Give Your Credit its Due!

It is no secret that a good credit history is something we all strive to maintain and is especially important when applying for a mortgage. There are practices, which you want to make sure you are doing, and mistakes to avoid. Following these simple tips will help ensure that your credit stays in tiptop shape.

1. Pay all of your bills by their due dates. Your payment history is a major factor the credit agencies look at when calculating your score. Any late payments will have to be explained satisfactorily when applying for your loan.

2. Make sure your credit is protected. It is vital to practice good credit security. This means all of your credit cards are signed, you review your accounts regularly for any fraudulent activity and you shred all of you credit card statements before disposing of them.

3. Make sure you review your credit report at least once a year. There are many free websites that you can use. You want to ensure there is no fraudulent activity or other errors in reporting. You will want to check your report again a few months prior to applying for a mortgage so you are aware of any issues you may need to rectify.

4. Mind your alerts! All credit cards have automatic alerts that tell you when a purchase has been made and when payments are due, these are great tools to help you maintain great credit. You can also set up automatic payments as well.

5. Make history. You need credit history to create a credit report, so if you don’t have a credit card, get one but make sure you make timely payments on it. In fact get more than one, use them and pay them and you will build a credit profile.

6. Thin your accounts. If you have a lot of creditors on you report that have been dormant for a while you can close the accounts, however leave the older accounts open. Credit agencies look at longevity as a positive factor.

7. Do not open multiple accounts at the same time. Every time you apply for credit it will cost you points on your report. If you are ready to apply for a mortgage or currently in the approval process, you definitely do not want to apply for any new credit!

8. Call your lenders! Ask your creditors if they will raise your credit limits and if they will lower your interest rates. A higher credit limit will improve your score and a lower interest rate will help you pay off debt more quickly.

9. Beware of balance transfers. While a balance transfer may seem like a perfectly reasonable way to manage your credit, do not do it. It is better for your credit score to have a few small balances spread among a few accounts than to have one large balance on one account.

10. Have a plan! Have a plan that will pay your debt down quickly. If you are able to pay off your balances each month you should. If not, at least try paying more than the minimum or make more than one payment per month. When prioritizing accounts pay off the ones with the higher interest rates.

STAY TUNED TO NEXT WEEK’S POST FOR THE MOST IMPORTANT CREDIT STRATEGY TO ENGAGE IN TO KEEP YOUR SCORES AT THEIR HIGHEST!

Amy Tierce of Newton is regional vice president for Wintrust Mortgage, a mortgage company with branches in MetroWest. She can be reached by phone: 617-308-4870, by email: atierce@wintrustmortgage.com, and online: www.amyrates.com – NMLS #15695.

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Should I Stay or Should I Go?

This is a frustrating market for buyers. Many move up buyers wonder if they should stay put and renovate or expand their current home versus moving. Below are 10 points to consider when thinking about a renovation provided by Bruce Irving, Renovation Specialist. Bruce was formerly the producer of public televisions “This Old House” and today has a construction consulting practice as well as a successful real estate sales practice.

Ten Things to Get Straight before You Renovate

1. Live there. Unless the home you’ve just purchased is a total wreck, live in it for a good period of time before shaking it up with a renovation. Learn its flow, where the groceries land, where the laundry wants to go, how the sun hits it, where the choke points are, which way the rain slants, even get a sense of its soul–all of which will inform your choices when you make your plans to change things.

2. Accept this truth: almost every job costs more and takes longer than you think. After you (and your advisors) have done your very best to estimate the cost, add 20%. If you don’t have the funds, cut the job back. Ditto on the time: add 25%. If it’s a big job, add slightly less–say 20%–if you can vacate the house for the bulk of the project. If you happen to beat these projections, then your surprises are happy ones.

3. Good professional help is worth the money–that means design as well as construction. You are about to spend more than you ever thought possible—it might as well be for a correctly designed thing.

4. Use your professionals wisely and efficiently: Many architects charge by the hour (which is a good way to work with one), so bring a lot of thinking and pictures (of likes and dislikes) to your first meeting. If he or she doesn’t ask you a lot of questions about your needs, desires, and the way you live, find someone else. Listening skills and curiosity are crucial in an architect and builder. With contractors, be willing to pay for (and wait for) a good one. Skip the low bidder and probably the one who is available right away.

5. Choose your teammates wisely. Be it a designer or a general contractor, ask to contact their last three clients. These people will have experienced the person at his or her current level of achievement and staffing. Also ask the architect for two GCs s/he has worked with; ask the GC for two architects. These people have seen the person as only a professional can. Visit a couple of candidates’ jobsites to check out cleanliness, organization, and vibe.

6. Take your design to the schematic stage (as opposed to finished “biddable” plans) and then get a contractor or two to look at it. This way you can find out if your project is in the right budget ballpark before falling in love with a plan–and paying for a complete set of bid drawings. It’s also a good way to meet potential contractors, get their input, and not misuse their time.

7. Lay it out for real. Lots of people have great difficulty truly understanding blueprints. They say they get it, but quite often they don’t. Whenever possible, mark out the proposed change on the floor, the wall, the yard, and walk through it. The experience may surprise you. Ask lots of questions. There’s no such thing as a dumb one, and besides, it’s your money you’re spending. You should know why and on what.

