Many people know that things like bankruptcy and foreclosure can cause heavy damage to a credit score, but a recent FICO-led study found that seemingly small things can have detrimental effects on credit scores also.
Lenders use credit scores to measure how well a person handles debt, and decide interest rates on loans—or even whether to issue a loan. The scores range from 300 to 850, with 650 and below considered poor credit. A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.
For this study conducted in March, 2011, FICO, the most prominent public company providing credit-scoring services, and VantageScore, a new credit-scoring model, looked at three circumstances experienced by three types of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower.
A mortgage, the biggest loan most people will ever get, often is the most important part of a person’s credit profile. Among other things, the study as reported on Realtor.org found that just one missed mortgage payment can hurt credit scores significantly. For instance, a 780 credit score borrower saw her credit score fall to 670-690; a 720 credit score borrower’s fell to 630-650; and a 680 credit score borrower falls to 600-620.
Conversely, loan modifications, when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, according to FICO officials. The effects on credit scores caused by short sales and foreclosures also were looked at.
In the case of short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
In the case of foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.
These effects on credit scores can be repaired, but in the meantime, they can be costly, so it is wise to monitor your credit score.
Spring traditionally is a busy season for buying homes, and this one should be even better, because many renters are weighing their options, adding up the numbers and finding that with the price of condos and houses remaining low, and rent going up, buying is more economical than renting.
According to Reis Inc., which tracks rental markets, rents climbed 2.3 percent in 2010 compared with a decline of 2.9 percent in 2009, according to Reis Inc., which tracks rental markets. Also, in January, the National Association of Realtors® reported that the Housing Affordability Index, which measures the ability of the typical household to cover the 20 percent down payment for a home and limiting monthly mortgage costs to no more than 25 percent of gross income, was the highest since record-keeping began in the 1970s.
But when weighing your options, because numbers can differ wildly by location, it is best to run the numbers for the area in which you want to live. You can calculate the price-to-rent ratio by multiplying the typical monthly rent in your desired community by 12. Divide that number into the median home price in the area to come up with the ratio. If the number you arrive at is below 16, industry experts generally agree that owning is less expensive than renting.
However, something else to consider is the length of time you plan to stay in the area. Three to five years used to be thought of as the time needed to offset the cost of buying and selling a property, about 10 percent of its value. But in the current market, where the high number of foreclosures has brought down the price of property, it is more like to take anywhere from five to 10 years to offset your costs.
Also, it isn’t always easy to compare the value of a rented condo or apartment to the condo or single-family home you are planning to buy, since they may vary considerably in size and amenities. So you have a lot of things to consider when weighing your options.
Moving is never easy and most of us hate to do it but for most of the moves we make we are not only moving our possessions but moving forward with our lives. Probably your first experience with moving was when you went to college. Remember how exciting it was to unload the car into your new apartment, meet your roommates and feel that excitement but also the uncertainty of being in a new place with new people. This most likely will be the first of many moves whether it is new job or just a move across town to a home more suited to your needs.
Moving into your first home or condo can be the most exciting move of your life. Moving your possessions is just a small part of making a move. The psychological aspect of moving can be both exciting and somewhat intimidating but it is an indication that you are moving forward with your life, career and maybe even family. We still look at owning our own home as one of the major goals of our lives giving us the satisfaction of a place we can call our own. That sense of satisfaction is what motivates many of us to move forward with life, family and career.
Moving can also mean moving your business as we have recently done. This also involves moving possessions but more importantly it is moving forward with your business life offering many more opportunities and relationships that can mean a step to a more rewarding and successful life.
When you decide to move, the process of house hunting can be fun and exciting, aside from the occasional headache that is bound to crop up as you search for a condo or home of any kind.
But for many people, after a contract is accepted on a new place or a lease has been signed, the (so-called) fun is only beginning, as they tackle the task of packing, and unpacking, which comes with its own share of headaches.
After the house hunting is done, packing can be cleansing too, as you go through your possessions and decide what is really important, or what you can bear to part with. You just might find that you really need very little, and most of the things should have been tossed a long time ago. It’s an eye-opening experience, to say the least.
