That rankles a lot of people, but what really annoys borrowers is the secrecy surrounding the credit-scoring process. A federal law enacted in 2003 requires the three credit bureaus to provide consumers with a free annual copy of their credit reports, but they're not required to include your credit score. If you want that, you usually have to pay, and even then it's unclear whether the score you've purchased is the one lenders will use when you apply for a loan.
But this year, free and relevant credit scores will become much more widely available, for two reasons:
•Provisions of the 2003 Fair and Accurate Credit Transactions Act — the law that requires credit bureaus to give you a free annual report — will impose new disclosure obligations that could encourage more lenders to provide customers with a free credit score.
Under "risk-based pricing" provisions that took effect Jan. 1, lenders are required to send a notice to loan applicants who receive a loan with a higher rate than the best rate available. The notice must also explain how the applicant can get a free credit report.
However, the law gives lenders who don't want to wrestle with these notices — and the rules governing who must receive them are complicated — an alternative. If they send all loan applicants a copy of their credit score, they don't have to provide risk-based pricing notices.
Most lenders will probably choose the second alternative, says Craig Watts, a spokesman for FICO, developer of the most widely used credit score. In addition to the credit score, consumers will receive an explanation of the range of the score and a graphic illustration showing how their score compares with other consumers' scores.
•A provision of the Dodd-Frank financial reform law that takes effect July 21 will require lenders to provide borrowers with a free credit score whenever they're turned down for a loan or charged a higher rate than the best rate available. This "adverse action" requirement will also extend to landlords, utilities and other entities that use credit scores, says John Ulzheimer, president of consumer education for SmartCredit.com.
Those two provisions are overlapping and somewhat contradictory, but the end result is that, for the first time, millions of consumers will see the credit score that lenders, insurers and others use to gauge the likelihood they'll repay a loan. "This will be an eye-opening experience for consumers," Ulzheimer says. "They'll be able to conclude how far they have to go before they truly have elite credit scores."
Tips for consumers who are disappointed with their score:
•Contact the lender that sent you the score. If you were given a rate that's higher than the best one available, ask the lender what score you would have needed to get the best deal, Ulzheimer says.
"If they tell you you're 20 points away, you'll realize you're not far off from the goal," he says. "If it's 70 points, you'll realize you've got some work to do."
•Order your free credit reports. Your credit score is based on information in one or more of your credit reports, so it's important to know what those reports contain. Yet most Americans don't take advantage of their right to a free credit report. A survey by the National Foundation for Credit Counseling found that nearly two-thirds of Americans hadn't ordered a copy of their free credit report in the previous 12 months.
•Get educated on what goes into a credit score. FICO has launched an educational website, scoreinfo.org, that explains the factors that influence a FICO score.
While these changes will put credit scores in the hands of a lot more people, some consumers should still consider buying a credit score, Ulzheimer says. Even after the Dodd-Frank provisions take effect, you'll have to wait until after you've applied for a loan to get a credit score, he notes. Buying your score several months before making a major purchase, such as a house or a car, will give you an opportunity to improve it before you apply for a loan.
All of the credit bureaus sell credit scores, but you need to be careful: Offers of "free" credit scores are often used to promote credit-monitoring services, which charge a monthly fee.
By Sandra Block, USA TODAY
COASTAL SAN DIEGO PROPERTIES
Tags: San Diego Real Estate, Coastal San Diego Properties
Credit Scores | Buying Real Estate | Mortgages/Loans | Real Estate News
So if you're going to buy a house this year, here are our resolutions for you. If you make these resolutions, we can almost guarantee that not only will you follow through with buying your home, the process will go a lot more smoothly!
Even the most inexperienced homebuyer probably recognizes that this is important. But in case you're unaware, before you get very deep in the home buying process, you should go to a lender and try to get pre-approved for a mortgage. You won't be locked into any interest rates yet, says Nicole Hall, editor-in-chief of the blog on LendingTree.com, a well-known online site that offers comparison shopping and access to mortgages and other types of loans. She says that at this point the goal is "simply to make sure that a lender will actually loan you the money to buy a house."
