Being a landlord is almost like being a superhero. You have to be very good at doing many different kinds of things to get the job done right. Here are six qualities that define a good landlord:

1. People skills

A good landlord is flexible and can keep cool even in the most trying circumstances. He or she is also a good communicator and assertive without being aggressive.

2. Management expertise

Land-lording requires that an ability to organize and prioritize many different tasks and set goals. It also means being able deal effectively with work interruptions and solve problems under pressure.

3. Business know how

Renting is a business. Landlords need to be able to market their properties, collect money from tenants and make tough business decisions that may include having to evict non-paying and/or difficult tenants.

4. Handyman skills

A landlord who can do simple plumbing, electrical and carpentry work as well as furnace and water heater maintenance can save money. Basic handyman knowledge also makes it easier to hire the right people for jobs that require more expertise.

5. Bookkeeping savvy

Landlords should have an understanding of financing, interest rates, credit reports, filling out and filing business reports and preparing income tax returns.

6. Financial stability

A good financial record is crucial. This means a solid credit history as well as money set aside for any and all eventualities and emergencies.

Each area that is a weakness will make your job that much more challenging. Even if you have all these bases covered, you may find that you lack one thing: time. At Herman Boswell Property Management, we’re here to make managing property a snap because we know that even the most committed superheroes need a little help sometimes. Let us simplify your life: contact us today!

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Most landlords know the qualities that make an ideal tenant, but what does it take to attract them?  Factors such as the location, landscape, and property amenities can be the make-or-break.  Landlords can gain a competitive edge and increase their chances of attracting excellent tenants if they have the following features of their rental properties:

Location

The first thing that tenants consider when looking for a place is its location. Many people look for rental properties near schools, business districts, transportation, and shopping malls. So, if you are looking to invest in a rental property, you want to look for these features. If your rental property is in an area with high demand, you can ask for higher rent.  Some prospective tenants will prioritize location over anything else and are willing to compromise on other amenities.

Safety and Security

More tenants are willing to live in your rental property if the area is safe and secure. With that in mind, location goes hand-in-hand with safety. The rental property must be in a safe environment with a low crime rate. The property should also have security devices and many landlords install alarm service systems in the premises.

Sufficient Parking Space

No one wants to spend a long time finding a parking spot after a long day at work or if they have groceries or other packages in the car. Parking spaces can be a pressing issue in properties located in urban areas. The streets are often busy, and some sites do not allow off-street parking.

Renovations

You can attract more people to rent your property if the space looks polished and organized. Even when the property has had several tenants staying in it over the years, it should not feel that way. Performing upgrades and renovations can make the property more attractive and functional. Kitchens and bathrooms are the rooms most often renovated.

Bonus Facilities: Backyard or Balcony Access

Some tenants prefer a property that has a designated place to sit back and relax. If your property has a backyard or balcony access, it can increase the chances of attracting more tenants. More often than not, places with these features can cost more, especially within urban areas.

Property Inclusive of Appliances

Appliances are another valuable bonus that tenants tend to look for. Most renters do not want to invest in major appliances. Installing new appliances including central air conditioning and a washer and dryer can attract higher-quality tenants.

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To provide a positive rental experience, you should be aware of landlord-tenant laws and fulfill your obligations as a landlord.  It’s also very important that you know the rights you have as a landlord. These rights include:

Right to Collect Rent from Tenants

As part of the rental agreement, all landlords have the right to collect rental payments from their tenants.

In addition to the rental amount, late fees may also be collectable.  Late fees are penalties collected when tenant does not pay the rent within the negotiated timeframe. Per Texas law, you can collect late fees if any portion of the rent remains unpaid two full days after it was due. However, landlords can only collect a late fee stipulated in the written lease.

According to Senate Bill 1414, landlords overdue fees must be reasonable.

• Pre-arranged late fees should not exceed 12% of the rent’s total cost for a property unit with four units or less.
• Pre-arranged late fees should not exceed 10% of the rent’s total cost for a unit in a property with more than four units.
• Pre-arranged late fees should not exceed the landlord’s uncertain damages related to the late payment of rent, including direct or indirect expenses, direct or indirect costs, or overhead associated with the collection of late payment.

