DEAR MR. MYERS: We signed a contract to purchase a home. However, when we applied for a mortgage, our credit report came back with a few errors on it. The bank and the credit bureau say it will take up to 30 days to review the mistakes and make any changes. The bank wants to charge us a higher interest rate because the errors have lowered our credit score, and the whole purchase might fall apart if we can’t meet our planned Aug. 11 closing date with the sellers. What can we do?
ANSWER: Your letter serves as a reminder for other buyers to always get a copy of their credit report – and also get pre-approved for a mortgage by a lender – before they start shopping for a home.
Obtaining a credit report early in the house-hunting process allows plenty of time for buyers to fix any errors, while getting pre-approved for a loan helps them avoid wasted time looking at homes they simply cannot afford.
The federal Fair Credit Reporting Act gives credit bureaus up to 30 days to investigate any errors that a consumer calls to their attention. But few buyers realize that most lenders also employ independent companies that can work with the bureaus to fix mistakes more quickly – sometimes in as little as two or three business days – and “re-score” their credit in order to qualify for the best loan terms possible.
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Ask the bank that you’re working with if it has a re-scoring service. If it does, you’ll need to provide documentation to prove that the information on your credit report is inaccurate.
Bankers say that the best candidates for re-scoring are those who are on the credit “cusp” – borrowers who can get a lower mortgage rate by boosting their score by just 10 points or so. If quickly adding a dozen points can move you from what lenders consider an “average” score to a “good” one, you’ll be rewarded with a lower interest rate, which may easily save you tens of thousands of dollars in finance charges over the life of the loan.
You probably will have to pay $150 or so to have your credit re-scored. Though no buyer likes such unexpected costs as closing time nears, it will be money well spent if re-scoring helps you get a better loan deal or prevents your pending home purchase from falling apart.
REAL ESTATE TRIVIA: Though it’s common for a potential employer today to order a credit report on a job applicant, the Fair Credit Reporting Act requires the applicant to first give written approval. Many consumer advocates say the federal law should be strengthened: Someone who applies for a job but hesitates at allowing the employer to order a report probably won’t get the job.
DEAR MR. MYERS: Is there a difference between a grant deed and a trust deed?
ANSWER: Yes. In most states, a grant deed transfers ownership of a home or other property to someone else. If I sell my house to you, I’ll sign a grant deed that gives you full ownership.
You, as the buyer of my home, also will have to sign a trust deed with the bank that finances the purchase. The bank is essentially trusting that you will repay your monthly mortgage debt, but the trust deed that you sign is the lender’s written proof of your commitment.
DEAR MR. MYERS: What are the best home-related items to buy this month?
ANSWER: For a variety of reasons, the best deals on big-ticket home goods in July tend to come in the second half of the month rather than in the first.
Consider barbecue gas grills. Deep discounts were scant in the weeks leading up to July 4th, because millions of Americans wanted a new barbecue for their Independence Day grilling. With demand strong, retailers had little reason to slash prices on their Webers and Char-Broils.
But if past years are any indication, you’ll see prices begin to drop in the second half of July – and plummet farther in late August and September – as the summer barbecue season winds to a close and retailers clear floor space for autumn-related items.
The same thing goes for furniture. Prices already are beginning to drop for sofas, high-end tables and the like because stores want to make room for the early-2018 models, which most begin showcasing in September or October. Better deals, though, should come in August.
There is, however, some good news for do-it-yourselfers: Now is a great time to buy small hand tools, many at discounts of 40 percent or more, largely because most home-improvement centers and independent hardware stores are anxious to clear their shelves of items that didn’t sell for last month’s Father’s Day.
Many retailers also offer exterior paints at their lowest prices of the year in July because even some of the most dedicated DIYers don’t like to toil in the hot summer sun. If you’re among them, take advantage of those big discounts now and set the cans aside until the weather cools.
An unopened container of exterior or interior paint can last for several years, as long as it doesn’t freeze or get exposed to extreme heat.
David W. Myers’ column is distributed by Cowles Syndicate Inc.