It’s Your Credit History. Get to know it.
If you watch any TV or listen to the radio at all, you’ve probably noticed catchy ads for a variety of companies offering free credit reports. Here’s what you should really know. Your credit history is maintained by three diffe
rent private credit reporting agencies: Equifax, TransUnion and Experian. The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting to provide you with a free copy of your credit report, at your request, once every 12 months. These reports do not provide you with your credits scores. You will have to pay a fee to get these.
However, you can go to Credit Karma (https://www.creditkarma.com/), an online free service that offers the scores for Equifax and TransUnion. It will not be the total picture of your credit but it will give you an idea of where you stand. It’s a good idea to order these reports from all three agencies as there could be errors that could negatively affect your ability to obtain a loan or the best loan.
The reports are detailed documents that track your entire credit history over the past seven years. They’re the same documents lenders analyze to determine your ability to repay debt so it’s important to examine them the same way a lender does. You’ll see the history of consumer credit that has been extended to you, late payments and highest balances. Make sure everything on these reports is correct or contact the reporting agency if you feel there is a discrepancy.
Even if you’ve had some problems with your credit in the past, don’t despair. There are a few important things to remember about your credit history.
- Negative credit can only be reported for 7 years. After that, it’s eliminated from your record and cannot be considered by lenders. Bankruptcy, on the other hand, can be reported for 10 years.
- Lenders tend to focus on how you’ve handled your credit recently rather than your history from several years ago. Even if you’ve had a bankruptcy, if you’ve been on time with payments, you could qualify in as little as two or three years.
- Lenders practice “Risk-Based Pricing,” which allows borrowers with less than optimal credit to still obtain a loan. The downside is, it comes at a higher cost.
The bottom line is, banks and financial institutions will pour through your history so it makes sense you know exactly what it is.
www.equifax.com 800-997-2493
www.transunion.com 800-888-4213
www.experian.com 888-397-3742
The Process of Buying a Home
Once we find a home you love and decide to buy it, the first thing we’ll do is to prepare and make an offer. We use the standard Arizona “Residential Resale Real Estate Purchase Contract.” In it we’ll have the offer price, the closing date and how the closing costs are going to be split. There are four main contingencies in this offer. The first one is your loan approval, then the property appraising for at least the purchase price, the inspection and the approval of the Homeowners Association (HOA) rules and financials. Any one of those contingencies allows you to cancel the contract and get your earnest money back. There are timelines for all of this.
The earnest money is usually 1% of the offer price but that’s just sort of a guide, there’s no set rule. The more the earnest money, the stronger the offer looks to the seller. Even though we get it back if one of the contingencies isn’t met.
As soon as we’ve agreed to the price and the contract is accepted, we deposit your earnest money with the Escrow Company and “open escrow”. At this time the escrow company begins their work as far as checking the title and ordering the documents from the HOA. They will also let the lender know of their fees so lender can provide approximate cost disclosures to you. We send the contract to the lender and then the lender will prepare their disclosures for you to sign. At this time, once we have an accepted contract, you can “lock” your interest rate.
Immediately after that we do the physical inspection of the property. We want to get that done right away in case there’s something seriously wrong with the home. Normally there are defective items that come up during the inspection that we give the seller an opportunity to correct. If he’s unable or unwilling, then you can cancel the contract and get your money back. You would just be out the money you had paid the inspector.
The inspection of the home starts with an overall general inspection and a termite inspection. The price is based on the size of the house, the age and whether or not they have to inspect a pool. It’s going to be in the neighborhood of $300-$600. Sometimes the first inspector recommends we get a further inspection of a flagged item. The most common one is the roof.
During our ten day inspection period is also the time for you to make sure you’re OK with everything else about the area. That would be checking crime statistics, checking the schools, talking to the neighbors. We just want to make sure that we get all of your questions and concerns addressed during this time. We only have one opportunity to cancel for any of these reasons and it’s going to be during the inspection period.
Just before the close of escrow, we go back to the home for a final walk-through to make sure all the agreed to repairs have been made and that the house is in the same condition as when we inspected it. Sometimes we have to have the inspector back to check the repairs, it all depends on how many there were and how complicated they were.
Once your loan is approved by the lender, all the documents will be sent for signing to the Escrow Company. You will have to bring a cashier’s check to complete your transaction. After signing, the Deed is scheduled to be recorded the same day or next, as a public record. When the Deed is recorded at the County Recorder’s Office, it is the moment that ownership transfers to you. Congratulations! You’re now a homeowner.
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Spanking New Website
Welcome to our new website page at buyerone.com. The site was long overdue for a face lift. First impressions are so important. First impression is the most critical contact of the consumer with your business. So look sharp, look smart!
New homes for sale in Chandler
Luxury homes in West Chandler. A gated community of Brownstone style homes with a desert feel. Three models available with 3 bedrooms, 3 baths and a 2-car garage. Very spacious floor plans have an additional 1000 square feet of balcony or patio. Low maintenance for the busy professional. Quick move in, close to I-10, shopping and entertainment. In the low $300K.
How can I qualify to buy my first home?
