Rule of Real Estate: Know your numbers. Check your credit score for FREE

Answer this question honestly:  

When was the last time that you pulled your credit reports? 

The fact is, your numbers matter!  I did the annual examination of my credit reports this AM- fast, easy, and painless.  I figured that this would be the perfect time to share the information on the blog with you!

Did you know that under the Federal Fair and Accurate Credit Transactions Act (FACTA), you are entitled to a free peek at your credit report once per year?  To comply with their obligations under FACTA, the three major credit reporting agencies (Equifax, Experian, and TransUnion) organized the web site AnnualCreditReport.com,  allowing consumers a way to easily exercise this right.  The website is safe and FREE TO YOU, providing all American consumers an easy mechanism to receive their three free credit reports per year.

Ok, so why don't people use this service?  After 13 years of discussing money matters with clients, I hear 4 reasons repeatedly.

1) I didn't know about the service.
2) I hate talking credit.
3) I have no plans for a big purchase, so why bother
4) By FAR, the most common- I don't want to damage my credit

Whether preparing for a large purchase (house or car) or NOT, an annual credit report check is necessary and advised to ensure that you are "moving in the right direction", that your identity has not been compromised, and to allow you the ability and adequate time to dispute any discrepancies. 

I equate the fear of facings ones' numbers to someone who refuses to go to the doctor every year.  The fact is: knowledge is power. Once you rip off the band-aid and HAVE the information in hand... you can work with it. When it comes to your finances (or your health for that matter), ignorance is NOT bliss.  If your goal is to build and maintain a healthy credit score, checking your credit report on a regular basis is a good first step. 

Just do it.  Face the music.  Take control of your finances and pull your report HERE.  You will be relieved that you did, I promise!

Per the Annual Credit Report site:  Keeping an eye out for three things can help to have a positive impact on your credit score: suspicious information, score factors and signs of identity theft. It’s a common misconception that having your credit checked will harm your score and this isn’t always the case. 

There are two types of credit inquiries

Hard Inquiries
These types of inquiries, such as when a potential lender checks your credit report to approve a loan, application, rental agreement or other contract, can show up on your credit report and damage your score to some degree. Companies will need your permission to review your credit report. 

Soft Inquiries
These inquires occur when you’ve given permission to access your credit report for things like employee background checks or when you review your own report. Soft inquires won’t affect your credit score.

Checking Your Credit Report for Signs of Identity Theft

The following issues may be indications that you’re a victim of identity theft:

• Accounts that don’t belong to you
• Inquiries that you haven’t authorized
• Addresses that you can’t recognize or haven’t lived at
• Checking for Unfamiliar Information

Sometimes information on your credit report is reported incorrectly by the company to the credit bureau. Some examples of incorrect reporting include:

• Accounts that are open being reported as closed
• Late payment reports that never occurred
• Incorrect numbers that deal with credit balances or credit limits

Reviewing Your Credit Score Factors

Your next step is to take a look at your credit score factors. These detail those issues that hurt or help your credit score. 

Positive credit score factors include: punctual payment history, age of accounts and low balances. 

Negative score factors include: being been more than 30 days late, having several inquiries, and having one or more legal judgments in your credit report. 

Refinance- a Realtor's Opinion & 5 Things Preventing You From Getting a Mortgage Refinance

Rates are still record low.  I have had numerous inquiries from friends and past clients in 2013 about the current condition of the lending industry and whether a refinance is possible or even worth the hassle.  A common misconception among those folks NOT in an industry that deals directly with lending institutions is that the system is broken.  That is so FAR from the case!

Money is flowing, the market is moving swiftly, and people are CASHING IN on the low interest rates.  That being said, WHO you choose to work with and your current financial status dramatically influences how successful you will be in the pursuit of a lower interest rate! 

There are many factors to consider: will the property appraise, do you have equity, due to lower value will you be forced to pay PMI, will you be in the property long enough OR is the rate LOW enough from your current rate to actually offset the closing costs.

My Best Advice: Please contact a Realtor before you begin the refi process and have all of your "ducks in a row" when you apply. First things first- what is your property worth?  A Realtor can provide you with concrete data.   At least in St. Louis, we can easily access your private and extensive tax records including your mortgage information.  Paired with your full neighborhood sales data, including which sales within your radius were distressed or foreclosures, an approximate amount of property equity is easily determined. THIS STEP IS VITAL to ensure whether an attempt at refi is "worth it" and most reputable agents do not mind assisting their friends, family, and clients with this information. 

