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Here’s How To Refinance A Mortgage (And Know If It’s Right For You)

Over the past decade, mortgage refinancing has grown in popularity. Not that big of a surprise, considering we’ve seen a sizable drop in mortgage rates during this time. At the height of the housing crisis in 2008, rates averaged about 6% for a 30-year fixed-rate mortgage for a 30-year fixed-rate mortgage.

Currently, the average rate for a 30-year fixed mortgage is about 3.26% , which gives some folks the opportunity to save some serious moola by lowering their interest payments. If you signed on for a higher rate years ago or your financial situation has improved, refinancing is worth considering.

While refinancing might not be right for every homeowner, but starting to look at rates and terms could be the first step to being able to save for other financial goals. Here’s everything you need to know about refinancing a mortgage from how to start the process, to figuring out if it’s right for you.

How much does it cost to refinance a mortgage?

Since you’re essentially applying for a new loan, there will most likely be fees if you choose to refinance. Because of this, it’s important to consider those costs compared to the potential savings. A good rule of thumb is to be certain you can recoup the cost of the refinance in two to three years—which means you shouldn’t have immediate plans to move.

Refinancing will generally cost from 3% to 6% of your loan’s principal value, though you should be sure to shop around to make sure you’re getting the best deal.

There are helpful online calculators for determining approximate costs for a mortgage refinance. Of course, this is only an estimate and all lenders are different. The lender will provide final closing cost information alongside a quote for your new mortgage rate.

When you refinance, you also have to consider closing costs. Some lenders may not have origination fees, but instead charge the borrower a higher interest rate.

If you have a great borrowing history and a strong financial position, there are some mortgage refinancing lenders, like SoFi, that reward such borrowers by offering competitive rates and no hidden fees.

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What are the steps in the mortgage refinancing process?

The first (and arguably most important) step is to determine what you want to get out of your mortgage loan refinance. There are several mortgage loan types, but “rate and term” and “cash out” are the two most common.

Just as the name implies, a “rate and term” refinance updates the interest rate, the term (or duration) of the loan, or both. You can also switch from an adjustable rate to a fixed rate and vice versa.

It is important to understand that not every refinance will save you money on interest. For example, if you extend the loan terms, you may end up paying more money over the course of your loan.

With a “cash out” refinance, you are using increased equity in your home to take out additional money on your mortgage; This is usually done to fund home repairs or pay off other, higher-interest debt. This is an excellent tool if you use it wisely, but as with all loans, it’s rarely advisable to take out more than you absolutely need.

Once you determine your goal, your primary focus will be determining whether the fees are worth what you’ll gain by refinancing. Here are the steps you’ll need to take to refinance:

1. Check your credit score and credit history for errors. Your credit score is an important factor in determining whether you get a better rate. Make sure you take time to clear up anything that’s been reported erroneously, and if possible take steps to boost your credit score.1
2. Research your home’s approximate value. Check comparable sale prices—not just listing prices—in your neighborhood to get an idea of what your house is worth. If the value of your home has gone up significantly and improves your loan-to-value ratio (LTV), this will be helpful in securing the best refinancing rate.
3. Compare refinance rates online. Don’t forget to ask about all costs involved. Most financial institutions should be able to give you an estimate, but the accuracy can depend on how well you know your credit score and LTV ratio.
4. Get your paperwork together. The process will move faster if you have your pay stubs, bank statements, tax filings, and other pertinent financial information ready to go.
5. Have cash on hand. You may have to pay some up-front costs, like property taxes and insurance.
6. The lender will (mostly) take it from here. They will send an appraiser for a home inspection. After the loan documentation and appraisal are submitted, loan officers determine the interest rate and create the loan closing documents. The closing is then scheduled with the refinancing company, mortgage broker, and real estate attorney.

How long does a mortgage refinance take?

The process can take anywhere from 30 to 90 days, depending on your diligence, the complexity of the loan, and the efficiency of the lender or broker.

