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The real estate downturn of the mid-2000s is mostly over and the market is heating up, with prices rising in all over the U.S. In Wisconsin, the real estate market might be even healthier than in other locales, with new and existing home prices expected to rise 2.4 percent by early 2016. It might just be the perfect time to buy, but before you make any offers, you need to do a little planning to make sure you can pay out over the long run, especially if it's your first home.

Get Your Financial Ducks in a Row

Do you have good credit? Do you know what good credit is or the factors that affect your credit? Have you had late payments, bankruptcies, judgments or other liens? If the answer is yes, the first step is to work on your credit score and report. Up until just recently, access to your credit score and full report was granted after putting down credit card info for a "free trial." that you would have to cancel right away to avoid a costly fee. Now, you can access your score and report for free, so there's no excuse for not knowing what's happening with your finances. Your FICO scores are ordered separately, usually for a nominal fee. Check it for discrepancies or old information. Much of the time you can contact the lender directly to resolve these issues. Or, contact the bureau and use their dispute resolution process. Most mortgage loan programs require a 640 score or higher, so fixing errors or having old information removed can make a big difference.

Do You Have Funds?

Do you have money for a down payment or closing costs? If not, how long will it take you to save? Start now. Make a commitment to stash funds away each month to help you meet your goal. Some loan programs are still available for 0% down but watch out for those; if the market should falter again you don’t want to owe more on the home than it’s worth. It also goes without saying that you want to refrain from big purchases that require credit, such as buying a new car, until after the home purchase process is over.

Are You Homeowner Material?

Owning a home is touted as a big factor in achieving the American dream, but it's not for everyone. Ask yourself:

Am I prepared for expenses like home repairs and landscape maintenance? Am I at risk for job relocation? Am I able to stay in one place for three to five years?

Talk to a Lender First, Not a Realtor

Resist the urge to call your realtor first. Instead, speak with a lender or two to find the best program. There are many loan products and even more lending institutions so it's worth shopping around for the lowest rate. A good lender will also advise you on the best ways to protect your credit while you a preparing to buy a house, which might include ID monitoring and credit report monitoring to ensure that someone else isn't using your good credit or your identity while you working on purchasing your home.

Use a mortgage worksheet to keep track of the information you receive from various lenders. It can be a dizzying amount of numbers and differences so keeping them in one place is important. When you are within 60 days of purchasing, your lender will issue a pre-approval letter for the amount you qualify for. Now you can call your Realtor and look for your dream home.

It's true, when you think about getting a mortgage for that condo or getting an offer put together for that speed boat on credit, we are upset when the credit company or the mortgage lender turns us down. This is all despite the fact that we have a good salary, a steady job and always pay off our credit card bills on time.

It's a fact that millions of Americans have absolutely no idea how their credit score is calculated. There have been at least four surveys that have taken place in America that ask us what it is we think affects our credit score. In some of the surveys, well over 20 questions have been posed. But while the majority of us know that mortgage lenders and those dishing out credit cards definitely use them to check on us if we submit an application – there are huge gaps in the knowledge surrounding the other factors that could directly help or hinder our credit score.

Generic Scoring

Less than half of all Americans are aware of the three key points where lenders and banks use generic scores. This is where you find your score start to go down just for applying for another credit card, making an application for a mortgage or applying to buy that Harley Davidson Fat Bob on credit. It does not matter if your creditors approved those mortgages, credit card applications or a chance for you to cruise down Route 66 on credit or not – your credit score will be affected by the application process alone.

If there is a risk that you may not be able to pay off that loan, then your credit score will be affected; not a lot of Americans knew that. This could be due to something as simple as being in a job that has some form of instability associated to its industry. But Americans can do something to improve their credit rating and paying all your bills, loans and credit cards on time does go a long way to help.

Many young Americans seem to be less savvy when it comes to understanding what pushes our credit score up or down, particularly the age group between 18 and 32. There are however several online websites that mimic the factors that determine our credit score and it would be prudent to those of us that do not know how our credit score is defined, to pay attentions to it.

Keep your eyes on that credit score and do your research before applying for a loan, credit card or mortgage.

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Many people have no clue what happens or if anything happens to their credit when they complete a short sale. Truth is, many people just don’t know however, some really great articles are out there about this very topic and yet, so many questions still exist.

