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As a real estate
professional, it's my job to make the
real estate buying and selling process as easy as
possible for everyone involved. That means providing quality
information that can benefit you immediately. I care about this
community and whether you’re buying or selling. I want to share some
important information with you that will help you in your next move.
The following reports will not only
SAVE you money, but can
make you money in real estate!
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The Advantages of Loan Preapproval
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Real estate experts tell
first-time homebuyers that it's critical to apply for a loan before
shopping for a home, and it's true; this is an essential first step.
But do you know that it's far better to be pre-approved for a loan
than to be pre-qualified? There are more advantages to gaining
pre-approval than you would initially surmise. When the lender hands
a borrower a pre-approval letter, it means the borrower can: |
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● Save Time by Looking at the
Right Homes
If your real estate agent is sending you automatic e-mail listings
of available homes, you can ask her to change the parameters to more
tightly encompass the selection of homes that you are qualified to
buy. If you're not receiving e-mails from your agent, ask her to
send them to you. Most MLS systems allow an agent to send
clients much of the same data that agents receive. This way, you'll
save time by checking out homes you can actually afford to buy
instead of falling in love with pie in the sky. |
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| ● Spend
More Time Examining the Right Homes |
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By decreasing the inventory of homes to those that
fit your parameters, you can allot more time to thinking about all
the little nuances each home has to offer. Lots of home buyers never
move past the price point when sorting out their preferences, but
now you can devote your energies to looking at the little things
that matter to you most such as whether your SUV will pass through
the overhead space in the garage or smash into the microbeam. |
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● Gain Confidence & Avoid Disillusionment
Now when you find that perfect home, nobody can take
it away from you by telling you that you do not qualify to buy it.
You can minimize anxiety and remove last-minute loan surprises that
could disqualify you. You'll sleep better at night knowing that the
home you selected is yours. Moreover, you can tell your relatives
and friends that the home you made an offer is definitely going to
close and you will not "lose face" with anybody. |
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● Increase Bargaining & Negotiating
Power
Sellers will be more likely to immediately accept your
offer, even if that offer is for less than list price, because you are
giving the seller peace of mind that her home is sold. She can take her
home off the market and place it into pending status with confidence. |
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● Enjoy a Faster Closing Period
Because there is no window period while your loan
application is processed, the lender can speed up the entire processing
procedure. Appraisals can be ordered immediately. It's possible to
shorten a 30-day closing to two or three weeks, which comes in handy if
a seller needs to quickly move and can't decide which offer to accept.
Yours will move to the front if you can accomplish the seller's need to
quickly close. |
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| Because mortgage approval is generally the longest
contingency to satisfy in a purchase contract, it is to your advantage
to obtain a pre-approval letter as soon as you're ready to begin your
search. Lenders will render a decision based on your complete loan
application, employment verification and data from all three credit
reports.
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How Your Credit Score is Calculated
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●Understanding Your FICO Score and How it Affects
Home Buying
Home buyers who are seeking a
mortgage find out early-on that their credit score plays an
important part in the home buying process and in determining the
interest rate that a lender offers.
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●What is a credit score?
A credit score is a number that lenders use to
estimate risk. Experience has shown them that borrowers with higher
credit scores are less likely to default on a loan. |
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●How are credit scores calculated?
Credit scores are generated by plugging the data
from your credit report into software that analyzes it and cranks
out a number. The three major credit reporting agencies don't
necessarily use the same scoring software, so don't be surprised if
you discover that the credit scores they generate for you are
different. |
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●Why are credit scores sometimes called FICO
scores?
