Deciding to Buy

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August 2021 Sarasota Manatee Real Estate Market conditions

May 31, 2021

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Purchasing a property is most likely the biggest financial decision you will ever make. Whether this is your first purchase or you are an experienced buyer, this decision must be made carefully

Why Do You Want To Buy?

Are you tired of paying rent? Have you decided to pay your own mortgage and not your landlord’s? Have you outgrown your current home? Are you looking for an investment portfolio? Are you looking for a rental property? Would you like a larger yard? Would you rather live in a different area? Do you want to shorten your commute? Having a clear sense of your reasons for buying will help you choose the right property.

Has Your Income Grown?

Property ownership is an excellent investment; whether you are looking for your dream home, a rental property, or to expand your investment portfolio. Owning real estate is one of the least risky ways to build equity or to obtain a greater return on your initial investment.

CREDIT SCORE INFO

CREDIT SCORE:

What is it and why is it important?

A 3 digit number from 300-850. The higher the number the better the credit score.

It is one factor used by Lenders to make lending decisions.

The higher credit score generally predicts better payment behavior.

A less than Excellent credit score takes time to fix – but it is fixable with good habits.

Consumer credit companies from all over the US keep data on consumers. This data is compiled into reports by 3 different agencies: Experian using Experian Fair Risk Model, Equifax using Beacon, and TransUnion using Empirica. These credit scores can differ from one another, and be different from a credit score given to a consumer from a mobile app.

Each Agency uses a different method for tabulating the data. Most lenders use all 3 agencies’ data on the borrower when making a lending decision. FICO – Fair Isaac Company – compiles all of these scores.

There are five parts to a FICO credit score:

1. Payment History (about 35% of a FICO score)
2. Amount owed (about 30% of a FICO score)
3. Length of credit history (about 15% of a FICO score) more inquiries of credit cards/scores with a short credit history can indicate greater risk of payment
4. New or recent credit (about 10% of a FICO score) Many inquiries can indicate greater risk.
5. Other factors (about 10% of a FICO score)

Inquiries or credit applications show up on a credit report. Too many inquiries by creditors may indicate that a consumer is overtaxing his or her financial resources. Inquiries stay on credit reports for 24 months.

For most, one additional credit inquiry will take less than five points off their FICO score.

To account for rate shopping when considering a large purchase on credit, like a car, the score counts multiple inquiries in any 14-day period as just one inquiry

The following is from Teresa Fink at American Dream Home Mortgage:

There are certain credit inquiries that do not affect the score. These are called “soft inquiries”. These types of inquiries may be a person that
checks their own credit, employers checking credit of prospective employees, or insurance agents that check credit in order to quote rates,
etc.

A mortgage-related pull for a pre-approval is NOT considered a soft pull, however, if there are mortgage-related inquiries pulled within a 3-week time frame of one another, these pulls are supposed to count as 1 and not individually affect the score negatively.

A consumer should check their credit score annually and especially before a big purchase.

• Equifax: 800.685.1111
  , www.equifax.com, FICO score name: BEACON
• Experian (formerly TRW): 888.397.3742, /www.experian.com, FICO score name: Experian/Fair Isaac Risk Model
• TransUnion: 800.888.4213, www.transunion.com, FICO score name: EMPIRICA

Consumers can also go to www.annualcreditreport.com to obtain a free copy of their credit reports from each of the three bureaus.

The Consumer Federation of America (http://consumerfed.org/), FICO (http://www.fico.com), and Freddie Mac (http://www.freddiemac.com) offer free online resources regarding consumer credit, credit reports, and credit scores.

Additional Resources:

https://www.credit.com/credit-reports/what-is-a-hard-inquiry/
https://www.credit.com/credit-repair/how-to-improve-credit-score/

REPUTABLE LENDERS WITH WHOM I HAVE A RELATIONSHIP

Please note, that I cannot guarantee that you will have a positive experience with these professionals. Please do your own vetting before committing to their services. Feel free to share your experience with me.

REAL ESTATE ATTORNEYS AND TITLE COMPANIES WITH WHOM I HAVE WORKED

Please note, that I cannot guarantee that you will have a positive experience with these professionals.
Please do your own vetting before committing to their services.
Feel free to share your experience with me.