vibe and proximity to the ocean make it a great place to live.

There’s also something unique about living in San Fran. Where else can find neighborhoods like The Castro or The Haight?

1. New York, NY

New York City at night with building lights on from a view on the water.

  • Residents per square mile: 27,547
  • Total Population: 8,336,817

Of course, New York tops our list. The Big Apple is not dead, and despite what you may have read, NYC is still very much thriving.

Although expensive, Manhattan is the kind of place every young person should experience living in at least once. Life in New York isn’t easy, but it is thrilling. The average price of rent in New York City is nearly $3,800 for a one-bedroom apartment.

NYC is a vital hub for media, finance, tech and real estate, with more billionaires living in New York than any other city in the world.

The 50 most crowded cities in the U.S.

If you’re curious to know what other cities made the list, here’s a comprehensive list of the 50 most crowded cities in the U.S.

The least crowded cities in America

In compiling data around the most crowded cities in the U.S., we also gathered the cities that remain on the roomier side. Here’s our list of the least crowded cities in America.

Methodology

To find the most crowded cities in America, we looked at all cities with a population over 50,000 in the U.S. and at least 10 square miles of land area. We divided each city’s population by its land area to determine the population density, or the number of people per square mile. Population figures and land area come from the U.S. Census Bureau. The cities with the highest population density are the most crowded cities in the U.S.

Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments. We pulled our data in March 2021, and it goes back for one year. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.

The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

125% Second Mortgages Are Back Again…

It feels like we’re getting dangerously close to repeating history in the worst way possible.

High-risk loan programs that seemed extinct were perhaps only endangered, as evidenced by a new product launch over at CashCall, an Orange County based company that offers both personal and mortgage loans.

Yep, they’re offering 125% second mortgages, and no, I’m not talking about HARP loans for those underwater on their mortgages.

This is a bona fide “no equity home loan,” a mortgage instrument popular during the housing boom that quickly disappeared once values began to take a dive.

How the 125% Second Mortgage Program Works

Essentially, those who wish to borrow more than their home is worth can apply for one of these loans if they meet certain conditions.

For example, if your home is only worth $200,000, but you want to borrow $250,000, this loan will allow just that.

This differs from a traditional cash-out refinance, which typically requires a homeowner to have some equity buffer, such as 20% or more.

These types of loans worked back in the day on the expectation that home prices would continue to rise over time, and eventually the homeowner wouldn’t be “underwater” any longer.

They failed because (as we all know) home prices eventually stopped going up, and homeowners with giant mortgage balances had already spent the cash elsewhere, and had no intention of paying it back once their property values were cut in half.

This particular 125% second mortgage is a 15-year fixed loan, and only requires a minimum FICO score of 660, which is pretty below average for this level of risk. It must also be an owner-occupied property.

The minimum loan amount is $25,000 and the max is $150,000. For attached condos, they actually limit the CLTV to 100%, seeing that condos are generally deemed higher risk.

Oh, and the max DTI ratio is 50%, though pricing is more favorable for those who keep it at or below 43%.

Speaking of pricing, rates range from as low as 7.49% to as high as 14.99%, depending upon the CLTV.

Here’s the rundown based on what I saw advertised today:

0-80% CLTV: 7.49%
80.01-90% CLTV: 9.49%
90.01-100% CLTV: 11.99%
100.01-125% CLTV: 14.99%

For the record, these mortgage rates are good for those with FICO scores of 700 and higher. I don’t want to know how high the rates are for those with lower scores.

There are also fees of 3% of the loan amount for DTI ratios at or below 43%, and fees of 5% for DTIs between 43.01% and 50%.

What the Heck Is CashCall Thinking?

One last thing I should mention is that this program is only available in California.

The Golden State has been looking good lately in terms of home price appreciation, and it will probably continue to enjoy higher prices as the recovery goes on.

Perhaps this is why CashCall is happy enough to offer extra-high CLTV loans in the state. After all, homes that sold for $500,000 two or three months ago might sell for $600,000 today. It’s out of control.

