Tag Archives: how to buy a home

Questions to ask when choosing a mortgage lender to buy a home.

When deciding to buy a home, the first step is getting preapproved. With so many mortgage lenders out there, how do you choose? Many home buyers who come to me say the same thing. I just called my bank to get preapproved…they have all my information and my car loan…

Banks who are good for checking accounts or even car loans are not always stellar at mortgages, which are riskier and more complicated transactions. The right mortgage lender can be the difference between getting or not getting a home. In a competitive market where the right homes are going into multiple offers, listing real estate brokers and there sellers may evaluate offers, including which lender will get the job done. If lenders have a bad reputation, it can hurt your offer. And the wrong mortgage lender can definitely cost you a lot of time, heartache and money if they do not get the job done.

Beware – rates are not everything. Mortgage companies that cloak themselves in the best rates are not often the best to deal with. If they can’t get the job done, it won’t matter what their rate is.

So here are 6 questions to ask a mortgage lender to see who will get you into your new home.

1. What do I need for a preapproval letter? If they don’t ask you for tax returns, w2, bank statements and proof of employment income right from the start….and pull your credit report…your preapproval is not worth anything and will be worthless to a listing broker with an offer. Sellers want to know the loan will go through and so do you. They need all this information to ensure you will have a successful loan.

2. Do you do your own underwriting locally or in your office? Underwriting is the key to all loans. Underwriting is where they look at all the documentation and ensure the company/investor is satisfied with a minimal risk of default on the loan. This is very complex and involves a lot of precision but also a lot of subjectivity. If the underwriters are with another company or in another state or even another office, the loan officer will be powerless if anything is tricky with you or the house to ensure the loan gets done.

3. Who do I deal with during the loan process? Service counts for a lot. Companies where you deal with multiple people in multiple locations, states, etc. usually will delay your loan and cause you more hassles. You want a team where the loan officer, the person you start with is still involved and still your point of contact for you, your Realtor and your attorney. Companies who have you talking to a different person every time will just give you a headache and waste a lot of your time. Internet companies are famous for this, you often are pushed from person to person.

4. What are your loan fees? Of course you want to know what the loan will cost you. But just like rate, you should ask the question (and get it in writing) but that should not be the only factor considered.

5. What loans can you do? Not all banks, mortgage companies and credit unions can perform all mortgages. Renovation loans, FHA loans, various grants and programs loans with home buyer assistance at local or state level…if you are looking for a particular loan product or a few, you want to know they can do the job in house and not send out for underwriting and processing.

6. How many of your deals go through? This is a very important question. Some loan officers are salaried (many banks) while mortgage companies typically are strictly commission…they don’t eat if they don’t close loans. If they could care less if you close or not and merely are fulfilling a quota of preapprovals or applications…they are likely not the lender for you. And lenders who don’t close at least 90% or more of all loans they submit preapprovals for…that is a red flag.

Housing Trends…in-law arrangements in homes have made multigenerational buyers more common

Home buyers looking for in-law arrangements in homes have experienced sharp increases in demand putting sellers with the potential for in-law arrangements and suites in a great marketing position.

Parents are aging and sometimes costs of care and other complications require adult children to take them in. But on the other side of the generations, high cost of renting, divorce and difficulties finding jobs have resulted in necessity for in-law arrangements adult children and sometimes their families to live with the folks too.

In many cultures, multi-generational living is commonplace, but it is new to the masses in the US.
What multi-generational buyers are looking for are ways to have a complete or partial living arrangement for either side of the familial spectrum, while maintaining a comfortable separation, when needed.

Older parents coming out of their own living arrangements are often the most difficult to accommodate. They are used to living on their own, so “downgrading” to something less than what they had on their own can be a sore subject.

They will at minimum want as much of their own separate space as can be provided. Private bedroom with on-suite bath (usually no tub), decent-sized bedroom and closets, sometimes a sitting area and sometimes a kitchen. And usually no stairs.

