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Repairing Damaged Credit To Buy Your Dream Home

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When life gets tough, it can be easy to fall behind on your debt payments. Unfortunately, as your debts stars to pile up, your credit may be damaged. Bad credit can affect almost every aspect of your life. You may find difficulty with opening a checking account, obtaining a credit card or car loan, buying a dream home and even finding gainful employment can be challenging.

Repairing Damaged Credit To Buy Your Dream Home

The most common causes of bad credit are unemployment and unpaid medical bills.

With damaged credit, it may become difficult to get back on track- as credit limits are lowered and interest rates are raised. 

Buying a home with bad credit can seem like a distant fantasy and an impossible dream. Many have people have walked this road and many more will walk this road in the future. Knowing how to navigate around this situation and knowing how to repair credit can be extremely beneficial.

Lease it. Love it? Buy it!

VantageScore vs. FICO Score

The VantageScore and FICO Score are the most common factors lenders use to evaluate credit. Credit scores can range anywhere from 300-850, with the a higher score meaning more credit worthiness.

Your payment history is significantly weighted in calculating a credit score. Both consistent and timely payments are critical in achieving and maintaining a good credit score.

Your credit utilization ratio- the amount of revolving credit you’re currently using, is also very important. A common guideline is not to utilize more than 30% of each credit line. You may find that having different lines of credit make it easier to keep your balances at or below 30% of the credit limit.

Credit utilization is calculated by dividing the balance by credit limit for each card and for all cards together.

Get a Free Credit Report

A good place to start is with getting a copy of your credit report. There are three nationwide credit reporting companies. These include:

  • Equifax
  • Experian
  • Transunion

You are entitled to one free copy of your credit report every 12 months from each of the three nationwide credit reporting companies.

You can contact these companies to request a copy by

  • Go online to Annual Credit Report (The only authorized website for free credit reports.)
  • Call 1-877-322-8228
  • Mail a request to: Annual Credit Report Service, P.O. Box 105281, Atlanta, GA 30348-5281

FYI- You will be required to provide your name, address, social security number, and date of birth to verify your identity.

Reviewing Your Credit Report

First- be wary of any impostor websites and be sure to type the web address exactly or use this link- Annual Credit Report.

Once you have a copy of your credit report, it is important to carefully review to properly interpret the data.

You will find five major categories on your credit report

  1. Personal information
  2. Open accounts (paid monthly)
  3. Accounts that have been reported as in default
  4. Public records
  5. Inquiries

Keep in mind that the credit reporting companies report information given to them by your creditors. This information is received when you fill you out any credit applications. (Hence the importance of always completing applications accurately and legibly.)

You may find different spellings of your name, address (both present and past), as well as employment.

Most items will be on your credit report for seven years, though items such as bankruptcies and tax liens can last up to ten.

After a careful review, verify that all of the data listed is accurate. Report inaccurate information by disputing inaccurate or incomplete information. Again, it is imperative that you report inaccurate and incomplete information on your credit report.

Many people do not realize the power of disputing items listed in your credit history. 

Most of your credit repair can be done by utilizing this with this simple practice. Know your rights. A great resource is the Fair Credit Reporting Act (FCRA). The FCRA and other great credit resources can be found- here.

Credit Repair Facts

Hiring a credit repair company can be tempting. Be wary! There are many scams that pretend to help but are in fact simply trying to steal your information. Considering simply saving the fee for this service.

Everything that credit report companies can do, you can also do.

If proper steps are taken, one can very easily repair your own credit in a fairly short amount of time, at little to no cost.

Keep in mind, delinquent accounts can be negotiated. Tax refunds are a great source to rid yourself of old debts.

Addressing delinquent accounts is paramount. Many people do not realize that one or two delinquent accounts can be the only thing holding them back from owning your own home.

Contact past creditors of delinquent accounts to see if they are willing to negotiate for a discount. For example- Many creditors with a delinquent balance of $600, may happily accept a total lump sum of $400 (or less), rather than waiting for years of payments to receive the full amount.

Understanding how credit works and cleaning up any errors on your credit report is half the battle to winning your financial freedom. After that, it is simply a matter of building up and maintaining your credit scores.

A Simple Credit Building Strategy

Start with one simple line of credit. Secured credit cards or low limit, high interest rate credit cards are a good place to start. Instead of using a debit card for your daily life purchases, such as gas and food, use this card.

The most important aspect of this technique is making sure you pay off the entire balance at the end of each month. This way you avoid paying any interest.

This will allow you to begin establishing credit and will increase your scores. As you establish a positive credit history and your credit scores increase, you will become eligible for lower rate credit cards with higher limits.

Don’t forget- keep your credit utilization rate for each card at or below 30%.

The key here is consistency in making your payments on time. Do not live beyond your means and do not be tempted to use your cards to buy frivolous items.

Repairing negative credit, building new credit, and consistently maintaining your credit balances will yield positive results. You will find better terms, higher credit line, and possibly better employment. In no time at all, you will easily be the proud owner of your very own home.

Giving you more homeownership options.

We believe that even if a household is not ready to buy a home, they should have a way to move into a home of their choice, with a path to own that home if they would like. The dream of owning a home can be a reality with our Lease Purchase aka Rent To Own Homesprogram. Learn more.

