The Home Selling Process

Step 1: Choosing A REALTOR

Selling a home is one of the largest decisions of your life. The first thing to do is to find a San Antonio REALTOR® who is educated, dedicated and you can trust.

Before working with a San Antonio REALTOR®, you should know that their duties depend on whom the they represent.The REALTOR® who lists the property for sale represents the owner. Your REALTOR®'s sole duty is to ensure that your home sells quickly, easily, and at a suitable price.

All agents must treat you honestly and fairly regardless of whom they represent,  you should enter into a written contract that

Step 2: Setting a price

When setting a price, the important thing is to be realistic. If the price is too high, you may not find a buyer. Too low, and you cheat yourself out of money.

Appraisal
Regardless of what you originally paid for your home and the cost of improvements you have made, the only price that matters is what the market will bear at the time you decide to sell. You may consider hiring an independent real estate appraiser with specialized training and experience. Don't rely on assessed valuations made for tax purposes. Such valuations may not be reliable indicators of value, as they are usually made using mass appraisal techniques.

Comparative market analysis
Whether or not you get an appraisal, your San Antonio REALTOR® can develop a comparative market analysis. This analysis will describe homes in your area that have recently withdrawn from the market and may compare specific features of your home to others--the value of a corner lot, a city view, or an extra bedroom, for example. The analysis may also point out market fluctuations caused by the opening of a new school or business, as well as long-term trends.

Net proceeds
Once you've decided on a price range, the REALTOR® can help you calculate an estimated amount you might net from the sale. If you have owned your home for several years, you may have built up sizable equity. Equity is the difference between the value of your home and the balance on your mortgage. After subtracting what you owe on your mortgage, ask your REALTOR® what costs you will incur in closing. These may include title fees, taxes, a penalty for prepaying your mortgage, brokerage commission, attorney fees, and charges for preparing and recording documents. Finally, ask your tax adviser about the tax implications of your proposed sale.

Step 3: Signing a listing agreement

After you choose a San Antonio REALTOR®, you will most likely sign a listing agreement--a contract in which you agree to allow a REALTOR® to sell your home during a given period and pay the REALTOR® a fee when your home sells. Most REALTORS® are independent contractors who work for a company operated by a licensed real estate broker.

The amount of compensation you pay a broker is negotiable, but the REALTOR® will generally follow the company's policy regarding compensation. The amount of the fee will be spelled out in the listing agreement. Make sure you understand how the fee will be paid before signing.

Exclusive listing
Most REALTORS® will ask for an exclusive right-to-sell listing. This means that you will owe the broker a commission regardless of who finds a buyer during the listing period. In other words, if you decide to sell the house to your cousin, your broker still gets a commission. In an exclusive listing, the broker is usually motivated to work harder to sell your home.

It's possible that a REALTOR® from another company will find a buyer for your home. In that case, your broker is the listing broker, and the second agent is the cooperating broker. Many times the listing broker will agree to pay the cooperating broker a fee from the amount you pay the listing broker. Your listing broker cooperates with other brokers who procure buyers interested in your property and offers to compensate the other brokers for procuring a buyer. Cooperating and compensating other brokers is discussed in the listing agreement you sign with the listing broker.

Length of listing
The listing agreement will specify how long you agree to list your house with a company. You want a period that's long enough to motivate your REALTOR® to advertise your home and respond to buyers, yet short enough to allow you to change to a different company if you become unhappy with the
REALTOR®'s service.

Remember that the listing agreement is a contract. You should get a copy for your records. Your REALTOR® is bound to the terms just as you are. You can expect the REALTOR® to keep appropriate information confidential and effectively market your property.

Step 4: Marketing your property

Preparing your home
In preparing your home for viewing by prospective buyers, remember that people buy on emotions. Your home has to feel right, or buyers will look elsewhere. Ask your San Antonio REALTOR® and some honest friends to look at your home objectively and suggest ways to make your home more inviting and sellable. Consider both the exterior and interior. Since you will be appealing to buyers' feelings, you need to pay attention to detail. An extra $50 you spend on red geraniums or new bath towels might mean a significant increase in a buyer's offer.