Payment Methods

There are no specific payment methods required for both tenants and landlords to use. However, landlords can declare their preferred means of payment in the leasing agreement.

Landlords should notify the tenants in advance if they want to transition to a new payment method. Setting a requirement to pay online is considered an amendment to the lease. This arrangement can either be performed at the start of the new lease period or upon the written agreement of both parties.

When the lease agreement does not express a particular payment method, landlords cannot refuse any payment type. Tenants that pay their rent in cash must receive a receipt.

Right to Raise the Rental Costs

The law does not prohibit landlords from raising the rental costs in the event of lease renewal. Rent increases cannot be implemented until the lease term ends.

You can anticipate local rent control ordinances in Texas after the declaration of a state of disaster. Housing emergency regulations are usually approved by the governor before the adjustments in rent prices apply.

It is also important to note that landlords cannot increase the rent as a form of retaliation for their tenants exercising their rights. These right include tenants requesting repairs, making complaints about the unit, or joining a tenant organization.

Right to Evict Tenants

Landlords can practice their right to evict tenants, especially those who refuse to pay rent. Before you evict a tenant, you should be aware of the appropriate eviction proceedings in Texas. This process allows you to collect the remainder of the unpaid rent or any other costs associated with the eviction.

The following involves the legal terms typically utilized during eviction proceedings. As a landlord, it is essential to know these terms to determine their role in the process.

Forcible Detainer.  This process refers to tenants who stay within the rental property after the landlord revoked their right to stay. Whether their lease expired or was forfeited, they cannot dwell inside the rental property.

Hold-over Tenant.  Hold-over tenant is the term used to describe a tenant who remains at the rental unit without notifying the landlord.

Notice to Quit or Vacate.  Tenants should receive a notice to vacate from their landlord. According to the law, landlords must notify their tenants before starting the eviction process. Tenants need warning of the issues that arise and given some time to make changes.

Tenancy-at-Will.  This explanation refers to the leasing agreement between a tenant and a landlord bound without adequate documents. Put simply, tenancy-at-will is a verbal agreement. More often than not, this arrangement occurs with family members, relatives, close friends to the landlord.  Even if the lease is merely a verbal agreement, the law requires a formal eviction process before the tenant can leave.

Writ of Possession.  Writ of possession is typically the final stage of the eviction proceedings. It is when the court orders the authorities to remove the tenant in the property, return unsettled rental costs, or retrieve the landlord’s property from the tenant.

Eviction Process

Here are the steps you need to take before evicting a tenant from your rental property:

1. Inform the tenant by sending them the Notice to Vacate. Landlords can give up to 3 days to let the tenant move out before filing the eviction suit.
2. After filing the eviction suit, expect the eviction hearing to commence after at least ten days.
3. Once the judgment is issued, there will be no action taken for the next five days. This time frame allows either party to appeal. When the tenant decides to appeal, another hearing begins after a week.

Upon the final judgment, landlords can ask for the tenant’s writ of possession. Tenants receive a full-day notice before authorities remove their stuff from the rental property.

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When property managers handle repetitive tasks, they ease your burden to focus on more critical landlord duties. This reprieve allows you to concentrate on significant repairs and legal issues that require your immediate attention. Most of all, you get to explore new ventures or possible expansion opportunities, making project managers worth an investment.

Property managers can be a significant asset to landlords. Consider the following factors to determine if working with a property manager is the right move for you.

Expanding your Property Portfolio Means More Properties to Handle

As your property investment grows, you tend to manage more rental properties and units. You may obtain properties at different locations, some of which might not be near to you.  Arising issues can be challenging to handle alone and from afar.

Moreover, not all landlords who undertake this venture might can devote enough time to manage day-to-day tasks. Whether you have properties at different locations or are too busy with your other commitments, property managers are here to help. They can manage tasks such as collecting rent, handling tenant complaints, performing maintenance duties, and more. This opportunity allows you to concentrate on the steps you need to take to expand your property investment.

