Jumbo Loans for the Self-Employed: What to Know

Buying a house is an exciting milestone, but it can also be stressful — especially if you’re self-employed and have to jump through extra hoops to secure a loan. Self-employed borrowers may have even more difficulty when applying for a jumbo loan for a more expensive house.

Below, we’ll walk through jumbo loans for the self-employed: types of loans available, typical requirements, and what the lending process is like.

What Are Jumbo Loans for the Self-Employed?

Each year, the Federal Housing Finance Agency (FHFA) sets a maximum limit on the dollar amount of mortgages that government-sponsored Freddie Mac and Fannie Mae will purchase. Loans within those limits are called conforming loans.

But what if you want a more expensive house and need a larger mortgage? That’s where jumbo loans come in. Jumbo loans, also called non-conforming loans, pose a higher risk to the lender and thus come with stricter requirements for borrowers.

Self-employed individuals can get conforming mortgages just like any other borrowers, though they may be asked for additional documents to prove their income. (The same is true when it comes to personal loans for the self-employed.) But what about jumbo loans for self-employed individuals? Are those possible?

Many lenders allow self-employed individuals to apply for and secure a non-qualified mortgage, also called a non-QM loan. Lenders enable borrowers to qualify for a non-qualified mortgage using alternative methods, particularly for income verification. Some examples of non-QM loans include 1099-only loans, bank statement loans, and investor cash flow loans.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


1099-Only Loan

A 1099-only loan is just what it sounds like. Self-employed individuals typically receive 1099s, not W-2s, at tax time. Though lenders usually review an applicant’s W-2s, a self-employed individual may be able to apply for a jumbo loan by showing 1099s from previous years. Loan requirements will vary by lender.

Why not just look at previous tax returns? All 1099 income appears on your tax return, after all. However, self-employed workers write off business expenses to lower their taxable income and reduce their overall tax burden. An individual who brings in good money but has a lot of write-offs may have a harder time qualifying based on their tax return, which shows adjusted gross income, but could qualify based on their 1099.

Bank Statement Loan

Another route that self-employed individuals can take to get a jumbo mortgage loan is through bank statements alone. Again, requirements will vary by lender, but lenders offering bank statement mortgages will often approve self-employed individuals for jumbo loans with just recent bank statements (personal or business) demonstrating income, rather than with traditional tax documents.

Investor Cash Flow Loan

Self-employed individuals who want to diversify by purchasing an investment property may be able to get a jumbo loan with no income verification at all. Instead, with an investor cash flow loan, borrowers can get a loan by using the anticipated cash flow from the rental property.


💡 Quick Tip: One answer to rising house prices is a jumbo loan. Apply for a jumbo loan online with SoFi, and you could finance up to $2.5 million with as little as 10% down. Get preapproved and you’ll be prepared to compete in a hot market.

Challenges Faced by Self-Employed Borrowers

These non-QM loan options for self-employed borrowers address typical challenges that self-employed borrowers face when applying for a mortgage, particularly a jumbo mortgage. For instance, self-employed borrowers:

•   Can’t produce W-2s to verify their income or employment.

•   May have a lot of write-offs on their tax return that make it look like they earn less.

•   May otherwise need to provide a lot of complicated business documents for underwriting.

Recommended: Benefits of Being an Entrepreneur

Jumbo Loan Underwriting Guidelines

Jumbo loans may allow you to buy a more expensive home, but you’ll have to meet a lot of strict requirements, self-employed or not. Below are the core underwriting guidelines that lenders use when considering jumbo loan applications:

•   Credit score: Credit score requirements for jumbo loans will vary by lender, but expect to need a higher credit score than you’d need for a more traditional loan. A credit score of 700 or above should do the trick, although some lenders will have more lenient standards, while some may have tighter restrictions for a second home or investment property.

•   Debt-to-income ratio: Lenders may have varying income requirements for jumbo loans, but they’ll also look at your debt-to-income (DTI) ratio. If you have significant monthly debt obligations compared to your monthly income, you may not qualify for a jumbo loan.

•   Cash reserves: For certain loans and certain applicants, lenders may require you to have mortgage reserves — liquid assets (money in a bank account or certificate of deposit, stocks and bonds, or vested retirement funds, for instance) set aside to cover a certain number of months’ worth of housing costs. The money you’ll spend on your down payment and closing costs is not considered part of your cash reserves. For a jumbo loan, it’s possible you’ll need to have six to 12 months’ worth of reserves.

Tips for Increasing Chances of Approval

As a self-employed borrower, it’s crucial that you work on your credit score, reduce your monthly debts, and have strong evidence of solid monthly income before trying to qualify for a mortgage, particularly a jumbo loan. Here are a few tips to increase your chances of approval:

•   Work on your credit score first: Having a high credit score is one of the major requirements for approval. If you’re right beneath the 700 threshold, it may be worth it to wait a few months if you’re actively working on maintaining a good credit score.

•   Pay off outstanding debts: An easy way to decrease your DTI (and thus increase your chances of approval) is to pay off debts before buying a house. Stop accruing new credit card debt, and work on paying off existing debts before applying. If you’re able to knock out your credit card debt or pay off your car before applying for a jumbo loan, you may have a better shot.

•   Collect all the documentation you can: Having documentation of your income and employment is key. As a self-employed individual, it might be worth it to work with an accountant to compile all the paperwork.

Understanding the Jumbo Loan Process

The jumbo loan process is similar to the standard conforming loan process, but it may take longer. Here are the general steps for getting a jumbo loan:

1.    Make sure you’re qualified: Review your credit score, DTI, and cash reserves to make sure you’re likely to get approved for a jumbo loan. Gather all the necessary documents.

2.    Find a lender: Not every lender offers jumbo loans to self-employed borrowers. Do some research to find out which lenders will offer you the best chances. Loan terms and interest rates will vary depending on the lender, the current market, and your finances. Get preapproved for a loan.

3.    Make an offer on a home: Once you have funding approved, find a house you love and put in an offer.

4.    Get an appraisal: As with a conforming mortgage, the lender will require a home appraisal to ensure the home is worth what you’re borrowing.

5.    Close on the home: Because jumbo loans are larger, expect to need a larger down payment. Closing costs will also be higher. Because jumbo loans pose more risk to lenders, the timeline between the offer and closing may take longer than for a traditional home loan.


💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.

Pros and Cons of Jumbo Loans for Self-Employed Individuals

Jumbo loans are possible for self-employed individuals, but there are also some drawbacks to consider. Self-employed borrowers should keep the tough requirements in mind when considering purchasing a home above the FHFA conforming loan limits, but if they really want that more expensive home, it could be worth the effort.

Here are the pros and cons to consider:

Pros

•   Higher loan limits: Self-employed individuals who make enough money to justify buying a house priced above conforming loan limits can get jumbo loans to finance their dream home.

