Good Credit is Key to Obtaining...Everything
I found out something interesting about credit scores last week. The better your credit, the better homeowners insurance rates are. I never knew that, but as I was shopping the rates (who hasn’t done that recently?) I was told that qualifying for the best offer was directly related to your credit score. I guess the insurance companies think you’ll be more likely to pay your premiums if you pay your other bills in a timely fashion. Statistically, they could be correct, but now I was curious to find out what other aspects of my life were governed by a good credit score other than just the ability to get a loan, refinance or obtain a new credit card.
We often get those offers to consolidate credit card balances onto one credit card with a very appealing initial interest rate. While in theory it certainly seems wise, putting all your balances on one card can spike that card’s debt to available credit ratio. A really good rule of thumb is that credit line balances should always be below 20 percent of the available credit.
From the perspective of my business, lenders have truly tightened credit score requirements. To obtain conventional financing at the best rates available, a minimum credit score of 740 is required. That doesn’t mean you won’t get financing if your score is less, it just changes what you’re offered. For a USDA loan, the minimum is 660 and FHA requires 640. Some portfolio lenders are more flexible on their credit requirements and will bend slightly on these figures.
Did you know that most employers now check the credit of job applicants? I asked a friend in the head-hunting industry what that was all about, and she told me that employers are concerned with the stability of applicants and look for arrears in child support, judgments and liens as well as numbers of credit cards and lines of credit.
This was great information to have. If by chance you are changing careers and have experienced some life-altering events, it would be wise to review your credit and have some letters of explanation prepared to answer any questions.
One would think that a proven ability to save and money in the bank would improve your credit standing. It does in one way, in that it makes you much more favorable in the eyes of lenders for a first mortgage or refinancing. Interestingly, the more money or guaranteed income you have does not improve your credit standing at all if you’ve been delinquent on payments for any loans or credit lines.
Everyone likes to help their kids or a hurting family member whenever possible. Just don’t co-sign for a loan or a car if they’ve had a bad track record regarding timely payments. Just co-signing a loan doesn’t guarantee a hit on your score, but if the person responsible for re-payment is delinquent, it will show up as a negative on your credit report.
In the real estate industry, I’ve always been aware that good credit is crucial in the home-buying process. I had no idea how many other aspects of our lives are affected by those three scores!
Meg Minehan is an Associate Broker and GRI with Roohan Realty in Saratoga Springs. She has 28 years of experience in the real estate business and can be reached at 587-4500 or This email address is being protected from spambots. You need JavaScript enabled to view it..
Lending – Know Before you Go
The lending industry has been taking some serious hits because its process has become so extensive and complicated. Several local lenders have offered up some tips on making borrowing easier.
If you are in the homebuying market, you have already spoken to someone from a bank or a mortgage broker to be pre-qualified. It’s the first piece of the puzzle and provides your originator access to your credit report and information on your income and assets. Not having that pre-approval before going out to look at homes puts you and your buyer agent at a decided disadvantage. Nothing is worse than falling in love with something that is ultimately unaffordable.
Having a list of the items required by the lender put together ahead of time, and actually knowing what they are for any given program, will be very helpful.
Jack Minehan, a mortgage originator from SEFCU offers this advice: “By the time you’ve gone to contract, your application and the process has become a time-sensitive issue, including contract deadlines and rate-lock deadlines. Having the necessary documents ready ahead of time will eliminate some of the time wasted in obtaining them.”
He adds, “When you are working on your pre-approval, investigating the most advantageous program for your situation will give your originator the opportunity to share the required list of information and you can have it ready to submit when you’ve gone to contract.”
Kimberly Dolan, senior mortgage consultant with First Niagara Bank, notes, “Compliance departments have quadrupled over the last few years. I work very hard with people the first time I sit down or speak with them to spot potential difficulties ahead of time, before they can get to an underwriter who then requires additional documentation.”
Her advice is, “Be upfront with any past difficulties you may have had, because if I know ahead of time, I can determine right then and there the course of action required to explain or remedy them that will eliminate time-consuming actions an underwriter will request.” She says a generic list of required documentation will include 30 days of pay stubs, a two-year history of W-2s and tax returns, two months of bank statements and a photo I.D.
Most mortgage consultants say timeliness is key. Make sure that when you are putting your contract for purchase and sale together, you and your Realtor are allowing sufficient time for the types of programs you have selected. Some government loans require additional processing times, and a 30-day contingency for mortgage approval is not practical or realistic.
If you do run into delays on loans, don’t despair and keep your eye on the prize. Some of them offer financing anywhere from 96 percent to 103 percent of the purchase price, and those are worth waiting for!
Meg Minehan is an Associate Broker and GRI with Roohan Realty in Saratoga Springs. She has 28 years of experience in the real estate business and can be reached at 587-4500 or This email address is being protected from spambots. You need JavaScript enabled to view it..
To Open House or not to Open? That is the Question.
