HARP Now Extended Through 2016

Since it first launched in 2009, the Home Affordable Refinance Program (HARP) has helped 3.2 million borrowers across the country lower their monthly payments by refinancing at historically low interest rates. Friday, FHFA Director Melvin Watt announced this relief won’t be ending any time soon.

HARP will continue through the end of 2016, allowing homeowners who owe more than their homes are worth and regularly make mortgage payments to refinance. To help eligible borrowers take advantage of this program, Zillow remains the only marketplace supporting HARP and FHA Streamline refinances.

The FHFA has started a 10-day Twitter campaign using the hashtag #HARPfacts to help spread the word. They’re targeting Chicago first, where nearly 40,000 Chicago-area homeowners could save an average $189 per month or $2,300 a year with HARP.

Get answers to your HARP questions here.

Related:

from Zillow Porchlight https://www.zillow.com/blog/harp-now-extended-through-2016-175787/

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What You Need to Know About the Fair Housing Act

If you’ve searched for a new place to live recently, you’ve likely seen the Equal Housing Opportunity logo (an equal sign inside a house) on a landlord’s, real estate agent’s or lender’s paperwork.

But the Fair Housing Act is more than just a logo. It’s a federal law designed to protect renters and buyers from discrimination.

Here are some key points to know about the Fair Housing Act when you’re searching for a place to live.

What is the Fair Housing Act?

Also known as the Civil Rights Act of 1968, the Fair Housing Act was signed into law by President Lyndon B. Johnson just days after the assassination of Martin Luther King Jr., who had championed the cause for many years.

The act prohibits housing discrimination based on race, color, religion, national origin, sex, disability and familial status (sex was added in 1974, and disability and familial status were added in 1988).

At the time the act was signed, overt housing discrimination was a huge problem throughout the country, including the attempted segregation of whole neighborhoods and the outright rejection of qualified renters based on race and other factors.

Today, much of the discrimination in the housing market is less obvious, but it’s still an unfortunate reality.

According to the National Fair Housing Alliance (NFHA), over 25,000 housing discrimination complaints were filed with the federal government and local and national fair housing agencies in 2017. Over half of the complaints were based on disability, followed by race at 20 percent.

But these numbers reflect only reported incidents. The NFHA estimates that over 4 million instances of housing discrimination occur annually, but many people don’t realize they’ve been discriminated against – or know what steps to take when it happens.

What does housing discrimination look like?

Most of the people you encounter in your home search, including real estate agents, sellers, landlords, property management companies and lenders, are bound to Fair Housing Act regulations and additional state and local laws, based on where you live or are looking to live.

Fair Housing Act violations can occur in all phases of buying and renting, including in advertising, while you search, throughout the application process, in financing or credit checks, and during eviction proceedings.

Here are a few examples of discrimination people in protected classes have encountered:

  • A real estate agent tries to “steer” a buyer away from a certain neighborhood
  • A landlord tries to avoid renting to someone by saying the unit advertised has been rented when it hasn’t
  • A property management company refuses to rent to a family with children or requires a higher deposit
  • A landlord evicts a person of color for a reason they wouldn’t evict a white tenant for
  • A mortgage broker asks questions or requests excessive documentation from an immigrant couple that they wouldn’t request from another buyer
  • A lender charges a single woman a higher interest rate than what her credit score should dictate
  • A landlord refuses to make reasonable accommodations for a tenant who is disabled

What do I do if I’ve been discriminated against?

If you’ve been discriminated against in any of the ways above, or if you suspect that other actions taken by a property manager, landlord, real estate agent, broker or lender may be discriminatory, there are many resources at your disposal.

  1. File a report: File a complaint with your regional Department of Housing and Urban Development (HUD) office – find yours at HUD.gov. You can also file a complaint on the national HUD website or with local housing resources found through the NFHA.
  2. Get more info from local housing agencies: You can find a list of local housing counselors at HUD.gov. Besides answering questions about discrimination claims, these agencies provide home buyer education workshops, pre-purchase counseling and rental housing assistance.
  3. Talk to an attorney: Like any other legal issue, when pursuing a complaint under the Fair Housing Act, it’s smart to consult a lawyer.
  4. Find people you can trust: If you experienced housing discrimination from your real estate agent, mortgage broker or lender, it’s time to find a new professional to help you in your home search. Ask friends, family members and colleagues for referrals they know, like and trust. Remember – these real estate professionals are working for you, so their only concern should be finding you the home that’s right for you.

