Check Your Credit Report Before Buying

Getting an annual Free Credit Report is important in this age when credit is important not only when buying a house but even when seeking employment,

There are businesses that exist solely to scrutinize your credit history. Credit card companies and other lenders rely on this information, so your credit score determines your chances to borrow money — and how favorable the terms will be.

A Crash Course in Credit Scoring

There are three major credit-reporting agencies: Equifax (www.equifax.com), Experian (www.experian.com), and TransUnion (www.tuc.com). The website of each details how to get a copy of your report via mail or Internet. Be sure to order one from all three.

Until recently, credit scores’ calculations (and how to improve them) were literally a secret. Fair, Isaac & Co. is the company that blazed the credit scoring trail 40 years ago, and — under pressure from consumer groups, Congress, and lending institutions — they recently decided to provide credit scores and guidance on their website (www.myfico.com).

Credit scores can range from 200 to above 800. Scores below 620 are considered risky, but 720 and above should afford you excellent rates and terms for any kind of credit.

There are five categories used in determining a credit score:

1. Payment history (35% of total score): Late payments and amount owed are the two areas scrutinized most closely. What you may not realize is that recent late payments are more detrimental than those from years before. According to Fair, Isaac, “A 30-day late payment from last month will count more than a 90-day late payment five years ago.”

2. Amount owed (30% of total score): Large outstanding balances on your accounts do not necessarily damage your score. The significant factor is the percentage of total available credit you’re using on your credit cards. A common mistake is to consolidate many small credit card balances onto one card. This will actually cause your score to go down because your credit line on the one card will be closer to your credit limit.

3. Length of credit history (15% of total score): If you’re just starting out, you know that you need credit to get credit. There’s no way to improve this part of your score other than to wait. Logically, it makes sense for parents to establish a credit card in their child’s name just to get the ball rolling.

4. New credit (10% of total score): Applying for too much new credit in a short period of time is the most common and costly mistake most consumers make. While it counts for only 10% of your score, your score still drops when too many companies request your credit report in a short time. Note that if you request your own credit report (a “consumer-initiated inquiry”), it doesn’t count against you.

5. Types of credit (10% of total score): This category considers the overall mix of the credit you carry — installment loans, mortgages, revolving credit accounts, etc. Unfortunately, this category remains shrouded in mystery. Fair, Isaac won’t disclose how the various types of accounts are weighted.

 

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Credit bureaus give your score to lenders along with “reason codes” which explain why your score is what it is. Examine these reason codes; they’re the keys to improving your credit score.

Deciphering the Credit Report Code

With your credit report in hand, give it a thorough review. Check these items for timeliness and accuracy:

Check that all items included in the credit report are factually correct. If there are incorrect entries, notify the credit bureau in writing. Include copies (never originals) of documents that dispute the incorrect entries. Send the whole packet by certified mail to provide proof that the credit bureau received the information. They have 30 days from receipt to adjust or verify the incorrect data.

Check that all items are yours. If you have a name or Social Security number like someone else, it’s possible that his or her information will be attributed to you. Remember that even if that person’s credit is better than yours, you still have an obligation to correct the information.

Look for inactive accounts that remain open. Close any accounts you don’t use.

Check for late payments. Those from more than seven years ago can be removed from your record at your request.

Look over the list of your accounts and verify the numbers.

Verify correct address information and Social Security number.

How to Improve Your Score

First, pay your bills on time. Reduce outstanding debt, especially high-interest credit cards. Build up your savings.

Don’t fall for schemes that help you create a new credit identity. It’s illegal, and purveyors of these schemes incorrectly tell you that they’re invisible to creditors.

Wait to Buy Big Ticket Items Until you Buy Your Home

If you plan on purchasing a home wait until you buy it before buying big ticket items on credit because this can negatively affect your credit big time.

There is no quick fix to improving your credit; stay the course and you will see improvement.

