About Matthew DeFede

Nutley Real Estate Agent

What Credit Score Do You Need To Buy A House?

What Credit Score Do You Need To Buy A House? | Simplifying The Market

There are many misconceptions about the credit score needed to buy a house. Recently, it was reported that 24% of renters believe they need a 780-800 credit score to be considered for a mortgage. The reality is they are misinformed!

Only 25% of the Americans have a FICO® Score between 740 and 800. Here is the breakdown according to Experian:

  • 16% Very Poor (300-579)
  • 18% Fair (580-669)
  • 21% Good (670-739)
  • 25% Very Good (740-799)
  • 20% Exceptional (800-850)

Randy Hopper, Senior Vice President of Mortgage Lending for Navy Federal Credit Union said,

Just because you have a low credit score doesn’t mean you can’t purchase a home. There are a lot of options out there for consumers with low FICO® scores,”

There are many programs available with low or no credit score requirement. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage. The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640. Veterans Affairs (VA) loans have no credit score requirement.

As you can see, none of them are above 700!

It is true that the average FICO® score for all closed loans in January was 726, but there are plenty of people taking advantage of the low credit score requirements. Here is the average FICO® Score of closed FHA Loans since April 2012 according to Ellie Mae:What Credit Score Do You Need To Buy A House? | Simplifying The MarketAs you can see, that number has been dropping for the last seven years. As a matter of fact, the average FHA Purchase FICO® Score reported in January 2019 was 675!

One of the challenges is that Americans are unsure about their credit score. They just assume that it is too low to qualify and do not double check. Credit.com confirmed that only 57% of individuals sought out their credit score at least once last year.

FICO® reported,

Since October 2009, the average year-over-year FICO® Score has steadily and consistently increased, from a low of 686 in 2009 to the latest high of 704 as of 2018.”

Here is the increase in the average US FICO® Score over the same period of time as the graph earlier.What Credit Score Do You Need To Buy A House? | Simplifying The Market

Bottom Line

At least 84% of Americans have a score that will allow them to buy a house. If you are unsure what your score is or would like to improve your score in order to become a homeowner, let’s get together to help you set a path to reach your dream!

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3 Good Reasons To Use A Local Nutley Real Estate Agent

Here are 3 Good Reasons You Should Use A Local Nutley Real Estate Agent, When Selling or Buying A Home in Nutley NJ

Local Nutley Real Estate Agent

  1. Local Market Knowledge –  The agent who lives in Nutley, works in Nutley and has a vested interest in Nutley will be the local knowledge broker and will know what is going on in a town, that agent will also have specific knowledge as to the history of an area and how the town works but will also know the best places to shop as well as the best places to eat etc. but most importantly will most likely know the trend of a towns real estate market and more.

 

  1. Proximity – Having good technology is great but if your agent cannot get there for another 2 hours or is tied up doing something else that can cost you a home, in today’s fast paced market everyone has a web site an app etc. but remember being there physically and on time plays a big part on whether or not you will sell or buy that home, many agents will push off appointments they have to travel a distance to get to.

 

  1. Inside Information – And the most important your Local Nutley Real Estate Agent will know all the latest gossip and town changes that will be going on, they will know if a new mall is going to be built where that home is you are thiking about buying or a business that is leaving a town that might impact your home value.

Want To Increase Your Family’s Wealth? Here’s How!

Want To Increase Your Family’s Wealth? Here’s How! | Simplifying The Market

Everyone should realize that unless you are living somewhere rent-free, you are paying a mortgage – either yours or your landlord’s. Buying your own home provides you with a form of ‘forced savings’ that allows you to use your monthly housing costs to increase your family’s wealth.

Every month that you pay your mortgage, you are paying off a portion of the debt that you took on to purchase your home. Therefore, you own a little bit more of your home every month in the form of home equityAs your home’s value increases, you also gain home equity.

Every quarter, Pulsenomics surveys a nationwide panel of over 100 economists, real estate experts, and investment and market strategists. They are asked to project how residential home prices will appreciate over the next five years for their Home Price Expectation Survey (HPES).

The latest data from their Q1 2019 Survey revealed that home prices are expected to round out the year 4.3% higher than they were in January. For the next 5 years, home values will appreciate by an average of 3.21% a year.

This is great news for homeowners!