Related:

from Zillow Porchlight https://www.zillow.com/blog/what-you-need-to-know-about-the-fair-housing-act-227310/

The Do’s and Don’ts of Home Equity Loans

Home equity is a valued resource, and if you have it, you might be tempted to tap that wealth for other purposes. A home equity loan, which allows you to use your home’s equity as collateral, is a great way to do this. But depending on your personal situation, it may not be the right thing to do.

Here’s when a home equity loan makes sense – and when it doesn’t.

DON’T: Fund a lifestyle

Remember when homeowners yanked cash out of their homes to fund affluent lifestyles they couldn’t really afford? These reckless borrowers, with their boats, fancy cars, lavish vacations and other luxury items, paid the price when the housing bubble burst. Property values plunged, and they lost their homes.

Lesson learned: Don’t squander your equity! Look at a home equity loan as an investment – not as extra cash when making spending decisions.

DO: Make home improvements

The safest use of home equity funds is for home improvements that will add to the home’s value. If you have a one-time project (e.g., a new roof), then a home equity loan might make sense.

If you need money over time to fund ongoing home improvement projects, then a home equity line of credit (HELOC) would make more sense. HELOCs let you pay as you go and usually have a variable rate that’s tied to the prime rate, plus or minus some percentage.

DON’T: Pay for basic expenses or bills

This is a no-brainer, but it’s always worth reiterating: Basic expenses like groceries, clothing, utilities and phone bills should be a part of your household budget.

If your budget doesn’t cover these and you’re thinking of borrowing money to afford them, it’s time to rework your budget and cut some of the excess.

DO: Consolidate debt

Consolidating multiple balances, including your high-interest credit card debts, will make perfect sense when you run the numbers. Who doesn’t want to save potentially thousands of dollars in interest?

Debt consolidation will simplify your life, too, but beware: It only works if you have discipline. If you don’t, you’ll likely run all your balances back up again and end up in even worse shape.

DON’T: Finance college

If you have college-age children, this may seem like a great use of home equity. However, the potential consequences down the road could be significant. And risky.

Remember, tapping into your home equity may mean it takes longer to pay off the loan. It also may delay your retirement or put you even deeper in debt. And as you get older, it will likely be more difficult to earn the money to pay back the loan, so don’t jeopardize your financial security.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published February 23, 2016.

from Zillow Porchlight https://www.zillow.com/blog/dos-donts-of-home-equity-loans-192836/

‘You’re Throwing Money Away’ and Other Myths About Renting

Renting often gets a bad rap.

It’s true that some aspects of being a renter are less than glamorous, but it’s not all bad. In fact, the number of renters is on the rise, and the traditional mindset about renting is changing.

Let’s debunk three of the most common myths about renting.

1. You’re throwing money away

Many people say that paying rent is like taking your money and throwing it away. While you may not be gaining equity in a home, you are paying for somewhere to call home, which is not the same thing as throwing your money in a trash can.

And let’s not understate the value of avoiding household maintenance costs. Most rentals include upkeep and repair services, and some even include the cost of utilities.

Additionally, buying a home may not be a wise financial decision for you right now. Maybe you live in an expensive housing market or you don’t have quite enough saved for a down payment. Simply put, renting may be in your best financial interest.

To find out whether renting or buying is more financially viable for you, there are several tools available to help you make an informed decision.

2. You have no negotiating power

A common myth surrounding the landlord-tenant relationship assumes the landlord has all the power.

Contrary to popular belief, renters have a lot of negotiating power when they sign a lease, says Tracy Atkinson, director of global marketing and relations for Goodman Real Estate in Seattle.

“If you think you may be buying a house soon ask, ‘Do you have a mortgage clause?’ You can also ask about a job relocation clause. Simply ask, ‘Can you work with me?’ Each resident has the power to do that,” she advises.

The most important thing is to read the lease in its entirety to ensure you understand what you’re signing. If you see terms you want adjusted, don’t be afraid to ask.

