buying a house

Improve Your Credit, Avoid These Things

  • View post

When you’re purchasing a home, your credit score matters. After all, your score will play a major role in whether or not you will get approved for a mortgage at a rate you can afford.

But, what if you need to improve your credit prior to applying for a mortgage? Many potential homeowners find themselves in this position and as such, need to know what to do (and what not to do) to boost their credit. And in this article, we discuss the top five mistakes to avoid when you’re looking to boost your credit. Let’s get started!

 

  1. Cancel Old Credit Cards/Request Limit Reductions

Did you know that 15% of your credit score is determined from the length of your credit history? It is and as such, cancelling old cards will make it seem as if you have more debt than you actually do (because your amount of available credit will decrease).

Relatedly, you shouldn’t request to decrease your limits either. Doing so will also make it appear as if you have more debt than you do, having the same impact as cancelling old cards.

 

  1. Staying Current on Only Some of Your Cards

We all have months where we must prioritize where we spend our money to pay off debts but you can’t fall behind on your cards! Approximately one third of your score is determined by whether or not you pay your cards on time and as such, it’s vital to stay current on every card.

 

  1. Having Too Much Credit

Was there a point in your life where you had to open credit cards to balance all of your purchases? Doing so may not seem like a big deal at the time but unfortunately it will influence your overall credit score.

If you have too much credit, you may be viewed as a risk because you could accumulate a significant amount of debt rather quickly. As such, you should avoid signing up for new cards (particularly impulse decisions at stores for discounts) since doing so will further jeopardize your chances of receiving an attractive mortgage.

 

  1. Maxing Out Credit Cards

You never want to reach your credit limits when managing your debt. After all, maxing out cards will negatively affect your credit, even if you’re staying current on your payments.

Don’t buy what you don’t need. Doing so will help you pay down the cards and manage your debt more effectively (especially when you’re looking to improve your credit score.

 

  1. Never Avoid Opening Cards or Securing Loans

Some individuals have the opposite problem than many others: They don’t have enough credit to build up their score. As such, it’s important to not fear cards or loans and instead, open and use them effectively.

For example, you may want to open one credit card for a store you shop at regularly. By using it on a frequent basis and paying it off each month, you’ll build credit that will give you a much better deal once you’re ready to purchase your home.

 

United Real Estate Can Help You Purchase Your Home

If you’re building credit in the hopes of purchasing your first or next home, the team at United Real Estate can help!

Since 1925, our team has worked across the United States to provide guidance, support, and expertise to homeowners just like you. Contact us to begin the search for your home, today!

How to Balance Buying and Selling a Home

  • View post

Whether you’re downsizing or upgrading, purchasing a new home is exciting. However, selling your current home at the same time can be quite a challenge.

As you can imagine, both selling and buying at the same time (or even within a short time of each other) can get tricky, and fast! But if you’re caught up in this balancing act, there are a few different paths you can choose, all of which we’ll discuss below to help you make the best choice for both you and your family.

What if You Sell First, Then Buy?

This is what’s known as the safe option, primarily because you won’t purchase a new home with the hopes of selling your current home quickly and for the price you want. However, this scenario often puts you and your family in an inconvenient scenario.

For example, if you sell your home quickly, you may have to put your belongings in storage as you search for the home you want. But with the comfort and peace of mind that comes with already selling one home before moving on to the next, many homeowners find this option attractive.

What if You Buy First, Then Sell?

If you don’t want to be in a temporary rental between selling your current home and purchasing a new one, buying first may be the answer. After all, doing so means that you can move in to your new home at a pace that works with your lifestyle. However, doing so may also mean you’re responsible for two mortgages for an undetermined period of time.

If you own your current home, this plan is great. But if you’re already paying it off, paying two mortgages may put a financial strain on your family. As such, it’s important to consider whether or not you’re financially able to support this scenario if you end up purchasing your new home before selling your current one.

What if You Buy and Sell at the Same Time?

In an ideal world, you would be able to carefully balance the buying and selling of both homes so you aren’t burdened by two mortgages or forced to find a rental as you search for your new home. However, doing so can be difficult.

The best way to buy and sell at the same time is to turn to bridge financing. Doing so means you’re able to own both homes for some time but requires a short-term bank loan. This basically establishes a Home Equity Line of Credit, allowing you to put a down payment on your new home by borrowing against the loan on your current home. Then, once you sell your home, you can repay the loan.

In this scenario, it’s also best to try and schedule the closing on your home sale after the closing date of your new home. By doing so, you can move in to your new home before closing on your current home, streamlining the entire process.

United Real Estate is Your Resource for Home Sales and Purchases

If you’re currently trying to balance buying a new home and selling your current home, the team at United Real Estate can help.

Our expertise allows us to effectively balance these buying and selling scenarios, creating an ideal experience for you and your family. Contact us to find your dream home, today!

