It can be so hard to find the perfect apartment, sifting through a seemingly endless selection of listings to choose the space that’s right for you. While it’s important to find an apartment that fits all your needs, you also need to be aware of some common red flags that can make your life as a renter much more difficult than it needs to be. So before you sign the lease for that Denver studio apartment or a 2-bedroom apartment in Sacramento, here are some common apartment red flags you absolutely need to avoid.
1. Absence of security deposit requirement
While the idea of not having to pay a security deposit upfront might initially seem appealing, it can actually be a red flag. Security deposits serve as a form of protection for landlords against potential damages to the property beyond normal wear and tear.
Landlords who don’t require a security deposit may be taking shortcuts in their screening process or may lack confidence in the condition of their property. Without a security deposit, tenants may also find themselves financially vulnerable if there are disputes over damages or unpaid rent.
“As a tenant, who would want to give a security deposit? This means extra money that you now need in addition to the first month’s rent,” says Illinois real estate lawyer David Frank. “This also means if you don’t keep the place in the proper condition, the landlord can offset damages from that deposit. It also means you lose access to that money during your lease term. But, what if I told you that putting down that security deposit could be the BEST leverage you will ever have against your landlord if an issue should arise?”
2. Poor maintenance
When viewing the apartment, take note of any signs of neglect or poor maintenance. Look for leaky faucets, cracked walls, broken appliances, or signs of pest infestation. A well-maintained apartment is a sign of a responsible landlord who cares about their property.
3. Unresponsive landlord
Communication with your landlord is crucial, especially when emergencies or maintenance issues arise. If the landlord or property manager is unresponsive during the rental process or seems difficult to reach, it could be a sign of future difficulties in getting necessary repairs or addressing concerns.
4. Overly restrictive lease terms
Pay attention to any overly restrictive clauses in the lease agreement that could limit your rights as a tenant. This might include unreasonable restrictions on guests, pet policies that are overly strict, or clauses that prohibit certain activities within the apartment.
While some rules are necessary for a peaceful living environment, excessively strict lease terms could indicate a landlord who is overly controlling or unwilling to accommodate reasonable needs. Make sure the lease terms are fair and reasonable before committing to renting the apartment.
5. Lack of lease agreement
A proper lease agreement protects both the tenant’s and the landlord’s rights. If the landlord is unwilling to provide a written lease agreement or presents one with vague or unfair terms, it’s a major red flag. Always review the lease thoroughly before signing and seek clarification on any ambiguous clauses.
6. Inconsistent or problematic rental terms
Pay attention to inconsistencies in the rental terms provided by the landlord. This could include discrepancies in the rent amount, included utilities, or maintenance responsibilities. Clear and consistent rental terms are key for avoiding misunderstandings down the line.
“When looking for a new apartment to rent, renters should be aware of hidden or problematic lease terms,” according to Los Angeles-based law firm Schorr Law. “It is one thing to get the apartment you physically want, but renters should be aware that even if you get the apartment you want, you may not get the lease you want. Hidden lease terms include shifting hidden costs to the tenant for things like utilities or building security. Other hidden lease terms can include an ability for the landlord to terminate the lease without cause or to relocate the tenant to a different unit.”
7. Visible signs of mold or mildew
Mold and mildew pose health hazards and can indicate underlying issues such as water leaks or poor ventilation. If you notice a musty odor or visible signs of mold during the apartment tour, it’s essential to address the issue with the landlord and ensure it’s properly dealt with before moving in.
8. Unusual payment requests
Be cautious if the landlord requests payment methods that seem unusual or suspicious, such as cash-only payments or payments to a personal account rather than a professional property management company. Legitimate landlords typically accept payments through standard methods such as checks, bank transfers, or online payment platforms.
9. Excessive secrecy or evasiveness
If the landlord or property manager seems evasive or unwilling to answer your questions about the apartment, it could indicate they’re hiding something. Transparency is key in any rental agreement, so be wary of landlords who are unwilling to provide straightforward answers or disclose important information.
10. Unsatisfactory amenities or facilities
Take a close look at the amenities and facilities offered by the apartment complex. Are they well-maintained and clean? Do they meet your expectations? If the amenities fall short or appear neglected, it could be a sign of poor management and a lack of concern for tenants’ comfort and satisfaction.
“Check online reviews to see how current and former tenants rate the apartment complex in terms of amenities, handling of maintenance requests and property management staff,” says Stephen J. Anthony of Anthony Law Group. “If there are many bad reviews, this can be a good indicator of serious problems with how the apartment complex is managed that you do not want any part of as a tenant.”
11. High turnover rate
Lastly, inquire about the turnover rate of tenants in the building or complex. A high turnover rate could indicate underlying issues such as dissatisfaction with the property, difficult landlords, or maintenance problems. While some turnover is normal, excessive turnover should raise concerns about the quality of the living experience.
Being observant during the apartment hunting process can help you avoid potential pitfalls and find an apartment that meets your needs and expectations. By paying attention to these 11 red flags, you can make an informed decision and enjoy a positive renting experience
Average mortgage rates fell moderately yesterday for the fourth consecutive day. So, it’s been a good week for those rates, and they’re now appreciably lower than they were seven days ago.
Whether that happy experience extends into next week will likely depend almost entirely on Tuesday’s inflation report, the consumer price index (CPI) for February. So, yet again, I’m forced to say mortgage rates next week could go either way. Ask me again late on Tuesday morning.
Find and lock a low rate
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.02%
7.04%
-0.08
Conventional 15-year fixed
6.51%
6.54%
+0.05
Conventional 20-year fixed
7.03%
7.05%
Unchanged
Conventional 10-year fixed
6.57%
6.59%
+0.08
30-year fixed FHA
6.15%
6.82%
+0.05
30-year fixed VA
6.43%
6.54%
Unchanged
5/1 ARM Conventional
6.28%
7.35%
-0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Find and lock a low rate
Should you lock a mortgage rate today?
I think it unlikely that the last couple of rate-friendly weeks are the start of the sustained downward trend in mortgage rates that I’ve been predicting for months. However, if next Tuesday’s CPI report turns out to be exceptionally good for those rates, I just might be proved wrong.
But I doubt it. So, my personal rate lock recommendations are now:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
What’s moving current mortgage rates
This week
The economic data published earlier this week suggested that economic growth is slowing at just the right rate. Mortgage rate watchers would like to see it cooling but not enough to trigger a recession.
Typically mortgage rates tend to be lower when the economy is struggling or at least not running too hot.
Some indicators this week pointed to continuing resilience, including the headline figure in yesterday’s jobs report. However, that was balanced out by a very large downward revision to the previous month’s number, and by the report’s other major components being friendly to mortgage rates
Next week’s CPI
So much depends on next Tuesday’s CPI. Only the jobs report rivals its ability to move mortgage rates so far and for so long.
As usual, we want lower numbers on the day than markets are expecting. Wall Street will already have priced into mortgage rates the consensus forecasts. So, it’s the gap between expectations and reality that changes those rates.
There are four main items in the CPI report:
All-items CPI — The amount by which the prices of all surveyed items moved in February. Called just CPI
Core CPI — The all-items CPI after volatile food and energy prices have been stripped out, revealing underlying inflation in February
YOY CPI — The year-over-year CPI will reveal how all surveyed items moved between Mar. 1, 2023 and Feb. 29, 2024
YOY core CPI — The year-over-year core CPI will reveal how all surveyed prices for items excluding food and energy moved between Mar. 1, 2023 and Feb. 29, 2024
Here’s what’s currently expected, according to MarketWatch, for the upcoming February report:
February CPI — Markets are expecting prices for all items to have risen by 0.4%. (0.3% in January report)
February core CPI — Markets are expecting prices for all items excluding those for food and energy to have risen by 0.3%. (0.4% in January report)
YOY CPI — Markets are expecting prices for all items to have risen by 3.1% between Mar. 1, 2023 and Feb. 29, 2024. (3.1% in January report)
YOY core CPI — Markets are expecting prices for all items excluding those for food and energy to have risen by 3.7% between Mar. 1, 2023 and Feb. 29, 2024. (3.9% in January report)
Remember, mortgage rates are more likely to fall if actual figures are lower than the expected ones.
Other important reports next week
The other economic reports are much less likely to move mortgage rates far or for long. But those most likely to do so, in rough order of importance, are:
February retail sales on Thursday — Expected to rise by +0.7% compared to January’s -0.8%
February producer price index (PPI) on Thursday — Expected to hold steady at 0.3%. This measures wholesale and factory-gate prices so changes may turn up in later CPIs
February industrial production on Friday — Expected to rise to 0.0% from a negative in January. Also, capacity utilization, which is expected to inch lower compared to January
February import price index (IPI) on Wednesday — Expected to fall to 0.3% from January’s 0.8%. This measures price changes in foreign-sourced goods and services
Of those, retail sales and the PPI are most likely to affect mortgage rates. But even they rarely move them far or for long.
The Fed
Wall Street currently views most economic reports through the prism of how they’ll affect the Federal Reserve’s decisions on when it will start cutting general interest rates and how often it will do so after that.
That’s why The Wall Street Journal (paywall) yesterday greeted the jobs report with the headline, “Hiring Boom Continues, but Signs of a Cooling Labor Market Boost Rate-Cut Hopes.” In the article beneath it said:
“The Goldilocks report lends credence to the Federal Reserve’s outlook that somewhat lower interest rates could be warranted later this year, potentially providing a boost to markets that have been on a tear to start 2024.
“Bill Adams, chief economist at Comerica Bank, summed up Friday’s report with one word: cool. ‘That’s what the Fed wants to see right now,’ he said.
The Fed will next decide on rate policy on Mar. 20. Very few expect it to cut general interest rates that day. But Wall Street hopes it will strongly hint at cuts at the May or June meetings of its rate-setting committee.
Economic reports next week
See above for details about the more important economic reports next week.
In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.
Monday — Nothing
Tuesday — February consumer price index. Also small business optimism index for the same month
Wednesday — Nothing
Thursday — February retail sales. Plus February producer price index. And initial jobless claims for the week ending Mar. 9
Friday — February industrial production and capacity utilization. Also, the February import price index
With the consumer price index, Tuesday is make-or-break day.
Time to make a move? Let us find the right mortgage for you
Mortgage rates forecast for next week
I hate not giving rate forecasts for the following week. But this is the third consecutive Saturday on which I really can’t.
Nobody knows what Tuesday’s CPI will say. And that’s very likely to determine how mortgage rates will move over the next seven days.
How your mortgage interest rate is determined
A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.
Your part
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
Shopping around for your best mortgage rate — They vary widely from lender to lender
Boosting your credit score — Even a small bump can make a big difference to your rate and payments
Saving the biggest down payment you can — Lenders like you to have real skin in this game
Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on something called you “PITI.” That stands for:
Principal — Pays down the amount you borrowed
Interest — The price of borrowing
Taxes — Specifically property taxes
Insurance — Specifically homeowners insurance
Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Down payment assistance programs in every state for 2023
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
If you’re like most people embarking on a home-buying journey, one of your first steps will be finding a mortgage lender. There’s a lot to consider when it comes to choosing the right one — everything from interest rates, loan types and fees to service and experience.
When comparing lenders, it’s worth taking your time and choosing carefully. Purchasing a home is a big step, and you want a knowledgeable lending partner by your side as you weigh your financing options and navigate the paperwork involved. A good mortgage lender is a valuable resource and can make the home-buying process easier and less stressful. Let’s take a look at the steps you can take to find the right lender fit for you.
How to Find a Mortgage Lender
There are several types of lenders you can look to for securing your home loan, with the most popular being direct lenders and mortgage brokers.
Direct lenders. Banks, credit unions and mortgage companies are considered direct lenders and handle the entire mortgage process from origination to closing.
Mortgage brokers. Mortgage brokers work independently with a variety of loan originators, including direct lenders, to help clients find a mortgage that fits their needs.
Which type of mortgage lender you choose depends on your personal preference, the type of loan you’re looking for and your financial situation. There are many factors to consider when comparing your options. While interest rates are certainly a big one, there are other things to think about, such as fees, loan products, the process and the lender’s experience and reputation.
Here are some tips for choosing the right lender and how to best set yourself up for mortgage success.
