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Economics

Why millennials are putting home purchases on hold (and a millennial’s view on the fix)

New study shows Millennials are putting their lives on hold because of one common factor. Have you done it? If so, can it be fixed?

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millennials student loans

A college education is a dream for many individuals; whether you want to further your career, forge a new path, or just expand your mind, college is one way to do this. However, higher education comes with a price tag and many millennials are finding out the cost may be too high, not only financially, but personally as well.

Fully 45 percent of Americans with student loans and 56 percent of those between the ages of 18 to 29, have put off a major life event because of the burden of that debt. A new study may have the answer as to why so many millennials are struggling: more than half of the students surveyed (2/3 of this group being millennials), stated they did not receive enough information, or advice, regarding the financial risks of a college education.

Millennials are putting off major purchases

Millennials state they put off buying a new home, new car, and even getting married, due to the burden of student loan debt.

Experts say it doesn’t have to be this way.

They suggest that instead of putting life on hold, millennials should seek out a financial professional to put together a plan that shows how to allocate money toward debt reduction while also saving for your life goals (vacation, retirement, new car, etc.). Millennials may also want to consider consolidating debt with a private lender to get a lower rate. If one has a federal loan, they may want to consider using the income-based method to save money, while those in the public sector can take advantage of the program that allows loan forgiveness after ten years of employment.

Millennials, what can you do about this?

So what can you do to prevent seemingly insurmountable student loans? Know and explore your options. There are scholarships, grants, work programs, and other financial opportunities for those in need. You should fill out the FAFSA (Free Application for Federal Student Aid), even if you think your won’t qualify.

Also, consider completing your “basic” classes at a community college. Most community college are cheaper and offer a way to quickly complete the necessary requirements without breaking your budget. If you go this route, make sure to speak with the academic counselor at your preferred college to ensure these credits will transfer, otherwise you may wind up spending more money to retake the courses.

Why are millennials in such bad shape?

Why are millennials in the worst shape when they have been afforded the greatest access to technology? I’m not sure. As the study stated, in part, I am sure, they were not properly advised regarding loan rates, plans, and other financial opportunities. Also, they were probably not warned about the repercussions of taking out more money than you actually need.

Sure, it’s nice to have extra money for parties and vacations with your friends, but do you really want to pay off that trip to Cabo for the rest of your life? Wouldn’t you rather wait until you’re done with school and can afford the trip on your own? If financial advisers phrased thing like this, students would be less likely to take out more money than they needed.

Most college students taking out loans are fresh out of high school. They are finally getting a taste of freedom and the all-too-available loan is a little bit too tempting for some. For others it is a necessity, but they were not aware they had the option to shop around for the best rate, instead of accepting what the institution was offering at the time.

My take on my generation

I am the first person in my family to graduate from college. When I graduated high school, I knew nothing about the process, but I researched it. I went to the library to find out the bulk of what I needed; the rest I found out by asking other people. I learned about financial aid by speaking with an adviser at my college. Perhaps the problem millennials are having is not one of financial responsibility, but one of communication.

Better communication leads to a better understanding of what is expected and in a world where you can send a text message and get groceries delivered to your door, communication is quickly becoming an archaic skill. The bottom line: don’t be afraid to ask questions. It’s your money, your life, your education, and you want to get the most out of everything. You cannot do that by sending a text message, or accepting what one person tells you.

Do you research, have a plan, and conquer the education system without fear, regret, or putting your life on hold because your financial adviser is pushing you into something that sounds good, but could change your life (positively, or negatively) for the next twenty years and beyond.

#Millennials

Jennifer Walpole is a Senior Staff Writer at The American Genius and holds a Master's degree in English from the University of Oklahoma. She is a science fiction fanatic and enjoys writing way more than she should. She dreams of being a screenwriter and seeing her work on the big screen in Hollywood one day.

Economics

Why it’s about to get more expensive to get a mortgage

(FINANCE) Borrowing money is getting more expensive, especially for those looking to get a mortgage. But why?

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bonds and mortgages

Although there have been some blips, bonds have grown substantially in value since the 1980s. They’ve performed extremely well for a number of reasons, not least of which is the big slowdown in inflation over that time period.

The result, for investors, has been that anything “bond-lik,e” i.e. capable of paying a regular income – like a high-dividend stock or even a property like your home – has shot up in value. A reversal of bond prices would mean less support for such investments.

That’s what the economy is currently experiencing. According to Financial Times, American worker wage growth is hastening the sell-off of bonds by the US government, which is decreasing the overall price of bonds. As bond prices go down, the interest rates that they offer new investors go up. That rate jumped to 2.85 percent last Friday, the highest level since 2014.

Since the rates at which banks lend their money are largely based on the interest rates offered by bonds, regular folks looking to take out a mortgage or a loan are facing higher costs.

