If you watch any TV or listen to the radio at all, you’ve probably noticed catchy ads for a variety of companies offering free credit reports. Here’s what you should really know. Your credit history is maintained by three different private credit reporting agencies: Equifax, TransUnion and Experian. The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting to provide you with a free copy of your credit report, at your request, once every 12 months. These reports do not provide you with your credits scores. You will have to pay a fee to get these.
However, you can go to Credit Karma (https://www.creditkarma.com/), an online free service that offers the scores for Equifax and TransUnion. It will not be the total picture of your credit but it will give you an idea of where you stand. It’s a good idea to order these reports from all three agencies as there could be errors that could negatively affect your ability to obtain a loan or the best loan.
The reports are detailed documents that track your entire credit history over the past seven years. They’re the same documents lenders analyze to determine your ability to repay debt so it’s important to examine them the same way a lender does. You’ll see the history of consumer credit that has been extended to you, late payments and highest balances. Make sure everything on these reports is correct or contact the reporting agency if you feel there is a discrepancy.
Even if you’ve had some problems with your credit in the past, don’t despair. There are a few important things to remember about your credit history.
- Negative credit can only be reported for 7 years. After that, it’s eliminated from your record and cannot be considered by lenders. Bankruptcy, on the other hand, can be reported for 10 years.
- Lenders tend to focus on how you’ve handled your credit recently rather than your history from several years ago. Even if you’ve had a bankruptcy, if you’ve been on time with payments, you could qualify in as little as two or three years.
- Lenders practice “Risk-Based Pricing,” which allows borrowers with less than optimal credit to still obtain a loan. The downside is, it comes at a higher cost.
The bottom line is, banks and financial institutions will pour through your history so it makes sense you know exactly what it is.
Once we find a home you love and decide to buy it, the first thing we’ll do is to prepare and make an offer. We use the standard Arizona “Residential Resale Real Estate Purchase Contract.” In it we’ll have the offer price, the closing date and how the closing costs are going to be split. There are four main contingencies in this offer. The first one is your loan approval, then the property appraising for at least the purchase price, the inspection and the approval of the Homeowners Association (HOA) rules and financials. Any one of those contingencies allows you to cancel the contract and get your earnest money back. There are timelines for all of this.
The earnest money is usually 1% of the offer price but that’s just sort of a guide, there’s no set rule. The more the earnest money, the stronger the offer looks to the seller. Even though we get it back if one of the contingencies isn’t met.
As soon as we’ve agreed to the price and the contract is accepted, we deposit your earnest money with the Escrow Company and “open escrow”. At this time the escrow company begins their work as far as checking the title and ordering the documents from the HOA. They will also let the lender know of their fees so lender can provide approximate cost disclosures to you. We send the contract to the lender and then the lender will prepare their disclosures for you to sign. At this time, once we have an accepted contract, you can “lock” your interest rate.
Immediately after that we do the physical inspection of the property. We want to get that done right away in case there’s something seriously wrong with the home. Normally there are defective items that come up during the inspection that we give the seller an opportunity to correct. If he’s unable or unwilling, then you can cancel the contract and get your money back. You would just be out the money you had paid the inspector.
The inspection of the home starts with an overall general inspection and a termite inspection. The price is based on the size of the house, the age and whether or not they have to inspect a pool. It’s going to be in the neighborhood of $300-$600. Sometimes the first inspector recommends we get a further inspection of a flagged item. The most common one is the roof.
During our ten day inspection period is also the time for you to make sure you’re OK with everything else about the area. That would be checking crime statistics, checking the schools, talking to the neighbors. We just want to make sure that we get all of your questions and concerns addressed during this time. We only have one opportunity to cancel for any of these reasons and it’s going to be during the inspection period.
Just before the close of escrow, we go back to the home for a final walk-through to make sure all the agreed to repairs have been made and that the house is in the same condition as when we inspected it. Sometimes we have to have the inspector back to check the repairs, it all depends on how many there were and how complicated they were.
Once your loan is approved by the lender, all the documents will be sent for signing to the Escrow Company. You will have to bring a cashier’s check to complete your transaction. After signing, the Deed is scheduled to be recorded the same day or next, as a public record. When the Deed is recorded at the County Recorder’s Office, it is the moment that ownership transfers to you. Congratulations! You’re now a homeowner.
Chandler is having a big street party tomorrow Saturday. The city is closing a one-mile stretch of Arizona Avenue. There will be two stages of entertainment, a skating ring, activities for the little ones and lots of great gift vendors. There will be a dunk tank featuring Mayor Jay Tibshraney and other business leaders. Since the holidays are fast approaching there will be a food drive to benefit two local food banks. Modern-rock station X103.9 (KEXX-FM) is sponsoring the main stage, bringing four artists from Valley-based Sundawg Records: Mergence, A Life of Science, the Weiley One and Fayuca. Also performing is cover band Wikked Rev, which performs a mix classic rock and metal tunes. Check it out. Time: noon to 8:00 p.m.