Raising Credit Score Helps Local Home Buyers

Raising your credit score can greatly affect the interest rate or documentation required to secure a mortgage for you new home. The types of loan available in the Greater Baton Rouge Area are tied into the credit score of the borrower. Buyers with a very high score can get 100% financing at a good interest rate as well as doing loans that require little documentation.

Andy Aucoin of Resource One Mortgage offers these tips to raise your score in 45 days.

1. PAY YOUR PAST DUE ACCOUNTS.
Yes, this sounds obvious, but understand that credit scoring software severely penalizes you for having accounts with a past due balance. Making sure all of your accounts are current, and paying the amount that shows as being past due on the credit report can increase your credit score by a significant amount.

2. TRY TO GET RID OF YOUR LATE PAYMENTS.
Contact all creditors that have reported late payments on your credit and request a good faith adjustment that actually removes the record of late payments reported on your account. Be persistent, if they refuse to remove the late payments at first, remind them that you have been a good customer that would deeply appreciate their help. Call several times if you need to and ask for supervisors. All persistence and politeness pay off in this scenario.

3. REQUEST TO HAVE YOUR CREDIT LIMITS INCREASED.
Contrary to popular belief, having low credit limits on a credit card can actually hurt your credit score. Having low available credit limits affects your actual debt to available credit ratio. For example, if you owe a total card debt of $10,000 and your total credit available is $20,000, you are only using 50% of your total credit available. But if you have card debt of $10,000 and your total credit available is $15,000, you change your ratio to 66% of your available credit being used. The lower the percentage of debt to available credit the better, as it shows you are able to handle having credit available without running it up to the max.

4. DO NOT CLOSE YOUR OLD CREDIT CARDS, KEEP THEM ACTIVE.
15% of your credit score is determined by the age of the credit file. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time yoy have had credit, as well as increase your debt to available credit ratio as discussed in point 3. Use the old card at least once every six months to avoid the account rating to change to Inactive. Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance down. An inactive account is ignored by Fair Isaacs credit scoring software, so you will not get the benefit of the positive payment history and low balance that card may have had in the past.

Call your lender and see if raising your credit score can affect the amount of home you will be able to purchase. Give yourself time to raise the score before you start your house hunting search, then enjoy the benefits every month of that low interest rate!

ADVANCE NOTICE OF 2006 'SEER' FEDERAL REGULATIONS

A new regulation (mandated by the EPA [Environmental Protection Agency] and regulated by the DOE [Department of Energy]) will greatly affect the heating and air industry, the home warranty industry and the real estate industry beginning January of 2006. It is often referred to as “13-Seer.”

Increased SEER Rating Standards

Central air conditioners are rated according to their Seasonal Energy Efficiency Ratio (SEER): the higher the SEER, the more efficient the air conditioner. The current national efficiency standard for air conditioning systems took effect in 1992, requiring a minimum SEER of 10. New standards, set to take effect on January 23, 2006, will raise the SEER requirement to 13, an efficiency improvement of 30%. Overall the changes are good for the environment and increase consumer’s piece of mind by improving comfort and indoor air quality. However implementation of the new regulations may be a bit painful for everyone involved.

How These New Standards Affect Consumers

Beginning in January when a condenser or evaporative coil fails and must be replaced, the new unit must be at least 13 SEER and will have to be compatible with all the other components in the system. Here are some of the potential challenges:

ü If a condenser is replaced, the evaporative coil and air handler must be upgraded to 13 SEER.
ü If the Freon lines are too small to handle a 13 SEER system, they must be replaced /upgraded.
ü The 13 SEER evaporative coils can be up to 3-4 inches taller, requiring sheet metal modifications to fit the new system in the old space. Should the space be too small, the cost to rebuild the area or relocated the system could be even more costly.
ü The system as a whole can be large and heavier, which may require additional labor expenses for a second technician to complete the installation.
ü The system requires about 40% more Freon to operate.
ü The system may requires a larger cement pad or larger roof stands which may requires modifications.

