The Basics of Homeowners Insurance
by Brandon Cornett
Summary: This article gives a basic overview of homeowners insurance and is intended for first-time home buyers who are new to the subject.
Are you planning to buy your first home in the near future? If so, you should reading up on homeowners insurance as well. Your mortgage lender will require you to have a home insurance policy prior to closing day. In fact, you’ll probably have to bring the policy with you when you close on the home.
This is one of the many things a first-time home buyer should know about homeowners insurance. Here are ten more things you should know…
What to Know About Homeowners Insurance
Getting a homeowners insurance policy is harder today than it was a few years ago. Our economic recession has had a lot to do with this. Everything is harder to get these days — mortgage loans, car loans, insurance coverage, etc. So you may have to shop around to get the kind of coverage you want, and you should definitely get multiple quotes to compare the cost from one provider to the next.
A couple of definitions you should know: The homeowners insurance premium is the amount you pay for coverage. The deductible is what you will pay in the event of a claim, before the insurance company will pay the rest.
Premiums and deductibles generally have an inverse relationship. That is, you can lower your premium by raising your deductible. This is a strategy recommended by many in the finance industry. The Insurance Information Institute says that “If you can afford to raise your deductible to $1,000, you may save as much as 25 percent [on your premiums].”
In the U.S., the average cost of a homeowners insurance policy is around $800 per year. This is for the premium. The deductible varies from one policy to another and can be raised or lowered by the homeowner.
Most homeowners insurance policies do not cover floods. So if you live in an area that’s prone to flooding, you should get a separate policy (or an add-on) for flood insurance. Visit Floodsmart.gov to learn more about this kind of coverage.
When choosing a policy, you will probably have to choose between replacement cost and actual cash value. These terms relate to the contents of your home, but they are two different things. Replacement cost coverage gives you more protection than cash value, because it covers the cost of replacing items even if they cost more than when you bought them (appreciation). Cash value only covers items up to the amount you paid.
You can get quotes for a homeowners insurance policy online, which will save you plenty of time and energy. This is also a great way to compare policies of multiple insurance companies at once.
Learn the Basics and Shop Wisely
These are the basics of homeowners insurance policies. There is certainly more to know about this subject, but the information presented above will give you a good foundation of knowledge. To continue your research, you might want to visit one (or more) of the following websites:
http://www.insureme.com/
http://www.iii.org/
http://www.homebuyinginstitute.com/
http://www.farmers.com/
I hope this article helps you understand the basics of home insurance, and I wish you well in your home buying process. Good luck!
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic.
Sphere: Related Content
Saturday, September 26, 2009
Friday, September 25, 2009
Free Credit Report Online - Or Fishing Bait?
Free Credit Report Online - Or Fishing Bait?
by Brandon Cornett
It’s safe to say that almost everyone in America has seen or heard a commercial for free credit reports. Watch an hour of national television anytime during the day, and you’re virtually guaranteed to see a commercial about credit reports.
But did you know that most of the offers for the so-called free reports are actually lures to sell other products? It’s true, and that’s the subject of this eye-opening article — the latest installment of our dirty little secrets of the credit industry.
Free Credit Reports Online - The Real Source
Let me start with the most important premise of this article, and then we can build from there. By law, you are entitled to one free credit report per year, from all three of the reporting agencies (Experian, TransUnion, Equifax). When I refer to “laws” in this context, I am talking about the Fair Credit Reporting Act. This is a federal law enforced by the Federal Trade Commission, and it regulates everything related to credit reports and reporting.
But there is only one official website that’s mandated and regulated by the FTC, and that is where I recommend you go to get your free credit reports online. That website is AnnualCreditReport.com.
So what is the fishing bait I mentioned in the title of this article, and what does it have to do with free credit reports online? Well, a lot of companies offer your free reports through their websites — but only when you sign up for some kind of credit monitoring or identity-theft prevention service. So while there is only one official website where you can get your free reports, there are literally thousands of other sites that offer freebies in conjunction with some kind of monthly service.
I’m not saying these monthly services are bogus. On the contrary, some of them do offer a good level of protection against credit fraud and identity theft. All I’m saying is that you can get your free credit reports from all three bureaus once a year, without signing up for anything at all. It’s required by law, and you can do it through the website I mentioned earlier in this article.
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
by Brandon Cornett
It’s safe to say that almost everyone in America has seen or heard a commercial for free credit reports. Watch an hour of national television anytime during the day, and you’re virtually guaranteed to see a commercial about credit reports.
But did you know that most of the offers for the so-called free reports are actually lures to sell other products? It’s true, and that’s the subject of this eye-opening article — the latest installment of our dirty little secrets of the credit industry.
Free Credit Reports Online - The Real Source
Let me start with the most important premise of this article, and then we can build from there. By law, you are entitled to one free credit report per year, from all three of the reporting agencies (Experian, TransUnion, Equifax). When I refer to “laws” in this context, I am talking about the Fair Credit Reporting Act. This is a federal law enforced by the Federal Trade Commission, and it regulates everything related to credit reports and reporting.
But there is only one official website that’s mandated and regulated by the FTC, and that is where I recommend you go to get your free credit reports online. That website is AnnualCreditReport.com.
