MONEY home financing

How to Get a USDA Home Mortgage

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pamspix—Getty Images

The USDA has been offering mortgages to "rural" homebuyers since 1991.

Unless you are buying a home in a rural area, you may not have even considered a Department of Agriculture loan or realized that the USDA participated in the mortgage market. The USDA loan program was created in 1991 to increase homeownership in rural areas – however, the USDA has a very liberal definition of “rural”, so you may find that a suburban home still qualifies.

USDA loans have two major advantages over traditional loans.

Down Payment/Fees – USDA loans require no down payment, and since the 2% mortgage insurance fee can also be financed, it is possible to borrow up to 102% of the home price. The overall size of the insurance fee compares favorably to Private Mortgage Insurance (PMI) applied to traditional loans with less than 20% down.

Easier Qualification – The requirements for overall income, debt-to-income (DTI) ratio, and minimum acceptable credit score are far more forgiving for USDA loans compared to conventional loans.

There are two varieties of USDA loan: the Guaranteed Loan, which is made through third-party lenders and backed by the USDA, and the Direct Loan, for even lower-income homebuyers, that is directly funded by the government. Qualifications for the direct loan will be stricter than for the guaranteed loan because of the higher risk involved.

There are a few other qualification issues, aside from the limitations of rural areas as defined by the USDA.

Primary Residences – USDA loans must be for primary residences only – no purchases of investment property. Farm loans are handled under different, non-residential programs.

Purchase Price – The home must be “modest in size, design, and cost.” Those vague qualifications keep the home price low relative to the area. The intent is to help those who are having difficulty buying homes, not to subsidize larger homes or wealthier homeowners.

Credit Score/DTI – The true limit on the price will be set by the traditional risk factors of credit score and debt-to-income (DTI) ratio since they will dictate the acceptable amount of risk. The lower qualification limits are usually a credit score of 640 or higher, and a DTI of 29% with mortgage costs or 41% including all debt. However, the USDA has been known to stretch these requirements to accommodate those in worse shape.

Income Limits – Guaranteed loans generally require that your income be less than 115% of the area median household income; direct loans require less than 80%. At less than 50%, you probably do not have sufficient income to qualify for a loan at all. You still have to convince a USDA lender, whether it is a third party or the government, that you are capable of paying back the loan.

Guaranteed USDA loans generally have 30-year fixed terms (15-year fixed loans may be available) and the lender sets the interest rate. Direct loans have even longer terms (33-38 years), with interest rates set by the government. Not all lenders handle USDA loans, so do some research to find a USDA-approved lender with whom you are comfortable.

The “rural” designations change from time to time, so be sure to check with the USDA to make sure that any property that you are interested in still qualifies.

If you are moving to an area that may be considered rural and you meet the USDA loan guidelines, check the status of properties in your new area and look over your USDA options. You may decide that a conventional or FHA loan is preferable to keep your debt load down – but if you cannot qualify any other way, a USDA home loan may be your ticket to homeownership.

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MONEY home financing

Why Latino Americans Are Denied Home Loans More Often Than White Applicants

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Hero Images—Getty Images

Latinos have driven homeownership growth for the last decade, but get approved for mortgages at half the rate of non-Hispanic white applicants.

With the exception of 2009 and 2010, Latinos have driven homeownership growth in the U.S. for more than a decade, according to Census Bureau data. Still, they’re experiencing significant obstacles to homeownership, which is the subject of a recent report from the National Association of Hispanic Real Estate Professionals.

Hispanic mortgage applicants were denied loans at twice the rate of non-Hispanic white applicants in 2013 (22% vs. 11% denial rates), and in the same year, Latinos accounted for only 7.3% of purchase mortgages, even though they make up 17% of the U.S. population, according to the report. (The report uses Hispanic and Latino interchangeably.)

In the report, that disparity is largely attributed to the use of conventional credit scoring models and the lack of affordable home options. Despite these obstacles, Hispanics represent half of the U.S. homeownership growth since 2010, with 614,000 more Hispanics becoming homeowners in that time.