If you want the process to move fast, look for mortgage lenders who are looking to disrupt the traditional mortgage process by offering a more streamlined service and a better customer experience.

If you’re like most people, you’ve got a life to live and don’t want your mortgage refinance to drag on for months. Keep this in mind while looking for a lender to refinance with.

Ready to check out your mortgage refinance rates with a competitive lender that values your time? SoFi can give you a quote (that won’t affect your credit score! 2) in as little as two minutes.



1. Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website on credit.
2. To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.

SoFi Lending Corp. is licensed by the Department of Business Oversight under the California Financing Law, license number 6054612. NMLS #1121636.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SoFi Mortgages not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com for details.

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How Much Are Closing Costs on a New Home?

Congrats if you’ve saved for a down payment on a new place. That’s a huge chunk of change, but dig deeper, because closing costs average 2% to 5% of the loan principal.

Whether you are buying your first house or you’re a seasoned buyer, know what you’re in for at the closing table.

When you apply for a mortgage, each lender must provide a loan estimate within three business days. It will estimate closing costs, interest rate, and monthly payment.

Your closing costs will depend on the sale price of the home, the fees the chosen lender charges, the type of loan and property, and your credit score.

What Closing Costs Include

Closing costs range from fees charged by professionals like appraisers and title companies to lender fees and home warranty fees.

Closing costs are traditionally divided between the buyer and seller, so you won’t necessarily be on the hook for the whole bill.

That said, the exact division between buyer and seller will depend on your individual circumstances, and can even be a point of negotiation during the buying process.

Here are some of the closing costs a homebuyer should account for:

Lender fees. This is the cost the lender charges for processing your loan. In addition to the origination fee, you may have “bought down” your interest rate with one or more points. Each point costs 1% of your mortgage amount, and that money is due at closing.

Appraisal, inspection, and survey fees. It is easy to be wooed by pristine wood floors and a shiplap statement wall, but you and your lender want to make sure that your potential new home is actually worth the purchase price. This means paying professionals to double-check that there are no major issues with the house and to provide a current market value.

Settlement agent, lawyer, or escrow fees. It turns out that paperwork can be difficult and is easy to mess up, so a settlement agent or lawyer is typically required so that your lender can be sure everything is properly prepared and signed.

Title service. To make sure you’re buying property that actually belongs to the seller and that the property isn’t subject to any legal obligations, it’s necessary to do a title search. Your lender will likely require a lender’s title insurance policy for its protection. You may also want an owner’s title insurance policy to protect yourself. The buyer and seller often divide these costs.

Recording fees. When the title of the property is transferred from the seller to you, legal documents need to be recorded in the county records to make sure the property is correctly transferred into your name. County recorders typically charge fees for doing this.

Home warranty. A home warranty can be purchased to protect against major problems. A warranty plan may be offered by the seller as part of the deal, or a buyer can purchase one from a private company. Your lender, however, will not require a home warranty.

Private mortgage insurance. Often lenders require PMI if you make a down payment that is less than 20% of the purchase price. This is usually a fee that you pay monthly, but it can also be paid at the time of closing.

Be aware that a “no closing cost mortgage” often means a higher rate and a lot more interest paid over the life of the loan. The lender will pay for many of the initial closing costs and fees but charge a higher interest rate.

Other Costs of Buying a Home

In addition to your down payment and closing costs, you also need to make sure that you can swing the full monthly costs of your new home. That means figuring out not only your monthly mortgage payment but all the ancillary costs that go along with it.

Understanding and preparing for these costs can help ensure that you are in sound financial shape for your first few years of homeownership:

Principal and interest. Your principal and interest payment is the amount that you are paying on your home loan. This can be estimated by plugging your sales price, down payment, and interest rate into a mortgage calculator. This number is likely to be the biggest monthly expense of homeownership.

Insurance. Your homeowner’s insurance premium should be factored into your monthly ownership costs. Your insurance agent can provide you with details on what this policy will cover.

