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Good credit, good references and still one of 200 waiting for social housing

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Samantha Salter has been looking for a house to rent in Blenheim for more than a year.

She has been placed in transitional housing, but views rentals every week looking for something secure and permanent for her four children.

Salter said she knew Marlborough had a “housing crisis” before moving home from Australia in July last year, but she “didn’t think it was as bad as what people said”.

She is one of 200 people on Marlborough’s social housing register. In 2015, there were 13 people on the wait list.

“There’s not that many listings here in Marlborough, and they go so fast … they sometimes get 60 applications for a single house,” Salter said.

“And it’s kind of first in, first served, but people who offer more rent or more bond will always get the place. It’s crazy.”

READ MORE:
* Opportunity knocks as seasonal workers vacate Blenheim properties
* The Squeeze: Flats for seniors to bolster Blenheim’s social housing stock
* Kāinga Ora rejects ‘win-win’ land swap as hotel looks to expand

After breaking up with her partner, Salter and her four children moved back to Marlborough to be closer to family, sleeping in her sister’s lounge to begin with.

The young family then spent eight months at the Ministry of Social Development’s former motel in Springlands, now named the Blenheim Emergency Transitional Housing Service (BETHS), before one of the service’s individual homes became available.

“But it’s still transitional, they might still move us around, depending on who needs what,” Salter said.

“Every week I go to viewings, every week I get notifications on Trade Me for new places, and I apply for those … It’s a lot, driving to these houses every week, it takes up quite a lot of time.

“I’m only on a single income but I’ve got good credit and good references and all that. There are people out there with bad credit, they would have no chance.”

She believed high competition for rentals often encouraged landlords to charge high rents.

“It depends if you get nice people, who put up $400 a week for a three-bedroom, whereas some people ask for $500 or $600 because they know people will pay it. For a single mum with four kids, that’s a lot to spend on rent. But I would pay it, just for that stability.

The young family spent two weeks in a Blenheim motel, before moving to emergency housing. (File photo)

Scott Hammond/Stuff

The young family spent two weeks in a Blenheim motel, before moving to emergency housing. (File photo)

“Families are really getting the short end of the stick, because two people working can pay for a four-bedroom house if they want to, and just leave three bedrooms empty.”

The number of houses for sale in Marlborough had also plummeted in the last year, with 162 homes listed in August, down 36.3 per cent from August 2019.

It was a 13-year record low for Marlborough’s total stock, according to realestate.co.nz figures released on Tuesday. Eight other regions also had record lows.

Spokeswoman Vanessa Taylor said the country’s “cramped rental market” was likely to continue, given the country’s long-term housing shortage, a growing population surpassing 5 million this year, and more Kiwis returning home due to the coronavirus pandemic.

Good credit and positive landlord references are no guarantee of finding a rental in Marlborough. (File photo)

Jim Rice/Stuff

Good credit and positive landlord references are no guarantee of finding a rental in Marlborough. (File photo)

Ministry of Social Development figures showed 132 people on the social housing register in June 2019, which rose to 200 in June this year.

Before 2016, the region’s register never rose above 30.

Christchurch Methodist Mission director Jill Hawkey, whose organisation helped run BETHS in partnership with Crossroads Charitable Trust, said homelessness in Blenheim barely existed 10 years ago.

Now the town had one of the country’s highest rates of homelessness per capita.

Christchurch Methodist Mission director Jill Hawkey says families, young people and beneficiaries struggle the most.

Scott Hammond/Stuff

Christchurch Methodist Mission director Jill Hawkey says families, young people and beneficiaries struggle the most.

She pointed to the FirstHomes initiative as a contributing factor, launched in Blenheim in 2013, which offered first-home buyers the opportunity to buy an “un-needed state house”.

At the time Marlborough was considered a low-demand area, and the programme was intended to free up capital, to invest in new state houses in high-demand areas like Auckland and Christchurch, Hawkey said.

Housing New Zealand’s stock in Blenheim decreased from 434 properties in 2012, to 405 by 2017.

