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7 Tips for Improving Your Credit

By: G. M. Filisko

Here’s how to clean up your credit so you get the least-expensive home loan possible.

Getting the loan that suits your situation at the best possible price and terms makes homebuying easier and more affordable. Here are seven ways to boost your credit score so you can do just that.

1. Know your credit score
Credit scores range from 300 to 850, and the higher, the better. They’re based on whether you’ve paid personal loans, car loans, credit cards, and other debt in full and on time in the past. You’ll need a score of at least 620 to qualify for a home loan and 740 to get the best interest rates and terms.
You’re entitled to a free copy of your credit report annually from each of the major credit-reporting bureaus, Equifax (http://www.equifax.com), Experian (http://www.experian.com), and TransUnion (http://www.transunion.com). Access all three versions of your credit report at www.annualcreditreport.com (http://www.annualcreditreport.com). Review them to ensure the information is accurate.

2. Correct errors on your credit report
If you find mistakes on your credit report, write a letter to the credit-reporting agency explaining why you believe there’s an error. Send documents that support your case, and ask that the error be corrected or removed. Also write to the company, or debt collector, that reported the incorrect information to dispute the information, and ask to be copied on any materials sent to credit-reporting agencies.

3. Pay every bill on time
You may be surprised at the damage even a few late payments will have on your credit score. The easiest way to make a big difference in your credit score without altering your spending habits is to diligently pay all your bills on time. You’ll also save money because you’ll keep the money you’ve been spending on late fees. Credit card or mortgage companies probably won’t report minor late payments, those less than 30 days overdue, but you’ll still have to pay late fees.

4. Use credit carefully
Another good way to boost your credit score is to pay your credit card bills in full every month. If you can’t do that, pay as much over your required minimum payment as possible to begin whittling away the debt. Stop using your credit cards to keep your balances from increasing, and transfer balances from high-interest credit cards to lower-interest cards.

5. Take care with the length of your credit
Credit rating agencies also consider the length of your credit history. If you’ve had a credit card for a long time and managed it responsibly, that works in your favor. However, opening several new credit cards at once can lower the average age of your accounts, which pushes down your score. Likewise, closing credit card accounts lowers your available credit, so keep credit cards open even if you’re not using them.

6. Don’t use all the credit you’re offered
Credit scores are also based on how much credit you use compared with how much you’re offered. Using $1,000 of available credit will give you a lower score than having $1,000 of available credit and using $100 of it. Occasionally opening new lines of credit can boost your available credit, which also affects your score positively.

7. Be patient
It can take time for your credit score to climb once you’ve begun working to improve it. Keep at it because the more distance you put between your spotty payment history and your current good payment record, the less damage you’ll do to your credit score.

Other web resources
How FICO scores are calculated (http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx)

Answers to frequently asked credit report questions (https://www.annualcreditreport.com/cra/helpfaq)

G.M. Filisko is an attorney and award-winning writer who keeps a close eye on her credit scores. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.

Visit houselogic.com for more articles like this. Reprinted from HouseLogic with permission of the NATIONAL ASSOCIATION OF REALTORS
Copyright 2010. All rights reserved.

Questions to Ask When Choosing a REALTOR?

Make sure you choose a REALTOR who will provide top-notch service and meet your unique needs.

1. How long have you been in residential real estate sales Is it your full-time job While experience is no guarantee of skill, real estate  like many other professions  is mostly learned on the job.

2. What designations do you hold Designations such as GRI and CRS  which require that agents take additional, specialized real estate training  are held by only about one-quarter of real estate practitioners.

3. How many homes did you and your real estate brokerage sell last year By asking this question, you ll get a good idea of how much experience the practitioner has.

4. How many days did it take you to sell the average home How did that compare to the overall market
The REALTOR you interview should have these facts on hand, and be able to present market statistics from the local MLS to provide a comparison.

5. How close to the initial asking prices of the homes you sold were the final sale prices This is one indication of how skilled the REALTOR is at pricing homes and marketing to suitable buyers. Of course, other factors also may be at play, including an exceptionally hot or cool real estate market.

6. What types of specific marketing systems and approaches will you use to sell my home You don t want someone who s going to put a For Sale sign in the yard and hope for the best. Look for someone who has aggressive and innovative approaches, and knows how to market your property competitively on the Internet. Buyers today want information fast, so it s important that your REALTOR is responsive.

7. Will you represent me exclusively, or will you represent both the buyer and the seller in the transaction While it s usually legal to represent both parties in a transaction, it s important to understand where the practitioner s obligations lie. Your REALTOR should explain his or her agency relationship to you and describe the rights of each party.

8. Can you recommend service providers who can help me obtain a mortgage, make home repairs, and help with other things I need done Because REALTORS are immersed in the industry, they re wonderful resources as you seek lenders, home improvement companies, and other home service providers. Practitioners should generally recommend more than one provider and let you know if they have any special relationship with or receive compensation from any of the providers.

9. What type of support and supervision does your brokerage office provide to you Having resources such as in-house support staff, access to a real estate attorney, and assistance with technology can help an agent sell your home.