3. It’s difficult to get out of a lease

Another common misconception about renting is that it’s hard to get out of a lease.

Though it’s not advisable to sign a long-term lease when you know life changes are ahead, sometimes life throws us a curve ball. Whether you relocate for a job or your roommate moves out, sometimes it’s necessary to break your lease.

One option is to sublet your place. Check with your landlord or property management company to ensure that subletting is allowed, and get everything from both your landlord and the new tenant in writing.

If you’re relocating, another option is to work with your property management company to find available units at a sister property or even in another state.

Talking with your property manager and explaining your situation will always help you find the right solution for you, Atkinson says.

Of course, there may be fees associated with breaking your lease no matter how you go about it, so be prepared for that expense.

Looking for more information about renting? Check out our Renters Guide

Related:

Originally published August 5, 2016.

from Zillow Porchlight https://www.zillow.com/blog/3-myths-renting-201963/

5 Mortgage Misconceptions Set Straight

Getting a mortgage can be a breeze or a slog, depending on what you know about the process. To get organized and set your expectations properly, let’s debunk some common mortgage myths.

1. Lenders use your best credit scores

If you’re applying for a mortgage jointly with a co-borrower, logic suggests that your lender would use the highest credit score between both of you.

However, lenders take the middle of three credit scores (from Equifax, TransUnion and Experian) for each borrower, and then use the lowest score between both borrowers’ “middle scores.”

So, if you had a middle score of 780, and your co-borrower had a middle score of 660, most lenders would qualify and approve you using the 660 credit score.

Rates are tied to credit scores, so in this example, your rate would be based on the 660 credit score, which would push your rate up significantly – or potentially even make you ineligible for the loan.

There are exceptions to this lowest-case-credit-score rule. Most notably, if you have the higher credit score and are also the higher earner, some lenders will allow your higher credit score on the file – but this is mostly for jumbo loans above $417,000.

Ask your lender about exceptions if you have credit score disparity between co-borrowers, but know that these exceptions are rare.

2. The rate you’re quoted is the rate you’ll get

Unless you’re locking in a rate at the moment it’s quoted, that rate quote can change. Rates are tied to daily trading of mortgage bonds, so most lenders’ rates change throughout each day.

Refinancers can often lock a rate when it’s quoted – as long as you’ve given your lender enough information and documentation to determine if you qualify for the quoted rate.

You typically receive a quote when you’re beginning your pre-approval process, but a rate lock runs with a borrower and a property. So until you’ve found a home to buy, you can’t lock your rate. And while you’re home shopping, rates will be changing daily, so you’ll need updated quotes from your lender throughout your home shopping process.

Rate quotes also come with an annual percentage rate (APR), which is a federally required disclosure that shows what your rate would be if all loan fees are incorporated into the rate.

This can make you think that APR is the rate you’ll get, but your loan payment will always be based on your locked rate, and the APR is just a disclosure to help you understand fees.

3. Fixed-rate mortgages are always better than adjustable-rate mortgages

After the 2008 financial crisis, many borrowers started preferring 30-year fixed loans. For good reason too: The rate and payment on a 30-year fixed loan can never change. But the longer the rate is fixed for, the higher the rate.

So before settling on a 30-year fixed, ask yourself this question: How long am I going to own this home (or keep the loan) for?

Suppose the answer is five years. If you got a five-year adjustable rate mortgage (ARM) instead of a 30-year fixed, your rate would be about .875 percent lower. On a $200,000 loan, you’d save $146 per month in interest by taking the five-year ARM. On a $600,000 loan, the monthly interest cost savings is $438.

To optimize your home financing, peg the loan term as closely as you can to your expected time horizon in the home.

4. Real estate agents don’t care which lender you use

A federal law enacted in 1974 called the Real Estate Settlement Procedures Act (RESPA) prohibits lenders and real estate agents from paying each other fees to refer customers to each other. So as a mortgage shopper, you’re always free to use any lender you choose.

But real estate agents who would represent you as a buyer do care which lender you use. They’ll often suggest that you use a local lender who’s experienced with your area’s nuances, such as local taxation rules, settlement procedures and appraisal methodologies.

