So you've decided to start down the exciting path of home ownership, but you're torn! Single family residence or condo/townhome? Which do you choose? Each has it's own pros and cons, and only YOU can decide what's best for you. The best thing you can do is educate yourself on the differences, before you start looking, so that you don't fall in love with something that just won't work for you or your family. I'll briefly go over the pros and cons, as explained in the photo below.
Single family residence (SFR)
1. You have control over all decisions pertaining to your home. If you want to have a rainbow colored front door, go for it!
2. Generally, SFR's have more square footage.
3. If you have pets, they are more pet-friendly since they usually have a larger yard.
4. More privacy thanks to no shared walls.
5. Generally higher resale value.
1. Increased cost - all maintenance and repairs fall to you, the homeowner.
2. Lack of amenities you may find in a condo/townhome community (pool/gym/clubhouse).
3. Generally more expensive to purchase.
1. Less maintenance/upkeep since HOA handles all exterior landscaping and maintenance of building exteriors.
2. Possible availability of amenities (pool/gym/clubhouse).
3. Increased sense of security due to neighbors being close.
1. HOA fees, which can vary widely depending on location and amenities offered.
2. Inability to customize the exterior of your home due to HOA regulations.
3. Less privacy due to shared walls.
4. Not as pet friendly due to smaller, sometimes non-existent, backyard.
5. Generally lower resale value.
There are always exceptions to these generalizations. There are single family residences in some HOAs, allowing you to blend the pros of each type, and buy the perfect home that fits your needs. If I can be of any assistance to you in your home search, please don't hesitate to call, text, or email me today!
"FICO." Not a word that brings up positive emotions, I know. We are all SO much more than a three digit number, but like it or not, we are judged by our scores by those who pass out credit. If we want to be granted credit, it is crucial to have an understanding of how we are being graded.
I'm here to explain what's true, and more importantly, what's NOT, when it comes to how our FICO scores are calculated. I recently attended a webinar put on by FICO, and it provided some very interesting information that I'd like to share!
Let's start with the facts, then we'll move on to dispel some myths.
FACT: FICO scores are generated using only information in your credit report.
FACT: FICO scores are a snapshot of your current credit status. Scores will fluctuate as your experiences with credit change.
FACT: FICO scores have improved the efficiency and fairness of credit distribution since they were instituted in 1958. They are used in 90% of all lending decisions today and are the industry standard
for determining credit worthiness.
So, now that you know what is true about how FICO scores are calculated, let's dispel some common myths.
MYTH: FICO scores are based on how much money you make vs. how much you owe.
False!! Remember, FICO scores only use the information provided in your credit report. Your income is NOT a factor, nor is it disclosed in your credit report. How much you owe vs. your available credit can give some insight as to whether you are overextending yourself financially, which IS a factor in your score. We'll touch on that later. Age, address, income, gender, and employment are never used in the score process.
MYTH: Too many credit inquiries when shopping for the lowest rate lowers my FICO score.
False!!This is a widely held belief, that too many inquiries into your credit will hurt you. It is not true in most situations. The algorithms that FICO uses to calculate scores are able to recognize when consumers are "rate shopping" for loans (auto, mortgage, student loans). These multiple inquiries are counted as a single inquiry as long as they are all performed within a 30 day window, thus your score is minimally impacted. So, when shopping around for a loan, try to get it all done within 30 days or less.
FICO scores ARE impacted negatively when consumers are actively applying for multiple new credit lines (versus rate shopping) from several sources in a short window of time. This is considered risky behavior, and for each application for a new credit line, your score will drop by 5 points on average.
FICO is currently developing algorithms to minimize the impact on score for renters whose credit is being pulled while applying for leases, since currently this process can hurt your score. Best practice when applying for a lease is to get a copy of your credit report/FICO score from the first application that's processed and use that report for any further applications (as long as the landlord/property manager is willing to accept an outside report).
MYTH: Canceling cards or paying in cash can boost my score.
False!! One of the factors your FICO score is based on is the ratio of how much credit you utilize versus how much you COULD utilize (existing balance vs. credit limit). If you cancel a card, you wipe out the available credit, thus lowering your ratio which negatively impacts your score. It is best to leave accounts open, and demonstrate restraint to prospective lenders, than close accounts. Look at the graphic below to help you understand how the ratio is calculated. Just like golf, a lower score is better here!
Paying in cash is great, but it's not going to help your score as it does not contribute to a positive credit history.
MYTH: A foreclosure will hurt my credit more than a short sale.
