Consumer Real Estate News


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  • How to Dispute Credit Report Errors

    21 February 2020

    If you’ve checked your credit reports lately for errors, congratulations! That’s a smart first step to improving your credit score, which can make getting approved for home loans and credit cards, along with getting the best interest rates, a lot easier.

    Errors can be as simple as a misspelled name, wrong phone number or address, or as serious as an account wrongly reported as delinquent.

    The next step is to fix them. Here are some ways to resolve errors on your credit reports:

    Write the Credit Bureaus
    Write a letter to the credit reporting bureau where you found the mistake. Equifax, Experian and TransUnion are the three major credit bureaus, and you can write to them online or by mail.

    Include your contact information, and explain the error you found and why it’s wrong. Include supporting documentation, such as a copy of an email verifying the status of an account that has been reported incorrectly.

    The Consumer Financial Protection Bureau has sample letters on its website for disputing credit reports. Be sure to keep copies of any letters or documents you send, and if sending anything by mail, use certified mail with a return receipt.

    Alert Creditors
    Banks and credit card issuers that provide information about you should also be notified of errors, unless it’s an identity-related mistake made by the credit bureau—those should be sent directly to the credit bureau.

    Also known as furnishers, companies that provide information to credit bureaus will often have their address listed on your credit report so you can contact the company directly.

    Allow 45 Days
    After reporting errors, allow up to 45 days for them to be fixed. The credit bureau generally has 30 days after receiving your dispute to investigate and verify the information with the furnisher. The credit bureau must report the results back to you within five days of completing its investigation.

    If you dispute an error with the furnisher, it typically takes 30 days to investigate and they must report their findings to you.

    If you’ve submitted incorrect or incomplete information, or have tried to contest the same item multiple times without any new information, then the bureau or furnisher may decide your dispute is frivolous. They must tell you this within five days, along with providing their reasoning. Once this is done, they don't need to investigate further. You can resubmit a dispute with updated materials if your original dispute was labeled frivolous.

    Even if the furnisher insists the dispute information is accurate, you can ask the credit bureau to include a statement in your credit file explaining the dispute.

    Check Back
    Credit report updates may take a while to appear, depending on when new information is sent and a bureau’s update cycle. If you don’t see a change in a few months, contact them again to verify that your account information is being reported and updated.

    Published with permission from RISMedia.

  • Alternatives to Traditional Down Payments

    21 February 2020

    The idea of putting a minimum of 20 percent down on a home is a myth that can keep some people from trying to buy a home.

    While it can be a great way to lower your mortgage payment and convince sellers that you’re serious about buying, coming up with 20 percent of a home’s purchase price can be difficult.

    Here are some other options:

    A lower down payment is acceptable. Lenders know that the 20 percent rule is a myth, and will often accept much less if you have good credit and a steady job.

    The average down payment on a home purchase in 2016 was 11 percent, according to a report on aspiring homebuyers by the National Association of REALTORS®. For borrowers under age 35, the average down payment was just under 8 percent. The largest share of loans for buyers under 35 were for people putting down less than 5 percent or about $3,500. Coming up with 10 percent down, however, can allow you to have a lower credit score—sometimes as low as 500 for an FHA loan—to qualify.

    Around 3 percent is common. A few government agencies require only 3 percent or so down. Loan programs backed by Fannie Mae and Freddie Mac require 3 percent down, while the FHA mortgage that targets first-time buyers asks for 3.5 percent down. The FHA mortgage allows the down payment to be a financial gift or from an approved down payment assistance program.

    The Fannie Mae HomeReady program allows non-borrowing household members to contribute toward qualifying income. So, if you have an aunt or roommate, their income can be included when qualifying for a home loan.

    The programs don’t require perfect credit. The average FICO credit score was 713, but borrowers with a 639 score can still be approved.

    People who don’t qualify for such programs can still buy a home with a 639 FICO score, but may need to increase their down payment to 5 percent.

    There are no-down-payment options. VA mortgages require no money down for current and former military service members, and most lenders offer them.

    Some loans for less than 20 percent down require private mortgage insurance, or PMI, which can add $100 or so to a monthly mortgage; however, VA loans don’t require mortgage insurance.

    USDA home loans also don’t require a down payment. These loans are backed by the U.S. Department of Agriculture, and aren’t for farms but for single-family homes that are in less-dense areas of the country.

    Piggyback loans are available. These require 5 – 10 percent down and are two mortgages that work best for people with good credit. The first mortgage funds 80 percent of the cost and the second is a 10 percent mortgage—the final 10 percent is a down payment. This eliminates the need for mortgage insurance.

    You can find other assistance programs. Down Payment Assistance programs, or DPAs, are run by the government and nonprofits. They offer gifts or no-interest loans to increase homeownership. Nearly 90 percent of all single-family homes in the U.S. are eligible for some kind of DPA.

    All of the major loan types listed above allow DPA funds to be used toward a down payment. Your lender should be able to help you find DPAs in your area.

    Published with permission from RISMedia.

  • Do You Need a Notary When Closing on a Home?

    21 February 2020

    Before you get the keys to your new home, you have to go through the closing process. This is where a notary public comes in. Also called a notary signing agent, this is one of the key people to help you in the closing process.

    What is a Notary?
    Many parts of the home-buying process require the help of professionals who work on your behalf, but may also be looking out for their own interests or those of the home seller. A notary is an impartial person who witnesses the signing process of closing documents.

