Lower Rates and Better Loan Processing Decrease Default
Great News for Home Buyers
We have great news for Home Buyers! Lower Interest Rates and Better Loan Processing Procedures have produced the lowest national level of mortgage loan defaults since levels last seen prior to the Great Recession, according to the CoreLogic Economic Outlook. Corelogic also expects the current 3.1% of delinquent loans to drop even further to 2.5% by the end of the year.
When a FICO® Score is calculated from a consumer's credit report, the credit reporting agency will also provide up to five reasons that are most heavily influencing that particular score. These reasons are usually negative. Obviously, they are the reasons why the credit score isn’t higher and why the consumer usually does not get funding for their loan. Consumers are not always aware of what things affect their rating. They may not have seen a recent copy of their report recently. When the lender requests the reports and find inconsistencies, delinquencies, etc., many consumers may not even be aware that they have a bad or incorrect credit report.
So what does this mean to all the REALTORS trying to get people on board to buy or sell? Bad or insufficient credit means that you have a goldmine sitting there just waiting to be mined! How hard can it be to get listings and make sales when the outlook is so great? Banks are now lending money and valuing properties based on real figures which means somewhat risky buyer's applications will be reviewed thoroughly so the buyer is not put into a position that they cannot afford a home.
If your client does not qualify for their mortgage, keep them as your client by helping them to understand what steps they need to take to improve their finances to be able to qualify for a loan when everything is under control. Your first thought might be to say, "Oh well, they can't afford to buy a home. So Long!" But your response should be, about understanding that "they will be in a better place in 1-3 years and they will make excellent buyers because they appreciate everything I have done for them to help get them back on their feet!" When interest rates are as low as they are and the inventory is not as high, it is still possible to get these "at risk" buyers into a mortgage that fits but it's best to be certain that they won't be underwater in a year due to changes in life or jobs. This happens. Not all lenders will have a solution for every consumer. But you will probably have an understanding of your client's position. Did they just overspend on their credit cards or did they just not make their payments and why.
The biggest incentive for a consumer to clean up their credit is usually to live the dream of becoming a homeowner. With a little guidance, YOU can help make that happen.
Download my Twelve Tips to Improve Your Credit today and share this information with your buyers. There are 12 easy to follow steps to a better credit rating. Once you have given them the report, put them on your drip email campaign. This keeps you in front of your client. You are a guide to remind them to remain diligent and to remind them there is a light at the end of the tunnel. Let them know that light is the front patio light of their new home!
Unfortunately, foreclosures will continue to occur as job loss, illness, and home-value declines will affect some borrowers. During the first three months of 2016, about 70 percent of loans that began foreclosure proceedings were originated prior to 2009. However, these loans account for only 30 percent of loans currently outstanding. Careful attention in underwriting and valuation of homes and interest rates will never eliminate foreclosures. But the closer attention to detail has made it better for consumers!