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Is it time for a Home Insurance check-up?

Your home is perhaps your most cherished and largest investment, so naturally you want to have financial protection in case something happens to your property or its contents. To offset these costs, you purchase homeowners insurance. But when was the last time you reviewed your policy to make sure that your coverage was up-to-date? If your answer is “when I purchased my home five years ago,” it’s definitely time to take another look at your policy.

Ideally, your homeowners insurance policy should be evaluated once a year, and sooner if you’ve completed major work to your home or have a life event such as marriage, new baby or divorce. This review will help guard against you being under- or over-insured. Below are some situations that will illustrate why it is important to make sure that your homeowners insurance is current.

Remodeling


Have you added on a room or made significant upgrades to an existing room in your home? What about structures outside your home such as a hot tub or gazebo? These improvements, undoubtedly, have increased the value of your home. When you purchased your homeowners policy, your coverage was based on the value of your property at that time. If there is damage to your home, you want to make sure that those areas are covered as well.

Safety Upgrades


Did you know most insurance companies give discounts for features that increase the safety of your home? If you’ve installed items such as fire sprinklers, central home security system, smoke detectors, deadbolt locks or even added an upgraded electrical system, you could possibly reduce your premium.

Personal Property


Besides structural coverage, most standard homeowners insurance policies include personal property coverage. Usually there is a percentage or dollar limit on the amount protected.

Take a home inventory. Are your current limits sufficient? If you’ve purchased high-ticket items such as computers, jewelry, and artwork, you may need to get additional coverage. Talk with your insurance agent to decide if you should increase your limits or purchase an endorsement/rider, which will give you higher and broader coverage than you have under your homeowners policy.

Life Events


Different life events can affect your coverage. For example, if you get married and your spouse moves into your home, you will need to make sure that there is enough coverage for your combined assets and even all of the wedding gifts you received. On the other hand, if you divorce, you may be able to decrease your personal property limits.

Deductible


Are your deductibles still relevant? Based on your current financial situation, you may want to adjust them. A higher deductible lowers your premium and increases the amount you will pay toward a loss.
Because the mortgage lender often pays insurance premiums, it is easy to overlook your insurance coverage. However as the homeowner, make it a priority to review your policy periodically and make changes as needed. That way if damage or loss does occur to your home or its contents, you are adequately insured. Speak with your insurance agent, who can give you more in-depth information and explain your policy to you.

 

Picayune Insurance Companies:

Allstate – 915 Hwy 43 North, Picayune MS – 601-798-7005

Farm Bureau – 6361 Hwy 11 North, Picayune MS – 601-798-2861

State Farm – 1817-B Hwy 11 North, Picayune MS – 601-798-4082

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You’ve Got The Keys, Now It’s Time To Settle In, Improve, And Maintain

You might not realize it, but qualifying for a home loan, making an offer, and signing documents at the closing are only part of the home ownership process. Once you receive the keys to your new home, there are still steps you need to take before truly calling your house home.
Settling In
The most obvious step you’ll take next is packing and moving your household contents. If you plan on hiring a professional, check with your real estate representative to see if he or she knows a reliable mover.  Once you’ve moved in, one of the first things you want to do is change the lock on all entry doors. This ensures that only your household has access to your home.  You’ll also want to make arrangements for special services such as paper delivery, cable and high-speed Internet service, and garbage and/or recycling pickup.  Get to know your neighborhood. Introduce yourself to your neighbors. They can give you inside information such as babysitters, names of contractors and more. Take a tour of your new neighborhood. Locate the nearest fire and police stations, as well as hospital. This will also give you an opportunity to find the closest grocery store, gas station, parks, etc.
Organizing
Next up is making sure that all of your documents are in order and that others know where you are.  At your closing, you more than likely were given a copy of your settlement papers. Make sure that you file them away somewhere that is easily accessible for tax time. Or, keep them with your other tax records. Next, don’t forget to finish sending out your change of address to family, friends, magazines, and organizations that may not have been a part of your primary group. Notify the Internal Revenue Service of your change of address. You can download Form 8822 from the website www.irs.gov or call (800) TAX-FORM (829-3676) to order the form by phone.
With a change in your address, there are other documents that need to be changed as well such as auto registration, driver’s license, and voter registration. Check with your state organizations to see what the procedure is. Also, don’t forget to notify your insurance agent of your change of address so that your policies remain up-to-date.
Improve and Maintain
After you’ve unpacked your boxes, it’s time to get to know your home. Locate your smoke detectors, furnace and switch or fuse box. Go room to room and make an improvement checklist such as new carpeting, window dressing or painting. Note regular maintenance that will be required such as cleaning water drains and replacing air filters and batteries in smoke detectors.  After you’ve completed an inventory, you may decide that you want to hire contractors to help with decorating needs. You may even decide that you want to hire a home cleaning or lawn care service. Your real estate professional is a good source for getting reliable recommendations.
There is much to do when you move into a new home. However once you’ve unpacked the last box, painted the final room, and all your services are running smoothly, you can sit back in your favorite lounging chair and enjoy the benefits of home ownership.

