IS THIS A GOOD TIME FOR ME TO BUY A HOME ?

One of my readers in Georgia, Valerie, asked me this exact question. She was concerned with the state of the Real Estate market including what has happened to property values over the last several years. Additionally, she is 35 years old and knows that thirty years or so down the road, she must have an eye on those “retirement” years also.

After weeks of research and reading many of the “experts” opinions, I stumbled across a website that answered all questions and settles the issue. For me at least. You may go to this link and program your own variables to see for your own self, the answer to the question “should I buy a home now?”

THE ANSWER IS A NO BRAINER

I used a monthly payment of $800 for rent, and mortgage payment. That would be the monthly principal and interest (5%) payment on a $150k mortgage. In addition I put in an appreciation factor of just 2% (as opposed to the 30-40% pre-crash), and 1% for property taxes. All considered very conservative factors.

AND THE RESULTS ARE IN

At the end of 30 years, the person who continued to rent has nothing but a lease in their hand, and, of course that same $800 rent has been adjusted for inflation to be about $1100. Still paying rent with ZERO TO SHOW FOR IT. The person who became a BUYER and stopped throwing their hard earned cash away on rent … that BUYER HAS $386,000 in their pocketbook! And no payments to make. !!!

CASE CLOSED.

YES, VALERIE, THIS IS A GREAT TIME FOR YOU TO BUY (watch a quick video to learn more here)

Richard Anteau, President

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LEGAL PERSPECTIVE

Unfortunately today we live in a society that determines what things should cost us (house, car, etc) by our credit file. If your credit report is good, chances are you will partake in many of the better things in life. The complete opposite is true if your credit report is bad.

Very few creditors will extend fair credit to you with blemishes within your credit history.

Our credit system is not set up to allow people to make mistakes -or even have bad luck.  What if you had to make the simple choice between eating and making a car payment? What if a job lay-off, medical emergency, or some other personal crises prevented you from making a timely payment? Should you be forced to pay added intrest for this for the next 7 to 10 years… serving a credit prison sentence?

How is a system like this allowed to operate in our democracy? The credit bureaus have placed themselves in the position of both judge and jury in relation to your credit file. Do not forget one very important difference… A judge will give you a chance to defend yourself BEFORE ruling. We are supposed to have the opportunity in America to face our accusers BEFORE judgment is passed. This is entirely untrue when it comes to your credit records.

The truth is creditors and credit bureaus have been swapping information about you behind your back and without your permission for a long time. In effect, it is hearsay and it can cause you severe economic hardship.

The current system does not give you the opportunity to defend yourself before inscribing your credit file with negative and damaging information (even if it is not yours). Their perspective is that you must prove to them that the negative information on your credit report is incorrect, invalid, erroneous, or otherwise non-verifiable before they will remove it. In other words, in the eyes of the credit bureaus… you are guilty until proven innocent.

We are brought up to believe that one is innocent until proven guilty. Why we are not extended the same courtesy by the credit bureaus? Why do they not give us a chance to defend ourselves before they place negative information on our report? Fact is, consumer rights cost them money.
The sole focus of credit bureau companies is profit.

Your credit file is their product. The credit bureaus have no government affiliation (except for spending millions on lobbying efforts). These private corporations sell your personal financial information to anyone that will pay for it…who generally accepts it as gospel. (Although it has been proven many times that mistakes do happen all too often.)
Creditors then reciprocate by giving back to the bureaus any information that they may have on you.

What can be done?

• a democracy, everyone is entitled to a defense.

• Consumers have the right to obtain representation and face their accusers armed with their legal rights.

• The credit bureaus should have to back up the information that they sell about you. Congress and the law agree. If your defense is presented properly, whether your credit report is accurate or not, it is usually more difficult and costly to prove the information is correct than to simply remove it.

• It should require more than just a form letter to validate my credit. It does. If the bureaus state the information was only verified, our attorneys will increase the intensity of the challenge and request validation until it is permanently removed.

Legal Links

Equal Credit Opportunity Act – ECOA

Credit Repair Organizations Act – CROA

Fair and Accurate Credit Transaction Act

Fair Credit Reporting Act – FCRA

Fair Debt Collection Practices Act – FDCPA

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A “rent to own” or lease to purchase” option is an arrangement in which a buyer and a seller agree to sell a home a certain price within a certain amount of time.  It can be a good or a bad thing.

Savvy investors did this when real estate prices were ascending in order to capture future appreciation while not actually having to buy the house today and in order to shield them from a possible decline in the house. I imagine that most people reading this blog are considering lease to purchase because of two major things- bad credit and no down payment. For simplicity sake we will focus on the options these people have.

