8 Tips to Getting Your Holiday Debt Under Control

Now that the holidays are over, resolve to eliminate your credit card debt. This is the first step in achieving financial independence. Imagine not having to pay 21% interest to the credit card companies every month! You could be saving $50-150 per month in interest payments. That results in $600-$1800 per year in interest payments alone!

Did you know that your credit score can plummet just by being maxed out on your credit cards? Even if you make the minimum payment every month, you can still receive a low credit score. With mortgage guidelines tightening, you need every point you can get to receive the most favorable interest rates. Let's resolve to remove your credit card debt!

1. Make a list of your credit cards. Create a spreadsheet or grab some graph paper. Write down the name of the creditor, the credit limit, the total amount owed, the minimum payment due each month, the interest rate, and the date due.

2. Develop a plan of attack. Decide how much money each month you can devote to paying down your credit cards. Once you have this amount, stick with it. This number is non-negotiable. You must make this payment, or else!

3. Develop the payoff order. Order your credit cards where the card that has the lowest balance goes first, and so on.

4. Determine your monthly payment amount. Write a payment amount that you agree to pay each credit card company every month. Hint, the first credit card in your order will get the lion-share of the payment. Every subsequent credit card will get a minimum payment plus a little extra. I'm a big fan of always paying above the minimum balance, even if it's only $5.

5. Always add late fees, over the limit fees, and annual fees to the monthly payment. If you receive any of these fees, your minimum monthly payment should include these fees to keep them from being added onto your principle balance of the credit card. The idea here is to pay off these cards, not incur more debt!

6. Stop using your cards! If you want to eliminate your credit card debt, you need to stop using your cards. Try carrying cash. Set up a budget and stick to it. It's not as difficult to make a plan and stick with it!

7. Monitor your progress. You should monitor each credit card and watch those principle balances decrease. Each balance on each credit card should calculate to less than 30% of your credit limit. Once you achieve this with all of your credit cards, your credit score should improve.

8. Keep your credit lines open. There are many factors that go into the calculation of your credit score. The age of your active credit lines is one of them. The older your credit cards are, the better it is for you. Financial institutions will look at you as being less risky than someone who has only been managing credit for less than a year. Even if you don't plan to use the card in the foreseeable future, take it from your wallet and put it in a safe place. Experts recommend that you use each card at least once every 6 months to keep them reporting to the credit bureaus. If you still have a balance on your account, you don't have to worry about this because your account is being reported to the credit bureaus regularly.

Follow these tips and you will be out of debt in no time!

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What is the Nashua Real Estate Market Currently Doing

The question of the day is...how is our Nashua New Hampshire real estate market doing? I hear this question a lot from people I know, my past and present clients, and new people I meet in my daily travels. From this month forward, I will pick a town to feature a market analysis, and I will present it in the following month's newsletter. Of course, if you would like to know the health of your New Hampshire or Massachusetts market, feel free to contact me and I will personally run the numbers for you!

I ran some numbers for December, and calculated an absorption rate for the past 6 months on single family homes in Nashua. The numbers were a little surprising. So, if you think people aren't buying homes, take a look at my numbers here:

During the month of December, 33 single family homes were listed in Nashua, 44 homes received accepted offers, and 35 homes closed. That's not bad for the slowest month of the year!

Now, how do we interpret these numbers? To look at the current state of things, we can't take 1 month of data. I usually go back 6 months to see the recent sales activity over time.

For Nashua single family homes, here are the current numbers:

Active single family homes on the market: 307
Homes that have sold in Nashua in 6 months: 330
Homes currently under contract: 44
Average homes that sell per month: 55

Number of months it takes to deplete all of Nashua's inventory: 5.58!!!!

Who's in the buyer's market now??? Only time will tell as to whether this market will remain the same or improve. I keep a close eye on the market so I can report accurate information to my buyers and sellers. The numbers speak for themselves.

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Top 10 Reasons Why Now is a Great Time to Buy Real Estate in New Hampshire

1. Mortgage rates remain low - Although mortgage rates fluctuate here and there, they still remain in the low to mid 6's. If you look at historical rates, these rates are incredibly attractive. When we bought our first single family home in 1996, we received a 7.6% interest rate on our mortgage. With interest rates hovering around 8%, our rate was a gift! 25 years ago, interest rates were between 13-18%!



2. If you have an imagination, you can buy a home - Where there is a will, there is a way. With the number of homes sitting on the market, sellers are coming up with creative ways to generate buyer interest. Lease-options are becoming popular again. There are still some assumable mortgages floating around. Ask the seller to float a second mortgage for you to use as your down payment. It doesn't hurt to ask when making your offer.



