The numbers work more like bowling and less like golf. The higher the number, the better candidate the applicant is to repay the debt, because their risk is low. The lower the number, the higher the risk, which means the applicant is less likely to repay the loan.

The most used score is a FICO score, which was created by Fair Isaac & Company. This score is used by the three major companies, Experian, Equifax, and TransUnion. Credit agencies use different algorithms to calculate a credit score, based on positive and negative information in your credit report.

Delinquent accounts in the past or present, debt level, the length of time you’ve had credit, types of credit, and the number of credit checks you’ve had all figure into your credit score.

Credit bureaus do not consider demographic values such as race, gender, or marital status, nor do they consider your income, the balance of your savings account, or down payments into your score.

In other words, if you’re of Russian, Guatemalan, or Ugandan descent won’t make a difference in your credit score, nor will it make a difference if you are the CEO of Google or the pixie dust spreader on the Tilt-a-Whirl. However, making late payments on your VISA card will lower your score, while re-establishing a record of on-time payments on your debt will raise it.

Different aspects of your credit file have different weight in calculating your score.

35% –   Past credit performance – such as late payments, collections, judgments, bankruptcies.

30% – Present indebtedness.

15% – Length of time credit has been in use.

10% – Types of credit – installment loans, revolving credit, etc.

10% – Pursuit of new credit – How many inquiries you have on your credit.

The biggest factor for a good credit score is paying your bills on time. Instead of moving debt around, pay it off. Pay all of your bills on time.

Some have said to close unused credit cards to quickly raise your score. This may actually be detrimental to your goal. Owing the same amount on fewer cards can lower your score. The best thing to do is to pay your bills on time and pay down your debt.

Each score has up to four reason codes. These are the biggest reasons why your credit score is what it is.

In order for you to actually have a credit score, you need… wait for it… credit. That’s right. You have to have credit for a score. You need at least one account that has been open for more than six months. You also need one account to have been updated in the past six months to get a score.

There are a few entities who can access your credit file, based on the Fair Credit Reporting Act (FCRA). Companies who grant credit, collection agencies, insurance companies, and employers can access your credit file, but they must have a “permissible purpose” and a “legitimate business need.” If they do look at your credit file, they will show up as an inquiry. Only inquiries you request actually show up for the basis of your credit score. The local car dealer and the multiple credit card applications that fill up your mailbox with “You’ve Been Pre-Approved” notices are logged as “promotional” and don’t impact your score, since you didn’t request them.

Otherwise, no one else can look at your credit files. Even your mom can’t have access.

Some people wonder about the negative impact from rate shopping for a mortgage. In order to get an accurate mortgage rate from a lender, you have to submit to a credit check, which is an inquiry. Some worry about the fact that too many inquiries can ding your credit.

Recent changes, however, minimize that negative impact from rate shopping. If you request a lender to inquire on your report within the past year (from mortgage or auto lenders), those inquiries are ignored for the first 30 days for scoring purposes. Then, for the next two weeks, multiple inquiries are counted as one. All inquiries show up on the credit report, but are not counted as multiple inquiries for the computation of your score.

And that… is how credit scoring works.

The Associated Press reported on Thursday, November 10, on a new report showing Foreclosures up almost 18% in October compared with September. 4,200 homeowners lost their homes in October, and 6,400 homeowners were served with notices of default, the first step in the process of repossessing a home.

Still, banks look like they are more open to the short sale process than foreclosure, as they have discovered that they get more money from a short sale than a foreclosure. In addition, with a short sale, a homeowner’s credit does not take such a big hit, and there is less negative impact on a community, as the home is not vacant as long.

The short sale process has also shortened and has become more streamlined in many cases.

Daren Blomquist of RealtyTrac, a California foreclosure listing firm, said that he expects Arizona foreclosure levels to remain high for a couple of years, but that “Arizona is past the peak of this foreclosure cycle. We’re at least headed in the right direction.”

Arizona homeowners facing the possibility of foreclosure in the future are encouraged to investigate and know their options. The Kenny Klaus Team offers education programs, both in person and online.

