The RE/MAX Associates Louisville Real Estate Blog

Two Types of Construction Loans

Building your own home can be a nightmare if you don’t know what you’re doing. Know and understand what you’re getting yourself into before you apply.

Types of construction loans

The two types of construction loans are:

Construction-to permanent – This type of loan is where the lender advances the money to pay for the construction, and once the home is built, the lender then rolls the loan balance into the mortgage. This is the most common loan option.

Stand-alone construction – The lender often advances the money to build the home. Once the home is complete you get a mortgage to pay your debt of construction costs.

The nice thing about a construction-to-permanent loan is there is only one closing. The interest is paid on the balance of the loan during construction, and it converts into the mortgage once the home is built. Your maximum mortgage rate is set at the beginning when the papers are signed.

The stand-alone-construction loan is worth it because it allows for a smaller down payment. One of the negatives of this loan is your interest rate could rise, simply because you aren’t locking in the rate at the beginning. To go along with that, you could pay for two closings if your circumstances change during the building; you end up paying one for the construction loan, and then again for the mortgage.

Difficult to qualify

Qualifying for the construction-to-permanent is a difficult loan to acquire. It’s different than a typical mortgage because the lender doesn’t hold the house as collateral to back the loan during the construction. You have to at least put down 20% of the loan amount, while rarely allowing you to go down to 10%. The lender will size you up...

How to NOT Break Your Lease

No matter what your reason may be, breaking a lease is always a grave and nerve-wracking decision. Before you throw your money for last month’s rent, you should explore every option with the property owner.

Start with a conversation with them

If you are displeased with your rental, or you must leave for personal reasons, don’t assume your hands are tied. Call your landlord, and set up a time to meet with them. If you prefer to do it online, as millennials do, get over it and find your courage and go talk to them in person. Find your words carefully and let them know why you must change your living situation.

Before you meet with your landlord, take a good hard look at your situation and see if you absolutely have to break your lease.

If your issues concern a troublesome neighbor, or a roommate is leaving and rent is too expensive, your landlord will probably work with you to keep you there and settle your concerns. Your landlord wants to keep you (assuming you are a good tenant) so they will do what they can to keep you in their property.

You have options

After you have told your landlord your problems and moving is the best course of action, it’s time to consider your options. Your options will be dependent on the size of the management company, as well as the terms of the lease.

One option is to simply up-size or down-size into a different unit in the complex. This can be a great option if you need more space, or if your roommate is leaving.

You can also check to see if they have a sister company, and see if they have any units available. Management companies often times have their sister-companies in other states, so you could end up transferring.

Don’t be alarmed if they still come with fees to transfer units, or complexes. It should all be written in your lease.

...

3 Ways to Protect Your Escrow Deposit

So you have finally decided to pull the trigger and make an offer on a home, the seller chose to go with your offer over everyone else’s, and signing the contract is days away. Now you have to show you are serious about it by putting a stack of money down.

The amount of money you put down is ultimately up to you, but some states have requirements, varying anywhere from 3 to 10 percent. This is a good-faith act signaling to the seller you are committed to following through on the deal. Once the money leaves your hands (or bank account) it can’t be touched without written consent from both the seller and buyer. The close of escrow, the earnest money deposit is applied to the balance of the down payment.

Your deposit is obviously negotiable, but if you try and go short, it may turn off the seller quickly. A lot can happen from the time you put down your deposit and close escrow, so here are a few ways to protect your deposit.

Know the property

Every home gets an inspection before it’s sold, and it’s your duty to make sure you protect yourself from buying a black hole home. Ask your agent to insert a contingency to make sure you are protected from these types of homes.

Older homes get special attention to roofs, foundations, and everything considered “major”. Specialized inspectors are an option if you so choose to go that route. They come in the form of HVAC inspectors, termite inspectors, pool inspectors, structural engineers, etc.

Small condos even warrant having expert inspectors from time to time.

If problems arise, you need to decide if it is worth it to you or not. How bad do you want this house? Inspection contingencies sometimes are as broad as the ocean and allow for buyers to sail away with their deposit. Most of these are known as “cold feet” contingencies.

