Credit Scores and How They Effect A Home Purchase

June 1, 2012 By Leave a Comment
 

As a Real estate agent in Central New Jersey, I am often asked about how a credit score will help or hurt a home purchase.  Obviously the higher the score the easier it is to purchase a new property but there are a lot of misconceptions floating around about how a credit score is determined and what it means.

There are some misconceptions about credit scores.

Misconception number 1 – People who have a lot of money have better credit scores.  This is a myth due to two factors.  One is that income is not a factor in determining a credit score and two is that even rich people do not always pay their bills on time.

Misconception number 2 – If you do not have a credit history you will automatically have a low score.  This question comes up with first time home buyers a lot. The good news here is that by having no history you also have no negative history!  In most cases, the three major credit score companies will give you an initial rating in the mid 600s.  As soon as you start to establish a credit history it will then go up or down based on your payment behavior.

Misconception number 3 – I have a low credit score and there is almost no way I can buy a home since I can’t raise the score enough to make a difference.  Nothing could be further from the truth.  A professional real estate agent has many resources to help you get your score up as soon as possible.  Within a year for instance you can add as much as 100 points to your score by using some of these suggestions:

*Get a credit report run.  There are often errors on your report and clearing them up can add points to your score.  Be prepared to write a letter to the credit reporting company documenting why you think there is a false report in your file.

* Get current on your payments.  Start paying your bills on time even if it is just the minimum payment on your credit cards.

*Consider using a secured credit card.  Basically you open a savings account for a set amount of money say $1000 and the card then has an available credit line of $1000. The deposit becomes a credit line for the credit card which helps you establish a higher credit score.

Misconception number 4 – You have to be in debt to have a good credit score.  To get credit score above 800 most people have done all the right things. They pay their bills on time all the time, they established their credit history early in life and actually used their credit cards and paid them off on time, and they kept a lot of debt off the cards.   The big credit assist here is the last part called credit utilization ratio.  Basically the reporting agencies look at how much credit you have access to as opposed to how much of it you are using at any point in time.  Thirty percent is consider the optimum ratio to most credit agencies.

If you are considering buying a home your interest rate as well as your ability to get a loan from the mortgage company will depend on your credit score.  In fact even if you are thinking you will simply rent the landlord will want a copy of your credit report to see if you pay your bills on time or have a lot of excess debt.

If you would like more information about the ways to get your credit score up in the shortest period of time just send me an email at mike@mikedowner.com with the word CREDIT in the subject line.  We will help you get back in the game as soon as possible.

 
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Tips to Help Sell Your Bridgewater Home

May 28, 2012 By Leave a Comment
 

Although the Bridgewater Housing Market is getting a little better every day, selling a home is not an easy task.  Home price, condition, and location in the community all make a difference as to whether or not you sell your home.  With that in mind there are some things you can do to make sure your home is the next one sold and not the last one sold.  Here are a few tips to help you sell in today’s Bridgewater economy.

 

All home buyers recognize value when they see it.  If you are realistic in the price you set right out of the gate, you will have some room to negotiate.  Remember if you do not get an offer you cannot EVER sell your home.  Get the conversation started.

 

One of the ways a real estate agent helps you get your home sold is by providing a Comparative Market Analysis.  This is an excellent way to see what asking prices and sold prices are in the area.  By pricing your home just a few dollars less than the closest competitor, you will draw the best offers and get them first!

 

Especially with the spring real estate market, you really need to take a look at your curb appeal.  Well maintained properties attract the most interest and the best dollar. First impressions go a long way to attracting the buyer’s eye.  It is all about the buyer thinking the place will be low maintenance for them and that they will have the best home in the neighborhood.

 

Depersonalize your home.  When buyers walk through the home you want them to focus on the room sizes, the great light, the counter space in the kitchen, etc. not your wedding photos and pictures of the kids.  Many buyers feel bad about kicking you out of your home even though they know you want to sell.  Put away as many of your personal belongings as possible.  You are moving, it all has to be boxed up anyway.