This one is tricky, it's evaluated on a case by case basis. Going through a short sale or foreclosure hurts people that start off with a high FICO score more than those who start with a lower score, believe it or not. The table below shows, on average, how long it takes to recover from various issues that lessen your FICO score.
As you can see, it takes much longer for the person with the higher score to rebuild their score after these negative events than it does the person with the lower score. But, as far as the FICO algorithm goes, short sale and foreclosure are judged the same. They are both considered "not paid as agreed" accounts, so they affect your FICO score equally. Bankruptcy affects your credit in a far more negative way, since multiple accounts are involved versus only one account, your mortgage, in a foreclosure or short sale. If you have gone through one of these events, don't give up hope though! If you keep up your obligations to your other debtors, your credit score can begin to rebound in as little as 2 years. There are some useful tips on how to rebuild your credit at www.myfico.com
I hope this post has helped educate you on what a FICO score does and does not represent. Just remember that when applying for a home loan, lenders take many things into consideration, not just your FICO score. I'm no loan officer, but my team and I strive to educate our clients on every aspect of the home buying process. A good loan officer too, will walk you through the process and explain it all, and even tell you if it's not the right time for you to apply for a loan. If paying down some debt, or some other action, is a better first step, they will put your needs first. My team and I pride ourselves in referring our clients to lenders that earn our trust by treating our clients like family. Please let me know if you need any assistance with a referral to one of our preferred lenders or if I can help you with any real estate related questions you may have.
* All information is provided by www.myfico.com and is deemed reliable but is not guaranteed, and should be independently verified.
2015 is going to be a great time to buy OR sell, which is a really exciting thing to be able to say. It has been a very long time since the market was so favorable in either direction! Buyers and sellers have so many things going for them right now:
1. Rates are still ridiculously low, we haven't seen rates like this since the 1950's!
2. Home prices are stabilizing.
3. Move up buyers can pay less per month for a larger house in the same city!
1. Lower inventory levels = less competition (until spring rolls around other sellers list their homes).
2. Appreciation will most likely occur in the first 4 months of this year due to low inventory levels. More homes on the market = flat appreciation, so list now to get while the getting is good!
Overall, expectations between buyers and sellers are readjusting. Sellers are more likely to reduce their list prices and sell below the list price as the market competition wanes. Buyers are, on the other hand, in a good position as they do not have to compete with as many bidders as they did last year. All things considered, housing market appears to be moving to a greater balance.
Take a look at the graphic below to see how even a slight shift upwards in interest rates can affect your ability to purchase or move up into the home of your dreams. I work closely with several trustworthy lenders who will be more than happy to consult with you to walk you through your financing options. You may qualify for down payment assistance or other special programs that you are not even aware of, but how will you know unless you take that first step?
Need I say more?? If you have been on the fence, now is the time to get off and make your move. Literally!
Many home buyers and sellers think that the holiday season isn't the right time to be in the market. I say phooey! It's a great time for several reasons-
1) There are typically less homes on the market which means less supply for buyers, who are usually more serious, during the holiday season. Give yourself the advantage of buying or listing now, while there's less competition out there. Don't be like everybody else who waits until January 1st to make the leap.
2) Your home and neighborhood are looking their best with the holiday decorations in place, what a special time to buy a home. Who doesn't love ringing in the new year in a new home?
3) There are tax benefits to buying a home, taking advantage of a tax break before the end of the year is a great incentive to many buyers.
4) Faster closings and historically lower interest rates due to less overall transactions in the industry.
Last but not least...
5) Buying or selling now frees up your summer for more fun activities! Let everybody else waste their summer vacations house hunting/moving/selling while you enjoy yourself.
So, don't let the holiday season scare you off, the early bird gets the worm! There are so many benefits to getting in the game now.
I hosted my first Thanksgiving this past Friday. It was a bit intimidating at first, to be following in the footsteps of some excellent hosts who have way more experience in the kitchen than myself. But, I have to say, it went great! My husband smoked a turkey and a brisket on our Traeger grill, and I made garlic herb mashed potatoes in my slow cooker. They all came out DELICIOUS. Thanksgiving is a potluck type affair in my family, which makes it so much less stressful for the hosts, and it gives each household the ability to put their spin on the traditional Thanksgiving fare. It was so wonderful to welcome my family into our home and give back to the people who have given me so much throughout my life. Now that I've got one successful Thanksgiving under my belt I feel so much more confident to do it again. Maybe this will become our new tradition. :)