We all know by now that this is a great time to buy, and it should remain that way for a few months anyway, but you need to be sure you are ready to buy! Go to www.annualcreditreport.com and you can get your credit score, and there are some things you can do to be proactive about it.
5 Factors That Decide Your Credit Score
Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage. The following factors affect your score:
1. Your payment history. Did you pay your credit card obligations on time? If they were late, then how late? Bankruptcy filing, liens, and collection activity also impact your history.
2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it’s a good thing if you have a good proportion of balances to total credit limits.
3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer's oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.
4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.
5. The types of credit you use. Generally, it’s desirable to have more than one type of credit — installment loans, credit cards, and a mortgage, for example.
For more on evaluating and understanding your credit score, visit www.myfico.com.
Monday, March 30, 2009
Thursday, March 26, 2009
Specialty Mortgages: Risks and Rewards
In high-priced housing markets, it can be difficult to afford a home. That’s why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them “stretch” their income so they can qualify for a larger loan.
But before you choose one of these mortgages, make sure you understand the risks and how they work.
Specialty mortgages often begin with a low introductory interest rate or payment plan — a “teaser”— but the monthly mortgage payments are likely to increase a lot in the future. Some are “low documentation” mortgages that come with easier standards for qualifying, but also higher interest rates or higher fees. Some lenders will loan you 100 percent or more of the home’s value, but these mortgages can present a big financial risk if the value of the house drops.
Specialty Mortgages Can:
· Pose a greater risk that you won’t be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
· Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
· Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.
Common Types of Specialty Mortgages:
· Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the “principal”). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
· Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan’s principal amount, causing the total amount you owe to increase each month instead of getting smaller.
· Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.
· 40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.
Questions to Consider Before Choosing a Specialty Mortgage:
· How much can my monthly payments increase and how soon can these increases happen?
· Do I expect my income to increase or do I expect to move before my payments go up?
· Will I be able to afford the mortgage when the payments increase?
· Am I paying down my loan balance each month, or is it staying the same or even increasing?
· Will I have to pay a penalty if I refinance my mortgage or sell my house?
· What is my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?
Be sure you work with a REALTOR® and lender who can discuss different options and address your questions and concerns!
Learn about the NATIONAL ASSOCIATION OF REALTORS® Housing Opportunity Program at www.REALTOR.org/housingopportunity. For more information on predatory mortgage lending practices, visit the Center for Responsible Lending at www.responsiblelending.org.
In high-priced housing markets, it can be difficult to afford a home. That’s why a growing number of home buyers are forgoing traditional fixed-rate mortgages and standard adjustable-rate mortgages and instead opting for a specialty mortgage that lets them “stretch” their income so they can qualify for a larger loan.
But before you choose one of these mortgages, make sure you understand the risks and how they work.
Specialty mortgages often begin with a low introductory interest rate or payment plan — a “teaser”— but the monthly mortgage payments are likely to increase a lot in the future. Some are “low documentation” mortgages that come with easier standards for qualifying, but also higher interest rates or higher fees. Some lenders will loan you 100 percent or more of the home’s value, but these mortgages can present a big financial risk if the value of the house drops.
Specialty Mortgages Can:
· Pose a greater risk that you won’t be able to afford the mortgage payment in the future, compared to fixed rate mortgages and traditional adjustable rate mortgages.
· Have monthly payments that increase by as much as 50 percent or more when the introductory period ends.
· Cause your loan balance (the amount you still owe) to get larger each month instead of smaller.
Common Types of Specialty Mortgages:
· Interest-Only Mortgages: Your monthly mortgage payment only covers the interest you owe on the loan for the first 5 to 10 years of the loan, and you pay nothing to reduce the total amount you borrowed (this is called the “principal”). After the interest-only period, you start paying higher monthly payments that cover both the interest and principal that must be repaid over the remaining term of the loan.
· Negative Amortization Mortgages: Your monthly payment is less than the amount of interest you owe on the loan. The unpaid interest gets added to the loan’s principal amount, causing the total amount you owe to increase each month instead of getting smaller.
