Home Buyer Tips - From our weekly e-mails

Scroll through the topics to find the home buying tips that will be the most beneficial for you. 

• Week 1 -- The importance of getting a pre-approval letter
• Week 2 -- How to be more competitive as a buyer
• Week 3 -- Buying a home is very exciting and stressful
• Week 4 -- Home buying stress starts with the purchase offer
• Week 5 -- Home buying stress can happen while waiting for an acceptance
• Week 6 -- Home buying stress can happen while waiting to close
• Week 7 -- Overcoming obstacles when buying a home
• Week 8 -- Finding a good lender
• Week 9 -- Three reasons not to wait to buy a home
• Week 10 - Buyers sometimes look at the wrong things when house hunting
• Week 11 - The Importance of a home inspection
• Week 12 & 13 - Understanding closing costs for home buyers (part 1)
• Week 14 -The Basics of Buying Homeowners Insurance

Week 1 -- The importance of getting pre-approved

1. It is better for home buyers to get a pre-approval letter vs. a pre-qualification letter.  A pre-approval letter involves more work on your part and to provide verification of your credit and job information and is more time-consuming than a pre-qualification but so much better for you as a buyer.
 
2. You'll know how much money you can qualify to borrow as well as what you are comfortable with.  Sometimes buyers are qualified to go higher than they feel comfortable with - looking at how much their house payment will be.
 
3. You'll have more leverage in negotiations with the seller. Sellers usually prefer to negotiate with pre-approved buyers because the sellers know such buyers are financially qualified to obtain the financing they need to close the transaction. A pre-approval letter is an especially favorable point if you are in a multiple offer situation.
 
4. Your real estate agent will work harder on your behalf. A pre-approval letter signals to your real estate agent that you're a well-qualified buyer who is serious about purchasing a home. In fact, some agents won't even show property to buyers who don't have a pre-approval letter.
 
Note to be aware of:  Pre-approval letters aren't binding on your lender. They are subject to an appraisal of the home you want to purchase and are time-sensitive. If your financial situation changes (e.g., you lose your job, lease a car or run up credit-card bills), interest rates rise or a specified expiration date passes, the lender will review your situation and recalculate your maximum mortgage amount accordingly.

Week 2  -- How to be more competitive as a buyer

There are lots of buyers in our market right now in the Inland Empire due to the historic low interest rates and low prices of houses for sale. 

Be ready to buy when you do start looking.

Before you begin your home search, be clear on what you can afford (and how much wiggle room you may or may not have), what features are must-haves and those things that you would like but can do without if you need to.  There is no perfect house and you most likely won't find a house that meets all of the criteria of what you would like to have.

By having a clear idea of what you are looking for, you'll know a good deal when you see it and won't hesitate to act. Many buyers miss out on their dream home because they hesitate – they either feel the need to think about it or see some more houses before they make a decision.  Often that house is no longer available when they are ready to make an offer.  One night of indecision can make a difference. 

Week 3 --  Buying a home is one of the most exciting things you can do and stressful

I remember buying our first home and feeling scared and very excited  - and not knowing or really understanding what was going on - all at the same time. Your real estate agent will play an important part in helping you cope with home buying stress so choosing a good, hard-working agent who communicates well with you is so important. 

Causes of Home Buying Stress
Buying a home is an emotional experience and it is very personal to each buyer. Some people find that the looking at houses over and over and the waiting to find out if offers are accepted is the stressful part.  Others are more stressed during escrow. Either way it can be emotional.  When your emotions are involved in a purchase, there's a possibility that those emotions can get out of hand. It is also true that the chances of things going wrong are pretty good.  Most of the things that go wrong are fixable. Here are a few things that can go wrong in the home buying process:
 
·         Sellers can be unreasonable and argumentative
·         A home inspection may reveal significant defects
·         Lenders may reject your loan
·         The appraisal doesn't come in at the agreed purchase price
·         Your agent might not communicate well with you
·         The title company could find a cloud on title or unknown lien
·         Your moving company could go bankrupt 

Knowledge is important to dealing with stress.  The more you understand about the home buying process, the more comfortable you will feel.