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Remodeling Options that Will Pay Off At Closing

Whether buying a new home or renovating an existing one, you want the upgrades and options you choose to personalize your home. However, if you are looking to recoup some of your investment during resale, you need to know that not all enhancements add value.

As a general rule, functionality wins over cosmetic and neutral is preferable over the exotic. Current trends also play a factor. According to HousingZone.com, some popular features among suburban home buyers are: oak kitchen cabinets with natural finishes, hardwood flooring in the foyer, kitchen and hallway, kitchen islands and pantries, and door levers instead of the traditional round knob.

If you are remodeling an existing home, take a look at resale properties in your neighborhood and compare it to newer properties. This will give you an idea what may be considered a standard or luxury item.

If you are selecting upgrades to a new home, ask the builder how much other buyers are spending on upgrades, as well as the type of upgrades. Use this information as a gauge so that you won’t over-improve your home. National research shows that the typical home buyer spends $5,000 to $7,500 on options (source: New Home Options Become Commonplace, Sept. 19, 2001, Realty Times).

Your real estate professional can also give you guidance on the type of options and upgrades that can add resale value to your property.

Below are some enhancements that will more than likely provide a return for your investment.

Wiring
In this age of high-tech, having your home wired for high-speed Internet access and computer data ports throughout the house is a plus. In addition, extra ceiling fan outlets give buyers the flexibility of adding more fans.

Fireplace
This is a valuable option that is worth more in certain locations such as the family room rather than in rooms such as guest bedrooms.

Flooring
Upgrading your carpet padding can make your carpet last longer, especially in high-traffic areas. You may also want to upgrade the carpet in those areas as well.

Hardwood floors are another popular feature that many buyers are interested in and are willing to pay extra for.

Kitchen
Updating your cabinets and counter tops are just two minor changes you can make that will modernize your kitchen and increase your home’s resale value. According to Remodeling magazine, minor kitchen enhancements return more value than any other remodeling project.

Siding
New siding can give a much needed facelift to an older home. Vinyl siding is preferable because it comes in almost any color and wood texture. It is also easy to maintain.

Decks
Adding a deck can provide a comfortable outdoor setting for homeowners to get some fresh air, relax and entertain. According to Remodeling magazine, deck addition projects recoup 54 percent of the initial investment at resale.

Although, your home is an investment, it is just as important that you are able to enjoy it. Just because an enhancement doesn’t add monetary value doesn’t mean you shouldn’t add it. So, go ahead and add the two spas in the back yard or the fireplace in the kitchen. Just be aware that if you do, don’t expect others to want to pay extra for it. Most future homebuyers will be willing to pay more for the upgrades, but not substantially.


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Preparing A House For A Home Inspection

Click on image above to see a “Virtual Home Inspection”

There are many things that a Home Inspector will be looking at during an inspection. The list below may be helpful in preparing. Many of these items can be done with little or no cost and many are regular maintenance items for a home.