“While Hispanics remain poised to drive homeownership growth for the next several decades, with only a few exceptions there is little evidence that the industry as a whole has done much to address the unique nuances of many Hispanic homebuyers,” the report says.

For example, immigrants are more likely to repay their mortgages than their credit scores suggest, according to a Federal Reserve study cited in the report, and while not all Hispanic homeowners are immigrants, many are. Additionally, about half of Latino households are considered unbanked or underbanked, according to a study from the Center for American Progress, and unbanked consumers tend to be left out of traditional credit scoring models, which are used to underwrite mortgages.

“Traditional models generally do not capture transactions outside the conventional banking payment systems,” reads the NAHREP report. “This omission puts ‘unbanked’ borrowers at a disadvantage, since their good payment history using cash transactions are not considered in their credit score.”

This data paints a picture familiar to many aspiring homeowners, regardless of ethnicity: People want to buy homes and may even feel financially ready to do so, but their preparedness doesn’t allow for them to with a tight mortgage market and a short supply of affordable homes.

There’s not a lot consumers can do to change this, other than work on their credit scores and thoroughly research their options for buying a house. There are a few mortgage programs designed for first-time homebuyers, including those that require a low down payment (the NAHREP report notes that Hispanics are more likely than other consumers to make low down payments on homes). We explain how to figure out your down payment here.

On the credit side, you’ll need to regularly review your credit standing in the years and months leading up to the time when you buy a home — it’s a habit you should maintain throughout your life.

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MONEY groceries

Why It’s Better to Live Near Trader Joe’s Rather Than Whole Foods

Trader Joe's
Todd Bannor—Alamy

Has nothing to do with grocery prices or organic foods.

Trader Joe’s has been named America’s favorite supermarket in consumer surveys, rating particularly high in terms of service, atmosphere, prices, and cleanliness.

A new study from RealtyTrac shows another reason why Americans may like living near a Trader Joe’s: It’s great for property values, apparently.

Or maybe the folks at Trader Joe’s just have a great nose for neighborhoods that are about to boom, bringing in an influx of affluent consumers eager to snap up “two-buck Chuck” merlots and edamame hummus.

After sifting through data related to 1.7 million homes in 188 zip codes, RealtyTrac researchers found that homeowners who live in the same zip code as a Trader Joe’s have seen their property values increase 40% since they purchased. The appreciation rate for homes near Whole Foods, on the other hand, was 34%, which is the average value increase for all zip codes.

On average, homes that share a zip code with a Trader Joe’s are worth more than those near Whole Foods too—$592,339 versus $561,840, respectively. For that matter, having either or both of these supermarket options nearby is a sign that your town is pretty well off: The study found that the average value of homes across all zip codes was $262,068.

There is a downside to living in a Trader Joe’s town, and it’s the same downside as living in any area where property values are high. And that downside is that high taxes go hand in hand with pricey homes.

The average annual property tax bill for homeowners living in the same zip code as a Trader Joe’s was $8,536, compared to $5,382 for homes near Whole Foods, and an average of $3,239 nationwide.

But, hey, at least the wine is cheap.

Read next: 29 Ways to Save Hundreds on Groceries

MONEY renting

3 Ways Paying Rent Can Help Your Credit Score

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Getty Images

New rent payment services work with credit bureaus to track your payment history.

There are pros and cons to everything in life — including renting a place to live. Those who like the idea of owning property say being a renter means losing the opportunity to build equity in an asset or to catch a tax break.

But proponents of renting cite lower living costs in many situations, no required maintenance of the property, and the freedom and flexibility to change your living arrangement whenever you need or want.

And now you can add one more check in the pro column for renting: Paying rent can build your credit score in a number of ways.

1. Paying rent builds your credit history

Even if you’re not a huge fan of using credit, there are a number of times in your financial life when you’ll appreciate having a history of managing it successfully. Whether or not it’s fair, institutions often use this measure to determine how financially responsible you are.

Depending on the situation, even having bad credit often trumps having no credit at all — so it’s important to establish a credit history and work to build up your credit score. Paying rent allows you to do this if the management company or landlord of your rental unit reports data to the credit bureaus. (Not all landlords do this, so if building a credit history is one of your financial goals, be sure to ask!)