Property Managers Can Help You Manage Turnover Rates

High tenant turnover can affect your profit as a landlord. When more tenants leave, you need to allocate a budget for acquiring a new one. It takes a certain amount of time to advertise a property, run background checks on applicants, prepare necessary documents, and show the new tenant their unit.

The more time you let your property vacant, the more money you lose.

Working with a property manager can help you resolve this issue. They have extensive experience in handling rental properties and tenants. They have the right resources to advertise your available units across several channels. It is also their job to perform strict tenant screening and background checks to acquire a reliable tenant. Property managers can handle background and reference checks, as well as employment and income verification.

Property managers can also perform the following tasks to eliminate high tenant turnover:

Make the Property More Attractive to Tenants. Seasoned property managers have a clear understanding of the type of units that are sought after. This understanding allows them to determine the improvements needed to attract more tenants.

Set a Reasonable Rental Rate: As industry experts, property managers can help you come up with an optimal rental rate. They have access to the local real estate market, data on competing units, and other property management tools to help you make an informed decision.

Minimize Tenant Turnover.   Property managers can help you improve tenant retention by facilitating routine maintenance and repairs. You can also pay close attention to your tenants’ needs when you have a right hand by your side. Addressing all the concerns and inquiries in a timely fashion increases the chances of them staying.

Get Expert Help

You can always use a property management expert to handle instances with which you are unfamiliar. Working with a property manager allows you to differentiate a good tenant from a bad one. Right off the bat, they can see the red flags. They also have enough tools to verify crucial information about potential tenants.

A portion of property management goes into lease enforcement. Landlords have to make sure that both parties follow the terms of the lease. Property managers can assist you in dealing with difficult or non-compliant tenants. Once a tenant breaks a rule, property managers will immediately step in to deal with it.

They Keep You Out of Legal Trouble

As a landlord, it is your responsibility to study all the obligations and responsibilities you have. You should also be very familiar with the specific state laws surrounding property rental. Property managers can enlighten you about these topics and provide you with useful advice. There are a lot of technicalities involved, so it’s best to talk to an expert.

The Bottom Line

Suppose you are a landlord who is just starting in the industry; learning what to do as you go can be risky. Not everyone knows how to acquire suitable tenants, charge reasonable rent, and maintain properties. When things go wrong, it can cost you time and money.

Working with property managers allows you to prevent the pitfalls of managing rental properties. They have the experience, resources, and knowledge to handle everything it takes to succeed.

The post How a Property Manager Can Help Landlords Avoid the Pitfalls of Owning Rental Properties appeared first on Herman Boswell Property Management.

If you own and manage rental properties, you need to know that the presence of mold can put you at risk of litigation. In the last decade,tenants across the country have won hefty settlements from landlords for health problems – such as nausea, asthma, rashes and chronic fatigue – allegedly caused by exposure to toxic molds.

Mold comes in many colors and shapes. The ones that are a cause for concern come in black, white, green or gray varieties and go by such names as:

• stachybotrys
• penicillium
• asperligus
• fusarium
• paecilomyces

Some molds are visible and have a distinctively bad smell. Others are more difficult to detect and live between walls, under floors or in basements and attics. Buildings in Texas are especially vulnerable to mold because of the humid climate. Wherever moisture is present, mold thrives.

If a tenant claims that his or her rental unit has mold, the wise thing to do is act on the complaint right away. Most mold – such as the kind that grows on shower tiles – is not harmful to human health. It’s still important, though, that you show your tenants that you are taking their concerns seriously.

The first thing to do is determine what’s contributing to the mold. The most common causes are leaky pipes, windows and roofs. Since landlords in Texas are responsible for maintaining fit and habitable housing and repairing rental property, you will need to fix any structural problems that might be giving rise to the mold as soon as possible.

If you can’t pinpoint the cause, you should call an inspection company to run tests in the rental unit in question. Even if you are able to figure out what is behind the mold, it’s still a good idea to get official documentation. That way, you’ll be able to show that have acted in good faith and adhered to your responsibilities as a landlord.

