Credit Information EVERYONE Needs to Know

If you are thinking about buying a or re-financing now, or anytime in the future, one of the main factors determining your ability to qualify for a loan is your credit score. Understanding what credit scores mean, how they are calculated, and how to improve your score can make the difference in your ability to qualify for a loan and get the best possible terms and interest rates.

Credit scores range from 300-850. Here is how those scores are broken down:

780 and Above: Outstanding

740-780: Excellent

690-740: Good

620-690: Fair

62o and Below: Poor

Typically, the higher your credit score, the better loan terms you will be offered. People with scores below 620 will generally not be able to qualify for a loan.

Credit scores are determined by a number of factors including:

• Amounts owed
• Payment history
• Types of credit in use
• New Credit
• Length of Credit History

There are three major credit reporting agencies: Equifax, Experian, and TransUnion. These agencies may all have slightly different information, and they each use a different method to calculate credit scores, so your score will be slightly different from each one. Most lenders will pull credit reports from all three agencies when processing a loan. It is important that everyone checks their credit report at least once a year to ensure that the information is accurate and up-to-date. You can pull a free copy of your credit report once a year through the website http://www.annualcreditreport.com/. This website also offers credit scores, for a fee.

If your credit score has seen better days, there are things you can start doing right away to improve your score:

• Pay all your bills on time
• Work to get credit card balances below 25% of their limits
• Open new accounts only if absolutely necessary
• Lengthen your credit history
• Seek credit counseling through the National Foundation for Credit Counseling http://www.nfcc.org/
• Opt-out to stop receiving new credit card offers through http://www.optoutprescreen.com/ or call 1-888-567-8688

In Boulder County, we have a fantastic resource for anyone who is thinking about buying a home and has questions about credit or related items. The Boulder County Housing Counseling Program offers free housing counseling and classes http://www.bouldercounty.org/hhs/housingcounseling.htm. These services are available to residents of Boulder, Broomfield, and western Weld Counties.

Brought to you by:

Jennifer Fly

Broker Associate

Colorado Landmark, Realtors

(303) 443-3377

jenniferfly@coloradolandmark.com

Twitter: jenflycolorado

What Does it Mean to be in a “Buyer’s Market”?

It is best to return to basic economics. A buyer’s market is when there is more supply than demand. Some say it is when the inventory rises above a six month supply and there are more homes for sale than there are buyers for these homes. All agree that a buyer’s market has more inventory than demand for this inventory and so buyers are in control. So what this means is that there are typically more homes for sale for buyers to choose from. What it doesn’t mean is that a buyer has total control and can make unrealistic demands on the seller.

If you are a buyer looking to buy in Boulder, you may have your pick of several homes that meet your criteria..and you may not. Revisiting the simple economics and understanding how Boulder’s sustainable growth or housing cap works is an important piece of this equation. Boulder has its own limited supply by historical and ongoing scrutiny with new building permits. This plan started in the 1960s when the City implemented a sales tax increase and purchased greenbelts to remain as such; surrounding the city instead of issuing developers building permits for this space. Currently the idea of quality over quantity is still evident in the “Comprehensive Rezoning Proposal” which addresses both commercial and residential development within the City of Boulder.

I found a very well written case study based on Eben Fodor’s Better Not Bigger if you would like to read more about Boulder’s sustainable growth plan. So even if the national news is telling you it’s a “buyer’s market,” it is best to examine real estate city by city or even better: block to block. Some areas within Boulder and price ranges are definitely taking a hit. The upper end of the market (above $1,000,000) has seen longer days on market and fewer sales in the past 12 months. At the same time, single family homes under $400,000 have continued to sell in less than 80 days on average, some even going under contract the same day they are listed. It just goes to show that homes will sell and not every market is the same.