Katrina Causes Home Owners to Rethink Coverage

We expect our homeowners insurance policy to help us recover from a catastrophe by providing us with enough cash to replace anything damaged or destroyed in such an event. As we found after hurricane Katrina, all was not as people expect. You need to read your policy very carefully and fully understand what you have paid for. You may not have the protection you think. It is standard for most homeowner policies to cover the structure of the house for replacement-cost value. But what coverage do you have on your contents? Are you covered only for actual cash value or the replacement cost? What's the difference? If you are only covered for actual cash value then the company will deduct for depreciation on those items. That could be significantly less than the cost for you to restore, repair or replace the item. Check your policy to see if you chose the option of replacement cost coverage. You may save money on the front end by having actual cash value coverage but it could cost you dearly in the long run. The longer you own your house or personal property, the more depreciation becomes an issue and replacement cost coverage becomes more critical.

Replacement-cost coverage varies. Different insurers offer varying levels of replacement-cost coverage, so you need to check your policy or with your insurer to see what is covered in your area and what the limits are. Some companies add maximums to replacement-cost coverage policies, to protect themselves from overexposure in the case of loss. For example, some insurers limit the amount payable on replacing a roof, especially when it is over a certain age.
Remember, you are insuring your home and your possessions -- not your land. Think about what it would cost to rebuild your house and replace its contents, not what the market value of the house is.

Next, you need to see if you are adequately insured. We personally buy flood insurance for our home in Baton Rouge, even though we are not in a flood hazard area. That decision was based on a flood that occurred in New Orleans about 10 years ago- homes that were over 40 years old and not in a flood hazard area were flooded. Now I think that it is even more important to consider purchasing flood insurance even for areas that do not require it. Of course, you need to know what you are getting coverage for, since it seems even flood insurance doesn't cover what we expected! Remember, your basic homeowners insurance will not cover you or your contents for flood. And a flood isn't always a river or body of water overflowing. Several years ago a tornado came through Baton Rouge and debris stopped up a drainage ditch, causing a house to flood during the storm. The house was not in an area that required flood insurance, and therefore, the damage was not covered by their insurance company.

Downtown Baton Rouge Continues To Grow

I am continually amazed at the amount of development happening in downtown Baton Rouge. We have seen the downtown area try to come to life over the past 25 years, first with the 1984 Catfish Town development of restaurants and shops - which is now one of our Casinos - and now, with the Shaw Entertainment Center bringing in wonderful entertainment as well as sporting a fabulous restaurant, downtown is coming back to life.

Some of the plans for downtown include the building of a high rise condominum overlooking the Mississippi River. I have looked at the plans for this building and it looks like an amazing project. Several more condominium projects are in the works - some include multi-use developments and others are strictly residential. The new Red Stick Lofts off Nicholson are designed after a development in Houston and are a design we have not seen here before.

Baton Rouge is in a growth phase - as it was pre-Katrina - and hopefully we will see downtown reviatlized with these new projects! It certainly is an exciting time to be involved in real estate!

Baton Rouge Real Estate Post Hurricane Katrina

What REALLY happed to real estate in the Baton Rouge area due to hurricane Katrina? As you have heard, there was an initial buying frenzy as people in affected areas scrambled to find a place to live. Some houses did sell for inflated prices - usually those that included all the furnishings. There were also a lot of what I loosely term 'urban real estate legends' that we all heard about but were not true. Many homes that sold fell through as buyers realized that things weren't as bad as reported and they would be able to return to their homes.

Pre Katrina Homes for sale: 3400 Homes sold during Sept 2005: 1713
Homes available after Sept 3100 Homes sold during Sept 2004: 1112
Homes that fell thru: 580

Average Sales Price Pre Katrina: $159289
Average Sales Price Oct 2005: $188,861
Average Sales Price year ending 2005 $168,519

The market has ended the year with a higher average sales price than pre-Katrina, but not as it was at the height of the aftermath of the storm. It is good to see our area see some appreciation for a change! There are plenty of homes available, interest rates remain low, and the prices of the homes have stabilized.

The information provided above is deemed reliable and is based on information gathered from select areas of the MLS.