Archives for October 2011

Wall Street Journal – “An Excellent Time To Buy A House”

October 23, 2011 by admin

The signs have been there: record-low interest rates and reasonably priced homes. This week, the Wall Street Journal presents two factors that make now “an excellent time to buy a house.” First, the ratio of home prices to yearly rents is close to its pre-bubble average. Second, when mortgage rates are considered, houses are the most affordable they have been in decades.

The article goes on to explain that whether or not buying is a better deal than renting depends on the relationship between prices and rents, the cost of financing and other factors. The good news is that the numbers all seem to be heading in the right direction.

According to Moody’s Analytics, the nationwide ratio of home prices to yearly rents is 11.3, down from 18.5 at the peak of the bubble. With all things being equal, a lower ratio means buying is preferable to renting. Even though the price/rent ratio is not as low as it has been, house payments are more affordable than they have been in decades because mortgage interest rates are so low.

– And, despite public opinions otherwise, mortgage money is available according to information in the article attributed to Stan Humphries, chief economist at Zillow, a home and real estate consumer website.

The article closes with this advice: “When prices are low, loans are cheap and plump investment yields are scarce, buyers should jump.”

Wallingford Real Estate, Wallingford, PA 19086

Real Estate ABC’s – Improving Your Credit Score

October 17, 2011 by admin

The Federal Reserve Bank offers some basic tips to follow in order to improve your existing credit score:

Pay Your Bills On Time – The quickest way to negatively impact your score is to miss monthly payments on your credit cards or other debts. In fact one late payment can affect your score for years. Bottom line – stay current with your monthly obligations.

Pay Down Large Balances – As you pay down an outstanding balance on a credit card or mortgage, your credit score is likely to increase. In contrast moving balances to new credit lines can decrease your score.

Don’t Max Out Your Credit Cards – Scoring algorithms compare the amount of debt you have relative to your established credit limits. When the amount you owe is close to your limit, your credit score is likely to suffer. Try to carry a low balance, no more than 15% of your credit limit on your cards.

Keep Your Credit In Pristine Condition – A short credit history will have a negative effect on your score, since you have not established a track record of your creditworthiness. However a short history can be positively impacted with timely payments and low balances.

Understand The Impact Of Your Past Actions – If you have a short sale or foreclosure in your financial past you will have a black mark on your credit history for up to seven years. A bankruptcy can impact your report for up to ten years. Your credit score will improve over time as past transgressions age, but you need patience combined with three to five years of good long term credit behavior.

Don’t Apply For Too Many Accounts – Do not apply for a variety of credit over a short period of time. A lot of new credit activity will negatively impact your score. Resist the urge to apply for the credit offers that appear in your mailbox.

Maintain A Mix Of Credit Types – A good credit report will contain a mix of installment loans and credit cards.

Correct Mistakes In Your Credit Report – Under federal law you are entitled to get one free credit report from each of the three credit reporting agencies once per year. To order, go to www.annualcreditreport.com – which is the only authorized source for a free credit report. Regular monitoring of your history brings attention to mistakes in your report, and can alert you to a pattern of identity theft.

Wallingford PA Real Estate – Wallingford, PA 19086

Early Mortgage Payment Triggers Bank Foreclosure

October 13, 2011 by admin

Sharon and James Bullington of New Port Richey, FL had made arrangements with Bank Of America to modify their mortgage on their home, cutting their monthly payments from $1,400 to $916.

Being diligent about sending her mortgage payment she mailed a check on Dec 23, 2010, a week early, which turned out to be a big mistake.

Why? By sending in the payment prior to it’s due date of January 1, Bank Of America invalidated the mortgage modificati0n agreement, and began foreclosure proceedings. Sounds totally ludicrous doesn’t it? Well it happened.

Stunned by the bank’s actions Bullington contacted CEO and president Brian T. Moynihan and was told the foreclosure process could not be stopped. Only after intervention by a Florida legislator did the bank listen to reason.

In August Bank Of America issued a statement admitting it made “made an error in posting” one of the Bullington’s mortgage payments. They reimbursed the couple for legal fess and waived late fees that were imposed.

Is it any wonder that the foreclosure picture gets bleaker all the time.

By the way it was reported today that mortgage delinquent notices were up 14% in September. I hope nobody sends in an early payment.

