It’s important to check your FICO score early on in the home-buying process, because it takes time to improve a low score. While you’re entitled to a free credit report per year, you’ll have to pay a small fee for the credit score. They are two different things. You can purchase your score from MyFICO.com — this is the company that actually designed the FICO scoring model.

But what if you check your score and find out that it’s low? You could qualify for certain types of loans with a score in 600 range, but you’ll be much better off in the mid- to upper-700 range. The question now becomes: How do I Improve my score? And that brings us to the purpose of this article.

5 Good Sources of Credit Information

Here are five websites worth visiting, if you want to learn more about your credit reports and scores:

1. www.myfico.com — We touched on this website earlier. This site is owned by the Fair Isaac Corporation, the company that created the credit-scoring model used by most lenders. They have plenty of educational articles, as well as a forum where you can post questions. It’s well worth a visit.
2. www.homebuyinginstitute.com/credit.php — On this page, you’ll find a collection of more than 100 articles relating to consumer credit. This collection was compiled over a two-year period, as readers sent in their questions. If you have a question about credit reports and scores, you’ll find the answer on this site.
3. www.annualcreditreport.com — This website is jointly owned by the three credit-reporting companies (TransUnion, Equifax and Experian). This is where you should go to request your free reports. This is the only site that is regulated by the Federal Trade Commission.
4. www.ftc.gov/freereports — Why do so many people offer “free” credit reports, and then try to charge you for stuff? It’s a marketing strategy referred to as bundling, and you can learn the truth about it on this website.
5. www.bankrate.com — This site is a treasure trove of helpful advice. In addition to credit tips, it explains the mortgage process in great detail. Start with a keyword search, or click on the “news and advice” link.

Research is the first step to home-buying success. The five resources listed above will help you get started on the right foot.

Here are five of the most important things to keep in mind when you start shopping for a mortgage loan — an even long before that.

1. Mortgage lenders will check your score.

When you apply for a home loan, you can be certain that the mortgage lender will review your credit score — among other financial factors. It’s not the only thing that will determine their decision, but it is one of the top factors of the mortgage-approval process.

If your score is low, you won’t even get your foot in the door. You will be rejected right from the start, or you’ll have a much harder time finding a willing lender. If your score is high, you will have more options and better interest rates available to you.

2. Your score partly determines the interest rate.

The interest rate is one of the components that will make up your monthly mortgage payment. Obviously, the principal amount you borrow is the largest factor that determines your monthly payment. But the interest rate plays a major role as well.

If you have a high credit score, you are more likely to get a low rate on your home loan. This in turn will reduce the amount you have to pay each month toward the mortgage. On the contrary, a bad score generally means a higher interest rate — and therefore a higher monthly payment as well. How much higher, you ask? That’s our next point.

3. A good score can save you thousands of dollars.

The difference between a good and bad credit score can greatly affect the interest rate you receive from the lender. It could be the difference, for example, between a rate of 5.5% and 7.2%. These may seem like small numbers on the surface, but when you apply them to something as large as a mortgage loan, we are talking about thousands of dollars over the life of the loan.

4. Your score comes from your own actions.

Credit scores are not arbitrarily assigned to consumers. Your score comes from the information contained within your credit reports. You have three of these reports by the way — one for each of the consumer credit-reporting bureaus.

So where does the information within your credit reports come from? It comes from your own personal actions, your financial history, and your previous use of credit. In other words, it’s a snapshot of how well (or how poorly) you have managed your credit in the past. Good behavior creates a good score, and bad behavior has the reverse effect. It doesn’t come out of thin air — it comes from your own actions.

5. There are no mysteries to improving a credit score.

There are a lot of companies out there who would like you to think that it takes some kind of special knowledge to improve a credit score. These companies make money from people who don’t realize they can handle it for themselves. So let’s set the record straight right here and now. You are the only person who can improve your credit score, and you can do it without paying any other company for assistance.

Pay all of your bills on time, maintain low balances on your credit card accounts, and use credit sparingly. These three things alone can help you earn and sustain a good score for years to come. And there’s no certainly mystery in that!

For a long time, there has been a predatory side of the credit industry as well. In particular, I’m talking about credit repair companies and the bold (and often false) promises they make.

