How Often Does Your Credit Score Change?

This is a question we often get during the mortgage process.  A credit check may have uncovered some incorrect information, and you get it updated.  So how fast will it change?

What is a Credit Score

Per the reporting agencies (TransUnion, Equifax, and Expperian), your score is a snapshot of your current credit report as well as how many pulls you have had on your report.  For example, from Yahoo:

“Right now it’s 11:40 my time,” said Rod Griffin, director of public relations for Experian, when I interviewed him for this story. “Let’s say a lender requested your credit report right now. If you apply for credit (again) in an hour your credit report could be different,” he says, referring to the inquiry that would have been generated when the first lender accessed my credit information.

“Credit reports can change as often as every day if there is new information provided to the credit bureaus,” says Barry Paperno, community director for Credit.com.
If you want to be technical about it, you don’t really have a credit report on file with the credit reporting agencies to begin with. Explains Griffin: “We have information from each of the lenders, and we go out to our databases and compile information from those databases when a credit report is requested. Your credit report represents a snapshot of your credit history at any given point in time.”

That means that the information is available in the credit reporting agencies’ (CRAs) databases at the time a credit report is requested is the information that will be reported. “You don’t have a credit report until you apply for credit and it’s requested,” Griffin says.

But it’s not like checking your online bank account and seeing the debit card purchase you made a few minutes ago in your running balance. “It’s not real time,” says Griffin.

So What Do You Recommend?

• Set up payment reminders so you never have a late payment again.  Do remember that a lot of credit card companies want the payment a few days before the due date to have time to process it.  It’s not fair since they say it’s due on a certain date, but it’s best be a few days early.
• Set up automatic payments using online banking where you can.
• Reduce the amount of debt you  owe.
• Check your credit report annually.  You can get your free report here.  Now, this won’t give you a score unless you pay for it.  But you can at least look for mistakes which do happen.
• Get your credit report 3-6 months before applying for a major loan.
• Be patient.  It can take 30-60 days for information to be updated on a credit report after you’ve made changes (like paying off a student loan, or had disputed information resolved)

8 Surprising Things That Impact Your Credit

And what would a post be without some trivia.  This is from Credit.com blog:

1. Renting a car
2. Applying for credit (even when you aren’t rejected)
3. Disputing an account
4. Having credit cards, but no loans
5. Just a single late payment
6. Closing an account
7. Divorce
8. Late library books

What other questions do you have about your credit report and score?

What Happens to Your Donated Items

Many of us are addicted to watching Storage Wars.  In the earlier seasons, they’d show Dave Hester’s operation for sorting through all the massive amounts of items from his lockers.  He mentioned how he had to do some community service at a place like Goodwill and Salvation Army, and learned how they sort through donations, and applied that assembly line process to his store.

So, we bet you were wondering what happens when you drop off a box somewhere.

Types of Stores

While it can go by many names, the purpose of a thrift store is to sell donated items in order to fund a charity or a cause.  It’s often called hospice shop, resale shop, charity shop, thrift shop or thrift store.  In Australia and New Zealand, it’s called an op shop for “opportunity shop.”  These shops are staffed by volunteers.

For a directory of Thrift Stores, check out the Thrift Shopper’s National Directory.

If you have questions, ask at the front counter what cause they are supporting.  If they have none, you’re in a second hand store (like Dave Hester had)

Some religious and spiritual organizations also accept charitable donations, but they are more limited in what they accept.  The items are then passed out to the needy.  You should check directly with the organization for their guidelines.

 

What to Donate

First, find out if your organization accepts what you want to donate.
Here’s a list from the Salvation Army:

Clothing, Toys & Furniture Donations Dos and Don’ts

• Do test all electrical and battery-operated equipment to make sure it is still working prior to donation
• Do include all manuals, if available
• Do include all pieces and/or parts
• Do donate items in clean, non-soiled condition
• Do call ahead of time if dropping items off at a center or store
• Do bring an itemized list of your donation and ask for a receipt
• Do NOT donate broken or soiled items
• Do NOT leave items outside a collection box or center
• Do NOT donate items that have been recalled or banned or which otherwise
• Do NOT donate items that do not meet current safety standards
• Do NOT donate items that have scratches, rips and/or tears

 

Once It’s Donated

First, the items have to be sorted into type: clothing, household, furniture, etc.  From there, they evaluate if the item needs to be cleaned, recycled or thrown away.

The clothing then gets sorted into sizes and marked.

Then the item gets priced.

If it’s a large organization, they may have one central clearinghouse for donated items, and then try to ensure a good stock in each store.

What’s your favorite organization where you donate?

