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Slaying That Credit Score – New Tips For A New Year

Getting ready to buy a house or just thinking about it? Where to buy, what to buy, and how you’ll afford it are probably top of mind. But if you’re not also concentrating on your credit score – and by concentrating on, we mean actively trying to raise your scores as much as possible – you’re not looking at the whole homebuying picture.

Not only does your credit score factor greatly into what you’ll pay for your house, it can keep you from being able to buy one, period. “Your credit history determines what loans you will qualify for and the interest rate you will pay,” said eloan. “A credit score provides an easy way for lenders to numerically judge your credit at a point in time. It gauges how likely you are to repay your loan in a timely manner. The better your history appears, the more attractive you become as a loan customer.”

Thankfully, your credit score is not static; it can (and does) change all the time, and there are all kinds of ways to improve it, some better than others. We’re running down the smartest options to boost your score in the new year.

Shoot for perfection

850 is the best score you can possibly get, and, while it may seem completely out of reach, there are people who actually crest that credit mountain and reach the top. “It’s the Holy Grail of all credit scores: 850. On the widely used FICO credit score scale, approximately one in every 200 people achieves perfection, at least as of a 2010 estimate by the Fair Isaac Corporation,” said The Motley Fool. Careful budgeting and detailed attention to every aspect of their financial picture are the umbrella tactics they use to get and maintain that score – and they’re ones you should be using, too.

Or, shoot for 750

If 850 is out of reach within a reasonable timeframe (reasonable being the maximum amount of time you want to wait before buying a home), try for 750. This is the magic number for many lenders and creditors. “It puts the ball completely in the corner of the consumer rather than the lender, said The Motley Fool. “You’ll often have lenders fighting for your business, and in nearly all instances, you’ll be offered the best interest rate by lenders, meaning you’ll have the lowest possible long-term mortgage and loan costs of any consumer.”

Talking to your lender about the items on your credit report that have the best chance of raising your score is key. You may think that paying off that old unpaid account from six years ago is an easy way to get a score bump, but is it about to fall off of your report on its own?

Set up automatic payments

According to CreditCards.com, a good 35 percent of your credit score is taken from your payment history. You may have missed payments in the past that you need to deal with now, but you certainly don’t want to make another mistake while you’re trying to get homebuyer-ready. Almost every creditor, from your utilities to your car payment to any outstanding student loans you may have, offers the option of automatic payments. This is the easiest way to ensure you never miss a payment because you got busy or spaced on the due date.

But, just remember to make sure there is enough cash in your account to cover the payments on the day the money will be coming out. If you have been busy moving funds into savings for your down payment, you’ll want to set a reminder to put money back into whatever account your auto payments are attached to.

Ask before you shut down credit cards

The amount of credit you have is a factor in qualifying – or not – for a mortgage. Too much debt is a bad thing. But, long-term credit use that has been managed properly can be helpful to your score. If your lender does recommend getting rid of some of your available credit, it likely won’t be older cards. “Length of credit history is considered when determining your score – so the longer you’ve had a credit card, the better,” said CNN Money.

Also beware that closing any card triggers a change in your “utilization,” and that might not be a positive. Be sure to consult with your lender first.

Watch your credit limits

Banks don’t look kindly on those who have used all of their available credit because it gives the appearance that you’re not living within your means. “The amount of available credit you use is the second most important factor in your score,” said NerdWallet. “Experts recommend you keep your balance on each card below 30% of your limit — if your limit is $5,000, your balance should be under $1,500.”

Of course, even lower is better. Get to 20% or even 10%, and you’ll be in great shape. But don’t go below that. While it may seem like a zero balance would indicate that you are financially savvy, banks like to see responsible credit management. That means using your cards and paying down the balance to a reasonable level every month.

Pay down your debt…but check with your lender first

If you’re trying to weigh the best tactics for improving your credit and you don’t have the funds to take care of every outstanding wrinkle on your credit report and pay down your existing debt at the same time, you definitely want to check with your lender before you make any move. Every dollar is important, and while NerdWallet notes that your credit score will “soar” as you “pay off your debt as aggressively as possible without acquiring more,” it could be that your lender has a strategy that places more importance on other credit issues in your report, or has structured your credit repair according to a different timeline.

This underscores the importance of working with a lender who is skilled and experienced in credit repair. Using the tools our lender gave us, we were able to improve our score by almost 100 points in four months, allowing us to qualify for the home we wanted and get a great interest rate.

