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 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

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.

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.

Wondering if you can afford a home in San Diego’s highly sought after North County? You might be surprised that you can! Check out the latest in North San Diego County’s housing affordability:

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 rose, to $2,902 in January 2014 (based on a conventional mortgage) from $2,739 in December 2013.
• The monthly payment for the median-priced SFD home in non-North San Diego County decreased, to $2,196 in January 2014 from $2,238 in December 2013.
• The percent of San Diego County households that could afford the median-priced SFD home in North County decreased, from 28 percent in December 2013 to 26 percent in January 2014, according to the North San Diego County HomeDex; in non-North County the affordability percentage increased, to 38 percent in January 2014 from 37 percent in December 2013.
• The affordability percentage was 37 percent in North San Diego County and 49 percent in non-North San Diego County compared to January 2013.
• The HomeDexTM affordability percentage for all homes in North San Diego County – single-family detached and single-family attached together – was again at 33 percent in January 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 decreased slightly, from $1,719 in December 2013 to $1,717 in January 2014.  The monthly payment for the median-priced SFA home in non-North San Diego County zip codes increased, from $1,430 in December 2013 to $1,452 in January 2014.
• The percent of San Diego County households able to afford the median-priced SFA home in North County increased, to 50 percent in January 2014 from 49 percent in December 2013.
• The SFA home affordability level for non-North San Diego County zip code decreased from 58 percent in December 2013 to 57 percent in January 2014.
• 60 percent of county households were able to afford the median-priced SFA home in North San Diego County in January 2013; 70 percent were able to afford the median-priced SFA home in non-North County zip codes in January 2013.

Article from HomeDex^TM Report.

The Lawhead Team would like to share an article from Coldwell Banker that talks about 5 helpful tips to saving for a down payment.

Read entire article at Coldwell Banker’s website to find out how to save for your down payment.

1. Decide How Much House You Can Afford

The first step is to set your savings goal. Research home prices and determine how much you can afford. Calculators can be found on most bank websites and on the FHA site at www.fha.gov.

As of Feb 2013, the median price of existing homes in the U.S. is $173,600, according to the National Association of Realtors. A 5 percent down payment for a home that price would be $8,680. A 20 percent down payment would be $34,720. If you’re able to save 20 percent, lenders will not require you to purchase Private Mortgage Insurance, which will reduce your monthly expenses.

2. Set Up a Savings Plan

You’ll also need to create a savings plan and set a deadline for reaching your goal. One method is to find the difference between your current housing costs and your projected monthly mortgage payment, and put that much away each month.

This system has the advantage of allowing you to decide if you really earn enough to afford the home you want. “In some cases, if a homeowner is paying a low rent, doubling that payment can be quite a shock, even if the bank says, ‘You meet our guidelines,’” said Mike Hines, homeownership services director for the Sacramento, Calif., office of the NeighborWorks America.

Open a separate savings account for your down payment to minimize the temptation to tap the money for other needs. Also setting up automatic transfers to your new account will lessen the chance you’ll spend the money elsewhere.

3. Pare Back Expenses and Raise Cash

Review your spending habits and determine where you can find extra cash. If you’re determined to buy a house as soon as possible, try living like a tightwad. Start by putting away the credit cards. Then cut out cable TV, switch to a less expensive cell phone plan and reexamine other aspects of your spending until you’ve pared back to just necessities. Use coupons at the grocery store and stay away from the mall. Hold a garage sale or sell unused items online. There are dozens of books and blogs you can turn to for frugal living advice that can help accelerate your savings.

Read two more tips to saving for a down payment from Coldwell Banker.

The Lawhead Team would like to share the latest key points from the North San Diego County Association of Realtors for the housing market in San Diego County.

