A low credit score can stand in the way of purchasing a home by making mortgage rates prohibitively high, or even simply unavailable to you. To make matters worse, most credit reports (nearly 80%) have mistakes on them. In fact, a 2004 study showed that nearly a quarter of all consumers had mistakes serious enough to result in denied credit! Fortunately there are steps you can take to correct your file and improve your score. The Fair Credit Reporting Act only protects consumers if they take action; the credit reporting companies are not required to verify the information given to them! Here's what you should do before applying for a mortgage to ensure your credit report is accurate:
1. Find out what's in your file. You can get one free credit report each year from each of the three credit bureaus: Experian, Equifax and TrasUnion. There is no need to get them all at once; it's best to stay on top of things and do a different one every four months. The best way to obtain these reports is online at www.annualcreditreport.com. This site truly is FREE, unlike some others that claim to be "free" but aren't.
2. Dispute inaccurate information. If you got your credit report through www.annualcreditreport.com you can dispute errors online. You can also write letters to each of the credit bureaus with details of the dispute including documentation such as a copy of a cancelled check showing payment, a bankruptcy disharge, etc.
3. Dispute inaccuracies at their source. You'll also want to contact the credit card (or other) company that provided the credit bureaus with the inaccurate information. There may have simply been a mistake in how a payment was credited, in which case it will be easier to deal with the creditor now than a collection agency later.
4. Have outdated information removed. Legally, credit bureaus are required to remove information pertaining to credit scores that is more than seven years old. That means if a creditor is showing you made two late payments in 2001 it should not be showing on your report! Employment history and the like does not need to be removed as it is considered neutral and doesn't affect your score.
5. Protect your identitiy. It is a federal crime to obtain a person's credit report without their consent or under false pretences. You can request that a "fraud alert" be placed on your account. This will cause you to be contacted each time your credit report is pulled so you know it's only being pulled when you have authorized it. An even more aggressive step is to have the credit bureaus put a security freeze (for a fee) on your account. You can temporarily lift the freeze when applying for a mortgage or other credit.
Do you have truly BAD credit? Here are three additional steps to take:
1. Control your spending by creating, and sticking with, a realistic budget. Write down your monthly income and expenses (and be honest about how much take-out you're eating!) If they don't agree, do what you can to decrease spending and/ or increase income.
2. If you've had one or two late payments, contact the lender and ask them to "re-age" the loan.
3. Give it time. Your credit didn't go sour overnight and it's not going to improve overnight, either. Even after credit-killers such as a bankruptcy or foreclosure, with diligence and wise spending choices, your credit can be repaired within three years.
If you'd like more information or guidance in getting your credit report in shape, call the JMC Group at 360-609-6775. You can also go to the "Contact Us" page on our website at www.MyRealtorIsJamie.com. We are here to help!
I read an article on Yahoo Finance yesterday that opened with the line, "The real estate market is so awful that buyers are now scooping up homes for as little as $1,000." I'm not trying to down play the heartache that faces familys who have gone through foreclosure but, this is not an "awful" market if you've ever considered investing in real estate!
The Yahoo article does go on to explain the deeper truth behind the headline. Most of these "steals" are in areas of the country that have experienced massive job loss, such as in the Michigan auto factories. Also, the "$1000" homes are in need of major repair and many buyers are being required to sign an affidavit promising they will fix the houses up. The repair costs can be $15-$25,000 but, even then, you've purchased a house for only $26,000! Owning long-distance rental properties can be stressful because, let's face it, you can't to "secret drive-by's" to check up on your tenants! Finding a reputable property management company is paramount in this situation.
Why would you, a part-time real estate investor in the Northwest, want to buy property in a place like Michigan? Isn't it risky? Stressful? A hassle? Yes! But it can also lead to a greater profit margin than you could expect investing closer to home! Property values here have held much more steady than in other parts of the country so you pay much more up front. Foreclosures have not been as rampant here as in other parts of the country so the rental market hasn't increased as much. Most of these hard hit areas come with large rental markets. There's the rental market that's always there, plus the renters that, until a recent foreclosure, were homeowners. It may sound risky to agree to rent to someone whose home was foreclosed, and in some cases it would be. There are, however, a few things to keep in mind. Just because someone wasn't able to pay their mortgage does NOT mean they won't be able to pay their rent! Mortgages typically have much higher monthly payments than rent. There are also taxes and insurance that come with home ownership. If the person had an adjustable rate mortgage, their payment may have jumped to an unaffordable level within recent years - for the vast majority of Americans an increse of only $100 per month can mean the difference between "affordable" and foreclosure! So, with proper credit and background checks you can rest easy when renting to someone who had a home foreclosed.
By working with a local Realtor you trust there's not even a need for you to ever GO to the state you're investing in! Your agent in Vancouver networks with trustworthy agents throughout the country and can refer you to someone who knows the market you're buying in. That agent can also help you locate trustworthy contractors to do any repairs and property managers to handle renting the house. If you'd like to learn more about taking advantage of this buyer's market, call the JMC Group at 360-609-6775. Or go to the "Contact Us" portion of our website at www.MyRealtorIsJamie.com. We are here to help!
It's no secret that lender requirements are changing rapidly, and seem to be getting stricter every day! This has left many potential home buyers feeling they won't qualify for a mortgage, and therefore are unable to take advantage of the great deals to be had in this market. In addition, the fallout in the mortgage industry has made the term "creative financing" sound almost dirty! But there's a definite difference between the under-handed tactics some less-than-savory lenders were using during the boom years and true creative financing. I'd like to share some creative financing techniques that not only work, but are safe and sane options for today's home buyers.
What Sellers Can Do:
What Buyers Can Do:
What Lenders Can Do:
Not all of these ideas will work for every situation. But just ONE could mean the difference between staying put and realizing your dream of owning a home. If you have questions about safe creative financing or purchasing a home at a discount price, give the JMC Group a call at 360-609-6775. Or go to the "Contact Us" portion of our website at www.MyRealtorIsJamie.com. We are here to help!
The Columbian has some great ideas for saying goodbye to 2008. I don't want to plagiarize so here's the link. Make it a fun, happy, and above all SAFE night!
http://columbian.com/article/20081226/LIVING11/712269992/-1/LIVING
A court in Australia recently approved the use of Facebook to notify a couple they lost their home after defaulting on a loan. Apparently several attempts to contact the couple in person and via email. In the past, Australian courts have permitted the use of emails and text messages when more traditional methods have failed. As far as I know, nothing like this has been done here in the US. It will be interesting to see if that changes as social networking sites, and foreclosures, gain in popularity. That's one "super-poke" I wouldn't want to see on MY profile!
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