· Option Payment ARM Mortgages: You have the option to make different types of monthly payments with this mortgage. For example, you may make a minimum payment that is less than the amount needed to cover the interest and increases the total amount of your loan; an interest-only payment, or payments calculated to pay off the loan over either 30 years or 15 years.
· 40-Year Mortgages: You pay off your loan over 40 years, instead of the usual 30 years. While this reduces your monthly payment and helps you qualify to buy a home, you pay off the balance of your loan much more slowly and end up paying much more interest.
Questions to Consider Before Choosing a Specialty Mortgage:
· How much can my monthly payments increase and how soon can these increases happen?
· Do I expect my income to increase or do I expect to move before my payments go up?
· Will I be able to afford the mortgage when the payments increase?
· Am I paying down my loan balance each month, or is it staying the same or even increasing?
· Will I have to pay a penalty if I refinance my mortgage or sell my house?
· What is my goal in buying this property? Am I considering a riskier mortgage to buy a more expensive house than I can realistically afford?
Be sure you work with a REALTOR® and lender who can discuss different options and address your questions and concerns!
Learn about the NATIONAL ASSOCIATION OF REALTORS® Housing Opportunity Program at www.REALTOR.org/housingopportunity. For more information on predatory mortgage lending practices, visit the Center for Responsible Lending at www.responsiblelending.org.
Monday, March 23, 2009
More Tips for Buyers: What You'll Need for a Mortgage
I'm on a roll to tell you all you need about the home buying process, and how to get the most out of your real estate adventure. Yesterday we talked about common mistakes buyers make, today it's all about the mortgage.
I'm sure you've heard, the mortgage company wants everything up to rights to your first born. Well especially in these days, they need to make sure they are making safe loan decisions. The best advice I can give is to go ahead and get these documents ahead of time, make copies and date when you gave each item to your lender. If you email them, get a return receipt.
Also, before you start this whole process, check your credit. Go to http://www.annualcreditreport.com/ and get your free credit report, no matter how sure you are about what is or isn't on there. Case in point: My husband and I refinanced last year, and I had not checked my credit because I've always been stellar about paying bills. You can imagine how embarrassed I was when the lender I've known for years told me that I had had a 30-day late on a Visa several months back. I looked into it and he was right, my purse had been stolen and after cancelling so many cards, there was a mixup with the bank, I had paid online on the wrong card for 2 months. The bank had straightened out my account, but failed to change the credit rating, which apparently was up to me to follow up on. This one glitch had thrown my score under 700, which in these times will kill you on an interest rate. Check your credit, contact any lenders about any discrepancies, and close any of those department store credit cards you had signed up for to get the 10% off!
Checklist for your Lender:
□ W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every
person signing the loan.
□ Copies of at least one pay stub for each person signing the loan.
□ Account numbers of all your credit cards and the amounts for any outstanding balances.
□ Copies of two to four months of bank or credit union statements for both checking and savings
accounts.
□ Lender, loan number, and amount owed on other installment loans, such as student loans and
car loans.
□ Addresses where you’ve lived for the last five to seven years, with names of landlords if
appropriate.
□ Copies of brokerage account statements for two to four months, as well as a list of any other major assets of
value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
□ Copies of your most recent 401(k) or other retirement account statement.
□ Documentation to verify additional income, such as child support or a pension.
□ Copies of personal tax forms for the last two to three years.
I'm sure you've heard, the mortgage company wants everything up to rights to your first born. Well especially in these days, they need to make sure they are making safe loan decisions. The best advice I can give is to go ahead and get these documents ahead of time, make copies and date when you gave each item to your lender. If you email them, get a return receipt.
Also, before you start this whole process, check your credit. Go to http://www.annualcreditreport.com/ and get your free credit report, no matter how sure you are about what is or isn't on there. Case in point: My husband and I refinanced last year, and I had not checked my credit because I've always been stellar about paying bills. You can imagine how embarrassed I was when the lender I've known for years told me that I had had a 30-day late on a Visa several months back. I looked into it and he was right, my purse had been stolen and after cancelling so many cards, there was a mixup with the bank, I had paid online on the wrong card for 2 months. The bank had straightened out my account, but failed to change the credit rating, which apparently was up to me to follow up on. This one glitch had thrown my score under 700, which in these times will kill you on an interest rate. Check your credit, contact any lenders about any discrepancies, and close any of those department store credit cards you had signed up for to get the 10% off!