These areas are all part of the loan process and can delay or kill deals if a nonlocal lender isn’t experienced enough to handle them.

Likewise, real estate agents representing sellers on homes you’re interested in will often prioritize purchase offers based on the quality of loan approvals. Local lenders who are known and respected by listing agents give your purchase offers more credibility.

5. Mortgage insurance is always required if you put less than 20 percent down

Mortgage insurance is a lender-risk premium placed on many home loans when you’re putting less than 20 percent down. In short, it means your total monthly housing cost is higher. But you can buy a home with less than 20 percent down and avoid mortgage insurance.

The most common way to do this is with a combination first and second mortgage – often called a piggyback – where the first mortgage is capped at 80 percent of the home’s value, and the second mortgage is for the balance of what you want to finance.

Related:

Originally published January 12, 2016.

from Zillow Porchlight https://www.zillow.com/blog/mortgage-misconceptions-190742/

6 Smart Ways to Build Home Equity

Home equity is the percentage of your home’s value that you own, and it’s key to building wealth through homeownership. Let’s take a closer look at how to build home equity without blowing your budget – and how to access it when you need it.

How much equity do you have?

Equity is easy to calculate when you first buy a home because it’s basically your down payment. For example, if you put $11,250 down on a $225,000 home, your down payment is 5 percent and so is your equity.

From 2016 to the first quarter of 2018, most first-time home buyers in the U.S. started with about 7-percent equity, according to Inside Mortgage Finance. This is encouraging because it shows you don’t need to spend years saving for 20 percent down or more before you buy. Repeat home buyers started with more equity, at about 17 percent.

How to build your equity

Here are six ways your home can create wealth for you. Some require time, money – or both. A lender can help you decide what works best for you.

1. Let your home appreciate

Building equity through appreciation can take little time or a lot, depending on the market. With home prices going up like they have in recent years, appreciation has been a boon for many home owners.

Zillow research indicates that the median home value grew from $185,000 in April 2016 to $216,000 in April 2018. If you bought a home for $185,000 in April 2016 with a down payment of $12,950, your beginning 7-percent equity would have grown to 23 percent by April 2018.

We calculate this by subtracting your current loan balance ($165,600) from your home’s current value ($216,000). Then we divide the difference by your home’s current value. One-eighth of this additional 16 percent equity is from paying down your mortgage, and the rest is market appreciation.

If you waited two years and bought the same home in April 2018 with a 20-percent down payment of $43,200, you started off with 20-percent equity. You also used 3.3 times more cash to make the purchase. And here’s the kicker: Your total monthly housing cost would be the same – about $1,050 in both cases.

This example illustrates two things:

First, the power of home appreciation. It’s a lot like buying stock and benefitting as its value goes up. But there’s also a difference: While you’ll pay capital gains on rising stock value, you’re exempt from paying taxes on primary-home capital gains up to $250,000, or $500,000 for married couples.

Second, waiting to “save enough” isn’t the primary factor in determining if you can afford to buy a home. When it comes to qualifying for a loan, lenders do indeed look at your down payment. They’ll also want to know how much you’ll have in cash reserves after closing. But there are lots of options for low down payments that require minimal reserves.

Your monthly budget is the primary factor lenders consider when deciding whether you can afford a home. Lenders will allow you to spend between 43 percent and 49 percent of your income on monthly bills, which is actually on the high side and could strain your budget.

Since 2016, most first-time buyers have spent about 38 percent of their income on housing and other debt, which is a pretty safe cap for budgeting.

2. Make a larger down payment

You can do this but, as we’ve seen, waiting to save extra cash can go against your broader financial interests if you lose the chance to build equity through appreciation. Therefore, you must strike a balance among down payment, monthly budget and savings for other priorities. A good lender can provide rate and market insight to help you do this.

3. Use financial windfalls

Take advantage of work bonuses, family gifts and inheritances to pay down your mortgage. If you do pay down in lump sums, see if your lender will recalculate (or “recast”) your payment based on the new, lower balance.

4. Double up on payments

Make mortgage payments every two weeks instead of once a month. Over the course of a year, this will add up to 13 monthly payments instead of 12. You’ll build equity faster and shave five to six years off a 30-year mortgage. Just make sure your lender isn’t charging extra for processing bimonthly payments.

