Home Buying Credit Myths: You Can’t Buy a Home Without Any Credit

As you go through the years from childhood to being young adult, and then an even older adult you hear the concerns buying a home without any creditfrom your parents, grandparents, friends and even colleagues that credit is extremely important.  Without credit you probably wouldn’t be able to buy expensive items and with bad credit you certainly wouldn’t be able to buy these items with reasonable interest rates.

Credit is a gauge of how you have made financial decisions throughout your entire life.  The almighty FICO score is what the credit mongers are concerned with, but is it fact or fiction?  Believe it or not the FICO score is a rating that involves an algorithm of how much debt you have been in and out of! Wait so the more debt the better, you ask?  Essentially there is a specific balance between the amount of credit you have, your payment history, loans amounts, credit card balances etc.

The highest credit score is 850 and the lowest is 300 and your credit score involves three major credit bureaus. The rating is their way of calculating the risk of loaning you money.  One problem most people are missing here is that if you have CASH and zero debt and don’t borrow money your credit score goes away!  The score does not go to ZERO it will just show up as not being calculated.

The home buying myths concerning credit are not necessarily true, depending on what you heard.  Just because the norm is to make sure you have a good credit score to pre-qualify for a loan doesn’t necessarily make this  amFACT.  It’s just like renting a home or apartment, if you didn’t have a credit score could you obtain the residence?  Well the answer is yes and that also goes for buying a home.

This does take a little more effort because it is not “normal” because normal is a percentage of DEBT to income ratio and in your case without the credit score and 20% down your ratio ends up being income to income ratio and not every mortgage company knows how to enter these numbers into the computer without the debt value…talk about a monkey wrench.

Here’s the situation and just to be clear a BAD credit score is different from NO credit score, the bad score will need to be cleaned up.  On the other hand no credit is not earth shattering but you will need to seek assistance from a mortgage company that will sit down with you and look at your physical income numbers and your history of payments (i.e. cell phone, water, power) along with what you are putting down.

Typically most are qualified for a mortgage that is far more expensive then what they actually need.  It goes with renting a house, many times large companies have the same issues with not have a credit score; this is a good opportunity to find a place that is being rented from a homeowner.  The funny thing is people with cash may even have the majority of the rent money ready to be paid for a year or six months but due to the lack of DEBT score the person is denied for not being “normal”.

Bottom line it IS possible to get a home without a FICO score but you will need to have 20% down just like everyone else and complete your due diligence in finding a good mortgage company that believes paying with cash rather then debt is a good thing and not a bad thing.  In the mean time save your money and do as much research as you can when looking for a house, I suggest using the tools at www.moversatlas.com to assist in your investigation.

Expert Tips On Lowering Your Property Taxes

Paying property taxes is probably one of the least favorite activities for anyone who owns a home.  While it has been established that paying taxes is unavoidable there are some things you can do to reduce the sting a bit.  To kick things off, tips on lowering your property taxeswe’ll describe what property taxes are and why they’re levied in the first place.

Property tax is a tax which is levied against your home and other real estate that you own.  A variety of factors affect how much you will pay in taxes each year, but some of the biggest ones are the true value of your home, your county’s millage rate, the rates applied by any special tax districts that you live in (such as a city or a school board) and your exemptions (such as a homestead exemption).   In Florida, around 50% of public education funding and 30% of your local government’s revenues come from property tax.  This tells us that your tax money is being put to work and that you’re not getting any of it back without a fight.

In order to lower your taxes, you have to prove that you are being taxed at an unreasonably higher rate than owners of other similar properties.  You can do this in a variety of ways.  One of the simpler methods is to establish that the assessor made a mistake when he or she evaluated your house.  This covers cut and dry mistakes where he got your square footage wrong or said that you have a pool when you don’t.  These are usually open and shut cases. If you just bought your house for less than the value it’s being assessed at, you’ve got another solid argument.  You can lose appeals like this, but at least it means that you got a great deal on your house.

