Searching for a new home can be a daunting experience. You may think you have a clear idea of the features that are important to you, both with a home and a location. However, once the search begins, it’s easy to forget your most important priorities. Here are some guidelines and a few suggestions that will hopefully help you in your search for your ideal home.

CREDIT
It’s a good idea to write the answers to these questions out and take them with you while house hunting. You may think you know what you want, but when you start the nitty-gritty of the search, it’s easy to become overwhelmed and forget. It may even be a good idea to give a copy to your Realtor so they have a better understanding of what you are looking for.

• How many bedrooms and bathrooms will you need? Garage size?
• Do you want a new home, or are you willing to settle for an older established one? Do you have the ability to do any renovations?
• Is the school district a factor for you?
• Do you want to be close to a shopping center? Other public amenities?
• Is commuting to work an issue? If so, how far are you willing to drive?
• What style of home are you looking for? Rambler? Two-story? Rustic? Contemporary? What about colors?
• Are there any special features you must have? Fireplace? Large yard? Quiet street?
• Prioritize your needs and wants with your spouse (if applicable) before starting your search so that you have a clear idea of what you both are looking for.
• You can even make a checklist for each of the homes you look at so that you can be sure to match the features with your priorities.

TIPS

• Make sure you’re pre-approved for a mortgage before you start looking so that you know exactly what you can afford.
• Bring a spouse, partner or friend. A second set of eyes is always helpful.
• Take a camera, notepad, a folder, and a map with you. Make notes during and after your home visit and save the property fact sheets in a folder.
• Take photos of the homes that appeal to you so you can remember the best features (or any problems you might see).
• Ask about utility, maintenance, and applicable HOA costs if they are not included in the property fact sheets.
• Limit the homes you look at in one session to three so you can focus on the details.
• Draw floor plans to help you compare homes. Especially be aware of important locations like the laundry room, access to the outside, etc.
• Ask questions about any problems you have with a home before making an offer.
• Ask if the seller is willing to change anything (i.e. paint, carpet, etc.) or contribute to the closing costs.
• Go with your gut. If you have any qualms, it’s best not to ignore them. There may be a very good reason.

We hope this helps. If we can help you with any questions relating to your financing needs, please don’t hesitate to call or email.

Credit is one of the most important things a consumer has, and yet it can be one of the most confusing issues that consumers face. Just how influential is your credit score? Someone with a 580 credit score (considered a “fair” score) will pay up to three points higher on a mortgage loan than someone with a 720 credit score (considered an “excellent” score). On a $150,000 mortgage, that’s the difference between an $1,200/month payment and a $890/month payment. The difference is pretty significant.

The best thing, you as a consumer, can do to protect your credit score is to:

• Keep your balances low (below 30%)
• Pay your bills on time (seems obvious, but even one 30-day late can drop your score by as much as 75 points)
• Check your credit scores periodically and report any errors immediately

Beyond that, here are some of the most common credit score myths:

1. My score is affected by my income, age, and sex. Actually, none of this data has any bearing on your score. It is listed on your credit report, but only for informational purposes.

2. A higher salary will help my score. The only way this helps is if you pay off your debts and pay your bills on time, because again, it is not factored into your score.

3. When I get married, my scores is merged with my spouse’s. Both you and your spouse have separate credit scores which, whether good or bad, remain separate. When you open credit accounts jointly, though, that information is reported to both credit reports.

4. I only have one score. You actually have three from each of the major credit bureaus: Experian, Equifax, and TransUnion. Sometimes some information only appears with one of the bureaus, but when you apply for a mortgage loan, all three scores are pulled. The high and low scores are discarded, and only the middle score is used.

5. Checking my own credit can hurt my credit score. You can check your score as many times as you want without having it affect your score. Just make sure that YOU are the one requesting it through a reputable source, like MyFICO.com. If you are shopping around for a loan of any type, (and they need to pull your credit) make sure you have all inquiries done within a 2-week period and it won’t adversely affect your score, either.

6. Closing accounts will help my score. It may seem counter-intuitive, but by closing accounts it may appear that your available credit is low compared to your debt balance and may, in fact, lower your score. If you do want to close accounts, close one at a time, but only if you are also paying off debt, and try NEVER to close old accounts. The longer the history you have the better.

7. Paying off debts will instantly repair my credit. Your credit score is more about your “history” than your current activity, and so while it will help eventually, it doesn’t erase any negative damage like late or missed payments.

8. Credit card offers are hurting my score. While they are usually unwanted and annoying, credit card solicitations don’t affect your score (as long as you don’t respond to them.) There is no magic number of how many cards you should have, just make sure to keep your balances on your cards below about 30%.

