Credit Scores - Fort Wayne, IN Mortgages

What’s your credit score?

This is the first question you should be prepared to answer when applying for a mortgage or really any big purchase. When was the last time you checked your score? If you can’t answer this simple question it’s time to check. TransUnion, Equifax, Experian, and myFICO are the best ways to find out what their reporting about your credit history.

If you are shopping for a mortgage or refinancing the equity in your home, your credit rating maybe the single most important factor to saving money by getting a lower interest rate.

In some cases reports with a 100-point difference in your FICO score might save you over $40,000 extra in interest payments over the life of a 30-year mortgage on a $300,000 home loan. In fact, your FICO credit score impacts many areas of your life, but most significantly your mortgage rate terms.

When checking your credit score note that you are entitled to get one free credit report from all three major credit reporting agencies. Remember, because information differs on each of your credit reports, your FICO score might vary with each report.

When reviewing your Experian credit report inspect it carefully for inaccurate records. If the information on all three credit reports is the same, and no major errors exist, chances are your Experian FICO score is about the same as the others.

You may also add notes to your credit report concerning negative items. You can list reasons for non-payment or explanations of negative items if you cannot get them removed. If you notice errors on your credit report days before your mortgage is approved, your mortgage broker can help you file what is known as a Rapid re-score to help you get the mortgage at the lowest interest rate possible.

Over 90% of the time when you apply for a mortgage loan is critical to lenders decision to qualify or deny your application. The FICO score ranges from 300 to 850 with most scores falling between 650 and 799. The lower the score, the higher the credit risk, and a borrower’s interest rates will be affected. Knowing your score before applying for a loan allows you to have a better idea of where you stand in regard to gaining a mortgage and whether you’ll be able to afford the monthly payments at the interest rate you can get.

A good credit score is not the only factor in getting a mortgage. Lenders also look at:

• Your employment history (should be at least two years with the same company, or in the same industry with a solid work history and no previous employment gaps)
• Your total income
• Down payment funds available (and where they came from)
• Your recent bank statements, usually the past three months

Don’t panic if your FICO is not so great, getting approved for a mortgage is still possible even if you have less-than-perfect credit. In today’s economic climate of tighter lending requirements, some lenders may approve you for a mortgage if you choose a home more based on income and credit ability i.e. lower cost home. The lender may also require a large down payment initially and require a solid work history.

Applying for a mortgage is often frustrating, and a cumbersome process. Make sure you know your credit score and that it reports accurate information.

Veterans of our armed forces should be honored for their service and one way that the government does that is by offering them their own kind of mortgage. It’s called a veteran’s assistance, or VA loan, and it is a good loan that many veterans often overlook having access to.

A VA loan is available to a variety of military members, some family members, and even members of certain organizations. The lists of eligible candidates that can apply include:

• Active duty members of service
• Members of the National Guard
• Reservists
• Veterans- certain guidelines have to be met such as time in service and type of discharge
• Widows and widowers of veterans, as long as the veteran’s death was directly related to their military service

There are others who can also qualify for a VA loan who are often overlooked:

• Some veterans of Foreign Service who served with allied forces during World War II
• Certain organizational members, such as officers who work for the National
• Oceanic and Atmospheric Administration
• Some service members of the Public Health Service

Where To Apply For a VA Loan

The great thing about VA loans is their availability. They can be obtained from banks, mortgage companies and even a savings and loan. This means that no matter where you bank, chances are good that you have access to this program.

Benefits of a VA Loan

VA loans are not only appealing to buyers, but also to banks, as well. That’s because VA loans are backed by the government, or, in this case, the Veterans Administration. The VA guarantees the loan to the bank in the event that the buyer defaults so that the bank is not forced to write off the debt. The bank where the loan originates gets the interest off of it and the VA gets fees that the buyer is charged up front. But even if someone qualifies for the chance to apply for the loan, the same criteria still exists for qualifying for the loan.

VA loans also require no money down, except for a few incidental fees. When you add this factor to the fact that you can still receive excellent interest rates this makes them extremely appealing.