Buying your first home is such an exciting experience! At first it may seem like a big puzzle, but it isn’t that difficult at all. However, having a great agent and a reputable lender can help putting it all together pain free. Regarding the financing you will have to meet some requirements, including coming with a small amount of cash for your down payment and closing costs. You will have to be credit worthy, have a stable employment history and you must be able to afford the mortgage monthly payment. Some of the criteria used to measure these may vary from lender to lender.
DOWN PAYMENT. There are several ways to finance your home, depending on what program you may qualify for. The Veteran Administration offers a mortgage (VA Loan) guaranty program with $0 down. This program is available to eligible service members, veterans, reservist and certain unmarried surviving spouses. The program requires an upfront funding fee that can be added to the mortgage.
The next lowest down payment program is a HomePath mortgage, available when you buy a home owned by Fannie Mae (a “repo”). It requires only 3% of the purchase price and offers very flexible terms. Down payment can be a gift from family or friend, a grant from a non-profit organization, the state or even an employer. It’s available for primary residence only but they do finance 2nd home or investment property with 10% down. This program requires a buyer with an excellent and longer credit experience. No mortgage insurance or appraisal is required.
The most popular program for first time buyers is an FHA mortgage. The Federal Housing Administration guarantees these loans. Minimum down payment is 3.5%. Qualification for one of these loans is a bit easier than any other program. Down payment plus closing cost can be a gift from any family member. This program is only available for primary residence and requires mortgage insurance.
Buyers that can afford a higher down payment may benefit from a Conventional loan program. The minimum is a 5% down payment, but now days these are very hard to get. It’s usually a 10% down but if you want to avoid mortgage insurance you will need to put down 20% or more.
Finally, there are various Public Housing programs sponsored by the state, cities and non-profit organizations. Normally, these programs offer down payment/closing cost and renovation assistance. One of such programs is the City of Phoenix’s Neighborhood Stabilization Program: $15,000 to assist with down payment and closing costs. Right now they are looking for buyers to use this money.
All of the above mentioned loans require additional funds for closings costs and pre-paids. These are costs associated with purchasing a home such as credit report, appraisal, lender fees, inspections, title insurance, escrow fees, etc. You can expect these items to add another 2 to 3% of the purchase price to your total investment. Most loan programs allow the seller to contribute to this part of the investment so you can ask the seller to pay for them.
CREDIT WORTHINESS. Your credit history must be clean for the last couple of years; definitely no pending judgments, open collections, repossessions, and no delinquent accounts. There are mitigating circumstances for having something negative (“dings”) in your history, and these can be explained during the application process. Having no credit or very little credit history can also be considered a negative and will lower your FICO scores. The minimum FICO score the lenders will normally accept is 640 for an FHA loan. We’ve heard some lenders are accepting lower scores, but we suspect they require a higher down payment. If you are considering buying, pull your credit report before the mortgage lender does and make sure it is accurate. Any changes to your report may take as long as three months.
EMPLOYMENT HISTORY. You must demonstrate you’ve had a permanent jog for the last two preceding years. If you had more than one job, the subsequent jog(s) will have to be related or in the same field. Recent graduates working in their fields will be given some credit for time spent in college.
AFFORDABILITY. Under FHA guidelines, your house payment can’t exceed approximately 29% of your gross monthly income. So lets say you earn $3,000 a month before any deductions, then your maximum monthly payment will be approximately $900. This amount should include payments to the principal, interest, real estate taxes and insurance (PITI) plus Homeowners Association fees if your prospective home has one. This is called the “Front Ratio:” monthly house payment/monthly gross income. Now, this house payment plus all of your other monthly credit debt (auto loans, student loans, credit cards, etc.) can’t exceed approximately 41% of your gross monthly income. In the above case $1230 is the “Back Ratio:” total monthly credit debt/gross monthly income. There is some flexibility on these ratios depending on your particular circumstances.
There you have it, a piece of cake… now go and shake your $$ source, check your credit report, call me, and I will take care of the rest… promise!
Rock the Block
Chandler is having a big street party tomorrow Saturday. The city is closing a one-mile stretch of Arizona Avenue. There will be two stages of entertainment, a skating ring, activities for the little ones and lots of great gift vendors. There will be a dunk tank featuring Mayor Jay Tibshraney and other business leaders. Since the holidays are fast approaching there will be a food drive to benefit two local food banks. Modern-rock station X103.9 (KEXX-FM) is sponsoring the main stage, bringing four artists from Valley-based Sundawg Records: Mergence, A Life of Science, the Weiley One and Fayuca. Also performing is cover band Wikked Rev, which performs a mix classic rock and metal tunes. Check it out. Time: noon to 8:00 p.m.
In a home, location is what matters. Part 3
The Home
No
w lets talk about the location of the home within the neighborhood or subdivision. You may not care about some of the following negatives for varied reasons, but when selling, you will narrow the pool of buyers willing to accept a negative location. Like we said before, these lots originally were sold cheaper as less desirable locations. You got a fair deal when you purchased, and when selling, you must pass it on. The most common objections given are:
- Backing or facing to a busy street or highway. Noise, pollution and safety are the obvious concerns. The worst location being on the corner of two or three busy streets.
