Feb 17 2016 Thinking Outside The Box On Home Loans

Dated: 02/17/2016

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Here is information about where the home loan industry is trending. It's time to consider buying and not renting!!

TransUnion, one of the three major credit reporting companies in the United States, turned the lending world on its ear in the summer of 2015, suggesting lenders increase volume through a monumental change – eliminating the traditional credit score.
You see, TransUnion noticed something interesting about young people and their ability to repay loans.
Millennials are actually seeking home loans at a higher rate than Gen-Xers (between 36 and 50) and Baby Boomers (over 50), but they are also being turned down at an exceptionally high rate.


But TransUnion's data suggests the typical Millennial borrower is low risk. The study found that younger consumers were a surprisingly responsible group, and those with student loans were no worse at managing their debt than people without it.
The youngest student debtors who also had credit cards and auto loans were actually less likely than rest of their age group to be 60 or more days late on payments.
The problem, the study suggested, was the entrenched credit scoring system of the Fair Isaac Corporation (FICO). Used since 1995 by both Fannie Mae and Freddie Mac, the system is heavily reliant on a borrower's record of previous monthly credit payment, rendering many young adults "credit invisible."
Today, 63 percent of people between 18 and 29 do not own a credit card, either from a bank or a store.
There are several reasons why: Banks have tightened credit availability since the Financial Crisis, and new laws restrict offering credit cards to people younger than 21.
But more than anything else, many young adults just aren't interested in credit cards: Seeing the problems of purchasing on credit, many choose to make no monthly payments at all, save rent and student loans. They are therefore more likely to have FICO scores under 660 than older groups.
So how surprising is the recent announcement that online lender SoFi is doing away with FICO scores, calling them "flawed and outdated?" 
SoFi will continue to offer its mortgage and other loan products to customers considering only employment history, track record of meeting financial obligations, and monthly cash flow minus expenses.
Alternative credit data from wireless providers, marketplace, or other online lenders might be more useful in predicting credit worthiness.
These age-based cultural differences are becoming increasingly integral to the home lending and real estate industries. Learning to market and sell them in a language Millennial consumers understand is key to the housing market's ongoing recovery.

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Amy Laidlaw

About Me BIOGRAPHY ~Seller’s Success Story~ How my client received 23% more for his home than his anticipated list price! I suggested adding $1,700 for granite counter tops in the kitchen ....

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