The Second Most Important Factor in Your Credit Score June 27, 2007
Posted by Patti Shawgo in Mortgage Stuff, Optimizing Your Credit.add a comment
Everyone knows paying your bills on time is going to help your credit score. Few people understand the breakdown in the different factors that make up your credit score.
The first thing you should do is make sure you have accounts that are reporting to the credit bureaus. These are student loans, car loans, credit cards, bank loans, mortgages. Otherwise you will have no data to make up a score.
Then….pay those bills on time. That is 35% of your credit score. What’s the second most important factor? Well, it makes up 30% of your score, so you should be paying attention to it. It is the ratio of the debt you have compared to your credit limits.
In short, it is really, really important to not max out your credit cards. If 2 people have a $500 balance, and one person has a $500 limit and the second person has a $2000 limit, it’s going to affect your score in drastically different ways. The amount of debt you have does not matter in your credit score.
So….you might have caught on from this, that if you raise your credit limit you can raise your score. This is true, BUT you MUST, MUST, MUST not charge any moren to that card. Raise your credit limit and pretend that it was never raised. This is, however, a handy little trick to add a few points to your credit score, or help repair some other damage that has been done to your score.
The chart below is a nice breakdown of what makes up your score. I would also recommend taking a look at www.myfico.com and click on the “learn” section. It has a lot of nice lessons on your credit score.
Home Buyer’s Seminar Information June 25, 2007
Posted by Patti Shawgo in Events, Mortgage Stuff, Real Estate.add a comment
Here is a flyer for the upcoming Home Buyer’s Seminar I’m holding on Saturday, July 14th, 2007. Please RSVP to pshawgo@carrolltonbank.com. (I will be going out of town from 6/28-7/4 if you don’t get an immediate response from me). The seminar has a lot of great information whether you are just starting to think about the possibility of owning a home, or are ready to make the jump from renting to owning your own home. It is myself, a realtor partner, and a title rep/CPA, so we have you covered from every angle!
We will also be having a seminar on a weeknight in August in the Mount Washington area of Baltimore City. So if you can’t make July 14, feel free to contact me for upcoming dates, as well as our “web seminar,” which I can send to you if no of our dates fit with your schedule (or you just don’t want to come in person).
Don’t Have Money For Closing Costs? Here’s How You Get It. June 24, 2007
Posted by Patti Shawgo in First Time Home Buyers, Interesting Stuff, Mortgage Stuff, Real Estate.11 comments
The number one thing I come across as a loan officer is that first time home buyers rarely have the funds for closing costs, or they may have the funds but they are tied up in IRA’s and 401k’s which I wouldn’t recommend tapping into unless absolutely necessary.
100% financing is widely available, but this does not cover the multitude of little fees that add up. Standard Closing Costs include things like: Transfer Taxes, Title Insurance, Appraisal cost, Home Owner’s Insurance, and certain “pre-paids” like your property taxes, a certain amount of which MUST be paid at closing.
It really is possible to get into a home for very little money out of pocket. You are going to need some money for things like the deposit to the seller and home inspection, but here’s how you get money for all that other stuff:
1. Seller Concessions: The market has changed! You, the buyer, are more in control than ever. A seller concession means the seller will credit you a certain percentage of the sales price at closing. Most loans will allow up to 3% of the sales price as a seller credit. On a $200,000 property that would be $6000.
2. Down Payment Assistance Programs: I work with them all! You can make up to $100,000 and still qualify for certain programs. These programs offer money towards closing and low interest rates. You are able to combine these programs with seller concessions.
3. Loans that allow you to borrow more than 100% of the sales price. There are some loan programs that will allow you to borrow up to 103% or even 105% of the sales price. I do not recommend this way to get money for closing unless you absolutely have to. The rates on these loans tend to be a little higher, plus you are borrowing more than what your new property is worth and that’s never a good idea! This is generally how those “no closing cost” programs you hear about work. Raise the interest rate slightly and credit back to you, but you shouldn’t pay a higher rate unless you have to.
Baltimore Area Housing Prices Faring Better Than National Average June 20, 2007
Posted by Patti Shawgo in Real Estate.add a comment
As you can see on this chart (click on it if you need a better view). Housing pricings in the Baltimore area have actually been increasing slightly. Where as some of those “hotter” markets like Miami and not so hot markets like Cleveland have been seeing a decrease in value. In fact, the national average is down 2.5%.