Additionally, I’m assuming the company relies mainly on refinance business, and because of the recent rise in rates, it lost a lot of business, just like any other shop relying on refinances to bring in the bacon.

So this appears to be a more aggressive move to offer something the competition doesn’t have, which could lead to an uptick in business to make up for that decline in refinancing apps.

Still, it reminds me of why the mortgage boom went bust, and it’s pretty scary that these types of products have returned just a couple years since the market bottomed.

Let’s hope home prices continue to rise…

(photo: Marcin Wichary)

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for nearly 15 years.

Source: thetruthaboutmortgage.com

10 Cities Near Los Angeles Where You Should Live

Finding a nice, livable, dependable, safe apartment in or near Los Angeles isn’t cheap. A one-bedroom in Hollywood averages $3,082 per month, while the same apartment in Santa Monica averages $4,018. That’s a lot of money for the most basic of one-bedrooms. Most young renters in those cities either budget a disproportionate chunk of their salary towards rent or they sublet the corners of their living rooms.

Luckily, there are some towns near Downtown Los Angeles (DTLA) with their own unique charm located close enough so a trip to the Staples Center only takes you an hour by car or public transport, yet their distance from Downtown proper keeps their average rent relatively low.

Before you commit to a DTLA apartment way out of your budget, consider these 10 cities.

Long BeachLong Beach

  • Average monthly rent: $2,342
  • Distance from DTLA: Approximately 31 miles south

Long Beach is kind of like a condensed version of Los Angeles. Like L.A., Long Beach has an interesting downtown, groomed suburbs, an arts district and on top of all that, it has, of course, a beach.

The city is fun, liberal and filled with vitality, but rent has steadily gone up the last 10 years due to lots of fancy development. On the plus side, Long Beach has easy access to DTLA when you want to make the trip — it’s a straight shot up the 710 or the Blue Line.

FullertonFullerton

  • Average monthly rent: $1,705
  • Distance from DTLA: Approximately 32 miles southeast

Fullerton is unique in that it’s a quiet suburb while somehow still maintaining the characteristics of a cool, small college town. While Fullerton has some great K-12 schools, sleepy cul-de-sacs and lush parks, it’s also currently enjoying a cultural resurgence made up of new nightlife, record labels and artists.

Apartments around the colleges can get a little “Animal House”-ish at times, but if you can find anything close to the intersection of Harbor Blvd. and Commonwealth, you’re in the heart of the city.

Orange CAOrange CA

  • Average monthly rent: $2,039
  • Distance from DTLA: Approximately 36 miles southeast

Fans of vintage Americana aesthetics will appreciate renting in Orange. Old craftsman homes and small-unit rentals make up most of the neighborhoods around the traffic circle, an antique district that looks like it hasn’t changed much since the ’50s. (Tom Hanks filmed “That Thing You Do” all over Old Towne.)

Orange also benefits from being off the 5 freeway so Downtown Los Angeles is always about 45 minutes away.

Rancho Palos VerdesRancho Palos Verdes

  • Average monthly rent: $2,389
  • Distance from DTLA: Approximately 36 miles south

Rancho Palos Verdes is an odd town. The city never gets talked about much because it’s sort of isolated on top of the bluffs of the peninsula. You don’t just drive through Rancho Palos Verdes, you have to go out of your way to get to it.

The ocean views are the reason why RPV is the most expensive city on this list, but even $2,389 is a small fraction compared to apartments with identical views in Venice or Santa Monica.

Huntington BeachHuntington Beach

  • Average monthly rent: $2,099
  • Distance from DTLA: Approximately 45 miles south

Huntington Beach is a long, sprawling city, which means it might take you up to 20 minutes to get to the nearest freeway depending on how close you live to the ocean. It’s not a town for the impatient. But as far as beach cities go, you could do worse than HB.

There seem to be as many apartment complexes as there are single-family homes, especially near the Pacific Coast Highway. Just make sure you move into a building with a parking structure. Parking anywhere within a mile of Main Street is torturous.

