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5 Factors That Decide Your Credit Score.

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage.

The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time If they were late, then how late Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it s desirable to have more than one type of credit  installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

KEEPIN UP

So, you are in your home-sweet-home. Ownership has many rewards, so it is important to maintain that ownership!

Here are some tips and advice on how to keep your head above water:

  • Review the budget you set up for yourself. Are you staying within those limits
  • Check with a tax advisor to make sure you re getting the maximum write-off on your loan interest. This can mean hundreds of dollars a month
  • Watch how much you spend when you first move into your new home! This is a dangerous time to run up big credit card bills buying all of that furniture you want
  • Be sure to put a little extra away every month to cover unexpected expenses like a new hot water heater or dishwasher
  • If interest rates fall more than a half point in the months after you buy, consider refinancing your mortgage. This could save you a great deal of money over the life of the loan

What is Escrow Anyway

Once an offer has been accepted by a seller and both parties have signed all of the pertinent dotted lines on the offer this document becomes the sales contract (or agreement). Next, the contract and all necessary paperwork and/or funds are collected and delivered to a neutral third party called an escrow holder.

During the escrow process, this neutral third party will carry out the provisions of the agreement between buyer and seller. An escrow holder is typically an escrow firm or title company. As with the other parts of your transaction, a good real estate agent can help you find an escrow holder in your area. Check the fees charged by the various escrow holders in the area. These fees may be negotiable.

The escrow officer carries out instructions from the buyer and seller, and ensures that ownership of the property is transferred from the seller to the buyer.

The escrow officer will also collect all of the odds and ends in the purchase process.

This includes proof of insurance, the preliminary title report, inspection reports, loan information and the like. The escrow officer will also prepare the final closing statement. The final closing statement is much like a bank statement, in that it lists all of the credits and debits associated with the purchase of the home. Compare the closing costs to those listed on the Good Faith Estimate received from your broker/lender.

You will typically meet with the escrow officer to sign a lot of documents. READ EVERYTHING! Take your time and ask questions about things you don t understand.

Hints on Closing

  • Keep in close communication with your lender. Are there any problems with documentation on the loan Has everything been verified
  • Keep in close communication with your real estate agent. Are there any problems with the home inspection Pest report
  • Always be available for any questions from your real estate agent, escrow officer, loan officer, or anyone else involved in the buying process. Make sure you re  in the loop with any issues that may arise.
  • When it comes time to close escrow — that is, take possession of the house — clear some time. Figure out WHEN you d like to close, and then look at when you HAVE TO close. Are you moving at the end of the month from a rental to your new place Don t let delays leave you out in the street!

Ask your escrow officer for an estimate of closing costs. You won t know exactly how much you ll pay until escrow closes, but it is good to know these figures ahead of time.

10 Questions to Ask Your Lender

1. What are the most popular mortgages you offer Why are they so popular
2. Which type of mortgage plan do you think would be best for me Why
3. Are your rates, terms, fees, and closing costs negotiable
4. Will I have to buy private mortgage insurance If so, how much will it cost, and how long will it be required (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you ve acquired a certain amount of equity by paying down the loan.)
5. Who will service the loan  your bank or another company
6. What escrow requirements do you have
7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored) Will I be able to obtain a lower rate if it drops during this period
8. How long will the loan approval process take
9. How long will it take to close the loan
10. Are there any charges or penalties for prepaying the loan

Used with permission from Real Estate Checklists & Systems, www.realestatechecklists.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Is It an Offer They Can t Refuse

So you ve gotten pre-approved on your loan and you ve decided on what type of home you want to buy. And, you ve found your dream home. Now it s time to make an offer on it. This is when the real fun begins.

To make a good offer on a house, look at its fair market value. To get its fair market value, there are two things you can do: get a comparable market analysis (CMA) or have a professional appraisal done.

The CMA is typically done by your real estate agent. Again, this is a good time to have a great, knowledgeable agent. A CMA is a process of looking at comparable sales in your prospective neighborhood. By examining things like size, location and purchase price, a good agent should be able to give a fairly accurate determination of a home s fair market value.

On the other hand, you can choose to have a professional appraisal done on your prospective home. An appraiser estimates the value of the home and will give you an estimated fair market value. However, you will have to pay to have an appraisal done  whether you get the property or not.

Short Sale Vs Foreclosure Means Weighing All The Options

Mortgagees behind on their monthly house payment have the difficult decision of short sale vs foreclosure. There are pros and cons of either option, but the final determination is based on the amount of time and work to be spent.