8. Water kills houses. If you’re faced with a choice of working on the outside or the inside, start on the outside. No point in putting in a new floor if the roof is getting set to leak. Gutters, grading, foundation plantings, flat roofs—make sure the water is going where it should: away from the building.

9. Synthetics are good. Especially when it comes to the exterior, low-maintenance is the name of the game, and cement clapboarding (HardiePlank), expanded polyurethane moldings (Fypon), and cellular PVC trim (Azek) outlast today’s wood and hold paint better. Each has its own quirks, so make sure your contractor is familiar with them or willing to learn about them. New treatment processes have made real wood exceptionally rot-resistant as well—Centurion is a pine trim that comes with a 50-year warranty against decay.

10. Psychology counts. I was describing my business to someone in a restaurant when the woman at the next table leaned over. She was a psychologist and she said that in her experience, renovations were right up there with moving and loss of a job as stressors on couples. The issues, she said, were power, control, and money. One way to see what your issues will be is to take on a small project together–paint a room, put up a mailbox. Your styles will soon be apparent, and you can work on figuring out a division of labor that might accommodate them–on that job and larger ones in the future.

BONUS: Spend good money on things you touch every day–door hardware, doors, faucets, appliances, kitchen cabinets. The tactile experience sends a daily reminder to you and your guests about the solidity and quality of your home.

EXTRA BONUS: Think long and hard before you replace your windows. If they’re original to the house and are in half-decent shape, they can and should be resuscitated. In combination with a storm window, a properly functioning old window comes very close to equaling the energy efficiency of a modern thermal-pane unit–and will outlast it. Anyone claiming that you will earn your money back in energy savings by installing replacement windows is either misinformed or looking for your money himself.

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Over communicate with your clients to avoid frustration!

Sitting at the airport waiting on a once cancelled and now extremely delayed flight; the frustration among the travelers is palpable. They are pacing, and huffing and speaking angrily into their phones trying to find an alternative. This has been going on for over an hour and will continue until we are comfortably in our seats and racing down the runway for takeoff.

It would be easy to alleviate some of the shared frustration and anxiety, if they would just communicate! I crave an announcement that would say, “We are terribly sorry for this situation, we promise to provide you with active updates every 15 minutes until you are on the plane.” That would be great, much better than the electronic sign which says that we are boarding now.

This is a situation that will last for a matter of hours. Imagine living through this unknown for days or weeks. That can be today’s mortgage and real estate buying process. A complicated process full of unexpected events and requirements, many that come up during the process adding stress and anxiety.

All we can do to make the experience more welcoming is to communicate from the beginning and throughout until the loan has closed and the buyer is soaring. Communicate consistently and at pre-determined intervals; reach out immediately if there are any concerns or new requirements. Deliver the news immediately and communicate even when there is nothing to say but “we are on track and there is no news.” It’s not much, but it is exactly what consumers crave, honest and frank communication about their specific transaction.

We cannot remove the pitfalls and hurdles in the mortgage process. All we can do is keep our borrowers, agents and sellers informed throughout with accurate details as to the timeline for the transaction. In the end, we all want to know what is going on in real time. Whether it is with our delayed flight or our mortgage application, keeping us informed will keep the relationship and the transaction on track and get us to take off with less stress.

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Who really wants to move in 30 Days?

Think about it. Four weekends total to pack and arrange all that is required to make a move. It’s hard, taxing, stressful and painful. Unless there is a reason that one has to move in 30 days, most people would prefer to have more time for this massive undertaking.

It is hard for mortgage lenders to close loans in 30 days too, painful, stressful and full of anxiety… mostly because so much of the process is out of the control of the lender. Among the greatest stressors in the mortgage industry today is the appraisal process. Today, much of New England expects a three-week period, or more, from the time the appraisal is ordered until the lender receives it. Once received, the appraisal has to go through an approval process, either with an underwriter or the lender’s appraisal review department. It is almost guaranteed that the report will need some type of correction. Appraisers are moving fast and can be overworked. They’re only human, they can make mistakes. However, today’s exacting mortgage process requires that all documents be absolutely perfect, to market specifications, prior to closing.

Getting corrections on an appraisal report can take several days. Appraisers are on the road daily and often spend their evenings at the computer, completing reports, or revising and correcting old ones. It can take time to connect with them to discuss the necessary changes to the report and to get the corrected report back.
The appraisal industry seems to be in crisis. Today there are fewer and fewer appraisers in the industry to meet the demands of this aggressive market. In the State of North Dakota alone, there are only 17 licensed appraisers. Thus in many areas of our country, appraisers are demanding $1000 to $2000 for a report, not including rush fees.

Think about this: in MA it takes at least 21 days to obtain an appraisal report, 2-5 days for approval, or revisions and final approval, then the loan needs to be clear to close prior to the closing date to meet the requirements of TRID regulations.
This situation makes 30-day closings near impossible, unless the stars align for all parties. The process might be easier for everyone if contracts were written with an, “On-or-Before,” closing date of 40 days out. This way, when there is a one-to-two-day minor delay in a closing, the need for extensions and back-and-forth goes away. The buyer and seller remain protected by the mortgage contingency and deposit check.

The knowledge that all are prepared to extend the closing date by a few days, due to unforeseen minor delays from third parties, helps all of those affected by the home buying process to sleep a little easier.

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