If you are someone that wants to take advantage of depressed home prices or just are tired of renting and want to start building equity, CONGRADULATIONS on taking the first step! I feel you are making a wise move, but when considering lease to own, make sure you are aware of these things.

1. Many times in lease to own situations you have to put money down and pay higher than average rent payments, the would-be seller uses the extra money to build up a down payment for you. This is OK- as long as you can qualify for a loan by the time your lease is up. This is big… If you don’t have a locked down game plan to increase your credit in an ever tightening credit market- you are just throwing your increase rent money and “down payment” out the window! The reality is most people can not improve their credit in 2 years time by themselves. If your score is below 550 I would seriously consider getting help increasing your score through a reputable credit repair company that has been doing business for a while and has a clean better business bureau track record.  In fact don’t be surprised if the land lord uses some of your added rent to pay for you to get into one of these programs. One of our companies, www.franklin-finance.com has been assisting 1000’s of people for decades and has a clean BBB track record. Their service also comes with a warranty so there is no risk to you.

2.  Make sure that the potential future price of the house is going to be in line with the appraised value or that a further decline in home prices will not result in you losing your down payment.  Most, but not all, of the land lords with these lease to purchase contracts want to sell you the house to make added commissions and capital gains but some are content to just take your down payments and increase rent.

3.  Some people say you can use the time in your home to make sure it is of sound structure, convenient for your day-to-day travels and just an overall good fit. To me this seems odd. Take your time and find a house that is a good fit for you first- not after, committing to the lease contract is a significant thing, I would not do so unless you are almost positive you can execute the purchase of the home in the end.

If it seems like to big of a step now, consider working on getting your credit back on track through a reputable company and saving up some money for a down payment. That way you can fore-go the whole lease process and buy ANY house you want, not just the ones in which someone is offer a lease to purchase contract.

All and all I would congratulate you on taking steps to becoming an owner, not a renter. Renting is fine if you are doing it for less than owning a home AND investing the difference in some asset (other than your home) that will give you something to show for your monthly payments. The sad fact is that for too many of us, the equity in our home is the majority of the money that gets put aside for retirement and is all we leave to our loved ones.

WANT TO LEARN HOW TO GET YOUR CREDIT BACK ON TRACK SPECIFICALLY FOR HOME LOAN APPROVAL? CLICK HERE

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What is credit repair all about?

A straight forward explanation with nothing to sell,

just the facts.

If you ever heard about credit repair and wondered what that was all about or how could it even be possible to have negative, accurate information like bankruptcies, credit card charge offs and the like removed from your credit report… this is the blog post for you. I’m going to give you the readers digest version because I have never seen so much misinformation about any other subject in my life. There is nothing for sale here, just a straight forward answer on what’s going on.

So you have heard about credit repair, or have seen a sign or saw an advertisement claiming to give your credit report a quick clean power wash. ….but your gut tells you it’s too good to be true. If this was possible everyone would be doing it, right?

Well here is a breakdown of what IS and ISN’T possible – and why.

Indeed, yes it is true; you can have negative information of any type removed from your credit report, even if it was really your obligation.

How can that be so? Because your credit report is nothing more than a serious of allegations made against you. Since we live in a country in which you are innocent until proven guilty – YOU HAVE THE RIGHT TO CHALLENGE THAT INFORMATION. The government has passed many pieces of legislation, most notably the Fair Credit Reporting Act, that are designed to protect you, the little guy from unfair practices that were hurting consumers. According to the non partisan

U.S. Public Interest Research Groups…

“Altogether, 79% of the credit reports surveyed contained either serious errors or other mistakes of some kind.”

This realization in the 1990’s prompted several states and eventually the U.S. congress to pass laws protecting you, giving you recourse against these huge for profit companies. Please remember this, you are the credit bureaus product, they sell information about you to potential employers and creditors – or almost anyone who wants to pay for it. If they are going to besmirch your name they have to cross a lot of t’s and dot a lot of i’s before doing so. Just ask yourself these 2 questions:

1. Can you imagine a world in which someone can keep information about you, information that determines how much your house and car cost and NOT be able to challenge it?

2. Can you imagine a world in which the collection companies, used car lots, satellite dish installers and credit card companies (the people saying you owe them money)  are in compliance with all the rules they have to follow BEFORE they put negative items on you account?

–OF COURSE NOT! STOP LETTING THESE PEOPLE SCARE YOU!

What’s it all mean? It means that again, just like in a court of law you are innocent until proven guilty except when it comes to your credit report there is no trial – it’s up to you to ask for one. . The process of credit repair is simply asking, often repeatedly, for the credit bureaus and creditors to prove what they claim to be true, to show documentation, to show that they followed the laws and so on. As you can imagine, when done properly, a lot of the negative information on all of our credit reports is so worthless that no one (neither the credit bureaus nor creditors) is either willing or able to follow the laws when asked to verify the information. Which brings us to the moral and ethical Question of credit repair, which I think people struggle with until they realize how flawed the U.S. credit system really is. If they aren’t willing to spend a one dime to defend the allegation why should it cost you 1,000’s of dollars in added interest on all the things you finance?

