How To Improve Your Credit FICO Score

This is an adaptation of a good overview by Dan White of Discovery Financial Solutions. You can contact Dan for Discovery's Credit Repair Guide at 773-878-1123 or at Dan4Loans@comcast.net.

A FICO score is calculated using the credit data available on the day the score is requested by a lender. Thus, a score can vary from month to month or even day to day. There are things a person can do to develop a solid credit history and improve the FICO score.

1. Pay bills consistently and on time – recent late payments carry more weight than past late payments.
2. Pay all unpaid collections and judgments – Make sure to obtain “0” balance letters and release of judgment if applicable.
3. Check credit report and remove any errors – If there is inaccurate information on the credit report, it could lower your score.
4. Keep debt reasonable – as a general rule, an account balances should be below 75% of the available credit.
5. Maintain only a reasonable amount of unused credit – having ready access to thousands of dollars of debt can actually make you an unsatisfactory credit risk.
6. Avoid too many inquiries – inquiries are interpreted as a sign that you have been actively seeking credit and could be overextending yourself or that you may be in financial difficulty.

Disputing Inaccurate Information on a Credit Report: To dispute inaccurate information on credit reports, you will need to write to the credit bureau and supply the following information:

1. Full name, first, middle and last and including any applicable suffixes (Jr., Sr., II, etc.)
2. Complete mailing address
3. Date of birth
4. Social Security number (this is necessary to access credit report)
5. The name and account number of the creditor and item in question
6. The specific reason for the disagreement with the disputed item
7. Signature

Notify the Creditor: We also recommend that you write the creditor (bank, department store or other lender) involved in any item that they dispute, detailing the error and the corrective actions they have taken by mail and follow up with them.

Where does Oprah live? And More Answers...

Rumors abound that Oprah lives in Lake Point Tower in Streeterville, said Chicago greeter Jennifer Gordon. But Oprah actually owns a condo in the Water Tower Place, Gordon said, a fact confirmed by a spokeswoman for the Tower's condominium.

RedEye picked the brains of several local historians and sports experts to uncover the truth behind popular traditions, myths and rumors blowing around the Windy City. Check it out.

First Price Decline in 11 Years

The NATIONAL ASSOCIATION OF REALTORS® just reported that the price of existing homes declined nationally for the first time in 11 years in August, signaling that the long-awaited other shoe has finally dropped on the real estate market. The median price for existing single-family homes nationwide slipped 1.7 percent from last August, the first such decline since April 1995. It also was the second-biggest decline in the 38 years the Realtors have gathered sales data. What's this really mean for you?

It's a brilliant time to be a buyer! Expect more for your money and get it! And interest rates are great right now.

Sellers have to be willing to play ball. Motivated sellers need to spruce up and price right to get the deal done, because there are a ton of condos on the market. This is not a market that has any forgiveness, everything has to look good, show well, price well. So, if you're a motivated seller, pay close attention to sales prices of comparable units and get yourself down to that sale price so you can be the next one.

Ten Step Home Buying Process

As an ABR® (Accredited Buyer's Representative), here's a quick overview of the steps I recommend for my clients:

STEP 1 - Wants vs. Needs
Make a list of the top 5 features you absolutely have to have in your new place. This will help both us find the home of your dreams. If you're the analytical type, use my excel based decision model that weights each criteria so you can see which properties score the best. Note, if you are shopping with a life partner, husband, wife etc. then you should each independently make your own lists then negotiate with each other until you agree on your top 5 features.

STEP 2 - Pre-approval vs. Pre-qualification
Knowing how much you can afford will help to streamline your home buying process. Pre-qualification is a relatively short process where your mortgage provider takes into account basic financial information and qualifies you for a certain amount. Pre-approval is generally conducted after pre-qualification. Your mortgage provider conducts a more thorough investigation on your current financial status and provides a pre-approval letter. Having a pre-approval letter to accompany your offer puts you in a stronger negotiating position.

STEP 3 - Neighborhood Information
In your "needs vs. wants" list, list the neighborhood(s) you would be willing to consider. This will again streamline your searching and will allow your agent to conduct thorough searches using all available resources.

STEP 4 - Home search
Search the entire Chicago area MLS for Free. Select homes you are interested in seeing and I'll do the rest! Or, ask me to do a custom search for you...that's what I'm hear to do! I do all the leg work including previewing the property for you if you'd like. Then we go see the finalists.

STEP 5 - Making an Offer
Once you have found the ideal home, it's time to make an offer. I'll do a comparative market analysis of the property and help you determine the terms of your initial offer. Initial earnest money is offered to the seller at this time.

STEP 6 - Negotiating to Buy
Negotiating until a final price is agreed upon is common practice in real estate. Anything is negotiable including price, earnest money, time allowed for attorney review and inspections, as well as the closing date. My years of negotiating experience will be a great advantage for you.

STEP 7 - Vendors & Attorney Review
Once your offer has been accepted, you'll need a real estate attorney to review the contract right away. If the property has a homeowners association, I'll help to get declarations, by-laws, and budgets for you to review with your attorney. Many associations require a move-in packet to be completed for their management company as well. I recommend you have an independent home inspection completed prior to the expiration of the attorney approval period. A new Illinois statute requires that home inspectors be licensed by the state and I can provide you a list of qualified inspectors. Your lender will also need a copy of the contract and will conduct an appraisal to insure that your investment is sound. Again, I can provide you with referrals and I'll coordinate with the different vendors to make sure that everything necessary is completed in a timely and legal manner.

