Missed Mortgage Payments Hurt Credit Scores

Daily Real Estate News  |  April 25, 2011  |   Share
Missed Mortgage Payments Hurt Credit Scores
Missed mortgage payments, short sales, and foreclosures can all drastically bring down a credit score.

Lenders use credit scores to measure how well a person handles debt. Credit scores range from 300 to 850, with 650 and below considered poor credit. A mortgage makes up a big part of a person’s credit score and often is the most important part of a person’s credit profile.

And just missing a single mortgage payment by 30 days can ruin a credit score, say FICO and VantageScore, which have studied the impact mortgages can have on credit scores. For borrowers, that can be nearly as destructive as a foreclosure to a credit score, according to the companies.

On the other hand, loan modifications, which is when lenders approve new loan terms, have a “very, very minimal” impact to credit scores, possibly dropping the borrower’s score by 10 or 15 points, Sarah Davies, the senior vice president for analytics at VantageScore, told The New York Times.

A good credit score is important not just for financing home purchases, but employers increasingly check credit as well as landlords when seeking rentals. Also, poor credit scores can also mean higher costs on car loans and credit cards.

How a Credit Score Is Affected

FICO evaluated three various scenarios of mortgage holders — a borrower with a great credit score (780), a borrower with good credit (720), and a poor credit borrower (680) — in a study it conducted last month. Here’s the impact FICO found:

▪ 30 days late on a mortgage payment: The 780 credit score borrower has her credit score fall to 670-690. The 720 credit score borrower has his fall to 630-650. The 680 credit score borrower falls to 600-620.
▪ Short sale, deed in lieu of foreclosure, or settlement, assuming the balance has been wiped out: The 780 credit score borrower falls to 655-675; the 720 credit score falls to 605-625; and the 680 credit score drops to 610-630.
▪ Foreclosure, or short sale with a deficiency balance owed: The 780 credit score drops to 620-640; the 720 credit score falls to 570-590; and the 680 credit score decreases to 575-595.

Source: “Fallout From a Poor Credit Score,” The New York Times (April 24, 2011)

Zillow Goes Public, Files for $52 Million IPO

Daily Real Estate News  |  April 19, 2011  |   Share
Zillow Goes Public, Files for $52 Million IPO
You may soon be able to buy stock in Zillow. The Seattle-based real estate Web site filed on Monday preliminary documents for an initial public offering. The company hopes to raise about $51.75 million for its IPO.

Zillow has not yet disclosed how many shares it intends to sell or the price for each share.

Technology Crossover Ventures and PAR Investment Partners have already agreed to buy a total of $5.5 million of common stock from Zillow, CNNMoney.com reports.

Zillow, founded in 2004 and originally known for its popular “Zestimates” home value estimates on homes across the U.S., has seen its Web traffic quickly grow. In March, it boasted 19.4 million unique users from its Web site and mobile app, a more than 90 percent year-over-year increase in traffic. Its revenue has also increased significantly. In 2010, Zillow’s revenue increased by 74 percent to $30.5 million, according to the Securities and Exchange Commission filing.

5 Most Innovative Mobile Apps

Daily Real Estate News  |  April 18, 2011  |   Share
5 'Most Innovative' Mobile Apps
PC World recently released its top picks for most innovative apps for 2011 — mobile apps for tablets and smartphones that have the potential of making your life easier. Here are five free apps that made the list for iPhone or Android:

1. Fring: An upcoming version of this app will offer free video group calls with up to four people at once. (A beta is currently available.)
Platform: Apple’s iOS, Android
Price: Free

2. UpSoundDown: You can put your phone on speakerphone mode automatically by just laying your phone down on a table or turning the phone upside down like you’re using it as a microphone. When you pick the phone back up, you’ll be able to use the handset again.
Platform: Android
Price: Free

3. Zite: This app learns what you like to read and then scans your Facebook and Twitter feeds for news based on your reading habits. It then populates a virtual magazine with content that is tailored to your reading habits.
Platform: Apple iOS
Price: Free

4. Adobe Photoshop Express: You can manipulate photos using this app’s simple features on your iPhone or iPad and then store your photos on the Internet to access from anywhere. Coming soon: Photoshop for iPad, which works like a desktop version of the Photoshop software, which includes layers and effect features (price to be determined for iPad version).
Platform: Apple iOS
Price: Free

5. iSwifter: iPad lovers will appreciate this app, which allows you to watch Flash videos and view Web site animations.
Platform: Apple iOS
Price: Free

Source: “The Top 15 Innovative Mobile Apps in 2011,” InfoWorld (April 2011)

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Daily Real Estate News  |  April 18, 2011  |   Share
5 'Most Innovative' Mobile Apps
PC World recently released its top picks for most innovative apps for 2011 — mobile apps for tablets and smartphones that have the potential of making your life easier. Here are five free apps that made the list for iPhone or Android:

