Real Estate Information

I saw this on the Trulia website today and thought it might be of interest to our readers.  It comes from Tara-Nicholle Nelson's blog.

Q:  What do you advise a financially fit homebuyer to do to increase their credit score or make themselves more attractive buyers, to qualify for the lowest mortgage rates?

A:  A FICO score of 700 (FHA)/740 (Conventional) or better qualifies you for the lowest rates. In fact, it qualifies you just as well as a higher score, so if you’re at or over 700/740, there’s no loan qualification rationale for investing effort into boosting it.  But these are firm breaking points. The difference between a score of 698 and a score of 700 (in an FHA loan scenario) can cost you a quarter of a point in interest, or thousands of dollars over the life of your mortgage.

I’ve found that people asking about how to boost their credit to qualify for the best interest rates is similar to people asking me how to lose weight: I tell them the truth, then their eyes glaze over when I give them the straight dope, no magic bullets.  No one wants to hear: eat vegetables, cut the sugar, and exercise; similarly, they don’t want to hear pay your bills on time, every time.

But I’ve been asked this question a lot recently, so here goes, anyway!
    
1.    Pull your reports online – get them for free, no strings attached, at the government authorized website AnnualCreditReport.com.  This doesn’t get you your actual FICO scores, but it does get you the content of your report. Look for errors that could be depressing your score, like accounts that don’t belong to you, balances that are actually lower than reported, old debts that are paid off that should have been removed entirely (7 years for credit cards, 10 for bankruptcies).

2.      Consider reopening accounts you thought were open but have been closed because you haven’t used them in so long - it will help boost your utilization ratio, one element of your credit score that is dependent on how much available credit you have.

3.      Pay down some debt.  This both decreases your debt-to-income ratio (36% is the goal, including the proposed mortgage payment) and increases your credit score, if you do it right (see the next tip).

4.     Don’t close any accounts.  Instead, spread your debt out. The ideal utilization ratio is about 20-30% of your available credit overall, and on any given account.  Closing accounts reduces the amount of credit that is available to you, so it makes it look like you’re closer to being maxed out.

So if you have one card that’s near its max and several others that have zero balances and you’re trying boost your score a bit, quickly, consider balance transfers to spread our your debt more evenly, aiming for 20-30% of the available credit on each card.

5.     Use your credit regularly – and pay it on time, every time:  Having a good FICO score doesn't happen because you have sound personal finances, including no debt. FICO scores are a measure that shows that you have a history of responsibly using and managing and repaying your debt on an ongoing basis.

6.      Finally, check in with your mortgage broker.  Have them pull your report and score, as the report they pull is the one they’ll have to go by in the final analysis.  If you’re really close to a score level higher, that would empower you to qualify for a lower rate, they can actually run a credit diagnostic on your score and generate some recommendations for which actions you could take to raise your score by the needed few points. Then many of them can do what’s called a ‘Rapid Rescore’ – once you’ve paid that bill off, they can actually submit a request directly to the credit bureaus to update that information and your score in just a few days.

None of these tips will get someone with a 500 credit score to a 700 (other than a massive debt reduction program).  But if you’re trying to get a little boost to get you over a credit score hump, these can be potent, and save you beaucoup bucks in interest.

Sitting at the North Carolina beach listening to the surf...

It occurs to me that with today's low interest rates, reasonable prices and the large inventory of vacation homes, it is a great time for Baby Boomers to
purchase their retirement home in a sunny environment. It will be years before
these three positive items for the purchase of a vacation or retirement property
will again be in perfect alignment.

This is also true for single family homes in Columbus whether it be a "move up" or first home. Interest rates are so low right now that the monetary benefits are far better than the incentive credits that were available at the beginning of the year.

If you are thinking about purchasing or selling a home, please call us to
discuss the pluses and minuses and a strategy for the present or future. We can help you here in Ohio or advise you about other states.  We can also find a good agent in any part of the country so that you can be assured of the best real estate advice if you want to buy property in an area you are not familiar with.

We promise, straight talk, sound and honest advice and superior marketing every time we consult with you.

One of our favorite loan specialists, David Arocho from Bank of America Home Loans, just sent over the unbelievable specials the BOA is offering right now.   

For a new purchase, closing within 30-45 days, the 30-year fixed rate ($100-$417K) is 4.125%.  The 20-year fixed rate is 4.00% and the 15-year fixed rate is $3.75!

The Jumbo 30-year fixed rate is 5.125%

These rates have no points or origination fees!

The minimum score on all conforming loans with less than 20% down or 20% equity is not 680.  Scores between 700 and 739 may be slightly higher than those of the special rates being offered.

