The Fair Credit Reporting Act states that you have the right to dispute any inaccurate or derogatory information on your report.  If you do have errors on your credit report, you will want to have them corrected as soon as possible.

You can either call or write to the appropriate credit bureau.  There are three major bureaus reporting on credit in the United States.  When you apply for a home loan, all three credit bureaus are checked by your mortgage consultant.  Each of these bureaus may issue a slightly different report on you.

In order to correct credit report problems, you will have to supply the bureau with the correct information in writing.  If you are unable to provide written proof of their error, you still have the right to formally dispute that account error with the credit bureau.  A good mortgage consultant also will be able to suggest a specific process to follow to make these changes.  Without a good credit report, the costs of your home loan can go up significantly.

Whhat happens to an old collection account which you have neglected to pay?  Just because they are no longer sending you invoices does not mean that this debt has disappeared.  Old collection accounts do not disappear.  If you had trouble in the past paying your bills, some of these accounts may have turned into collection accounts.

What that means is that the business where you owed money sold your debt to a company which specializes in collecting debts.  This company will be paid by the business when they collect the bad debt.  usually they receive a percentage of the debt payment as their commission.

Even if you have not heard from these creditors in years, more than likely they will show up on your credit report.  There is no way to get rid of these debts except to deal with the business or collection agency.  you may be able to negotiate a discount on the debt, but you will have to pay it to remove the reference on your credit report.  When you pay it off, be sure to save a copy of the cencelled check.  Often, the business will also send you a letter telling you the debt is paid and that they are removing references to it from your credit report.  Be sure to save these letters as well.  Clean credit reports are needed for you to be able to obtain a home loan.

If you haven’t checked your credit report in the last year, you will want to do this before you apply for a home loan.  What is your credit report?  It’s made up of any and all information obtained from businesses that have loaned you money in the last ten years.  If you haven’t borrowed any money for school or for a car or opened any charge accounts, you may not have a credit report.

The information on your report may or may not be correct.  Sometimes, errors are made when the data are entered.  Sometimes, other people’s information can get on your credit report by mistake.  old credit accounts, which you no longer use, may still be showing as “open” on your report.  Some accounts, which were past due but have been paid, might still show a balance due.

We recommend checking your credit report once a year.  If you don’t want to bother with this, be sure and check your credit with a good mortgage consultant if you plan to buy a house in the next year.  If it needs to be updated to make it more accurate, this will give you plenty of time.

Like so many things in real estate, the answer to this question is, it depends.  If you are buying a single family home, you will need three kinds of insurance. 

The first is called HOMEOWNER’S OR HAZARD insurance.  This insurance protects you and the mortgage lender against bad things happening to the home.  For example, your home is in a hailstorm or a fire and part of the home is destroyed.  Or your home is vandalized.  This is the insurance that helps you repair the damage and put the home back in like-new condition.  If you buy a townhome or a condo, you might pay your monthly insurance premiums in your association dues.  Otherwise, you will pay your monthly premium as a part of your house payment.

The second is called TITLE insurance.  You pay a one time premium when you buy the home and the insurance is good for as long as you own the home.  This insurance protects your lender and you against any errors or fraud in transferring the title of the home to you.  It also protects you against claims of others against the property in the future. 

The third is called MORTGAGE insurance.  We have talked about this type of insurance in another blog so read up on what it does there.  Your premium is paid as a part of your monthly house payment.  All these insurances are intended to protect you and your home.  We hope you never have to file an insurance claim but if you do, you are covered.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

The mind boggles!!  $8000 in free cash, very few strings attached, from my favorite uncle, Uncle Sam.  I’m sure you’ve already spent this money in your mind but here area a few more suggestions related to home ownership.

Let’s say you are short of cash for the down payment but you have a blood relative who would “gift” you the money if you promised to repay them some time in the future.  If you were buying a home on an FHA mortgage, you would need 3.5% of the purchase price in down payment money.  For $8000, you could buy up to a $230,000 home (assuming you qualified for that much monthly payment) and take a loan from uncle/aunt/grandma/mom.  You could then collect your $8000 tax credit from Uncle Sam and pay them back this year.    If you’ve read some of our other blogs, you know that the closing costs can be paid by the seller.  You could get into that lovely home for FREE.