You Can Fix Your Own Credit Reports

Let me start with the absolute truth at the core of my argument. There is no company on the planet that has special powers over your credit report. The only thing these “repair” companies can do is help you make corrections to your credit report, which is something you can easily do for yourself. In fact, there are hundreds of articles online (from reputable sources) that can help you make such corrections. And you can do it for free — without spending a dime on anything.

Credit Repair Scams Tracked by the FTC

A lot of the so-called credit repair companies will make bold promises about what they can do, and they will make it seem as if they have special access to the reporting bureaus. This is simply not the case. How do I know this? Because the FTC investigates more complaints against this industry than just about any other industry. Visit the FTC website and do a search for credit repair, and you’ll quickly see what I mean.

My best advice is to scratch the word “repair” from your credit dictionary, and replace it with the word “counseling.” Better yet, replace it with the phrase nonprofit counseling, because there are plenty of these services available all over the United States. A nonprofit credit counselor will help you make corrections to your credit report and otherwise improve your financial situation, and they will do it for little or no cost.

A credit repair company, on the other hand, will generally ask for upfront fees because they know they cannot deliver on their bold promises. Consider yourself warned and educated on this dirty little secret of the credit industry.

But did you know that most of the offers for the so-called free reports are actually lures to sell other products? It’s true, and that’s the subject of this eye-opening article — the latest installment of our dirty little secrets of the credit industry.

Free Credit Reports Online - The Real Source

Let me start with the most important premise of this article, and then we can build from there. By law, you are entitled to one free credit report per year, from all three of the reporting agencies (Experian, TransUnion, Equifax). When I refer to “laws” in this context, I am talking about the Fair Credit Reporting Act. This is a federal law enforced by the Federal Trade Commission, and it regulates everything related to credit reports and reporting.

But there is only one official website that’s mandated and regulated by the FTC, and that is where I recommend you go to get your free credit reports online. That website is AnnualCreditReport.com.

So what is the fishing bait I mentioned in the title of this article, and what does it have to do with free credit reports online? Well, a lot of companies offer your free reports through their websites — but only when you sign up for some kind of credit monitoring or identity-theft prevention service. So while there is only one official website where you can get your free reports, there are literally thousands of other sites that offer freebies in conjunction with some kind of monthly service.

I’m not saying these monthly services are bogus. On the contrary, some of them do offer a good level of protection against credit fraud and identity theft. All I’m saying is that you can get your free credit reports from all three bureaus once a year, without signing up for anything at all. It’s required by law, and you can do it through the website I mentioned earlier in this article.

Are you planning to buy your first home in the near future? If so, you should reading up on homeowners insurance as well. Your mortgage lender will require you to have a home insurance policy prior to closing day. In fact, you’ll probably have to bring the policy with you when you close on the home.

This is one of the many things a first-time home buyer should know about homeowners insurance. Here are ten more things you should know…

What to Know About Homeowners Insurance

Getting a homeowners insurance policy is harder today than it was a few years ago. Our economic recession has had a lot to do with this. Everything is harder to get these days — mortgage loans, car loans, insurance coverage, etc. So you may have to shop around to get the kind of coverage you want, and you should definitely get multiple quotes to compare the cost from one provider to the next.

A couple of definitions you should know: The homeowners insurance premium is the amount you pay for coverage. The deductible is what you will pay in the event of a claim, before the insurance company will pay the rest.

Premiums and deductibles generally have an inverse relationship. That is, you can lower your premium by raising your deductible. This is a strategy recommended by many in the finance industry. The Insurance Information Institute says that “If you can afford to raise your deductible to $1,000, you may save as much as 25 percent [on your premiums].”

In the U.S., the average cost of a homeowners insurance policy is around $800 per year. This is for the premium. The deductible varies from one policy to another and can be raised or lowered by the homeowner.

Most homeowners insurance policies do not cover floods. So if you live in an area that’s prone to flooding, you should get a separate policy (or an add-on) for flood insurance. Visit Floodsmart.gov to learn more about this kind of coverage.