Get Your Credit Mortgage Ready

The path to homeownership can be stressful and often difficult. If you have less than perfect credit history, the obstacles might be even greater. Even if your credit is good, there are a few red flags that might prevent you from getting a mortgage (or the mortgage rate/type) that you are hoping for. Below is a list of items that can hinder the process of obtaining a mortgage:

Don't leave your credit score up to chance.

Don’t leave your credit score up to chance.

  • Bankruptcy– Some mortgages will work with a past bankruptcy. But you usually need to be several years past the discharge date and have rebuilt your credit. A bankruptcy, even when discharged, can stay on your credit report for up to ten years.
  • Foreclosure short sale – Some mortgages will work with a past foreclosure short sale. But you usually need to be several years past the sale date and have rebuilt your credit. Even when finalized, a foreclosure short sale can stay on your credit report for up to seven years.
  • Unpaid judgments– No mortgage lender wants to take the risk that an earlier debt could take precedence over their loan. All judgments must be satisfied, removed or vacated from your credit report. And, if paid, your judgment will stay on your report for seven years. Solve open judgments. Try to vacate them first or pay them and get proof that they’re paid. Yes, I know it hurts to take money out of your hard-earned down payment savings account. But that down payment won’t do you a bit of good if you can’t get a mortgage because of an old judgment from the cable company you fought with in your first apartment.
  • Open collections– If you don’t pay a bill, the company you owe may sell your debt to a collection agency who will try to get you to pay. ONLY PAY THEM OFF IF YOU ARE TOLD TO DO SO. Keep in mind that paying a collection will not raise your credit score, but LOWER YOUR SCORE. Once a debt has gone to collections, your credit is hit and can only recover over time.
  • Too much monthly debt– A good rule of thumb is that if you’re paying more than 5 percent of your gross monthly income for debt payments (credit cards, student loans, car payments, personal loans), you’re decreasing the amount of mortgage you’ll be approved for. If your income is high and housing prices are reasonable, high debt might not hurt you much. But if you have a modest income, debt can price you right out of a mortgage.
  • Pay your current bills on time, religiously – You’ll need the boost to your credit score if you’ve had problems in the past. And you’ll want to prove to a lender you’ve gotten past old issues and made a fresh start in rebuilding your credit.
  • Make sure the problems are right – If not, you must dispute them off. Experts disagree about how many people have serious errors on their credit reports, but I have witnessed a client who discovered that someone had posed as his spouse after finding lots of strange information on his credit report. Don’t pay the price for someone else’s mistake.

This piece is guest written by our partner, Credit Law Center (CLC). CLC helps clients achieve financial success by cleaning up their credit history and putting them on track for financial freedom. Contact them today at (800) 994-3070 or by visiting creditlawcenter.com.

How to Win a Bidding War

Now that the housing market is heating back up, you’re likely going face stronger competition from your fellow buyers. So what do you do when you’ve found the perfect home, and it turns out that someone else thinks it’s perfect too?

Here are some expert tips to help you come out on top in a bidding war:

In a competitive market, you might be facing multiple offers on homes.

In a competitive market, you might be facing multiple offers. Be smart and follow our simple tips for success.

Get Your Finances in Order

Getting pre-approved for a loan will go a long way towards winning a bidding war. It shows you’re committed and helps to eliminate any doubts a seller may have about your financial ability. In a competitive market, your offer might not even be considered if you do not have a pre-approval letter.

Master Your Cover Letter

Your offer should contain a cover letter along with a pre-approval letter or a proof-of funds document. Your cover letter should showcase why you want the home, what you do for a living, your interests, and also how you see your future unfolding in this property. If you truly love the home, don’t be afraid to reveal why you and or your family belong there. Creating an emotional connection can help you stand out among the other bidders and give you an added advantage.

Much like a cover letter for a job, your offer cover letter is a pivotal element to getting noticed by the seller and can make or break your chances of getting the home.

Be Swift

As they say, the early bird gets the worm. Be the first with an offer that matches the asking price or comes in slightly below, to increase your chances of winning a bidding war. It shows you’re a serious buyer and that you value the home you’re bidding on. To give your offer some added urgency, put an expiration date on it as well.

Make a clean offer

The simpler the offer, the more likely the seller is to accept it. While you may be tempted to outline all of your “must-haves” upfront, these are better left until after you’ve made it a few steps further in the buying process. You’ll still have an opportunity to negotiate repairs, closing costs, furniture, and any other wants after the inspection.

Keep Your Emotions in Check

Don’t let your emotions over-rule all of that hard work you put into researching asking prices, looking at schools and scoping out the neighborhood.  These are necessary to make a sound decision and sometimes all logic goes out the window when you fall in love with a home. Don’t let yourself step outside your price range in the heat of the moment. There will always be another home but there isn’t always more money.

If you’ve found yourself in the midst of a bidding war and need some expert advice, contact our knowledgeable and friendly team at 855-441-6288.

http://www.realtor.com/advice/how-to-win-a-bidding-war-on-your-dream-house/

http://www.cnbc.com/id/102640371