So what is the fishing bait I mentioned in the title of this article, and what does it have to do with free credit reports online? Well, a lot of companies offer your free reports through their websites — but only when you sign up for some kind of credit monitoring or identity-theft prevention service. So while there is only one official website where you can get your free reports, there are literally thousands of other sites that offer freebies in conjunction with some kind of monthly service.
I’m not saying these monthly services are bogus. On the contrary, some of them do offer a good level of protection against credit fraud and identity theft. All I’m saying is that you can get your free credit reports from all three bureaus once a year, without signing up for anything at all. It’s required by law, and you can do it through the website I mentioned earlier in this article.
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
Saturday, September 19, 2009
5 Things a Home Buyer Should Know About Credit Scores
5 Things a Home Buyer Should Know About Credit Scores
by Brandon Cornett
Go online and start researching the topic of credit scores, and you will quickly be overwhelmed with information and analysis. But in truth, there are only a few important concepts that you, as a first-time home buyer, should know about credit scores.
Here are five of the most important things to keep in mind when you start shopping for a mortgage loan — an even long before that.
1. Mortgage lenders will check your score.
When you apply for a home loan, you can be certain that the mortgage lender will review your credit score — among other financial factors. It’s not the only thing that will determine their decision, but it is one of the top factors of the mortgage-approval process.
If your score is low, you won’t even get your foot in the door. You will be rejected right from the start, or you’ll have a much harder time finding a willing lender. If your score is high, you will have more options and better interest rates available to you.
2. Your score partly determines the interest rate.
The interest rate is one of the components that will make up your monthly mortgage payment. Obviously, the principal amount you borrow is the largest factor that determines your monthly payment. But the interest rate plays a major role as well.
If you have a high credit score, you are more likely to get a low rate on your home loan. This in turn will reduce the amount you have to pay each month toward the mortgage. On the contrary, a bad score generally means a higher interest rate — and therefore a higher monthly payment as well. How much higher, you ask? That’s our next point.
3. A good score can save you thousands of dollars.
The difference between a good and bad credit score can greatly affect the interest rate you receive from the lender. It could be the difference, for example, between a rate of 5.5% and 7.2%. These may seem like small numbers on the surface, but when you apply them to something as large as a mortgage loan, we are talking about thousands of dollars over the life of the loan.
4. Your score comes from your own actions.
Credit scores are not arbitrarily assigned to consumers. Your score comes from the information contained within your credit reports. You have three of these reports by the way — one for each of the consumer credit-reporting bureaus.
So where does the information within your credit reports come from? It comes from your own personal actions, your financial history, and your previous use of credit. In other words, it’s a snapshot of how well (or how poorly) you have managed your credit in the past. Good behavior creates a good score, and bad behavior has the reverse effect. It doesn’t come out of thin air — it comes from your own actions.
5. There are no mysteries to improving a credit score.
There are a lot of companies out there who would like you to think that it takes some kind of special knowledge to improve a credit score. These companies make money from people who don’t realize they can handle it for themselves. So let’s set the record straight right here and now. You are the only person who can improve your credit score, and you can do it without paying any other company for assistance.
Pay all of your bills on time, maintain low balances on your credit card accounts, and use credit sparingly. These three things alone can help you earn and sustain a good score for years to come. And there’s no certainly mystery in that!
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at www.HomeBuyingInstitute.com to learn more about this topic. Sphere: Related Content
by Brandon Cornett
Go online and start researching the topic of credit scores, and you will quickly be overwhelmed with information and analysis. But in truth, there are only a few important concepts that you, as a first-time home buyer, should know about credit scores.
Here are five of the most important things to keep in mind when you start shopping for a mortgage loan — an even long before that.
1. Mortgage lenders will check your score.
When you apply for a home loan, you can be certain that the mortgage lender will review your credit score — among other financial factors. It’s not the only thing that will determine their decision, but it is one of the top factors of the mortgage-approval process.
If your score is low, you won’t even get your foot in the door. You will be rejected right from the start, or you’ll have a much harder time finding a willing lender. If your score is high, you will have more options and better interest rates available to you.
2. Your score partly determines the interest rate.
The interest rate is one of the components that will make up your monthly mortgage payment. Obviously, the principal amount you borrow is the largest factor that determines your monthly payment. But the interest rate plays a major role as well.
If you have a high credit score, you are more likely to get a low rate on your home loan. This in turn will reduce the amount you have to pay each month toward the mortgage. On the contrary, a bad score generally means a higher interest rate — and therefore a higher monthly payment as well. How much higher, you ask? That’s our next point.
3. A good score can save you thousands of dollars.
The difference between a good and bad credit score can greatly affect the interest rate you receive from the lender. It could be the difference, for example, between a rate of 5.5% and 7.2%. These may seem like small numbers on the surface, but when you apply them to something as large as a mortgage loan, we are talking about thousands of dollars over the life of the loan.
4. Your score comes from your own actions.
Credit scores are not arbitrarily assigned to consumers. Your score comes from the information contained within your credit reports. You have three of these reports by the way — one for each of the consumer credit-reporting bureaus.
