Home buyers need to be ready to move

We hear all the time how the Chandler house market is a buyers market right now. Except for luxury homes over $400,000, that is not the case. There are a lot of buyers right now and homes are usually going fairly quick.

If you are a buyer in Chandler, Tempe or anywhere else in the valley you need to be ready to move. I was working with a buyer and we looked at about a dozen homes over a week. There was one property they they really like and wanted to sleep on it.

Wanting to sleep on it is understandable, but if it is a property you think you want you should be ready to move on it. In this situation the buyers waited a week and when they were ready to move the house was pending with another offer already accepted.

Lesson of the story, if you like a house be ready to move. If you are not ready to buy yet, then wait to look at homes until you are.

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If a hot chick dumps you, do you never date a hot chick again?

Time Magazine wrote an article about how home ownership did not make sense anymore, they were wrong.

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Financing your home: Do you know how your FICO works?

Chart from myfico.com

Chart from myfico.com

Most of us cannot afford to buy our homes with cash and need financing. When you are considering buying a home it is important that you know how your credit score (FICO) is calculated. Your FICO score will be used in determining what your risk is and which will determine your interest rate.

Your FICO score is based on 5 different categories:

Payment history is 35%
What they are looking for here is if you pay your bills on time. Also any past history of judgments, bankruptcy or collections will effect this number.

Amounts owed is 30%
What is your ratio of debt owned to debt available? The higher the percent of debt owed to debt available the lower your FICO score will be.

Length of credit history is 15%
How long has your account been active? If you have had an account for ten years that will help your score more than an account that has only been open one year. If you have many credit cards and are considering closing some, this is a factor to consider.

New credit is 10%
This includes the number of new accounts compared to accounts that have been opened for a longer time and also new credit inquiries.

Types of credit is 10%
What type of accounts do you have, credit cards, retail stores, mortgages, installment loans etc.

Remember when you hear those ads on the radio trying to sell you something, there is no magic pill or fairy dust to repair your credit. Paying your bills on time and not carrying to large of a balance is the best way to keep your score high. Those tactics will be the best ways to keep your credit score healthy and get the best finance rate you can when buying a home.

For more information take a look at myfico.com

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First time buyer jitters

If you are a first time buyer, don’t be afraid to pull the trigger. Your agent found you the house that matches exactly what you were looking for, the price is right and the neighborhood is the perfect place to raise the family you dream of. Now is not the time to get cold feet and start making up reasons not to buy. You are scared, it is normal and every first time buyer felt that same butterflies in the stomach. If this is the home you can’t stop thinking about while you are daydreaming then now is the time to pull the trigger and put in that offer. It’s just like having kids, if you wait for that perfect time it will never happen.

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Weekly buying tip

Today more than ever you need to take a few minutes and get pre-approved for your loan. In today’s economy, where the lending has been cut back, it has become more important than ever to get pre-approved before you go searching for a home. But even when things turn around this fact doesn’t change, take the time to get pre-approved. Take a few minutes and contact a lender to find out for certain what size mortgage you can qualify for.

When the time comes to submit an offer, a pre-approved letter from the lender will make your offer taken more seriously by the selling agent and the home owner who is selling the home. There are many option you should explore including FHA, VA and conventional loans. If you are looking for a lender to help you make the process easier let me know and I can make some recommendations.

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Weekly buying tip

First step: Figure out how much you can spend. Every day we turn on the T.V. we hear about people losing their homes to foreclosure because they cannot afford the payments. The first and most important step in buying a home is to figure out how much you can afford to spend, then stick to it. So the question becomes how much can you afford? FHA guidelines say your total monthly mortgage payment should be less than 29 percent of your monthly income. The number arrived at after multiplying your total monthly income by 29 percent is referred to as principle, interest, property taxes, and insurance (PITI). The PITI amount is the highest amount that your monthly mortgage payments can be with an FHA loan. Also FHA takes into account your total debt such as car loans and credit card balances. That debt plus your monthly PITI amount cannot be more than 41 percent of your total monthly income. Click here for more FHA loan information.

While the FHA has their guidelines you may consider your own guidelines based on your comfort level. Some financial planners will recommend you only spend 25 percent of your monthly take home pay as a comfortable monthly loan amount. I recommend you talk to your financial planner of a mortgage broker for the plan that works best for you. One final piece of advice, make sure your real estate agent is working for you. If you tell your agent you can afford $1,300 a month payment, and they are showing you properties that would require you to pay $1,400 a month if your offer was accepted, you have the wrong agent. Your agent needs to be looking out for your best interest. That is their fiduciary responsibility. It’s only $25 a week more is not a good answer. That is what gets buyers in trouble.

When you decide how much you can spend contact me and I will help you find a home that fits your needs and wants.

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Weekly buying tip

Credit Score ChartSome recent surveys have found as many as 80% of all credit reports contain inaccuracies (Motley Fool, April 2008).  Those inaccuracies could range from a minor blemish to a major mistake that could prevent you from getting a loan you should rightly qualify for. 

 So how do you know if you have something that shouldn’t be on there?  Your first step is to pull all three of your credit reports.  Experian, Equifax and TransUnion all collect credit information and it is important to check them all.  All three can be obtained once a year for free at AnnualCreditReport.com.  Once you pull your reports, if you find any mistakes you will need to do the following to remove those problems.

1) Keep good notes of any phone calls, letters or any other evidence you can find to support your claim and also your dispute.

2) Send a letter to the proper reporting institute to notify them of the inaccuracy.  An example letter can be found on the Federal Trade Commission website. Within 30 days they will investigate and let you know of their findings.

3) Let the creditor/company that is reporting the error know of the mistake and ask them to fix the problem. 

4) Finally if you are unsuccessful in removing information from your credit file you can contact a lawyer and take legal action. If that is to much you can always write a letter to the reporting agency and attach a letter of explanation to your credit file.

 One final tip I like to use.  There are three reporting companies and each will provide you a free report once a year.  I like to pull one report every four months, that way if something major does pop-up I can address it quickly.  

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