How does this work?

If we’re talkin’ bond prices, we’re talkin’ yield. When the price of a bond goes up, the yield of that bond goes down! Let’s say you’re getting paid $5 each year. If you pay $50 for that right, then you’re making a 10% “yield” (5/50 = 10%). But if you pay $100 for that right, then you’re making a 5% “yield” (5/100 = 5%).

It’s the same thing with the price of a bond because the amount a bond investor gets paid (usually) is fixed. And so, when the bond goes up in value, the “yield” goes down – and vice versa.

For realtors, its important to help clients shop for the best rates to improve their confidence in this market. Leveraging the right online and local financing resources can help potential buyers get the best deal. Explaining broader market context is also critical. Historically, a three percent interest rate is still very low.

According to Investopedia, mortgage rates averaged 7.81% in 1996 and 10.19% in 1986. Instilling confidence with information will put buyers and sellers in the right place to make moves.

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Economics

How does this soft jobs report impact the housing market?

(REAL ESTATE NEWS) When we see a soft jobs report, does that hurt or help the housing market? We talk to two economists about it.

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In a year of political uncertainty, the release of any jobs report is polarizing. Political figures and armchair policy wonks will read into the data as they wish, but not housing economists.

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That’s who we look to in these times, because we all know that jobs is the cure-all for a recovering economy, but payroll growth slumped in September as the U.S. Labor Department reports that employers added only 156,000 jobs.

This fell short of the 172,000 originally projected by economists surveyed by Bloomberg.

Hidden positives in the report

Dr. Ralph McLaughlin, Chief Economist at Trulia said, “While the September jobs report came in below expectations, the continued addition of jobs to the US economy will help buoy demand for homes, both on the for-sale and rental side of the market.”

He observed another positive hidden in the Labor Department result. “In addition, wage growth kicked up again, which will help bolster the savings of first-time homebuyers trying to scrape together a downpayment.”

Real estate remains unchanged

“Given no major surprise in the data, the national outlook for real estate market remains essentially unchanged, with home sales expected to squeak out slight gains in 2016 and 2017 while commercial building vacancy rates should continue to fall,” said NAR Chief Economist, Dr. Lawrence Yun.

Yun adds that “we should note that men have been underperforming as 68.4% of adults have jobs, down from historic norm of around 75%. Meanwhile, 55.8% of women have jobs, roughly matching the historic norms.”

Pointing out that the data is being “digested” through the perspective of the upcoming election, Dr. Yun notes that, “among men, those with a college degree 72% of adults are working while only 54% of those with only a high school degree are working.”

Dr. Yun observes, “There will surely be a big divergent voting patterns among men versus women and among those with college education and those without in November.”

#jobsVhousing

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Economics

Mortgage companies hiring time travelers to uncover missing documents?

(MORTGAGE NEWS) – Mortgage companies are hiring for an interesting new position that may speak to their role in the economic crash of 2008.

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During the Great Recession of 2008, it’s been estimated that around seven million Americans lost their home. Many of the homes that went into foreclosure did so because people lost their jobs, and just gave up on their home. In some, people got kicked out based on false documentation, faulty paperwork or just downright illegal mortgage servicing. Numerous lawsuits have been filed and won by homeowners who were wrongfully evicted.

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In California, in Yvanova v. New Century Mortgage Corporation, the California Supreme Court ruled that plaintiffs held the right to contest foreclosures when documentation (in this case, a mortgage transfer that was allegedly void) was not handled correctly. The Court didn’t determine validity of the document in Yvanova’s case, just that she had the right to contest the foreclosure.

New jobs in mortgage documentation

According to David Dayen, who wrote Chain of Title, this phenomenon has brought new jobs to the market. Career Builder lists a job for a “Default Breach Specialist” posted by a recruiting firm in Jacksonville, Florida. The primary characteristics for this position:

“The Default Breach Specialist responsibilities include ensuring all breach letters are issued as required by investors, insurers and/or State Law.  Responsible for ordering title, reviewing title and all security documents to identify missing assignments needed to complete the chain of title prior to foreclosure referral.”

Seeking time travelers

According to Dayen, all the assignments of mortgage should have been prepared and recorded at the time of the sale or transfer. He questions why any mortgage company would need to order these documents.

In Yvanova’s case, it’s alleged that the mortgage was not converted into the trust in a legal fashion. In many of the cases involving foreclosure, third parties were hired to produce the paperwork that conveyed a mortgage into the trust. Dayen alleges that many of these companies “mocked up” documentation.

Although it is possible that the mortgage company is simply looking for someone to make sure everything is in the case file, it’s also possible (some would say highly likely) that some documents may never be found because they don’t exist.

The failure to follow the law as it pertains to property records is so bad that companies are now hiring chain of title specialists to manage the problem. This does not put the real estate industry in the best light.

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