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Loan Debt-to-income Ratios Explained

Read this article it will let you know if your numbers or ratios are right for getting a loan the better your ratios look the easier you’ll qualify for a loan I work with a Great Mortgage Broker / Lender more information at the end of this article.

When you’re ready to buy a house, a lot of jargon is thrown around. One term you’ll hear a lot is debt-to-income ratios. If you’re not a math wizard, such lingo can sound intimidating, but it doesn’t need to. Debt-to-income ratios are simple to figure and use to your advantage, even giving you the opportunity to figure out how much house you can afford before you even set out to look.

The debt-to-income ratio is, simply, the way that mortgage lenders decide how much money you can comfortably afford to borrow. It is the percentage of your monthly gross income (before taxes) that is used to pay your monthly debts (not your monthly living expenses). Two calculations are involved, a front ratio and a back ratio, written in ratio form, i.e., 33/38.

The first number indicates the percentage of your monthly gross income used to pay housing costs, such as principal, interest, taxes, insurance, mortgage insurance and homeowners’ association dues. The second number indicates your monthly consumer debt, such as car payments, credit card debt, installment loans, etc. Other living expenses are not considered debt.

So, a debt-to-income ratio of 33/38 means that 33 percent of your monthly gross income is used to pay your monthly housing costs, and 5 percent of your monthly gross income is used to pay your consumer debt—so your housing costs plus your consumer debt equals 38 percent.

33/38 is a common guideline for debt-to-income ratios. Depending on your down payment and credit score, the guidelines can be looser or tighter, and guidelines also vary according to program. The FHA, for instance, requires no better than a 29/41 qualifying ratio, while the VA guidelines require no front ratio but a back ratio of 41.

What if you already have a house or don’t plan to buy a house for a good period? You still need to know and control your debt-to-income ratio, so you can avoid creeping indebtedness, or the gradual rising of debt. Impulse buying and routine use of credit cards for small, daily purchases can easily lead to unmanageable debt.

Debt-to-income ratio not only affects your ability to buy a home, but other purchases as well. Debt-to-income ratios are powerful indicators of creditworthiness and financial health. Know your ratio and keep it low. Your consumer-debt number should never go higher than 20 percent regardless. If you let it rise above 20 percent, you may:

Jeopardizes your ability to make major purchases—cars, homes, major appliances—when you need them.

Not get the lowest possible interest rates and best credit terms.

Have difficulty getting additional credit in emergencies.

If you keep a stranglehold on your spending habits and therefore your debt-to-income ratio, you can:

Make sound buying decisions, and refrain from frivolous credit purchases and loans.

See the clear benefits of making more-than-minimum credit card payments.

Avoid major credit problems.

Calculate your debt-to-income ratio before you begin looking for a house. Get your credit in order so you can get the best credit terms, the lowest interest rate and the most house possible.

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Broward Homes for Sale, debt to income ratio, Plantation, Davie, Cooper City, Tamarac, Sunrise, Weston, Fort Lauderdale, Pembroke Pines, Hollywood, Miramar.

Helpful Tips to Get Your Home Ready to Sell - Value My Home

We’ll discuss some tips that can save you a lot of money and speed up the amount of time your home is on the market, please see my contact information at the end of this article.

A common mistake people make is to spend a lot of money – renovations, new roof, remodeling. While buyers will be impressed with these things, spending $5000 on remodeling will not add $5000 to your sale. Spend as little money as possible, and spend it on cosmetic, readily seen features like interior painting. The time to remodel is when you plan to stay in the house, not when you’re going to sell.

If you think about everything that needs to be done to sell your house, you might throw your hands up in despair, or at least feel some anxiety. Take one step at a time, one small task at a time. Break it down to manageable-sized chores and you’ll have better results.

First things first – have a garage sale. Whatever doesn’t sell needs to be set out for a Disabled American Veterans or Association of Retarded Citizens pickup. Once the clutter is cleared away, it will be easier to see what needs to be done.