Another benefit of this loan is that, unlike other popular loan programs, private mortgage insurance is not required. Since the VA guarantees the loan there is no need for third-party insurance requirements.

Not only does the VA offer a fixed rate mortgage, but many people do not realize that there is also an adjustable rate mortgage. In this loan, the interest can be adjusted one percent each year for a total of no more than five percent over the life of the loan. Plus, the VA also offers ways to refinance. And if you have a VA loan and sell the property, you are free to use your benefit again.

The past three years across the country, we have witnessed historic drops in the housing market. Property values across the country, especially in Florida, Michigan, Arizona, and California have plummeted. Foreclosures and mortgage delinquencies have skyrocketed while interest rates are now at all time lows. Many analysts believe the home prices have bottomed out and great deals are there for the taking.

Despite some critics, a growing number of market watchers see signs the price decline has ended.

Here are a couple examples of where rebounds are currently taking place

1. Home Values under 200,000. Looking at the lower end of the market, homes priced at $200,000 or less have stabilized. Thanks to decent investor demand, it’s not uncommon to see bidding wars for homes at this price level. Annual, median prices for low end homes in some parts of the country have risen no higher than $110,000 and fallen no lower than $99,000.
2. The top of the market — homes that sell for $500,000 and above — may still face turmoil. More people than realized bought luxury homes they could not afford, says Jack McCabe, the real estate consultant who correctly called the top of the market in 2005. Those houses will be sold at deep discounts during the next two years, he predicts.
3. Still, all those bargains at the high end will help raise median prices.
   “The sheer fact that more transactions will take place in the upper range will have the net effect of dragging up the median,” McCabe said.

At low end: stability

Jeff Twigg, who spends his days driving the region checking out properties for sale through courthouse auctions, says there is considerably more competition among bidders these days — so much so that he and his partner are passing on opportunities because they think competitors are bidding too much.

Eric Greenstein, an agent at Tarpon Coast Realty, says similar activity is affecting the short sale market, made up of sellers who owe more to banks than their properties are now worth.

“Six months ago, the market was still dipping,” Greenstein said. “When a buyer made an offer on a property and the bank would come back six months later to accept, the end user would say, ‘Forget it,’ because values would be lower at that point. Now the banks are countering with higher offers and buyers are accepting because the price pendulum is swinging in the opposite direction.”

Others market watchers, including Matt Augustyniak, the president of Manatee County’s Horizon Realty, say a new wave of foreclosures may be avoided because of new federal rules governing short sales and the expansion of the Obama administration’s mortgage-aid plan announced last week.
“The new rules will force banks to respond to short sale offers within 10 days,” Augustyniak said. “They don’t have to accept, but they have to come back with a number they would be willing to accept, and that might speed short sales and eliminate some foreclosures.”

Because bank foreclosures usually sell for 20 percent less than short sales, overall prices will trend higher if the pace of short sales accelerates, he said.

At high end: uncertainty

Sales at the upper end of the market haven’t yet picked up. Sales in the $500,000-and-above range actually fell by 30 percent in Sarasota and Manatee counties during the 12 months ended Jan. 31, compared with the same period a year earlier, statistics generated by TrendGraphix show.
It is also taking longer for luxury homes to sell — 194 days on average in Sarasota County during the 12 months ended Jan. 31 compared with 171 days during the same period a year earlier. In Manatee County, it took 205 days to sell a home in the $500,000 and above range, compared with 156 days the year before.

“Days on the market only increase if properties are listed too high,” said Hannerle Moore, a luxury agent with Michael Saunders & Co. “Many high-end sellers are still hoping for a return to 2005 prices and that’s many, many, many years away. As I tell my clients, you can either be like the lady across the street that has had her house on the market for 936 days or you can price your property to sell.”

For McCabe’s theory about the median price to play out, more luxury homes must come to market during the next two years at much lower prices, and buyers have to snap them up with the same gusto being displayed at the low end.

