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WHAT AFFECTS CREDIT SCORES: 7 MISCONCEPTIONS

 

 

 

WHAT AFFECTS CREDIT SCORES: 7 MISCONCEPTIONS

You have to keep your credit score up in case you want to take out a second mortgage or home equity line of credit (HELOC), or get the lowest premiums on your home owners insurance. Here’s the 411 on how various money management tactics goose up or ding your credit score.

More money improves your credit score
False. Your level or sources of income don’t affect your credit score, although lenders may look at it when making loan decisions, according to the Fair Isaac Corp., the company that issues the commonly used FICO credit scores.

Ownership of several credit cards can hurt your credit score
Mostly false. Having many credit lines isn’t necessarily a bad thing, says credit expert Liz Weston, author of Your Credit Score. Multiple lines give you a favorable debt-to-available-credit ratio. But use them correctly: It’s best to keep any balances below 10% or 20% of the total credit line, she says. Anything more will affect the ratio of debt-to-available-credit, which can decrease your credit score.

Opening and closing credit lines can hurt your credit score
True. New credit applications can decrease your credit score, so be careful about applying for new credit cards or personal loans before applying for a HELOC, second mortgage, automobile loan, or other large line of credit.
Surprise: Closing existing credit lines may also hurt your credit score, since it’ll damage your debt-to-available-credit ratio. A good rule is not to make any credit changes in the months leading up to a major credit request, such as for a HELOC.

Consolidating credit lines will help your credit score
Mostly false. Although it may seem like a good idea to move all your balances to one card, that can actually hurt your credit score, since your debt-to-available-credit ratio will spike on that card, says Weston.
However, credit expert Harrine Freeman says such a slight decline isn’t necessarily a deal-breaker for a loan, especially if the card has a lower interest rate and will allow you to pay off the balance sooner. Your score will increase as soon as that ratio goes down.

Changing jobs can hurt your credit score
Partly true. Taking a new job or losing your job doesn’t affect your credit score. However, if you have a spotty employment history, lenders may hold that against you in making a loan. Dips in income may signal that it could be difficult to pay bills in a timely manner.
Co-signing for others can hurt your credit score
Partly true. Simply co-signing on a loan for someone else may not affect your score, but if that person is late on paying the loan, it’s likely to show up on your report, says Freeman. And that’s a nasty surprise if you didn’t know the person was late.

Judgments and liens aren’t considered in your credit score
False. If you’ve had a judgment or lien filed against you, it’s considered in your payment history, which represents 35% of your score.
Similarly, while most utility companies don’t report payment history to credit bureaus, your account will likely be reported if it is seriously delinquent and referred to a collection agency.
Additional details on how to manage your FICO score are available on the FICO site.

FSBO IS A NO-GO

FSBO IS A NO-GO

It's hard to resist commenting on the story which recently appeared in the Wall Street Journal regarding Colby Sambrotto, the founder and former CEO of forsalebyowner.com. It seems the founding father and lifelong evangelist of the concept of selling your home without a real estate agent was forced to hire a broker to sell his home after failing at what he preaches others should do.
After failing to sell his NYC apartment on his own as a For Sale By Owner (FSBO), Sambrotto hired a broker and paid a 6% commission in order to get the job done. His personal experience helps refute some of the myths Sambrotto has been espousing for over a decade. Let’s look at two of those myths:

Myth #1 – You Will Pocket More Money Selling on Your Own
Most FSBO sites say you can save the commission by selling on your own. What happened in Sambrotto’s sale?

From the WSJ article:
“The broker, Jesse Buckler, said he told Mr. Sambrotto the apartment in the Lion’s Head building on West 19th Street near Sixth Avenue was priced too low and wasn’t drawing the right buyers.
By May, it went into contract, he said, after attracting multiple offers. It closed in the last few days for $150,000 more than the original asking price.”

Myth #2 – The Internet Alone Can Sell Your Home
Many have said that, with the introduction of home search on the internet, hiring an agent is no longer a necessity. What happened to the FSBO guru when he attempted to only depend on the internet?

From the WSJ article:
“Looking to move his family to the suburbs, [Mr. Sambrotto] said he carefully staged his apartment for sale himself, and put it on the market. But after using a mix of websites to publicize his apartment, he said he had only ‘middling success’ and switched to a broker because many buyers were so reliant on brokers.”

Bottom Line:
There is a reason the real estate industry has been around for centuries: it performs a valuable service.

Atypical Abodes

ATYPICAL ABODES

Flickr and Yahoo have comprised photo galleries to showcase the top Atypical Abodes of 2011 (Flickr) and the strangest homes you can currently buy (Yahoo).  Whether you're just curious or seriously interested, these homes range from fantastical to incredible to mind-boggling.




Mushroom House, Rochester, NY
Photo: Rich Testa of RE/MAX Advance



"Eye of the Storm" home in Sullivans Island, S.C.



No information has been provided about this exquisitely strange residence!