Week 4 --  Home buying stress starts with the purchase offer

Are you nervous about the purchase agreement (offer) and signing it?  Writing up that first offer can be stressful for some people.   I have found that once a buyer has put in that first offer which is like a hurdle to some, putting in offers after that is much easier.  Here is a partial list of what an offer should contain:

·         Purchase price
·         Earnest money deposit – **more on this below
·         Down payment
·         Loan amount and type of financing (FHA, VA, conventional) or all cash – no financing
·         Length of escrow
·         Contract contingencies such as inspections, loan and appraisal
·         Allocation of closing costs, i.e. are you asking the seller to pay for some of your closing costs? Who is paying for what
·         Disclosure of agency relationship
·         Time period for acceptance and delivery

**Earnest money deposit - Offers to buy a house are accompanied by a check (actually a copy of a check). This check is generally referred to as the "earnest money deposit“or” initial deposit”.  The basic reason for the deposit is to show the seller that the buyer "earnestly" intends to purchase the property.  The amount of the deposit varies from purchase to purchase, depending on a variety of factors. If a property generates a lot of interest, a buyer may make a larger deposit to convince the seller that their offer is stronger than the others.

Week 5 -- Home buying stress can happen while waiting for acceptance

With fingers crossed behind your back, you will probably shake hands with your agent and mumble something about hoping for the best. But secretly you probably feel butterflies in your stomach, and you hate the idea of not knowing what the seller will do and waiting for their answer -- wondering if your offer will be accepted.

You can't settle down to watch a movie or play with the kids because all you can think about is buying that home. What if the seller rejects your offer? What if the seller makes an unreasonable counter offer that you can't afford? Was your offer high enough? Or was it too high? All these thoughts and more can take over your brain. You may begin to needlessly strategize, saying to yourself, "If the seller does X, we'll do Y."

If you and probably when you have these feelings, take comfort in knowing that it completely normal.  It may help to:

·         Call your agent or trusted friend or family member who has recently bought a home and talk about your feelings and concerns.
·         Focus on something else that requires your undivided attention such as a computer game, reading a book or exercise.
·         Tell yourself that you cannot control the outcome; it's up to the seller to respond.

Week 6 -- Home buying stress while waiting to close

Some of you are further into the home buying process than others. You may already be in escrow.  Keep in mind that it is important to submit your paperwork in an orderly and timely fashion.  Most of the time, the lender will ask for even more information that what you have already provided.  And they will probably come back and again and ask for even more.  It is easy to loose patience - but it is important to provide the bank what they need and do it quickly.  It will help you get your loan approved more quickly.  Not being responsive to your  lender can really gum things up and may even cost you money if there are per diem charges in your contract for not closing on time.

Make sure your real estate agent informs you of what is happening during the escrow period. I do my best to keep my buyers informed all along the way.  You need to have an understanding so you'll know what to expect. Your real estate agent should  be an invaluable resource for you at this time. Experienced agents know how to predict possible problems and can often solve them before they become  gigantic headaches.

Don't be afraid to ask questions of your lender and your agent  until you understand. And expect that there will be some "hiccups" along the way.  These transactions don't often go completely smoothly.  Also it is normal to feel stress during this time of waiting for your new house to close.  Hang in there.

Week 7 -- Overcoming obstacles when buying a house
 
The two biggest obstacles in buying a home often involve the buyer’s financing and the property qualifying for a mortgage.  As your real estate agent, I will help you to find the right home, help you determine how much to offer, negotiate the offer for you and guide you every step of the way throughout all the in’s out’s of buying a home, even the obstacles that you may face along the way.
 
Home Buying Obstacle #1: Finding a Down Payment
Most buyers will need to get financing for their home purchase. The only loans available that are zero down payments are for veterans. All other loans require a down payment. For the last two or three years, the most popular loans are FHA loans, which require a minimum down payment of 3.5% of the sales price. As of May/June 2011, there is a push by federal lawmakers to increase that minimum to 5%.  Conventional loans are also popular but they require a higher down payment than FHA loans.
 
Home Buying Obstacle #2: Meeting Lender Ratios
Most lenders expect a buyer to have a maximum 33% front-end ratio. This means your mortgage payment, plus taxes and insurance (PITI), cannot exceed 33% of your monthly gross income. If you earn $5,000 a month, the maximum PITI payment for which you may qualify is $1,650.
The back-end ratio is more complicated. This involves adding together your PITI payment with all of your monthly debt payments. That percentage of your gross monthly income should fall between 41% and 50%, depending on the type of loan and lender.
 
