First-time Homebuyer tips and resources

Are You Ready?

iStock_000003929033_SmallConsider the following question. Are you ready? The three most important words for buyers also to seriously contemplate when thinking about when considering the purchase of their first home. RESPECT is the acronym I have chosen to assist you on your journey. Respect for the process and all parties in it will give you invaluable insight to navigating a successful path.

R Relevant research specific to your desired markets. Find out what is available in your desired monthly payment range.

E Expectations – reasonable and earnest. What can you realistically afford and do you understand ALL the costs involved?

S Sensible mentality – check your emotions and understand all the steps to achievement of your goals.

P Preparedness and plan-plan-plan. A goal without a plan is nothing more than a wish.

E Education, education on credit, financing, markets, pricing, area data, moving and interim housing costs, and process knowledge.

C Commitment, collaboration and communication with all professionals in your process.

T Timely decision making and responsiveness. Be prompt with decisions upon completing your research and planning.

By enlisting a trusted and respected local real estate advisor prior to making any determined decisions will help you assess your options. The right consultant will be more than happy to help you in the beginning of your process and give you valuable advice and local contacts for first time home buyer education to lender contacts.

rlogoCode of Ethics and Standards of Practice of the National Association of REALTORS®

REALTORS® are subject to disciplinary action and sanctions if they violate the duties imposed by the Code of Ethics. The Code of Ethics is a detailed document that spells out the professional responsibilities of every REALTOR®.

Click here to read the 2016 REALTOR Code of Ethics in it’s entirety.

11 Loan tips

General tips that will help ease the process of acquiring a home loan by improving credit scores or maintaining your good credit.

1. Always pay on time.

No lender likes to lend money to an individual who has a repeated record of missing his payments. This indicates a lack of discipline and poor financial management, and it leads to a bad impression on paper.Whether it was intentional or due to genuine reasons is immaterial. If you have a frequent history of missing monthly installments you will end up with a lower FICO score.This is one of the most important tips to improve credit score: On-time payments improve your credit score tremendously. It carries almost a 40 percent weight on your score. payments.So pay in full and on time; do not become a credit risk. Why should you suffer unnecessary late payment charges and interest? On-time payments improve your credit score tremendously; it carries almost 40% on your score.

2. Keep your credit owed within limits

A good ratio is not having your unsecured credit outstanding above 50 percent of your annual salary. Keep your credit card balances within half of the allowed limit. If you have $10,000 as your limit, then it is wise to restrict your statement amount to $5,000.

Keep your credit card balances within half of the allowed limit.

3. Understand that no credit history does not equate to good credit history.

If you do not have any history of credit account and payment history, you will be viewed as an unknown credit risk to lenders. Plan wisely and seek advice from a mortgage professional on a plan of action.

4. Use two credit cards if you are a definite credit card spender

This is good and bad advice at the same time. FICO does not consider spending money on two credit cards as one. But if you have two credit cards, you can keep your usage percentage in control.For example, if you have a credit card with a limit of $20,000, and you charge $15,000 on it, you’ve used 75 percent of your credit limit.Now if you split your amount into two, and spend $7,500 each, then the percentage of usage will be around 37 percent. So it helps you in the eyes of FICO.Now, don’t go on a credit card shopping spree.

5. Maintain a good mix of good and bad loans — AKA, a healthy credit mix

Home loans and business loans are considered good loans. Personal loans and credit are considered bad loans.That is why investing in a home loan if you are a spendthrift is a better decision. You will have a good credit mix and be building an asset.

6. Pay high-interest loans and small loans first

It is a prudent decision to pay your home loans over longer periods. Pay off your personal loans, credit cards and private loans first, as they tend to have a higher interest (typically 15 percent to 36 percent) with no asset creation.

Home loans, on the other hand, are just 9 percent to 11 percent, but they build an asset. This is one of the underutilized logical tips to improve credit score.

7. Close your unwanted savings accounts

Many people tend to abandon their savings accounts without closing them. If you have less than your Minimum Average Balance (, it will start to affect your credit score. Also, when you finish a loan, it’s imperative to get the loan closure certificate.

8. Check your credit reports regularly

Credit reports can be availed for a minimal cost. You can obtain them from the official FICO site. Just pay online and check your credit score at least once in a year, so that you can seek clarification on any mistake and have it sorted. There have been cases when banks report you to FICO by mistake.

9. Monitor your co-signed joint accounts properly and do not co-sign on any new loans.

In instances of co-signing a loan or maintaining a joint credit account, be careful when dealing with someone outside your close family. You need to monitor the statements closely to make sure everything is in order.There is no use complaining if you chose the wrong joint holder who was careless.

10. Communicate with lenders

This is also one of best tips to improve credit score. People often know that they would not be able to pay their bills in advance. Regardless, they do not take any action. If you know you will not be able to pay on time, see if you can  negotiate with your lender -communicate! Lenders may be willing to re-negotiate terms if they see you as an earnest and honest customer.

11. Understand that pre-qualification is not the same as loan approval

Finally, once you are in the home loan approval process, understand that pre-qualification is not the same as loan approval. In the beginning of the process lenders do not scrutinize your credit history; they only provide top level approval based on your income, expenses and credit score. Do NOT open up any new credit accounts at retail stores offering discounts, credit card offers, car loans, etc… keep your life simple and in balance!