  • Remove grade or mulch from contact with siding. Six (6) or more inches of clearance is preferred.
  • Clean out dirty gutters or debris from the roof.
  • Divert all water away from the house; i.e. Downspouts, sump pump, condensation drains, and the like. Grade should slope away from the structure. Clean out basement entry drains.
  • Trim trees, roots and bushes back from the foundation, roof, siding, and chimney.
  • Paint all weathered exterior wood and caulk around the trim, chimney, windows and doors.
  • Seal asphalt driveways, if cracking.
  • Seal or point up masonry chimney caps. Install metal flue cap.
  • Clean or replace HVAC filter. Clean dirty air returns and plenum.
  • Patch up any failing mortar joints in brick or block.
  • Test all smoke detectors to ensure they are in safe working condition.
  • Update attic ventilation, if none is present.
  • Have the chimney, fireplace or wood stove cleaned and provide the buyer with a copy of the cleaning record.
  • Seal masonry walls in the basement.
  • Don’t do quick cheap repairs. You may raise questions that will unfairly cause great concern to buyers and inspectors.
  • Ensure that all doors and windows are in proper operating condition, including repairing or replacing any cracked window panes.
  • Ensure that all plumbing fixtures (toilet, tub, shower, and sinks) are in proper working order. Check for and fix any leaks. Caulk around fixtures if necessary.
  • Install GFCI receptacles near all water sources. Test all present GFCI receptacles for proper operation.
  • Check septic tank for proper operation.
  • Replace any burned out light bulbs.
  • Replace rotting wood and/or firewood from contact with the house.
  • Ensure that proper grading is followed under a deck.
  • Install proper vapor barrier in crawl spaces.
  • Caulk all exterior wall penetrations.
  • Check to ensure that the crawl space is dry and install a proper vapor barrier if necessary. Remove any visible moisture from a crawl space. Moisture levels in wood should be below 18% to deter rot and mildew.
  • Check that bath vents are properly vented and in working order.
  • Remove paints, solvents, gas, and similar materials from crawl space, basement, attic, porch, and so forth.
  • If windows are at or below grade, install window wells and covers.
  • Have clear access to attic, crawl space, heating system, garage, and other areas that will need to be inspected.
  • If the house is vacant, make sure that all utilities are turned on, including water, electric, water heater, furnace, air conditioning and breaks in the main panel.

If you have any questions or concerns about a Home Inspection, be sure to contact Michelle Fradella, Associate Broker – Keller Williams Realty Professionals

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Selling Your Home? Here’s How the Process Works

Even if you’ve bought or sold a home before, this process can still be daunting. Let’s look at the many steps involved in selling a home and see how a real estate professional works to tie them all together.

Step 1: List your property with a real estate professional. Select someone who’s knowledgeable, listens carefully to identify your needs, and with whom you feel comfortable.

Step 2: Discuss how the real estate professional can assist you in finding your new home. If you have not identified a property to purchase, you’ll want to work with someone with an in-depth knowledge of the area to guide you.

Step 3: Establish price and time frame. Your listing agent will prepare a comparable market analysis (CMA), which compares your home with similar homes in the area that are currently listed, in contract or have sold within the last six months. Supply and demand, craftsmanship, amenities, condition and any special circumstances can also impact price. For instance, a relocation might necessitate a quick sale.

Step 4: Develop and implement a marketing strategy. It’s important to develop a plan that will expose your home to as many buyers as possible. This usually includes scheduling open houses, advertising in local newspapers and magazines and on the Internet, preparing property brochures, registering with a multiple listing service, exposing the listing to brokers’ and referral networks and installing a lawn sign.

Step 5: An offer is submitted. A buyer will make an offer through his agent. The buyer’s agent will present the offer to your representative, who will promptly relay it to you and help you evaluate it.

Step 6: The negotiation process begins and eventually an offer is accepted. The process of offer and counter-offer may go on until parties arrive at an acceptable contract. This step can go very quickly or take days, even weeks.

Step 7: Buyers submit a loan application and home inspections are scheduled. Most often, the loan approval is contingent upon a satisfactory appraisal and various inspections.

