People are having to make tough financial choices today, but many don’t have to wreck their credit scores if they know how the system works.

“With the same amount of money, you can make decisions that kill your credit score or ones that keep your score – or at least give you the ability to rebuild your score quickly later,” explains Eddie Johansson, president of Credit Security Group. “Most people have wrong or little information about how the system works, and that’s a big reason scores go down when difficult decisions are made during a recession.”

Johansson advises major financial institutions and consumers on the FICO credit score model used by most lenders in deciding the borrower’s risk and interest rate. He described three common misconceptions that needlessly lower credit scores.

Misconception #1: Paying late didn’t hurting my credit since I’m caught up now.
Johansson said recent late payments are the credit score killers he sees most often. “It’s great that you caught up,” he said, “but it doesn’t change the fact that you paid late. Anything other than ‘paid as agreed’ on accounts on your credit report hurts your score.”

Misconception #2: Dollar Amounts Matter in Credit Scores.
An example of bad credit score advice here is “pay the highest bill first,” Johansson said. “Dollar amounts don’t matter in FICO scoring; ratios and recency do. The effect on your score is the same for a $1 late payment as a $1,000 late payment. The fewer late payments on your credit report, the higher your score – regardless of their dollar amounts,” he said.

Johansson emphasized the importance of paying all your bills on time, every time. However, he says that if you must pay late and want to avoid damage to your score, pay the accounts that report to credit bureaus first. You can find this information by getting a copy of your credit report.

Misconception #3: Closing Credit Card Accounts Helps Your Score.
If you cancel a card, you may have just thrown away your chance to increase your score by continuing to build on years of positive credit. “Very long term positive account history can really boost your score,” Johansson said. “It’s best for your score to keep cards open and active, using them for small purchases. Next best is to just keep them open so you can build your score back up quickly by using them later.”

Don’t Make a Bad Situation Worse.
In tough economic times, people often buy more on credit than they usually would. The amount they pay in interest on these purchases is largely determined by their credit scores. Poor decisions that lower scores combined with an already tight budget can be very costly, making money problems worse than they have to be. “What we’re trying to do,” Johansson said, “is help people get through these tough times with as little financial damage as possible. This is best for them, for lenders and for our economy.”

Johansson emphasized that lower credit scores may be unavoidable for some, and that credit scores are not the only factor to consider. “However,” he said, “good credit is an important part of financial security and must be considered when making the best long-term decisions. Having the right information is necessary to make good choices – now more than ever.”

The FHA Short Refinance option is targeted to help people who owe more on their mortgage than their home is worth – or ‘underwater’ – because their local markets saw large declines in home values. Originally announced in March, these changes and other programs that have been put in place will help the Administration meet its goal of stabilizing housing markets by offering a second chance to up to 3 to 4 million struggling homeowners through the end of 2012.

“We’re throwing a life line out to those families who are current on their mortgage and are experiencing financial hardships because property values in their community have declined,” said FHA Commissioner David H. Stevens. “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”

FHA published a mortgagee letter to provide guidance to lenders on how to implement this new enhancement. Participation in FHA’s refinance program is voluntary and requires the consent of all lien holders. To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth and be current on their existing mortgage. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal to or greater than 500. The property must be the homeowner’s primary residence. And the borrower’s existing first lien holder must agree to write off at least 10% of their unpaid principal balance, bringing that borrower’s combined loan-to-value ratio to no greater than 115%.

In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent. Interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees the write down a portion of the unpaid principal.

To facilitate the refinancing of new FHA-insured loans under this program, the U.S. Department of Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens. To be eligible, servicers must execute a Servicer Participation Agreement (SPA) with Fannie Mae, in its capacity as financial agent for the United States, on or before October 3, 2010.

August 19, 2010 – Bolstered by favorable interest rates and low house prices, housing affordability remained near its highest level nationwide for the sixth consecutive month since the series was first compiled nearly two decades ago, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI) released today.

The Housing Opportunity Index indicated that 72.3 percent of all new and existing homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the second quarter was slightly more affordable than the previous quarter and almost equaled the record-high 72.5 percent set during the first quarter of 2009.

Until 2009, the HOI rarely topped 67 percent and never reached 70 percent.

“Homeownership is within reach of more households than it has been for almost a generation,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “Interest rates continue to hover at historic low levels, the economy is beginning to rebound and with house prices starting to stabilize, conditions are beginning to draw home buyers back into the market, which is a positive step on the path to recovery.”

