THREE THINGS YOU SHOULD KNOW ABOUT “TRENDED CREDIT DATA”

Three credit cards piled on top of dollar bills

1 – What is it?
“Trended credit data” is an analytical tool that helps lenders better evaluate your spending habits.  It’s a detailed analysis of the last 24 months of your credit history, including:

  • Month-by-month balances on your credit cards and other debts; and,
  • The difference between your scheduled minimum payment and your actual payment amount.

2 – Why does it matter?
Mortgage lenders are now required to use “trended credit data” when they evaluate your loan application.  This helps them to spot trends including:

  • Do you typically max out your credit cards; and if so, which ones?
  • Do you typically you pay off your credit card balances each month?
  • Do you intend to carry a balance from month-to-month while making minimum or other payments?

3 – How does it impact you?
Trended credit data does not impact your credit score. It simply gives the lender a more thorough analysis of your balance and payment history over the past 24 months. For example, if you typically pay off your balances in full, this may positively impact your loan application.  On the other hand, if you typically max out your credit cards and make only the minimum payments, this may negatively impact your loan application.

You can always request a copy of your credit report from your mortgage lender, and it will now include your trended credit data.  If you notice any errors, feel free to dispute the errors with the credit bureaus using their standard dispute procedures.  Please contact me if you have any questions or for further information.

How Do Rising Prices Impact Your Home Equity?

How Do Rising Prices Impact Your Home Equity? | MyKCM

Yesterday, we shared the results of the latest Home Price Expectation Survey by Pulsenomics. One of the big takeaways from the survey is that over the next five years, home prices will appreciate 3.5% per year on average, and cumulatively will grow by around 18%.

So what does this mean for homeowners and their equity position?

For example, let’s assume a young couple purchased and closed on a $250,000 home in January of this year. If we only look at the projected increase in the price of that home, how much equity would they earn over the next 5 years?

How Do Rising Prices Impact Your Home Equity? | MyKCM

Since the experts predict that home prices will increase by 4.5% this year alone, the young homeowners will have gained over $11,000 in equity in just one year.

Over a five-year period, their equity will increase by over $46,000! This figure does not even take into account their monthly principal mortgage payments. In many cases, home equity is one of the largest portions of a family’s overall net worth.

Bottom Line

Not only is home ownership something to be proud of, it also offers you and your family the ability to build equity you can borrow against in the future. If you are ready and willing to buy, let’s meet up to find out if you are able to today!

Home Sales Up in Every Price Range over $100K!

Homes Sales Up in Every Price Range over $100K! | MyKCM

The National Association of Realtors’ most recent Existing Home Sales Report revealed that home sales were up rather dramatically over last year in five of the six price ranges they measure.

Homes priced between $100-250K showed a modest increase at 3.4%. This not only points to the lower inventory of homes available for sale in this price range but also speaks to the overall strength of the housing market.

Sales of homes over $250,000 increased by double digit percentages with sales in the $750,000- $1 million range showing the largest increase, up 16.7%!

As prices in many markets continue to accelerate, it is no surprise to see the percentage of homes in the higher price ranges increasing.

Here is the breakdown:

Homes Sales Up in Every Price Range over $100K! | MyKCM

What does that mean to you if you are selling?

Houses are definitely selling. If your house has been on the market for any length of time and has not yet sold, perhaps it is time to sit with your agent and see if it is priced appropriately to compete in today’s market.

Do You Know the Impact Your Interest Rate Makes?

Do You Know the Impact Your Interest Rate Makes? [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Interest rates have come a long way in the last 30 years.
  • The interest rate you secure directly impacts your monthly payment and the amount of house that you can afford if you plan to stay within a certain budget.
  • Interest rates are at their lowest in years… RIGHT NOW!
  • If buying your first home, or moving up to the home of your dreams is in your future, now may be the time to act!

Real Estate is Best Long-Term Investment

Americans Believe Real Estate is Best Long-Term Investment | MyKCM

According to Bankrate’s latest Financial Security Index Poll, Americans who have money to set aside for the next 10 years would rather invest in real estate than any other type of investment.

Bankrate asked Americans to answer the following question:

“Which would be the best way to invest money you did not need for more than 10 years?”

Real Estate came in as the top choice with 25% of all respondents, while cash investments (such as savings accounts and CD’s) came in second with 23%. The chart below shows the full results:

Americans Believe Real Estate is Best Long-Term Investment | MyKCM

Sterling White, co-founder of Holdfolio, gave one reason as to why real estate may have ranked so high.

“Houses are tangible. You can physically see and feel the product. So you know where your money is going.”

July’s poll also found that for the “26th consecutive month, Americans’ sense of financial well-being improved when taking into account debt, savings, net worth, job security, and overall financial situation.”

Bottom Line

There are several reasons, both financial and non-financial, as to why homeownership makes sense. It is nice to see that Americans have returned to a belief in homeownership as the best investment.

Brexit: The Impact on Mortgage Rates

Brexit 1 Month Later: The Impact on Mortgage Rates | My KCM

Recently, the United Kingdom decided to withdraw from the European Union in a decision commonly known as Brexit. At that time there was a lot of speculation on how that decision would impact the Financial Markets as well as U.S. residential mortgage market. Today, we want to look at the impact.

Most believed that the Brexit decision would drive mortgage rates down and keep them down for some time. As CoreLogicreported:

 “First-time buyers can count on continued low mortgage rates to help with affordability issues. Similarly, re-setting adjustable rate loans will have less of a rate shock, and in some cases may even go down.”