Step 8: The loan is approved. All parties breathe a sigh of relief and begin preparations for moving.

Step 9: The listing agent coordinates all activities required for closing. Your agent will funnel all the closing documents to the escrow agent. Papers include the deed, mortgage, numerous tax receipts, a Certificate of Occupancy and other documents. A final walk-through will also be scheduled.

Step 10: Finalize and close transaction. What you call this final real estate transaction depends on where you live and if the parties gather for the proceedings. The term settlement applies when a meeting takes place.  In colloquial terms, many people refer to this as the closing.  In Mississippi, a closing attorney or title company “closes” the loan, and all parties sign at the closing table.

Step 11: Time to move!


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Buying Your First Home? Here’s What You Need to Know

By Michelle Fradella, Broker – Pinnacle Real Estate Services, LLC

You’ve made the decision to make one of the largest investments you’ll ever make in your life-buying your first home. You’re excited, but at the same time anxious. Some of the questions you may be asking are: Will I be able to afford the home of my dreams? Do I have enough money for a down payment? Can I get a home inspected before I make an offer?

The homebuying process can be overwhelming, but if you go into it prepared, your first purchase can be a good experience. Here are some things to consider before making the plunge.

Getting a mortgage-Fear of being rejected for a home loan is one of the main concerns for first-time homebuyers. To lessen the stress, you may want to get pre-approved for a loan before looking at prospective homes. This will not only help you feel more confident, it will also give you an advantage when there are multiple offers for a specific home. The fact that your loan has already been approved is of great value to the seller: because it shortens the purchase process and there is less of a chance that the buyer will back out of the sale.

Mortgage Payments-The costs involved in the purchase of a home can be overwhelming to first-time buyers. However, with the help of a real estate professional, you can calculate out how much they you be able to pay each month in mortgage payments, and from there, what prospective homes offer a feasible payment plan.

Down-Payment-The down-payment amount varies depending on the value of the home you choose and your mortgage lender. And in some cases, first-time home buyers can purchase a home with no money down. Although it varies from state to state, most offer government-funded programs for first-time buyers that help people buy a home with no down-payment. Your real estate professional will be able to explain the different options available to you.

Closing Costs-First-time buyers often forget to consider the closing costs when making an offer on a home. Paying closing fees of up to 10 percent of the home sale amount is not unusual. Add that to the down-payment and you’ll have quite a sum to raise before the final papers can be signed. However, a smart first-time buyer takes this into account before making an offer, and with some professional help, the costs can be estimated in advance.

Making offers-Don’t feel pressured into making an offer on the first home you see. This is a common mistake of many first-time homebuyers. Make sure you view different homes to get a feel for the marketplace. When you do decide on a home to make a bid on, work with your real estate professional to get all of your questions answered first before making an offer. But don’t wait too long to make an offer. The longer you wait, the greater the chance other prospective buyers may place offers, making it harder for you to negotiate a good deal.

Condition of the Home-Buying a “problem” home is another fear of first-timers. A home that needs major repairs can become a costly venture. And, unless the asking price is adjusted to reflect the hidden repairs needed, chances are the home is not worth as much as the seller is asking for it. To avoid unfortunate surprises, your real estate professional may advise you to hire a home inspector before making a serious offer. That way, you know what you are getting into.

Above all, remember that there are no silly questions. Make sure you understand and are comfortable with every aspect of the transaction. Your real estate professional can be an invaluable asset in helping you make educated decisions so that your first-home purchase is a rewarding experience.

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Attract Buyers With A Home That Has Eye Appeal

The housing market has become much more competitive. Many communities are beginning to see homes remain longer on the market and the bargaining pendulum swing in favor of the buyer. This is called a buyer’s market, as the number of available homes outnumbers the buyers. As a seller, your challenge is to turn a buyer’s market to your advantage.

The right price is vital, because overpricing your home can cause you to eliminate potential buyers and lengthen the time that your home stays on the market. But equally important is making sure that you give your home a competitive edge by giving it creative eye appeal.