2. Making payments on time and in full helps your credit score

A large portion of your credit score is based on your track record of making payments on time and in full. That means on any loans you have, your credit cards — and yes, your rent payments. The credit bureau Experian will consider your rental payment history when looking at this element to calculate your total credit score.

Again, it’s important to check and see if your rental management company or landlord will submit this information about your payments being on time and in full to credit bureaus. If not, you can consider signing up with a rent payment service like ClearNow, RentTrack, or PayYourRent that works with Experian to report your payment history.

3. Using a credit card to pay rent can boost your score

Most likely, you can’t use a credit card to make a monthly mortgage payment, even if you have good credit and always pay your balances on time and in full. But you can use a credit card to pay rent, and this can help you boost your score if you do it wisely.

For one, using your credit card this way can help you maintain responsible habits around credit card usage — stick to putting only your necessary expenses on your cards so you build credit history, keep your accounts active, and get in the habit of paying the card off each month.

This helps diversify your credit usage too. Not only are you making the rent payment on time and in full, but you’re also putting another type of credit to work while you’re doing it. Showing that you can manage a variety of accounts might help your score.

One caveat here: Be careful that your monthly rent doesn’t eat up too much of your available credit each month. If you have only a $2,000 credit limit, using a credit card to pay your $1,500 rent isn’t the best strategy.

That’s because another factor that impacts your credit score is your credit utilization ratio. This ratio makes up 30% of how your score is calculated, and it refers to how much credit you use versus how much total credit you have. The lower the ratio, the better for your score.

If you can wisely use your credit and develop good habits around money management, you can make paying rent do a little work for you by leveraging it to build and boost your credit score.

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TIME neil young

Why Neil Young Is Selling this $24.5 Million Estate in Paradise

Neil Young Opening Night Reception For "Special Deluxe" Art Exhibition
Angela Weiss—Getty Images Musician Neil Young.

It's a shrewd business move

Neil Young doesn’t want to wait until after the gold rush, so he’s selling his Hawaii estate before the market tops.

According to a report in Bloomberg, the legendary rock musician is listing his nearly 3,000 square-foot, five-bedroom, four-and-a-half-bath estate on the Big Island of Hawaii. The property also features two guest cottages, and “830 feet of prime ocean frontage is located on the Kohala Coast near the world class surf break and white sandy beach known as 69’s,” according to the listing.

The likely reason Young is selling the estate–on an island he once wrote had powers of “magical healing,” is simply business. According to Bloomberg:

Homeowners in Hawaii are seeking to capitalize on demand from wealthy California technology executives by listing opulent estates, leading to a record number of $20 million-plus homes for sale . . .

Just as the Hamptons have long been a retreat for Wall Street executives, Hawaii is becoming a favored playground of Northern California’s wealthy digerati, though they have to get on a plane rather than drive a couple of hours. Property prices in the Aloha State have soared past the heights of the last housing boom as buyers seek island getaways.

MONEY renting

The Bad News Behind the Home Rental Boom

Greg Vote

Say hello to higher prices.

Is renting a picket fence the new American Dream?

You’ve probably seen the slew of reports recently confirming that homeownership is on the decline around the country — a trend begun during the Great Recession that has not changed during the recovery. The Census Bureau reported last month that the share of homeowners in America dropped to its lowest level since 1967 — since before humans walked on the moon!

This is not good news for renters. The more competition for rental units, the higher the prices. Zillow reported recently that rental prices were up 4.3% in June year over year, leading to this dismal proclamation by Zillow’s chief economist Stan Humphries: “Rents are insanely unaffordable on a historical basis in the United States right now.” Rent increases are far outpacing wage increases.

When rents rise like this, renters normally turn to purchasing homes. Mortgages offer one clear advantage over renting: fixed monthly payments. But housing prices are rising in many markets too, and the for-sale inventory is shrinking, Zillow says, meaning there aren’t many home bargains out there either.