Clean your home thoroughly and make minor repairs such as tightening towel racks and gluing wallpaper edges. For larger repairs, consult your San Antonio REALTOR® as to whether repairing the item will generate a good return on the sale. Repainting the woodwork may be worth it, but replacing the carpet may not. Hire a professional inspector to examine your house for structural and mechanical defects. Get an inspection early, and you can avoid surprises.

Honesty and candor
If your home has a major problem you don't intend to correct, be candid about it. Don't paint over the water marks on the ceiling to hide a leaky roof. Buyers will find out about the problems anyway, especially if they are smart shoppers and hire a professional to inspect your home. In an age when lawsuits are as common as family sit-down dinners, it pays to be open about everything.

You should consider including a one-year residential service contract with the sale of your home. This buyer perk is a common practice and helps ease concerns. Typically, after the first year, the buyer has the option of renewing the coverage at his or her expense. A residential service contract is simply an agreement with a company to repair certain items on the property if such items fail to function or are in need of repair (for example, air conditioning unit, heating equipment, plumbing system, etc.).

Attracting and screening buyers
As part of the overall marketing strategy, your San Antonio REALTOR® may arrange a tour of your home for local REALTORS® and perhaps schedule an open house for the public. Your REALTOR® may also run ads in local newspapers, Web sites, and other publications tailored specifically for the type of home you are selling. As responses come in, your REALTOR® will screen out sightseers and half-hearted inquirers and make appointments with the serious prospects.

When the showings begin, keep your home clean and ready. Your REALTOR® will try to give you advance warning before showing your home but be prepared anyway. If people drop by and are not with a REALTOR®, it's best not to show them your home. Ask for their names and phone numbers and refer them toyour REALTOR®.

Purposeful absence
When a REALTOR® comes to show your home, it's best if you are not there. Many buyers feel like intruders when the owner is present; they tend to hurry away. Letting the buyers walk through your property at their own pace will help put them at ease. They will feel free to look around and ask questions. If you must be there, let the REALTOR® handle the showing. Sit quietly and be courteous, but avoid engaging the buyer in conversation. The REALTOR® needs the buyer's complete attention to show your home properly.

Fair housing
REALTORS® are required by law to make your property available to all persons without regard to race, color, religion, national origin, sex, disability, or familial status. Your REALTOR® will not discuss any matter that may potentially discriminate against any person.

Step 5: The offer

When a buyer makes an offer on your home, your San Antonio REALTOR® will contact you promptly. The REALTOR® will scrutinize the document, review it with you carefully, and answer your questions. The written offer lays out all the terms of the proposed transaction--the price the buyer is willing to pay and the financing terms--and becomes a binding contract if you sign it.

The offer may be contingent on the buyer selling a home first or obtaining an inspection. Ask your San Antonio REALTOR® how these terms affect you and whether the offer is in line with the market. The offer describes the property, states who pays for which closing costs, and specifies dates of closing and possession. Along with making the offer, the buyer may place some earnest money with the escrow agent as a sign of good faith. The earnest money will be kept in an escrow account and applied to the buyer's down payment or closing costs when the sale closes.

Your options
In reviewing the offer, you have three options: accept, reject, or make a counteroffer. A counteroffer is a rejection of a buyer's offer with a simultaneous offer from you to the buyer. Carefully review the figures compiled earlier to determine your net proceeds--closing costs may be quite different from earlier calculations. Discuss the possibilities with your San Antonio REALTOR®, your attorney, and a tax adviser.

Seller's disclosure
In most residential sales, Texas law requires that the seller deliver a seller's disclosure notice to the buyer on or before the effective date of purchase. This document provides important information about the seller's knowledge of the condition of the property. Complete the notice to the best of your knowledge and belief. Your San Antonio REALTOR® will most likely ask that you complete the notice at the time the listing is first taken. Copies of the completed notice will be made available to those looking at your property.

