How can I improve my credit score?

Blemished reports make borrowing money more difficult
By Dian Hymer
Inman News
Courtesy Top Producer

A woman who was recently in the market for a new home discovered that her credit report was blemished, all because of a late payment on her existing home mortgage. This came as a surprise to her because she always paid her bills on time.
She contacted her bank immediately and reported the error. The bank acknowledged that a mistake had been made, and issued a letter stating this to the credit bureau. Even so, it can take a couple of months at least before a mistake like this is corrected.
In this case, the buyer was able to obtain the loan she needed despite the credit error because she had a cash down payment of more than 50 percent of the purchase price. But if she, like many buyers, had a cash down of 10 percent, or less, she might have been turned down completely, or only qualified for a less desirable mortgage.
When a late payment or similar credit blemish shows up on your credit report, it can lower your credit score and make loan qualification more difficult. Increasingly lenders are using credit scores to streamline the mortgage approval process. A credit score gives a picture of your credit situation at a given point in time.
The information in your credit files at the credit report bureaus is used to derive a number that indicates the likelihood that your will repay a debt, like a mortgage. The good news about credit scores is that they enable lenders to process loans more quickly and more impartially. The bad news is that a mistake in your credit report can wreck havoc with your home buying plans. And, mistakes are all too common.
HOUSE HUNTING TIP: Order a copy of your credit report at least 90 days before you plan to make a home purchase. The three major credit reporting agencies are: Experian (888) 397-3742, Equifax (800) 685-1111, and Trans Union (800) 916-8800. Small errors in a report might have little effect on your credit score, but major errors like late payments on a home mortgage can seriously lower your score. Lenders don't like to lend to borrowers who have a past history of missing their mortgage payments.
Ask your mortgage broker or lender to interpret your credit report for you and make recommendations about what you can do to improve your score. If there are errors in your credit report, inform the credit bureau, and the company that created the erroneous credit record, that you are disputing the information. This must be done in writing. You have the right to request that the credit bureau include your account of the disputed record in your credit file.
Having too much credit can negatively impact your credit score if you have a history of mismanaging credit. But, racing out to close accounts may not be a quick fix to a bad credit score. It's better to pay down the balances on your credit accounts. Closing them won't necessarily remove them from your credit file.
Lenders like to lend to borrowers who have a good history of managing credit. Prospective borrowers who have never established credit can be at a disadvantage when applying for a mortgage. This may change in the future. Credit scoring companies are working to establish alternative ways to score consumers who have no debt history. But, this will take time.
To establish yourself in the credit world, open a few charge cards, being careful not to open more accounts than you need. Then charge a few items on each and pay the balances off in full.
THE CLOSING: This is how you establish a positive credit history.

Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.
Copyright 2004 Dian Hymer

Real estate refinancings gain market share

New purchase loans drop
Wednesday, February 16, 2005
Inman News
Courtesy Top Producer

Overall mortgage applications fell 0.5 percent on a seasonally adjusted basis from the week before, despite the third consecutive week of increased refinancings, according to the Mortgage Bankers Association's weekly survey.
The MBA seasonally adjusted refinance index increased by 4.1 percent to 2,530.1 from 2,430.7 one week earlier.The seasonally adjusted purchase index decreased by 4.8 percent to 423.3 from 444.6 the previous week.
The refinance share of mortgage activity increased to 49.9 percent of total applications from 48.9 percent the previous week. The adjustable-rate-mortgage share of activity decreased to 30.7 percent from 31.9 percent of total applications.
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.5 percent from 5.48 percent one week earlier. Points including the origination fee increased to 1.27 from 1.25 the previous week for 80 percent loan-to-value ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.09 percent from 5.06 percent one week earlier. Points including the origination fee increased to 1.3 from 1.17 for 80 percent loan-to-value loans.
The average contract interest rate for one-year adjustable-rate mortgages decreased to 4.1 percent from 4.24 percent one week earlier, with points including the origination fee increasing to 1.07 from 0.99 for 80 percent loan-to-value loans.
Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry.
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Real estate prices hit double-digit growth in 62 metro areas

A record number of metropolitan areas showed double-digit annual price appreciation in median existing-home prices in fourth-quarter 2004, according to a report by the National Association of Realtors.

