Sandra Bailey

Let's get working on that credit report! By now you know what you owe and that ultimately, and unfortunately, you have to pay it back. That part really sucks doesn't it?

This is probably going to be my longest blog so far, so be patient with me as I walk you through to the best of my ability how to help you pay off your debt and achieve the dream of Home Ownership!

You have debt. You need to pay off your debt to be financially set to own a home. Simple as that. I have put together a "mock" chart of what you owe, balances, minimum payments, etc. We are going to work off of that. If you want to follow along with your own bills, make a list on a sheet of paper and write down the information as it pertains to you, using the chart below as an example. Good luck....here we go....

Total Debt: $317,784.46.....WOW! No, not really that bad at all!

First of all take away the fact that you owe $xxxxx amount of dollars on your mortgage. A House payment is a house payment is a house payment. Whether you are renting or have a mortgage. It is there forever more until you move, or sell, or someone is nice enough to hand you a million dollars or the key to a brand new home out of the goodness of their heart. (BTW if anyone ever does that for you, please have them contact me - I'd love to be their friend too!)

For now, I am going to move forward assuming that you are renting, or live with family, etc. We are going to focus on the debt that's making your credit score low and the potential to buy a home even lower.

Ok, so this is what our debt REALLY looks like...

THIS is the debt on your credit report. Let's take care of it. How? I'll show you. Remember, I am NOT a credit counselor, a mortgage lender, and I'm definitely not a credit card company! I am showing you from my own personal experience. I have been to a credit counselor in the past, and this is how they showed me, so I'm passing along my knowledge to you. Let's get started....

1. Make a payment arrangement with Intermountain Health Care. Most Doctors and Hospitals will work with you on the balance you owe. But, treat them like a monthly bill. Be on time! They can and will report you to a credit collection agency and possibly a lawyer if you don't pay. You will notice that I put a dollar amount next to the Words "Due In Full", we are going to use this number as the monthly payment amount due for the Medical bill.

2. Do not look at the interest rates! Most common mistake! People assume that they must pay off the creditor with the highest interest rate first....WRONG! Start with the lowest balance. Then work your way up. I'll show you how in a few minutes...

3. Stick to your budget! Anyone who owns a computer has a program for writing a monthly household budget. Microsoft Office comes with one, you can make your own if you are just a tiny bit handy with making tables on your word processor or spreadsheet, or you can write one out in a notebook. Whatever is most convenient. If you prefer, you can click on any of the links below to print out a blank, or use an online program:

http://www.womens-finance.com/worksheets.shtml

http://www.dollartimes.com/download-and-print/blank-budget-worksheet.htm

http://financialplan.about.com/cs/budgeting/l/blbudget.htm

http://quicken.intuit.com/

My favorite is quicken. I use the larger version, QuickBooks, but only because I own a Company. Quicken is very useful. I highly suggest that everyone look into purchasing something similar. You will keep better records of your finances and it is great when tax time rolls around. It is amazing to see how you spend your money when you are putting it in black and white.

Ok, moving right along...

Now we know that we have monthly payments in the amount of $675.00. Let's get started figuring out how we are going to pay this off!

I am going to use a chart that I made for myself when I was not able to see the "bigger picture" of paying off my debt a certain way. So my trial and error is going to be your success!

The rules are simple...

1. First take the smallest amount owed (in this case First National Bank Visa) and start making your monthly payments. Any additional Money you receive, (Taxes, Christmas, Gifts, etc) put towards that payment.

2. When that is paid off, go to the next smallest balance (Household Bank Credit Card).

a. THIS IS WHERE YOU START SEEING YOUR DEBT DISAPPEAR!

b. The same applies to this card, any additional money goes towards paying it off PLUS the money you were sending as a minimum payment to the 1st debt! Example: The Payment to First National Bank was $45 / month. When you paid that off, you have $45 / month extra - add that to your payment to Household Bank Credit Card of $180. You are now paying $225 / month towards this debt.

c. You see the point, so follow the chart. So forth and so forth....

By the way, you will probably have more than the original balanced owed due to interest, fees, etc. So you may need to adjust your balances accordingly. But you can still get to your goal!

Start with the debt highlighted in RED, make this your primary payoff goal. The items in BLUE will continue to only be normal monthly minimum payments. Once you pay one off, it becomes GREEN for MORE MONEY to use towards the next one, which then becomes RED until it becomes GREEN and so on and so on.

CONGRATULATIONS!!! YOU ARE NOW OUT OF CREDIT CARD DEBT!!!

Please don't make the most common mistake once your card is being paid down or completely paid off...DON'T KEEP CHARGING! We will talk about that more in Part V!

Until then...

Stay Positive!

Sandy

Hopefully by now you have pulled your credit report....AND....talked with a Lender. But, if you are a procrastinator, my worst fault, you have not. Shame Shame Shame....

