Debunking Credit Score Myths

In March, ING Direct bank commissioned Harris Interactive to conduct an online survey of 1,042 parents of children age 17 years and younger.

The survey discovered more than half, 56 percent, of those surveyed thought bouncing a check or paying a fee for having non-sufficient funds in their bank account would reduce their credit scores.

Wrong.

Credit reports typically don't include information about checking and debit accounts, nor non-sufficient fund issues unless they somehow impact an attached credit account.

Also one in five (21 percent) thought checking their credit scores would hurt credit scores. Nearly as many (18 percent) thought accessing their credit report, would hurt their credit scores.

Wrong and wrong.

Obtaining your credit report and credit score has no bearing on your credit standing.

In fact, you should check your credit reports regularly. Every year, federal regulations allow you three free credit reports (ONLY through AnnualCreditReport.com), one each from the three credit reporting agencies, Equifax, Experian and TransUnion.

If you visit some other sound-alike, come-on web site, instead of AnnualCreditReport.com, expect to pay for credit services you may not need in exchange for that so-called "free" report.

From AnnualCreditReport.com, get the three free reports all at once if you haven't seen them for years. Otherwise get one from a different company every four months to regularly monitor your credit report for errors, identity theft, black marks you may need to work on and other issues.

For your credit score it will cost you a nominal fee (it's worth it) paid to each of the three credit reporting agencies.

A credit score -- virtually always examined by lenders when you apply for a mortgage, credit card, car loan, other credit, even homeowners insurance and other financial accounts -- is a numerical rendition of your creditworthiness.

Scores range from about 300 to about 850. The higher the number the more likely you are to get credit and the more likely you are to get cheap credit. Your score should be at 760 or above to land the best interest rate, according to FICO, a leading credit scoring system provider.

Debunking the myths

To help debunk credit score myths, misunderstandings, misdirection and to stop financial behaviors that could be passed onto future generations, ING Direct and Experian developed five tips to help parents separate fact from fiction.

Practice what you preach. Simple financial behaviors such as paying your bills on time will keep your credit in good standing and will allow you to obtain better interest rates on big asset purchases like a house or car. Lead by example.

Start early. When you kids start to ask you to buy things for them, it's time for the "money talk." Later, introduce more complex credit topics with stern statements like "credit is not free money." Talk about interest rates, paying on time, paying off balances and saving money.

Make credit a family affair. Let children in on household financial discussions that reveal the true cost of necessities. Sit them at the table during budget and bill paying sessions. Explain the fallout from making poor financial decisions.

Set family financial goals. Teach children how money doesn't grow on trees. Show them how to save for things they desire rather than accessing credit to spend money they do not have. It's a way to encourage your children to set financial goals and work towards achieving them. Children savor things more when they put in the time and effort to purchase items with their hard earned cash.

Explain the difference. Talk to children about the differences between needs versus wants, especially at times when they want you to give into impulse buying. During grocery store visits, show kids the difference in prices between name brands and generic brands as a way to expand on this lesson.

Written by Broderick Perkins

Buyers Should Be Careful About Credit Use Prior to Closing

Buyers and their agents need to be aware that it is a very bad idea for buyers to increase their credit balances or to open new lines of credit shortly before they close escrow on their new home. More specifically, they should avoid such activity during the period of time between loan application and closing. This is because policies under Fannie Mae's Loan Quality Initiative, effective June 1, 2010, requires lenders to "refresh" a borrower's credit report just prior to closing.
Here's what happens: Bill and Betty Buyer are excited to make an offer on a home they just love. They realized that they are stretching, but the loan officer has pre-qualified them and is confident that they will receive full loan approval. When formal loan approval comes, then, they are ecstatic. In eager anticipation of closing, they visit their favorite furniture store and purchase (that is, charge) a new bedroom set, dining room furniture, and a sectional that will be perfect for the family room. It all adds up to a pretty penny, but they are confident that they will be able to pay it off in a timely manner. Things are going well at work. What could go wrong?