Syracuse, N.Y., was the most affordable major housing market in the country, edging out Indianapolis-Carmel, Ind., which had held the top ranking for nearly five years. In Syracuse, 97.2 percent of all homes sold were affordable to households earning the area’s median family income of $64,300.

Also near the top of the list of the most affordable major metro housing markets were Detroit-Livonia-Dearborn, Mich.; Youngstown-Warren-Boardman, Ohio-Pa.; and Buffalo-Niagara Falls, N.Y.

Among smaller housing markets, the most affordable was Springfield, Ohio, where 96.6 percent of homes sold during the second quarter of 2010 were affordable to families earning a median-income of $56,800. Other smaller housing markets near the top of the index included Mansfield, Ohio; Bay City, Mich.; Monroe, Mich.; and Lansing-East Lansing, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as its least affordable major housing market during the second quarter of 2010. There, 19.9 percent of all homes sold during the quarter were affordable to those earning the New York area’s median income of $65,600. This was the ninth consecutive quarter that the New York metropolitan division has occupied this position.

The other major metro areas near the bottom of the affordability scale included San Francisco-San Mateo-Redwood City; Santa Ana-Anaheim-Irvine, Calif.; Los Angeles-Long Beach-Glendale, Calif.; and Honolulu, all metro areas that have lingered among the bottom rankings for several quarters.

San Luis Obispo-Paso Robles, Calif., was the least affordable of the smaller metro housing markets in the country during the second quarter. Others near the bottom included Santa Cruz-Watsonville, Calif.; Ocean City, N.J; Santa Barbara-Santa Maria-Goleta, Calif.; and Napa, Calif.

Please visit www.nahb.org/hoi for tables, historic data and details. Please contact your Indianapolis Realtor with questions about local housing affordability and inquiries about buying or selling in the Metro Indianapolis housing market.

RISMEDIA, August 13, 2010—The real estate trend in firming home prices solidified in the second quarter with more metropolitan areas showing increases from a year ago, aided by a surge in home sales driven by the home buyer tax credit, according to the latest survey by the National Association of Realtors. In the second quarter, 100 out of 155 metropolitan statistical areas (MSAs) had higher median existing single-family home prices in comparison with the second quarter of 2009, including 14 with double-digit increases; two were unchanged and 53 metros showed price declines. In the first quarter of this year, 91 areas had higher prices, while only 26 MSAs experienced annual price gains in the second quarter of 2009.

The national median existing single-family price was $176,900 in the second quarter, up 1.5% from $174,200 in the same period of 2009. The median is where half sold for more and half sold for less. Distressed homes accounted for 32% of second quarter sales, down from 36% a year ago.

Lawrence Yun, NAR chief economist, said the correction in home prices appears to have ended in 2009. “All year we’ve been seeing relatively flat national home prices, which appear to be supported by market fundamentals,” he said. “Prices in some areas remain below replacement construction costs, so even with an elevated supply of existing homes on the market, we don’t expect any consequential movement in home prices for the foreseeable future. Very low inventory of newly built homes will also help to support home values.”

Yun urged caution on interpreting price data. “The median price is influenced by the mix of homes that were sold and do not reflect pure appreciation or depreciation,” he said. “The recorded home prices in many markets were significantly depressed last year because of a large percentage of distressed homes sold at discount. Now as more normal, non-distressed home sales are occurring, the median price in many areas is showing higher values.”

Total state existing-home sales, including single-family and condo, rose 9.1% to a seasonally adjusted annual rate of 5.61 million in the second quarter from 5.14 million in the first quarter, and were 17.3% above the 4.78 million-unit pace in the second quarter of 2009.

Sales increased from the first quarter in 44 states and the District of Columbia; 47 states and D.C. had increases over year-ago sales levels.

NAR President Vicki Cox Golder, said record low mortgage interest rates will help cushion a summer slowdown. “As expected, sales are slowing down now that the home buyer tax credit has expired, but record-low mortgage interest rates, along with stable and affordable home prices in most areas, provide opportunities for buyers who weren’t able to take advantage of the credit,” she said.

According to Freddie Mac, the national average commitment rate on a 30-year conventional fixed-rate mortgage was a record low 4.91% in the second quarter, down from 5.00% in the first quarter; it was 5.03% in the second quarter of 2009.

“Job creation will give home buyers more confidence, but the market over the next few months is likely to be below what we would expect for the size of our growing population,” Golder said. “With improving bank balance sheets, credit restrictions should gradually improve—Realtors are a great resource for consumer information on loan availability as well as neighborhood market conditions, which vary widely.”