Many people list their homes for sale with a Realtor. Often during the listing presentation, sellers will ask the candidate they are interviewing how they feel about public open houses. Some people don’t even ask, they just tell you they don’t want them — they have never found them to be productive. We are in the spring marketing season so I felt this an opportune time to address both sides of the issue.
On the plus side is the first most obvious benefit — Increased exposure. With nearly 90 percent of the buying public utilizing the Internet for the purpose of searching for a home, having your listing on the open house page as well as the regular website of the listing company is just that much more exposure. A full-page color ad in the local newspaper is a huge bonus as well. There have been studies done that show calls and activity on Sunday open-house ads extend into the middle of the following week.
Some people feel that if a buyer were working with a Realtor they would prefer to have their own private appointment. That may be the case, but in many instances people embark on their search shopping for a Realtor and may come to your home to look at the house not intending on signing with a Realtor right away. Certainly in that case it’s a benefit.
Often, clients will have gone through a property with their Realtor as one in a long list of properties viewed that day. An open house affords them the opportunity to take their time, appreciate the homes they liked most and not have the time crunch of a busy schedule. Occasionally, someone may not have even intended to buy that particular day, but but fall in love with a property after coming across the open house.
Realtors certainly understand the feelings of those homeowners who would just prefer not to have open houses for whatever reason. In the 28 years that I have been in the business, never has anyone had something come up missing from an open house. But I can certainly understand that concern.
Some properties are too far off the beaten path to entertain the thought of an open house. Those properties truly do benefit from appointment-only showings. Other folks are too private and even the thought of having to put their home on the market is scary.
With the advantage of the Multiple Listing Systems, virtual tours and company websites, there are those who feel open houses are merely an opportunity for tire kickers to get great decorating ideas.
I actually had a client tell me with all the new opportunities available for exposure of properties for sale, that now when someone calls to see their home, she really feels as though they must be interested. If they’ve availed themselves of the virtual tours and websites, they must truly like what they’ve seen so far. I thought that was such a great way of looking at things!
As there are always pros and cons for every argument, I’ll continue to do open houses for those clients inclined to have them and certainly not argue with those who choose not to.
Meg Minehan is an Associate Broker and GRI with Roohan Realty in Saratoga Springs. She has 28 years of experience in the real estate business and can be reached at 587-4500 or This email address is being protected from spambots. You need JavaScript enabled to view it..
To Escrow or not to Escrow?
There is no denying that tax and insurance escrow accounts are handy. You pay 1/12 of those annual costs every month with your mortgage instead of writing two or three checks a year to pay for property tax, school tax and homeowners insurance.
Let’s face it — some people are just not terrific budgeters. And for them this kind of forced savings account is preferable. Those annual checks can be tough if you’re not squirreling away 1/12 of those payments every month. Most financial advisers will suggest an automatic withdrawal of some kind into a tax account earmarked for those bills.
There are some interesting features of escrow accounts everyone should be aware of.
Depending on what state you live in, the bank may not be required to pay you interest on the money in the account. Since the money is locked up for quite a while, often way before the bill is actually due, it’s not available to you for other purposes.
Make sure to pay special attention to the annual account statement. The bank is required to refund any remaining balance if there is a decrease in taxes, and if you sell your home or refinance, the balance must be refunded.
There actually may be a benefit to paying your taxes at a certain time every year in terms of tax advantages. These are unavailable to you if you’re paying a flat amount every month.
Some lenders insist on these accounts because they can then be sure the insurance and taxes are being paid promptly. Believe it or not, it also ensures the lender gets the first claim on your house if you default, ahead of the local government. Some will insist on adding a flat fee or upping the percentage of the loan if you choose not to have an escrow account.
However you choose to pay is certainly individual. If an escrow account is more to your liking, there are several ways to stay on top of it and to make sure the lender is managing it properly.
Check the size of the account. Most lenders are only allowed to keep a reserve of two months of payments in the account at one time. Check with your lender, Realtor or attorney for the specifics of your situation.
According to HUD (Housing and Urban Development), if your lender misses an insurance payment it should pay any late fees as long as your mortgage payment is current. If your insurance is ever canceled as a result of the lenders’ late payment, you can sue them.
Make sure that everything on your annual statement adds up. The escrow statement, your tax bills and homeowner’s insurance bills are required to do this.
Always contact your lender in writing if there are ever any disparities in these bills and your account statement. Your lender is required to answer your letter within 20 days, and the problem has to be addressed within 60. Anytime your concerns are not answered within this time frame, your next step should be to contact HUD in writing with all the pertinent information.
Everyone should be getting (if they haven’t already), their annual statements, so now is the time to check them for any potential problems.
Meg Minehan is an Associate Broker and GRI with Roohan Realty in Saratoga Springs. She has 28 years of experience in the real estate business and can be reached at 587-4500 or This email address is being protected from spambots. You need JavaScript enabled to view it..
