Credit can be a wonderful thing, but, like eating cake, too much of a good thing can backfire on you. And for wannabe homeowners, loan approval relies more on your history of debt repayment than on your income or savings.

How do you know if your credit history is healthy? First, don’t rely on guesswork. Order a copy of your credit record, preferably three months before applying for a loan. You’ll see where you stand and have time to clear up errors, which are a common finding, on your record.

How Is Credit Risk Measured?
In today’s lending market, most credit reports are automated, relying on a credit “scoring” system that analyzes about 100 variables to gauge the likelihood that the borrower will make on-time payments.

The information measured is gathered from retailers, public records, and sometimes credit applications and bank records. The score analyzes patterns over time, with more recent payment and debt habits holding greater weight. In the scoring system used by Fair, Isaac—the originators of scoring software—the main criteria and their approximate percentage of importance are:

Payment history (35%)
Amounts owed (30%)
Length of credit history (15%)
New credit—a warning of taking on too much debt (10%)
Types of credit in use (10%)

Lenders use these credit scores, which range from 400 to 900 points, along with information such as the stability of your income, your employment history, and the value of any collateral and liquid assets, to determine your credit risk.

Establishing Good Credit
These tips will help you establish and maintain a healthy credit history:

Open an account. The only stumbling block as serious as poor credit history is no credit history. To receive an automated credit scoring, you must have at least one account that’s been open longer than six months and shows activity within the past six months. (On-time utility and rent payments may apply.) To establish credit, start by requesting a credit card from your bank; that will trigger other offers.
Don’t go crazy on credit. Don’t rush to open multiple accounts just so you can pay them off to raise your credit rating. Lenders see too many credit applications as a sign that your finances might be overextended. Applying for new accounts actually lowers your rating, since it lowers the average length of your account history—and, especially if you’re new at using credit, it signifies risky behavior.
Pay down before saving up. Lots of savings or a high income may help you with a down payment, but if your credit history is questionable, you’ll be lucky to reach that point. Lenders want a track record of responsible debt payment—that’s how they make their living. Make a habit of paying your bills, preferably in full but always on time. Paying down debts also saves you more on each dollar by reducing high interest payments.
Minimize credit checks. Whenever someone requests your credit report, it appears in your credit history. According to Fair, Isaac, you can order copies of your own report from credit reporting agencies without worry; they even advise that you do this annually to check its accuracy, especially before a large purchase such as a house or car. But it could be a red flag if too many loan officers, credit card companies, or car dealerships are requesting your credit record.
Don’t take it to the limit. Lenders are wary of too many cards, but a bigger warning sign is even one account that’s maxed out; they see it as a sign that you’re overextended. The ideal is to use only one or two cards with medium balances that you pay on time (remember, punctuality is more impressive than full payments). On the other hand, if your debts reach the limit on one or two cards it’s better to redistribute lower balances over several accounts.
Hold off on purchasing big “toys.” Lenders like low debt, so unless yours is very low, hold off on charging a car, a boat, appliances, or large furniture until after you’ve closed on a new house.

Cleaning Up Your Credit
If you have credit problems, make improvements before applying for a loan. Even if your history includes a bankruptcy or foreclosure, following these tips can polish up your record enough to help you qualify for a future loan:

If you’ve made late payments in the past, take six months to a year and make every payment on time before applying for a loan.
Use cash whenever possible, and stop charging.
Use secure savings to pay down high debts vs. saving for a down payment that may never happen.
Lower the balances on all credit cards; as they’re paid off, write to each company canceling your account until just one or two remain.
Pay down installment loans such as car payments.
Don’t open any new credit accounts.
If you’ve had a good credit history for seven years (the period considered in scoring), but it was damaged by extenuating circumstances, write a 100-word explanation to file with your loan application.
For serious credit problems, ask a credit counseling center about signing up for a home buyer’s payoff program and apply for a loan only when you’re nearing the end of the program.