This Week’s Market Commentary

This week brings us little to drive bond trading and mortgage rates. There is only one monthly economic report scheduled, which is considered to be of low importance to the markets anyhow. That would give the appearance that we are in for a quiet week for mortgage rates, but I don’t believe this will be the case. There probably will be less activity and movement than we saw last week. However, I suspect that we will still end up seeing a fair amount of movement in rates between Monday’s opening and Friday’s closing.

There is nothing of importance scheduled to be posted Monday or Tuesday. This means that the stock markets will probably dictate bond direction there first part of the week. If the major stock indexes rally again, they will pressure bonds leading to higher mortgage rates. However, stock weakness should allow bond prices to rise and mortgage rates to improve.

Besides the sole monthly economic report late in the week, we also have two Treasury auctions that have the potential to influence mortgage pricing. They will be held Wednesday and Thursday when 10-year Notes and 30-year Bonds are sold. The 10-year sale is the more important of the two as it will give us a better indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would likely result in upward revisions to mortgage rates.

Also worth noting is some news from overseas before the markets open Thursday. The Bank of England’s monetary policy announcement (equivalent to our FOMC) will be released at 7:15 AM ET while the European Central Bank will announce at 7:45 AM ET. The ECB will draw the most attention as global investors are extremely concerned about the Eurozone and what actions will be taken to shore up some of its’ member’s finances. We should be on alert for a reaction in the bond and mortgage markets if they yield any surprises.

November’s Goods and Services Trade Balance will be posted early Friday morning. It measures the size of the U.S. trade deficit and is expected to show a $41.8 billion deficit. This data usually does not directly affect mortgage rates, but it does influence the value of the U.S. dollar versus other currencies. A stronger dollar makes U.S. securities more attractive to international investors because they are worth more when sold and converted to the investor’s domestic currency. But unless we see a significant variance from forecasts, I don’t believe this data will lead to a change in mortgage rates Friday.

Overall, it would be easy to say this will be a calm week for the mortgage markets due to the lack of important or highly influential events scheduled. I would not be surprised to see stocks move lower for the week, helping to push funds back into bonds. We saw some improvement in bonds late Friday, so if your lender did not improve rates during afternoon trading, you have an improvement of approximately .125 – .250 of a discount point waiting at Monday’s opening. That could shrink or get larger depending on how the markets perform during early morning trading, but there is a decent possibility of starting the week off in the right direction. With the benchmark 10-year Treasury Note currently yielding 1.90%, I believe there is more likelihood of seeing bonds improve (pushing yields and mortgage rates lower) in the immediate future than seeing them move lower (raising yields and mortgage pricing). Of course, this is just speculation and only an opinion, so please maintain contact with your mortgage professional if still floating an interest rate.

 

Happy Boxing Day

We hope you received everything you wanted for Christmas.  Today is Boxing Day.  The joke currently is it’s the day when you box everything up you don’t want and take it back to the store.  In reality, Boxing Day is traditionally when  servants and tradesmen would receive gifts from their superiors.  It’s unknown when it first started, but there is evidence that dates it back to the middle ages.  Since the servants would have to wait upon their masters on Christmas Day, they were given the 26th off to visit family.

Historians suspect it goes back to Roman times when people would put coins, food, and clothing in metal boxes outside of churches for the Feast of St. Stephen.  We sing about the Feast of St. Stephen in the carol Good King Wenceslas who was a king in Czech from 907-935.

Christmas Wrappings

You’ve probably gathered up all of the ribbons and bows and wrapping paper.  But did you know:

• Average number of presents wrapped by an adult each holiday season: 15
• Wrapping paper and shopping bags thrown away each holiday season: 4 million tons
• Annual sales for the gift wrap industry: $2.6 billion (ok, we have birthdays too)
• Christmas cards soled each year in the U.S.: 2.65 billion (and if you stacked them all up, it would be 10 stories tall)
• In one survey, 53% said that they’ve saved and re-used wrapping paper. (obviously not the stuff opened by small children in a frenzy)
• Amount of ribbon thrown away each year: 38,000 miles (enough to tie a bow around the Earth)

 

Other Trivia

• 12.9 million fake trees were purchased in 2011 at an average cost of $78.  The average lifespan of an artificial tree is 10 years.
• 21.6 million real trees were purchased in 2011 at an average cost of $46.
• So if you bought a fake tree, by year 3, you’ve gotten back your investment.  For some, like those with allergies, fake is the only way to go.  For others, real trees are the only choice.  16% of those people prefer to cut their own tree.
• And it’s a real mood booster no matter which way because 87% of Americans say that Christmas decorating makes them happy, and in 2011, 71% of U.S. households decorated for Christmas.

And you can have a lot of (cheap) fun driving around local neighborhoods in the evening and admiring the colorful displays.  Did your neighborhood put up lights this year?