Property taxes. Property tax rates vary throughout the country. The rates are typically set by the local taxing authorities and may include county and city taxes.

Private mortgage insurance. As mentioned, PMI may be required with a down payment of less than 20%. PMI is usually required until you have at least 80% equity in your home based on your original loan terms.

Homeowners association fees. If you live in a condo or planned community, you may also be responsible for a monthly homeowners association fee for upkeep in the common areas in your community.

The Takeaway

Before buyers can close the door to their new home behind them and exhale, they must belly up to the closing table with closing costs—usually 2% to 5% of the loan amount. A home loan hunter may want to compare estimated closing costs in addition to rates when choosing a lender.

Shopping for a home and a mortgage? SoFi home loans come with no hidden fees and competitive rates.

Get prequalified for a SoFi home loan in two minutes.



SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Business Oversight under the California Financing Law, license # 6054612.. For additional product-specific legal and licensing information, see SoFi.com/legal.
SoFi Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.
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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What Credit Score is Needed to Buy a House

What’s your number? That’s not a pickup line; it’s what a lender will want to know. The number will range from 300 to 850, and it will weigh heavily in whether you qualify for a conventional or government-backed loan and at what interest rate.

The national average credit score has inched up in the past few years, all within the range considered “good.” But applicants with “fair” and even “poor” credit scores can and do secure mortgages.

Below, we’ll cover the minimum credit score for a mortgage and how you can improve your credit score if needed.

First, Why Does a Credit Score Matter So Much?

Lenders look at a credit score to help determine whether a potential borrower is trustworthy. Considering that the recent median home sale price was over $350,000 and that financial institutions hold about $10 trillion in mortgage debt, lenders want to know that a borrower is solid and that repayment will be made.

Credit scores were created by the Fair Isaac Corp. to put a simple numerical representation on a person’s history of obtaining and repaying debt.

There are now other institutions that also calculate credit scores, but FICO® scores are the most commonly used. Experian, Transunion, and Equifax are the three credit reporting agencies that collect information on your history of borrowing, and then FICO® or another company amalgamates the information into a score between 300 and 850.

In general, those with a strong history of making on-time payments on their debts will have higher credit scores. Here’s what goes into calculating a credit score:

•  Payment history (35%): Considers whether the applicant has made payments on time.
•  Credit utilization (30%): The ratio of how much you could borrow from all accounts vs. how much you are borrowing. The lower your credit utilization, the better.
•  Length of credit history (15%): Histories with accounts that have been open for longer are seen more favorably than those that have been open for less time.
•  Types of credit (10%): Having multiple types of debt is preferable. Installment credit, such as an auto loan, personal loan, student loan or mortgage loan, and revolving credit, like a credit card, are both considered.
•  New inquiries (10%): Each time a new inquiry on credit is made, there can be a negative effect on a credit score. Credit inquiries happen when opening credit cards and taking out loans, and even when a lender does a “hard pull” on your credit history.

A Look at the Numbers

Here’s how credit scores are generally classified:

•  Exceptional: 800-850
•  Very good: 740-799
•  Good: 670-739
•  Fair: 580-669
•  Very poor: 300-579

In general, lenders consider applicants with “bad” or “poor” credit score subprime borrowers. Depending on what type of mortgage loan an applicant is trying to acquire, it may be hard to obtain a loan with a credit score lower than around 600.

If you are trying to acquire a conventional loan, you’ll likely need a credit score of at least 620.

With an FHA loan, 580 is the minimum credit score to qualify for the 3.5% down payment advantage. Applicants with a score as low as 500 will have to put down 10%.

The FHA program was created to get applicants with lower credit scores into homes. The loans are insured by the Federal Housing Administration, so lenders are more lenient.

A VA loan usually requires a minimum score of 580 to 620; and a USDA loan, 640.