3. There is plenty to choose from - The number of homes on the market in southern New Hampshire is overwhelming! Make a list of all of your needs. Then, make a list of your wish list items. In today's market, there's a better chance you will be able to meet all of your needs and some of your wish list items, and have money left to spare. In the previous market, buyers had to make hasty decisions or the house would be sold out from under them. Now, you have choices. Homes are still selling, but at a slower pace which allows you time to think about your decision before you go through with it.



4. Choose the property that's right for you - In today's market, sellers are more accommodating than in the previous market. Gone are the days where you had to bid up the price just to secure the house. Sellers are thinking twice about your offer and most offers are given some consideration and negotiation.



5. Real estate is a sound investment - If you look at historical averages of real estate prices over the past 100 years, you'll see some dips in the market, but the general flow is upward. Real estate makes a sound investment. We are experiencing a correction in our market right now. This is no different than what the stock market goes through periodically. For example, if you put $10,000 in a mutual fund and that fund increases at a conservative rate of 5% in 1 year, and you put another $10,000 towards a down payment of a $250,000 house that also earns 5% the first year, at the end of the year, the mutual fund would have earned a little over $500 over the course of the year while the house investment would have increased $12,500! With that same $10,000, you just doubled your money by investing it in real estate! The best part is, your real estate investment will most likely be tax free!



6. Move-up for less - Is your family growing? Use this market as an opportunity to get into a bigger house for less! Sure, your house is worth a little less than what it was a year ago. Just think about this: If the market decreased by 5% across the board, and you sell your house for 5% less than what you might have last year, you will also be buying your next home for roughly 5% less. 5% of a larger home completely wipes out the 5% decrease you will take on your current home.


7. Price appreciation - If you're a first-time buyer, you're probably having a difficult time with how real estate appreciates. Real estate has the capacity of appreciating at a rapid rate. Look at my example in #5. This is very real. Once you buy your first home, you can use price appreciation to your advantage to put a larger down payment on a larger home, and so forth. The acquisition of real estate has generated a lot of wealth for a lot of people.



8. Your mortgage interest and property taxes are tax deductible - This is a huge win for many people. What other loans can you think of where the interest is completely tax deductible? Hmmm, I can't think of any!



9. Capital gains exclusion - This just gets easier and easier! Not only can you deduct your interest and property taxes, but when you sell your primary residence, single people can exclude up to $250,000 of the profit they realize from the sale and married couples can exclude up to $500,000. This exclusion will only apply to a house you've actually lived in for 2 out of the last 5 years.



10. Capitalize on the down market - This market is not going to last forever. Get in while the getting is good! Once the market stabilizes a bit, things will pick up. The rental market is really hot right now. If you've even considered buying investment property, now's the time.

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Amherst New Hampshire's Best Kept Secret

Are you looking for something fun to do this weekend? How about sledding? With all of the snow we have had over the past couple of weeks, it's a great time for some family fun.

Yesterday, during the calm after the storm, we headed over to a sledding hill in Amherst, New Hampshire. Where is this sledding hill you ask? It's on route 101 East, heading from Amherst, toward Bedford. You park across the street from the hill. There will be a sign, "Bragdon Farm Parking". You'll know you're in the right place when you see other people having the same idea. The parking lot is near the Bedford line.

The cool thing about this sledding hill is that the town knows about it and they support it! Once you get out of the car, head toward the "Town of Amherst" sign. This sign will have the rules and regulations about using the sledding hill. You'll walk under route 101 through a drainpipe. Don't worry, it's perfectly safe. You can see the end of it before you go through it. Plan on ducking as you're walking. I'm not that tall, and I had to duck a little!

The drainpipe directs you to the bottom of the hill. It's nice to get your exercise in before you start to have fun! Once you're at the top, line up your sled, and off you go! The Amherst sledding hill is not too big and not too small. The little kids might need some help walking up the hill, but all in all, it's a nice, gentle slope for controllable sledding (just my speed!). I hear it can get quite slippery when the weather warms up.

Some of the kids from a previous visit had made a small ski jump. Although I did not attempt to go over this myself, I can attest to my older son's enjoyment.

It's a nice hour or two of exhilerating and exhausting fun. So, if you're in the Amherst NH area, stop by and give it a try! You won't be disappointed!

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Sub-Prime Mortgage Holders Get Relief

The Bush Administration reached an agreement with the mortgage bankers association allowing certain sub-prime mortgage holders to apply to have their adjustable rate mortgage fixed for up to an additional 5 years, or until the real estate market improves, allowing the homeowner the ability to refinance to a lower fixed-rate mortgage.