A judicial foreclosure lowers one’s credit score up to four hundred points and remains on the credit reports for seven to ten years. The lending institution sues the borrower in court. If the amount due cannot be repaid, the court allows the bank to continue the process.

An auction date is scheduled and posted in the newspaper and on signs that the sheriff’s department has placed on the home. The lending institution pays for insurance coverage during the process. The borrower can save the home by paying the amount due up to the morning of the public auction. Otherwise, the home and property are sold to a person with the highest bid. The financial institution will write off the remainder of the debt or sue the former mortgagee.

Another alternative is deed in lieu in which the resident signs ownership of the home to a loan holder as payment. The property is then auctioned to whoever bids the highest. This is a feasible option for those who cannot afford workout payments or cannot find a buyer. This option is less costly for the bank since routine court fees are not needed. The mortgagee’s obligation is considered paid in full, but their credit score can be affected just as negatively as a foreclosure unless the account is reported as paid and settled.

Both first and second mortgages can be wiped away with a short sale by selling the property at a reduced price approved by financial institutions. This alternative reduces one’s credit score by only up to two hundred points, and stays on the credit report for up to seven years. Previous borrowers may be approved for another loan at another institution as quick as one year later.

The institution is informed by borrowers of the intent to sell in this method. The lending institution works closely with the realtor chosen by the homeowner who is experienced in this method. The home is listed at a reduced price which is bank approved. Once the homeowner accepts a bid by a potential buyer, the necessary paperwork is given to the facility. Any disapprovals are dealt with including bid changes and resubmitted. After approval, the selling process continues to the title company for completion.

This alternative permits the borrower to be involved in all decisions from choosing the realtor and their involvement to picking the winning bid to be submitted. Although the only person benefiting from any profits is the realtor, the seller does not pay any costs that he would normally be responsible for.

When deciding short sale vs foreclosure, those in debt desiring to stay in charge of their outcome should decide on the former alternative. Like standard house selling, they have the final say in who to sell their home to. Although they gain no profit, their profit is knowing they made the choice of who their beloved home was given.

Article Source: http://www.articlesnatch.com

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So what is a short sale and how does it work you ask? You can learn more on short sale today.. Free reprint available from: Short Sale Vs Foreclosure Means Weighing All The Options.

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Why You Should Work With a REALTOR

Not all real estate practitioners are REALTORS . The term REALTOR is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS and subscribes to its strict Code of Ethics. Here are five reasons why it pays to work with a REALTOR .

1. You ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.

2. Get objective information and opinions. REALTORS can provide local community information on utilities, zoning, schools, and more. They ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment Second, will the property have resale value when I am ready to sell

3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR to find all available properties.

4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

5. Property marketing power. Real estate doesn t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR , you do not have to allow strangers into your home. Your REALTOR will generally prescreen and accompany qualified prospects through your property.

6. Real estate has its own language. If you don t know a CMA from a PUD, you can understand why it s important to work with a professional who is immersed in the industry and knows the real estate language.

7. REALTORS have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you ve done it before, laws and regulations change. REALTORS , on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.

8. Buying and selling is emotional. A home often symbolizes family, rest, and security  it s not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they ll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.

9. Ethical treatment. Every member of the NATIONAL ASSOCIATION of REALTORS makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a REALTOR , you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for REALTORS to take the Code of Ethics orientation and they are also required to complete a refresher course every four years.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Making an Offer on a Short Sale What You Need to Know

Are you looking to buy a new home Are you thinking that now’s a great time to find bargains Before you make an offer, it pays to know a little about the seller’s situation.

If a home is being sold for below what the current seller owes on the property and the seller does not have other funds to make up the difference at closing the sale is considered a short sale. Many more home owners are finding themselves in this situation due to a number of factors, including job losses, aggressive borrowing against their home in the days of easy credit, and declining home values in a slower real estate market.

A short sale is different from a foreclosure, which is when the seller’s lender has taken title of the home and is selling it directly. Homeowners often try to accomplish a short sale in order to avoid foreclosure. But a short sale holds many potential pitfalls for buyers. Know the risks before you pursue a short-sale purchase.

You’re a good candidate for a short-sale purchase if:

* You’re very patient. Even after you come to agreement with the seller to buy a short-sale property, the seller s lender (or lenders, if there is more than one mortgage) has to approve the sale before you can close. When there is only one mortgage, short-sale experts say lender approval typically takes about two months. If there is more than one mortgage with different lenders, it can take four months or longer for the lenders to approve the sale.