In the condo sector, metro area condominium and cooperative prices—covering changes in 55 metro areas—showed the national median existing-condo price was relatively flat at $175,700 in the second quarter, down 0.5% from the second quarter of 2009. Twenty-six metros showed increases in the median condo price from a year ago; the first quarter of 2010 showed 24 metros up, while only four metros saw annual price gains in the second quarter of 2009.

In the Midwest, the median existing single-family home price increased 1.4% to $148,500 in the second quarter from the second quarter of last year. Existing-home sales in the Midwest rose 14.5% in the second quarter to a pace of 1.30 million and are 20.9% above the same period in 2009.

Regionally, the median existing single-family home price in the Northeast declined 3.2% to $238,000 in the second quarter from a year earlier. Existing-home sales in the Northeast jumped 14.9% in the second quarter to a level of 980,000 and are 23.6% above the second quarter of 2009.

In the South, the median existing single-family home price slipped 2.0% to $155,500 in the second quarter from the second quarter of 2009. Existing-home sales in the South increased 10.9% in the second quarter to an annual rate of 2.10 million and are 18.8% above a year ago.

The median existing single-family home price in the West rose 2.6% to $219,700 in the second quarter from a year ago. Existing-home sales in the West fell 2.6% in the second quarter to an annual rate of 1.23 million but are 7.6% higher than the second quarter of 2009.

In the months leading up to the contract deadline, existing home sales increased steadily and they jumped 7.6% from March to April, showing a 22.8% increase from April 2009 figures, according to data released by the National Association of Realtors in May.

Now, with the qualification deadline for the tax credit past, customers may believe that the great opportunities in housing market have passed as well – but they will be surprised.

Truth is, the tax credit was one of many incentives to enter the market in the past two years—and several of those advantages still exist for qualified buyers. It’s still a great time to buy. Here are some key points:

Low Home Prices
Although there is widespread agreement in the industry that the housing market has reached the bottom, home prices aren’t expected to spike upward. Instead, they’re likely to skip along the bottom into 2011. They will continue to decline in some markets and creep up in others. As long as buyers remain diligent in the home search over the coming months, possible pricing fluctuations won’t have a dramatic effect on their property options.

Low Interest Rates
Interest rates on 30-year, fixed-rate mortgages hit a five-month low of 4.93% in May, and as of early June the rates were holding steady below 5%. Financial concerns over the growing debt crisis in Europe have stemmed discussions in the U.S. of raising rates. The historically low rates will save home buyers thousands and thousands of dollars over the life of a loan, which arguably is reason enough to enter the market.

Other Tax Benefits
The U.S. Home Buyer Tax Credit was temporary, but there are other tax benefits that buyers can continue to count on for the foreseeable future. Property taxes, mortgage interest payments and mortgage insurance premiums are qualified deductions that can help reduce many homeowners’ tax liability. For eco-conscious homeowners, purchasing energy-efficient appliances and making other green upgrades can mean a tax credit up to $1,500. For more information, be sure to visit www.irs.gov or consult a tax professional.

Focus on today’s favorable home buying conditions, instead of looking back with regret. It’s worth sitting down with your Metro Indianapolis real estate agent to recap the benefits of buying over renting. Tax credit or no tax credit, homeownership is part of the America dream—and it’s alive and well.

Source: RISMedia

“There’s no question, the tax credit has had a significant impact on this market. No one can predict the future, and we may still see a slight pull back, but for right now it appears that housing is holding its own, hopefully on the road to a sustainable recovery,” said Margaret Kelly.

Transactions – Year-Over-Year Change
Buyers trying to make the closing deadline for the tax credit may have pushed sales higher for June with a 7.2% rise from May in addition to the 5.6% gain over last year. Sales were especially strong in the Northeast—Boston and Hartford saw 23% more sales than last year, Providence was up 21% and Philadelphia was higher by 27%. An equal number of metro areas, 27, had increases and decreases in closed transactions year over year.

Median Sales Price – Year-Over-Year Change
Responding to demand, home prices appear to be stabilizing and slowly inching higher. In the survey’s 54 metro areas, the year-over-year change in median sales price was 3.5%, with 27 metros headed up, 25 lower and 2 unchanged. The weighted average of all median sales prices for June was $211, 530.

Days on Market – Average of 54 Metro Areas
Besides price, most home owners are concerned about how long it will take to sell their home. For the homes that sold in the survey’s 54 metro areas, the average number of days it took from listing to signed contract was 81, slightly lower than the 83 day average in May and the 89 day average in June 2009.