Lead-based paint disclosure
If your property was built before 1978, federal law requires that before a buyer is obligated under a contract to buy the property, the seller shall: 1) provide the buyer with a lead hazard information pamphlet (as prescribed by EPA); 2) disclose the presence of any known lead-based paint or hazard; 3) provide the buyer with a lead hazard evaluation report or records available to the seller; and 4) permit the buyer to conduct a risk assessment or inspection for the presence of lead-based paint or hazards. A contract for the sale of property built before 1978 must contain a statutorily prescribed Lead Warning Statement to the buyer. Your REALTOR® will provide you with the forms necessary to comply with the law and will suggest procedures to follow in order to comply.

Accepting the offer
Once you and the buyer agree on terms and sign the contract, the buyer will generally have to find a lender and apply for a loan. Your San Antonio REALTOR® may monitor the loan process, which could last several weeks. During this time, your REALTOR® will also be busy coordinating other arrangements to prepare for the final sale.

Title search
As part of the process, the title company may order a survey of your property and research the title to your home, making sure the chain of title is clear. Clearing the title may require paying off liens--that is, any monetary claims against your property. Examples are: mechanic's liens, unpaid state and federal tax liens, court judgments, and probate considerations (if a co-owner has died). The product of the title search can be in the form of title insurance, abstract of title, or certificate of title, depending on what is commonly used in your area.

Inspection and repairs
If the buyer requires it, your San Antonio REALTOR® can coordinate an inspection of your home. A buyer may hire an inspector to review many items in the property such as the structural components, mechanical items, electrical systems, and plumbing systems. The inspector will report to the buyer the items that the inspector finds to be in need of repair. Most likely, the buyer will provide a copy of the inspection report to you and may ask you to complete certain repairs. Don’t be surprised if the inspection notes some items in need of repair. An inspector is trained to see items and defects that are not obvious to you and your REALTOR®. No matter how new or well-maintained a home is, an inspector may find some items in need of repair.

Step 6: Closing the deal

Closing the deal
The sale formally ends at the closing table. In most transactions, the closing lasts less than an hour and often occurs at the title company office. Your San Antonio REALTOR® and the buyer's agent may be present. A title company officer or escrow agent will preside. Be sure to bring your driver's license to the closing (DPS identification cards and passports are also acceptable).

Basic documents

The sale actually consists of two transactions: 1) transferring the property to the buyer, and 2) paying off the existing mortgage on your home (or allowing the buyer to assume your mortgage). To transfer the property, the title company will present documents proving that you have the title. Proceeds of the sale may be disbursed at closing or shortly thereafter, once all the paperwork and verifications have been processed. When you give your house key to the new owners, the sale

is complete.

The Home Buying Process - 6 Steps

Step 1: Choosing a REALTOR®

For buyers, there's really no downside to hiring a REALTOR® because the seller generally pays buyer's-agent commissions. These agents can save you time and money by researching properties based on your criteria, helping you secure the best mortgage rates, counseling you on the offer amount and terms most favorable to you, and negotiating on your behalf. (Plus I offer to all of my clients a Buyers Cash Rebate from what would be sellers payed commission just for buying there home with me!)

All brokers must treat you honestly and fairly regardless of whom they represent.

If you choose to have a San Antonio area REALTOR® represent you, you should enter into a written contract that clearly establishes the obligation of both parties.

Step 2: Deciding what you need and want

Needs and wants list
Before you start looking, make a list of what you want and need. Once your list is made, go back over it and decide what is most important--which items are musts and which you are willing to give up. Assign each item a priority so that you will know what to look for as you begin house hunting.

Location
Deciding where you want to live may be the single most important factor in choosing a home. Location to employment centers, shopping centers, schools, major traffic arteries, and other attractions are important and have significant influences on value.

Your choice of location may be limited somewhat by the price you can afford. Even so, make sure you consider such things as:

• prices of properties and property taxes;
• distance to work, schools, shopping, and entertainment;
• proposed changes in land use such as commercial shopping centers and roads, and potential hazards such as flooding and noise from a nearby airport
  or highways.

