I participated in a website tool today that could get you started down the right path!

Credit.com offers a tool to consumers to “grade” their credit report.  Best yet, it is FREE, no detrimental ”inquiry” is created, and I completed it in 8 minutes!

Go to the Credit Report Card on www.Credit.com

The site will give you a score of A+ thru F on several scoring categories used by credit scoring firms.  They also describe what to do and not to do in trying to fix the issues.

Also review my past blog post on credit reports and your score.   MetrowestHome.com Blog Post on Credit Scoring

The Money Magazine article I found this in also recommends www.CreditKarma.com as a 2010 recommended website.  It will show you how changing one factor might affect your credit score.

 Ed Daniels, of Re/Max Executive Realty in Hopkinton, Massachusetts can be reached at 508-341-7880 with any MA real estate questions.  Covering the Metrowest Boston real estate market, the MAhome Team has served clients in buying and selling homes since 1998.

Just a quick post: 

This is a graph of mortgage rates over the course of the past 40 years. 

Fielding calls about interest rates and client’s worry about where they are heading, I lose perspective about these numbers.

People, you can’t get much better than this… don’t worry about an eighth of a percent, lock it in!

Ed Daniels, of Re/max Executive Realty, can be reached at 508-341-7880.  He is an 11 year veteran of the real estate market in Metrowest Boston, and has great mortgage broker contacts to answer all your specific questions.

If you are a First Time Home Buyer who closes between April 9th, 2008 and July 1st, 2009, you may be eligible.  First time home buyer is defined as someone who has not owned a home in the past 3 years.

The amount you can claim is the smaller of 10% of the purchase price or $7500.

This tax credit should be viewed by the consumer as an interest free loan, because unfortunately, you have to pay Uncle Sam back!  The good news is that you start to pay it back after 2 years, and you have 15 years to pay it all back.

So here is a real world scenerio…

You go out and buy your first home.  Take the tax credit at the end of the year and get a fat tax refund of $7500. 

Pay off high debt credit cards,  take care of home remodeling like a new roof,  invest the money in your 401K, etc, etc. 

That saves you potentially thousands in interest, build equity in your home, or will return you thousands in your invested stocks.

Year 3 you will be paying less than $700 back per year to the Feds.  Sell the house and it is taken out of the proceeds in full.

Another qualification you must meet:

Modified Adjusted Gross Income has to be no more than $75000 single, or $150000 married, before it becomes phased out.  It phases out completely at $95000/$170000.

Learn more at this helpful site:  National Association of Home Builders

Ed Daniels is with Remax Executive Realty and can be your guide to purchase a first home.  10 years of experience as a full time local Realtor can help you negotiate this market ripe with opportunties.  Call 508-341-7880 to reach The MAhome Team.

If you would like to research refinancing or getting a pre-approval, feel free to give me a call.   I have worked with several mortgage brokers and lenders who would look at your financial picture for no charge or obligation.  Service is an important factor in this area, and shopping for that last bit of the lowest interest rate may not be worth the headache.  I can get you started in the right direction.

 I also came across this graph of the Number of Home Sales in MA since 1991.

If the MAhome Team can answer any of your real estate related questions, give Ed or Doriane Daniels a call at 508-341-7880.

I am usually a skeptic while reading the newspapers and magazines (just ask my wife!).  After many months of doom and gloom,  I am seeing cracks in the armor of despairI.  There are properties out there that are ripe for a great investment.

Here is an excerpt from Time Magazine titled “Ignore the Headlines” by Dan Kadlec:

But let’s say you are emotionally ready to be a homeowner. You have good credit, plan to stay put for five years and have been waiting for the perfect entry point. It’s time to get serious–before an inevitable rise in interest rates wipes out your advantage. “The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher,” says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs.

Consider a typical home that sells for $218,900. You put down 20% and get a 30-year fixed-rate mortgage at today’s rate of 5.5%. Monthly principal and interest come to $994.31. Let’s say that 12 months from now the same house goes for 10% less, or $197,010. But by then the recession is history and the Fed is jacking up rates to stem inflation. If mortgage costs rise a point, to 6.5%, your monthly payment would be $994.94 and you’d have saved nothing. Meanwhile, home prices might steady and sellers might become less willing to negotiate. And you have spent a year living someplace you’d rather not be.

It’s more complicated if you must sell before you can buy. But that logjam won’t persist forever–and if it appears you’ll be trapped for a few years, try to refinance at today’s lower rates. Risks always seem most acute when the headlines give you ulcers. But that’s exactly when you should think long term–and get off your thumbs.

There are 2 people contacting me this week to talk about where the good investments are right now.  We talk about goals of appreciation or net rental income, judge how much renovation work they wish to do, and also timeline for cashing out.  Each one of these goals put us on a different path.