So where does the information within your credit reports come from? It comes from your own personal actions, your financial history, and your previous use of credit. In other words, it’s a snapshot of how well (or how poorly) you have managed your credit in the past. Good behavior creates a good score, and bad behavior has the reverse effect. It doesn’t come out of thin air — it comes from your own actions.
5. There are no mysteries to improving a credit score.
There are a lot of companies out there who would like you to think that it takes some kind of special knowledge to improve a credit score. These companies make money from people who don’t realize they can handle it for themselves. So let’s set the record straight right here and now. You are the only person who can improve your credit score, and you can do it without paying any other company for assistance.
Pay all of your bills on time, maintain low balances on your credit card accounts, and use credit sparingly. These three things alone can help you earn and sustain a good score for years to come. And there’s no certainly mystery in that!
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at www.HomeBuyingInstitute.com to learn more about this topic. Sphere: Related Content
Friday, September 18, 2009
Most Credit Repair Companies Are Scams
Most Credit Repair Companies Are Scams
by Brandon Cornett
It is particularly despicable when companies prey on people who are in financial distress. Unfortunately, there is no shortage of such companies. Just take a look at the mortgage industry and the current economic recession we are in. With so many people facing foreclosure on their homes, there has been a huge rise in foreclosure prevention scams and similar rip-offs.
For a long time, there has been a predatory side of the credit industry as well. In particular, I’m talking about credit repair companies and the bold (and often false) promises they make.
You Can Fix Your Own Credit Reports
Let me start with the absolute truth at the core of my argument. There is no company on the planet that has special powers over your credit report. The only thing these “repair” companies can do is help you make corrections to your credit report, which is something you can easily do for yourself. In fact, there are hundreds of articles online (from reputable sources) that can help you make such corrections. And you can do it for free — without spending a dime on anything.
Credit Repair Scams Tracked by the FTC
A lot of the so-called credit repair companies will make bold promises about what they can do, and they will make it seem as if they have special access to the reporting bureaus. This is simply not the case. How do I know this? Because the FTC investigates more complaints against this industry than just about any other industry. Visit the FTC website and do a search for credit repair, and you’ll quickly see what I mean.
My best advice is to scratch the word “repair” from your credit dictionary, and replace it with the word “counseling.” Better yet, replace it with the phrase nonprofit counseling, because there are plenty of these services available all over the United States. A nonprofit credit counselor will help you make corrections to your credit report and otherwise improve your financial situation, and they will do it for little or no cost.
A credit repair company, on the other hand, will generally ask for upfront fees because they know they cannot deliver on their bold promises. Consider yourself warned and educated on this dirty little secret of the credit industry.
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
by Brandon Cornett
It is particularly despicable when companies prey on people who are in financial distress. Unfortunately, there is no shortage of such companies. Just take a look at the mortgage industry and the current economic recession we are in. With so many people facing foreclosure on their homes, there has been a huge rise in foreclosure prevention scams and similar rip-offs.
For a long time, there has been a predatory side of the credit industry as well. In particular, I’m talking about credit repair companies and the bold (and often false) promises they make.
You Can Fix Your Own Credit Reports
Let me start with the absolute truth at the core of my argument. There is no company on the planet that has special powers over your credit report. The only thing these “repair” companies can do is help you make corrections to your credit report, which is something you can easily do for yourself. In fact, there are hundreds of articles online (from reputable sources) that can help you make such corrections. And you can do it for free — without spending a dime on anything.
Credit Repair Scams Tracked by the FTC
A lot of the so-called credit repair companies will make bold promises about what they can do, and they will make it seem as if they have special access to the reporting bureaus. This is simply not the case. How do I know this? Because the FTC investigates more complaints against this industry than just about any other industry. Visit the FTC website and do a search for credit repair, and you’ll quickly see what I mean.
My best advice is to scratch the word “repair” from your credit dictionary, and replace it with the word “counseling.” Better yet, replace it with the phrase nonprofit counseling, because there are plenty of these services available all over the United States. A nonprofit credit counselor will help you make corrections to your credit report and otherwise improve your financial situation, and they will do it for little or no cost.
A credit repair company, on the other hand, will generally ask for upfront fees because they know they cannot deliver on their bold promises. Consider yourself warned and educated on this dirty little secret of the credit industry.
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
Thursday, September 17, 2009
Real Estate Auctions - 21 Things a Home Buyer Should Know
Real Estate Auctions - 21 Things a Home Buyer Should Know
by Brandon Cornett
You are probably already aware of the rise in home foreclosures that has occurred in recent months. After all, it has been in the news almost daily for several months now.
But what you may not know is that many of the properties that get foreclosed upon end up being sold at real estate auctions for less than market value. What this means to you, as a home buyer, is that you can often save a lot of money by purchasing a home at auction (instead of buying it through a traditional real estate transaction).
With that in mind, I would like to offer you 21 important points about this topic. There are some of the things you should know before attempting to buy a home at a real estate auction.
21 Things You Should Know
The process leading up to a foreclosure can last up to five months. It starts when the homeowner defaults on the loan, but it can drag on through various stages, depending on what state you are in.