Don’t be afraid to refinance

You may end up buying a home before you get your credit score exactly where you want it to be. If you’re in an appreciating market, which much of the country is, and your score continues to rise after you close escrow, you might be in a position to refinance sooner than you think. Especially if you buy your home with an FHA loan, their streamline refinance program can potentially lower your rate without an appraisal, a credit check, or job/income verification.

Position Realty
Office: 480-213-5251

Financial Don’ts When Getting Ready To Buy A Home

If you’re in the process of buying a home, you’ve probably already met with a lender who advised you on what to do and what not to do during the escrow process. But if you’re just getting ready to buy or plan on doing so in the near future, following a few financial tips can mean the difference between qualifying…and not, and also getting a decent rate. These are a few universal “don’ts” that will help you stay on track, even before you get a lender involved.

Don’t take out more credit

If you’re thinking you’re going to buy a house in a matter of a few months, forget that new laptop on the Best Buy card, forget that new car, and forget that Old Navy card. Sure, it’s only a $30 pair of pants. But, taking out more credit can harm your debt-to-income ratios, which can make you look like a credit risk. And that’s not worth it, no matter how cute the pants are.

Don’t pay off all your current credit cards

Your lender will tell you specifically what you should pay down and what you should leave alone, but banks tend to like responsible credit management. In some cases, that may mean carrying a small balance on one or more cards.

Don’t charge up all your cards to the limit

“Responsible credit management” does not mean running every available card up to the limit and/or only making minimum monthly payments. Banks will not look kindly on this when you go to get approved for a loan.

Be careful with old debts

You may think that in order to qualify for a mortgage or get the best possible rate you have to pull your credit and go back through every single entry to identify and take care of anything negative. You’re right about the first part. Pulling your credit so you know what you’re working with is critical, and financial experts recommend doing it annually, regardless of what you’re planning (or not planning) to buy. But be careful with old debts. It doesn’t hurt to ask a lender what should and should not be taken care of. But, in general, you’ll want to:

Pay in full instead of making settlement arrangements – It’s not uncommon for debt collection companies to send out settlement offers that allow you to settle debts for less than the total amount. While this can sound tempting, it likely won’t yield the results you’re looking for. Yes, it’ll stop the harassing phone calls and persistent letters. But if your goal is to get the debt to disappear from your credit report, you’ll be disappointed.

“When you settle your debt, the activity usually shows up on your credit report as ‘debt settled’ or ‘partial payment’ or ‘paid in settlement.’ You can talk to the settlement company about the specific language they use, but the bottom line is: this is a red flag on your report,” said clearpoint. “FICO doesn’t reveal how much your score will drop, exactly, and your report doesn’t indicate how much of the original debt was forgiven; it simply shows you settled. Either way, it still points to the fact that you may be a credit risk.”

Stick to newer debts – Older debts that are getting close to falling off your report should be the last thing you pay. “You also want to consider the statute of limitations on your debt,” they said. “Most past debts remain on your credit report for seven years, so if you’re close to the time frame when the debt falls off, settling it may not make much of a difference. There’s an ethical argument to be made here, but practically, you might just be settling a debt that was about to disappear anyway.”

Be careful with debt consolidation

If you have a lot of outstanding debt, are in over your head with credit cards and store cards, and can only manage the minimum monthly payment on all your existing loans, you’re likely going to have a hard time qualifying for a mortgage. You may be tempted to lump your debt together into one payment through a credit consolidation company, but beware the consequences. There may be startup fees, interest rates on the consolidation loan could skyrocket after an initial teaser rate expires, and, in some cases, an improvement in credit is years away.

Don’t get lax with your payments

Your lender will reinforce this, but it bears repeating that even after you’ve been prequalified, you need to keep your payments current on your car, your Visa, etc. Your lender will do a recheck before closing just to make sure nothing has changed in your credit report, and if you have new issues, it could impact your loan.

Don’t move money around

“We know a story of one homebuyer who almost lost his home because he had stated on his application that the down payment was coming from a mutual fund account. Then, two days before closing, he decided to sell a baseball card collection instead,” said HSH.com. “The loan had to be underwritten all over, his ownership of the collection, its value and its sale had to be verified, the closing was delayed and the fees increased.”

