Real Estate Newsletter January 2020
January 2020 Newsletter
Happy New Year! This may be the year you have been waiting for to purchase your new home!
If you liked 2019’s mortgage rates, 2020 will be lower!
The year that just winded down will be remembered, in the real estate world, for its mortgage rates that persistently and unexpectedly declined.
While rates aren’t going to plunge another percentage point – November’s average rate for a 30-year fixed mortgage was 3.7%, compared with 4.87% in the year-ago month, according to Freddie Mac data – they’re going to set some new lows, Fannie Mae said in a forecast.
The average fixed rate probably will be 3.6% in 2020, which would be the lowest annual average ever recorded in Freddie Mac records going back to 1973. It compares with 3.9% in 2019 and 4.5% in 2018, according to Fannie Mae. The current record was set in 2016 when the annual average fell to 3.65%.
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Remember, you need buyer representation! Check me out!
It’s time to file your homestead exemption on your new home. If you were one of my buyers in 2019, I will be contacting you soon with the info you need to file this important document to reduce your tax bill for 2020.
You can file between January 1st & April 30th, 2020.
Credit Scores Demystified
If you've made a resolution this year to get your credit on track, getting started can feel a bit daunting. After all, it can sometimes seem as if credit agencies want to keep you in the dark about how scores are calculated. Not to worry - with some diligence on your part and a little insight into the world of credit score-keeping, you can get back on track in 2020.
Credit scores follow an algorithm first developed by the data analytics company FICO years ago. For a while, credit scores weren't the primary force behind a credit decision but over time the impact of a credit score became more and more important. Most every loan program available today has a minimum credit score.
There are five characteristics of your credit history that make up your three-digit score: your payment history, account balances, the length of your credit history, the types of credit used and how often you've applied for new credit. Credit scores will improve much more quickly by paying attention to the two categories that have the greatest impact on a score: payment history and account balances.
Payment history accounts for 35 percent of the total score. When someone makes a payment more than 30 days past the due date, scores will fall. An occasional "late pay" won't do much damage to your score but continued payments made more than 30 days past due definitely will. Preventing late payments is a key to recovering your score.
Account balances compare outstanding loan balances with credit lines and make up 30 percent of your score. If a credit card has a $10,000 credit line and there is a $3,300 balance, scores will actually improve, as the ideal balance-to-limit is about one-third of the credit line. As the balance grows and approaches or exceeds the limit, scores will begin to fall.
The remaining three have relatively little impact. How long someone has used credit accounts for 15 percent of the score, but there's really nothing anyone can do to improve this area other than to wait. Types of credit and credit inquiries both make up 10 percent of the score. By concentrating on payment history and account balances, scores will improve significantly over the next few months.
Inspections vs. Appraisals vs. AVMs
Inspections, appraisals, and automated valuation models, while related, all have different functions but can be easily confused. Let's take a closer look.
Inspections: A property inspection is ordered by the buyer and is meant to be an unbiased look at the condition of the property. While not necessarily required by a lender, an inspection protects the buyer from purchasing a home that requires expensive repairs or otherwise doesn't live up to its list price. A property inspector will examine the condition of the property inside and out, running through a checklist of areas including, but not limited to, the roof, electrical panels, wiring, plumbing, appliances, doors and windows. If any issues pop up, the inspector makes note and provides the buyer with a report.
Many reported issues will need some attention but won't affect financing. If major repairs are needed however, the lender might want to have those issues addressed before they provide any funding.
Appraisals: Once the inspection has been completed and reviewed, the lender can order an appraisal. The appraisal will consider comparable homes in the area as well as other factors such as lot size, nearby schools and crime rates. The goal of the appraisal is to determine the true value of the property for the sake of the lender.
The key difference between an inspection and an appraisal is that an inspection aims to assess the physical condition of a home itself, while an appraisal solely determines the market value of the real estate.
AVMs: An automated valuation model is a digital evaluation of the value of a home. An AVM will quickly research the database of similar homes in the area and compare them with the value of the subject property. AVMs are often used to assess the value of a property portfolio, and have the advantage of saving time and money since no one physically visits the property. However, AVMs can't take into account the true condition of a property and often aren't enough to secure a conventional loan for a home buyer.
Please allow me to be your "Go To" source for information on the market. You are welcome to call or email me at any time if I can be of service in any way! Or, visit my blog for articles and insight to the market.
You should know the value of your home! Find out what it is worth.
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