Because of this lengthy process, you need to be flexible, patient and persistent, all at the same time.
At some point, the lender will file a notice of default against the homeowner, which formally begins the process of foreclosure.
From a legal perspective, there are two types of foreclosures — the judicial and the non-judicial. As you would imagine, the former takes place in court and the latter takes place outside of court.
Most foreclosures in this country are of the non-judicial variety, meaning they never go to court before a judge.
The non-judicial variety is also referred to as a “power of sale” foreclosure. It allows the trustee to sell the property more quickly (on behalf of the lender) by avoiding a court process.
During the pre-foreclosure stage, the homeowner may work with the lender to get back on track with his or her mortgage payments.
Also during this stage, the homeowner could sell the home before the bank forecloses on it, typically through what’s known as a real estate short sale process.
If the homeowner fails to (A) get back on track with mortgage payments or (B) sell the house via short sale, the property will move along the path to a real estate auction.
About 20 days before the real estate auction is to take place, a notice of sale will be posted for public viewing.
In most cases, the notice of sale is posted at the county courthouse (in the county where the foreclosed property is located).
In most cases, the actual auction will also take place at the county courthouse.
In addition to the notice of public sale (which is a minimum requirement), the lender will announce the auction event through other channels as well, because…
The lender wants a good turnout at the event, because having a lot of qualified bidders will increase the likelihood of a quick sale.
The lender wants a quick sale above all else, because they are losing money and wasting other resources by keeping the non-performing (unpaid) loan on their books.
In true auction fashion, the attendees will bid on the property and it will eventually be sold to the highest bidder.
After the home is sold, a deed will be given to the successful bidder. This person is now the new owner.
The starting price for a home being sold at auction is normally based on the amount owed to the lender (combined with other expenses the lender might have incurred when foreclosing on the property).
Overbidding is a common mistake among first-time attendees. This will drive up the price of the home and defeat the purpose of buying through an auction. The purpose for investors is to obtain a property below market value.
In most scenarios, attendees must have financing lined up before they will be allowed to bid on a property. For obvious reasons, real estate auctions are typically cash-based.
Most homes sold in this way are sold as-is with no warranties of any kind. So if you have the chance to inspect the property before bidding on it (even if it’s just a cursory walk-through), take that opportunity.
Obviously this article does not cover everything you need to know about buying a home through a real estate auction. Entire books have been written on the subject, and you should read those too. But this article will help you understand the basic process that takes place, and therefore shall serve as a good jumping-off point for your further research.
With that in mind, I recommend you print it out and highlight the areas where your knowledge is lacking. Then, learn as much as you can about those areas. Good luck!
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
by Brandon Cornett
You are probably already aware of the rise in home foreclosures that has occurred in recent months. After all, it has been in the news almost daily for several months now.
But what you may not know is that many of the properties that get foreclosed upon end up being sold at real estate auctions for less than market value. What this means to you, as a home buyer, is that you can often save a lot of money by purchasing a home at auction (instead of buying it through a traditional real estate transaction).
With that in mind, I would like to offer you 21 important points about this topic. There are some of the things you should know before attempting to buy a home at a real estate auction.
21 Things You Should Know
The process leading up to a foreclosure can last up to five months. It starts when the homeowner defaults on the loan, but it can drag on through various stages, depending on what state you are in.
Because of this lengthy process, you need to be flexible, patient and persistent, all at the same time.
At some point, the lender will file a notice of default against the homeowner, which formally begins the process of foreclosure.
From a legal perspective, there are two types of foreclosures — the judicial and the non-judicial. As you would imagine, the former takes place in court and the latter takes place outside of court.
Most foreclosures in this country are of the non-judicial variety, meaning they never go to court before a judge.
The non-judicial variety is also referred to as a “power of sale” foreclosure. It allows the trustee to sell the property more quickly (on behalf of the lender) by avoiding a court process.
During the pre-foreclosure stage, the homeowner may work with the lender to get back on track with his or her mortgage payments.
Also during this stage, the homeowner could sell the home before the bank forecloses on it, typically through what’s known as a real estate short sale process.
If the homeowner fails to (A) get back on track with mortgage payments or (B) sell the house via short sale, the property will move along the path to a real estate auction.
About 20 days before the real estate auction is to take place, a notice of sale will be posted for public viewing.
In most cases, the notice of sale is posted at the county courthouse (in the county where the foreclosed property is located).
In most cases, the actual auction will also take place at the county courthouse.
In addition to the notice of public sale (which is a minimum requirement), the lender will announce the auction event through other channels as well, because…
The lender wants a good turnout at the event, because having a lot of qualified bidders will increase the likelihood of a quick sale.
The lender wants a quick sale above all else, because they are losing money and wasting other resources by keeping the non-performing (unpaid) loan on their books.
In true auction fashion, the attendees will bid on the property and it will eventually be sold to the highest bidder.
After the home is sold, a deed will be given to the successful bidder. This person is now the new owner.
The starting price for a home being sold at auction is normally based on the amount owed to the lender (combined with other expenses the lender might have incurred when foreclosing on the property).
