1. ‘Closing an old account will help my credit’
This might be one of the most common misconceptions around how unused accounts, like credit cards, can impact creditworthiness. One of the main factors that lenders look at when reviewing your clients’ credit history is how long accounts have been open. They typically average all current and past accounts to get an average length of time. The longer your credit history, the better. By closing an old account, you are effectively reducing the impact that individual account may have on your overall credit history. Instead of closing the account, keep it open.
2. All debt is treated equally
Since all debt carries a monetary value, it might make sense that all debt is the same. However, this is not the case.
Lenders look at the specific type of debt to better understand the risk associated with it. Short-term accounts, like credit or charge cards, are considered more risky if the account has a high amount of revolving debt. This is due, in part, to the requirement that credit cards be paid off monthly.
In contrast, a 30-year mortgage is understood to be a long-term debt and is treated as such. Therefore, just because your clients have a car loan with a high balance remaining, does not mean that it will hurt their credit as much as a credit card that is maxed out.
3. ‘Credit repair companies can help improve my credit’
The old adage of “if something is too good to be true, it probably is” couldn’t be more accurate in this example. Buyers have become increasingly interested in getting help establishing or repairing their credit. Companies such as Credit Karma, Credit Sesame, and even the major three credit reporting companies such as Equifax, Experian and TransUnion offer ways to improve or “boost” credit. However, these companies can only assist you with creating a plan to pay down or consolidate debt. They cannot magically make or reduce the amount of debt a person has — this can only be done by paying off an account.
Instead of paying a company to put this plan together, homebuyers can create a spreadsheet with their recurring expenses along with their monthly income to visualize and plan for what debts can be paid down over a period of time.
4. ‘Paying off a collection or debt removes it from my credit report’
Undeniably false. In fact, a derogatory mark like a collection or missed payment can stay on your credit report for up to seven years. While paying this off will stop future attempts by the collection agency or banking institution to collect on the debt, there is no way to remove a derogatory mark from your credit report unless it was reported incorrectly due to fraud or identity theft.
5. ‘My relationship status or divorce is reflected on my credit report’
Information like income, employment and relationship status are not reported to credit bureaus. Questions regarding this information will likely be asked during the credit application process in conjunction with the review of your credit score.
For baby boomers, the question of when—and where—they'll retire is a perennial topic of discussion. But with the novel coronavirus sweeping the globe, it has become an especially pressing question these days.
Many are feeling the pressure to ramp up their decision-making and act fast—between concerns over COVID-19 contagion, rampant layoffs, and new rounds of self-reckoning where they ponder "Why wait to realize my dreams?" Many believe that the time is now to make real estate decisions they've been putting off.
'COVID-19 convinced me to move to my retirement home early'
David, 66, who lives in Boston, thought he’d stay a New Englander for a few more years. But the COVID-19 pandemic galvanized his long-simmering plans to head south.
“I grew up in Georgia and miss some aspects of Southern life, including the weather,” he explains. "That becomes a bigger deal every year. But I wanted to keep earning as much as I could until age 70, the way you’re supposed to if you want the biggest Social Security income.”
However, since he works in fundraising for an arts organization, he’s seen his work hours dramatically reduced since COVID-19 came to town. “Our organization came to almost a full stop, and, while still employed, I took a significant salary cut," he says. "And the fact that the arts will be among the last areas to reopen in hard-hit states makes me think my work life is over.”
David chooses to look at this as a glass half-full.
“It's a sign to move on to the next phase of life,” he says. "I've been talking about buying a little, cheap, beach-bum place in Florida for years. Now, I'm ready. This virus has brought me face to face with my mortality. The time to realize my dreams is now. There are no guarantees."
He is actively searching online for a cottage or condo near the water in the vicinity of Tallahassee, FL. Working with a local real estate agent, he’s doing virtual walk-throughs on FaceTime. While he's not sure if he'll actually buy a house sight unseen, he's excited to be laying the groundwork for the next phase of his life.
"The idea of having a laid-back life, listening to the surf, going fishing in Florida, that will be heaven! For me, this tragedy has a silver lining.”
In 2012, Woodley Architectural Group, which serves Southern California and Denver, designed two BUILDER concept homes, one for boomers (Gen B) and one for younger entry-level buyers (Gen Y). Empty nesters loved the smaller, open home without a formal dining room or guest room that had been designed for entry-level buyers. That project taught him that boomers and millennials have virtually the same needs. For perhaps the first time ever, similarities between a parental generation and the generation it raised far outweigh the differences. They mingle at concerts, over craft beers and cocktails, on bike paths and hiking trails. They’re all foodies. AND: Boomers are in the process of downsizing and getting rid of junk, and millennials don’t have junk. “Neither wants a big yard, but they both want a place for a dog!
We think that the home building industry has focused too heavily on meeting the needs of over-50 buyers while largely ignoring millennials. Builders are finally starting to get that they need to build a different kind of home! Today’s Boomers are looking for different things than in the past. A lot of the things they want—walkable communities, natural light, open space, outdoor living—are also very important to Generation Now.
Excerpted from Builder News: Boomers Move in on Millennial Building Stock!