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Wondering if you might qualify for a home loan? You might be surprised!

I can help you with your financing  with  both good and bad credit.. Take a look under the financing area for some information you might find helpful.

Financing Figuring out what home you can afford isn't too difficult. Sit down and use this plan to look at your costs and income.

A simple way to estimate what you qualify for...

  1. Take your gross earnings monthly before you pay taxes, insurance, etc. (See list of types of income below.)
  2. Subtract all your credit cards minimum payments, your mortgage payment (unless you are selling your current home), automobile loans, student loans, child support, and other installment loans. Don't count rent, utilities, or memberships.
  3. Multiply the balance by 30%
  4. This is an estimate of what payment you can qualify for.
Income Debts
  1. Job
  2. Social Security Payments
  3. Gifts from family and friends
  4. Interest from bank accounts
  5. Income from Investments
  6. Child Support
  7. Benefits
  1. Credit Cards
  2. Tax Liens
  3. Garishments
  4. Child Support
  5. Medical Bills
  6. Furniture Payment
  7. Taxes

Here are some answers to frequently asked questions about buying a home.

Q. What is a fico score and what does it say about my credit?

A. The term "fico" is a mathematical number invented by a man named Fair Isaac. His company Fair Isaac Company, thus F.I.C.O. was named. It is a tool for lenders to use in evaluating the risk associated with loaning you money. F.I.C.O scores range from 400 to a high of 900. 620-650 is low to fair and 690 is considered good. 740 and higher is A+ credit.

Q. How can you raise your fico scores?

A. Here are some examples of ways you can improve your FICO score.

  • Close out all unused accounts (credit available)
  • Pay balances down so that you are not at or near the limit
  • Stop or limit inquires
  • Don't list multiple addresses, phone numbers and employers
  • Pay all accounts on time

Q. What is calculated into my score?

A. The basic things that are calculated into your score are:

  • How long you've lived at your current address
  • Your financial obligations (debt-to-income ratio)
  • Any late payments
  • The amount of credit you have outstanding and that you are using
  • The amount of time you've had credit established

Q. What factors put me at higher risk for a low score?

A. Any of the following reasons could increase your risk to have a low score.

  • Excessive amount owed on accounts
  • Proportion of loan balances on installment accounts
  • Too many new or existing accounts
  • Too many recent credit checks
  • Credit card balance vs. limit is too high

Q. Why do different companies quote different scores on the same person?

A. Each company has their own way of coming up with your score.

Q. What factors cause my fico score to change?

A. Here are a few examples that could cause your score to change.

  • Excessive activity
  • Past due debts
  • Job change- better or worse
  • Moving
  • Marital status
  • Other- any reporting changes from debtors

Q. What is a debt ratio?

A. Debt ratio is a number that compares what you have (income) available against the total of what you owe. Such as: Job vs. Bills; Income vs. Debts you currently owe.

Q. What can I do if a lender turns me down? Should I just forget it?

A. No, there are many reasons to think about speaking to another lender.

  • Other lenders might overlook some of your credit issues
  • Some information on your credit report may be wrong and can be corrected
  • I can help you clean your credit up and call to workout payment arrangements for release of past due debt
  • Sometimes you need to wait for a few months to let your credit "settle" after having a lot of activity

Q. What is an appraisal and why does the lender require it? Do I pick the appraiser?

A. An appraisal is a calculated value "assessed" by a certified appraiser. They measure the size, location, and condition and average cost of other property nearby related as possible. They take all the data collected and compute their "best guess" at what value they determine.

Q. What do we do when we get a lower appraisal than needed for the lender?

A. The seller will have to find ways to "up" the value for the loan. There are some very simple ways to add value- paint, landscape, updates, and repairs. The lender usually contracts the appraiser.

Q. How do you know how much down payment to make?

A. The answer can vary, but here are some good example for you to think about.

  • The lender usually requires a % of the sales price
  • The amount due down to get the better interest rate you want
  • How much down can remove PMI- more down
  • Debt to income ratio
  • Credit history

Q. Where can I get the money for a down payment?

A. You can find many options, but here are some options that many home buyers review.

  • Savings
  • Gift (parents, etc.)
  • Personal loan
  • Down payment services (rates vary)
  • Sale of personal property (car, boat, etc.)
  • Liquidated assets

Q. How much is Home Owners Insurance?

A. The prices have several things that affect them:

  • What area is it in?
  • Higher rates for more rural areas further away from fire dept.
  • Age of the property.
  • Credit history. Insurance companies believe that poor credit makes for a higher risk of destruction of property.
  • Condition of property.