•   Flexible underwriting: By using non-QM loans, self-employed borrowers can use documentation like 1099s or bank statements instead of W-2s and tax returns to demonstrate their income and employment.

Cons

•   Higher interest rates: Jumbo loans may have higher interest rates because they pose a greater risk to the lender.

•   Stricter qualification criteria: Anyone applying for a jumbo loan should be prepared for stricter qualification criteria, but self-employed borrowers may have even more hurdles to clear. Lenders might want to see multiple years’ worth of income — and the income, credit score, and DTI thresholds may be higher than for a conforming loan.

Recommended: What to Consider When Choosing a Mortgage Lender

The Takeaway

Self-employed individuals may have a tougher time getting approved for a jumbo loan, but it’s not impossible. Having a strong credit score and low DTI are important, but having the proper documentation to demonstrate stable income is also crucial.

When you’re ready to take the next step, consider what SoFi Home Loans have to offer. Jumbo loans are offered with competitive interest rates, no private mortgage insurance, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.

FAQ

How many years of tax returns do I need to provide for a jumbo loan?

Typical borrowers will need to provide at least two years of tax returns to get a jumbo loan. Self-employed individuals, however, may need to provide additional documentation to get approved for funding.

Can I use 1099 income to qualify for a jumbo loan?

Some lenders allow you to use 1099 income to qualify for a jumbo loan. Self-employed individuals who don’t receive any W-2 income may want to consider lenders that offer 1099-only loans.

What is a 1-year self-employed mortgage and how does it work?

Lenders typically want to see at least two years of stable income. Borrowers who have been self-employed for just one year, however, may be able to get a mortgage from specific lenders.This mortgage can be more challenging to get: Lenders will need borrowers to demonstrate the stability of their income, the financial strength of their business, and a promising business outlook. Usually, the self-employed borrower needs to have been in the industry longer than a year, even if they’ve only been self-employed in said industry for a year.

Are there any special requirements for 1099 home loans?

Each lender will have its own requirements for a 1099 home loan, like minimum credit score, maximum DTI, and loan limits. Check a lender’s requirements before applying.

What is the minimum credit score required for a jumbo loan?

Credit score requirements for jumbo loans vary by lender, but typically, you’ll need at least a 700 score to qualify. Before applying, ask potential lenders what their minimum credit score requirements are. Some lenders may approve loans for borrowers with scores below 700, but interest rates may be higher.

How much of a down payment do I need for a jumbo loan?

Down payment requirements for jumbo loans vary by lenders. Many lenders require that you put at least 20% down for a jumbo loan, but in some cases, lenders may approve jumbo loans with as little as 5% down.


Photo credit: iStock/SeventyFour

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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How to Buy Homeowners Insurance in 2022

How to Buy Homeowners Insurance in 2023

Buying homeowners insurance involves a few simple steps that ensure you’re purchasing a policy tailored to your needs. By investing a little time, you’ll be rewarded with coverage that protects your home and your belongings at the right price. This holds true whether you’re buying a house and insurance for the first time or shopping around for a better rate.

Insurance can be tricky, and many policies have a flurry of exceptions when it comes to what’s covered and what isn’t. Having an insurance policy with certain kinds of exceptions can wind up costing you hundreds of dollars for coverage that might fall short when it’s needed.

Fortunately, you can avoid that scenario. Here, we’ll walk you through how to buy homeowners insurance as well as offer some tips on how to find the best rate on your policy this year.

5 Steps to Shopping for Homeowners Insurance

When shopping for homeowners insurance, it’s a good idea to compare similar policies. You want to be sure you’re reviewing what different insurers charge for policies with almost identical coverage.

You’ll also want to shop around to get the best deal you can. Policies from the same company can vary widely by geography, property type, and even between two different zip codes.

It’s also a smart move to compare some intangibles, such as a company’s reputation for customer service and claims satisfaction. They can have a big impact when it comes time to file a claim.

Now, let’s walk through the steps of how to shop for homeowners insurance.

Step 1: Decide How Much Coverage You Need

When deciding how much homeowners insurance coverage you need, you’ll want to make sure that you have enough coverage to replace your most important belongings; rebuild your house in the event it’s destroyed; and cover any liability for injuries that might occur on your property. Your policy will be there in case a fire, storm, or crime causes a loss.

In industry terms, homeowners insurance coverage for the aforementioned events is typically broken into four categories:

•   Personal property coverage: Insures against losses to personal property — including furniture, clothing and electronics — in the event of a covered incident.

•   Dwelling coverage: Covers the repair or replacement of your property and any attached structures, like a garage, fence, or any sheds.

•   Liability coverage: Protects against any medical or legal expenses that you may be liable for as a result of injuries that occurred on your property.

•   Additional living expense coverage (ALE or Loss of use coverage): Pays for temporary housing and related costs in the event you’re displaced from your home due to a covered loss.

Each of the coverages listed above are subject to their own insurance limits. These are calculated based on both the insurers’ proprietary formulas and the amount coverage you choose to purchase. Here’s a closer look at each kind of coverage and how much you might want to buy.

Personal Property Coverage

Just as the name suggests, personal property coverage covers the cost of any personal property that you would need replaced in the event of a covered loss. This can include all the contents of your home, including furniture, electronics, kitchenware, and jewelry.

Generally, you’ll want enough personal property coverage to cover the cost of replacing all of your important belongings. To help you calculate how much this might cost, create a written inventory of all your major belongings and their cost. This allows you to better estimate how much personal property coverage you need and gives your insurer a reference point for how much insurance you might need. You might even consider doing a video inventory to keep track of your property.

Bear in mind that not all items are covered under your home insurance policy. For example, any vehicles damaged while housed in your garage should be covered under your auto insurance. Additionally, rare and high-value items, like art, fine jewelry, and antiques, may be subject to value caps under your policy and may require separate/supplemental insurance policies for full coverage.

Recommended: Should I Sell My House Now or Wait?

Dwelling Coverage

Dwelling coverage covers the cost to repair or rebuild the building on your property, in addition to any attached structures, like garages, balconies, or fences. When you think about the dollar amount here, you probably want to be prepared for the worst-case scenario of totally rebuilding your home. Though rare, this kind of catastrophic incident can happen.

Liability Coverage

Liability coverage helps shield you from lawsuits in the event you’re found liable for any accidents that occur on your property. These can range from slips and falls to any damage caused by falling trees from your property.

Generally, the more assets you have, the more liability insurance you’ll want to purchase. However, liability coverage will only pay out to a set dollar limit as listed on your policy, with you responsible for any balance. If you’re looking for added liability coverage, you may want to look into a personal umbrella policy.