The compromise between renting an apartment and buying a home is renting a single-family home. That’s traditionally a choice made by only a small number of Americans, but one of the trends-within-a-trend in the housing market is a tremendous surge in families doing just that. Here are some startling numbers from a recent report published by the Joint Center for Housing Studies at Harvard University.

‘Unprecedented’ Change

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During the 1990s, single-family homes for rent grew at an average of 73,000 units annually. Pre-recession, growth jumped to 138,000. When the recession hit, that number soared to 513,000 annually. Add it all up, and one hidden consequence of the housing bubble burst is 3.2 million more American households rent their single-family home, rather than owning — a figure that accounts for nearly half the jump in all rentals post-recession.

“The recent growth of single-family rentals is unprecedented,” the Harvard report says.

Some of the reasons for this are obvious, some less so. Many Americans hit by the recession could no longer afford their house payments, or were no longer able to obtain mortgages because of bad credit scores or limited income. Renting single-family, detached homes became an attractive option for this group. Also, single-family housing construction projects begun during the housing bubble became difficult to sell when the bubble burst. Builders rushed to convert them to rental stock.

“When rental demand began to climb after the housing bust, conversions of owner-occupied single-family homes to rentals accommodated much of this growth. These shifts also helped to stabilize for-sale markets, especially in the Sunbelt metros with the largest inventories of distressed and vacant single-family homes,” the Harvard report said.

So conversion to rentals helped restore order to neighborhoods plagued by foreclosures; but some now fear that as the trend continues, it’s another factor squeezing out young adults trying to start families. Investors noticing the solid returns on rental homes are gobbling up that excess single-family housing stock, and have begun renting out homes en masse.

Data from RealtyTrac demonstrates the trend. Owner-occupant buyers accounted for 63.2% of all residential single family home and condo sales in the first quarter of 2015, down from 68.6% a year ago, to the lowest quarterly level going back to the first quarter of 2011, the earliest quarter with data available. Meanwhile non-owner-occupant buyers — any buyer who purchased a property but has their property tax bill mailed somewhere else — reached a new high of 36.8% in the first quarter of 2015.

Bad News for Would-Be Buyers

This trend is having unfortunate consequences for would-be first-time homebuyers. First, those who might rent a single-family home as a transition stage are facing the same competitive atmosphere that all renters are — rental fees are rising. More important, investors who have no plans to occupy the homes they buy are pushing up prices on what would otherwise be low-priced starter homes for families.

RealtyTrac data hints that, in some markets, larger investors have pulled back slightly from single-family home purchases … but smaller “mom-and-pop” investors have taken their place.

“Investor activity continues to represent a disproportionately high share of all home sales activity in this housing recovery,” said Daren Blomquist, vice president at RealtyTrac.

And hot housing markets are a big target for investors — contributing to rising prices and rents.

“Among metropolitan statistical areas with a population of at least 500,000, Memphis, Tennessee, posted the highest share of institutional investor purchases of single family homes in the first quarter of 2015 — 14.1 percent — followed by Charlotte, North Carolina (12.1 percent), Atlanta, Georgia (9.6 percent), Jacksonville, Florida (8.5 percent), and Oklahoma City, Oklahoma (7.6 percent),” RealtyTrac says.

It all adds up to higher prices for families trying to move out of apartments and trying to find a home to live in, buying or renting. But the shift to a renter-heavy mix in neighborhoods might have longer-term social consequences, warns housing expert Logan Mohtashami, a loan officer in California.

“Are we at the beginning of a sociological movement away from middle-class home ownership and towards a cultural split between the investment property landlords and their renters both of whom may have less personal investment in neighborhood security, local schools and shared public facilities compared to primary homeowners,” he said. “The longer-term consequences of an unstable residential real estate market may be more serious than just the destruction of individual wealth. The ideal of middle-class homeownership may be at stake.”

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MONEY selling a home

8 Signs Your House Isn’t Quite Ready to Sell

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Kevin Zen—Getty Images

If your clutter runneth over, now's the time to tidy up.