Well, here's one thing that could go wrong: Following FNMA's guidelines, the lender runs an updated credit report on Bill and Betty just before closing. With their newly-acquired credit balance, Bill and Betty no longer meet the required debt-to-income (DTI) ratio in order to qualify for their loan. The loan is pulled. Sadness reigns.

Fannie Mae's Loan Quality Initiative was introduced in a lender letter February 26, 2010. The letter noted that, during the past three years, the need had been highlighted "for an improved approach for working with lenders to deliver loans that meet Fannie Mae's underwriting and eligibility guidelines." In other words, the loans that had been delivered to Fannie Mae turned out too often not to meet Fannie Mae guidelines. Regrettably, this tended to be discovered well after Fannie Mae had purchased the loan. The idea of the Loan Quality Initiative, which was to become effective June 1, 2010, was to focus "on capturing critical loan data earlier in the process and validating it before, during, and immediately after loan delivery."

Borrower qualification was not the only issue of concern. Among others were determining owner occupancy, verification of social security numbers, a new policy on excluding certain entities from Fannie Mae loans, and updated quality-control requirements.

Technically speaking, the Fannie Mae guidelines do not require that updated ("refreshed") credit checks be performed for borrowers. Fannie Mae states that "It is the lender's responsibility to develop and implement its own business processes to support compliance with Fannie Mae's requirements on loans delivered to Fannie Mae." But, in the same memo, Fannie Mae does provide "tips for lenders to consider." One of those tips is "Refreshing a credit report just prior to closing."

Does anyone think that a lender who sells its loans to Fannie Mae is going to ignore such tips? Hardly.

The tips point out that not only might a refreshed credit report show newly-acquired debt (as in the example), but also that it may show new credit inquiries. "Credit inquiries listed on the credit report should be investigated to determine whether the borrower did in fact open additional credit resulting in repayment obligations." Don't go buy a new car until after you close.

Given recent history, it would be unreasonable to fault Fannie Mae for tightening up its procedures in every way possible. Buyers just need to remember that loan approval is based on statements of income and liabilities at the time of the loan application. If those factors change materially prior to closing, it is likely to be discovered and it could undo a deal.

Congratulations on your new home, and go ahead and buy new furniture; but wait until after escrow has closed.

Written by Bob Hunt

June Round Up: Rates Hit an All-Time Low

In Freddie Mac's results of its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 4.69 percent with an average 0.7 point for the week ending June 24, 2010, down from the previous week when it averaged 4.75 percent. Last year at this time, the 30-year FRM averaged 5.42 percent.

The 15-year FRM this week averaged 4.13 percent with an average 0.6 point, down from the previous week when it averaged 4.20 percent. A year ago at this time, the 15-year FRM averaged 4.87 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.84 percent this week, with an average 0.7 point, down from the previous week when it averaged 3.89 percent. A year ago, the 5-year ARM averaged 4.99 percent.

The 1-year Treasury-indexed ARM averaged 3.77 percent this week with an average 0.7 point, down from the previous week when it averaged 3.82 percent. At this time last year, the 1-year ARM averaged 4.93 percent. This is the lowest the 1-year ARM has been since the week ending May 6, 2004 when it averaged 3.76 percent.

"Mortgage rates for all but traditional 1-year ARMs hit all-time record lows this week in our survey while activity in the housing market slowed in May following the expiration of the homebuyer tax credit," said Frank Nothaft, Freddie Mac vice president and chief economist. "Freddie Mac began collecting rates for 30-year fixed loans in April 1971, 15-year fixed mortgages in September 1991 and 5-year hybrid ARMs in January 2005. The record low for traditional 1-year ARMs of 3.36 percent occurred during the week of March 25, 2004.

"Both new and existing home sales showed unexpected declines in May. Existing sales fell 2.2 percent, compared to the market consensus forecast of a 6.0 percent gain, based on figures published by the National Association of Realtors® . Sales of new homes fell 32.7 percent to an annualized rate of 300,000 units, which was the largest monthly drop and slowest pace since records began in 1963, according to the Census Bureau ."

