The Five Factors Driving Your Credit Score

When it comes to buying a home or refinancing your mortgage, one of the first things your lender will need is a credit report. Like most people, you probably have a general sense of whether or not you have good credit. If you routinely pay your bills late, or don’t pay them at all; you can expect your credit score to be low. However, if you’ve never missed a payment on a loan or any other bill, yet your credit score is still less than outstanding (meaning anything less than 750) you may not be sure why.

The three major credit reporting companies, Experian, TransUnion and Equifax all use similar basic criteria for determining credit. Here’s a look at the five factors that determine your credit score.

Payment History
Your payment history is incredibly important. In fact, your personal payment history accounts for as much as 35% of your overall credit score. Serious delinquencies in payments including foreclosures, short sales, repossessions and bankruptcies all drive your credit score down. Late payments will also have a negative impact, though their impact may not be as severe. Being 30 days late is always preferable to being 60 days late, and your more recent delinquencies will hurt your credit more than delinquencies from a few years ago.

If you’ve always been current with your payments, but found yourself making a late payment once or twice -perhaps due to being out of town or as the result of a personal emergency- pay the balance immediately. Once you’ve done so; call the creditor. They may be willing to delete the delinquency if your history shows that it was just a fluke.

Balances
Credit reporting companies will also base your credit score largely on your balances relative to your credit limits. Your existing balances will account for roughly 30% of your score. For example, if you only have one credit card with a limit of $10K, and you currently owe $9,500, the debt to availability ratio will drive down your score. However, if you have available credit on multiple cards of $40K, but only owe $9,500, your debt to availability is viewed more favorably by the reporting companies.

Credit History
The longer your credit history, the better. Credit reporting companies like to see that you’ve borrowed and paid back your loans consistently over time. It establishes a record of reliability that will drive your credit score up. To that end, if you have had a credit card for 10 years, but rarely use it; it’s still a good idea to keep the account open. Longevity of credit can count towards as much as 15% of your credit score, so it’s wise to maintain open lines of credit, even if the interest rates aren’t great.

Type of Credit
The type of credit you have on your report will account for 10% of your total credit score. Not all types of credit and/or loans are weighted equally. For example, department store or electronics store credit cards are generally provided through a finance company rather than your credit union or local bank. Borrowing from established financial institutions and banks is viewed more favorably than borrowing from finance companies.

Inquiries
Multiple inquiries into your credit will lower your credit. However, when you are shopping for a home loan or an auto loan, credit bureaus will understand that multiple inquiries within 10 days- 2 weeks may be necessary, and as such will only count the inquiries as a single “hit” to your credit. However, ongoing inquiries will result in negative “hits” on your credit, lowering your score. It’s not a good idea to keep opening lines of credit year round.

No matter what your credit score is currently; there are always ways to improve it

Market Update: June 2014

Year over  year appreciation ranges between 6-9% for all 4 counties Century 21 North Homes serve.

Below are figures for our 4 county area showing the current median prices and appreciation from May 2013 to May 2014.

Figures courtesy of NWMLS.

County Median price 12 mo appreciation
King $398,000 up 6.1 %
Snohomish $305,000 up 7.0 %
Pierce $215,000 up 9.0 %
Skagit $225,750 Up 6.1 %

Rates on 30-year mortgages down from last year

Freddie Mac: Rock-bottom rates should help with home affordability

For the second straight week, homebuyers enjoyed rates on 30-year fixed-rate mortgages that were lower than they were at the same time last year, Freddie Mac reported.

Rates on 30-year fixed-rate mortgages averaged 4.12 percent with an average point of 0.5 for the week ending July 3, down from 4.14 percent last week and 4.29 percent a year ago, according to Freddie Mac’s latest Primary Mortgage Market Survey.

Frank Nothaft, vice president and chief economist at Freddie Mac, said the rock-bottom rates should help with home affordability in many markets.

“Housing data was better with pending home sales up 6.1 percent in May and overall construction spending showing a slight improvement with private residential spending now up 7.5 percent on a yearly basis,” Nothaft said in a statement.

Rates on 15-year fixed-rate mortgages and five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans were unchanged, while rates on one-year Treasury-indexed ARMs declined.