* Your financing is in order. Lenders like cash offers. But even if you can t pay all cash for a short-sale property, it s important to show you are well qualified and your financing is set. If you’re preapproved, have a large down payment, and can close at any time, your offer will be viewed more favorably than that of a buyer whose financing is less secure.

* You don t have any contingencies. If you have a home to sell before you can close on the purchase of the short-sale property or you need to be in your new home by a certain time a short sale may not be for you. Lenders like no-contingency offers and flexible closing terms.

If you’re serious about purchasing a short-sale property, it’s important for you to have expert assistance. Here are some people you want to work with:

* Experienced real estate attorney. Only about two out of five short sales are approved by lenders. But a good real estate attorney who’s knowledgeable about the short-sale process will increase your chances getting an approved contract. Also, if you want any provisions or very specialized language written into the purchase contract, a real estate attorney is essential throughout the negotiation.

* A qualified real estate professional. You may have a close friend or relative in real estate, but if that person doesn t know anything about short sales, working with him or her may hurt your chances of a successful closing. Interview a few practitioners and ask them how many buyers they’ve represented in a short sale and, of those, how many have successfully closed. A qualified real estate professional will be able to show you short-sale homes, help negotiate the purchase when you find the property you want to buy, and smooth communications with the lender. (All MLSs permit, and some now require, special notations to indicate that a listing is a short sale. There also are certain phrases you can watch for, such as  lender approval required. )

* Title officer. It s a good idea to have a title officer do an initial title search on a short-sale property to see all the liens attached to the property. If there are multiple lien holders (e.g., second or third mortgage or lines of credit, real estate tax lien, mechanic s lien, homeowners association lien, etc.), it’s much tougher to get that short sale contract to the closing table. Any of the lien holders could put a kink in the process even after you ve waited for months for lender approval. If you don t know a title officer, your real estate attorney or real estate professional should be able to recommend a few.

Some of the other risks faced by buyers of short-sale properties include:

* Potential for rejection. Lenders want to minimize their losses as much as possible. If you make an offer tremendously lower than the fair market value of the home, chances are that your offer will be rejected and you ll have wasted months. Or the lender could make a counteroffer, which will lengthen the process.

* Bad terms. Even when a lender approves a short sale, it could require that the sellers sign a promissory note to repay the deficient amount of the loan, which may not be acceptable to some financially desperate sellers. In that case, the sellers may refuse to go through with the short sale. Lenders also can change any of the terms of the contract that you ve already negotiated, which may not be agreeable to you.

* No repairs or repair credits. You will most likely be asked to take the property  as is. Lenders are already taking a loss on the property and may not agree to requests for repair credits.

The risks of a short sale are considerable. But if you have the time, patience, and iron will to see it through, a short sale can be a win-win for you and the sellers.

* Not all real estate practitioners are REALTORS . A REALTOR is a member of the NATIONAL ASSOCIATION OF REALTORS and is bound by NAR s strict code of ethics.

Note: This article provides general information only. Information is not provided as advice for a specific matter. Laws vary from state to state. For advice on a specific matter, consult your attorney or CPA.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Negotiate Your Best House Buy

By: G. M. Filisko

Keep your emotions in check and your eyes on the goal, and you’ll pay less when purchasing a home.

Buying a home can be emotional, but negotiating the price shouldn’t be. The key to saving money when purchasing a home is sticking to a plan during the turbulence of high-stakes negotiations. A real estate agent who represents you can guide you and offer you advice, but you are the one who must make the final decision during each round of offers and counter offers.

Here are six tips for negotiating the best price on a home.
1. Get prequalified for a mortgage
Getting prequalified for a mortgage proves to sellers that you’re serious about buying and capable of affording their home. That will push you to the head of the pack when sellers choose among offers; they’ll go with buyers who are a sure financial bet, not those whose financing could flop.

2. Ask questions
Ask your agent for information to help you understand the sellers’ financial position and motivation. Are they facing foreclosure or a short sale Have they already purchased a home or relocated, which may make them eager to accept a lower price to avoid paying two mortgages Has the home been on the market for a long time, or was it just listed Have there been other offers If so, why did they fall through The more signs that sellers are eager to sell, the lower your offer can reasonably go.

3. Work back from a final price to determine your initial offer
Know in advance the most you’re willing to pay, and with your agent work back from that number to determine your initial offer, which can set the tone for the entire negotiation. A too-low bid may offend sellers emotionally invested in the sales price; a too-high bid may lead you to spend more than necessary to close the sale.
Work with your agent to evaluate the sellers’ motivation and comparable home sales to arrive at an initial offer that engages the sellers yet keeps money in your wallet.