Starting the Loan Certification Process
When choosing a lender, look for one that offers a written letter or certification you can provide to sellers to let them know you are qualified. This gives you a clear picture of your buying power and can help you make a stronger offer on a home. When you work with a lender that provides this, you’re doing much of the legwork involved in obtaining a mortgage contract without actually finalizing it.
Choosing Pennymac as your lender gives you access to our unique BuyerReady Certification process. This certification gets you even closer to your new home by confirming precisely how much of a mortgage you will qualify for.
While a BuyerReady Certification does not guarantee a closing, it is a conditional approval based on the information you provide us through the formal loan process. You’ll have peace of mind knowing your borrowing limit and be able to show realtors and sellers that you’re serious about purchasing. To receive a Pennymac BuyerReady Certification, you’ll submit a mortgage application and financial documents, which a Pennymac Loan Expert will review.
Here are some of the benefits of having a BuyerReady Certification:
Shows sellers, realtors and lenders that you’re a serious homebuyer
Helps inform your decision-making in terms of how much you can spend on a home and the types of financing you’ll be able to qualify for
Gives you a competitive advantage over homebuyers who don’t have it
Important Mortgage Considerations
Whether you begin your hunt for the perfect lender and loan by visiting your local bank, searching online or surveying your family and friends, here are some key factors you’ll want to consider.
Interest Rates
Interest rates are among the most important factors to consider when comparing lenders. Your interest rate will determine how much you have to pay for your home loan, so take time to do the math when examining your options. Even a seemingly small difference between rates, such as an additional .5%, can add up to a considerable increase in your monthly payment. Over a 30-year term, you could be paying tens of thousands of dollars more in interest.
While interest rates aren’t the only factor to look at when choosing a lender, they are a significant one. Select a lender that offers a range of competitive rates and terms and will quickly lock in a rate when you find the one that works best for your budget.
Down Payment and Mortgage Insurance
Most, but not all, home loans will require a down payment. A home down payment is money paid upfront for the home at closing and is a percentage of the home’s purchase price.
A conventional fixed-rate mortgage may require a down payment of as little as 3%. A Federal Housing Administration (FHA) mortgage has a minimum down payment of 3.5%, while the U.S. Department of Veterans Affairs offers loans with 0% down.
When comparing mortgage lenders, be sure to inquire about which loans they offer, especially if you’re interested in a non-conventional loan, such as a FHA or VA loan.
Keep Mortgage Insurance in Mind
While there is flexibility in how much of a down payment you make, if you have a conventional loan and do not put at least 20% down, you’ll have to pay for private mortgage insurance (PMI). This is a policy that protects your lender if you fall behind on your payments or end up in foreclosure. It is paid monthly on top of your regular mortgage payment.
Lenders partner with certain PMI providers and may use different calculations to determine your PMI premium. If you anticipate that you’ll be paying PMI, be sure to factor those premium charges into your cost comparisons. Conventional mortgage insurance can be priced quite aggressively, especially if the borrower has a solid credit score. It’s a great option for those who want to keep cash in the bank for investing and/or reserves.
If you opt for an FHA loan, mortgage insurance — similar to PMI — is always required at first. How much and how long you’ll have to pay the extra monthly premium depends on the amount of your down payment. VA loans do not require any type of mortgage insurance but may have other mandatory fees.
Fees
When comparing lenders, you’ll want to specifically evaluate rates, as well as origination fees and discount points, which can vary depending on who you choose. The homebuyer usually pays the fees, although sometimes a seller will agree to a concession and pay for some. Don’t be afraid to negotiate any closing costs. See if the lender you’re considering will work with you to reduce some fees or make other favorable compromises.
Prepare for Meeting with a Loan Officer
Once you find a prospective lender, you’ll meet with a loan officer or expert in person, through email or over the phone to discuss your mortgage options. Your loan officer will help determine your short and long-term goals with your home purchase and offer options to tailor your loan to your current financial situation. This meeting will provide a foundation for your loan officer to match you with a home loan that meets your needs.
Being prepared will help you make the most of your meeting and facilitate the mortgage process. Before meeting with your loan officer, here are some things you can do.
Improve Your Credit Score
Your credit score is a major factor in determining what kind of loans you may qualify for and your interest rate. A lender will want to be confident that you’ll be able to repay your loan. Your credit score is based on the data in your credit report and is a numerical rating based on your credit history. It takes the following into account:
Your bill-paying history
Total amount of current unpaid secured and unsecured debt
Your open loan accounts
How long you have had your loan accounts open
Credit account limits
Collections, charge-offs and any derogatory debt
Typically, the higher your credit score, the more loan options you will have. A lower credit score can mean that mortgage choices may be limited to non-conventional loans with broader qualification requirements.
The following are three steps you can take to help boost your credit score:
Check your credit report. Request free credit reports from each major credit bureau (Equifax, TransUnion and Experian) and review them for accuracy.
Pay bills on time. Late payments for credit cards and personal or auto loans can negatively impact your credit score. Making consistent on-time payments is one of the most influential credit score factors. If this is an area of concern, consider setting up automatic payments and commit to paying at least the minimum amount due each month.
Reduce credit utilization ratio (CUR). Demonstrate responsible credit management by lowering your credit card balances as much as possible. Try to keep your credit utilization ratio below 30%, which indicates that you are using a smaller portion of your available credit. Calculate your CUR as follows: Credit Utilization Ratio = (Total Outstanding Balances on Credit Accounts/Available Credit/Total Credit Limit on Accounts) x 100.
Organize Your Finances and Documents
To prepare for your loan officer meeting, determine how much money you have for a down payment, as this will be important when evaluating your loan options and monthly payments. You will also be required to submit numerous financial documents, including:
Photo ID
Pay stubs
Tax returns and W-2s and/or 1099s
Bank statements
All the paperwork may not be necessary during your initial meeting. Still, a jumpstart on document-gathering can help streamline the mortgage application process when your loan officer is ready to review them.
Understand Which Loan Is Right for You
While your lender will look at your complete financial picture before presenting — and explaining — your mortgage options, it is a good idea to have a basic understanding of the choices available. The following are the most common types of home purchase loans:
Each type of loan has its benefits and qualification requirements. When comparing home loans, you’ll want to think about:
How long you intend to stay in the loan
Your down payment and credit score
Your income stability
How much you intend to borrow
How long you plan to stay in and/or own the home
Your future plans, e.g., will you need more space for children or aging parents?
Your budget
Assess Your Budget
After you apply for your mortgage, you’ll go through the underwriting process, whereby all your financial documents will be examined and verified. Because the loan officer will ultimately determine how much you can borrow based on your budget, it’s crucial to provide them with the most accurate information upfront during the application process. Providing inaccurate information before going into processing can impact your qualification on the back end. Taking these steps before your loan officer meeting may help improve your chances that you’ll receive a loan approval:
Review your debt-to-income ratio (DTI) with a licensed loan officer. Your DTI is determined by how much recurring monthly debt you have compared to your monthly gross income. Look at your credit card and loan payments. Having less of your monthly income allocated to debt is a positive indicator of being able to qualify for a loan.
Establish how much you can put down on a home. The higher your down payment, the less you’ll have to borrow.
Determine how much you can afford to pay every month. Your new home expenses are not limited to your mortgage. Consider other costs such as:
Closing costs
Insurance
Property taxes
Potentially higher utility expenses
Any applicable mortgage insurance
Homeowners association fees
You’ll also want to think about how your new mortgage will affect your long-term savings goals, such as saving for retirement or your child’s education.
Questions to Ask the Loan Officer
Whether you’re a first-time homebuyer or a seasoned homeowner, the mortgage process may seem a bit overwhelming. Meeting with a licensed loan officer is an opportunity to get your questions answered so you can better understand the process, the loans available and the fees involved.
The following questions are a starting point for gathering information from your loan officer:
What types of home loans do you offer? Which do you think would best fit my needs?
What are the loan rates, terms and eligibility requirements?
What is the required minimum down payment amount for the different loan options?
Will my loan require mortgage insurance?
Is there a prepayment penalty if I want to pay off my loan early?
Do you offer a letter, certification, pre-approval or something similar I can provide sellers to validate my qualifications?
What will my closing costs be?
Can I lock in my interest rate?
Who will be my primary contact? Will it be you or someone else once the loan moves to underwriting?
Can I buy discount mortgage points? How long will it take to recoup them?
These are fees paid at closing that can help you lower your monthly mortgage payment.
How long is the mortgage process? When can I expect to close?
Will the loan closing take place in person or online?
Take your time to ask all the questions you need. A mortgage is a significant financial commitment, and you want to be confident that you’re making the most informed decision. If your loan officer is impatient or reluctant to answer your questions, that may be a sign that they’re not the right lender for you. A loan officer should be a borrower’s advocate and take the time to educate them throughout the process.
Interest Rate Lock
Mortgage rates constantly fluctuate, so asking for an interest rate lock is a smart idea if you find a good rate. An interest rate lock, also known as a locked-in rate, is a guarantee from a lender to give you a set interest rate when you apply for a mortgage. It protects borrowers against potential interest rate increases during the mortgage underwriting process.
Rates can generally be locked for an option of 30, 45, 60 or even 90 days. They are usually locked after the loan application has been reviewed and before underwriting. Lenders have different policies regarding rate locks, including fees, so inquire about policies when comparing lenders.
How Long Is the Process?
The mortgage loan timeline, consisting of a BuyerReady Certification, applying for the loan and underwriting, varies from 30 to 60 days or longer. Some factors that hinder the mortgage process include:
When borrowers do not have all their documents in order or provide inaccurate or incomplete information
When borrowers have more complex situations, such as credit issues
When lenders experience delays obtaining verifications, such as your credit history from the credit bureaus, rental records from a landlord or employment information
Stricter regulations that require lenders to accommodate more compliance checks
While some delays may be beyond your control, here are a few tips that could help expedite the loan process:
Gather as many financial documents as possible before applying for the loan
Do not omit any required information
Respond promptly to your lender’s questions or documentation requests
Stay in frequent communication with your lender and address any issues quickly
Try to avoid making any major financial changes during this time, such as changing jobs or taking on significant new debt
Get a List of All Paperwork Needed
Submitting documents is a requisite part of the home loan application and approval process. All lenders require certain documents to verify your financial and personal information to assess your creditworthiness and ability to repay your loan. The documentation will give your lender insight into your financial situation, income, assets and liabilities. While you should check with your lender to see what specific documentation they will need, at a minimum, lenders will typically ask for:
Employment verification, including pay stubs
Social Security, pension or retirement income, if retired
Evidence of any other forms of income, such as child support
Tax returns for the past two years
Bank statements for your checking and savings accounts
Statements for other assets like your investment and retirement accounts
Student loan details
Information on any debt you have, such as auto or student loans
Gift letter, if family members are contributing funds toward the down payment
Rental payment history, if applicable
There’s a lot that goes into choosing the right lender. But finding one that offers a loan that aligns with your financial goals and provides a positive borrowing experience is essential. With some due diligence, you’ll find a reputable lender to guide and support you through the mortgage process as you make the move toward your next home.
As a top national mortgage lender, Pennymac has loan experts who specialize in purchase loans to help homebuyers through the mortgage process and ensure a seamless home-buying experience. Plus, they can help you get BuyerReady Certified so you’ll know how exactly much money you can borrow and be more confident when looking for a home. Interested to learn more about what Pennymac can do for you? Get a custom instant rate quote today.
Average mortgage rates just inched lower yesterday. And they were effectively unchanged over the last seven days.
Next week, the direction those rates take will probably hinge almost entirely on Friday’s jobs report and appearances before Congress of the Federal Reserve’s chair. (More on those below.) Of course, nobody knows what they will say. So, once again, I’m forced to say mortgage rates next week could go either way.
Find and lock a low rate
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.27%
7.29%
-0.02
Conventional 15-year fixed
6.68%
6.71%
-0.02
Conventional 20-year fixed
7.11%
7.14%
-0.02
Conventional 10-year fixed
6.59%
6.61%
-0.03
30-year fixed FHA
6.31%
6.98%
-0.08
30-year fixed VA
6.64%
6.75%
Unchanged
5/1 ARM Conventional
6.31%
7.39%
Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Find and lock a low rate
Should you lock a mortgage rate today?
There’s no such thing as certainty in future mortgage rates. However, the chances of their gently gliding lower in 2024 are good. Unfortunately, it’s looking unlikely that the happy trend will arrive before late spring, and possibly well into the summer.