Home Buying Obstacle #3: Receiving an Appraisal at Value
The Home Valuation Code of Conduct (HVCC) became effective a couple of years ago, and applies to all conventional and FHA transactions. Instead of helping home buyers as intended it is actually hurting them.  It has caused the price of appraisals to increase quite a bit and lenders can no longer select appraisers.  Now, appraisal management companies pick an appraiser at random from a pool of appraisers. Often these appraisers are inexperienced and/or are from another area or unfamiliar with the neighborhood of the house, which often results in low appraisals.  If the appraisal comes in lower than the agreed purchase price, and if the seller refuses to adjust the price, buyers with an appraisal contingency can either walk away from the transaction or pay the difference in cash.
 
Home Buying Obstacle #4: Satisfying Loan Conditions
Underwriting can be frightening and difficult. An underwriter for the lender will review your file and can and will make demands. These demands can include more documentation from you, a review of the appraisal and more.  They can reject the loan for a number of reasons.  Do your best to meet the demands of the underwriter as quickly as you can. Obstacles are a normal occurrence when buying a home.  It is nice if they don’t come up – but it is better to expect obstacles and problems – and be ready to deal with them as quickly and calmly as you can.

Week 8 -- Finding a good lender

The real issue with buying and financing your new home is not getting a loan, but getting the loan that's just right for you -- the mortgage with the lowest cost and best terms.  And a big factor in getting your home loan is finding a good lender. This task can be a bit daunting for some people.  There are several ways prospective homebuyers can find a lender. You can search the internet and phone book – but be sure to read reviews of lenders (including on-line lenders) you are considering. One of the best ways to find a good lender is to talk to people you know that have bought homes and if they were happy with their lenders. 

Your Realtor is also a good resource for information and recommendations about good lenders.  It is a good idea to speak with more than one lender.  Don't be afraid to shop around and then choose a lender based on who you are comfortable with, who offers the best interest rate and loan fees and who has the type of mortgage that you are looking for.  We have a list of some really execellent lenders that we have worked with over the years that we recommend. Let us know if you would like to receive these names.

Homebuyers can work with a mortgage broker or a bank loan officer. Bank loan officers usually work in a bank or credit union.  Their jobs are to sell and process home loans and other types of loans that their companies offer.  Mortgage lending is not the strong point of some banks, so sometimes they don't offer the best rates.  Mortgage brokers get paid to bring lenders and borrowers together.  They work with many different lenders to secure the best home loan for their borrowers.  

Week 9 -- 3 Financial reasons not to wait to buy a house

Here are three great financial reasons why it might not be a good idea not to wait before taking the plunge into homeownership.
 
1)  The 30-year mortgage may disappear
 
There has been much debate regarding government's role in providing support for homeownership. Many in the government want to eliminate Freddie Mac and Fannie Mae from the home loan picture in our country.  Fannie Mae and Freddie Mac, the two huge government-run corporations, have kept costs low for middle-class homeowners by guaranteeing home loans. There are several experts who believe that if Freddie Mac and Fannie Mae's roles are eliminated, or even limited, it may be the end of the 30-year mortgage.  To read more about this, go to MSN Real Estate's "Is it curtains for the 30-year mortgage? 
 
2)  QRM requirements could be much more stringent
 
What is QRM?   It is a provision in last summer’s Dodd-Frank financial reform legislation called the "qualifying residential mortgage", which will likely have a huge impact on what sort of loans lenders offer and to whom.  We don't have the room to get into the specifics of this issue.  But in a nutshell, here are the proposed changes to requirements for a "qualified residential mortgage":
Certain mortgage types would be eliminated
Buyers would need to put a minimum of 20% down
Buyers would need a minimum FICO score of 690
The ratios of income to both the mortgage payment and your overall debt would become much more conservative - meaning harder to qualify for a home loan
There would be loans available to buyers who don't qualify under the new rules, but they will most likely be more expensive to buyers (both in interest rate and costs of the loan).
 
3) Rents are expected to increase
 
The supply of available rentals is decreasing and the demand in increasing.  That will lead to an increase in rental costs throughout this year.  The Wall Street Journal recently stated: "Expect vacancies to continue declining, and rents rising through the rest of 2011 at an even faster pace."
 
Bottom Line
 
You may be waiting on the sidelines to see if prices will continue to drop before you buy a home.  That may happen, but the mortgage expense is a major piece of the overall financial picture of homeownership.  Make sure that you consider all these factors when deciding when to buy.