• The median price for all North County home sales – attached and detached – decreased to $475,000 in November 2013 compared to $482,500 in October 2013.
• Detached homes in North County decreased 5.44 percent to $539,000 in November 2013 compared to $570,000 in October 2013. Year-over median price for SFD housing in North San Diego County increased 11.25 percent, compared to $484,500 in November 2012, continuing a 16-month trend of year-over median price increases.
• Detached housing prices OUTSIDE North County decreased 1.38 percent to $429,000 in November 2013 compared to $435,000 reported in October 2013. Year-over non-North County median price jumped 15.98 percent compared to $369,900 in November 2012, continuing a 20 month trend of year-over median price increases.
• Attached home prices in North County rose 10.67 percent to $350,000 in November 2013 compared to $316,250 in October 2013. Year-over SFA North San Diego County median price jumped 30.84 percent, compared to $267,500 in November 2012, the 23 month of year over price increases.
• Non-North County attached housing prices decreased 1.58 percent to $280,500 in November 2013 compared to $285,000 in October 2013. Year-over non-North County SFA median price increased 9.21 percent, compared to 256,850 in November 2012.
• The number of North San Diego SFD listings (active and contingent) decreased 11.21 percent in November 2013 compared to October 2013, and decreased 5.12 percent year-over compared to November 2012 – the 27th straight month of year-over declines in listings.
• The number of sold North San Diego County SFD units rose 13.95 percent in November 2013 compared to October 2013. Year-over sold SFD units declined 6.91 percent compared to November 2012.
• Median days-on-market for single-family detached housing sold in North County increased to 32 days in November 2013 compared to 30 days in October 2013.
• The HomeDex affordability percentage for all homes in North San Diego County – attached and detached – was 33 percent in November 2013.

Finding the right home loan.

Just as you shop for a home, it is important to shop for what type of loan will be best for you and your family.

The Lawhead Team would like share some common home loans and why they are beneficial. If you have any questions about applying for a home loan, please call us and we would be happy to help steer you in the right direction.

30 Year Fixed – A 30 year fixed is a loan where interest and mortgage payments remain the same for 30 years, at which time you will have paid back the entire loan. This is good for those who prefer the security of fixed-monthly payments like fixed-monthly mortgages. Often, this loan is more expensive than its adjustable-rate counterparts, but is easier to understand and provide the greatest payment stability. If you can afford this loan and plan to be live in your home for 10 or more years, this may be the best option for you.

15 Year Fixed – These are mortgages where interest and mortgage payments remain the same for 15 years, at which time you will have paid back the entire loan. These loans offer the lowest fixed rates but have the highest monthly payments because you are paying off the loan in a shorter time-frame. This is good for those who prefer the security of fixed-monthly payments and can afford the higher monthly payments of a 15-year term like this loan. You will build equity quickly, but the high monthly payments may restrict the overall price of the home you can afford.

ARMs – Adjustable-rate mortgages (ARMs) are mortgages where the interest rate you pay adjusts at a specified time and frequency. There are many different ARM products, but generally they offer a lower initial rate than a 30-year fixed and they adjust with market trends. Therefore, when your initial rate period ends and your ARM is ready to adjust you may be paying more (with higher current market trends) or less (with lower current market trends) than your initial rate. Generally, ARMs follow this pattern: the shorter the initial term, the lower the initial rate.

Interest Only – These are fixed or adjustable rate mortgages where you the option of paying interest only for a specified term, usually five to ten years. After the initial term the mortgage switches to a fully-amortizing loan for the remainder of the loan. This is good for people who expect their financial situation to change in the near future. Young professionals like doctors and lawyers may also prefer this loan since they believe they will be making significantly more money in the future than they do now.

Payment Option “flex pay” – These are mortgages where you have the option of paying different amounts each month. Usually, the monthly payment options include a low payment option, an interest-only option and an interest plus principal option. The low payment option creates negative amortization and usually adjusts yearly with a maximum rate cap. This is good for people that do not have steady incomes may like this loan. It provides the most flexibility from month to month.

As you are probably aware, mortgage rates are now starting to make their way back up from their record low numbers.

The Lawhead Team would like to share an article from US Finance Post about the expected increase in mortgage rates seen here is the US:

An Increase in Mortgage Rates Should be expected

Reporter: Rebecca Freeman

As mortgage rates have risen recently, many people appear to have started to panic. Mortgage rates really haven’t spiked, but they have increased, experts say. The increase appears to be a shock to some, but analysts point out the rates had been dropped to all-time lows.

