Is this a good time to buy a house?

Though national median price of an existing home was down 1.5 percent in the second quarter compared to a year ago, it was up 1.3 percent in the New Haven-Milford market. Some areas are seeing much bigger swings: the median price for the same period fell 11.3 percent in Sarasota, Fla. but rose 21.9 percent in Salt Lake city, Utah. (Here’s how other markets are doing.)

Above all, figure out how much you can afford, and don’t get talked into a bigger house by real estate agents, mortgage brokers or builders who tell you the “guidelines” say you can afford a bigger mortgage. No one knows how much you can comfortably afford by you. So make a sensible budget, decide how much you can spend and stick to it.

And don’t forget to budget for a bucket of fresh, white paint for that picket fence.

My friend was told by a "debt counselor" that he should keep his credit utilization ratio at about 30 percent because having it too low would hurt his score. I dispute this notion. My (credit ration) generally sits between 1 and 4 percent based on monthly purchases (paid in full) during a statement period. Can you settle this dispute?
-- John R.,  Phoenix Ariz.

In general, making generalizations about credit scores is not a good idea.

According to the people who created the scoring system, a lower credit utilization is usually gives you a better score. That's why closing credit accounts without paying down debt on open accounts can lower your score. By reducing your total credit limit without a corresponding drop in your debt balance, you raise the ratio of debt to credit limit.

Still, your score is based on a complex formula that takes a number of factors into account. For more on how it works, check out the Fair Isaac & Co (FICO) Web site. They used to be fairly secretive about how the scoring works, but these days they’re happy to share the criteria with the public.

As for your friends “credit counselor,” in my opinion many of those holding themselves out as counselors are simply selling more credit. The common scam is to consolidate loans into a new one, charge a higher interest rate and then stretch out the term for many more years to lower the monthly payment. Since most people are so fixed on monthly payments they go along with this. But they end up paying much more interest before the loans are paid off.

The only credit counselors we believe to be legit are those certified and affiliated with the National Federation of Credit Counselors. You can find one in your area by going to www.nfcc.org.

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