Additional Living Expense Coverage

Additional living expense coverage, or loss of use coverage, pays for reasonable housing and living costs if you’re displaced for an extended period due to a covered event. Imagine that a storm sent a tree branch crashing through your roof and your bedrooms became uninhabitable — that’s the kind of situation that would lead you to move out and tap what’s sometimes called ALE coverage.

Typically, your loss of use coverage will encompass a fixed percentage of your dwelling coverage. Larger families may wish to opt for more coverage if your weekly living expenses are particularly burdensome.

Learn the Difference Between ACV, RCV, and GRC Coverage

Once you have some ballpark numbers in mind for the amount of coverage you need, you also need to decide what kind of coverage you want in terms of potential payout. There are three terms to know — ACV, RCV, and GRC — and these will impact how claim amounts are determined as well as your premiums.

•   Actual Cash Value (ACV): Typically the cheapest option, ACV calculates your home and property’s value based on its current market value minus depreciation. Depreciation occurs naturally over time. Let’s say you had a 10-year-old refrigerator that had cost $1,000 when you bought it. After 10 years, its “cash value” might be, say, $100, so that is what ACV would reimburse you if it were destroyed during a covered event. This would not enable you to go out and buy a similar unit.

•   Replacement Cost Value (RCV): This policy is more expensive. In the event of loss, it insures your home for the cost it takes to rebuild it like new and replace the items in it at their full cost. Unlike actual cash value, RCV does not factor in depreciation.

•   Guaranteed Replacement Cost (GRC): The most expensive policy of the bunch, this policy insures your home and property for its replacement cost value plus a certain percentage over that amount, which can help protect against inflation.


💡 Quick Tip: If you have a mortgage, a homeowners policy may be required by your lender. Surprisingly, unlike auto insurance, there is no legal mandate to carry insurance on your home.

Step 2: Verify Details About Your Home

Before an insurer can give you a quote, you’ll need to provide them with details about you and your home so they can accurately price your home insurance policy.

Keep in mind that insurance agents will take steps to verify the accuracy of this information, so be sure to answer to the best of your ability. Here are some of the most commonly requested details:

•   Property size and foundation

•   Roof type, material, and age

•   Age of structure and building materials

•   Age and type of electrical, plumbing, and heating system

•   Presence of any adjacent structures, pools, fences, etc.

•   Presence and number of pets

•   Intended use of property (rental, secondary, or primary home)

You can ask your real estate agent to forward you this information or obtain it from publicly available sources. Often, many of these details can be found in your home inspection and appraisal reports. Remember to disclose any improvements or renovations that have been made over time.

Step 3: Consider Whether You Need Added Coverage

A typical homeowners insurance policy goes a long way towards protecting you from damage to or loss of your home and property. But it doesn’t cover everything. Acquaint yourself with these details and decide if you want additional coverage.

According to FEMA, a common myth among many Americans is that homeowners insurance covers flooding. However, it does not.

In fact, here’s a list of common events that are often NOT covered under most home insurance:

•   Floods

•   Earthquakes

•   Sinkholes

•   Water and sewer backup

It’s important to review your insurance policy for any exceptions or issues not mentioned that you may want covered. You may be able to purchase additional insurance coverage for the above-mentioned issues as part of a separate policy, or what’s known as an endorsement, on your existing home insurance policy.

Also remember that personal property coverage often has a reimbursement cap on valuable items, which may limit the recoverable amount on certain rare or valuable goods. If you inherited valuable artwork or saved like crazy to afford a luxury watch, you may want to purchase additional endorsements for these.

Step 4: Take Advantage of Any Discounts Your Insurer Offers

Before finalizing your policy, check with the insurer about any discounts they offer and how many you might qualify for.

These can take them form of bundling discounts, which reward you for purchasing other policies (e.g. auto and life) through the same insurer; retention discounts which reward you for staying with a single insurer for an extended period of time; and even safety discounts, which reduce your premiums based on various improvements that you make to your home (e.g. adding a security system).

Each insurer has its own batch of discounts that you may be eligible for. Make sure to check with each potential policy provider to confirm that you’re getting the best deal possible.

Recommended: How Much Is Homeowners Insurance?

Step 5: Finalize Your Policy and Figure Out Your Payments

Now that you’ve selected the coverage you want, at the price you want, it’s time to put the finishing touches on your homeowners insurance policy.

First, you’ll want to set your insurance policy deductible, which is the amount you agree to be personally responsible for before the insurance company pays out on any claims. This is similar to a copay on a health insurance plan and is charged on a per-claim basis.

Generally, higher deductibles lead to lower insurance premiums, because they transfer some of the financial burden of paying for claims from the insurer to you.

While you will end up paying more out of pocket when you need to file a claim, this can be a smart financial decision for newer homes and low-risk areas. Of course, this option will only make sense for you though if you are confident you can cover that deductible in an emergency.

Second, you’ll need to decide how you wish to pay your insurance premiums. Policies are typically written on an annual basis and can be paid on a monthly or quarterly basis, or even in one lump sum. Some insurers offer added discounts if you decide to pay the entire amount upfront.

Finally, you’ll need to set the date on which your policy takes effect. Generally, this should be the same day you take possession of the property if you’re buying a new home. If you’re switching insurance providers, it should coincide with the end date of the previous policy, without any lapse in coverage.


💡 Quick Tip: Your insurance needs depend on your age, dependents, assets, possessions, and economic situation. As your circumstances change, so should your insurance plans.

The Takeaway

Buying the right homeowners insurance ensures that your home is protected if disaster ever strikes. That said, shopping for a policy can feel overwhelming at first since there are a lot of new terms to be learned, figures to calculate, and decisions to be made.

As you gather the information and quotes you need to make your choice, you’ll be rewarded with a policy that suits your needs, is priced just right, and can give you peace of mind.

If you’re a new homebuyer, SoFi Protect can help you look into your insurance options. SoFi, via Experian, offers homeowners insurance that requires no brokers and no paperwork. Secure the coverage that works best for you and your home.

Find affordable homeowners insurance options with SoFi Protect.


Photo credit: iStock/JLco – Julia Amaral

Insurance not available in all states.
Experian is a registered service mark of Experian Personal Insurance Agency, Inc.
Social Finance, Inc. ("SoFi") is compensated by Experian for each customer who purchases a policy through Experian from the site.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Is a Cash-Out Refinance for Home Improvements Right for You?

If you’re looking at your chipping laminate countertops, you’re probably wondering what it would take to replace them — and maybe your whole kitchen, for that matter. That leads to the big money question: How are you going to pay for home improvements?

One option is to cash out the equity you have in your home in order to fund improvements on it, by doing a cash-out refinance. A cash-out refinance replaces your current mortgage with a new one and refunds you the difference in cash. You can use the cash however you would like.

However, it’s not your only option, and not every situation is the same. You’ll need to consider what it means to refinance for home improvements and whether or not it’s right for you.