My lender stories over the past 3 years is an entirely different blog post. Frankly, there are 2-3 banks that I will STRONGLY urge my clients not to use- and yes, they are names that you will recognize- as their backlog makes a timely & successful closing nearly impossible. The fact is: Realtors (and the Title Companies that we work hand-in-hand with) deal with lenders on a daily basis and know who is getting these loans pushed through and who is not. Period.   Trust me, we can save you many headaches!

Anyhoo, I stumbled upon this article a couple of days ago and felt compelled to share as it is SPOT ON.   Great advice via AOL Real Estate...

5 Things Preventing You From Getting a Mortgage Refinance

By Chris Birk on AOL Real Estate

Mortgage rates are beginning to creep up, but they're still well within the kind of range that makes longtime homeowners shake their heads in disbelief.  The average interest rate on a 30-year fixed-rate mortgage hit 3.63 percent for the week of March 10, marking the highest point since last summer.

So while a seller's market may be taking shape, it's still a great time to shop for a mortgage, especially a refinance. That's why it's so frustrating for homeowners who can't get on the bus.

So what's keeping you from getting a refinance loan right now? Here's a look at five of the most common culprits:

So-So Credit

Same as it ever was when it comes to mortgage lending -- you're going to need to meet a lender's qualifying credit score for a refinance, which in many cases will be higher than what you'd need for a purchase loan. For conventional refinancing, you're likely looking for at least a 740 score to really capitalize on current rates. The bar won't be quite so high if you're going after a government-backed option like an FHA or VA loan. Make no mistake: A loan program may not have a credit score requirement, but the lenders who actually issue loans certainly will. Right now, for example, VA lenders are generally looking for at least a 620 score. But you'll more than likely need at least a 640 to start the refinance conversation.

Your Home Is Underwater

Values are starting to rebound in some parts of the country, but a lower-than-anticipated appraisal remains a common refi-killer. Consumers who owe more than their home is worth know this all too well. Pursuing a traditional refinance is all but impossible for underwater homeowners -- and that explains why the government's special refinance program for distressed borrowers is absolutely booming. Refinances through the Home Affordable Refinance Program (HARP) topped 1 million in 2012, more than double the year prior. The HARP program helps underwater homeowners with Fannie Mae- and Freddie Mac-backed loans. It's possible for some lenders to process refinance applications without an appraisal (the VA's Streamline program is one example). But today that's a rare exception.

Not Enough Income

All indications are the economy is on the upswing. While that's good news for the nation, continued recovery doesn't suddenly put more money in your pocket. Many homeowners lost jobs or took pay cuts in the wake of the economic crisis. One missed mortgage payment can stymie a refinance application. Lenders will typically want to see 12 consecutive months of on-time payments. Diminished income can also make it tough to actually pay for the refinance, which like any mortgage loan comes with costs and fees. Self-employed homeowners will need at least 2 years of tax returns.

You Bought Big

Jumbo loans can present a unique set of refinance difficulties. These non-conforming loans typically require sterling credit and significant skin in the game to acquire. It can be especially tough when your $625,000 home has lost a third of its value. Jumbo homeowners may have to come to the closing table with cash in order to secure that lower rate.

Mortgage Insurance

Paying mortgage insurance can complicate your ability to secure a refinance. That's especially true for lender-paid mortgage insurance. Either form presents problems for the federal HARP program as well, although some lenders have loosened restrictions a bit in the last two years. If this is currently an obstacle, keep searching for a lender that will work with you.

2 MAJOR Tax Changes for 2012, Homeowners...

Primary Mortgage Insurance premiums for those with less than 20% equity in their property (PMI) and energy efficiency upgrades will no longer be considered tax deductible.

More information can be found HERE on the National Association of Realtors HouseLogic website.

2012 Homeowner Tax Deductions

Yep, it is that time again... tax time!  We can all agree- necessary evil.  That being said, the news is not all bad. 

