Homeowners Tips

Credit Scores Not Always On The Number

By Eileen Ambrose, Tribune Newspapers

Everyone’s got your number — a credit score, that is — and as a savvy consumer, you might want to find out exactly what they’ve got.

This three-digit number tries to predict whether you are a credit risk and can dictate the terms you get on credit cards, mortgage loans and insurance premiums. Once secret, scores are now widely pitched by companies, often for a price.

But the score you buy might not be anywhere close to the one your lender or creditor uses. Even a small difference could keep you from getting the terms you expected.

“They show you a score but don’t tell you it’s not the one that’s used by the lender, or not even used by a majority of lenders,” said Evan Hendricks, author of “Credit Scores & Credit Reports.” “That ain’t right.”

Scores and credit reports wield increasing influence on our financial lives. That’s why Congress has been looking into how they are created and used.

There’s also been a push on Capitol Hill to make credit scores more accessible. A provision in the House financial reform bill would allow consumers to buy the scores used by creditors. And next year, federal regulations take effect that could make free scores available to consumers applying for credit.

Credit scores remained a mystery until about a decade ago, when legislative pressure forced mortgage companies and credit bureaus to share scores with consumers.

Now they flood the marketplace. Fees run about $15 for a score and credit report, or $15 to $40 a month for a service that provides scores, reports and other features.

FICO is the oldest and most widely used score by creditors and lenders.

The three major credit bureaus, Experian, Equifax and TransUnion, created the VantageScore four years ago. Consumer advocates say it’s not broadly used by creditors, though TransUnion spokesman Steven Katz said many of the top financial institutions and credit card issuers use it.

There also are knockoffs, or so-called FAKO scores, that are purely educational and sold only to consumers.

Creditors select the score they want to use. It could be one that’s tailored for a specific product, such as autos or credit cards and not sold to the public. Or they can supplement a score with their own model.

Mortgage brokers find the scores a consumer buys can be 30 to 100 points higher than the FICO they use, said Liz Pulliam Weston, author of “Your Credit Score.” That can mean “not only don’t you have a good score, but you’re subprime,” she said.

Some creditors adjust every 20 points, Hendricks said. If you buy a score that says you’re a 740, but the lender is looking at one that pegs you at 720, the interest rate could be a quarter-point higher than you expected, Hendricks said.

If you’re just curious, try one of the free credit scores through Quizzle.com, CreditKarma.com and Credit.com.

But if you plan to refinance or make a big purchase using credit, buy your score at least three months in advance so you have time to improve it. (To boost a score, pay bills on time, avoid new lines of credit and reduce credit card balances.)

Buy the FICO score because it’s likely closest to the one your lender will use, credit experts say. Go to myFICO.com to get scores based on a TransUnion or Equifax report for $15.95 each. (Consumers no longer can buy a FICO score based on an Experian report, though lenders can get this.)

Get both FICOs in case the results vary significantly, a sign that one report holds more negative information than the other, Hendricks said.

“We focus so much on the credit score, we forget the score is driven by the report,” said John Ulzheimer, president of consumer education for Credit.com.

What Is A Lease Option?

Lease options were popular financing instruments in the late 1970s and early 1980s and were primarily used as a way to circumvent alienation clauses in mortgages. However today it has become one of the ways in which a person with low credit or credit problems can buy a home.

A lease option is a lease contract and a purchase contract combined together. A lease gives the tenant or the renter the exclusive use of the property for a specific period of time. An option gives the right not the obligation to buy a specific property at a specific price on or before a specific date. It is a grant of the right to purchase property, at set price and terms, from the owner of the property. The person who receives the option can purchase the property during a set period of time agreed to by both parties when they enter the option but is not bound to purchase.

The basic philosophy behind lease option is that you rent the home and have an option to buy it at a set price by a set date. Generally there is a non-refundable deposit which could be $1,000 or $10,000. This is also called option fee. The option fee is applied towards the purchase price when you close the deal. If you do not exercise the purchase option, you lose the deposit. Generally a part of the rent is applied towards the purchase price to enable you to more easily come up with a sufficient down payment to get reasonable financing terms.

Lease options are becoming increasing popular with those that have bad credit problems and can not normally qualify for a home mortgage loan. To qualify for a home mortgage loan, you have to fix your credit situation first. Lease options provide that solution

Seven Ways You Can Make Your Home Green and Save The Environment

You can find all kinds of eco-friendly products being sold on the market today. If you want to go green, you can make little changes or even big changes to make an impact on the environment. However, each consumer can make a carbon imprint toward saving money and the environment. Whether you want to go green before you purchase a product or if you’re doing it to save the home environment, here are seven great ideas to get you going.