For example, let’s assume a young couple purchased and closed on a $250,000 home in January of this year. Simply through their home appreciating in value, those homeowners can build their home equity by over $40,000 over the next five years.

Want To Increase Your Family’s Wealth? Here’s How! | Simplifying The Market

Let’s look at the potential equity gained over the same period of time at some higher price points:

Want To Increase Your Family’s Wealth? Here’s How! | Simplifying The Market

In many cases, home equity is a large portion of a family’s overall net worth.

Bottom Line

Whether it’s your first or your fifth, if your plan for this year includes buying a home, let’s get together to help you understand where prices are headed in our area.

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Don’t Let Your Luck Run Out! Buy A Home This Spring [INFOGRAPHIC]

Don’t Let Your Luck Run Out! Buy A Home This Spring [INFOGRAPHIC] | Simplifying The Market

Don’t Let Your Luck Run Out! Buy A Home This Spring [INFOGRAPHIC] | Simplifying The Market

Some Highlights:

  • Interest Rates for a 30-year fixed rate mortgage have dropped to 4.41% from near 5% in 2018.
  • Take advantage of more inventory coming to market in the spring to find your dream home!
  • Buying now will allow you to start earning equity today!

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Homeownership is a Cornerstone of the American Dream

Homeownership is a Cornerstone of the American Dream | Simplifying The Market

“The rumors of my death are greatly exaggerated.”

The famous quote attributed to Mark Twain can apply to homeownership in the United States today. During the housing bubble of the last decade, the homeownership rate soared to over sixty-nine percent. After the crash, that percentage continued to fall for the next ten years.

That led to speculation that homeownership was no longer seen as a major component of the American Dream. That belief became so widespread that the term “renters’ society” began to be used by some to define American consumers.

However, the latest report by the Census Bureau on homeownership shows that over the last two years, the percentage of homeowners has increased in each of the last eight quarters.

Homeownership is a Cornerstone of the American Dream | Simplifying The Market

Going forward…

It appears the homeownership rate will continue to increase.

The 2019 Aspiring Home Buyers Profile recently released by the National Association of Realtors revealed that 84% of non-owners want to own a home in the future. That percentage increased from 73% earlier last year.

Bottom Line

In the United States, the concept of homeownership as part of the American Dream is very much alive and well.

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7 Things To Avoid After Applying for a Mortgage!

7 Things To Avoid After Applying for a Mortgage! | Simplifying The Market

Congratulations! You’ve found a home to buy and have applied for a mortgage! You are undoubtedly excited about the opportunity to decorate your new home! But before you make any big purchases, move any money around, or make any big-time life changes, consult your loan officer. They will be able to tell you how your decision will impact your home loan.

Below is a list of 7 Things You Shouldn’t Do After Applying for a Mortgage! Some may seem obvious, but some may not!

1. Don’t change jobs or the way you are paid at your job! Your loan officer must be able to track the source and amount of your annual income. If possible, you’ll want to avoid changing from salary to commission or becoming self-employed during this time as well.

2. Don’t deposit cash into your bank accounts. Lenders need to source your money and cash is not really traceable. Before you deposit any amount of cash into your accounts, discuss the proper way to document your transactions with your loan officer.

3. Don’t make any large purchases like a new car or new furniture for your new home. New debt comes with it, including new monthly obligations. New obligations create new qualifications. People with new debt have higher debt to income ratios… higher ratios make for riskier loans… and sometimes qualified borrowers no longer qualify.

4. Don’t co-sign other loans for anyone. When you co-sign, you are obligated. As we mentioned, with that obligation comes higher ratios as well. Even if you swear you will not be the one making the payments, your lender will have to count the payment against you.

5. Don’t change bank accounts. Remember, lenders need to source and track assets. That task is significantly easier when there is consistency among your accounts. Before you even transfer money between accounts, talk to your loan officer.

6. Don’t apply for new credit. It doesn’t matter whether it’s a new credit card or a new car. When you have your credit report run by organizations in multiple financial channels (mortgage, credit card, auto, etc.), your FICO score will be affected. Lower credit scores can determine your interest rate and maybe even your eligibility for approval.

7. Don’t close any credit accounts. Many clients have erroneously believed that having less available credit makes them less risky and more likely to be approved. Wrong. A major component of your score is your length and depth of credit history (as opposed to just your payment history) and your total usage of credit as a percentage of available credit. Closing accounts has a negative impact on both those determinants of your score.

