Bad credit can be disheartening, and many believe that bad credit can disqualify you from buying a house. While it can be difficult, it is not impossible to buy a home with bad credit. Below I have put together tips on what steps you can take to boost your prospects of buying a home. If you’re not in the position to buy today, preparing for what could be available in the future is a strategy that will pay off in the long run.

First, check your credit score.

Checking your credit score is easy to do. Each of the nationwide credit reporting companies, Equifax, Experian, and TransUnion, are all required to provide you with a free copy of your credit report, at your request, once every 12 months.

Along with this, check for errors in your credit report. If you find an error, the best way to attempt a correction is through a dispute letter. Dispute letters allow you to formally request a fix by the reporting agency. Though it may take a little time to get the errors removed, cleaning up these mistakes can have a direct, as well as favorable, effect on your credit score, helping you secure lower interest rates and better terms.

Larger Down Payment

Down payment assistance is complicated to get with a bad credit score. You’re going to have to help your odds of pre-approval by proving you have 10% down to put on your home. That 10% is beneficial if your credit score is sub-550. Above 550, you might be able to land an FHA loan with only 3.5% in equity.

Need help saving for a down payment? Here are some tips for conquering saving for a down payment:

• Find out where your money goes and make adjustments on what are “needs” versus “wants.”
• Get specific about how much you need to save, so you have a visible goal to shoot for.
• Determine the big moves you can make to change your financial picture.
• Set up a separate savings account, so your down payment is out-of-sight and out-of-mind.
• Pretend you already have a house payment by paying that amount to yourself each month.

Make Moves to Rebuild Your Credit

You don’t have to be perfect to improve your access to better mortgage terms. First, pay down your credit card balances. Then identify any outstanding debts or collections that you can manage to get cleared through full payment or a negotiated settlement. If you can push your rating above 620, you’ll not only get closer to better terms, but generally, you’ll experience less scrutiny during the approval process. Focus on doing what you can to bring your debt-to-income ratio below 45%.

Don’t Force It

Suppose you’ve experienced a bankruptcy, foreclosure, or short sale scenario. In that case, it may not be possible for you to secure a mortgage for at least three years (sometimes two, depending on the situation). Use this time to work on the tips above!

If you’d like to begin hunting for your next home, I am happy to help guide you. Or, if you need a referral to a reputable mortgage professional, get in touch! I have a network of trusted folks I work with every year: 928-710-9148

Success is often worth repeating, and Brent Sutherland, a Certified Financial Planner and Real Estate Investor, has undoubtedly made his way in a momentum-driving direction.

Who is Brent Sutherland?

Sutherland was 35 when he bought his first single home to rent out for income, less than five years later, he owns eight additional properties and part of a commercial real estate project.

Here are three tips Brent shares from a recent piece in Business Insider on the benefits of owning real estate:

1. Real estate diversifies your income

“While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income. This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job.”

The article highlights how having multiple income sources, such as those derived from real estate investments, can eventually lead to relying less and less on a day job. Sound dreamy? It can be. When done well, real estate investments may eventually open up your time and the financial freedom to explore other things, like travel and other aspirations you may have for the future, particularly in the golden years of retirement.

2. Real estate produces near-immediate results

“You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future.”

Currently, home prices are appreciating in all price ranges, and just last week CoreLogic announced their 12-month home value projection at 5.6%, an increase from 4.5% noted earlier this summer. With that in mind, real estate today is driving immediate results!

3. Passive income can help you become financially independent sooner

“If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs.

While returns, taxes, and inflation can, of course, affect your timeline, cash-flowing real-estate is a clear asset.”

Homeownership is a form of ‘forced savings.’ Every time you pay your mortgage, you’re contributing to your net worth by increasing the equity in your home, bringing you one step closer to true financial independence.

Bottom Line

If you want to increase your savings and overall net worth, real estate is a great way to go. To learn how you can make it happen, let’s get together to discuss the process.

If you’re a first-time buyer and are confused about what a Home Owners Association is (or does), you need to ask the right questions before considering buying. An HOA is an organization designed to protect the quality of life and property values for owners within a neighborhood or shared building. Although, how they make this happen can vary widely. Typically, when you purchase a residence subject to an HOA, you’ll be required to pay monthly dues, which often contribute to major repairs or maintenance or the upkeep of common/shared resources.

But HOAs can also significantly impact what you can and can’t do with your own home. The covenants, conditions, and restrictions (CC&Rs) detail the HOA’s rules. To understand how strict an HOA is (or isn’t), you’ll want to understand the details of its CC&Rs before you consider buying. These might have reasonable restrictions, such as keeping junk cars out of the front lawn, or they might extend to what color you can paint your garage door.