With the current state of the economy, you may be wondering if now is really the right time to buy a home. There are some amazing reasons, however, to prove that there has actually never been a better time:

• Interest rates are at a 50-year-low. The government has infused over $1.3 trillion dollars into the economy to keep interest rates at affordable levels, but there is no guarantee that they will remain at these low levels for a long time. As consumer confidence rises, a usual consequence is that interest rates begin to climb as well.

• Affordable home prices. Homes are finally at a level that more people can afford. Prices have fallen dramatically over the last two years, but are not expected to fall any more, and in many areas, homes are expected to start increasing in value.

• Government incentives. There are new FHA programs that are allowing more and more people to qualify for a mortgage.

If you have any questions about how you can take advantage of any of these incentives, please don’t hesitate to call or email us today.

Once we know how big of a monthly payment you qualify for, we’ll know what size of a down payment you’ll need to come up with. Standard down payments can be anywhere from 3-20%, however, there are other alternatives depending on the type of loan you qualify for and other some additional financing options.

Right now is a great time to buy, especially for first time home buyers, because of some of the incentives currently being offered:

• There are some excellent programs being offered to buyers in rural areas. (I can tell you what is considered “rural.”)
• Certain properties that currently have a loan held by Fannie Mae have great incentives for buyers, including no-money-down options. (I can help you find out if a property meets this criteria.)
• In many cases, the seller can contribute toward the closing costs, reducing the amount (if any) that needs to be put down on a property.

Loan programs and options are changing, sometimes daily. We keep as informed as possible about what is going on in the market, so if We can be of any assistance to you in answering any questions about down payments, or any other financing issues, please don’t hesitate to call or email us.

Are you wondering: How much can I afford to pay for a home? A better question to ask may be: How big of a mortgage can I afford based on my current circumstances?

The best way to answer these questions is to let us pre-qualify you. I will do a quick credit check, ask you some questions about your current financial situation, and find out about some of your future financial goals.

Another reason to get pre-qualified is that it is required by most Real Estate Agents to have this letter completed before placing an offer on a home, and in many cases, before even looking for a home. It lets them and potential sellers know that you are serious and capable of purchasing once you’ve found the home you like.

A good rule of thumb when determining what you can qualify for is that your total Debt-to-Income ratio (also known as DTI) cannot be above 45%. This “Debt” includes any car loans and student loans, as well as any revolving credit (credit cards, etc.) It also includes taxes, insurance, and HOA dues on the property.

Please call or email us as soon as you are ready to start looking for a home so we can help prepare you with the tools you’ll need to get into the home you want.

Before and during the time that you apply for a mortgage loan, you need to be extra mindful that nothing is done to lower your credit score. Doing anything to jeopardize your score could mean that when the lender does a final credit pull (which they all do), you may not qualify for the same rate that you did when you started.

Here are the top credit Do’s and Don’ts:

1. Don’t apply for new credit of any kind. This includes any “pre-approved” credit card offers that you receive in the mail. Every time your credit is pulled by a potential creditor or lender, you risk losing credit points immediately. Depending on the circumstances, you could lose anywhere from 2 to 50 points for one hard inquiry.

2. Don’t pay off collections or charge-offs. Paying old collections will decrease the credit score immediately due to the scoring models that calculate based on “date of last activity.” An old “unpaid collection” with “recent activity” adversely affects your score. If you want to pay off old accounts, do it through escrow (at closing), and make sure that you 1) validate that the debt is indeed yours and 2) the creditor agrees to give you a letter of deletion.

3. Don’t close credit card accounts. As I explained in the last email, closing a credit card account may make it appear that your debt ratio has gone up. If you want to close a credit card account, do it after closing, and make sure that it is not an account with a long history. The longer the history you can show, the better.

4. Don’t max out or over charge on your credit card accounts. This is the fastest way to lower your score as much as 50 to 100 points. Try to keep your credit card balances below 30% of their available limit at all times. This is a good rule of thumb whether you are applying for a loan or not. And if you decide to pay down balances, pay down balances equally across the board.

5. Don’t consolidate your debt onto 1 or 2 credit cards. It would seem like consolidating is a smart thing to do, especially if you have a card with a low interest rate. However, when you do this, it appears that your are maxed out on that card, and the credit scoring system will penalize you as I mentioned in #4 above. If you want to save money on credit card interest rates, wait until after closing.

6. Don’t do anything that will cause a red flag to be raised by the scoring system. This would include adding new accounts, co-signing on a loan (even if you won’t be paying on the loan), or even changing your name or address with the bureaus. The less activity of any kind during the loan process, the better.

7. Do consider joining a credit watch system. If you join one of these programs, you can check your reports weekly, or even daily depending on the program you select. (When you pull your own reports, you don’t get penalized for a “hard inquiry.”) This way, if something does show up on your report that has caused your score to go down, you’ll know immediately, and you may be able to take care of the problem before closing.

8. Do stay current on existing accounts. This includes not only your mortgage, but any car loans or revolving credit accounts (credit cards). Even one 30-day late can cost you anywhere from 30-75 points.