While basements can often accommodate all this and more, older parents usually can’t or don’t wanted to be relegated to the “dungeon” – even with a chair-lift to handle the stairs. And they want to feel comfortable in the space to live as their own home, not like they are intruding.

Buyers looking for this kind of accommodation will likely have to do some renovation to make this happen. Renovation loans can be obtained in order to make changes, even moving walls, etc. They require a higher level of and come with a bigger interest rate, but the money in the mortgage is cheaper than credit cards. Sometimes the sale of their home can be used for this extra money. But don’t look for sellers to be ok with 2 home contingencies to buy a home. Not going to happen.

However, additions are more expensive and a lot more hassle. Looking for homes with extra 1st floor rooms, like a den, sunroom or 1st floor master bedrooms often can be a perfect in-law suite. Adjacent living rooms can be tapped to make a suite where parents can have privacy to have friends over, etc. If utilizing the 1st floor master, enough space has to be made to accommodate a 2nd master on the 2nd floor.

Many “in-law arrangements” are basement suites. While this will not often suit older parents, it is often perfect for young couple, single or young family needs. They can benefit from the proximity of parents for potential babysitting and save a lot of money with no rent payments, and sometimes better schools and area than they could afford. And they also have a completely separate retreat and living area, which both parents and adult children alike appreciate.

Depending on the family dynamic, the in law may not the final decision maker, but they may have a say in the final plan. Need to plan ahead to ensure you don’t ruin the space so it can not be reasonably reverted if necessary by a future buyer.

Sellers who have this type of feature in their homes or can even offer an idea of how it can easily be done, can certainly market that feature to capture some of these new buyer needs and put their homes ahead of others in the marketplace.

Selling and Buying a Home with Home For Sale or Close Contingencies – Facts and Fiction

If you are selling you home, do you buy a new home first or do you wait until you sell and risk two moves and being homeless. It can be a dilemma and can be exacerbated by complications of a large family or work schedule, schools, transportation, etc.

Once upon a time, buying a home contingent on the sale of your home was normal. When the housing slump occurred, sellers did not have enough confidence in the market that the buyer could sell their home to risk taking their home off the market. Since 2015, that is beginning to change. Sellers are having more confidence in the market, but not total confidence. Here are some facts for buyers and sellers about contingencies.

. You can not purchase a foreclosure or short sale home contingent upon the sale or close of your home. And banks will not give you months to sell and close on your home.
. A purchase contingent on sale or close is a big seller concession, they need to be compensated with a better offer price to risk losing market time.
. Best time to ask for contingent on sale or close is during the winter months. Sellers are not risking as much. . You have better chance and price negotiation on that – still no foreclosures or short sales.
. Do the inspection up front, but not the appraisal. Yes, the inspection costs money but you need to show the seller good faith that you are serious about the deal. Inspection items are negotiable and need to be done within the 1st week of any contract so no one wastes their time.

. Never take a contingent on sale/close contract over a non contingent contract. Yes, you may get a little money more, but it is not a done deal and wasting precious market time can cost you more than you gain if it doesn’t go through.
. Your house is NOT SOLD. There are no sure things here, there is always a risk. Keep showing it.
. Your agent should do a market analysis of the buyer’s home to ensure their home is saleable or closeable to mitigate the risk.
. Don’t compound contingent on sales. So don’t you get a house contingent on sale/close when your buyer has the same situation. And don’t take a contingent on sale/close deal if the buyer’s buyer has the same. Just like dominos, too much risk, it could all come tumbling down.
. Not all sellers should consider a contingent on sale/close. Contingent on close is better, but if you are in a good market and getting tons of activity…..better not to risk it.

The property ladder can not move without someone taking a risk. Contingencies on sale/close can work, but due diligence is required to calculate the benefits and risks. Many sellers and buyers benefit from this, but both must be realistic.

Millennial Buyers – How to Live for Free

I blog a lot about Millennials because they are very important to every aspect of our economy and housing recovery. One of the millennial trademarks that is unique to this generation is the “boomerang” or “failure to launch” effect of millennial graduates moving back in with mom and dad.

