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Understanding Credit
Jul 24, 2020
Credit is one of the crucial factors when applying for a mortgage. Did you know, you have three credit scores from three different credit bureaus? We look at all three scores and use the median score for the homebuying process.
Your credit score tells lenders (hi, that’s us) just how likely you are to pay your mortgage on time every month and understanding what impacts your credit score is important as you start your journey to owning a home.
What Impacts a Credit Score?
- Late payments in general as well as those that lead to charge-off’s and collection accounts
- High credit utilization – typically using over 50% of your credit limits can decrease your credit scores
- Numerous credit inquiries in a short time period can have a negative impact on your credit. Don’t worry us pulling your credit at pre-approval and at the start of the application won’t drastically hurt your score.
- Too much – or too little – credit can also have a negative impact. You need a credit history to qualify for a mortgage, but you also don’t want to open lines of credit for no reason.
Here are some useful credit-related tips to help you prepare for the home loan application process:
- Pay debts on time every month and avoid making late payments of 30 days or greater because they will adversely impact credit.
- Be careful not to overuse credit cards
- Avoid closing accounts with zero balances. It’s best to leave them open until they automatically drop off the credit report.
- If there are outstanding collections, it’s best to work out a repayment plan with the collection agency and only agree to make payment in full if the collection agency agrees to delete the collection account upon their receipt of the full balance.
If you are struggling with your credit, we have a network of credit counselors that are happy to help you determine how to pay off debts and will give specific instructions to help you improve your credit score.
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We've begun to see signs that the Spring Market is here and could be robust! Here is what we know: According to NAR, home sales were up 14% in February over the previous month which marked the biggest monthly increase since July 2020. While March results are not yet published, the mortgage industry saw an increase in purchase applications for the 3rd straight month; a great sign for the housing market. Driving much of this activity is the stabilization of rates in January & February and lower interest rates this past month. We’re starting to see signs of a slowing economy and the markets are now pricing this in. This week we saw the 10-yr Treasury drop under 3.4%, a level it has not reached for quite some time and the lowest it’s been since September 9, 2022. This is great news for consumers as decreasing rates mean more home affordability. Over the past year, most markets have seen home prices stabilize if not even decline, albeit by a very small amount. This stabilization was still a relief for homebuyers as it helped to offset higher interest rates. As rates continue to decrease, we would expect home prices to again increase due to demand increases. In addition to increased demand, there is still a shortage of homes for sale nationwide and that will continue to worsen as more and more homebuyers enter the market. So what does it all mean? Now is a GREAT time to buy a home! Rates and home prices are stable, there is not as much competition as there will be when rates do decrease, and buying a home is still extremely affordable for most. Once rates fall, we will likely see home prices rise and the competition for the shortage of homes will increase alongside it making the window of a buyer-dominated market very small.
We are well into Q1 and feel confident saying that the market appears to be stabilizing. Before we start looking forward, let’s quickly look back at the end of 2022.
Buying a home is a huge investment and one we talk about often - BUT the flipside is that you have an opportunity to cash in on that investment when you’re ready to sell your home! While you do have the chance to cash-in, a lot more work goes into selling a home than you might think! If you are considering selling your home, working with a listing agent will help you market your home, negotiate with potential buyers, work through paperwork, and ultimately close on your home! So what is a listing agent? In its most basic terms, a listing agent is a real estate professional who represents the seller in a real estate transaction. The listing agent lists the home for sale and works on behalf of the seller to sell the home at the best price and terms for their client. Listing your home is a BIG deal and it is not a place to try and DIY. But why can’t you just grab a sign at Home Depot and try and sell yourself? Well, there are lots of reasons some of which include: Professional consultation: A listing agent will walk you through each step and tell you what to expect along the way! They should understand the specific community you’re in and the current market environment and will help you determine a competitive but realistic asking price for your home. Marketing and selling your home: Your listing agent will list your home on the multiple listing service (MLS) in order to better market your home to potential buyers. They also can make staging recommendations and hire a photographer to best show off your home and its features. They’ll schedule house showings, and can be present to answer any questions. Communication and negotiation: Communication is key to both buying and selling a home in order to minimize stress and misunderstandings. Listing agents take care of this important task, by staying in touch with interested buyers and their agents, fielding questions, handling paperwork, and negotiating the final sale price and terms. Recommendations: Seasoned listing agents might come with a list of professionals who they have worked with in the past that they enjoy working with in order to make the selling process smoother for you! Some of these professionals include: real estate attorneys or title companies, inspectors, stagers, those who specialize in home improvement AND of course trusted Loan Officers. How do I find the right listing agent for my situation? In order to find the right listing agent for you, make sure your agent is licensed and has experience, references, and a professional website where you can learn more about them and their qualifications. Most real estate agents work with both buyers and sellers, but some might specialize in one or the other. Once you find a few agents through referrals or online research, meet with them in person to ensure they meet your needs and work well with your personality. It is also important to ask questions during your meeting with them and it’s imperative that you determine what you’re looking for in an agent so you make sure you are happy with the product being delivered. Selling a home can be stressful, especially for first-time sellers. A listing agent can help by taking on some of the burden and providing the information and resources needed to help sellers make informed decisions. We work with agents on both sides of the transaction – if you have any questions or would like a recommendation for an agent in your area, please reach out to us!
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