Century 21 North Homes Volunteers With Veterans

Two weeks ago, the team from Century 21 North Homes in Puget Sound, WA spent the day volunteering with the Veterans Memorial Clean Up Project. Started by Rich Sundance, a veteran and former Century 21 System member, the project focuses on giving much needed care to veterans’ memorials in the Puget Sound area.

Rich works for Veterans Affairs as a counselor and his office is inside the Century 21 North Homes office. When he began the project, the Century 21 team was eager to help.

Scott Heiner of Century 21 North Homes shared, “Rich is very passionate about this cause. Everyone in the office knows Rich and his commitment to the project. We all wanted to help him and these veterans. Our people jumped at the opportunity.”

On Saturday, June 21st, a dozen members of the Century 21 North Homes team headed to Annacortes, WA to help spruce up Causland Memorial Park, along with local disabled veterans. Causland Memorial Park is the largest veterans memorial in the county. It was created in 1920 and needed some extra TLC after nearly 100 years of weather exposure.

Rich has organized a few veterans memorial clean ups, this being the fourth.  For each project he researches the type of medal the memorial is made of so the volunteers can use the right cleaning solution to spruce, without causing any damage.

Rich explained, “There are monuments all over the country that have never seen any care. I’ll never stop doing this. I have three more on my radar right now. “

Over the weekend, 50 volunteers participated in the clean up at Kaufland Memorial Park.  The Century 21 North Homes team volunteers together several times per year, including activities in support of Easter Seals. The office is ranked #12 in the Century 21 System for donations to Easter Seals.

2013 Market Recap

2013 Real Estate from the Rear View Mirror:

  • Closed sales: Northwest MLS broker-members reported 75,517 closed sales valued at nearly $25.5 billion
  • Median Price: $270,000 for single-family homes and condos that sold last year, up 10.2 percent from 2012
  • Inventory Increase: (+14%) from 2012. MLS members added 104,168 new listings of SFH and condos to inventory, an increase of 12,809 from 2012
  • Brokers Represented: 21,946 home sellers, on average, each month
  • Priced at $1 million or more: Reported 1,621 sales of single family homes and 137 sales of condominiums. 732 condos sold for $500,000 or more
  • Highest number of million dollar-plus sales:The MLS area covering Bellevue/West of 405 with 237, followed by Central Seattle with 193.
  • For high-end condos ($500,000-plus): The area covering West Bellevue reported the highest number of sales (180), followed by Belltown/Downtown Seattle with 171
  • Highest prices: Among the 21 counties in the MLS service area, King County claimed the highest median price for single family homes that sold last year ($415,000)
  • New construction: The median price for 8,298 newly built single-family homes that sold in 2013 area wide was $325,000; for 846 condo sales it was $350,214.
  • About half (49.1 percent) of single family homes that sold system-wide last year had 3 bedrooms
  • Condos: Brokers sold 10,395 condominiums during 2013; about two-thirds (64 percent) of condo sales system-wide were in King County; nearly 77 percent had two or fewer bedrooms
  • Prices, 3-bedrooom homes: The median price for a 3-bedroom home that sold in 2013 was $250,000; median prices on these homes ranged from a low $128,000 inPacific County to $450,000 in San Juan County
  • Most expensive: The highest priced single family home that sold was in Medina ($9.75 million); the highest priced condo was a downtown Seattle penthouse ($6.2 million)
  • INTEREST RATES UP: Rates Increased Across the board but are still low by historical standards
    - January 2013 Average 30 year fixed rate was 3.41% (according to Freddie Mac)
    - November 2013 Average 30 year fixed rate was 4.26% (according to Freddie Mac)

Call or email us today for all your Real Estate needs

2013 Median Price County Map

Closed Sales Single Family Homes Only

Home Values Rise Dramatically in 2012!

Home Values Rise Dramatically in 2012!

2012 was an interesting year in the real estate market.  The year began with a shortage of homes for sale that continued to become more severe as the year progressed.

 Homes for Sale Chart

At the same time, more buyers and investors entered the market attempting to purchase homes.  With severely low inventory and increasing demand, we consistently saw multiple offers on reasonably priced homes.  February of 2012 marked the end of a five year side in home values.  By the end of the year, home values in Snohomish County realized a 12.3% increase.  If I take January’s losses out of the equation, we actually saw our home values rise by more than 20% since February!  I have to go clear back to 1990 (21.7%) to find a year with that kind of appreciation.