If you really have no idea how to get your home ready to market, consider using a professional stager.  They will help you rearrange things like furniture, pictures or accent pieces to show the home in the best light.

These small things can actually go a long way to getting your home sold in the shortest period of time and for them most money. If you would like more tips on how to get your home sold just drop us a line at mike@mikedowner.com with the word STAGING in the subject line or give us a call at 732-301-1771.

 
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Home Buyer First Impressions

May 12, 2012 By Leave a Comment
 

As the spring housing market begins here in Bridgewater, one thing to keep in mind is that your home only gets one chance to make a first impression.  It begins the minute your potential buyer sees it online.

To create that great first impression in your photos start with a well card for yard.  Make certain it has been freshly mowed and has been watered to keep it green. Take a look before the photographer gets there and clean off the front porch, consider painting the front door and park the cars anywhere but in the driveway or in front of the house.

Nine out of ten buyers start their search online.  The first impression created online carries through when a potential buyer comes out to see your home. A good impression reassures the buyer that your home is well maintained and that you take care of it so the buyer will not issues when they move into the home.  Homes that show pride of ownership usually receive the best offers.

If your home appears chaotic or messy, prospective buyers may believe your home has been neglected and needs repairs. Negative impressions often result in less-than-market value offers–or possibly no offers at all.

When looking at selling your home, seek out a neighbor who will tell you the truth and ask them to view your home and let you know why they would or would not buy your home.  Then ask yourself, would YOU buy your home?

If you would like suggestions or tips about selling your home and how to make a great first impression please don’t hesitate to call 732-302-1771 or email mike@mikedowner.com if I can be of further assistance.

 
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What are the Different Types of Home Inspections?

April 27, 2012 By 1 Comment
 

Many first time home buyers are confused when their real estate agent tells them they need to have a home inspection when they buy a new home.  Here is a quick list of the types of inspections you may choose to have when buying your next home.

Primary Home Inspection

This is the most basic of inspections and yet the one many people decide they should save some money on by not have it done. This type of inspection allows you to find out what repairs if any should be done to protect your interests as well as any repairs that may be too expensive to have done so you should walk away from the deal.  In order to avoid buyer’s remorse get this one done at all times.

Engineer’s Reports

Some buyers retain an engineer to do a detailed inspection of a property.  This would be a thorough inspection of the electrical, plumbing, air conditioning, and or heating systems.  Many primary inspections include this as part of their service.  It is especially important where the home is older or the systems are older.

Termite Inspection

As the name implies, the purpose of the inspection is to check for termites or other wood-destroying insects in a house. Many banks require this as part of the mortgage process.

Well Water Inspections

If you do not have public water to the property you most likely will have a well.  Potable water as well as the availability is key to your being able to live in the home.

Appraisal / Appraiser’s Inspection

If you are going to get a mortgage on your property, the bank will require an appraisal.  The bank wants to be sure there are no problems with the property in case you stop making payments.  They want to make certain they have a marketable asset if something goes wrong later.

Walk-Through Inspection

The final walk-through normally takes place a day or two before closing or on the morning of the closing depending on when the previous owner moves out.  Your real estate agent should accompany you on this inspection to look at any possible issues.  It is the final inspection and your chance to make sure that any previously agreed upon issues have been resolved.

 For a list of inspectors licensed by the State of New Jersey who serve the Somerset and Middlesex County areas just drop us an email with the subject line INSPECTORS to mike@mikedowner.com and we will get that right out to you.

 
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Is Buying a Short Sale in Your Future?

April 25, 2012 By 2 Comments
 

Even in Bridgewater the expression “short sale” seems to be popping up more and more. You see it in economic reports, the local newspaper, on real estate web sites, and you may even have friends or relatives who have looked at or purchased a home that was a short sale. But what exactly is a short sale? Is a short sale always a good deal? What are the potential problems with buying a short sale?