Week 10 -- Buyers Sometimes Look at the Wrongs Things

While looking at houses, some buyers look at the wrong things in the wrong way. As a home buyer, you must look at things differently than a casual observer would:

 1.   You're not there to give the owners a thumbs-up or down on their color scheme or decorating. The best buys out there may be a poorly decorated or home that is out-dated. Look at the floor plan and features of the house – not the décor.

2.   You're not shopping for furniture. If you love the furnishings, beware. They may distract you and cause you not to really look at the house/room. Don’t eliminate the house from consideration if you hate the décor.   Try to imagine the rooms empty and then mentally add your furniture and decorations.

3.   Don't buy with your nose. Yes, the smell of dampness can be a warning sign, but if the owners love smelly food or need to wash the dog, just hold your breath. A house or condo that shows (or smells) badly may save you money.

 4.   Too much emphasis on cleanliness? If the level of housekeeping and cleaning up is below your standards, don’t worry about it. Look carefully to separate dirt from damage. If a professional cleaning, new carpet and a new paint would transform the place, would the house work for you?

You are viewing the property to see if you would like to make an offer.  If the property is worth visiting, it's worth serious consideration. To help you establish a crystal clear, accurate impression of its value to you, be prepared by bringing a tape measure, note-taking material, and camera. Get a copy of the listing and take notes about what you like and don’t like and what you want to have included in an offer. Check out appliances to see if they are old. After you've seriously considered the property, decide whether you want to make an offer. Don't decide this when you first see it from the curb or the front door.  Your perfect house may be a "diamond in the rough" that other buyers didn't bother with because it had poor curb appeal. 

Week 11 -- The Importance of  a professional home inspection

Depending on the type of financing you choose, there should be either two or three separate inspections on the home you want to purchase. The first should be your own basic inspection (which takes place while you are house hunting).  The 2nd inspection should be a professional home inspection by a certified home inspector. If you are getting either an FHA or VA loan, the third inspection will come at the time of the appraisal, which would be something like a "mini-inspection." Do not, however, rely on this appraisal as your only inspection of the property! 

We cannot emphasize enough the value and necessity of a home inspection - once you are in escrow. Some home buyers don't want to spend the $250 to $500 that a good inspection costs.  Often in today's market with foreclosures and short sales, the banks will not agree to any repairs or credits for repairs so some buyers don't see the point in getting a home inspection.  It is so important that you know as much as you possibly can about the property you are going to buy.  Any offer to purchase you make should be contingent upon (subject to) a home inspection with a satisfactory report. Do not let anyone--not the agent, not your family or friends, and especially not the seller--dissuade you from having the property thoroughly inspected!  Not only will you sleep much sounder after you have moved into the house, a professional inspection can give you an escape hatch from a contract on a defective house. If the home inspection uncovers a serious flaw that you don't want to deal with, you have the option to cancel the contract.

Inspections are designed to disclose defects in the property that could materially affect its safety, livability, or resale value. They are not designed to disclose cosmetic problems (i.e. an interior wall that needs paint touch up).

Don't wait until you have placed an offer on a house before you begin the search for a home inspector. There will be a time limit in the contract designating when the inspection must be completed (typically between 7 and 17 days).   If you start trying to find an inspector at that point, and cannot find an acceptable one to schedule it in that time frame, you will only have two choices: go with an inspector that is not your first choice, or run the risk of running past the deadline for the inspection (which could void any chance having the seller take care of repairs and possibly backing out of the contract if there are serious problems discovered). Neither is an acceptable alternative. 

We suggest that you look for a home inspector who is an ASHI certified inspector (American Society of Home Inspectors) and/or a member of CREIA (California Real Estate Inspection Association. 

Weeks 12 and 13 - Understanding Closing Costs for Home Buyers

If you are considering buying a home, then you may have heard the word “closing costs.” So what are closing costs and how much will they cost you?

In addition to the price of the home, there are additional costs that buyers must pay, which are known as closing costs.  These costs are charges by companies who provide required services during the escrow period.  In total, these charges can run about 3% of the cost of the home if you are buying a home in California.  For example, if you are buying a home priced at $300,000, the closing costs can run about $9,000. So in addition to the down payment you are putting on your home loan, you should have another $9,000 available to pay buyer closing costs on a $300,000 home.

Many buyers do not have the funds available to both put a down payment on a loan and pay these closing costs.  In this situation, the buyer may request in their offer that the seller pay for the buyer’s closing costs.  The likelihood that a seller will agree to pay a buyer’s closing costs depends on several factors.  For example, if the seller receives multiple offers and other bidders do not ask the seller to pay buyer closing costs, then the chance of getting the seller to pay buyer closing costs is low.  The chances increase if you are the only person making an offer on a house, and if your offer price is in a reasonable range.