The number of families seeking help started rising. People on the social housing register were assessed as eligible for social housing, but had not yet been placed in a state home.

As demand grew, so did the cost of renting, Hawkey said.

Marlborough’s median rent was $350 a week in 2016, but reached $420 in February this year.

Springlands emergency housing complex BETHS opens in 2018, after being converted from a motel.

Scott Hammond/Stuff

Springlands emergency housing complex BETHS opens in 2018, after being converted from a motel.

People on the register often competed with more than 15 other applicants for rentals, and found the few places advertised “routinely totally unaffordable”, she said.

“So why is Blenheim, which has the second highest non-metropolitan GDP per capita in the country, after Taranaki, unable to house its own families?”

Hawkey pointed to Marlborough’s growing population as a contributor.

The population increased by nearly 4000 people between 2013 and 2018, to 47,340, and the Government reclassified the region a “medium growth area”.

Marlborough’s population is increasing, and its housing supply is struggling to keep up.

SCOTT HAMMOND/STUFF

Marlborough’s population is increasing, and its housing supply is struggling to keep up.

Hawkey said Marlborough’s expanding wine industry had resulted in an expanding labour force, with an estimated 2100 fulltime skilled workers and almost 1000 foreign seasonal workers joining the regional industry in the last few years, each needing somewhere to live.

The industry should have anticipated the impending housing crisis, Hawkey said.

“The market is not going to solve the housing crisis in Blenheim. While BETHS has been able to support over 50 homeless households to find permanent homes, most still struggle.”

A multi-agency response was needed and a regional strategy, bringing together the Marlborough District Council, Government agencies, iwi, and other housing organisations, Hawkey said.

“With all players around the table, to understand the drivers of this crisis and deliver strategies to resolve it. Only then will the most vulnerable families in Blenheim be able to find long-term secure homes where they can thrive.”

THE DETAIL/RNZ

On today’s episode of The Detail, Emile Donovan speaks to Stuff chief political reporter Henry Cooke and landlord Mark Todd about the reformed renting regulations and what they’ll mean for your tenancy, or tenants.

Developers, agencies and contractors had been discussing Marlborough’s housing problems at the Housing Group forum, which had been meeting since 2018.

Several projects hoped to ease the shortage were underway, including 12 seniors’ flats being designed for George St, 55 new Kāinga Ora homes to be finished by the end of next year, and new RSE lodgings being completed.

The Housing Group resolved at its July meeting to start forming sub-groups around areas of interest, so potential solutions could be developed and brought back to the main group.

Surveyor Vicki Nalder was drafting a Community Housing Action Plan to be tabled at the next Housing Group meeting in September, hoping an overarching vision for community housing would help to focus the group’s work.

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Bad Credit

Home Equity Loan With Bad Credit: Can It Be Done?

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Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Home equity loans let you turn your equity into cash, which you can use to pay for home improvements, unexpected medical expenses, or any other bills you might be facing.

Generally, lenders require at least a 620 credit score to qualify for a home equity loan. If your score isn’t quite there yet, though, you still have options.

Here’s how you may be able to get a home equity loan with bad credit:

  1. Check your credit and try to improve it
  2. Find out your debt-to-income ratio
  3. Find out how much equity you have
  4. Think about bringing on a cosigner
  5. Shop around for the best rates
  6. Consider alternatives to bad credit home equity loans

1. Check your credit and try to improve it

To start, head to AnnualCreditReport.com and pull your credit. You get one free report from all three credit bureaus per year.

Once you have your credit report, check it for errors and evidence of identity theft, such as accounts you don’t recognize and credit cards that aren’t yours. Reporting these to the credit bureau can help improve your score. So can taking these steps:

  • Pay all your bills on time: Payment history — or your track record of payments — accounts for 35% of your score, so make it a point to pay all of your bills on time, every time.
  • Pay down your debts: Lenders want to see a credit utilization rate of 30% or less — meaning your balances account for 30% or less than your total available credit.
  • Keep credit cards open: How long your accounts have been open impacts 15% of your credit score, so avoid closing accounts — even once you’ve paid them off.
  • Avoid applying for new cards: This will result in hard credit inquiries, which can hurt your score.