Credit Scores Are Just Part of the Pie

Credit scores aren’t the only factor that lenders consider when reviewing a mortgage application. They will also require information on your employment, income, and bank accounts. A lender facing someone with a low credit score may increase expectations in other areas like size of the down payment or income requirements.

The lowest credit scores that lenders are willing to accept change with the economic environment. During the housing crisis of 2008 and the years after, it was very difficult for borrowers with credit scores lower than 700 to obtain loans.

During better economic times, credit score requirements for borrowers may loosen. Therefore, it is a bit of a moving target to nail down the precise average or the lowest possible credit score one must have to receive a mortgage loan.

How to Bump Up a Credit Score

Working to improve a credit score before applying for a home loan could save a borrower a lot of money in interest over time. Lower rates will keep monthly payments lower or even provide the ability to pay back the loan faster.

Let’s look at an example using a mortgage calculator: If you were take out a mortgage on a $400,000 home after putting 10% down with a 4.5% interest rate on a 30-year fixed rate mortgage, your monthly payment would be $1,824 and you would pay $296,663 total in interest over the life of the loan.

If you were to take out that same loan with a 5.5% rate of interest, your monthly payment would be $2,044 and you’d pay $375,854 total in interest. The difference of 1% in interest results in almost $80,000 paid over time.

Improving your credit score will take a bit of time, but it can be done. Here’s how:

1. Check for errors on your credit report. Reporting errors are quite common, so be certain that your credit history doesn’t mistake a missed payment or report a debt that’s not yours. You can get a free credit report once a year from each of the three reporting agencies: Transunion, Experian, and Equifax.

2. Pay all of your bills on time. If you haven’t been doing so, it could take up to six months of on-time payments to see a significant improvement.

3. If you do not have credit established, an easy way to do so is by opening a credit card. But only do this if you are prepared to use the credit card responsibly. This means paying back the card, in full, each month. Do not simply pay the minimum payments. If you are having trouble qualifying for a card, look into a secured credit card. With a secured card, you put a cash payment down that works as your line of credit, proving you can manage a credit card.

4. Request to increase the credit limit on one or all of your credit cards. This will increase your credit utilization ratio by showing that you have lots of available credit that you don’t use. It is best to keep the credit utilization ratio below 30%, meaning you’re only using 30% of your available credit at any time.

Understand that this number can be assessed at any time during the month, not just on the day that you pay your bills. Even if you pay your cards in full every month, if you’re consistently using more than 30% of your available limit, you could get dinged.

5. If you are working to pay off credit cards, don’t close them once you’ve paid them off. Keep them open by charging a few items to the cards every month (and paying them back). Remember, sources of debt that have been in use for longer are preferable to ones that are new. For example, if you have two credit cards, each has a credit limit of $5,000, and you have a $2,000 balance on each, you currently have a 40% credit utilization ratio. If you were to pay one of the two cards off and keep it open, your credit utilization would drop to 20%.

6. Consider obtaining a personal loan. If you have multiple credit cards and are struggling to manage them and pay them off, this might be a good solution. A personal loan may have a lower rate.

Another option for those with lower credit scores is to have a co-signer on a mortgage loan. If this person has a better credit score and financial situation than the main applicant, it could greatly improve the rate that a lender will offer. Only go down this route if this is a relationship that you can trust completely.

Once you feel that your credit score is ready, be sure to shop around for a home loan at several lenders. You want to be sure that you’re getting the best rate given your personal financial situation, and not every lender has the same criteria.

Know that even with credit scores that aren’t perfect, there are options for people who want to be homeowners; it’s just a matter of seeking out those options.

The Takeaway

What credit score is needed to buy a house? The numbers hinge on the economic climate, lender and type of loan, but those with imperfect credit often manage to secure home loans. First, know your credit score, take time to improve it if needed, and compare lender offers.

Find out your rate on a SoFi mortgage loan in just two minutes.