How Cash-Out Refinancing for Home Improvement Works

When you cash out equity for home improvements, you can get a new mortgage and have some equity refunded to you in the form of cash. It’s best to look at how cash-out refinancing works with an example.

Let’s say you own a home worth $800,000 and your current mortgage amount is $500,000. Lenders allow a refinance of around 80% of the home’s value, so 80% of $800,000 is $640,000. $640,000 is the maximum amount that the lender will loan.

Let’s suppose you qualify for that loan. Next, the lender will pay off your original mortgage of $500,000. After you subtract $500,000 from $640,000, you’ll have $140,000 left. You’ll receive $140,000 in cash after you close on the loan (minus the closing costs on the loan). Your new loan amount will be $640,000.

If you want to take a closer look at how much money you would want to have on hand for a renovation, you can use a home improvement cost calculator to form an estimate of potential expenses.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


What Can You Use the Cash For?

According to Fannie Mae guidelines, which are the regulations mortgage lenders follow for conforming loan types, you can use the cash from a cash-out refinance for anything. That includes whatever home improvement dreams you have — a pool, new kitchen, she-shed, pickleball court — so dream big!

Pros and Cons of a Cash-Out Refinance for Home Improvements

Benefits

Cash-out refinancing for home improvement has some benefits to consider.

•   A better loan. When you apply for a cash-out refinance loan, your loan terms will change with the new mortgage. It’s not guaranteed, but you could end up with a lower interest rate than the one you had on your previous mortgage. Depending on the scenario, it is possible that a refinance could lower the payment for the borrower while accessing cash and shortening the term.

•   Increased property value. When you refinance for home improvements, the renovations could increase your property value. New flooring or an updated kitchen could increase the value of your home by more than the amount of money you pour into the project.

•   One payment. With a cash-out refinance, there’s one payment for both your mortgage and the cash you take out for home improvement projects. It’s convenient and usually offers a lower monthly payment than other financing methods.

•   Lower interest rates than other types of loans. A mortgage has a lower interest rate than other loan types, such as credit cards or personal loans, which can reach an APR of 30%. Just keep in mind that financing over another 15- or 30-year term could add a significant amount of interest to your loan, so be judicious in how much debt you add to your home.

Drawbacks

As with any financing option, there are some drawbacks you’ll want to consider before refinancing for home improvement with a cash-out refi.

•   Loan terms may change. If you have very favorable loan terms on your original mortgage, you won’t necessarily get those same ones when you refinance. If interest rates have risen since your original closing, the mortgage refinancing cost could make your new mortgage more expensive than an old one.

•   What you can borrow depends on equity. You need a substantial amount of equity to be able to do a cash-out refinance. Your lender may only want to lend on 80% of the home’s current market value. That means you’ll need to have an original mortgage amount even further beneath that amount to be able to cash out equity for home improvements.

•   Closing costs. With a new mortgage come new closing costs, which are never fun to pay. There are usually fewer closing costs to pay with a refinance, but it’s still a cost you need to consider.

•   Long-term costs. Increasing the amount of your mortgage over a long period brings large interest costs. Take a look at an amortization table or mortgage calculator so you know exactly what the total cost of your mortgage will now be.

Requirements for a Cash-Out Refinance

To qualify for a cash-out refinance, you’ll need to qualify for a mortgage again. A lender will look at your credit score, debt-to-income ratio, as well as the amount of equity you have in your home.

Credit Score Minimum

When you’re looking to qualify for a mortgage, you want your credit score as high as possible so you can qualify for the best available mortgage rates. For the best rates, aim for a credit score of 740 or above. A credit score of 620 is needed for most home loan types, though you may be able to get a home with a credit score around 500, depending on the type of mortgage or program available in your area.

Home Equity Requirements

The amount of your new mortgage will retain around 20% equity before refunding cash (sometimes less, depending on the lender or the program). If your home is worth $500,000, that means they’ll likely be willing to lend up to $400,000 on the home. If your current mortgage sits at $300,000, the most cash you would be able to access with a cash-out refinance is $100,000.

Debt-to-Income Ratio (DTI)

A debt-to-income (DTI) ratio is the total sum of your debts divided by your income. Generally, lenders look for a DTI ratio at 43% or lower. There are exceptions, so be sure to consult with your lender.

Cash-Out Refinance vs Home Equity Line of Credit (HELOC)

Another way to pay for home improvements is with a home equity line of credit (more commonly referred to as a HELOC). A HELOC is a second mortgage loan that uses the equity in your home as collateral. It acts like a line of credit and you only borrow what you need. It’s flexible and easy to use.

It makes sense to use a HELOC instead of a cash-out refinance in a few scenarios:

•   When the interest rate on your current mortgage is very low. Changing your current mortgage to a higher-interest mortgage with a cash-out refinance would be very expensive. Paradoxically, a HELOC or personal loan will have an even higher interest rate than what you can get on a primary mortgage, but because you’re paying the HELOC or personal loan off sooner, you will spend far less in interest.

•   You can make a larger HELOC payment. A HELOC usually won’t take 30 years to pay off. On a HELOC that is paid off sooner, the monthly payment amount will be higher, but if the numbers make sense (meaning, you’re able to access enough money for your home improvements from a HELOC at a competitive interest rate and you can cover the payments), then you probably want to go with a HELOC instead of a cash-out refinance.

•   You’re not sure how much you need. With a HELOC, you apply for a credit line and are approved up to a limit, kind of like a credit card. You only take out what you need, which is convenient when you’re planning a project and are not sure exactly how much it will cost.

The Takeaway

Cashing out the equity for home improvements can be an affordable way to update, repair, or improve your home — but only if the circumstances are right. While a lump sum of cash can be a great way to pay for home improvements, be sure to factor in all the costs before you choose this method. There are other financing tools available to you if this one is too costly.

Turn your home equity into cash with a cash-out refi. Pay down high-interest debt, or increase your home’s value with a remodel. Get your rate in a matter of minutes, without affecting your credit score.*

Our Mortgage Loan Officers are ready to guide you through the cash-out refinance process step by step.

FAQ

Can I use a cash-out refinance for ongoing or future home improvement projects?

The cash you get from refinancing your home can be used for any purpose.

How long does the process typically take for a cash-out refinance for home improvements?

The cash-out refinance process averages 30 to 45 days regardless of what purpose the excess funds will be used for.

Can I use a cash-out refinance to fund home improvements on an investment property?

Yes, however the requirements for a cash-out refinance on an investment property may be different from those on your personal residence, so it’s best to consult with a mortgage lender.

Are there any restrictions on how I can use the funds from a cash-out refinance for home improvements?