Men and Women Agree in Home Must-Haves

It’s true. Men aren’t looking for exactly the same things women are when they go home shopping.

A survey of 1,000 home shoppers concluded that while about an equal number of men and women sought green features – about 27 percent – and 35 percent of both sexes put a high priority on a home office, there is disparity in the desire for other features. Both sexes did agree on the biggest turn-offs: structural damage, bad odors, a busy street, and an awkward floor plan.

Here are the top 10 features most desired by men:

• Garage or designated parking space, 85.5 percent

• Master suite, 79.8 percent

• Ample storage space, 71.2 percent

• Guest bedroom, 70.2 percent

• Large closets, 64.2 percent

• Outdoor entertainment area, 63.4 percent

• Gourmet or updated kitchen, 59.1 percent

• Breakfast room or eat-in kitchen, 55.2 percent

• View, 44.5 percent

• Large yard, 43 percent

Here are the top 10 features most desired by women:

• Garage or designated parking, 87.7 percent

• Master suite, 77.8 percent

• Ample storage space, 72.7 percent

• Large closets, 68.7 percent

• Outdoor entertainment area, 64.2 percent

• Guest bedroom, 63.9 percent

• Gourmet or updated kitchen, 61.8 percent

• Breakfast room or eat-in kitchen, 56.1 percent

• Large yard, 43 percent

• Wood floors, 40.9 percent

What to Leave for the New Owners

A quick check list of items to leave for the new owners of your home.

• Owner’s manuals and warranties for appliances left in the house.

• Garage door opener.

• Extra sets of house keys.

• A list of local service providers — the best dry cleaner, yard service, plumber, etc.

• Code to the security alarm and phone number of the monitoring service if not discontinued.

• As a courtesy, you could provide numbers to the local utility companies.

• If it’s a condo, leave information on how to contact the condo board.

Have You Checked Your Property Taxes Lately?

With most mortgages today, the lender collects money not only for monthly interest and principal payments, but also for home insurance and property tax payments. The money is kept in an "escrow" or trust account for your benefit.

In the usual case you will receive information from your insurance carrier that the premium has been paid. Also, the local government will send out a form listing property taxes and showing that they have been paid by your mortgage lender.

However, with millions of loans outstanding, it sometimes happens that tax and insurance payments are not made on a timely basis or not made at all. It can also happen that such bills have been paid but not properly recorded.
Written by Realty Times Staff

Choosing The Best Home

After weeks of searching for your next home, you now have it narrowed down to two great options. One offers a shorter commute, but the other offers more square footage for your growing family. How can you make the best choice?

There are several strategies you can employ in your decision making process. Above all, be confident in your decision making abilities. "The fear of making serious decisions is a new kind of fear, called decidophobia," proclaimed by Walter Kaufmann at Princeton University in 1973. Worry and procrastination do nothing to aid the process, so buyers, be confident that you will make a sound choice.

Pro/Con list: In this case, you are deciding between two houses as your prospective home. For each house, divide a sheet of paper into two columns: pro and con. Be realistic about what the positive and negative factors would be for each purchase. Considerations could include: price, location, schools, repairs, square footage, floorplans, street noise, neighborhood value, comparables, and gut intuition.

Brainstorm scenarios: Chances are, whatever house you decided upon will be your residence for many years to come. Try and think ahead to situations that may arise in the future, and how each residence would affect those situations. Do you have aging parents that could move in? If so, then which house provides the best floorplan for this? Planning on having children? Check out ratings on local schools.

Do the math: Business executives might call this the "cost/benefit analysis." Buying a home is a huge financial decision, and while personal preferences (e.g. location, schools, square footage) all come into play in homebuying, many purchases are based on what makes the best financial sense. Discuss numbers and neighborhood comparables with your real estate agent. One home may be a smaller dollar amount, but the other may be a better deal in the long run. Some neighborhoods are up and coming, while others have come and gone. Are either homes overpriced or underpriced for their neighborhoods? Do either homes need repairs or updates?

