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, Experian, and TransUnion. Access all three versions of your credit report at 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.

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.com with permission of the NATIONAL ASSOCIATION OF REALTORS®

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Love letters, how meaningful are they?

Some buyers get so excited about a home they want the seller to know.  This could be especially true if they feel they will be in a multiple offer scenario.  So, should they write a letter to the seller to let them know how much they love their home and hope the seller accepts their offer?  The buyer hopes that if they express their love for the sellers home the seller will want them to have it.  For most owners, selling is emotional and they want a buyer to be someone who will love the home as much as they have.  The buyer hopes to pull on those emotional strings with their love letter.

But is this a good idea?  If this was my buyer I would say it’s not a good idea at all!  Writing a letter to the seller letting them know how much they love the home gives away all their negotiation power.  Even if they get the home for the price they want they still have to go through the repair negotiations and the seller will know they don’t have to do much to keep the buyer in the deal if the buyer loves the home that much.

It’s ok to love the house, but it might be ok to show it with a love letter.  Save those for expressing your emotion to someone who won’t have a reason to hold it against you.

Can The Landlord Just Say No?

In North Carolina marijuana in any form isn’t legal.  It has been rejected twice by lawmakers when it has been proposed, but that doesn’t mean proponents won’t try again.  So what would it mean for landlords and property managers if marijuana were to be legalized?  Can they refuse to allow their tenants to use it in their homes?

So far in other states where the use of some form of marijuana is legal the state laws don’t prevent landlords from prohibiting it’s use in their properties.  The National Association of Realtors recommends a landlord or property manager should directly address the use or cultivation of marijuana on their properties.  For lease agreements which are already in place when the law passes a landlord may have to write up an addendum to their current lease agreement addressing the issue.

Some question remains if a judge would uphold an eviction in a scenario where (in a state where use medical marijuana is legal) a landlord attempts to evict a tenant for using marijuana in the property even if the lease stated they couldn’t.  If it was being used for medical reasons and it was legal within the state a judge may rule in favor of the tenant so as to not discriminate against the ill.  There are still a lot of questions as the laws have yet to be tested with the use of marijuana in various still being relatively new.   Last December President Obama signed a bill prohibiting federal funds being sent to prosecute medical marijuana users.  With this , landlords may lose grounds in any eviction battles as the courts may be less compelled to enforce a law the federal government is lenient on.

Right now twenty-three states and the District of Columbia have legalized medical marijuana.  Four of those states have also legalized recreational pot.  Currently, no state explicitly requires landlords to accommodate tenants who wish to use the drug at home, many of the states prohibit landlords from discrimination against medical marijuana patients by refusing to rent to them.

Landlords and property managers need to keep abreast of the laws so they know how to react with their lease agreements.

 

*Information from this article from REALTOR Magazine Jan/Feb 2015

Getting your name right…for good credit.

If you were blessed enough to have parents who gave you a beautiful name with two parts make sure you are consistent on all your legal docs!  You know who you are…Mary Jane, Mary Ann, Mary-Ann.  What you might not realize is that having your name inconsistently documented may cause you some issues.  Especially when you are applying for a mortgage.  Make sure you fill out your loan application properly as well!  The inconstancy can cost you 10 – 20 points with the credit agencies and that came make the difference in the interest rate for your new mortgage!

 

See: How A Typo Can Derail Your Mortgage

Upward Momentum….The Good and The Bad

We are seeing an upward movement of home prices that has been a bit more rapid over the past few months.  Low interest rates and the spring season have helped prices stay strong.  This past April marked the largest increase between March and April since 2005, according to FNC Residential Price Index (RPI).    FNC’s RPI predicted some moderate price increases as the interest rates were falling and credit was becoming more available.  This is all great news for sellers as buyers were ready and anxious to buy homes.

Unfortunatley  for buyers is that home prices are rising more quickly than either per capita personal income or wages.   We may see some stabilization in prices from here on out for a while; especially since we have past the busy spring season.  Once that stabilization hits if there is an abundance of inventory we may see some sellers needing to drop list prices.  It will be interesting to see how the second half of the year pans out.

Click on graphs below to see price trends for overall MLS are (Charlotte Metro) as well as for the 3 towns; Davidson, Cornelius, Huntersville.

 

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Interest Only Loans…didn’t that get us in trouble last time?

Once blamed for our subprime mortgage crisis that we finally seem to be recovering from seem to be re-emerging.  Should we be concerned?

The good news is the product is changing somewhat, which may ease some of our fears about the product’s comeback.  With interest only loans, borrowers make monthly interest payments and pay nothing toward the principal for a set period of time.   That part stays the same – but those who can qualify will be different.  Banks are requiring much higher credit scores (up in the range of 740 or higher) and a down payment of at least 35%.  These loans are geared toward the wealthiest of borrowers and centered around the jumbo mortgage level.

A few years ago, in a time where realtors can recall homes selling in 48 hours, 100% financing and too many closing to keep up with, lenders were much more open with their qualifications for interest-only loans.  Back then, lenders would qualify a buyer for an interest only loan as long as they could make the payment on the interest alone.  Another qualification for today’s interest-only loans is that the borrower be qualified to make the principal plus interest payment, even though it’s only an interest-only payment.  These more stringent qualifications should make us feel a bit more at ease.

Rates for interest-only loans may also be a bit higher – about .25% higher.

While the interest-only loans keeps the payments low at first, after a certain period of time the payments jump radically.  Principal is added and it is amortized over a shorter amount of time.  And to boot the payment may be based on current interest rates and not the rate when the loan began!  Definitely something to consider before deciding this is the product for you!