Archive for April, 2013

VANTAGESCORE

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FICO logo

Factors contributing to someone's credit score...

Factors contributing to someone’s credit score, for Credit score (United States). (Photo credit: Wikipedia)

There’s a lot of talk about the new Credit Scoring model called VantageScore. Proponents say that it will boost your score and help people with no credit history build a strong credit score.

Here’s the bottom line: don’t waste a single memory cell on it.

Now… the back-story for those those want it:

Until the majority of lenders are using a new scoring model, the FICO score will remain the main credit scoring system out there.

As of right now, major lenders like Fannie Mae and Freddie Mac are not using VantageScore. In fact, I have never heard of a single lender who does use it.

When deciding whether to extend a loan to you, your potential creditors want to know how risky you are. Currently, the model they use to determine your creditworthiness is FICO, and almost exclusively FICO.

So if you want to qualify for a loan, or if you want to qualify for better terms on your existing loans/credit cards, you must follow the FICO model and do things which will improve your FICO score.

Ignore everything else because it will not make an ounce of difference if your lender is not looking at it. All it will do is paint an unrealistic picture of what loan terms you can expect.

I want you to focus on reality. And the reality is this: Almost every lender out there relies on FICO and only FICO when determining a credit score.

NOTE 1: When referring to FICO I mean the credit scoring model used by the 3 major Credit Bureaus, EQIFAX, TRANSUNION, and EXPERIAN.

NOTE 2: Be very careful of anyone claiming to be able to improve your Credit Score. I am aware of many scams but only 3 legitimate services that will actually get it done.

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THE NEXT BUBBLE IS COMING

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Global Real Estate Bubble

Global Real Estate Bubble (Photo credit: Ryan Harvey)

Zillow.com launches!

Zillow.com launches! (Photo credit: Billiard)

Housing forecasters remain optimistic that property values will continue to increase over the next several years and exceed pre-bubble rates by 2017, according to the first-quarter Zillow home price expectations survey.
Based on predictions from 118 economists, real estate experts, and investment and market strategists, these respondents believe home prices will end 2013 up on average 4.2% and rise cumulatively by 22% over the next five years.
Similar to this year, survey respondents anticipate home values will escalate another 4.2% in 2014 before moderating somewhat to annual appreciation rates between 3.6% and 3.8% over the next three years. With an annual 4.1% prediction in housing unit prices expected between 2013 and 2017, this represents the first time the average annual growth rate has surpassed pre-housing bubble (1987-1999) since the Seattle-based analytic firm began its survey three years ago.
The most optimistic of panelists predicted a 6.1% increase in home values this year, while pessimistic economists projected for an average jump of 3%. Furthermore, through 2017, the outlook for cumulative home price change projections ranged from 34.2% among the most positive quartile respondents to 11.7% for the most discouraged housing forecasters.

NOTE: These predictions cannot be used to discuss any specific area.They are for the whole of the Country. In my area, Silicon Valley, these folks are about 2 years behind the times. In other parts of California, mostly inland areas, are only now seeing early signs of recovery.

 

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SHORT SALES-THE END??

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Silicon Valley

Silicon Valley (Photo credit: Wikipedia)

For about 2 years now my market (Silicon Valley) has seen a steady increase in sales prices. This is finally causing changes in Banks approach to Short Sales.

I just had my 1st experience where a Bank (BofA) cancelled a previously approved short sale when they realized that the current value of the property is now higher than the amount of the loan.

They have now re-started the Foreclosure process where they can expect to get all of their money back and not have to take a loss after all.

This also gives the owner/borrower the opportunity to minimize the Credit hit by selling the property before the foreclosure completes, and maybe even get a little money back themselves.

I firmly believe that the age of the Short Sale Specialist is coming to it’s end and all those useless seminars will disappear with them.

However, there

Bank

Bank (Photo credit: 401(K) 2013)

for the home owner who is falling behind  if the Banks begin to think it might be smarter to foreclose and lose a lot less than previously, rather than expend time and effort trying to keep the afloat.

The next 6 month will be very interesting.

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