4. Avoid contingencies
Sellers favor offers that leave little to chance. Keep your bid free of complicated contingencies, such as making the purchase conditional on the sale of your current home. Do keep contingencies for mortgage approval, home inspection, and environmental checks typical in your area, like radon.

5. Remain unemotional
Buying a home is a business transaction, and treating it that way helps you save money. Consider any movement by the sellers, however slight, a sign of interest, and keep negotiating.
Each time you make a concession, ask for one in return. If the sellers ask you to boost your price, ask them to contribute to closing costs or pay for a home warranty. If sellers won’t budge, make it clear you’re willing to walk away; they may get nervous and accept your offer.

6. Don’t let competition change your plan
Great homes and those competitively priced can draw multiple offers in any market. Don’t let competition propel you to go beyond your predetermined price or agree to concessions-such as waiving an inspection-that aren’t in your best interest.

More from HouseLogic
Determine how much mortgage you can afford (http://buyandsell.houselogic.com/articles/4-tips-determine-how-much-mortgage-you-can-afford/)

Keep your home purchase on track (http://buyandsell.houselogic.com/articles/keep-your-home-purchase-track/)

Plan for a stress-free home closing (http://buyandsell.houselogic.com/articles/7-steps-stress-free-home-closing/)

Other web resources
More negotiating tips (http://www.freddiemac.com/corporate/buyown/english/purchasing/offer/negotiate.html)

Develop a homebuying strategy (http://www.nolo.com/legal-encyclopedia/article-29746.html)

G.M. Filisko is an attorney and award-winning writer who has to remind herself to remain unemotional during negotiations. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

6 Reasons to Reduce Your Home Price

By: G. M. Filisko

While you’d like to get the best price for your home, consider our six reasons to reduce your home price.

Home not selling That could happen for a number of reasons you can’t control, like a unique home layout or having one of the few homes in the neighborhood without a garage. There is one factor you can control: your home price.

These six signs may be telling you it’s time to lower your price.

1. You’re drawing few lookers
You get the most interest in your home right after you put it on the market because buyers want to catch a great new home before anybody else takes it. If your real estate agent reports there have been fewer buyers calling about and asking to tour your home than there have been for other homes in your area, that may be a sign buyers think it’s overpriced and are waiting for the price to fall before viewing it.

2. You’re drawing lots of lookers but have no offers
If you’ve had 30 sets of potential buyers come through your home and not a single one has made an offer, something is off. What are other agents telling your agent about your home An overly high price may be discouraging buyers from making an offer.

3. Your home’s been on the market longer than similar homes
Ask your real estate agent about the average number of days it takes to sell a home in your market. If the answer is 30 and you’re pushing 45, your price may be affecting buyer interest. When a home sits on the market, buyers can begin to wonder if there’s something wrong with it, which can delay a sale even further. At least consider lowering your asking price.

4. You have a deadline
If you’ve got to sell soon because of a job transfer or you’ve already purchased another home, it may be necessary to generate buyer interest by dropping your price so your home is a little lower priced than comparable homes in your area. Remember: It’s not how much money you need that determines the sale price of your home, it’s how much money a buyer is willing to spend.

5. You can’t make upgrades
Maybe you’re plum out of cash and don’t have the funds to put fresh paint on the walls, clean the carpets, and add curb appeal. But the feedback your agent is reporting from buyers is that your home isn’t as well-appointed as similarly priced homes. When your home has been on the market longer than comparable homes in better condition, it’s time to accept that buyers expect to pay less for a home that doesn’t show as well as others.

6. The competition has changed
If weeks go by with no offers, continue to check out the competition. What have comparable homes sold for and what’s still on the market What new listings have been added since you listed your home for sale If comparable home sales or new listings show your price is too steep, consider a price reduction.

More from HouseLogic
How to ready your home for sale at little cost (http://buyandsell.houselogic.com/articles/5-tips-prepare-your-home-sale/)

How to review offers on your home (http://buyandsell.houselogic.com/articles/6-tips-choosing-best-offer-your-home/)

Other web resources
Setting the right price

More on setting the right price (http://public.findlaw.com/abaflg/flg-4-4a-1.html)

G.M. Filisko is an attorney and award-winning writer who made strategic price reductions that led to the sale of a Wisconsin property. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

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