The association's fourth-quarter metro area home-price report, covering 129 metropolitan statistical areas, shows 62 areas with double-digit annual increases in median existing-home prices and only four areas posting modest price declines. The previous record was 49 metros showing double-digit price appreciation in the second quarter of 2004.

The national median existing-home price was $187,500 in the fourth quarter, 8.8 percent higher than a year earlier when the median price was $172,400. In the third quarter of 2004, the national median existing-home price was $188,200 and the national annual rate of home-price appreciation was 7.5 percent. The median is a typical market price where half of the homes sold for more and half sold for less.

For the year of 2004, the median existing-home price in metro areas was $184,100, compared to $170,000 in 2003 and $158,100 in 2002.

David Lereah, chief economist for the national association, said, "We ended 2004 with a record-low supply of homes on the market. With more buyers than sellers nationally, what we're seeing is a natural pressure on home prices as buyers compete to bid on available properties. Fortunately, the historically low cost of debt service on a home purchase means that we have a comfortable buffer in most of the country because the typical family can afford to buy a home well above the median price."

The strongest price increase was in the Las Vegas area where the fourth-quarter price of $281,400 rose 47.3 percent from a year earlier. Next came the Riverside-San Bernardino area of California at $322,400, up 34.7 percent from the fourth quarter of 2003. Third was the West Palm Beach-Boca Raton-Delray Beach area of Florida, with a fourth-quarter median price of $338,800, up 34 percent in the last year.

Meanwhile, median existing-home prices dropped 4.2 percent in Charleston, W.V.; dropped 3.9 percent in Indianapolis, Ind.; dropped 2.1 percent in Austin/San Marcos, Texas; and dropped 1.3 percent in Beaumont/Port Arthur, Texas, from fourth-quarter 2003 to fourth-quarter 2004.

Lereah said analysts looking for signs of weakness will be disappointed. "In the handful of areas with price declines, none had previously experienced rapid price growth," he said. "In fact, they were all lower-cost areas experiencing one or both of the conditions necessary for temporary price softness – local economic weakness, mainly in jobs, or a large supply of homes available in the local market."

NAR President Al Mansell, CEO of Coldwell Banker Residential Brokerage in Salt Lake City, said market performance has contradicted predictions of a home-price bubble for four years now. "Although temporary price declines are always possible under the right conditions, people who were scared off by faulty predictions have missed out on the strongest housing market in U.S. history," he said.

"Considering rents on comparable properties generally are higher than mortgage payments, and housing returns generally are multiples of a down payment, a little perspective may help. The population is growing faster than the supply of homes, the cost of construction rarely declines and the long-term prospects are positive – one of the largest generations in U.S. history, who believe housing is a good investment, is just entering the years in which people typically buy their first home."

Median fourth-quarter metro area resale prices ranged from $87,800 in Beaumont-Port Arthur, Texas, to more than seven times that amount in the San Francisco Bay area where the median price was $656,700. The second most expensive area in the United States was Anaheim-Santa Ana (Orange Co., Calif.) at $627,500, followed by San Diego at $569,900.

Other low-cost markets include Springfield, Ill., the second least-costly area, at $93,600, and Buffalo-Niagara Falls, N.Y., with a fourth-quarter typical resale home price of $94,800.

Regionally, the strongest increase was in the West where the median resale price was $278,000 during the fourth quarter, up 14.1 percent from a year ago. After the Las Vegas and Riverside-San Bernardino areas, the strongest increase in the region was in Sacramento, with a fourth-quarter median price of $343,800, up 31.5 percent from a year earlier, followed by the Reno, Nev., area, where the median price of $286,200 rose 25.5 percent. Twelve other Western metro areas also experienced double-digit price gains, including Los Angeles, San Francisco, Anaheim-Santa Ana, San Diego and Honolulu.

In the Northeast, the median resale price during the fourth quarter was $222,500, rising 13.5 percent from a year earlier. The strongest increase in the region was in the Atlantic City, N.J., area, at $216,500, up 18.9 percent from the fourth quarter of 2003, followed by New Haven-Meriden, Conn., with a median price of $264,600, and Monmouth-Ocean, N.J., at $338,400, both up 16.5 percent, and the Albany-Schenectady-Troy area of New York, where the typical resale price of $168,600 rose 16 percent from the fourth quarter of 2003. Eleven other Northeastern metros had double-digit price gains including the New York City area, Philadelphia, Hartford, Buffalo-Niagara Falls and Providence.