Rent To Own Homes Program

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Buyer Tips Buyers First Time Home Buyers

5 Items You Need To Qualify For a Home Loan

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5 Items You Need To Qualify For a Home Loan

Congratulations! You’ve decide to purchase a home. This is an exciting time, but there is work to do before you pop the champagne.

The first step toward purchasing a home is getting pre-qualified for a loan.

Your loan officer will review your financial information and determine how much you are qualified to borrow and what financial programs you may want to consider.

A lender pre-qualification with a lender will answers the following questions:

  • What is the best type of home loan for me?
  • How much money will I need to put down?
  • What will my payments be?

Be sure your loan officer/lender answers any additional questions you have. You want to be confident that you understand your loan.

Pre-Approval

Loan pre-approval and the accompanying pre-approval letter will typically be required to put an offer on a property.  Keep in mind– A seller, before they take their home off the market, will want to know that you are already approved for financing. 

As a pre-approved buyer, your offer on a home is much more likely to be accepted. So, be prepared to get that pre-approval letter before you start looking at any properties.

A pre-approval will require a credit check and documents that prove your income and assets.

Loan Prep Checklist

Depending on your unique situation, there are several documents you might need when you apply for a home loan, but here are the basics.

“Don’t sweat it, just gather the documents in the loan prep checklist in advance so you are prepared.”

Dana Ash-McGinty, ASH MCGINTY Prinicpal Broker

Photo ID

You’ll likely need to provide a photo ID, such as a driver’s license. This is simply to prove you are who you’re claiming to be.

Social Security number

In order to assess you as a borrower, lenders will need to pull your credit report.

You may need to explain any blemishes on your credit. Blemishes may include a previous short sale or a foreclosure.

You should be prepared to fully explain any negative items on your credit report. This helps a lender evaluate what kind of risk you are. Lenders may look at one-time unavoidable circumstances differently from habitual delinquency.

Checking and savings account statements

When assessing your risk profile, lenders may want to look at your bank statements and other assets.

Lenders typically request these documents to make sure you have several months’ worth of reserve mortgage payments in your account in case of an emergency. They also check to see that your down payment has been in your account for at least a few months and did not just show up overnight.

Pay stubs, W-2s or other proof of income

Lenders may ask to see your most recent pay stubs from the past month or so. Your tax returns help give them a clear idea of your overall financial health, while pay stubs help them gauge your current earnings.

If you’re self-employed or have other sources of income (such as child support), you may need to show your lender proof through 1099 forms, direct deposits or other means.

Federal tax returns with W-2s, K-1’s, 1099 for the past 2 years

Mortgage lenders want to get the full story of your financial situation. You’ll probably need to sign a Form 4506-T, which allows the lender to request a copy of your tax returns from the IRS.

Lenders generally want to see one to two years’ worth of tax returns. This is to make sure your annual income is consistent with your reported earnings through pay stubs and there aren’t huge fluctuations from year to year.

Bottom line

Your lender’s goal is to assess you as a borrower and ensure you can make your mortgage payments on time.

Your goal is to provide them with documents that paint an accurate picture of your creditworthiness.

Since everyone’s situation is unique, additional documentation might be required. Your Loan Officer will let you know exactly what is needed.

Need help? We will be happy to answer any questions and assist you with finding a lender. Give us a shout or schedule a call.


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First Time Home Buyers Homeownership

The 10 Most Common Real Estate Terms

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homebuyer tips

Real Estate Terms

Here are a few basic real estate terms:

ACCEPTANCE DATE- The date of which the buyer’s written offer is accepted by the seller.

BINDING AGREEMENT- A written agreement, between buyer and seller, to do or not to do a certain thing.

CLOSING COST- Various fees and expenses payable by the seller and buyer at the time of closing.

CLOSING DATE-The date on which the seller delivers the deed and the buyer pays for the property.

CONTINGENCIES- A clause in a purchase contract outlining conditions that must be fulfilled before the contract is executed. Contingencies may be included by both, buyer or seller, and must be accepted by both parties.

EARNEST MONEY- A deposit made by the purchaser to evidence Good Faith. Often it becomes part of the down payment, if the offer is accepted.

EXHIBIT- A document used to present or expose.

LEGAL DESCRIPTION- A legally acceptable definition of real estate by government rectangular survey, metes and bounds, or recorded plat.

OFFER- An expression of willingness to purchase a property at a specified price or willingness to sell.

PURCHASE PRICE- The price at which real estate was actually purchased.


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Categories
Buyer Tips First Time Home Buyers

I’m A Single Woman, Should I Buy A House?

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I’m a single woman, should I buy a house?

My answer is an unequivocal “Yes!”

I purchased my first home and multiple investment properties before I ever got married.

My first real estate purchase (a condo I still own in Atlanta) was purchased 10 years before I was married.

It has served as an excellent financial investment and the perfect pied-à-terre ( French for “foot on the ground”; a small 2nd home in another city, typically a condo).

Did I have this in mind when I purchased it? Yes!

I knew that it was a great size and the perfect location for a future investment property- rental or 2nd home.

Mostly importantly, I valued purchasing a property that still allowed me the financial freedom to explore the world.

I wanted to have home ownership but, still have the financial flexibility to pursue my passion for travel.

I believe, one of the best decisions I ever made was buying a property that was well suited for me at that time in my life.

I didn’t purchase a home for a family, I purchased a home for an adventurous single woman.

If you are a single woman that aspire to marry, don’t let your future aspirations get in the way of purchasing.

how much house can I afford

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