The first article I want to draw your attention to is notably an older article however, based on all the chatter I hear on a daily basis about how a deed in lieu or short sale will impact your credit, I really think this article should be revisited.

As published in the Washington Post 8/30/2011 by Michelle Singletary she stresses the fact the actual credit score it’s self, also known as the FICO score may be impacted differently by a short sale or deed in lieu however, that impact is so marginally different that, claims a short sale is less negatively impactful than a deed in lieu seem a bit farfetched, when strictly referring to impact of the FICO score. If you want to read her article yourself, click here.

A 2^nd article I think you should read is by Linda Ferrari on 6/9/2009 on her blog, Linda Ferrari Your Credit Score Expert. She wrote an article titled The Mortgage Crisis and Your Credit Part Three: Deed in Lieu of Foreclosure. This article is really good from the stand point about how your credit score is impacted by how the deed in lieu is reported. Many people don’t realize that the bank can report your deed in lieu three different ways and of those three different ways, the negative impact will vary from most negative impact to lest negative impact. I would strongly suggest you read her article to learn more about how it’s reported. It was a huge eye opener for me.

Finally, I found a great article, maybe the best one on what the future may hold for those of you who have completed a short sale vs a deed in lieu. Now this article is very recent, in comparison to the other two, it was written back on 7/8/2013 by Alanna McCargo and even better, it’s posted on the Equifax forums giving it credibility. It’s titled “Can I buy a Home After a Short Sale or Foreclosure” and, the best part is her approach to credit fundamentals and how important it is to do all you can to protect your credit.

All in all, after these I read these articles and did some further investigation on my own, here is what I learned.

1. Your credit will be negatively impacted by a Short Sale, Foreclosure or Deed in Lieu.
2. The negative impact to your FICO score will be marginal at best between the Short Sale, Foreclosure or Deed in Lieu.
3. When you agree to participate in any of these default disposition options, CONSUMERS MUST READ THE TERMS AND CONDITIONS OF THEIR PARTICIPATION and watch out for how their action is being reported to the credit reporting bureaus. The truth is, some reporting options are much more negatively impactful than others. Consumers need to know they have options they can negotiate here for a less negative impact to their credit.
4. Finally, benefits like, relocation assistance, no risk of future deficiency judgments are not guaranteed and once again, CONSUMERS MUST READ THE TERMS AND CONDITIONS OF THEIR PARTICIPATION as these additional benefits are NOT guaranteed. Consumers have options here to negotiate a better deal and should be aware they have options.

If you are considering a short sale, contact me, Jesus “Jesse” D. Gonzalez Jr. Realtor / Principal Broker of Liberty House Realty LLC. I would be happy to discuss your options with you and how we can help. 615-424-0961

Golden Rules on Achieving High Credit Scores

“We are glad you chose us as your lender.  As you know, your credit score is _______.”  For some people, filling in that blank might be nerve-racking.  For others, it might be a source of pride and personal accomplishment.  If you are working on your credit score, or simply want to know more about putting together a score that will make friends jealous and bankers swoon, read on.

Keep Your Available Limits Manageable

One of the top factors that affect a credit score is a person’s available credit.  This is simple to understand with some numbers.

• A person has one credit card to their name.  The available balance is $1,000.  At present, the person has charged a total of $200 on the card, leaving them with $800 available.  As a percentage, the person has 80% available credit.
• A different person has only one credit card, but their available limit is $300.  At present, the person has charged $100 on the card.  Their available limit is $200 or 67%.

Even though the second person in our example has a smaller outstanding balance, their available percentage is lower and their credit score will be lower.  The closer your available limit is to 100% the higher your score will be.

Pay On Time, Every Time

Without a doubt, the single biggest factor of a person’s credit score is whether or not they pay their obligations on time.  Paying all debts, regardless of the size, on time will do more to improve a person’s credit score than other tactics.

Keep Paid Off Credit Lines Open

Review the earlier example about available credit for a moment.  Suppose you have three credit cards but you only owe money on two of them.  Most people would be tempted to close out the one card in order to reduce temptation of charging too much.  However, closing down the account hurts in two ways.  First, it reduces your available credit limit.  Second, it wipes out the history you had with that account.  Both of these items will lower your score.