As Horton says, "It's emotionally draining to fall in love with a house and not be able to secure a loan."
#2: Before I look to buy, I will clean up my credit score.
Closely related to the pre-approval resolution, if you suspect you won't get into buying your house until the last half of 2011 or maybe even 2012, then at least look into cleaning up your credit history, to increase the odds of getting pre-approved. Every 12 months, you can get a free credit report from each of the major credit bureaus. You can order all three credit histories at once, if you want, but if you'd like to be able to look at your credit history relative often, and for free, it might be more beneficial to order one every four months, so you can monitor your credit history, again, for free, indefinitely.
#3: I will number crunch and buy a house I can afford.
Granted, in today's market, it's harder than it used to be to buy a house out of your price range. In the past, many lenders used whatever creative financing they could devise to get you in the most expensive house they could, but now banks are taking a hard look (maybe too hard, some might say) at whether you truly can make the mortgage payments. That said, you yourself still need to whip out the calculator and scrutinize the financial side of owning a house. There's plenty to consider, from how fat a mortgage payment you can afford to pay to whether you want to pay for additional points--a portion of the interest that you pay at closing--in order to get a lower interest rate.
#4: I will think long term.
It used to be that it was pretty common for a first-time homebuyer to purchase a modest-sized house and consider it their starter home. In other words, there would be more, maybe quite a few more, houses in your future. Aiming for a modest abode is great but because there are so many costs involved in purchasing a home, and because the real estate market is slowly coming out of a long slump, it's not a great move to buy a house if you think you'll be there less than two years, and all the better if you can envision yourself living there for at least four or five years and possibly longer.
If you're able to sell in a few years and know you won't take a loss, and you can easily enough trade up, great, and good for you. But in the meantime, when you're looking at a house, take a look at the community around your prospective home. Ask yourself whether you can imagine living here in ten years. For instance, maybe you're single, young and while you want to marry and have kids, you can't imagine that you'll be doing that for another five or ten years. Check out the school district anyway. If it's pretty crummy, and you know you want kids, the smarter move is to look for a community that does have a nicer school district. You want a community that you can grow into, not one that already has you thinking about an exit strategy. Because if you can't exit easily, you're going to be very unhappy.
#5: I will think about moving and other logistics now.
True, you have plenty of other things to worry about, but the point of thinking now about how you're going to haul your belongings from one dwelling to another is that by the time moving day comes, you won't be worried. It's far too early to reserve a moving day, but it's not too soon to search web sites and call moving companies and find out what their rates are now, so you can decide whether you're going to be hiring professionals or, once again, plying your friends and family with bribes of pizza and beer. If this is your first house, you can research homeowner's insurance. You'll never think of everything, but if you think of anything, anything at all, your future self will gratefully look back and think your present self is an utter genius.
Excerpts By Geoff Williams, FrontDoor.com
Buying Real Estate | Mortgages/Loans | Real Estate News | San Diego Real Estate
#1: I will begin thinking about fixing up my house - NOW.
Even if you have a smidge of doubt that you're going to sell this year, this is a smart strategy that will only help you, no matter what you do. Because the best way to start prepping your house for sale isn't to put an ad in the paper but to start working on home repairs and making sure your house is more than livable.
"Sellers frequently underestimate the amount of time required to prepare a home for the market," says John E. Horton, chairman of the Austin Board of Realtors in Austin, Texas. "Many sellers want top dollar when their home is not in top condition. As homeowners, we live in our homes every day and we become accustomed to the normal wear and tear, but prospective buyers see a house through their own critical lens."
#2: I will clean out my house - NOW.
While you're fixing up your home, you should really be thinking about all of the junk that has piled up over the years. If your basement and garage look like they could be filmed in one of those hoarder reality shows, then not only should you begin carting trash out to the curb now, so you can make a better impression on future buyers, do you really want to pack that up and move it with you to a new house? And if the answer is--well, as a matter of fact, yes, I do want my junk in the next house--then invest in some cardboard boxes now and begin organizing at least some of your clutter now. Might as well. It's going to take you awhile.