Why has Baltimore been faring better? I think it’s because Baltimore has a strong steady job market. So does DC, you might say, and they have been seeing devaluing in their properties. Yes, this is true, but while Baltimore had been seeing great gains during the market booms, it was never quite so out of control as DC. Baltimore still has somewhat affordable housing, or at least enough high paying jobs to sustain demand.
However, these statistics are a bit outdated, so I won’t say everything is all shiny and happy. In May 2007, according to the Metropolitan Regional Information System, the average sales price in Baltimore County was down -.69%, although the median sales price was up .43%. 846 houses sold while there are almost 4000 on the market.
Baltimore City has a different situation going on, they have a little more than 5000 listings on the market, and 780 sold in May. The average sales price though, is up 7% over 2006, and the median sales price is up 9%. I think maybe that 5000 listings number is a bit deceptive and sounds a little worse then it really it. 1000 of those listings are priced $80,000 or lower and some of those really low priced properties are more likely to sit on the market if they are in great need of repair, etc.
What are Your Rates Today? June 20, 2007
Posted by Patti Shawgo in Mortgage Stuff.add a comment
Many home buyers want to “shop” interest rates, so they call up lenders or look at web sites and their main question is, “what is your interest rate today?”
The real answer is, “it depends.” You see, lenders don’t have just one interest rate. They have an entire menu of interest rates.
To quote you a rate, the lender needs to know several things. First, he/she needs to know if you are buying or refinancing. If you are buying a home, the lender needs to know how much you will be putting down and what percentage of the purchase price the down payment will cover. He needs to know what loan program you are interested in, whether you have a strong credit history or not, whether you want to document your income and savings or want an “easy qualifier” loan. This list of variables does go on.
However, you still want a rate quote because you’re “shopping” for a loan. The lender still needs to know approximately how many “points” you want to pay. A point is one percent of the loan amount. Say you are willing to pay one point as a loan origination fee on a 30-year fixed rate loan — today your interest rate might be 6.5%. If you wanted to pay zero points, your interest rate would probably be 7%. On the very same day, you could also get an interest rate of 5%. That would cost approximately five points or more. If you’re going to own the home for 30 years and never refinance, that might actually make a lot of sense.
The point is — there is no ONE interest rate. There are a variety of interest rates. When you get an interest rate quote from a lender, he/she is just providing you with one option among an entire menu of choices. Then tomorrow, it all changes. Rates change every day – sometimes a lot, sometimes a little.
What’s a “Short Sale”? June 15, 2007
Posted by Patti Shawgo in Mortgage Stuff, Real Estate.add a comment
If you’ve been looking through Real Estate listings, you may have seen the term “short sale” come up. Then you might wonder, what the hecht is that?
Well….it’s not that seller is selling their home in short amount of time, although frequently, there is only a small amount of time for an offer to be put in. In short, what a short sale is, is when a seller is facing foreclosure, and the seller’s lender, rather than have the property go to auction, will take a sales price that is less than what is owed on the property. The seller is not obligated to pay the differnece between the sales price and the amount that is owed on the loan.
Why would a lender take less money than is owed on a property? If foreclosure is imminent for a property, it can cost the lender less in the long run to do a short sale. Also, if the property owner has maxed themselves out in loans, that is they’ve borrowed up to what the appraised value is for a home, and the home has not appreciated that much in value…..the lender is not likely to recoup the costs if the property goes to auction any way.
Here’s a hypothetical example:
- Mr. Homeowner buys a home in 2004 for $200,000
- In 2005, he refinances and gets cash out, at the time the property appraises for $250,000
- By 2007, he has fallen behind in his mortgage payment for whatever reason AND he has not kept up with regular maintenance on the house
- A house in good condition would sell for $250,000, but his house is no longer in great condition, the most his house would probably get on the open market would be $240,00
Now….the lender has a couple of options…..they can foreclose on the house and put the house up for auction and pay for the auctioneer and lawyers a sizable chunk of money, not knowing what the house is going to get. The seller trys to sell the house, and finds a buyer, but it is at less than what is owed. At least in the latter example, the bank is getting a known amount of money. Plus saving the money of completing the foreclosure proceedings.
So….is a “short sale” something you want to target? I personally would not recommend it, just because you are at the mercy of the seller’s lender. You might be able to get somewhat of a deal, but just because a lender will allow a sale at less than what is owed on the loan, they are not going to allow a sale at significantly below the appraised value.
If you want to target foreclosures you are generally better off going after a regular foreclosure where the owner owes much less than what the property is worth. You might be able to negotiate to a good bit below market value and snage yourself a deal.