Rushing to get your house on the market? Before you book that real estate photographer, take a deep breath and hit the pause button. If you take shortcuts to get your abode market-ready, you’ll likely have to pay for them later.

Whether it’s those small home repairs you’ve neglected, paperwork that’s in serious disarray, or closets that are stuffed to the gills, it’s well worth taking a few extra days (or weeks) to get your house in order — both literally and figuratively.

It’s trite but true: You never get a second chance to make a first impression.

1. Kitchen nightmares

OK, so yours is not a gourmet chef’s kitchen. Still, there are things you can do to up the ante on your otherwise humdrum galley. Swap out hardware, upgrade pendant lights, and paint or refinish cabinets — each is a fail-safe way to refresh the look of a dated kitchen.

If most of your appliances are nearing the 10-year mark, consider upgrading one of the big three — refrigerator, stove, or dishwasher — and then making that upgrade part of your sales pitch.

2. Your clutter runneth over

Pretend you’re a first-time visitor and scan your home. Is it brimming with distracting magazine piles and assorted tchotchkes? What’s become everyday to your eye can be distracting to the prospective buyer who favors minimalist decor.

Take the Japanese art of decluttering to heart and be ruthless: Box up the clutter and be done with it (at least temporarily).

3. Overstuffed closets

Don’t just shove those boxes into the back of your closet. Storage space is a top priority for any prospective buyer; if they see a closet full to bursting, they’ll think the space is smaller than it is. If you can, rent a storage space for your extra stuff and then paint the empty closets a light color so they seem airier.

In the bedroom closets, hang just a few strategic items to make the space feel ample and store the rest. If you’re living out of suitcases for a few weeks, so be it — you’ll need to pack all that stuff eventually anyway.

4. Oh, right, the pets

Dogs and cats are lovely companions but not great for home sales — even the faintest wisp of pet hair can ruin a showing. Not only do you need to scrub your home of every last animal vestige, but you also should plan out a pet-sitting strategy before your listing goes live.

5. Oh, right, the kids

Buyers are more forgiving of children than pets, but that doesn’t mean they want to see toys and video games strewn about. Buy a couple of huge and cheap (and opaque) bins for all the kid ephemera, then train your charges to reallytruly pick up after themselves.

6. Hapless hedges

Even if you’ve never claimed to be a green thumb, if your neighbors are master gardeners, you’ll probably need to at least attempt to keep up, curb appeal-wise. If you’re not up for it, you can hire a gardener or lawn maintenance company to properly trim your bushes and add a few strategic front plantings. And if your grass has gone to seed, it might be worth it to lay down fresh sod — a lush lawn especially beckons to city dwellers who have never had their own outdoor space before.

7. Keep it clean

The house can’t just be clean; it has to be cleaner than clean. That means the fridge, the woodwork, the windows, the couches … everything has to be pristine. Before you list, do a deep clean, or hire a professional cleaner who can also handle rugs and upholstery.

If you can handle the upkeep once the house hits the market, great — but be honest about your own schedule and consider keeping the cleaner on a weekly touch-up schedule.

8. That neglected filing cabinet

Any idea where the refrigerator warranty is? The HVAC instructions? Your last few heating bills? Savvy buyers like to know the intricacies of a home, including the exact age of appliances and the monthly cost of upkeep.

If your house files are a shambles, take a rainy afternoon to sift through the piles and delineate your home costs. You’ll also be able to monetize the upgrades you’ve made to the home over the years, which might persuade your real estate agent to up the asking price.

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MONEY renting

The Right Way to Break Your Apartment Lease

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elenaleonova—Getty Images

Never rely on a verbal agreement.

What happens if you need to break a lease on a home or apartment? Is your credit doomed to destruction? Maybe, or maybe not. It depends in part on how you handle it.

There are numerous reasons why individuals want to get out of a lease before it’s up. Here are three recent stories from from the Credit.com blog:

I was under old management contract and then the apartment got bought out and the new management is horrible. I wanted to break lease but the fee is 2 months rent! I just can’t afford that. I wanted to just move out hand them the keys and say sorry I am not paying to break my lease, what would happen?

