Higher Credit Scores Needed For Home Purchase

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Welcome to the 2018 home-buying market. Rising demand and an extremely tight supply of homes, especially in the critical starter-home market, make it difficult to realize your goal of home ownership.

In this buyer’s market, you’ll need two important things to land your dream home – more money and a higher credit score.

Data from the Joint Center for Housing Studies (JCHS) at Harvard University highlight the credit score issue. According to the 2017 JCHS study, “The State of the Nation’s Housing – 2017,” the median credit score for successful mortgage loan applications increased from a FICO score of 700 in 2005 to 732 in 2016. Lenders are still conservative in their risk assessments – aided in part by regulations put in place during the housing crisis.

In the pre-crisis market of 2005, around 10% of conventional first lien mortgages went to borrowers with a credit score below 620. That number fell to nearly zero by 2009, and as of 2016, it…

Who Lives At Home?

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We know the stereotype of the unmotivated millennial, living at home with their parents without any long-term plan or concern about their situation. Is that a fair representation? Do millennials disproportionately live with their parents? If so, is this from necessity, lack of motivation, or part of a grander strategy?

It’s logical that younger generations are more likely to live with their parents in a non-caretaker capacity, even in the best of times. Millennials suffered the added indignity of coming of age during one of the worst recessions in history while dealing with prohibitive student loan debt.

Previous information from the Pew Research Center found that in 2016 – after years of economic recovery – 15% of millennials surveyed still lived with their parents. That’s well above previous generations at that same point in their lives (10% for generation X, 11% of late ba…

Interest Rate Acronyms

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APR and APY – are they new texting acronyms? IDK, you say – or rather, you text? (For the benefit of the textually-challenged, IDK means “I don’t know.”) If you think they are texting acronyms, or just “DK” what they are, it’s time to learn.

APR and APY are financial acronyms, short for Annual Percentage Rate and Annual Percentage Yield, respectively. Both are interest rates, but they have a significant difference. APR does not address how interest is compounded – the default is the interest that you earn if you are depositing money, or pay if you are borrowing it – in one year. APY takes into account how often the interest is compounded.

If interest is compounded once per year, there is no difference between APR and APY – interest is added all at one time. However, let’s assume an interest rate is compounded monthly. In that case, the interest payment is divided up into twelve equal increments.

If you are earning interest on a deposit, that adds a sma…

How to Select the Best Business Bank – How to Choose the Bank Your Company Needs

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As a company owner, CFO or Controller, one of your most important tasks is to select the right business bank. It is easy to think that all banks are the same, but there are important differences in services, fees and culture. So it’s worth taking some of your valuable time to insure that the bank you select is the best fit for your business.

First, analyze the services you need from a bank. Here are some factors to consider:

Understanding Your Business Loan Options

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Lending institutions profit from helping businesses thrive. If you are concerned about your business simply surviving, or if there are indications of fundamental flaws in the business model, there may be too much risk for any outside investor to take on. Before you approach any financial institution for a business loan, there are several key documents you should develop and questions you should be prepared to answer. These must demonstrate who, what, when, where, how and why an institution would be making a sound investment by loaning money to your business. And, in the spectrum that ranges from failure to survival to a thriving business, you should develop these documents in such a way that the focus on thriving is front and center and well-articulated.

  • Who — Create executive profiles that provide detailed biographical information, education, past work history and major accomplishments for each key decision maker in your business. Because banks w…

Business Loans 101

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If you own a small business or intend to buy or start one, you will probably be borrowing money at some point — and possibly more than once. You may need money for startup costs, expansion, cash-flow management, disaster recovery, or any number of uses requiring operating funds and/or capital investment. Unless you have a money tree, trust fund or fairy Godmother, you may need a business loan to tide you over when cash is tight.

Typical types of small business loans include:

  • Standard Term Loans – A standard loan used for working capital. They may be secured (using company assets as collateral) or unsecured (based only on the credit rating of the business). Personal assets can be used as collateral for secured loans, but with obvious risk.
  • Startup/Acquisition Loans – Funds used to start up a business or acquire a business/franchise. To convince a lender, startup loans will often require a sound business pla…

Small Businesses Turn To Alternative Lending Sources

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As the qualifications for small business loans become more difficult to meet, many small business owners are looking for alternatives. Many have found that going with an online lender has advantages over banks and other traditional lenders, although there are some disadvantages as well.

One of the reasons small business owners are looking at online loans is because they can have their funds in hand quicker. Brick-and-mortar lenders often take more than a month to check a loan application, approve it, and transfer the money to the business. Online lenders, though, often approve loans in less than a week and have the money to the borrower in a day or less.

These lenders also may not look as closely at the applicant’s …

How Social Media Is Influencing Business Loans

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When applying for a loan, most small business owners assume they will be evaluated only on the information they supplied on their application, but that’s not always the case. In fact, when applying for a loan from an online lender, that lender often takes into account things such as the social media profile of the business before making a decision. Lenders with a physical location take a look at Facebook, Yelp, and other social media sites to better check a business loan applicant.

Lenders are looking at these profiles to get a better idea of where a small business stands. For example, a business with thousands of Facebook followers has a ready au…

Risks Businesses Take With Credit Cards

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Many businesses make use of credit cards for daily purchases, and some new small business owners even finance their entire business on credit cards in the beginning. A business can make use of various reward points and other perks to save money and build up its credit score, but there are some downsides to using business credit, too. Just as with individual credit cards, there are risks. Here are a few things a business needs to be wary of.

Multiple employees can have credit cards connected to the same account, making it easy for businesses with several employees who need to make regular purchases. However, these employees can abuse their credit cards by using them for personal purchases. The business is respons…