Get...

2018: Surge of Home Buyers!

Being a rebound isn’t the best thing to be when dating someone, but it’s never a bad thing when put into the real estate context.

There are plenty of people on the rebound that mortgage officers and realtor partners should be fancying.

Online information by RealtyTrac estimates that seven million people lost their homes across the country during the recession. Considering their circumstances and remembering that it takes several years to repair credit history and be eligible for a loan again. The home buying pool is about to get a bit more crowded now that enough time has passed.

People have come back from the dead and ready to buy homes again, and the peak is supposed to be in 2018 when a giant wave of 1.5 million people will be eligible for loans. Loan officers and realtors will be working overtime with this many new people in the market.

This influx of buyers will keep MLO’s and agents on their toes, so here are a few things for them to remember.

Reaching out to renters

The amount of inventory available for first time home buyers will be quite minimal. They simply won’t be able to afford bigger homes. Increased competition among home buyers has created bidding wars and drawn out the time it takes to close a deal with so many options for the seller to consider. Adding a giant number of people to the equation could intensify this already gritty process.  So the professionals need to make a plan, implement it the best way possible, and actually hold their feet to the fire.

Hailing homeowners

Taking a close look at equity position means they will have to contact current home owners and past clients. They should take a look at area appreciation and goals for the next decade. Reach out to the homeowners should spark them to start buying more real estate, so they should be ready...

What is Dual Agency

Homebuyers and home sellers are two different sides of a home transaction. Should they have their own agent representing them? The norm says yes, but it isn’t always the case, so it depends.

The old adage “you can’t have your cake and eat it too” seems like the right thing to say here, but whoever said that never tried eating a little now and saving some for later. We sometimes have multiple options and have a difficult time choosing between two good ones. In real estate, dual agency breaks the cake rule. It may just happen that your agent is also the listing agent of the home you want to buy. If this is the case, you don’t need to find a new agent; you can keep your agent and get the house too!

More often than not in real estate each party has their own agent representing them. If it’s a dual agency case the agent gets both sides of the deal and keeps the entire commission. It also happens when agents from the same brokerage represent each party. There are surely pros and cons of dual agency, just like any scenario that is too good to be true.

Pro: Fast communication

If an agent represents both parties, they don’t have to wait to hear back from the other party every time communication needs to happen. Streamlined communication makes for a faster transaction because the agent is in control of both sides, and should know what each party is looking for. Motivated dual agents won’t be missing deadlines, or fail to perform their duties if they are looking at the entire commission check.

Con: No advice

This situation can often be a problem, conflict-of-interest. IF the seller wants the highest amount they can get, while the buyer wants the lowest amount they can spend, the agent cannot take sides, or give their advice. This situation is often like one lawyer defending both husband and...

How Fast Will Your Home Stay on the Market

Remax has reported that on average, a home is currently selling three times faster than it did three years ago.

Remax National Housing Report, in the month of June looked at 53 metropolitan cities and saw that a home’s average number of days on the market was four days shorter in May of 2016 and June 2016. For the record, the new average amount of time a home spends on the market is 54 days. June was the 39th straight month with a days-on-market average of 80 days or less.

Cities with the least amount of inventory are Denver, Seattle, and San Francisco, and they averaged all in the low 20’s days on the market. Augusta, Maine, and Des Moines, Iowa had the most time on the market. Des Moines was rough 103 days, while Augusta was 143!

Markets across the country are still slowly rebounding from the great collapse in 2008. Sales are on the incline every year. Home prices are being moderated so they are affordable again, and no one is really being priced out of the market. There are a few inventory problems, but overall the entirety of the market is recovering quite well.

Summer of 2016 is one of the most anticipated seasons as home sales and prices are rising. Market demand moved June sales to 9.4 percent over sales in May, and the country’s median sale price in June was $299,900. This time last year, prices were 2.2 percent lower than they are now!

Inventory shrank a little as June home sales fell 15.6 percent.