At Herman Boswell, we understand the importance of staying on top of tenant concerns, especially where issues of health and habitability pertain. Our experts are here to help you manage your real estate investments so that you can have the peace of mind you deserve. Contact us today!

The post DEALING WITH MOLD PROPERTY MANAGEMENT COMPLAINTS FROM TENANTS appeared first on Herman Boswell Property Management.

When it comes to marketing your rental property, you have a lot of choices–almost too many. You can put an ad in the local newspaper, list the property with a home finding agency and/or put up a sign in the front yard.  And that doesn’t even include your online options. It all depends on who you want to have as potential tenants.
Once you’ve figured out what might work best, then there’s the issue of what you should say about the apartment, home or condominium you want to rent. If you have any doubts at all, then you need to review the Fair Housing Act which describes exactly who is entitled to rent (or buy) from you.

Knowing what this Act–along with other state and local fair housing laws–says is especially important.  Any ad you place cannot contain words, phrases, symbols or images that could indicate or imply you have discriminatory preferences. You also have to watch out for any religious references. Saying that your rental unit is located near a  particular church or other religious establishment could suggest unintended limitations or exclusions.

The best way to market your property is to be as neutrally descriptive as possible. You can mention prices, amenities, when the unit will be available for move-in and whether references and/or a credit check are required. You can also talk about location–without referring to any religious establishments–and given address. And of course, you can talk about all the special features that make your unit stand out:  for example, spaciousness, affordability and quietness.

Even after you’ve figured out where to market your property and what you can legally say about it to make it sell, you need to have a plan in place regarding what you will do if your marketing approach doesn’t yield the results you want.  Pretty exhausting, isn’t it?

Herman Boswell is a property management firm that understands the needs of busy landlords like you. We are real estate experts that know what it takes to successfully market a rental unit to people who will be good tenants. That is, who will pay rent on time and treat your property with the respect it deserves. When you need a team that knows the DFW market like nobody else, contact us.

Photo credit: jscreationzs

The post MARKETING YOUR RENTAL PROPERTY THE RIGHT WAY appeared first on Herman Boswell Property Management.

In these times of economic uncertainty, an investor needs to make sure that the returns on an investment are maximized. No investment should be earning less than its potential and this is especially the case for real estate.

You may be the owner of an apartment or an apartment complex, a stand-alone home or many houses in different locations, or a more complicated and complex portfolio with multiple property types. Whatever your investment profile is, if you have real estate investments you need real estate property management of the highest quality.

With so many companies out there vying for your attention and your dollars, it makes sense to choose only the best. But many investors make some common errors when choosing the best manager for their properties. If you are aware of these mistakes, you can avoid them and ensure that your investments pay off.

Here are the most common problems with a company and why it’s a mistake to ignore them.

1. Inexpensive
There’s nothing wrong with saving some money if you can but make sure that you’re not cutting corners when it comes to services and quality. The cheapest services may not always be the best for the performance of your real estate holdings. Take a close look at what services you are getting for the cost, at the quality of the services provided, and at the short and long term consequences of ignoring any red flags that come up just to save a few dollars. You want a company that can manage your holdings effectively, efficiently and professionally, and sometimes this means paying more to get what you need.

2. Inexperienced
It is important to know how long the management company you are hiring has been in business and what kinds of properties they have managed. It is also important to assess how successful they have been based on their current and previous clients’ experiences. The longer a real estate property management company has been doing their job, chances are the more satisfied customers it has and has had.

3.Understaffed
It’s not just how many employees the management firm has but the quality of those employees. A competent and successful company will have trained and educated staff not just for property maintenance, but office work, computer tasks and even public relations. Look for an adequate staff for the kinds of tasks that need to be done but also look for educated, experienced, and professional people that have made the company a success. If the staff is too small or not well-qualified, your investment will be at risk.

4. Not up-to-date
An experienced, well-staffed real estate property management company will have the latest, most efficient computer hardware and software available to help manage your investment. They will use effective programs that make it easy for the maintenance staff to stay current and on schedule, for screening and processing potential tenants, for tenants to pay rent, for you as the owner to access the figures and files you might need, and for the general business of the office to be conducted properly. If the company is not completely modernized and cutting edge, you may not be getting the maximum return on your real estate investments.