In Person:

An Avoiding Foreclosure Workshop will be held November 15, 2011 at Augusta Ranch Golf Club at 6pm, hosted by Realtor® Kenny Klaus, real estate law firm Mack and Drucker, and CPA firm Weech Financial. The event is free, and you can register online at Short Sale Workshop.

Online:

The Kenny Klaus Team invites homeowners to watch the free online video series, “ShortSale411” at TheKennyKlausTeam.com. This series answers six of the most commonly asked questions.

Homeowners can also call to set up a free one-on-one consultation with Kenny Klaus, Realtor® and Certified Distressed Property Expert by calling 480.354.7344.

East Valley Tribune Article

With roughly 40 percent of Valley homeowners being underwater, most were unable to take advantage of the HARP program, which required homeowners to have a loan-to-value ration not in excess of 125 percent. Most Arizona homeowners seeking help with their mortgage were more underwater than that.

In addition, with a HARP refinance, a premium was added to the new rate, so homeowners seeking help through HARP could not enjoy the rates new homeowners were receiving. While the rates were lower than their current loans in most cases, they still were not as low as the market rates all of their friends were talking about.

The new HARP proposal eliminates some of these issues. It eliminates the cap of 125% loan to value ratio, and allows any amount of “upside-downedness” to qualify. The premiums will also be eliminated or reduced.

To qualify, homeowners need to have received a loan serviced by Freddie Mac or Fannie Mae before May 31, 2009.

For more detailed information, see Jeremy House‘s article on the new HARP changes.

Or see the Arizona Republic story from October 25, 2011

What are your thoughts on this new program?

I remember elementary school. We had a see-saw. It was usually fun.

I was an average sized kid. There were always kids who were much bigger than me, and there were always kids smaller than me.

The most fun to a see-saw was finding someone who was about the same size as yourself. Recess was only so long, and going out there to break a sweat working my second-grade calves was not the way I wanted to spend my fifteen minutes of freedom.

Nor did I want to spend my fifteen minutes sitting on the elevated half of the see-saw being held hostage by the big bully twice my size who wanted to spend his fifteen minutes sitting on the see-saw, laughing at the little guy stuck and crying four feet off the ground.

The best see-saw experiences were those where the two sides found balance.

Balance is tough to find, especially when you have two people who want different things. Yet, even with different motivation, there is a commonality to most things. Even with the see-saw, the commonality is the mutual desire to not only see, but to also saw.

In our current real estate market, we find ourselves playing see-saw with a buyer and a seller. And, like so many other areas of life, we often find ourselves needing to find the oh-so-often-elusive balance.

Most sellers have had their homes since 2006 or before, or purchased them in 2007 and 2008 at the beginning of the down slope. Some bought at the high pointof the bubble, and some bought before, but went to Zillow and saw how much their investment had appreciated. The goal of many sellers in selling their home is to get as close as possible to the high point of the bubble.

Buyers have been watching a lot of television and have heard about the property values in Detroit, and feel that they should be able to find a 3 bed, 2 bath property in the best neighborhood that is move-in-ready with no issues on inspection for $29,900 just like their parents did in the 1970s.

Both want bragging rights. The seller knows her friends will ask about the sale, and she’ll want to let them know how well she did. The buyer will want to post on Facebook about his victory, much like a jubilant tourist who negotiated his way to the purchase of very special item from a Mercado in Rosarito for $5, like a procrastinating fan who found Cardinals tickets available just outside the stadium after the game started for 20% less than list price for the seat, or like a triumphant Craigslist shopper who found the deal of deals.

Both sides want to feel like they came out on top, and yet, so often, great deals fall through because of an inability to find balance.

Sometimes, just an understanding of reality can bring balance to the see-saw of negotiation. Sellers have to understand that prices today are nowhere near the height of the bubble. Buyers have to understand that, with inventory down, it is not uncommon today for accepted offers to be at or above listing price, since many properties are entertaining multiple offers.

For a great real estate experience, when both parties on the see-saw find their balance, selling and buying can be enjoyable and mutually profitable. After all, there is a mutual commonality – both sides want to see that property transacted.

Now… after all that nostalgia, I’m Jonesing for a good see-sawing. Any takers?