No, there are no restrictions on how to use funds from a cash-out refinance. You can pay for whatever home improvements you would like. There are restrictions, however, on whether or not you can deduct the interest you pay on the loan on your taxes. Ask your tax preparer for guidance.

Can I apply for a cash-out refinance for home improvements if I have a second mortgage or existing liens on my property?

Yes, but the second mortgage and other liens will likely need to be paid for a lender to issue a new mortgage for a cash-out refinance. There are some exceptions, so it’s best to consult with your mortgage professional on this one.


Photo credit: iStock/Kerkez

*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


SoFi Mortgages
Terms and conditions apply. Not all products are offered in all states. See SoFi.com/eligibility for more information.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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How and When to Refinance a Jumbo Loan

Jumbo loans are just that: jumbo. For 2023, conforming loan limits for houses in most counties — set by the Federal Housing Finance Agency — are $726,200. If you want to buy a more expensive home and need to finance more than that limit, you’ll be in the market for a jumbo loan.

Homeowners often refinance traditional (i.e., conforming) mortgages to get a lower interest rate, change their loan terms, or tap into home equity. But what about homeowners with a jumbo loan: Can they refinance as well?

A mortgage refinance for a jumbo loan is possible, but it may be a little more complicated. Let’s have a look at the process of a jumbo loan refinance.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


When Can You Refinance a Jumbo Loan?

There is no set timeline for refinancing a jumbo mortgage loan. In theory, you could refinance at any point during your loan, but lenders typically have strict requirements before approving a jumbo mortgage refinance. If you’ve been paying down the loan for a while, it’s possible your refinance would fall within the conforming loan limits. To determine whether or not this is the case, take a look at the conforming loan limits for your specific area. If you still need a jumbo mortgage loan, this is what you’ll want to consider:

Credit Score

Unsurprisingly, getting approved for a jumbo refinance means you’ll need a strong credit score. To refinance to a 30-year fixed-rate loan, lenders typically want to see a credit score of 680 or higher. Refinancing to a 15-year fixed or adjustable-rate mortgage has an even tougher credit score threshold: 700 or higher. And if you’re looking for a refinance for an investment or rental property, you may need a credit score as high as 760.

Recommended: Does Having a Mortgage Help Your Credit Score?

Debt-to-Income Ratio

Similarly, lenders will analyze your debt-to-income (DTI) ratio when reviewing your jumbo refinance application. While lenders typically want a DTI of 50% or lower for conventional loans, you may need a DTI as low as 36% when refinancing a jumbo mortgage loan.

Cash Reserves

Lenders will also typically want to see that you have cash reserves set aside. The amount of mortgage reserves you need will vary by lender but could be as much as six months’ worth of mortgage payments in liquid assets, more if you are self-employed.

Other Considerations

In addition, lenders may consider your payment history. If you have made one or more late payments on your current jumbo mortgage loan, you might not get approved for a refinance.

Other lenders may want you to have a certain amount of equity in your home before permitting a refinance.

And if you’ve filed for bankruptcy, it can be much more challenging to refinance. You’ll usually need to wait until the bankruptcy (or a past foreclosure) vanishes from your credit history — potentially 10 years.


💡 Quick Tip: If you refinance your mortgage and shorten your loan term, you could save a substantial amount in interest over the lifetime of the loan.

Jumbo Loan Refinance Requirements

Assuming you have the right qualifications for a jumbo refinance, here’s what you’ll typically need to provide to the lender:

•   Two previous months of bank statements

•   Proof of income, like your most recent pay stub

•   Tax returns from the last two years, including all W-2s

•   A profit/loss and balance sheet if you’re self-employed

•   Any other documentation of income, such as 1099s, that can help your chances of approval

Of course you’ll also have to go through all the steps of refinancing a mortgage that would be required with any loan.


💡 Quick Tip: Your parents or grandparents probably got mortgages for 30 years. But these days, you can get them for 20, 15, or 10 years — and pay less interest over the life of the loan.

Pros and Cons of Refinancing a Jumbo Loan

As with regular refinancing, jumbo mortgage refinances have a number of pros and cons to consider:

Pros

•   Faster payoff: If you refinance to a mortgage with a shorter term, you’ll pay off your home sooner — and be free from that high monthly payment.

•   Less interest: If you get a lower interest rate, you could save money over the life of the loan.

•   Predictable payments: If you switch from an adjustable-rate mortgage to a fixed-rate loan, your monthly payments will be locked in.

•   No more PMI: You may be able to get rid of private mortgage insurance when you refinance your loan.

•   Home improvements: If you do a jumbo cash-out refi, you can leverage the equity you have in your home to make home improvements. You could also use the money to pay down debt or cover college costs.

Cons

•   Closing costs: Refinancing a home loan means you’ll have to close again, and that can get expensive. According to Freddie Mac, closing costs when refinancing average about $5,000.

•   Larger monthly payments: If you shorten your loan term when refinancing, be prepared for larger monthly payments. You’ll want to feel confident that if you face a job loss, have a new baby, or experience another big life change you can still afford the higher monthly payment.

•   Lost equity: With a cash-out refinance, you borrow against the equity in your home. While it’s helpful for funding home improvements or paying down high-interest debt, you lose out on that equity you’ve built.

Recommended: How Much Does It Cost to Refinance a Mortgage?

How Will Refinancing a Jumbo Loan Affect Your Mortgage?

Refinancing a jumbo loan can have a few intended effects, including:

Lower Rate

Mortgage rates fluctuate over time. If rates drop, you might want to refinance to take advantage of the lower interest rate.

Longer Loan Term

If your current monthly mortgage payment is too high for you to handle, you may be able to lower it by refinancing and lengthening the loan term. Keep in mind, you’ll likely pay more in interest over the life of the loan — but the tradeoff for lower monthly payments might be worth it.

Shorter Loan Term

On the flip side, you might be able to shorten the length of your loan by refinancing. Your monthly payments may go up, but you’ll likely pay less in interest, and you’ll be free from the burden of a mortgage payment significantly sooner.

Take Cash Out of Equity

Many homeowners do a cash-out refinance to take advantage of some of the equity they’ve built in their home. You might refinance to get a nice lump sum to put toward home renovations, high-interest credit card debt, or another big expense.

Change Interest Structure

If your jumbo loan is an adjustable-rate mortgage, you may have trouble predicting your monthly payments. When you refinance to a fixed-rate loan, you’ll get more dependable monthly payments, which can make it easier to budget.

The Takeaway

Refinancing a jumbo mortgage is possible and could yield several benefits, like a better interest rate, better terms, and a better interest structure. The requirements to refinance your jumbo loan may be stricter than refinancing a conforming loan. Work with a lender to understand when and how you can refinance your jumbo loan.

When you’re ready to take the next step, consider what SoFi Home Loans have to offer. Jumbo loans are offered with competitive interest rates, no private mortgage insurance, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.