Learn More: How Your Credit Score Impacts Mortgage Rates

2. Find out your debt-to-income ratio

Lenders will also consider your debt-to-income ratio (DTI) when you apply for a home equity loan. This indicates how much of your monthly income goes toward paying off debt.

How to calculate DTI: Add up your monthly bills and loan/credit card payments, and divide the total by your monthly income. Multiply that amount by 100.

For example, if you have $2,000 in debt payments and make $6,000 per month, your DTI would be 33% ($2,000 / $6,000 x 100).

Most lenders want a DTI of 43% or lower. A low DTI can help improve your chances of getting a loan, especially if you have a lower credit score, since it indicates less risk for the borrower.

3. Find out how much equity you have

How much equity you have in your home, as well as your loan-to-value ratio, will determine whether you qualify for a home equity loan — and how much you can borrow. To find out yours, you’ll need to get an appraisal, which is a professional evaluation of your home’s value. The national average cost of a home appraisal is $400, according to home remodeling site Fixr.

Once the appraisal is finished, you can calculate your loan-to-value ratio by dividing your outstanding mortgage loan balance by your home’s value.

For example: If you have $100,000 remaining on your home, and the appraisal determines it’s worth $200,000, then you have an LTV of 50% ($100,000 / $200,000). This also means you have 50% equity in the home.

Most lenders will only allow you to have a combined LTV of 85% — meaning your existing loan, plus your new home equity loan can’t equal more than 85% of your home’s value.

In this example, you’d be able to borrow $170,000 (85% of $200,000) across both your initial mortgage loan and your new home equity loan. Since your existing loan still has $100,000 on it, that’d mean you could take out a home equity loan of up to $70,000.

4. Think about bringing on a cosigner

Bringing in a family member or friend with excellent credit to cosign your bad credit loan can help your case, too. If you do go this route, make sure they understand what it means for their finances. Though you may not intend for them to make payments, they’re just as responsible for the loan as you.

Tip: If you fail to repay the loan as agreed, it could hurt the other individual’s credit score or result in collections against both of you. Make sure you’re upfront and transparent about what cosigning your loan may mean for them.

5. Shop around for the best rates

A lower credit score will typically mean a higher interest rate, so it’s incredibly important you shop around and compare your options before moving forward. Get rate quotes from at least three to five lenders, and make sure to compare each loan estimate line by line, as fees and closing costs can vary, too.

Credible makes comparing rates easy. While Credible doesn’t offer rates for home equity loans, you can get quotes for a cash-out refinance — another strategy for tapping your home equity. Get prequalified in just three minutes.

Get the cash you need and the rate you deserve

  • Compare lenders
  • Get cash out to pay off high-interest debt
  • Prequalify in just 3 minutes

Find My Loan
No annoying calls or emails from lenders!

6. Consider alternatives to bad credit home equity loans

A bad credit score can make it hard to get a home equity loan — especially one with a low interest rate. If you’re finding it difficult to qualify for an affordable one, you might consider one of these alternatives:

Cash-out refinance

Cash-out refinances replace your existing mortgage loan with a new, higher balance one. You then get the difference between the two balances in cash.

Find Out: Credit Score Needed to Refinance Your Home

Personal loans

Personal loans offer fast funding, and you don’t need collateral either. Rates can be a bit higher than on home equity loans and refinances, though, so it’s even more important to shop around. A tool like Credible can help here.

Check Out: Home Equity Loan or Personal Loan: How to Choose the Best Option

Compare multiple lenders

If you have bad credit, there are still ways to tap your home equity or borrow cash if you need it. Head to Credible to see what personal loan options and mortgage refinance rates you might qualify for. With Credible, you can easily compare prequalified rates from all of our partner lenders without leaving our platform.