Don’t change jobs before you buy your home

This is a big no-no don’t if you’re in the process of buying a home or are about to. Among all the other financial information your lender will be collecting in consideration of your loan, they will also be asking about your employment history. You’re obviously less likely to be approved if you’re unemployed (unless you’re independently wealthy, and, in that case, Congratulations!). A recent job change may also be problematic if the bank is feeling jumpy about your job security.

Position Realty
Office: 480-213-5251

New Tax Bill ~ Things You Might Want To Do Before The End of The Year

There are some pretty straight-forward money moves people make every year at this time to protect what they have and lower their tax obligation. Many of them are still in play, however, the new tax bill that was just signed has also complicated a few things.

“Add another item to your holiday shopping list: last-minute tax planning,” said the Los Angeles Times. “Congress has passed the most sweeping overhaul of the federal tax code in three decades. The Republican legislation…delivers most of its benefits to corporations and the wealthy, but there are key changes that affect individuals. Unlike the corporate tax cuts, the revisions to the individual code are temporary and expire in 2026. Most of them kick in on Jan. 1, and there are steps you could take in the coming days to maximize new advantages and minimize the potential hit from other changes.”

Make an extra mortgage payment

With the new tax bill, standard deductions for those who don’t itemize on their taxes will almost double next year, going “from $6,350 to $12,000 for individuals, and from $12,700 to $24,000 for couples,” said the L.A. Times. “Taxpayers who anticipate itemizing on their 2017 returns might want to consider making their January mortgage payment before the end of the year. Doing so would allow you to deduct an extra month of mortgage interest that you might not be able to deduct on your 2018 return if you don’t end up itemizing because of the higher standard deduction.”

If possible, pay your 2018 property taxes early

“Taxpayers who itemize their deductions may want to consider prepaying their 2018 property taxes before Dec. 31,” said CBS News. “Because the tax bill will cap the deduction for state and local taxes (SALT) at $10,000 starting next year, homeowners in high-tax regions like New York or New Jersey can maximize their SALT deductions in 2017 by prepaying next year’s property taxes before Dec. 31.”

Beware of prepayment from an escrow account, however, as this could create “the potential for crossed wires with the bank.”

Defer income until 2018

Many families will end up in a lower tax bracket next year, which should increase take-home pay. If you are expecting another paycheck or a bonus before the end of the year, delaying it until 2018 could mean more money in your pocket.

Give more to charity

Charitable contributions are not affected by the new tax bill per se, but because the number of itemizations is expected to drop sharply next year, there may be a reduced financial benefit to giving to charity in 2018. Loading up on charitable donations now will allow you to take advantage of the deduction before the new year, and do a good deed.

“This might be the year, if they can no longer itemize their charitable donations, to clean out the closet and donate to Goodwill or the Salvation Army or make that extra contribution to your church,” Kathy Pickering, executive director of the Tax Institute at H&R Block, which provides research and analysis to the company’s tax preparers, told the L.A. Times.

Check your contribution limits

Contribution limits were unchanged by the new tax bill, but the importance of maximizing those contributions by the end of the year remains. “In 2017, people can choose to have $18,000 of their pre-tax income placed into their 401(k) accounts,” said CheatSheet. “Participants aged 50 and older are allowed an additional $6,000 catch-up contribution. You may wish to check how much you have contributed to date in 2017 and increase contributions accordingly. If you have an Individual Retirement Account, or IRA, check to see if there’s room there as well for last-minute savings. The 2017 limit for both Roth and traditional IRA accounts is $5,500.”

Position Realty
Office: 480-213-5251

What To Do When Your Home Isn’t Selling

When sellers start the home-selling process, no one wants to think “What would happen if my home doesn’t sell?” But before you panic, recognize that there are many things that you can do so you don’t wind up in that position.

Tip 1: Understanding the real estate market and the value of your home will help you avoid this dilemma. The first key point is to get educated about the market. Read your newspapers, online real estate sites, and consult with the best experts in real estate for your area to determine the sales price.

While all that may seem basic, you’d be surprised how many sellers rely on emotion to dream up a selling price for their home. Some have done little, if any, research on even their own neighborhood. Instead, their strong ties to their homes cause them to imagine that their home should sell for the price they want. Or they base the selling price on how much they owe which is, of course, of no significance to buyers.

