Down 10 to 30 pts. 

Down 25 to 45 pts. 

Down 60 to 80 pts.

Down 90 to 110 pts. 

Down 45 to 65 pts. 

Down 105 to 125 pts. 

Down 85 to 105 pts.

Down 140 to 160 pts. 

Down 130 to 150 pts.

Down 220 to 240 pts. 

Carlsbad, CA - You may know your credit score – but do you have any idea how it is calculated?  In a formula that is so secretive that they could tell you – but then they’d have to kill you, we never know how our actions will affect that score. 

How will your credit score change if you close a credit card?  Should you go through the hassle of a short sale, or just allow your house to go into foreclosure?  What if things are tight, and you go over your credit card limit?

Your credit score is a three digit number normally between 300 and 850.  It is the number used to determine the risk of giving you a loan.Scores over about 715 are considered good scores, and typically will get you the best interest rates.  Scores over 600 and under 715 are moderate scores. 

And although you may get a loan, you may pay a premium interest rate to get it.  Scores under 600 are typically considered to be a high risk borrower.  These borrowers either may not get a loan, or may pay much higher interest rates on their loan.

Although the formula is still a mystery, Fico.com has at least provided a table showing some of the most common penalties to your credit score.

FICO’s information shows that bankruptcy does the most serious damage to a credit score (up to 240 points), followed by foreclosure (up to 160 points) while maxing out a credit card has the least numerical impact (as few as 10 points).

Those with good or excellent credit — so-called prime borrowers — put more points at risk with each mistake. For example, someone with an average credit score of 680 who pays a bill 30 days late will see a drop of 60 to 80 points. But for someone with an excellent credit score — 780 — that same delinquency can cost 90 to 100 points.

If considering whether or not to try to sell your house through a short sale vs. allowing a full foreclosure, please keep in mind that settling a debt (short sale) with a lender can save you 50 to 100 points (and the ability to get another loan in the future) or MORE!  If you have any questions about how this might impact you personally, or how to market your property for a short sale, please contact The Mewborn Team.  We are happy to sit down with you for a no obligation consultation about your best options.

The foreclosure prevention plan, is meant to reduce eligible borrowers’ monthly payments to no more than 31% of their pre-tax income.  In order to qualify, a homeowner must make three on-time monthly payments before they can receive a permanent modification.

Unfortunately there is the typical he said/she said to each loan.  The mortgage companies are complaining that they need more information that the borrowers aren’t providing.  The borrowers are complaining that the mortgage companies keep losing their documents.  So months go by without permanent modifications.

The Obama administration is trying to make changes to their programs allowing mortgage companies to access tax records through the IRS, rather than waiting for borrowers, and approving and moving clients into permanent modifications without their signatures.  They are hoping that this will help streamline the process and help more US homeowners. 

If you are having problems making your mortgage payment.  Contact your mortgage company.  They may tell you that they can not help you until you have missed a payment.  You may want to ask for a forbearance plan.  Although this will still affect your credit, it will allow you to work with your lender to find a more permanent, acceptable solution.

Your home is often the biggest investment you will ever make.  Make the most informed solutions possible.  If you have any Carlsbad or North County Coastal real estate questions, please contact us.

When their situations were really tough, most banks preferred short sales because they were their best opportunity to get the most money back. But with an improving economy, and because the losses on many of these properties have already been written off the books, banks are increasingly reluctant to negotiate a short sale.

Today, banks demand 9.5 weeks to respond to a short-sale request, compared to 4.5 weeks a year ago, according to research firm Campbell Communications. Their reluctance is frequently stymieing sales and frustrating real estate practitioners.

Source: Based on article from Business Week – Christopher Palmeri

2. Don’t buy Carlsbad real estate unless you can afford to stay put.
Although property values have been on the upswing in La Costa and Carlsbad, there are still concerns about a coming wave of foreclosures.  We may have seen Carlsbad property values at their bottom, but that is still unknown.  Don’t buy Carlsbad real estate hoping to flip it quickly at a profit.  Now isn’t the time to take that kind of risk!

3.  Only buy what you can really afford
Most of our recent real estate problems have come from families buying homes they can’t afford.  The average family can afford a home that is 2 1/2 to three times their annual salary.  But take into consideration, your other expenses and debts before you commit to a monthly mortgage payment.

If you have any Carlsbad real estate questions, please contact us.  A home is one of the biggest purchases you may ever make.  Please be informed and make the best decision possible!

1. The tax credit expires on December 1st, 2009.  That means all real estate purchases have to be CLOSED before then.  You can not still be in escrow.

2. If you were hoping to use the tax credit – you can no longer buy a short sale.  Most short sales take about six months to complete.  There is no longer time to complete the short sale process and close escrow before November 30th.