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SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

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Price-to-Rent Ratio in 50 Cities

Better to buy or rent? The price-to-rent ratio helps to gauge affordability in any city, especially for people on the move, and millions of Americans are, thanks in part to a remote-work boom.

The number can be helpful when looking at a certain area and deciding whether to plunk down your life savings into a home—if it’s even within reach—or pay a landlord and wait.

Read on to see the home price-to-rent ratio in 50 of the biggest U.S. cities.

First, What Is the Price-to-Rent Ratio?

The price-to-rent ratio compares the median home price and median annual rent in a given area. (You’ll remember that the median is the midpoint, where half the numbers are lower and half are higher.)

Median home sale price divided by median annual rent equals the ratio.

Let’s say the median rent in a city is $3,000 a month and the median sale price is $1,000,000. The price-to-rent ratio would be nearly 28—$1,000,000 divided by $36,000.

To make sense of that number:

•  A ratio of 1 to 15 typically indicates that it is more favorable to buy than rent in a given community.
•  A ratio of 16 to 20 indicates it is typically better to rent than buy.
•  A ratio of 21 or more indicates it is much better to rent than buy.

The ratios could be useful when considering whether to rent or buy. And investors often look at the ratios before purchasing a rental property.

The number also may be used as an indicator of an impending housing bubble, as a substantial increase in the ratio could mean that renting is becoming a much more attractive option in that specific housing market.

If you’re exploring different areas, it might be a good idea to estimate mortgage payments based on median home prices.

A Snapshot of Real-Life Ratios

Here are 50 (plus one) popular metropolitan areas and their price-to-rent ratios as 2021 began, when the U.S. median home sale price was $346,800, the Federal Reserve Bank of St. Louis reported.

Median sale price listed comes from Redfin as of December 2020. Median rents listed come from a Zumper national rent report from February 2021, based on a one-bedroom apartment.

Remember, as home prices and rents shift over time, so do the ratios.

San Francisco

It’s no secret that San Francisco housing prices are way up there. The median sale price was $1,350,000, and median rent was $2,680 per month (or $32,160 a year). That gives the hilly city a price-to-rent ratio of 42.

A snug studio at, say, $2,000 a month yields a ratio of 56.

San Jose, Calif.

Golden State housing continues its pricey rep. The median sale price in San Jose was $1,050,000, and the city had median rent of $25,560 yearly ($2,130 a month), leading to a price-to-rent ratio of 41.

Seattle

The Emerald City had a median sale price of $725,000 and median annual rent of $20,388, for a price-to-rent ratio of close to 39.

Los Angeles

A median sale price of $831,000 and median one-bedroom rent of $23,280 a year ($1,940 a month) shines a Hollywood light on renting, with a ratio of 36.

Long Beach, Calif.

With a median home price of $675,000 and rent of $1,600 a month, Long Beach earned a ratio of 35.

Santa Ana and Anaheim, just north of Santa Ana, were in the same league, with ratios of 33 and 34.

Honolulu

The ratio in the capital of Hawaii is a steamy 35, with a $620,000 median sale price and median rent of $17,520.

Oakland, Calif.

Oakland, across the bay from San Francisco, had a median sale price of $785,000 and median rent of $24,000 a year ($2,000 a month), earning a price-to-rent ratio of close to 33.

Austin, Texas

A hotbed for artists, musicians, and techies, Austin had a price-to-rent ratio of 33, thanks to a median sale price of $475,000 and median annual rent of $14,400.

San Diego

Hop back to Southern California beaches and “America’s Finest City,” where a median sale price of $690,000 and median rent of $21,600 led to a ratio of 32.

New York, NY

The median sale price here was $725,000 and median rent was $28,200 a year ($2,350 a month), which equates to a price-to-rent ratio of nearly 26.

Of course the city is composed of five boroughs, the Bronx, Brooklyn, Manhattan, Queens, and Staten Island, and it’s probable that most of the sales under $725,000 were not in Manhattan (where the median was $1.18 million) or Brooklyn (where the median was $915,000).

