How is Your Credit?

By Patrick McCarran

Real Estate Broker

In todays world now more than ever a good credit score can make a real difference in your future and directly effect your wallet. Although no one except the credit reporting agency’s know exactly how the algorithm works I am listing ten general tips that are commonly acknowledged to help increase your credit score

  1. Always pay on time

This sounds like a no brainer but it isn’t. No lender likes to lend money to an individual who has a track record of missing their payments. This indicates a lack of discipline and poor financial management, and it translates to a lower score. On-time payments improve your credit score tremendously. It carries almost a 40 percent weight on your score. If you find it hard to keep track or forget to mail the payments try and epay option at your bank. Set up the minimum payment to go out preferably just before the due date and choose the recurring option so it pays every month. Just remember to check your statements in case the minimum payment changes. Because you are setting this up at your bank you can change it or cancel anytime with the click of a mouse.

  1. Keep your credit owed within limits

Keep your credit card balances within 40%  of the allowed limit. If you have $5,000 as your limit, then keep your balance amount to $2,000. This applies even if you pay it off each month. The total balance at any time must stay under 40% to show that you are not pushing your limits, it is like the old saying they only give you money if you don’t need it. Also it is good practice not to have your total unsecured credit balance over 50 percent of your annual salary.

  1. 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 $2,000, and you charge $1,500 on it, you’ve used 75 percent of your credit limit.

Now if you split your amount into two, and spend $750 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.

  1. 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 private label credit cards are considered bad loans. This 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.

  1. 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 4 percent to 5 percent, but they build an asset. This is one of the underutilized logical tips to improve credit score. Pick a loan and set a goal and then focus on paying that one off ( but don’t buy something to celebrate).

  1. 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 (MAB), it will start to affect your credit score. Also, when you finish a loan, it’s imperative to get the loan closure certificate.

  1. Check your credit reports regularly

Credit reports can be accessed for free. You can obtain them from the official FICO site. Just go 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. Keep in mind that free reports are a consumer product and the credit score will vary depending on the type of credit you are applying for.

  1. Monitor your co-signed joint accounts properly

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.

  1. Negotiate if you cannot pay on time

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, negotiate with your bank. Banks will be willing to extend your loan period and reduce the EMI if they see a genuine customer.

It might hurt, but you will make a good impression, and the FICO will see you are proactive.

So these are some of the tips to keep your credit score in check and get a home loan easily. Feel free to contact me with any other questions or for more information.

 

Patrick McCarran is a local Realtor and Broker DRE# 01325072. He can be contact by phone or text at (925) 899-5536, pmccarran@yahoo.com or www.CallPatrick.com. An independently owned and operated office.  In association with Realty One Group Elite DRE# 0193160. Equal Housing Opportunity.

 


Posted on January 25, 2019 at 7:48 am
Patrick McCarran | Posted in Uncategorized |

The American Dream is Still Alive & Well!

By Patrick McCarran

Real Estate Broker

 

Is the American Dream a thing of the past? Is there still a value to owning a home? My answer is absolutely buy a home and not because I sell them actually I am in real estate because of my belief in the value of owning real estate. America is one of a handful of countries where ANYBODY can own property. There has been a great deal of reports of the sky falling with the change in the tax code effecting the  deduction of interest and caps on local and state taxes, what most alarmists aren’t telling you is that only a small percentage of loans in the USA are over $750,000 and even with the increase in the personal deductions the PRIMARY reason to own a home is UNCHANGED.

 

The WHY you should own is relatively easy. It seems like every day there are news reports of someone displaced by high rents or the building is sold to a new owner and they are forced to move. Rents are at a high and with the strong resistance to building they will continue to rise and be unpredictable, when you own you know what the payments will be and it your home not the landlord to dictate rules. Mortgage interest will most likely remain the largest deduction for the middle class. Mortgage interest rates remain historically low and there is affair amount of inventory from which to choose. Long-term homeownership continues to be one of the best ways for the typical American to build wealth.

 

So what’s holding you back? Down Payment? Many people are intimidated by the widely publicized 20-percent down-payment requirement. They don’t realize that there are many federal programs and other methods designed to help homebuyers, and even those who have lost their homes to foreclosure.

For example, Freddie Mac and Fannie Mae have loans available to first-time buyers with as little as 3-percent down payment and the FHA has similar programs that require 3.5 percent down and payment. If you qualify there are a number of programs and grants that can help with the down payment. With a seller credit for closing costs I have gotten buyers into a home for as little as $1500 out of pocket. For veterans, the VA program has no-down-payment loans available for qualifying military members and veterans that can close with almost no out of pocket money.

 

Why wait? What’s the worst that could happen if you buy a home now? You’ve already seen it, the 2007 mortgage crisis. It will take generations, if ever, before the government lets the banking systems get that far out of hand again. It is far more likely that home prices will steadily climb as they have been. Americans are getting back to work and leading the global economy out of stagnation. So don’t be blinded to the future by your past experiences. The American population will continue to grow and build families of all types, creating more demand for housing. Don’t view your home as a trading vehicle or a one-way-up investment. Instead, look at the home-ownership benefits that are mostly forgotten by today’s potential homebuyers — the chance to build equity (instead of throwing rent down the drain) and the opportunity to customize your own environment.

 

That’s what has always motivated Americans to own their own home. And it isn’t going to change in the long run. Grab the American Dream now.  Start building wealth and stability. Call a REALTOR or a Loan officer you have nothing to loose and everything to gain.