National statistics show that adjustable-rate jumbo mortgages that high-end buyers obtained during the boom years from 2004 through 2007 are starting to reset, which should lead to more foreclosures, said Gordon Hester, who runs a high-end mortgage brokerage on Siesta Key.
“Banks are going to have more of these problems. They are bigger problems and they will want to get out of them as soon as they can,” Hester said. “That will mean a huge fall in prices.”

That has already happened in a small way in Sarasota County, court records show. Eleven of 129 properties that sold for more than $1 million during the 12 months ended Feb. 28 were foreclosure sales of unimproved homes. During the same period a year earlier, just one of the 151 sales was a foreclosure.

Prices of the 11 unimproved homes that were seized and sold by banks were 27 percent lower than the owners originally paid. The previous 12 months, high-end foreclosed homes sold for only 13 percent less than the owners originally paid.

The big question among market watchers is whether there is enough demand for high-end properties, even at greatly reduced prices.
“Those homes will be sold at a range where credit is still tight and there would have to be a lot of cash buyers, and I’m not sure that will be the case,” said Sean Snaith, a University of Central Florida economist.

“It is not as if we haven’t had foreclosures at the high end yet. That end has had foreclosures as well and we haven’t seen the median go up.”

Northern buyers return?

Add in the fact that it is still difficult for home buyers to get bank loans, and you have a recipe for a weak market heavily dependent on cash buyers.
But McCabe — who predicts that prices will gradually move higher for two years before rising at a more normal 4 percent to 6 percent a year — thinks there is plenty of pent-up demand.

Northern buyers who were priced out of the market during the boom have been waiting to buy ever since, he said.
When prices drop by 50 percent or more, those buyers will act quickly.

• “They will see incredible opportunities toward the end of the year to pick up $2 million properties for under $1 million,” he said.
  At the top end of the market homes selling for $500,000 or more are sluggish to move. People are much more cautious than previous accordingly few are making any high end commitments. Top end houses are being sold at deep discounts, a trend likely to continue for a couple years.
• High Activity at Auctions. Many real estate brokers that spend their days checking out properties for sale through courthouse auctions finding there is considerably more competition among bidders these days. This similar activity is affecting the short sale market, made up of sellers that owe more to banks than their properties are now worth. Now banks are countering with higher offers and buyers are accepting because the prices are swinging in the opposite direction.
• New Federal Rules. Other market watchers say a new wave of foreclosures may be avoided because of new federal rules governing short sales and the expansion of the Obama administration’s mortgage-aid plan.
• New Federal rules have forced banks to respond to short sale offers within 10 days. They don’t have to accept, but must provide a number they would be willing to accept, and that might speed short sales and eliminate some foreclosures.
• Foreclosures are Cheap. Currently, Real estate bank foreclosures typically sell for 20% less than a short sale; therefore overall prices could trend higher or accelerate the pace for home buying.

   

  All though even the experts seemed confused on what to label this stage of recovery, positive data is starting to be reported around the country. There’s no debating sales for luxury homes have fell by 30% in many regions and jumbo rates still are resetting but the big question remains whether there is enough demand for median and high-end properties at these greatly reduced prices.

   

  Northern buyers who were priced out of the market during the boom have been waiting to buy ever since, he said.
  When prices drop by 50 percent or more, those buyers will act quickly. “They will see incredible opportunities toward the end of the year to pick up $2 million properties for under $1 million,” he said.

Why it’s important to know what to do to maintain a good standing

• We are a credit-driven society with everything revolving around its importance.
• From buying a home or car, renting an apartment and sometimes and even opening a bank account.