So, my personal rate lock recommendations are now:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
What’s moving current mortgage rates
Next week’s jobs report
Two monthly economic reports vie for the top spot as the most consequential for mortgage rates. One, the jobs report, is due next Friday. And the other, the consumer price index (CPI), is scheduled for the following Tuesday.
We’ll deal with the CPI next week. But let’s look at what the jobs report (formally called the employment situation report) for February might do.
With almost all economic data, mortgage rates tend to fall when the figures in a report are lower than markets are expecting. One exception crops up in the jobs report. It’s better for mortgage rates when the unemployment rate is higher than expected.
Before each report, analysts come up with a consensus forecast. And many investors trade ahead of publication based on the forecast, pricing it into mortgage rates and assets. So, when the forecast is wrong, investors are left scrambling to buy or sell assets as they rebalance their portfolios to reflect reality. The asset that largely determines mortgage rates is a type of bond called a mortgage-backed security (MBS).
So, let’s see what markets are expecting, according to MarketWatch, from the jobs report:
Nonfarm payrolls (new jobs added during the month) — 210,000 in February, down from 353,000 in January
Unemployment rate — 3.7% in February, unchanged from January
Hourly wages — 0.2% in February, down from 0.6% in January
To be clear, mortgage rates tend to fall when economic data are worse than expected. So, we’d like nonfarm payrolls to be below 210,000, hourly wages to have risen more slowly than 0.2%, and the unemployment rate to be higher than 3.7%.
Chances are, the jobs report will on Friday swamp the effects of all the other economic reports next week. But a few of the lesser ones might cause some volatility earlier in the week.
Other important reports next week
The ones most likely to do so are:
January factory orders on Tuesday — Expected to fall to -3.1% from December’s +0.2%
February purchasing managers’ index (PMI) from the Institute for Supply Management (ISM) — Expected to fall slightly
February ADP employment report for the private sector on Wednesday — Expected to rise to 150,000 from 107,000 in January. Sometimes seen as a bellwether for the jobs report
January job openings and labor turnover survey (JOLTS) on Wednesday — Openings are expected to dip slightly to 8.9 million from 9 million in December. A helpful peek under the labor market’s hood
Second reading of productivity during the last quarter of 2023 (Q4/23) on Thursday — Expected to be a shade lower than the first reading at 3.1% compared to 3.2%
We’d need to see big variations from the analysts’ consensus forecasts for these to move mortgage rates far or for long. But any of these might push those rates up or down.
The Fed
Although these and other reports routinely move mortgage rates even when inflation and the Federal Reserve are not front of mind, things are different now. Investors tend to view the data through the prism of how they might affect the Fed’s decisions on the timing and scope of future cuts to general interest rates.
One way they can gauge that is by listening to what top Fed officials say in public. And those have nine speaking engagements next week.
Most importantly, Fed Chair Jerome Powell is due to provide evidence to Congress next Wednesday and Thursday. His voice is highly influential and his testimony could easily move mortgage rates.
The Fed will next decide on rate policy on Mar. 20. Very few expect it to cut general interest rates that day. But Wall Street hopes it will strongly hint at cuts at the May or June meetings of its rate-setting committee.
Economic reports next week
See above for details about the more important economic reports next week.
In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.
Monday — Nothing
Tuesday — February ISM PMI. Also factory orders for January
Wednesday — Fed Chair Jerome Powell testifies to Congress. Also February’s ADP employment report and January’s JOLTS
Thursday — Fed Chair Jerome Powell testifies to Congress (again). Plus productivity in Q4/23. And initial jobless claims for the week ending Mar. 2
Friday — February jobs report
The jobs report is by far the most important publication next week. But watch out, too, for the Fed chair’s appearances before Congress.
Time to make a move? Let us find the right mortgage for you
Mortgage rates forecast for next week
Once again, mortgage rates are unpredictable next week. Whether they move higher or lower will largely depend on the jobs report (which regularly confounds analysts’ forecasts) and on what Fed Chair Jerome Powell tells Congress.
How your mortgage interest rate is determined
A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.
Your part
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
Shopping around for your best mortgage rate — They vary widely from lender to lender
Boosting your credit score — Even a small bump can make a big difference to your rate and payments
Saving the biggest down payment you can — Lenders like you to have real skin in this game
Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on something called you “PITI.” That stands for:
Principal — Pays down the amount you borrowed
Interest — The price of borrowing
Taxes — Specifically property taxes
Insurance — Specifically homeowners insurance
Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Down payment assistance programs in every state for 2023
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
The VA home loan: Unbeatable benefits for veterans
For many who qualify, VA home loans are some of the best mortgages available.
Verify your VA loan eligibility. Start here
Backed by the U.S. Department of Veterans Affairs, VA loans are designed to help active-duty military personnel, veterans and certain other groups become homeowners at an affordable cost.
The VA loan asks for no down payment, requires no mortgage insurance, and has lenient rules about qualifying, among many other advantages.
Here’s everything you need to know about qualifying for and using a VA loan.
In this article (Skip to…)
Top 10 VA loan benefits
1. No down payment on a VA loan
Most home loan programs require you to make at least a small down payment to buy a home. The VA home loan is an exception.
Verify your VA loan eligibility. Start here
Rather than paying 5%, 10%, 20% or more of the home’s purchase price upfront in cash, with a VA loan you can finance up to 100% of the purchase price.
The VA loan is a true no-money-down home mortgage opportunity.
2. No mortgage insurance for VA loans
Typically, lenders require you to pay for mortgage insurance if you make a down payment that’s less than 20%.
This insurance — which is known as private mortgage insurance (PMI) for a conventional loan and a mortgage insurance premium (MIP) for an FHA loan — would protect the lender if you defaulted on your loan.
VA loans require neither a down payment nor mortgage insurance. That makes a VA-backed mortgage very affordable upfront and over time.
3. VA loans have a government guarantee
There’s a reason why the VA loan comes with such favorable terms.
The federal government guarantees these loans — meaning a portion of the loan amount will be repaid to the lender even if you’re unable to make monthly payments for whatever reason.
This guarantee encourages and enables private lenders to offer VA loans with exceptionally attractive terms.
4. You can shop for the best VA loan rates
VA loans are neither originated nor funded by the VA. They are not direct loans from the government. Furthermore, mortgage rates for VA loans are not set by the VA itself.
Instead, VA loans are offered by U.S. banks, savings-and-loans institutions, credit unions, and mortgage lenders — each of which sets its own VA loan rates and fees.
This means you can shop around and compare loan offers and still choose the VA loan that works best for your budget.
5. VA loans don’t allow a prepayment penalty
A VA loan won’t restrict your right to sell the property partway through your loan term.
There’s no prepayment penalty or early-exit fee no matter within what time frame you decide to sell your home.
Furthermore, there are no restrictions regarding a refinance of your VA loan.
You can refinance your existing VA loan into another VA loan via the agency’s Interest Rate Reduction Refinance Loan (IRRRL) program, or switch into a non-VA loan at any time.
6. VA mortgages come in many varieties
A VA loan can have a fixed rate or an adjustable rate. In addition, you can use a VA loan to buy a house, condo, new-built home, manufactured home, duplex, or other types of properties.
Or, it can be used for refinancing your existing mortgage, making repairs or improvements to your home, or making your home more energy-efficient.
The choice is yours. A VA-approved lender can help you decide.
Verify your VA loan eligibility. Start here
7. It’s easier to qualify for VA loans
Like all mortgage types, VA loans require specific documentation, an acceptable credit history, and sufficient income to make your monthly payments.
But, compared to other loan programs, VA loan guidelines tend to be more flexible. This is made possible because of the VA loan guarantee.
The Department of Veterans Affairs genuinely wants to make the loan process easier for military members, veterans, and qualifying military spouses to buy or refinance a home.
8. VA loan closing costs are lower
The VA limits the closing costs lenders can charge to VA loan applicants. This is another way that a VA loan can be more affordable than other types of loans.
Money saved on closing costs can be used for furniture, moving costs, home improvements, or anything else.
9. The VA offers funding fee flexibility
VA loans require a “funding fee,” an upfront cost based on your loan amount, your type of eligible service, your down payment size, and other factors.
Funding fees don’t need to be paid in cash, though. The VA allows the fee to be financed with the loan, so nothing is due at closing.
And, not all VA borrowers will pay it. VA funding fees are normally waived for veterans who receive VA disability compensation and for unmarried surviving spouses of veterans who died in service or as a result of a service-connected disability.
10. VA loans are assumable
Most VA loans are “assumable,” which means you can transfer your VA loan to a future home buyer if that person is also VA-eligible.
Assumable loans can be a huge benefit when you sell your home — especially in a rising mortgage rate environment.
If your home loan has today’s low rate and market rates rise in the future, the assumption features of your VA become even more valuable.
VA loan rates
The VA loan is viewed as one of the lowest-risk mortgage types available on the market.
Verify your VA loan eligibility. Start here
This safety allows banks to lend to veteran borrowers at lower interest rates.
Today’s VA loan rates*
Loan Type
Current Mortgage Rate
VA 30-year FRM
% (% APR)
Conventional 30-year FRM
% (% APR)
VA 15-year FRM
% (% APR)
Conventional 15-year FRM
% (% APR)
*Current rates provided daily by partners of the Mortgage Reports. See our loan assumptions here.
VA rates are more than 25 basis points (0.25%) lower than conventional rates on average, according to data collected by mortgage software company Ellie Mae.
Most loan programs require higher down payment and credit scores than the VA home loan. In the open market, a VA loan should carry a higher rate due to more lenient lending guidelines and higher perceived risk.
Yet the result of the Veterans Affairs efforts to keep veterans in their homes means lower risk for banks and lower borrowing costs for eligible veterans.
VA mortgage calculator
Eligibility
Am I eligible for a VA home loan?
Contrary to popular belief, VA loans are available not only to veterans, but also to other classes of military members.
Find and lock a low VA loan rate today. Start here
The list of eligible VA borrowers includes:
Active-duty service members
Members of the National Guard
Reservists
Surviving spouses of veterans
Cadets at the U.S. Military, Air Force or Coast Guard Academy
Midshipmen at the U.S. Naval Academy
Officers at the National Oceanic & Atmospheric Administration.
A minimum term of service is typically required.
Minimum service required for a VA mortgage
VA home loans are available to active-duty service members, veterans (unless dishonorably discharged), and in some cases, surviving family members.
To be eligible, you need to meet one of these service requirements:
You’ve served 181 days of active duty during peacetime
You’ve served 90 days of active duty during wartime
You’ve served six years in the Reserves or National Guard
Your spouse was killed in the line of duty and you have not remarried
Your eligibility for the VA home loan program never expires.
Veterans who earned their VA entitlement long ago are still using their benefit to buy homes.
The VA loan Certificate of Eligibility (COE)
What is a COE?
In order to show a mortgage company you are VA-eligible, you’ll need a Certificate of Eligibility (COE). Your lender can acquire one for you online, usually in a matter of seconds.
Verify your VA home loan eligibility. Start here
How to get your COE (Certificate of Eligibility)
Getting a Certificate of Eligibility (COE) is very easy in most cases. Simply have your lender order the COE through the VA’s automated system. Any VA-approved lender can do this.
Alternatively, you can order your certificate yourself through the VA benefits portal.
If the online system is unable to issue your COE, you’ll need to provide your DD-214 form to your lender or the VA.
Does a COE mean you are guaranteed a VA loan?
No, having a Certificate of Eligibility (COE) doesn’t guarantee a VA loan approval.
Your COE shows the lender you’re eligible for a VA loan, but no one is guaranteed VA loan approval.
You must still qualify for the loan based on VA mortgage guidelines. The guarantee part of the VA loan refers to the VA’s promise to the lender of repayment if the borrower defaults.
Qualifying for a VA mortgage
VA loan eligibility vs. qualification
Being eligible for VA home loan benefits based on your military status or affiliation doesn’t necessarily mean you’ll qualify for a VA loan.
You still have to qualify for a VA mortgage based on your credit, debt, and income.
Verify your VA loan eligibility. Start here
Minimum credit score for a VA loan
The VA has established no minimum credit score for a VA mortgage.
However, many VA mortgage lenders require minimum FICO scores of 620 or higher — so apply with many lenders if your credit score might be an issue.
