What does disputing a tradeline do to your Credit Score?

credit scores

Your credit score will open doors for you when you are in the need to borrow money and your score will determine the cost of that money.

So protecting it is extremely important.

Our topic of discussion today is to review Disputing Credit and how it affects your score and your ability to move forward in purchasing a home.

In the past, disputing a debt on a credit report was used to by-pass a negative reporting.  When you dispute a debt on your credit report, the algorithms skip over that debt and does not include the history of that debt into your actual credit score.

This was discovered and now in many cases, disputes on a credit report must be removed in order for underwriting to discover the actual credit score as the history of that debt must be included in the overall evaluation of the loan applicant.

There is a systematic way of getting this information corrected:

1.)   Get the dispute resolved by working with the creditor and obtain a letter from them proving that the derogatory information should be removed.

2.)  In many instances, debtors will not remove the dispute and as a consumer wanting to obtain a loan, you need to take steps to remove the dispute, even if you still don’t agree with the decision of the creditor.

Here is some information provided to us by a Credit Report company called Cisco Credit.  They were  assisting us in directing a consumer of what steps to take to remove a dispute from his file that his creditor refused to remove.  This borrower wanted to obtain a home loan and could not proceed due to the dispute filed on his credit report:

Here’s what I recommend: have your borrower go to www.annualcreditreport.com and pull their credit from each of the 3 bureaus (it’s free once per year)…once they do this they can request that the dispute comments be removed from those creditor tradelines…they will be given a unique report/ID number from each bureau…have them save this as it will allow them to call each of the bureaus at a number they will provide to check progress. At the same time they will also need to contact each of the creditors showing a dispute to be removed and tell them they no longer wish to dispute the account(s). 

Please note if any of the disputes are with a collection agency or an account that has been charged off, the creditor might not remove the dispute unless it is first paid off.

In today’s economic enviroment, it is really important for you to prepare for your home purchase with a plan of action.  Choose your lender carefully and ensure that they are able to guide you to your plan.

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Should I Buy a Home Now? Or Wait Until Next Year?

Some Highlights:

  • The Cost of Waiting to Buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time.
  • Freddie Mac predicts interest rates to rise to 4.4% by next year.
  • CoreLogic predicts home prices to appreciate by 5.0% over the next 12 months.
  • If you are ready and willing to buy your dream home, find out if you are able to.  Take action!

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The Impact of Homeownership on Civic Involvement

The National Association of Realtors recently released a study titled ‘Social Benefits of Homeownership and Stable Housing.’ The study confirmed a long-standing belief of most Americans:

“Owning a home embodies the promise of individual autonomy and is the aspiration of most American households. Homeownership allows households to accumulate wealth and social status, and is the basis for a number of positive social, economic, family and civic outcomes.”

Today, we want to cover the section of the report that quoted several studies concentrating on the impact homeownership has on the civic participation of family members. Here are some of the major findings on this issue revealed in the report:

  • Homeowners have a much greater financial stake in their neighborhoods than renters. With the median national home price in 2015 at $223,900, even a 5% decline in home values will translate into a loss of more than $11,195 for a typical homeowner.
  • Because owners tend to remain in their homes longer, they add a degree of stability to their neighborhood.
  • Homeowners also reap the financial gains of any appreciation in the value of their home, so they also tend to spend more time and money maintaining their residence, which also contributes to the overall quality of the surrounding community.
  • Homeowners were found to be more politically active than renters with 77% of homeowners saying they had at some point voted in local elections compared with 52% of renters.
  • There seems to be a greater awareness of the political process among homeowners. About 38% of homeowners knew the name of their local school board representative, compared with only 20% of renters.
  • There is a higher incidence of membership in voluntary organizations and church attendance among homeowners.
  • Homeownership does create social capital and provide residents with a platform from which to connect and interact with neighbors.
  • Owning a home means owning part of a neighborhood, and a homeowner’s feelings of commitment to the home can arouse feelings of commitment to the neighborhood, which, in turn, can produce interactions with neighbors.

Bottom Line

People often talk about the financial benefits of homeownership. As we can see, there are also social benefits of owning your own home.

 

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Do You Know the Real Cost of Renting vs. Buying? [INFOGRAPHIC]

 

Some Highlights:

  • Historically, the choice between renting or buying a home has been a close decision.
  • Looking at the percentage of income needed to rent a median-priced home today (30%), vs. the percentage needed to buy a median-priced home (15%), the choice becomes obvious.
  • Every market is different. Before you renew your lease again, find out if you could use your housing costs to own a home of your own.

 

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The Foreclosure Crisis: 10 Years Later

CoreLogic recently released a report entitled, United States Residential Foreclosure Crisis: 10 Years Later, in which they examined the years leading up to the crisis all the way through to present day.

With a peak in 2010 when nearly 1.2 million homes were foreclosed on, over 7.7 million families lost their homes throughout the entire foreclosure crisis.

Dr. Frank Nothaft, Chief Economist for CoreLogic, had this to say,

“The country experienced a wild ride in the mortgage market between 2008 and 2012, with the foreclosure peak occurring in 2010. As we look back over 10 years of the foreclosure crisis, we cannot ignore the connection between jobs and homeownership. A healthy economy is driven by jobs coupled with consumer confidence that usually leads to homeownership.”

Since the peak, foreclosures have been steadily on the decline by nearly 100,000 per year all the way through the end of 2016, as seen in the chart below.

If this trend continues, the country will be back to 2005 levels by the end of 2017.

Bottom Line

As the economy continues to improve, and employment numbers increase, the number of completed foreclosures should continue to decrease.