Or let’s say you are interested in a home but it needs some redecorating such as new carpet or flooring throughout ($4000), new paint in all the rooms ($300) and some new appliances in the kitchen ($3000).  None of these fixes would make it hard for you to get mortgage approval but they might make it hard for you to LOVE your home.  Buy the home, claim your $8000 tax credit and use the cash to create a home you LOVE.  Put in the carpet, repaint the rooms in custom colors and buy those stainless steel kitchen appliances.  Then sit back and enjoy.

Or let’s say the home is pretty darn nice but the yard isn’t.  It’s been neglected, never had any landscaping or fencing for the kids and the dog, and the deck needs to be removed and rebuilt.  Let’s plan a new deck ($5000) and let’s get some landscapers out there to put in the perennials, replace sod and add a tree or shrub or two ($3000).  From ugly to lovely.  There’s lots more ideas too but these should get you thinking of the POSSIBILITIES for that lovely $8000 First-Time Homebuyer Tax Credit.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

Some homebuyers are very clear on the kind of home they want when they start shopping.  They own Roscoe the wonder dog and they want a yard for him to run and play in.  Or they have a desire to travel a lot and don’t want to be tied down with yard work and outside maintenance.  Choosing a traditional home with a yard may be best for folks with a yen to garden.  If you spend half the year in Florida, you may want a townhome where care is provided outside even when you are gone.

That’s why picking the home style for you depends on your life style and your personal preferences.  When townhomes were first introduced, 30 or 40 years ago, people just couldn’t conceive of a home which SHARED a yard with the other homeowners.  It wasn’t part of our home ownership heritage.  But with the passing of the years, more folks are opting for a “carefree” lifestyle.  Because townhomes are built on smaller lots and the green space outside the homes is owned jointly with the other homeowners,,the care of the yard and snowplowing is hired out.  You pay for it in your townhome association dues.  The association also cares for your siding and roof and in some instances the windows.  You just worry about the inside of the home.

If you like to putter outside in the yard, or have a pet or kids, or you enjoy outside maintenance and own an awesome riding mower and snowblower, you may prefer living in a single family home.  There is nothing inherently better about a townhome or a single family home.

Once you decide how you’d like to live, then it will be easy to decide if you rather own a townhome or a single family home.  Your realtor may be a valuable resource to you in making this decision.  If you are still not clear about what you want, go look at both and take some time to make up your mind. 

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.

The first-time homebuyer tax credit has been getting a lot of publicity lately.  Although it’s pretty easy to qualify, there are still some guidelines which must be followed.

First, and probably the most important, you must be a FIRST-TIME HOMEBUYER.  So if you married recently and your spouse owned a home previously, you can’t qualify for the credit.  BOTH of you must be first-time homebuyers.  How the Federal government defines this is someone who hasn’t owned a home in the previous three years.  This must be calculated to the date of the sale of the previous home.  For example, if you are buying a home and closing the home purchase on March 31, 2009 but you sold a previous home in April of 2006, you wouldn’t qualify.  You’d have to wait till after the three year anniversary of the home sale.

Let’s say that you are a first-time homebuyer but you want to buy the house as an investment and rent it out.  Sorry, once again, you don’t qualify.  The tax credit goes to those who are buying the home as their own residence.

Once you purchase the home and claim your $8000 tax credit, you must live in the home for a full three years in order to keep the credit.  If you sell before the three year anniversary of the purchase, you will have to repay the credit.

The credit is a once in a lifetime opportunity.  There has never been a credit like this before and there likely will not be one again, at least in our lifetimes.  Take full advantage of it and buy a home before December 1^st of this year.  Free money.  $8000 to spend on the home or on a great vacation.  Hurry.  It’s too good to pass up.

For more detailed information, come to our FREE NO OBLIGATION FIRST TIME HOMEBUYER class or wait for future blogs.  “Simple answers to home ownership questions”.