Let’s face it, after the taste of freedom in college, living with your parents as an adult is a little awkward and can be difficult to conduct your life on your terms and spread your wings.

It can have the same difficulties to your parents who don’t keep the same nocturnal calendar as their adult children and are tired of having to tell an adult to pick up their things.

To solve all of those problems and plan for the future, several of my millennial buyers have come up with a new idea that I am calling the Millennial Boarding House.

Instead of living with mom and dad, this formula can be used by smart millennials who don’t want to waste money on rent and want independence. You can be a first-time buyer and create an investment nest egg to move up in the housing market, get government grants and most importantly LIVE FOR FREE. Here is how it works….

1. Use your good credit rating and income to qualify for a nice starter home that has a good price, good area, good schools and is in an accelerating and not a declining area and has potential for future resale. You can do some work updating it if you like or not. The idea is good for now and easy to sell in the future. There are still deals out there and we are in an accelerating marketplace. Interest rates are good. Waiting will cost more.
2. Use government grants through the @Home Illinois program to get $5k in free down payment and/or closing costs.
3. Find a few friends to be roommates and charge them a few hundred dollars each month. Cheap for them and they get independence from their parent’s house or basement.
4. You can live for Free. If you have two or three extra bedrooms, you can charge friends enough to cover your monthly payment and you pay nothing or next to nothing each month to live.
5. You save money by not having to pay anything each month to live, building your nest egg for the future.
6. In a few years when you are ready to get married or start a family, you sell the house for a profit and a nice down payment on your first family house. Or, you keep the house as an investment and rent it out for future income.

There it is, an easy formula for success to start saving money, not waste money on rent and plan for the future. Do yourself a favor and call a Realtor – call me – and get on the path to future equity and success.

Property Tax Game

Property Taxes in Illinois are no bargain…we all know that. When you are buying a house, property taxes in cook county and property taxes in will county are a big factor, but maybe not the only factor. If you qualify for a $200k home a $1,200 higher tax bill each year can make your qualification to $180k. So for $100 more each month in taxes, you can get $20k less home. High property taxes were a significant cause of short sales and foreclosures in Illinois in the past few years. Here are a few things you need to know when it comes to property taxes and buying a home in will county and buying a home in cook county.

Property taxes are based on the assessed value made by the assessor derived from the market value compared to non-distressed comparable properties in the area. Property taxes in Cook County are assessed on 10% of the assessed value of the home. Property taxes in Will County are assessed on 30% of the assessed value of the home.

So why are property taxes in Cook County and property taxes in Will County so different from home to home or town to town? The biggest variance in property taxes in Cook county and property taxes in Will county are from two things.

Schools are the first difference. Schools comprise 70-80% of your tax bill. Mainly that is why property taxes in Illinois are so much higher than other states. Since the burden of the majority of the school budget is on property taxes in Illinois, the budgetary needs of the schools and the values of the homes in the district (more value, more taxes) greatly affect the school budget and sometimes the quality and ranking of the school district. The amount of commercial or industry contributing to taxes without any burden on schools also helps reduce taxes.

The other difference is the town tax rate. Many municipalities in Cook County and some municipalities in Will County are “home rule”. That means they do not have to follow state or county limitations on the tax rate. Basically, they can charge whatever they want in taxes.

When you are buying a home in will county or buying a home in cook county, here is what you look for with property taxes in cook county and property taxes in will county….

What are the real property taxes for the last year? Don’t rely on what the MLS says for that. Vacant properties especially are notorious for inaccurate information on the MLS. Go to the property records. You can find on www.cookcountytreasurer.com or wwww.willcountytreasurer.com. You can use the PIN property identification number for the property or sometimes the address and find out what the real taxes are, what exemptions are on the house and what is the assessed value of the home.