If you are thinking about buying a short sale in Bridgewater or some other area of Central New Jersey here are some questions you should ask your REALTOR.

What exactly is a short sale?
A short sale happens when a homeowner is “underwater” on his or her mortgage.  (The house is worth less than they owe on the mortgage.)  They have usually missed at least three months of payments to the bank or lender and they are trying to make a deal with a bank in hopes of avoiding a foreclosure. The bank that holds the mortgage allows the owner sell the home for less than he or she owes on the mortgage.  A short sale agreement allows the bank to avoid a foreclosure process that in New Jersey can take up to two years in many cases. The short sale allows the homeowner to escape the effects that a foreclosure has on their credit score.

How is a short sale different than a foreclosure?
In a short sale, the owner is probably living in the home while it is for sale. The owner is usually significantly underwater in the home so the hope of selling for what they owe is out the window. When a home is marketed as a foreclosure, the bank has already evicted the homeowner and taken possession of the house.

When a potential buyer places a bid on a short sale property, the offer must be accepted by both the homeowner and the bank. If there are two mortgages on the home (commonly called a second mortgage or home equity loan) all banks must sign off on the offer. In a foreclosure the offer must only be accepted by one bank since they have taken possession.

What should you consider if you put an offer on a home that’s a short sale?
Patience is the key to short sales. Since there are multiple parties involved (banks, homeowners, lien holders, etc.), the negotiation process can take a lot longer than in a traditional purchase. Also, many lenders only accept “as-is” contract offers on short sale properties. Basically they will not do any repairs to the home.  (Make certain your contract offer allows for a home inspection period so you have a clear idea of what you are getting into with your new home.)

Will you save money buying a short sale property?
Especially for first time buyers, a short sale can be a great way to get into a home.  It is also a great way for move up buyers to find a place in a more desirable neighborhood at a good price.  Keep in mind that your real estate agent should be able to help you find comps in the area so you can submit a winning offer.

Is a short sale right for you?
A short sale is best suited for buyers with patience. Short sales can span many months.  The hurry up and wait aspect drives many potential buyers crazy. Often short sales attract multiple offers, including all-cash offers from investment speculators. If your timeline is flexible for moving and have found a home you love, buying a short sale can get you the home of your dreams for less money than you might think.

For a list of short sale properties in Bridgewater or Central New Jersey in general just drop us a line at mike@mikedowner.com.

 
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Beginner Tips On Buying Bridgewater Homes For Sale

April 24, 2012 By 1 Comment
 

When it comes to looking at Bridgewater homes for sale; many first-time buyers often are overwhelmed by the thought of the process.  With the assistance of a professional REALTOR, the way toward a new home can be not only fun but quite successful.  Here are some tips on how to start your search and things you can do before you even look at the first picture on www.REALTOR.com, www.CBMoves.com or www.DoorPath.com.

Ask your real estate agent to get you preapproved for a mortgage through a reputable mortgage lender.  They will help you determine how much you can afford and more importantly how much you are comfortable affording.  Many people tend to go for the as much money as they can qualify for, even if they can’t really afford it and enjoy their lifestyle.  Remember you have other expenses that you already incur such as car payments, food, insurance, etc., not to mention new ones such as taxes, HOA fees and so on for the new Bridgewater home.

Determine what is reasonable for you long term, particularly when it comes to your mortgage and key elements such as what is important to you in a new home. Setting a budget for you and then sticking to Bridgewater houses that meet this price range can often help to avoid the hassle of being tempted by unrealistic houses or homes out of your price range.

To help you with your search you should ask your real estate agent for a bracket search form.  It is the easiest fastest way to determine needs versus wants in your next home.  (For a copy of the form just send me an email with the word bracket in the subject line – mike@mikedowner.com)  Space is also a big consideration, as well as whether or not you want a single family home or a townhouse/condo format.

