JULY 2015

In This Issue

Millennials Getting More Positive About Homebuying

by Realtor.com 



Millennials have become more positive when it comes to taking the plunge into home ownership and are primed to gain market share in the second half of the year, according to the results of realtor.com's consumer behavior survey of more than 12,000 respondents conducted from Jan. 1, 2015 to June 15, 2015.  


Jonathan Smoke, chief economist for realtor.com, revealed an in-depth analysis of these survey findings during a panel discussion at the National Association of Real Estate Editors conference in Miami.


"Despite the slow indicators we saw earlier this year, 2015 is on pace to be one of the best years for housing since 2006 due to strong sales and higher than predicted home prices," said Smoke.


"Additionally, we're observing an uptick in millennial traffic and sentiment that we expect will result in more first-time home buyer sales in the later part of the year."


Smoke went on to explain that first-timers are especially critical when it comes to the health of the market. "Historically, they're the largest demographic of home buyers and can have a dramatic impact on housing," he said.


Since the beginning of the year, realtor.com has observed a slight increase in older millennials - between the ages of 25 and 34 years old - visiting its website and mobile applications with the goal of buying a home. In the first half of June, realtor.com saw its share of traffic represented by older millennials looking for a home to purchase increase to 23%, as compared to 21% in January. In mid-June, it also observed its share of those looking for property to rent decrease to 20%, from 26% in January.


Another revealing metric is the number of millennials who intend to buy a home within the next three months. In mid-June, 65% of 25-34 year olds responding to the survey indicated that they intend to buy a home within three months, up from 54% in January. Additionally, older millennials and first-time buyers are very optimistic about buying. Both groups are slightly more likely than the average buyer to say that they are "very likely to purchase within the next 12 months."


"Last year, first-time buyer market share decreased as the year progressed and dropped all the way to 27% in the summer, according to data from the National Association of Realtors," stated Smoke. "This year, we're seeing an increase in millennial demand that points to a strengthening first-time buyer demographic. As the economy continues to grow over the next few years, we can expect first-timers to return to a healthy level of 40% of the market. A return to that level would add approximately 15% to the number of total homes sold."



Check Your Credit Score & Report Before Buying a Home
by Credit.com


What is a Credit Score?

Imagine that a friend asks to borrow money from you. Assuming you had the money to loan, you might then ask yourself, "Did he pay me back the last time he borrowed money? Did he pay me back the full amount? On time?" When you approach banks and lenders for a loan, they go through a similar analysis, but since they don't know you personally, they use your credit history to determine whether you will be a responsible borrower. Lenders learn about your credit history by looking at your credit report. You can get a free Credit Report Card that includes your free credit score right now!


Credit reports are developed by three separate credit agencies. These agencies (Equifax, Experian, and TransUnion) gather information about your credit history, and, using a formula developed by Fair Isaac Corporation (FICO), each assigns you a credit score. You will end up with three slightly different credit scores, each from one of the three agencies. Lenders typically look at your middle credit score (as opposed to the highest or the lowest), and you must provide all three of your credit scores (one from Equifax, one from Experian, and one from TransUnion), when applying for a loan.

Why are Credit Scores so Important When Buying a Home?

Your credit score helps determine the rate and conditions you receive on a loan. If your credit score is high, meaning that your credit history indicates that you've paid your credit card bills on time, haven't "maxed out" your credit cards, etc., then lenders believe it's a fairly good bet that you won't have difficulty paying off your loan. They will see you as a low-risk investment and offer you a low rate on your loan with good conditions.


If your score is lower, lenders will think you're a riskier investment, and charge you (by loaning you money at a higher interest rate, often including hidden charges) to take on the perceived risk. Get your free credit score now.

How do Credit Scores Affect You When Applying for a Loan?

Most lenders have a baseline credit score by which they largely make their decision to approve or deny mortgage applicants. The maximum credit score is 850 (though a score of 850 is rare, indeed. Only about 10% of applicants have a score over 800). Any score in the 700s or above is excellent and will get you a loan with the lowest interest rate. When you get into the 600s it starts getting dicey. A score of 680, for example, is still considered good, but when you get below 660, some lenders start saying, "No."


U.S. Pending Homes Sales Hit Nine-Year High 

by Reuters



WASHINGTON (Reuters) - Contracts to buy previously owned U.S. homes rose to their highest level in just over nine years in May, in a further boost to the housing market and the broader economic outlook.


The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, increased 0.9 percent to 112.6, the highest level since April

2006. Contracts have now increased for five straight months.


Pending home contracts become sales after a month or two, and last month's increase pointed to further gains in home resales after they hit a 5-1/2-year high in May. Economists had forecast pending home sales rising 1.2 percent last month.


"The recent trend suggests that we will see continued strength in resales in the months ahead. However the current low inventory levels, which are placing upward pressure on home prices, remain a downside risk," said Derek Lindsey, an analyst at BNP Paribas in New York.


The housing market recovery is back on track after being slammed by bad weather at the start of the year. It is being bolstered by a tightening labor market, which is helping to spur some pick-up in wage growth.


U.S. financial markets were little moved by the report, with investors warily watching developments in Greece as Athens moved closer to a defaulting on its debt. U.S. stocks fell at the open, while the dollar was little changed against a basket of currencies. Prices for U.S. government debt were higher.


The pending home sales report added to robust building permits, housing starts, new home sales and home resales data in painting a bullish picture of the housing market.


It also joined strong retail sales, consumer sentiment and employment data in suggesting a building up of momentum in the economy after a mild contraction in output in the first quarter.


Pending home sales increased 10.4 percent from a year ago.