 Home Prices in Snohomish County

 So, what can we look forward to in 2013?

Because home values in Snohomish County plummeted by 40.6% from the peak of the market in 2007, the inventory of homes for sale is going to remain relatively low for a few reasons.  First, the drop in value left many homeowners completely upside down in their homes.  With little or no equity, a large percentage of homeowners are simply stuck in their homes and can’t sell yet.  Despite 2012’s gains, it could realistically be another few years before they have enough equity to sell.  The second reason is now that prices are rising, many homeowners that can sell are simply going to decide to stay put and recapture some of the value they have lost since 2007.  Finally, low inventory and high demand sets the stage for more multiple offers.  If you want to sell your house and buy a different one, it won’t be impossible, but it will be tougher to convince many sellers to accept a contingent offer over an offer from another buyer that doesn’t have to sell first. 

Buyers Beware:  Low inventory means prices could skyrocket in 2013.  You will be competing against other buyers, so you will have to be thoroughly pre-approved by your lender.  Sellers are going to scrutinize your approvals like never before.  You will need to know exactly what you are looking for and make a decision quickly.  And finally, make your offer at or above list price if the seller has other potential buyers.  We are in a severe seller’s market and they have more control now.

Sellers you are in the driver’s seat.  Avoid overpricing your home.  The market has plenty of  over-priced listings that buyers are ignoring.  Price your home at market and you’ll probably get more than one offer and more money as they bid the price up.  The easiest time to sell is when there aren’t many competing homes on the market.     

If you are considering selling your home and want to know its current market value,

give us a call today!

425-742-1515

Douglas Lovitt is the Managing Broker

CENTURY 21 North Homes Realty, Inc.

1133 164th St SW Suite 102

Lynnwood, WA 98087

“Statistics not compiled or published by the Northwest Multiple Listing Service.”

Home Values Going Up!

Real Estate Values Going Up!

The collapse of the sub-prime market and the financial crisis that swept throughout the banking industry in early 2007 sent real estate and our home values into a tailspin.  Over the last five years we have seen our home values drop 40% from the peak of the market in March of 2007.

 Take a closer look at the chart.  Prices hit bottom in January of this year.  Since then prices have been rising – 16% since January!  This is great news for homeowners!  If you haven’t heard about this in the news, you will.

More great news for our home values is found in the active listing chart below. The glaring fact is that homeowners have not been putting their homes on the market this year.  This has created a shortage of available homes for buyers to purchase.  And, I expect to see the shortage get even worse over the next few months.  Why?  Typically we see the number of homes for sale decrease by 22% between September and the end of the year because of the holidays. 

 

 Buyer demand is very strong.  In fact, below $300,000 we are having a hard time finding quality homes for buyers to purchase!  Homes that are clean and well maintained are selling fast.  Even those properties that are in need of repairs are selling fairly quickly when they are priced correctly.

It’s no secret that for the past few years we have been in a “Buyer’s Market.”  What exactly determines whether it is a buyer’s or seller’s market?  Supply vs. Demand.  The absorption rate measures the total amount of homes for sale (supply) divided by the total number of closed sales from the previous month (demand).  The result is how long the current supply will last given the current level of demand.  Six months of supply is considered to be a balanced market.  More than six months of supply is considered excessive inventory and a buyer’s market.  While less than six months of supply is a shortage and a seller’s market.  The next chart very clearly shows that buyers are no longer in control of today’s market! 

We have plenty of well qualified buyers who want to buy a home before the end of the year.  We need homes to sell!

 If you have been thinking about selling your home, call us today!

We’d be more than happy to confidentially discuss your situation and help you determine what your options are in today’s market.

If you have been thinking of moving into a larger home, now is the perfect time.  The prices on larger homes are just starting to increase.  Take advantage of this window of opportunity by getting a good buy on your next home and selling your existing home quickly at a fair price!

425-742-1515

Douglas Lovitt is the Managing Broker at
CENTURY 21 North Homes Realty, Inc.
1133 164th St SW Suite 102
Lynnwood, WA 98087

Home Buyers Need to Brace for Fewer Homes for Sale and Higher Prices

Home Buyers Need To Brace For Fewer Homes For Sale and Higher Prices.

