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What are Closing Costs?

Another question I’m asked about is Closing Costs. When purchasing or planning for a purchase involves several items to consider and prepare for. One is the Down Payment (which will be covered next week), secondly is your Closing Costs. Buyers absolutely need to understand Closing Costs, because they will be paying them when you purchase a home.
It is also imperative for the Seller to understand closing costs, because you will probably be asked to pay for the Buyer’s Closing Costs; at least a portion of them.
Closing Costs are broken into Recurring and Non–Recurring closing costs.
We will first discuss:

Recurring Closing Costs. Recurring means will occur repeatedly, such as property taxes, home owners insurance, MMI (Insurance) and association fees (if any).

Non–Recurring Closing Costs (one time fee/charge). Would include pre–paid interest, loan origination fee, escrow fee, lender title insurance, recording fees, notary (which can be costly today) and several other miscellaneous fees.

As a general guideline, Closing Costs run between 3 to 6% of the Sales Price. Look for our next edition covering Down Payments. Down payments are paid at the closing of escrow, but not considered closing costs, just purchase costs.

Another question I’m asked about is Closing Costs. When purchasing or planning for a purchase involves several items to consider and prepare for. One is the Down Payment (which will be covered next week), secondly is your Closing Costs.

If I can answer any additional questions, or help you get Pre–Approved, give me a call or e–mail:

larry@robertsonrealtor.com or Call: 909.983.2892

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Credit Score (FICO) Secrets…

If you’ve ever applied for credit for a home loan or a car loan, then you’ve probably seen your credit report. These lenders consider you credit worthy or having an unworthy credit report based on a certain criteria. These lenders base their decision on many factors, including your Credit Score. One of my clients have a FICO Score of 832 (the last lender they used said it was the highest score, he has ever seen). It meant they bought a home without verifiable jobs or income. You can see the importance of your Credit Score.

To improve your FICO Score there are things you can do to develop a solid credit history that will improve your FICO score.

Pay your bills consistently on time – recent late payments are more harmful to your score than older late payments.

Check your credit report and remove any errors – inaccurate information on your credit report can lower your score.

Keep your debt reasonable – as a general rule, your account balances should be below 75% of your available credit.

Maintain only a reasonable amount of unused credit – having ready access too much money (instant debt) can make you an unsatisfactory credit risk.

Avoid too many inquiries – inquiries can be interpreted as a sign that you are seeking credit and could overextend yourself or may be in financial difficulty.

WHAT’S IN A SCORING MODEL?

Recent payment history

The amount of credit you have access to and are using

How long a credit history you have

Whether you’ve been shopping for credit

Notification of collection and public record items such as liens and bankruptcies

WHAT’S NOT?

By law, lenders–and scoring models–are prohibited from considering factors such as:

Your race – Your religion – Your gender, whether you’re married, single or divorced

Where you were born.

Although there are dozens of scoring models being employed (and more on the way) the most well-known company in the scoring business is Fair, Isaac and Company, known as FICO Scores (you can get your FICO score here).

A numerical score is then developed, typically ranging from 300 to 900, with the low end of the scale indicating a poor credit risk. This can tell a lender whether or not he’ll lend to you.

What’s in your score?

According to FICO, the breakdown of your score is as follows:

35% of the score is determined by payment histories on your credit accounts, with recent history weighted a bit more heavily than the distant past;

30% is based upon the amount of debt you have outstanding with all creditors;

15% is produced on the basis of how long you’ve been a credit user (a longer history is better if you’ve always made timely payments);

10% is comprised of very recent history, and whether or not you’ve been actively seeking (and getting) loans or credit lines in the past few months;

10% is calculated from the mix of credit you hold, including installment loans (like car loans), leases, mortgages, credit cards, etc.

You Can E-Mail Me Any Real Estate Question, I Am Always Willing To Answer Or Help With Your Questions, Problems Or Concerns.

larry@robertsonrealtor.com or Call: 909.983.2892

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Pre-Qualified v. Pre-Approved

I receive many questions about the difference between a Pre–Qualified loan and a Pre–Approved loan. A Pre–Qualified status, means you have talked to a lender, and given him all pertinent information for obtaining a loan. Based on the information you have given, you are qualified for a loan of a certain amount.

