The Lawhead Team would like to share the C.A.R.’s Center for Real Estate’s latest “One Cool Thing” about what stands in the way of achieving the American Dream.

Prospective home buyers face numerous challenges when it comes to achieving the American Dream of homeownership, but obstacles remain and often vary among ethnic groups.

Among those who plan to buy a home, the biggest challenges home buyers face are:

• 29% Saving for a down payment
• 27% Lack of inventory
• 22% Access to credit and financing
• 19% Personal debt

Click the image below for more hurdles home buyers face achieving the American Dream.

Source: The Futures Company in partnership with the CALIFORNIA ASSOCIATION OF REALTORS® Center for California Real Estate

The Lawhead Team would like to share the latest One Cool Thing to let you know how your credit scores are being used.

Who’s Checking Your Credit?

Consumers underestimate the impact of credit scores – and a significant number don’t even know that credit scores are used by non-creditors.

Only half of consumers know when lenders are required to inform borrowers of their use of credit scores:

1. After a mortgage application
2. When not receiving the best terms on a loan
3. Whenever a consumer is denied a loan

Not all consumers know which companies look at credit scores:

• 53% know that electric utilities may use credit scores
• 66% know that credit scores may be used by home insurers
• 68% are aware that cell phone companies look at credit scores
• 70% know that landlords check credit scores

Source: Consumer Federation of America

The Lawhead Team would like to share the latest “One Cool Thing” from the California Association of Realtors about homebuyers and their credit.

Spring and summer mean warmer weather and increased home sales, according to C.A.R. data. However, a new Experian survey suggest many homebuyers dread the process because they’re unaware of their credit scores.

• 70% of prospective buyers who know their credit scores feel significantly more prepared to buy a home
• 54 % do not know their scores
• 62% of potential buyers are confident about their credit status
• 60% of future buyers say they are financially prepared to buy a home

Taking Action

• 58 % of future homebuyers are working to improve their credit in order to qualify for a better home loan interest rate
• 55% are paying off debt
• 54% are paying bills on time
• 28% are keeping balances low on credit cards
• 20% are protecting credit card information from fraud/identity theft
• 16% aren’t applying for or opening new credit accounts

Source: Experian Home Buying and Credit: Survey, Report 2015

 The Lawhead Team would like to share the latest One Cool Thing from the C.A.R. to help you understand what affects your credit score.

When it comes to credit reports and FICO scores, there is a lot of confusion about what actually impacts one’s ability to open a credit card, finance a car, or purchase a home.

Myth 1: Your credit scores drop if you check your own credit

• Truth: Viewing your credit report counts only as a “soft inquiry” and doesn’t change the score. “Hard Inquiries” by a lender or creditor, though, can slightly lower your credit score.

Myth 2: You should close old or inactive accounts to help your credit score

• Truth: Closing accounts may actually have the reverse effect of lowering your credit score because it can shorten the measured duration of your credit history.

Myth 3: Paying off a negative record means it’s taken off your credit report

• Truth: Generally, negative records like collections or late payments will remain on your credit report for up to seven years.

Myth 4: Cosigning doesn’t mean you’re responsible for the account

• Truth: If you open a joint account or cosign a loan, you will be held legally responsible for the account, meaning activity on the joint account is displayed on credit reports of both account holders.

Myth 5: Maying on-time rental, utility, and cell phone payments helps my credit score

• Truth: While outstanding rental, utility, and cell phone debt that have gone to collections can negatively affect your score, generally, on-time payments are not regularly reported to credit bureaus

Myth 6: Your credit score reflects changes or trends in your payment behavior

• Truth: Historically, credit scores have not incorporated trended credit information, meaning they are a moment-in-time glimpse at consumer risk.

Source: TransUnion

Are you looking to purchase a home in North San Diego County? Check out the latest in housing affordability from the CAR’s HomeDex Report:

Housing Affordability – Single-Family Detached Homes

• The monthly payment – including principal, interest, property taxes, and insurance – for the median-priced SFD home in North San Diego County fell, from $3,004 in September 2014 (based on a conventional mortgage) to $2,826 in October 2014.
• The monthly payment for the median-priced SFD home in non-North San Diego County declined, from $2,338 in September 2014 to $2,313 in October 2014.
• The percent of San Diego County households that could afford the median-priced SFD home in North County increased, from 25 percent in September 2014 to 28 percent in October 2014, according to the North San Diego County HomeDex; the affordability percentage in non-North County zip codes also increased, from 36 percent in September 2014 to 37 percent in October 2014.
• The affordability percentage was 25 percent in North San Diego County and 37 percent in non-North San Diego County in October 2013.
• The HomeDexTM affordability percentage for all homes in North San Diego County – single-family detached and single-family attached together – remained at 32 percent in October 2014

Housing Affordability – Single-Family Attached Homes

• The monthly payment – including principal, interest, property taxes, and insurance – for the median-priced SFA home in North County increased to $1,932 in October 2014. The monthly payment for the median-priced SFA home in non-North San Diego County zip codes dropped, to $1,561 in October 2014 from $1,602 in September 2014.
• The percent of San Diego County households able to afford the median-priced SFA home in North County fell, from 46 percent in September 2014 to 45 percent in October 2014.
• The SFA home affordability level for non-North San Diego County zip code increased, to 56 percent in October 2014 from 54 percent in September 2014.
• 52 percent of county households were able to afford the median-priced SFA home in North San Diego County in October 2013; 57 percent were able to afford the median-priced SFA home in non-North County zip codes in October 2013.