Here are some questions you’ll want to ask yourself and the HOA before you make an offer:

1. How comfortable am I sharing decision making about my own home? Yes, you own your property, but if you agree to abide by the CC&Rs of an HOA, you’ll need to be willing to abide by its rules.
2. How much are the HOA fees, and how much have they increased over time? Your budget can be seriously impacted not only by current HOA fees but anticipated increases. Sometimes HOAs can even require residents to chip in for major repairs or upgrades beyond HOA fees.
3. What are all of the CC&Rs? Get a copy of the CC&Rs and make sure you understand all of the rules. Furthermore, see if you can sit on an HOA board meeting or obtain notes from past meetings. Observing will help you understand the HOA’s temperament and the type of past conflicts residents have had with the board.
4. Is the home (or unit) you’re considering in compliance with the HOA’s CC&Rs? If you’re considering an offer on a problematic property, understand a real hassle may follow.

A great way to learn about the association’s history is by asking the neighbors around your desired home. Walk around the community and find a few residents to talk to. Are they happy? Have the neighbors had problems with the HOA? Does the HOA keep a well-run community?

If you like the idea of a group of neighbors who set community or building standards, a residence with an HOA may be for you. But if not, don’t worry, there are lots of other homes out there! Get in touch today: (928) 710-9148

The idea of a home warranty can sound great. The definition of home warranty is “a service contract, normally for one year, which helps protect home owners against the cost of unexpected covered repairs or replacement on their major systems and appliances that break down due to normal wear and tear” (National Association of Realtors). Coverage is for systems and appliances in good working order at the start of the contract.

It sounds simple: You insure critical systems in the home, and should something go wrong with those systems, the insurance company largely covers the cost of repairs. And it’s true, a home warranty can be exceptionally valuable, especially in the first year of homeownership, when you’re still getting a feel for the overall health and maintenance status of your home.

For basic home warranty coverage, plans average from $350 to $600 per year. An annual premium and service charge is also referred to as a deductible paid by the homeowner for each claim. This fee ranges from $75 to $100 for each repair or replacement.

Sellers often offer a home warranty to ease buyers’ concerns over their first year in the home. In fact, in states where foreclosures are common, home warranties are practically the norm. If a buyer is looking at two comparable homes, a warranty can be a competitive advantage.

But as with all insurance policies, the fine print matters. When researching home warranties, you must be certain of what the policy covers and how the insurance company honors claims. For big-ticket items like heating and cooling systems, the home warranty can be a massive cost savings, often reducing out-of-pocket expenses to less than 10% of the total. However, with smaller appliances and simple repairs, the deductible/service fee can cost you as much as the repair would on its own. Plus, it’s vital to know if the warranty will replace versus repair aging appliances. (Many companies will repair an old stove or refrigerator rather than replace the unit with a more energy-efficient model.)

You should also be aware when having a home warranty isn’t required on certain home features. For instance, if you have a dishwasher or water heater that is already under the manufacturer’s warranty, the home warranty coverage may be superfluous. However, if you have major systems with considerable age, the warranty can be worth the investment.

Be aware of the terms of the warranty when it comes to maintenance and neglect. Occasionally, home warranty companies will try to get out of paying for repairs or replacement by claiming you haven’t kept up with routine maintenance issues. To ensure you don’t get caught out on these technicalities, understand how the insurance company justifies these claims.

We have found that homeowner’s insurance is most valuable for more extensive repairs rather than smaller ones such as a leaking sink or a toilet that keeps running.  Insurance is always a complex business, but don’t shy away from investigating a home warranty if you’d like some protection from major, catastrophic repairs.

In addition, check with the insurance company for a list of providers in the Prescott area.  Unfortunately, most claims are ‘emergencies,’ and you will want to make sure they have service contractors ready to take care of your needs quickly.

With a little diligence, you can get the coverage you need.  If you have any questions about where to get home warranty quotes, get in touch with me today.

Every month you pay the rent, you’re probably thinking, “I wish this money were going into my future.” For a lot of would-be first-time home buyers, it’s the down payment, which makes home ownership seem impossible. We want to encourage you, climbing the “down payment mountain” isn’t impossible. Like any significant challenge, it’s all a matter of breaking your essential, challenging, audacious goal down into practical steps.

Here are some tips for conquering saving for a down payment:

Find out where your money goes. You can’t start saving money if you don’t know where you’re spending the money. For a month or two, track each expenditure, no matter how small. Get an objective picture of where you’re spending the cash.