9. Do call us if you receive anything in the mail from a creditor or collection agency that you believe may affect your score during the loan process. We may be able to supply you with the resources you need to stop any derogatory reporting to the bureaus.

We hope you found this information useful. Credit is such a confusing subject for most people. Even those in the industry can find the credit reporting system to be extremely perplexing. If you have any additional questions about credit, or any other financing issues, please don’t hesitate to call or email us.

You just got quoted a rate on a mortgage loan at 5.5%, but your friend just bought a home and got a rate of 5.0%. Why the difference, why do rates fluctuate, and how can you be sure that you are getting the best rate?

WHAT CAN I QUALIFY FOR?
First of all, your credit, income and the type of loan you want makes a big difference in the rate you can qualify for. Credit is perhaps the biggest factor. For example, sometimes a difference of 20 points on your credit score will keep you from having an “excellent” score (720 or above). This can mean the difference in as much as .5 to 1.0 percentage points. Income also affects your score. If your Debt-to-Income ratio (also known as DTI) is too high, you may be consigned to only certain loan programs that may or may not have higher rates. Also, rates differ between loan programs. For example Adjustable Rate Mortgages (ARMs) have different rates that Fixed Mortgages.

WHAT AFFECTS RATES?
Rates, especially lately, have seemed to fluctuate excessively. Only recently, we saw 30-year fixed rates as low as 4.5%. Now, they can be as high as 5.5% for the same programs. Avoiding any technical jargon, the bottom line is that when the stock market goes up, so do rates. What causes the stock market to go up? Well, a lot of things, but the short answer is consumer confidence. It’s kind of a catch-22. When consumers start feeling better about spending money, mortgage rates usually go up. The Federal Government can do certain things to bring rates down, like they did by infusing over $1.3 trillion into the market, but it’s never a guaranteed thing.

AM I GETTING THE BEST RATE?
Just be aware, that even if you are quoted a lower rate by one party, you may be paying more in closing costs or other fees. Or you may get terrible service. Or you may get to closing and suddenly the rate you were quoted is no where near what you started with. It’s important to look at the big picture to make you are getting the best deal. (Here is an article about “APR” and how it should be considered when choosing a loan that may help explain this better.)

You can depend on Salt Lake Mortgage Guide to offer the most competitive rates with the best service. We are committed to making sure that all our clients are treated fairly, and if you have any questions or concerns, we would be more than happy to answer or resolve them for you.

It’s been reported that 48% of consumers’ credit files have an error of some kind. And over half of those errors are significant enough to result in credit denial. The mortgage industry relies heavily on credit scores and a poor score may mean the inability for a borrower to qualify for a loan.

HOW CAN I INCREASE MY CREDIT SCORE?
Previous credit performance (i.e. credit history) is the single most important factor in a credit score. The truth is, it is difficult to change a score, but there are steps you can take to improve your credit, especially if you feel that the information on your credit report is incorrect.

CONTACT THE CREDIT BUREAU
If you feel the information in your credit file is in error, you can directly contact the appropriate agency. Each bureau (Experian, Equifax, and TransUnion) gives instructions on disputing information on their websites. They recommend that you do not apply for credit while a dispute is pending.

Investigations are typically completed within 30 days of the date the request is received. If the disputed information cannot be verified during that period, they are required to delete or update the credit report as requested. If the information is verified as correct, the information will remain on the file and the consumer will be notified within five business days.

CREDIT REPAIR
There are also other steps available to help you clean up their credit. Several credit repair guides have been published on the internet, and there are Credit Repair Agencies that are available to assist with this process.

Be aware that there are a lot of disreputable companies making false claims and charging a lot of money. Only work with a company that is recommended by a trusted party. (We can give you the name of a company that we have worked with from time to time that we highly recommend.)

PLAN OF ACTION
If you think that your credit report falls into the 48% category mentioned above, we would be more than willing to help discuss a plan of action to help you get it fixed. Call or email me with these or any other questions you might have.

On March 4, 2009, the U.S. Treasury Dept. published guidelines for the Home Affordable Modification Program (HAMP).  The idea of this program is to help qualifying individuals reduce their monthly mortgage obligations helping them through this difficult economic time.  Lenders also receive incentives to provide individuals with home loan modifications.

1. Was your mortgage originated before January 1, 2009?
2. Is the home your primary residence?
3. Is your current mortgage payment (including taxes, insurance, mortgage insurance, and HOA) greater that 31% of your monthly gross household income?

If you answered yes to the above questions, you may qualify for a home loan modification.

There are a number of companies that use the modification programs as a way to scam homeowners out of their money.  Salt Lake Mortgage Guide does not provide modification services, but if you are interested, please contact us.  We’d be happy to refer you to a reputable Utah Home Loan Modification company.