When choosing a policy, you will probably have to choose between replacement cost and actual cash value. These terms relate to the contents of your home, but they are two different things. Replacement cost coverage gives you more protection than cash value, because it covers the cost of replacing items even if they cost more than when you bought them (appreciation). Cash value only covers items up to the amount you paid.

You can get quotes for a homeowners insurance policy online, which will save you plenty of time and energy. This is also a great way to compare policies of multiple insurance companies at once.

Learn the Basics and Shop Wisely

These are the basics of homeowners insurance policies. There is certainly more to know about this subject, but the information presented above will give you a good foundation of knowledge. To continue your research, you might want to visit one (or more) of the following websites:

• www.insureme.com
• www.iii.org
• www.homebuyinginstitute.com
• www.farmers.com

I hope this article helps you understand the basics of home insurance, and I wish you well in your home buying process. Good luck!

So, what is the best way to begin your quest for a new home? In truth, any way you begin the process is a good way, because the most important thing is to get started. After all, you will learn a lot as you go. But there are some things to keep in mind:

Do the Proper Research

Buying real estate can be an overwhelming experience for the first-time buyer. But you can make the process much easier simply by understanding it. Start with the lingo. By learning the terminology associated with home buying and mortgage, you will make smarter decisions along the way.

Set Your Budget

The best way to begin looking for a home is to first sit down with a mortgage lender to determine how a high a mortgage you can afford and be approved for. Remember, there is a difference between the loan amount you can be approved for and the amount you can actually afford. So in the end, only you can determine your home buying budget — not a mortgage lender.

When dealing with a mortgage lender you will want to provide him or her with an understanding of what mortgage payment you are comfortable making so they can give you a sense of the size of the mortgage that equates to, based on your credit, income and other factors.

Taking this step first will help “frame” your home search so you are only looking at homes within your budget range. Many first time homebuyers fail to take this step and therefore waste time and energy looking at homes that are well above their budget.

You can find plenty of websites that offer mortgage calculators, and these tools are a good place to start when determining your budget. Just keep in mind that the one variable you can never predict in advance is the interest rate. Only by speaking to a lender can you get a full mortgage quote that includes the interest rate (based on your credit history).

Get Pre-Approved for a Mortgage

Another reason you may wish to start with speaking to a mortgage lender is so you can be prepared to show a pre-approval letter to the seller. This gives them the confidence that you can buy their home, which is especially important for homes where more than one buyer makes an offer (i.e. a seller’s market). Do not confuse pre-qualification with pre-approval. Pre-qual is an informal process in which the lender tells you how much of a mortgage you might qualify for. Pre-approval, on the other hand, is a more formal review of your finances and is likely to reflect the actual loan amount the lenders extends to you. In other words, the person selling the home will pay more attention to the pre-approval letter.

Though there is no wrong way to begin a search for a new home, meeting with a mortgage lender first may be the best way to begin your search and find your dream home. Just remember to always keep an open mind when visiting each property and envision the possibilities. You must also stay realistic about your finances and do your best not to over-extend yourself by purchasing a home beyond your means.

This is a frequently asked question among people buying a home (especially first-time buyers), so it’s worth a thorough examination in this article. In fact, the first half of this question pertains to consumers in general, because everyone can benefit from knowing the “ingredients” that make up a credit score.

Let’s begin by discussing why credit is important for home buyers in the first place. When you apply for a mortgage loan in order to pay for a home, your mortgage lender will examine your financial history from several angles.

For one thing, the lender will review your debt-to-income ratio, which is a comparison between the amount of money you make each month and the amount you owe each month (car payment, credit card bills, other loans, etc.).

And, of course, the lender will also examine your credit scores. Note that I mentioned “scores” in the plural sense. Though most people don’t realize it, you actually have three credit scores, one for each of the credit-reporting companies (Experian, TransUnion and Equifax).

How Your Score is Created

Your credit score is derived from your credit reports, using a special scoring model developed by the Fair Isaac Corporation. You’ve probably heard the acronym “FICO” before? Well that’s what it stands for … Fair Isaac Corporation.

Your history of payments on things like credit cards and car loans is a major part of your credit score. In fact, past payment history is said to account for about 35% of your overall score. If you have a history of paying bills on time, this will help your score. On the other hand, if you miss payments on a regular basis the opposite will be true.