Priorities list: Yes, you know you want the pool, landscaping, granite counters, close proximity to work, extra bath, and the list goes on. But when push comes to shove, and it might, what items are your priority, really? For some, driving a longer commute is worth having a larger house or a cheaper price. For other buyers, the exact opposite can be true.

Change perspectives: Sometimes you simply must step out of your own shoes to see a situation clearly. There are many different ways to approach this decision. You can look at it from an emotional point of view (which home do you love), an intuitive view (what does your gut tell you), and even a devil's advocate view (what if). Experts consider this the "Six Thinking Hats," introduced by Edward de Bono in a book of the same title, where you put on six different hats during a decision making process. Try and see the buying process from the perspective of your spouse, your children, friends, and even your worst enemy.

Finally, be realistic in your own abilities. While the final decision rests on your capable shoulders, you should rely on the professionals that are by your side. This includes your agent, lender, attorney, and even your family. And while you are the final say, remember that you have a team to help give you information to fuel that sound decision.

Written by Carla Hill

How To Make Buyers Want Your Home

You love your home but when it comes time to sell, you have to share the love. In the other words, you have to make your home be seen in the eyes of potential buyers as their home. That can be tricky.


But if you do some of the basic things such as clearing clutter, creating light, bright, and open space, adding curb appeal, removing personal items (family photos, trinkets), fresh paint, and clean or new carpet -- you'll be on your way to attracting serious buyers.

Let's look at specific areas that create widespread appeal inside the home.


Here are some of the top areas to improve: countertops, flooring, built-in furniture, and old-style attached fixtures such as those big sheet mirrors in the bathroom. However, when making these improvements, there's one important consideration.

Functionality is the greatest concern cited by homeowners, according to the latest poll conducted by the National Association of the Remodeling Industry (NARI).

"The functionality of a home is very important, especially over the long term, as many homeowners in this economy have opted for remodeling over moving to new homes," says NARI National President Paul Zuch, CR, president of Capital Improvements.

So let's explore the areas I mentioned earlier and see how improving these items can lead to greater interest in your home. Countertops are fixtures in homes. So making sure that you select the best material to endure the daily wear and tear is important. If we're talking about the kitchen, for instance, there are many options: granite, tile, recycled glass (for a green option), solid steel, composite stone, butcher block, laminate, and even concrete. Yes, that last one sounds surprising but concrete is being used for countertops and laminate isn't necessarily trying to mimic other materials anymore. Instead, homeowners are embracing laminate's own unique high-tech look. The popular trend is a mixing of several styles creating a blended custom look for the kitchen. But in the end, functionality will rate highest for potential buyers. All of the countertop materials mentioned above have advantages and disadvantages when it comes to maintenance and usage; make sure you completely research the material before selecting it for your home.

Fixtures are an important area to improve. "People know a lot more about design," Laura Kirar from Larua Kirar-TRU Design told the Alexandria Times. These days, quirky, eclectic styles from international trends are becoming more prevalent in the United States. However, push the envelope too far with quirkiness and you just might lose a potential buyer. What's important to know is that buyers are paying attention to fixtures. If you have damaged or worn out faucets or lighting, it's best to replace them before showing your home. Also, replacing those big, nothing-special sheet mirrors with some framed mirrors can add a unique look without costing very much. While you don't want to have to spend a lot just before you sell your home, remember that these seemingly small items can have a great impact on improving buyers' interest in your home.

Flooring is a big interest for buyers. Wood floors are still very popular. Many Realtors say buyers are looking for hardwood floors. That's partly because they endure and don't go out of style. However, if they're damaged it can be a drawback because buyers may focus on how much work it will take and cost to do the repairs.

Built-in furniture can improve a home. Built-in bookcases and entertainment centers can save space and help make the room look larger. However, there's a downside. Built-in furniture isn't easily movable. So, potential buyers will have to really find the furniture useful and suitable for their needs. "It's all about personalization—homeowners want to know that their space can be converted easily into a different space in the future," Zuch said in a press statement by NARI. And that's what buyers want as well—the ability to make your home theirs when the sale closes.