I bought a self test mold kit and it came up with mold. I spoke to my land lord and she said yes I can break out of my lease. They got a specialist in and found no mold. She has no negated on that and telling me I must pay to break my lease early as I had already setup a new place. If I refuse to pay the $522 will her verbal say so stand up if they take me to court or collections.

I broke my lease with my former landlord in mid-April. I got a phone call about cleaning and damages two weeks later and the manager stated she would send me an itemized list. I never got one. Imagine my surprise when I got a call from a collection agency today about a $700+ bill from the apartment complex. I paid a $2,038 early termination fee and $600 in deposits….I am in the middle of a security clearance process and this could jeopardize my clearance.

If you need to get out of your lease, here are seven essential steps.

1. Read Your Lease

“Read it three times!” says Joel S. Winston, a former deputy attorney general for the State of New Jersey, who currently practices consumer protection litigation and privacy law for the Winston Law Firm, LLC in New York City. He said he recently helped a client terminate a lease after a landlord failed to change the electronic access codes that had been used by previous tenants. The lease should spell out the procedures and penalties for canceling early. “The lease that you signed and that no one reads — that’s going to control how difficult and expensive it will be to break a lease,” he says.

In particular, look for details spelling out what happens if you terminate the lease early, including whether you will be held responsible for the entire remaining term of the lease or a lesser amount. (In many states, landlords can’t use the fact that you left early as a windfall. They must try to rent the property, but if they can only re-rent it at a lower rate than you were paying you may be required to make up the difference. You may also have to pay for the advertising costs associated with finding a replacement tenant.)

2. Communicate

Let your landlord know what you want to do and why. Some may be more flexible than others. A large property management firm may not be as sympathetic to your financial woes like an individual landlord with whom you have a good relationship. Or an individual landlord may be put in a real bind if he or she can’t collect rent for a few months. Try think of it from their perspective. They have to find and secure a new tenant, which is easier in some cases than others. You may want to help them find that person, but remember it’s ultimately their decision whether or not to rent to them.

Just don’t make up problems with the property that don’t exist in order to try to get out of your current lease, Winston says. “Try to be open and honest and approach your landlord in a nice and friendly manner,” he recommends.

However, if there are problems and you feel the landlord is avoiding fixing them, put them in writing and keep a copy of your complaint for your records.

3. Get It in Writing

Make sure you get written confirmation of any changes to the lease. If your landlord says you can move out early with no penalty (or with a smaller penalty), get it in writing. Keep a copy for your records in a safe place where you can easily access it. It won’t do you any good if you can’t find that information two years later when a collection agency contacts you. Never rely on a verbal agreement; otherwise it will be your word against theirs. If you end up in collections or in court, the written terms in the lease will likely prevail.

If the landlord won’t budge, won’t put anything in writing or won’t compromise, you can still create your own paper trail by communicating in writing and keeping a record of the letters you sent.

4. Don’t Forget the Walk-Through

No matter how anxious you are to move out, you should protect yourself from unexpected charges for damages to the property by doing a walk-through with your landlord and getting a written record of the results. If at all possible, don’t leave until you do. If your landlord refuses, take detailed pictures — or better yet video — of the status of the property the day you leave.

5. Don’t Assume

Do not assume your security deposit will take care of any remaining balance that you owe. “When you are breaching the contract it doesn’t always entitle the landlord to scoop up your security deposit. For example, in New York the landlord has to go to the housing court to file a complaint in order to take that.” Winston says.

Similarly, don’t assume that if you pay your portion of the rent on time, but your roommate does not, that you are off the hook. If you both signed the lease you are both fully responsible for the entire rent, regardless of what the two of you have worked out between yourselves. In addition, if your roommate causes damage to the property and doesn’t pay for it, you may be stuck holding the bag.

6. Exceptions to the Rules

You may have legitimate reasons for breaking a lease that aren’t spelled out in a lease; for safety or health reasons for example.