FAQ

Can I refinance my jumbo mortgage loan with my current lender?

It may be possible to refinance your jumbo mortgage loan with your current lender. But refinancing is also a time to shop around and consider the terms other lenders have to offer. With any jumbo loan refinance, you’ll need to meet certain requirements; this might include a minimum credit score or DTI.

What are the risks associated with refinancing a jumbo mortgage loan?

Refinancing a jumbo mortgage will involve significant closing costs. Your credit score will also likely drop when you refinance because of the hard inquiry. And if it’s a cash-out refinance, you’ll lose some of the equity you’ve built in your home.

How often can I refinance my jumbo mortgage loan?

While there’s technically no limit to how often you can refinance a mortgage loan, you likely won’t want to do it too often. You’ll pay closing costs every time you refinance, and your credit score can take a hit each time.

Can I still refinance my jumbo mortgage loan if I’m self-employed?

It’s possible to refinance a jumbo mortgage loan if you’re self-employed. You may just have to jump through additional hoops to prove your income. That can mean providing a profit-and-loss and balance statement, tax returns or 1099s from recent years, and business bank statements.

Can I refinance my jumbo mortgage loan if I have an adjustable-rate loan?

Yes, you can refinance your jumbo mortgage if you have an adjustable-rate loan. One of the many reasons people consider refinancing a jumbo loan is to switch from an adjustable- to a fixed-rate mortgage.

What should I do if I’m having trouble making payments on my jumbo mortgage loan?

If you’re having trouble making payments on your jumbo mortgage loan, you may be able to refinance to get a better interest rate/and or lengthen the loan term. Both options could lower your monthly payment. However, if you’ve already missed one or more payments, getting approved for a jumbo refinance could be challenging.

How do I know if refinancing my jumbo mortgage loan is the right decision for me?

To determine if refinancing a jumbo mortgage loan is right for you, consider your current finances and long-term goals. If refinancing means your monthly payments will be more manageable, you’ll save money in the long term, or you’ll be able to leverage your equity to fund a home renovation or pay down high-interest debt, it may be a good strategy for you.


Photo credit: iStock/FG Trade

SoFi Mortgages
Terms and conditions apply. Not all products are offered in all states. See SoFi.com/eligibility for more information.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Foreclosure Rates for All 50 States

Foreclosure Rates for All 50 States in August 2023

After a period of historic lows, foreclosure rates in the U.S. are once again on the rise. According to property data provider ATTOM , the number of housing units with foreclosure filings in August was 33,952, a nearly 2% increase from the previous year. The expiration of COVID-era government initiatives such as foreclosure moratoriums and loan forbearance has had a serious impact on this increase in numbers, leaving many homeowners without recourse.

With the U.S. median home price hovering around $406,700, home ownership is becoming increasingly challenging for new buyers and existing owners alike. Experts believe that high mortgage interest rates are worsening the crisis, with the interest rate for a 30-year fixed mortgage lingering near 7.18% as of September 14th. This represents a week-over-week increase of 0.06% and a year-over-year increase of 1.29%.

The Federal Reserve has been raising interest rates to battle inflation, but these hikes are also causing mortgage rates to rise, making it more expensive to finance a home or refinance an existing mortgage. Borrowers should stay up to date on their mortgage payments and work closely with their lenders to explore options for assistance if needed.

Read on for the foreclosure rates in August 2023 — plus the five counties or county equivalents with the highest rates within those states.

50 State Foreclosure Rates

As previously noted, foreclosure rates increased marginally compared to last month, but are down slightly compared to last year. Read on for August foreclosure rates for all 50 states — plus the District of Columbia — beginning with the state that had the lowest rate of foreclosure filings per housing unit.

District of Columbia

Ranking in population between Vermont and Alaska, the country’s second-and-third-least populous states, Washington, D.C. observed 73 foreclosures in August, down 39% from the previous month. With a total of 344,306 housing units, the foreclosure rate of the Nation’s Capital was one in every 4,717 households, putting it in between the states of Texas (#20) and Alaska (#21).

50. Vermont

In 49th place for population, the Green Mountain State ranked 50th yet again for its foreclosure rate this month. Of the state’s 333,519 housing units, five homes went into foreclosure at a rate of one in every 66,704 households. Only four counties in Vermont saw foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Windsor, Addison, Windham, and Washington.

49. South Dakota

The Mount Rushmore State nabbed the 49th spot for its foreclosure rate once again. Having 388,373 total housing units, the fifth-least populous state had a foreclosure rate of one in every 35,307 households with 11 foreclosures. Only four counties in South Dakota saw foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Pennington, Minnehaha, Brown, and Lincoln.

48. Montana

Listed as 44th in population, the Treasure State rated 48th for highest foreclosure rate this month. With 29 foreclosures out of 512,553 housing units, Montana’s foreclosure rate was one in every 17,674 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Sweet Grass, Dawson, Sanders, Hill, and Lincoln.

47. Kansas

The Sunflower State ranked 47th for highest foreclosure rate in August. With 1,272,290 homes and a total of 97 housing units going into foreclosure, the 35th most populous state’s foreclosure rate was one in every 13,116 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Sherman, Republic, Geary, Scott, and Pottawatomie.

46. Wyoming

The country’s least populous state claimed the 46th spot for highest foreclosure rate this month. With 271,818 housing units, of which 21 went into foreclosure, the Equality State’s foreclosure rate was one in every 12,944 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Weston, Sheridan, Campbell, Sweetwater, and Converse.

45. Rhode Island

The eighth-least populous state placed 45th for highest foreclosure rate in August. A total of 39 homes went into foreclosure out of 481,168 total housing units, making the foreclosure rate for the Ocean State one in every 12,338 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Providence, Kent, Bristol, Newport, and Washington.

44. Washington

Sorted as 13th in population, the Evergreen State ranked 44th for highest foreclosure rate. Of its 3,170,695 housing units, 272 went into foreclosure, making the state’s foreclosure rate one in every 11,657 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Grays Harbor, Cowlitz, Lewis, Clark, and Mason.

43. North Dakota

The Peace Garden State’s foreclosure rate was one in every 11,215 homes. This puts the fourth-least populous state — with 370,111 housing units and 33 foreclosures — in 43rd place. The counties with the most foreclosures per housing unit were (from highest to lowest): Mercer, Ward, Stutsman, Barnes, and Morton.

42. Maine

Ranked 42nd in population, the Pine Tree State also placed 42nd for highest foreclosure rate in August. With a total of 737,782 housing units, Maine saw 71 foreclosures for a foreclosure rate of one in every 10,391 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Waldo, Somerset, Androscoggin, Sagadahoc, and Oxford.