Run For the Border! June 13, 2007
Posted by Patti Shawgo in Real Estate, Uncategorized.add a comment
I’m not talking about Mexico, but Pennsylvania. Just up I-83, a number of people Maryland have been making the jump to Pennsylvania in the last few years. I’m even one of them, and I will tell you first hand there are pros and cons to choosing any area to live and PA is no exception.
There are deals to be had for sure. The photo pictured is an active listing in York and is $204,500! It was built in 2005 and has 2606+ square feet with a 2 car garage. It’s huge and gorgeous. The same property in Maryland would run you in 300-350k depending on the area.
Also…the commute is not so bad depending on where the location is in PA and where your job is. I work in Timonium and it takes me about 25 minutes, which there are definitely many in my office with longer commutes. I’ve also seen a lot of nurses seem to live in PA, and maybe this is because of their off hours and don’t have to drive in rush hour so much.
Here’s a quick run down, in my opinion, on the pros and cons of Southern PA for the Maryland Native.
Pros:
- Many cases more house for the money
- Better Schools than some areas of Maryland
- More open countryside if that’s your thing
- No sales tax on clothing
Cons:
- Higher Property taxes (do not underestimate this)
- Longer commute depending on job location
- More gas expense/car maintenance
- Friends that refuse to visit you b/c your house is too far away.
Oh…if you are interested in finding out more about that listing above, it’s listed by Sherri DiLeonardi of Country Home Real Estate, and you can reach her at hopeinpa@comcast.net
Find More Interesting Statistics for Baltimore County and City June 12, 2007
Posted by Patti Shawgo in Interesting Stuff.add a comment
While not as all emcompassing as the Baltimore Neighborhood Indicator Alliance, the Baltimore City Police interactive mapping system is simple to use and you can get a snap shot of all reported crime in the last 14 days for any area of the city.
Baltimore County also has a crime map, but it’s not as easy to use as Baltimore City’s map, at least for me. I’ve included the link below and maybe you can get it to work, but when I try to use it, it looks like Baltimore County doesn’t have any crime.
Find Interesting Statistics for Baltimore City June 12, 2007
Posted by Patti Shawgo in Interesting Stuff.add a comment
The Baltimore Neighborhood Indicators Alliance, which is part of the University of Baltimore has a really great interactive map on their website. The city is broken down into distinct neighborhoods and has color coded lots of interesting information. When you scroll over the neighborhoods, the specific statistic for that neighborhood gets displayed at the bottom of your browser.
You can access it here: http://www.ubalt.edu/bnia/Axiomap/c_data/main2.htm
Granted…the info on the site is not the most up to date, but you can find out all sorts of neat stuff like the age breakdown of neighborhoods, crime, rehabbing activity, # of clogged storm drains, all really important stuff… but enthralling none the less.
Thoughts on interest rates… June 11, 2007
Posted by Patti Shawgo in Mortgage News.add a comment
This past month interest rates have been on the rise, especially this past week. Rates are the highest they’ve been since last October. But hey, they are still lower than they were a year ago.
Fears of inflation always mean higher interest rates, because those people investing in long term bonds (which directly affect interest rates), don’t expect their dollar to be worth as much in the future. To make the investment worth it, they need a higher rate on return, ie higher interest rates. Why is there fear about inflation? OIL! Higher oil prices meaner higher prices for everything. All the goods you buy are transported to you by some sort of gas guzzling mode of transportation, be it freight ship, truck, or train.
What does this mean long term? The “experts” are mixed. Most think that 30 year fixed rates are going to continue coasting in the 6-7% range, as they have been for the last 18 months or so. We have definitely swung to the higher side of that, and probably are going to stay on this high side of the range for a while.
There are definitely enough financial indicators to say that we might not see real reductions in rate for a while to come. But….it could be much, much worse. Rates are still really low! It was not that long ago that 8 or 9% was the norm when buying a house.
On the upside, there is enough pressure from the real estate market needing rates to maintain the level they are at that it might help stabilize rates. Prices had risen so fast in the last few years with the help of low rates, drastically increasing rates now, has the same effect as raising prices, it will take houses out of the affordable range. The real estate market is starting to recover and can’t handle rising rates, which in turn make monthly payments higher.
My prediction: Rates have risen a little bit, and don’t expect them to be going down anytime soon. (though they shouldn’t be going up that much either).
Now, this is purely my opinion, so don’t take it as fact; predicting interest rates is definitely no science! I would be a really rich woman if I could tell you exactly where rates are going to go!
