Email ElizabethDoes Leasing a Car Affect a Buyer’s Ability to Buy a Home?
Does leasing a car affect a buyer’s ability to buy a home? As a mortgage professional for almost 20 years, I know just about every gotcha that can cause an underwriter to deny your loan. We look at a borrower’s monthly minimum obligations paid on debts. We take those minimum payments, including your proposed total mortgage payment (principal, interest, taxes, insurance, and private mortgage insurance). Then we divide this by your gross income. This debt-to-income ratio is the barometer we use to determine your ability to repay the mortgage.
My wife, a college professor, texted me yesterday: “My friend, who is a business/finance professor and contract attorney, is insisting that leasing a car will not affect buying a home because it’s not debt … He says he also teaches mortgage people this stuff.”
WIFE: “Can I tell him he’s wrong?”
ME: “Yes, he’s wrong. It’s debt!”
WIFE: “LOL, I knew it! He is generally full of crap, but when he said that’s what he teaches in his classes, it made me pause.”
Imagine you have a $375/month car payment, which is nearly equivalent to $75,000 in spending power when buying a home. Or, imagine you are a two-car family spending $750/month on car loans. This would reduce your buying power by $150,000. So instead of affording that charming $500,000 home you have had your eye on, your max is only $350,000. As my clients know too well, this could hinder getting into that perfect neighborhood with the right schools. Also, the short commute you so desperately want, it may no longer be in reach.
Here is the rub — a leased vehicle is even worse. Are you listening, Mr. Professor? Most of us know that when your lease period expires, you either lease again or keep the leased vehicle with a hefty buyout (this could be money you need for your down payment or closing costs for a new home). Whereas, with a conventional car loan, when you make your last scheduled payment, you own the car free and clear (a/k/a: no debt).
Also, in some circumstances, if you are a few months shy of paying off your auto loan, an underwriter will not hit you with the monthly auto debt and will not hold it against your ratios. You can see why the hair on the back of my neck jumped to attention upon hearing this professor tell his many students that a car lease is not debt and will not affect their ability to buy a home. Rubbish!
This one financial decision can be the reason you miss that opportunity to get into your dream home. When something sounds too good to be true, it genuinely is too good to be true. My best advice is to sit down with a trusted mortgage professional. Talk first before paying off any debt or restructuring those credit card balances. Next, work through your debt-to-income ratios with someone who does this every day. So, does leasing a car affect a buyer’s ability to buy a home? YES, it absolutely can.
— Dan Tharp
If you have loan questions or need to be pre-qualified please call our expert loan officer, Dan Tharp with Guild Mortgage. NMLS # 3274, Equal Housing Lender. He can be reached at 916-257-1470. Dan wrote this blog for us and he did a great job, thank you, Dan.
Weintraub & Wallace Realtors, JaCi Wallace, RE/MAX Gold 916-233-6759
Can A Realtor Have A Felony Record?
Can a Realtor have a felony record? Well, there’s one way to find out; you can go to this link at the California Department of Real Estate License Lookup, also known as the DRE. You fill out a name or a license number.
When we receive an offer on a property, I always check the license number on the DRE site. I can make sure they have a license that is valid without any disciplinary issues or suspensions. If there are court records, you will find those documents attached. Then, the next step is MLS online to look up a buyer’s agent production numbers. It is important to know whether this is a newer agent and or does the agent have enough transactions completed to work without supervision.
On one occasion I found an older license number but only a few closed escrows. I looked up the agent and she had been suspended for several years for burglary. Yup, I’m serious. It is a bit shocking. There was a local sting operation and this Realtor was selling stolen property to law enforcement, according to the court documents. I thought to myself, how can the DRE give this person an ability to enter people’s homes with a Supra key? I closed a real estate transaction with this Realtor. Making the seller aware of the situation was completed. As it was a vacant house, the seller was not overly concerned in this case.
In another instance, I saw a posting of an open house, and I noticed it was a broker who had been previously arrested, as it was on the news. Another Realtor working with this firm also had a theft conviction, as stated on the DRE site, and was reissued a license. I called the DRE, as I was curious about this. There is a section they directed me to read up on called rehabilitation. Department of Real Estate Commissioner’s Regulation 2911. Criteria for Rehabilitation (Denial). This is surprising information. If there is a criminal issue, it will be attached to the license on the DRE link so you can read all about it. In this 2911 section, it even talks about money laundering. I think some sellers would have an issue with a convicted felon having the ability to enter an owner-occupied home.
This was surprising to me. Though we have our fingerprints taken for a background check to apply for a state license, it appears convicted felons can obtain a real estate license in California. Burglary, theft, what’s next? Murder? I would think convicted felons would be denied a license. If they have enough time past the crime, are off probation or parole and have letters of recommendation, it appears in some cases they can obtain a restricted license. Then, after a year or two with no issues, they can apply to have their real estate license fully reinstated without a restricted license.
Can a Realtor have a felony record? It appears lawbreakers can. I am aware of a few agents who have reported burglary convictions and hold active real estate licenses. A suggestion, if you are concerned, you can look up the Realtor you are working with to ensure you are aware of any past or current issues with the DRE. This way you can decide if a criminal history is concerning to you.