Homeowners, particularly you first-timers-  the deductions now available to you as a homeowner will likely reduce your tax bill substantially. Particularly if you have been claiming the standard deduction up until now...  the extra write-offs as a result of owning a home will almost certainly make you an itemizer. Suddenly, the state taxes you pay and your charitable gifts will earn tax-saving deductions as well, which equals money back in your pocket.  *cha-ching*

Below are the most common real estate tax deductions. For more information about these tax incentives and to determine which ones you may qualify for, please consult  your tax advisor

Mortgage interest:

For most people, the biggest tax break from owning a home comes from deducting mortgage interest. Your lender will send you Form 1098 in January listing the mortgage interest you paid during the previous year. That is the amount you deduct on the Schedule A tax form. Be sure the 1098 includes any interest you paid from the date you closed on the home to the end of that month. This amount is listed on your settlement sheet for the home purchase. You can deduct it even if the lender does not include it on the Form 1098.

Mortgage Points:

When you buy a house, you may have had to pay "points" to the lender to obtain your mortgage or buy down your rate. This charge is usually expressed as a percentage of the loan amount. And, believe it or not, you may get to deduct the points even if the seller paid them for you as part of the deal. The deductible amount should also be shown on your 1098 form.

Real-estate property taxes:
You can also deduct the local property taxes you pay each year. In the year you purchase your residence, you likely reimbursed the seller for real estate taxes he or she had prepaid for time you actually owned the home. If so, that amount will be shown on your Hud-1 settlement sheet. Include this amount in your real-estate tax deduction. You can't deduct payments into your escrow account as real-estate taxes, as these deposits are simply money put aside to cover future tax payments. You can deduct only the actual real-estate tax payments made from the account by your lender.

Private mortgage insurance premiums:
For mortgage loans with a down payment of less than 20% of a home's cost usually include a premium for private mortgage insurance (PMI), an extra fee that protects the lender if the borrower fails to repay the loan. PMI premiums can be deducted by home buyers. This write-off phases out as income increases above $50,000 on married filing separate returns and above $100,000 on all other returns.

Home improvements:
Save receipts and records for all improvements you make to your home, such as landscaping, storm windows, fences, a new energy-efficient furnace and any additions. When you sell your home, the cost of the improvements is added to the purchase price of your home to determine the cost basis in your home for tax purposes.

Energy credits:
Some energy-saving home improvements to your principal residence can earn you an additional tax break in the form of an energy tax credit. To learn more visit: www.energytaxincentives.org

Tax-free profit on sale:
Another major benefit of owning a home is that the tax law allows you to shelter a large amount of profit from being taxed if certain conditions are met. If you are single and lived in the house for at least two of the five years before the sale, then up to $250,000 of profit is tax free. If you're married and file a joint return, up to $500,000 of the profit is tax free if you lived in the house as a primary home for two of the five years before the sale.

Still falling!

I said it a few weeks ago, but wanted to reiterate...
If you have been considering a loan refinance OR your current interest is at 5% or above... the time is NOW!! Do not wait. The rates are at historical lows, yet again, and they will not last.

According to the latest Freddie Mac survey, the average interest rate for a 30-year home loan dropped to 4.4% last week.

I have received almost a 1/2 dozen phone calls and emails from past clients over the past 2 weeks, all inquiring the same thing: Is a refi worth the hassle at this point? Here is a basic interest rate calender...




That being said, there are many other factors to consider during the loan restructuring process, as well: your current rate, how long you plan to stay in the house, how much equity you have, and the fees associated with the loan restructuring.

My best piece of advice on how to proceed to ensure a refinance is favorable to your current financial situation? Make a call to your lender, crunch the numbers, and see how the cards fall. It can't hurt and you can always change your mind. If it works out in your favor, however, it could save you a LOT of money.

Savings alert...

Considering a purchase or refi?


The time is NOW, NOW, NOW! Lock in your rates/loans quickly.

This week, mortgage rates plummeted to their lowest point in 40 years. The average for a 30-year fixed-rate loan sank to a ridiculously low 4.69 percent. Rates for 15-year and five-year mortgages hit record lows, as well.

That means MAJOR savings and more house affordability. If you have any questions regarding the rates and the pros/cons/logistics of refinancing and/or purchasing a home in this market, email me at cdnandthecity@charter.net.

Interest rates plummeted...

Still more good news for 1st time home buyers: the 8k tax credit, record low prices, and now super low interest rates...
If in need of a refinance... the time is NOW!