STEP 8 - Pre-Closing
Once the seller and buyer attorneys approve the contract and the balance of earnest money has been paid, the attorneys will be ordering all of the documents needed to complete the transaction and schedule a closing with the title company. During this time your lender will be completing the underwriting process to finalize the loan as well. If you're purchasing a property with a homeowners association, the association will provide proof of hazard insurance for the building to your lender and attorney. If there is no association, your lender will require that you provide an insurance binder showing that you have secured hazard insurance for the property at this time. Here again my assistance in providing referrals and coordinating the activity to insure a timely closing is invaluable.

STEP 9 - Closing
This is the process where transfer of ownership takes place, from the seller to the buyer. Your attorney will guide you through every step and I will be there to answer any questions that arise regarding the property.

STEP 10 - Post-closing
Congratulations, you are now a new homeowner. You will need to set up local utilities and I'll provide you with a list of local utility vendors.

"Cookie Monster"

This shot of my life partner Vlad and me was taken at Sunday's open house at 720 W Randolph by our Kiwi friend Rana. She and Ian are our "open house cookie groupies." Invariably they show up to all my open houses to sample the freshly baked cookies and to provide valuable feedback as to how the home looks. Cheers Mates!

Comments on "Condo Prices Near A Cliff"

Interesting article by Susan Diesenhouse in the Tribune yesterday.

Frankly, I'm not surprised that the first of the big Chicago developers to bail out of the market is American Invsco Corporation. They're known for converting boring old apartment buildings with no glamour (low ceilings, no in unit W/D, limited amenities, etc.) into entry level mediocre condos. I kinda think these buildings should have remained apartments anyhow.

In the next month I predict we will hear more reports of big Chicago condo developers bailing. It'll be more meaningful when the developers known for building quality new condo construction (I know these are few and far between!) begin to pull in the horns.

2BR/2BA + Den Great West Loop Value

If you've been waiting for a deal in the West Loop, here's a great value play. 720 West Randolph Unit 708 (City View Tower) has 1,420 square feet, is nicely upgraded and is in a great location near all the restaurants and shops and transportation.

The seller is seriously motivated and the asking price reflects this motivation. It's listed at $399,000 including a garage parking spot and a flat screen TV with surround sound. Comparable units in the area sell for $425,000 - $435,000.

Make an offer and get a deal!

"Twisty" Tallest N. America skyscraper to be Built in Chicago After All

The Chicagoist reports today that Irish developer Garrett Kelleher has purchased the property where the "Fordham Spire" was to built from The Fordham Company. The wild twisty skyscraper will now be called (yawn) 400 North Lake Shore Drive. It's slated to be 124 stories high and contain 50,000 square feet of retail space and a 20-story, five-star hotel. Sound familiar?

Does anyone else wonder why these developers don't see what most of the rest of us see as obvious. Namely, that there are way too many new developments like this slated to be build in Chicago? That being said, I'm pretty fired up about the design of this one.

Buyers Enjoying Low Mortgage Rates

More good news for buyers. This week's national average interest rates are even lower than last week:

30-year, fixed-rate mortgage 6.4%
15-year, fixed mortgages 6.06%
5-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs), 6.08%
1-year ARMs, 5.54%

Disconnected?

Yes! There's a big disconnect between buyers and sellers and sometimes real estate professionals too. It's a market where buyers can negotiate and they are not in a rush to buy. Some sellers haven't gotten the word yet because they may be basing their concepts of appropriate price on sales prices from 3 to 6 months ago. Some real estate professionals are not yet comfortable in coaching their sellers as to the value of their place in today's market and the time it will take to sell. When they don't get the price they want in 60 to 90 days, many sellers are unhappy and take their place off the market to either try and rent it or just continue to live in the home. So, what percentage of Chicago sellers are not really "motivated?" From what I've seen it's between 40-50%. While this isn't all bad as it keeps prices from sinking too far too fast, it is taking some time for us all to get re-connected.

Step up to the BIG TIME

OK, so we all know it's a buyers market in Chicago and has been for many months...long before most folks were willing to acknowledge it! Now I think it's actually a BIG TIME buyers market with BIG TIME opportunities. There are far more properties on the market for sale then there are buyers who are looking to purchase, in some areas like the West Loop and South Loop some say there's an 11 month inventory! Thus it's a BIG TIME buyers market. Great news for buyers.

Ok, so it's not so great news if you need to sell. That said, don't be taken by the age old misconception that in a buyers market sellers have to sell for less than fair market value. Not true. What is true is that you should expect the sales process to take longer, and A LOT longer if you own a BIG TIME property valued over about $400,000. Here's why:

Depending on which Chicago neighborhood, first time buyers tend to buy in the range of $150,000 and $400,000 and they are still out there buying right now because rates are still relatively attractive...less than 6.5% for a 30-year conventional mortgage at this writing. They know buying beats renting any day especially now when deals can be had. Many of my friends who own $200,000 to $400,000 places are not stepping up to the BIG TIME unless they have to...read: "boy friend / girl friend moved in, we got married or we ABSOLUTELY need more room for the kids." Actually, I think this Fall is generally an excellent time to take the step up to a bigger place as long as you've got the cash flow and credit to do so comfortably.

To sell your current place without the stress, just set your timing and pricing expectations correctly and keep in mind the great deal you'll get when you step up to the BIG TIME and get your dream home at a great price! Oh, and hire a professional to help you because in a market like this a great REALTOR® gives you the edge.

Welcome to Blog Home Chicago!

Today is September 20, 2006 and the first day for Blog Home Chicago which is an open forum for discussion on how, why and where we live in Chicago. I'll post ideas, observations, comments and resources.