Date Archives: February 2013

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With the market on the upswing, many are stepping up to the home-buying plate. However, for those interested in buying that are not quite financially ready, a lease option may be an ideal alternative.

"A lease option is an agreement between a renter and a landlord in which the renter signs a lease with an option to purchase the property," explains Michael LitznerBroker of Century 21 American Homes. Lease options, also known as "rent-to-own" options, usually last from one to three years, although periods vary from option to option. The option only binds the seller, who cannot sell the property to anyone else during the agreed upon lease option time period; the tenant has a choice to make a purchase or not. "If the tenant does not purchase the property at the end of agreed upon time, the option expires, and the seller can look for an alternative buyer, or renew the option with the same tenant," states Litzner. Lease options are common among buyers who would like to own a home but do not have enough money for the down payment and closing costs. "A lease option may be attractive to those working to improve bad credit before approaching a lender for a home loan," says Litzner. However, buyers aren't the only ones who can benefit from a rent-to-own deal. Lease options are often offered by sellers of hard-to-sell properties, and, similar to standard renting, they provide the seller with relief from paying a mortgage on a vacant property. "Often, these rent-to-own payments exceed market rent," notes Litzner. "However, the buyer should view the payments as the building of a down payment." At the end of the option, if the buyer chooses to make a purchase, the lease payments are credited toward the larger purchase price. "It's important to note that even though the payments are often higher than market rent, if the buyer defaults, they do not get a refund," says Litzner. If you're considering a lease option, it's wise to talk to a real estate law professional that is familiar with the guidelines in your specific state, as the laws in each state vary. For more information on lease options, please contact Century 21 American Homes at 1-800-270-6318. Century 21 American Homes is one of the fastest growing real estate brokerages serving Long Island, Queens and Brooklyn. To find out more about an exciting career in real estate contact us at

Credit score requirements for loans are higher than they have been in the past, so a good credit score is more crucial than ever. In today's economy most lenders are looking for credit scores of 720 or higher to secure a low mortgage rate. Here are seven ways to build up your credit score so you can enjoy the best interest rates available. . Request your credit reports and assess the situation. Credit bureaus (,, are required to provide you with a free credit report every year. Nationwide consumer reporting companies get their information from different sources, the data in your report from one company may not reflect the same data in your reports from the other two companies, so request all three. • Check to verify all of the information is correct. If there are any errors, contact the bureaus immediately. • Your payment history accounts for 35% of your score, so make sure payments are on time every month. • The amount owed is 30% of your score. A good rule is to use less than 10% of your credit available on each individual card. • The length of your credit history accounts for 15%, so maintain your accounts instead of closing them. You are not penalized for available credit. • New credit is 10% of your score and every time you apply for credit an inquiry is added to your report, which drops your score. • Types of credit used accounts for 10%. Installment loans like vehicle and personal loans demonstrate you can manage various long and shortterm credits.

If you've been thinking about buying, applying for a new home loan or refinancing your current one, get a move on it. Rising home prices combined with record-low rates are both reasons why 2013 will be a great year for managing your mortgage. Below, Michael Litzner, Broker of Century 21 American Homes offers seven tips to take into account, whether you're a new buyer or simply working to be mortgage-free. Buy now If you're on the fence about buying, but your finances are up to snuff, then take the plunge and buy. Home prices are rising, and will continue to rise in 2013 and beyond. Litzner suggests you buy now when homes are still priced low, and take advantage of low mortgage rates. Refinance now Mortgage rates are at all-time lows, and will remain that way for the first few months of 2013, so if you're thinking about refinancing, do it now. "Changes were made to the Home Affordable Refinance Program to allow homeowners to refinance, regardless how deeply underwater they are," says Litzner. Litzner suggests that even if you have been previously denied, try again, and do it now. Economists expect rates to gradually increase as the year continues. Pay off your mortgage earlier "If you have been pining to be mortgage-free, and have some money saved or are making your current payments with ease, then consider taking advantage of the current low rates to refinance your 30-year mortgage into a 15-year mortgage," Litzner recommends. Mind your credit Credit standards are stricter than ever, with the majority of lenders requiring a year of clean history and a score of 720. They also want to look into your debt, and see how much of the available credit you are using. "This means it's important to pay down your cards before applying for a mortgage," Litzner explains. Shop around While lending is tighter, this doesn't mean you should just pick one lender and go with them if they offer you a mortgage. "It's still important to shop around with different lenders to find one you are comfortable with, and that can provide you with the best offer," says Litzner. If your credit is good, then you will most likely be approved by more than one lender, so it's smart to find who can give you the best deal, despite strict standards. Learn your loans If you can't afford the typical conventional loan down payment (20 percent) Litzner reminds you not to automatically decide to pursue an FHA loan. While these loans do require a much smaller down payment (3.5 percent) they come with additional insurance premiums and fees. "FHA is currently in a tight spot financially," Litzner warns, "and this means not only have their loan standards increased, but their fees are on the rise as well." While they are still much less expensive than a conventional loan, before you jump for an FHA, talk to your lender about conventional options with a smaller down payment percentage. With less fees, these may cost less in the long run, even if the down payment is slightly higher than an FHA (usually between 5 and 7 percent.) Approved? Great. Don't touch that credit! One of the largest mortgage mistakes you can make is to make changes to your credit after approval. "Lenders typically order an additional credit report right before closing, so that swanky new sofa set you purchased on credit for your new home could actually put a halt to your deal," Litzner says. Remember, nothing is final until you have signed the final closing paperwork. So even if you have been approved and have an interest rate locked, don't assume it's a done deal. For more information on refinancing, please contact Century 21 American Homes at 1-800-270-6318.

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