Buying a House This Year? This Should Be Your 1st Step!

Buying a House This Year? This Should Be Your 1st Step! | MyKCM

In many markets across the country, the number of buyers searching for their dream homes outnumbers the number of homes for sale. This has led to a competitive marketplace where buyers often need to stand out. One way to show that you are serious about buying your dream home is to get pre-qualified or pre-approved for a mortgage before starting your search.

Even if you are not in an incredibly competitive market, understanding your budget will give you the confidence of knowing whether or not your dream home is within your reach.

Freddie Mac lays out the advantages of pre-approval in the ‘My Home’ section of their website:

“It’s highly recommended that you work with your lender to get pre-approved before you begin house hunting. Pre-approval will tell you how much home you can afford and can help you move faster, and with greater confidence, in competitive markets.”

One of the many advantages of working with a local real estate professional is that many have relationships with lenders who will be able to help you through this process. Once you have selected a lender, you will need to fill out their loan application and provide them with important information regarding “your credit, debt, work history, down payment and residential history.”

Freddie Mac describes the ‘4 Cs’ that help determine the amount you will be qualified to borrow:

  1. Capacity: Your current and future ability to make your payments
  2. Capital or cash reserves: The money, savings, and investments you have that can be sold quickly for cash
  3. Collateral: The home, or type of home, that you would like to purchase
  4. Credit: Your history of paying bills and other debts on time

Getting pre-approved is one of many steps that will show home sellers that you are serious about buying, and it often helps speed up the process once your offer has been accepted.

Bottom Line

Many potential homebuyers overestimate the down payment and credit scores necessary to qualify for a mortgage. If you are ready and willing to buy, you may be pleasantly surprised at your ability to do so today.

What You Need to Know About the Mortgage Process

What You Need to Know About the Mortgage Process [INFOGRAPHIC] | MyKCM

Some Highlights:

  • Many buyers are purchasing a home with a down payment as little as 3%.
  • You may already qualify for a loan, even if you don’t have perfect credit.
  • Take advantage of the knowledge of your local professionals who are there to help you determine how much you can afford.

IRS Scams

The IRS doesn’t initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.  And the IRS does not call taxpayers and tell them there are warrants out for their arrest for nonpayment.  Here is the link to the IRS website and the page that addresses phishing and scams.

.IRS – Report Phishing and Online Scams

Be safe out there and protect your finances.  Have a great day!

Lee McLain

Boomerang Buyers: Most Qualify for Financing in 2-3 Years

Boomerang Buyers: Most Qualify for Financing in 2-3 Years | MyKCM

According to a new study from Lending Tree, Americans who have filed for bankruptcy may be able to rebuild enough credit to qualify for a home loan in as little as 2-3 years.

This is in stark contrast to the belief that many have that they need to wait 7-10 years for their bankruptcies to clear from their credit reports before attempting to apply for either a mortgage or a personal or auto loan.

The study analyzed over one million loan applications for mortgages, personal, and auto loans and compared borrowers who had a bankruptcy on their credit report vs. those who did not to find out the “Cost of Bankruptcy.”

The study found that 43.2% of Americans who filed bankruptcy were able to repair their credit back to a 640 FICO® Score in less than a year. The percentage of those who achieved a 640 FICO® Score increased to nearly 75% after 5 years. The full breakdown of the findings was used to create the chart below.

Boomerang Buyers: Most Qualify for Financing in 2-3 Years | MyKCM

Americans who were able to repair their credit scores to a range of 720-739 within three years of filing were able to obtain the same financing options as those who had never filed bankruptcy.

According to Ellie Mae’s latest Origination Insights Report, 53.5% of those who were approved for a home loan had FICO® Scores between 600-749 last month. This is great news for Americans who are looking to re-enter the housing market.

Boomerang Buyers: Most Qualify for Financing in 2-3 Years | MyKCM

Raj Patel, Lending Tree’s Director of Credit Restoration & Debt-Related Services had this to say:

“People may think that filing a bankruptcy would put you out of the loan market for seven to ten years, but this study shows that it is possible to rebuild your credit to a good credit quality.”

“LendingTree’s research found that very few bankruptcy filers have a harder time [obtaining a mortgage] than those who have not filed for bankruptcy.”

Bottom Line

If you are one of the millions of Americans who has filed for bankruptcy and think that you have to wait 7-10 years to make your dream of returning to homeownership a reality, let’s get together to find out if you qualify now.

The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. Keeping Current Matters, Inc. does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. Keeping Current Matters, Inc. will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.

August Loan Performance from CoreLogic

CoreLogic released their Loan Performance Insights for August 2017. It is showing that the Housing market continues to be on solid footing. Appreciation and solid underwriting are a big factors. Really good sign to see these continued low rates of delinquency.

