Louisville Real Estate Blog | Brad Long Real Estate Group | Keller Williams Louisville East

Top 10 Credit Don'ts

THINGS NOT TO DO DURING THE LOAN PROCESS

1.       Don’t Do Anything That Will Cause A Red Flag To Be Raised By The Scoring System. This may include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. Generally, the less new activity on your reports during the loan process, the better.

 

2.       Don’t Apply For New Credit Of Any Kind. Including those “You have been pre-approved “credit card invitations that you receive in the mail or online. Every time that you have your credit pulled by a potential creditor you could lose points from your credit score. Depending on the elements in your current credit report, you could lose anywhere from one to twenty points for one hard inquiry. For lender inquiries as of Jan. 2007, any indicial inquiries count as one incident through a duration of 45 days.

 

3.       Don’t Pay Off Collections or Charge Offs During The Loan Process. Unless you can negotiate a delete letter, paying collections will usually decrease your credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, consider doing it through escrow at closing.

 

4.       Don’t Max Out Or Over Charge Your Credit Card Accounts. This is typically the fastest way to bring credit scores down 50-100 points. Try keeping your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, consider doing it across the board - meaning, pay balances to bring your balance to limit ratio to the same level on each card (i.e. all 30% of the limit, or all 40% etc.)

 

5.       Don’t Consolidate Your Debt Into One Or Two Credit Cards. It seems like this would be the smart thing to do; however, when you consolidate all of your debt into one credit card, it may appear that you are maxed out on that card and the system will penalize you as mentioned in above item #4. If you want to save money on credit card interest rates, consider waiting until after closing.

 

6.       Don’t Close Credit Card Accounts. If you close a credit card account, you may lose available credit and it might appear to the FICO that your debt ratio has gone up. Also, closing a card may affect other factors in the score such as length of credit history. If you have to close a credit card account, think about doing it after closing.

 

7.       Don’t Pay Late. Stay current on existing accounts. Under the new FICO scoring models, one 30-day late could cost you anywhere from 50-100 points. Points lost for late pays may take several months if not years to recover.

 

8.       Don’t Allow Any Accounts To Run Past Due—Even 1 Day! Most cards offer a grace period; however, what they may not tell you is that once the due date passes, that account could show up past due on your credit report. Past due balances can also drop scores by 50+ points.

 

9.       Don’t Dispute Anything On Your Credit Report Once The Loan Process Is Started. When you send a letter of dispute to the credit report agencies a note is added to your credit report. In many cases when an underwriter notices a dispute they may not process the loan until the dispute is removed.

 

10.   Don’t Lose Contact With Your Mortgage And Real Estate Professionals. If you have a question or not if you should take a specific action that you believe may affect your credit reports or scores during the loan process, your mortgage or real estate professional may be able to supply you with the resources you need to avoid making mistakes that could drop your credit score or affect your loan.

 

Any questions about credit or Louisville Real Estate please contact us at The Brad Long Real Estate Group.

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Seven Steps for First Time Home Buyers

SEVEN STEPS FOR FIRST-TIME HOME BUYERS

 

Home buying is exciting and the joy one feels walking into their first home is incomparable. First time homebuyers need to follow certain steps to get on the pathway to homeownership. Following these steps will make your dream of becoming a homeowner in Louisville, Kentucky (or surrounding area) a smooth process.

 

1               Get Pre-Approved? The first step is to talk to a lender.  If you are serious about buying a house, get pre-approved instead of just pre-qualified, that will show buyers that you are serious.  Your lender should be able to tell you what you need to do, give you advice on your credit score, and explain all the details. If you do not understand, feel rushed or confused and asking for clarification doesn’t help, seek out another mortgage professional.  Communication is vital during these steps, and you should feel with your mortgage professional.  If you aren’t, then listen to that. Your Brad Long Real Estate Group agent can provide you with a list of mortgage lenders with a proven track record of providing superior service to our clients.

 

2               Find a Real Estate Professional Since you are reading this on my blog, I am hopeful that I may be your real estate agent in your home-buying endeavor in the Louisville, KY area. Just as with the mortgage professional, you need to find a real estate professional who you can trust, listens to, answers your questions, and guides you through the home buying process with your needs in mind. Communicate openly and honestly with your realtor about your wants, needs, and concerns, and expect no less than for him or her to do the same during the home buying process.

 

Many people have asked why don’t I just call the phone number on the sign in front of the house when buying? While you certainly can call the listing agent on the sign, it is not a good idea to let them write the purchase contract to buy the house because the listing agent is hired by the seller and is representing the seller's interests, not yours.

 

You may ask - how much does it cost to hire a buyer's agent? Crazy enough, it's free to the buyer. Why is that?  Historically, the buyer's agent is paid out of the seller's proceeds; therefore the buyer's agent compensation comes from the seller's pocket. 

 

3               Search for a Home Make a list of needs and wants when home buying. Your needs are those items that are not negotiable—number of bedrooms for your family size, accessibility for disabilities, distance of potential commute, etc. Your wants are those wishes that are not necessary, but which you hope to find—a pool, lots of windows, a den, etc.  Share this list with your realtor during the home buying process, and continue to visualize the house you want until you find one that speaks to you.

 

This website offers many advanced tools to search Louisville MLS listings, including options to search by neighborhood, zip code, price range or map search. Once you have determined the area and price you would like, then you can register for Property Tracker and all new listings will be emailed daily. In many cases, you will learn of these new listings even before most Realtors.

 

4               Visualize When you walk into a house, envision it empty (if it’s not vacant) and then imagine where you would put your belongings.  Where will the couch go, and the entertainment center?  What wall will your bed go against, and how will your clothes fit in the closets?  Then imagine yourself living in the home… Can you see yourself stumbling from the bed to the kitchen for a cup of coffee in the morning?  Can you imagine the walk from the kitchen to the dining table?  Where will you spend your free time at home?  While making a decision about buying a house, stay in tune with your feelings and how well you can see yourself in it. Could it feel like a home instead of just a house?

 

5               Be Practical Your gut feeling is important, but also look at the house with a practical eye. Are the updates needed something you can handle?  Does it have enough storage?  How do its attributes compare with the list of needs you made in step three? These are crucial and honest questions to ask yourself before buying a home.

 

6               Make an Offer You might need a second showing to know for sure, but when you find the house you want, let your real estate professional know. Together, you will put together an offer, and your real estate professional will write it up.  Once again, communication and trust are key, and the competence of your real estate professional is essential in this step. Any mistakes at this step can cost both money and frustration, so if you are at all uncertain, please feel free to seek professional legal advice before you sign any agreement. A good real estate professional will understand and support your decision. Buying a home is the largest purchase most people will ever make in their life.

 

7               Don't Stop There Stay active after the offer is accepted. Once you have a contract on the house, post a list of important dates in a prominent place so you are informed about what steps need to come next.  (Your Brad Long Real Estate Group professional will give you this information.) Then find a good inspector and have the house inspected. The money you spend on this will more than come back to you in the future.  n addition to the inspection, do an inspection of your own about 24 hours before closing.  A good real estate agent will gladly take you through the place one more time to ensure that nothing major changed since you saw it last and that the property is still in the condition of the one you agreed to buy.

 

There’s no place like home! I’m excited for you to get to enjoy the feelings that come with owning your very first home in Louisville, KY.  If you have any questions or concerns about the Louisville, KY real estate market, contact...