5. Cut your loan term in half

Take out a 15-year mortgage instead of a 30-year mortgage, and you’ll build equity twice as fast. Two caveats here: You’ll have a significantly higher monthly payment and, because of that, you may have a tougher time qualifying.

6. Make home improvements

New appliances or cosmetic features like paint are unlikely to increase value. Only big improvements like new kitchens, or additional bathrooms or other rooms will add meaningful value. Make sure the cost of such improvements will create the added value you’re looking for.

How to use your equity

You must borrow or sell your home to use your equity. The three most well-known ways to get to your equity through borrowing are a home equity line of credit (HELOC), home equity loan or cash-out refinance. Compare the pros and cons of each.

Rates are rising right now, so these borrowing options might cost more in the future. Talk to your lender to determine the best approach for you.

Top image from Shutterstock.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

from Zillow Porchlight https://www.zillow.com/blog/how-to-build-home-equity-226885/

Everything You Need to Know About Employer Relocation Packages

If your company has asked you to move to a new city or state for work, you’re not alone. Each year, nearly seven million people in the United States relocate because of their jobs.

Before you start packing boxes, it’s important to know what your employer will and won’t offer in terms of relocation assistance, and how that could affect both your move and your pocketbook.

Make no assumptions

Approximately 70 percent of U.S. companies offer relocation incentives for employees or new hires. If a relocation package isn’t discussed with your offer, you’ll need to start the conversation yourself. Ask for what you want, including all the services and compensation you’ll need for your move.

In 2012, companies spent an average of $19,303 to move a new hire renter and upward of $90,000 to move a current employee homeowner, according to the Worldwide ERC, the association for professionals who oversee employee transfers. Do your research to figure out what your move will cost, and make sure your relocation package is adequate. If it’s not, see if you can negotiate changes.

Ask about extras

No two companies offer the same relocation packages. Some will cover just the basics, while others will transfer vehicles, provide cultural training, help pay closing costs or mortgage points buy down, or even provide employment assistance for an accompanying spouse or partner.

If you’re a homeowner being asked to relocate, you’ll know you’ve hit the jackpot if your relocation package includes a Guaranteed Buy Out (GBO). With a GBO, the relocation company hires two independent appraisers prior to listing your home. If you’re unable to sell the property on your own within a certain time period, the company will buy your home for the average of the two appraisals.

Doing it yourself

If your company’s relocation package is of the barebones variety, you may want to explore your DIY alternatives.

Moving all your household items using your own vehicle is the least expensive do-it-yourself option, but it comes with risks. Without professional packing and moving services, you increase the chance of your belongings being damaged. This option can be physically and emotionally draining, plus it can take a toll on relationships with friends and family you’ve asked to help. This type of move works best if your new home is not far from your old one.

Another DIY option is renting a moving truck. A large-capacity truck is easier to load and unload than a car, and allows you to accomplish the task with fewer trips back and forth. In addition to the cost of renting the truck, you’ll need to buy gas to get the vehicle from one place to another, and you may be required to purchase additional insurance.

Self-service moving uses portable storage containers, and is a blend of DIY moving and professional moving. These services drop off large storage containers at your current residence. You pack and load the containers yourself, on your own timeline. When the containers are full, the moving company transports them to your new home or, if you’re not ready to move in just yet, they can take the containers to their warehouse, where they will store your belongings.

Tax implications

If your job requires you to relocate, your moving costs and the expense of traveling to your new location could be deductible if they meet certain IRS standards regarding distance and time worked after the move.

Payments made directly by your employer to your moving company do not need to be reported on your W-2 form. However, if your employer gives you a lump sum payment to cover moving expenses, that money is fully taxable as earnings. Depending on the program specifics, either you or your company must bear the associated tax cost of including these amounts in your wages.

Interpreting these tax laws can be complicated. Be sure to hold onto all your moving receipts and consult with your tax or legal advisor to ensure you stay on the right side of the IRS.

Ask questions, do your research and seek out professional advice to make sure your move is a good one.

Top photo from Shutterstock.

Related:

Originally published September 1, 2015.

from Zillow Porchlight https://www.zillow.com/blog/about-employer-relocation-packages-182791/