Strive to Have a Good Mix of Debt

In order to reach the magical number of 700 or more it is necessary to have a mix of debt that you are paying timely.  A modest automobile loan, one or two credit cards and a small unsecured loan are usually enough to provide someone with enough diversity to get a high score.  Having only one type of debt, regardless of the type of debt or how it is paid, will keep your scores in the 600 to 680 range.

Above all else, it is important to understand that building a strong credit score takes time.  It will not happen in a day, a week or even a month.  You will need to focus on the tips outlined above for a few months, maybe a year, in order to reach the pinnacle of credit scores.

Original Post - Tips for Higher Credit Scores

My client just bought a new home two years after we did a successful short sale on his previous home. He now has a mortgage at half the interest rate he was paying previously.  His new home is  approximately half the purchase price of his old home that he purchased in 2004, and his new payments are a third of the old payments. Icing on the cake is that the new home is larger, move in ready, with a two year warranty. More icing? His new payments are $315 a month lower that his small rental.  Yes, it really is less expensive to buy than rent.

How did we do this?  Of course timing is everything.  Prices in this area are 50-60% lower than they were in 2004. There is a good inventory of homes that are reduced accordingly.  When we completed the short sale on his first home, I told him to keep the rest of his credit clean, pay the rent on time, and he would be able to buy again.  It didn't hurt that he was a V.A. buyer.  V.A. buyers can buy a home again two years after a short sale. 

Unfortunately, many figure their credit is shot anyway, so they drown their sorrow in their credit card debt.  After going through the trauma of losing their home, they may think they will never buy again.  But after living in a rental house or worse yet - an apartment, they change their mind.  The desire for home ownership is very strong and everyday I am amazed at the lengths buyers will go to in order to have their very own home.

Every situation is different.  Did you sale your home or walk away?  What is your credit and employment like? What kind of loan are you looking for FHA, VA, or conventional?  See a good loan officer who can assess your situation and give you advise on how to find your way back to home ownership again. Don't wait too long; it may take time and who knows where interest rates will be this time next year.

Today I got a call from an agent about a short sale I have listed. In talking I mentioned the current owner is not in default to which he countered "but he must be." I am here to tell you from experience, from closings, from approvals in my hand your client does not have to be in default to obtain an approval for a short sale. If the mortgage co tells you they must be ask them to show you in writing where this is their policy so you can show your client 9 out of 10 can't and this will get you past this hurrdle..
Myth #2, I get all the time, "once I short sale I can't get a mortgage to buy for some time." INCORRECT!! In July of 2011 I executed and closed a short sale on my listing and the same client was approved to purchase a new home and closed 3 weeks later. There is no rule that says you can't, if you keep your current mortgage current and the person negotiating your short sale gets an approval that say lender is going to except short sale as mortgage paid in full. We supplied the payoff (actually both it was a first and second) and credit showed always paid on time client upgraded to bigger and better house for same payment and maintained good credit.
This point brings me to myth #3 "it doesn't save me any to short sale I should let my house go and save my money."  NO NO NO! See above scenario if you bide your time and pay payments till your agent can negotiate a short sale for you, you can save your credit by paying your payments and getting that payoff showing paid zero balance! Just because a bank didn't go after your friend for his foreclosed home doesn't mean they won't come after you and garnish your wages, freeze your bank accounts, or harass you till you can't stand it any more. Problems don't just go away a short sale is a proactive solution to an economy induced problem.
Myth#4 I make to much money I will not get granted a short sale....you can make 500k a year and still be granted a short sale on your house and here is why. You bought 123 Apple St for 700k 4 years ago now it's worth 200k as it stands with you in it, looking nice and clean and put together. HOWEVER if 123 Apple street is foreclosed and then has chance to be stripped down or vandalized the bank knows it will then only be worth 100k so they are better off letting you short sale then risking another foreclosure on their books which will be supported when appraiser goes out and does BPO. This also disproves myth#5 that "I owe way to much compared to what home will sell for bank will never do it." I closed a home that had a $750k loan on it but appraised only for $295 so bank allowed the short sale after they did their bpo and we sent copy of FHA appraisal.
Myth 6 my agent is a "short sale expert" I'm here to say I have been doing short sales since 2006, I was taught by a bank how to structure and execute them and still I am not an expert and I'll tell you why. You can not be an expert at something that changes with every file, every day. You can be very good, you can be excellent but not an expert. There is no such animal for short sales.. I give the example that a short sale is like a snow flake, every single one is different! I have closed one in two weeks YES TWO WEEKS but in the same token I have had one take eight months. The eight monther was a first and second for a divorced couple with a husband that claimed bk on the second but none the less it took eight months to get to closing. I am great at them and many others are too but be wary of the self proclaimed expert as often they over promise and underperform.
These are all just my experiences as stated earlier there are many others out there and every file differs but I think education is important as many agents are telling people they can't when in fact they just don't know yet that they can! :-)