Tip 2: Fix up your home. Most buyers don’t want to purchase a big list of must-do fixes in order to live in the home they just bought. Yet, some sellers think that it’s a waste to spend money on a home that they’re moving out of soon. That’s quite a predicament. Both sides have valid points but buyers might be in a stronger position. The seller wants out and if the home is a mess, many buyers will simply move on to the next best house.

Yet, if a buyer wants it badly enough, he/she might agree to purchase your home but it’s guaranteed you’ll take a financial hit as the buyer will want to discount the price for the problems that need fixing. In the end, you might have to fix the issues before the sale anyway. So, starting with a house that is in relatively good order is the best way to begin. Read some of my other columns to see which renovations give a good return.

Tip 3: If you need to sell your home, don’t pull it off the market because you think the season isn’t right. Buyers who need to buy a home will keep hunting through all the seasons. There may be some slow times but if people need a house, they’ll keep looking even in the unlikely times.

Tip 4: Consider incentives. Yes, you can make your home more appealing by tossing in some incentives. It’s best to speak with your REALTOR® about which incentives are best for you to offer. Even practical incentives can help get buyers to your home to view it. These incentives can help encourage the buyer to move forward, especially if other challenges arise.

Tip 5: Stage your home. This is not the same thing as fixing up your home. Fixing up your home includes daily maintenance and repairs. Staging your home involves using experts to make your home showroom-ready–like a model home. I know you might say that all your friends tell you that you have fantastic taste but, trust me, if you’re serious about selling your home, then it’s worth at least having a consultation with an expert in the industry.

Here’s why: They are trained to stay on top of the trends that have mass appeal. They also offer a fresh set of eyes on your home. They might easily point out something that you never saw before because you’ve been living in your home for a long time. They will look at your home from an “outsider’s” perspective and that’s exactly what you need.

Taking the time to, at least consult with experts, allows you to gain knowledge and information about your home and the market place. What you do with that is up to you, but it may just be the difference between a For Sale sign and a Sold sign hanging outside your home.

Position Realty
Office: 480-213-5251

Phoenix Real Estate Market Report ~ November 2017

The current real time market profile shows there were approximately 8,552 new listings (down 1,422 listings from last month) on the market in November 2017 and 7,218 sold transactions (down 206 listings from last month). This is the fourth consecutive month the number of new listings exceeded the number of sold transactions. Overall, the inventory of homes on the market is still very low where in November 2017 there were 20,509 homes (up 75 listing from last month) on the market which is down -20.2% as compared to the number of home on the marker in November 2014. In November 2015 there were 23,585 homes, in November 2014 there were 26,270 homes and in November 2013 there were 26,836 homes for sale on the market. The average days on market have been in decline since February 2017 but in November the average days on market increased 4.6% but this is normal due to the holidays.

Historically, since 2014 the average sold price has declined from July to August and doesn’t start to increase until late September and early October. Despite the decrease in the number of transaction since August 2017 the average sold price has continued to increase from $297,070 in October to $308,202 in November which is a 3.7% appreciation rate. Overall, the average sales price since December 2016 (12 months ago) has an appreciation rate of approximately +9.3% (up from last month) or from $282,054 in December 2016 to $308,202 in November 2017. In 2014 real estate prices appreciated 4.5%, in 2015 5.5% and in 2016 4.2% where according to the National Association of Realtor the average annual appreciation rate is 5.4%. Therefore, Phoenix is above the historical appreciation rate as long as prices continue to increase in December.

The volume of foreclosure purchases since December 2016 (12 months ago) has decreased approximately -39.9% and the volume of short sales decreased of approximately -59.5%. The current percentage of foreclosure sales and short sales sold is only 1% of the market which indicates a healthy market. Unfortunately, there are still some homeowners who bought between 2005 and 2007 that are still up-side-down as shown in the yearly average sold price chart above.

Since December 2016 (12 months ago), the number of homes for sale on the market have decreased approximately -8.9% or 22,520 homes for sale on the market to a gradual decrease of 20,509 homes (Down 2,011 homes). The total number of listings is low as compared to 25,960 listings in September 2014. This decrease in the number of homes for sale indicates we are currently in a seller’s market (low supply and increased demand).

Real estate prices will continue to increase and interest rates are planned to increase in 2018 so if you are thinking about buyer a home this year will be the time to buy before you get priced out of the market. Give us a call to discuss your best buying or selling strategy, TODAY!!

Position Realty
Office: 480-213-5251

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