Months Supply of Inventory – Average of 54 Metro Areas
The inventory of homes on the market in June rose slightly from May, up only 1.2%, but down 5.8% from June 2009. In the survey’s 54 cities, the average months supply of Inventory was 8.5 months, which remains unchanged from May. This means that at the current rate of sales, the average metro would eliminate its inventory of homes for sale in eight and a half months. However, a six month supply is considered a market balanced equally between buyers and sellers.

Source: RISMedia

CareerBuilder’s latest nationwide survey shows that one-third of small businesses will be hiring in the second half of 2010, kick-starting one of the major drivers for economic recovery and job growth.

Thirty-two percent of companies with 500 or fewer employees plan to add new employees in the months of July through December. Twenty-one percent will hire full-time, 11 percent will hire part-time and 6 percent will hire contractors or temporary workers. Of companies with 50 or fewer employees, 24 percent plan to hire in the second half of 2010. The survey was completed in June 2010 and included more than 1,300 employers in businesses with 500 or fewer employees and more than 4,400 workers.

In addition to new jobs being added, new small businesses may be emerging to serve as a primary or secondary source of income. Of workers who have started a small business in the last year, 96 percent reported that they run a small business in addition to another job. More than one-quarter (26 percent) of workers who were laid off in the last six months and have not found jobs said they are considering starting their own business instead of finding a new job.

“Historically, it has been the small business sector that has created the most jobs at the end of an economic downturn, allowing the overall job market to bounce back faster,” said Brent Rasmussen, president of CareerBuilder North America. “The intellectual capital that companies were forced to lay off over the last 18-24 months was substantial and it is not surprising that many individuals are using their business skills to create their own opportunities.”

According to the U.S. Small Business Administration, small businesses employ just over half of all private sector employees and account for more than half of nonfarm private gross domestic product. They have also generated 64 percent of net new jobs over the past 15 years.

Source: RISMedia

“The housing market is performing better than the predictions made over a year ago,” said HUD Assistant Secretary Raphael Bostic. “We’re absolutely not claiming victory. But improved home affordability is continuing to provide opportunities for prospective, qualified home buyers, while promising neighborhood stabilization efforts are helping hard hit neighborhoods start to recover.”

“Programs to stabilize the housing market have helped many across the country weather this crisis,” said Treasury Assistant Secretary Herb Allison. “Our initiatives continue to offer responsible homeowners the chance to avoid the often painful process of foreclosure.”

Key data on the health of the housing market:

Historic low rates continue to promote affordability: Families continue to benefit from the lowest rates in history on 30-year fixed mortgages. Since April of 2009, record low rates have helped more than 7.2 million homeowners to refinance, resulting in more stable home prices and $12.9 billion in total borrower savings.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, are 9.8% higher than the 4.89 million-unit pace in June 2009.

NAR President Vicki Cox Golder, said softer home sales expected this summer don’t tell the whole story. “Despite these market swings, total annual home sales are rising above 2009 and we’re looking for overall gains again this year as well as in 2011,” she said. “Conditions have become more balanced in much of the country, which is good for both buyers and sellers. However, consumers find it even more challenging to navigate the transaction process, especially for distressed properties, which only underscores the value Realtors bring to buyers and sellers in this market.”

A parallel NAR practitioner survey shows first-time buyers purchased 43% of homes in June. Investors accounted for 13% of sales in June, little changed from 14% in May; the remaining purchases were by repeat buyers.

Existing-home sales in the Midwest are 11.8% higher than a year ago. The median price in the Midwest was $155,900, down 0.1% from June 2009.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to a record low 4.74% in June from 4.89% in May; the rate was 5.42% in June 2009.

The national median existing-home price for all housing types was $183,700 in June, which is 1.0% higher than a year ago.

Source: RIS Media

The top 10 cities were Eden Park, MN; Columbia/Ellicott City, MD; Newton, MA; Bellevue, WA; McKinney, TX; Fort Collins, CO; Overland Park, KS; Fishers, IN; Ames, IA; and Rogers, AR.

To determine its communities, Money Magazine looked at municipalities in the country with populations between 50,000 to 300,000 – which rules out Indianapolis as well as the Metro South towns and cities.

But what Money Magazine might not know, are the hidden gems located in the South Metro Indy area: Greenwood, Center Grove, Franklin Township, Perry Township, the cities of Franklin, Beech Grove and Southport… As you drive around the Southside of the large metropolitan city of Indianapolis, you’ll find friendly neighborhoods, great schools, wonderful opportunities for shopping, eating, living and working. Money Magazine may not have designated any of Metro Indy’s Southside Gems as the ‘Best Place to Live’ – but having lived here my entire life – I will gladly designate the Southside of Indianapolis as an absolutely wonderful place to call home.