Even VA lenders that allow lower credit scores don’t accept subprime credit.
VA underwriting guidelines state that applicants must have paid their obligations on time for at least the most recent 12 months to be considered satisfactory credit risks.
In addition, the VA usually requires a two-year waiting period following a Chapter 7 bankruptcy or foreclosure before it will insure a loan.
Borrowers in Chapter 13 must have made at least 12 on-time payments and secure the approval of the bankruptcy court.
Verify your VA loan home buying eligibility. Start here
VA loan debt-to-income ratios
The relationship of your debts and your income is called your debt-to-income ratio, or DTI.
VA underwriters divide your monthly debts (car payments, credit cards, and other accounts, plus your proposed housing expense) by your gross (before-tax) income to come up with your debt-to-income ratio.
For instance:
If your gross income is $4,000 per month
And your total monthly debt is $1,500 (including the new mortgage, property taxes and homeowners insurance, plus other debt payments)
Then your DTI is 37.5% (1500/4000=0.375)
A DTI over 41% means the lender has to apply additional formulas to see if you qualify under residual income guidelines.
VA residual income rules
VA underwriters perform additional calculations that can affect your mortgage approval.
Factoring in your estimated monthly utilities, your estimated taxes on income, and the area of the country in which you live, the VA arrives at a figure which represents your “true” costs of living.
It then subtracts that figure from your income to find your residual income (e.g. your money “left over” each month).
Think of the residual income calculation as a real-world simulation of your living expenses.
It is the VA’s best effort to ensure that military families have a stress-free homeownership experience.
Here is an example of how residual income works, assuming a family of four which is purchasing a 2,000 square-foot home on a $5,000 monthly income.
Future house payment, plus other debt payments: $2,500
Monthly estimated income taxes: $1,000
Monthly estimated utilities at $0.14 per square foot: $280
This leaves a residual income calculation of $1,220.
Now, compare that residual income to for a family of four:
Northeast Region: $1,025
Midwest Region: $1,003
South Region: $1,003
West Region: $1,117
The borrower in our example exceeds VA’s residual income standards in all parts of the country.
Therefore, despite the borrower’s debt-to-income ratio of 50%, the borrower could get approved for a VA loan.
Verify your VA loan eligibility. Start here
Qualifying for a VA loan with part-time income
You can qualify for this type of financing even if you have a part-time job or multiple jobs.
You must show a 2-year history of making consistent part-time income, and stability in the number of hours worked. The lender will make sure any income received appears stable. See our complete guide to getting a mortgage when you’re self-employed or work part-time.
VA funding fees and loan limits
About the VA funding fee
The VA charges an upfront fee to defray the costs of the program and make it sustainable for the future.
Veterans pay a lump sum that varies depending on the loan purpose and down payment amount.
The fee is normally wrapped into the loan. It does not add to the cash needed to close the loan.
Find out if you qualify for a VA loan. Start here
VA home purchase funding fees
Type of Military Service
Down Payment
Fee for First-Time Use
Fee for Subsequent Use
Active Duty, Reserves, and National Guard
None
2.3%
3.6%
5% or more
1.65%
1.65%
10% or more
1.4%
1.4%
VA cash-out refinance funding fees
Type of Military Service
Fee for First-Time Use
Fee for Subsequent Uses
Active Duty, Reserves, and National Guard
2.3%
3.6%
VA streamline refinances (IRRRL) & assumptions
Type of Military Service
Fee for First-Time Use
Fee for Subsequent Uses
Active Duty, Reserves, and National Guard
0.5%
0.5%
Manufactured home loans not permanently affixed
Type of Military Service
Fee for First-Time Use
Fee for Subsequent Uses
Active Duty, Reserves, and National Guard
1.0%
1.0%
VA loan limits in 2024
VA loan limits have been repealed, thanks to the Blue Water Navy Vietnam Veterans Act of 2019.
There is no maximum amount for which a home buyer can receive a VA loan, at least as far as the VA is concerned.
However, private lenders may set their own limits. So check with your lender if you are looking for a VA loan above local conforming loan limits.
Verify your VA loan eligibility. Start here
Eligible property types
Houses you can buy with a VA loan
VA mortgages are flexible about what types of property you can and can’t purchase. A VA loan can be used to buy a:
Detached house
Condo
New-built home
Manufactured home
Duplex, triplex or four-unit property
Find out if you qualify for a VA loan. Start here
You can also use a VA mortgage to refinance an existing loan for any of those types of properties.
VA loans and second homes
Federal regulations limit loans guaranteed by the Department of Veterans Affairs to “primary residences” only.
However, “primary residence” is defined as the home in which you live “most of the year.”
Therefore, if you own an out-of-state residence in which you live for more than six months of the year, this other home, whether it’s your vacation home or retirement property, becomes your official “primary residence.”
For this reason, VA loans are popular among aging military borrowers.
Buying a multi-unit home with a VA loan
VA loans allow you to buy a duplex, triplex, or four-plex with 100% financing. You must live in one of the units.
Buying a home with more than one unit can be challenging.
Mortgage lenders consider these properties riskier to finance than traditional, single-family residences, so you’ll need to be a stronger borrower.
VA underwriters must make sure you will have enough emergency savings, or cash reserves, after closing on your house. That’s to ensure you’ll have money to pay your mortgage even if a tenant fails to pay rent or moves out.
The minimum cash reserves needed after closing is six months of mortgage payments (covering principal, interest, taxes, and insurance – PITI).
Your lender will also want to know about previous landlord experience you’ve had, or any experience with property maintenance or renting.
If you don’t have any, you may be able to sidestep that issue by hiring a property management company. But that’s up to the individual lender.
Your lender will look at the income (or potential income) of the rental units, using either existing rental agreements or an appraiser’s opinion of what the units should fetch.
They’ll usually take 75% of that amount to offset your mortgage payment when calculating your monthly expenses.
VA loans and rental properties
You cannot use a VA loan to buy a rental property. You can, however, use a VA loan to refinance an existing rental home you once occupied as a primary home.
For home purchases, in order to obtain a VA loan, you must certify that you intend to occupy the home as your principal residence.
If the property is a duplex, triplex, or four-unit apartment building, you must occupy one of the units yourself. Then you can rent out the other units.
The exception to this rule is the VA’s Interest Rate Reduction Refinance Loan (IRRRL).
This loan, also known as the VA Streamline Refinance, can be used for refinancing an existing VA loan on a home where you currently live or where you used to live, but no longer do.
Check your VA IRRRL eligibility. Start here
Buying a condo with a VA loan
The VA maintains a list of approved condo projects within which you may purchase a unit with a VA loan.
At VA’s website, you can search for the thousands of approved condominium complexes across the U.S.
If you are VA-eligible and in the market for a condo, make sure the unit you’re interested in is approved.
As a buyer, you are probably not able to get the complex VA-approved. That’s up to the management company or homeowner’s association.
If a condo you like is not approved, you must use other financing like an FHA or conventional loan or find another property.
Note that the condo must meet FHA or conventional guidelines if you want to use those types of financing.
Veteran mortgage relief with the VA loan
The U.S. Department of Veterans Affairs, or VA, provides home retention assistance. The VA intervenes when a veteran is having trouble making home loan payments.
The VA works with loan servicers to offer loan options to the veteran, other than foreclosure.
Find out if you qualify for a VA loan. Start here
In fiscal year 2019, the VA made over 400,000 contact actions to reach borrowers and loan servicers. The intent was to work out a mutually agreeable repayment option for both parties.
More than 100,000 veteran homeowners avoided foreclosure in 2019 alone thanks to this effort.
The initiative has saved the taxpayer an estimated $2.6 billion. More importantly, vast numbers of veterans and military families got another chance at homeownership.
When NOT to use a VA loan
If you have good credit and 20% down
A primary advantage to VA home loans is the lack of mortgage insurance.
However, the VA guarantee does not come free of charge. Borrowers pay an upfront funding fee, which they usually choose to add to their loan amount.
The fee ranges from 1.4% to 3.6%, depending on the down payment percentage and whether the home buyer has previously used his or her VA mortgage eligibility. The most common fee is 2.3%.
Find out if you qualify for a VA loan. Start here
On a $200,000 purchase, a 2.3% fee equals $4,600.
However, buyers who choose a conventional mortgage and put 20% down get to avoid mortgage insurance and the upfront fee. For these military home buyers, the VA funding fee might be an unnecessary expense.
The exception: Mortgage applicants whose credit rating or income meets VA guidelines but not those of conventional mortgages may still opt for VA.
If you’re on the “CAIVRS” list
To qualify for a VA loan, you must prove you have made good on previous government-backed debts and that you have paid taxes.
The Credit Alert Verification Reporting System, or “CAIVRS,” is a database of consumers who have defaulted on government obligations. These individuals are not eligible for the VA home loan program.
If you have a non-veteran co-borrower
Veterans often apply to buy a home with a non-veteran who is not their spouse.
This is okay. However, it might not be their best choice.
As the veteran, your income must cover your half of the loan payment. The non-veteran’s income cannot be used to compensate for the veteran’s insufficient income.
Plus, when a non-veteran owns half the loan, the VA guarantees only half that amount. The lender will require a 12.5% down payment for the non-guaranteed portion.
The Conventional 97 mortgage, on the other hand, allows down payments as low as 3%.
Another low-down-payment mortgage option is the FHA home loan, for which 3.5% down is acceptable.
The USDA home loan also requires zero down payment and offers similar rates to VA loans. However, the property must be within USDA-eligible areas.
If you plan to borrow with a non-veteran, one of these loan types might be your better choice.
Explore your mortgage options. Start here
If you apply with a credit-challenged spouse
In states with community property laws, VA lenders must consider the credit rating and financial obligations of your spouse. This rule applies even if he or she will not be on the home’s title or even on the mortgage.
Such states are as follows.
Arizona
California
Idaho
Louisiana
Nevada
New Mexico
Texas
Washington
Wisconsin
A spouse with less-than-perfect credit or who owes alimony, child support, or other maintenance can make your VA approval more challenging.
Apply for a conventional loan if you qualify for the mortgage by yourself. The spouse’s financial history and status need not be considered if he or she is not on the loan application.
Verify your VA loan home buying eligibility. Start here
If you want to buy a vacation home or investment property
The purpose of VA financing is to help veterans and active-duty service members buy and live in their own home. This loan is not meant to build real estate portfolios.
These loans are for primary residences only, so if you want a ski cabin or rental, you’ll have to get a conventional loan.
If you want to purchase a high-end home
Starting January 2020, there are no limits to the size of mortgage a lender can approve.
However, lenders may establish their own limits for VA loans, so check with your lender before applying for a large VA loan.
Spouses and the VA mortgage program
What spouses are eligible for a VA loan?
What if the service member passes away before he or she uses the benefit? Eligibility passes to an unremarried spouse, in many cases.
Find and lock a low VA loan rate today. Start here
For the surviving spouse to be eligible, the deceased service member must have:
Died in the line of duty
Passed away as a result of a service-connected disability
Been missing in action, or a prisoner of war, for at least 90 days
Been a totally disabled veteran for at least 10 years prior to death, and died from any cause
Also eligible are remarried spouses who married after the age of 57, on or after December 16, 2003.
In these cases, the surviving spouse can use VA loan eligibility to buy a home with zero down payment, just as the veteran would have.
VA loan benefits for surviving spouses
Surviving spouses have an additional VA loan benefit, however. They are exempt from the VA funding fee. As a result, their loan balance and monthly payment will be lower.
Surviving spouses are also eligible for a VA streamline refinance when they meet the following guidelines.
The surviving spouse was married to the veteran at the time of death
The surviving spouse was on the original VA loan
VA streamline refinancing is typically not available when the deceased veteran was the only applicant on the original VA loan, even if he or she got married after buying the home.
In this case, the surviving spouse would need to qualify for a non-VA refinance, or a VA cash-out loan.
A cash-out mortgage through VA requires the military spouse to meet home purchase eligibility requirements.
If this is the case, the surviving spouse can tap into the home’s equity to raise cash for any purpose, or even pay off an FHA or conventional loan to eliminate mortgage insurance.
Qualifying if you receive (or pay) child support or alimony
Buying a home after a divorce is no easy task.
