Great Article for First Time Buyers!

http://www.frontdoor.com/Buy/Top-10-Things-to-Know-Before-Buying-Your-First-Home/55558

From the Blown Mortgage Blog

Loan Modifications, Foreclosures, Short Sales, and The Truth About Your Credit Score

Posted: 09 Apr 2010 08:04 PM

There has been a lot of ink spilled on the issue of loan modifications, foreclosure, short sales, and their effect on your credit score. Depending on which newspaper, blog, or Wikipedia article you read there are a couple dozen theories or authoritative statements on how the whole credit scoring system works.

If you are planning to do any of the above: modify your mortgage, foreclose on your mortgage, short sale your home, or any other loan related activity it is worth finding out what the effects will be on your credit score. But why is our credit score so important? And, how does your payment history affect it?

Your credit score is important because it summarizes your credit risk to lenders and businesses. It is a number that describes your financial reliability as a borrower. Some employers and landlords also use this score as one of many ways to get a background check on us. If we apply for a loan and our credit score is low we a) might not get approved, or b) will have to pay higher interest rates than if we he had a higher score. It is as simple as that.

What makes up your credit score?

The biggest factor is your payment history. Around 35% of your score is based on your borrowing and paying record. This is quite understandable; a lender is justified in wanting to know if you have paid your debts in the past. This does not mean that a single (or event two) late payment/s will automatically destroy your credit score. An overall good record of paying your loans could outweigh a couple of bad instances.

This doesn’t mean either that if you have no late payments you will have a perfect score (that would be 850, in FICO’s main scoring system), there are many other factors to consider.

How long will past delinquencies affect your credit score for?

Bankruptcies, foreclosures, wage attachments, and other cases of delinquency seriously affect your credit score. How recent and frequent a case of delinquency is also counts in your credit score. Bankruptcies will stay on your credit report for 7 to 10 years depending on what chapter you filed under. The good thing is that more recent activity in your account will weigh more in your credit score than older delinquencies. A foreclosure, even though some of our readers would like to believe otherwise, will stay on your credit report for a long time. How long is not specified by FICO, but even a 90 day late payment 5 years ago will affect your credit score. Although thankfully the longer ago a delinquency occurred the less effect it has on your score, which means it is worth trying to improve your score because what you do now will have a great effect on your score.

rates for 4/9

15 year fixed 4.375%
5/1 Conventional ARM 3.625%
FHA 5.125%
VA 5.125%
NCHFA 4.75%

Investment 5.75%

"Long Distance" Agents

I saw a snippet of a newspaper article recently that was typical for these times -- written by someone outside the real estate industry, giving advice to home buyers and sellers without acknowledging that our industry is evolving and changing every day. Can you tell I was a little bothered by it?
Anyway, the article was advising home sellers that if their agent's "home base" was more than 15 miles from the location of their home, then they needed to pick another listing agent. The reasoning was that agents further than that could not be as responsive to buyers and buyer agents as one whose home base was closer.
WOW. I have an office on Stratford Road in Winston-Salem where I make copies, store files of old clients, etc. Most importantly, if the Real Estate Commission needs to contact me, they use that address. But my "real" office, where 99% of my negotiations, communications, etc, take place is wherever I am with my iPhone! Most of my active files stay in the backseat of my car, and I log tremendous miles every day driving from Pinnacle to Lexington to Greensboro to Elkin. I have the capability to fax, email, text, phone, etc. from anywhere. In fact, my office on Stratford is 45 minutes away from my very own home -- does that mean I am not qualified to sell my own house? No!
I am licensed to conduct business in the State of NC. I do not go beyond certain areas because I simply do not have the firsthand market knowledge to service customers in those areas. If you live outside of my comfort zone, I will let you know (as will most professional agents) and will help you find someone within your area to help. But please understand, just because I don't live in your neighborhood does NOT mean I can't represent you professionally and competently in a transaction.
Ok, thank you for indulging my tirade...

Rates are Already Rising

Conventional 5.125%
Conventional 15 year 4.375%
5/1 ARM 3.750%
FHA 5.00%
VA 5.00%
NCHFA 4.750%
Investment 5.750%

A week ago (March 26), conventional was a flat 5, so they are moving up...

Rising Interest Rates

A lot of people don't realize the impact an interest rate can have on their payment... for example, on a $100,000 loan, the difference between a 4.5% rate and a 5.5% rate could be $100 a month! So, with economists forecasting that rates will rise after April 30, it is extremely prudent for a lot of folks to put on their home finding hats NOW, get a home under contract, and lock their rates. I have heard some buyers say "well, after April 30 there won't be as much demand, so sellers will have to reduce their prices...". While this may be true in some cases, those rising interest rates may more than make up for any price cut done by aggressive sellers. So, why not take advantage of the low rates AND the tax credit and find something now? As always, I am here to help!