Credit reports frequently have mistakes. Very often consumers are not aware of these mistakes until they are trying to obtain credit for a large purchase like a home or car.  There is a process for rectifying credit mistakes, but it can take some time.

As more and more short sales are being processed it is only natural that some mistakes are showing up on credit reports, especially since there is no standard way for a credit report to reflect a short sale. The bank may report loan paid as agreed, or loan paid for less than the full amount. Which ever way it is reported it should not say foreclosure. Unfortunately occasionally this will happen, but the fix is easy.  When you sell a home as a short sale you will receive a HUD1 statement. this is a statement that spells out what money came in from the sale and how it was distributed. If a home is foreclosed there is no HUD1 given to the owner.  So, if you have a HUD1 your home was not foreclosed.  You should send the HUD1 to the credit reporting agency along with the statement that since you have a HUD1 you were not foreclosed on. They can then remove the foreclosure from your credit report. 

It is probably a good idea to check your credit report 6 and 12 months after a short sale just to make sure this has not happened.

If you have nay questions about short sales please feel free to contact me.

Marcy Moyer CDPE

Keller Williams Realty

www.marcymoyer.com

marcy@marcymoyer.com

650-619-9285

D.R.E.  01191194

Federal Government Disclaimer (MARS): 1. You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us commission as agreed to in listing contract for our services.
2. Marcy Moyer of Keller Williams Realty is not associated with the government, and our service is not approved by the government or your lender; and 
3. Even if you accept this offer and use our service, your lender may not agree to change your loan.

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New proposal would extend the CLOSING time until September 30th, 2010.

This is for those ALREADY under contract. The current tax credit has to close on the home by the end of this month - June 30th.

We all know what a mad dash it was to get the homes under contract for the buyers now getting them all closed by the end of this month is a monumental task and there are a lot of buyers that are going to miss the deadline. Lenders and title companies are swamped.

There are so many buyers here tied up with Las Vegas Short Sales, (as I'm sure it is across the country) that are waiting for the banks to approve these short sales that it just isn't going to happen by the end of the month for so many.

This in turn could lead to a lot of homes being dumped back on the market because if you had a buyer only buying a home to get the tax credit, they may walk away from the deal now.

I know for several of my buyers that are hanging in there, they now are crossing their fingers even more!

The Honorable Governor Arnold Schwareneggar has come to the homebuyer's rescue. He signed a bill that will give a 5% measured credit up to $10,000 payable in three annual payments. Of course you have to repay it if you sell your home prematurely. On a $250,000 home that means a warrant from the state of California at $3,333 /year for three years. Not quite as sexy as the $8000 version but it helps pay for that furniture you will need.

THE DETAILS:

The eligible taxpayer who closes escrow on a qualified principal residence between May 1, 2010 and December, 31, 2010, or who closes escrow on a qualified principal residence on and after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010, will be able to take the allowed tax credit.

There has been talk too of re -renewing the federal version. Although nothing is carved in stone,I have heard that it is caught up in the Senate right now...and its reicarnation will probably be a lesser credit. Maybe Obama can sneak that into his health care bill like he did the abortion thing! Kinda like burying in your short sale agreement that the lender will consider the seller's debt paid in full.

I always said real estate was stimulating and I am sure it will be even more so after April 1 when HAMP kicks in and lenders really have to start working with realtors and not be so mysterious. I already am seeing a surge in BPO orders from clearinghouses that would indicate a storm is coming. They even send stuff at 3 am or 9 pm at night...they are still hard to get however. Realtors need to remember too that although we like dollar signs, the needs of our CLIENT COME FIRST! If they can manage to keep their home, then it is a good thing!

Be a servant ...to quote Cory Boatwright.