Credit remediation is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process. Sub-prime borrowers who are eager to move into A-Paper territory often find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.
The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)
It's also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.
While credit repair is necessary for some, it's not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:
· Evenly distribute your credit card debt to change the ratio of debt to available credit. Let's say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.
· Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don't close those old accounts!
· Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you're only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.
Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.
If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission's website, which contains a wealth of helpful literature.
If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC's regulations on credit repair. With over 1100 credit repair companies to choose from, it's important to be certain you are dealing with a reputable firm. Examine the FTC's information on fraudulent practices to avoid falling prey to credit repair scams.
Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.
As with any resale product, the person trying to sell said product will usually try to make the product look as new as possible to ensure the highest profit available. In reviewing many of the homes on the market today, however, some sellers don't get that notion.
Don't make the mistake of the seller who, knowing full well that buyers were coming by, not only failed to do a fresh clean up, but also left his underwear on the exercise bike, a pan of crusty macaroni and cheese on the stove and debris throughout the yard.
There are some task items any seller should consider when selling a house. Even if you decide to sell "as is," a little soap and water could put a few more bucks in your pocket. With that in mind, let's look at what sellers should look at doing with any house they want to put on the market; what to do when you want to get a little more money; and how to compete with the Joneses when looking to prepare your home for sale.
Any House
Even if you're selling as-is, the above four tips are a must. Next is where we spend a little more money.
Redecorating
Keeping up with the Joneses
At some point you have to look at what the neighbors are doing and keep up or you'll lose out. If everyone in the neighborhood is ripping out the old and installing the new (kitchen, bath, carpet, doors, etc.) then you may be forced to do the same thing long before you're thinking of putting your home on the market. My wife and I are facing that right now with the kitchen. It's starting to show its age, which means before we put the house on the market in a few years, if I want the best buyer (or any buyer for that matter) the kitchen cabinets need an upgrade.
Redo, Remodel, Relax
As you look around the house, making your list of things to change before putting the house on the market, remember to create some time to enjoy your new digs before selling the place. If a sale is on your horizon and you must redo the landscaping before putting the house on the market -- do it early so you can drive home to the professionally designed flowerbeds and floral creations a few months or years before selling it to someone else.
While you want to repair, paint, remodel and add on to your house because it adds value to your home, every homeowner should especially do it because they want to enjoy the changes as well.
With the cost of insuring homes on the rise in recent years, now is a good time to examine your policy and look for ways to save money.
The price tag of insuring homes across the United States rose 6 percent in 2001; a similar increase is expected this year, according to the Insurance Information Institute (III), a non-profit organization supported by the property and casualty insurance business.
III attributes the increases to the mounting number of catastrophes, the high cost of home repairs, and the emergence of mold claims.
In addition to major catastrophes like Hurricane Andrew and the Northridge earthquake, hundreds of smaller disasters stemming from tropical storms, tornados, wildfires, hail, ice and snow are driving costs up.
III also points out that the cost of home repairs is rising by more than 7 percent a year - three times faster than the rate of inflation.
And the surfacing of mold claims is also boosting costs. In Texas, the number of mold claims increased by 581 percent between the first quarter of 2000 and the first quarter of 2001. Insurer payouts increased 755 percent.
Some states are being hit particularly hard. In December last year, Allstate asked state approval for a 22.3 percent increase for California policyholders. The decision is pending with the state Department of Insurance. Other insurers are seeking increases from 6.9 to 28 percent in California.
So what can you do to help keep your rates reasonable? The III makes the following suggestions:
Finally, when you're ready to buy a new home, be sure you factor in the cost of homeowners insurance. The cost of your premium will depend on how much it would cost to rebuild, and whether the house is likely to succumb to a disaster or fire.
Also, flood and earthquake damage are not covered by a standard policy. If you need flood insurance, which costs about $400 per year, you'll want to contact the Federal Emergency Management Agency. Most insurance companies offer a separate earthquake policy.
What's the payback for remodeling? Our annual report compares construction cost with resale value in 60 markets.
Source: REMODELING MagazinePublication date: November 1, 2005
By Sal Alfano
Each year since 1988, REMODELING's Cost vs. Value Report has compared construction costs for common remodeling projects with the value they add at resale in 60 U.S. housing markets. This year's Report has all 15 legacy projects (formerly, 10 were surveyed each year in rotation), plus the “upscale” versions of 5 projects introduced two years ago. New this year are upscale versions of roofing and siding replacement projects.
Cost data for the Report come from HomeTech Information Systems, a remodeling estimating software company in Bethesda, Md. HomeTech collects current cost information quarterly from a nationwide network of remodeling contractors, and employs an adjustment factor to account for regional pricing variations. Construction cost figures include labor, material, sub-trades, and contractor overhead and profit.
