Getting a new loan - things to do and not to do....

Are you getting a new loan?  Here are some tips of things to do and not do, in order to facilitate the procedure.  Some are essential, while others are more subtle.

-       Always pay on time:  your payment history is one of the biggest factors in your credit score.

-       Monitor your credit regularly:  make sure you stay on top of your credit history. Be sure to check all 3 credit bureaus annually to make sure there are no errors.

-       Know your credit limits:  being close to or maxing out your credit limits may negatively impact your credit score.

-       Set up alerts, do not be late.  Set up email and text alerts, as well as auto-pay, to help ensure that you pay your bills on time and build positive credit history.  The first missed payment has the largest impact on a credit score, so don’t miss payments. If you are late, don't be 30 days late, and if you have difficulty, call your lender - often time they can work with you.

-       Do not do charge anything unusual on your credit card - no cars, no motorcycles - do not increase your debt ratio as you are trying to get a new loan. 

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Beware of moving debt. Be wary of moving around debt repeatedly - you need to pay debt down to improve your credit score. Also beware of moving large amounts of money during the loan process, unless you can document it thoroughly.

-       Know your debt-to-income ratio.  Lenders look at the amount of debt you have compared to your monthly income   - it’s good to keep that under 35%.
   

-  Good scores = Good rates:  better credit scores in most cases get you better credit interest rates.

-       Don’t open too many accounts: opening up a bunch of credit accounts you don't need may negatively impact your credit score.

-       Keep balances low:  keep balances low on credit cards and other revolving accounts  - this may help your credit score.

-       Think before closing accounts.  Closing credit card accounts may lower your available credit and could hurt your credit score in the short term.

-       Length of your history matters.  Lenders care about the length of your credit history because they want to see that you can manage credit accounts responsibly over time. 

-       Finally: know that others view your credit.  Landlords, public utilities, and potential employers may review your credit history, in addition to lenders.

I always tell me clients: when it is time to apply for a loan, follow closely the instructions of you loan agent, and in doubt: ask the question.  They know best what the underwriter is going to scrutinize, what works and what does not work.

Do you have an input on the subject?  Please let me know.!

Thanks for reading.

Francis

Silicon Valley real estate

Trends: Local prices and graphs.
A noteworthy local non-profit event:  Coalition on Homelessness, SF

All cash buyers... some perspective

It is quite well known that a lot of residential purchases in the US are now made without a loan, all cash.
But what is the real story, in fact? 

Overall, all-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, according to a new report from RealtyTrac, a company that collects and analyzes housing data.   Several factors are at play here, including the fact that institutional investors, more numerous, have bought up many homes with cash, and that many average buyers have remained constrained by unusually tight lending standards.

A few facts, from the January article of “PlanetMoney” (shared in a blog from NPR):

• All-cash purchases accounted for 42.1 percent of all U.S. residential sales in December, up from a revised 38.1 percent in November, and up from 18.0 percent in December 2012.
• States where all-cash sales accounted for more than 50 percent of all residential sales in December included Florida (62.5 percent), Wisconsin (59.8 percent), Alabama (55.7 percent), South Carolina (51.3 percent), and Georgia (51.3 percent).  - so, it's not only California... 
• For all of 2013, 29.1 percent of U.S. residential sales were all-cash purchases, but the percentage
  
  trended substantially higher in the second half of the year. The 29.1 percent in 2013 was up from 19.4 percent in 2012 and 20.6 percent in 2011.
• Institutional investor purchases accounted for 7.9 percent of all U.S. residential sales in December, up from 7.2 percent the previous month and up from 7.8 percent in December 2012.
• For all of 2013, institutional investor purchases accounted for 7.3 percent of all U.S. residential property purchases, up from 5.8 percent in 2012 and 5.1 percent in 2011.

Thanks for reading!

Francis
Silicon Valley real estate
Local market: Smart graphs

Buyer beware! lenders need to know everything!

Buyers beware...  When applying for a loan: lenders need to know everything!

1- All funds used for the down payment and closing costs are going to be very carefully scrutinized by the lender:

• you must provide detailed and accurate information to show which accounts the funds are in and where the funds are coming from,
• you must document the source of any funds that have been in your accounts for less than 2 months,
• any changes that occur to your financial condition will need to be explained to the lender,
• changes to your assets, employment, income or credit scores during the escrow could jeopardize your ability to qualify,
• provide complete documents, - all pages!
• provide documents with names, addresses and account numbers.

2- The lender is going to require a letter of explanation and/or support documentation for:

• recent inquiries or derogatory items on your credit report,
• recent deposits, transfers of money etc... in your accounts,
• evidence earnest money deposit has cleared your account.  ... hum, they don't trust much...

3- If you are receiving Gift Funds the lender will require:

• a gift letter signed by you and the gift donor,
• evidence of the donors ability to gift the funds (bank statement),
• evidence of the receipt of the gift funds, in your account.

4- Things not to do during an escrow:

• do not transfer funds between accounts, nor make large deposits into your bank accounts,
• do not buy a car!... or spend large amounts of money on stuff..
• do not change jobs,
• do not close or open credit card accounts.

Yes, it is a real experience, to get a loan nowadays!  ;-)

For lenders referrals, do not hesitate to contact me.

Francis

Silicon Valley Real Estate

Local market trends

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