La VerneLa Verne

  • Average monthly rent: $1,687
  • Distance from DTLA: Approximately 36 miles east

We’re going to lump Claremont together with La Verne. The small, hipster college towns border each other, and their neighborhoods share the same mid-’60s aesthetics. The cities are only about 45 minutes and one freeway away from DTLA, but they might as well be in different time zones.

Both communities are filled with sleepy streets lined with massive oak trees and lush, green lawns — nothing like Los Angeles proper, but it’s a nice alternative.

GlendoraGlendora

  • Average monthly rent: $1,986
  • Distance from DTLA: Approximately 30 miles east

It’s easy to forget about Glendora. It’s a quiet town wedged between the 210 and the Angeles National Forest. It’s a solid upper-middle-class neighborhood and not much has changed since the ’80s. You’ll find no 5-star sushi or acclaimed art galleries here. (If that’s what you’re looking for, the Metro Gold Line will take you from APU to Little Tokyo’s Arts District in 45 minutes.)

Instead, you’ll get a quiet, unassuming town where the biggest amount of activity comes from its private, evangelical Christian university.

Santa AnaSanta Ana

  • Average monthly rent: $1,887
  • Distance from DTLA: Approximately 34 miles east

Living in Santa Ana is tricky. On one side of the street, you could be living in an apartment where you have to look out the window every 30 minutes to make sure your car is still parked where you left it.

On the other side of the street, you could be living in a cool loft in Santa Ana’s burgeoning Santiago Art District. Do your research if you’re thinking about renting here, but if you stay in the Historic District, you’ll be fine.

Costa MesaCosta Mesa

  • Average monthly rent: $2,024
  • Distance from DTLA: Approximately 41 miles south

Costa Mesa is another fairly unassuming town. It has the Orange County Fairgrounds and even though it’s not on the ocean, it feels like a beach town and the apartments reflect that.

You’re going to find a lot of nautically-themed rental complexes here, and it’s quaint enough, but if you can, stay south of 17th Street. (Bonus: Los Angeles is one freeway away up the 405.)

PomonaPomona

  • Average monthly rent: $1,363
  • Distance from DTLA: Approximately 34 miles east

Pomona is the diamond in the rough on this list, and it’s sort of had that reputation for the last 20 years now. The city can be a bit on the fringy side, but its DIY arts and antique districts have quietly given Pomona underground street cred since the early ’90s.

If you romanticize Downtown Los Angeles during the late ’70s, you can still find that adventurous vibe in Pomona.

The current rent information included in this article is based on July 2019 multifamily rental property inventory on ApartmentGuide.com and Rent.com and is used for illustrative purposes only. The data contained herein does not constitute financial advice or a pricing guarantee for any apartment.

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Moving With Kids? How to Learn About the School Districts in Your New Area

Your search for the perfect house involves more than just the home itself. Beyond seeking out the perfect number of bedrooms and an entertainment-ready backyard, you also need to find the right neighborhood. Maybe that means walkability and proximity to a farmers market, or a commutable distance to your job. But if you have kids, buying a house situated in the right school district will likely move to the top of your decision-making list.

You’ll have plenty to learn about when it comes to an unfamiliar neighborhood. But how can you learn about the school districts there before you buy a house?

Where to find school district info

Fortunately, there are plenty of resources that can point you in the right direction.

“The district’s website will give you the most thorough information about the district and the schools within it,” says Erik Schwinger of Chicago-based brokerage Baird & Warner. He also recommends reaching out to the parent-teacher association of a particular school to learn more about the school, its curriculums, level of parent involvement, and what the parents really think of the school.

You can also research schools and school districts online. Samantha Scalzo, director and broker at S&S Global Corp. in Miami, lists GreatSchools and Niche as two valuable sources of online information.

Alina Adams, author of “Getting Into NYC Kindergarten” and “Getting Into NYC High School,” also recommends SchoolDigger. However, she says there’s no substitute for visiting a school and gauging your gut reaction.

“No school is one-size-fits-all, and families may be surprised that a school’s reputation is different from what they see on a tour—for better or for worse,” she says.