I received an email today from a Mortgage Lender I work with and I absolutely had to share this link with you. It will help you understand WHY it is so important to know what is going on in your report.

Here is the link:

Yahoo FICO Score Article

Please let me know if you have any questions, or if you need help reading your credit report!

Stay Positive!

Sandy

Ok, here is the first step. Are you ready? It's really tough...

PULL YOUR CREDIT REPORT!!!!!

How do you know where you stand if you have absolutely NO IDEAwhat's on your credit report? Unfortunately this is how you are measured in the "financial world". It doesn't matter that you are a nice person and always there for your friends and family. It doesn't matter that you would give the shirt off your back for a loan. And no matter what....the bank does not take "pinky promises" to pay back the loan (I already tried)!!

So what is a "credit report"? It is a record of an individual's current and past debt repayment patterns. A credit history helps a lender (ie: bank, car loans, mortgages, etc) to determine whether a borrower has a history of repaying debts in a timely manner. A credit report also includes information found from public records including tax liens and judgments. They also like to see that you are not "maxed out" on all of your cards. Can you keep minimal balances?

There are dozens of sites you can go to for a copy of your credit report, here are a few:

• www.annualcreditreport.com ~ You can pull all 3 Bureau's at once, or pull one bureau every 4 months, it's your choice. I suggest this site - it's completely free!
• www.freecreditreport.com
• www.creditreport.com
• www.truecredit.com

Ok, print your report out & keep a copy. Most reports are fairly easy to read. You will notice that there is a "Public Records" section also. This section goes through any names that may be listed as "alias", if you are a married woman it will show your maiden name, if you have middle names, same thing there, etc.

PAY CLOSE ATTENTION TO YOUR CREDIT REPORT! If there are ANY errors report them to the credit bureaus immediately! You have the right to dispute errors on your report! Follow this link to learn how to dispute items on your credit report:

http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm

What's a FICO?

FICO stands for Fair Isaac Company, the company that created--and computes--this credit score. Although other companies also compute credit scores, FICO is the most trusted, and most used, score.

"It's asking me if I want to get my FICO score for additional cost....do I?"My opinion....NO! Get a copy of your credit report first. If there are a lot of problems, let's face it, your FICO is probably low, so don't waste your money. If you have decent to good credit, then you can decide if you want to pay for it, in that case I probably would. It's about $15.00 depending on what site you go on.

I suggest you follow this link and learn about FICO scores and how they are calculated and affect you. Remember, the better your credit=the higher your FICO score=the better loan you will get!

www.myfico.com

Ok, here is step two....again....very tough....

GO TALK TO A LENDER!!!

You can take a copy of your credit report with you, but most likely they will run a copy for their file from their system. You are probably wondering why I am sending you to a lender since I already told you to run your credit report. The answer is simple....If you have great credit, you already know you can get a loan. But, if you have even one blemish on your report, you need to talk to a qualified Lender/Bank who can help you figure out what steps you need to take to become eligible for the goal you are trying to accomplish - meaning purchasing a home, or any kind of Real Estate. Go over your options with them, that is what they are there for. BORROWER BEWARE: If you see something that says "For this much $ we can fix your credit" Don't do it! I doesn't always work. Sometimes it does, but it's your decision if you want to take that chance. Again....talk to your lender. Make sure you feel your lender is someone you feel confident in, that you can trust and you know that they are working WITH you and not working for themselves. I can refer you to many lenders, email me for a list sandrambailey@yahoo.com

Ok....what are you still doing here? Go pull your report!

Stay Positive!

Sandy

P.S. My biggest tip to you right now is this:

DO NOT PROCRASTINATE! If you intend on buying anything, especially a home, any time at all in the future, you MUST do this NOW! It is better to know where you stand now and work your way towards your goal! You will regret it later if you don't!

We've all heard the phrase atleast once in our lives "living within your means". The phrase simply means, you spend more than you make.

Anyone that knows me, knows that I am very close with my family, and to this day, my extremely successful Father will still come up to me and say, "Daughter....you're not living within your means". Funny isn't it? But he's right.

It's not something you can change right away, but with the right mind-set and a lot (and I do mean A LOT) of hard work and persistence WE can get there.

Some things that I notice myself doing that are financial no-no's especially in this bad economy...

• Buy 1 for $3.00, but buy 2 and you get them for $5.50 ~ yep....I'll buy the two, but I only need 1
• Children's Place is having a sale - I can buy my kids clothes for NEXT year! ~ Guilty.....
• It's a tax write off if I buy myself 4 brand new outfits ~ When is tax time again?????
• As long as I have enough to pay the minimum amount due, then I'll be fine ~ Sigh....

The list goes on and on and unfortunately on and on and on.... Are you in this boat too? I am not here to preach to you that I am going to turn myself around and be out of debt in a month - no that would take a miracle! But what I will show you in the next few blogs is WHY we live outside of our means, and WHAT we can do to get back to where we need to be....REGARDLESS OF THE ECONOMY!