Checklist for your Lender:
□ W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every
person signing the loan.
□ Copies of at least one pay stub for each person signing the loan.
□ Account numbers of all your credit cards and the amounts for any outstanding balances.
□ Copies of two to four months of bank or credit union statements for both checking and savings
accounts.
□ Lender, loan number, and amount owed on other installment loans, such as student loans and
car loans.
□ Addresses where you’ve lived for the last five to seven years, with names of landlords if
appropriate.
□ Copies of brokerage account statements for two to four months, as well as a list of any other major assets of
value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
□ Copies of your most recent 401(k) or other retirement account statement.
□ Documentation to verify additional income, such as child support or a pension.
□ Copies of personal tax forms for the last two to three years.
Sunday, March 22, 2009
Getting through the ABCs of Buying a Home
I've been selling homes since 1997, and when working with both buyers and sellers I try to make sure that I cover all of the details involved before the question even comes to their minds. Of course it doesn't always work that way, sometimes I take for granted that they may know more than they do. For the next couple of weeks, I'm going to post different tidbits of information, first for buyers because, especially if you haven't owned a home in the past three years, this is the time to buy, with rates as low as they've been and prices even lower. Then I'll cover all the tidbits for sellers.
Now of course, you don't have to wait for me to post these on the blog....feel free to email me with any questions and I can help you right away.
If you know of anyone thinking of buying, please share this information with them, or suggest they subscribe to my blog. Even better, suggest they contact me to help them through the process, I will take great care of them!
Okay, we'll start with the first tidbit.....
Common First Time Home Buyer Mistakes
Now of course, you don't have to wait for me to post these on the blog....feel free to email me with any questions and I can help you right away.
If you know of anyone thinking of buying, please share this information with them, or suggest they subscribe to my blog. Even better, suggest they contact me to help them through the process, I will take great care of them!
Okay, we'll start with the first tidbit.....
Common First Time Home Buyer Mistakes
1. They don’t ask enough questions of their lender and end up missing out on the best deal.
2. They don’t act quickly enough to make a decision and someone else buys the house.
3. They don’t find the right agent who’s willing to help them through the homebuying process.
4. They don’t do enough to make their offer look appealing to a seller.
5. They don’t think about resale before they buy. The average first-time buyer only stays in a home for four years.
Source: Real Estate Checklists and Systems, www.realestatechecklists.com.
Wednesday, March 18, 2009
Important lesson in backing up your hard drive
This morning I turned on my trusty Lenovo laptop to find an unfamiliar site, the Rescue and Recovery screen. What it was apparently telling me was that I my system had failed and I needed to go through all of these steps to hopefully save my documents. Not only am I not the most technical person on the planet, but my husband is convinced that the electrical chemistry in my body works havoc with anything electronic. I'll be leaving a voice mail message for someone and my voice cuts off the message, and I don't have a shrill voice! Anyway, I called our IT guru and left him a message, but didn't hear from him for awhile because our MC's computer had crashed as well, and since she's the one who writes the checks she gets first dibs. Not wanting to cause further damage I decided to do nothing, I just left the laptop on and worked from my desktop until I got in touch with IT, which was about 3 hours later. (In the meantime, my home printer runs out of ink and my Treo crashes again, I'm telling you it's me!) When I spoke to Paul, he instructed me to bring it to the office but to turn it off, because the longer it stays on the more likely my hard drive will be corrupted. So for the next few hours I was so afraid that my unbacked-up computer with all of my listing information, budgets, etc., was gone, vanished, and that I was going to have to start my life as a Realtor over again. I have been crying on Facebook, Twitter, whoever would listen, all morning, because of my stupidity of not backing up my data.
Fortunately all was well, the computer came on fine for Paul and there is no damage to the hard drive. I of course went straight out and bought an external hard drive, where I'm committed to backing up my information daily and hiding it in a fireproof filing cabinet so it won't ever be lost, ruined or stolen. And that's why I'm leaving this post, so everyone will learn from me and do the same thing! They're on sale at Office Depot!