Why doesn’t everyone just stop paying their bills and then hire a lawyer or a company to dispute the information? Because…NOTHING IS GUARENTEED to be removed by disputing and run from any company  or person who tells you a particular item will come off. As you know if you don’t pay your debts, it will cause you pain. If there was a sure fire way to get a collection item or bankruptcy item removed from your report the world turn upside down! BUT KNOW THESE FACTS…good companies are averaging 70% deleation ratios because most items are a joke… and ANY TYPE OF ITEM CAN BE REMOVED from your credit report and it happens more often than not, you will learn why in just a minute. For now let’s recap, on the two important facts here.

1. In credit repair, nothing is guaranteed; if you don’t pay your bills, there will be pain; but credit repair can limit that pain drastically. The person disputing the item (you, a credit repair company, a lawyer) is banking on one of several things to happen. That the credit bureaus and your creditors didn’t follow all the rules and laws before they put information on to your credit report or that they simply don’t want to invest time and money fighting with you, your lawyer or a credit repair company. (Some might say that the information is erroneous or outdated or unverifiable, but in reality persistently asking for big bureaucratic companies to verify information is how a good portion of items get deleted.)

2. Because NO ONE, no company, no person or government is allowed to load things on your credit report without following some rules – ANYTHING on your report can be removed. This means any type of item can be removed, bankruptcies, credit card charge-offs, foreclosures, a tax lien from the Supreme Court (if they have those) – anything can be removed. Every citizen has the right to say “STOP – You are besmirching my character and I demand to know why and where you got this information so that I can make sure you are in compliance with the law, if you are not know that I will hold you accountable.”

You may say “But wait, I know I’ve heard that bankruptcies and certain items stay on your credit report for 7-10 years”. WRONG, well kind of wrong. The whole truth is that theses items are not allowed to stay on for MORE than 7-10 years. That’s the max, that doesn’t mean they can’t come off quicker. In fact the “7-10 rule” was passed to limit how much damage can be done to you, to restrict the credit bureaus. They are not intended to make sure you suffer for at least 7-10 years.

The real question you should be asking now is, well it’s not guaranteed, but how probable is it that credit repair can help me increase my credit score?

If you need any one item removed from your report then I would say hiring a credit repair company could be a drastic step. If you are someone that just needs an increase in score then I would say a solid company, with a good BBB track record could defiantly offer you a return on your investment. This is because the cost of bad credit is so high; the added interest payments are ridiculous. Why should not paying a cell phone bill add an extra 50 bucks a month on your car for 5 years? An extra 100 on your mortgage for 30? Why should the bank giving you a mortgage receive an extra 100k dollars over 30 years for a $1,000 worth of mistakes?

The U.S. Credit system makes no sense. For people looking to get financed for a home the return on investment made with a reputable company to fix your credit can be well worth it.

Good luck, hope this helped.

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Do you remember learning about indentured servants back in school? Back in the 17th century you could get a ride to America in exchange for 7 years labor. This meant that because you didn’t have the money now you traded 7 years of your life for one boat ride. What a horrible deal.

But how is our relationship with the bank different today for those of us with bad credit? 15+% for a car loan, 25+% for credit cards, 7-9% for a house if we can get one at all. And we all know if we rent we are paying 100% interest, a total waste. We are slaving away to pay back a bank at ridiculously high interest rates for the same cars, homes and stuff that cost others 50-75% less. This is why you feel like you can never get ahead! YOU NEVER GET AHEAD PAYING THESE HIGH RATES.

Who do you work for? Your kids, your spouse or a bank? How many hours do you put in just to pay back interest? If this makes you sick to your stomach like it does me make sure you  watch the free webinar we put on to show you how to stop being the banks’ indentured servant. If they want so much of your paycheck they should be clocking in at your place of employment and doing your job.

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1. Did you know that the credit report YOU see as a consumer is different than the ones your potential creditors might see? You see, your credit report is assembled “on the fly” its not stored information on some database at the credit bureau. When your credit is pulled a computer program searches a network for information with your social security number, name, date of birth and so on.

Did you know that when a CONSUMER pulls his or her own credit report the search criteria is different than, say, a mortgage broker? A consumer has to have all matching socials with matching DOB and so on. There are 18 different search criteria that have to match in order for an item to populate on a credit report when a consumer looks at their credit report BUT when a potential creditor pulls your credit they lower the criteria! This results in more items on your report when you are trying to get approved for financing. For Example:

-         When a creditor looks at your credit report, only the month you were born has to match? The day and the year are irrelevant; this results in more items on your report and probably lower scores.