 

 

Patrick McCarran is a local Realtor and Broker He can be contact by phone or text at (925) 899-5536, DRE#01325072 pmccarran@yahoo.com or www.CallPatrick.com. An independently owned and operated office. Equal Housing Opportunity.


Posted on January 25, 2019 at 7:47 am
Patrick McCarran | Posted in Uncategorized |

Buying a Newly Built Home? Use A Realtor!

By Patrick McCarran

Real Estate Broker

With new home construction going strong again you may not think it is necessary to involve a real estate professional in a transaction where a buyer can deal directly with a builder. Think again! The builder’s agent is representing the builder’s best interest. As your buyer’s agent a Realtor can guide you along the right path, smooth the rough places and help ensure you make a decision you can live with (and in) for many years. As your agent, the Realtor is representing your best interests. Just as a real estate professional calls on experience and knowledge of an area to help buyers locate re-sale homes in a community, the same applies to guiding buyers interested in newly built homes to developments and communities that match their wants and needs. Your agent can suggest builders based on their reputation for delivering a high-quality product, responding quickly to issues, and being financially sound. Your agent may be familiar with how a builder prices his products and where there may be room to negotiate price or upgrades.

Your agent can assist you as you face hundreds of design choices and consider which upgrades provide the best value in terms of resale and whether to upgrade from an outside vendor. The upgrades or options available will vary from builder to builder and the choices you make will depend on largely person decisions. Often a buyer can pay far less after the home is built by contracting with a third party but price is not always the only consideration you need to consider the convenience, cosmetic ramifications and if it is even feasible to perform after the home is built.

 

The lender approval process may go smoother if your agent schedules visits, accompanies you to lenders, and helps expedite required documents.

When relocating to a new area, your agent can be particularly valuable resources. In addition to providing local area information regarding schools, day care or elder care services, public transportation, proposed development, and so on, once construction is under way, an agent can periodically stop by the work site, supply you with progress reports, and photograph phases of the construction.

 

REMEMBER the builder will require your agent to accompany you on your first visit to the site. So let them shop with you it is not an inconvenience it is there job.

By now, you should be convinced of a real estate professional’s value as you search for and purchase a newly built home. Still, here’s one more great reason to work with an agent—the builder pays the agent’s commission. You enjoy individual attention and support at NO cost to you. What a great way to start life in a new home!

Know Your Options

 

Patrick McCarran is a local Realtor and Broker DRE# 01325072. He can be contact by phone or text at (925) 899-5536, pmccarran@yahoo.com or www.CallPatrick.com. An independently owned and operated office.  In association with Realty One Group Elite DRE# 0193160. Equal Housing Opportunity.


Posted on September 28, 2017 at 7:28 am
Patrick McCarran | Posted in Uncategorized |

Is a Home Warranty a Good Deal?

By Patrick McCarran

Real Estate Broker

 

I am often asked if a home warranty is a good deal or worth the money.  I highly recommend them. Considering that the average water heater runs about $1300, and a new furnace and A/C can run over $10,000 with the new SEER laws, a home warranty can save you thousands of dollars on a repair that pops up after you purchase a home.

I think it is important to understand that a home warranty is not an end all be all warranty and you should be aware of exactly what the home warranty covers. It does not cover everything that may go wrong but does cover a great many items. The warranty brochure will spell out exactly what is covered and what is NOT covered. It has been my experience that the major warranty providers do not try to “wiggle out” of paying, if it is covered and not obviously a preexisting condition then they will repair of replace. In general the warranty will cover items not covered by your home owners insurance. For example if a pipe leaks the home owners policy will cover the damage caused by the leak but not repair the pipe, the home warranty will cover the pipe but not the damage.

Be aware that if the warranty is generally only for basic coverage, if you need extended coverage, such as for pool equipment, air conditioning, or even the refrigerator, you may be able to negotiate that extra cost with the seller, or consider paying the difference yourself.  It is important to note that you must file a claim with the warranty company and use their service provider, if you have a problem you can request a new vendor but you cannot generally call your own contractor and expect the warranty to pay them.  Remember that although most home warranties provide coverage only for one year, but you can always for more upfront or most plans are renewable after the first year, one of my clients kept their home warranty for the 22 years they owned the home.

Take note of what the deductible or per visit cost for repairs?  What’s the maximum dollar amount for repairs and what are the policy limitations such as new fittings or SEER inspections or permits?  Also the warranty company will buy out the claim, sometimes this may work out better for the home owner.

A warranty is not a blanket protection form defects and no buyer should forgo a home inspection. An inspection may uncover defects or potential problems that may not be covered by the warranty—and may give you the opportunity to request the seller to make any major repairs before the closing.

But, warranties definitely have a place when it comes to protection and peace of mind. For sellers they can act as “insurance” that you won’t get an angry call about the bad water heater in the house you sold and for buyers you don’t have to worry about dealing with the added expense of replacing a  major system or appliance after you move in.

Give me a call or email for more information or any questions on home warranties and providers. Know your options.

Patrick McCarran is a local Realtor and Broker DRE# 01325072. He can be contact by phone or text at (925) 899-5536, pmccarran@yahoo.com or www.CallPatrick.com. An independently owned and operated office.  In association with Realty One Group Elite DRE# 0193160. Equal Housing Opportunity.


Posted on September 28, 2017 at 7:25 am
Patrick McCarran | Posted in Uncategorized |

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