Don’t let yourself ignore the important lesson of knowing what you “can afford” when buying a new home. That is why getting pre-approved through a bank, credit union or mortgage broker is not only a good idea, but a great idea. Knowing what you can afford before you start looking at homes will allow you to search in your price range and not fall in love with a home that you can’t purchase. At The Jim Allen Group, we recommend pre-approval to our clients so that they not only learn what they can afford, but to also get a better idea of their credit score and if there are credit issues that need fixing prior to making a home purchase.

What is the Difference between Pre-approval and Pre-qualification?

You may hear the terms pre-approval and pre-qualification and think they are they same, however, they vastly differ. Pre-qualification is different from pre-approval because a lender typically will not review your credit report when pre-qualifying. Thus, pre-approval provides better bargaining power since it is a solid commitment from the lender on what they will loan you, rather than an estimate. One important fact is that there may be a fee associated with pre-approval so be sure to ask in advance. Also inquire as to whether you have to pay the fee in the event your application is denied.

The Pre-Approval Process

If you are considering purchasing a home, it is a wise decision to get pre-approved. Ask others whom have already gone through the home buying process for recommendations of a lender or if you are working with a real estate agent, they may have some great resources to consider. You don’t have to go with the first lender you talk with. Shop around as many lenders offer different loan terms and its important that you are comfortable with whomever you choose.

Each lender has specific requirements on what you need however,  most likely they will ask for the following items to complete the process:

1. Proof of Income: pay stubs for the past 3 months and your most recent W-2 Tax form; if you are self-employed you may need your tax returns from the past 2 years, business-related receipts and invoices, financial statements and a copy of your business license (if applicable).

2. List of Assets: material possessions such as a home, car, boat or large ticket items and liquid assets such as cash, stocks and bonds. If you have loans associated with these items, its important to provide the details (lender, account #’s, amount).

3. Bank Statements: recent bank statements to verify that you have available money for a down payment, and to ensure the absence of large deposits from non-employment sources such as gifts or loans (from friends or family members). You will most likely be required to bring bank statements from up to the last six months showing deposits, withdrawals and consistent transactions of funds.

4. Credit Report: the lender will get approval from you to pull your credit report/s. These reports will include your FICO score which will provide the lender an idea of your credit history and your credit risk. Your credit score is important as higher numbers will deliver better loan terms (lower interests rate). Review these reports to determine if there are any inaccurate details and if necessary, get these fixed to improve your score.

Once all the appropriate information is submitted, the lender will be able to determine how much they are “willing” to lend you. The rule of thumb for determining what you can afford to borrow is based on your debt-to-income ration (what you owe and how much you make) and taking into account your credit history and also your down payment.  Lenders will then give you a pre-approval letter based on how much they are willing to lend you and that provides a buyer the knowledge that you have the funds available to purchase their home.  Also important to know is how long the pre-approval letter is good for. Typically they are good for 90 – 120 days which means, you can safely purchase a home within the determined time frame without having to go through the process again. Each lender may have a different scenario, so always get the facts.

What’s Next?

With pre-approval in hand, you can now enjoy your home search knowing exactly what you can afford without over-spending! With home prices more realistic and interest rates at historical lows, you should be comfortable with your decision for years to come!

Allen says sales of new construction are returning to pre-recession paces. With the last several months showing impressive signs of a recovery, inventory  levels lower than they have been in years and interest rates still historically low, the real estate market is more of a “Sellers-Market” than the “Buyers-Market” of the past several years.

Check out the interview with Jim Allen and Jeremy Salemson, CEO of Corporate Investors Mortgage Group on WRAL.com.

What Are Your Thoughts About the Direction of the Raleigh Real Estate Market?

Leave a comment below and tell us what you think.

There are numerous signs of growth in the real estate market as housing prices are leveling off and the number of home sales is increasing. The Jim Allen Group has made a conscious effort to embrace the growth and good fortune that we have experienced through the down economy and developed a year-long commitment to help make a difference to those less fortunate.

Our commitment to targeted charities is just a small effort to make the lives of others a little more promising and hopefully, raise awareness that we can all make a difference. For every home sold in 2012, we will make a financial contribution to a specific cause. For the first quarter of 2012, we have selected the ‘Water of Life’ program through Compassion International which is a Christian child advocacy ministry that assists children in impoverished countries in life-saving ways. Through this program, a water purification system will be purchased with every closed transaction. This water system will provide over 1 million gallons of safe drinking water to a child and their family in developing countries. Countries like Guana, Guatemala, Haiti, India and Ruanda where the quality of life is shockingly appalling. We hope that The Jim Allen Group will be not only be making a difference but in many instances, saving a life.

