Category: ‘First Time Home Buyer’

Anatomy Of Your Credit Score

November 23, 2013 Posted by Andre Hemmersbach

A Credit Score is a number that ranks a consumer’s credit risk based on a statistical evaluation of information in the consumer’s credit file. In layman’s terms, it’s a number that represents the risk that you will default on a loan, using your prior payment history and other factors as a benchmark. Statistically speaking, the higher your credit score number the less likely the lender will experience delinquencies or a default on your account. Different industries use different credit score products. For instance mortgage lenders rely on FICO or the Fair Issac Credit Company score to determine your credit risk level for home loans. A car dealer and a credit card company may rely on different credit score products. Each mathematical algorithm used to calculate credit scores is unique and extremely complex, so the information below is a simple explanation of how a FICO credit score works.

A FICO score is based on five different weighted factors as presented in the pie chart below:

The most common question I hear about a borrower’s credit score, is how to quickly increase the borrower’s representative score, so that we can get the borrower approved for a home loan. Sometimes we can also quickly improve a score to get a client a better rate and fee combination. The basics for increasing your credit score are all related to the weighted factors in the chart above and have to do with:

  • Correcting any delinquent payment histories that are incorrect.
  • Paying off account balances.
  • Rearranging account balances.

We have tools available by which we can create a plan that actually allows us to try different credit scenario fixes and measure the resulting credit score improvements. This new tool has already saved many of our clients time, money and frustration and is not available through your standard mortgage conduits. If you are looking to purchase a home in the next six months I would highly recommend a free credit consultation to make sure you have the best possible chance of getting the lowest interest rates on your mortgage.

Finally, when dealing with credit score issues it’s best to get help from someone who understands how credit scores are figured.  Attempting to raise your credit score yourself could be counterproductive as simple mistakes made during the process can actually decrease your credit scores delaying or making your home loan more expensive.  Please call me if I can help you.

Historical Low Rates Are Still Available

October 31, 2013 Posted by Andre Hemmersbach

Even with the rate increases from May, mortgage rates are at incredible levels of which prospective borrowers should take advantage. Twenty years from now people will be talking about how they should have bought back in 2013 and financed using 4.0% interest rates, just like they talk about how they should have bought that piece of property back in 1990!

Click link at the bottom if you wish to review on a larger format.

South Bay Home Prices Higher and Inventories Still Low

July 26, 2013 Posted by Andre Hemmersbach

Sales prices in the Greater South Bay area have continued to move higher as inventories are still very low. These trends however, are rearward looking events and represent contracts that were written before the mortgage rate increases from 45 days ago. Of real interest are what the numbers will look like in August and September after homebuyers have had some time to digest and concider the higher mortgage rates and the higher monthly housing payments that corresponds with those higher rates.

Robert Dixon of RE/MAX Estate Properties in Palos Verdes thinks that the higher mortgage rates are not going to affect property prices in any substantive way. The number of borrowers who are deciding they have missed the oppurtunity to buy their first home are equal to the number of fence sitters that finally have decided “we better move now, before rates move even higher.” Robert does feel that the higher mortgage rates in conjuction with the traditional end of the summer buying season approaching will bring back a more normalized negotiation environment between buyers and sellers. “The last several months have seen a frenzy of buyers who are climbing over each other to have their offers accepted.”

Greater South Bay Listings vs Sales Prices

Greater South Bay LIstings vs Sales Prices

By Andre Hemmersbach

Mortgage Rate Update

June 3, 2013 Posted by Andre Hemmersbach

I thought it would be timely to send you a financial chart that quickly shows you how much rates have moved over the last 4 weeks. The move has been pretty dramatic and started with some good job numbers in the begging of May.  The real catalyst however has been Fed Chairman Ben Bernanke’s comments regarding the Federal Reserve’s continued commitment to purchase Mortgage Backed Securities (MBS) in the wake of the stronger economic outlook. Low Mortgage Rates have been artificially supported by the Federal Reserve through heavy purchasing programs which have now come into question. The chart below shows bond prices, which are inverse of rates (red days means higher rates, green days means lower rates).

Please call me if you need further explanation of the current rate environment or need an update on how this affects your specific qualifications or payment amounts. 

MBS Chart

MBS Chart

Newest Fad – Off Market Listings

March 22, 2013 Posted by Andre Hemmersbach

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