In general start with the basics. For example, think about how many bedrooms you need, are you OK with living right next to neighbors or do you need a fenced backyard. Do you need a garage for your car or for storage or can a basement work for storage?

Most importantly you need to be realistic with your expectations and budget.  In Bridgewater you usually do not get a moat and a drawbridge for $100,000. Fortunately Bridgewater has many different neighborhoods and price ranges.  You may choose to go with a smaller residence or choose to move to a different place in order to get a larger-sized home.

Working with a professional real estate agent about Bridgewater homes for sale can often be a great way to gain further help and insight. We are familiar with the area and pricing since we work the market every day.  We often have access to hard-to-find deals that could potentially be in your favor. Prior planning can be a great way to find what you’re looking for.

If you have questions or comments about these tips for buying a home, please call us at 732-302-1771. We’d love to hear from you.

 
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Reality Check for Real Estate Investing

April 21, 2012 By 3 Comments
 

Reality Check for Rental Real Estate Investing

You can’t judge a book by its cover.  When considering whether or not to become a real estate investor, you always need to look deeper than the surface and you always need to look at dollars as the motivating factor.  Don’t let the media or your emotions lead you down a path of mistakes.

To help you avoid these mistakes here are four rules to follow:

1. Rule one is always know who your target market is.  You may not want to live in the property you are considering but renters may think it is a great home for them.  Ask a real estate agent what types of properties are in demand for the areas you are considering.  In the Bridgewater area we are seeing places that offer two bedrooms and two baths being snapped up almost immediately.  Studios and one bedroom places tend to stay on the market a little longer.

2. Rule number two is never get emotionally involved with a property.  When it comes time to negotiate a contract on a new purchase you should always feel like you can walk away from the deal emotionally.  If you feel as though you cannot walk away from the deal, you need to take a step back and review all the terms! When your emotions take over you cannot make rational decisions and will almost never make a good business decision.

3. Rule number three is a little tricky.  Are the numbers actually true?  No matter how good the numbers look a simple reality check can save you time and money.  Will the rent cover expenses such as a mortgage, taxes, association fees, utilities, etc.? Check the numbers on leases and get copies so you can verify what current tenants are paying.  Call around to check on market rates for rents.  If the rents are high on the places you are considering your tenants may not renew with you and your potential income will drop.

4. Rule number four is ugly can be pretty in the pocketbook.  Many places are overlooked due to a negative first impression.  Often the ugliest place can be rehabbed easily and turn a profit quickly.

When investing in real estate always consult with a REALTOR.  Their job is to know the market, recognize value and assist in closing the deal you are seeking.  A professional real estate agent will know of short sales, foreclosures and in some case special circumstances which may allow you to get a bargain on your next investment property.

 
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Saving Your Home From Foreclosure

April 13, 2012 By 5 Comments
 

If you are facing a foreclosure, it is not a trivial situation. The stress can lead to anxiety or depression and create tense situations in your family life. The thought of losing your house or condo can be frustrating and embarrassing especially since it’s probably your biggest investment.

A foreclosed home attracts more buyers who want to invest in cheaper, but good properties, and grab a superior investment opportunity. Seeing your home in public auctions is the worst thing that can happen to any homeowner.  Luckily an experienced REALTOR can often help you avoid a foreclosure by working on your behalf with the mortgage company and credit agencies to help you stay in your home.

Overcoming a foreclosure can be difficult but the truth is you are actually caught in a situation faced by many homeowners. In fact, foreclosure rates have significantly increased during the past few years. Many homeowners are becoming overwhelmed with the process and worried about a situation that they find it really tough to pull themselves out of due to all the financial anxieties.

Fortunately, there are a few companies offering stop foreclosure assistance—things you need to learn to save your home. Make sure you opt for legitimate services so you won’t get hooked on scams. Doing thorough research online can help you find legitimate services or talk to a real estate agent who specializes in Short Sales and Foreclosures. Aside from getting information and solutions from a reputable organization, you can also consider some efficient tips or tricks on how to stop foreclosure and secure your home.

