Looking to Buy a Home? Do This First
Buying a home is stressful enough without getting blindsided with a higher-than-expected rate on your mortgage — or outright rejection — due to a low credit score or errors on your credit report.
Even so, only half of recent home buyers said they checked their credit report early on in the homebuying process, according to a report released by Experian.
That can make for some nerve-wracked meetings with lenders. About a third of those surveyed said that their credit score surprised them, and a fifth of buyers said their score was lower than expected. Fourteen percent of homebuyers found something negative on their credit report that they didn’t know about.
Related: Why Your Credit Score Is the Most Important Number in Your Life
A low credit score can have costly consequences. A borrower with a FICO score of 760, for example, would pay $1,360 per month on a $300,000 loan, while a borrower with a score of 759 would pay $1,397 per month on the same loan. That difference will add up to more than $10,000 over the life of a 30-year mortgage.
Forty-five percent of future homebuyers surveyed by Experian said that they had delayed purchasing a home in order to work on their credit and qualify for better rates.
If your score is lower than expected, first check the report for errors and contact the credit bureaus about correcting them. If you’ve been dinged for a single missed payment, call your credit card company to see if it will remove the incident from your reports. Then focus on making on-time payments and paying down any high balances to get your debt-to-income ratio below 25 percent.
Coming Soon: Deductible Relief Day!
You may be familiar with the concept of Tax Freedom Day – the date on which you have earned enough to pay all of your taxes for the year. Focusing on a different kind of financial burden, analysts at the Kaiser Family Foundation have created Deductible Relief Day – the date on which people in employer-sponsored insurance plans have spent enough on health care to meet the average annual deductible.
Average deductibles have more than tripled over the last decade, forcing people to spend more out of pocket each year. As a result, Deductible Relief Day is “getting later and later in the year,” Kaiser’s Larry Levitt said in a tweet Thursday.
Chart of the Day: Families Still Struggling
Ten years into what will soon be the longest economic expansion in U.S. history, 40% of families say they are still struggling, according to a new report from the Urban Institute. “Nearly 4 in 10 nonelderly adults reported that in 2018, their families experienced material hardship—defined as trouble paying or being unable to pay for housing, utilities, food, or medical care at some point during the year—which was not significantly different from the share reporting these difficulties for the previous year,” the report says. “Among adults in families with incomes below twice the federal poverty level (FPL), over 60 percent reported at least one type of material hardship in 2018.”
Chart of the Day: Pragmatism on a Public Option
A recent Morning Consult poll 3,073 U.S. adults who say they support Medicare for All shows that they are just as likely to back a public option that would allow Americans to buy into Medicare or Medicaid without eliminating private health insurance. “The data suggests that, in spite of the fervor for expanding health coverage, a majority of Medicare for All supporters, like all Americans, are leaning into their pragmatism in response to the current political climate — one which has left many skeptical that Capitol Hill can jolt into action on an ambitious proposal like Medicare for All quickly enough to wrangle the soaring costs of health care,” Morning Consult said.
Chart of the Day: The Explosive Growth of the EITC
The Earned Income Tax Credit, a refundable tax credit for low- to moderate-income workers, was established in 1975, with nominal claims of about $1.2 billion ($5.6 billion in 2016 dollars) in its first year. According to the Tax Policy Center, by 2016 “the total was $66.7 billion, almost 12 times larger in real terms.”
Chart of the Day: The Big Picture on Health Care Costs
“The health care services that rack up the highest out-of-pocket costs for patients aren't the same ones that cost the most to the health care system overall,” says Axios’s Caitlin Owens. That may distort our view of how the system works and how best to fix it. For example, Americans spend more out-of-pocket on dental services ($53 billion) than they do on hospital care ($34 billion), but the latter is a much larger part of national health care spending as a whole.