3.  Because of the large amount of buyers, there are often bidding wars on properties under $400,000.  If this is your price range, be prepared to make full price offers, and often be forced to counter above asking price.

4.  Financing is still tight - and slow!  Most “easy” mortgages are taking around 45-60 days to fund. 

If you are looking to take advantage of this First Time Buyer Credit – please consider all these facts above.  In order to close by November 30th, you probably need to be in a contract by September 30th.  You need to be prepared to make strong offers, and you need to work with your professional team of real estate and mortgage consultants to keep the process moving quickly.

If you have any questions about Carlsbad, La Costa, Encinitas, Del Mar, Oceanside, or San Marcos real estate, please call The Mewborn Team.  We specialize in coastal luxury San Diego real estate.  We are happy to serve as your personal real estate advocate!

Rent-to-own contracts, usually require buyers to pay a premium on each month’s rent and sometimes an up front fee/deposit of about 5% of the purchase price. The regular rent then goes in owner’s pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.

If done properly, a rent to own (or lease option) may be a great way for a buyer to build up down payments and improve their credit scores, while living in that home they wanted to buy.

An example that we have seen was this – On a $600,000 Oceanside home, the buyers paid $3,300/mo – $1,000/mo more than market rent. After three years, there would be $36,000 accrued in an account for their down payment and closing costs. If the buyer could not perform at the end of 36 months, the contract was void.

The real risks are to Carlsbad real estate buyers. The contracts are typically written to protect the sellers. Some specific risks:

Loss of your payments to date – often if you fall behind or can not perform, you are not entitled to a refund of any previously paid fees, deposits, or rent premiums paid.

Lack of Financing - Most Carlsbad, Oceanside, and San Marcos buyers are entering into lease option contracts because they can’t get financing in the current market place. If you can’t get financing at the end of the lease option contract, you forfeit everything you have paid to date.

Falling home prices - Most lease options establish a set price at the time the contract is signed. As we have seen over the past couple of years, prices don’t always go up. If after signing the contract, Carlsbad home prices fall, the buyer may not want to continue with the purchase, but that still doesn’t mean that they get their money back.

The House Going Into Foreclosure – Some Carlsbad renters have paid their inflated rent payments on time, only to find out the seller hasn’t been paying the mortgage. Instead the house goes into foreclosure, with the buyer/renter being evicted, never benefiting from their inflated payments.

Although these rent to own options seem like a great solution when it is hard to make a deal, there are plenty of pitfalls to consider.

If you have any questions about Carlsbad, La Costa, Oceanside, or San Marcos real estate or mortgages – please contact us.   Talk to a professional and make sure that YOUR interests are represented!   We are always happy to answer any Carlsbad real estate or mortgage questions.

Carlsbad, CA – A fear of overpaying for Carlsbad, Oceanside, or San Elijo real estate is common these days, especially  when prices continue to be unstable.

If you are a San Diego home buyer and are frozen because you are unsure what to do next – and are concerned you may pay too much, here are some items to consider:

1. Waiting for the right time can be expensive. Some Carlsbad real estate buyers would have more equity today, despite falling prices, if they had bought when they first started looking, instead of continuing to pay rent.

2. Financing is not guaranteed. Some people who were highly qualified last year can’t find financing this year because the credit market has tightened or their personal financial situation now makes them an undesirable borrower.

3. Interest rates have no where to go but up. If prices decline by another 10 percent, but interest rates increase by 1 percentage point, the monthly payment will be the same.

Can we guarantee that Carlsbad real estate prices are at the bottom?  No!  Can we say confidently that now is a great time to buy real estate in Carlsbad, La Costa, Oceanside, Encinitas, Vista, or San Marcos – YES!  In most of these areas, prices are at near 2001 levels.  Interest rates are at near all time lows!  This Carlsbad real estate opportunity is unprecedented!  Don’t miss it!

Source: Based on an article in The Wall Street Journal, Douglas Heddings (07/27/2009)

Carlsbad, CA – With Carlsbad and La Costa home prices low, now many parents are thinking of buying their children a home or investment property.

1. Give a cash gift. Although some parents want to (and can afford to) purchase a house for their children, many want to help but are not in the position to gift the entire cost of the home. Parents are allowed to gift up to $13,000 per person per year without incurring gift tax. This means two parents could give their child and spouse up to $52,000 per year to go toward a down payment.

2. Lend money. Rather than gifting, you may prefer to loan money. In order to avoid taxation, the government requires that loans from family members meet or exceed minimum loan rates to avoid having the loan be considered a gift.

If you have any real estate or mortgage questions about Carlsbad, La Costa, or other coastal areas, please contact us.

The federal tax credit is 10% of the home’s purchase price (up to a maximum of $8,000). 

Please contact us to find out more about the benefits available to you ONLY until the end of 2009!