The amount of time it will take for your home to sell is mostly dependent on your market. Having a good realtor helps as well. If your home is in good shape, you have a hard working, well connected realtor, and are asking a reasonable amount for your home you shouldn’t be on the market long at all. 

...

Homeowner's versus Pokémon Go

Pokémon Go has taken the country by storm, and not everyone is as equally enthused. Homeowners aren't so fond of it as it's causing some people to wander on their private property. Police have gone as far as issuing warnings to Pokémon Go players to stay off private and public places where they don't have access to go. 

The New York Police Department has issued warnings not only to stay off private property, but to not play while driving a car or riding a bike.

Police reports have been a little stranger lately; one report contained information saying a man's house was a gym where Pokémon can be trained. The homeowner said people started parking in front of his house and karge clusters of people began waving cell phones in his yard.

Not all experiences are so friendly. There have been reports of people tresspassing at 1 AM. At that point it could be construed as criminal. The defense of, "I was catching Pokémon" isn't going to hold up well in court. SO be sure if you are a Pokémon catcher, you do it where you have permission.  

...

Getting Your Home Ready for Appraisal

Deciding to put your home on the market and getting your appraisal next can be a scary experience. All your do-it-yourself projects will be judged for their weight in dollars, and it can determine thousands of dollars lost or made. 

But it doesn't have to be this way; with the proper tools and know-how, this experience can spring you forward into your next home. Gaining a little extra cash by making the proper improvements and repairs will be worth it in the end. Plus its a true test of your man skills

Here's what you want to do

Just like any other big life decision, you do your homework to better serve yourself. Find out the appraiser's market knowledge of the area. Having a local, well-rounded, veteran, state certified appraiser is who you want. They're good at what they do, they've been around the area long enough to see changes, and have a confident base of the market. 

Check the maintenance 

Your maintenance costs are your smaller costs. Anything like a chipped shingle, snagged rug, or broken mailbox; fix it before the appraiser comes. Any little defect could chip away at your home's value. 

Keep a list of updates/renovations done to the home, and keep the receipts that went with it. This is a sure way to keep track of what you spent on the upgrades, so you can figure out how much you've put in against what you expect to get back.

Maximize your curb appeal

An inspection is puting your home to the test, so it has to be the nicest one on the block. 

Landscaping is the first thing anyone sees when walking up to the house. it's the first impression, and it's the lasting impression....

As Borrowers Underestimate Equity, Their Confidence Turns to Confusion

Fannie Mae has been doing her research and has found as the prices of real estate continue to rise, borowers aren't realizing how much equity they actually have. Fannie Mae has reported that the uninformed homeowners are less likely to refinance mortgages, apply for home equity loans, or even buy new homes.

Since home values have risen since 2012, just as reductions in prices submerged some homeowners underwater, the rising home values would bring underwater homes afloat on top of raising a lot of home equity. A lot of homeowners are unware of this, seeing they now have the favor.

Every month Fannie Mae conducts new interviews with homeowners about where they stand on renting, buying, planning to buy and sell. 

What they have found during these interivews is suprising. The number of homeowners who believed they were underwater hasn't changed much, but the fact that home prices are rising has led to homes floating again without homeowners even knowing it. 

Fannie Mae asked homeowners to compare their total mortgage debt to the value of their homes in 2014, 23% of homeowners thought they were underwater. The next year in 2015 showed that the belief of being underwater bumped to 24%. In 2015, the true number of underwater homes was actually 7%!

The whole idea is to not misinform homeowners and lead them to take on crippling debt, but to inform them enough to make wise, and sound financial decisions. If you can remove the gap between perceived and actual home equity, the confidence bar would skyrocket. In turn, this would lead to a stronger market.

...

New Mortgage Programs and Their Impact

America’s top home lending banks have made a ton of headlines lately as they have been dealing with non-Federal Housing Administration (FHA) low-down payment programs. The banks are JPMorgan Chase, Quicken Loans, Bank of America, and Wells Fargo. What are these programs? And do they change the game of credit availability for the next while?

