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Hire Your Agent: When you’re looking for a real estate professional to help you, know that above all else, good agents put their clients first. This is your dream, and your agent is your advocate to help you make your dream come true.

A great real estate agent will:

1. Educate you about the current conditions of the market.
2. Analyze what you want and what you need in your next home.
3. Co-ordinate the work of other needed professionals throughout the process.
4. Guide you to homes that fit your criteria and budget.
5. Negotiate on your behalf to get you the best deal possible.
6. Check and double-check paperwork and deadlines.
7. Inform and discuss with you, and suggest solutions to solve any problems that may arise.

Keeping Score: Credit rating tips for home buyers.

As a rule, lenders are looking for FICO¹ scores over 650 and the best interest rates are reserved for buyers above 760. Just one 3-day-late payment can throw a score off by as much as 50 points.

Aggravating the situation, nearly 80 percent of all credit reports have errors. Consumers are responsible for finding any mistakes and disputing them with credit reporting agencies.

Credit Score Components

A buyer’s payment history compromises the biggest part of their credit score (35 percent). But it’s not the only piece of the puzzle.

The amount a consumer owes is viewed in relative, rather than absolute, terms. For example, if someone has four credit cards all approaching their credit limit, they will be viewed unfavorably compared to an “identical” consumer who owes the same amount of money, but only using 25 percent of their credit line.

This concept is termed credit utilization (CU). Specifically, CU is defined as a borrower’s outstanding balance divided by their credit limit. Typically, the algorithm is looking for a CU below 30 percent; less than 15 percent is considered ideal.

Five Common Mistakes

1. Closing old accounts.
2. Paying off old debt.
3. Opening new credit lines.

While it may be tempting to accept a retailer’s offer of free financing on the new refrigerator, washer and dryer a buyer needs for the home, they should wait until after closing day. In fact, buyers need to avoid any actions that alter their credit picture after they’ve applied for a mortgage but before the transaction has closed. Even pre-approved buyers are subject to a lender’s second review of their credit score prior to closing.

4. Assuming you know your credit score.

Each credit bureau and related credit-reporting company uses their own algorithm to establish a credit score. As a result, a consumer’s so-called soft inquiry can generate a different number than the actual FICO score a mortgage lender sees.

5. Credit line increases/decreases
6. Credit Repair Solutions

Buyer’s agents can help buyers move closer to home ownership by researching these resources and providing contact information for qualified specialists in your area.

How to stop Credit Solicitations:

Want to prevent companies from accessing information about you through credit bureaus, then soliciting you with preapproved credit or insurance offers? Go to Optoutprescreen.com

Where you can elect to opt in or out of receiving these offers.

The price of 100 points:
620 vs. 720

Based on early-2012 interest rates, a mortgage applicant with FICO score of 620 will be offered, on average, a $300,000 mortgage, the difference in total cost would be $91,080.

Payroll job gains of 678,000 imply a move away from an easy monetary policy and a focus on containing inflation. The Federal Reserve will be raising interest rates this month and beyond. The employment gap between current conditions and pre-COVID days is narrowing, with only 2.5 million more jobs needed to get there.

Employment in the oil sector is still down by 9,000 compared to pre-COVID days, so expect high oil prices for some time. Inflation is already high at 7.5%, and the latest wage gain (only 5.1% in February) is not catching up.

More housing inventory will show up later in the year because jobs in residential construction and for general contractors have been steadily rising. There are 314,000 more workers now compared to March 2020. It is a different story in commercial real estate, however, as there are 136,000 fewer workers in the sector and office buildings still remain mostly empty.

It appears many Americans took early retirement, as the labor force participation rate is a full one percentage point below what it was before COVID. That also means some have become Realtors®. The industry is fiercely competitive.

Although mortgage rates dropped below 3% in 2020, not everyone had the same opportunities to get a home loan and benefit from these low rates. Data shows that Black home buyers and owners face extra challenges in getting a mortgage. Denial rates vary significantly by race/ethnic group, with Black Americans having the highest denial rates for purchase and refinance loans. According National Association of Realtors analysis, Black applicants are twice as likely to be denied for a mortgage compared to their White counterparts. While the main reason a mortgage lender rejected their application is the debt-to-income ratio, Black home buyers reported that they also were rejected due to a low credit score. Parsing out by the purpose of loan, denial rates for Black Americans are even higher for home purchase loans. According to the Home Mortgage Disclosure Act (HMDA), nearly 27% of the loan applications for a home purchase were denied compared to 20% which is the denial rate for refinancing.

At the local level, the denial rate is disproportionately high for Black homeowners and buyers in those states with high concentrations of Black households. Low income seems to be the main reason that more Black households were denied mortgages in these areas. Specifically, in the top 10 states with the highest denial rates, the median income of Black applicants was $62,990 on average. For instance, the median income for Black households was $51,760 in Mississippi, which was the state with the highest denial rates in the country. However, as income increases, denial rates drop. In the top 10 states with the lowest denial rates for Black households, the median income of those applicants was $81,440. For example, the median income of Black households that applied for a mortgage was $102,830 in Hawaii, the state with the lowest denial rates for Black households.

Home Buyers and Fair Housing
Additionally, recent buyers were asked if they had experienced or witnessed discrimination during their real estate transaction. Looking at ways recent home buyers witnessed or experienced discrimination in a real estate transaction, the most common was being steered toward or away from specific neighborhoods, which was reported at higher rates compared to the previous year. We saw 50% of Hispanic/Latino, 48% of Asian/Pacific Islander, and 46% of Black/African American buyers reported steering toward or away from specific neighborhoods. This is compared with the 2021 report where 34% of Hispanic/Latino, 28% of Asian/Pacific Islander, and 30% of Black/African American buyers reported steering toward or away from specific neighborhoods. This year we added the option for “appraisal of home” as a possible discrimination that could be witnessed or experienced. Nine percent of Asian/Pacific Islander, 6% of Hispanic/Latino and White/Caucasian, and 5% of Black/African American buyers reported witnessing or experiencing discrimination through a home appraisal.

In the meantime, during the pandemic, rising home prices and low housing supply have disproportionally impacted Black households more than any other race/ethnic group. According to our “Double Trouble” report, White households are 40% more likely to be able to afford to buy a home compared to Black households. Nationwide, households with incomes of $100,000 or more can afford to buy at least roughly half the homes that were listed for sale. But, while 35% of White households have that income, only 20% of Black households do. So, due to lower income, affordability for Black households is the lowest compared to any other race/ethnic group. For instance, the affordability score in the District of Columbia is 1.4 for White households but only 0.5 for their Black counterparts. Respectively, the affordability score for White households is 1 in Wisconsin compared to 0.6 for Black households.