If, prior to your divorce, you lived in a two-income household, you now have less spending power and a reduced monthly income for purposes of your VA home loan application.
With less income, it can be harder to meet both the VA Home Loan Guaranty’s debt-to-income (DTI) guidelines and the VA residual income requirement for your area.
Receiving alimony or child support can counteract a loss of income.
Mortgage lenders will not require you to provide information about your divorce agreement’s alimony or child support terms, but if you’re willing to disclose, it can count toward qualifying for a home loan.
Different VA-approved lenders will treat alimony and child support income differently.
Typically, you will be asked to provide a copy of your divorce settlement or other court paperwork to support the alimony and child support payments.
Lenders will then want to see that the payments are stable, reliable, and likely to continue for another 36 months, at least.
You may also be asked to show proof that alimony and child support payments have been made in the past reliably, so that the lender may use the income as part of your VA loan application.
If you are the payor of alimony and child support payments, your debt-to-income ratio can be harmed.
Not only might you be losing the second income of your dual-income households, but you’re making additional payments that count against your outflows.
VA mortgage lenders make careful calculations with respect to such payments.
You can still get approved for a VA loan while making such payments — it’s just more difficult to show sufficient monthly income.
VA loan assumption
What is VA loan assumption?
One benefit for home buyers is that VA loans are assumable. When you assume a mortgage loan, you take over the current homeowner’s monthly payment.
Verify your VA loan home buying eligibility. Start here
That could be a big advantage if mortgage rates have risen since the original owner purchased the home. The buyer would be able to acquire a low-rate, affordable loan — and it could make it easier for the seller to find a willing buyer in a tough market.
VA loan assumption savings
Buying a home via an assumable mortgage loan is even more appealing when interest rates are on the rise.
For example:
Say a seller-financed $200,000 for their home in 2013 at an interest rate of 3.25% on a 30-year fixed loan
Using this scenario, their principal and interest payment would be $898 per month
Let’s assume current 30-year fixed rates averaged 4.10%
If you financed $200,000 at 4.10% for a 30-year loan term, your monthly principal and interest payment would be $966 per month
Additionally, because the seller has already paid four years into the loan term, they’ve already paid nearly $25,000 in interest on the loan.
By assuming the loan, you would save $34,560 over the 30-year loan due to the difference in interest rates. You would also save roughly $25,000 thanks to the interest already paid by the sellers.
That comes out to a total savings of almost $60,000!
How to assume (take on) a VA loan
There are currently two ways to assume a VA loan.
The new buyer is a qualified veteran who “substitutes” his or her VA eligibility for the eligibility of the seller
The new home buyer qualifies through VA standards for the mortgage payment. This is the safest method for the seller as it allows the loan to be assumed knowing that the new buyer is responsible for the loan, and the seller is no longer responsible for the loan
The lender and/or the VA needs to approve a loan assumption.
Loans serviced by a lender with automatic authority may process assumptions without sending them to a VA Regional Loan Center.
For lenders without automatic authority, the loan must be sent to the appropriate VA Regional Loan Center for approval. This loan process will typically take several weeks.
When VA loans are assumed, it’s the servicer’s responsibility to make sure the homeowner who assumes the property meets both VA and lender requirements.
VA loan assumption requirements
For a VA mortgage assumption to take place, the following conditions must be met:
The existing loan must be current. If not, any past due amounts must be paid at or before closing
The buyer must qualify based on VA credit and income standards
The buyer must assume all mortgage obligations, including repayment to the VA if the loan goes into default
The original owner or new owner must pay a funding fee of 0.5% of the existing principal loan balance
A processing fee must be paid in advance, including a reasonable estimate for the cost of the credit report
Find out if you qualify for a VA loan. Start here
Finding assumable VA loans
There are several ways for home buyers to find an assumable VA loan.
Believe it or not, print media is still alive and well. Some home sellers advertise their assumable home for sale in the newspaper, or in a local real estate publication.
There are a number of online resources for finding assumable mortgage loans.
Websites like TakeList.com and Zumption.com give homeowners a way to showcase their properties to home buyers looking to assume a loan.
With the help of the Multiple Listing Service (MLS), real estate agents remain a great resource for home buyers.
This applies to home buyers specifically searching for assumable VA loans as well.
How do I apply for a VA loan?
You can easily and quickly have a lender pull your certificate of eligibility (COE) to make sure you’re able to get a VA loan.
Most mortgage lenders offer VA home loans. So you’re free to shop and compare rates with just about any company that catches your eye.
Getting a VA loan for your new home is similar in many ways to securing any other purchase loan. Once you find an ideal home in your price range, you make a purchase offer, and then undergo VA appraisal and underwriting.
VA appraisal ensures that the home meets its minimum property requirements (MPRs) and is structurally sound and safe for occupancy.
What’s more, VA-specific mortgage lenders are actually some of the highest-rated (and lowest-priced) on the market. Here are a few we’d recommend checking out.
Time to make a move? Let us find the right mortgage for you
In the past, real estate investing was only accessible to the affluent. However, the advent of real estate investment trusts (REITs) has altered this perception.
Investing in real estate through a REIT eliminates the need for purchasing and managing properties individually. This can be a smart way to branch out from the stock market and diversify your investments, yet it’s important to note that economic downturns may still affect your returns.
In this piece, we’ll explore the advantages and disadvantages of REITs and guide you on how to embark on this investment journey.
What is a REIT?
A real estate investment trust (REIT) is a company that owns and operates income-generating real estate. A group of investors will pool their money together to invest in a REIT, which makes it possible for you to earn rental income from real estate without buying and managing it yourself.
REITs invest in all sectors of the real estate market, including apartment buildings, hotels, retail locations, warehouses, and more.
Investing in REITs is popular due to its potential for a stable income and ease of buying and selling as most REITs are publicly traded. Additionally, the wide range of real estate sectors that REITs invest in adds to its appeal, providing investors with diverse investment opportunities.
REIT Requirements
To be recognized as a Real Estate Investment Trust (REIT) by the Internal Revenue Code (IRC), a company must adhere to several guidelines, such as:
Offering shareholders a minimum of 90% of taxable income as dividends each year.
Investing a minimum of 75% of its resources in real estate assets or cash.
Generating at least 75% of its gross income through real estate rentals, mortgage interest, or sales.
Being taxed as a corporation.
Maintaining a board of directors or trustees.
Having a minimum of 100 shareholders after its first year in operation.
Limiting the ownership of its shares by no more than five individuals, with each holding no more than 50% of the total shares
The Pros and Cons of Investing in REITs
There are upsides and downsides to any investment decision, and REITs are no exception. If you’re on the fence about investing in a REIT, here are a few things you should consider first.
Pros
Diversify your portfolio: Investing in a REIT is a good way to diversify your portfolio outside the stock market. And it allows you to invest in real estate without having to take on the risk of buying and managing the properties yourself.
Steady stream of income: Many people are drawn to REITs for the steady dividend payments. By law, a REIT must distribute at least 90% of its taxable income to its shareholders.
Less volatile investment: There is no such thing as a risk-free investment, but REITs do tend to be less volatile than the stock market.
Liquid asset: Unlike physical real estate, REITs are a liquid investment and much easier to buy and sell quickly.
Cons
Some REITs can be risky: Not all REITs are created equal and in particular, non-traded or private REITs are not as easy to sell.
They can be expensive: To begin investing, some REITs require a minimum investment of $25,000.
You may lose dividend payments: During an economic downturn, you could lose your dividend payments if the property stops producing adequate income.
Different Types of REITs
There are several kinds of REITs, depending on how the shares are bought and held. Here is an overview of the different types of REITs you can invest in.
Publicly-Traded Equity REITs
Publicly traded REITs are listed on a public stock exchange, such as the New York Stock Exchange (NYSE) or the NASDAQ. They are regulated by the U.S. Securities and Exchange Commission (SEC).
Individual investors can buy and sell REITs with an ordinary brokerage account. Publicly traded REITs tend to be more transparent and liquid than non-traded or private REITs.
Public Non-Traded REITs
A public non-traded REIT is listed with the SEC but is not listed on an exchange. They can only be purchased through certain types of brokers, and are much harder to buy and sell.
According to the SEC, it can also be much harder to determine the value of a non-traded REIT. Non-traded REITs don’t usually provide an estimate of the value per share until 18 months after the offering closes.
Private REITs
Private REITs are unlisted and aren’t typically regulated by the SEC. This makes them harder to value and a riskier investment. They also tend to be much more expensive, and often require a minimum investment of $25,000 or more.
Equity REITs
An equity REIT operates like a landlord and owns income-producing real estate. The company manages the property, provides basic upkeep, and collects monthly rent payments.
Mortgage REITs
A mortgage REIT doesn’t own the property but instead owns debt securities backed by the property. They collect the monthly payments, but someone else owns and manages the property. This tends to be a riskier investment than an equity REIT, but the shareholder dividends also tend to be higher.
Hybrid REITs
A hybrid REIT is a combination of an equity and mortgage REIT. The company typically owns and operates both real estate properties and commercial real estate mortgages on its portfolio.
How do I invest in a REIT?
Investing in REITs can be done by buying individual REITs listed on public stock exchanges, or by investing in a REIT mutual fund or exchange-traded fund (ETF). The latter offers the advantage of exposure to real estate through a single investment, without the need to buy and manage individual REITs.
If unsure where to begin, seeking the guidance of a broker or financial planner can be helpful in finding the best investment option that suits your needs.
Is investing in a REIT the right choice for me?
Maybe, depending on your level of risk tolerance and financial goals. REITs do have a strong track record of growing dividends and long-term capital appreciation.
Many investors appreciate the steady form of income that a REIT can provide. And publicly traded REITs are regulated by the SEC and professionally managed, so they tend to be pretty transparent.
Bottom Line
Many people are interested in investing in real estate but don’t have the time or money to buy and manage properties on their own. If you find yourself in this situation, REITs could be a suitable alternative for you.
With REITs, you can diversify your investment portfolio and reap the rewards of consistent dividend payments. Additionally, REITs tend to have high liquidity, making them a simpler investment than conventional real estate.
However, non-traded and private REITs can be more risky and opaque, so it’s crucial to thoroughly understand the investment before committing. If unsure, seeking guidance from a financial advisor can help determine the best approach for you.
Interested in learning about different types of REITs? Check out our full review of Fundrise to learn more.
Real Estate Investment Trust FAQs
What is a real estate investment trust (REIT)?
A REIT is a type of investment vehicle that owns and operates income-generating real estate properties. REITs allow individual investors to invest in a diversified portfolio of real estate assets. These include office buildings, apartments, shopping centers, and warehouses.
How do REITs generate income?
REITs generate income by owning and managing a portfolio of income-producing real estate assets, such as apartment buildings, hotels, office buildings, and retail spaces. These assets generate rental income, which is then distributed to REIT shareholders in the form of dividends.
Additionally, REITs can also generate income through the sale of real estate properties or by financing real estate developments, such as mortgage origination or securitization.
How are REITs different from other real estate investment options?
One aspect that sets REITs apart from other real estate investment options is their publicly traded nature. Many REITs can be found on stock exchanges, just like regular stocks, enabling individual investors to purchase and sell REIT shares with ease and agility. This allows individual investors to access real estate investments without the hassle of directly owning and managing properties.
Are REITs a good investment?
Investing in REITs can provide a lucrative opportunity for investors seeking to diversify their portfolio and earn passive income from the real estate market. However, as with any investment, REITs are not without their own set of risks.
It’s imperative to weigh the potential rewards against these risks before making a final investment decision. Researching the investment options available to you can help mitigate potential risks and maximize your chances of success.
What are the risks of investing in REITs?
Investing in REITs can be complex and entails potential risks. Key factors such as economic downturns, interest rate fluctuations, intense competition, subpar management, and limited liquidity can negatively impact REIT returns.
To safeguard your investments, it’s imperative to perform thorough market analysis and seek professional financial advice. This approach helps you establish your investment goals and risk appetite, enabling you to make well-informed decisions and potentially lower the risks associated with REIT investments.
Can REITs be held in a retirement account?
Yes, REITs can be held in a retirement account such as a traditional IRA, Roth IRA, or a 401(k).
Are REIT dividends taxable?
Yes, REIT dividends are generally taxable as ordinary income. However, REITs may also pay capital gains distributions, which are taxable at the capital gains rate.