Many homeowners make the mistake believing they are selling “their home,” but once on the market your home is actually a product.  You need to create an environment the buyer can’t resist. In other words, do everything you can to make the home so attractive, charming, cozy, inviting, comfortable and exciting that a buyer will want to buy that lifestyle for himself.

This can be accomplished by making just a few improvements in your home’s presentation.  Here are some guidelines to make your property distinctive and memorable.

1.  Eliminate clutter. Have you ever noticed how model homes are perfect with no mess, clutter, or mass of personal belongings heaped about?  There should only be a few exquisite and well-placed accessories on tables, desks, chests, etc.  Also, clear kitchen and bathroom counters and furniture of everything except decorative accessories.  Put the personal things–cosmetics, toiletries, clothes, bills, papers, and homework—out of sight.  Tuck wastebaskets under counters or inside cabinets.  Clutter and personal belongings detract from the important features of the home.

2. Create a color theme. If you embark on any investment decorating, like painting, wallpaper, draperies or new furniture purchases, create a color theme that’s consistent.  Wall-to-wall carpeting should be the same throughout the house.  Neutral colors are best to please all tastes.

3. Rearrange the furniture. Just the slightest readjustments can make a big difference. Pull the furniture from against the walls to create a more intimate setting. Move furniture from one room to another. That extra armchair in the living room may create a cozy sitting area in the guest bedroom.

4.  Create custom spaces. Luxury master bathrooms, decorator kitchens, built-in cabinets, computer workstations, exercise rooms, and children’s play areas are the kinds of features that generate sales appeal.  Even if you don’t have these specific custom spaces, you can fashion them or suggest the potential for creating them.  Accessories, mirrors, plants and fluffy new towels can generate a feeling of luxury even in a plain-Jane bathroom.  Turn an extra bedroom into an exercise room if you’ve got the equipment, or a loft space into a child’s play area or hobby center.

5. Keep it clean and pristine. Dust, vacuum, mop and polish on a regular basis.  You’re not selling the furniture, but a high shine on wood furniture and floors can make a room sing.  Touch up nicks on walls and make sure the porcelain sinks and tubs and metallic fixtures shine.  Windows should sparkle.  Keep yards and landscaping neat and attractive.  Add color spots of flowers to perk up entryways and yards.

6. Consult with a professional. There are decorator professionals trained to “stage” a home for sale. They are able to offer an objective view of what buyers are looking for in your competitive market.  Depending upon location, neighborhood, demographics and price range, the special touches that turn on buyers may range from splashy master bathrooms and gourmet kitchens to children’s play areas or home offices.

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9 Deadly Mistakes Home Sellers Make

Mistake #1.  Not knowing how to price your home to sell.

Perhaps the most challenging aspect of selling a home is listing it at the correct price. It’s one of several areas where the assistance of a skilled real estate agent can more than pay for itself. Listing the home too high can be as bad as too low. If the listing price is too high, you’ll miss out on a percentage of buyers looking in the price range where your home should be. This is the flaw in thinking that you’ll always have the opportunity to accept a lower offer. Chances are the offers won’t even come in, because the buyers who would be most interested in your home have been scared off by the price and aren’t even taking the time to look.

By the time the price is corrected, you’ve already lost exposure to a large group of potential buyers. The listing price becomes even trickier to set when prices are quickly rising or falling. It’s critical to be aware of where and how fast the market is moving – both when setting the price and when negotiating an offer. Again, an experienced, well-trained agent is always in touch with market trends – often even to a greater extent than appraisers, who typically focus on what a property is worth if sold as-is, right now.

 

Mistake #2.  Using a part-time real estate agent instead of a Full-Time Realtor(R).

A part time agent is not going to be there to dedicate their full interest in selling your home. If you were in need of medical care, would you trust your body to a part-time doctor?  Your home is one of your greatest investments.  Don’t trust it to someone who isn’t working full time to market your home.

Mistake #3.  Minimal marketing exposure. 