Herman Boswell Property Management has 37 years of cutting edge experience as a property management company in the Arlington Tx area. We maintain over 700 properties and have the well-trained staff and equipment to do so. We help you avoid the pitfalls of dealing rental property investing. We do our job and do it well.

The post FOUR MISTAKES TO AVOID WITH A REAL ESTATE PROPERTY MANAGEMENT COMPANY IN ARLINGTON, TX appeared first on Herman Boswell Property Management.

Most real estate owners have had problems with taking care of their property at one point or another.

Handling one’s personal home is a difficult task that requires a substantial amount of time. That said, the responsibility, stress, and effort required for the task increases exponentially if a person becomes the owner of more than one property, and even more so if they have tenants. The solution to this complicated issue is to hire a property management company that employees property managers who know the law, have experience, and can deal with people in a civil manner.

Although hiring a property management company is a superb investment on the part of the real estate owner, thorough research must be done in searching for the correct company, given that these individuals will be managing what is quite probably your most valuable asset.

Here are some mistakes to avoid when choosing a property management company.

1. Hiring a company based solely on price.
A company may offer a price that seems favorable- that is until you experience their services. Make sure you look at what they are offering and see if it correlates with your demands. You might have to pay more money to some companies, but this addition will be worthwhile if they offer an abundance of services- you’ll be getting the best value rather than the best price.

2. Hiring an inexperienced company.
This issue comes up, once again, as a result of monetary considerations. If a property management company has not managed any properties, or very few properties, they are still undergoing a learning process, and one you will be paying for. An inexperienced manager could be too extreme with your tenants in two ways- either too tyrannical or too lenient. Both scenarios end with you losing money.

3. Hiring a property management company that is not certified.
Certification is a useful measure of the adequacy of a property manager. An independent, objective board decides on whether or not an individual has the qualifications to undertake this particular stream of employment. If a person doesn’t meet certification standards, they likely will not meet your standards either.

4. Hiring a property manager with too many obligations.
While it is detrimental to hire an individual who has no experience, it is equally negative to have a property manager who overextends their capabilities. It is important to have a balance in the two extremes. If your potential property manager takes care of a property where they are earning more money, having to do less work, or have personal connections with the property owners, there is a good chance that you will not be their top priority.

When evaluating a property management company, it is essential to have all of these criteria in mind. Nevertheless, a savvy real estate owner should not stop here. You should make your own additions to this list, including requirements that are specific to your own vision of what a property management company should offer you. Additionally, do not compromise on your expectations too much because it is likely that you will be working with this company for a substantial period of time.

If you own a rental property in any of the following areas:

• Arlington,
• Bedford,
• Benbrook,
• Burleson,
• Cedar Hill,
• Colleyville,
• Crowley,
• Duncanville,
• Euless,
• Fort Worth,
• Grand Prairie,
• Grapevine,
• Hurst,
• Lake Worth,
• Mansfield,
• Saginaw,
• Southlake,
• Watauga, or
• White Settlement,

then the property management company you can count on is Herman Boswell Property Management.

We advise you to definitely shop around but Herman Boswell Property Management has 37 years of property management experience to bring to bear on the needs of your particular property or properties. We oversee more than 700 properties. There is a reason why people trust us. Find out why.

The post FOUR COMMON MISTAKES IN HIRING A PROPERTY MANAGEMENT COMPANY appeared first on Herman Boswell Property Management.

Depending on your level of familiarity, you might already be aware that real
estate investment is a great way to reap a residual income. If that alone
does not sell you on the value of investing in a rental property, perhaps the
appreciation and tax benefits will.

Passive Income

For starters, investing in real estate is touted as a great method for
generating a low-maintenance, passive income. You invest in the beginning,
but it is your eventual tenants that pay the mortgage, effectively growing
your equity long-term. Once the property is paid off, you will be able to
collect passive income. In essence, you are generating revenue from the
money you have already invested in the property.

