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True. Those making minimum wage can't put together a down payment for a mortgage, nor can they qualify for one. They might be able to do a owner financed or land contract, but those type of deals aren't the norm in all areas.
So while a landlord might want 3x the rent, the lender is also going to look at income, debt and the ability to pay.
Minimum wage was never intended to be a livable wage, but that's what people are trying to make it. Sad that so many want to do so little and yet expect to get to so much.
The economy has changed to the point some millions of adults are earning and trying to live on minimum wage - MW is not just for teens anymore.
Normally, economies adapt to structural change, e.g. housing markets should adapt to the emergence of adults earning minimum wage. But Americans resist downward mobility and reject the housing adaptations necessary to affordably house today's minimum wage breadwinners.
Which penalizes the frugal low earner. For the past ten years I have been paying 45-75% of my income on rent and obviously I'm never going to meet a lender's ratios, but I've always paid the rent on time. So I don't understand the lender's irrational rigid thinking on ratios.
you're not only low income, but you have bad credit...and judgments. So in your case your income isn't the issue...you bad credit is. And whose fault is that? Yours and yours alone. Its also your own fault that you make minimum wage. No one HAS to make minimum...it's a choice in many, many cases.
Mortgage lenders don't immediately rev into legal action mode at a 30-day late payment, landlords do in five days. Something gets landlords worked up that doesn't faze mortgage lenders.
Banks are in the business of lending money. Banks also have physical collateral - the property.
Landlords (in my state) only have a 1.5 months worth of the non-paying tenant's rent in the form of a security deposit. Landlords aren't in the business of lending money. LLs have no physical collateral to hold against a tenant.
When I got my Mortages the bank want 25% of income for payments. LL Insist on 30% Ther are TONS of loans out there with No or Low down payment. There are also Rent to own deals where a % of the rent goes towards a Down payment. Once you reach that you turn the Rent into payments.
HUD helps low income folks Buy
USDA also helps low income
Habbitat for Humanity Helps
Telemond also Helps
& the List goes on....
I don't understand most of your post but.......... I don't insist on taking 30% of my tenants income, I charge whatever the going rate for the rental is in the current market. And qualified tenants must make at least 3x that to be considered.
My (idiot) SIL who has foreclosures and sub-par credit did/is doing a contract for deed purchase. She thinks it's the greatest thing ever.....I can say with 100% certainty that the end result will not be in homeownership for her given her track record. Deed for purchase and rent to own are awful for the prospective buyers. ALL the odds are stacked in favor of the seller. They are the mortgage equivalent of payday loans, IMO
In your case, it's the landlord who can't wait, not the mortgage lender. It's always the landlord who can't wait. Sounds to me like an instant gratification issue.
After TWO DECADES of the above, we were able to buy a place and some rental property. But guess what - I still have mortgages, taxes, insurance, HOA and upkeep and repairs on those properties. Expecting my tenants to pay on time and in full - you know in accordance to the lease that they signed hardly makes me greedy !
Mortgage lenders don't immediately rev into legal action mode at a 30-day late payment, landlords do in five days. Something gets landlords worked up that doesn't faze mortgage lenders.
They gave you about 1.5 month with a hefty late fee, they will take your property away if you are default on the loan. How about those insurance and property tax? I need the rent to cover that,too. If someone late on the rent that's mean I have to pay the different to the bank out of my pocket. That money could be my child's music lessons or swim lessons.
IF you as a LL expecting the tenant to make 3X rent then yes that IS 30% of the tenants income. Your Rent $1000 But your Not happy with a tenant that makes $2500 your looking for the tenant that makes $3,000 that = 1/3 or 30%
They gave you about 1.5 month with a hefty late fee, they will take your property away if you are default on the loan. How about those insurance and property tax? I need the rent to cover that,too. If someone late on the rent that's mean I have to pay the different to the bank out of my pocket. That money could be my child's music lessons or swim lessons.
So you live off the backs of others to Pay for your kids lessons... things the kids Don't need. Yet you tell your tenants to do with out.... Seems to me You LL needs another job so your kid can enjoy those lessons.
IF you as a LL expecting the tenant to make 3X rent then yes that IS 30% of the tenants income. Your Rent $1000 But your Not happy with a tenant that makes $2500 your looking for the tenant that makes $3,000 that = 1/3 or 30%
I'm not looking to take a certain percentage of my tenants income. I'm looking for tenants that can and will pay the rent in full when it is due. My experience has been that tenants who are spending more that a third of their income on rent do not have enough money to meet all of their obligations. I fail to see renting to someone who can't not afford my rental does EITHER of us any good.
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