Depending on the exemptions, if there is no homestead (homeowner) exemption, the property taxes in cook county and property taxes in will county should go down for the exemption, if you can file for the exemption within the first month or so of the year. If there is a senior, veteran or disability exemption and you do not qualify for that, the taxes will go up.

The same thing with the assessed value. The assessed value of the house determines the taxes. If the home is assessed lower than what you pay for it. The property taxes in will county and property taxes in cook county will go up. If you buy it for less than the assessed value, you have a chance to reduce the taxes by appealing the assessed value. Distressed properties (foreclosures and short sales) will usually not factor in the value appeal. You will have to formally file an appeal. CAUTION….this can only be done for a very short time each year. Will county property tax appeals typically allow 1 month where Cook County property tax appeals give 2-4 weeks. If you don’t file the appeal during that period, it will not be accepted. You need to watch the assessor’s websites at www.willcountyassessor.com and www.cookcountyassessor.com for dates, forms and requirements.

When you are buying a home in will county or buying a home in cook county, property taxes in will county and property taxes in cook county are factors in your decision. But keep one thing in mind. Very often, the reasons you may like the area are reasons that the same reason the taxes are high – good schools, good property values, not as much commercial or industry, etc. Keep that in mind. It may be a compromise that you are willing to make. Also, in some areas, the taxes are higher, but the prices may be lower, so often that can work in your favor to buy something at a lower rate.

4 Bedroom Home in Orland Park with Enviable Outdoor Garden and Living Area

Yes, Winter in Chicago is here and the “white stuff” SNOW is already starting to make an appearance. BUT it is only 136 days to Spring flowers. This 4 bedroom home in Orland Park offers exceptional landscaping with great outdoor space to remind us of warmer days and outdoor living with barbeques, bonfires and enjoying a warm sunny day. This 4 bedroom home in Orland Park is for sale at $509,900 and offers easy ranch living with an open floor plan with 3 bedrooms on the main floor, including the master suite, plus a loft suite with full bath, bedroom and sitting area and a full related living suite with full kitchen, 2nd laundry, two additional bedrooms and huge open living area.

The Outdoor Garden in this 4 bedroom home in Orland Park includes an electronic Sunsetter retractable awning to shade the patio area. The patio area is surrounded by brick paver wall and decorative iron fencing.

Included Planter boxes on the brick wall of this 4 bedroom home in Orland Park can be filled with perennials or colorful annual flowers as seen in this picture.

Perennial plantings in this 4 bedroom home in Orland Park surround the patio area and exterior perimeter of the home featuring multi-seasonal plantings which will give color and look elegant and manicured in every season. This is the back yard everyone wants. It is available in this 4 bedroom home in Orland Park for $509,900 along with a 3,100 square foot upgraded executive ranch home. With granite counters, hardwood flooring, volume ceiling and decorative custom features, this home is beautiful and elegant inside and out. deerpoint garden 14

Veterans Benefits can make Homebuying Easier

Today on Veterans Day, we celebrate and thank men and women vets past and present for their service and sacrifice. But there are more tangible 24/7/365 benefits offered in housing that give an advantage to veterans buying a home.

VA loans are a huge benefit. You can use it any time, one home at a time. VA loans are currently the only NO MONEY DOWN option offered for veterans buying a home. AND for veterans buying a home with low money down usually comes with a PMI private mortgage insurance kicker that can be a couple hundred dollars per month. Veterans buying a home DO NOT HAVE ANY PMI. Huge savings and can help qualify for veterans buying a home in a different price range for the same monthly payment. Veterans buying a home need to have a 640 credit score and qualify for the loan on the debt to income ratio. There is a service fee that is tacked onto the back of the loan, so you don’t ever see it really. Also, there are condition standards that the home must meet. This can make foreclosure homes a little more difficult for veterans buying a home (but no more difficult than FHA financing) BUT not impossible. Veterans buying a home and considering foreclosures need to work with a Realtor and lender who are familiar with the requirements. You also will need a termite inspection (no other loans require) and about 45 days to close.

