Credit Scores Hit Record High

Credit Scores Hit Record High

Credit scores among U.S. consumers surged to a record high this spring. Further, the share of borrowers considered among the riskiest borrowers hit a record low. The higher credit scores could be a boon for the mortgage market: A good credit score can help borrowers snag a better mortgage rate and better their chances of qualifying for financing.

“Higher scores lead to more available credit,” says Cris deRitis, senior director in the economics group at Moody’s Analytics. “We’d see more activity in terms of loan approvals and credit-card approvals, more spending, and that would have a ripple effect across the economy, increasing aggregate demand for goods and services.”

In April, the average credit score nationwide reached 700, which is up one point from last fall, according to the Fair Isaac Corp. That is the highest average since FICO began tracking such data in 2005.

The share of consumers considered to be the riskiest — with scores below 600 — hit a record low of about 40 million, or 20 percent of U.S. consumers who have FICO scores, according to Fair Isaac. That is down from a 25.5 percent peak in 2010.

Rising credit scores will likely prompt banks to make more credit available to consumers and at a cheaper cost, finance experts say.

“The domino effect for lenders would be more consumers they can market to [and] more consumers who may be credit-eligible who weren’t in last year’s models,” says Nidhi Verma, senior director of research and consulting at TransUnion, a credit-reporting firm.

Part of the reason behind the soaring credit scores is the increasing number of foreclosures and bankruptcies that are falling from American’s credit reports. More than 6 million U.S. consumers will have personal bankruptcies disappear within the next five years from their reports, according to Barclays PLC.

Consumers have a greater likelihood of getting approved for financing after negative events, like bankruptcies and foreclosures, drop from their reports. Foreclosures stay on credit reports for up to seven years (dating to the missed payment that resulted in the foreclosure). Foreclosure starts peaked in 2009 at 2.1 million, according to ATTOM Data Solutions. Personal bankruptcies can stay on credit reports for seven to 10 years.

Source: “Credit Scores Hit Record High as Recession Wounds Heal,” Dow Jones Newswires (May 29, 2017)

Risky Behaviors in Email Communication

Risky Behaviors in Email Communication

If you’re not careful about how you respond to clients over email, you could risk losing contracts, damaging your reputation, and even being sued for breach of confidentiality. Forbes.com offers some of the following tips to avoid PR nightmares and liability offenses with your email behavior.

Beware of hitting the “reply all” button. If you’re responding to multiple contacts, delete the email thread history in your message to avoid potentially exposing private information. Make a point to review each message carefully, check it for spelling and grammar, and note recipients who are copied on the email before pressing “send.”

Consider confidentiality footnotes. Forbes.com cites one company’s policy to include a footnote on all emails saying: “This email is intended only for the person or entity to which it is addressed and may contain information that is privileged, confidential, or otherwise protected from disclosure. Dissemination, distribution, or copying of this email or the information herein by anyone other than the intended recipient, or an employee or agent responsible for delivering the message to the intended recipient, is prohibited. If you have received this email in error, please immediately notify us by replying to sender.” Such language does not necessarily protect the company from legal action, but it can serve as a warning to email recipients about the pitfalls of sharing or forwarding confidential emails.

Avoid emailing when tired or angry. If you get an email that really irks you, wait to respond. “The terse message that seemed justified in the heat of battle may seem worse than intended to the recipient,” notes Forbes.com columnist Cherly Conner. “Additionally, the gaffe will be intensified if the receiver is sufficiently offended [and shares] the message with others.” Also, be sure to avoid sarcasm in your emails; your intended meaning may get lost in translation.

Source: “Do These 8 Things to Reduce Email Risks,” Forbes.com (May 29, 2017)

Mortgage Rates Hit Lowest Averages of the Year

Mortgage Rates Hit Lowest Averages of the Year

Mortgage rates dipped to their lowest averages of the year this week, Freddie Mac repots. “As we predicted, the 30-year mortgage rate fell 7 basis points this week in a delayed reaction to last week’s sharp drop in Treasury yields,” says Sean Becketti, Freddie Mac’s chief economist. “The survey rate stands at 3.95 percent today, a new low for the year.”

Freddie Mac reported the following national averages with mortgage rates for the week ending May 25:

• 30-year fixed-rate mortgages: averaged 3.95 percent, with an average 0.5 point, falling from last week’s 4.02 percent average. Last year at this time, 30-year rates averaged 3.64 percent.
• 15-year fixed-rate mortgages: averaged 3.19 percent, with an average 0.5 point, falling from last week’s 3.27 percent average. A year ago, 15-year rates averaged 2.89 percent.
• 5-year hybrid adjustable-rate mortgages: averaged 3.07 percent, with an average 0.4 point, dropping from last week’s 3.13 percent average. A year ago, 5-year ARMs averaged 2.87 percent.