Written by Phoebe Chongchua

Most affordable popular retirement locations

The real estate downturn has turned some very popular retirement destinations into bargains. To determine where the prices are most attractive, U.S. News & World Report examined price-to-income data for 384 metropolitan statistical areas. This expresses the relationship between owner income and home values.

Here are 10 retirement havens where homes are most affordable by this measure:


1. Bend, Ore.


2. Napa, Calif.


3. Fort Meyers, Fla.


4. Fayetteville, Ark.


5. Las Vegas, Nevada


6. Santa Fe, N.M.


7. Punta Gorda, Fla.


8. Phoenix, Arizona


9. Santa Cruz, Calif.


10. Burlington, Vt.

Source: U.S. News & World Report, Luke Mullins (07/08/2010)

Current Mortgage Rates

Today's mortgage interest rates are at an all time low. This is an incredible time to buy!!

30 yr fixed: 4.57%

15 yr fixed: 4.07%
1 yr adj: 3.75%

(U.S. Daily Averages) 
 

Call or email to find your dream home today or to find your next investment property.

 

Leah Hamman

Keller Williams Integrity First Realty

My Arizona Home Team

(480) 330-6242

Email: HammanTeam@cox.net

Custom Home in Goodyear on 2 acres, Price Reduced to sell!

Price : $379,000

Bedrooms : 3

Bathrooms : 3

Square Foot : 2,710

Lot Size : 2+ acres.

County : Maricopa

Property Type : Custom Single Family Detached 

Year Built : 1998

MLS Number : 4337980

3 bedrooms + Den + Dining Room!

SOUTHWEST STYLE CUSTOM HOME BEAUTY SITUATED ON 2+ ACRES OF ELEVATED HILLSIDE W/AMAZING CITY VIEWS*PERFECT FOR THE RURAL BUYER WHO WANTS A TRANQUIL SETTING YET A SHORT DRIVE TO THE CITY*HOME LOADED W/CUSTOM UPGRADES*VIGAS BEAMS*SALTILLO TILE*BEEHIVE FIREPLACE W/CHARMING SUNKEN-IN SITTING AREA*SNAIL SHOWER*WALK-IN CLOSETS*ICEMAKER*PERFECT FOR HORSES RIDING*COUNTY ISLAND*CLOSE TO PHOENIX INTERNATIONAL RACEWAY FOR YOU RACE FANS.

Keller Williams Integrity 1st Realty : Mesa AZ 85209 :
480-330-6242

Happy Independence Day!

In the truest sense, freedom cannot be bestowed; it must be achieved. ~Franklin D. Roosevelt

Summer Travel Trips

As you get ready to travel—even if it’s a short trip, like 4th of July weekend—don’t forget to take these few easy steps at home before you leave:


• Turn up your thermostat to 85 degrees (unless you’re leaving pets at home, of course). Experts agree that the energy saved from turning your thermostat up in the summer while you’re away is greater than the energy used to cool your house back down after you return.

• Close window blinds and shades to block out the sun’s heat. It’s amazing how much indoor heat simply comes from the heat of the sun though the windows. Most ENERGY STAR qualified windows reduce the “heat gain” into your home more than typical windows do, without reducing the visible light. You get the light you need without the uncomfortable heat.

• Aside from those one or two lights that you may want to leave on for safety, make sure everything else is turned off—all lights, ceiling fans, the alarm on your radio, and other small appliances.

• Perhaps the best thing you can do to save energy this summer is to choose hotels that have earned EPA’s ENERGY STAR label. Follow the link to find the hotels listed which use at least 35 percent less energy and emit at least 35 percent less greenhouse gas emissions than other hotels—making a stay with them a carbon-saving experience. Here is the hotel link: http://tiny.cc/nu970

Give us a call with any questions; 480-889-1424