In a CNBC article, self-made millionaire David Bach explained that: “The biggest mistake millennials are making is not buying their first home.” He goes on to say that, “If you want to build real financial security, real wealth for your lifetime, then you need to buy a home.”
Bach went on to explain:
Then he explains the secret in order to buy that home!
What will it cost to pay your mortgage in fifteen years? He explains further:
Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave simple advice – if you don’t yet live in your own home, go buy one.
Who is David Bach?
Bach is a self-made millionaire who has written nine consecutive New York Times bestsellers. His book, “The Automatic Millionaire,” spent 31 weeks on the New York Times bestseller list. He is one of the only business authors in history to have four books simultaneously on the New York Times, Wall Street Journal, BusinessWeek and USA Today bestseller lists.
He has been a contributor to NBC’s Today Show, appearing more than 100 times, as well as a regular on ABC, CBS, Fox, CNBC, CNN, Yahoo, The View, and PBS. He has also been profiled in many major publications, including the New York Times, BusinessWeek, USA Today, People, Reader’s Digest, Time, Financial Times, Washington Post, the Wall Street Journal, Working Woman, Glamour, Family Circle, Redbook, Huffington Post, Business Insider, Investors’ Business Daily, and Forbes.
FEBRUARY 2018 | BY ROBBIE CRONROD
Tenant screening provides a first line of defense against discrimination complaints. That’s because differences in factors such as an applicant’s income, employment, references, and credit histories can help justify the selection of one tenant over another and thereby help landlords avoid discrimination charges. Here are eight recommendations for using the screening process to keep discrimination lawsuits at bay.
DO apply your policies and procedures uniformly. Avoid running a full tenant screening report on some applicants and only a credit check on others. If you have a policy of renting to applicants with the best credit, don’t make an exception for a would-be tenant with a better personality but a less positive credit report. Be consistent or be vulnerable to discrimination complaints.
DON’T get too personal on rental application forms. Ask about jobs, previous addresses, income, and references. But stay away from specific questions about spouses or children, as well as other protected characteristics under the Fair Housing Act. (You can provide space for an applicant to list all the individuals who would be living in the apartment.) Even asking the question may give the impression that you would limit housing access based on the answers.
DO choose a “colorblind” screening service. Some services have a scoring system that enables landlords to establish their preferred tenant profile based on specific parameters, such as income, past evictions, and credit score. The software then evaluates each applicant according to the criteria and returns a “recommend” or “not recommend” verdict completely independent of race, religion, or other potentially discriminatory factors. This ensures that applicants are evaluated equally, providing a strong defense, assuming you follow the software’s recommendations.
DON’T automatically reject an applicant with a criminal record. In 2016, the U.S. Department of Housing and Urban Development issued a memorandum on housing providers’ use of arrest and conviction records to make housing-related decisions. According to Jodie McDougal, a partner at the Davis Brown Law Firm in Des Moines, Iowa, these guidelines mean that you cannot have blanket policies excluding all applicants who are felons or consider arrest records. Instead, you should perform a case-by-case evaluation. Read McDougal’s explanation and recommendations.
DO stay abreast of new developments affecting screening. One of them is a pending amendment to the Fair Credit Reporting Act, introduced in Congress last August. Currently, eviction reports used in the tenant screening process can include records dating back seven years. Under the proposed amendment, called the Tenant Protection Act, only eviction records no older than three years and resulting in a judgment that is not being appealed would be allowed. Use of older records would be viewed as discriminatory.
DO keep all documentation for up to 10 years. That includes rental applications, signed releases, tenant screening reports, and any other data or documents collected during the screening process—even if you don’t rent to the applicant. This information may be crucial if a rejected applicant questions your denial or selection of a different tenant. A paper trail can help you prove that the person was not denied residency based on discrimination but because a more qualified tenant was selected instead.
DO send a declination letter when rejecting a potential tenant. This document, also called an “adverse action letter,” specifies the reason or reasons for rejecting a rental application, such as income, employment, or credit history. Some screening services provide free declination letters with all the federally required language, along with a checklist of legitimate reasons for turning down a candidate.
DO call your attorney when in doubt. With new legal challenges and decisions coming out on a regular basis, it’s wise to have a legal resource you can turn to with questions. Find an attorney who can periodically review your rental application form to make it sure it complies with the latest antidiscrimination requirements. It will help prevent you from making a mistake that may land you in court.
There are some people who have not purchased homes because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize, however, that unless you are living with your parents rent-free, you are paying a mortgage – either yours or your landlord’s.
As Entrepreneur Magazine, a premier source for small business, explained in their article, “12 Practical Steps to Getting Rich”:
“While renting on a temporary basis isn’t terrible, you should most certainly own the roof over your head if you’re serious about your finances. It won’t make you rich overnight, but by renting, you’re paying someone else’s mortgage. In effect, you’re making someone else rich.”
Christina Boyle, Senior Vice President and head of the Single-Family Sales & Relationship Management organization at Freddie Mac, explains another benefit of securing a mortgage as opposed to paying rent:
“With a 30-year fixed rate mortgage, you’ll have the certainty & stability of knowing what your mortgage payment will be for the next 30 years – unlike rents which will continue to rise over the next three decades.”
As an owner, your mortgage payment is a form of ‘forced savings’ which allows you to build equity in your home that you can tap into later in life. As a renter, you guarantee the landlord is the person building that equity.
Interest rates are still at historic lows, making it one of the best times to secure a mortgage and make a move into your dream home. Freddie Mac’s latest report shows that rates across the country were at 4.22% last week.