Listed below are some common charges that buyers pay in closing costs.  This list does not include all possible charges. Buyers should request from their lender a Good Faith Estimate (GFE), which itemizes the costs of the loan and estimates closing costs.  Closing cost charges for home buyers are categorized into seven categories: Real Estate Commissions, Items Payable in Connection with the Loan, Items Required by Lender to be Paid in Advance, Reserves Deposited with the Lender, Title and Escrow Company Charges, Government Recording and Transfer Charges, and Adjustments for Items Paid by the Seller in Advance.

Real Estate Commissions.

• In most real estate transactions in California, the seller pays for the cost of real estate agents so there are usually no charges to a buyer.

Items Payable in Connection with Loan

• Lender origination charge.
• Lender charge for specific interest rate chosen.
• Adjusted origination charges.
• Appraisal fee.
• Credit report fee.
• Tax service fee.
• Flood certification fee

Items Required by Lender to be Paid in Advance

• Daily interest rate charge.
• Mortgage insurance premium.  A borrower who puts less than 20% down payment on a home loan normally has to pay a mortgage insurance (MI) fee.  Mortgage Insurance is a product required by a lender and is paid for by the borrower. MI protects the lender in case the borrower defaults on a loan.
• Homeowner’s insurance.  Also called hazard insurance, homeowner’s insurance covers a home for perils such as fire, vandalism, and other damages to a home.  Many lenders require that the first year’s premium for homeowner’s insurance is paid upfront as part of the buyer’s closing costs.

Reserves Deposited with Lender

• Homeowner’s insuranc
• Mortgage insurance (monthly premium
• Property taxes.

Title Company and Escrow Company Charges

• Title insurance.  Required by most lenders, title insurance covers lenders and buyers against problems in the ownership history of a property (called title defects) that were not revealed during a title search.  There is a separate policy that covers the lender’s interest and the buyer’s interests.  All title policies have exceptions to coverage.
• Escrow settlement or closing fee

Government Recording and Transfer Charges

• Government recording charges.  Fees charged by local government agencies to process the change of ownership documents from the seller to the buyer.
• Deed recordation. A fee charged by a local government agency to acknowledge receipt of ownership change from a seller to a buyer.
• Transfer taxes.  Taxes imposed by government agencies for selling or buying real estate.
• City/County tax/stamps.  Fees charged by local government agencies for transferring property from a seller to a buyer.
• State tax/stamps. Fees charged by a State to process change of ownership documents in real estate transactions.

Adjustments for Items Paid by the Seller in Advance

Week 14 - The Basics of Buying Homeowners Insurance

Start by getting a price quote from the company that handles your auto insurance.  You can usually get a discount on your auto and home insurance if you have both policies with the same company.  An independent agent can give you price quotes from several insurers. You can also contact a few big insurers separately, such as State Farm, which don’t sell through independent agents.  If you have any military connection in your family, it's worthwhile to contact USAA.

Before you start comparing quotes, you'll need to decide how much coverage to get. A home's insurance value is based on the cost to rebuild the house, not the market value. And even though market values are still down in many areas, rebuilding costs are on the rise. You can get an estimate of the home's rebuilding cost at AccuCoverage.com, which asks a lot of questions about the size of the house and the building materials and details, then uses the same building-cost database that insurers use. Or you can work with the agent to come up with an estimate.  You will need to have your homeowners insurance coverage in place before closing.

Homeowners insurance automatically provides coverage for your possessions based on a certain percentage of your home's insurance value -- 75% is typical. So if your home is insured for $200,000, you'll also have up to $150,000 of coverage for your possessions. But homeowners insurance policies usually have lower limits for certain kinds of items -- such as $2,000 or $3,000 for all of your jewelry, for example. If you have any particularly valuable possessions -- such as jewelry, artwork or special collections -- you may want to get extra coverage for those items. Note:  Homeowners insurance does not cover floods.

 You'll also need to choose the deductible amount. One good way to lower your premium costs is to choose a deductible of at least $1,000.  Before you settle on an insurance company, check out the insurer's complaint record through the National Association of Insurance Commissioners Consumer Information Source . Saving a few dollars in premiums can backfire if your insurer ends up hassling you about claims.