Bottom Line

Any blip in income, assets, or credit should be reviewed and executed in a way that ensures your home loan can still be approved. The best advice is to fully disclose and discuss your plans with your loan officer before you do anything financial in nature. They are there to guide you through the process.

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What’s Going On with Bidding Wars?

What’s Going On with Bidding Wars? | Simplifying The Market

In a strong seller’s market, like the one we have experienced over the past few years, bidding wars are common and expected. This makes sense! A seller’s market is defined as a market in which the inventory of homes for sale cannot satisfy the number of buyers who want to purchase a home.

According to the Cambridge English Dictionary, bidding wars occur when two or more parties repeatedly outbid each other as they compete to purchase something- in this case, a home.

In some areas of the country, first-time buyers have been met with fierce competition throughout their experience. Some have been out-bid multiple times before finally winning a bid on a home to call their own.

According to the latest Existing Home Sales Report from the National Association of Realtors (NAR), there is currently a 3.7-month supply of homes for sale.

With the current number of houses listed for sale and the level of demand from buyers, this means it would take 3.7 months for all the homes listed to sell if no additional listings came to market. Any supply number under a 6-month supply is considered a seller’s market. According to NAR, the housing market hasn’t had a 6-month supply of homes for sale since August 2012.

Good News for Buyers

A recent report shows that the percentage of houses sold including a bidding war before settling on a final price decreased from 53% in January of 2018 to 13% this year.

One reason for the decline is an influx of homes being listed for sale. Even though the month’s supply number is not increasing, the number of homes for sale is. The chart below shows the year-over-year change in inventory over the last 12 months.

What’s Going On with Bidding Wars? | Simplifying The Market

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As you can see, the number of homes for sale has started to build over the last eight months. Prior to this reversal, inventory levels had fallen for 36 consecutive months when compared to the year before.

Danielle Hale, realtor.com’s Chief Economist, gave some insight into why bidding wars are less common on a local level this year,

“[Last year] you might have been the only listing in your neighborhood, and you could put your home up at a certain list price and you would likely see multiple offers at or above that list price. That tide is turning this year.

It’s going to depend on what neighborhood you’re in, but we expect it to be more common this year that you won’t be the only listing.”

Inventory in the luxury and premium markets (the top 25% of listings in an area by price), is increasing at a greater rate than the starter home market. As the choices buyers have continued to increase, the likelihood of a bidding war will decrease.

Bottom Line

If you are debating listing your house for sale this year, you may not want to wait for additional competition as inventory continues to rise.

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5 Tips When Selling Your Home in Nutley NJ

Selling your Home in Nutley

The purpose of showing your home in Nutley is to hook a buyer. You want NYC buyers to come through your house and be impressed – so impressed in fact, that they’re ready to make an offer.

You’ll have one chance to make a first impression on the potential Nutley buyers and you want to make it count. Focusing on the outside is the first tip. Make sure that you don’t neglect the outside of your home.

Curb appeal can make or break the odds of someone even bothering to get out of the car to come in. If they pull up and see a home with a lawn that obviously needs edging and has an unkempt flower bed, they’re going to wonder what else hasn’t been cared for properly.

You want the outside of your Nutley home to be spotless. Clean the siding, the windows, and the doors. Make sure there are no dirt smudges, no cobwebs and that anything that needs painting has been spiffed up.

The second tip is to take yourself out of the house. That means that you want to take out all the personal stuff. Remove the family photos from the wall or tables. You want the home to look neutral so that the potential buyers can look at your house and picture it as themselves living there.

Everything should be as neutral as possible in terms of personal items. The third tip is to pare down all the extra clutter you see at first glance. If you look around, it’ll amaze you at how much stuff you’ve accumulated over the years.

Some of it might very well be important, but that doesn’t mean that your potential buyers looking to buy in Nutley should see it. When you have a lot of clutter, it shrinks the living space of the house.

It makes it look and feel cramped and smaller. Many homeowners in Nutley get something called “house blindness”. They’ve lived in the home for so long with the same clutter that they don’t even really see it anymore.

But a stranger will always notice. So clean out your house and make the space as big as possible. The fourth tip is that if you have a pet, no one who walks through your house should be able to notice it exists.