Pagoda House, Wapiti, Wyoming.  This home was unfinished at the time the photo was shot.



Conch Shell House, Isla Mujeres, Mexico



Photo: Jesper Voetmann Mikkelsen, Denmark

See the complete Flickr gallery.

See the complete Yahoo article.

Chicagoans. Good news. Carpe Diem. Great time to buy!

Case-Shiller Index Posts Second Straight Increase

 

For the second month since recording an official double-dip in home prices, the S&P/Case-Shiller index has posted an uptick.

Data released Tuesday by Standard & Poor’s shows that 16 of the 20 metros included in the study and both composites reported positive monthly increases.
The 10- and 20-city composites were up 1.1 percent and 1.0 percent, respectively, in May over April.
Detroit, Las Vegas, and Tampa were down over the month and Phoenix was unchanged.
On an annual basis, Washington D.C. was the only metro with a positive rate of change, up 1.3 percent.
The remaining 19 metros were down in May 2011 versus the same month last year. Minneapolis fared the worst posting a double-digit decline of 11.7 percent.
The 10-city and 20-city composites recorded annual declines of 3.6 percent and 4.5 percent, respectively, when compared to May 2010. (Last year’s spring season had the benefit of federal homebuyer tax credits which served to boost activity.)
Still, David Blitzer, chairman of the index committee for S&P, says he’s seeing some seasonal improvements in May’s data.

Feng Shui your home with Plant Energy!

B Uplifted with Plant Energy

Plants have an uplifting affect, raising the energy in stagnant spots and corners.  The best plants to use are upward-growing with rounded leaves.  Cacti and plants with spiky stiff leaves are less positive.  Dead plants, dried flowers, and potpourri have dead energy and should be thrown away.
To increase Energy flow, place plants in the following areas:

• On your desk or next to your computer
• In a bathroom to increase healthy energy
• Staggering plants down a hallway can slow down energy
• Soften corners with floor plants

Here are some examples of house plants that require low light:
Peace Lily, Camille Dieffenbachia, Ficus, and Rubber tree


 
These plants require medium light: Jade, Croton, Fiddle leaf fig, Philodendron

High light plants: Weeping Fig, Zebra plant, Orchids
  

Choosing the Best Offer

 

 

 

Choosing the Best Offer

You’ve worked hard to get your home ready for sale and to price it properly. With any luck, offers will come quickly. You’ll need to review each carefully to determine its strengths and drawbacks and pick one to accept. Here’s a plan for evaluating offers.
1. Understand the process
All offers are negotiable, as your agent will tell you. When you receive an offer, you can accept it, reject it, or respond by asking that terms be modified, which is called making a counteroffer.

2. Set baselines
Decide in advance what terms are most important to you. For instance, if price is most important, you may need to be flexible on your closing date. Or if you want certainty that the transaction won’t fall apart because the buyer can’t get a mortgage, require a prequalified or cash buyer.

3. Create an offer review process
If you think your home will receive multiple offers, work with your agent to establish a time frame during which buyers must submit offers. That gives your agent time to market your home to as many potential buyers as possible, and you time to review all the offers you receive.

4. Don’t take offers personally
Selling your home can be emotional. But it’s simply a business transaction, and you should treat it that way. If your agent tells you a buyer complained that your kitchen is horribly outdated, justifying a lowball offer, don’t be offended. Consider it a sign the buyer is interested and understand that those comments are a negotiating tactic. Negotiate in kind.

5. Review every term
Carefully evaluate all the terms of each offer. Price is important, but so are other terms. Is the buyer asking for property or fixtures—such as appliances, furniture, or window treatments—to be included in the sale that you plan to take with you?
Is the amount of earnest money the buyer proposes to deposit toward the downpayment sufficient? The lower the earnest money, the less painful it will be for the buyer to forfeit those funds by walking away from the purchase if problems arise.
Have the buyers attached a prequalification or pre-approval letter, which means they’ve already been approved for financing? Or does the offer include a financing or other contingency? If so, the buyers can walk away from the deal if they can’t get a mortgage, and they’ll take their earnest money back, too. Are you comfortable with that uncertainty?
Is the buyer asking you to make concessions, like covering some closing costs? Are you willing, and can you afford to do that? Does the buyer’s proposed closing date mesh with your timeline?
With each factor, ask yourself: Is this a deal breaker, or can I compromise to achieve my ultimate goal of closing the sale?

6. Be creative
If you’ve received an unacceptable offer through your agent, ask questions to determine what’s most important to the buyer and see if you can meet that need. You may learn the buyer has to move quickly. That may allow you to stand firm on price but offer to close quickly. The key to successfully negotiating the sale is to remain flexible.
G.M. Filisko is an attorney and award-winning writer who has survived several closings. A frequent contributor to many national publications including Bankrate.com, REALTOR® Magazine, and the American Bar Association Journal, she specializes in real estate, business, personal finance, and legal topics.