One of these tips is to learn about the things you should NOT do if you want to prevent the foreclosure procedure.

In reality, lenders are more willing to give you a list of options that can help you save your property as opposed to you having to sell your home in a public sale or spending thousands on a complicated foreclosure process. They are even more interested to know what caused your failure to pay your credit and if you can still remedy the situation.

So, don’t ignore their calls because they won’t just go away by you not doing anything. Don’t file a bankruptcy right away if you haven’t yet talked with your lawyer or tried other options. Don’t be in too much of a hurry to settle everything with loan modification if you can’t assure you can afford the interest rate. While getting modified loans is another way to protect your home, you should be aware that some companies want to benefit from this option so they occasionally adjust the interest rates.

Don’t spend on things you don’t really need. Instead, make plans to boost your income.

To summarize, talk to your lender, DON’T ignore the past due payments and get the help of a real estate agent specializing in Short Sales and Foreclosures. You may be surprised how willing they are to work with you to help you stay in your home.

 
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Five Things Your Real Estate Agent Should Bring On Your Home Search and Three Things You Should Bring.

April 2, 2012 By 1 Comment
 

While it can be fun to just head out in a direction to see where you end up, looking for a home can be the most frustrating experience of your life if you do not have the right tools for the journey.

I work with a lot of first time home buyers who come to me and say they just want a house and it has to have four bedrooms and two bathrooms.  Oh and I want to live near shopping and the New Jersey Transit Train line to New York City.

When I started in Real Estate several years ago I would put them in the car and we would go look at places.  Wow what a waste of time for my clients and for me.  My clients ended up looking at houses from Bridgewater to Clinton, Ranches and Colonials, large lots and small lots.  We had to go back a few times to check on things like would the bookcase fit in the den or did it have crown molding in the dining room.  Now I know why people should use an experienced agent when looking for a new home.

With this in mind I now have a list of five things I suggest people ask their agent to bring with them so we can properly see a home and make an offer on a property as soon as we find the right one.

  1.  A Flip video camera.  Flip is the easiest way to record your thoughts and impressions of each new place we see.  After a day of looking at houses most people have a hard time remembering whether the third one was the one with the great dining room or the pool in the back.  Or was the fourth one the one with the great family room or was that the one where we liked the backyard?  It also makes a nice memory of the first time you saw your new home.  Some second level decision makers may want to see your home before you make an offer and we can email them the video for their advice.
  2. A spiral notebook for your notes.  Each house has many of the needs and wants for you search.  A spiral notebook will keep everything in one place so you can go back and look at your notes in case you are on the fence about more than one place.  A list of things you need in a home is a great way to stay on track.
  3. A 25 foot tape measure or a laser measurement tool.  When you want to measure for possible carpet or paint the longer tape will be a blessing even for smaller places.  I also have a laser with me when we go out.  It is faster and easier to get basic room sizes.
  4. At least two flashlights.  Basements, crawl spaces, places that have no power or lights (foreclosures are famous for this) are all reason to carry good quality lights with you when you head out.
  5. GPS – Yes the agent knows how to get to the home but by having a GPS available the buyer can find out exactly how far the home is from work, shopping and entertainment.

 

 

So your agent has the right stuff with them, what three things do you need to bring as a buyer?

 

  1. A prequalification letter from your bank.  It will be needed to make an offer on any place you like.  If you are paying cash you need three months of bank statements showing the funds have been seasoned.
  2. The contact information for your attorney.  If the seller likes your offer we can go to attorney review as soon as possible and get the deal done for you.
  3. Your checkbook.  When we place an offer the seller will almost always want a good faith deposit which it placed in escrow.

Even in this challenging market, the good places go fast.  If you are prepared when you go out to look, you will see results when you are ready to buy.

 
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