Of course, all rates are subject to change at any time without notice and are for borrowers who qualify via credit, ratios and standard program guidelines.

The important thing to note is that these are historic rates -- even more beneficial to buyers than the first-time-buyer tax credit of $8,000 from earlier this year!  Between these fabulous rates and the rock bottom real estate prices in the Columbus area, you won't find a better time to buy a home!

To contact David Arocho about this -- or refinancing your current mortgage -- call him at 614-781-3434 ext. 275 or email him at david.arocho@bankofamerica.com.

by Jo-Anne LaBuda

 I recently returned from the Keller Williams Family Reunion in New Orleans, Louisiana.  Family Reunion is the name that Keller Williams gives its yearly international convention. 

Approximately 7000 agents attended this event.  The highlights were Gary Keller's "vision speech" for the future, a rousing and enthusiastic general session, informative financial forecasts and over 100 classes and breakout sessions to further agents' experience and improve their service to and for their clients.   

On top of the exceptional education opportunities, we found time to enjoy the French Quarter and have coffee and binets at the Cafe Du Monde which is a very popular outdoor cafe.  A brass quartet played some jazz as we enjoyed our coffee and sweets.  We also had an excellent view of the famous St. Louis Cathedral in Jackson Park. 

Later we took the Katrina tour. Viewing the re-building of this great city seemed particularly appropriate since the overall theme of the Family Reunion was "Overcoming Adversity".

by Lynn Nadler

Mark your calendars for the annual Pancake Day on Saturday, March 6, 2010 from 8-3 pm.  The event will be held this year at Worthington Kilbourne High School.  Tickets are $5 presale and $6 at the door.  This is the 9th year for Pancake Day which is a joint fund-raiser for both Worthington Kilbourne and Thomas Worthington High School athletic teams.

The money raised from this event helps the athletic teams purchase equipment that is not funded by the school district.  Wolves Inc. and Cards Inc, the umbrella organizations for the high schools, also use the money to fund large projects such as the moving sign outside Worthington Kilbourne.

Plan to attend this event which includes breakfast (or lunch), entertainment, a silent auction and a chance to visit with old friends and neighbors!

by Jo-Anne LaBuda

I was reading some information from Barbara Corcoran who owned The Corcoran Group (real estate company) in New York City and, in 2001, sold the company for $66M.  She appears regularly on NBC's "Today Show" and is an investor in ABC's "Shark Tank".  (She obviously is a savvy real estate entrepreneur.) Barbara is predicting that the real estate market will make up most of the loss of the last four years in the next 18 months.  I certainly hope she is correct, however I am not as optimistic.  I my experience, real estate prices go down quickly, but tend to go up slowly.

I do agree with her that the absolute best prices for real estate are available today, at least in Columbus, Ohio.  That, in addition to the current 5% interest rates, make it the best time to invest or purchase real estate here. 

Gary Keller, founder of Keller Williams Realty, has been saying for the past few years that the real estate market will begin to return to an upward direction when affordability returns.  I feel that we have affordability in Columbus.  I don't think this has happened yet in Phoenix, Las Vegas and some other high end markets. 

We are also observing a pent-up demand to purchase a move-up property for families hoping to purchase a larger home and also an increase in senior sellers who are looking to downsize.  Hopefully this is a perfect situation for both. 

The good news is this: Columbus, Ohio may not have skyscrapers or Broadway, but it is affordable and, as always, it is a great place to call home.

by Lynn Nadler

Changes are coming to the Worthington Middle School programs.   Beginning in the 2011-12 school year there were will be 3 instead of 4 traditional middle school programs.  Perry Middle school, which has been for the last few years both a traditional and alternative school, will now be solely an alternative program. 

Perry Middle School's innovative alternative program, known as the Phoenix Program, has become very popular with Worthington families and will continue to grow under the new plan.  Students who would have attended Perry will now attend McCord Middle School. 

The team-teaching method, which has been in place in Worthington's middle schools since the 1970s, will be discontinued. These changes are being made to save money.  According to a team of educators, who suggested these changes, this will help make the schools more effective and efficient.

What do you think of these changes?  We'd love to hear your comments!

by Nicki Campbell

I was going through some articles I had saved over the years and found this small sidebar from a larger article that appeared in the June 2005 issue of Good Housekeeping.  If everyone had read this back then and followed this excellent advice, many people would not be in the financial straits in which they find themselves today and the number of foreclosures might be greatly reduced.

I'm going to reprint the article exactly as it appeared back then.  It's worth reading.

Are you borrowing too much?

by Jennifer Wysmuller

If you need money, a home equity loan can make a lot of sense.  You tap the value of your home to get a cash infusion and the interest is tax deductible.