It only makes sense why this history would be important to mortgage lenders, but it shows how you’ve performed over the years in terms of paying back loans. This is extremely relevant to somebody who is considering loaning you money!

The total amount of debt you have is another big component of your credit score. For example, if you have a lot of debt (perhaps more than you can afford to pay off), then your score will reflect this. And it probably won’t help your cause when applying for a mortgage loan.

So with this in mind, two of the best things you can do to improve your score (if it needs improving) are paying all bills on time and minimizing your debt.

But what you may not know is that many of the properties that get foreclosed upon end up being sold at real estate auctions for less than market value. What this means to you, as a home buyer, is that you can often save a lot of money by purchasing a home at auction (instead of buying it through a traditional real estate transaction).

With that in mind, I would like to offer you 21 important points about this topic. There are some of the things you should know before attempting to buy a home at a real estate auction.

21 Things You Should Know

1. The process leading up to a foreclosure can last up to five months. It starts when the homeowner defaults on the loan, but it can drag on through various stages, depending on what state you are in.
2. Because of this lengthy process, you need to be flexible, patient and persistent, all at the same time.
3. At some point, the lender will file a notice of default against the homeowner, which formally begins the process of foreclosure.
4. From a legal perspective, there are two types of foreclosures — the judicial and the non-judicial. As you would imagine, the former takes place in court and the latter takes place outside of court.
5. Most foreclosures in this country are of the non-judicial variety, meaning they never go to court before a judge.
6. The non-judicial variety is also referred to as a “power of sale” foreclosure. It allows the trustee to sell the property more quickly (on behalf of the lender) by avoiding a court process.
7. During the pre-foreclosure stage, the homeowner may work with the lender to get back on track with his or her mortgage payments.
8. Also during this stage, the homeowner could sell the home before the bank forecloses on it, typically through what’s known as a real estate short sale process.
9. If the homeowner fails to (A) get back on track with mortgage payments or (B) sell the house via short sale, the property will move along the path to a real estate auction.
10. About 20 days before the real estate auction is to take place, a notice of sale will be posted for public viewing.
11. In most cases, the notice of sale is posted at the county courthouse (in the county where the foreclosed property is located).
12. In most cases, the actual auction will also take place at the county courthouse.
13. In addition to the notice of public sale (which is a minimum requirement), the lender will announce the auction event through other channels as well, because…
14. The lender wants a good turnout at the event, because having a lot of qualified bidders will increase the likelihood of a quick sale.
15. The lender wants a quick sale above all else, because they are losing money and wasting other resources by keeping the non-performing (unpaid) loan on their books.
16. In true auction fashion, the attendees will bid on the property and it will eventually be sold to the highest bidder.
17. After the home is sold, a deed will be given to the successful bidder. This person is now the new owner.
18. The starting price for a home being sold at auction is normally based on the amount owed to the lender (combined with other expenses the lender might have incurred when foreclosing on the property).
19. Overbidding is a common mistake among first-time attendees. This will drive up the price of the home and defeat the purpose of buying through an auction. The purpose for investors is to obtain a property below market value.
20. In most scenarios, attendees must have financing lined up before they will be allowed to bid on a property. For obvious reasons, real estate auctions are typically cash-based.
21. Most homes sold in this way are sold as-is with no warranties of any kind. So if you have the chance to inspect the property before bidding on it (even if it’s just a cursory walk-through), take that opportunity.

Obviously this article does not cover everything you need to know about buying a home through a real estate auction. Entire books have been written on the subject, and you should read those too. But this article will help you understand the basic process that takes place, and therefore shall serve as a good jumping-off point for your further research.

With that in mind, I recommend you print it out and highlight the areas where your knowledge is lacking. Then, learn as much as you can about those areas. Good luck!

But what if you can’t sell your home during the spring or summer? What if it’s just not in the cards? Perhaps you cannot afford the home any more and you need to sell it fast, regardless of the season. Or maybe you have a job transfer that requires you to move during the winter months.