Just looking at Manhattan, even with rents falling to under $3,000 a month, the ratio looks more like 34 or 35.

Boston

With a median sale price of $702,000 and median rent of $24,240 a year, Beantown had a price-to-rent ratio of 29.

Portland, Ore.

The midpoint of buying here of late was $485,000, compared with median rent of $16,800, for a price-to-rent ratio of 29.

Tucson, Ariz.

In Tucson, the median sale price of $251,000 and median annual rent of $8,760 rounded up to a ratio of 29.

Denver

The Mile High City logged a renter-leaning ratio of 28, thanks to a median sale price of $476,000 and median annual rent cost of $16,800.

Colorado Springs, Colo.

With a median sale price of $366,000 and annual rent of $13,080, this city at the eastern foot of the Rocky Mountains had a recent price-to-rent ratio of 28.

Albuquerque, N.M.

In the Southwest, Albuquerque heated up to a ratio of 28, based on a median home sale price of $250,000 and rent of $8,880.

Washington, D.C.

The nation’s capital is another pushpin on the map with a high cost of living. The median sale price of $640,650 compares with median rent of $23,520 annually ($1,960 a month), translating to a ratio of 27.

Mesa, Ariz.

With a median sale price of $325,000 and median rent of $12,240, Mesa slithers to a price-to-rent ratio of nearly 27.

Las Vegas

Sin City has reached a ratio of 26, based on a $314,900 median sale price vs. $12,000 in rent.

Phoenix

Phoenix’s price-to-rent ratio has revved up to 26, with a median home sale price of $320,000 and $12,120 in rent.

Raleigh, N.C.

The North Carolina capital, the City of Oaks, logs a ratio of 25, based on a $320,000 median home sale price and median rent of $12,600.

Tulsa, Okla.

Tulsa had a price-to-rent ratio of 25, with low median rent of $7,680 but home sale prices ticking up to a median of $192,000.

Dallas

This sprawling city had a recent median sale price of $374,000 and median annual rent of $14,640, leading to a price-to-rent ratio of 25.5.

Sacramento, Calif.

This Northern California city had a recent median sale price of $402,000 and rent of $16,800, for a price-to-rent ratio of 24.

Fresno, Calif.

Fresno makes the list with a price-to-rent ratio of nearly 23, based on figures of $300,000 and $13,200.

Oklahoma City

The capital of Oklahoma had one of the lower price-to-rent ratios until recent home price spikes. It logs a ratio of 23 lately, based on figures of $215,000 and $9,240.

Arlington, Texas

Back to the Lone Star State, this city between Fort Worth and Dallas, with median figures of $250,000 and $11,400, had a ratio of 22.

San Antonio

This Texas city southwest of Austin had a median sale price of $244,000 and median annual rent of $11,280, resulting in a price-to-rent ratio near 22.

El Paso, Texas

El Paso traded a low price-to-rent ratio for a higher one when home prices rose. It’s at a 22, based on recent figures of $187,000 and $8,520.

Omaha, Neb.

With a median sale price of $206,750 and median annual rent of $9,600, Omaha had a recent home price-to-rent ratio of 21.5.

Nashville, Tenn.

The first Tennessee city on this list is the Music City, with a ratio of 21.

Virginia Beach, Va.

The ratio here has reached 21, based on a median home sale price of $290,000 and rent of $13,560.

Tampa, Fla.

This major Sunshine State city had a price-to-rent ratio of 20, based on figures of $290,000 and $14,400.

Jacksonville, Fla.

This east coast Florida city had a recent ratio of 20, based on a median sale price of $233,000 and rent of $11,640.

Charlotte, N.C.

Charlotte’s price-to-rent ratio of 20 arises from a median home sale price of $295,000 and median annual rent of $14,640.

Fort Worth, Texas

Panther City’s price-to-rent ratio has crept up to 20, based on a home sale price of $262,000 and rent of $12,960.