There are many benefits of passive income from a rental property. Once
you have set it up, it should require little to no upkeep from you. Of course,
this will depend on the condition of the rental property when you initially
make your purchase, but after any needed updates are complete, the
ongoing maintenance should ideally be minimal.

Passive income is great for adding a bit of extra money to your retirement
fund and reaching your additional wealth-building goals with little to no
effort. With the right ingredients and dedication, you can eventually build
your wealth with ease.

Property Appreciation

There are various factors to consider that will influence property
appreciation. Appreciation is the growth in value that is generally a
byproduct of the community conditions and quality of the neighborhood
where your property is located.

Finding a good, solid property or area where real estate prices have
consistently risen in recent years is a strong indicator that the
neighborhood will continue to develop and maintain a high value.
Additionally, you can attract good tenants this way. Having an attractive
property that is close to major transportation or highways makes for a
great selling point to potential renters.

If it is your first time purchasing a rental property as an investment, you
could consider investing in something nearby so you can monitor the
condition of the place and efficiently handle anything that might come up.
Buying something lower cost and fixing it up can be good if you are looking
for a short-term turn-around, though you should try to avoid “money pits”
when it comes to rentals. Attractive and move-in-ready options are optimal
for keeping the initial investment smaller on the front end.

Collateral

Real estate is commonly an asset that is used as collateral. Before being
issued a loan, lenders want to see that you can repay it and keep up with
your financial obligations. In the event you establish a successful rental
property, you can build your collateral as evidence that you are a
responsible steward of the investment.

Collateral is an important consideration when investing in rental properties,
and one you should feel relatively sure of before investing. Having a healthy
amount to invest and put into the property at the onset is key to ensuring
you will maintain strong financial health and good collateral with your
prospective lenders.

Tax Advantages

One of the greatest advantages of owning rental property as an investment
is the availability of deductions for the investor. In fact, real estate is one of
the most tax-advantaged investments out there.

Tax write-offs that are available include costs associated with interest on
mortgages, operating expenses, depreciation, interest, repairs, and more.
Because many real estate investors choose to own their properties with an
entity (for example, a limited liability corporation), they are eligible for
deductions related to the operation of a business. This savvy tip allows
investors to avoid shouldering individual expenses and taking on
unnecessary costs.

Deducting depreciation, the property's total loss in value over its expected
lifetime is another way of lowering your tax burden. The natural loss in
value is a huge advantage for real estate investors, as it gives way to
greater deductions on expenses long term.

If you ultimately sell the property for more than you purchased it, you are
also eligible for capital gains taxes. These tend to have lower rates than
ordinary income taxes. As a real estate investor, you are also able to
leverage various tax-deferred methods on your real estate depending on
the transaction. One example would be swapping an investment property
for like-kind property, essentially avoiding any changes in cost or
depreciation.

Conclusion

When investing in rental property, it’s important to partner with individuals
who have extensive property ownership and management experience.
Contact Herman Boswell Property Management to discover all we have to
offer.

The post Why Rental Properties are a Great Investment appeared first on Herman Boswell Property Management.

Fixed-Rate

If you’re looking for something with some consistency while buying and
owning a home, a fixed-rate mortgage can offer just what you need. A
fixed-rate mortgage remains at the same interest rate for the entire life of
the loan. For example, whether you have 10 years or 30 years left on your
mortgage, the rate will always remain the same.

A fixed-rate mortgage can be ideal for those borrowers on a tight budget
because it will have the same monthly payment for the principle and
interest amount. However, once decided on a fixed-rate, the rate does not
change even if the standard financial indices that determined these rates
do. This means borrowers would not be able to benefit from reduced
interest rates if/when they decrease, but they will also not be impacted by
increased rates if/when the rates increase.

Adjustable-Rate

In contrast to a fixed-rate mortgage, an adjustable-rate mortgage’s interest
rate varies over the loan’s lifetime. Adjustable rates often go up or go down
based on a standard financial index, such as the Treasury bill yield or the
Federal Reserve. Typically, an index or range of the interest rates is
provided when selecting a mortgage, but these can vary with time because,
as the standard financial index shifts, the lender adjusts the interest rates.
An adjustable-rate mortgage can be advantageous if buyers are looking to
take advantage of a period of low-interest rates.