Each day in many impoverished countries, over 4,000 children are dying of water-related diseases such as cholera and typhoid that are easily preventable. Many more are suffering sickness, diarrhea and acute stomach pains – illnesses that stop children from going to school and growing up into healthy adults. The Compassion Water of Life filters provide those who have no access to clean water to use any available water source, run it through a filter and obtain 99.9% pure drinking water. One filter is $55 and lasts a lifetime for a child and their family. These purification systems are a small investment with a big impact and a chance to make a difference to others.

The first quarter of 2012 resulted in 67 closed homes and we anticipate that the next quarter will far exceed our expectations. In both January and February we closed 17 homes and in March we closed 33 homes. The impact of this cause has been so well received and gratifying. Our charity of choice for the 2^nd quarter of 2012 is Hospice of Wake County.  This local charity provides physical, emotional and spiritual care to those living with an advanced illness, their caregivers and those who have lost a loved one. Our financial contribution will again be attributed to every closed transaction in the months of April, May, and June.

This year-long commitment is the idea of Jim Allen, President of The Jim Allen Group who believes that charity makes us all stronger. “The charity of Hospice is near and dear to me as my mother whom recently passed away was a patient at a Hospice in Alabama which delivered amazing compassion and care that made her last days as comfortable as possible,” states Allen. “Our team is excited about this local charity and we are hopeful that our sales over the next three months will continue to grow so that our contribution grows.”

Check back to see what strides we are making in our 2nd Quarter Charity!

Jennifer grew up in upstate New York on her family’s dairy farm and has been living in the Raleigh area since a teenager.  She attributes her strong work ethic to her time spent in NY seeing the dedication and time involved to maintain the family business.

Campbell is a mother of 3 boys ages 4, 5 and 7 and together they keep her very active.  She is currently pursuing a degree in Philosophy and attends classes at both Wake Tech Community College and NC State. Previously, Jennifer worked as a paralegal and experienced the excitement and gratification of real estate.

Campbell enjoys spending time with her family, fitness, nutrition, cooking, traveling and meeting new people. “Working with people and providing them the tools and the knowledge to either sell their home or purchase a dream home is such an honor, and I look forward to being a part of The Jim Allen Group,” states Jennifer.

“We have a great team of agents and Jennifer will fit in nicely” says Jim Allen, President of The Jim Allen Group, “Jennifer is eager and has a positive attitude that makes her clients comfortable throughout the entire process.”

Jennifer will be working with clients to assist them in their real estate transaction of either buying or selling a home in the areas of Raleigh, Wake Forest, Youngsville, Creedmoor, Franklinton and Zebulon, NC. All these real estate markets have seen growth.

A Credit Score Summarizes Your Credit Risk

Your Credit Score helps lenders determine your risk as a potential client. This score influences the amount of money that is available to you and the terms (interest rate) that lenders will offer you. It’s an important part of your “credit health.” The higher the score, the better you are. High scores can mean lower interest rates.

How a Credit Score is Determined

Your credit score is a number that is calculated by a mathematical algorithm, or formula that is based on information from credit reports. Your credit report  is compared to tens of millions of other people to determine your score. This score is a highly accurate forecasting of how likely you are to pay your bills on-time.

What a Credit Score or Number Means

As stated, the higher the number or score, the better you look to a lender. Lenders can use several different methods to determine your financial health and the FICO score is the most popular method. FICO uses advanced math and analytics, and works with the top credit reporting agencies: Equifax, Experian and TransUnion to determine your score. Scores can fluctuate based on changes in your “financial status” such as paying bills late, making a large ticket purchase or even applying for a loan or credit card.

The FICO Score is a scale that runs from 300 to 850 based on the mathematical calculations determined. Here is an approximate breakdown of how it is determined:

• 35 Percent is based on your payment history. Paying bills late has a negative impact.
• 30 Percent is based on outstanding dept. How much you owe (credit cards, loans) and how much available credit do you have available to you. Having lots of credit cards (even if the balance is zero) with high limits will result with a lower score.
• 15 Percent is based on the length of time you have had credit. Showing a longer credit history provides a better forecast of financial credibility.
• 10 Percent is based on new credit. Opening new credit accounts will effect negatively. This category also penalizes hard inquiries such as applying for a loan or credit card.
• 10 Percent is based on the types of credit you currently have. If you have several different kinds of credit such as an auto loan, school loan, credit cards and personal loan – you have a more favorable score (especially if you have a history of  making payments on time or paying off the loan).

The vast majority of people fall in the range of a credit score between 600 to 800. A score of 720 or higher will get you the best interest rates. Having a credit score below 500 will have a major impact on your ability to secure a mortgage loan.  Although your score has an impact on your ability to secure a loan, remember that there are other factors that will also influence the interest rate. These include things such as the type of property you are purchasing (rental, vacation, new home), how much of a down payment you have, and the value or worth of the home compared to the amount of the loan needed.