How about foreclosures or short sales? Buying from a bank has its own set of rules and if you are someone that likes to control situations then this is not for you. It is a game of "hurry-up and wait". When I was first starting my real estate career, all I did was buy foreclosures and pre-foreclosures. I know from experience it can be a long process. It can take a month or more for a bank to decide whether or not to accept a short pay offer and 80% don't get accepted. There is no one to call and push along, the person that answers the phone at the bank doesn't care much if the property sells or not and the listing agent has no control over the speed at which the bank responds. What’s more is because the market is moving in Boulder, there are little to no foreclosures available, even right now.

What else does a “buyer’s market” mean? Currently it means that buyers still have choices and incentives to buy. One of the most popular loan products I have seen is an FHA loan where the buyer only needs to bring 3.5% to the table. You can bring more of a down payment, but 3.5% is pretty stellar. This loan has been a 30 yr fixed with a rate around 5%, depending on the borrower. Also, the federal government has implemented a non-repayable $8,000.00 tax credit to first time home buyers. The terms “first time” are pretty loose as the definition according to the federal housing tax credit website says first time also means that you haven’t owned in the past 3 years. Visit the site to find out if the tax buyer credit will work for you.

And what about if you are a seller? Well, the above incentives for buyers are great because it keeps buyers buying. But sellers are not off the hook yet. Price your home right, stage it

properly and market it effectively. Look for a follow-up post from me on how sellers can reach their goals in a buyer’s market.

This post contributed by:

Sheila Mudd-Roberts

boulderrealtor@gmail.com

720-628-8454

Understanding Short Sales - A Good Option for Homeowners in Trouble

Most of us in the real estate business (and probably most people in America) didn’t know what the term “short sale” meant 2 years ago. Now it is a topic that appears in our business on a daily basis, and we are all working hard to stay up to date with the latest information to help our clients.


A short sale is an agreement from your lender to accept less than the amount you owe on your mortgage and release the lien on your property so you are able to sell it and move on. The short sale process can take, on average, 4-6 months and requires a lot of patience, but there are steps that can be taken to make the process easier.

If you are a seller and you have fallen behind on your mortgage payments, tell your Realtor right away. As with all real estate transactions, it is important to work with someone who knows and understands the process. Your Colorado Landmark Realtor can give you a checklist of the items that should be completed and submitted to the bank upon listing your home. Once you receive an offer on your property, your Realtor will help you submit it to the lender along with other required documentation to help facilitate the sale as quickly as possible.

By the time they have reached the point of becoming delinquent with their mortgage payments, many sellers are tempted to just walk away from their mortgage and allow the bank to foreclose on their property. There are several reasons why this is a bad idea.

• A foreclosure can negatively impact your credit score by 250 – 300 points, and it will remain on your credit history for up to 10 years.



• A homeowner who has had a foreclosure is ineligible for a Fannie Mae backed mortgage for a period of up to 5 years, and has to disclose a foreclosure in the last 7 years on any loan applications.



• Having a foreclosure on your credit history can make it difficult for you to qualify for any other type of loan, and some employers will even use this information to re-assign or terminate employees.
  

Instead, if you take the time and effort to get your house sold through a short sale, it will most likely impact your credit score by only 50 or so points, and you are able to qualify for a mortgage and purchase another home after only 2 years. Not to mention that you can sell your home and move out of your neighborhood with dignity, and feel as though you did everything you could to protect your family’s future.

If you are a buyer and you are interested in purchasing a property that is being sold as a short sale, you will also need to be patient. It is important to work with a buyers agent who has experience with short sales. New post coming soon: tips for buyers interested in short sale properties!


The short sale process can be stressful and frustrating, but working with an experienced agent will make it much easier for you every step of the way. At Colorado Landmark our real estate sales associates strive to be up to date on the latest real estate trends and market information. Our sales associates regularly pursue continuing education opportunities to reinforce their expertise and knowledge. If you have any questions or are ready to sell your home, please give us a call.




This blog entry written by:


Jennifer Fly, Broker Associate, Colorado Landmark Realtors

303-506-0253 (cell)
jenniferfly@coloradolandmark.com