As always, let me know if you have any questions.

Thanks for reading,

Lee McLain

Equifax Data Breach

You may have heard about Equifax Credit Bureau in the news lately. Equifax is one of the three largest credit reporting agencies in the United States.

Last week they announced that their systems had been compromised several months ago by cyber criminals who may have obtained personal information such as:

  • Name
  • Social security number
  • Address
  • Birth Date
  • Credit card information

Equifax indicated that debit cards were not exposed, so it’s very unlikely that criminals have the ability to withdraw funds from a checking account.

Equifax estimates nearly 143 million consumers may be affected by this data breach.

Check the Equifax website to see if your information could be affected

You can check to see if your information was impacted by visiting the Equifax website.

If it was, you can enroll in complimentary identity theft protection and credit-file-monitoring through Equifax. Please read the details on Equifax’s website to ensure you are aware of the legal conditions of the agreements involved with this monitoring program.

If you are concerned about future data breaches and/or identify theft, we recommend considering the following: www.identitytheft.gov/

The federal government provides resources to help you report and recover from identity theft, please visit www.identitytheft.gov/

Or, you can call the three credit reporting companies directly at:

  • Equifax: 1-800-349-9960
  • Experian: 1-888-397-3742
  • TransUnion: 1-888-909-8872

The information contained herein is not intended to be personal legal advice. Nothing herein should be relied upon as such. The views expressed are for commentary purposes only and do not take into account any individual personal or financial considerations. First Federal Bank of Kansas City may provide hyperlinks to third-party web sites as a convenience, but we do not control third-party web sites and are not responsible for the contents of any linked-to, third-party web sites or any hyperlink in a linked-to web site. First Federal Bank of Kansas City does not endorse, recommend or approve any third-party web site hyperlinked from the Website. First Federal Bank of Kansas City will have no liability to any entity for the content or use of the content available through such hyperlink(s).

Here is the link to the above article on First Federal Bank’s website – http://www.ffbkc.com/financial_success/equifax_data_breach.aspx.

All the best,

Lee McLain

Schooling College Students about Financial Responsibility from Allos Investment Advisors

Earlier today I received a great email from Allos Investment Advisors that I thought I would share with my readers.  With friends of mine taking their kids to college right now, I agree this is a very timely piece and helpful in guiding young people on a path to financial success.

Classrooms at universities and colleges across the nation are now opening for fall semester. You might have a child, grandchild, niece or nephew who is all set to spend their semester studying, socializing, and living on their own. You have prepared them for college life by teaching them how to grocery shop, prepare simple meals, and do laundry. Often, however, college students head to school with little knowledge about making a budget and managing money.   A National Student Financial Wellness Study, the first of its kind released in 2015 by Ohio State University, showed college students’ biggest worries were not exams or terrible roommates. Their biggest worries revolved around money. A little more than 72% of the students surveyed said they felt stressed about personal finances, monthly expenses, or whether they would be able to pay for college at all.   A 2016 survey found that among college students surveyed, 71% said they learned about money management from their parents. So take a few minutes and sit down with your college student today and share these tips. Your advice could help them not only during their college days but throughout their lives.  

Financial Advice for Your College-Bound Students

Help your college student set up necessary accounts. College students likely will need at least checking and savings accounts. Start teaching them good habits now and ask them to research banking institutions that would be convenient for them to get to from campus or their residence.

Establish clear financial responsibilities. Determine who will be responsible for which expenses. If you are planning to take care of bills such as auto and health insurance, or cell service, be clear with your student that he or she is responsible for living expenses including rent, utilities, groceries, and other household costs. 

Wean them off your bank accounts. It might be tempting to continue paying your college student’s expenses to help them get a strong start, but that does not teach them to be self-sufficient; it is likely to make them more dependent on you. 

Decide whether a credit card is appropriate. Credit cards often give college students the most trouble. Credit cards are an effective way to establish early credit history, but it is common for students to run up balances without fully understanding how credit cards work. If your student gets a credit card, be sure they understand how credit cards work and how important it is to pay off the balance every month. 

Will your college-bound student work during college? Holding down a part-time job while going to school has plenty of advantages. It helps cover living expenses or it gives them a chunk of money to save each month. It also makes it easier for them to manage money and gain valuable work experience. And finally, it looks great on their resume after they graduate and go looking for a job in their field.

It is never too late to sit down with your college-bound child, grandchild, niece or nephew and talk frankly with them about the importance of being financially responsible.  

We are here to help you each step of the way, so please let us know if you have any questions about these tips or the bigger strategies that are helping guide you to your financial future.

Sources Available Upon Request

Again, my thanks to Allos Investment Advisors in Overland Park, Kansas for the article.  Click on their name to go to their home page and learn more about them.

Any questions, please let me know.

All the best,

Lee McLain