When you move into your new home, it's the perfect time to conduct an inventory, which will streamline the claims process if you have to file a claim in the future. Take photos or a video of every room, keep receipts for valuable items, and keep a copy of the file somewhere away from home so it's easy to access if needed.

Week 16 -  5 Tips for Finding a Good Real Estate Agent

1. Ask around. The first place to start looking for a buyer's agent is by asking friends and family. Did they like their agent? How was their experience? Recommendations are a good place to start, but don't feel pressured to use your sister's agent or your friend's mom's cousin who happens to work in real estate. Go through the rest of the tips before deciding.

2. Check credentials. Is his/her license current or are there any complaints registered about him? Do they have advanced accreditation, such as ABR (Accredited Buyer's Representative) or GRI (Graduate Realtor Institute), or are they members of their local real estate board or the National Association of Realtors®? Designations aren't everything, but they do show commitment to the profession. Don't hesitate to ask to see their references. An agent who is active and recommended must be doing something right.

3. Have a trial period. Work with the agent for the day, so that you can see how you work together. Think of it as dating — you didn't marry the first person who asked you to dinner. Did the agent understand what you were looking for and is that represented in the day's showings? They'll get paid if you decide to purchase any of the properties they show you, and you're not stuck with them if you can't stand to be in the same car by the end of the day.

4. Trust your gut. If after your day out with your potential agent, something doesn't feel right, listen to your intuition. You should like your agent and know that they have your best interests in mind. You could be working with them for a long time, so if there's a personality clash or a trust issue, find someone else.

5. Sign a contract. A buyer representative contract protects both you and your agent. If you don't have a contract, your real estate agent is legally a facilitator of the transaction and doesn't represent your interests. The buyer fee is always paid by the seller, anyway, so it doesn't cost you any money to use a buyer's agent.

 Improve Your Credit Score

 1. Get copies of your credit report--then make sure information is correct.

Go to www.annualcreditreport.com.  This is the only authorized online source for a free credit report. Under federal law, you can get a free report from each of the three national credit reporting companies once every twelve months.  Do this before you apply for a home loan.   It is best to check your credit about six months before you are going to start looking for a new house.  Review your credit report carefully and check for problems that you can correct.

You can also call 877-322-8228 or complete the Annual Credit Report Request Form and mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

2. Pay your bills on time.

One of the most important things you can do to improve your credit score is to pay your bills by the due date. You can set up automatic payments from your bank account to help you pay on time, but be sure you have enough money in your account to avoid any overdraft  fees.

3. Understand how your credit score is determined.

Your credit score is usually based on the answers to these questions:

1. Do you pay your bills on time? The answer to this question is very important. If you have paid bills late, have had an account referred to a collection agency, or have ever declared bankruptcy, this history will show up in your credit report.
2. What is your outstanding debt? Many scoring models compare the amount of debt you have and your credit limits. If the amount you owe is close to your credit limit, it is likely to have a negative effect on your score.
3. How long is your credit history? A short credit history may have a negative effect on your score, but a short history can be offset by other factors, such as timely payments and low balances.
4. Have you applied for new credit recently? If you have applied for too many new accounts recently, that may negatively affect your score. However, if you request a copy of your own credit report, or if creditors are monitoring your account or looking at credit reports to make prescreened credit offers, these inquiries about your credit history are not counted as applications for credit.
5. How many and what types of credit accounts do you have? Many credit-scoring models consider the number and type of credit accounts you have. A mix of installment loans and credit cards may improve your score. However, too many finance company accounts or credit cards might hurt your score.

4. Learn the legal steps to take to improve your credit report.

The Federal Trade Commission's “Building a Better Credit Report” has information on correcting errors in your credit report, and tips on dealing with debt and avoiding scams.

5. Pay Down Some of Your Credit Cards

If all or almost all of your credit cards are maxed out or nearly maxed out, it is time to plan an aggressive strategy for paying some of them down. One of the critical factors that often determine your ability to get approved for a mortgage loan is your debt to income ratio. In addition, high credit card balances can pull down your credit score. So it is important to look at paying off some of those balances.  It’s usually best to begin with your highest-rate balances first.

Beware of credit-repair scams.

Sometimes doing it yourself is the best way to repair your credit. The Federal Trade Commission's "Credit Repair: How to Help Yourself" explains how you can improve your credit score and lists legitimate resources for low-cost or no-cost help.

How to get your real FICO scores - go to www.myFICO.com