“Essentially, the ‘warranty of habitability’ is a landlord-tenant legal doctrine requiring landlords to maintain rental real estate in reasonable conditions that are fit for tenants to live safely,” explains Winston. “The warranty of habitability is accepted law in most every jurisdiction in America. In some states, the warranty has been established by decades of case law (i.e., Implied Warranty). But in other states, the warranty has been expressly established by legislation.”

There may be state-specific laws that allow you to break a lease early. For example, in Washington state one of the legitimate reasons for terminating a lease include when a landlord fails to make certain types of repairs within a specific period of time. But mold, as our reader mentioned, doesn’t appear to be one of those specific circumstances. In New York, tenants age 62 or older (or their spouses) who qualify because their physicians certify that they are no longer able to live independently may be able to terminate their leases.

And members of the military may be entitled to break their leases early due to deployment, permanent change of station orders, release from active-duty orders and in other specific circumstances.

7. Get Help

Landlord-tenant laws are state-specific. So it’s a good idea to research your rights as a tenant. If you believe a landlord’s actions may be illegal, you may be able to get help from Legal Aid, a local housing agency or a consumer protection attorney in your state.

Understand that even if you do everything right, problems can arise. Perhaps like our reader’s story above illustrates, an unknown balance can wind up in collections and you may not hear about it until the damage to your credit scores is done. Or the fact that you terminated your lease early may wind up reported to specialty credit reporting agencies used by landlords and catch you by surprise the next time you try to rent.

For that reason keep good records of what transpired long after you think you’ll need them (seven years is usually safe). Also review your free annual credit reports and get your free credit scores frequently to make sure you’re aware of any significant changes. You can get two free credit scores updated monthly at Credit.com.

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MONEY buying a home

8 Ways to Convince Home Sellers to Accept Your Offer

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Jay Spooner—Getty Images

Sweeten your bid without raising it.

What happens when the seller of the house you really love won’t budge off asking price, and you simply cannot up your bid? Answer: You dig into your bag of buyer tricks and choose the right strategy.

Although it’s money that usually will motivate sellers, there’s more than one way to win this game. If you really want the house and your offer is at least within the ballpark of others on the table, don’t give up until you’ve tried some creative ways to motivate your seller.

1. Find out what your seller wants

This one is easier than you might think. There’s only one step: just ask.

Each seller’s situation is unique, points out Tali Raphaely, president of Armour Title Co. “Buyers just need to educate themselves on the goals and needs of the sellers to find out what other types of arrangements or contract clauses the sellers would find especially helpful.”

For example, some sellers want a short escrow period, and some want a longer one. If you know which your seller wants, you can accommodate those needs.

“I always suggest asking the listing agent what the perfect escrow period for the seller is,” says David Kean, a luxury home specialist with Teles Properties in Beverly Hills.

2. Offer cash

If you can offer a cash sale, you have a great chance of getting the seller to accept your below-asking-price offer.

“Nobody will turn away a cash buyer,” says Julie Pelle, a luxury property specialist in Scottsdale, AZ.

But if you’re like most people and will be taking out a mortgage, do the next best thing and secure a preapproval letter from your lender. Sellers often prefer a strong offer to a high one. It’s the difference between knowing the deal will close and worrying about the deal falling through.

“Submit a well-written, straightforward offer and include a loan preapproval as well as proof of down payment,” recommends David Kean.

3. Rent the house back to the seller

Your seller might not be ready to move just yet. To get the price down, you could “offer the seller the option to stay in the house after the closing date … for a specified period of time,” says Raphaely.

Rob Williams, a Washington, DC real estate agent, explains how: “Close within the traditional 30-day window so that the seller gets the proceeds from the sale, but let them remain in the property rent-free for a short, specific time period, typically one to four weeks.”

4. Waive contingencies

This tactic is controversial. It’s like buying a used car “as is” without first having a mechanic check it out. This might work out if the car is certified pre-owned from a dealer. Might not if it’s a lemon with no warranty from Sketchy’s Used Car Lot.

Some houses are riskier than others, and while some real estate agents recommend this move, most don’t.

“No contingencies and being flexible may be attractive to the seller,” says Katherine Salyi of Nest Seekers International, Team Ryan Serhant in New York.