Especially if you are downsizing, perhaps moving from a single-family house to a townhome or condo, you will have to make some hard decisions about how much room you will have to fit all your “stuff.” You don’t need to be a hoarder to find it all a bit overwhelming. Even moving from one small apartment to another, I was inclined to agonize over what to pack, throw out or donate.
Having gone through the house-hunting process myself just recently, it is fresh in my mind. In fact, I still need to unpack some boxes, as soon as I find space for the stuff inside them. I had forgotten how much I had! I even found things I had packed away during my last move four years ago. Leaving them unopened is a sure sign that I didn’t need whatever they were. This is just another reason not to rack up personal debt when you are seeking a home loan, since you may not have space for your purchases in the new place anyway.
Homeownership has been a part of the American dream for as long there has been an America and the right of owning private property was first discussed by our founding fathers. It matters not only to people who set owning a home as their lifelong goal but to communities as well. Think about these statistics from an article from Houselogic published in February of this year. For every two homes sold, one job is created in the United States and each purchase can generate over $60,000 of economic activity over time.
Homeownership offers many benefits that can affect communities where high percentages of homeowners reside. Educational achievement is higher, homeowners take a more active role in their communities and the overall quality of life tends to be better. Homeownership creates jobs from the local hardware store to the kid who cuts your grass in summer and shovels your walk each winter.
The homeownership debate has been going on for decades but not more so than in recent times. The recent challenges facing the real estate market and mortgage industry have brought the idea of homeownership to the forefront again and the debate over the next few years will heat up even more. Many say homeownership is overrated and we might be better off as a nation of renters but talk with any homeowner and they will tell you the benefits far outweigh any negatives those on the opposing side offer. Homeownership is a part of our heritage, a dream most aspire to realize and last but not least the sense of pride we feel when we can call our home our own.
It is Super Bowl weekend so you might be inclined to take a break from your condo search to relax and enjoy the big game with family and friends. Next year, you’ll be hosting them at your new place.
Of course, if you had your hopes pinned on the Chicago Bears, New York Jets, or any other team that stumbled on the way to Super Bowl Sunday, you might not be in a mood to celebrate—until you win the football pool anyway. Here in Chicago, of course, many fans will be celebrating if the hated Green Bay Packers lose to the Pittsburgh Steelers.
Finding your dream condo can sometimes feel like the race toward the Super Bowl trophy, with so many twists, turns, teams, or condos, in the running at the beginning. You don’t know who your winner will be until you can see them and weigh the pros and cons. Of course, in the condo search, you hold all the cards when picking a winner.
When you do find your favorite and begin the process of arranging condo financing, the mortgage lender looking over your credit score can sometime act like a referee coming out of nowhere to penalize you and prevent you from reaching the goal line.
However, working with our Realtors® is like having the best defense in the business, and offense too, protecting you from pitfalls and guiding you toward your goal. Our condo specialists will be at your side all the way, at the negotiating table and beyond, ensuring that you get that ideal home, which can be as elusive as a Super Bowl ring.
After deciding to buy a condo, or any home, choosing a neighborhood is likely to be one of your most important decisions.
Within cities such as Los Angeles, Chicago and New York, there can be any number of neighborhoods, all quite different from one another. Of course, price will likely be a deciding factor, whether you are looking for a luxury condo or a starter home. But even within the same price range, there are a lot of variations.
There is much truth in the old saying in real estate about “location, location, location,” being the most important factor in home values. Depending on your needs, being close to a nice coffee shop, restaurant, grocery store or dry cleaner’s—or even your favorite “watering hole” can be of prime importance, and should not be overlooked when choosing a neighborhood. Accessibility to public transportation or major highways is something else to consider. Accessibility and the quality of schools are also a major consideration for many people when choosing where to live, not only if a member of the household needs to attend school, but as a selling point when it's time to move on. Whether you are buying or renting a condo or house, there is no point in settling for something in an area that doesn’t suit you.