There’s also another source for reliable information on a potential school district: your real estate agent.

“The most established and experienced real estate agents in a buyer’s area of interest—who have had clients with children in the school system, or have children of their own in the school system—will be able to provide an overall feel of the local schools,” says Tim Smith of The Smith Group, an Orange County, CA–based Coldwell Banker Team. “This knowledge and experience will enable them to best match a buyer with the schools that meet the particular needs of their children.”

__________

Watch: Home-Buying Checklist: 5 Things Parents Shouldn’t Forget

__________

What to look for

There are numerous factors you should take into account when looking at school districts. These include class sizes, special needs programs, inclusion classes, language immersion programs, advanced placement programs, arts, athletics, music, and other extracurricular activities, says Alison Bernstein, president and founder at Suburban Jungle, a real estate firm focused on buyers leaving the city for the suburbs. You also want to find out as much as you can about the staff.

“You want to know about the administration (principal, vice principal, etc.) as well as the teachers. What are their education and experience levels?” says Schwinger.

Ibrahim Firat, chief educational consultant at Firat Education, in Houston, says the process of finding a school is different for each and every student. He has written books on the topic of finding the right school, and has helped families who are relocating find the right schools before they find the right home.

“Just because a [school district] is ranked high in the region/state/nation doesn’t mean it is the right place for your child, so identifying the best-fit school is the first step to a quality education,” he says.

Source: realtor.com

Should I Buy a Used Rental Car?

Rental cars often get a bad rap. Since drivers are only borrowing the vehicle for a short period of time, conventional wisdom goes that they won’t treat the car very well. So most would think that purchasing a questionably treated rental car is a poor financial decision.

While a privately owned used car might have had to contend with one person’s driving quirks (or at most, one family’s), rental cars are driven by all types of drivers (one a hard braker, the next a fast accelerator, and so on). But some argue those fears are largely unfounded, “Cars are so well engineered these days that it really doesn’t matter,” Philip Reed of Edmunds.com told Kiplinger.

When you’re in the market for a car, and you don’t mind doing a little extra research, you might be surprised to find a former rental car offers savings (even over identical used cars) as well as peace of mind.

Guide for Purchasing a Former Rental Car

Shopping for a used rental car is a lot like shopping for a used car. With rental cars, you’ll still want to remain practical and skeptical, but it’s prudent to take a few additional steps:

  • Determine the fair market value of the car make, model and year and compare it to the rental car company’s price. Kelley Blue Book and Edmunds.com com both have great resources.
  • Before visiting a mechanic, look over the car. Test drive it yourself, look for any signs of body damage both inside and outside the vehicle and listen for unusual noises. And always request a vehicle history report from the seller, or you can choose to run one yourself from places like AutoCheck, Carfax or the federal National Motor Vehicle Title Information System.
  • Be sure to have a pre-purchase inspection done by an independent party so you’ll have an accurate picture of current and future problems. You’ll also want to have a mechanic certify that the car isn’t wearing prematurely.

How to Decide if a Rental Car is Right for You

Here is our take on buying a rental car, with good, old fashioned pros and cons.

Pros:

  • Rental car companies keep close tabs on their fleets, making repairs when necessary and sticking to maintenance schedules.
  • Lower-than-market price options are (usually) available because rental car companies buy vehicles in volume so their resale prices can be lower.
  • Most used rentals for sale are only one or two years old, so most of their warranties are still at least partially in effect.
  • If you’re buying from a rental company, they’ll provide a third-party vehicle history report (usually for free).
  • The purchasing experience should be simple. If you buy from a rental car company, most sales are negotiation-free, which can be a relief for people who don’t like to haggle (something experts recommend doing on every new and used car lot).
  • Certain large rental companies, such as Avis, Enterprise and Hertz, have fixed pricing, financing and a wide inventory listed on their websites.
  • Some rental car companies let you take the car for several days on an extended test drive: “Rent2Buy at Hertz and the Ultimate Test Drive at Avis/Budget let you browse the fleet online, pick the model that you want, and take it for an extended test-drive (up to three days) from many of their rental locations. During the car’s tryout, you can have a mechanic look at it, if you like,” writes Kiplinger. Enterprise, they add, doesn’t let you take it for a multi-day test drive, but they’ll buy it back within seven days if you’re not happy.
  • Not all rental cars finished with their hustling days go on to be sold through the rental company’s sales division: only the best-maintained cars are sold to consumers while the rest, writes Kiplinger, go to auction or elsewhere (good news for buyers).