Some adjustable-rate mortgages feature combinations of fixed and
adjustable interest rates. For example, lenders may offer an adjustable
mortgage with an introductory fixed rate for five years, and then after that
initial five-year period expires, the interest rate will fluctuate annually or
several times a year after that.

Federal Housing Administration (FHA) Loan

The Federal Housing Administration (FHA) is umbrellaed by the United
States Department of Housing and Urban Development (HUD). Since 1934,
FHA insures a loan so that your private lender can offer lower down
payments, closing costs, and relaxed requirements for loan qualifications.
FHA resources and loans can offer assistance for renters and homeowners
to afford their payments. They also ensure fair lending to all races,
religions, sexes, and disabled persons. More information on eligibility can
be found here.

Veterans Affairs (VA) Loan

The Veterans Affairs (VA) Loan was created in 1944 by the United States
government to help veterans, service members, and their families purchase
a home with little to no down payment or exceptional credit after serving
their country.

There are two types of VA home loans: direct and VA-backed. In the former,
the VA acts as the mortgage lender, helping you apply for and manage your
loans. These rates are often better (i.e. lower, more competitive) than a
private bank or other lenders. For a VA-backed home loan, a portion of your
home loan is guaranteed by the VA; thus, making it easier for you to meet
private lenders’ qualifications for a home mortgage.

The VA home loans have also allowed veterans and service members to
put $0 down on a mortgage to purchase a home! The backing of the loan
by the VA also means that veterans and service members may have access
to more competitive interest rates, relaxed loan qualifications, and banks
do not require private mortgage insurance. It’s no wonder that the VA has
helped over 24 million American veterans and service members find a
home for their families! More information is available here.

Balloon Mortgage

A balloon mortgage is a type of loan that starts with low (interest only) or
no monthly payments; however, the full balance of the loan is due in
full—along with any interest—at the end of the loan period. It is called a
“balloon” mortgage because the full balance of the borrowed amount is not
due back until the end of the loan term, so the payments get very large at
the end of the loan lifetime.

Balloon mortgages can have fixed or variable/adjustable interest rates but
are more common in commercial real estate than in residential. However,
borrowers may prefer a balloon mortgage if they are only looking to own a
home for a short period. In this case, the homeowner will pay only interest
rates until they sell the home, then use the sale of the home to pay back
their remaining balance.

This type of mortgage can be risky, though. The homeowner must be able
to repay the loan at the end of the term or refinance it for at least the
amount of the balloon payment, pending approval from the lender. The
balloon mortgage also reduces the homeowner’s equity during
homeownership. Construction businesses may opt for balloon mortgages
because these mortgages allow for short-term financing without collateral.
Once the company has built the new property, it may refinance the balloon
mortgage at a lower rate by leveraging the new building as collateral.

Jumbo Loan

Just like homes, loans also come in all shapes and sizes. As the name
implies, jumbo loans are mortgages to finance more expensive homes than
a conventional conforming loan may cover. The Federal Housing Finance
Agency (FHFA) sets the ceiling of these conforming loans at $510,400 for
2020 (but can vary by state and county), so any mortgage for a home more

expensive is considered non-conforming, or jumbo. With more money,
comes more strict qualifications from your lender. For a jumbo loan,
borrowers should expect to have a higher credit score (700+), 20%+ down
payment, and little debt compared to their income to qualify for their non-
conforming loan.

United States Department of Agriculture (USDA) Loan

The United States Department of Agriculture (USDA) offers specialized
mortgages for low- to moderate-income homebuyers in rural areas. The
USDA offers these loans to those who do not make more than 15% of the
local median salary live in a locality with a population under 20,000. To
qualify, one must have a steady income, 640+ credit score, and a 41% or
less debt-to-income ratio. The USDA backs these loans from private
lenders, and this allows rural buyers to finance the entire purchase price of
the home ($0 down!) and get competitive fixed interest rates on their
mortgage. More information can be found here.

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