Lured by a weak U.S. dollar in comparison to Canadian currency and historically low interest rates and property prices, there has been an uptick in the number of Canadian Real Estate investors buying properties in Arizona.

In a recent WSJ article, Chana Schoenberger gives some incredible figures. For the period from March 2009-March 2011, Canadian investors consisted of the largest percentage of foreign home buyers in the United States with an amazing 23%, a jump from 11% four years ago. Mostly, Schoenberger noted Canadian real estate investors buying property inArizona and Florida.

Some Arizona real estate agents are trained and experienced in helping Canadian real estate investors buy property in Arizona. Sites such as ArizonaEh.com are geared specifically for Canadian real estate investors.

Many Canadian real estate investors are seeking to buy property in Arizona for the sake of renting it for a time, and then selling it for a profit in five to seven years. Others are buying property to be used as an investment property now, with a future as a retirement home.

Other Canadian real estate investors buying property in Arizona opt for the live-in investment. Mesa, Arizona is a community with a larger population in the winter months, as “winter visitors” leave colder climates for the perfect weather of the Phoenix metro area. With large numbers of season-long visitors from the north, there are many businesses designed for those residents, including Canadian-themed restaurants and bars. Maple leaf flags can be seen on “Canadian-friendly” businesses which go out of their way to attract Canadians.

Canadian real estate investors buying property in Arizona often buy with cash, but also take out mortgages with U.S. banks.

In addition, Mesa, Arizona is a popular location for Canadian real estate investors buying property in Arizona because of its airport, Phoenix-Mesa Gateway Airport, which is home to Allegiant Airlines. Allegiant is an affordable carrier which offers service to Bellingham, WA and to Grand Forks, ND. Many Canadian citizens cross the border from Vancouver and Winnepeg for the inexpensive rates to and from Mesa, Arizona.

The Kenny Klaus Team is very experienced in understanding what Canadian real estate investors buying property in Arizona are looking for. To set up an appointment or to see online listings, visit www.thekennyklausteam.com or call 480.354.7344.

Of current homeowners, 19% are considering a new purchase. Of renters, 29% are planning a home purchase in the next two years. Yet, they are waiting until “the time is right.”

I wonder if many don’t realize that the time is right.

Currently, in many East Valley cities, it is cheaper to buy than to rent, if one plans to be in the home for ten years. The report, available at http://www.bizjournals.com/phoenix/blog/business/2011/09/phoenix-better-for-home-buyers-than.html, gives ratios to different Maricopa County cities, with the lower ratios reflecting home ownership as more affordable than renting. Mesa Real Estate has a ratio of 8.2. San Tan Valley Real Estate has a ratio of 8.9,Chandler with 9.7, and Gilbert with 10.8. Anything lower than 15 favors owning. (The ratio is of median purchase price to median annual rent.)

Fletcher Wilcox of Grand Canyon Title looked back a few years, and found that the own to rent ratio for August 2011 was the lowest for any month of August this century.

If you or someone you know is waiting for just the right time, I encourage anyone contemplating this to set up a free consultation with our office and to discuss financing options with our in-house lender, Rudy Santa Cruz. You can reach us at 480.354.7344.

Create a customized Market Insider report on the areas you care about most, and then sign up to receive FREE monthly updates. Market Insider provides home listing and sale prices, community demographics, school ratings, side-by-side neighborhood comparisons, and more!

Whether you are looking to sell and want local market data, or are thinking about buying and want to explore different homes and neighborhoods, here is a great resource for you!

Market Insider offers a wealth of current information to help you make the best real estate decisions.

• Local real estate market data including current listings and recent sales
• Easy-to-use charts that clarify local price and market inventory trends
• Side-by-side comparisons of areas by zip code
• Maps, charts, and valuable insight into specific neighborhoods using income by household, criminal activity, education levels attained, and weather risks
• Neighborhood points of interest including shopping, restaurants, and healthcare services
• School district summary information and a map/grid of individual schools for your zip code
• Tips to help you better understand the factors that impact the real estate market

Become a “Market Insider” today!