10. What s your business philosophy While there s no right answer to this question, the response will help you assess what s important to the agent and determine how closely the agent s goals and business emphasis mesh with your own.

11. How will you keep me informed about the progress of my transaction How frequently Again, this is not a question with a correct answer, but it reflects your desires. Do you want updates twice a week or do you not want to be bothered unless there s a hot prospect Do you prefer phone, e-mail, or a personal visit

12. Could you please give me the names and phone numbers of your three most recent clients
Ask recent clients if they would work with this REALTOR again. Find out whether they were pleased with the communication style, follow-up, and work ethic of the REALTOR .

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

10 Questions to Ask Your Lender

1. What are the most popular mortgages you offer Why are they so popular
2. Which type of mortgage plan do you think would be best for me Why
3. Are your rates, terms, fees, and closing costs negotiable
4. Will I have to buy private mortgage insurance If so, how much will it cost, and how long will it be required (NOTE: Private mortgage insurance is usually required if your down payment is less than 20 percent. However, most lenders will let you discontinue PMI when you ve acquired a certain amount of equity by paying down the loan.)
5. Who will service the loan  your bank or another company
6. What escrow requirements do you have
7. How long will this loan be in a lock-in period (in other words, the time that the quoted interest rate will be honored) Will I be able to obtain a lower rate if it drops during this period
8. How long will the loan approval process take
9. How long will it take to close the loan
10. Are there any charges or penalties for prepaying the loan

Used with permission from Real Estate Checklists & Systems, www.realestatechecklists.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

10 Questions to Ask the Condoboard

Before you buy, contact the condo board with the following questions. In the process, you ll learn how responsive  and organized  its members are. You ll also be alerted to potential problems with the property.

1. What percentage of units is owner-occupied What percentage is tenant-occupied Generally, the higher the percentage of owner-occupied units, the more marketable the units will be at resale.

2. What covenants, bylaws, and restrictions govern the property What grandfather clauses are in place You may find, for instance, that those who buy a property after a certain date can t rent out their units, but buyers who bought earlier can. Ask for a copy of the bylaws to determine if you can live within them. And have an attorney review property docs, including the master deed, for you.

3. How much does the association keep in reserve Plus, find out how that money is being invested.

4. Are association assessments keeping pace with the annual rate of inflation Smart boards raise assessments a certain percentage each year to build reserves to fund future repairs. To determine if the assessment is reasonable, compare the rate to others in the area.

5. What does and doesn t the assessment cover Does the assessment include common-area maintenance, recreational facilities, trash collection, and snow removal

6. What special assessments have been mandated in the past five years How much was each owner responsible for Some special assessments are unavoidable. But repeated, expensive assessments could be a red flag about the condition of the building or the board s fiscal policy.

7. How much turnover occurs in the building This will tell you if residents are generally happy with the building. According to research by the NATIONAL ASSOCIATION OF REALTORS , owners of condos in two-to-four unit buildings stay for a median of five years, and owners of condos in a building with five or more units stay for a median of four years.

8. Is the condo building in litigation This is never a good sign. If the builders or home owners are involved in a lawsuit, reserves can be depleted quickly.

9. Is the developer reputable Find out what other projects the developer has built and visit one if you can. Ask residents about their perceptions. Request an engineer s report for developments that have been reconverted from other uses to determine what shape the building is in. If the roof, windows, and bricks aren t in good repair, they become your problem once you buy.

10. Are multiple associations involved in the property In very large developments, umbrella associations, as well as the smaller association into which you re buying, may require separate assessments.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

10 Important Tips to Successful Real Estate Investing

Be a Real Estate Investor – 10 Important Secrets

When it comes to investing, everybody has certain goals and aspirations. However, we have found that there are certain guidelines every aspiring real estate investor needs to know:

1. Compare Property Values and Rents

Financial statistics only go so far; the best measure of a property’s market value is often the sale prices of nearby properties. The same holds true for area rents. A low price can often be justified by a reasonable rent; renters who can afford a high rent can afford to buy instead, so reasonably priced rent is a need.

2. Be Careful – Tax Laws May Change

Don’t base your tax investment on current tax laws. The tax code is constantly changing, and a good investment is a good investment regardless of the tax code. The right property with the right financing is what you should look for as an investor.

3. Specialize In Something You Know

Start in a market segment you know. Whether you focus on fixer-uppers, foreclosures, starter homes, low-down payment properties, condominiums, or small apartment buildings, you’ll benefit from experience by specializing in one aspect of investment real estate properties.

4. Know The Costs Going In!

Know the financial statements inside out. What are operating expenses?

What are loan payments? Vacancy costs? Taxes? What does the cash flow statement look like? These are key issues that must be addressed before making a solid investment.

5. Know Where Your Tenants Are Coming From

If the last rent increase was recent, your tenants may be considering a move. If tenants have a short-term lease, they may be living there simply to attract unsuspecting buyers. It is also important to collect the tenants’ security deposits at closing.

6. Assess The Tax Situation

Taxes are an integral part of successful real estate investing, and they often make the difference between a positive cash flow and a negative one. Know the tax situation, and see how it can be
manipulated to your advantage. It may be a good idea to consult a tax advisor.

