What You Should Know About Credit Inquiries

Any time your credit report is reviewed, a credit inquiry is automatically added to your report. Your personal credit report lists all these inquiries for two years. There are two main types of credit inquiries: a hard inquiry, also called a hard pull, and a soft inquiry or soft pull. There are also personal credit inquiries.

Applying for credit or doing something that requires a credit check, such as applying for phone service, renting, or possibly taking a job, triggers a hard pull. Establishing business credit for the first time will do this. A hard inquiry reduces your credit score by up to five points, albeit usually for a short time. Sometimes multiple inquiries within a short period, such as looking for the best rates for auto insurance or a mortgage over 30 days, counts as only a single hard inquiry. Be cautious about multiple hard pulls in a short time, though. Lenders can see hard inquiries on your report and tend to interpret this behavior as high risk.

When you receive a pre-approved credit offer, chances are there was a soft inquiry on your credit report. Businesses use these to know your credit score for promotional information, as do banks and lenders to review your account to see if you qualify for new offers. These usually happen without your knowledge, though you can see them on your personal credit score. Fortunately, others cannot see them and they have no effect on your credit score.

A personal credit inquiry is how you see all the information about your credit report. Your credit score and all inquiries, hard and soft, are visible to you at any time, and you can request your report for free once per 12 months at https://www.annualcreditreport.com/index.action. This is a good idea before applying for credit and also periodically to make sure it’s accurate and up to date. Visit the credit reporting agency’s website if you encounter an error.

More: https://www.sba.gov/blogs/credit-inquiries-what-you-should-know-about-hard-and-soft-pulls

What to Expect in 2019

2018 began with very high prices, at historical lows for interest rates, and in a seller’s market. That’s shifted in the last few months, with price growth dwindling, high interest rates, and the beginnings of a buyer’s market. Here’s what a few experts are predicting that means for 2019.

Aaron Terrazas, Zillow’s director of economic research, expects mortgage rates to continue rising. Despite the rate of growth, they’re still low for the current state of economy. Terrazas predicts a 30-year fixed rate of 5.8% in 2019, not seen since the recession in 2008.

First American senior economist Odeta Kushi and chief economist of Realtor.com Danielle Hale both predict increased demand among millennials. Many millennials will be reaching the age of homebuying and getting eager to buy at the same time that other segments of the population are hesitating in the face of high interest rates. While both believe millennials will make up a large percentage of buyers, Kushi is expecting many to be first-time buyers, while Hale thinks first-time buyers will struggle financially, so most of them will be older millennials.

More: https://www.forbes.com/sites/alyyale/2018/12/06/2019-real-estate-forecast-what-home-buyers-sellers-and-investors-can-expect/#394829fb70d9

Looming Trade War Portends Economic Downtrend

The US plan to start a trade war with China is bad news, predict economists and management experts at UCLA. This year saw a GDP growth of 3%, which President Trump optimistically expects to rise by 4-6% going forward. According to the experts, though, over the next two years, the rate is expected to drop to 2% and then 1%.

Job growth is predicted to dip from 190,000 per month to 160,000 per month by 2019 then fall off dramatically in 2020 to 40,000 per month. While the expected rate of unemployment is 3.5% in 2019, a fifth of a percent lower than the current rate of 3.7%, by the end of 2020 it could rise again to 4%.

The worry of the UCLA team of economists is that recent attempts by businesses to invest while interest rates are low to profit later will cause them to carry more debt than expected as trade tensions rise. Furthermore, it’s not just these businesses but the whole economy that will suffer because of rising prices coupled with slower growth.

More: https://www.latimes.com/business/la-fi-economic-forecast-ucla-20181205-story.html

New Homeowner’s Insurance Laws

Four new California laws will be taking effect soon aimed at helping homeowners to find and take advantage of homeowner’s insurance:

  • Under AB 1875, the Department of Insurance will need to provide an online searchable database of insurance agents and brokers, which will be called the California Home Insurance Finder. It is to be updated annually, and the Department of Insurance has until July 1, 2020 to get it working and up to date. Also after this point, insurers will be obligated to inform denied applicants of the Finder.
  • SB 894 provides for extended insurance coverage after a disaster or state of emergency. Currently, insurers are only required to renew insurance once. After July 1, 2019, insurance must be renewable for at least 24 months, or the next two annual renewal periods if that is longer. In a state of emergency, insurance will need to provide for additional living expenses for at least 24 months, possibly extended by unavoidable delays in construction.
  • AB 1797 comes into effect July 1, 2019 and will require property insurance providers to provide an estimate of the cost to replace a property when offering replacement cost coverage, updated every other year at the time of renewal. However, if the owner has increased their coverage within the last 2 years, this requirement doesn’t apply.
  • AB 1772 increases the time limit to collect the first insurance payment to replace destroyed or lost property during a state of emergency from 24 months to 36 months. Though this change is effective immediately, insurance providers have until July 1, 2019 to update their policy forms.

More: http://journal.firsttuesday.us/homeowners-insurance-changes-in-2018/65856/

Property Improvements on the Rise

Due to home prices having increased faster than wages, homeowners right now don’t feel that they’re in a position to sell to buyers who can’t afford their homes. So instead, they’re preparing to sell in the future, with renovations, maintenance, and additions. As of October, expenditure on such investments to one’s existing home increased by 2.9% during the prior 12 months.

One particular type of addition that’s gaining popularity fast is the accessory dwelling unit, or ADU. Also called granny flats, these structures are designed to house either renters or family members on the property, but not in the main building. As a result of recent law changes, California has seen the most growth in ADUs, reaching a 54% increase from 2017 to 2018.

More: https://magazine.realtor/daily-news/2018/11/19/more-homeowners-add-adus-other-improvements

Conforming Loan Limit to Go Up Next Year

Beginning in 2019, Fannie Mae and Freddie Mac will increase their conforming loan limit by 6.9%, matching the percentage increase in average home values nationwide. In most of the country, the limit will be $484,350, higher in more expensive areas.

Besides conforming loans, there are also jumbo loans — those that do not conform to this limit. While these are currently cheaper than conforming loans, it’s much easier to qualify for a conforming loan. And the difference in price isn’t much, on average: an annual rate of 5.01% on conforming and 4.9% on jumbo mortgages. However, in more expensive areas, such as California’s Bay Area, 39.5% of loans were jumbo loans in September, as a result of a median price of $815,000. The new limit of $726,525 for them still won’t reach the median with the minimum down payment of 5%, but Fannie Mae and Freddie Mac hope to take that percentage down.

More: https://www.sfchronicle.com/business/networth/article/Buyers-can-get-a-little-more-house-with-a-Fannie-13426148.php