What has actually happened?

Initially, rates did fall. However, Freddie Mac has reported that rates have stabilized and have actually increased marginally each of the last two weeks. This prompted Freddie Mac Chief Economist Sean Beckett to say:

“Post-Brexit volatility tapered off over the last two weeks, allowing interest rates to bounce back a bit from their near-record 30-year mortgage rate lows.”

And, Capital Economics Property Economist Matthew Pointon believes rates will continue to increase:

“Given we expect Brexit will have a minimal impact on the U.S. economy, we see no reason to change our forecast for mortgage rates to reach 3.85% by the end of this year, and 5.0% by the middle of 2018.”

For now, it appears that the impact of Brexit on the U.S. housing market was not as dramatic as some thought it could be.

Slaying Myths About Home Buying

Slaying Myths About Home Buying [INFOGRAPHIC] | My KCM

Some Highlights:

  • Interest Rates are still below historic numbers.
  • 88% of property managers raised their rent in the last 12 months!
  • Credit score requirements to be approved for a mortgage continue to fall.

Buying Remains 36% Cheaper than Renting!

Baby Boomers Are On the Move | My KCM

According to a Merrill Lynch study“an estimated 4.2 million retirees moved into a new home last year alone.” Two-thirds of retirees say that they are likely to move at least once during retirement.

As one participant in the study stated:

“In retirement, you have the chance to live anywhere you want. Or you can just stay where you are. There hasn’t been another time in life when we’ve had that kind of freedom.”

The top reason to relocate cited was “wanting to be closer to family” at 29%, a close second was “wanting to reduce home expenses”at 26%.

A recent Freddie Mac study found similar results, as “nearly 20 percent of Boomers said they would move closer to their grandchildren/children compared to 13 percent who said they would move to a warmer climate.”

Not Every Baby Boomer Downsizes

There is a common misconception that as retirees find themselves with fewer children at home, they will instantly desire a smaller home to maintain. While that may be the case for half of those surveyed, the study found that three in ten decide to actually upsize to a larger home.

Some choose to buy a home in a desirable destination with extra space for large family vacations, reunions, extended visits, or to allow other family members to move in with them. According to Merrill Lynch:

“Retirees often find their homes become places for family to come together and reconnect, particularly during holidays or summer vacations.”

Bottom Line

If your housing needs have changed, or are about to change, let’s get together to discuss your next steps.

Rents Skyrocket at Highest Rate in almost a Decade

Rent Set to Exceed $535 Billion Paid Last Year | MyKCM

The Consumer Price Index (CPI) was released by the Labor Department last week. An analysis by Market Watch revealed the cost of rent was 3.8% higher than a year ago for the second straight month in June. That’s the strongest yearly price gain since 2007.

This coincides with a report released earlier this month in which AxioMetrics announced that rents are continuing to increase in 2016. The report revealed:

  • There was a 3.7% increase in effective rents in the second quarter of 2016 as compared to the same period last year.
  • That the effective rent growth this quarter compared to last quarter was 2.3%.
  • Annual effective rent growth was positive in 49 of the top 50 markets, based on number of units. Only Houston was negative, at -1.4%, as the fallout from energy-industry job losses and excess construction continues.

Here is a graph to illustrate the rate of increase over the last several years:

Rent Set to Exceed $535 Billion Paid Last Year | MyKCM

Bottom Line

With rents continuing to rise and mortgage interest rates still at historic lows, let’s meet up today to determine if you could turn your monthly rental cost into a home of your own.

Questions? Every Home Buyer Should Ask.

3 Questions Every Buyer Should Ask Themselves | MyKCM

If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family will have your best interest at heart, they may not be fully aware of your needs and what is currently happening in the real estate market.

Answering the following 3 questions will help you determine if now is actually a good time for you to buy in today’s market.

1. Why am I buying a home in the first place?

This truly is the most important question to answer. Forget the finances for a minute. Why did you even begin to consider purchasing a home? For most, the reason has nothing to do with money.

For example, a recent survey by Braun showed that over 75% of parents say “their child’s education is an important part of the search for a new home.”

This survey supports a study by the Joint Center for Housing Studies at Harvard University which revealed that the four major reasons why people buy a home have nothing to do with money. They are:

  • A good place to raise children and for them to get a good education
  • A place where you and your family feel safe
  • More space for you and your family
  • Control of that space

What does owning a home mean to you? What non-financial benefits will you and your family gain from owning a home? The answer to that question should be the biggest reason you decide to purchase or not. 

2. Where are home values headed?

According to the latest Home Price Index from CoreLogic, home values are projected to increase by 5.3% over the next 12 months. 

What does that mean to you?

Simply put, if you are planning on buying a home that costs $250,000 today, that same home will cost you an additional $13,250 if you wait till next year. Your down payment will need to be higher as well to account for the higher home price.

3. Where are mortgage interest rates headed?

A buyer must be concerned about more than just prices. The ‘long term cost’ of a home can be dramatically impacted by even a small increase in mortgage rates. 

The Mortgage Bankers Association (MBA), the National Association of Realtors, Fannie Mae and Freddie Mac have all projected that mortgage interest rates will increase over the next twelve months as you can see in the chart below:

3 Questions Every Buyer Should Ask Themselves | MyKCM

Bottom Line

Only you and your family will know for certain if now is the right time to purchase a home. Answering these questions will help you make that decision.