Each bank has their own version of the same thing. Wells Fargo’s your First Mortgage, Bank of America’s Affordable Loan Solution, JPMorgan Chase’s Standard Agent 97%, and Quicken’s 1 percent down payment plans are essentially the same plan, just with minor variations of company policy. These are appealing to first time home buyers and low to moderate income borrowers who may not have enough for a down payment on a home, or have less than average credit scores. Each bank also has their own credit score minimum: Wells Fargo – 620, Bank of America – 660, Chase and Quicken – 680.

Borrower friendly features

The cool thing about these programs is they are friendly to the borrower. They come with features that allow the combination of down payments with gifts and grants, homebuyer counseling, consideration of nontraditional forms of credit, and no PMI under Bank of America’s program. Bank of America and Wells Fargo flirted with selling their loans to Fannie Mae and Freddie Mac, respectively. Self-help groups like Self Help Credit Union, which is a nonprofit, offers help for first-loss risk coverage in lieu of PMI, which saves the borrower a ton of cash. Quicken offers its clients 2 percent grants and then sells the loans to Fannie and Freddie under its Home Possible advantage program, which does require PMI. On the other hand Chase will sell to Fannie and Freddie, but it is unknown of they require PMI.

Not identical, but similar

The two most popular programs...

What's a Loan Modification? How Do I Get One?

Ever heard of a loan modification? It’s basically a lifeline for a homeowner who is at the end of their rope. Some people fall on hard times and have severe difficulty paying their mortgage. A loan modification gives them an alternative option other than foreclosing or selling their home. If they opt for a loan modification they are basically agreeing with the lender to change the terms of the loan.

There are several ways to change a loan. The lender could lower the interest rate, extend the life of the loan, or allow the borrower to skip a couple payments until they have landed the new job they’ve been after, but will add the skipped payments to the principal to pay down the road. This is all of course, circumstantial for the borrower, but the end goal is mostly the same: to financially relive the borrower whose mortgage payments are stressed.

You might be asking why lenders would agree to take less money. Pretty much the banks look at it like they’re keeping their business rather than losing it. Yes loan modifications require specific qualifications too, so don’t be surprised if not everyone gets one.

How to get a modification

If you are considering a loan modification, the best thing to do first is to decide if you absolutely need one or not. If you become desperate to pay your mortgage, chances are you need one.

In seeking a loan modification, you must apply through your current mortgage lender. You will be asked to fill out a Request for Mortgage Assistance form. You will need the following documents:

  • Your monthly mortgage statement
  • Two recent bank statements
  • A letter describing your current hardship and their circumstances
  • A utility bill with your name and address
  • Information about any other mortgages on your home
  • Two most recent federal tax returns
  • Documentation of any benefits you receive (disability,...

What Sellers Do to Drive Agents Crazy

Agents’ strategy is to get close to their clients, not just physically, but mentally and emotionally. The more they know about them, the better. Sellers are often in vulnerable situations when putting their house on the market, and it may stay that way for an extended period of time. During this time, bonds can form, or feelings can grow sour. The lines between business and personal space can become blurry, which can lead to the seller acting out in ways that drives the agent nuts.

Here are five ways in which sellers can get under their agent’s skin, and kill their chances for a smooth sale during their relationship.

Not keeping the home clean

When a home is on the market it needs to be in pristine condition at all times. Keeping it clean and tidy is part of the process that must be done continuously. Keeping furniture and counter spaces clean and organized is what this boils down to.

Before you put your home on the market, pack up all your belongings that you won’t need until you move into your new home. Make a space in a hidden part of the house for the typical day-to-day items that you will need. Doing this makes your agents not have to worry about cleaning your mess, and goes a long way with potential buyers.

Staying around during an open house

Agents rarely want their sellers lingering around during an open house, and the reason is that your presence can alienate your customers by making them feel uncomfortable without you even knowing it. Even if you are friendly and hospitable, this is still not appreciated.

Potential buyers want to walk through the house as if it was theirs to get the full experience. They will be opening every door they can, and poking around cabinets and making comments to their partners or kids that they would probably not make if you were standing in the room.

Your lingering self...