If you are looking to buy a home in Snohomish County it’s going to be even tougher to find the home you want.  And if you do find it… there are going to be other buyers to compete with when you make your offer.

Why?

First, every year beginning in September the amount of homes on the market typically begins to shrink.  In fact over the last five years from September through December inventory levels have dropped an average of 22%.  As of today there are only 1,978 homes for sale in Snohomish County.  If seasonality holds true, we should expect to see that number fall to only 1,543 homes for sale.  To put that number in perspective, for the same time period over the last five years we have averaged 4,408 active residential listings for sale.  

Inventory usually tightens the last 4 months of the year for several reasons.  Many would be sellers make the decision not to sell because they could not find anything they wanted to buy before school begins.  So, they decide to stay put.  Others sellers decide to take their homes off the market as the holidays approach.  Others make the decision not to move during the wet and possibly freezing winter weather.  Finally, many sellers decide to wait until spring.  They believe their home will look better and there will be more potential buyers.

Second, the recent decision by the Washington State Supreme Court over the validity of foreclosures initiated by MERS (Mortgage Electronic Registration Service) will bring many of the pending foreclosures to a grinding halt.  This will definitely reduce the number of homes for sale over the next four months.

Third, buyer demand is showing no signs of slowing down.  In fact, given the number of sales that are closing each month, the existing number of homes for sale will be completely gone before Thanksgiving!  Wow did I just really say Thanksgiving was on the near horizon?  Sorry about that.  But it is true.  Our existing inventory will only last 2.2 months.  I personally have been in real estate for 20+ years and have never seen inventory levels this low.  And, it’s going to go lower.

My advice…

If you are planning to buy a home in the near future, try to do it now.  Get your financing in order before you start looking.  A pre-approved buyer is much more attractive to a seller when they are reviewing offers.  Getting pre-approved might just be that edge you need to beat out other buyers. 

If you’re thinking about selling, consider taking advantage of the low inventory over the next four months.  Don’t wait until spring when everyone else puts their home on the market.  Low inventory means your home will sell faster and for more money.

If you want some help, give us a call…

425-742-1515

Douglas Lovitt is the Managing Broker at
CENTURY 21 North Homes Realty, Inc.
1133 164th St SW Suite 102
Lynnwood, WA 98087

From many false predictions to Signs of a Turning in Housing?

Announcements of a housing recovery have become a false prediction rite of summer, but after several years of false hopes, evidence is accumulating that the optimists may finally be right.

The housing market is starting to recover. Prices are rising. Sales are increasing. Home builders are clearing lots and raising frames.

The pace of recovery will probably be slow, and the prices of some homes will continue to decline.

Millions of people remain underwater, owing more on their homes than the homes are worth, and unable to sell.

At CENTURY 21 North Homes, “Our sense is that the market is recovering, and we’re extremely confident that it’s not going to get worse,”

FHA 203k Rehab Loans Are a Great Way to Go!

If you are considering buying a home, the FHA 203k rehab loans are a great way to go.  Because of the shortage of homes on the market, homes in good condition sell very quickly and receive multiple offers.  These multiple offer situations usually push the purchase price up, making the deal much less attractive, and pricing many buyers out of the picture.  If you have been through this you know exactly what I am talking about and know how frustrating it can be. 

So what can you do?

Many of the bank owned and HUD properties on the market are in need of repairs and have been priced much lower than most private sellers - the banks and HUD want these properties sold now!  Some of these properties are selling for unbelievable prices.  The problem that stops most buyers from getting one of these great deals is having the money to do the repairs.  If you use an FHA 203k rehab loan to purchase the property, you’ll not only be able to get a great deal, but you’ll also have the money to do the repairs and upgrades you want after the transaction closes!  FHA 203k rehab loans can be used to purchase the home, make health, safety and energy conservation improvements, make repairs such as roofs, decks, lighting, painting, carpeting, new appliances and much more!

Give us a call… we’ll teach you how you can take advantage of this program and get a great home for less.

425-742-1515

Douglas Lovitt is the Managing Broker at
CENTURY 21 North Homes Realty, Inc.
1133 164th St SW Suite 102
Lynnwood, WA 98087