Type of home and lot
A single-family detached home typically provides more living space and land area than other types of living units and permits you greater freedom (less restrictions) to remodel, expand, paint, and alter the appearance.

If you don't like spending leisure time on yard work, consider a condo or garden (patio) home. Condos and garden homes often offer shared greenbelts and garden areas or membership in private recreational facilities such as swimming, golf,
and tennis.

New vs. older homes
Preowned homes usually have established yards, and the neighborhood or subdivision is usually built-out. On the other hand, they may require
more maintenance.

New homes are not without problems. Although they require less maintenance in the first few years, you may have to put in landscaping and call the builder back to correct faults. And if buildings are still active in the area, you may have to endure nearby construction.

You could already have your dream home in mind. Then again, you might not know what you like until you see it. Either way, your San Antonio REALTOR® will listen to your preferences and help you find the perfect home.

Step 3: What can you afford?

There are typically three major areas of concern when deciding what you can afford: down payment, qualifying for a loan, and closing costs.

Down payment
A conventional loan typically requires a down payment. It is not uncommon for buyers to place a down payment of 10% to 20% of the purchase price. For example, on an $80,000 home, a down payment of $8,000 to $16,000 in cash may be warranted.

Government-backed loans, insured by the Federal Housing Administration (FHA) and the Veterans Administration (VA) are particularly useful to first-time buyers and often require 5% or less as a down payment.

Generally, a higher down payment means better loan terms and a lower interest expense on the mortgage.

Qualifying for a loan A lender will determine how much they think you can afford. But remember, just because the lender says you can afford one price doesn't mean that's what you should spend. Be wise and thoroughly examine how much you should spend on a home.

Be prepared to provide the lender with a two- to five- year financial history that contains the following:

• Income--gross monthly income as well as employment history, education, and any secondary income such as bonuses, dividends, and child support. The lender may require a letter from your employer, W-2 forms, or, if you are self-employed, recent tax returns.
• Assets--current checking account balances, savings accounts, stocks and bonds, certificates of deposit, other property, insurance policies, and
  pension funds.
• Credit--debts on cars and appliances, debts on all credit cards, and history of debt repayment. Your lender may ask for a credit report, so you may want to clear up any known negative terms in advance.

Your San Antonio REALTOR® can help you determine what price range and monthly payment you can afford. The monthly payment typically consists of principal, interest, taxes and insurance--PITI, for short.

* Don't forget about closing cost (contact me to get an estimate)

Step 4: The offer

What to offer
A San Antonio REALTOR® can help you find your perfect home, but only you can decide how much you are willing to offer for it. Ask your REALTOR® about the selling prices and marketing time of other houses in the direct area.

Once you have determined the amount you are willing to spend, your REALTOR® will help you prepare a written offer. In most transactions you will offer to deposit earnest money with the escrow agent, showing your sincerity in making a reasonable offer and abiding by the terms of the written contract.

Contract forms
Your REALTOR® will help you prepare an offer using standard forms. The offer, if accepted, will become a binding contract. This document is the most important paper you will sign because it lays out all the terms of the transaction. It contains:

• a legal description of the property,
• any property that will be transferred with the home, (blinds, curtains, fireplace screens, etc.)
• the price
• financing conditions and contingencies
• amount of earnest money deposit
• name of the escrow agent and title company
• proration of insurance, taxes, and interest
• fees to be paid and who pays for which
• rights to inspect the property and for repairs to be made
• dates of closing and possession
• what happens if either party defaults on the contract

Inspections and warranties
Before signing the contract, take precautions to protect yourself against unseen defects in the home. An inspection by a qualified inspector can provide you with unbiased opinions about the condition of the foundation, mechanical systems, plumbing systems, appliances, etc. If you can, accompany the inspector at the time the inspection is conducted.

It's also a good idea to get a termite and other wood-destroying insect inspection.