In Illinois, the Illinois Department of Housing also offers a program for Veterans buying a home to receive $10,000 to pay for closing costs, etc. With no down payment, after closing costs are paid for, the extra money can go to paying down the mortgage loan, which means getting a discount on the home. Great program. Doesn’t have to be done on a VA loan. Can be an FHA or conventional loan. Eligibility does have an income maximum and Veterans can not own another home at the same time to use the program. BUT it CAN be combined with other downpayment grant or assistance monies in certain state areas.
I have sold several homes with the use of these programs, both combined and separately and it enabled my
Veterans buying a home to get a home faster and get more home for the same money.

Not all lenders can do VA loans or participate in the IDHA Heroes program. And not all lenders offer the program, even if they can do it. This was the case with several of my clients. Make sure to ask your lender if they participate in the program. Information about both these programs is available online at idha.gov, hud.gov and benefits.va/gov/homeloans.

Another feature for veterans buying a home or just living in a home is the various tax exemptions offered by various counties. An exemption on your taxes is like a discount offered to certain people like homeowners, seniors, disabled people and veterans. This tax exemption or discount deducts a portion of your assessed value, which you are taxed on. Anything helps when it comes to taxes. You need to apply for the exemption with the county you are in and some you need to renew each year. Cook County, for example, offers tax exemption discounts to Returning Veterans and Disabled Veterans. More information and forms at http://www.cookcountyassessor.com/exemptions.aspx. Will County offers many Veteran exemptions including Returning Veterans, Disabled Veterans, special homeowner exemption for Disabled Veterans and tax exemption for Veteran Organizations (like VFW, American Legion, etc.). More information at http://www.willcountysoa.com/exemptions.aspx.

Why are Property Taxes So High? Part 1 of 2

Spring is close to springing – hopefully – but as the excitement of Spring comes, the doom and gloom of taxes drags it down. Property taxes, income taxes, etc.

Despite the fact that our founding fathers rebelled against taxes from the British, ever since our government was formed the burden of the government (and the government’s spending) has been place squarely on the shoulders of property owners and taxpayers.

For some who recently received tax bills and some who will receive and pay them soon, this is a popular question. This blog will focus on the whys and next week, we will focus on how to change that, if possible.

Unfortunately, in the entire state of Illinois and in certain towns in particular, there are several reasons for high taxes.

1. SCHOOLS – Statewide, the government gives very little of the dollars collected to schools, so the burden is on the property taxes and that is a high burden. Depending on the area, between 60-80% of your taxes go to your grade school, high school and junior college.

This burden can increase on areas that have lower assessed homes get less tax dollars per home, so the district needs to increase the rate to get more tax dollars from each person. Or in some communities which have very few businesses and very little industry – they are called bedroom communities – and the burden or the tax coffers is on the homes and property owners with no one else contributing. Businesses and industry pay taxes (in cook county a lot more than homeowners) and do not send kids to school. That lowers taxes. Long and short is everyone pays more.

2. HOME RULE – Another reason for high taxes is that some towns in Illinois have “Home Rule.” Home Rule is allowed in Illinois for towns with over 25,000 population or by referendum. Many of these towns acquired this before it was apparent what could be done with it. Many south suburban towns have this authority. It allows the town to basically make the tax rate anything they want – no ceiling – no referendum for a vote. It gives the town government a blank check.

3. ASSESSMENTS – Perhaps your home is over-assessed. The home maybe overassessed due to no re-assessment when the property values dropped in the last few years. On your tax bill or on the county assessor’s website, you can see what the market value is on your home and what the assessment is.

4. EXEMPTIONS – Are you getting all of the exemptions you are entitled to? If you live in a home as an owner occupant, if you are a renter and are paying the taxes yourself as part of your lease agreement, if you are over 65, if you are over 65 and make less than a certain income, if you are a disabled veteran, disabled person, returning veteran or if you have just made a major value improvement to your home (exemption for a certain amount of time), you could be substantially reducing your property taxes with these exemptions. All counties are different with the amount and type of exemptions, but most counties at least do the homeowner and senior exemptions.

