When applying for credit, lenders will check your credit score to see how good it is. But what exactly is a credit score; how is it calculated; and why is this number so darned important?
A credit score is a number that strongly indicates to lenders and creditors how likely you are to pay back the debt you owe, based on your past borrowing behavior. The higher your score, the more likely you are, in their eyes, that you will pay back the money you borrow.
Your credit score is used to determine whether you can get credit for things like: a credit card, a loan to finance your college tuition, a loan to buy a house or car, or even to start up a new business. Not only that, it is used to determine what kind of loan you qualify for, how much credit you qualify for and what your interest rate will be.

What’s a Good Credit Score?
The most widely known type of score is a FICO score. FICO is short for Fair Isaac Corporation and is considered by many to be the most accurate. The three major credit reporting agencies, Equifax, TransUnion and Experian also calculate credit scores based on their own statistical model.
But how do you know what a good score is and what a bad score is? Well, that’s sort of a gray area since different scores are calculated in different ways; different creditors use different scores; and no one knows exactly how they are calculated since those formulas are proprietary to the companies using them. Scores may range from around 300 to 900 with the average credit score in America being at about 740. Here is an approximate range of how credit scores are judged:
Excellent credit = 720 and above
Good credit = 660 to 719
Fair credit = 620 to 659
Poor/bad credit = 619 and below

A Basic Breakdown
Although the exact formulas used to calculate credit scores is still a mystery, Fair Isaac has disclosed an approximate breakdown of what comprises a credit score and how much weight they carry:
* Timeliness of payments = 35%
* The amount of revolving debt in relation to the amount of your total revolving credit = 30%
* Length of credit history = 15%
* Type of credit used (installment, revolving, consumer finance) = 10%
* Amount of credit recently obtained and recent searches for credit = 10%
Certain things can significantly impact your score, such as late payments. One or two is not bad, but the more payments you make that are late, the harder it hurts your score. Bankruptcies, foreclosures and judgments are also “blemishes” that can significantly impact your score. The more blemishes you have, the more lenders become concerned about your ability to manage your debt.
Bad Credit
Having bad credit, however, is not the end of the world. It still may be possible for lenders to give you a loan, provided your credit score is not too low. But be aware that you may pay a higher interest rate and more fees since you are more likely to default–fail to pay the loan back.
There are ways you can improve your credit, such as paying down your debts, paying your bills on time, and disputing possible errors on your credit report. But on the flip side, there are ways you can also hurt your score, so remember: DON’T close an account to remove it from your report (it doesn’t work); DON’T open too many credit accounts in a short period of time; and DON’T take too long to shop around for interest rates. Lenders must pull your credit report every time you apply for credit. If you are shopping around with different lenders for a lower interest rate, there is generally a grace period of about 30 days before your score is affected.

• by Clayton Closson
• on December 8, 2006
• Market Insights, Market Update


• Read more at http://www.quickenloans.com/blog/what-is-a-credit-score-and-why-is-it-so-important-5091#GcXoe0CA40QBAAER.99
  

There's no question something has changed in the Houston Real Estate Market! Other agents have brought it up in conversation, and both sellers and buyers I am currently working with have noticed some kind of change as well! Where houses were getting snatched up in a blink of an eye earlier in the summer (which still is happening at a lower price point).... Now most seem to be sitting active much longer and you see more price drops across the board.... not to mention less inventory to choose from it seems as well.

A slower market shouldn't deter you from beginning or continuing your home search as long as you have realistic expectations. Many real estate agents advise their seller clients to hold off on marketing their homes in August because it's often a slow time for sales. This means there might be a slowdown in new inventory coming on the market and fewer new listings for you to consider.

Patience is the name of the game in today's real estate market. There are many uncertainties about where the market is heading. Many economists think we've hit a point where we will see prices starting to drop. Or it might be a small phase and things pick right back up again. One report stated that Houston Homes are overpriced about 10-11% and will need to come DOWN to be where we should. This might be concerning for people who might fall into the category of "overpaying" for the home they are in now. 

Try not to dwell on national headline news regarding the housing market. Real estate is all about location. It's imperative that you research your local market to find out what conditions apply there. Home sales in your area could be better, worse or similar to what's going on nationally. Don't make homebuying decisions based on national data.
In areas where there is plenty of inventory and homes are selling slowly, buyers have MORE opportunity to negotiate price or wait for a better deal if they run into a stubborn seller.

Most buyers prefer to buy when the housing market is on solid ground. However, prices tend to be higher. Think of this... would you rather have purchased in 2006 when buyers couldn't buy fast enough? (which we saw a lot of this earlier this year as well)  Many of those buyers lost their homes in foreclosure during the five years that followed when home values dropped 25 to 50 percent, depending on the location.
It may take time to find the right home, particularly if there is a lull in new inventory coming on the market. But it's essential to wait until the right house comes along. You may not be able to sell it again soon for what you paid if you factor in the costs of sale. PATIENCE IS THE KEY! :) 

                                     MUST DO ASAP...