The Lawhead Team would like to share the latest “One Cool Thing” about different age groups’ interest in buying a home and how Generation Y is at the top of the home buying list.

Although millennial face multiple challenges, including tight credit, limited inventory, and high debt loads, Generation Y sees a home as a good investment, and comprises one-third of recent buyers.

Who’s ready to buy?

• 9% of those looking to buy are the Silent Generation (born between 1925 and 1945)
• 14% of those looking to buy are Older Boomers (born between 1946 and 1954)
• 16% of those looking to buy are Younger Boomers (born between 1955 and 1964)
• 30% of those looking to buy are Generation X (born between 1965 and 1979)
• 31% of those looking to buy are Generation Y (born between 1980 and 1995)

The median income of Generation Y is $73,600. The median age of the Generation Y home buyer is 29 years old and the average home purchase price is around $180,000.

The median income of Generation X is $98,200. The median age of the Generation X home buyer is 40 years old and the average home purchase price is about $250,000.

Check out the California Association of Realtors® “One Cool Thing” about Generation Y.

The Lawhead Teams would like to share the latest from the California Association of Realtors® HomeDex Report about single family attached homes in San Diego:

• The North San Diego County median-priced single-family attached (SFA) home increased 2.13 percent, to $380,450 in May 2014 from $372,500 in April 2014.
• Non-North San Diego County SFA home median price fell 2.36 percent, from $317,500 in April 2014 to $310,000 in May 2014.
• North San Diego County SFA median price jumped 20.78 percent year-over, compared to $315,000 in May 2013, the 28th month of year-over price increases.
• Non-North County SFA median year-over price increased 5.89 percent, compared to $292,750 in May 2013.
• San Diego County SFA home median price increased 0.45 percent, to $335,000 in May 2014 from $333,500 in April 2014.  Year-over county median price increased 9.84 percent compared to May 2013.
• The median number of days-on-market for North County SFA homes sold remained at 14 days in May 2014.  The average number of days-on-market fell to 29 days in May 2014, from 34 days in April 2014.
• The number of sold SFA units decreased 13.85 percent in May 2014 from April 2014; the number of sold SFA units in non-North County Zip Codes decreased 5.38 percent in May 2014 from April 2014.
• Year-over SFA sales in North San Diego County increased 1.51 percent, compared to May 2013. Non-North County year-over sold units decreased 10.63, compared to May 2013.
• SFA listings (active and contingent) in North San Diego County increased 11.85 percent in May 2014 from April 2014, and increased 27.32 percent year-over from May 2013.  San Diego County SFA listings (active and contingent) increased 12.81 percent in May 2014 from April 2014, and increased 23.61percent year-over compared to May 2013.

Planning to buy a home in the near future? Check out these ten steps from TransUnion to prepare your credit and finances to apply for a mortgage:

1. Start with your credit report. The first thing lenders will probably do when you apply for a mortgage loan is to check your credit; you should, too. There’s no better time for regular credit monitoring than when you’re trying to prove your creditworthiness to a lender so you can get the best possible rates. You want to make sure that your credit report is as accurate as possible, your scores are where you want them to be, and no one else is getting access to your credit, possibly harming your scores.
2. Then, get things in order. Once you’ve been keeping regular tabs on your credit report, you’ll be able to see how you’re doing. Dispute any inaccuracies with the 3 credit bureaus and get everything cleared up. If your debt-to-credit ratio is too high, monitoring your score over time will show you how your score might change. If you see accounts that you didn’t open or addresses that aren’t yours, take immediate steps to investigate what could be identity fraud.
3. Do your homework. Yes, the word “homework” makes us shudder too, but this time the reward is much bigger than memorizing geometry theorems or the periodic table. You’re finding a home but you’re also making a financial commitment you’ll have to live with for years: get the best deal you can. Research loans, rates and brokers exhaustively before you sign or commit to anything. Doing the hard work now will pay off down the road with a better rate and terms.
4. Be realistic about what you can afford. Home ownership may be the American dream, but keep one foot on the ground, too. If you’re looking for a rate that will require you to come up with a 20% down payment and you only have about 5%, figure your calculations based on the rate you’ll be able to get.
5. Understand how lenders operate. Your credit score, on which lenders base much of their decision about your loan amounts and rates, is a reflection of their confidence in your ability to repay them. In a nutshell, the higher your credit score is, the easier it will be to get the amount and rate you want.
6. Decide how you’ll finance it. Once you research the types of financing available, determine which is best for your financial situation when buying a home: 15-year mortgage or 30, adjustable or fixed. If you are looking for security and a guarantee that payments won’t increase, a fixed rate mortgage might be the way to go. If you believe mortgage rates could still fluctuate and you want more flexibility, consider an adjustable rate mortgage.
7. The larger your down payment, the wider your options. See number 4, it’s important to be realistic. So within a realistic framework of what you can afford, the more you put down, the better your terms. The days of zero down payments, especially on a mortgage, seem to be winding down. Putting more money down up front will help ensure you pay less each month.
8. Check on pre-payment penalties. Something else to keep in mind when finding your perfect mortgage is whether or not you’ll be penalized for paying the mortgage off early. Some homeowners double up on payments to reach the end of their term sooner—regularly or when they experience a cash windfall. Check and make sure you won’t be dinged for actually getting to your goal sooner!
9. Take a targeted, rather than shotgun approach to mortgage applications. Remember that whenever you apply for a loan, including a mortgage, the “hard inquiry” the lenders make shows up on your credit report and temporarily lowers your score. Applying for several mortgages in a two week period only counts as one inquiry, but if you drag it out and canvas as many lenders over a longer period, you’ll end up doing damage to your score, which could result in a lower rate than you were hoping for.
10.  “Not now” doesn’t mean “never”. Home ownership is just not a realistic option for everyone right now, despite what may look like once-in-lifetime mortgage rates. If you fall into this category, don’t despair. Your financial circumstances could change, the economy is still very much in flux, and remember that the current mortgage crisis involved a lot of home buyers getting in over their heads. When it comes to a major purchase like a home, timing is critical.

Read entire article from TransUnion – Ten Tips When Preparing For A Mortgage.

The Lawhead Team would like to share some recent statistics for single-family attached homes such as town-homes and condominiums in North San Diego County:

• The North San Diego County median-priced single-family attached (SFA) home jumped 15.39 percent, from $322,813 in March 2014 to $372,500 in April 2014.
• Non-North San Diego County single-family attached home median price increased 9.24 percent, to $317,500 in April 2014 from $290,650 in March 2014.
• North San Diego County SFA median price increased 12.88 percent year-over, from $330,000 in April 2013 – the 27th-month of year-over price increases.  Non-North County SFA median year-over price increased 19.81 percent, from $265,000 in April 2013.
• San Diego County SFA home median price increased 10.98 percent, from $300,500 in March 2014 to $333,500 in April 2014.  Year-over county median price increased 15 percent compared to April 2013.
• The median number of days-on-market for North County single-family attached homes sold declined, from 21 days in March 2014 to 14 days in April 2014.  The average number of days-on-market fell from 51 days in March 2014, to 34 days in April 2014.
• The number of sold SFA units increased 37.32 percent from March 2014 to April 2014; the number of sold SFA units in non-North County Zip Codes increased 17.59 percent from March 2014 to April 2014.
• Year-over single-family attached sales in North San Diego County increased 23.81 percent, from April 2013. Non-North County year-over sold units increased 14.42, compared to April 2013.
• SFA listings (active and contingent) in North San Diego County increased 13.64 percent from March 2014 to April 2014, and increased 14.84 percent year-over from April 2013.  San Diego County SFA listings (active and contingent) increased 5.3 percent from March 2014 to April 2014, and increased 10.46 percent year-over compared to April 2013.

Whether you go with a conventional loan, FHA loan or a VA loan, there are different features that many loans offer.

The following are some of those features:

Fixed Rate – A mortgage with a fixed rate means your interest and mortgage payments remain the same, or “fixed”, through the entire loan. Typically the loans are for 15 to 30 years. A 15 year loan will obviously have higher monthly payments but you will end up saving more than half of the interest costs than a 30 year fixed loan and pay it off in half the time.

Adjustable Rate – This type of mortgage is also known as an ARM. The interest rate on an ARM fluctuates during the entire life of the loan. Your interest rate will be modified based on a predetermined economic index established at the beginning of the loan. Most of the time a max is set on the interest rate to avoid enormous increases. An ARM is usually safe only if your budget can afford to handle fluctuating payments.

Payment Option Adjustable Rate – This type of loan accommodates a households fluctuating cash flow which include minimum payment options, interest only payment options and others. You will want to thoroughly understand these types of loans because you need to make sure you are prepared for a sudden increase in payment.

Balloon Rate – A balloon mortgage has a fixed rate but for a shorter term than 15 or 30 years. At the end of the balloon rate (the fixed rate), the borrower must pay the remaining lump sum or refinance. If the buyer is purchasing unimproved property that they plan to build on in less than ten years, a balloon mortgage may be a good option.

Talk to a lending professional to find out what the best type of loan for you is. We highly recommend knowing exactly what you are getting into when you apply for a home loan.