Idea 1 – Use Beeswax Or Soy Candles Instead Of Paraffin Candles

These types of candles will burn cleaner than regular candles, which are usually made of petroleum-based paraffin. Natural candles are generally soot free and made out of renewable sources.

Idea 2 – Use Cloth Napkins and Cloth Diapers

Quit wasting your money on paper napkins and use washable cloth ones instead. These napkins can go into the wash instead of the landfill. However, if you really like paper napkins, use ones that are unbleached and made of recycled material. Compost them when you are through. 

Cloth diapers are better for the environment, as they are reusable and can be saved for the next child. Quality cotton diapers will hold up for 75 – 100 washings (at minimum), and although energy is required for washing the diapers, it is a fraction of the energy used for disposables. Cloth diapers also make wonderful, washable, household rags (once children have completed their toilet learning).

Idea 3 – Be Battery Savvy

Did you know that up to 70 percent of heavy metal in a landfill are batteries? Instead of throwing them out, consider recycling them. Consider reusable batteries because they tend to last longer and have a low impact on the environment. Before you purchase a battery-operated item, think of anyone who can let you borrow one.

Idea 4 – Save Your Water

Install a dual flushing system on your toilet, low flow showerheads and faucets, all in the effort to reduce how much water your household consumes. Purchase a tankless water heater to save money and space; these last twice as long as regular water heaters.

Idea 5 – Use Cork Or Bamboo Flooring

When you want new flooring, use cork because it’s a natural insulator and the tree isn’t damaged when it’s being harvested. It’s also water resistant and limits how much noise is heard.  Bamboo flooring is harder than hardwood floors and takes about five years to mature. It’s also got some anti fungal properties, which is great for homeowners.

Idea 6 – Pick Out and Use Low VOC-Paints, Glues and Finishes

Bear in mind that new materials tend to give off gassy-chemicals and using low VOC-paints and other material can reduce your exposure to these toxic chemicals.

 Idea 7 – Use Sunlight

Instead of using your electric all day long, use sunlight to brighten up the home/workspace. This helps you to save some cash and gives you some sunlight exposure. Make sure to open the windows every now and then to clear the air from the home.

You don’t have to make the big changes right away especially if you’re new to the whole “go green” movement. However the little changes you make can go a long way for you, your home and the environment.  If you choose to go with the big changes such as using solar panels for your home, be aware of the upfront costs and then the costs down the road.

Flood Insurance: Protect Your Home or Business From Rising and Devastating Waters

It doesn’t matter where you live in Virginia… a flood is a risk you may have to contend with. It happens in every single state with some areas more prone to flooding than others. For that reason, you should have some flood insurance on your home and business.

Who Should Get Flood Insurance?

Since floods happen anywhere at anytime, consider taking a flood insurance policy on your home/business. This is especially true if you’re in an area at risk for floods. If you purchase a home and get a federally insured mortgage, your lender will demand you get flood insurance.

Where Are You Able To Purchase A Flood Insurance Policy?

You can acquire flood insurance through an insurance agent that participates in the National Flood Insurance Program, which is a government-backed program.

Does Your Homeowner’s Insurance Include Flooding?

It’s important to know that your homeowner’s insurance plan will not cover flooding. This means you’ll need additional coverage that includes your flood protection. If the home has never had a claim before for flood insurance, the premiums will be less.

 There are three ways you are able to discover if the home has ever had a flooding claim.

•  C.L.U.E. Report
•  Seller Disclosure
•  Home Inspection

A Look At The Three Ways To Find Out About Previous Flood Damage

C.LU.E. Report

C.L.U.E. is short for Comprehensive Loss Underwriting Exchange, which gives you the five-year history of the home. The insurance agent can get hold of this report or you can purchase it online or order it with the natural hazard disclosure report. This generally costs about $20.

Seller Disclosure

 Sellers are generally required to make known any previous problems such as former flooding issues.

Home Inspection

Consider hiring a home inspector to give you the rundown on your home. You can also look for signs of mold or water damage.  If a buyer isn’t happy with the results, they can ask for the earnest money back or cancel the transaction altogether.

How Floods Occur

When people think of floods, they generally think of hurricanes or tropical storms. Here in Hampton Roads we know a great deal about hurricanes. However, natural disasters are not the only reason for floods. Areas near bodies of water such as rivers are also prone to it. Flash flooding or rapid snowmelt can cause flooding.

