Market Update
More Inventory, and even more buyers!!!
The spring selling season is here! The seller’s market continues with demand
outpacing inventory. And, prices continue
to rise despite stubborn interest rates. We are seeing more competitive bidding
again for many homes. In order to stand
out, buyers must be fully pre-approved and ready to act swiftly.
Rates are high compared to the pandemic period, but are still
running close to historical averages. Expert
guidance is key to navigating the mortgage process, especially for first time
homebuyers. Be sure to work with a knowledgeable
and experienced lender to streamline the process and ensure a successful close.
Here is the current conundrum regarding rates:
Prices are high, CPI is high, and inflation is higher than the Fed wants. The Feds will apparently only reduce rates
when CPI falls. Which will only happen
when home price appreciation cools.
Which will only happen when there is a sustained increase in housing
inventory. Which will only happen when
rates fall. And, back to the beginning.
FICO
SCORE HELPFUL HINTS
When planning for a home loan, whether a purchase or a
refinance, it is paramount to understand the factors that influence your FICO
score. And, remember there are different scoring models. Clients may tell me what their FICO score is, but when I pull a Tri-Merge from Experian, Transunion and Equifax, which is required for a mortgage loan, the scores are quite different.
1.
Payment History – Late payments,
especially on any mortgage are a critical negative factor.
2.
Credit Utilization – Keep balances to
less than 30% of credit available; this is typically the most common issue affecting
FICO scores we see
3.
Length of Credit history – the longer you
have had credit, the better. And, being
added as an Authorized User to a relative’s long-standing account may help, check with us first!
4.
Credit mix – Installment loans (auto
loans) or leases help your score when coupled with revolving credit. And, have
at least two or three revolving credit accounts.
5. Inquiries – typically these have the least effect on your score although consumers believe otherwise.
We frequently work with clients to assist them with credit
repair. Here are some of the most common
questions we hear:
1.
Should I pay off my credit cards and/or car
loan? Not necessarily, unless they
are affecting your debt-to-income ratio.
You don’t need to be debt-free to qualify for a home loan. And sometimes it is best to have a small
balance on some accounts.
2.
Should I close my credit cards that I don’t
use anymore? After all, I’ve paid them
off. NO! This will have a negative effect on your FICO
score. The more unused credit you have,
the better!!!! Never close an account.
3.
Can I apply for a car loan at a number of
places to find the best rate? NO! Too many inquiries at one time will temporarily
drop your score.
Always discuss any possible changes to your credit cards or
loans with your loan officer first.
We are here to help and be your resource!
Karen, Katie and Stephanie
