“Nailing it Down”
By Dave Murnen
and Pat Beaty
Maybe it’s not “improved” you want, it’s “new” you’re really after.
We’ve been talking about remodeling your home for several weeks. But as exciting as it is to transform your home by updating your kitchen or adding a family room, that might not be the best solution for you.
Maybe with all things considered, it simply makes more sense to look for a new house. Or, perhaps you’re wondering about entering the proud world of homeowners for the first time.
On Grays Harbor, now is a particularly good time to buy a house. The jobless rate slipped down to the lowest it’s been since 1976, interest rates are still low, and it’s definitely a buyers’ market with more houses for sale on the Harbor at one time than there have been for years!
Once you’ve made the decision that you may want to buy a house, a good next step is to take a hard look at your finances so you know just how much of a home you can afford.
Evaluating your credit
Because most folks don’t have the luxury of being able to pay for a new house in cash, we have to find a bank or another institution willing to loan us the money.
Before they do that, they’re going to want to make sure you’re a good risk for paying it all back. They can determine this by looking at how much you make, and how much money you’ve managed to squirrel away. They’re also concerned with how much money you owe other people for such things as cars, college tuition, credit cards, etc., as well as how you’ve paid off your bills in the past.
Have you paid every bill regularly and on time, or has your credit rating suffered because of missed or late payments?
One pretty standard rule of thumb is that a mortgage loan should not exceed 33 percent of your family’s gross income. In addition, those who loan money are reluctant to have your total debt reach more than 38 percent of your gross income.
When lenders or other businesses extend you a loan or line of credit, they inform one or more of the large credit reporting agencies. If you make late payments, bounce a check or default on a loan, the affected business also notifies these agencies. This information forms your credit record.
The Fair Credit Reporting Act entitles you to obtain copies of your credit history. If you’re thinking about asking for a loan to buy a new house, this is a good time to get a copy of your credit report. For one thing, sometimes the credit report can contain mistakes that could harm your ability to get a loan.
Here are the three major credit reporting agencies. You can order a report from any of the three by calling the toll free numbers and following the instructions. For each there is an $8 charge for the report.
P.O. Box 2104
Allen, TX 75013-2104
P.O. Box 105783
Atlanta, GA 30348
P.O. Box 390
Springfield, PA, 19064-0390
(If unemployed or low income, may be eligible for free report.)
Correcting your credit report
If you discover errors in your credit report, you should correct them before applying for a loan.
Contact each business that made an inaccurate entry and ask them to retract it. If they refuse, contact the credit reporting agency or agencies and tell them that you dispute the entry.
By law, the credit-reporting agency must include your objection in the credit report. If you find many serious errors or encounter difficulty in fixing them, consider hiring an attorney to help you.
Improving your credit report
If your report accurately show that you haven’t been consistent in paying your bills on time, you must change your ways –and soon -- if you hope to secure a loan.
Pay any past due accounts immediately. And begin establishing a good credit record by paying all your bills on time.
At Aberdeen Neighborhood Housing Services we have folks who specialize in helping you budget your money, improve your credit rating and who may even be able to help you secure a loan.
Give us a call and we’ll hook you up with our very own Royce Travis, a top-notch housing counselor. If there’s a way to prepare you to become a home owner, she’s the one who can help you through the process.
Dave Murnen is the construction manager and Pat Beaty is a construction specialist at Aberdeen Neighborhood Housing Services, a non-profit organization committed to creating safe and affordable housing for all residents of Grays Harbor County. Do you have questions about home repair, remodeling or becoming a homeowner or a member of our contractor pool? Call 533-7828 or visit us at 710 E. Market St. in Aberdeen.