In the South, the median existing-home price of $169,700 was 8 percent higher than the fourth quarter of 2003. After the West Palm Beach-Boca Raton-Delray Beach area, the strongest increase in the South was in the Bradenton area of Florida, where the fourth quarter median price of $245,700 rose 32 percent from a year earlier. Next came the Melbourne-Titusville-Palm Bay area of Florida at $172,200, up 30.5 percent, and the Washington, D.C., area, where the median price of $370,800 was 26.9 percent higher than a year earlier. Twenty-two other Southern metro areas experienced double-digit increases in their median price including Baltimore; the Florida metro areas of Miami-Hialeah, Orlando, Ft. Lauderdale-Hollywood-Pompano Beach, and Tampa-St. Petersburg-Clearwater; New Orleans; Norfolk-Virginia Beach-Newport News, Va.; and Birmingham, Ala.

In the Midwest, the fourth-quarter median existing-home price of $151,000 increased 6.9 percent from the same period in 2003. The strongest increase in the Midwest was in the Waterloo-Cedar Falls area of Iowa, where the median price of $97,900 was 13.2 percent higher than the fourth quarter of 2003. Next came Springfield, Mo., at $109,100 in the fourth quarter, up 12.4 percent, and the Milwaukee area $199,300, up 11.3 percent in the last year. Aurora-Elgin, Ill., and Fargo, N.D., also had double-digit gains.

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Copyright 2005 Inman News

www.GreatChicagoRealEstate.com

Do real-estate agents represent the buyer, seller or both?

Do real-estate agents represent the buyer, seller or both?
BY LARRY FINLEY
SUN-TIMES REPORTER

A real estate agent represents either the buyer or the seller in a home purchase. That was not always the case.
Until January 1995, real estate agents were legal agents of the property's seller. Even though agents helped buyers find a home, they still were acting for the seller.
Now, by law, it is presumed that if you go to an agent and ask his help in finding a property, he works for the buyer. This is called a buyer's agent.
The Chicago Bar Association recommends determining if the agent represents you, the seller, or both the buyer and the seller.
The buyer's agent should help find listings of properties that suit the buyer's needs. He or she should provide information about financing, and help in the purchase and closing.
The buyer's agent also should help determine the fair value of a property, and negotiate for the best price and terms. The buyer and the broker enter into a contract defining the legal relationship and duties of both parties.
Even though the broker represents the buyer, the broker is paid by the seller--just as before.
The seller's (listing) agent represents the home seller in a transaction. Agents representing a seller might work in the same agency as your broker.
A dual agent represents both the buyer and the seller. Such an arrangement requires the permission of the buyer.
A first-time home buyer, or someone not familiar with negotiating a purchase, probably would be better served by a buyer's agent.
Some "buyer brokers" have offices that only represent buyers and not sellers. They, too, are paid by the seller.
A Realtor is a licensed real estate professional who is a member of the National Association of Realtors, and is regulated by a code of ethics and standards of practice.
All agents are licensed by the state of Illinois.
More information can be found at the Illinois Association of Realtors Website www.illinoisrealtor.org.
The Chicago Bar Association also has information on the rights and duties of both the real estate buyer and the seller at www.chicagobar.org.

When is remodeling a waste of money?