When selling your home there are no guarantees that the ultimate buyer of your home will have simply walked through the front door. In many cases you may have to bring your home to the buyer.  Effective marketing will help ensure that your property receives maximum exposure to attract a ready, willing and able buyer in the shortest period of time. Ask your Realtor to list for you all of the ways he/she intends to market your home and on what time-line.

 

Mistake #4.  Not paying attention to “curb appeal”.

When you’re preparing your house for sale, remember the importance of first impressions. A buyer’s first impression can make or break whether they even want to go inside for a look. It is estimated that more than half of all houses are sold before the buyers even get out of their cars. With that in mind, be sure to stand outside of your home and take a realistic “fresh look” and then ask yourself what can be done to make the “curb appeal” improve. Also ask your Realtor’s opinion as to how to improve the curb appeal. It could make a huge difference in your final sales price.

 

Mistake #5.  Forgetting about health and safety issues.

Be upfront and disclose to your Realtor any problems with the property. The problems are going to be discovered anyway. A decade ago, health and safety issues were rarely a part of the typical real estate transaction. Today, however, it’s common for inspections relating to health, safety, and even environmental concerns to be a part of most sales contracts. Moreover, in many states, the seller must disclosure to the buyer any knowledge of existing property problems. In many cases, these issues have been or can be factored into the home’s listing price.

Mistake #6.  Forgetting to put yourself in the buyer’s shoes

Remember that although people can be different in personality, they tend to be the same when it comes to expectations at someone else’s expense. In other words, a prospective buyer would probably like to see a perfect home from top to bottom, inside and out, when it comes to your home. Try to do as many of the following items as possible to improve the likelihood of your home sale in an expedient way.

On the outside

o       Sweep front walkway.

o       Remove newspapers, bikes and toys.

o       Park extra cars away from the property.

o       Trim back the shrubs.

o       Apply fresh, clean paint throughout.

o       Clean windows and window coverings throughout.

o       Keep plumbing and all appliances in working order.

o       Maintain all sealant (window, tub, shower, sink, etc.) in good condition.

o       Make sure roof and gutters are clean and in good condition.

o       Mow the lawn frequently and plant flowers.

o       Keep pet areas clean.

On the inside

o       The kitchen and bathroom should shine.

o       Quick once-over with the vacuum; carpets should be clean.

o       Place fresh flowers in the main rooms.

o       Put dishes away, unless setting a formal display for decoration.

o       Make all beds and put all clothes away.

o       Open drapes and turn on lights for a brighter feel.

o       Straighten closets.

o       Put toys away.

o       Turn off television.

o       Play soft music on the radio/stereo.

o       Keep pets out of the way and pet areas clean and odor-free.

o       Secure jewelry, cash, prescription medication and other valuables.

o       Enhance the spaciousness of each room.

 

 

Mistake #7.  Thinking you need to be in the home to explain things to a prospective buyer.

You will be better served if you allow your Realtor to do their job without you there.  An experienced Realtor will know how to show your home, and point out the items that matter most to their buyers.  Most potential buyers usually feel more comfortable if they can speak freely to the real estate professional without the owners being present.  If people who are unaccompanied by an agent request to see your property, you should refer them to your real estate professional for an appointment.

Mistake #8.  Not planning your move early enough.

Many sellers simply don’t plan their move early enough and then feel totally overwhelmed at the time of moving out of the house. If you are able to move at any time of the year, don’t wait until summer, the peak-moving season. Consider also that the first and last few days of the month are extra busy. If you plan to sell your house, get it on the market as soon as possible. Keep a record of all expenses related to the move, some of which may be tax deductible.

Fill out the Personal Household Inventory for each room. This is important for establishing the amount of declared valuation for the shipment and as a permanent inventory for insurance purposes. List, as nearly as possible, the year of purchase and original cost of each item. Attach any invoices or records of purchase to the completed inventory.