You may also want to have your REALTOR® request that the seller furnish you with a one-year residential service contract as part of the deal. This is common practice with the purchase of existing homes (after the first year, you'll have the option of renewing coverage at your expense) and ensures that certain items will be repaired by the company if they fail to function after you move in. If you buy a new home, the builder may offer a warranty as well. Whether you get a residential service contract or receive any other warranty, find out how claims will be processed and how any necessary repairs will be made.

Seller's options
The REALTOR® working with you will present the contract to the seller's agent or seller. The seller has three options: accept, reject or make a counteroffer--a rejection of the offer with a simultaneous offer from the seller to the buyer. If the seller makes a counteroffer, you then have the same three options. This process goes on until a suitable price is agreed upon by both parties.

Binding contract
Once you and the seller agree to the written terms and both of you sign, the document becomes a binding contract. Be sure that you pay close attention the terms. Otherwise, you may waive some contractual rights.

The contract may also set out other contingencies that have to be satisfied, so read the contract carefully and comply with its requirements.

If repairs are required, the contract will specify who will bear the cost of the repairs, who will arrange for the repairs, and when the repairs must be made. Before you close, be sure that the condition of the property meets the required condition specified in the contract.

Step 5: Financing

Finding financing
Once a contract becomes binding, you'll probably have to arrange for financing. Depending on the terms of the contract, the purchase of the home may be contingent upon you finding the right financing.

Lenders
Most homebuyers get loans through savings institutions and mortgage bankers and, to a lesser extent, from commercial banks, credit unions, other private sources, or even the seller. Sellers often can offer a competitive interest rate and attractive terms. Check on specifics.

Types of loans
In general, three broad categories of loans are available:

1. Private vs. government loans. Most mortgage loans are made by savings institutions, banks and mortgage companies. Generally, a lender will require you to buy mortgage insurance, particularly if you make a low down payment. This insurance may be paid at closing or added to the loan amount. VA loans require no mortgage insurance, but only qualified veterans may apply for them. Mortgage insurance protects the lender, to a degree, in the event of default.

On government (FHA and VA) loans, the government does not actually loan the money but rather guarantees (or insures) to repay the lender if you default for some reason. Government loans have important advantages--they generally require a lower down payment than conventional loans and often have a lower interest rate or points. On the down side, government loans limit the amount you can borrow, often take longer to process, and sometimes have higher
closing costs.

2. Fixed rate vs. adjustable rate. On a fixed rate mortgage, the interest rate stays the same over the life of the loan, usually 15 or 30 years. That means your payment will not change except for adjustments on taxes and insurance.

Adjustable rate mortgages (ARMS) have interest rates or monthly payments that can go up or down over time. These mortgages typically start out with a lower interest rate, lower monthly payments, and lower fees and points than fixed rate mortgages and often appeal to first-time homebuyers, younger couples who expect their incomes to grow in the coming years, and people who might not have much cash for down payment and closing costs.

If you consider an adjustable rate mortgage, ask the lender to explain the terms fully. Ask about the interest-rate cap (the maximum rate you will be charged no matter how high rates go in the market), the index that will be used to calculate future interest rates, and how index charges will affect your mortgage.

3. Assumable vs. new loan. Some loans, particularly FHA and VA loans as well as some adjustable rate mortgages, are assumable. That means a buyer can assume an existing loan usually on the same terms as the previous owner.

Assuming a loan may save some costs and time. As the buyer, you would typically pay the lender a fee at closing for processing the assumption.

The true price of financing
When shopping for a loan, don't judge the loan by the interest rate alone. Compare several items in the entire loan package, including:

• Points on a low-interest-rate loan can be double those for a loan with a higher interest rate, causing you to pay more up front.
• Total fees charged by the lender. Some lenders will absorb the cost of many services, while others do not, so ask in advance.
• Term. In general, the longer the life of the loan and the more fixed the payment, the more you can expect to pay over the life of the loan. For example, a 30-year, fixed-rate loan will cost more in interest than a 15-year, fixed-rate loan.
• Penalties. Ask what penalties will be charged if you pay off the note early. A prepayment clause could require you to pay a penalty if you pay off the loan early, such as refinancing the loan at a later time.