But Andi Blackwell, a broker in Portland, OR, says waiving contingencies is a major don’t. “Giving up your right to walk away based on inspections or appraisal could cost you far more in the end.”

Confused? Your real estate agent can help guide you.

5. Offer to buy the furniture

Many sellers don’t want to bother moving all their stuff. If you like the furnishings, let the seller know you’re interested in buying them and make the furniture deal a separate transaction with a separate bill of sale.

6. Write a heartfelt letter

Although most agents will tell you that sellers usually care more about their net profit than about whoever moves into their home, writing a heartfelt letter could tip the scales.

Pelle has her clients include a letter that explains how “they look forward to enjoying the home just as much as the current owner has.” She’s found that sellers appreciate buyers who will respect the home, especially if it’s a unique or historic property.

7. Play hardball

Realistic sellers don’t expect buyers to pay more than the home’s value. If a seller’s price is overly optimistic, work with your agent to kindly point this out. Include comparable sales and neighborhood statistics.

But hardball has its limits. Some buyers try to get the price down by pointing out how much work the home needs.

“Trying to win through intimidation is soooo yesterday,” says Sissy Lappin, a Texas real estate agent. “Insulting someone’s home is like insulting their child.”

8. Think outside the box

In this case, it’s the pizza box. One Portland, OR buyer who owned a pizza restaurant offered the seller “free pizza every month for life.”

“If you have a special service or product, use your assets,” says Andi Blackwell.

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MONEY homeowners insurance

Home Inventory Apps Help Protect You in Case of Disaster

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Leren Lu—Getty Images

Making an inventory of everything in your home helps verify your losses and speed insurance claims.

Home inventories are one of those things everyone knows they should compile but few people actually end up completing. Creating a home inventory can be a very long and tiresome process, which is why so many people avoid them.

Having an accurate inventory allows you to have some peace of mind should anything terrible ever happen to your home or belongings, like a hurricane, flood or fire. Luckily, apps can help speed up the home inventory process while keeping your information in a safe and accessible place. Some of these apps were developed by individual insurance companies, while others are independent of any particular insurer.

Non-Branded Apps

The Know Your Stuff® – Home Inventory app was developed by the Insurance Information Institute and anyone can use it for free. This app is accessible on Apple or Android devices, or on your computer.

Know Your Stuff allows you to record all of the relevant information you should need if you ever have to make an insurance claim. For each item, you can attach an image of the item, a copy of your receipt, an image of an appraisal (if you have one), the name of the item, which room the item is located in, what category the item fits in, how many of the item you have, the purchase price, the replacement cost or appraised value, the date and place you purchased the item as well as the make, model, serial number and description of the item. It will take a good bit of time to record all of this information, but the app organizes it all in one location where you will not lose it.

When you need to access your list of items, the app allows you to view your items by room or by category. Additionally, you can view a complete list of all of your items. This allows you to determine easily if you need to remove any discarded items or add any newly purchased items.

The Know Your Stuff – Home Inventory app even allows you to keep inventories of multiple locations, which can be extremely helpful if you have a rental property or vacation home. While this is the most comprehensive home inventory app we could find, the user interface is not as polished as some of the branded apps below. Remember, it is the information you record and how can you access it, not how pretty the app looks, that matters.

Branded Apps

Many insurance companies offer their own version of home inventory apps. In general, insurance companies do not require you to be a customer in order to download and use the apps they have created. Insurers provide these apps free of charge in hopes that you will consider awarding them your insurance business in the future.

Some popular branded home inventory apps include Allstate’s Digital Locker and Liberty Mutual’s Home Gallery. Be careful what you enter into these apps as insurance companies may have access to this information should you need to file a claim. If you accidently enter incorrect information into the app, it could hurt you. Additionally, these apps may not allow you to enter as much information as the Know Your Stuff – Home Inventory app.

Make Sure You Use The App You Download

No matter which app you choose to create your home inventory, make sure to actually complete the process and document every piece of information you think you may need. Make sure your app allows you to record the essential information needed by your insurance company to file a proper claim. You can always contact your insurer if you are not sure of their requirements.

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