I Bought a Condo

I bought my own condo earlier this year, and some people (mostly my own age – millennial) think I am crazy. They have the idea that buying a home is what you do once you are ready to settle down. They would rather pay rent than own something, but the way I look at it, rent is money you will never see again. At least your mortgage comes back to you once you sell what is yours.

This is making the most of my money, by investing in a property and not wasting thousands of dollars by giving it to someone else.

Yes buying a home can be scary because the numbers are so big, but think of it as money sticking to the side walls of your house. It’s not really leaving, well a little of it is because it is interest for your loan, but you will reclaim most of it when you go to sell.

I never thought I would have the purchasing power in my 20’s to buy a property. Through a lot of hard work and sacrifice I managed to save enough for a hefty down payment. Now, to get a loan was the problem. There are several types of loans you can get. Traditional, government backed, secured, open-ended etc. I was lucky enough to get a private loan, meaning I didn’t have to deal with the banks and contribute to making them richer.

Depending on which type of loan you get determines how long you will (want to) stay in your new home. Some loans will have you pay an absorbent mount of interest, while others will have you pay little interest and more principle. Your best loan is the one that pays little interest, and more principle.

My condo was a fixer-upper from the start, and I knew it would require a lot of work. Having a roommate there will help with the cost of it all, but it also comes at a price of having less space.

Lessons learned

MY advice to you is to get yourself a quality, dependable real estate agent. You don’t want to go through the process feeling alone. Having a good agent makes things...

The Most Unaffordable Places to Live in the U.S.

Believe it or not, the most unaffordable places to live in the U.S. are not San Francisco or Manhattan; it’s actually Brooklyn.

Someone who ears the average salary in Brooklyn simply cannot afford the average home there. If they spent their complete and entire salary (with a little extra) on housing they still would fall short on the scale of affordability.

A real estate firm known as RealtyTrac, took a survey last week of 417 of the most populated cities across the country, and combined the average wage data from the Bureau of Labor Statistics. The second and third place cities go to Marin County, California, and Santa Cruz California. Living in both of those places requires the complete salary devoted to their median home, and you still can’t technically afford to live there.

A lot of the times people are priced out of cities like San Francisco,  Manhattan, and San Jose, so they choose to move to Brooklyn, Marin, etc. which is making the prices of homes there sky rocket. While people continue to move into these emerging cities, wages aren’t rising nearly as fast, creating the unaffordability problem. Keep in mind that home prices are still more expensive in cities like San Francisco, Manhattan, but so are the wages.

About one in five markets are unaffordable, which means that a median priced home was less affordable in those cities than the historically normal level for that city as far back as 2005.

Across the country the average person owning the average home would need to spend about 35 percent of their income to afford the home. Clearly this number is higher than what Uncle Sam says it should be, but it’s still way less than places like Marin and Santa Cruz.

Uncle Sam says a maximum of 30 percent of your take home pay should be spent on housing, or your risk having a difficult time affording your home, and other necessities like food and clothing etc. But when was the last time the government knew how to spend other people’s...

5 Questions to Ask Yourself about Real Estate and Brexit

Another article about Brexit! As the U.K. has decided to leave the European Union they have shaken markets globally, and lowering the outlook for economic growth in the United States. It will take years to see the repercussions, but for right now markets and governments are scrambling to react in all the uncertainty.

It seems like buying, selling, lending, and the whole nine yards is now riskier. Buying big assets, like a house take a healthy amount of confidence, and without uncertainty floating around everywhere, that confidence could fade quickly.

Despite grim headlines, the U.S. economy hasn’t faltered thus far. The silver lining in all this restlessness is cheap loans. Today we know Brexit, tomorrow is still to be handled day by day. Without seeing the future, here is what we know.

Will home prices fall?

Maybe! Nationally, homes value might slow down in the short term. The buyers who have money in the stock market aren’t sitting as pretty as they were yesterday, and they’re starting to sweat. The upside is that mortgages are about to get cheaper, which boosts their incentive.