How do I buy REITs?
REITs can be purchased through a brokerage account, just like stocks. You can place an order to buy REIT shares online, over the phone, or through a broker.
Can I buy REITs directly from the company?
While a few REITs offer the option to buy shares directly from the company, this is not a widespread practice. Typically, REITs are listed on stock exchanges and can only be acquired through a brokerage account.
Are REITs suitable for all investors?
REITs may not be suitable for all investors. Assess your financial aspirations, risk appetite, and investment timeline to determine if REITs align with your investment strategy. To make informed investment choices, it’s advisable to either seek advice from a financial expert or conduct extensive research.
If you had $20,000, how would you spend it? One of the smartest things you could do if you suddenly came into an extra $20,000 – or managed to save that much money over time – would be to invest it. But where? And how?
The right answer differs for everyone and depends on your financial objectives, comfort level with risk, and time horizon. This guide illuminates 10 ideal ways to invest $20,000 and maximize your returns.
Set Your Investment Goals and Assess Your Risk Tolerance
Establishing clear financial objectives and measuring your tolerance for risk should serve as the cornerstone of your investment decisions. For instance, if you’re eyeing retirement, long-term investments like stocks or real estate might be right up your alley. Conversely, if your goal is to accumulate funds for a house down payment in five years, safer options like a high yield savings account may be more appealing.
Risk tolerance plays an equally critical role. If the thought of market volatility unsettles you, safer options with lower returns might suit you better. But if you can handle a higher level of risk for the prospect of higher returns, you might explore riskier ventures like individual stocks or even cryptocurrencies. A consultation with an in-person financial advisor can help you decipher your financial goals and risk tolerance.
10 Best Ways to Invest $20K
As you prepare to grow your $20k investment, an array of options awaits. Your financial goals, risk tolerance, and timeline will guide you to the ideal choice. Here are 10 ways to strategically invest your $20k:
1: High-Yield Savings Accounts
High-yield savings accounts are a low-risk, steady-growth choice for those looking to invest $20k. They offer more competitive interest rates than traditional savings accounts, meaning your money works harder for you. The Federal Deposit Insurance Corporation (FDIC) protects these accounts, offering an additional layer of security and peace of mind.
This investment route is particularly beneficial if you prefer having your emergency fund accessible, or if you’re saving for near-term goals. Despite the returns being lower than riskier investment options, the safety and stability they provide make high-yield savings accounts an attractive option for many investors.
2: Bitcoin
Bitcoin has emerged as a prominent player in the investment world, offering a high-risk, high-reward dynamic that appeals to some investors. The value of Bitcoin is notoriously volatile, yet its remarkable growth cannot be ignored.
Over the past decade, Bitcoin has experienced gains exceeding 5,700%, significantly outpacing traditional markets like the NASDAQ, which had a gain of 336% over the same period. Even within a five-year timeframe, Bitcoin still came out ahead with a 96% increase compared to the NASDAQ’s 69%.
Given its digital nature and decentralized structure, investing in Bitcoin can be complex and fraught with unique risks. Unlike traditional currencies, Bitcoin operates independently of a central bank. Furthermore, its value is susceptible to sharp fluctuations influenced by a variety of factors, including market demand, investor sentiments, regulatory news, and macroeconomic trends.
Ready to dive into Bitcoin investing? Consider Swan Bitcoin, where you can easily set up recurring buys or make instant purchases right from your bank account.
3: Stock Market Investing
Stock market investing is a viable path for those seeking to grow their $20k investment, especially for long-term financial goals. Today’s investing apps make it easy to start investing with as little as $1 and to diversify your investments with fractional shares if you desire.
When considering individual stocks, potential returns can be substantial, but they often come with a higher level of risk. By holding a variety of stocks across different sectors and regions, a diversified portfolio can help mitigate these risks, providing a buffer against market volatility.
As an investor, it’s important to remember that past performance doesn’t guarantee future results. The stock market has demonstrated remarkable growth over time, but it’s not immune to periods of downturn. Staying resilient and maintaining a long-term perspective can help you deal with these fluctuations.
4: Mutual Funds and Exchange-Traded Funds (ETFs)
Mutual funds and ETFs offer investors an easy way to diversify their portfolios. These funds allow investors to buy a stake in a wide range of stocks and bonds, spreading the risk and potentially improving the returns over time.
Financial institutions manage mutual funds and ETFs, charging management fees for the expertise they provide in managing and selecting the assets within the funds. While mutual funds often require a significant initial investment, ETFs are more accessible for investors, as most brokerage firms offer a wide variety of ETFs with no minimum investment requirements.
Index funds, a subtype of mutual funds or ETFs, aim to replicate the performance of a specific market index, such as the S&P 500. These types of funds are a popular choice among passive investors due to their typically lower management fees compared to actively managed funds. The strategy of mimicking the market rather than attempting to outperform it allows investors to enjoy broad market returns while keeping costs low.
5: Bonds and Treasury Securities
For more conservative investors, bonds and Treasury securities offer a safer, lower-yield alternative. When you purchase a bond, you’re essentially loaning money to a corporation or government entity. In return, you receive interest payments over a specified period and the return of the principal amount at the bond’s maturity.
Treasury securities are a type of bond issued by the U.S. government, widely regarded as one of the safest investment vehicles. For broader exposure, bond ETFs and bond mutual funds allow you to diversify across different types of bonds, reducing the impact of any single bond defaulting.
6: Robo-Advisors
For those who prefer a hands-off approach to investing, robo-advisors can be an excellent option. These digital platforms create and manage your investment portfolio using sophisticated algorithms, taking into account factors such as your risk tolerance, investment goals, and time horizon.
Robo-advisors typically charge lower fees than traditional financial advisors, making them a cost-effective choice, especially for beginners or those with simpler financial situations. They offer a straightforward path to diversification and automatic portfolio rebalancing, reducing the need for constant monitoring and manual adjustments. It’s an appealing solution for those looking to invest $20k while minimizing time and effort spent on investment management.
Most robo-advisor platforms offer exposure to stocks, bonds, ETFs, and mutual funds.
7: Real Estate Investing
Real estate has proven to be a lucrative asset class for many investors. Income-producing real estate, like rental properties, can generate a steady flow of rental income, with potential property appreciation over time. However, property management can be time-intensive and comes with additional costs such as maintenance and property taxes.
If the idea of becoming a landlord doesn’t appeal to you, you might want to consider investing in real estate investment trusts (REITs). These publicly-traded companies own, operate, or finance income-producing real estate, allowing you to dip your toes into real estate without the hassle of managing properties.
8: Peer-to-Peer Lending
Peer-to-peer lending, an alternative form of investing, involves lending money to individuals or small businesses through online platforms that match lenders with borrowers. As an investor, you can potentially enjoy higher returns than those offered by traditional savings or money market accounts. However, this approach comes with its own set of risks, including the risk of borrower default.
To safeguard against potential losses from defaults, it’s wise to diversify your lending across different borrowers. This practice, similar to diversification in a stock portfolio, can help spread the risk, increasing your chances of overall success.
9: Investing in a Small Business or Start-up
Investing in a small business or a start-up offers an opportunity to potentially reap significant returns. However, it is a high-risk venture and typically requires becoming an accredited investor. As an accredited investor, you’ll need to meet specific income and net worth criteria, emphasizing the fact that this investment option is not for everyone.
Due to the inherent risk, this investment path should only be considered if you’re financially secure enough to withstand potential losses. Remember, while investing in a burgeoning business can be lucrative, it could also result in losing your entire investment.
10: Education and Skill-Building
Often overlooked in investment discussions, investing in yourself through education and skill-building can offer meaningful long-term returns. Whether it’s advancing your current job skills, earning a new certification, or exploring a new field, enhancing your knowledge base and skills can lead to increased earning potential and greater job satisfaction.
While the returns may not be immediate or easily quantifiable like other investments, investing in your personal and professional growth can open doors to new opportunities and provide long-lasting benefits. This is a valuable investment that you can make, regardless of market conditions.
What to Consider Before Investing
Before you venture into investing, it’s crucial to have an emergency fund, ideally three to six months’ worth of living expenses, set aside. Additionally, paying off high-interest debt, like credit card debt, should be a priority. The average credit card account interest rates often outpace the returns you’d earn from investments.
Consider the tax implications of your investments. Some investments, like taxable brokerage accounts, are subject to capital gains tax, while others, like Roth IRAs, offer tax-free income in retirement.
Finally, diversification is a key strategy to manage risk. By spreading your money across different types of investments (stocks, bonds, real estate), you can better weather market fluctuations.
Conclusion
Wisely investing 20k requires careful consideration of your financial goals, comfort level with risk, and investment timeline. Whether you choose high-yield savings accounts, the stock market, real estate, or another option, the goal is to grow your wealth over time and move closer to achieving financial freedom.
Regardless of your chosen path, remember that investing involves risks, including potential loss of principal. So, it’s crucial to review any investment strategy periodically to ensure it still aligns with your financial objectives. Consider seeking advice from a financial planner or other professionals to help guide your investment journey.
Looking for a real estate side hustle? Whether you are looking for passive income ideas or if you are looking for a part-time job (or more!), there are many different real estate side hustles. I have done a few different real estate side gigs, and I know many people who have side hustles in this…
Looking for a real estate side hustle?
Whether you are looking for passive income ideas or if you are looking for a part-time job (or more!), there are many different real estate side hustles.
I have done a few different real estate side gigs, and I know many people who have side hustles in this area as well. To get started in real estate, you don’t have to spend a lot of money – there are several real estate side gigs that can be started even if you are brand new or are on a budget.
Key Takeaways
Real estate side hustles have a range of options from income generating assets to freelance opportunities to office jobs.
You can supplement your income with both short-term and long-term real estate strategies.
Finding the right fit depends on your availability, investment capacity, and financial goals.
Best Real Estate Side Hustles
Here’s a quick summary of some of the different best real estate side hustles:
House hacking: Buy a property, live in one unit, and rent out the rest.
REIT investing: An easy way to start investing in real estate with less capital.
Airbnb rentals: Rent out a spare room or an entire property on a short-term basis.
Property management: If you’re organized and good with people, managing properties for others could be a perfect fit.
Long-term rentals: Becoming a landlord can generate steady cash flow.
Fix and flip: Buy properties that need work, renovate them, and sell them for a profit.
Below, you will read the full list and learn more about each one.
1. House flipping
Flipping houses can be a good real estate side hustle if you like real estate and enjoy fixing things up.
When you flip houses, you’re basically buying homes, making them better with repairs and upgrades, and then selling them to make more money.
The first thing to do for a successful house flip is to find a property that can be made better, such as by looking for homes in neighborhoods that are getting better or have room to grow. Think about things like where it is, what the market is like, and the condition of the property.
Before putting money into anything, it’s important to carefully look at the finances. You’ll want to figure out how much it will cost to buy, fix, and keep the property, and think about things like the cost of materials, paying workers, getting a loan, and the costs while you’re fixing things.
To flip a house well, you need to make smart changes that make the property better, without spending too much, by concentrating on important areas like the kitchen and bathrooms, and fixing any big problems with the structure or safety.
Recommended reading: 10 Best Books on Flipping Houses To Make Money
2. Investing in REITs
Real Estate Investment Trusts (REITs) are companies that own, operate, or finance income-generating real estate. They are a way for you to invest in real estate without directly managing or owning properties.
An REIT is like a company that owns and takes care of real estate that makes money. They sell shares of this company to people, kind of like how stocks work.
When you invest in REITs, you can earn money from the real estate world without actually owning any property. So, if you don’t want to deal with being a landlord, this could be a good option. It’s way less work than owning property and handling it yourself.
You can even spread out your money and invest in different kinds of properties with REITs, like houses, offices, factories, and stores.
3. Getting a roommate
Getting a roommate in your home, whether that be a full-time roommate or renting out an extra room in your home short-term on Airbnb, can be a great real estate side hustle that doesn’t require very much work from you.
The earnings you can make from having a roommate depend on things like:
Where your home is (an expensive area? rural?)
The space you are renting to a roommate (for example, do they get their own bathroom? private entrance available?)
To find a roommate, you can share about it on your own Facebook page, put up an ad on sites like Craigslist, or make a rental listing on Airbnb. There are lots of places where you can let people know you’re looking for a roommate.