About the author

Aly J. Yale

Aly J. Yale

Aly J. Yale is a mortgage and real estate authority and a contributor to Credible. Her work has appeared in Forbes, Fox Business, The Motley Fool, Bankrate, The Balance, and more.

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A Look Back At Housing 2020: Rental Housing Gets Riskier

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According to the American Housing Survey cited in a recent article, there are about 48 million rental housing units in the United States ranging from single-family homes to large multifamily apartment complexes. Of those 48 million units about 23 million are owned by individuals, according to a recent Rental Housing Finance Survey; that’s more than half of the occupied units in the country. Yet private rental housing providers have been under relentless attack in recent years increasing risks and costs. This has worsened in 2020 as I have pointed out. More risk means fewer housing units and higher prices, not a good outlook for the future.

Any business based on renting assets is based on risk. Think about the last time you went bowling. When you rent the shoes, the person behind the counter often will hold a driver’s license? Why? It’s a way of offsetting the risk that you’ll go home with the shoes either on purpose or accidentally. Nobody wants to deal with a lost driver’s license. Offsetting this risk has absolutely nothing to do with you or your trustworthiness; it is uniformly applied and routine.

Housing providers have to similarly offset the risk of allowing a stranger occupy their private property. There are several ways of doing this, including using credit checks. But lately, politicians are beginning to eliminate the credit check from the tools that housing providers can use to offset risk. Minneapolis for example has eliminated credit checks arguing that they are a “barrier” to housing.

Is race a factor in bad credit and thus a barrier to people of color to get housing? The fact is, yes, African American people have more credit issues. But would eliminating credit checks help them? The answer is, “No.”

An article in the Washington Post, “Credit scores are supposed to be race-neutral. That’s impossible,” is emblematic of how this issue plays among the public and policy makers. The author says two contradictory things. First,

“This would lead one to think that credit-score calculations can’t be biased. But factors that are included or excluded in the algorithms used to create a credit score can have the same effect as lending decisions made by prejudiced White loan officers.”

Then she writes,

“One quick way to impact your credit history is a court-ordered judgment. And Black borrowers are more likely to fare badly when taken to court by their creditors. Debt-collection lawsuits that end in default judgments also disproportionately go against Blacks, according to a 2020 Pew Charitable Trusts report.”

Logically, the right way to state this is that credit measures are biased against people who have default judgments against them, and African Americans have higher rates of defaults. Then the next question would be, “Why?” The most obvious answer is the right one, poverty is disproportionately concentrated among people of color.

But eliminating credit checks for housing won’t help that problem. If a housing provider is unable to evaluate risk based on past financial performance her only option will be to raise rents and deposit amounts in case there is a problem; that extra cash would provide a buffer if a resident stops paying rent. This won’t help anyone with less money. What’s the response to that? Ban rent increases by imposing rent control! That’s a bad idea too and won’t help either.

The answer is to figure out how people who have less money and therefore have more issues making ends meet can solve that problem and improve their credit scores. The author of the Washington Post article makes a sensible suggestion: include steady rent payments in credit scores. Some housing providers do, and it’s a great idea. But it is a positive one that actually helps the family; banning quantitative measures of past financial performance doesn’t.

The danger that unfolded in 2020 is that justifiable outrage about racism could lead to interventions that don’t address poverty and it’s negative consequences like default judgments but elimination of accepted measures of those consequences. Eliminating the evidence of poverty – struggling to pay bills – doesn’t help pay the bills! At best, these kinds of measures sweep the problem under the rug ensuring higher rents and making housing a risky business only big corporations will be able to do.

The answer is to address the broader underlying issues of poverty and increasing housing production. When there is more supply of housing providers compete with providers for residents and will be forced to bargain with potential residents, even those with dings or dents or completely destroyed credit. Housing abundance solves a housing problem while eliminating measure of risk only makes that risk higher and actually creates a housing problem.

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Can My Cosigner Take My Car?

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Cosigners don’t get any rights to the vehicle they signed the loan for. However, if the cosigner is trying to take your car, it may be time to take some action.