This Week’s Market Commentary

This week brings us the release of five economic reports that are considered relevant to mortgage rates, but only four of them are of concern. In addition to them, we also have the year’s last FOMC meeting and other related Fed events and two Treasury auctions that have the potential to influence mortgage pricing. The biggest news comes the middle and late days of the week, so we should see more movement in rates as the week progresses.

There is nothing of relevance scheduled for today. This means we can expect the stock markets to drive bond trading and mortgage rates again. If the major stock indexes open the week with gains this morning, bonds may move lower, pushing mortgage rates higher. But a weak open in stocks could lead to slightly lower mortgage rates today. We could also see traders position themselves ahead of the week’s agenda, so even though there is nothing concerning on the calendar, we could see mortgage rates change.

October’s Goods and Services Trade Balance report will be posted early Tuesday morning. This report gives us the size of the U.S. trade deficit, but it is considered to be of low importance to mortgage rates. It is actually the week’s least important monthly report. It is expected to show a $42.7 billion trade deficit, which would be an increase from September. Unless it varies greatly from forecasts, I don’t expect this data to affect mortgage pricing Tuesday.

Wednesday has no important economic data scheduled for release but it does have the 12:30 PM adjournment of the FOMC meeting that began Tuesday. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting, but traders and analysts are anxious to get the Fed’s current economic forecasts. Also worth noting is that the meeting is ending earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference hosted by Fed Chairman Bernanke. The meeting will adjourn at 12:30 PM, forecasts will be posted at 2:00 PM and the press conference will begin at 2:15 PM. It is fairly safe to assume that all of that will lead to afternoon volatility in the markets and mortgage rates Wednesday.

There are Treasury auctions scheduled for several days this week, but the two important ones are the 10-year Note sale Wednesday and the 30-year Bond sale Thursday. Wednesday’s auction is the more important of the two and will likely have a bigger influence on mortgage rates. Results of Wednesday’s sale will be posted at 11:30 AM ET due to the FOMC events while Thursday’s will be at the usual 1:00 PM. If they were met with a strong demand from investors, particularly international buyers, we should see strength in bonds and improvements to mortgage pricing those days shortly after. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.

Thursday has two important economic reports scheduled for release, both at 8:30 AM ET. November’s Retail Sales report is one of them. This report will give us a key measurement of consumer spending by tracking sales at retail level establishments. This data is highly important to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rapidly rising consumer spending raises the possibility of seeing solid economic growth. Since long-term securities such as mortgage bonds are usually more appealing to investors during weaker economic conditions, a large increase in retail sales will likely drive bond prices lower and mortgage rates higher Thursday. Current forecasts are calling for an increase of 0.4% in November’s sales.

November’s Producer Price Index (PPI) will also be posted early Thursday morning. It measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices, giving a more stable reading for analysts to consider. If Thursday’s release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should respond well and mortgage rates should fall. Current forecasts are showing a 0.5% decline in the overall index and a 0.1% rise in the core data.

Friday has more highly important data when November’s Consumer Price Index (CPI) is posted at 8:30 AM ET. It is similar to Thursday’s Producer Price Index, except it tracks inflationary pressures at the more important consumer level of the economy. Current forecasts call for a decline of 0.2% in the overall index and a 0.1% rise in the core data reading. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.

The week closes with November’s Industrial Production mid-morning Friday. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting it to show a 0.4% increase in output, indicating modest manufacturing growth. A smaller than expected rise would be good news for bonds, while a stronger reading may result in slightly higher mortgage pricing. However, the CPI release is much more important to the markets than this data.

Overall, there is a high probability that we will see an active week in the financial and mortgage markets. Wednesday will probably be the most important day due mostly to the Fed events, but Thursday has two very important economic reports so we may see plenty of volatility that day also. Monday is an easy choice for least important, however, we could still see an extension of Friday’s trading affect mortgage rates Monday also. I still believe we are due for a stock pullback that will cause a flight-to-safety in bonds, hence the optimistic approach towards interest rates. On the other hand, with so much on tap this week and a strong likelihood of several active days in the markets, it is strongly recommended that you maintain contact with your mortgage professional if still floating an interest rate.

Are You Ready for Black Friday?

With businesses like WalMart, Target and Toys R Us announcing that they will open on Thanksgiving Day, the lines of Black Friday shopping have blurred into the Thanksgiving holiday. Amazon has announced that they will be providing Black Friday style savings that started last week and will continue on.

Some families are turning it into a tradition of eating early, napping, and then going shopping for the best deals.  For some, it’s a way of making their limited budget go farther.

Some stores hold items back and then have a large unveiling for Black Friday.  It’s still a good idea to scope out the stores, where they have merchandise, and create your plan.
So in today’s blog, we’re going to provide some resources so you can make your plan whether it’s online, or waiting in line.