Get specific about how much you need to save. Even if you’re not 100% sure what your down payment needs to be yet, it’s good to start doing a little math to figure out how much you need to save. Pick a dollar amount and a timeline to hit that dollar amount. For example, a $25,000 down payment in two years comes to $1,041/month. Sound unrealistic? Either scale down your home desires to something smaller or scale up your timeline. If you can wait three years, that monthly savings goal drops to $694/month.

Determine the big moves you can make. If you’re in a three-bedroom apartment and can handle the idea of scaling down to a one-bedroom, how much would you save in rent? What about going from two cars down to one? If you can make it work, these sacrifices will have a massive impact on your savings goals.

Establish a separate savings account. Don’t let your dream home money mingle with your regular checking or savings account. Establish high-yield savings account with a credit union or money market account to protect and build your savings. It’s essential to have a separate account with a “hands-off” attitude.

Pretend you already have a house payment.  Once you determine the approximate amount of what a new house payment would be, start making that payment now. Instead of paying the bank, pay your savings account. This trick is two-fold. It will help you accumulate a down-payment faster, and it will ensure that you can afford the amount of the new house payment.

Mind the risky investment schemes. Once you have a little momentum, it may be tempting to take some of that cash and invest it to make it grow faster. Be very prudent about this, as investing in stocks, startups, or high-yield funds can quickly decimate your savings. Be conservative.

Of course, it’s essential to know how much home you want to buy when you’re saving up for your down payment. I’m happy to give you an idea of what homes are selling for in your area.

Feel free to get in touch at any time if you have questions.

Kim Shaw

(928) 710-9148

Do you think you have found the perfect home? Hold on, and think again, it might not be as perfect as you think.

There are six little details which can turn an ideal house into a purchase you may regret. Before you make your offer, take into account these six small, but surprisingly important details:

#1: Check Your Cell Reception

Does your future dream home have cell reception? Check your signal when you’re on the property and see if it has dead spots, poor/limited data connections, or flat out “NO SERVICE” messages. This is especially important if you telecommute or had planned on skipping a landline entirely. While you can try and live on VoIP connections, WiFi, and other options, the hassle of a hole in cell coverage can wear on you.

#2: Calculate Your Commute

It’s a sunny Saturday afternoon, and for kicks you decide to see how long the drive is from your potential dream home to your office. Doesn’t seem too bad, does it? Now try it during rush hour on a Monday (in bad weather if you can swing it). You might be surprised how school zones, backed-up interstate ramps, new construction, and peak transit schedules extend that commute. This goes for urban commutes too, so even if you don’t drive to work, you’ll want to evaluate the commute in real-world conditions.

#3: Check the Delivery Zone

Restaurant delivery areas are often drawn like congressional districts, so if you can, check out what the local food delivery options are like ahead of time. Look up a few places, call them, and verify they deliver to your address. (Asking the average delivery time is a good idea, too.)

#4: Do a 24/7 Check

The home may be in a neighborhood that is quiet and peaceful on a Saturday afternoon, but what is it like on a Friday night?  What kind of traffic is there in the mornings?  There may be an excessive number of children playing in the street in the afternoons after school.  It is wise to do a drive-by at various times of the day, as well as various days of the week.

#5: Give it the Sniff Test

Do you smell sewage, gas, or anything equally unpleasant? Sewage systems in older homes can sometimes get clogged or damaged by tree roots. Luckily, some sewer or plumbing companies can send a camera through the pipes to detect any breaks or blockages.  How does it smell outside?  There are some neighborhoods that have distinct odors from nearby farms, landfills, water treatment plants, and industrial parks.  It is vital to give it the sniff test inside and out.

#6:  Touch EVERYTHING

Literally, touch everything. Turn on every faucet and light switch, open every window and door, and flush the toilets. Buying a house is a big step, quite possibly one of the biggest, and you need to know how everything works firsthand.  Don’t forget to taste the water.  There are water treatment options, but water quality is something you will definitely want to know prior to becoming homeowners.

Markets can be super competitive, but remember that you’re planning on living in this new house for a considerable amount of time. (Most people would tell you at least 5 – 7 years.) Perhaps your priorities don’t include these six details, but they might to other buyers when you’re ready to sell.

As a realtor, I truly respect the time it takes to find the best home for the best price.  I diligently do my homework for you to find what you are looking for. Contact me at (928) 710-9148, I’d be happy to show you homes for sale in the Prescott area.