Loan approval process
From the lender's viewpoint, approving the loan, based on your financial standing, is only part of the risk; the other part is the property itself. The lender may require an appraisal to verify that the home is worth the loan as well as a physical survey to discover any encroachments on the property. Repairs may be required. Insurance must be purchased. Verifications of employment, deposits, and other matters must be obtained. Loan documentation and conveyance instruments must be drawn and approved. In addition, the title company must research the title and arrange for paying off any liens, taxes, and other costs. All these conditions and others must be satisfied before a transaction can close.

Hazard insurance
As another protection, the lender may require insurance to protect against fire and storms. (Flood insurance could be required if the house is in a flood plain.) Even if not required by a lender, it's probably a good idea for you to consider all types
of insurance.

Step 6: Closing the deal

The closing is the end of weeks or even months of research and decision making. The closing could last less than an hour but may take longer, depending on the complexity of the transaction. It often occurs at the title company's office. The title company officer will explain each document before you sign.

Two basic kinds of documents
If buying a home were stictly a cash transaction, you would simply hand over the money and receive the deed. More than likely, however, you are borrowing money for the home, which means that you are actually making two transactions--acquiring the loan and buying the home.

As a borrower, you will sign a note promising to repay the loan and a deed of trust (also known as the mortgage) pledging the house (or other collateral) as security for the note. You will also sign numerous other papers including acknowledgments, disclosures, surveys, certificates, etc. Be sure to read each document carefully. Ask questions if you do not understand anything. There are no dumb questions. Seriously consider having your attorney present at closing.

As a homebuyer, you will present a cashier's check (or other good funds) to the seller, sign a document that itemizes closing costs (the lender will have given you an estimate in advance), and pay your share of the closing costs. In return, you will receive a deed, transferring ownership rights to you.

The home is yours
At the end of the meeting, you will likely receive keys to the property. At that moment, the home will be yours. Occasionally, possession of the property will occur after closing. For example, the seller may have negotiated with you for a few extra days after closing, or the loan will not immediately fund, or other concerns. But, in most transactions, you will be the new owner at the end of closing.

Some other points to keep in mind:

• Buyer/seller agency. It's important to understand who your REALTOR® represents--buyer or seller. The REALTOR® will provide you with information about representation. As a buyer you may sign a buyer representation agreement with a REALTOR®. It will discuss the scope of the
  REALTOR®'s representation.
• Prepaids. You should be aware that your closing costs will include prepayment of an escrow account to cover insurance and taxes.
• REALTORS® are required to make properties available without regard to race, color, religion, national origin, sex, disability, or familial status.
• Be sure to have a property inspected by licensed inspectors to determine: a) the condition of the property (structural, mechanical, electrical items, etc.); b) any environmental conditions (asbestos, lead-based paint, toxic materials, etc.); c) wood-destroying insects; and d) other matters. Brokers are not qualified to perform such inspections.
• Residential service contracts can offer repair to appliances, electrical, plumbing, heating, cooling, or other systems in the property.
• Be sure to obtain a policy of title insurance or have an abstract of title reviewed by an attorney of your choice before buying a property.

Getting A Mortgage in Las Cruces

When selecting a lender, your goal is to obtain a mortgage loan with terms that are most favorable to your situation. In order to find the best home loan for you, contact several lenders to discuss the mortgages they offer, their rates, closing costs, and other fees. If you already have a mortgage, contact that institution too. 

Mortgage loans are available from many sources, including:

• Mortgage companies
• Savings and loan associations
• Banks
• Credit unions

If you have any questions or need assistance in locating a qualified mortgage/financing source please give me a call and I will be happy to help guide you in the right direction. (575) 376-5579
What’s the difference between being pre-qualified and pre-approved for a mortgage?
Typically you will first pre-qualify for a mortgage, then get pre-approved before you have found the specific home you wish to purchase. What is the difference? 

Pre-qualification: An informal determination by a lender or mortgage broker stating how much mortgage you can afford. 