They aren’t expecting a price surge, but they are kind of expecting a few dips in some markets. The fears of uncertainty of the stock market will probably keep people on the conservative side of bidding. They’ll be less likely to bid up $50,000 for a piece of real estate.

The luxury market will feel a slight sting. The foreign real estate investors have their hot spots in New York, Miami, and other places. With the stock market losing some of its value, there is less wealth to go around.

What will happen with interest rates?

Many loans are about to get cheaper because mortgage rates fall when Treasury rates fall, and Treasuries just took a steep dive as money fled out of the U.K.

Right now a good mortgage lender is bracing themselves...

Brexit: and the Impact on U.S. Markets

As we have all heard by now, the United Kingdom decided to leave the European Union last Thursday. Since this is so fresh, and never done before, no one really knows how this will play out. There’s a lot of speculation about how this will affect the U.S. economy. So below are a summary of the opinions floating around the nation about our housing market.

TO begin with, Standard & Poor’s is reporting it could downgrade UK sovereign ratings: now at “competitive disadvantage compared with other global financial centers.”

Stateside, financial institutions insisted to downplay the growing worries on Friday.

They said, “We affirm our assessment that the U.K. economy and financial sector remain resilient and are confident that the UK authorities are well-positioned to address the consequences of the referendum outcome,” the G-7 finance ministers and central bank governors stated.

“We recognize that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability,” their statement went on.

So despite their words of speculation, how will this actually affect our housing market?

Wells Fargo had this to say about Brexit, “the market action in Treasuries and Gilts continues to evolve in line with the playbook from the 2011 U.S. sovereign downgrade,” said Mike Schumacher who is the head of rate strategy for WF. He continues, “There is one key distinction: this time Gilts are leading the way, Should Gilts lead Treasuries? We think not. We still expect capital to flow out of the U.K., with the U.S. being a very likely destination.”

“In the June 17 edition of the rates explorer, we called for two-0year and 10-year Treasury yield to reach 0.5% and 1.3%, respectively, in the week or two after a leave victory. We stand by these projections /. In the Asia trading session, the two-year reached 0.5%, while the 10-year bottomed at 1.4%.”...

Three Deal Breakers for Home Buyers

When searching for a home, everyone has in mind exactly what they’re looking for. Home buyers hunt and walk through dozens of homes before even finding one they kind of like. Then it finally happens, they find the one they love. During the hunting process home buyers are searching for aspects of the home that they can change or alter to improve the value. Sometimes they may even love a home, knowing they can’t change some parts of it.

Here are three significant considerations to consider before deciding whether to put an offer on a house you love or not.

Location

The old real estate cliché, “location, location, location” isn’t at the top of importance just because. It’s one of the most important factors of a home, and unless you plan on making it a historical spot, you cannot change this aspect.

If the home sits on a busy road, across from a popular shopping center in town, or next to the highway, take this into consideration. This home will always be worth a little less than a similar home nearby.

If you are willing to sacrifice to get into the school district or neighborhood you’ve always dreamed of, keep on looking. Once you get the location, nobody but Uncle Sam can take that away from you.

Floor plan

Old homes with closed off kitchens are out in today’s market. It’s a thing of the past. People today want open kitchen plans that look into other rooms. If you think you can just open up the kitchen to allow people to see into the family room, think again.

To make this change will require a lot of construction, money, resources, and is quite a project. It also takes a significant ant amount of time. Think about it, you will be making architectural drawings, tearing out a wall(s), putting up temporary walls, installing beams to carry wider loads, and risking your kitchen ceiling falling through...

Real Estate Investing for Entrepreneurs

The world of real estate is a means of investment opportunity for successful entrepreneurs. The risk versus reward aspect relies on knowing which properties are a smart buy, and which will turn into a train wreck. How do the best real estate geniuses know when to buy and when to sell?

Long term

Don’t invest in real estate thinking you will get rich quick, it just won’t happen. Yes, there have been booming moments in history when that did happen, but today’s market isn’t anywhere near that level of activity. In the 90’s buying a property was easy, making renovations, and flipping it for a profit could be done relatively quickly. After the bubble burst, the real estate market has been one of the slowest sectors of the economy to rebound. If you’re thinking about investing in real estate, do your homework and move slowly.