It is wise to visit the neighborhood at different times also, to see if you like the atmosphere. Why wait until moving day to find that the neighbors like to blast music at all hours of the day and night? Introducing yourself to neighbors is also a good idea. It doesn’t hurt to ring a few doorbells on a weekend just to say hello when you are choosing a neighborhood. Who knows, if you are looking in celebrity hotspots such as Los Angeles or New York, you might find anyone from Anderson Cooper to Ziggy Marley living next door.
In any case, our Realtors® are ready to help you find the perfect place.
So after working so hard in the office, we tend to get a little loopy at times. I noticed that one of my colleagues was eating a banana the 'wrong way’ as I had seen it. I was always told to look at how a monkey eats a banana, and that is the way that humans are supposed to eat it. That very way is upside down, as most people see it. Most people peel the stem of the banana and then proceed to eat it, but if you have ever seen a monkey eat a banana or if you read this blog, you will know that the proper way is to peel from the non-stalky end. This usually leads to less "banana strings" and you can use the stalk as a handle. It is easiest to just pinch this end instead of trying to pull first before eating the banana.
We, here at OwnACondo.com now know the proper way to eat a banana. Check that off the list and also add that to the list of what we already know and are good at, like finding dream condos for buyers all around the Chicago area. We are experts at this and we are there to assist you when you are looking to buy a home. We not only know the proper way to treat our clients, we know the best, most effective way to get you the property of your dreams.
The prospect of winning the lottery is on a lot of people’s minds these days, especially as the Mega Millions jackpot continues to roll over. It was at $355 million just before the Jan. 4 drawing.
While “you have to be in it to win it,” the odds of winning Mega Millions, which is played in 41 states and Washington, D.C., are something like 175 million to 1. Not many of us can say we have won that sort of lottery, but if you think about it, finding a condo you like is something like winning the lottery too, with much better odds. You do have a better chance of finding your deam home.
And unlike the lottery, the odds of finding the right condo are actually improving across the United States, because there are so many available. This is due in part to the market being flooded with foreclosed condos following the downturn in the economy.
Most are quite affordable too, so winning the lottery is not a prerequisite to buying a condo either. In addition to the foreclosures, there are also quite a The foreclosed condos are not necessarily in bad shape, in fact, many can be in move-in condition.
The fact that interest rates continue to remain at historic lows is also helpful for people shopping around for a good mortgage rate. So instead of pinning all your hopes on winning the lottery, why not get out there and start condo shopping. Our condo specialists can help you narrow the odds of finding your dream home even more.
This is the second in a series of blogs regarding the purchase of real estate and is taken from the seller’s perspective. Real estate transactions are a complicated process and the need for a professional real estate agent is crucial to complete the transaction so all parties involved are satisfied with the outcome. Traditionally sellers are always represented by both real estate agents in a transaction. Obviously, the listing agent who has a signed legal document with all the responsibilities lined out represents the seller. What many buyers do not know is the agent who is finding and showing them properties is also legally responsible to the seller. But in the past several years a new type of representation has emerged with the buyer being exclusively represented by their agent. This type of representation is known as Buyer’s Agency.
From the seller’s perspective buyer's agency can eliminate any conflict of interest real estate agents may have when showing and negotiating for a buyer. The seller’s main focus is to sell their home or condo for the highest and best price which is the fiduciary responsibility of the listing agent. The main focus of a real estate agent acting as a buyer’s agent is to find and negotiate the sale for the buyer, representing their wants and wishes above all others. Sellers need to be careful about what they say, as well as their actions, when the buyer or their agent is present at showings. The seller needs to be aware that any information they may give the buyer’s agent can be conveyed to the buyer, which may or may not influence their price and terms when making an offer. Sellers also need to know that the buyer’s agent will most likely complete a Comparative Market Analysis (CMA) for the buyer which shows what similar properties have sold for in the area. The CMA is the basis for the buyer’s offer. This is where many times emotion enters the transaction and it is the job of both agents no matter who they represent to calm everyone down and present the facts to both parties. No one wants to complicate matters when as a buyer you may be making the most expensive investment you will ever make and as the seller you are trying to sell your home or condo and move on with your plans. From the seller’s perspective it is best to remember that as you are being represented, so is the buyer and both of you are trying to get the best deal possible.
