Must-watch Items on Your Credit Report

So you have just received your credit report and your score has dropped. Why? There are different items on your credit score that can affect your score negatively. Make sure you keep an eye on the following four must-watch items on your credit report to maintain a good score.

First, you can receive a free credit report once every year from each of the three nationwide credit reporting companies. You can order yours online from annualcreditreport.com or by calling 877-322-8228. (Other sites may advertise free credit reports, but the fine print often requires you to buy a product or service.) Some credit card companies also provide a free FICO credit report, and there are sites such as creditkarma.com where you can view your score for free as well.

Must-watch items

Late payments. Late payments and delinquencies have a huge impact on your credit score. They make up 35 percent of your entire FICO score. If you see marks that bills have been paid 30, 60, 90 or 120 days late, that is extremely damaging to your score. The other important factor is the timeline of how late your payment was and how long ago you made this mistake. The later your payment is, the more it negatively affects your score. The more time that has passed since the late payment, the less it affects your score.

Collections. Any collections activity on your report will go against your score. If you have had an account or bill that has gone to a collections agency, you are probably aware of it, but in some cases you may not be. There are certain situations where you may not be aware of collections action, such as if you didn't pay the last utility bill after you moved and the collection agency couldn't locate you. If you see a mark on your report that is not related to you, you can dispute it and have it removed. Any collections item can stay on your report for seven years, but the longer it has been on your report, the less it affects your score.

Active accounts. An easy way to detect identity fraud is to look for accounts on your credit report that you didn't open. If you have closed an account, it will reflect that on your credit report and you will be able to verify the date you closed it. If an account is shown as open but you have closed it, reach out to the issuer to find out why it is still active.

High debt-to-credit limit ratio. Credit score companies will look at how you utilize your credit cards by comparing the balance on one revolving account with the available credit from the lender. You want to keep your ratio under 10 percent. For example, if your credit card has a limit of $5,000 and you have a $1,000 balance on it, the ratio is 20 percent. If you are running a balance of $7,000-$8,000 on a credit card with a $10,000 limit, it will really negatively affect your score. It is even worse to have high running balances on several cards.

What items do you watch for most on your credit report?

Is Your Homeowner's Insurance Policy Out of Date?

Your homeowners' insurance policy is one of those things that, after you purchase it, you rarely think about. In fact, if you're like most homeowners, it's probably the same policy that you purchased when you bought your home. When was the last time you pulled it out of the desk drawer and took a look at your coverages?
Here are five reasons your homeowner's insurance may be out of date:


If you're unsure of what damages are covered…
In general, most homeowners' policies cover a standard list of damages. Some of the types of damages covered by most policies include:

• Fire
• Hail
• Smoke
• Theft
• Falling objects
• Freezing

It's important to remember that threats to your home vary greatly according to the location of your home. If you live in a coastal region, flooding or hurricane damage may be of concern to you. On the other hand, if you live in California or Arizona, fires and dust storms might be more prevalent. It's important to know how you're protected if these types of natural disasters occur.


If your rates are climbing…
It's always a good idea to keep an eye on your insurance rates and to revisit the policy every year to ensure that you're still getting the best deal you can. Many homeowners often choose to consolidate several of their insurance policies to one carrier to get a better deal. If you've noticed your rates are increasing, do not be hesitant to shop around.


If you moved to a new location…
When you move to a new location, it's likely you're taking out a new mortgage and, therefore, new homeowners insurance will be required. Keep in mind that the coverages that you had in your previous policy may change at your new residence. Also, keep in mind that even if you move to a new home within the same city, coverages like flood insurance can change drastically from one street to the next. Always consult with an agent regarding any changes that need to be made to the policy.


If you made improvements…
You may be capped out at a certain amount of money on your homeowners' policy that does not take into account any major improvements you've made recently. If you are upgrading or have done major renovations on your home, you should update your policy to reflect the increased value of your home.


If you are rebuilding according to new building codes…
If your home is damaged and you are forced to rebuild, there may be new building codes in place that were not there when you initially took out your policy. Those changes may require you to spend more than you would have previously. Make sure that you are covered for those additional costs.
Your local builders' association will be able to tell you what changes may affect your homeowners' insurance policy and the cost to rebuild. As always, you should be able to get straightforward answers from your insurance agent about these and other questions before you renew or upgrade.


It pays to do your research
As with all things in life, it pays to do your research and to never accept the status quo for too long. Dust off that homeowners policy to make sure you're covered. Don't wait until it's too late!