- Orientation of the home. Here in Arizona’s hot weather a North/South orientation is preferred.
- Power lines. Whether on the back or front of the home, they are considered an eyesore, not to mention the perception that electromagnetic fields are a hazard to human beings.
- Backing up to commercial or industrial property. Again, noise and safety.
- Lack of privacy. Backyard or/and pool face two story home(s).
- Being at the end of a street “T.” Oncoming traffic that is more evident in the evenings.
- Pests. Scorpions, rats and pigeons can be a localized hazard.
- Fissures and Subsidence. A problem the Valley is facing in some areas as we deplete ground water. After it is drained, the soil compacts and gives away creating fissures and sink holes.
After finding a home in a great location, you are now ready to buy. One last thing you may want to do is talk to your immediate neighbors-to-be; ask them what they think of their neighborhood. Neighbors will tell you things about the neighborhood in a more objective way because they’re not selling you anything. In the process you will get acquainted and conclude they could be wonderful neighbors to have.
How reliable is Zillow?
Zillow Zestimate Zonked
Frequently our clients, sooner or later, will allude to some listing or estimate they got from Zillow. We as Realtors® dismiss the website just as net entertainment. When it comes to real estate, the compilation of this data will not necessarily provide you with a reliable, meaningful or accurate value for any given property. From Zillow:
“The Zestimate (pronounced ZEST-ti-met, rhymes with estimate) home valuation is Zillow’s estimated market value, computed using a proprietary formula. It is not an appraisal. It is a starting point in determining a home’s value. The Zestimate is pulled from data; your real estate agent or appraiser physically inspects the home and takes special features, location, and market conditions into account. We encourage buyers, sellers, and homeowners to supplement Zillow’s information by doing other research such as:
- Getting a Comparative Market Analysis (CMA) from a real estate agent* Getting an appraisal from a professional appraiser.
- Visiting the house (whenever possible)
- Our data sources may be incomplete or incorrect; also, we have not physically inspected a specific home. Remember, the Zestimate is a starting point and does not consider all the market intricacies that can determine the actual price a house will sell for.”
So, if you are interested in getting some general and preliminary information about a particular area or neighborhood, then Zillow is a cool site to surf. (Zillow does not offer live information so there is a statistical lag time, sometimes months old.) However, if you are making an offer, you must get the help of a real estate agent familiar with the area to help you make use of the information.
We have found Zillow to have wide fluctuations in their estimates that do not reflect the facts on the ground. Only 33.3% of the 1.5 M properties listed in Zillow with Zestimates, in the Phoenix area, come within 5% of the actual sales price.
Agents, for instance, can’t determine the condition of a property by the listing description or even by the pictures that accompanied it. These sometimes, we find, are slightly manipulated for marketing purposes without having to be misrepresentations, but a subjective view of a given property. Therefore a formula can’t account for all of the nuances and variables, just as it cannot visit the property to confirm any of its presuppositions. So, we give Zillow 3 stars out of 5.
If you need a real Market Analysis on any property in Metropolitan Phoenix, we would be more than glad to email you one… free of charge. Since we do not take listings, you can rest assured that no one is going to follow up to solicit one.
In a home, location is what matters. Part 2
The Neighborhood
Next you must consider a neighborhood. You may want to know its boundaries and what lies adjacent to it that may diminish its value (Google it). You may not want to live next to a dairy farm, a smoke stack, a city waste dump, within the noise boundaries of an airport or backing to an obsolete trailer park. You should check and search online for crime statistics of the area, and for the location of sex offenders as well.
Notwithstanding the recent drop in gas prices, distances have become very important. Is there easy access to major highways? How far do you have to drive to work, to the supermarket, to the mall, the airport, downtown, and other amenities? Is mass transit an available option? We helped a buyer who actually visited the local grocery store, strip malls, a restaurant and the mall, and later decided it was not where she wanted to live. If you have children, is it a family-friendly neighborhood? Are there lots of children? Are the schools close? How are they rated? Are you close to the bus stop? Any parks or green areas nearby?
After the vicinity, the pride of ownership should be the most telling clue about a neighborhood. If everyone is taking care of their homes it will help maintain values. In this regard I must mention the often-despised HOA (Homeowners Association). They enforce the developer’s “CC&R’s” (Covenants, Condition and Restrictions), a document detailing the obligations and rules by which you will abide to be a member of the neighborhood. Rebels and advocates of free expression don’t do well here. But a frequent omission in discussing the rules is that they were put in place to extend the vision of the builder and its architect. Their holistic approach supersedes anyone’s right to express their individual taste. This integration adds a reliable measure of value to the neighborhood, where you would expect an “enforced” and permanent pride of ownership. The cons can usually be traced to self-managed (vs. professionally managed) associations made of community volunteers who run for office and are summarily elected with a small participation from the whole. These volunteers are in effect running the neighborhood on your behalf the best they can. So read the CC&R’s before you buy in one of these subdivisions.
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