The software used to calculate a great number of
credit scores was created by Fair Isaac Corporation--FICO. |
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Use these percentages as a guide:
35% - Your Payment History
30% - Amounts You Owe
15% - Length of Your Credit History
10% - Types of Credit Used
10% - New Credit
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Your Payment History Includes:
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● Number of
accounts paid as agreed
● Negative public records or collections
● Delinquent accounts:
total number of past due items
how long you've been past due
how long it's been since you had a past due payment
What You Owe:
- How much you owe on accounts and the types of
accounts with balances
- How much of your revolving credit lines you've
used--looking for indications you are over-extended
- Amounts you owe on installment loan accounts
vs. their original balances--to make sure you are you paying them
down consistently
- Number of zero balance accounts
Length of Credit History:
- Total length of time tracked by your credit
report
- Length of time since accounts were opened
- Time that's passed since the last activity
- The longer your (good) history, the better your
scores
Types of Credit:
- Total number of accounts and types of accounts
(installment, revolving, mortgage, etc.)
- A mixture of account types usually generates
better scores than reports with only numerous revolving accounts
(credit cards)
Your New Credit:
- Number of accounts you've recently opened and
the proportion of new accounts to total accounts
- Number of recent credit inquiries
- The time that's passed since recent inquiries
or newly-opened accounts
- If you've re-established a positive credit
history after encountering payment problems
- In general, checking to make sure you aren't
attempting to open numerous new accounts
Credit scoring software only considers
items on your credit report. Lenders typically look at other factors
that aren't included in the report, such as income, employment
history and the type of credit you are seeking. |
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How to Improve your Credit Score
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Techniques for Better Credit Reports and Scores
Lenders analyze your credit scores to determine
whether or not to approve a home mortgage, a car purchase and nearly
all other types of loans.
Before lending you money, creditors want to
determine how much of a risk you are—in other words, how likely you
are to repay the money they loan you. Credit scores help them do
that, and the higher your score, the less risk they feel you'll be.
Most increases to your credit scores take place
over time and require an ongoing effort from you. The only true
credit score quick-fixes are to pay down debt and to successfully
dispute negative information on a credit report. |
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Credit scoring software looks at five areas of your
credit reports: |
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● Your Payment History
● Amounts You Owe
● Length of Your Credit History
● Types of Credit Used
● Your New Credit |
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You can improve your credit scores by taking a close
look at your credit reports and charting a plan of action to improve
them. |
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Improve Your Payment History
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● Always pay your bills on time. Late payments
play a major role in driving down your credit score. |
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● If you have past-due bills now, get current
and stay that way. |
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● Contact your creditors as
soon as you know you will have a problem paying bills on time. ●
Try to work out a payment arrangement and negotiate with them to
keep at least a portion of the late notations off of your credit
reports. |
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● If your situation is
serious, see a legitimate, non profit credit counselor. Avoid
the scam artists who promise a quick reversal of your credit
problems. |
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Keep Debt to a Minimum
- Keep your credit card balances low. High
debt-to-credit-limit ratios drive your scores down.
- Pay off debt, don't move it around. Owing the
same amounts, but having fewer open accounts, can lower your score
if you max out the accounts involved.
- Don't close unused accounts, because zero
balance might help your score.
- Don't open new accounts that you don't need as
a quickie approach to altering your debt-to-credit-limit ratios.
That can lower your score.
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Length of Your Credit History
- Time is the only thing that can improve this
aspect of your scores, but you can manage it wisely:
- Don't open several new accounts in a short
period, especially if your credit history is less than three
years. Adding accounts too rapidly sends up a red flag that you
might not be able to handle your credit responsibly.
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Manage New Credit Wisely
- Several credit inquiries during a short period
means you are attempting to open multiple new accounts, and that
lowers your credit scores.
- Credit scoring software usually recognizes when
you are shopping for a single loan within a short period of time,
such as a home loan. If multiple inquiries are necessary, have
them pulled as closely together as possible.
- Checking your own credit report does not affect
your scores.
- Do try to open a few new accounts if you've had
credit problems in the past. Pay them on time and don't max out
your credit limits.
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The Types of Credit You Use
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A mixture of credit cards and
installment loans, loans with fixed payments, can help raise your
score if you manage the credit cards responsibly.
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Having many installment loans
can lower your scores since payments remain the same until
balances are paid in full.
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Don't open new accounts just to
have several accounts or to attempt a better mix of credit.
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Closing an account doesn't
remove it from your report. It may still be considered for scoring
purposes.
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