1. Fring: An upcoming version of this app will offer free video group calls with up to four people at once. (A beta is currently available.)
Platform: Apple’s iOS, Android
Price: Free

2. UpSoundDown: You can put your phone on speakerphone mode automatically by just laying your phone down on a table or turning the phone upside down like you’re using it as a microphone. When you pick the phone back up, you’ll be able to use the handset again.
Platform: Android
Price: Free

3. Zite: This app learns what you like to read and then scans your Facebook and Twitter feeds for news based on your reading habits. It then populates a virtual magazine with content that is tailored to your reading habits.
Platform: Apple iOS
Price: Free

4. Adobe Photoshop Express: You can manipulate photos using this app’s simple features on your iPhone or iPad and then store your photos on the Internet to access from anywhere. Coming soon: Photoshop for iPad, which works like a desktop version of the Photoshop software, which includes layers and effect features (price to be determined for iPad version).
Platform: Apple iOS
Price: Free

5. iSwifter: iPad lovers will appreciate this app, which allows you to watch Flash videos and view Web site animations.
Platform: Apple iOS
Price: Free

Source: “The Top 15 Innovative Mobile Apps in 2011,” InfoWorld (April 2011)

More resources:

Webinar: Are Tablets the Future of Computing for Real Estate?

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Avoid Sellers' Worst Mistakes

Daily Real Estate News  |  April 12, 2011  |   Share
Avoid Sellers' Worst Mistakes
In a buyer’s market, sellers have little room for error when putting their home on the market or they risk having their property linger. Sellers should take caution to avoid the following common traps, according to a recent article at MSNBC.com.

1. Overpricing the home. Home values have dropped considerably since its peak in 2006, but sellers still are often tempted to list a home based on what they paid for it. Eventually they realize their error and have to reduce their price, sometimes several times. In the past month, 23 percent of homes listed for sale on Zillow have reduced their price.

2. Relying too much on just comps. Size up your competition currently on the market, not just the homes that have already sold. Evaluate homes with a listing price similar to yours to see how well yours stacks up against the competitions and how you can differentiate.

3. Failing to take into account the home’s web appeal. Photos are key when marketing a home online. Be sure to include lots of high-resolution photos of the interior, including of the areas in a home that buyers most care about, such as kitchen, living spaces, and bathrooms, experts say.

4. Hovering during showings. Sellers certainly shouldn’t be home for showings, but as a seller’s agent, either should you. Lurking sellers or seller agents may make buyers nervous. Other real estate agents often want privacy with their buyers so they can gather true feedback about the house.

Source: “Six Common Mistakes That Home Sellers Make,” MSNBC.com (April 11, 2011)


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4 mistakes to avoid when buying a foreclosure

ORLANDO, Fla. – April 8, 2011 – Foreclosures continue to flood real estate markets across the country, and buyers are looking to cash in on what they view as some of the best real estate deals. But experts say that while some foreclosures are a great purchase, buyers need to be cautious before jumping in. They must make sure they’re really getting a bargain.

Dan Steward, president of Pillar to Post Professional Home Inspections, advises buyers considering a foreclosure to avoid the following top mistakes:

1. Don’t judge a house by looks alone. A $2 million mansion may look fabulous but have mold hiding beneath the walls or need numerous, costly repairs. A fixer upper, on the other hand, may look rundown but have excellent bones and be repaired at a reasonable cost. A home inspection prior to purchasing a property can help buyers determine if they might be getting in over their head, Steward says. He cautions buyers to not just rely on previous inspections, however, since vacant homes can deteriorate rapidly.

2. Don’t focus on price alone. Buyers may focus on the ultra-low price so much that they forget to factor in other qualities, such as the home’s school district, view, location and local crime rate. Steward cautions buyers not to assume that a previous owner’s financial problems cause all foreclosures.

3. Don’t be tempted to “flip.” Purchasing a home at bargain price, updating it and trying to sell it for a lot more may seem tempting, but Steward warns buyers to be cautious. Unless the buyers are pros at house flipping, they’ll likely run into several novice mistakes in trying to make fast money on flipping a foreclosure. Steward recommends buyers consult a real estate professional, home inspector and contractors before considering a flip.

4. Don’t go over budget. Foreclosures often require some fixes so buyers need to make sure they have the money to afford needed repairs. Steward recommends that buyers have at least half of the money in cash for needed repairs. He says that buyers will want to avoid taking more loans than needed, particularly private loans, because the interest on them will slowly chip away at their initial foreclosure bargain.

Source: “What to Watch Out for When Buying a Foreclosure: Help Your Clients Know Which to Buy ... and Which to Walk By,” RISMedia (April 7, 2011)

© Copyright 2011 INFORMATION, INC. Bethesda, MD (301) 215-4688

Related Topics: Foreclosures, Real estate investing

Foreclosure money to help 40,000 Floridians

TALLAHASSEE, Fla. – April 6, 2011 – About 40,000 struggling Florida homeowners may soon get federal help making mortgage payments in an effort to help stave off foreclosure.