This is your first impression, so it had better be a good one.

Edge, mow and fertilize the lawn regularly. Make sure it’s well watered and reseed any sparse areas.

Put a bright coat of paint on your mailbox.

Trim hedges weed lawns and flowerbeds, and prune trees regularly. Cut back overgrown shrubbery that looks scraggly or keeps light out of the house.

Buy a new welcome mat.

Check the foundation, steps, walkways, walls and patios for cracks and crumbling, and reseal if possible.

If you have siding or brick, power-wash it. If you have a painted exterior, consider repainting in a neutral shade. This is especially important if there is any peeling.

Make sure the porch light works.

Clean and align gutters and downspouts.

Inspect and clean the chimney.

If the doorbell doesn’t work, repair or replace it.

Repair and replace loose or damaged roof shingles.

Repair and repaint loose siding and caulking.

Remove oil stains from driveway and garage.

If you’re selling in the winter, keep walks neatly cleared of snow and ice. Otherwise, keep the walks and driveway swept.

Repair broken outdoor steps.

Spring for some brightly colored potted outdoor flower arrangements for the front yard near the entrance.

Keep your garage door closed.

Wash the windows inside and out.

Store RVs, boats and extra vehicles (anything that can’t be parked in the garage) elsewhere while the house is on the market.

Paint the front door.

If prospective buyers walk into your house greeted by the smell of cat litter, cigarette smoke, mildew or pet accidents, there is little chance that even a reduced sales price will persuade them to buy. So, the first thing to do:

 

Clean, clean, clean. This includes walls, floors, inside closets and cabinets – everything. If you must, hire a cleaning service to come in and do the job.

Get rid of clutter. Put away appliances you normally leave on countertops. This alone will make your house appear bigger and brighter. Clean out your closets, garage, basement and attic.

Paint the walls and ceilings a neutral color – off white or beige.

Repair cracks, holes and damage to plaster, wallboard, wallpaper, paint, and tiles.

Replace broken or cracked windowpanes, moldings and other woodwork.

Repair dripping faucets and showerheads.

Buy new cabinet knobs and curtains for the kitchen.

Shampoo all carpets, scrub and wax linoleum, wash and wax wood floors.

Unclog slowly draining sinks and tubs.

Clean out the fireplace and lay some logs in it.

Mend torn screens. Clean out all window tracks.

Check to see that all windows will open and close.

Replace burned-out light bulbs. Use brighter light bulbs.

Make sure every light switch works.

Nail down any creaking boards or stair treads (drive two long finishing nails at opposing angles through the floor and sub-floor into the joist).

Lubricate any squeaking doors

Remove excess, worn or unattractive furniture.

Thoroughly clean all appliances (especially refrigerator and oven).

Replace old toilet seats and shower curtains.

Clear all cobwebs from corners and doorways.

Wash all light switches, handrails and doorknobs.

On Showing Days

Keep draperies and shades open to let in the light.

Place fresh flowers throughout the house.

Have your home well-lit during showing.

At night, turn on porch light and outdoor lighting in back if you have it.

Set out colorful, luxurious towels in the bathroom.

Avoid having dirty dishes in the sink or on counters.

Keep any toys in the children’s rooms, bikes, wagons and skateboards in the garage.

Play pleasant music at low volume.

Spend the day of an open house away from home.

Leave pets outdoors.

Unless you’re selling it yourself, let the agent show your house, and don’t tag along.

Repairs that matter

Making sure your home is clean and aesthetically appealing is only half the battle. You also have to ensure that your systems are in working order and that your home is safe and ready for its next family. A few things to fix before the “For sale” sign is in the yard are:

●     Creaky floors. Creaky floors are a great indicator of an older home. While some squeaks are expected, quiet down your noisy hardwood by using wooden shims or special repair kits made for the job.