So what's the big deal if I use the credit card and it's maxed out, right? I make my payments on time. No, I have don't have money in the bank, but I still pay my bills as needed. I MUST have good credit....

This is the reason I want to help you. These are common misconceptions that will not help in leading you to the road of financial freedom and home ownership.

The Real Estate Market is still a great investment, and with the tax credit being extended, now is the time to buy or invest. The market WILL get better. Will you get better too???? Yes, you will, and so will I - we will work on this together :) But we must apply ourselves NOW!

I am a FIRM follower of Dave Ramsey (mostly recently of course), and I advise you to follow this link and take his challenge...

http://www.daveramsey.com/tools/beat-daves-plan/

Until next time....

Stay Positive!

Sandy

Dear Potential/Confused Buyer,

So you want to achieve the dream of home ownership right? YEAH!!!! Besides being the biggest financial decision you will make, this is also the biggest roller coaster ride you will ever find yourself on. Lucky for you, I am at the control panel and I'm going to make sure that you don't get thrown off the track! So, sit back, try to relax, and enjoy the ride.....

The most common thing I hear - What if I'm not ready yet, but I know I want to buy, but I'm just not sure??? Your knees are wobbly and you want to know, but you will never know unless you get on. With so many grants out there right now, especially since they will be ending soon, you need to know where you stand financially. You may be able to get into that home that you were only admiring from afar. My advice? GO TALK TO A LENDER NOW!!!! The only way it will affect you is if you DON'T go talk to them now. You might miss out on a great opportunity.

How will I know what I can afford?

Easy, go see a Mortgage Lender, Bank or Credit Union. Your Loan Officer will be able to tell you how much you will qualify for and they may be able to tell you what program and interest rate you will get. There is documentation you will need to take with you when meeting with your Loan Officer - be prepared and it will be easy for them to help you. You will need the following:

• • • 2 months worth of pay stubs for anyone working that will be on the loan
    • If you are self-employed, you will need 2 years of tax returns
    • Do you receive any additional income, such as alimony or child support? You will need to bring bank statements and/or garnishment orders showing you receive that monthly in order to be used as income
    • Make sure you take your Social Security Card and Drivers License/And/Or State Issued ID Card - They will want to make copies
    • When you have been pre-qualified, make sure they give you a pre-approval letter. You will need this when looking for homes.

So that was easy enough right? Ok, now you are ready for the next step. Let's go look at homes! This is my favorite part. I love to show you homes, to see the look on your faces when you find what you love, but please do me a favor - tell me what you want to see. I already know how much you can afford, and I am going to stick within that range for you. But you need to let me know the following:

• • • Is there a specific area you want/need to be in? It may be because you don't want to switch your kids from their school, or you want to be in walking distance to work, etc.
    • How many bedrooms would you like? How many bathrooms? One story, two story? Fenced yard, no yard? Do you see the specifics I need?

Sit down and write me a list of what is important to you. You may have to give and take to get what you want for a good deal. Make sure you think about what's important to you and what you absolutely MUST have. This helps me to narrow down my search and find what you want not what I think you want.

"WOW - this is it! This is the one for us" I love hearing those words. Don't you???? The next step is making an offer. I will help you write an offer for a reasonable amount. We will go over all the paperwork and submit any contingencies that you request. Please know that I will do my best to help you, but if you are asking the sun, moon and stars in addition to low balling the sellers, I need to let you know that your offer is probably going to end up in the trash. Be reasonable, but be firm if needed. In most cases, the seller is going to counter your offer. I will try to negotiate on your behalf to the best of my ability and hopefully we will have a deal asap. Please understand that things take time, so sometimes you can't rush.

Yeah we have a deal - you are a few steps closer to having that home you keep driving past everyday. Yes, I know you drive past it and that's ok - you SHOULD be excited! I'm excited for you!!!

What happens now? I will send over a copy of your purchase contract with all the information over to your Loan Officer. Then they will order the appraisal. The appraisal can take up to 4 weeks. Once the appraisal is complete, we hope and pray and cross our fingers that it comes in for at least the amount you are purchasing it for, if not MORE.

Woohoo! The appraisal came in for what we are purchasing the home for. Awesome! Now we can move forward with the loan process. Your Loan Officer will draw up all the necessary paperwork and will be in contact with you about how much your payments and interest will be and all of that good mortgage stuff.

Guess what? It's time to close your deal! This means everything is complete. We will go to the Title Company and sign all of your papers.

CONGRATULATIONS! YOU ARE A HOMEOWNER!

You have rode the roller coaster of home buying and survived! Do you remember I promised I would stay with you through it all? I never let you get off track, and as your Realtor I never will. I look foward to working with you soon!

Sincerely,

Sandy