You first need to know what you’re starting with

• Everyone is entitled to a free credit report every year. If you are denied credit somewhere you are automatically entitled to another one. Look it over VERY CAREFULLY. The information is a compilation from the three major credit bureaus so it is easy for there to be mistakes. If you find errors start working on correcting them right away. Once you rectify an error make sure that you receive documentation to support the correct information.
• For those who do not have a credit history, or very little, there are ways of generating credit accounts. An account is something that you have a history of paying on time. Cell phones are one way. Utilities can be used as creditors, too. What you are looking for are accounts that you are paying on time that can be used as a reference to build your case. Talk to your lender to see if they have other suggestions.
• Establish a new credit account. If you don’t have a credit card, or can’t qualify for one get a secured one. Banks offer these cards that are connected to a savings account. The account guarantees the card limit will be covered in the event that you default. Charge a small amount, pay it off as soon as the bill comes and repeat next month. Before long, you’ll have a card with a history. Just make sure that the account will be reported to all three credit bureaus.
• Community banks and credit unions are great for getting a small loan. Borrow a small amount that you can easily make payments on. Then, pay it off early. If you want, do it again. It only helps create stability. Again, make sure it is reported.
• If you have any collections contact the company and ask to settle the account. Again, make sure you get the agreement in writing and that the negative mark will be taken off. Once you have everything in writing, follow through.

How to estimate your money down

• For every $1000 you put down on a home it lowers your monthly payment approximately $6 a month
• So if you can borrow some from your family or if you have some money in savings, some of it might do better paying off old debt to give your credit time to recover. Talk to your lender to get a plan of action on open accounts. They can tell you which ones you should address first that will pay back the most in the end.

It’s probably the question everyone wants to know, how much is my home currently worth?

With recent struggles in real estate values and buying or selling your single largest purchase, for some, we gathered a list of online resources for you.

Let’s take a look at several website online tools helpful in calculating value. Now you can stay updated on your most important life-time investment, that being your home.

Zillow is a leading free home value websites. It’s fun to use with helpful online tools and calculators that are generally useful.

Real Estate ABC is also a great online tool. One of its unique features offers a list of potentially comparable homes for you to select including in the valuations. This enables you to quickly know the best homes sold recently in your neighborhood.

Eppraisal, website offers home values, and neighborhood demographic data including education, finances and employment.

Reply online has a clean interface and provides a confidence rating for its appraisals based on factors related to the comparable homes used to generate the appraisal.

Yahoo! Is a useful website offering convenient tools. Yahoo home values are calculated using Zillow, Eppraisal and Reply thus giving you instant access to three appraisals for your home, with links to each of the three websites.

HomeGain offers market and census data plus home values. Its database might be somewhat limited when searching addresses.

CyberHomes is a practical, no nonsense home valuation tool. It provides reasonably accurate values and demographic data competitive to other websites.

Property Shark’s database is rather limited but does offer some cool features.

Trulia is also a popular website real estate tool. It offers solid calculation solutions and convenient mobile device applications.

Rentometer although, it doesn’t provide the value of the home, it gives the estimated rent one would pay to rent the home. A solid useful resources but has its limitations.

Ideally, when searching online you should be looking for website tools that allow you to input the address of your house, condo or other real estate property. It should also list recent home sales and valuation estimates based on recent home prices of comparable properties. Your list of recent comparable sales includes home prices, property data, plus the number of beds, baths, size and last date sold.

Remember, these property values given are typically, only estimates based on public data and other sources. If you are selling or buying this home, you should consult a local professional, such as an appraiser or real estate agent, for an appraisal or comparative market assessment (CMA) that takes into consideration the unique value and characteristics of your home.

Deciding whether to rent or buy a home is an important decision

Since there is so much to take into consideration it is best to have all of the facts to make an informed decision.

When you rent you have to look at it from a monetary standpoint, as well as from other aspects. First, consider the money. Every time you pay rent you are paying off someone else’s home. Renters are paying each month for a place to live- period. There is no investment of their money, nor does it give them anything in return except a roof over their head. There is no need to make improvements since you don’t own the property.

Renters have to live by the rules of the landlord

Any changes have to be accepted or you’re forced to move out. Repairs are at the convenience of the landlord, too. And any suggestions for making the living conditions better have to get approval.

Other considerations include privacy. Renting means you do not always get to pick your neighbors. You automatically get the neighbors and their bad habits. Plus, chances are that other renters surround you. That means temporary residents that do not hold the same respect and care for their property as if they owned it.

When you own a home you have freedom

You can improve the yard or the structure itself since it is an investment. When looking for a home if you don’t like a neighborhood you can move on to another one. Being surrounded by home-owners means they value their investment, too, and are much more willing to protect it. That keeps the values in the neighborhood up.

