WILL SHOPPING FOR A MORTGAGE HURT MY CREDIT?
Experts say you should shop around to get the lowest mortgage rates. But can that hurt your credit? Although credit “pulls,” or formal requests to review your credit report, can affect your overall credit score, TheMortgageReports.com says you shouldn’t worry. Requests by mortgage lenders are a small part of scoring and should affect your FICO score by five points or fewer.
The FICO scoring system is built with consumer protection in mind, and it encourages credit pulls from multiple lenders. The credit bureaus give consumers the right to shop for a mortgage with an unlimited number of lenders without having to fear multiple “dings” to their credit score.
“When you apply for a mortgage loan with multiple lenders, the credit bureaus count it as a single credit inquiry,” according to the website. “All mortgage rate shopping done within a 14-day period will count as a single credit pull, with the bureaus acknowledging the first credit check, then ignoring all subsequent ones.”
Here are their tips for finding a lender and protecting your credit.
1. Shop around. Talk to at least two lenders, or even five or more.
2. Limit your rate shopping to a 14-day timespan to avoid multiple pulls on your credit.
3. Check multiple sources for quotes – retail banks, mortgage brokers and online lenders.
4. Don’t be afraid to share your social security number with reputable mortgage lenders. It’s the only way you’ll get accurate rate quotes, instead of best guesses.
Bristol Global Mobility and the Board of Governors of the Federal Reserve System also suggest the following:
Know what you can afford: Review your monthly spending plan to estimate what you can afford to pay for a home, including the mortgage, property taxes, insurance, and monthly maintenance and utilities. Make sure you save for emergencies. Plan ahead to be sure you will be able to afford your monthly payments for several years. Check your credit report to make sure that the information in it is accurate. A higher credit score may help you get a lower interest rate on your mortgage.
Understand loan prices and fees: Many consumers accept the first loan offered and don’t realize that they may be able to get a better loan. On any given day, lenders and brokers may offer different interest rates and fees to different consumers for the same loan, even when those consumers have the same loan qualifications. Keep in mind that lenders and brokers also consider the profit they receive if you agree to the terms of a loan with higher fees, higher points, or a higher interest.
Know the risks and benefits of loan options: Mortgages have many features–some have fixed interest rates and some have adjustable rates; some have payment adjustments; on some you pay only the interest on the loan for a while and then you pay down the principal (the loan amount); some charge you a penalty for paying the loan off early; and some have a large payment due at the end of the loan (a balloon payment). Consider all mortgage features, the APR (annual percentage rate), and the settlement costs. Ask your lender to calculate how much your monthly payments could be a year from now, and 5 or 10 years from now. A mortgage shopping worksheet (48 KB PDF) can help you identify the features of different loans. Mortgage calculators can help you compare payments and the equity you could build with different mortgage loans.
Get advice from trusted sources: A mortgage loan is one of the most complex, most expensive financial commitments you will ever assume–it’s okay to ask for help. Talk with a trusted housing counselor or a real estate attorney that you hire to review your documents before you sign them. You can find a list of counseling resources at NeighborWorks and on the U.S. Department of Housing and Urban Development’s (HUD) website or by calling (800) 569-4287.
HOME IMPROVEMENTS TO BOOST YOUR SELLING PRICE
When it comes to looking at houses, we do tend to judge a book by its cover. That’s why it’s so important to make sure your home looks as appealing as possible, both inside and out, if you want to get top dollar when you sell. U.S. News & World Reporttalked to real estate experts, who said these home improvements will help boost your selling price.
Improve your landscape. Keep your lawn neat, trim the bushes, clear out any old or tired-looking shrubbery and replace with new ones, add color with potted plants or garden beds, and top everything off with a fresh layer of mulch or rock.
Spruce up your entryway. Paint the front door or replace it, and update your house numbers and mailbox.
Change out light fixtures and plumbing fixtures. Replacing outdated fixtures with more modern ones gives your house an instant lift.
Return rooms to their original uses. If you use the extra bedroom as an office, turn it back into a bedroom.