    They notarize, or legally sign off on, official documents and statements to ensure you aren’t being pressured to sign something. Notaries are appointed by state governments.

    To become a notary, applicants must follow the steps enforced in their state. Generally, it requires filling out an application, paying the application fee, taking a training course and passing an exam. A bond is then filed and an oath of office is taken.

    Part of a notary’s job is to be impartial, with no personal interest or bias for the documentation. To help ensure impartiality to you or your transaction, notaries are chosen at random for closing.

    As part of their impartiality, a notary must never refuse to serve a person due to race, nationality, religion, politics, sexual orientation or status as a non-customer, according to the National Notary Association.

    What Do They Do
    A notary signing agent, or NSA, deals specifically with home closings and is trained to work with loan documents. They’re the last step to completing a home loan.

    An NSA validates your identity and ensures you understand what you’re signing. They must be present with you during the closing. You may be required to take an oath declaring your identity and understanding of what you’re about to sign.

    Upon completion, the NSA will add their signature, seal and notary license to the documentation, and then your documents will be considered notarized. Without it, your documents aren’t considered valid and your state won’t accept them for recording.

    Notary fees vary, but can range from $25 to $40 for one or two notarizations. More notarizations can then cost about $10 each.

    Published with permission from RISMedia.

  • The Pros of Buying a Home Warranty

    20 February 2020

    For $600 or so a year, plus a service fee of around $75 every time you ask for repair, a home warranty can be an inexpensive way to have peace of mind as a new homeowner.

    Home warranties cover breakdowns in a home, from HVAC systems to appliances. A broken water heater can be repaired within hours, but if it can’t be fixed, a home warranty can pay for a new one to be installed.

    For homeowners with an older house, they may want more things covered than a newer home would need—such as older appliances—and will likely pay more for it. If you just bought new appliances and have a manufacturer’s warranty for a year or more, you won’t need this coverage. You may be able to exclude new appliances from a home warranty to cut down on costs.

    Things that can be covered by a home warranty include ductwork, electrical, plumbing, dishwashers, refrigerators, ovens, stoves, clothes washers and dryers, and water heaters.

    Things that are unlikely to be covered include expensive items such as septic tanks, wells, heating systems, pools, garage doors, windows and doors, sprinkler systems, pre-existing conditions, and walls. Coverage for such items may cost more. Roofs may also be exempt, though some home warranty companies sell plans to fix leaking roofs.

    Consider Cost
    A big factor in deciding if a home warranty is worth buying is cost. Basic coverage can start at about $300 and go up to $600 or more.

    Some home warranties charge for a service call, such as $75 or so, while others allow unlimited service calls. Contractors are screened and sent out by the company.

    To determine if a home warranty cost is worth it, start by learning how old your appliances and home systems are and if the original equipment manufacturer warranties still cover them. Find out what the expected lifespan of each item is to help you figure out if a home warranty is needed.

    Some home warranty companies require annual maintenance on appliances and home systems to keep the warranties valid. Some may ask how long you’ve had them. Don’t expect the home warranty company to pay for the annual maintenance of your appliances or home systems.

    Read the contract carefully to make sure that old appliances are covered in the home warranty. Some don’t cover old appliances, such as anything more than 10 years old.

    Any home, whether old, new or somewhere in between, will have things break sooner or later. Appliances and home systems only last so long. For $50 a month or so, a home warranty can provide peace of mind when things eventually fail.

    Published with permission from RISMedia.

  • What to Expect from a Home Inspection

    20 February 2020

    A home inspection can make or break a transaction. Without it, you wouldn’t know if you’re buying a money pit or a home that will last a lifetime.

    Homebuyers are responsible for hiring a professional home inspector, who should uncover possible problems before they buy the home. An offer on a home is often conditional upon a successful inspection.

    The inspector should evaluate the physical structure and its critical internal systems. These include:

    • Electrical
    • Plumbing
    • Heating and cooling systems
    • Walls, ceiling and flooring
    • Windows and doors
    • Roof
    • Basement
    • Attic
    • Foundation
    • Insulation
    There are some things a home inspector may not uncover. These can include hidden problems like pests, mold, asbestos and flaws in areas below ground or that are inaccessible, such as wells and septic tanks. Additional inspections, such as for termites, may be needed for those areas. Some states require a pest inspector before a home loan can close. Even if it’s optional, a pest inspection is a good thing to add as a buyer.

    Try to be at the home during the inspection. Follow the inspector around the house and ask questions. You should be able to ask about potential issues and how to make repairs or take care of certain areas of the home.

    Don’t chat the inspector up too much. It could distract them from their work and they could miss something. If you can’t be there, meet with them later to go over the report.

    Remember that an inspection is only a snapshot of the time and day of the inspection. A home might perform differently in the winter than the summer.

    Home inspections are very detailed, so expect to see dozens of issues—many of them small—in the list of deficiencies. The severity of each problem should be listed, and some may even include cost estimates to fix each issue.

    If there are too many problems than you’re willing to handle that are found in a home inspection, you can back out of the sale or negotiate with the seller to make the repairs or lower the price.

    But not all infractions are equal. If you’re going to negotiate some repairs, focus on the red flag items such as the roof, foundation, HVAC systems or other expensive problems. Don’t worry about small details like a cracked electrical cover or small things that can be easily fixed with a trip to the hardware store.

    Published with permission from RISMedia.