41. West Virginia

Ranked 39th in population, the Mountain State claimed the 41st spot this month. It has a total of 859,437 housing units, of which 88 went into foreclosure. This means that the foreclosure rate was one in every 9,766 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Kanawha, Pendleton, Cabell, Tyler, and Berkeley.

Recommended: Tips on Buying a Foreclosed Home

40. Wisconsin

With 295 foreclosures out of 2,718,369 total housing units, America’s Dairyland and the 20th most populous state secured the 40th spot with a foreclosure rate of one in every 9,215 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Pepin, Taylor, Manitowoc, Iron, and Richland.

39. Oregon

The 27th most populous state ranked 39th for highest foreclosure rate in August. Of the Pacific Wonderland’s 1,798,864 homes, 207 went into foreclosure, making for a foreclosure rate of one in every 8,690 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Wheeler, Yamhill, Douglas, Lake, and Josephine.

38. Kentucky

With a total of 1,988,420 housing units, the Bluegrass State saw 234 homes go into foreclosure, thus landing in 38th place this month. This puts the foreclosure rate for the 26th most populous state at one in every 8,498 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Webster, Hardin, Hart, Boyd, and Shelby.

37. Colorado

The 21st most populous state ranked 37th for highest foreclosure rate in August. Of the Centennial State’s 2,454,873 housing units, 291 went into foreclosure, making for a foreclosure rate of one in every 8,436 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Cheyenne, Morgan, Bent, Pueblo, and Fremont.

36. Mississippi

Ranked 34th in population, the Magnolia State experienced 170 foreclosures out of 1,317,375 total housing units. This puts the foreclosure rate at one in every 7,749 homes and into the 36th spot this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Copiah, Coahoma, Chickasaw, Pike, and Perry.

35. Arkansas

Listed as the 33rd most populous state, the Land of Opportunity ranked 35th for highest foreclosure rate for the second month in a row. The state contains 1,361,880 housing units, of which 180 went into foreclosure, making its latest foreclosure rate one in every 7,566 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Cleveland, Poinsett, Arkansas, Clay, and Lawrence.

34. Missouri

Coming in at 19th in population, the Show-Me State once again took the 34th spot for highest foreclosure rate. Of its 2,782,081 homes, 392 went into foreclosure, making for a foreclosure rate of one in every 7,097 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Ripley, Webster, Montgomery, Knox, and Oregon.

33. New Hampshire

The Granite State, and the 41st most populous state in the U.S., ranked 33rd for highest foreclosure rate. New Hampshire saw 93 of its 636,480 homes go into foreclosure, making for a foreclosure rate of one in every 6,844 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Coos, Sullivan, Carroll, Hillsborough, and Rockingham.

32. Hawaii

The Paradise of the Pacific, and the 40th most populous state, came in 32nd for highest foreclosure rate in August. Of its 556,937 homes, 86 went into foreclosure, making for a foreclosure rate of one in every 6,476 households. Only four of the five counties in the state saw foreclosures. They were (from highest to lowest): Hawaii, Honolulu, Kauai, and Maui.

31. Tennessee

Ranked 16th in population, the Volunteer State endured 465 foreclosures out of its 3,011,124 housing units. This puts the foreclosure rate at one in every 6,476 households and in 31st place this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Houston, Hardeman, Claiborne, Henderson, and Macon.

Recommended: What Is a Short Sale?

30. Idaho

Ranked 38th in population, the Gem State received the 30th spot due to its 117 housing units that went into foreclosure this month. With 742,145 total housing units, the state’s foreclosure rate was one in every 6,343 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Clark, Washington, Lewis, Lincoln, and Franklin.

29. New Mexico

The 36th most populous state claimed the 29th spot for highest foreclosure rate. Of the Land of Enchantment’s 937,397 homes, 149 went into foreclosure, making for a foreclosure rate of one in every 6,291 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Torrance, Eddy, Sandoval, Colfax, and Valencia.

28. Arizona

Sorted as 14th in population, the Grand Canyon State withstood 487 foreclosures out of its total 3,056,890 housing units. This puts the foreclosure rate at one in every 6,277 homes and into the 28th spot. The counties with the most foreclosures per housing unit were (from highest to lowest): Graham, Cochise, Pinal, Yuma, and Mohave.

27. Nebraska

Ranking 37th in population, the Cornhusker State also placed 27th with a foreclosure rate of one in every 6,093 homes. With a total of 840,802 housing units, the state had 138 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Clay, Garden, Frontier, Scotts Bluff, and Webster.

26. Minnesota

Ranked 22nd for most populous state, the Land of 10,000 Lakes obtained the 26th spot for highest foreclosure rate this month. It has 2,470,483 housing units, of which 407 went into foreclosure, making the state’s foreclosure rate one in every 6,070 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Waseca, Faribault, Wright, Isanti, and Wilkin.

First-time homebuyers can
prequalify for a SoFi Mortgage Loan,
with as little as 3% down*.


25. Oklahoma

The Sooners State landed the 25th spot in August. With housing units totaling 1,741,721, the 28th most populous state saw 290 homes go into foreclosure at a rate of one in every 6,006 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Harmon, Kingfisher, Ellis, Okmulgee, and Jackson.

24. Massachusetts

The 15th most populous state ranked 24th for highest foreclosure rate this month. Of the Bay State’s 2,979,634 housing units, 517 went into foreclosure, making for a foreclosure rate of one in every 5,763 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Hampden, Plymouth, Bristol, Worcester, and Berkshire.

23. Utah

The Beehive State placed 23rd for highest foreclosure rate in August. Of its 1,133,558 housing units, 203 homes went into foreclosure, making the 30th most populous state’s foreclosure rate one in every 5,584 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Carbon, Box Elder, Iron, Tooele, and Washington.

22. Virginia

With 674 homes going into foreclosure, the 12th most populous state ranked 22nd for highest foreclosure rate this month. Having 3,596,100 total housing units, the Old Dominion saw a foreclosure rate of one in every 5,335 households. The counties and independent cities with the most foreclosures per housing unit were (from highest to lowest): Galax City, Portsmouth City, Suffolk City, Caroline, and Highland.

21. Alaska

The Last Frontier saw 62 foreclosures in August, making the foreclosure rate one in every 5,094 homes. This caused the third-least populous state, with a total of 315,797 housing units, to claim the 21st spot. The boroughs with the most foreclosures per housing unit were (from highest to lowest): Sitka, Matanuska-Susitna, Anchorage, Kodiak Island, and Kenai Peninsula.

Recommended: Are You Ready to Buy a House? — Take The Quiz

20. Texas

The Lone Star State withstood 2,473 foreclosures this month. With a foreclosure rate of one in every 4,623 households, this puts the second-most populous state in the U.S., with a whopping 11,433,880 housing units, into 20th place. The counties with the most foreclosures per housing unit were (from highest to lowest): Andrews, Kaufman, Ector, Real, and Mitchell.