Fortunately all was well, the computer came on fine for Paul and there is no damage to the hard drive. I of course went straight out and bought an external hard drive, where I'm committed to backing up my information daily and hiding it in a fireproof filing cabinet so it won't ever be lost, ruined or stolen. And that's why I'm leaving this post, so everyone will learn from me and do the same thing! They're on sale at Office Depot!
Friday, February 13, 2009
Charlotte Regional Realtor® Association (CRRA) Reports
Residential Real Estate Monthly Activity for January 2009
CHARLOTTE, N.C. – CRRA reports on the residential real estate market in this region based on Carolina Multiple Listing Service, Inc. (CMLS) data. The number of closings for January 2009 was 1,258, which is a 37.4 percent decrease compared to January 2008 and a 6.8 percent decrease over last month (December 2008). The average sales price for January 2009 was $189,048, a decrease of 13.5 percent when compared to last January when the average sales price was $218,610. The average listing price of solds in January 2009 ($209,711) decreased 10.2 percent over last January’s average list price of $233,648.
Residential contracts reported in January (1,841) increased 43.3 percent over last month when contracts totaled 1,285. New residential listings for January totaled 5,342. The average days a property was on the market from the time it was listed until it closed (list to close) was 146 days for January. The average days a property was on the market (days on market), excluding the days the property was off the market or pending, was 112.9 for January.
Donna Anderson, CRRA/Carolina Multiple Listing Services, Inc. (CMLS) president says, “This past month’s activity continues to reflect the challenges facing our local and national economy. Now more than ever, consumers should rely on the assistance of a Realtor®, the most knowledgeable resource available, when making decisions about listing, purchasing and selling homes. Real estate, when purchased or sold properly, continues to be a sound investment for consumers.”
- as found in the CRRA press releases
Residential Real Estate Monthly Activity for January 2009
CHARLOTTE, N.C. – CRRA reports on the residential real estate market in this region based on Carolina Multiple Listing Service, Inc. (CMLS) data. The number of closings for January 2009 was 1,258, which is a 37.4 percent decrease compared to January 2008 and a 6.8 percent decrease over last month (December 2008). The average sales price for January 2009 was $189,048, a decrease of 13.5 percent when compared to last January when the average sales price was $218,610. The average listing price of solds in January 2009 ($209,711) decreased 10.2 percent over last January’s average list price of $233,648.
Residential contracts reported in January (1,841) increased 43.3 percent over last month when contracts totaled 1,285. New residential listings for January totaled 5,342. The average days a property was on the market from the time it was listed until it closed (list to close) was 146 days for January. The average days a property was on the market (days on market), excluding the days the property was off the market or pending, was 112.9 for January.
Donna Anderson, CRRA/Carolina Multiple Listing Services, Inc. (CMLS) president says, “This past month’s activity continues to reflect the challenges facing our local and national economy. Now more than ever, consumers should rely on the assistance of a Realtor®, the most knowledgeable resource available, when making decisions about listing, purchasing and selling homes. Real estate, when purchased or sold properly, continues to be a sound investment for consumers.”
- as found in the CRRA press releases
Friday, January 23, 2009
Buyer interest is increasing!
Wow! I got my weekly report from Realtor.com today and the number of hits on my Charlotte listings has doubled since mid December. That is a great sign that the buyers are starting to come out and look at the great deals to be had. We've seen a slight increase in actual showings on houses, but the internet searches are telling me that we may see much more activity in the coming months. Online showings went from 1000 total last week to 1500 this week, December showings ranged around 700/week.
The rates creeped up a bit this week but we expect them to get back down in the 4s soon. Inventory is increasing as expected, many sellers waited until January to put their homes on the market. Prices are still at 2005-2006 levels, if I had some extra money I'd be investing like crazy right now.
If you know of anyone wanting to invest in this great Charlotte market, please pass Beth Smith Shuey's name along!
The rates creeped up a bit this week but we expect them to get back down in the 4s soon. Inventory is increasing as expected, many sellers waited until January to put their homes on the market. Prices are still at 2005-2006 levels, if I had some extra money I'd be investing like crazy right now.