I have had many roommates in the past when I was younger and had a home with spare bedrooms. I would rent them out to long-term renters and people that we personally knew (such as friends and my sister).
Recommended reading: Tips For Renting A Room In Your House.
4. Airbnbs and vacation rentals
Turning your property into an Airbnb or other short-term rental can be a way to generate extra income. This is when you rent out your space, whether a full house, an apartment, or just a room, to travelers for short stays.
Before starting your Airbnb side hustle, be sure to:
Check local laws: Make sure short-term rentals are permitted in your area. There are many areas nowadays that are more strict when it comes to short-term rentals.
Understand the financials: Calculate potential earnings against expenses like mortgage, utilities, and maintenance.
Set up your space: Furnish and decorate to create a welcoming environment.
Market your rental: Use high-quality photos and create listings on rental platforms like Airbnb and Vrbo.
The amount you can earn can vary, with some hosts making around $5,000 to $10,000 a month or more, but this depends on factors such as location, rental type, and occupancy rates. Always plan for occupancy ebbs and flows – it’s part of the short-term rental business.
5. Real estate photography
If you’ve ever looked at a house listing and thought that the pictures looked awful, then this may be the real estate side hustle for you.
Real estate agents many times hire out for the photography side of selling a house, as they know and understand how important good pictures are.
Real estate photography is all about taking pictures of houses and spaces to grab the attention of people who might want to buy them. Real estate photographers might take pictures of the outside of a house, the backyard, the living room, attic, bathroom, and more.
You can start with the equipment you likely already have, like your smartphone, which can work well because phones these days have great cameras.
How you show a property can really impact a client’s chance of selling it. Your photos are not just pictures; they’re an important part of how the property gets advertised.
As you continue with this real estate side hustle, you might think about getting better equipment (like a real camera!), but for now, practice paying attention to details and getting better at taking pictures.
If you’re thinking about doing something extra to earn money in real estate, photography could be a great choice.
Recommended reading: 18 Ways You Can Get Paid To Take Pictures
6. Real estate drone photography
Drone pilots sell real estate photography services to help real estate agents showcase the properties they are selling.
When property listings include pictures from various angles and heights, it gives a different perspective compared to regular photos. This helps show aspects of real estate that traditional pictures might miss.
When you sell property photography services using your drone, you’re providing a valuable service to real estate companies that want to stand out in a crowded housing market.
Homes are increasingly being sold using drone photos, and it’s understandable because they can showcase the surroundings of a home. Also, potential home buyers can see the entire property and house through a drone picture, giving them a better understanding of what the home includes.
Recommended reading: How To Make Money With A Drone
7. Long-term rentals
A long-term rental is when you rent out a property for a long amount of time, usually six months to a year or even longer. An example would be renting out an apartment or house to a family to live in full-time.
Long-term rentals are different from short-term rentals like vacation homes or Airbnb listings. They are meant for people or families looking for a longer place to live.
A benefit of long-term rentals is the reliable and steady income they can give you. When you rent your property to tenants for an extended period, you set up a regular cash flow of rental payments. This stability can be especially nice for people who are looking for a dependable source of passive income.
Plus, it’s usually less work than a short-term rental, because you don’t have to clean the home every few days or find new people to rent out to.
Recommended reading: How This 34 Year Old Owns 7 Rental Homes
8. Buy and hold for long-term wealth
If you want to grow wealth through real estate, the buy-and-hold strategy is a way to achieve lasting growth. This means buying a property and keeping it for an extended period, benefiting from both its increasing value over time and the rental income it makes you over the years.
Some positives to think about with a buy-and-hold real estate side hustle include:
Appreciation: Over time, real estate often increases in value.
Rental income: It can provide a steady cash flow each month.
Tax advantages: Possible deductions can reduce your taxable income.
The buy-and-hold strategy requires patience and a willingness to handle market changes. It’s a long-term approach, not a quick one, but if you stay persistent, you can create an investment portfolio for future financial stability.
9. Notary services for real estate
If you want to get more into the real estate world without becoming an agent or broker, becoming a notary public can be a way to make extra money.
Many documents, including deeds, mortgages, and power of attorney, require notarization to be legally binding.
With a notarization license, you can provide an important service required for different real estate transactions.
Notaries are important because they help make sure that the people signing documents are who they claim to be to prevent fraud.
10. Rental arbitrage
Rental arbitrage is a way to make extra money in real estate without owning a property. You rent a place for a long time and then sublease it as a short-term rental using platforms like Airbnb.
Here’s how to get started:
Check local laws: You’ll want to make sure your city or state allows for short-term rentals.
Make sure the rental allows for you to do this: Not every rental will be okay with you renting it out. You will want to read your rental contract carefully.
Do market research: Understand the demand for short-term rentals in your target area, such as by looking for locations with high tourist traffic or business conferences.
Potential Benefits
Considerations
+ Strong cash flow potential
– Initial setup and furnishing cost
+ Low startup costs compared to buying
– Dependence on short-term rental market stability
Making money in rental arbitrage comes from the difference between the cost of the long-term lease and the income from short-term rentals. The bigger the gap, the more potential for profit. But remember to factor in the expenses of running the rentals, like cleaning and maintenance costs.
11. House hacking
House hacking is a strategic approach to real estate where you purchase a property with multiple units and live in one unit while renting out the others. This is a side hustle because it can help offset your living expenses through the rental income.
House hacking can be an easy starting point if you want to dip your toes into real estate investing with the added perk of reducing your personal living expenses.
Back when we were living in a traditional house, we house hacked for a little while and had a few different roommates live with us. The monthly rent we collected allowed us to lower our house payments and put more money in savings.
We house hacked with our first house, and it was really great for us. Being able to set more money aside even helped me get ready to quit my job to become a full-time blogger.
If you are looking for a good book on the subject of house hacking, then I recommend reading The House Hacking Strategy: How to Use Your Home to Achieve Financial Freedom by Craig Curelop.
Recommended reading: What Is House Hacking & How To Live For Free
12. Real estate agent
A real estate agent is a person who helps people, like you and me, find real estate to buy or sell. They usually earn their income through a commission, which is a percentage of the property’s sale price.
To become a real estate agent and start this real estate career, you only need a high school diploma and a professional license. As of 2021, the median pay, according to the U.S. Bureau of Labor Statistics, is $23.45 per hour, or $48,770 per year.
And, there are tons of real estate agents who make a lot more money than this.
13. Crowdfunding and peer-to-peer lending
If you want to learn how to make extra money in real estate, then crowdfunding and peer-to-peer lending are areas to look into.
Crowdfunding platforms allow you to invest in real estate deals with a smaller amount of money compared to purchasing property outright. This can provide you with passive income through rental returns or potential property value appreciation.
Peer-to-peer lending platforms enable you to lend money directly to borrowers. You can potentially earn higher returns compared to traditional savings accounts, but there is always the risk of a borrower not repaying the loan.
Both crowdfunding and peer-to-peer lending utilize technology to connect investors with individuals seeking funding.
14. Bird dogging
Bird dogging in real estate can be a side hustle where you help find potentially profitable properties for investors. Your skill in spotting undervalued or distressed properties is important.
Here’s what you usually need to do:
Conduct market research to locate properties that are flying under the radar.
Build a network with local real estate investors who are looking for deals.
Learn to use the Multiple Listing Service (MLS) to spot opportunities.
Typically, you’ll be on the lookout for foreclosures, bank-owned properties, and distressed homes due for a quick sale.
As a bird dog, your compensation usually comes from a referral fee after the investor decides to move forward with your find. Importantly, to perform this role, you don’t necessarily need any initial capital, just the time and skill to identify promising investment opportunities.
15. General contractor
General contractors handle the day-to-day activities on construction sites, overseeing tasks from residential remodels to constructing new homes.
This is typically more of a full-time job, but this can sometimes be done as a real estate side hustle.
As a general contractor, you can choose projects that match your schedule and interests, providing flexibility. Despite the responsibilities, this role allows you to play a central role in turning plans into actual buildings, giving you the potential to make extra money.
16. Flip raw land
Getting involved in raw land flipping is when a person finds and buys undeveloped land to sell later at a profit.
The main benefits include a lower initial investment and less complexity compared to traditional real estate investments, as it doesn’t involve renovation or improvements. There are no buildings, instead it may be a lot or acres of land.
Here’s a step-by-step guide on how to start:
Find raw land – Research areas with potential growth or upcoming developments that could boost land value.
Due diligence – Perform thorough checks on land titles, zoning laws, and road access to avoid legal issues.
Pricing strategy – Your selling price should be attractive enough for buyers yet ensure you make a reasonable profit margin.
Sell and negotiate – Use online platforms to reach potential buyers and negotiate the best deal.
17. Rent out your storage space
If you have unused land or space in your home, renting it out for storage space can be an easy way to make passive income.
People have a lot of stuff, and they will pay you to store their stuff in your unused spaces.
You can sell storage solutions for vehicles, boats, personal belongings, and more. You can rent out your parking space, closet, basement, attic storage, and more.
A site where you can list your storage space is called Neighbor and you can earn $100 to $400+ each month. This depends on the demand in your area and the type of storage space you are renting out.
Recommended reading: Neighbor Review: Make Money Renting Your Storage Space
18. Property manager
A property manager side hustle can be a great way to make extra money.
A property manager is a real estate professional who finds and oversees tenants, collects rent, and handles repairs and maintenance activities. It’s a side hustle that property owners pay for because they may not have the time or skills to effectively manage their own property.
Property managers can manage long-term rentals like apartments, short-term rentals like Airbnbs, and even commercial spaces as well.
I have a friend who is a property manager on the side of his full-time construction job – he manages many different types of properties, from second homes to vacation rentals to someone simply being out of town. He checks on their properties to make sure that everything is running smoothly.
19. Home stager
If you’re passionate about real estate and design, starting a side hustle as a home stager could be profitable for you. As a home stager, your job is to improve the appearance of a home before it’s listed for sale.
This often results in faster sales and higher prices, making your service valuable to sellers.
You can start by staging homes for friends or family, if possible, to build a portfolio. Before and after photos are powerful tools to showcase your work.
You can even provide consultations to homeowners who prefer to do the actual staging themselves. In such cases, your design style can be a more budget-friendly option for a do-it-yourself homeowner.
20. Home inspector
We recently bought a house, and our home inspector was actually a home inspector on the side – this was his real estate side hustle! I think he was a city inspector (or something similar) full-time, so he was very knowledgeable in the area.
Home inspection as a side job can be a strategic move if you’re interested in real estate. This job allows for flexibility since you can set your hours, such as by completing home inspections on the weekends or before or after your day job.
You’ll need to invest in proper training and get licensed, which is a process that can be completed relatively quickly.
The responsibilities of a home inspector include:
Inspecting homes for possible problems, like a leak or bad wiring.
Creating and delivering reports based on what you find during the inspection.
21. Real estate appraiser
Real estate appraisers determine the fair market value of a property, and this process is important in transactions, such as home sales and refinances.
Appraisers assess property values by taking notes on unique characteristics and comparing them with similar properties that have sold recently.
They then prepare reports, detailing findings and providing a valuation that banks and other institutions depend on for loans.
22. Real estate wholesaler
Real estate wholesalers are middlemen who find properties under market value, contract them with the seller, and then sell the contract to a buyer, often an investor. Their profit comes from the difference between the contracted price with the seller and the amount the buyer pays.
Here is a quick summary of what a wholesale real estate side hustle is:
Find a distressed property – Search for properties that can be bought below market value.
Evaluate the property – Determine the After Repair Value (ARV) and estimate repair costs.
Secure under contract – Enter into a contract with the seller, giving you the right to purchase.
Find a buyer – Locate an investor interested in buying the contract.
Assign the contract – Transfer your purchasing rights to the investor for a fee.
By becoming skilled at finding good deals and building connections with trustworthy investors, real estate wholesaling can become a profitable real estate side hustle.
23. Start a real estate blog
Starting a real estate blog (or even a real estate YouTube channel or social media account!) can be a good way to make extra money without having to spend a lot of money.
With a real estate blog, you can write about local market insights, home buying and home selling tips, property investment strategies, home improvement and DIY projects, and more.
I have been a blogger for years, and I really love it. I am able to create my own schedule, decide how I make money online, travel whenever I want, and more. And, it all started on the side of my day job – so I definitely think that a real estate blog can be started as a side hustle.