Call Weintraub & Wallace Realtors, with RE/MAX Gold, if you would like to buy or sell real estate. You can look up any of our license numbers on our team with confidence. We look forward to working with you in Sacramento, Placer, Yolo, El Dorado, Amador, Sutter and Nevada counties. We can be reached at 916-233-6759.
— JaCi Wallace
Is Martin Luther King Day a Realtor Holiday?
Is Martin Luther King Day a Realtor holiday? This day began like any other day, hustle and bustle. We have a new Carmichael listing coming soon and we were busy getting the agreement signed. There are some legal overlays, so an attorney had to review. Both sellers have to sign it. We should be in MLS on market status by Friday. What a beautiful property, and be sure to read that post in a Coming Soon listing blog promotion. We should have photos next week.
Also, we received an offer on our Oak Park listing on 48th today, so we responded right away with a seller counter offer. Our escrows needed updating as they are in process. With appraisals due next week, we have our handyman getting them ready with smoke detectors and CO2 detectors.
My nephew is home shopping and so is my niece Adina, so it has been busy searching high and low online for a property because we are plagued with very low inventory.
It was like any other workday, except title company and lenders were closed for business so the phones were a bit quieter than usual. Is Martin Luther King Day a Realtor Holiday? The answer to this is NO, there is no Realtor holiday when there is work to do.
If you would like to have a Realtor working for you who works on all federal and national holidays, call Weintraub & Wallace Realtors, with RE/MAX Gold. We can be reached seven days per week at 916-233-6759.
— JaCi Wallace
Submitting Home Buying Offers in Sacramento 2020
Submitting home buying offers in Sacramento 2020 should be well-thought out with a strategic plan. The market is very competitive as inventory is down by a third in many areas. What does this mean for homebuyers? Perseverance is the answer. Understand your priorities. Be willing to compromise and invest in sweat equity. When buyers cling to very stringent criteria, it is a challenging journey. To have “it all,” you will pay dearly and may have to build a custom home, which is not inexpensive. However, when you buy a resale home, you are not paying top dollar for upgrades.
My niece has a 20% down payment, is preapproved and wrote a brilliant letter about her family. We are in back up offer status on 2 offers. A back up is a second-place offer; if the current offer falls out for any reason, we are ready, willing and able to buy this house.
Even with a 20% large down payment and offering $10,000 over the list price, our offers were still not chosen. The seller’s response will generally tell you why you were rejected. Submitting home buying offers in Sacramento 2020 is taking assertive measures to win. Best advice, listen to a competent Realtor.
To submit clean Sacramento offers on your behalf, which will give you the best ability to win, call Weintraub & Wallace with RE/MAX Gold today! We can be reached at 916-233-6759.
–JaCi Wallace
Sacramento County Housing Report for December 2019
The Sacramento County Housing Report for December 2019 comes to us from team member Josh Amolsch. Josh is out there every day in the trenches, working relentlessly. He knows the inventory and how to find the homes his clients dream about. As a well seasoned professional Realtor, Josh knows the market pulse and shares his experience with you in his monthly market trends blog. Enjoy. — JaCi Wallace
The Sacramento County Housing Report for December 2019 includes only Sacramento County single-family homes. No other criteria are included in this particular report. This singular focus of sales gives us a deepened understanding of what is happening in our area. If you want to receive updates for a specific area, a ZIP code, multiple ZIP codes, multi-family properties, and / or land, sign up here for your Sacramento housing report by ZIP code.
We start a new decade in Sacramento County with housing stats that are leaving many prospective homebuyers and sellers to wonder: how to proceed? Is it time to buy, sell, refinance or wait? Before we get into the latest numbers that came out recently, I want you to pinch yourself really hard. Do it because the pain that you will feel is not nearly as bad as the pain that you may feel if you go out to look for a home to purchase this year without a rock-solid game plan. This plan should include hiring an experienced exclusive buyer’s agent to help guide your expectations and align them with reality in a seller’s market.
The top graph shows that the number of homes for sale in Sacramento County fell 30.4% from November 2019 to December 2019. This is down more than 45% from December 2018. Look at the light green column compared to the dark green column right above 12/19 in the graphs above. In the last 5 years, we have not seen those metrics been so close. This is a first in the last 10 years that new listings fell so much lower than the pended sales. Along with inventory being so low, buying activity ticked up 10% from December 2018 to December 2019. The perfect storm is brewing. Sellers can put a home on the market and potentially receive multiple offers with very favorable terms on homes priced to sell.
The average cumulative days on the market jumped up to 38 days in December. This was a 15.6% decline from last year at the same time. What is interesting is the sellers are still receiving 97% of the price they originally listed at, which means sellers at first blush often feel they can get more than market. Lowball and unrealistic offers from uninformed buyers are often ignored. Competition from the influx of buyers from surrounding areas won’t allow a poor strategy to bear fruit. The California Association of Realtor’s report shows that housing affordability in Sacramento has been hovering around 65% since the second quarter of 2015. By comparison, our neighbors in the San Francisco Bay Area are averaging 43% in Q3 2019.
We predict that prices will continue to push forward while interest rates are widely expected to remain muted. If you have been unable to pin down a home in an area that you want to live in, then give us a call. We will give you some ideas you may not have thought about. Our team has been at this for many decades and are eager to help! If you want an edge in this extremely competitive market, call Weintraub & Wallace Realtors, with RE/MAX Gold at 916-233-6759.
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