Source: Freddie Mac

Couples Spats Common in Home buying

Couples Spats Common in Home buying

Buying a home can be stressful on couples. Sixty-percent of millennial and Gen X couples say they disagreed occasionally, frequently, or “a lot” when buying a house with their partner or spouse, according to a new survey released by LendingHome. They surveyed 514 adults ages 25 to 45 who were in a relationship (engaged, married, or domestic partnerships) and purchasing a home within the past year.

Couples who have been together a longer time tend to be more harmonious in the home-buying process, according to the survey. Those who had been together five or more years disagreed frequently only 14 percent of the time when searching for a home. On the other hand, couples who have been together for four years or less disagreed twice as much, with nearly 30 percent disagreeing frequently or more often.

So, what are couples disagreeing about? Their top disagreements were the level of debt to take on (49 percent); the style of home to purchase (46 percent); size of house (45 percent); and whether or not to buy a house in need of renovation (43 percent), according to the survey.

Some couples’ disagreements may be based on gender. For example, the survey showed that women tend to prefer traditional, cozy homes in the suburbs. Men, however, tend to prefer more modern homes in urban settings.

“Buying a home together is more than playing house and making Pinterest boards of dream kitchens; it’s a serious commitment with enormous financial implications,” says Samantha Burns, The Millennial Love Expert, a licensed couples therapist and dating coach in Boston. “So you need to feel secure and confident in your relationship before taking this step together. In searching for your dream home, get clear on your wants versus needs, firm deal breakers, and ability to analyze the pros and cons. By getting on the same page at the beginning, you’ll be able to minimize conflict throughout your home search.”

Regardless, most couples say they’re able to leave their home buying disagreements behind after the transaction is complete. Sixty percent of couples surveyed said their disagreements when buying a home didn’t matter in the end. In fact, more than 50 percent of couples said they felt more committed to the relationship after purchasing the house.

Source: LendingHome

New-Home Sales Face a Setback

New-Home Sales Face a Setback

Sales of newly built single-family homes plunged 11.4 percent in April to a seasonally adjusted annual rate of 569,000 units, the first time such sales have decreased this year, the Commerce Department reported this week. Still, builders are writing off the dip as a minor setback, instead focusing on the bigger picture.

“Despite some slowness this month, total new-home sales in 2017 are up more than 11 percent from this time last year, and builders are optimistic about future market conditions,” says Granger MacDonald, chairman of the National Association of Home Builders.

New-home inventories were at 268,000 in April, which is a 5.7-month supply at the current sales pace. The median sales price of new homes sold in April was $309,200.

The West posted the biggest month-over-month drop in new-home sales, decreasing 26.3 percent month-over-month. The Midwest saw new-home sales drop by 13.1 percent, the Northeast saw a 7.5 percent decrease, and the South saw a 4 percent drop.

“New-home sales were strong in the first three months of 2017, so some pullback in April is to be expected,” says NAHB Chief Economist Robert Dietz. “However, our forecast calls for new-home sales to increase throughout the year, buoyed by rising household formations, continued job growth and tight existing-home inventory.”

Source: National Association of Home Builders

Home Insurance Myths to Bust for Your Clients

Home Insurance Myths to Bust for Your Clients

Most mortgage lenders require borrowers to purchase home insurance, but many buyers may be confused about what their policy covers. Realtor.com® recently highlighted several common myths consumers believe when it comes to home insurance.

Myth number one: All of a home’s belongings are covered. “A homeowners insurance policy is not designed to cover everything,” says Jeanne Salvatore, chief communications officer at the Insurance Information Institute. “Each policy clearly sates what’s covered and what’s not.” Personal valuables, for example, aren’t typically covered by a basic policy. “If you have valuable art or fine jewelry inside your house, you might need a scheduled personal property policy to cover these items,” says Laurie Pellouchoud, vice president at Allstate.

Myth number two: Coverage should be based on the market value of a home. Fifty-two percent of buyers believe they should purchase insurance coverage based on their home’s market value, according to a survey by Insure.com. However, with most insurance policies, rates are based on the cost to rebuild the home, not the value of the property. “In most cases, you need less coverage than the market value of your house,” Salvatore says.

Myth number three: Flood coverage is included in most standard policies. Flood coverage typically is not included in standard insurance policies. Homeowners who live in an area that is prone to flooding likely will be required to purchase a separate policy to protect themselves. Separate flood insurance is available from the National Flood Insurance Program and some private insurers. Even homeowners who live outside a flood zone may be wise to consider buying the extra protection against floods, experts say.

Source: “6 Home Insurance Myths That’ll Cost You Big-Time,” realtor.com® (May 23, 2017)