Prepare a separate high-value inventory if the shipment will contain articles of “extraordinary” value. The following list includes items that might fall into this category:

o       Antiques

o       Art Collections

o       Cameras

o       China  Collections

o       Computer Equipment

o       Crystal

o       Figurines

o       Firearms

o       Jewelry

o       Manuscripts

o       Oriental Rugs

o       Silver

o       Stones Or Gems

o       Tapestries

o       TVs Or Stereos

 

Also, unless you have been given a binding moving estimate where a firm cost is established in advance, the exact cost of a move cannot be determined until after the shipment has been loaded on the van and weighed. The weight on which charges are based is calculated by weighing the van before and after loading. The total cost of the move will include transportation charges, any charges for declared valuation, plus charges for any extra services performed at your request. All of these charges are based on tariff rate schedules.

 

Mistake #9.  Using a “discount broker” to list your home.

When working with a real estate agent, it’s critical that you have full confidence in that agent’s experience and education.  A skilled, knowledgeable agent will be a great negotiator.  If an agent is willing to drop their fees, before they even begin marketing your home, how strong of a negotiator do you believe they will be when it’s time to stand strong for YOU and negotiate the best price possible for your home?

These agents also offer less of the commission split to a cooperating broker (the one that will most likely be bringing the buyer for your home), and if your home is offering less commission, it will most likely be placed on the bottom of the properties offered to their buyers (if it’s even included in the list at all).  Think about it this way – if you were going to be offered $3000 on one job, and $2000 on another, which job would YOU pick to work?

 

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8 Ways To Improve Your Credit

1. Check for and correct errors in your credit report. Mistakes happen, and you could be paying for someone else’s poor financial management.
2. Pay down credit card bills. If possible, pay off the entire balance every month. However, transferring credit card debt from one card to another could lower your score.
3. Don’t charge your credit cards to the maximum limit.
4. Wait 12 months after credit difficulties to apply for a mortgage. You’re penalized less for problems after a year.
5. Don’t purchase big-ticket items for your new home on credit cards until after the loan is approved. The amounts will add to your debt, and this could affect your credit score, and/or debt-to-income ratio on your pending loan.
6. Don’t open new credit card accounts before applying for a mortgage. Having too much available credit can lower your score.
7. Shop for mortgage rates all at once. Too many credit applications can lower your score, but multiple inquiries from the same type of lender are counted as one inquiry if submitted over a short period of time.
8. Avoid finance companies. Even if you pay the loan on time, the interest is high and it will probably be considered a sign of poor credit management.

This information is copyrighted by the Fannie Mae Foundation and is used with permission of the Fannie Mae Foundation. To obtain a complete copy of the publication, “Knowing and Understanding Your Credit,” visit http://www.homebuyingguide.org.

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8 Steps to Getting Your Finances in Order

1.  Develop a Family Budget. Instead of budgeting what you’d like to spend, use receipts to create a budget for what you actually spent over the last six months. One advantage of this approach is that it factors in unexpected expenses, such as car repairs, illnesses, etc., as well as predictable costs such as rent.
2.  Reduce Your Debt. Generally speaking, lenders look for a total debt load of no more than 36 percent of income. Since this figure includes your mortgage, which typically ranges between 25 percent and 28 percent of income, you need to get the rest of installment debt—car loans, student loans, revolving balances on credit cards—down to between 8 percent and 10 percent of your total income.
3.  Get a Handle On Expenses. You probably know how much you spend on rent and utilities, but little expenses add up. Try writing down everything you spend for one month. You’ll probably see some great ways to save.
4.  Increase your income. It may be necessary to take on a second, part-time job to get your income at a high-enough level to qualify for the home you want.
5.  Save for a down payment. Although it’s possible to get a mortgage with only 5 percent down—or even less in some cases—you can usually get a better rate and a lower overall cost if you put down more. Shoot for saving a 20 percent down payment.
6.  Create a house fund. Don’t just plan on saving whatever’s left toward a down payment. Instead decide on a certain amount a month you want to save, then put it away as you pay your monthly bills.
7.  Keep your job. While you don’t need to be in the same job forever to qualify, having a job for less than two years may mean you have to pay a higher interest rate.  8.  Establish a good credit history. Get a credit card and make payments by the due date. Do the same for all your other bills. Pay off the entire balance promptly.