Here are ten Short Sale Myths that my team and I are trying to dispel:

MYTH 1: You must be behind on your mortgage to qualify for an Arizona short sale. Lenders look for three things: a “verifiable hardship,” such as a job loss, pay cut, job transfer, divorce or serious illness; a monthly cash-flow shortfall or pending shortfall and insolvency; or lack of liquid assets that would allow you to pay down your mortgage. Henderson said distressed homeowners often wait too long, and should consult with a qualified agent before burning through savings or trying such desperate measures as using a credit card to cover mortgage payments.

MYTH 2: Arizona Short sales rarely get approved. We have an 85 percent success rate for closing Arizona short sales but says they still take patience, requiring anywhere from 30 to 120 days for lender approval. 

MYTH 3: Banks would rather foreclose than approve an Arizona short sale. What we suggest is that banks typically lose 35 percent more on a foreclosure than a short sale. They also avoid the hassle and liability of vacant properties if they can approve a sale before foreclosure.

MYTH 4: There’s no time to negotiate a short sale. It’s always worth a try. This is defentally not the case.

MYTH 5: It’s fine to make simultaneous offers on Arizona short-sale properties. While it may be legal, we bristles at buyers making offers on short sales that are not sincere. Multiple offers clog the system and could force sellers who think they have a solid offer into foreclosure when the offer is rescinded.

MYTH 6: An Arizona short sale is a fire sale. Not just any offer will do. Home sellers may counter; their agents can only bring reasonable offers to the bank, which typically means market value.

MYTH 7: Anyone can help navigate an Arizona short sale. Henderson suggests homeowners find an Arizona real-estate agent with special training in handling distressed properties.

MYTH 8: An Arizona short sale is not worth the effort. For buyers, Arizona short-sale properties are often in better shape than foreclosures and are priced to sell quickly. For sellers, there is no lasting stigma for completing an Arizona short sale.

MYTH 9: Arizona Short sales are as financially damaging as foreclosures. Unlike foreclosures, Arizona short salesare not reported on a person’s credit history and don’t present problems with employment or security clearances. Homeowners who undergo a foreclosure are ineligible for a Fannie Mae-backed mortgage for five years, while a homeowner who closes an Arizona short sale is eligible for a Fannie Mae backed mortgage after only two years.

MYTH 10: Arizona Short-sale negotiations are adversarial. We still hear from buyers’ agents who loathe short sales. We once felt the same way. Arizona Short Sales are more a matter of communication and organization — having all the paperwork in order and knowing exactly who needs what when in order to help banks approve a sale.

http://www.thekennyklausteam.com/10-Short-Sale-Myths

The first six short (about one minute) videos have Kenny Klaus of the Kenny Klaus Team answering the following questions:

• What is a Short Sale?
• Will I Be Able to Buy Again?
• Who Will Rent to Me?
• How Will My Taxes Be Affected?
• Where Does the Difference Go?
• Why Use The Kenny Klaus Team?

The videos are available for free viewing on YouTube by following the links above.

Do you have ideas for other videos? Leave them in the comment section!

The other day, I was out and I ran into a wonderful couple. As we began to chat, I could see that there was something on their minds. Something they wanted to talk about that was consuming them.

So, I asked. There was something on their minds. Foreclosure.

It was so foreign to them. Before the latest trial in their life, they had never missed a mortgage payment in their lives. They had never thought about foreclosure before, and never thought that they would be in default. So, of course, they had questions.

They wanted to know how to avoid foreclosure. They wanted to know how an Arizona short sale works. They asked about alternatives to foreclosure. And, I had to be honest. Their questions weren’t out of the norm. So many people are struggling with the same issues, and so many have the same questions.

That’s why we started our Avoiding Foreclosure Workshops. Once a month, except for December, we offer you the opportunity to get together with a real estate expert, an attorney, and a CPA to explain the AZ short sale process, tax impacts, and answer questions. We let you know about how to qualify for $4,500 in relocation assistance and other government aid programs.

If you would like to join us for our next Avoiding Foreclosure Workshop, click here: http://www.eventbrite.com/event/1272737793. You can also call our office at 480.354.7344 to set up a free consultation with one of our Short Sale Experts.