BFADS

The granddaddy of all sites is bfads.net.  It was founded by a CalPoly student who would get ahold of Black Friday circulars before they were made available, and he would post them on his site.  In the beginning, companies would hit him with a cease and desist order, but over time, they realized that it was a great way to get people excited about shopping, and now, he provides the circulars starting November 1st.

 Other Resources

• blackfriday.com
• blackfriday.fm

And you can also find out more about deals on the websites of the businesses you’re interested in.

Things to Remember

• Create your list of who you’re buying for.  If it’s clothing, make sure you have their sizes and color preferences as items may not be returnable.  It could be exchange only.  And if it is returnable, it will only be for the amount you paid.
• See if you can shorten your list.  Talk with your friends about exchanging cookies or letters of how much you appreciate one another.
• Decide on your budget and be firm on it.  It’s easy to get caught up in the moment of what appears to be a great deal, but you don’t want the credit card hangover in January.
• Consider bringing only one credit card or the cash in your budget.
• If you bring someone else, help each other to stay on target.
• Make sure you budget something for yourself.   After all, you’re the one out there.
• Be safe.  If there’s a donnybrook over the last Giggle Me Something Doll, you really don’t want to be a part of it.  Better to wait and pay a bit more later then pay for medical bills now.  And watch out for crowds that surge. You don’t want to fall down and get stepped on.
• There will always be jerks.  Remember to breathe and don’t lower yourself to their level.
• Bring water to stay hydrated.
• Wear comfortable shoes.

And don’t forget to plan in Cyber Monday when companies have additional sales!
Do you save up to buy something major during black friday?  Or do you just do your holiday shopping?  Or do you stay home and enjoy the quiet day?

How Long Should Your Close Be?

Your offer is almost accepted.  Now you and your Realtor® are working with the seller and their Realtor® on the terms of the close.  How long should it be?

 What is a "Close"?

When people talk about the close of a home sale, they are referring to the close of escrow when all the terms of the purchase contract have been met, the seller deposits the deed, and the buyer deposits the funds.  Some conditions (and yours will vary based upon your location…even in the same state) you will probably need to meet (from About.com Home Buying/Selling)

• Fully executed purchase agreement and addendums.
• Deposit of earnest money deposit.
• Home inspection or waiver.
• Fulfillment of seller obligations such as submission of pest inspection report and / or completion, roof certification, home warranty, preliminary title policy, beneficiary demand receipt, repairs, if any, according to the Request for Repairs.
• Completion of buyer inspections, including release of contingencies, if demanded.
• Buyer’s final walk-through inspection or waiver.
• Appraisal of property by lender’s appraiser.
• Lender’s loan approval and satisfaction of loan conditions by buyer such as depositing evidence of a homeowner insurance policy.
• Seller’s and Buyer’s signed escrow instructions.
• Seller’s signed and notarized deed conveying title.
• Buyer’s signed and notarized deed of trust and executed promissory note.
• Buyer’s signatures on all loan documents.
• Deposit of buyer’s funds from lender.
• Deposit of balance of buyer’s down payment and buyer’s closing costs.

Seller Usually Goes First

Usually, the seller will request a close that is best for them.  It could be long if they need to find another house, or if they want their children to finish out a school term.  Or it could be short because they’ve already moved and want their cash.
One buyer had a set date in the offer for a birthday as the final close.  The seller countered with a sooner date that happened to be his birthday.

Brand New Homes

But what if you’re purchasing a brand new house?  You should work closely with the builders as to their schedule.  If you want to move in sooner, they might have the flexibility to adjust the schedule of which houses they complete when.
Additionally, do your research and find out if the builder is known for completing on time.  If they aren’t, you may want to put in a clause where they pay for your rent for each full month past the agreed upon date.

Other Considerations

You will also need to have enough time for appraisers and inspectors.  If they’re busy, it could delay your final settlement.
Buyers with pre-approval will be able to close much sooner than buyers who are not.  If many people are going for mortgages at the same time, it may not only delay you locking in an optimal rate, but it could also delay your taking possession of the house.  The underwriters will need to process the paperwork and review the appraisal, and this can sometimes take a week or two.  If a document is missing from the file such as a title clearance, it could delay the close.
Other things that can go wrong (also from About.com Home buying/selling)

• Low appraisal or the underwriter orders a review appraisal that does not match the first appraisal.
• Additional debt found on the buyer’s updated credit report.
• Mistakes noted in the buyer’s credit report.
• New liens or judgments filed against the buyer or seller upon title update.
• Clouds on title.
• Marital status change for buyer or seller.
• Required updated bank statements or financial documents.
• Insurance information missing.
• Expired loan or program commitment.

Bottom line is that pre-approval will help.  And work with your Realtor® as to when the close of escrow is best for you, and how flexible you can be.