Q. What does a homeowner's policy cover?

A. It depends on the policy, but usually not things that wear out. It does cover:

  • Roof- if damaged by a storm or if struck by lightning, otherwise it's not covered
  • Fire to structure
  • Burglary

Q. What is a home warranty, how much does it cost, and who pays for it?

A. Anyone can pay for it, buyer or seller. A policy costs around $450 - $550. Policy repairs damaged or broken items in the home: appliances, plumbing, roof, heating and air, if it should become inoperable. A complete list comes with the policy.

Q. How do you get the repairs done?

A. Call an 800 number and tell them the address. They call the repairman for you. If you call the repairman, you're responsible for paying them.

Q. How much does it cost me for the warranted items repaired?

A. Between $50 - $100 per visit or call.

Q. What is PIM (Private Mortgage Insurance) and why do I have to pay for it?

A. It is an insurance policy that you're required to take out. But it doesn't protect you. It protects the lender from loss in the event you default on your loan. PMI is typically required on mortgage loans where there is no cash down payment, or where the down payment is less than 20 percent of the total loan. Many lenders allow you to drop PMI once your equity exceeds 20 percent. Typically PMI might add anywhere from $60 to $120 to your initial monthly housing payment. But the situation can be much worse if you have bad credit.

Q. Do we pay PMI for the full term of the loan?

A. No. As your equity builds, lenders will more than likely remove their requirements at the 80% equity.

Q. Why is a legal description necessary when buying property?

A. 1. The law only recognizes the certified designation from the county records of the property's address. The description usually says a part of the _____means that the township book is only a portion of it and not the total township area.

Q. Do I have to be responsible for my recorded legal description?

A. Yes and No. It is a way to be certain about what you are buying and the legality of owning a property. I always get tax records for all my clients to check for the right property and to check for tax paid or tax debts against the property. Always use a good closing company to help make sure the deed is written correctly.

Q. Why is everybody so excited about the interest rates? What does it mean?

A. Well there are many reasons that include.

  • You get more house for less money.
  • You pay less interest to the lender.
  • Get more and pay less.

$80,000 @ 6% for 30 years = $320.34/mo
$80,000 @ 8% for 30 years = $479.64/mo
That's a difference of $159.30/mo!
$159.30 X 12 = $1,911.60 pay savings! That would pay for taxes and insurance.

Q. What are discount points?

A. In addition to the interest rate, lenders may charge for discount points, origination fees, the appraisal, title and credit reports, and other miscellaneous items. Discount points and origination fees are usually the largest fees lenders charge, so they make the most difference in determining which scenario is better. For this comparison, don't worry about the other miscellaneous fees, such as the appraisal, title and credit reports. These charges are much less significant than points. Each point paid equals 1 percent of the loan amount, so if $100,000 is borrowed and you have to pay three points, you are actually getting $97,000. However, you have to repay $100,000, and have to pay interest on that. The reason lenders charge discount points is to change the interest rate that is paid. The more points, the lower the rate, and vice versa.

Q. What are closing fees and who has to pay for them?

A. The charges from services performed by agents on your behalf to get your property ready to sell, get a clean title, title insurance, agents fees, and time fees for filing with the county to record taxes for your protection of new ownership. Who pays can sometimes be financed within the loan.

Q. Can you give me some examples of closing fees?

A. Sure, see the list below for some of the fees.

  • Closing agents, $200 usually split between the buyer and seller.
  • Title Insurance- determined by policy maker.
  • Revenue stamps- 3.30% usually split 1.65 x per 1,000
  • Taxes- any taxes due at the time of sell will be collected or dispersed at closing.

Low-Income Housing

  1. ARVAC offers assistance for qualified buyers.
  2. USDA offers assistance
  3. First time homebuyer program
  4. Attach co-signer
  5. Rental assistance help

Call, email, fax me, facebook me, twitter, Yahoo Message me, face-to-face, whatever your favorite way is to communicate I'm here to help!

American Dream Realty
701 East Main

Suite 1
Russellville, AR  72801

Cell: (479) 857-1041
Office: (479) 967-6969
Fax: (479) 967-2983

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Cindy Walker is a member of the National Association of REALTORS®