Do the research and see what comparable houses are going for in your neighborhood and price accordingly, even if it's really, really painful. Chad Rogers, a Realtor in Los Angeles, is sympathetic. "No one ever likes to hear that their home is worth less than they thought," says Rogers. "It's a tough reality for people to be in, but it is a reality. No matter if your home is worth $200,000 or $60 million, it needs to be competitively priced or else it's not going to sell. I always tell sellers that they can sting now or sting much worse, later when their home becomes a stale listing. The price that a home is worth after sitting on the market for six months to a year will be far less than if it was priced right from the get-go."
#4: I will make this a business transaction and not an emotional decision.
That's a little easier said than done, of course, but it is especially critical in the current marketplace because we are in a buyer’s market. So go beyond the emotions because this is a financial transaction, and if you can keep that in mind, you'll likely come through this in better shape. Yes, it is your home, but remember that it is typically just another house to potential buyers.
When it comes to selling your home, everything may feel personal, but at the same time, nothing's personal.
#5: I will get a pre-inspection for my own house, before I sell it.
If you have been living in your house for awhile, and especially if you know it needs some work, this is something worth considering. "Sellers can better position themselves in the market by having a pre-listing inspection conducted on the home now and then have the opportunity to have any issues corrected before the house goes on the market and before the purchaser's inspector finds the problems and puts the sale of the house in jeopardy," says Reggie Marston, president of Residential Equity Management Home Inspections and the original house detective on the HGTV series The House Detective.
It is, adds Marston, a "tough, tough market out there now." His argument is that since it's a buyer's market, your house "better shine and be in pristine condition." And if you can get a handle on anything wrong with your house before you start selling, obviously your home is going to tower above the other competition in your community.
Economy | Real Estate News | San Diego Real Estate | Selling Your Home | Avoiding Foreclosure | San Diego Communities
The civic dream of transforming San Diego’s Embarcadero into one of the nation’s great public places has suffered more stops than starts over the past 20 years. But a new agreement between previously warring parties could be the breakthrough that will finally get the project under way this fall.
Under the deal, described in a meeting with the Union Tribune editorial board last week, developers of the long-stalled hotel project proposed for the site of the former Lane Field have agreed to revise plans in order to make two acres of the property available for a grand public plaza at the foot of Broadway. The developers also agreed to remain neutral in organized labor’s expected future effort to unionize the hotel’s workers.
A key port district commissioner agreed to push for removal of the proposed Broadway Pier improvements from the first phase of the Embarcadero project, satisfying the main group of activists who have sued the port in a battle over use of the pier.
And in return for all of that, the activists, known as the Navy Broadway Complex Coalition, agreed to drop opposition to the rest of the project and to support it at Tuesday’s port commission meeting and at the City Council and state Coastal Commission.
“It’s about time the public got this development they’ve been expecting,” Ian Trowbridge, co-chair of the coalition, told the editorial board.
Indeed, it is.
At stake in all of this is the $28 million first phase of the $228 million North Embarcadero Visionary Plan, a proposed remake of Downtown San Diego’s bayside “front porch” with a public esplanade, parks, gardens, a bike path, public art and other amenities that would help turn the waterfront into a world-class public space for San Diegans and visitors alike.
As promising as the new agreement is, hurdles remain, perhaps most significant of which is new Gov. Jerry Brown’s proposal to tap redevelopment funds up and down the state to help balance the state budget. That creates a new sense of urgency related to the Embarcadero project’s $28 million financing, which is to come from the city’s downtown redevelopment corporation, half of it in the form of a loan to the port district.
Still, the agreement represents a major step toward making the plan not just a vision but a reality. Credit goes to Port Commissioner Scott Peters, former Commissioner Steve Cushman, Councilman Kevin Faulconer, the Lane Field developer, and the coalition activists, including Trowbridge and labor leader Lorena Gonzalez, all of whom played key roles in putting the deal together.
It is still too early to uncork the Champagne. But in the end, this deal could prove to be a model for how to get things done.
Tags: Coastal San Diego Properties, San Diego Real Estate
San Diego Real Estate | San Diego Communities | Real Estate News
