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Credit Journal, Part 5

The next thing is tackling collections and charge offs. I’m still researching this topic.

What I do know, if you plan to pay these off then make sure you have correspondence in writing for each collection agency (CA). You can also suggest a pay to delete agreement with the collection agency. If you pay or negotiate a settlement on the debt then they agree to remove the collection from your report for good.  

I have a single collection in dispute right now with TransUnion because I didn’t know what I was doing. I’m waiting to see what happens and I’ll let you know. It may come off and raise my score and then come back on the future. 

A credit repair firm can dispute everything and get it removed but the collection agency may put it back on your credit report. Now that sucks.

Talk to you soon,

Leona.

If you or someone you know is thinking of selling a home, or buying a home or investing in real estate contact me. I love referrals.

Leona@LeonaTurner.com

http://leonagreenlowturner.kw.com

www.facebook.com/BayAreaRealEstateToday

 

How much money do I need to buy a home?

Earnest Money Deposit

An earnest money deposit (EMD) sits in escrow during the duration of the purchase. EMD is about 3% of the purchase price. Escrow is an impartial company that holds the deposit. If the transaction is cancelled the buyer and seller must agree, in writing, to return the deposit to the buyer.

Inspections

The first two weeks of the purchase is a time for inspections. Normally, inspections are paid by the buyer. Your Realtor will review all of the inspections available. The most common inspection is the home inspection. The cost of the home inspection is based on the size of the home. It is a safe bet to budget about $600. Other inspections can include roof, pest, structural and sewer.

Down Payment

The next step in the process is your down payment. Down payments can range between 3% and 20% of the purchase price. For example, if your home is $600,000 then at 3.5% your down payment would be $21,000.

Closing Costs

Another step is the paying for the closing costs. Closing cost can range between 2% – 5% of the purchase price. FHA loans typically have lower down payments than conventional loans. FHA loans often has an additionally monthly fee called Private Mortgage Insurance or PMI. PMI amounts vary based on the amount of the purchase price.

Talk to you soon,

Leona.

If you or someone you know is thinking of selling a home, or buying a home or investing in real estate contact me. I love referrals.

Leona@LeonaTurner.com

http://LeonaGreenlowTurner.kw.com

www.facebook.com/BayAreaRealEstateToday

Credit Journal, Part 4

Also, on 7/30/2016 I had “The Breakthrough”. I went Capital One to apply for credit. The cool thing is Capital One has a pre-approval page: https://findmycard.capitalone.com/en/PageVersions/LandingPages/LP_ONE_V01.aspx

You can find out if you are pre-approved for a card without a hard pull on your fico score. I decided to try and I was pre-approved for two cards. Once I applied I did get the hard pull but it’s worth it once you get credit. I heard that once you make 5 months of on time payments you gain a credit line increase.

This approval allowed me to avoid a secured credit card. There is nothing wrong with a secured credit card. Why use your money when you don’t have to?

How do I get credit without a hard pull on my credit? 

There are several sites where you can see if you’re pre-approved before you apply: (Thanks DOC)

The other factor is not applying for too much credit all at once. Get one and wait 6 months to a year for another one. I applied because I wanted to see what I could get. In hindsight, I would have leaned more toward a Visa or MasterCard. Credit card offers are not going anywhere. You have plenty of time.

Talk to you soon,

Leona.

Leona@LeonaTurner.com

http://leonagreenlowturner.kw.com

www.facebook.com/BayAreaRealEstateToday

I got to thinking about questions I receive from buyers on a regular basis.  

Question 1 – I think I’m ready to buy a home, where do I start? 

The first thing is to find out how much house you can afford. Your agent will need a pre-approval letter from your lender to start looking for properties. Lenders can come from anywhere banks, credit unions and mortgage brokers. If you don’t know anyone, ask around. Your Realtor will probably have a few referrals as a starting point. 

Before meeting with a lender, you’ll need to gather the following documents:

  • 2 years tax returns (all pages)
  • 2 months bank statements (all pages)
  • 1 full month of tax returns

 Additionally (if applicable):

  • Statements from retirement accounts
  • Statements from investment accounts
  • Business records

 ** Note: Before and during the process, do not open new credit or close credit until advised by your lender. They will know what will strengthen or weaken your loan package. 

Your lender will run your credit and look at all of your documents. Be prepared to answer questions and/or provide additional documentation. Your lender will give you a pre-approval letter that says how much house price you can afford. The Realtor now knows what type of homes to show you that fit in your budget. The Realtor needs the pre-approval letter to present an offer on your new home.

Talk to you soon,

Leona.

If you or someone you know is thinking of selling a home, or buying a home or investing in real estate contact me. I love referrals.

Leona@LeonaTurner.com

http://LeonaGreenlowTurner.kw.com

www.facebook.com/BayAreaRealEstateToday

Credit Journal, Part 3

Let’s get into Credit 101 

Why do we need credit? 