Example one:  Buying a rental property for net income and eventual appreciation.  There is a one bedroom condo in Framingham that is bank owned and sitting vacant on market.  Comparable renovated units have sold for $125K in the past 6 months.  Non-renovated units attempted to sell for the same price and were wildly unsuccessful.

This bank owned condo is listed in the $80K’s.  How can you go wrong?  Renovate it immediately and list it – maybe?  Rent it out in current condition, make a net gain each month – maybe?  Live in it, renovate it, sell it when market appreciates in a few years – maybe?  No matter, I like the possibilities!

Example two:  Single family home in great neighborhood is a short sale.  This means essentially that the owner owes more than they could sell it for.  They ask the bank to accept less rather than foreclose on them.  Throw them an offer with the market depreciated over the past 2 years, enjoy life for a few years, and sell it for fair market value in a few years.  I think I remember an old saying… something like this… “buy low, sell high”.  Ring a bell?

 Psst… this is pretty “low” right now!

You will only know that you are in the bottom of the real estate market when you are viewing it from the rear view mirror.  Prices will be going up when we recognize the market was at the lowest point.

They are a young family who are First Time Home Buyers.  This market holds great opportunities for these Buyers, and a Short Sale is one avenue. 

Now let me tell you about my fears!

Since Auburn, MA is outside my specific service area of towns, I passed them along to a trusted Realtor out there.  My bigger worry is the agent for the Seller.  They have a home listed for low $300K’s when the “true market value” should be $290,000. 

A Short Sale means that the Seller needs bank approval to sell because they are selling for less than they currently owe.  It is a way for the bank to forgive the debt and not have to foreclose on the property.

What does the Seller care about with PRICE??  In a Short Sale they will see NADA (aka zip)!  They should be pricing at $270,000 and selling it in a day.  Then they can start the Short Sale paperwork for the bank to negotiate.

In addition, the home has burst pipe damage and a contractor’s lien of $9000.  Boy, the bank is going to be happy to get this one back, right?

The good news on this one… the home is only 5 years old.  What could possibly be wrong with it right?  Worst case scenerio they have furnace repair, carpet replacement, and replacing water damaged sections of walls.  GO FOR IT.

Then the waiting starts!

Banks accepting Short Sales have departments trying to keep up.  They are understaffed and undertrained.  They leave at 5pm and don’t work weekends.  The industry is also changing every day in terms of deciding when to write off bad loans, how it affects the publically traded quarterly reports (translation – stock price), and waiting to hear if the government will bail them out.

So, the Seller calls the bank to get started.  A package is sent out to the seller to name all the documents that need to be collected.  These include:

1. Tax Returns

2. Pay Stubs

3. Profit and Loss Statement

4. Hardship Letters

5. Offer from the Buyer

6. Pre-approvals

7. Settlement Statement showing their Net

When they receive this maybe 2 weeks later, and finally getting around to it, they most likely will have to get a Broker Price Opinion on the home.  This is a cheap “appraisal” from another independant Realtor.

The experienced Seller’s Agent would have already had this paperwork part ready, along with comparables for the bank’s viewing pleasure.  Most agents don’t!

After a few weeks of poor communication with the bank, my hope is that they decide to sell the home to my friend for a fair price.  If you can wait a few weeks (months perhaps) and can handle “not knowing”, it could turn into a real estate goldmine.

Last questions to be answered:

• Any liens on the property?

• Clear title?

• When do home inspections get completed?

• Condition of this usually vacant home while negotiating?

Oh, the joy of getting a good deal!  Not for the faint of heart.

I will spell out the top reasons why you should care about your score, as well as how to get started!

To illustrate, a credit score in the low 700 range could qualify for a rate of 6.6% requiring a monthly payment of $1916.  While this same scenario, but with a credit score of mid 600 would get a 7.7% interest rate, translating into a $2138 monthly payment. 

That is $2664 more per year because of this credit score number.  Over 30 years this would be almost $80000, ouch!

    You can receive your credit score for a minimal cost ($10-$15)  A recent study found that fewer than 6 out of 10 Americans have obtained their credit scores. 

You can’t fix what you don’t realize is broken! 

Your credit report can be obtained for free once per year.  Since there are 3 reporting bureaus, request a report every 4 months from a different bureau.  Links to the 3 major firms can be found on this site:

www.annualcreditreport.com

    Consumers can take certain steps that will improve the scores.  The two greatest factors that go into the scoring system is payment history and how much of the available credit that is being utilized.  So pay at least the minimum each and every month and open up that gap between the outstanding credit line and the available credit line.

    Other steps to improve the score would include keeping the number of applications for new credit products to a minimum and keeping open the credit line that has your longest history. 

So don’t go applying for a few department store credit cards when planning to buy a home in the next few months.  Also, don’t necessarily close that Visa card that is 15 years old but that you don’t use anymore.

    The moral of the story, get your credit history in order when getting ready to buy a home, and your mortgage broker will also appreciate seeing that 800+ credit score when reviewing your file.