Houston

Houston, we have a number. It’s 20. That’s based on a median sale price of $269,000 and median annual rent of $13,200.

Louisville, Ky.

Despite having a different median sale price ($205,000) and rent ($10,440), Louisville had the same price-to-rent ratio as some bigger cities, at about 20.

Columbus, Ohio

The only Ohio city on this list had a price-to-rent ratio of 20, due to a median sale price of $208,000 and median annual rent of $10,320.

Atlanta

Heading South, Atlanta had a median sale price of $349,450 and median annual rent of $18,480, for a price-to-rent ratio of 19.

Miami

Those looking to put down roots in this vibrant city will find a price-to-rent ratio of a hair under 19, based on $360,000 and $19,200.

Minneapolis

The Mini-Apple is sweeter on renting, with a ratio of 19, based on a median sale price of $295,000 and rent of $15,600.

New Orleans

Next up is another charming Southern city, with a price-to-rent ratio of 18, given a median sale price of $312,500 and median rent of $17,040.

Kansas City, Mo.

In this Show-Me State city, a median home value of $218,000 and median annual rent of $12,000 equate to a price-to-rent ratio of 18.

Chicago

Chi-Town’s 16.5 ratio is based on a $305,000 median home sale price and $18,480 median rent.

Memphis, Tenn.

Memphis logs a ratio of 16, with a median home sale price of $163,000 and median annual rent of $9,960.

Indianapolis

The ratio in this capital city is 16, thanks to a median home sale price of $185,000 and rent of $11,280.

Philadelphia

This major East Coast city had a recent median sale price of $240,000 and median annual rent of $16,200, for a price-to-rent ratio of 15, the number that begins to signal that a place may be more favorable for buying over renting.

Baltimore

Charm City had a recent median home sale price of $198,000 and median rent of $14,160, for a price-to-rent ratio of 14.

Newark, N.J.

Newark, anyone? The median sale price here was $271,000, but median rent spiked to $1,750 a month, leading to a buyer-friendly ratio of 13.

Milwaukee

Milwaukee is more favorable to homebuyers than renters, thanks to a price-to-rent ratio of 11. This Midwest city had a recent median sale price of $155,000 and rent of $14,400.

Detroit

Detroit saw a spike in home sale prices, though the latest median was a relatively low $71,000, compared with median rent of $10,800, for a ratio of 6.5.

The Takeaway

The price-to-rent ratio lends insight into whether a city is more favorable to buyers or renters. Usually in a range of 1 to 21-plus, the ratio is useful to house hunters, renters, and investors who want to get the lay of the land.

If you’re in the market to buy, whether as a primary-home owner or investor, give SoFi mortgage loans a look.

SoFi home loans have competitive rates and no hidden fees. Plus, you may qualify for a loan with well under 20% down.

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How to Read a Preliminary Title Report

When you’ve decided on a house to buy and entered into escrow, you can expect a preliminary title report. The report will verify ownership and reveal lurking issues that will not be covered under a subsequent title insurance policy.

When you’re buying a home, the preliminary title report gives you the chance to remove or eliminate problems before you close on the property in order to avoid any legal headaches that arise from those issues.

Here’s a look at how to read these documents and what kind of information you can expect to find in them.

Title Insurance 101

First you’ll need to fully understand what title insurance is. A title is the set of legal rights you have to a property once you buy it. A clear title is the goal, meaning you want the property to be free of liens and other ownership claims.

Title insurance protects both buyers and lenders against any problems with a title when ownership of a property transfers from one person to another.

During or after a sale, if there is a title dispute, the insurance company may be responsible for paying certain legal damages. If you don’t have title insurance, you could be responsible for any issues that crop up.

There may be two forms of title insurance involved in a sale. If you are borrowing money to buy a home, you may purchase lender’s title insurance, which protects the lender. Owner’s title insurance, less common, is usually purchased by the seller to protect the buyer.