●     Missing hardware. While you might not notice a missing handle on that kitchen drawer you never use, buyers will. Make sure that the hardware throughout your home is intact, functional, and matching.

●     Visible exterior damage. Damage to the roof, windows, walkway, or yard will be immediately noticeable and can take away from curb appeal. Fix visible issues so that your buyers don’t get turned off before they ever make it into the house. Finding a reliable and insured pro is simplified thanks to online service directories; just use a search engine and read up on customer reviews to get started.

You don’t have to change the entire layout of your home to make it appealing to buyers. But, a few quick projects, such as adding custom wallpaper and fixing noisy floors, will go a long way toward making the property stand out. Although we are still in a seller’s market, you don’t want to get lax about home repairs and renovations. For everything you’re not willing to do, the next seller is. Tackle the list above for a quick and easy sale.

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Visit our Website:  www.SouthBrowardHomesbyTony.com

Antonio Ortega LLC Licensed Real Estate Professional

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Closing Costs When Selling or Buying a Home

As a rule of thumb you should set aside 5% – 10% for closing costs and other minor charges, if you are selling you can help pay some of the buyer closing costs if you are buying you may ask in your offer to purchase that the seller pay some or all of your closing costs specially if you are not asking for much of a discount from the asking purchase price.

Non-Recurring Closing Costs Associated with the Lender

l Appraisal fee: The property being appraised is collateral for your mortgage (you’re borrowing money against the value of the property you’re borrowing money to buy) so the lender will want to verify that the property’s value is comparable to similar property based on recent sales in your area. l Credit Report l Flood certification fee: The certification verifies whether your property is in a federally designated flood zone. l Flood monitoring: Monitors remapping of flood zones. l Lender’s Inspection fee: for newly constructed property to verify that construction is complete with carpeting and flooring installed. l Loan discount: AKA points, each point equal to 1 percent of the loan amount. l Loan origination fee l Mortgage broker fee l Tax service fee: For monitoring your payment of property tax.

Other Lender Fees

l Administration fee l Appraisal review fee: Usually done on higher-valued properties. l Document preparation l Underwriting fee l Warehousing fee: The cost of a “warehouse” line of credit. l Wire transfer fee: This is the cost to transfer funds from one account to another.

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Items required to be paid in advance

l Homeowner’s insurance: You are usually required to pay the entire first year’s insurance at closing. l Mortgage insurance: Some first-time homebuyer programs still require the first year’s mortgage insurance to be paid in advance. l Pre-paid interest: The interest that accumulates between closing day and the first payment due date. l Up front mortgage insurance premium l VA funding fee: This is paid to the Veterans Administration for guaranteeing your loan.

Reserves Deposited with Lender

l Homeowners insurance impounds: You will need to deposit two months’ worth of premiums into the impound account to start it up. l Mortgage insurance impounds: Usually two months’ worth of premiums. l Property tax impounds

Non-recurring closing costs

l Closing/escrow/settlement fee l

Courier fee: This is the charge for sending documents back and forth between lender and borrower. l Home inspection: This is an optional, but recommended, cost. l Home warranty l

Homeowner’s association transfer fee l Loan tie-in fee: Usually charged by the closing agent, this is for services they provide in dealing with the lender.

l Notary fees l Pest inspection l Recording fees: To record documents with county recorder. l Sub-escrow fee: The title insurance company charges this for dealing with the closing agent.

l Title insurance: You pay this to make sure you have clear title to the property.

Stay Safe and Healthy

                   
        

Visit our Website:  www.SouthBrowardHomesbyTony.com

Antonio Ortega LLC Licensed Real Estate Professional

Text or Call 954-648-6095

Global Luxury Realty, LLC

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Broward Homes for Sale PQ letter or Prequalification letter Plantation, Davie, Cooper City, Tamarac, Sunrise, Weston, Fort Lauderdale, Pembroke Pines, Hollywood, Miramar.