The interest rate freeze will be available only to homeowners who have not fallen behind on their current, lower-rate mortgages. It is only available to primary-residence homes. Investment properties and possibly second homes are excluded from this rate freeze. If you can afford the higher payment resulting from the increase in interest rate, you will also be excluded.

To find out if you qualify, the administration has setup a hotline for you to call: 1-888-995-HOPE.

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7 Steps to Better Credit

Your Credit score (also known as a FICO score) is a number that views how banks, mortgage companies, credit card companies, and even employers see you. The interest rate you get with a lending institution will weight heavily on your FICO score. Understanding what is on your credit report and correcting any errors will save you lots of headaches when you get ready to make a major purchase. Follow these simple steps to improve your credit score now!

Obtain a FREE copy of your credit report from each of the 3 credit reporting agencies. Federal law entitles you to a free copy of your credit report annually. Go to http://www.annualcreditreport.com/ to obtain your credit reports. If you have already received your free credit reports, you can go to each of the credit reporting agencies websites and request your copy there. There will be a small charge associated with the credit reports you get from the credit reporting agencies.

There are 3 major credit reporting agencies:

TransUnion

Equifax

Experian

Look through each page in your credit report to find any inaccuracies. Any delinquencies from loans or credit cards are reported a maximum of 7 years. Bankruptcies, tax liens, and judgements can be reported up to 10 years. Check any account balances, collections, dates that appear incorrect.

If you find inaccuracies, your first order of business would be to dispute these directly with the credit reporting agency where the error occurred. If the same error is on more than one credit report, you must send a letter to each credit reporting agency where the error occurred. Send each letter certified mail, return receipt. The law states that the credit reporting agencies must verify with the creditors' in question that what they are reporting is accurate. If there is an error, the credit reporting agency must correct the error within 30 days or remove the offending data from your credit report.

Pay Your Bills on Time. I know this goes without saying, but it bears repeating. Paying one credit card past the 30 day late mark can tank your score by 50 points or more! 35% of the overall fico picture is how you pay your bills.

Keep those balances low. FICO wants to see the amount of your credit card balances below 30% of the overall credit line. If you are maxed out on all of your credit cards, even though you are paying your bills on time, you can still have a low FICO score.

Do not close old credit cards. That very first credit card you opened on your first day of college can keep your credit score strong. Age of your credit history plays an important part in the credit scoring model. If you start closing old, unused cards, you will cut your credit age to that of your next oldest card.

Use your cards sparingly. We know you should keep your balances below 30% of your total credit line. You should also rotate your cards so FICO can see some activity at least once every 6 months. Experience has shown that a maximum of 4 cards should show a small balance at the time you receive your bill, which is typically when the credit card companies report your balance and payment history to the credit bureaus. If you always pay in full every month, the credit card companies can still report a balance to the credit bureaus because they typically do so as soon as they cut your statement. I have found that only a select few credit card companies don't report every month.

Following these tips monthly will do wonders for your FICO score and overall credit picture. Good luck and please contact me if you have any questions or need additional assistance!

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Why are YOU Still Paying Rent?

In this market, home values are sinking to reasonable levels, interest rates remain attractive, it's a great time to buy! There are a TON of 1st time homebuyer mortgage programs that are meant to assist a 1st time homebuyer to get into the housing market.

When you figure out how much rent you're paying, that you're throwing out the window, you can probably own a home for roughly the same as what you're paying! And...the interest you pay on the loan and the property tax may be tax deductible (speak to your accountant).
Whatever your situation, your mortgage professional can evaluate your current situation and your goals, and fit the right mortgage to meet your needs. Here are just a few programs that are out there:

Rehab loans: The lender will lend the cost of the house plus repairs. They will escrow the repair money and your contractor will draw the money after each repair is made. This is the perfect program if you want to save some money buying a fixer-upper.

FHA loans: FHA requires that you put 3% down on the purchase of a 1-4 family owner-occupied home. Your credit has little impact on this type of loan. There is no PMI (private mortgage insurance) on this type of loan, as it is backed by FHA.

100% finance loans: These loans are alive and well. Be prepared to document your income! Gone are the days when banks will lend any amount of money.

Stated income/stated asset: If you're like me, and all of your deductions eat up your income, you may fall in this category. Here, you will tell the lender how much you make and/or tell them how much you have in the bank (between savings accounts, stocks, mutual funds, 401(k), etc). The interest rate is marginally higher. Be prepared to have excellent credit for this type of loan though. The lender may require you to put 5-10% down on the home.
This is just the tip of the iceburg. There are many, many loan programs out there. Your mortgage professional can help you find just the right one that works for you.

Happy house hunting!


Search for your new home here at southern New Hampshire Real Estate

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