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Homeownership

Why realtors should never use the phrase ‘Starter Home’

(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.

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starter homes debt existing home sales

Just words

Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.

There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.

Grind your gears

Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.

Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?

Do you really need two living rooms?

Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.

But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.

You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?

Be content where you are

Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.

Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.

Dawn Brotherton is a Staff Writer at The American Genius, and has an MFA in Creative Writing from the University of Central Oklahoma. Before earning her degree, she spent over 20 years homeschooling her two daughters, who are now out changing the world. She lives in Oklahoma and loves to golf. She hopes to publish a novel in the future.

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Homeownership

Rental history can soon help folks qualify for a mortgage

(REAL ESTATE) Historically, rental history has not been reported to credit bureaus which doesn’t help anyone with obtaining a mortgage. Soon, that all changes.

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Mortgage papers held in hands with a pen, being handed to the other hands.

Effective September 18, more renters may qualify for a mortgage under Fannie Mae’s updated underwriting process. The rules have changed to incorporate consumers’ rent payments to better serve the “credit invisible” of America who are historically under-served by traditional lending products.

Fannie Mae’s Desktop Underwriter® will automatically identify recurring rent payments based on banking data to improve mortgage eligibility.

It’s estimated that about 17% of previously rejected applicants could now be approved for a mortgage, simply due to their rental history.

Hugh R. Frater, Chief Executive Officer of Fannie Mae said that this is “but one important step in correcting the housing inequities of the past, creating a more inclusive mortgage credit evaluation process going forward, and encouraging the housing system to develop new ways of safely assessing and determining mortgage eligibility in order to fairly serve all potential homeowners.”

Rent payments will only positively impact eligibility.

Although Fannie Mae does not handle loans simply backs them, applicants can be pre-approved through their process to private lenders. Credit history is one of the most important factors in getting approved for a mortgage, but less than 5% of renters have their rent history on their credit report.

Fannie Mae is changing this to expand opportunities for under-served consumers. Even more importantly, the rent payment history will only be used to improve eligibility. Missed payments or inconsistent history will not negatively affect a person’s ability to qualify for a loan.

However, consumers will need to have a digital history of making payments, whether to the property management company through their payment portal or by check or another digital solution.

Rental history directly relates to paying your mortgage on time.

Lenders want their mortgage payments to be on time. That’s the simplified bottom line.

Rent is one of the biggest expenses in any renter’s budget, but it rarely gets reported to the credit bureau without a third party reporting tool like CoreLogic’s RentTrack. This move by Fannie Mae will help level the playing field for renters who are responsible borrowers.

Welcome to the 21st century, Fannie Mae (and America).

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Homeownership

Women are outperforming male counterparts with investments

(FINANCE) New data shows that investments made by women are increasing at an unprecedented rate and are proving successful. Pay attention to the trend!

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female investors on the rise

Data from a recent Fidelity Investments survey shows that women are investing at an unprecedented rate – and their portfolios, despite comprising less of the overall market than men’s holdings, are proving to be more successful than their male counterparts’ portfolios.

The surge in women investing dovetails with an increase in ease of trading in the last few years, with many turning to “social investment” services that remove traditional barriers to market usage. Public.com, an investment app commonly used by those who are new to trading, reports that women make up around 40% of its user base.

Although the Fidelity study specifically addresses retail investment vehicles, we have been seeing a similar trend in residential real estate (particularly investment) in recent years.

The survey also notes that the newest investors are millennial women. Here are some examples of how they are spending (and saving) their money.

On average, women who invest are seeing “positive returns” and “[surpassing] men by 40 basis points, or 0.4%,” says CNBC. Their data is predicated on a decade-long analysis of 5.2 million accounts’ annual performance.

For all that, most of the women polled are still hesitant to begin investing. 70% of participants in the survey said they want some form of education regarding selecting individual stocks, and roughly 50%  reported at least $20,000 in savings outside of emergency funds.

“We’re still seeing money sitting on the sidelines,” says Lorna Kapusta, the head of women investors at Fidelity.

Kapusta expresses some concern that, rather than investing now, women are holding off until they feel more secure in their knowledge of the investment process, thus potentially missing out on growth opportunities.

But 90% of those surveyed did say they planned to take steps toward investing sometime in “the next 12 months”, indicating a near-unanimous confidence that the necessary education to reach that point is attainable.

Indeed, it may be that hesitancy and willingness to wait for guidance rather than risking more volatile stocks that puts women investors ahead of their male counterparts. Last August, CNBC reported that twice as many men as women invest in cryptocurrency of some form, positing that democratization of trading should be a focus of that particular market.

In truth, cryptocurrency has proven to be remarkably unstable; while men have been visibly eager about investing in things like Bitcoin and Ethereum, the majority of women’s reluctance to invest without knowing more about the stocks they purchase may have given them an edge in cultivating more successful portfolios.

Either way, Kapusta views the dearth of active women investors as a learning opportunity: “There’s often this self-doubt that comes into play… the opportunity for us is to continue to normalize the money conversation.” In the coming 12 months, it seems likely that “the money conversation” will extend to involve guidance for a sharply growing number of women looking to invest in all types of vehicles (which obviously includes real estate).

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Homeownership

Hilarious items left behind when homeowners move out

(HOMEOWNERSHIP) People often forget what changes and additions they’ve made to a house until it is too late. This Twitter thread is a hilarious reminder to take everything with you when you leave.

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hidden in house

There are moments when social media brings people together and gives us comedy gold. Have you ever left something behind when you moved, something that while maybe not so crucially important to you, will definitely offer an interesting insight into your life? Such as a message written behind a wall, or a note hidden in an air duct? Well a twitter thread posted earlier this week opened up Pandora’s box for amusements on this topic and some of these are just getting stranger and stranger.

The original poster, @KaylaKumari, brought it up originally when she asked her mother, who had just recently moved out of her last home, if she’d uninstalled the special fire alarms that she recorded in her voice yelling, “GET OUT OF THE HOUSE BECAUSE MOM’S CANDLES CAUGHT THE HOUSE ON FIRE”. A perfect line, short and succinct. Now some poor family is going to have a fire and some woman’s voice will be ushering them out instead of an alarm. Hopefully there won’t be too much confusion there.

kayla kumari upadhyaya on Twitter: “My parents sold their house like a month ago but my mother JUST realized she did not uninstall the special fire alarms she had put in that are a recording of her own voice screaming at me and my sister to “GET OUT OF THE HOUSE BECAUSE MOM’S CANDLES CAUGHT THE HOUSE ON FIRE” / Twitter”

My parents sold their house like a month ago but my mother JUST realized she did not uninstall the special fire alarms she had put in that are a recording of her own voice screaming at me and my sister to “GET OUT OF THE HOUSE BECAUSE MOM’S CANDLES CAUGHT THE HOUSE ON FIRE”

After that, the tweets and retweets just kept coming. Some of them mostly relating to habits or forgotten moments. In four days, the post has gotten over 17K retweets and/or comments and some of these are gems.

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A lot of people seem to enjoy feeding wildlife as well. Lots of fun shocks to go around. I would recommend however, to disclose that upon sale of the house so you don’t get sued. But this just goes to show that social media can be nice sometimes. A nice uplifting moment in our days.

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