Pre-approval: A guarantee in writing by a lender to grant you a loan up to a specified amount. 

What are the advantages of being pre-approved?
There are two advantages of being pre-approved for a loan as early as possible in your home-buying process:

1. Sellers will find any offer you make more attractive if you are pre-approved for a mortgage.
2. Most sellers will not accept an offer without a pre-approval letter.
3. The length of time before closing can be shorter if you’ve completed the steps to securing mortgage approval prior to signing a contract on a property.

Credit Tips

It's important to note that repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. The best advice for rebuilding credit is to manage it responsibly over time. If you haven't done that, then you need to repair your credit history before you see credit score improvement. The tips below will help you do that. They are divided up into categories based on the data used to calculate your credit score.

3 Important Things You Can Do Right Now

1. Check Your Credit Report – Credit score repair begins with your credit report. If you haven't already, request a free copy of your credit report and check it for errors. Your credit report contains the data used to calculate your score and it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit bureau and reporting agency. 
2. Setup Payment Reminders – Making your credit payments on time is one of the biggest contributing factors to your credit score. Some banks offer payment reminders through their online banking portals that can send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instill a sense of money management.
3. Reduce the Amount of Debt You Owe – This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.

More Tips on How to Fix a Credit Score & Maintain Good Credit

Payment History Tips

Contributing 35% to your score calculation, this category has the greatest effect on improving your score, but past problems like missed or late payments are not easily fixed.

• Pay your bills on time.
  Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO score.
• If you have missed payments, get current and stay current.
  The longer you pay your bills on time after being late, the more your FICO score should increase. Older credit problems count for less, so poor credit performance won't haunt you forever. The impact of past credit problems on your FICO score fades as time passes and as recent good payment patterns show up on your credit report. And good FICO scores weigh any credit problems against the positive information that says you're managing your credit well.
• Be aware that paying off a collection account will not remove it from your credit report.
  It will stay on your report for seven years.
• If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
  This won't rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO score.

Amounts Owed Tips

This category contributes 30% to your score's calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below.

• Keep balances low on credit cards and other "revolving credit".
  High outstanding debt can affect a credit score.
• Pay off debt rather than moving it around.
  The most effective way to improve your credit score in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your score.
• Don't close unused credit cards as a short-term strategy to raise your score.
• Don't open a number of new credit cards that you don't need, just to increase your available credit.
  This approach could backfire and actually lower your credit score.

Length of Credit History Tips

• If you have been managing credit for a short time, don't open a lot of new accounts too rapidly.
  New accounts will lower your average account age, which will have a larger effect on your score if you don't have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

• Do your rate shopping for a given loan within a focused period of time.
  FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
• Re-establish your credit history if you have had problems.
  Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
• Note that it's OK to request and check your own credit report.
  This won't affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

• Apply for and open new credit accounts only as needed.
  Don't open accounts just to have a better credit mix – it probably won't raise your credit score.
• Have credit cards – but manage them responsibly.
  In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
• Note that closing an account doesn't make it go away.
  A closed account will still show up on your credit report, and may be considered by the score.

To summarize, "fixing" a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent good credit history. Raising your score after a poor mark on your report or building credit for the first time will take patience and discipline.

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Curious about local real estate? So are we! Every month we review trends in our real estate market and consider the number of homes on the market in each price tier, the amount of time particular homes have been listed for sale, specific neighborhood trends, the median price and square footage of each home sold and so much more. We’d love to invite you to do the same!

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You can sign up here to receive your own market report, delivered as often as you like! It contains current information on pending, active and just sold properties so you can see actual homes in your neighborhood. You can review your area on a larger scale, as well, by refining your search to include properties across the city or county. As you notice price and size trends, please contact us for clarification or to have any questions answered.

We can definitely fill you in on details that are not listed on the report and help you determine the best home for you. If you are wondering if now is the time to sell, please try out our INSTANT home value tool. You’ll get an estimate on the value of your property in today’s market. Either way, we hope to hear from you soon as you get to know our neighborhoods and local real estate market better.