If neither of these two situations describes you, then you have to prove that the assessor made faulty comparisons when valuing your home.  This argument is a lot less clear cut but you can still win.  In this case you need to look at ‘comparable’ homes, which are similar to yours in design and reasonably close to yours  geographically (i.e. in the same city/county).  In order to make a well-founded case, you should visit your property appraiser’s website and learn which factors they consider (square footage, number of bathrooms, etc.) when valuing your home.  Many appraiser websites also have a web portal where you can look up information about your home.  Once you know where you stand, look at other homes with similar taxable attributes.  If their tax rate is lower than yours you might have a case; typically the difference has to be around 10%, but this can vary.

Once you’ve determined that you’re being taxed too highly, you can file a complaint with your local value adjustment board.  Each county in Florida has a 5-member board which rules on challenges to a home’s assessment.  Value adjustment boards are not able to change the millage rates adopted by local governments, but they are independent of your property appraiser which helps ensure unbiased results when challenges are made.

We hope this post has helped you understand a bit more about how property taxes work and given you an idea of what to do if you think you’re being unfairly taxed.  If you’d like to check out interesting community features nearby your home, have a look at the MoversAtlas MoveMap, it makes getting to know your neighborhood easier than ever!

Best Advice For Buying A Home After Bankruptcy

Buying a home after bankruptcy presents a number of challenges.  Declaring bankruptcy severely damages your credit and significantly lowers your credit score.  This effectively destroys your ability to purchase a home or any other large item buying a home after bankruptcyfor some time.  In today’s economic climate, getting a home loan can be difficult, but the damage bankruptcy does to a person’s credit is temporary and there are a number of things you can do to improve your chances of finding a lender and buying the home of your dreams after bankruptcy.

The best thing you can do is give yourself time.  Most lenders will not even consider issuing you a loan until at least two years after your bankruptcy has been discharged.  On the bright side, two years isn’t that long of a wait and there are many things you can (and should) do during that time to improve your credit and increase your attractiveness to lenders.  The very first thing you should do is get a copy of your credit score.  This will help you more fully understand where you are financially and allow you to spot any mistakes that might be dragging down your credit score unnecessarily.  If you do spot any mistakes, dispute them with the credit agency that issued your score.

After you’ve gotten a handle on where you stand, you can begin working to improve your credit score; with proper planning and discipline your credit rating will improve over time.  Keep in mind that the overall goal here is to prove to lenders that you can be trusted to pay back money that you have borrowed.  Improving your credit score is a way to accomplish this.  While it isn’t necessarily advisable to take out additional credit, obtaining a secured credit card or making regular payments on an installment loan are two methods people use to improve their credit score.

A secured credit card is basically a card whose credit limit is dependent on the amount of money you have deposited with the issuing bank and your previous credit history.  With this type of card, a savings account is used as collateral on the credit available on the card.  As you’re rebuilding your credit, you should only use a fraction of the credit available to you.  In other words, don’t max out all of your cards.  Also, make sure your payments are on time and over the minimum amount required by your bank.  Don’t bounce any checks either as these can also negatively impact your credit score.  Less obviously, try to stay at the same job for at least two years and maintain your current income level.  Lenders like to see stability when they’re evaluating who they’ll give a loan to.   Finally, make a commitment to growing your savings account.  Putting money in the bank will lower your debt-to-income ratio and allow for a larger down payment.  This is important since the larger your down payment is, the more likely lenders will be to talk to you.  A larger down payment can also lower your interest rate.

Once your credit rating is in better shape and you’re ready to get serious about looking for a home, consider getting a loan from the Federal Housing Administration (FHA).  FHA loans are often more accommodating for those who have a bankruptcy in their history than loans issued by standard lending institutions.  Additionally, be ready to pay a higher interest rate.  A past bankruptcy often means a higher interest rate; but a larger down payment can lower it for you.

Finally, make sure to purchase only what you can afford.  Mortgage calculators can help you figure out what sort of down payment you can expect.  Best of luck in your home search; if you’d like to check out communities you’re interested in -  have a look at our MoveMap, it makes finding the neighborhood that’s right for you easy and fun!