What Does this Mean to a Home Buyer?

Your credit score has a direct impact on your ability to secure a mortgage, what interest rate you will receive and how much money you can borrow, as well as, how much money will you need to put down. A good example of what this means to a home buyer, is the long-term savings in interest payments over the course of a $100,000 loan with a 30-year mortgage for someone with a 520 score compared to someone with a 720 credit score. The person with the 520 score will pay more than $110,325.00 in interest charges and the have a monthly mortgage payment that  is $307.00 higher than the 720 credit score candidate.

Improving Your Credit Score

Thankfully, you have the ability to improve your credit score so that you have better opportunities for lower interest rates and long-term financial savings. First, it’s important to find out your credit score and you are entitled by law to a free credit report once every 12 months. It’s a good idea to take advantage of this opportunity, especially if you plan to apply for a mortgage soon. You can see it by going to AnnualCreditReport.com. If you are considering making a home purchase, the sooner you know your credit score, the sooner you will be able to start making improvements, if needed or getting pre-qualified.

Here are things you can do to try and improve your credit score:

• Review your credit report and correct any errors found. Getting rid of errors that are mistakenly listed on your report can dramatically improve your score.
• Keep old credit accounts that show good payment history. Creditors look at the limit ratio (debt to credit) and the average age of your accounts.
• Reduce your balances on credit cards to 75% or less of your available credit (the lower the better).
• Pay your bills on time. This may take time to raise your score but consistency will show and add value.
• Don’t let anyone make an inquiry on your credit report unless you have to. Most inquiries will lower your score – if you are shopping for a loan, make sure you have multiple inquiries to that you can show your intention and it will count as one inquiry.
• If you are planning on applying for a mortgage (large sum), don’t open new credit accounts to increase your available credit in hopes of raising your score. Opening new accounts will have a negative impact as it may show you are over-extending yourself.

If you are considering a new home purchase, The Jim Allen Group has over 300 years of combined real estate experience and can assist you in the entire transaction. We can help you with the pre-qualification process, finding the perfect home and if you have a home to sell, getting the best price for your home.

Budge Husky, President & COO Coldwell Banker Real Estate LLC, Jim Allen and Jim GillespieCEO of Coldwell Banker Real Estate LLC

The Jim Allen Group has been ranked #6 in North America for teams in Adjusted Gross Commission Income and #4 in North America for teams in Total Units Sold for the Coldwell Banker® System in 2011. These awards were presented at the Generation Blue Experience in New Orleans, LA among thousands of Coldwell Banker real estate professionals.

Established in 1983 and  comprised of 17 Buyers Agents, office staff, and Jim Allen, the agency generates 100% of its sales from the Triangle, Wake, Franklin and Granville counties. Jim Allen has the unique distinction of being the #1 Agent in the Triangle since 1996. The group has won numerous accolades and awards including being ranked the #1 Coldwell Banker Real Estate Team in the Carolina’s; REALTrends and The Wall Street Journal The Thousands List 2011 as #64 Real Estate Team in the US; and Coldwell Banker’s International President’s Premier award.

“The Jim Allen Group and Jim Allen’s extensive knowledge and understanding of the overall real estate industry and Raleigh, NC and surrounding communities personify the success embodied by the Eagle’s Ledge Statuette and ranking among the top 10 nationally,” says Jim Gillespie, chief executive officer of Coldwell Banker Real Estate LLC. “It’s this type of attention to detail and dedication that have defined the Coldwell Banker brand for over 100 years, and with The Jim Allen Group, will continue for years to come.”
Although the housing market has been stressed for several years, there are many signs of improvements. The Raleigh/Durham real estate market is strong and continues to show growth in homes sales and the stabilization of home prices. Interests rates are at historical lows however, the stringent policies and approval process is making home buying a complicated process. With inventory levels coming down, promising results will show growth in the near future. These results may be subtle, but continual.

If you are in the market for a new home, like to see what is out there in new home construction or are a “Looky-Lou” who just likes to tour new homes… You won’t want to miss the “Spring New Home Tour”. The weekend of March 24th and 25th from 12 to 5PM you will have the chance to tour 90 new  homes in Wake County. Not only will these 90 homes be open but, in many new home communities, there will be additional houses to view. The Spring New Home Tour is a great way to check out new communities, see some impressive details and custom features and get excited about buying your next Dream Home!

At The Jim Allen Group, we represent over 30 new home communities in the areas of Raleigh, Wake Forest, Youngsville, Franklinton, Creedmoor, and Zebulon. Each neighborhood is unique with different price points, home styles, features, amenities and builder teams.  With all these communities, there is something for everyone!