 

 

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5 Reasons Why Homeownership Is a Good Financial Investment

5-reasons-home-ownership-is-good

According to a recent report by Trulia, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.” That may have some thinking about buying a home instead of signing another lease extension. But, does that make sense from a financial perspective?

In the report, Ralph McLaughlin, Trulia‘s Chief Economist explains:

“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

The report listed five reasons why owning a home makes financial sense:

  1. Mortgage payments can be fixed while rents go up.
  2. Equity in your home can be a financial resource later.
  3. You can build wealth without paying capital gains.
  4. A mortgage can act as a forced savings account.
  5. Overall, homeowners can enjoy greater wealth growth than renters.

Bottom Line

Before you sign another lease, learn more about your home buying options.

 

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Think All Millennials Live in Their Parent’s Basement?

think-all-millennials-live-in-their-parents-basement-think-again

According to the Census Bureau, millennials have overtaken baby boomers as the largest generation in U.S. History. Millennials, or America’s youth born between 1982-2000, now represent more than one quarter of the nation’s population, totaling 83.1 million.

There has been a lot of talk about how, as a generation, millennials have‘failed to launch’ into adulthood and have delayed moving out of their family’s home. Some experts have even questioned whether or not millennials want to move out.

The great news is that not only do millennials want to move out… they are moving out.  The National Association of Realtors (NAR) recently released their 2016 Profile of Home Buyers and Sellers in which they revealed that 61% of all first-time homebuyers were millennials in 2015. 

The median age of all first-time buyers in 2015 was 31 years old. 

Here is chart showing the breakdown by age:

1st-time-homebuyers-by-age

Many social factors have contributed to millennials waiting to buy their first home. The latest Censusresults show that the median age of Americans at the time of their first marriage has increased significantly over the last 60 years, from 23 for men & 20 for women in 1955, to 29 & 27, respectively, in 2015.

Those who went to college and took out student loans are finally paying them off, as the terms on traditional student loans are 10 years. This means that a large portion of the generation is making its last loan payments and is working toward saving for a first home.

As a whole, the first-time homebuyer share increased to 35% of all buyers, up from 32% in 2014. Not all millennials are first-time buyers, they also made up 12% of all repeat buyers.

Bottom Line

Millennials will continue to drive the housing market next year, as well as in the years to come. As more and more realize that owning a home is within their grasp, they will flock to own their piece of the American Dream.  For REALTORS®-  do you have your plan of action to attract these Millennials?  And to the Millennials-  are  you ready to buy your first home…perhaps your 2nd?

As a Licensed Senior Mortgage Loan Officer, my team and I are prepared to assist you both.

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BREXIT: What’s the FIXIT for U.S. Home Buyers and Sellers?

Brexit

 

Now that much of the dust has settled and the panic has waned, let’s take a look at what impact Britain’s exit from the European Union may have on the U.S. housing market.

The most immediate impact of Brexit will be on mortgage interest rates. Interest rates have remained at historic lows for the last several years. Contrary to what many experts believed, rates have remained low throughout the first half of 2016.

Possible impact of Brexit on mortgage rates?

In a recent article, the Washington Post explained:

Brexit has spawned the recent bout of volatility in global financial markets. That has anxious investors scurrying for safety — and few assets are safer than U.S. Treasuries. High demand for government debt pulls down interest rates.

That all translates into ultra-low mortgage rates for American households. And with Britain voting for Brexit, they could go even lower.”

Now that much of the dust has settled and the panic has waned, let’s take a look at what impact Britain’s exit from the European Union may have on the U.S. housing market.

The most immediate impact of Brexit will be on mortgage interest rates. Interest rates have remained at historic lows for the last several years. Contrary to what many experts believed, rates have remained low throughout the first half of 2016.

Possible impact of Brexit on mortgage rates?

In a recent article, the Washington Post explained:

“Brexit has spawned the recent bout of volatility in global financial markets. That has anxious investors scurrying for safety — and few assets are safer than U.S. Treasuries. High demand for government debt pulls down interest rates.

That all translates into ultra-low mortgage rates for American households. And with Britain voting for Brexit, they could go even lower.”

However, the lower rates caused by Brexit may be short lived as Trulia Chief Economist Ralph McLaughlin pointed out in a recent post:

While the departure of the UK from the European Union has driven down the 10-year bond, and thus mortgage rates, we expect them to rebound later in the year as uncertainty over the economic consequences of the departure lifts.”

Bottom Line

Rates are already at historic lows. The UK’s exit from the EU almost certainly guarantees they will remain low (and possibly go lower) over the next few months. If you were thinking of buying your first home or trading up to the house of your dreams, this may be the time to act. The cost of money may never be better for a potential buyer.

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4 Reasons to Refinance Your Mortgage

4 reasons to refinance

 

You may be wondering whether it’s worth it to refinance your home loan. Rest assured my team and I are here to make the process as smooth and painless as possible. We’ll answer all of your initial questions and walk you through the entire loan process, with the end goal of securing the right home loan for you.

As a rule of thumb, check out four reasons why refinancing can be a smart move. By refinancing, you may be able to:

Lower your interest rate, making a big difference in your monthly out-of-pocket costs for housing, meanwhile saving money on financing fees over the life of your loan.

Build equity faster. Homeowners who are in a position to make higher monthly payments could switch from a longer to shorter term mortgage, where available.

Change your loan program from an adjustable-rate mortgage (ARM) to the stability of a fixed-rate mortgage, taking advantage of more attractive rates and loan programs.

Cash out on equity you’ve already established for home improvement projects you’ve wanted to tackle, to pay off debt, or send your child to college.

If you would like to discuss whether refinancing makes sense at this time and all available opportunities, please get in touch. I’m happy to help.

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