Whatever the reason, you need not despair. While there are certain challenges to selling a home during winter, they do not by any means make it impossible. On the contrary, if you follow the selling techniques and tips in this article (and the advice provided by your real estate agent), you should be able to sell your home in the winter nearly as easily as you would in the summer.

Contrast the Cold With the Warmth

Emotions play a big role in the home buying process. Granted, the buyers will be most concerned with the size of the home, the number of rooms, and other tangible items. But “gut” feelings and first impressions go a long way as well. So even in the coldest winter months, you can put this knowledge into practice. In fact, you can even take advantage of the winter cold!

The best way to do this is by showcasing the warmth and coziness of your home. By doing this, you will create a favorable first impression that the buyers will take with them throughout your house. Let’s look at an example of this concept in action.

Imagine This Realistic Scenario

Local home buyers John and Jane visit your home while house hunting. It’s cold outside, with wind and rain on top of that — the kind of conditions that make you want to hunker down someplace warm. John and Jane open the front door and enter the home. The house is well lit and exudes warmth. Candles burn atop the mantle. A fire crackles softly in the fireplace. The smell of gingerbread cookies (recently baked on offered on a glass plate) permeates the air.

Doesn’t that feel inviting? It will be the same way for buyers. So just by showcasing the warmth of your home, you have increased the likelihood of selling it. You are creating a favorable first impression by literally welcoming the buyers in from the cold.

You can think about it in terms of both psychology and physiology. The first physical impression will be one of warmth and relaxation, just as soon as the buyers walk in. This will lead to a favorable mental impression as well, and the buyers will carry this impression with them through the rest of the home.

Conclusion

Some people will tell you that selling a home fast during winter is impossible. We say it depends upon two things — (A) the amount of effort you put into it, and (B) the type of real estate market you are in. So one cannot say across the board that selling a home fast in winter is impossible. It is a case-by-case situation. Use the tips provided in this article, follow the expert advice of your real estate agent, and you have every chance of selling your home during winter!

But this policy protects your investment in the home, as well. It gives you peace of mind that, in the event of a loss, you will be covered in some form or fashion. So you should make sure you get solid coverage from a reputable insurance provider.

With that being said, it sure is nice to save money wherever possible. And this goes for insurance policies as well. Here are some of the ways you can lower the overall cost you pay for a homeowners insurance policy.

Compare Insurance Companies

When you compare one provider to another, you are doing two important things at once. First, and most obvious, you are finding out who offers the lowest rates for a comparable level of coverage. Secondly, you are learning about the different types of coverage these companies provide, including the many components that make up a policy, the terminology associated with it, etc. Both of these items are important when trying to lower the cost you pay out of pocket.

Save Time by Using the Internet

The good news is that you can conduct much of the above-mentioned research fairly easily, just by using the Internet. In the past, you had to make a lot of phone calls (or even office visits) to compare insurance companies and policies. There are many big insurance websites that allow you to do this. But as always, watch out for scam websites that ask for too much personal information up front.

Another benefit to getting a home insurance quote online is the speed factor. Using the Internet, you can accomplish in a few hours what used to take a few days or even weeks.

Improve Your Credit Score

These days, in the wake of the subprime mortgage crisis of 2007 - 2008, it’s more important than ever to have a good credit score. For one thing, mortgage lenders require that borrowers have higher scores these days to get the best loan rates. But there’s another good reason to maintain good credit. Many insurance companies are beginning to use this factor when determining the price for policies.

Raise Deductible to Lower the Costs

The deductible is the money you would pay toward a loss before your insurance policy would cover the rest. If you have coverage on your car, you are probably familiar with the concept of deductibles. It’s the same basic concept with a homeowner policy.

You can lower your premium by raising your deductible amount. Many financial experts recommend doing this as a way of lowering premium costs. The logic is that you know for certain that you’ll pay the premium on your policy, but there’s only a small statistical chance of suffering a loss and having to file an actual claim. So this approach seeks to lower the amount you know you’re going to pay (the premium) by increasing the amount you may never have to pay (the deductible).

Purchasing insurance for your home can be a balance between cost and coverage. You want to control the former without sacrificing the latter. I hope this article has given you the knowledge and confidence you need to accomplish these goals.