In this Spring New Home Tour, The Jim Allen Group represents 4 of the entries. Each of these new homes offer custom details, impressive features, unique floor plans and are in communities that offer conveniences and amenities. The communities are: Claridge in Raleigh and Majestic Oaks and Hillcrest Farms in Wake Forest. Here are some additional details and directions to each of the homes. I hope you take advantage of this great weather and this opportunity to tour some custom new home construction!

CLARIDGE,  RALEIGH, NC

8107 Andrea Lane, Raleigh, NC 27615   MLS#1802881

4 Bedrooms   3.5 Baths   3580 Sq. Ft.   3 Car Garage   Energy Star

 HILLCREST FARMS, WAKE FOREST, NC

2024 Shingleback Drive, Wake Forest, NC   MLS#1799684

4 Bedrooms   3.5 Baths   3013 Sq. Ft.   3 Car Garage    Energy Star

 MAJESTIC OAKS, WAKE FOREST, NC

5644 Clearsprings Drive, Wake Forest, NC    MLS#1806359

4 Bedrooms   3 Baths   2760 Sq. Ft. + 890 Sq. Ft. Unfinished Space   Energy Star

MAJESTIC OAKS, WAKE FOREST, NC

4129 Field Oak Drive, Wake Forest, NC   MLS#1780768

4 Bedrooms   3.5 Baths   2960 Sq. Ft.   Energy Star & EPS Indoor AirPlus

Louis has been an active member of the Home Builders Association of Raleigh/Wake County for over 20 years. He was previously recognized as  “Builder of the Year” for his outstanding service as  Chairman of the Builders Council and currently serves on the Governmental Affairs Committee.

After graduating from NC State University, Louis started a career that has encompassed every aspect of real estate. A licensed General Contractor, he has experience in residential development and construction, production homebuilding, commercial construction, project management and residential remodeling. He has been a real estate broker for over 10 years.

Louis has been blessed with two grown sons and lives in Raleigh with his wife Lynn, and a Golden Retriever, Hadley. When not working, he enjoys NC State athletics, Bible study and playing golf.

Roberta started her real estate career at the “Jersey Shore” in Wildwood, NJ where she specialized in new home sales, re-sales, and commercial properties. Later moving to Lake Norman and working with Allen Tate and Zip Realty.

Her move to Raleigh was sparked by her interests of being closer to her children and grandchildren. Slattery is thrilled with the opportunity to join The Jim Allen Group and is looking forward to continuing her successful real estate career.

Roberta delivers confidence to her clients and enjoys working with buyers and sellers to deliver a “no surprise” approach. She believes in keeping her clients informed and feels that honesty and respect are key ingredients to her success.

She lives in Wake Forest with her husband Jim whom she has been married to for 36 years. They have three grown children and two grandchildren. Slattery enjoys traveling, walking, going to the beach and spending time with her family.

Ashton Meadows is nestled among mature landscapes, rolling hills and two community ponds which provide amazing water views. These craftsman style custom homes from the mid $200’s feature impressive details such as hardwoods in the main living areas, gourmet kitchens with custom cabinets, granite counter tops, SS appliances, open floor plans, screened porches, first-floor master options, 2 and 3-car garages and  additional unfinished storage space that provides future expansion possibilities. The craftsmanship is evident throughout these homes with crown molding, coffered ceilings, trey ceilings, custom built-ins, unique tile work and fully landscaped yards. Ashton Meadows is only minutes to US-1/Capital Blvd., convenient to shopping, schools, and town services.

After touring the 3 homes, attendees submitted entries to a drawing for a romantic dinner for two at Angus Barn plus additional cash prizes; Marcella Ellis with Keller Williams Realty won the grand prize and cash prize winners included: Colleen O’Keefe – Coldwell Banker HPW, Luis Turner – Youngsville Realty, Phyllis Moy – Coldwell Banker HPW and Ann Marie Della Morte – Youngsville Realty.

The 3 new homes included:

• 40 Cranbrooke Drive, Lot #23 – MLS#1817204
• 60 Cranbrooke Drive, Lot #21 – MLS# 1804950
• 90 Cranbrooke Drive, Lot #19 – MLS #1812781

You can visit Ashton Meadows by taking US-1 N/Capital Blvd. through Wake Forest, Cross Hwy 98; Turn Right on Holden Road (@ Sheetz); Drive through Youngsville town center; Left on Cedar Creek Road; Right on Hill Road; Left into community. You will be impressed by the large lot sizes, and the uniqueness of each of the homes. An on-site agent is available Saturday and Sunday from 1 – 5 PM.