How Long Do Most Appliances and Home Systems Last?

If you get 10 years out of most of your home appliances, you will probably come out ahead. And your home systems should last maybe two decades. However, there are factors that will affect just how long your appliances and home systems last. On average, here's how long you can expect most of your major appliances and home systems to last — and when it's time to replace them.


Typical Life Span of Appliances and Home Systems

Today's appliances have a different life span than older appliances. Many newer models are high-tech and hence have different problems when they break down that may be more expensive to repair. Some older appliances are so inefficient that replacing them when they've exceeded their life span, even if they still work, makes more financial sense.

Other factors that will affect the life span of your appliances include brand, wear and tear, costs for or availability of replacement parts, complexity of repairs, and the age of the machine or system.
Once your appliances are out of warranty (typically after one to five years), you have to factor in life expectancy to determine when it's time to replace them. Here is a breakdown of the average life spans of typical home appliances and systems:

• Air conditioners: 8–15 years.
• Refrigerators: 7–13 years.
• Stoves and gas ranges: 8–15 years.
• Washing machines and dryers: 5–15 years.
• Dishwashers: 9–15 years.
• Water heaters: 8–15 years.
• HVAC systems: 10–30 years.

Your HVAC system has several caveats. If you run your HVAC system constantly over its life, it probably won't last three decades. If it's located in a damp or dank basement or near corrosive materials, it won't last that long either. For major systems, even if your equipment conks out after 15 years, it's considered at full life span if it's reached two-thirds of its expected life span.

Clues That You Should Chuck Your Stuff

Some of your appliances can create a hazard when they start to break down. Consumer Reports lists the factors that you should weigh when deciding to replace several major appliances:

• For your refrigerator, replace it if it's old and inefficient or if it keeps breaking down over and over again (once it's outside its warranty and is at least seven years old).
• Gas stoves last longer than electric ones, but if there is anything wrong with either, it should be fixed immediately — stoves present fire and electrocution hazards if they are not working properly.
• Washers and dryers should be replaced if after eight years they are leaking, noisy, shaking, overfilling, or not cleaning and drying clothes properly.
• If a repair is going to cost at least half what you would have to spend to buy the item brand-new, you should replace it.
• If your warranty is expired and the appliance has almost lived to its life expectancy, replace it if it's broken.

Of course, if there are problems with any appliance that create a hazard, you should chuck it and get a new one.

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5 Common Reasons Home Sales Fall Through

You've got your buyer, you've entered into a contract and you're well on your way to selling your home. Then, all of a sudden, things take a turn. The momentum is broken and it all begins to unravel. Before you know it, the deal is off and you're back at square one. Why does this happen?
Here are five common reasons:


Financial qualifications
Lenders no longer give out loans freely like they did before the housing crisis. Oftentimes, buyers who are prequalified or preapproved later find out that they aren't qualified to obtain the loan they need to fulfill the contract. Remember that even a preapproval letter is only a statement of intent and anticipation, not an actual loan.


Closing costs and fees
Buyers may become so enamored with your home and focused on general financing that they will underestimate the miscellaneous costs associated with actually closing on it, such as inspections, appraisals, commissions and seller's fees. Even a single unexpected fee of a few hundred dollars can be enough to tear the seams of a deal. Be sure that all costs and fees are clearly outlined early in the transaction.


Low appraisal
If there is an appraisal contingency and the subsequent appraisal comes in significantly lower than the sales price, this can be a major roadblock. Low appraisals are lethal to real estate deals, as neither party likes to budge in this type of situation. Even if you are willing to lower your sales price, it may no longer be a smart deal for you at that point.


Disclosures
A home inspection can uncover notable flaws that the seller either did not know of or purposely withheld from the buyer. In either case, undisclosed items can plant a seed of distrust in a buyer's mind. Always be sure that you've done your part to inspect and repair any possible issues. Never try to hide anything; it's simply not worth it to invest your time in a deal knowing that an undisclosed issue could become a sticking point in the end.


Personal circumstances
Let's face it: life happens. We all change jobs, go through financial downswings and deal with new challenges each day. Your buyer may decide to relocate to a new state or get laid off. Any one of a thousand things could happen at any given moment. You can't protect yourself from unforeseen circumstances, but you can have a better chance of predicting them by communicating and building a personal relationship with the buyer.


These are just a few of the common reasons deals fall through. Contact me today and I'll be happy to offer my advice for selling your home and avoiding potential deal-breakers.