Courtesy Top Producer
Monday, February 07, 2005
By Dian Hymer
Inman News
It would be nice if you could count on getting one dollar back when you sell your house for each dollar you invested in renovations. Most people hope for more than a dollar-for-dollar return. In reality, many improvements return less than the amount invested.
For example, the 2004 Cost Versus Value Report, recently published by the National Association of Realtors, reported that nationally, the average percent recouped on a bathroom remodel was only 90.1 percent. It was 88.1 percent for a deck addition, 81.2 percent for a family room addition, and a mere 79.4 percent for a major kitchen remodel.
Does this mean that remodeling is a waste of your time and money? It can be, especially if you go about a renovation in a haphazard fashion. It's important to do due diligence investigations before embarking on a remodel project, just as you would if you were considering buying a new home. There are many variables to consider.
First, consider that the figures quoted above are national averages. The amount recouped on a remodel depends in large part on where you live. There's significant variability from one city to the next, according to the NAR report.
For instance, nationally, homeowners recouped only 90 percent on a bathroom remodel. But, the amount recouped for the same job was 109.7 percent in New York City, 100 percent in San Francisco, and only 61.3 percent in Denver, on average.
The return on a remodeling investment will also depend on the value of your home, particularly in relationship to the value of homes in your neighborhood. If you have a small home in a neighborhood of larger, more expensive homes, you could come out ahead by enlarging your home.
However, it's important to keep costs in line so that you don't end up over-improving your home for the neighborhood. Buyers tend to discount a home that's priced above the value of other homes in the neighborhood.
Before remodeling, it's also important to consider your competition. In some areas, certain remodeling projects are taken for granted. For instance, if you're in an upscale neighborhood of older homes where most homeowners have remodeled their kitchen and bathrooms, you will be penalized price-wise by the market if your home is outdated.
In areas where home prices are rising rapidly, you're likely to recoup more on your remodel investment than you would during times of meager appreciation. With this in mind, you're more likely to recoup your investment over the long term.
HOMEOWNER'S TIP: There's a subjective factor that can't be overlooked when remodeling. This factor is often referred to as pride of ownership. And, don't discount the value of creature comfort. There's a certain sense of well being to be derived from a home that suits your lifestyle while aptly reflecting who you are.
Despite these factors, from an investment standpoint, it makes sense to consider resale value before making an investment in a major renovation. This doesn't mean that you should remodel your home with someone else in mind. But, if you're aim is to recoup as much of your investment as possible, it's wise to consider home buyer preferences in your area. If your remodeling is not in tune with what buyers want, it could actually decrease the value of your home. Also keep in mind that while trends vanish quickly, quality and good taste are timeless.
THE CLOSING: The NAR Cost Versus Value Report was based on professional judgment rather than on actual sales data. Therefore, the report is somewhat subjective. However, it does point out the importance of carefully considering before remodeling.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide," Chronicle Books.

Winter Arts Festival

Around The Coyote
2005 Winter Arts Festival
Festival Dates: February 11th, 12th, and 13th

Chicago, IL -- Around the Coyote is giving artists, and art patrons, a chance to break from winter to enjoy some of Chicago artist¹s most entertaining work at the 6th Annual Around The Coyote Winter Arts Festival in Wicker Park over the second weekend in February.

The fun kicks-off on Thursday, February 10th, at 7 p.m. when ATC hosts the Opening Night Party, which will feature the Curator¹s Choice Exhibition & Silent Auction in the Flat Iron Arts Building¹s north entrance at 1939-1/2 W. North Avenue. Poet cin salach will perform her work and serve up some evocative poetry at this event. Party-goers can enjoy complimentary food, drink, and music while bidding on their favorite piece of art, and unlike in the past, the Curators' Choice show and silent auction will close at 11 p.m. the same evening. The Opening Night Party is a great way to meet the artists involved in the festival and talk to them about their work, as well as see the Curators' Choice picks of their favorite submissions to the festival

Visual art
Friday 6-10pm
Saturday 11-10pm
Sunday 11-6pm
Exhibitions and performances begin on Friday, February 11th and will run through Sunday, February 13th with more than 100 visual artists exhibiting a diverse collection of photography, paintings, sculpture and mixed-media works in the Flat Iron Arts Building at 1579 N. Milwaukee.

Theatre
ATC Winter Theatre Festival provides a venue to examine the unique collaboration between playwright and director. This festival features several short, raw plays--each of which has been born out of artistic partnerships between local playwrights and emerging directors.

Short Film & Video
ATC Short Film & Video will be held at RODAN, 1530 N. Milwaukee, on Friday and Sunday We’ll have some of our moviemakers at the screening both nights to field your comments and question. We’ll also be voting for the winter winner of the Audience Choice Award. We will show two sets each night, one nice and the other "naughty". Come and join us for either or both at Rodan.