19. Pennsylvania

The Keystone State had the 19th highest foreclosure rate in August. The fifth-most populous state saw 1,254 homes out of 5,728,788 total housing units go into foreclosure, making the state’s foreclosure rate one in every 4,568 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Fulton, Susquehanna, Philadelphia, Allegheny, and Delaware.

18. Michigan

Ranked 10th in population, the Wolverine State secured the 18th spot yet again with a foreclosure rate of one in every 4,353 homes. With a total of 4,566,504 housing units, the state had 1,049 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): St. Joseph, Calhoun, Shiawassee, Otsego, and Oscoda.

17. Iowa

The Hawkeye State had the 17th highest foreclosure rate this month. With 326 out of 1,407,100 homes going into foreclosure, the 31st most populous state’s foreclosure rate was one in every 4,316 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Howard, Clinton, Audubon, Jasper, and Wayne.

16. North Carolina

The ninth-most populous state claimed 16th place once more for highest foreclosure rate. Out of 4,673,933 homes, 1,094 went into foreclosure. This puts the Tar Heel State’s foreclosure rate at one in every 4,272 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Jones, Gates, Hertford, Hoke, and Camden.

15. Alabama

Listed as 24th in population, the Yellowhammer State came in 15th for highest foreclosure rate in August. Of its 2,278,526 homes, 536 went into foreclosure, making for a foreclosure rate of one in every 4,251 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Bibb, Coffee, Montgomery, Mobile, and Jefferson.

14. New York

With 2,052 out of a total 8,449,178 housing units going into foreclosure, the Empire State claimed the 14th spot in August. The fourth-most populous state’s foreclosure rate was one in every 4,118 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Orleans, Nassau, Washington, Orange, and Suffolk.

13. Georgia

Ranked eighth in population, the Peach State took the 13th spot for highest foreclosure rate for the second month in a row. Of its 4,375,039 homes, 1,168 were foreclosed on. This puts the state’s foreclosure rate at one in every 3,746 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Jasper, Ben Hill, Richmond, Dawson, and Liberty.

12. Louisiana

Sorted as 25th in population, the Pelican State placed 12th for highest foreclosure rate in August. Louisiana had a foreclosure rate of one in every 3,703 households, with 558 homes out of 2,066,323 housing units going into foreclosure. The parishes with the most foreclosures per housing unit were (from highest to lowest): East Feliciana, Webster, Tangipahoa, St. Bernard, and Red River.

11. California

The country’s most populous state ranked 11th for highest foreclosure rate. Of its impressive 14,328,539 housing units, 4,088 went into foreclosure, making the Golden State’s foreclosure rate one in every 3,505 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Calaveras, Trinity, Lake, Modoc, and Madera.

Recommended: Your 2023 Guide to All Things Home

10. Connecticut

With 463 of its 1,527,039 homes going into foreclosure, the Constitution State had the 10th highest foreclosure rate at one in every 3,298 households. In this 29th most populous state, the counties that had the most foreclosures per housing unit were (from highest to lowest): Middlesex, New Haven, Litchfield, Windham, and Fairfield.

9. Indiana

The 17th largest state by population, the Crossroads of America landed the ninth spot with a foreclosure rate of one in every 3,084 homes. Of its 2,911,562 housing units, 944 went into foreclosure in August. The counties with the most foreclosures per housing unit were (from highest to lowest): Sullivan, Jay, Grant, Morgan, and Howard.

8. Ohio

The Buckeye State placed eighth in July with a foreclosure rate of one in every 2,904 homes. With a total of 5,232,733 housing units, the seventh-most populous state had a total of 1,802 filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Marion, Fayette, Cuyahoga, Ashtabula, and Seneca.

7. Maryland

Ranked 18th for most populous state, America in Miniature placed seventh for highest foreclosure rate for the second month in a row. With a total of 2,516,341 housing units, of which 900 went into foreclosure, the state’s foreclosure rate was one in every 2,796 households. The counties and independent city with the most foreclosures per housing unit were (from highest to lowest): Baltimore City, Dorchester, Caroline, Charles, and Prince George’s County.

6. Florida

The third-most populous state in the country has a total of 9,764,897 housing units, of which 3,709 went into foreclosure. This puts the Sunshine State’s foreclosure rate at one in every 2,633 homes and into sixth place. The counties with the most foreclosures per housing unit were (from highest to lowest): Hernando, Calhoun, Union, Wakulla, and Osceola.

5. Delaware

The sixth-least populous state in the country, the Small Wonder took fifth place this month. With one in every 2,618 homes going into foreclosure and a total of 445,104 housing units, the state saw 170 foreclosures filed. Having only three counties in the state, the most foreclosures per housing unit were (from highest to lowest): Kent, Sussex, and New Castle.

4. New Jersey

With a foreclosure rate of one in every 2,585 homes, the Garden State ranked fourth for highest foreclosure rate in August. The 11th most populous state contains 3,738,342 housing units, of which 1,446 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Cumberland, Sussex, Warren, Gloucester, and Camden.

3. South Carolina

The 23rd most populous state had the third highest foreclosure rate with one in every 2,506 homes going into foreclosure. Of the Palmetto State’s 2,325,248 housing units, 928 were foreclosed on this month. The counties with the most foreclosures per housing unit were (from highest to lowest): Fairfield, Kershaw, Orangeburg, Dorchester, and Barnwell.

2. Illinois

The Land of Lincoln claimed the second spot for highest foreclosure rate this month. Of its 5,412,995 homes, 2,225 went into foreclosure, making the sixth-most populous state’s foreclosure rate one in every 2,433 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Hardin, Kendall, Logan, Will, and St. Clair.

1. Nevada

Ranked 32nd in population, the Silver State took the first spot for highest foreclosure rate in August. With one in every 2,224 homes going into foreclosure, and a total of 1,269,846 housing units, the state had 571 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Clark, Mineral, Humboldt, Elko, and Nye.

The Takeaway

Of all 50 states, California had the most foreclosure filings (4,088), and Vermont had the least (5). As for the states with the highest foreclosure rates, Nevada, Illinois, and South Carolina took the top three spots, respectively.

Two regions — The Great Lakes and the Mideast — tied for having the largest presence among the 10 states that ranked the highest for foreclosure rates. The states in the Great Lakes region were (from highest to lowest): Illinois, Ohio, and Indiana. The states in the Mideast region were (from highest to lowest): New Jersey, Delaware, and Maryland.

Two regions — The Plains and New England — tied for having the largest presence among the 10 states that ranked the lowest for foreclosure rates. The states in the Plains region were (from highest to lowest): North Dakota, Kansas, and South Dakota. The states in the New England region were (from highest to lowest): Maine, Rhode Island, and Vermont.

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