As reported to Daily Real Estate News in Realtor Mag on Monday, August 11, 2014
FICO, the nation’s most popular credit-scoring system, announced it
is tweaking some of the criteria used in coming up with consumers’
scores, which could help consumers save more money in qualifying for
mortgages and other types of loans.
The changes include reducing the toll that overdue medical bills can
take on credit scores, as well as removing other past penalties from
consumers who have paid off debts that had been assigned to collection
agencies. A consumer whose only major delinquency comes from an unpaid
medical bill could see their credit score rise by 25 points due to the
changes.
The changes come after a recent Consumer Financial Protection Bureau
study, which found that both paid and unpaid medical debts were unfairly
penalizing consumers’ credit ratings. An estimated 64 million Americans
have a medical collection item on their credit reports, according to
Nick Clements of Magnify Money, a personal finance site.
The FICO changes will go into effect this fall, but borrowers may
have to wait a year or more until they see the impact of the changes in
their scores, lenders say.
The changes may help consumers with blemished past credit histories
or high medical debts qualify for mortgages more easily. Consumers with
higher scores also might qualify for a lower rate, housing experts say.
"In recent years the [credit score requirement] has been dialed so
tightly that only fairly upper-tier consumers were able to qualify for a
loan," says Lawrence Yun, National Association of REALTORS®’ chief
economist. "We're looking at people who are currently being denied
potentially being offered a mortgage because of this."
In June, the average FICO score for a closed mortgage was 728, a drop
from 742 a year prior, according to data from Ellie Mae, a company that
processes mortgage applications for lenders. FICO scores range from 300
to 850.
Borrowers with higher FICO scores can usually expect to pay less in
interest on a loan. A borrower with a FICO score of 675 may nab a 4.75
percent interest rate on a 30-year fixed-rate mortgage, which would be
about $2,086 a month in payments on a $400,000 loan, according to
Informa Research Services. In comparison, a borrower with a 700 FICO
score may qualify for a rate of 4.212 percent, which could drop the
monthly payment to $1,959 and bring a $127 savings.
The credit scoring changes will not remove any unpaid debts from a
credit report, so some lenders may still be able to factor that
information into their lending decision.
“This move will ultimately make a real difference in the lives of
millions of Americans, who have been shut out of the housing market or
forced to pay higher mortgage interest rates because of flawed credit
scores,” Steve Brown, NAR’s president, said in a statement. “Since the
housing crash, overly restrictive lending has been the greatest obstacle
to home ownership. NAR will continue to support efforts to broaden
access to credit for qualified homebuyers.”
In other news, two of the big national credit bureaus Experian and
TransUnion recently reported they’ve added verified rental payment data
into credit files, which will be used to compute a consumers’ score
when applying for a mortgage. A recent TransUnion study showed
that the inclusion of rental data could raise some consumers’ scores.
For example, nearly 20 percent of renters’ scores rose by 10 points or
more after just one month.
Source: “New FICO Criteria Could Help Borrowers,” Los Angeles Times (Aug. 8. 2014) and “Experian, TransUnion Start Adding Rent Payment Data to Credit Profiles,” Los Angeles Times (Aug. 10, 2014)
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Tuesday, August 12, 2014
Friday, August 8, 2014
Top 10 "Coolest" Cities in America
As reported to Daily Real Estate News in Realtor Mag on Thursday, August 7, 2014
What makes a city "cool"? For one, it has to have plenty of entertainment, restaurants, and recreational amenities. But it also needs to have diversity, a large group of young professionals, and a thriving place for population growth. After all, if a lot of people are flocking there, then it must be cool — at least according to Forbes' latest rankings of America's coolest cities to live in.
The country's political mecca, Washington, D.C., tops this year's list as the coolest city in the country.
"D.C. is a high-amenity city," says Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA's Anderson School of Management. "It has its share of cultural arts. It has its share of natural beauty." Also, the city’s population is booming, posting a 4.9 percent increase in net migration since 2010.
According to Forbes, the following 10 cities are the coolest places to live in the nation:
What makes a city "cool"? For one, it has to have plenty of entertainment, restaurants, and recreational amenities. But it also needs to have diversity, a large group of young professionals, and a thriving place for population growth. After all, if a lot of people are flocking there, then it must be cool — at least according to Forbes' latest rankings of America's coolest cities to live in.
The country's political mecca, Washington, D.C., tops this year's list as the coolest city in the country.
"D.C. is a high-amenity city," says Stuart Gabriel, director of the Ziman Center for Real Estate at UCLA's Anderson School of Management. "It has its share of cultural arts. It has its share of natural beauty." Also, the city’s population is booming, posting a 4.9 percent increase in net migration since 2010.
According to Forbes, the following 10 cities are the coolest places to live in the nation:
- Washington, D.C.
- Seattle
- Austin, Texas
- Houston
- San Francisco
- San Diego
- Denver
- Riverside, Calif.
- Boston
- Dallas
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