Cosigners and Ownership

Can My Cosigner Take My Car?Cosigners can’t take the vehicle they cosigned for because their name isn’t listed on the title. A cosigner isn’t responsible for making the monthly payments, maintaining car insurance, or really anything else. Cosigners simply lend you their good credit score to help you get approved for the auto loan, and if you can’t make payments, the lender can require them to pick up the slack.

Since you’re the primary borrower on the vehicle and your name is listed on the car’s title, you have ownership rights. Your cosigner can’t come to your residence and take possession of the vehicle – even if they’re the one making the car payments right now.

If you do default on the loan and the vehicle is repossessed, the cosigner still can’t take the car.

But My Cosigner Did Take My Car!

If your cosigner did somehow take your keys and your vehicle without permission, it’s considered theft. If you want to take action, you can report the car as stolen.

However, a better first step is probably contacting the cosigner and letting them know that they don’t have any ownership rights (if you want to maintain a relationship with them). You can ask them to return the vehicle and explain that their name isn’t on the title.

Removing a Cosigner From a Car Loan

If things are dicey with your cosigner, then it may be time to consider removing them from the auto loan. The easiest way to remove a cosigner is by refinancing.

Refinancing is when you replace your current loan with another one. You can work with your current lender or another one, but most borrowers look for another lender to refinance with.

You don’t need a perfect credit score to refinance your car loan – it just has to be good or better than it was when you first got the loan. Another common requirement of refinancing is that you’ve had the loan for at least one year.

Other common requirements for refinancing are:

  • You’ve stayed current on payments throughout the loan
  • You have equity or your loan balance is equal to the vehicle’s value
  • Your car has less than 100,000 miles and is less than 10 years old

Most borrowers usually refinance to lower their loan payments. Since you’re replacing your current auto loan with another one, many borrowers try to qualify for lower interest rates or extend their loan to lower their payments. If your credit score has improved, you may even be able to get a better interest rate and remove your cosigner!

Can’t Refinance to Remove the Cosigner?

Refinancing isn’t in the cards for everyone. However, another efficient way to remove a cosigner is by selling the car. Cosigners don’t have to be present at the sale of the vehicle, since they don’t have to sign the title to transfer ownership.

If you sell the car and get an offer large enough to cover the entire balance of your loan, you and the cosigner can walk away from the auto loan scot-free.

However, many borrowers need cosigners because their credit score isn’t the best. If you want to sell your vehicle to remove your cosigner, but you’re worried you can’t get a car loan by yourself, consider a subprime auto loan for your next vehicle.

Bad Credit Auto Loans

Since many traditional car lenders don’t work with borrowers who have poor credit histories or lower credit scores, they often ask them to bring a cosigner. But what if you don’t want a cosigner (or can’t get one) on your next auto loan? Enter subprime car loans.

Subprime lenders are teamed up with special finance dealerships, and they operate remotely. When you apply for financing with a special finance dealer, you work with the special finance manager who acts as the middleman between you and the lender.

You need documents to prove you’re ready to take on an auto loan – typical things like check stubs, proof of residency, valid driver’s license, a down payment, and other assorted items depending on your credit situation. If you qualify, the lender determines what your maximum car payment can be, and you choose a vehicle you qualify for from there.

What sets subprime auto loans apart from traditional car loans is that they assist borrowers in tough credit situations and offer the opportunity for credit repair. Some in-house financing dealerships that don’t check credit reports don’t report their auto loans, which means your timely payments don’t improve your credit score.

Finding a Car Dealership Near You

The best way to improve your credit score is by paying all your bills on time. Payment history is the most influential piece of the credit score pie. There are many lenders willing to work with bad credit borrowers, you just have to know where to look!

Here at Auto Credit Express, we’ve already done the searching, and we’ve created a nationwide network of dealers that are signed up with subprime lenders. Get matched to a dealership in your area, with no cost and no obligation, by filling out our car loan request form.

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