Learn about past successful local investments

Most entrepreneurs find their real estate success by purchasing a property and adding significant value to it. The question is what improvements add the most value? Which are a waste of time that won’t get dollars back for your time and effort?

Look at the local case studies in your area to understand the valuation of your city. For example, if you live in a big city like Portland, you could add value to your property by adding bike lockers and a fitness area in a mixed use building. It comes down to knowing what the culture of your area is like, and what people want to see in their homes.

Knowing when to buy and when to wait for the Unicorn

When investing in real estate it is tempting to buy the first thing you see, but you shouldn’t.  You will want to make a list of “must haves” for the property you want, and wait a while until you find it. Make sure you know what your highest priorities...

April Foreclosures Down From This Time Last Year

Foreclosures are declining across the country, decreasing a whopping 23.4% annually in April, while completed foreclosures decreased by 15.8% annually.

The completed foreclosures averaged 37,000 nationally, which is down from 43,000 in April of 2015. From its peak of 117,813 in September 2010, this is down 68.9%.

The foreclosure inventory is the number of homes at some point in the foreclosure process, doesn’t matter where. The completed foreclosures are homes that have been foreclosed upon.

The peak was in 2010 and the number of homeowners with negative equity has decreased by two thirds, and the number of borrowers in foreclosure proceedings has also dropped at the same time.

Roughly four million homeowners were underwater in the first quarter, and they were more susceptible to foreclosure proceedings if they default.

Because home prices continued to rise, it allowed for 268,000 homeowners to regain the equity in the first quarter of 2016m which pushed the total number of mortgaged residential properties with equity to 92%.

The good news about last month is the number of homes in some stage of foreclosure and the numbers of delinquent mortgages were at levels that haven’t been seen since late 2007, just before the big collapse.

April continued the trend and hit another low not seen since 2007, when foreclosures had an average of 21,000.The total homes in the national foreclosure inventory for April was 406,000 homes, about 1.1% of which had a mortgage. Compared to 2015, it’s down from 530,000 homes, which had 1.4% with a mortgage.

The loans that have serious delinquency, meaning they are 90 days or more past due, in foreclosure, or real estate owned, declined by 21.6%, with 3%, and 1.1 million mortgages in this category.

Two major factors have helped the drop in delinquency rates, and we have the rising home prices and improvement in the labor market to thank. The home price index has risen 6.2%, and the labor market gained 2.6 million jobs.

...

What Really is a Good Credit Score?

Your credit score is perhaps the most important number lenders will look at when trying to buy a home. These numbers identify you as a person who is either able, or unable to pay your debts whether they are credit cards, car, or student loans. The general rule is if your number is high, you will be fine, if it’s low, you will have trouble.

So what exactly is a good credit score?

The perfect credit score is 850, but anything above 760 is considered to be in the best range of scores. Because you have proven you can pay off your debts, mortgage lenders want to do business with you. You will also receive lower interest rates with such a high score, and this is their way of enticing you to go with them instead of another lender.

A good score is from 700 to 759; a fair score is 650 to 699. The lower scores indicate you’ve had a little trouble making payments, and lenders will assume you will struggle to make those payments as well. You can still get a mortgage with these numbers, but it will come with the cost of a higher interest rate.

Any score below 650 is deemed as poor, and you’ve had a few rough patches in your payment history. Some banks will still lend you a mortgage, but you will have to jump through a ton of hoops and pay out the wazoo in interest.

How credit scores are calculated

Three major U.S. credit bureaus track your scores; Experian, Equifax, and TransUnion. Each score is somewhat similar, but pulls its info from different sources. TransUnion looks at your job history while Equifax checks out your rent payments. Here are the variables each definitely looks at.

Payment history – 35%: Can you pay your debts on time? If you’ve never missed a payment, a 30-day delinquency can cause as much as 110 point drop in your score.

Debt-to-credit utilization – 30%: This is how much debt you have accumulated through credit cards, divided by the credit limit on the total sum...