Resale values (“cost recouped” in the tables) are aggregated from estimates provided by members of the National Association of Realtors. E-mail surveys containing construction costs and median home price data for each city were sent to more than 20,000 appraisers, sales agents, and brokers, yielding data from more than 1,600 respondents (an 8% response rate).
If some cost figures appear too high or too low, one cause is the leveling effect of averaging. High demand for remodeling services in some parts of a given metro area may drive prices up, but this is often countered by lower demand — and lower prices — in another part of the same city. Also, seemingly small differences in size, scope, or quality of finishes can dramatically affect final project cost.
Averaging also affects the “value” side of the equation. In an actual real estate transaction, the amount recouped for a given remodeling project depends on the condition of the rest of the house, as well as the value of similar homes nearby and the rate at which property values are changing in the surrounding area. Location in an urban, suburban, or rural setting will also affect a home's value, as will the availability and pricing of new and existing homes in the immediate vicinity.
In some cases, the value of the remodeling project at resale is more than 100% of its original cost. This usually happens in markets where property values are rising very rapidly, but it can also occur when buyers regard certain types of remodeling projects as “standard.” For example, in a neighborhood where most houses have two bathrooms, adding a bath to a home that has just one may increase the resale value of the home beyond the cost of construction. In fact, not adding the bath could cause the home to sit on the market for much longer than is normal and to eventually sell for less than similar homes in the area.
When resale value is a major factor in a homeowner's decision to remodel, the best course of action is to consult with a local remodeler about construction cost, and ask an experienced Realtor about home prices in the neighborhood.
The most reliable numbers in the survey are those in the national tables, for which the confidence level is 99% (+/-4%), according to Farnsworth Group. Dividing the results into regions effectively reduces the number of responses, so the confidence level goes down. Data for individual cities are least reliable because of the much smaller number of responses. This year, however, three cities — Houston, Phoenix, and San Diego — generated more than 100 responses each, enough to earn a confidence level of 95% (+/- 10%).
Specpan, an Indianapolis-based market research company, programmed and hosted the Web-based survey for the 2005 Cost vs. Value Report, and also collected and compiled the data. Farnsworth Group, a sister company to Specpan, analyzed survey data and provided pre- and post-survey consulting.
Having credit checked is an important and necessary step in the home buying process. Each time your credit checked the credit bureaus can sell your info to other lenders. They are marketing your personal and confidential info to competing creditors….and making millions.
The lenders purchase your name for a premium and will use sneaky bait and switch tactics to recoup their costs.
The guidance below (and in the "How to Avoid Foreclosure" pamphlet) is applicable to homeowners with FHA Insured loans. While a good deal of this information may apply to all homeowners in danger of losing their homes, not all of the foreclosure avoidance tools mentioned may be available to you if you have a VA or conventional loan. Additionally, HUD/FHA does not have any Loss Mitigation oversight over VA or conventional loans. Please contact your lender or a housing counseling agency.
Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you also would owe HUD an additional amount.
Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible.
You may be considered for the following:
Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses. You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem and can afford the new payment amount.Partial Claim. Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current. You may qualify if: your loan is at least 4 months delinquent but no more than 12 months delinquent; you are able to begin making full mortgage payments.
When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a Lien will be placed on your property until the Promissory Note is paid in full. The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the property.
When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a Lien will be placed on your property until the Promissory Note is paid in full.
The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the property.
Pre-foreclosure sale. This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan. You may qualify if: the loan is at least 2 months delinquent; you are able to sell your house within 3 to 5 months; and a new appraisal (that your lender will obtain) shows that the value of your home meets HUD program guidelines.
Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it is not as damaging to your credit rating as a foreclosure. You may qualify if:
you are in default and don't qualify for any of the other options; your attempts at selling the house before foreclosure were unsuccessful; and you don't have another FHA mortgage in default.
Your lender will determine if you qualify for any of the alternatives. A housing counseling agency can also help you determine which, if any, of these options may meet your needs and also assist you in interacting with your lender. Call (800) 569-4287 or TDD (800) 877-8339.
Yes. Beware of scams! Solutions that sound too simple or too good to be true usually are. If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty. Be especially alert to the following:
Equity skimming. In this type of scam, a "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services, call a HUD-approved housing counseling agency at (800) 569-4287 or TDD (800) 877-8339. Do this before you pay anyone or sign anything.
Here are several precautions that should help you avoid being "taken" by a scam artist:
Act now. Delaying can't help. If you do nothing, YOU WILL LOSE YOUR HOME and your good credit rating.
Copyright © 2010 VALUE-RITE APPRAISALS INCPortions Copyright © 2010 a la mode, inc.Another XSite by a la mode, inc. | Admin Login| Terms of Use| Site Map