A Pre–Approved loan, means all information given (income, reserves, employment and credit information) have all been verified by documentation. This will grant you a Pre–Approved status.

When looking to buy a home or property, the seller’s agent (if a good agent) will require a letter from a lender, stating that you are Pre–Approved for the loan you require to purchase the home or property. This is to make certain the home or property is not tied up with an unqualified buyer.

If I can answer any additional questions, or help you get Pre–Approved, give me a call or e–mail:

larry@robertsonrealtor.com or Call: 909.983.2892

NEXT – WHAT ARE CLOSING COSTS?

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TO CONSIDER WHEN SELLING YOUR HOME

Since you are reading this, you have decided to look into Selling your home. Selling your home requires a Real Estate Broker your comfortable with and can trust with probably your largest investment. When Selling your home the two most important considerations are:

1) Your Real Estate Broker.

2) Pricing your Home.

In that order, your Real Estate Broker will guide you on No. 2. Remember without an able and willing buyer and an able and willing lender you have no Sale. Most importantly, you need to choose a Realtor® you can trust. This is so crucial with the myriad of expected, required, requested and mandated disclosures along with the high emphasis on the Pre-Sale Home Inspections here in the most consumer oriented state of California. This makes it imperative that you choose an Ethical (Honest) and Experienced Real Estate Broker, who knows how to protect you and get the most for your property.

Remember the foregoing demonstrates the importance of the Real Estate person you choose, it can mean a great deal of time, money and heartache.

I am always willing to answer Real Estate questions, give me an Email: larry@robertsonrealtor.com or a call at (909) 983-2892.

Our Next Post Will BE:  “Pre-Qualified v. Pre-Approved”

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Why Do I Need To Go To A Lender?

Let’s start back in the early 1990’s, I was selling a lot of FHA and VA Foreclosures and repossessed properties. They were just called Repos. I was a Certified HUD Broker and a VA Approved Real Estate Broker. Houses would come out weekly for inspection by potential buyers, then after a week, buyers would put in a bid on the property. The house went to the highest bidder.

The obvious question, how did the buyer get to place a bid. First the Buyer was directed to a Certified HUD Lender. The lender would process the buyer and his qualifications for a loan (much like what is done today). In fact I am still working with several of those lenders today.

Once they were approved and all provided information was verified in writing. The Buyer was qualified for a loan amount, then I could place a bid on a property on behalf of the Buyer up to that amount.

Now the tricky part, the lender had to guarantee to HUD, that if the Buyer’s Offer was accepted, they (the lender) would close the loan at the end of 45 days, not 44 or 46, but 45 days, if not they had to pay a daily penalty. It seemed to work very well for everyone.

In fact many of us in Real Estate liked it so well that we had our Buyers pre-approved for homes on the regular market. As a Listing Agent, I could tell my Sellers that this Buyer is Pre-Approved for a Home Loan. We in Real Estate, the Buyer and the Seller all enjoyed the Home Buying Process more with less stress on the transaction.

It worked so well, that after a short time it became the Real Estate Standard to the point that Sellers (at least my Sellers), would not accept an offer from a Buyer that was not Pre-Approved.

This is a long winded way around to say, this is why you must go to a lender before buying a property, to be Pre-Approved by a Reputable Lender. Just another reason why you need an Honest, Experienced Real Estate Broker to help decipher and help you work through this not so simple maze and process of Home Buying and Home Selling in today’s volatile real estate market.

Will the Home Buying or Selling Process be worth it? A resounding YES! Remember: “Real Estate is the only Limited Natural Resource, with no Alternate Resource Available”.

You Can E-Mail Me Any Real Estate Question, I Am Always Willing To Answer Or Help With Your Questions, Problems Or Concerns.

larry@robertsonrealtor.com or Call: 909.983.2892

Next Will Be The Difference Between Pre-Qualified and Pre Approved?

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