Replace dirty or worn carpet. Prospective buyers can tell the difference between new carpet and cleaned carpet, and often, cleaning it just isn’t enough. If you have hardwood floors underneath the carpet, your best bet might be to refinish them and forego carpet completely.
Remove window treatments, unless they are current and high-end. Your window treatments probably won’t match a prospective buyer’s décor, so you’re better off removing them. Plus, uncovered windows let in more light.
Depersonalize. House hunters want to imagine themselves in your home, so remove obvious and identifying personal items, like photos and knick-knacks.
Clean thoroughly. Make every inch of the house sparkle and shine by deep cleaning it. And then think about hiring a house-cleaning service to do it, too.
Paint every room. A fresh coat of paint in a neutral color appeals to everyone. It freshens up the house, making it look newer and more modern.
Consider replacing textured ceilings. For some buyers, popcorn ceilings are a deal-breaker. If your home was built before 1979, the ceilings could contain asbestos, so you would need to hire a professional remove the texture. If it’s a newer house, you can scrape the ceilings yourself or, if your ceilings are high enough, you could just install drywall over them to create new ceilings.
5 REASONS ANOTHER HOUSING CRASH IS UNKILELY
As the housing market continues to improve, some are afraid we’re heading toward another housing bubble and, with it, another bubble burst. But, according to TheStreet.com, “A repeat of the 2009 real estate implosion that followed the collapse of the equities market in 2008 is highly unlikely this time.” Here are five reasons why.
More fixed rate loans. During the housing crash, many Americans who had short-term adjustable-rate mortgages defaulted when their interest rates increased and they couldn’t afford their new payments. But today, most who could refinance to a fixed-rate mortgage have done it.
Low foreclosure levels. Although there has been an increase in bank repossessions, according to the Mortgage Bankers Association, the percentage of loans in foreclosure nationwide is just 2.1 percent – the lowest level since 2007.
More first-time buyer assistance programs. To transition millennials and others from renting to owning a home, new initiatives have been designed to help first-time buyers, including the Federal Housing Administration’s move to reduce annual mortgage insurance premiums – a move the national Association of REALTORS® estimates could push home sales to their highest level since 2006 and introduce up to 140,000 new buyers to the market.
Increased job creation. Job creation has risen steadily over the past five years, indicating a strengthening economy. many jobs lost during the recession have been brought back, and the quality of jobs being created has improved.
Steady rise in residential home prices. “Prices for average residential homes have risen at a slow, steady pace.” TheStreet says. In mid-2015, residential home prices were within 15 percent of their April 2006 peak, according to the S&P/Case-Shiller 10-City Composite Home Price Index.
“The fundamental conditions that led to the crash have diminished,” says TheStreet. “The real estate market today has a stronger foundation than it did in 2006, thanks to more disciplined and conservative credit underwriting of debt and a market that is much healthier than it has been at any point during the past decade.”
HOME SALES REPORT SHOWS IMPROVEMENTS
RealtyTrac recently released its 2015 third quarter U.S. Home Sales Report. Here are some of the key findings.
- “An increasing number of homeowners in 2015 have been cashing out the home equity they’ve gained during the housing recovery of the past three years,” says RealtyTrac vice president Daren Blomquist.
- Home sellers realized an average price gain of $40,658 (17 percent) on their purchase price, the highest gain in eight years.
- Buyers using Federal Housing Administration loans (typically low down-payment loans designed for first-time buyers or those with low equity) accounted for 23.4 percent of all single-family home and condo sales with financing.
- There were 245,220 all-cash sales of single-family homes in the third quarter – 27.8 percent of all single-family home and condo sales.
- There were 15,956 sales of single-family homes and condos to institutional investors – 1.9 percent of all sales, down from 5 percent a year ago.
- 72,218 single-family homes and condos sold were actively in the foreclosure process – 8.1 percent, a 15-year low.
- 72,245 single-family homes and condos sold were bank-owned – also 8.1 percent of all sales.
For more information contact your Bristol Mobility Advisor.
Deb Borrell, CRP, Vice President, Director or Relocation & Business Development, Allie Beth Allman & Associates
5015 Tracy St., Suite 101, Dallas, TX 75205