That means no cat litter box, no dog to jump on anyone, no food sitting around in a dish. Your home should not have any pet odors. Having a clean house that’s odor free is a big selling point in Nutley NJ.

You don’t want to lose a possible deal just because they can smell your pet’s presence or your pet makes a bad impression. The fifth tip is to stage your home. You can hire a professional local stager in Nutley or you can do it yourself.

Stage your living areas in a way that shows off your home. You can rent furniture to make your home furnishings look good if you don’t use a stager. Someone who knows how to stage a house knows how to play up the best features of your home and knows what to bring in or get rid of to make the entire house appeal to a buyer.

4 Reasons to Buy a Home in the Spring

4 Reasons to Buy a Home in the Spring | Simplifying The Market

Spring has sprung, and it’s a great time to buy a home! Here are four reasons to consider buying today instead of waiting.

1. Prices Will Continue to Rise

CoreLogic’s latest U.S. Home Price Insights reports that home prices have appreciated by 4.4% over the last 12 months. The same report predicts that prices will continue to increase at a rate of 4.6% over the next year.

Home values will continue to appreciate for years. Waiting no longer makes sense.

2. Mortgage Interest Rates Are Projected to Increase

Freddie Mac’s Primary Mortgage Market Survey shows that interest rates for a 30-year fixed rate mortgage came in at 4.41% last week. Most experts predict that rates will rise over the next 12 months. The Mortgage Bankers Association, Fannie Mae, Freddie Mac, and the National Association of Realtors are in unison, projecting rates will increase by this time next year.

An increase in rates will impact YOUR monthly mortgage payment. A year from now, your housing expense will increase if a mortgage is necessary to buy your next home.

3. Either Way, You Are Paying a Mortgage

Some renters have not yet purchased a home because they are uncomfortable taking on the obligation of a mortgage. Everyone should realize that unless you are living with your parents rent-free, you are paying a mortgageeither yours or your landlord’s.

As an owner, your mortgage payment is a form of ‘forced savings’ that allows you to have equity in your home that you can tap into later in life. As a renter, you guarantee your landlord is the person with that equity.

Are you ready to put your housing cost to work for you?

4. It’s Time to Move On with Your Life

The cost of a home is determined by two major components: the price of the home and the current mortgage rate. It appears that both are on the rise.

But what if they weren’t? Would you wait?

Examine the actual reason you are buying and decide if it is worth waiting. Whether you want to have a great place for your children to grow up, greater safety for your family, or you just want to have control over renovations, now could be the time to buy.

Bottom Line

If the right thing for you and your family is to purchase a home this year, buying sooner rather than later could lead to substantial savings.

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The Real Estate Business, Why You Should Think Twice.

The Real Estate BusinessAre you a New Agent or Are You Thinking About Getting A Real Estate License?

I see it every couple of years when the market gets hot, young eager new agents watch a tv show get excited about getting a real estate license and they go to the classes, start telling everyone they are into “Real Estate” and then 4 months later Boom! They are on to the next thing.

Why do you think the real estate industry has an 84% failure rate? BECAUSE IT IS NOT EASY!!!! THAT’S WHY!!!

Sure the barrier to getting your real estate license is rather easy, I know many people who just have a license waiting to buy their own home or just wanting to do it part time to make a little bit of money, and then there are the other that  want to build a business and a future and actually love the business, and I mean love it a majority of the time but, I hate the whole process.

The Real Estate transaction has a lot of moving parts to it, buyers, sellers, attorneys, cutthroat agents, honest people, dishonest people, flippers, attorneys and so on, throw in some massive emotion and bam! that is the real estate business, oh did I also mention that you have to earn a living and pay your bills at the same time? Yes, the most important part.

There are a lot of Gurus that are willing to take your money and tell you if you do this you will be successful, I am here to tell you it’s all bullshit, the only way you make money in this business if focusing on income generating opportunities, yes you got it working with buyers and sellers and closings deals, these days I am telling agents to focus on their “Brand” because there will be another shift and you are going to see all the part-time people leave the business and the real pros will have to pick up the slack and they will thrive.

No amount of money you throw at marketing and lead generation will fix the problem, now that does not mean you cannot be successful in this business you can, but it takes a lot of hard work and managing disappointment at every level but if you love what you are doing and you do good work you can make it.

If you have any questions about being a realtor please feel free to contact me at 862-228-0554.

 

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