If you know of anyone wanting to invest in this great Charlotte market, please pass Beth Smith Shuey's name along!
Saturday, January 17, 2009
Living with my head in the sand
Too often I find myself thinking that life is always so good, and although it really is despite the economy, etc., I still need to keep my eyes open and my head out of the sand. First example was last year, when our booming real estate market that was still strong when the rest of the country was tanking. I had all the confidence that we were not going to be affected, we had the strong banking centers and were the second largest financial center in the company. Suddenly our market shifted drastically, and it honestly took most of our community by surprise. I'm still hoping that we won't be as dramatically affected for as long as other parts of the country, but you just don't know.
But that's not what I wanted to write about. My rude awakening came the Monday after New Years when I got a text from my husband while I was in a listing appointment. Our house had been robbed in the middle of the day. Our house is in a modest neighborhood close to town, a neighborhood that has appreciated 200% in the past 5 years, except of course the past year when the market tanked. I've been in the house for 15 years, my new husband for almost two. We are on a slight hill on a street that is often used as a cut-through, so our front door is fairly exposed. We have two large dogs in the backyard with access to the back porch, so I never was concerned about anyone breaking into our house because the dogs wouldn't let them in the back door. Therefore we never turned on our alarm! So you can imagine how stupid I felt when I found out that these burglars kicked in our front door and took out our 42" TV as well as cameras, laptops, IPod, and my jewelry, right out the front door. Yep, head in the sand. So now I call our house "Fort Knox", and encourage all of my friends and clients to get a security system and turn it on, just because you never know who's going to be wandering in your neighborhood! It doesn't make my neighborhood nor our city an unsafe place to live, break-ins are becoming more common in all areas of the country with more people out of work and homes. I equate it to my advice to sellers..."Think ahead of the market and price accordingly, don't chase the market". We have to think ahead of the economy and plan accordingly, whether that is getting an alarm system, pricing homes ahead of the market, or cutting our projected expenses in 2009, just in case!
There is some comic relief to the burglary that I'd like to share....I had a jewelry box on my dresser that had most of my necklaces, mostly Lia Sophia jewelry I've collected at parties the past two years, nothing too valuable or sentimental, but things that I wore a lot and loved. The same night my neighbor across the street was taking out his trash, and found the box and the jewelry all in his garbage can! So the adage is true in many forms, "one person's treasure is another person's trash"! Fine with me that they didn't have my taste in accessories!
But that's not what I wanted to write about. My rude awakening came the Monday after New Years when I got a text from my husband while I was in a listing appointment. Our house had been robbed in the middle of the day. Our house is in a modest neighborhood close to town, a neighborhood that has appreciated 200% in the past 5 years, except of course the past year when the market tanked. I've been in the house for 15 years, my new husband for almost two. We are on a slight hill on a street that is often used as a cut-through, so our front door is fairly exposed. We have two large dogs in the backyard with access to the back porch, so I never was concerned about anyone breaking into our house because the dogs wouldn't let them in the back door. Therefore we never turned on our alarm! So you can imagine how stupid I felt when I found out that these burglars kicked in our front door and took out our 42" TV as well as cameras, laptops, IPod, and my jewelry, right out the front door. Yep, head in the sand. So now I call our house "Fort Knox", and encourage all of my friends and clients to get a security system and turn it on, just because you never know who's going to be wandering in your neighborhood! It doesn't make my neighborhood nor our city an unsafe place to live, break-ins are becoming more common in all areas of the country with more people out of work and homes. I equate it to my advice to sellers..."Think ahead of the market and price accordingly, don't chase the market". We have to think ahead of the economy and plan accordingly, whether that is getting an alarm system, pricing homes ahead of the market, or cutting our projected expenses in 2009, just in case!
There is some comic relief to the burglary that I'd like to share....I had a jewelry box on my dresser that had most of my necklaces, mostly Lia Sophia jewelry I've collected at parties the past two years, nothing too valuable or sentimental, but things that I wore a lot and loved. The same night my neighbor across the street was taking out his trash, and found the box and the jewelry all in his garbage can! So the adage is true in many forms, "one person's treasure is another person's trash"! Fine with me that they didn't have my taste in accessories!
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