Reading a Preliminary Title Report

Once you open escrow, an order is placed with the title company to produce your preliminary title report. The company will assemble and review records having to do with the property you want to buy.
When you receive the report, look for the following information:

Owner of Record

The preliminary title report will start with the name of the owner of record. If you’re buying a home, this should be the seller’s name. If it isn’t, that’s a major red flag, and you should let your escrow or title officer know.

Is the seller really selling the property? As absurd as that sounds, during the 2008 housing crisis, people managed to sell properties they didn’t even own.

Statement of Vesting

Next, the report will lay out the extent of the current owner’s interest in the property. The highest type of ownership, and the most common, is known as “fee simple” or “fee.”

There may be other types of ownership that will show up in this section. For example, you might see a leasehold estate, which gives a tenant exclusive rights to use a property owned by someone else for a set period of time.

Legal Description

The legal description details the property location, lot size, boundaries, and any easements or encroachments. For condominiums and planned unit developments, the legal description might include common areas, parking, storage, and easements that convey.

A plat map, which shows how land is divided into plots, may be included as well to show the general location of a property.

Exceptions

Exceptions will be listed numerically and are matters that your title insurance policy will not cover. They may include:

•  General tax issues. Are there unpaid taxes? Property taxes will show up as the primary “lien” and as due or paid in full. Property taxes must be paid for the property sale to go through. And tax classifications could affect the new owner. For instance, if land is classified as agricultural, there could be penalties for withdrawing from that classification.
•  Assessments. Are there delinquent water or sewer bills owed to the city that need to be paid before closing?
•  Encumbrances. These might include liens from creditors or lenders, or liens for the payment of federal taxes or assessments. They might also include liens against a property because of back-due child support of spousal support. Are there loans against the property you weren’t aware of, such as additional mortgages?
•  Covenants, conditions and restrictions, or CC&Rs. These are rules that homeowners must follow in a planned community or common interest development. They might determine whether you are allowed to park on the street, what kind of fence you can put up, or what color you can paint your house.
•  Easements. An easement is the right another party has to the property you’re interested in buying. For example, neighbors may have a right of way that allows them to access their property through yours. Or a utility company might have the right to install, access, or maintain equipment on the property, such as power lines or cable.
•  Other issues. There are other matters that may appear on the preliminary title report, such as bankruptcies or notices of action, which are court proceedings that are underway and involve the property.

The transfer of property is subject to these exceptions unless they are dealt with by the seller before the sale.

If any liens or encumbrances crop on your preliminary title report, you have the chance to clear them before the sale goes through. Together with your real estate agent you can work with the sellers and their agent to clear the title before you take it on.

If you have any questions about your preliminary report, you can contact your real estate agent, an attorney, or your escrow or title officer.

Standard Exceptions and Exclusions

In addition to the list of exceptions that are particular to the home you want to buy, there are standard exceptions and exclusions that a title insurance policy won’t cover.

Building codes and restrictions are exempt from title insurance coverage, as are zoning restrictions or other regulations for how land can be used in certain areas.

Sometimes a building is subject to zoning restrictions. For example, it may be in a historical district that restricts how a buyer can develop the property.

Limitations of the Preliminary Title Report

Be aware that the preliminary title report only shows the matters that the title company will exclude from coverage when and if a title insurance policy is issued.

It is not a complete picture of the condition of the property. And it may not even list all of the liens and other encumbrances that may affect the title of the property.

The Takeaway

Think of a preliminary title report like a background check on a home, revealing tax, lien, or ownership poltergeists lurking. Knowing how to read a preliminary title report helps prevent spooky surprises.

Speaking of clean titles and clean starts, if you’re shopping for a home or investment property and a mortgage, SoFi’s home loan options are worth a look.

If you’re already a SoFi member, you may get a rate reduction or discount on a loan.

Check out SoFi’s competitive rates today.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available 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.

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