Overbidding is a common mistake among first-time attendees. This will drive up the price of the home and defeat the purpose of buying through an auction. The purpose for investors is to obtain a property below market value.
In most scenarios, attendees must have financing lined up before they will be allowed to bid on a property. For obvious reasons, real estate auctions are typically cash-based.
Most homes sold in this way are sold as-is with no warranties of any kind. So if you have the chance to inspect the property before bidding on it (even if it’s just a cursory walk-through), take that opportunity.
Obviously this article does not cover everything you need to know about buying a home through a real estate auction. Entire books have been written on the subject, and you should read those too. But this article will help you understand the basic process that takes place, and therefore shall serve as a good jumping-off point for your further research.
With that in mind, I recommend you print it out and highlight the areas where your knowledge is lacking. Then, learn as much as you can about those areas. Good luck!
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
Monday, September 14, 2009
What Makes Up My Credit Score?
What Makes Up My Credit Score?
by Brandon Cornett
What types of information make up my credit score, and how will it affect me when I try to buy a home?
This is a frequently asked question among people buying a home (especially first-time buyers), so it’s worth a thorough examination in this article. In fact, the first half of this question pertains to consumers in general, because everyone can benefit from knowing the “ingredients” that make up a credit score.
Let’s begin by discussing why credit is important for home buyers in the first place. When you apply for a mortgage loan in order to pay for a home, your mortgage lender will examine your financial history from several angles.
For one thing, the lender will review your debt-to-income ratio, which is a comparison between the amount of money you make each month and the amount you owe each month (car payment, credit card bills, other loans, etc.).
And, of course, the lender will also examine your credit scores. Note that I mentioned “scores” in the plural sense. Though most people don’t realize it, you actually have three credit scores, one for each of the credit-reporting companies (Experian, TransUnion and Equifax).
How Your Score is Created
Your credit score is derived from your credit reports, using a special scoring model developed by the Fair Isaac Corporation. You’ve probably heard the acronym “FICO” before? Well that’s what it stands for … Fair Isaac Corporation.
Your history of payments on things like credit cards and car loans is a major part of your credit score. In fact, past payment history is said to account for about 35% of your overall score. If you have a history of paying bills on time, this will help your score. On the other hand, if you miss payments on a regular basis the opposite will be true.
It only makes sense why this history would be important to mortgage lenders, but it shows how you’ve performed over the years in terms of paying back loans. This is extremely relevant to somebody who is considering loaning you money!
The total amount of debt you have is another big component of your credit score. For example, if you have a lot of debt (perhaps more than you can afford to pay off), then your score will reflect this. And it probably won’t help your cause when applying for a mortgage loan.
So with this in mind, two of the best things you can do to improve your score (if it needs improving) are paying all bills on time and minimizing your debt.
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
by Brandon Cornett
What types of information make up my credit score, and how will it affect me when I try to buy a home?
This is a frequently asked question among people buying a home (especially first-time buyers), so it’s worth a thorough examination in this article. In fact, the first half of this question pertains to consumers in general, because everyone can benefit from knowing the “ingredients” that make up a credit score.
Let’s begin by discussing why credit is important for home buyers in the first place. When you apply for a mortgage loan in order to pay for a home, your mortgage lender will examine your financial history from several angles.
For one thing, the lender will review your debt-to-income ratio, which is a comparison between the amount of money you make each month and the amount you owe each month (car payment, credit card bills, other loans, etc.).
And, of course, the lender will also examine your credit scores. Note that I mentioned “scores” in the plural sense. Though most people don’t realize it, you actually have three credit scores, one for each of the credit-reporting companies (Experian, TransUnion and Equifax).
How Your Score is Created
Your credit score is derived from your credit reports, using a special scoring model developed by the Fair Isaac Corporation. You’ve probably heard the acronym “FICO” before? Well that’s what it stands for … Fair Isaac Corporation.
Your history of payments on things like credit cards and car loans is a major part of your credit score. In fact, past payment history is said to account for about 35% of your overall score. If you have a history of paying bills on time, this will help your score. On the other hand, if you miss payments on a regular basis the opposite will be true.
It only makes sense why this history would be important to mortgage lenders, but it shows how you’ve performed over the years in terms of paying back loans. This is extremely relevant to somebody who is considering loaning you money!
The total amount of debt you have is another big component of your credit score. For example, if you have a lot of debt (perhaps more than you can afford to pay off), then your score will reflect this. And it probably won’t help your cause when applying for a mortgage loan.
So with this in mind, two of the best things you can do to improve your score (if it needs improving) are paying all bills on time and minimizing your debt.
© 2009, Cornett Communications.
About the Author: Brandon Cornett is a consumer advocate and publisher of the Home Buying Institute. You may visit the author's website at http://www.homebuyinginstitute.com/ to learn more about this topic. Sphere: Related Content
Sunday, September 13, 2009
Romans 5:10
"For if when we were enemies we were reconciled to God through the death of His Son, much more, having been reconciled, we shall be saved by His life!"
Sphere: Related Content
Saturday, September 12, 2009
First Time Home Buying...What you should know.
