The First Steps Series-Establishing Good Credit-Part 1

So you're thinking about buying a home? Well one of the most important factors you should be thinking about is your credit. The first step in the homebuying process is understanding your credit.
When you apply for a mortgage, lenders will review your credit report. Your credit report is a history of how you've managed your finances: it's a record of money you've borrowed, your history of paying it back, and how much open credit is available to you.
Your credit report follows you wherever you go and will have a big influence on whether or not you can get a mortgage, the terms of that loan, and the interest rate. If you have good credit, you may have a much wider range of mortgage options with lower rates.

So how do you better understand credit?

Be aware of how important your credit history is to the process.

1. Building good credit is not difficult, but it does require time and patience. Here are some tips to follow:
   Pay your bills on time. Credit Scores emphasize your most recent payment record. Paying on time raises your credit score. If you've been late, start paying on time!
   Pay at least the minimum amount required. If you can pay more do so- it's a good idea if you can afford to. But you should never pay less than the minimum.
   Keep your credit card balances low. "Maxing out" your credit cards can lower your credit score.
   Don't apply for too many loans or new accounts. Applying for a lot of credit in a short period of time may concern lenders that you won't manage your debt well. Only apply for credit when you need it.
   Keep your debt-to-income ratio at 20%. Generally, you should not have debt that's more than 20% of your net monthly income.
   Establish credit if you don't have any. Open a free or low-cost checking or savings account and make regular deposits. Only write checks when you have money to pay for things. And apply for one or two credit cards, use them carefully, and pay them off each month.

Next time we'll talk about Credit Scores and Credit Reports!

Happy House Hunting!!

Tuesday News

Government report shows construction of new homes jumped 22% in February

Is the housing market heating back up??

Last week, there was an indication that the housing market may be heating back up. New mortgage applications for home purchases and refinances suddenly surged as they hadn't in the last eight months. Applications for FHA loans to buy houses were up by 10.4 percent. And overall home purchase applications jumped by 7.1 percent. Meanwhile mortgage interest rates dropped to their second lowest level in nearly two decades, according to the Mortgage Bankers Association. Thirty year fixed rates averaged 4.96 percent and fifteen year rated dropped to just 4.5 percent.
New applications for financing to purchase homes point to rising purchase contracts and closed sales in the months ahead. They also suggest that prices have hit a level in many markets that is attracting once-hesitant buyers off the sidelines.
There's still another factor that's likely at work here as well: Congress's recent improvements to the home purchase tax credit -- pushing it to $8,000 from $7,500 and making it non-repayable.
A rise in home purchase applications does NOT suggest we've turned the corner in the cycle or have solved the multiple challenges facing markets around the country -- high foreclosure levels, continuing domination in some areas of REO and short sales, and continuing increases in the unemployment rate.
Even amid these problems, however, there are some hints of possible improvements ahead. More than half of the nation's foreclosures in 2008, researchers found, were concentrated in just 35 counties in 12 states. You can guess where: California, Las Vegas, Phoenix and Florida.
But the really eye-opening finding: In more than 650 other counties, representing one fifth of all markets in the U.S., foreclosure numbers have actually declined since 2006.
Foreclosures are horrible no matter where they occur. But the fact is: Huge portions of the United States have NOT been seeing record foreclosures, short sales or even serious property value declines. They're doing better.