But it can be too much of a good thing.  Home equity borrowing is at an all-time high, and many people are getting in over their heads, jeopardizing their most valuable asset, says Karen Gross, a law professor who specializes in debt and other related issues.  What's more, banks and other financial companies are pushing these loans more than ever -- one bank intends to entice borrowers with free maid or lawn service.  Worse, some shady companies allow consumers to borrow as much as 125 percent of their home's value.  Here's what you need to know to make sure you don't get stretched too far.

Stick with the tried-and-true formula.  Conservative companies won't lend you more than 80 percent of the value of your home.  Borrow in excess of that, and you may find that you end up owing more than your home is worth -- a big problem if you have to sell unexpectedly in a down market.

Know your home's worth.  Some appraisers hired by lenders may inflate the value of your home.  If you have any doubts, hire an independent appraiser, for about $200 to $500.

Watch out for fluctuating interest payments.  A home equity line of credit usually comes with a variable rate; if interest rates rise, so will your payment.  Before you borrow, be sure to calculate what your highest monthly payment could be.

by Nicki Campbell

In case you are wondering if this is a good time to buy a home, this graph should help to put things in perspective!

To help you make a valid comparison, consider this:

Monthly payments on a $200,000 (30-yr) loan in 1981 at 16.5% would have been $2,770.  Today, at 5.09%, your monthly payment would be only $1,084.

Conversely, if you could afford a monthly payment of $2,770, you could have borrowed $200,000 in 1981;  today, you could borrow $511,000!  That translates to being able to buy a $555,000 house today with 10% down for the same monthly payment as a $220,000 home (with 10% down) in 1981!

This graph is courtesy of Brad Rich of Wells Fargo Mortgage.  You can reach him at 614-888-2038 or Brad.R.Rich@wellsfargo.com.

by Nicki Campbell

The massive snowfalls we have been experiencing over the past few weeks have turned Central Ohio into a winter wonderland.  Icicles hanging from trees create a magical effect, especially when the sun comes out (this actually happened on Sunday!) and makes the icicles sparkle.

But what about the icicles that are hanging from the eaves of so many of our homes?   Far from being magical, these can be signs of a phenomenon known as "ice damming", which can cause minor or major leaks resulting in roof and insulation rot, ceiling and wall damage, attic flooding, mold and more.

Ice dams usually occur after a heavy snowfall and several days of freezing temperatures.  Warm air that builds up under the roof or in the attic will heat the underside of the roof causing the snow or ice on the roof to melt.  The resulting water runs down the roof under the snow until it reaches the roof overhang, which is very cold.  The melted water then refreezes and forms a dam of ice, behind which the water ponds.  This ponding water can back up under the roof covering and leak into the attic or along the exterior walls.

Prevention

The way to prevent ice dams is to keep the entire roof of the house the same temperature as the outside, or the eaves.  This can be accomplished by increasing ventilation, adding insulation and sealing off every possible air leak that might warm the underside of the roof.  The general recommendation for proper insulation is 1 square foot of vent for every 150 feet of attic floor area.  (This can vary according to area of the country.)  Some experts recommend installing an electric vent fan that works on a thermostat.  The fan will pull outside aire into the attic to keep the inside temperature consistent .

What Not to Do

• Do not try to "chip away" the ice.  This commonly leads to shingle or gutter damage.
• Do not install heaters or mechanical equipment in the attics.
• Do not use salt or calcium chloride to melt snow on the roof.  These chemicals are corrosive and can damage metal gutters, downspouts and flashings, as well as nearby grass and plants.
• Do not get on the roof to try to remove snow or ice.  This can cause roof damage and it is not safe for you!

What to do if ice dams are causing water damage (short term solutions)

• Hire a qualified contractor to carefully remove most of the snow from the roof above the ice dam.  He should not touch the roof with equipment or walk on the roof, if possible.  Cold roofs are brittle and are prone to damage. The contractor may decide to create one or two grooves in the ice dam to allow the ponding water to drain off. 
• Make a "snow melt sock" by cutting the legs off a pair of pantyhose, filling with calcium chloride ice melter and laying it onto the roof so it crosses the ice dam and overhangs the gutter.  This should melt small channels in the ice, allowing runoff to occur.

For more information, the University of Massachusetts has an excellent article at  http://bct.nrc.umass.edu/index.php/publications/by-title/preventing-ice-dams/. 

Other sites with information are:

http://htoyh.com  (Mr. Fix-It Home Tips)

http://diylife.com

http://thisoldhouse.com

Although we believe this information to be reliable and accurate, we cannot guarantee it.  As always, consult an experienced contractor or other expert to determine the best solution for your individual situation.