With the deadline for the First Time Home Buyer Tax Credit looming so near, many people are unsure whether they should hurry and go ahead and purchase, or if they should wait and see if the deadline will be extended, or new incentives produced. But for those deciding not to take the chance to miss out on this rare opportunity here is some advice on that first time home purchase:
1. Do your best to be an informed buyer, collect all the information you can. Do not hesitate to ask your REALTOR® questions.
2. Familiarize yourself with the mortgage process. Talk to you lender about all the steps, and what is to be expected during the process so that you will not have any surprises later on.
3. Be a pre-approved Home Shopper. This gives you an edge when putting in offers. Talk to your lender and REALTOR® about this.
4. Be highly aware of your credit situation. Take care of any credit issues as soon as you possibly can. This will help you as you are going over your budget.
5. Find a REALTOR® that you trust and can be open with about your needs & wants in a home. (But also be realistic about your needs/wants vs. your price range)
6. When you find a home have your REALTOR® do a PTA(price trend analysis) or CMA(comparative market analysis) so that you have the knowledge to make the best offer possible or are able to negotiate the home price down to where it needs to be.
7. Once your offer is accepted you will need to familiarize yourself with the closing process and what is expected from your side of things.
8. Start making moving plans, so that you aren't feeling rushed last minute.
9. Find your closing attorney.
10. Do the final walk-through.
11. Secure your loan approval.
12. Final Closing and Settlement.
13. You are now a homeowner, enjoy your new home! Sphere: Related Content
1. Do your best to be an informed buyer, collect all the information you can. Do not hesitate to ask your REALTOR® questions.
2. Familiarize yourself with the mortgage process. Talk to you lender about all the steps, and what is to be expected during the process so that you will not have any surprises later on.
3. Be a pre-approved Home Shopper. This gives you an edge when putting in offers. Talk to your lender and REALTOR® about this.
4. Be highly aware of your credit situation. Take care of any credit issues as soon as you possibly can. This will help you as you are going over your budget.
5. Find a REALTOR® that you trust and can be open with about your needs & wants in a home. (But also be realistic about your needs/wants vs. your price range)
6. When you find a home have your REALTOR® do a PTA(price trend analysis) or CMA(comparative market analysis) so that you have the knowledge to make the best offer possible or are able to negotiate the home price down to where it needs to be.
7. Once your offer is accepted you will need to familiarize yourself with the closing process and what is expected from your side of things.
8. Start making moving plans, so that you aren't feeling rushed last minute.
9. Find your closing attorney.
10. Do the final walk-through.
11. Secure your loan approval.
12. Final Closing and Settlement.
13. You are now a homeowner, enjoy your new home! Sphere: Related Content
Friday, September 11, 2009
Credit Reform
The credit card reform in some eyes is good and bad news. The good news being, of course, that the consumer must be notified 45 days in advance before their interest rates can go up instead of the 15 that it has been in the past. Also, you should have more notice before your bills are due, which to many is a great relief. There is now an option if you want to drop your card and pay off the balance that you will be able to do so at the old interest rate. Which during these times should help many consumers.
However, many credit card companies raised interest rates an average of 20% since Jan. 2009. It is believed that they did this in expectation of these new regulations. Many people are feeling the pain of these newly increased interest rates and are being vocal about them (and rightfully so).
As the regulations are starting to be put into effect we will see how much of an overall change they will really have. Hopefully a good one :-)
For a little bit more info try this link: http://www.cnn.com/2009/POLITICS/07/18/consumer.agency.fight/index.html?iref=newssearch
*Keeping those affected by 9/11 in our prayers today. Sphere: Related Content
However, many credit card companies raised interest rates an average of 20% since Jan. 2009. It is believed that they did this in expectation of these new regulations. Many people are feeling the pain of these newly increased interest rates and are being vocal about them (and rightfully so).
As the regulations are starting to be put into effect we will see how much of an overall change they will really have. Hopefully a good one :-)
For a little bit more info try this link: http://www.cnn.com/2009/POLITICS/07/18/consumer.agency.fight/index.html?iref=newssearch
*Keeping those affected by 9/11 in our prayers today. Sphere: Related Content
Thursday, September 10, 2009
Things to do around town and locally....
With Labor Day over, it really feels like fall is starting to head in. Luckily, we have a few fun things to do around the community to really enjoy this time of year:
Almost every Friday, the Rex Theatre in downtown Galax has Blue Ridge Backroads Live at the Rex Theatre. Free Admission.
This Saturday, Sept. 12th, there will be The First Kyle Creed Banjo Show from 11am to 10pm. Click the link to find out more: http://www.tcvaevents.com/1st_Kyle_Creed_Banjo_Show.aspx
Also on Saturday, Sept. 12th there is a Stories of the Stitch Quilt Show on the Matthews Living History Farm.
Next Thursday, Sept. 17th the Galax High School Auditorium will be hosting SOLAZO Latin Folk & Dance Rhythms at 7pm. There is a $5 admissions fee.
Sphere: Related Content
Almost every Friday, the Rex Theatre in downtown Galax has Blue Ridge Backroads Live at the Rex Theatre. Free Admission.
