Seven Deadly Credit Score Sins

John Ulzheimer, president of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, is an expert on credit reporting, credit scoring and identity theft.

Formerly with FICO, Equifax and Credit.com, Ulzheimer is a rare editorial source -- a recognized credit expert who actually comes from the credit industry.

He often references in his writings t...he "Seven FICO Deadlies," credit score deflating actions, but only recently identified them in one consolidated list.

Your credit score, from about 350 (poor) to 800 (excellent) is a numerical rendition of your credit report. The higher your score, the more likely you'll get approved for credit and the more likely you'll get the best rate and terms. Negative actions posted to your credit report, take a bite out of your credit score. 

 

 Here's what Ulzheimer says are the seven worst things you can do to your credit score. And speaking of "seven," that's how many years these black marks can stay on your credit report.

•Deadbeat behavior. Frequent, significant and late payments 30 days, 60 days, 90 days late. Don't believe a 30-day-late payment won't hurt. It may not ruin your credit but it's not helpful and can remain on your report for years.

•Collection activity. When the lender gets tired of your deadbeat behavior it will call out the dogs -- a third-party collection agency. The collection agency will report collection activity to the credit bureaus and again, seven years of bad luck.

•Charge offs. If the lender gives up on your collection case, acknowledging you'll never pay the bill, it charges off the debt and puts your credit report on notice for seven years.

•Public recordings. Bankruptcy, tax liens, judgments and the like are killers for your credit rating. Judgments are good (or, from your viewpoint, bad) for seven years, even if you pay them off. Bankruptcies can dog your credit report for 10 years and unpaid tax liens never go away.

•Settlements. If you pay a portion of a debt to your lender in a settlement, say a some of the mortgage in a short sale, you can get a settlement notice on your credit report card for seven years. Credit cards and other debts, likewise can be settled, with negative impact to your credit report.

•Foreclosures. If you can't or won't pay your mortgage the lender will eventually foreclose and relieve you of your home. Another seven year negative notification will drag down your score. The same applies when you give the home to the lender in a deed-in-lieu of foreclosure.

•Repossession – When you don't pay your vehicle loans a bounty hunter will be coming your way. He or she is not coming after you, but your vehicle, and that's often without notice, after you've been dunned for a while. It's all legal. The repo man can take your property down and your credit score will follow.

Written by Realty Times Staff

Five Ways Bargain Hunting for Homes Can Backfire

It's natural to want to save money when you're making a purchase as large as a home. You want to buy the best home in the best neighborhood at the best price, and to do that, you may think you have to shop in the bargain bin.   

FSBOs (for sale by owner,) foreclosures, and short sales aren't as plentiful as equity listed homes -- homes listed with a real estate agent by the seller. You may even scour the MLS (multiple listing service) for signs of desperate sellers, such as homes priced AS-IS, or homes that have been on the market for months. 

While some people are successful buying a bargain basement home, you may not be so fortunate, if you put price first. Here are five ways a low price can backfire on you: 

The home doesn't suit your needs. A home is a good buy only if it suits your family's needs for space, features, comfort, and function. If you buy a home without enough bedrooms or baths, it's not as comfortable or functional. 

A bad fit costs you later. To get out of a home that's too small, too old, or too far from where you need to be, you'll likely to pay more in transaction costs to sell the home and buy another than if you'd chosen more wisely in the first place. 

Bargains are rare. If a home is priced lower than others in the area, there's a reason. Sometimes bank-owned home will appear to be a bargain compared to other similar nearby homes, but you may notice a real difference in the way it's been maintained. It's not much of a bargain if you find out that all the appliances have been stolen or all the copper wiring has been pulled out of the walls. 

The home needs updating. A home priced below market value usually requires expensive repairs or updates. Are you willing to perform the work or pay someone else to do the work? Any remodeling you do will be at today's prices. Before you buy, get a home inspection and then talk to professionals who can help you bring the home up to today's standards. 

You lose ground trying to lowball the seller. Just as you want the home you buy to appreciate in value, sellers purchased their homes as investments, too. They want to net as much as possible, because they've already taken on the risks of buying and maintaining a home. That makes sellers less willing to negotiate on homes that are well priced and well maintained. 

If a home has been on the market for a long time without a price reduction, there's usually a good reason. You have an unmotivated, unrealistic, or upside-down seller, any of which could waste your time unmercifully. 

An unmotivated or unrealistic seller simply won't negotiate to your level. For example, for-sale-by-owner homes are typically priced the same as listed homes, even though the sellers aren't paying real estate agent commissions, including for your agent, if you have one. Why would you pay the seller not to represent your interests?  

Furthermore, a bank foreclosure or bank-approved short sale could take months to close. What if interest rates go up before you close? You may get the home at a bargain price, but the savings could evaporate in higher interest payments. 

Right now, home prices are still below previous market highs. Mortgage interest rates are hovering near historic lows. And inventory levels are improving in most areas. 

Under these circumstances, you're buying a home at a bargain already. The best strategy for today is not to try to beat the seller down, but to offer a fair price for the home you think is best for your household. 