Cons:

  • While you can find a good range of options, from budget to luxury vehicles, with a rental company, the cars are often base models with fewer amenities and advanced safety features, and you can’t upgrade.
  • The stigma of lots of people having driven your car is real, as is the fear that those strangers didn’t care as well for the vehicle as a private owner might have.
  • Many former rental cars have more scratches and interior damage than privately owned used cars.
  • You can’t know what every driver did with your car, and you might not ever know the full history.

Where You Can Buy A Used Rental Car

The major car rental companies in the U.S. also have sales divisions. You can purchase used rental cars from:

  • Budget
  • Avis
  • Enterprise
  • Hertz

Additionally, CarMax has former rental cars for sale, as does Autotrader.com.

How Much You Can Save

Used rental cars aren’t the absolute lowest prices out there — they aren’t as cheap as what you might find at auction, for instance (though cars bought at auction are definitely riskier buys, on a whole), but you can still get a great deal. Edmunds.com compared prices on a rental agency’s used car lot and found them to be very competitive with dealer retail prices.

“That’s still the case today,” writes Edmunds.com

“We compared prices for that automotive commodity, the Toyota Camry, at Hertz, Avis/Budget and Enterprise,” writes Kiplinger. “As a benchmark, we used the Kelley Blue Book Fair Purchase Price — what you might expect to pay a dealer — for a good-condition 2014 LE model with about 25,000 miles on it, which in late April was $17,716.

The lowest price was at Hertz, where our Camry went for $16,000. It was $17,600 at Avis/Budget and $17,999 at Enterprise. Prices for some other vehicles we checked, including the Hyundai Elantra, Mercedes C250 Sport sedan, Nissan Rogue and Ford Expedition, in a variety of trim levels, also showed savings—sometimes slim, sometimes huge. The Elantra at Hertz had 35,000 miles and was 15% below the KBB Fair Purchase Price.”

True Stories: ‘I Bought a Rental Car’

Deidre Woollard, from Los Angeles, bought a former rental car. It had 30,000 miles on it and opted for the complete extended warranty. “It seemed pricey at the time but turned out to be worth it because approximately six months later the car had a breakdown on the highway. It turned out to be a cracked engine block and was covered by the warranty,” Woollard says. “The car went on to live many more happy years until it was totaled when rear-ended in a crash. I would buy a rental car again, but I would get the warranty too.”

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Nedalee Thomas, from Orange County, California, purchased a car from a dealer a few years ago and was told it had been a rental car. The car was two years old and had 22,000 miles on it. The dealer told Thomas the car would get 19 miles to the gallon, but Thomas never got more than 11, which she found quite disappointing. The biggest issue, though, was with the structure of the car. “The car had apparently been in an accident and would never stay in alignment,” which, she says, caused greater wear on the tires so she had to replace them more frequently.

To really know how much you can save, you’ll have to comparison shop between rental car sellers, used car dealers, and private owners (if you like)–and always get a third-party vehicle report before purchase. While a former rental car might not end up being the best option for everyone, they have a lot of pluses and are certainly worth consideration.

If you’re shopping around for the best auto loan, it’s a good idea to keep your credit score in mind. Many credit scoring models will count all auto-financing inquiries within a specific period, usually about 14 days, as one inquiry, which will have less impact on your credit score (check out how inquiries affect your credit score here). And it’s important to keep on eye on your credit before, during and after you apply. You can view two of your credit scores for free every 30 days on Credit.com.

More on Auto Loans:

Image: SIphotography

Source: credit.com