This Saturday, Sept. 12th, there will be The First Kyle Creed Banjo Show from 11am to 10pm. Click the link to find out more: http://www.tcvaevents.com/1st_Kyle_Creed_Banjo_Show.aspx
Also on Saturday, Sept. 12th there is a Stories of the Stitch Quilt Show on the Matthews Living History Farm.
Next Thursday, Sept. 17th the Galax High School Auditorium will be hosting SOLAZO Latin Folk & Dance Rhythms at 7pm. There is a $5 admissions fee.
Wednesday, September 9, 2009
Tuesday, September 8, 2009
New Listings
Beautiful 3 bedroom, 2.5 bath home constructed in 1919. It is a 1.5 story house with 1772 square feet on the main floor and 504 square feet on the 2nd. This home features a fireplace and a basement.
This 3 bed 2 bath modular home is placed on a nice level corner lot in Hillsville. The floor plan is open with vaulted ceilings and a stone fireplace. The master bath features a garden tub & separate shower. Come see this home today!
This spacious home has 4 bedrooms and 2.5 baths. 3 bedrooms and 1.5 baths are on the main level, and 1 bedroom and 1 bath are in the finished basement. This home is right on the New River Trail and is within walking distance of the quaint town of Fries, VA.
This home also comes with a 1300 square foot detached workshop. Sphere: Related Content
Monday, September 7, 2009
Low-Cost Ways to Spruce Up Your Home’s Exterior
Make your home more appealing for yourself and potential buyers with these quick and easy tips:
1. Trim bushes so they don’t block windows or architectural details.
2. Mow your lawn, and turn on the sprinklers for 30 minutes before the showing to make the lawn sparkle.
3. Put a pot of bright flowers (or a small evergreen in winter) on your porch.
4. Install new doorknobs on your front door.
5. Repair any cracks in the driveway.
6. Edge the grass around walkways and trees.
7. Keep your garden tools and hoses out of sight.
8. Clear toys from the lawn.
9. Buy a new mailbox.
10. Upgrade your outside lighting.
11. Buy a new doormat for the outside of your front door.
12. Clean your windows, inside and outside.
13. Polish or replace your house numbers.
14. Place a seasonal wreath on your door.
Sphere: Related Content
1. Trim bushes so they don’t block windows or architectural details.
2. Mow your lawn, and turn on the sprinklers for 30 minutes before the showing to make the lawn sparkle.
3. Put a pot of bright flowers (or a small evergreen in winter) on your porch.
4. Install new doorknobs on your front door.
5. Repair any cracks in the driveway.
6. Edge the grass around walkways and trees.
7. Keep your garden tools and hoses out of sight.
8. Clear toys from the lawn.
9. Buy a new mailbox.
10. Upgrade your outside lighting.
11. Buy a new doormat for the outside of your front door.
12. Clean your windows, inside and outside.
13. Polish or replace your house numbers.
14. Place a seasonal wreath on your door.
Sunday, September 6, 2009
Deuteronomy 8:2
"And you shall remember that the Lord your God led you all the way these forty years in the wilderness, to humble you and test you, to know what was in your heart, whether you would keep His commandments or not."
Saturday, September 5, 2009
Why You Should Work With a REALTOR®
Not all real estate practitioners are REALTORS®. The term REALTOR® is a registered trademark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics. Here are five reasons why it pays to work with a REALTOR®.
1. You’ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.
2. Get objective information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR® to find all available properties.
4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.
6. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language.
7. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.
8. Buying and selling is emotional. A home often symbolizes family, rest, and security — it’s not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.
9. Ethical treatment. Every member of the NATIONAL ASSOCIATION of REALTORS® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a REALTOR®, you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for REALTORS® to take the Code of Ethics orientation and they are also required to complete a refresher course every four years. Sphere: Related Content
1. You’ll have an expert to guide you through the process. Buying or selling a home usually requires disclosure forms, inspection reports, mortgage documents, insurance policies, deeds, and multi-page settlement statements. A knowledgeable expert will help you prepare the best deal, and avoid delays or costly mistakes.
2. Get objective information and opinions. REALTORS® can provide local community information on utilities, zoning, schools, and more. They’ll also be able to provide objective information about each property. A professional will be able to help you answer these two important questions: Will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?
3. Find the best property out there. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your REALTOR® to find all available properties.
4. Benefit from their negotiating experience. There are many negotiating factors, including but not limited to price, financing, terms, date of possession, and inclusion or exclusion of repairs, furnishings, or equipment. In addition, the purchase agreement should provide a period of time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.
5. Property marketing power. Real estate doesn’t sell due to advertising alone. In fact, a large share of real estate sales comes as the result of a practitioner’s contacts through previous clients, referrals, friends, and family. When a property is marketed with the help of a REALTOR®, you do not have to allow strangers into your home. Your REALTOR® will generally prescreen and accompany qualified prospects through your property.
6. Real estate has its own language. If you don’t know a CMA from a PUD, you can understand why it’s important to work with a professional who is immersed in the industry and knows the real estate language.
7. REALTORS® have done it before. Most people buy and sell only a few homes in a lifetime, usually with quite a few years in between each purchase. And even if you’ve done it before, laws and regulations change. REALTORS®, on the other hand, handle hundreds of real estate transactions over the course of their career. Having an expert on your side is critical.