Written by Blanche Evans

Semantics Won't Avoid Liquidated Damages Limit

Written by Bob Hunt on Tuesday, 21 October 2014 12:28 pm             

If it walks like a duck, and quacks like a duck … You know the rest. Common sense tells us that you can't change the nature of a thing simply by deciding to call it something else. In at least one situation (Allen v. Smith et al.) a California Court of Appeal seems to agree with common sense.

The issue at hand was an attempt to circumvent California's statutory 3% limit on liquidated damages in a residential purchase agreement.  

Liquidated damages are an amount that contracting parties may in advance agree to be the measure of damages that would be suffered should there be a default. Thus, if there is a default there will be no need to prove how much the injured party has been damaged. The amount will already have been agreed upon.

 

Liquidated damages provisions are commonly used in residential purchase agreements. When buyer and seller agree that the deposit (and sometimes a second, increased deposit) will be subject to liquidated damages they are saying that, should the buyer default, the deposit amount is the damages amount that will be owed to the seller. California Civil Code section #1675 generally limits the valid amount of liquidated damages in a residential purchase agreement to 3% of the purchase price. This limitation is specifically stated in most residential purchase contracts. 

Sometimes sellers want to be able to exact more from defaulting buyers than the 3% liquidated damages limit; and sometimes their agents can get creative in trying to help them do so. That is what happened in Allen v. Smith, and the court didn't like it. 

Allen submitted an offer to the Smiths to purchase their Rancho Santa Fe home for $1,775,000. With the offer Allen submitted a $20,000 deposit along with an agreement to increase the deposit by $33,250 after the removal of inspection contingencies. The entire $53,250 (3% of the purchase price) would be subject to the liquidated damages provision. 

The Smiths wanted to receive a larger amount, specifically $100,000, if Allen were to default. In order to get around the 3% limit the agent wrote this in the counter offer: "Buyer's increased deposit to be $80,000 -- total deposit of $100,000 to be released to seller as non refundable purchase option monies." (Italics added by the court.) But nothing in the counter offer changed the general nature of the purchase agreement. No option period was specified. No manner of exercising the option was indicated. Both parties still had the same mutual obligations that they had under the original offer. 

Allen agreed to the counter offer, the deal went forward until, you guessed it, Allen defaulted. Naturally, the Smiths held on to the $100,000, so everyone went to court. 

Allen, or Allen's lawyer, said that the Smiths shouldn't be able to keep the full $100,000 because they had "sought to circumvent the policy of the law concerning liquidated damages in residential sales contracts through a sham mechanism in which [they] labeled the deposit monies falsely as option monies."

The San Diego County Superior Court agreed with the Smiths and let them keep the $100,000 "nonrefundable option fee"; but the Fourth District Appellate Court disagreed. On examining the contract they found that it had none of the characteristics of an option, except for the reference to the deposit amount. For that reason the court agreed with Allen. It allowed the Smiths to keep the $53,250 (3% of purchase price) but required that the rest be returned, along with Allen's court costs.

There were other issues in Allen v. Smith,and I have presented a simplified version here in order to keep focus. Still, a general lesson emerges. While creativity may be an admirable quality in real estate agents, be careful when it extends to attempting to change reality.

Bob Hunt is a director of the California Association of Realtors®. He is the author of Real Estate the Ethical Way.

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Arthur Rutenberg Homes - Luxury Home Builders

Have you been looking for a luxury home or 2nd home close to the beach, plus 5-star amenities? 

Arthur Rutenberg Homes are now building along the coast!  They have 60 years of experience in building luxury homes at affordable prices.  Their style of home is "open living" which offers a large, open living area great for entertaining.  One of the most magnificent details of an Arthur Rutenberg home is the 90 degree pocketing, sliding glass doors that line the living area and open to enjoy outdoor/indoor entertainment!  A detail so stunning and sure to be enjoyed on a brisk October night in Florida.

The Coquina plan is a popular floor plan offering 2,479 sqft of LA and 3 bedrooms, 3.5 bathrooms plus a den perfect for a home office.  The gourmet kitchen would suit any chef and the large breakfast bar allows for extra seating. 

The high ceiling give the great room an open, airy feeling which leads to the master suite which encompasses the West wing of the home.  With a private luxury bathroom with a spa-like garden tub and separate, tiled-glass shower and double vanity all with high-end finishes.  The spacious master bedroom offers access to the outdoor living area as well. 

 

 

 

Wild Heron offers 5-star amenities which include secluded living areas with appropriate beautifully maintained landscaping, fully equipped fitness center with Lake Powell view, Prospect Point pool and hot tub, boathouse with canoes/kayaks, boathouse deck with stone fireplace and tables for dining, boardwalk along Lake Powell, fire pit, nature trails and sidewalks. Lake Powell is a treasure and is the largest Coastal Dune Lake in North America.  Wild Heron is close to Pier Park Shopping and about 15 minutes away from the new Northwest Florida Beaches International Airport.  Located on the desirable West end which offers quick access to 30A and Destin.

Another unique feature of Wild Heron is the acclaimed Shark's Tooth Golf Course!  There are Social Membership to the Club that includes the renowned Watersound Beach Club on 30A.  Luxury living only given by Arthur Rutenberg Home Builders.

Prices are starting in the low $400,000 (excluding the lot).

Here are additional details and photos of a few Arthur Rutenberg Homes that are available in Wild Heron now.  Click Here to go view all listings at once.

For more details please contact me!