Posted by Elizabeth Dennis on November 13, 2011 | No Comments
Building and maintaining good credit is essential when it comes to purchasing a house. The difference between good and bad credit can save or cost a homeowner thousands of dollars over the course of the life of a loan in terms of interest rate. Home buyers with good credit are going to be able to secure a much lower interest rate from a bank or a mortgage company than a person with much worse credit. In order to save you money, follow these tips on how to get your credit in order before purchasing a house.
Check Your Credit
One of the worst things you can do is to not keep on top of your credit report. Sometimes, mistakes do happen and you could wind up with some bad information on yours. As a result, you could see your score drop to an unacceptable level or you could wind up with a much higher interest rate. As a result, you should get a copy of your credit report at least once a year. This will allow you to make sure your it is accurate and you will not have any surprises. In addition, pull another one just before applying for a loan in order to make sure that everything is in order.
Close Some Accounts
Another good way to boost your credit is by closing store accounts. These store charge cards normally come with very high interest rates and fairly low limits. As a result, get rid of these by paying them off and closing them. You really only need one or two regular Visa or MasterCard cards in order to have the purchasing power you need.
Watch Your Limit
When buying a house, you will need some credit to play with. Therefore, it is important to not use more than 80% of the credit limit on revolving accounts. Having credit card accounts near their limit can have a drastically negative effect on your overall credit score. As a result, you will want to pay down as much as you can on your credit cards before applying for a home loan.
Re-establish Credit
If you need to re-establish your credit before buying a house, don’t just buy things you don’t need in order to show that you are now more responsible. Instead, get a secured card that reports just like a regular credit card. Use this card to purchase everyday items and at the same time, deduct the money from your checking account. That way, you will pay it off every month and your credit will be rewarded at the same time.
Put off Big Purchases
If you are thinking of making other big purchases right before buying a house, don’t. This will only have a negative effect on your overall credit. For example, if you also need a new car, put off the purchase until after you have closed on the house. The recent purchase will bring down your score and show up as a new and high debt which you have just incurred.
Posted by Elizabeth Dennis on October 30, 2011 | No Comments
Purchasing a house is the single largest decision that you will ever make in your life. Not only are you trying to find the perfect house to make a home, but you are also trying to get the best deal possible. One of the things to consider other than the cost of the mortgage itself, is the price that you will wind up paying for insurance.
Some homeowners, especially new ones, don’t think about this additional cost and how it can take them over their budget. In fact, homeowner’s insurance is required when you get a mortgage so it is not an expense which you can skip. In order to keep the cost of homeowner’s insurance down, here are a few tips which you can follow.
Shop Around
No one really wants to spend time shopping for insurance, but it is a great way to save you a few bucks on your policy. Be sure to ask your friends who they use and you can even contact your state insurance department in order to get a complete list of agencies in your area. Of course, don’t forget to look online as well as some agencies may have more of a virtual presence than a real brick and mortar one. You can also use online quote services to help you find an idea of the price you are likely to pay.
Change Your Deductible
In order to get a better out of pocket rate each month, you may want to raise your deductible. This is the amount of money in which you will have to pay toward a loss before the insurance will begin to pay on a claim. The higher your deductible, the more money you save on the premium. For example, if you raise the deductible from $500 to $1000, you could save 25%. However, be sure to take into account where you live. If you live in an area prone to hurricanes, for example, this may not be the way to go or you may need another policy for specific damages.
Use the Same Agency
Many insurance agencies will give you a discount if you have multiple policies with them. That means if you have your home along with your cars and even your life insurance, you will wind up paying less in premiums on all your policies.
Home Security
Another way to cut down on insurance premiums is to upgrade your home security. You can get a 5% percent discount for smoke detectors, dead bolt locks and a burglar alarm. You can even get a larger discount if you upgrade to a sophisticated system that will not only call emergency services but also has a sprinkler system in order to protect your home in the event of a fire.
Credit
Keeping up your credit will also help you reduce your monthly premiums. More often, insurers are now looking at credit history and taking it into consider when writing your policy. The better your credit, the less you are likely to pay.
Posted by Elizabeth Dennis on October 16, 2011 | No Comments
Negotiating for a house can sometimes be the dreaded part about buying a house. The process can sometimes take a while or be over with in a matter of a few hours. Of course, getting the best deal means following a few rules and understanding the process at the same time.
One way to know where you should start is to request a comparable market analysis or CMA from your real estate agent. These reports show valuable information on homes in your city and you will be able to compare such items as square footage and amenities which determine a home’s price. In addition, do some research on your own to see what is selling and if prices have been going down or up.
Next, go into negotiations with a maximum price that you are willing to pay. Be sure to take into account what your monthly payment is going to be and don’t forget about private mortgage insurance, regular insurance and taxes.
When you have these pieces in place, call your broker and make an offer. Of course, you will want to start out several thousand dollars below what you are willing to pay. If your initial bid is rejected, then be prepared to adjust your bid. You can do this by increasing the amount you are willing to pay or you can make other adjustments. You may ask for certain concessions such as the willingness to pay more money if the seller will fix certain problems found in the home inspection. You may also negotiate with the seller to see if they are willing to pay closing costs.
In addition, ask for a professional appraisal of the house to be done. A good inspector will be able to give an impartial price and this quote can be an indicator of which way the negotiations will go.
There are also several other steps a buyer can take during negotiations. One is to fully understand the seller. For example, you want to make use of the seller’s fears. A thorough buyer should try and figure out why the house is on the market. You can strengthen your position as a buyer by seeing if the seller is getting a divorce, moving out of town for a job or needs to raise some cash quickly. You may find out that you can buy the house for a much lower than the asking price if the buyers needs to get out in a hurry.
When negotiating on house always remember to hold your cards tightly to your chest. Always divulge the bare minimum to a seller about yourself. Remember that knowledge is power and could be used by the seller as leverage. For example, if you want to pay cash, don’t mention that fact because sellers may see you as a person with means and hold firm on their asking price.
Next, have options when negotiating. Find another house that you would be perfectly willing to have even when negotiating a deal on another. That way you are not so desperate for the first house, that you give in to the seller’s wants.
When negotiating, you may want to start with a range of figures rather than specific price point. You don’t want to start so low that you insult the seller and negotiations are over before they even start. A price range, on the other hand will give some flexibility.
Finally, don’t let negotiations become ego driven. Remember, you are there to buy a house and not beat the seller. If you like the house and it has come down enough to fit your budget, consider it a victory. Don’t lose a house over a few thousand dollars just because your ego doesn’t want to give in.
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