8. Buying and selling is emotional. A home often symbolizes family, rest, and security — it’s not just four walls and a roof. Because of this, home buying and selling can be an emotional undertaking. And for most people, a home is the biggest purchase they’ll ever make. Having a concerned, but objective, third party helps you stay focused on both the emotional and financial issues most important to you.
9. Ethical treatment. Every member of the NATIONAL ASSOCIATION of REALTORS® makes a commitment to adhere to a strict Code of Ethics, which is based on professionalism and protection of the public. As a customer of a REALTOR®, you can expect honest and ethical treatment in all transaction-related matters. It is mandatory for REALTORS® to take the Code of Ethics orientation and they are also required to complete a refresher course every four years. Sphere: Related Content
Friday, September 4, 2009
Pending Home Sales Increase...
according to this article on CNN.com:
Pending Home Sales Increase
That's great news for everyone. As (pending) home sales continue to slowly climb many believe that it will bring the economy with it, slowly but surely. Now, no one can be sure, but it does sound promising. One thing we do have to keep in mind is the nearing of the deadline on the First Time Home Owner's Tax Credit. It is a bit of a waiting game to see if that is what is continually driving the sales up, or if it is going up of its own accord. But optimism can be the name of the game. The more optimistic our public is, the better things seem to do. Its when the media is filled with things that terrify us that we seem to fall apart and make their "predictions" come true. So let us all focus on the good points of these articles and hope for the best. Not just for ourselves but for our entire country.
So here's to seeing what happens to home sales after the First Time Homeowner's Tax Credit deadline is up. Let's keep our fingers crossed. Sphere: Related Content
Pending Home Sales Increase
That's great news for everyone. As (pending) home sales continue to slowly climb many believe that it will bring the economy with it, slowly but surely. Now, no one can be sure, but it does sound promising. One thing we do have to keep in mind is the nearing of the deadline on the First Time Home Owner's Tax Credit. It is a bit of a waiting game to see if that is what is continually driving the sales up, or if it is going up of its own accord. But optimism can be the name of the game. The more optimistic our public is, the better things seem to do. Its when the media is filled with things that terrify us that we seem to fall apart and make their "predictions" come true. So let us all focus on the good points of these articles and hope for the best. Not just for ourselves but for our entire country.
So here's to seeing what happens to home sales after the First Time Homeowner's Tax Credit deadline is up. Let's keep our fingers crossed. Sphere: Related Content
Thursday, September 3, 2009
On the Fence About Homeownership???
In these times, many people are unsure as to whether they should invest their money in a home. But now (especially if you are a first time buyer) is a great time to invest. Prices are low, and recent reports show that real estate is slowly making the climb up from where it fell during the "bubble burst".
To those of you who are potentially first time buyer's you should consider the benefits to owning your own home, particularly before the $8,000 tax credit runs out on November 30th. This is truly a unique opportunity to receive as it can be used as collateral for short-term or "bridge loans" or to put down towards your closing costs, downpayment or to even buy down your interest rate on your mortgage. The tax credit will be equal to 10% of the cost of the home, up to an $8,000 maximum credit. For more information on the First-Time Homebuyer Tax Credit contact us at 276.236.4444 or email: info@galaxrealty.com .
Investing in real estate is a wise decision as it offers more stability in the long run than most other types of investments. It is almost always guaranteed against inflation, and inevitibly after a few years (or longer depending on your local market) if the home stays in good condition or has improvements made upon it then it should appreciate in value. With home prices as low as they currently are due (unfortunately) to foreclosures and short sales it is time to start the search for your new home or investment property today.
Sphere: Related Content
To those of you who are potentially first time buyer's you should consider the benefits to owning your own home, particularly before the $8,000 tax credit runs out on November 30th. This is truly a unique opportunity to receive as it can be used as collateral for short-term or "bridge loans" or to put down towards your closing costs, downpayment or to even buy down your interest rate on your mortgage. The tax credit will be equal to 10% of the cost of the home, up to an $8,000 maximum credit. For more information on the First-Time Homebuyer Tax Credit contact us at 276.236.4444 or email: info@galaxrealty.com .
Investing in real estate is a wise decision as it offers more stability in the long run than most other types of investments. It is almost always guaranteed against inflation, and inevitibly after a few years (or longer depending on your local market) if the home stays in good condition or has improvements made upon it then it should appreciate in value. With home prices as low as they currently are due (unfortunately) to foreclosures and short sales it is time to start the search for your new home or investment property today.
Wednesday, September 2, 2009
Tuesday, September 1, 2009
Great New Listings
This 2 bed 1.5 bath property features lots of fruit trees, a nice level lot, and is convienently located off of Route 58 on Cranberry Rd. in Woodlawn, VA.
http://www.galaxrealty.com/GR1327.aspx
This 3 bed 2.5 bath property is full of charm and character. It is feature on a corner lot, and is just across the street from the Galax Library. With many upgrades and a finished attic (possible 4th bedroom) this home is move-in ready! Sphere: Related Content
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