Where you live, work and attend school can all be affected by credit. What you drive is also affected by credit. I know there are some that believe cash is king. If cash is king, then credit is certainly queen. Eventually, having or not having credit will stare you in the face at some point. It may be as simple as getting a job. 

I always wanted to be one of those people that can charge all my monthly expenses (utilities, fitness, gas, and food) on their credit card and then pay it off at the end of the month. I’ll get there very soon. 

In short, we need credit to get most of the big things we desire in life and sometimes the small things. 

Credit Inquiries 

When you apply for credit (someone asks for your full social security number) and an inquiry is made against your fico score. This inquiry will drop off in 24 months. If you’re shopping for a car loan, apartment or mortgage then you may have several inquiries at the same time. The credit reporting agencies counts this as one inquiry. Keep the number of times you apply for credit very low. And be selective on who runs your credit and why.  

Utilization 

Utilization is how much of your credit you use. Keep your utilization as low as possible. If you have a credit line with a $2,500 credit limit, pay your balance down to $750 or less. For most of you, that will pop your credit score significantly. 

Payments 

Pay your credit lines on time. I don’t care if you have to cross the United States to make a payment get it in on time. Years ago you had to mail in the payment and you were at the mercy of the postal service and the credit companies to post your payment by the due date. What I found out later was some credit card companies purposely delayed payment or dropped payments in the trash to make sure you had a late charge. Hmmm . . .

Talk to you soon.

Leona.

Leona@LeonaTurner.com

http://leonagreenlowturner.kw.com

www.facebook.com/BayAreaRealEstateToday

 

 

Credit Journal, Part 2

End of July 2016

As of 7/30/2016, I had 7 credit cards with 7% utilization. My score increased by 18 points. So now Credit Karma has 557 on TransUnion and 567 on Equifax.

The key factors in having good credit:

  • Low utilization <30% of total balance – Don’t get a card and charge it up to the balance unless you’re going to pay it off before it’s due)
  • Length of credit history (years preferred more than months)
  • On time payments (Not negotiable. Pay on time all the time.)
  • Low credit inquiries (< 3 hard pulls)
  • Wide variety of credit (credit cards, loans (car, mortgage, small loans at a bank)

Your credit score may not be as low as where I started and that’s great. Unless you’re at an 850 fico you can always improve.

Short post today. Be encouraged about credit, it can be your friend.

Talk to you soon,

Leona.

Leona@LeonaTurner.com

http://LeonaGreenlowTurner.kw.com

www.facebook.com/BayAreaRealEstateToday

 

Credit Journal, Part 1

Lately, I have been obsessed with personal and business credit. I’ll be transparent and say my scores were not the best. I’m researching, testing and succeeding in raising my credit score. My score has increased by 86 points (on Credit Karma) since July 6, 2016.

In large part, I must thank http://www.Credit Karma.com for giving me a free, painless look at my score. The scores on Credit Karma are not the same as those pulled at car dealerships and mortgage companies but it was a way for me to begin this journey. As a Realtor, the biggest challenges I see for new homeowners are down payments and credit scores. I’m documenting my journey because I know someone will be helped.

July 2016, The Beginning 

I was overwhelmed by credit in college. It was so easy to get a credit card. My family did not teach credit management. I never knew what to do. No blame. At the end of June 2016, my scores were not looking so good. Credit Karma (CK) says my scores were 539 on TransUnion and 552 on Equifax. In actuality, they were a lot lower; they were in the high 400s. I have collections and charge offs. (really transparent here) CK suggested I open two credit lines or in the industry we call them trade lines. The last installment loan was my then new car that I paid off 6 years ago.

The first thing to do is get some credit. Now with scores like mine, a secured credit card was is in my future. If you don’t know what a secured credit card is, it’s going to a bank such as Wells Fargo and deposit money for a secured credit card. The balance of the card is based on how much you deposit. It can be as low as $200. After about a year of on time payments, they return your deposit and now you have an unsecured line of credit.

I found a second method that may not be the best overall but it has been working for me. The first card I got was a clothing store that I will call STORE CARD A. I’m not a big shopper but it was a start. I went to their store online and I found a few items. As I was going to pay, a pre-approved offer popped up for $500. Two great things occurred:

  1. I had a $500 credit line
  2. It was not a hard pull on my credit (A hard pull on your credit is when your score drops after a company runs your credit. Your score can drop 0 – 10 points in some cases.)

In my research I found my credit use or utilization should be under 30%. I charged $150 (exactly 30%) which included tax and shipping.

I also got another clothing store card, STORE CARD B. The balance was a lower at $200. I mentioned this only to emphasize I bought one thing that was $60 (30%) to keep my utilization low. My goal is to get larger credit lines that are not store cards. I immediately paid STORE CARD B off. I made a large payment on STORE CARD A.

At the end of July, I had my first big score increase of 18 points.

This is great two lines of credit. Now what?

More journal coming up . . .

Talk to you soon.

Leona@LeonaTurner.com

http://leonagreenlowturner.kw.com

www.facebook.com/BayAreaRealEstateToday