Contracts increased 6.3 percent in the Northeast and rose 2.2 percent in the West. They slipped 0.8 percent in the South and dipped 0.6 percent in the Midwest.




Try This Totally Doable 7-Day Plan to Improve Your Credit
 by Everyday Money

Fixing your credit doesn't need to be a Herculean task.

There are 168 hours in a week. By allocating a tiny fraction of them to improving your credit, you could potentially save hundreds or thousands in interest on future loans, get the best insurance rates and avoid utility deposits.

Here's a Monday through Sunday credit-building schedule, but feel free to get started any day of the week. Check out the Nerds' seven actionable steps you can take this week to improve your credit.

Monday: Pull and read your credit reports

You can do everything right credit-wise, but errors on your credit reports can unfairly hurt your score. In fact, according to a 2012 study by the Federal Trade Commission, more than a quarter of the participants discovered at least one potentially material error on one or more of their credit reports. As such, it's important to pull your credit reports to check for discrepancies.

You can request your credit reports for free once a year. Go to annualcreditreport.com and read your credit reports to ensure they don't contain errors.

Tuesday: Dispute any credit report errors

If you found any errors on your credit reports, now is the time to get them fixed. The Consumer Financial Protection Bureau last year added new rules to make reporting errors easier. Gather any evidence you have that your reports contain erroneous information and dispute them for a possible boost to your credit.

Wednesday: Create a debt payoff plan

If you're carrying a lot of unsecured debt, your score may be suffering due to high credit utilization. Credit utilization is the amount of debt you have in relation to your credit limits. Experts recommend that this percentage doesn't exceed 30% at any time to maintain a good credit score.

Create a debt payoff plan to get your utilization down as soon as possible. If you don't have enough in your budget to make progress on your existing balances, check out our ideas on how to increase your income and decrease your expenses. And if high-interest debt is slicing into your budget each month, check out our favorite balance transfer credit cards.

Thursday: Consider increasing your credit card limit(s)

To further improve your credit utilization ratio, consider increasing your card limits. This may result in a small hit to your credit via a "hard" credit pull - although sometimes you can get a small limit increase without a credit pull. But credit utilization has more impact on your score than credit inquiries.

Friday: Set up a payment plan on large debts

If you have outstanding debts you can't pay off, call your furnishers and set up payment plans. Whether it's a medical bill, overdue taxes or an account in collections, communication with your creditor is key to keep a past due bill from further damaging your credit.

Your creditors will want to collect the entire balance you owe, but many will gladly take partial payments over nothing at all, so call them up and ask.

Also, make sure the monthly amount realistically fits into your budget before agreeing to a payment plan.

Saturday: Set up automatic payments for other bills

Consider setting up automatic bill payments. Payment history is the No. 1 factor in your credit score, and it's important to make all of your payments on time, 100% of the time. Missed payments can be reported to the credit bureaus and linger seven years on your credit reports.

Avoid late payments - and their corresponding fees - by setting up automatic payments for every account you can. If you have irregular income and can't be certain that you'll have the cash in place when your bills come due, set up email or text reminders to pay every bill before its due date.

Sunday: Take a break!

Whew! It's been quite a week. Take Sunday to rest - after practicing good credit habits, the best thing you can do for your credit is be patient. Time lengthens your average age of accounts and allows negative items to eventually fall off your credit report. Kick back and relax knowing that you've spent the week improving your credit and enjoy reaping the rewards of your hard work.



The Right Ways to Split the Bill at a Restaurant
by Kiplinger


Dining out should be an opportunity to relax with friends, impress a client or bond with someone special, not fret over the protocol for paying and tipping. Here's how to handle three awkward situations.  


When I try to pay the check, I get an argument. If you have formally invited someone to join you for a meal (for example, "I want to take you out to celebrate"), you're the host-be prepared to pay. But if your guest insists on splitting the tab, accept the offer rather than argue.

When you're determined to treat someone for a special occasion, do some advance planning: Choose a restaurant you know well, arrive early and slip the waiter your credit card with instructions to charge the meal and gratuity to the card.

As the invitee, it doesn't hurt to offer (sincerely) to share the bill; most hosts appreciate the gesture, even if they plan to pay. If you get no for an answer, simply thank your host and say the meal is on you next time. Don't spoil a pleasant occasion by bickering over the bill.

For occasions such as a large birthday dinner at a restaurant that you're not planning to host, let guests know ahead of time that you're putting together a pay-your-own-way type of event, says Daniel Post Senning, spokesman for the Emily Post Institute. Keep your tone casual when spreading the word.


The group wants to split the bill evenly, but my meal costs less. Light eaters or sparing drinkers may resent having to subsidize their tablemates' lobster entrees or bottles of wine. If you're out with a regular group of friends and suspect you'll end up feeling stiffed, request a separate check from your server-but do so when he or she is taking your order, says etiquette expert Diane Gottsman. (Volunteer an explanation to your friends if you like, such as "I'm just having a salad tonight" or "I'm sticking with water this time.") Once everyone is throwing their credit cards down for the waiter to charge equally, you've missed the chance to bow out gracefully.


In other situations-especially business contexts-avoid the nickel-and-diming. "You run the risk of looking cheap," says Gottsman. Instead, be prepared to fork over your equal share and enjoy the group experience. 


I noticed my host left a terrible tip. Much as you might like to add to the tip yourself, "that's making a comment on the generosity of your host," says Post Senning. He advises dropping the issue altogether. If your conscience won't let you shortchange the waiter by proxy, however, walk out with your host and say good-bye, then discreetly return to make up the difference, advises Gottsman.