Taxes are very specific to the area. So if you are looking for a home, you need to weigh the taxes against other benefits like lower sales taxes, lower prices on homes, services provided by the town, better schools, etc.

Property taxes are easy to find. The MLS shows property taxes on each home, your Realtor can help with that. But always make sure you know the current taxes and exemptions on the home, which greatly affect the taxes. i.e. if it doesn’t have a homestead exemption it will be higher or if it does have senior exemption or other exemption and you are not qualified for that, it will be higher. You also can go on the county assessor’s website and search by address or property identification number (pin). Or you can call or go to the township or county assessor’s office and ask.


Many times my clients are surprised at the differences in homeowner’s insurance rates when they are purchasing their first home or a different home.  With the help of Louis Babalis from Primary Insurance Group in Orland Park, Illinois, this should answer some questions.

When do you need homeowner’s insurance?  If you own a home and have a mortgage, the lender will require you pay the first year’s premium up front prior to closing and then they will escrow for the following years.  But even when you don’t have a mortgage, you should have homeowner’s insurance to cover you JUST IN CASE…. You never know what can happen, and your home is usually your biggest and most important investment.

Who should you call?  I recommend calling the people who have your auto insurance first, and then contacting other companies to compare.  You can also contact an independent insurance agent, who will have access to several top carriers they can use and will be able to shop your rate for you.  This might save you some time.   Some companies are good for auto insurance, but don’t have the best rates on home.  By combining home and auto with the same company you will receive a discount.

What do you look for in an insurance company?  “A” rating, years in existence, price, claim service, low complaints are all good things to look for in a company.  Sometimes the company can be big or small, but you want to ensure they are there for you when you need them.   Ask them about their customer service for claims?  Is it 24/7?  Online?  See what you like best.  Insurance companies spend a lot of advertising money focusing on their claims service.  You need to see how the difference in price and service impacts you.  You can also check with the Department of Insurance at each state or Better Business Bureau or just search online for “X company insurance claims” and see what comes up.

Why are the rates so different?  A lot of different things make up their rates.  You impact your rate.  Your age, your credit score, prior insurance claims, value of personal items you have included for coverage,  and the amount of medical coverage, all impact the rate.  The house also impacts the rate.  The police and fire department rating, the age of the home, location,  the way the home is built (mostly the materials), and the size of the home all impact the rate.  That can impact different companies in different ways – all changing the annual premium cost.  And the companies’ losses the past year can also change the rate from the beginning and from year to year.   Not only from you if you have claims, but from your state and any where the company has claims can change their rate.

What should I ask about discounts? Different companies have different discounts.  Home and auto combined is the biggest discount, sometimes paperless billing, automatic payments, or paying the policy in full can give a discount.  A monitored home security system, or even a newer roof can also give you additional discounts.

What should I tell them to get a quote?  You will want to give them the address of the home, sales price, square footage, year built, personal content items you want insured., etc.  If you have any collectibles or expensive items such as jewelry that exceed their per item limits, you want to ask and find out.

How can I get a better rate?  Discounts, as discussed before helps, but also looking at increasing your deductible can impact the rate a lot.  When considering the deductible, you want to look at what your potential claim/loss could be and the likelihood of it and then what you could absorb without a claim (claims will increase your rate).

Value of personal items can also impact.  If there was a total loss, what would your exposure be?   These are your choice; again, you need to think about what you can absorb and what you need and how it impacts your annual rate.

Medical coverage also is important.  If you have good medical insurance, you may not need a lot for this, no need to duplicate.   But you do need to consider if someone is hurt on your property or in your home and they don’t have insurance.  Consider what that should be.