The Florida Housing Finance Corp. announced Tuesday it is expanding the federal Hardest Hit Fund statewide.

The $1 billion fund will help eligible homeowners make mortgage payments for up to 6 months. Homeowners must be unemployed or their housing cost must be 31 percent or more than their income. Delinquent homeowners who are now able to start making payments could also get help getting current on their loans.

First announced on Feb. 19, 2010, by the U.S. Department of the Treasury, the fund provides federal money to states hardest hit by the aftermath of the housing bust. To date, $7.6 billion has been allocated to 18 states and the District of Columbia.

In October, a pilot Florida program began in Lee County. The expanded statewide program will begin accepting website applications at 9 a.m. April 18.

Cecka Rose Green, spokeswoman for the housing group, said she recommends homeowners act quickly.

“A billion dollars sounds like a lot of money,” she said. “But there are hundreds of thousands of people who probably need help. The money will run out.”

Participants must be owners of single-family homes who are no more than 180 days delinquent on their mortgage payments.

The program will be slightly different than the pilot program in Lee County. Homeowners will now have to contribute at least $70 per month or 25 percent of their monthly income. The pilot program paid 100 percent of homeowners’ mortgage payments. And the assistance will only last up to six months now, down from 18 months.

Previously, homeowners were eligible for up to $35,000. The assistance amount is much lower now, though.

There will be two programs, one for the unemployed and one to help homeowners who’ve found work get caught up on payments.

The Unemployment Mortgage Assistance Program will provide up to $12,000 to pay monthly mortgage and escrowed mortgage-related expenses for up to 6 months, or until the homeowner can resume making mortgage payments.

The Mortgage Loan Reinstatement Payment Program will provide up to $6,000 to bring the homeowner’s mortgage current, if the homeowner is able to make mortgage payments.

Homeowners can apply for assistance through the Florida Finance Corporation website.

Copyright © 2011 Tampa Tribune, Fla. Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

Help a Property Appeal to More Buyers

Daily Real Estate News  |  April 5, 2011  |   Share
Help a Property Appeal to More Buyers
When real estate agent Kathryn Madison listed a vintage home that looks like a traditional ranch house on the outside but meets all the criteria of Midcentury Modern on the inside, she knew some buyers would be put off by the fact that many of the fixtures were the originals from when the home was built in 1948.

She says there is a museum quality to the home; and while some buyers are able to appreciate it, they also cannot bring themselves to remodel it. However, Madison wanted to cater to all three buyer types -- those who would love the home as is, those who would be respectful to the era in their improvements, and those who would alter the home to meet their needs.

She took hundreds of photos of the home and posted them online, many of the photos of the property without furnishings for a virtual staging tool that would enable buyers to see how more contemporary features could spruce up the home.

Such a move helped Madison sell it within a matter of months.

22% Have Trouble Paying off their Mortgage

22% have difficulty paying off mortgage
NEW YORK – April 4, 2011 – A new Harris Poll finds that 22 percent of people with mortgages are having difficulty meeting their mortgage payments, including 7 percent who have “a great deal of difficulty.” Furthermore, 21 percent of those with mortgages think their homes are “underwater” – worth less than the amounts that they owe.

However the numbers are somewhat lower than a year ago. The percent of people who have difficulty paying off their mortgage has declined from 29 percent to 22 percent, and the percent having a great deal of difficulty is down from 11 percent to 7 percent. At this time in 2010, 24 percent of those with mortgages thought they were underwater – three points higher than today.

The Harris Poll interviewed 3,171 adults online between March 7 and 14, 2011.

Some main findings include:

• Two thirds (66 percent) of all adults have mortgages on their homes, slightly lower than last year’s 69 percent.

• While most homeowners with mortgages (73 percent) have little or no difficulty making their mortgage payments, the 22 percent who have difficulty represent about 32 million people. The 7 percent having a great deal of difficulty represents more than 11 million people.

• Those who believe their homes are worth less than the money they owe on their mortgages (21 percent of all those with mortgages) includes 8 percent who say their homes are worth “a lot less.” However these numbers are also somewhat lower than they were a year ago (24 percent and 11 percent).

• Most adults (62 percent), whether or not they are homeowners with mortgages, are at least somewhat concerned that their family’s income will not be enough to cover all their costs and expenses this year. This number is also slightly lower than it was last year (65 percent). Unsurprisingly, the higher the family income, the lower the level of concern. But among the lowest group with household incomes of less than $35,000, fully 75 percent are concerned and 36 percent are very concerned.

The findings are consistent with other Harris Poll economic data that show a very modest, but still painfully slow, recovery from the recession. Harris also notes that one reason numbers may have dropped is that some people in difficulty last year have since lost their homes and no longer have mortgages.

© 2011 Florida Realtors®

Related Topics: Economy, Research