Still turned down?
If your lender turns down your application because of poor credit, ask for precise reasons and for a copy of your Residential Mortgage Credit Report. If it contains errors, be sure the dates of facts in question are within the past seven years; anything older shouldn’t be used to assess your credit risk. Advise your lender of errors immediately, and contact the relevant agency or agencies below to request a new investigation of questionable areas. And be sure that credit accounts you’ve closed are noted as “closed by consumer.” (Note: Closing an inactive account doesn’t remove its history from your record.) Finally, ask your lender if you’re a good candidate for “rapid rescoring”—a growing trend in which a local credit-reporting agency analyzes your report for inaccuracies and gives specific advice, potentially raising your score in a matter of days.

If you’re turned down for a conventional loan because of credit problems, you can probably still qualify for a loan with a lender that works with people who have a B or C credit rating or a subprime lender, but expect a substantially higher interest rate. But be extremely cautious with “special” loans offered to high-risk first-time buyers—they often demand impossibly high interest rates or promise future refinances that never happen.

Even with a great credit history, remember to review your credit report annually or before making major purchases. Below are the three credit bureaus that provide credit scoring to lenders:

Experian: 888-397-3742 or www.experian.com
Equifax: 800-685-1111 or www.equifax.com
Trans Union: 800-916-8800 or www.transunion.com

The Federal Reserve raised short-term interest rates a quarter-point for the fourth time in five months Wednesday, extending its campaign to keep inflation in check after the economy showed impressive job growth over the past three months.

The decision by Fed Chairman Alan Greenspan and other central bank policy-makers, which was widely expected, brings the overnight federal funds rate to 2 percent, up from 1 percent in June when the Fed began raising the benchmark from its lowest level in 46 years.

“Output appears to be growing at a moderate pace despite the rise in energy prices, and labor market conditions have improved,” the Fed said in a statement explaining the decision.

Fed officials appeared slightly more upbeat than they were Sept. 21, when the central bank said in a statement that “output growth appears to have regained some traction, and labor market conditions have improved modestly.”

Joel Naroff of Naroff Economic Advisors said the latest statement makes it “almost a certainty” the central bank will raise the funds rate by another quarter-point at its next meeting Dec. 14, although other economists are divided on the question. But given the recent evidence of strong job growth, most analysts agree the Fed’s policy-setting Federal Open Market Committee is not finished with the rate-hike campaign.

“Eventually, the Federal Reserve will reach the neutral rate of 3.5 to 4 percent,” Wells Fargo chief economist Sung Won Sohn said in a written commentary. “How rapidly the FOMC moves will depend on the economy and inflation.”

The central bank is slowly but steadily raising borrowing costs for consumers and businesses after a period of unusually low rates. The prime rate, a benchmark commercial rate that rises in lockstep with the federal funds rate, was raised by major banks to 5 percent from 4.75 percent after the Fed’s move.

But long-term interest rates, including 15- and 30-year mortgage rates, actually have fallen since June in a reflection of concern about a slowdown in economic growth. As the Fed continues to raise rates, it is all but inevitable that long-term rates will rise, analysts say.

The latest move brings the federal funds rate above the core rate of inflation for the first time since the terrorist attacks of Sept. 11, 2001, said Michael Wallace, global market strategist for Action Economics. The 9/11 attacks triggered a series of emergency rate cuts from a Fed already in the midst of an aggressive effort to boost the flagging economy

* Know local sales prices

* Ask your agent to check comparable homes sales or do your own research to measure your offer against current price tags.

* Don’t get carried away in a multiple-offer situation

* Stick to your market research and negotiate with a clear head. You may win the bid if you offer better terms, and still get a lower price.
Control your emotions

* No matter how much you want the house, you’ll probably feel worse knowing you overpaid.

* Never buy the best house on the block

* It’s not as likely to appreciate in value as a lesser property.

* Don’t be afraid to walk away

* Get underwritting approval if you are not paying cash it will help you negociate

* Find a Buyer Broker, they can be a vaule asset and may farm an area / subdivision you want and beat everyone to the punch

—Arizona is experiencing the California Market, you know, low inventory, multilple offers, and apprasial problems

Avoid most problems by call 480.695.6485 Now
Unless it’s a unique property, you’ll probably find another house you like just as much.

Identity thieves may have obtained sensitive information about thousands of Wells Fargo mortgage and student loan customers, after four computers containing customer account numbers and Social Security numbers were stolen last month.