Real Estate ABC’s – Your FICO Credit Score

October 12, 2011 by admin

The importance of wise and prudent use and management of credit is critical.Your creditworthiness determines the terms and interest rate of any loans you apply for, and ultimately whether or not a lender will lend to you at all.

You have probably heard of the acronym FICO. FICO stands for Fair Isaac Corporation, the company who provides the majority of credit scoring services in the country today.

FICO credit scores range from 300 to a high of 850. The following chart is a breakdown of credit scores for the U.S. credit population:

% Of Population Credit Score

2% 300 – 499

5% 500 – 549

8% 550 – 599

12% 600 – 649

15% 650 – 699

18% 700 – 749

27% 750 – 799

13% 800 – 850

When discussing FICO scores terms in mortgage financing a score of 620 has historically been the dividing line between “bad” and “good”. Financing is possible for borrowers with credit scores below 620, but the interest rate will be higher and the terms more strict.

Various facets of your credit data are more important that other when determining your FICO credit score. The breakdown that follows summarizes the major criteria, and their relative weight in the determination of your credit score.

These percentages are based on the importance of the five categories for the general population. For particular groups – for example, people who have not been using credit long – the importance of these categories may be somewhat different.

PAYMENT HISTORY

Account payment information with such agencies as credit card companies, lenders of installment loans, mortgages, and retailers. This part of your credit score measures your ability to pay on time, and the money you have past due. The presence of adverse public records such as bankruptcy, judgements, suits, liens, wage attachments, etc., collection items, and/or delinquency or past due items is also a factor

AMOUNTS OWED

Information concerning the total amount of credit you have outstanding, number of accounts, balances on account, and how much credit you have relative to the maximum amount creditors are willing to extend to you.

LENGTH OF CREDIT HISTORY

This factor measures how long your accounts have been open with creditors and lenders. The longer your credit history, the easier it is to accurately identify payment patterns.

NEW CREDIT

The data used here reflects how much credit you’ve applied for lately. The number of recently opened accounts, and number of credit inquiries are key elements.

TYPES OF CREDIT USED

This is the measure of the diversity of credit you have in your portfolio. For example, do you have a mortgage, car loan, and credit cards? The more types of credit you have, the more accurately your score can be determined.

A FICO score takes into consideration all these categories of information, not just one or two. No one piece of information or factor alone will determine your score. The importance of any one factor depends on the overall information in your credit report.

For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it’s impossible to say exactly how important any single factor is in determining your score – even the levels of importance shown here are for the general population, and will be different for different credit profiles. What’s important is the mix of information, which varies from person to person, and for any one person over time.

Your FICO score only looks at information in your credit report. However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.

Next week: How to Improve Your Credit Score.

National Fire Prevention Week – October 9 – 15, 2011

October 9, 2011 by admin

National Fire Prevention week is being observed during the week of October 9 through October 15. This fire safety awareness program began in 1911 on the 40th anniversary of the Great Chicago fire of 1871.

Simple safety tips can prevent accidental fires in the home, which is a leading cause of accidental injury and death in U.S. households.

Checking smoke dector batteries to make sure they are in working order is one of the basic steps in fire safety. As you are picking up Halloween candy at the store, which you will most likely consume prior to Octobe31, pick up some extra 9 volt batteries for your smoke detectors.

There are many other relatively simple tips to prevent accidental fires:

Never leave food unattended on a stove.
Keep cooking areas free of flammable objects (such as, potholders and towels).
Avoid wearing clothes with long, loose-fitting sleeves when cooking.
Never smoke in bed or leave burning cigarettes unattended.
Do not empty smoldering ashes in a trash can, and keep ashtrays away from upholstered furniture and curtains.
Never place portable space heaters near flammable materials (such as, drapery).
Keep all matches and lighters out of reach of children. Store them up high, preferably in a locked cabinet.
Install smoke alarms on every floor of the home, including the basement, and particularly near rooms in which people sleep.
Use long-life smoke alarms with lithium-powered batteries and hush buttons, which allow persons to stop false alarms quickly. If long-life alarms are not available, use regular alarms, and replace the batteries annually.
Test all smoke alarms every month to ensure they work properly.
Devise a family fire escape plan and practice it every 6 months. In the plan, describe at least two different ways each family member can escape every room, and designate a safe place in front of the home for family members to meet after escaping a fire.

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Archives for October 2011

Wallingford Real Estate, Wallingford, PA 19086

S. Clark Kendus