As more trees are cut down and newer homes are built, there is less soil to absorb the water. On top of that, homes are being built on wetlands because this area is so cheap. When the water can’t sink in, a flood can occur. Heavy rain can easily drop more than two feet of water, which will cause a car to float.

Assess Your Flood Risk

Even if you’re living in a 100-year flood plain, that doesn’t mean a flood will occur every 100 years. This term can be confusing but what it actually means is you have a one in 100 chance of a flood each year. Make sure your insurance agent checks the flood maps so you’ll know for sure if your home is situated in a flood plain. If you are, determine your risk level.

 What Does A Flood Insurance Policy Cost?

Don’t ask yourself how much it costs to pay for a flood insurance policy; ask yourself what it would cost without one. Even one inch of water can do a bit of damage and can cost you thousands and thousands of dollars.

Coastal Policy – If your home is on the coast, your premiums are likely to be high. Most buildings can be insured for coverage amounts of $250,000 without any prior claims. Renter’s coverage generally has coverage amounts of $100,000.

High Risk Policy – If you’ve never had a flood claim, you’re liable to pay approximately $2,400 for the coverage amount of $250,000. If it’s just a content-only coverage plan, it’s generally $100,000.

Preferred Risk Policy – This type of policy with $250,000 worth of coverage will cost about $317. If you need contents only coverage, it is about $196 a month. If the home has a previous flood claim attached it, that number can rise to about $1,200 or more.

How To Spring Clean Your Home For The Wintertime

How To Care For Your Lawn In The Winter

Most people assume that since it’s the wintertime, their lawn doesn’t need to be as cared for as it does in the spring and summer months. However, despite those cold, short days, your lawn still must be taken care of. Here are some steps you can use that will make your lawn look greener in the spring.

Before Winter’s First Freeze

Before your region gets its first freeze, there are some things you will need to do. Of course, when your first freeze happens is depending on where you live. Make sure you do the five following things before it takes hold on your region.

- Be sure to get the lawn exposed to air so any compressed soil is loosened.

- Once done, over-seed the lawn and ensure that the seeds penetrate the ground.

- Fertilize it one more time so the grass will get the needed nutrients stored for the spring months.

- Clean garbage from the yard; this doesn’t just include leaves or branches. This also means your child’s toys, tools, hoses, etc. All these things can be concealed by the snow and harm the grass.

- Make sure to cut the grass shorter. This keeps new grass from appearing in the winter months, which makes it vulnerable to diseases and cause it to dry out.

After Winter Care

Before springtime is upon you entirely, you need to get your lawn prepared for the season. Here are two things that you must do to ensure you have a healthy lawn during the spring season.

- Look for signs that your lawn is suffering with a disease. If so, treat it correctly.

- If you find patches of bare spots, re-patch them.

Taking care of your lawn in the winter is not as bad as the spring, summer and fall but it is still necessary to do. If you take care of your lawn year-round you can produce a healthy lawn that sure to look good.

Winter Home Maintenance Tips For Homes and Other Buildings

When you own a home, it’s very important to get it ready for the winter months; after all the cold weather is quite brutal for many things in the home, not just the pipes.  Here are nine tasks that should be handled before the winter season takes hold on your home.

First, make sure to get your heater checked out and serviced. It’s always best to take preventative measures so your heating system doesn’t break down on those cold, winter nights.

Second, ensure that the pipes in the home are well insulated; exposed pipes tend to freeze and break during the wintertime.

Third, your storm windows will keep the cold air out and keep the warm air in.

Fourth, when you have rooms that are not being used, close them off and make sure to lower the temperature to 55 degrees. You shouldn’t heat rooms you don’t use but make sure that you don’t let pipes freeze either.

Fifth, make sure you store up on fuel in case you need it. If you use propane, oil or some other kind of fuel, have extra on hand for days that are especially bad. If you’ve got an emergency, you won’t go without any heat.

Sixth, for homes that have window air units, you should either cover it or remove the unit from the window until the winter is over.

Seventh, firewood should be stored about 30 feet away from the home. If you store it close to your home, there’s the possibility of a fire. It can also attract bugs, which means you’ll need to do some maintenance when the spring season hits.

Eighth, if you have snowblower, get it maintained right away. Have salt on hand for when it ices.

Ninth, check out your holiday decorations. You want to ensure that the exterior of your home looks good and that the wiring of these decorations are still in good shape.

Winter can be a tough time for people and for buildings but so long as you do some preventative maintenance on your home, you won’t have to worry with spending a lot of money on repairs from the damage it can cause.

For more Winter Maintenance tips check out: www.sellmyhomevirginia.com