All good things must end, and that is the case with the mortgage rates. Experts point out that two months ago, a 30-year fixed rate mortgage had an interest rate of only 3.35 percent. Instead of working about them increasing to slightly over four-percent, people need to realize why they were so low.

The rates were reduced because the Federal Reserve had no confidence in the economy. Rising mortgage rates has a positive overall meaning, the economy is improving. An improving economy has a major overall impact on a variety of industries and markets.

What should be expected? Experts say as the economy improves, mortgage rates will slowly increase and make it back to their normal levels.

While some reports have indicated that rising interest rates could negatively impact the housing market, others indicate that is not the case. According to the Mortgage Bankers Association, the volume of applications to refinance mortgages since May has dropped by 53 percent. The volume of applications for purchase-money mortgages, which are mortgages for those wanting to buy homes, has decreased by only eight percent.

To sum it up, fewer people need to refinance and the number of those wanting to buy since May has been barely affected. The number buying new and existing homes has not been drastically affected by the rising rates. The most recent national average has the thirty-year fixed rate mortgage at 4.51 percent. The Wall Street Journal has pointed out that even when that rate reaches five percent the cost of housing is still affordable by historical standards.

So as the economy improves, the mortgage rates will continue to rise. Overall, that could be a positive thing because it means that many industries are seeing growth. When industries see growth, there is an increase in cash flow. If people have the cash flow, they can and will buy houses. Increasing mortgage rates are not to believe to result in a major negative impact on the housing market, according to analysts.

However, if someone wants to take advantage of the historically low mortgage rates, now is the time to act, experts indicate. As the economy improves, the rates will continue to climb.

Read entire article here: http://usfinancepost.com/an-increase-in-mortgage-rates-should-be-expected-2892.html

If you are shopping for a home, you will also want to shop around for the right home mortgage to fit your needs.

The Lawhead Team would like share some common home loans and why they are beneficial. If you have any questions about applying for a home mortgage, please call us and we would be happy to help steer you in the right direction.

• 30 Year Fixed – These are mortgages where interest and mortgage payments remain the same for 30 years, at which time you will have paid back the entire loan. This is good for those who prefer the security of fixed-monthly payments like fixed-monthly mortgages. Often, this mortgage is more expensive than its adjustable-rate counterparts, but is easier to understand and provide the greatest payment stability. If you can afford this loan and plan to be live in your home for 10 or more years, this may be the best option for you.
• 15 Year Fixed – These are mortgages where interest and mortgage payments remain the same for 15 years, at which time you will have paid back the entire loan. These loans offer the lowest fixed rates but have the highest monthly payments because you are paying off the loan in a shorter timeframe. This is good for those who prefer the security of fixed-monthly payments and can afford the higher monthly payments of a 15-year term like this mortgage. You will build equity quickly, but the high monthly payments may restrict the overall price of the home you can afford.
• ARMs – Adjustable-rate mortgages (ARMs) are mortgages where the interest rate you pay adjusts at a specified time and frequency. There are many different ARM products, but generally they offer a lower initial rate than a 30-year fixed and they adjust with market trends. Therefore, when your initial rate period ends and your ARM is ready to adjust you may be paying more (with higher current market trends) or less (with lower current market trends) than your initial rate. Generally, ARMs follow this pattern: the shorter the initial term, the lower the initial rate.
• Interest Only – These are fixed or adjustable rate mortgages where you the option of paying interest only for a specified term, usually five to ten years. After the initial term the mortgage switches to a fully-amortizing mortgage for the remainder of the loan. This is good for people who expect their financial situation to change in the near future. Young professionals like doctors and lawyers may also prefer this mortgage since they believe they will be making significantly more money in the future than they do now.
• Payment Option “flex pay” – These are mortgages where you have the option of paying different amounts each month. Usually, the monthly payment options include a low payment option, an interest-only option and an interest plus principal option. The low payment option creates negative amortization and usually adjusts yearly with a maximum rate cap. This is good for people that do not have steady incomes may like this loan. It provides the most flexibility from month to month.