-         For something negative to populate when a creditor pulls your credit under your social, the address doesn’t have to match, It doesn’t even have to be close – you just have to live in the same “region”

-         For a negative item to make it on to your report, your name doesn’t even have to match, just 2 letters in the name. David and Dan are the same to the credit bureaus.

This is simply not fair, why should the rules be different? What this means is that when a creditor pulls your credit to decide whether or not to extend you credit – the credit bureaus allow your potential creditors to cast a wider net than they do you…. Why is that? Could it be because they don’t want to spend the time and the money it takes to fix their records?

2. Did you know that paying off a collection can LOWER your credit score? Paying off a debt can actually hurt your credit. Negative items on your credit report are allowed to stay on your credit report for a maximum of seven (7) years, except for bankruptcy that can stay for up to ten (10) years. This 7 or 10 year clock begins ticking at the date of last activity. Making a payment represents new activity and restarts the clock. When paying an outstanding debt, you will change the account status to paid collection, paid charge-off, satisfied judgment, or “paid was xxx days late”. This is still considered very negative and appears as though you had to be strong-armed by the creditor to pay the account. It is almost always prudent to have professional help so as to not further damage your credit by trying to do the right thing.

3. Did you know that one 30 day late on your mortgage THIS month will most likely be reducing your score more than a bankruptcy that is 5 years old.

4. Did you know that two people with the same income, wealth and credit history could both have 10,000 in debt but will have drastically different scores because of that $10,000 in debt? Why? Because it’s not how much debt you have, its how much debt you have in relation to how much credit you have. Example:

If person A has in 10,000 in credit card debt but only $12,000 in available credit limit that ratio will drastically suppress the score. Meanwhile client B also has the same amount of debt but has $40,000 in available credit looks much more responsible with their credit and therefore has a higher credit score. So pay attention to the ratios, not amounts owed. This is a good reason to never cancel a credit card without a yearly fee. Rip it up; throw it away but leave it open.

6. Did you know that the United States court systems DO NOT trade information with the credit bureaus? They courts do not tell the credit bureaus about bankruptcies and tax liens. So how does this public information make it onto your credit report? Contractors are paid by the credit bureaus to find the information and upload it to your report. These for profit companies must be following the law when doing this, many times they do not.

7. Did you know that your zip code affects your credit score?

8. Did you know that the bill paying habits of your neighbors can suppress your credit score?

9. Did you know that using a P.O. Box can suppress your credit score?

10. Did you know that your previous address suppress your credit score? Previous addresses imply that you have “vagabond blood” and therefore less stable lifestyle than someone who stays put. Real Estate investors – beware!

10. Did you know that the types of companies you deal with affect your credit score, even if you pay on time? Did you know that having a capital one card can hurt your credit? Well not just capital one, any bank that has a reputation for high interest rates will look worse than a bank that has, in the eyes of the bureaus,  a more stable clientele. Since the credit bureaus cant see the interest rate you have on your credit report the look less favorably on the “cheesy banks” these are the banks that are more likely to charge higher interest rates. These look worse than banks that have a reputation for charging lower rates.

Did you know that capital one has admitted under oath that they purposely do not report your available credit limit in order to suppress your credit score? If you have a $10,000 limit and are only using $2,000 they will report your balance owed and your credit limit to be the same thing! (or close to the same) This is to reduce your score and your ability to make a balance transfer to another card less likely for you. Yikes.

11. Did you know that 4 out of 5 credit reports contain errors? According to the independent Public information research group credit reports in the united sates

- 3 out of 10 credit reports contain false delinquencies and/or accounts that didn’t even belong to consumer.

- 1 in 4 reports have accounts labeled “closed by credit grantor” even though the accounts were closed by the consumer. “Closed by credit grantor” although similarly the same it actually implies that the line of credit was taken from you, actually hurting your credit score.

12. Did you know that when you dispute an item online you are 5 times more likely to have that information verified than if done in writing? Conversely, if an attorney sends in your dispute it is 7 times more likely to not be outsourced to another offshore company for verification and therefore much more likely to result in the disputed item being removed from your credit repot.

Did you know that wealthy people have been hiring attorneys to reduce their debt and credit blemishes for years? The laws are written in your favor, you just need to take advantage of them.

Long story short the credit bureaus do not have your best interest in mind. You must always keep in mind that you are not the credit bureaus customer, you are their product. They sell your personal information behind your back without any regard for your sell being for a profit. Learn how to right these wrongs and beat the credit bureaus at their own game.

Learn more from our free webinars

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