The other big difference is replacement value.  With a home loan, you need to have insurance to cover at least the loan amount, but beyond that is up to you.  Replacement value is an interesting thing.  Even if the home was completely destroyed by fire or a tornado,  the land and the foundation of the home will be intact.  Those are not usually affected.  When buying a home, you buy everything, so that will not have to be replaced, but building material and labor costs do change – sometimes up and sometimes down.  That also has to be considered.   Ask their opinion, but don’t get caught up in market value beyond the initial loan requirement.  Market value and replacement value can be different.

Also, remember, computers change everything.  If you had a claim with another agency, they will know.  If the house had a prior claim (without you ), this will not impact your rate, but they will know.  So, it is all very transparent.

So, there is a lot to consider.  Make sure when you get quotes, you decide all of this ahead of time (sometimes with the first insurance person who quotes you a price), then ensure you give the same information to all so the quotes are comparing apples with apples.   And make sure you ask all of these questions to the person giving you the quote.

There is a lot to know.  The good news is you can change anything in your insurance any time, if you rethink it or if circumstances change.  It will cost you more or give you a refund in your rate, prorated, depending on the circumstances.  So there is a do over.



Credit Woes – Part III – What to Look for in a Credit Correction company?

Let’s say you want to buy something like a home or a car or have read my blog and know how bad credit is costing you money.  There are tons of credit correction companies out there.  Some are good, some are scams.  How do you tell the difference?  Do your homework.

Ask for references on companies.  Ask Realtors, Lenders, Banks.  These professionals make their bread and butter from people with good credit.  They will know the good companies to use.  Ask questions on Realtor forum sites like Trulia, Zillow, Homes.com.

Beware of the internet.  Remember, anyone and everyone can create a website and become an ecommerce business.  It is difficult to tell the difference between a reputable company and a scam.  One way to spot a scam is if they ask you for a lot of money up front.  No company deserves your money up front.  A little set up fee is fine, but not all up front. 

Once you find some reputable and referenced companies, ask the right questions to ensure they will earn their money and you will restore your credit.  Plus, don’t sign up for any term.  They should be working to get you done when done, not when a certain contract expires. 

Ask for a plan.  Any credit company should be willing to give you a minimal charge or FREE consultation on what you need to fix your credit. They should be able to have a plan and be able to tell you what they can do for you.  Simply monitoring your credit is not enough.  Can they remove the inaccuracies with the credit bureaus?  Can they advise you on how to settle or negotiate delinquent and outstanding obligations?  Can they give you a budget or a plan on what you can do to make the most impact on your credit in the little time.  Someone who says – pay your debts and we will let you know when your score improves – not good enough to get your hard-earned money.

Accountability.  If I follow your plan – how will I know it is working?  If you are paying a monthly fee, you should have someone calling you or emailing you AT LEAST once a month to ensure that they are working for you.  What have you done for me lately?   It usually takes 60 days for any changes to appear in your credit report.   Make sure they are working for this money.  If you are paying someone and they don’t make progress and tell you what they have done for you – DROP THEM!

Guarantees.  Don’t expect guarantees.  They may be able to tell you some timetables, but they can not predict completely time accuracy.  All they should be able to guarantee is that if you follow the plan and do your part and they do their part, progress should be made and your score should rise. 

Cooperation.  Be patient.  As long as they are accountable, be patient.  As always, it takes longer to undo something than to do it the first time.  And don’t forget – you are a partner in this process.  The company can correct things with your credit bureau, but you must follow the plan and make the lifestyle changes and sacrifices to get back on track.

Payment.  This will cost you money.  Most companies charge a monthly fee and maybe a reasonable start up fee.  Most I have seen are not more than $100-200.  Again, don’t lock into anything, you should be able to cancel at any time. Make sure you get all charges and promises in writing – even email is fine. 

How do I start?  You can get your credit report free 1x a year from each credit bureau at annualcreditreport.com.  Look at the accuracies and inaccuracies and then call for the free or minimum fee consultation.  Many will ask you to provide your credit report to them.

This is the third in our CREDIT series, look for parts I and II on our about How BAD credit is costing you money and What you DON’T know about your Credit can be Hurting You.