7. Investigate Insurance Coverage

If seller’s coverage is based on lower-than-current replacement value, your insurance cost may increase when you pay a higher purchase price.

8. Confirm Utility Costs

Ask the local utilities to verify recent utility expenses, especially if any of these costs are included in your tenant’s rent.

9. Consult Your Accountant

Taxation is a key element of successful real estate investing, so be sure to find an accountant who is well-versed with the constantly evolving tax code.

10. Inspect!

Make sure that you always perform a thorough inspection of the property before buying it. Never, ever buy any property without at least examining the site. In some cases, hiring professional inspectors to examine the structural mechanical system may be a sound investment.

How High Tech Home is Your Home

If the latest technology or entertainment options are important in your new home, add the following questions to your buyer s checklist.

1. Are there enough jacks in every room for cable TV and high-speed Internet hookups

2. Are there ample telephone extensions or jacks

3. Is the home pre-wired for home theater or multi room audio and video Does it have in-wall speakers

4. Does the home have a local area network (LAN) for linking computers

5. Does the home already have wiring for DSL or another high-speed Internet connection

6. Does the home have multi zoning heating and cooling controls with programmable thermostats

7. Does the home have multi room lighting controls, window-covering controls, or other home automation features

8. Is the home wired with multipurpose in-wall wiring that allows for reconfigurations to update services as technology changes

To rate the home on its technological sophistication, fill out the Consumer Electronics Association s TechHome checklist at www.ce.org/techhomerating.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Does Moving Up Make Sense ?

These questions will help you decide whether you re ready for a home that s larger or in a more desirable location. If you answer yes to most of the questions, it s a sign that you may be ready to move.

1. Have you built substantial equity in your current home Look at your annual mortgage statement or call your lender to find out. Usually, you don t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you ve owned your home for five or more years, you may have significant, unrealized gains.

2. Has your income or financial situation improved If you re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

3. Have you outgrown your neighborhood The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you d like to be closer to your job or live in a better school district.

4. Are there reasons why you can t remodel or add on Sometimes you can create a bigger home by adding a new room or building up. But if your property isn t large enough, your municipality doesn t allow it, or you re simply not interested in remodeling, then moving to a bigger home may be your best option.

5. Are you comfortable moving in the current housing market If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you ll have more selection and better pricing as you seek your new home.

6. Are interest rates attractive A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Get Your Finances in Order: To-Do List

1. Develop a household budget. Instead of creating a budget of what you d like to spend, use receipts to create a budget that reflects your actual spending habits over the last several months. This approach will factor in unexpected expenses, such as car repairs, as well as predictable costs such as rent, utility bills, and groceries.

2. Reduce your debt. Lenders generally look for a total debt load of no more than 36 percent of income. This figure includes your mortgage, which typically ranges between 25 and 28 percent of your net household income. So you need to get monthly payments on the rest of your installment debt  car loans, student loans, and revolving balances on credit cards  down to between 8 and 10 percent of your net monthly income.

3. Look for ways to save. You probably know how much you spend on rent and utilities, but little expenses add up, too. Try writing down everything you spend for one month. You ll probably spot some great ways to save, whether it s cutting out that morning trip to Starbucks or eating dinner at home more often.

4. Increase your income. Now s the time to ask for a raise! If that s not an option, you may want to consider taking on a second job to get your income at a level high enough to qualify for the home you want.

5. Save for a down payment. Designate a certain amount of money each month to put away in your savings account. Although it s possible to get a mortgage with only 5 percent down, or even less, you can usually get a better rate if you put down a larger percentage of the total purchase. Aim for a 20 percent down payment.

6. Keep your job. While you don t need to be in the same job forever to qualify for a home loan, having a job for less than two years may mean you have to pay a higher interest rate.

7. Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills, too. Pay off the entire balance promptly.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

10 Questions to Ask Home Inspectors

Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors:

1. Will your inspection meet recognized standards Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group s standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI s Web site also provides a database of state regulations.

2. Do you belong to a professional home inspector association There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID.

3. How experienced are you Ask how long inspectors have been in the profession and how many inspections they ve completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner.

4. How do you keep your expertise up to date Inspectors commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training.

5. Do you focus on residential inspection Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular.

6. Will you offer to do repairs or improvements Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state.

7. How long will the inspection take On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in.

8. What s the cost Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true.

9. What type of inspection report do you provide Ask to see samples to determine whether you will understand the inspector’s reporting style. Also, most inspectors provide their full report within 24 hours of the inspection.

10. Will I be able to attend the inspection The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector’s refusal to let the buyer attend should raise a red flag.

Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Common First-Time Home Buyer Mistakes

1. They don t ask enough questions of their lender and end up missing out on the best deal.

2. They don t act quickly enough to make a decision and someone else buys the house.

3. They don t find the right agent who s willing to help them through the home buying process.

4. They don t do enough to make their offer look appealing to a seller.

5. They don t think about resale before they buy. The average first-time buyer only stays in a home for four years.

Source: Real Estate Checklists and Systems, www.realestatechecklists.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

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