1. Earnest Money
There needs to be some cash involved in the beginning of a transaction to protect the sellers interests while they take their house off the market. Earnest money is your proof as a buyer that you “earnestly” want to purchase their home.

Some REALTORS® will collect earnest money from you before they submit your offer. Others will coordinate the earnest money drop off after an offer is accepted. Whatever your scenario is, make sure that your earnest money is delivered on time and in the proper payment form. This information is usually documented in your sales contract.

2. Property Inspections
Once you have an executed sales contract in hand, the clock starts on your inspection period. Make sure you know how long your inspection period is, and complete your inspections in a timely manner. There are multiple types of inspectors that you may need to schedule. A standard home inspector is the most common, but radon, pest, septic, structural, HVAC, and mold inspections may also be relevant to your buying situation. Discuss your options with your REALTOR®. Make sure that you have resolved any inspection issues within the time allowed in your sales contract.

3. Lender Documents
As soon as you have an executed sales contract, you will need to communicate with your mortgage lender so that they will start the mortgage process. Be prepared to provide lots of documentation throughout this transaction. Make sure that you get the requested documentation to them ASAP to limit any problems with their timeline. Some lenders are not as thorough with regards to checking in with you to keep you updated on their progress. Make sure that you are checking in with them to verify that they are on track. Your REALTOR® should help you with this as well. If a lender does not complete the loan process in a timely manner, it can cause you to be in breach of contract by not closing on time. If you stall on any requested lender docs, you can be sure that the finger will be pointed at you if they are not ready. Make sure that you are not put in this situation by promptly providing any documentation to your mortgage lender in a timely manner.


                            WHAT'S NEXT???
 
4. Title Commitment
This step is handled by the Title Company. They will issue a title commitment that reviews the title history of the property and discloses any liens against the property that need to be resolved before closing. Be sure to review your title commitment and ask an attorney for advice if you see anything in it that looks concerning. Most title commitments are straight forward and require no additional work on your part. Just be sure to review it thoroughly before moving on to the next step.

5. Appraisal
Once you have cleared the Inspection process, let your lender know. They will then order a home appraisal to verify that the value of the home your purchasing is worth the loan amount that you are asking for. It is important to make sure that your lender orders your appraisal as soon as possible. It’s likely that you will be paying for the appraisal, so it’s best to wait until after you have completed the inspection process.

6. Home Owners Insurance & Warranties
Your lender will require you to have a Home Owner’s Insurance Policy on the property that you are purchasing. You will want to shop around and choose the home owners insurance provider and policy that works best for you. Once you have the policy in place, let you lender, REALTOR®, and/or title company know.

Also, some sellers will provide an allowance for you to purchase a home warranty. If you are purchasing a home warranty, you’ll want to shop around and find the home warranty company that best suites your needs. Your REALTOR® should also be able to help with recommendations. Once you have found the right home warranty provider, be sure that the title company knows who you plan to use BEFORE closing.

                              FINAL STEPS:

7. Turn On Utilities
Now that you are past all of the major steps required to purchase your home, you will want to get your utilities turned on, or transferred into your name. The sellers often provide all of the relevant utility contact info in the Seller’s Disclosure.

8. Schedule Closing Date & Time
Your sales contract will have an agreed upon closing date. Make sure that you and/or your REALTOR® have contacted the title company in advance to make sure they have a time slot open that is convenient for your schedule. Some sellers like to close at the same time as the buyers, so your REALTOR® may need to coordinate this with the listing agent as well. This is usually an easy step - just make sure that it doesn’t get put off until the last minute so that the title company can accommodate your request.

9. Final Walkthrough
It is wise to do a final walkthrough before the closing. The purpose is to verify that any repairs have been completed, that all of the seller’s personal belongings have been moved out, and/or to make sure that the home is ready to move into. This is not a time to renegotiate any items on the sales contract. It’s simply a safeguard to make sure that no major issues arise that could cause the closing to terminate; which would likely be followed by legal proceedings to mitigate the issues.

10. Close The Transaction
On the day of closing, you will need to have your driver’s license (or other approved photo ID) and certified funds (cashier’s check or wire transfer) for any monetary amount required from you at closing. You will meet at the title company to sign all of the required documentation. A typical smooth closing usually takes about an hour or so. Once the documentation has been signed and your lender has funded the transaction, you will be given the keys and the house is yours!

A good REALTOR® is your best resource to make sure that every step above is met in a timely manner with no added drama. Buying a home takes time and energy, but it’s extremely rewarding as well. After you sign the papers at closing and get your keys, all of you and your REALTOR®'s hard work will have paid off, and you will feel a wave of excitement as you move on to enjoy your new home!