The incident occurred in mid-October, when the computers were stolen from the Atlanta office of Regulus Integrated Solutions, a vendor that prints the loan statements for the bank. The computers also contained customers’ names and addresses.

The theft marks the third time in roughly a year and a half that computers housing Wells Fargo mortgage customers’ personal data were stolen.

“To this date, in all these incidents, we have had no indication anyone’s information was compromised,” Kevin Waetke, a Wells Fargo spokesman, said Wednesday, adding that the bank considers each case an isolated incident. “We have always reviewed our policy around our security measures and take such steps as encrypting data when possible and making sure our information is password protected.”

In the Atlanta case, no passwords or personal identification numbers were housed in the computers, he said. Wells Fargo began issuing warning letters on Oct. 25 to customers whose data was housed on the stolen computers. Those customers will be offered 12 months of free enrollment in Wells Fargo’s identity protection program, Waetke said.

Wells Fargo declined to release the number of loan holders affected by the latest theft but noted it was a small percentage of its total pool of 4.9 million mortgage customers and 890,000 student loan holders. Waetke said the number of customers affected was in the “thousands.”

In the other two cases, a Wells Fargo vendor in Concord, Calif., had several items stolen in November 2003, including a desktop that contained personal data of the bank’s mortgage and home equity customers. And in March of last year, a St. Louis bank employee’s car was stolen. In the bag was a laptop containing customers’ sensitive mortgage data, Waetke said. The car was later recovered, but the laptop was not.

At some point, most homeowners find that their home no longer suits their lifestyle needs. You may have purchased your home when there were just two in your family and now there are four. Or perhaps you’re working at home more and need space for a home office. A question that often comes to mind is whether it’s better to remodel your existing home to fit your new lifestyle, or sell the home and buy another one.

Use the following list of questions to guide you through the decision-making process:
Is your current home in the right location?
What don’t you like about your current home?
Is it feasible to remodel your home to create the kind of living space you need?
How much will the remodel cost? Can you afford it?
Will you be over-improving for the neighborhood?
Can you realistically live through a remodel project?
Is it possible to buy a home that will suit your needs? Can you afford it?
Is it more cost effective to buy another home or remodel the existing one?
Is there an urgency factor? Remodeling takes time-usually more time than you anticipate it will take.

The decision is an easy one if you’re not satisfied with your current neighborhood. If the local public schools don’t work for your children, and you can’t afford the cost of private schooling, it probably makes sense to move to an area with good public schools rather than spend money to remodel your existing home.

If your neighborhood works for you, start researching whether your home can be modified to suit you for a price that’s affordable. Make a list of the features your current home lacks as well as those features that you want and need. Ask friends who remodeled recently, or your real estate agent, to recommend architects to you.

Meet with an architect—you may want to interview several—to discuss the feasibility of the project you have in mind. This will also give you an opportunity to see if an architect is someone with whom you’d like to work.

Make sure you talk with local architects who know the ins and outs of the local zoning and permitting departments. You may want to have preliminary drawings done, but don’t spend money on a complete set of architectural plans until you’re sure you want to move forward. Once you know the renovation is feasible, consult with contractors to get ballpark estimates of how much the project will cost.

First time tip: Homeowners often make the mistake of assuming that they’ll recoup the full cost of a major renovation when they sell. This is rarely the case, unless you own the property for a significant time after the renovations are completed. So don’t undertake a major remodel unless you plan to stay in your home for the long run.

It’s a good idea to talk to your real estate agent to make sure that the renovations you’re contemplating won’t over-improve your home relative to other homes in the neighborhood.

For example, one couple needed a larger home for their growing family. They lived in a tract development where homes were the same size and approximately the same value. Creating a larger home in a neighborhood of small homes would have been a mistake financially because the most expensive home in the neighborhood usually sells at a discount. Instead of remodeling, these homeowners bought a larger home in a more affluent neighborhood. This house also needs renovations, but the neighborhood easily supports making this kind of investment.

The closing: To ensure you make the right choice, weigh your decision to move or remodel carefully based on the cost, the work necessary, the location and nature of your neighborhood and surrounding homes. No matter what your decision may be, with all the information at hand, you’ll make a better investment in the end.