Learn more at How To Start A Blog FREE Course.
Frequently Asked Questions
Below are answers to common questions about real estate side hustles.
Can real estate be a side hustle? Is real estate a good side hustle?
Yes, real estate can be a lucrative side hustle. Many people do real estate activities on a part-time basis, which can include short-term rentals, getting a roommate, and more, with lower time commitments.
Is real estate worth it as a side hustle?
Real estate as a side hustle can be worth it if you are looking for more income streams and have an interest in the housing market or real estate. As you probably noticed above, there are many different kinds of side hustles, so the amount of money you can earn or the amount of time you will spend will just depend on the gig you choose.
How can realtors make extra money?
Realtors can make extra money by managing rental properties, taking part in real estate crowdfunding, selling real estate photography services, and more.
Is real estate a good side hustle for teachers?
Yes, real estate can be a good side hustle for teachers. There are many options that may work for a teacher.
For example, some teachers work as real estate agents on the side. This is possible because you can handle listing and selling homes during weekends, breaks, evenings, and over the summer. However, keep in mind that selling homes might pose challenges, as clients may require your full attention during the day, which could clash with your teaching commitments.
You can find more ideas at 36 Best Side Jobs for Teachers To Make Extra Money.
Which licenses might be required to pursue a side hustle in the real estate field?
Depending on the side hustle, certain licenses like a real estate license may be required. For example, to become a real estate agent or home inspector, you’ll need a specific license. However, if you’re looking into just getting a roommate, then you may not need a license. It all just depends on the real estate side gig you are interested in.
How to make money in real estate without ever buying any property?
As you learned above, you don’t need to personally buy or own real estate in order to make money in real estate. You can invest in REITs, become a notary for real estate transactions, include affiliate marketing for real estate products on a blog, and more.
Real Estate Side Hustles – Summary
I hope you enjoyed this article about real estate side hustles.
Picking the right side hustle gig in real estate might feel overwhelming because there are many choices.
Some people might like jobs where you have to do more, like fixing up houses or taking care of Airbnb rentals. Others might prefer making money without doing much, like through REITs or renting out a spare room.
Whatever you’re into or however much money you have to invest, there are probably real estate side business ideas that fit with what you have and what you want to achieve.
What do you think is the best real estate side hustle?
Average mortgage rates climbed appreciably yesterday, taking them to their highest level in a couple of months. Two different inflation reports were behind last week’s damage.
Mortgage rates might move a little lower next week. That is more of a hope than an expectation. And I’m basing it on nothing more than that little is scheduled for the next seven days, and markets might decide they went too far on Friday. Such delayed reactions happen quite often after sharp movements.
Markets are closed next Monday for the Presidents’ Day holiday. And this should mean mortgage rates won’t move that day. So, the usual daily edition of this report won’t appear.
Find and lock a low rate
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.31%
7.32%
+0.06
Conventional 15-year fixed
6.61%
6.64%
+0.02
Conventional 20-year fixed
7.16%
7.19%
+0.09
Conventional 10-year fixed
6.49%
6.52%
+0.06
30-year fixed FHA
6.52%
7.2%
+0.07
30-year fixed VA
6.62%
6.73%
-0.03
5/1 ARM Conventional
6.15%
7.33%
Unchanged
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Find and lock a low rate
Should you lock a mortgage rate today?
I think there is a strong possibility that this week’s poor inflation reports have delayed my hoped-for downward trend in mortgage rates. And we now may have to wait for it to fully establish itself until May, June or even later.
This is beyond disappointing and means I’ve changed my personal rate lock recommendations to:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
What’s moving current mortgage rates
This week
Both this week’s consequential inflation reports showed prices rising more quickly than markets were expecting. And mortgage rates moved higher in response.
That was partly because the bond investors who largely determine mortgage rates hate inflation. But it’s also because markets know that higher prices are likely to delay the Federal Reserve’s first cut in general interest rates and may mean fewer subsequent cuts this year.
Mortgage rates probably won’t move lower in a sustained way until Wall Street is confident that the Fed is set to cut general interest rates imminently. And we may well now have to wait until the summer for that level of confidence.
Of course, I can’t guarantee that mortgage rates will fall at all this year. But I think improvements in the second half of this year are currently the most likely scenario for 2024.
Economic reports next week
We’ve had enough excitement recently and are due a dull week. And, sure enough, we’re about to get one.
The only day on which reports are likely to move mortgage rates is Thursday. And that’s just a couple of February purchasing managers’ indexes (PMIs) from S&P.
PMIs certainly can affect mortgage rates, though rarely appreciably. And I’ll be shocked if next week’s reports more than tweak them.
The only other reports next week are leading economic indicators on Tuesday, and initial weekly jobless claims and existing home sales, both on Thursday. Again, the market that determines mortgage rates typically shrugs these off.
The Fed next week
The Fed is scheduled to release the minutes of the last meeting of its rate-setting committee next Wednesday afternoon. We already know a lot of what was said from the news conference that was hosted by Fed Chair Jerome Powell immediately after the meeting. And much has changed since then, meaning the minutes have already been overtaken by events.
But investors always pore over these minutes in the hope of gleaning some new insights. And mortgage rates may move if they find anything actionable. I doubt they will, but let’s hope that anything they do uncover pushes those rates lower.
Seven senior Fed officials have speaking engagements next week. And their remarks have the potential to affect mortgage rates.
Whether their speeches are good or bad for those rates will depend on what they say. Ideally, we’d like most of them to talk up a May cut in general interest rates. But that may be wishful thinking.
Besides economic reports and Fed activity, our best hope for lower mortgage rates over the next seven days is a calming in market sentiment. I’m hoping investors will reflect on the current position and feel they overreacted to last week’s inflation reports. Such bounce downs are common after sharp rises but far from inevitable.
Economic reports next week
See above for details about the more important economic reports next week.
In the following list of next week’s reports, only those in bold typically have the potential to affect mortgage rates appreciably. The others probably won’t have much impact unless they contain shockingly good or bad data.
Monday — Markets closed for Presidents’ Day holiday
Tuesday — January leading economic indicators
Wednesday — Fed minutes
Thursday — February PMIs for the services and manufacturing sectors from S&P. Also January existing home sales. Plus initial jobless claims for the week ending Feb. 17
Friday — Nothing scheduled
We’re in for a quiet week for economic reports. But mortgage rates could still move on any day except Monday.
Time to make a move? Let us find the right mortgage for you
Mortgage rates forecast for next week
Mortgage rates might edge lower next week. I think the chances of that are better than further rises. But only slightly better. So, don’t bank on anything.
How your mortgage interest rate is determined
A bond market generally determines mortgage and refinance rates. It’s the one where trading in mortgage-backed securities takes place.
And that’s highly dependent on the economy. So mortgage rates tend to be high when things are going well and low when the economy’s in trouble. But inflation rates can undermine those tendencies.
Your part
But you play a big part in determining your own mortgage rate in five ways. And you can affect it significantly by:
Shopping around for your best mortgage rate — They vary widely from lender to lender
Boosting your credit score — Even a small bump can make a big difference to your rate and payments
Saving the biggest down payment you can — Lenders like you to have real skin in this game
Keeping your other borrowing modest — The lower your other monthly commitments, the bigger the mortgage you can afford
Choosing your mortgage carefully — Are you better off with a conventional, conforming, FHA, VA, USDA, jumbo or another loan?
Time spent getting these ducks in a row can see you winning lower rates.
Remember, they’re not just a mortgage rate
Be sure to count all your forthcoming homeownership costs when you’re working out how big a mortgage you can afford. So, focus on something called you “PITI.” That stands for:
Principal — Pays down the amount you borrowed
Interest — The price of borrowing
Taxes — Specifically property taxes
Insurance — Specifically homeowners insurance
Our mortgage calculator can help with these.
Depending on your type of mortgage and the size of your down payment, you may have to pay mortgage insurance, too. And that can easily run into three figures every month.
But there are other potential costs. So, you’ll have to pay homeowners association dues if you choose to live somewhere with an HOA. And, wherever you live, you should expect repairs and maintenance costs. There’s no landlord to call when things go wrong!
Finally, you’ll find it hard to forget closing costs. You can see those reflected in the annual percentage rate (APR) that lenders will quote you. Because that effectively spreads them out over your loan’s term, making that rate higher than your straight mortgage rate.
But you may be able to get help with those closing costs and your down payment, especially if you’re a first-time buyer. Read:
Down payment assistance programs in every state for 2023
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The result is a good snapshot of daily rates and how they change over time.
A soft opening Feb. 3 brought customers into the RD International Market who shopped the food, décor and houseware aisles, the fresh produce, refrigerated foods, frozen and fresh meats and fish – and the 70 live seafood tanks.
Crab, eel, geoduck (a large clam), shrimp and other live seafood were available along with other fresh options.
Owner Steven Yuan said business was good. “There are a lot of people,” he said, surveying the renovated Winn-Dixie at 7534 Beach Blvd.
The Asian and international supermarket is in the Beach Boulevard Shopping Center along Beach Boulevard at Hogan and Parental Home roads near the eastern access to the Hart Expressway.
Winn-Dixie closed in 2017. Yuan has leased it as his second RD International Market, with the first in Lake Worth.
The city issued a permit June 2, 2023, for Master Contractors Inc. of Lake Worth to renovate the 52,600-square-foot store at a construction cost of $980,000. The architect is Sandra Puerta of Lake Worth.
Yuan equipped the store with new flooring, shelving, freezers, refrigerators, checkout stations and carts with swivel casters that allow for easy guidance.
Some shelves and cold cases were not full yet Feb. 3; the hot food area in the back was not set up; and the 13 food court tenants were not operating. The sign was up for one of the tenants, Teppanyaki House. Tables and chairs are being prepared for setup.
Yuan said the store should be fully open in 20 or 30 days with the food court open within a month. He is considering a grand opening event.
From housewares to meats
In addition to food, the store carries housewares, toys, décor, tea sets and tea tables and chairs.
Meats include traditional cuts as well as frog legs; duck feet; pork belly, intestines and snouts; and other specialty varieties.
Produce includes mushroom varieties, bok choy tips and a large selection of vegetables and fruit.
The live seafood is sourced from its native areas, such as cold water from the north and warm water from Florida.
RD International intends to carry Florida-sourced fish and produce to the extent available.
Staff can clean and cut the seafood for customers and in the future will be able to cook it for eating in the food court or to take home.
The store is open in time for the Feb. 10 Lunar New Year for the Year of the Dragon. The celebration concludes with the Feb. 24 Lantern Festival.
The Chinese New Year also is known as the Spring Festival.
RD International Market is stocking seasonal items for the celebration.
Hours are posted as 10 a.m to 9 p.m. daily but those may change. Yuan said the Jacksonville store has been opening earlier than that.
The state’s second RD International
Last June, when starting work on the store, Yuan said the market would include fresh produce, a bakery, 13 to 14 food-court operators, a hot food bar, groceries and – its specialty – 60 fish tanks for live seafood, including lobster, shrimp and crab.
The first market opened five years ago in Lake Worth. It has 30 live seafood tanks. At 11,000 square feet, the Lake Worth store is about a fifth of the size of the Jacksonville location.
Yuan and Irene Zhang, his sister and a company representative, expect the center to create 80 jobs.
The website says the market will host community events throughout the year.
“A lot of grandparents take the kids as a field trip to our store,” Zhang said previously.
While the store has a strong inventory of Asian food, the goal is to serve an international market.
“There is a large Asian population in Jacksonville,” Zhang said, in sharing how they chose the location.
While there are smaller Asian and international groceries, there is no large one with a wide selection of live seafood, she said.
“Jacksonville is a big city,” she said, and the Beach Boulevard address is conveniently located.
The U.S. Census reports that as of 2022, the Asian population in Jacksonville is estimated at more than 47,500, or 4.9% of the city’s population. That is up 35% from 35,200 in 2010.
The ZIP codes with the highest Asian population include 32256, 32246, 32207, 32258 and 32216, where the store opened, which is central to the others.
With Jacksonville’s waterfront and fishing, “it is a very good place to have a seafood market,” Zhang said.
The property owner is 1980 Union Port Associates LLC of New York City. Goldstein Commercial Properties Inc. is the landlord representative.