When you purchase you have a required monthly payment. But there is always the option of paying extra each month in order to pay the home off faster. That means saving on interest. And every dollar you pay off on your home is an investment for when you sell.

As the housing market increases so do the values of a home. Each year that the value goes up means an increase in your investment. Some areas can go up dramatically in value. Plus, if you got the home for a good deal you might be able to make some improvements to increase the value. Even updating a room has the potential to pay off. Increasing the value means more money in your pocket.

Owning a home means you are in charge

If you get a good job offer that requires relocating you can either, sell your home and pocket the difference or there is always the option of renting it out and letting a renter pay down your home.

Don’t forget the taxes. Every year that you pay on your mortgage allows you to take the interest of those payments off of your taxes. That can add up to a significant amount each year.

If you are in the market to purchase a new home, you need to know that one of the most critical components to getting your offer accepted by the seller is having a pre-qualification or pre-approval letter from a reputable lender. In fact, it can make or break whether or not the seller takes your offer seriously.

Starting Your Home Search

When you first decide that you want to buy a home, the excitement can be overwhelming. You start looking around online, using mortgage calculators and driving new neighborhoods. You figure your income and decide what you think you can afford. Then, you might even call up an agent to start viewing homes. However, you have already made a huge mistake. You have not had a conversation with a lender, and that is where you should have started your search in the first place.

You cannot possibly know what price range of home to search for without talking to a lender. If you need to get a mortgage, you have to get pre-qualified so that you will know your price range, interest rate, down payment amount and other information to assist in your home search.

So many buyers end up distraught and disappointed because they start looking in a higher price range than what they can really afford. Then, they are forced to go down in price range which causes every home to pale in comparison to the ones they were looking at before pre-qualification. The remedy for this: You need to talk to a qualified lender before you start the home search so that you will have a letter in hand to show to sellers.

Proving Your Worth

Sellers are very picky when it comes to offers on their home. You must prove to them that you are worth them taking their home off the market for other potential buyers. The seller is going to want to see proof that you are a quality purchaser who can actually get a home loan. By having a letter in your hands from a lender, you are one step ahead when it comes to competing with other buyers. This letter will assure the seller that you are working with a loan officer and you are a credit worthy purchaser.

Getting pre-qualified is great, but getting pre-approved is even better. If you start early enough and provide the information a mortgage representative is requesting, you can get a pre-approval letter that will really impress sellers and allow you to negotiate from a stronger position.

As a future home buyer, it is important for you to get your documents in order so that you have everything you will need for your mortgage application. This is often an issue for buyers who are in the process of moving as they will pack things away in storage containers and forget where these important pieces of paper are when they need them.

What Documents Do You Need?

If you are buying a home, the first thing that the lender will need to see is your signed purchase agreement. This is the document where you have negotiated the price and all of the terms with the home seller. This also has the property address which is something that a lender will want to research for other parts of the mortgage process.

You will need to provide information on your residence addresses for the last 2 years as well as an employment history for at least the last 2 years. Include the dates you were employed as well as the name, address and phone number of your employer.

You should also supply your lender with your current pay stub which will verify the last 30 days of income (this may require 2 pay stubs) as well as your year-to-date income. Be sure to include any information on commissions, overtime and bonuses also.

Having your last 2 years of W-2 forms from all employers is another important part of the application process. So many individuals pack these away and forget where they are, so find them early as they can hold up your loan application.

If you are self-employed, you need to provide signed copies of your federal tax returns for the last 2 years. Keep in mind that being self-employed can present its own set of challenges when it comes to qualifying for a loan, so ask your lender about your specific situation as there is more paperwork involved.

There are other documents that may be required in your unique case depending on several factors. For instance, if a divorce is involved then you may need to provide a copy of the decree. You may be asked for bank statements for the last 2 months as well as any information on social security, pension or disability payments. As you fill out the application for a mortgage, you will also be listing out monthly payments such as rent, current mortgage, credit cards, child support, student loans and other financial obligations.