4 Things First-time Homebuyers Should Know About Credit Scores and Mortgage Payments

With the housing market improving, we know you'll be tempted to start looking for a place to call home. Before you start shopping around and looking for a place, let Angel work with you and help you reach those goals. Consider your financial situation before you start shopping around. 

Here are four things every first-time homebuyer should consider:

1. Have a Good Credit Score

The first step is knowing what your credit score is across all three bureaus. When you trust Angel to help you with your financial situation the first thing we do is partner you with a qualified Credit Counselor who will help you discover your credit scores and review your report to see if there are any negatives. Lending standards have tightened since the housing market collapse and our counselors are trained to know what those standard are. They'll not only help you navigate the standards and requirements lenders have, but will also get you on a plan to getting your credit healthy. The minimum score lenders will consider is a 640, a feat we help clients reach every day. 

2. Hard Inquires Could Lower Your Score

When a lender pulls your credit repsort they're going to notice your hard inquiries on your history. Mortgage lenders will examine your history to determine whether your score is up to par after you apply for pre-approval for a home loan. Hard inquiries will drop your score and may last up to 2 years, potentially stopping you from getting approved for a loan. When you enroll in our program, we ask for a commitment from you, not to attempt to get credit cards or anything else that may cause a hard inquiry on your record. There are certain exceptions to this rule and your counselor will help you navigate those rules so we can get you ready to get pre-approved. 

3. Higher Credit Score Means Lower Interest

Many people come to us and say, "but I know a guy who was approved with a 580 credit score." We're not doubting you, but what your friend may not have realized is that a higher credit score, means lower interest. The difference between being approved at 580 and say, 640 may mean the difference between 14% interest and 3% and that's a big deal -especially with a 30 year mortgage. 

4. Be Prepared to Juggle Mortgage Payments with Other Bills

First-time homebuyers should always plan out their budgets with their mortgage in mind. When you enroll in a credit repair program with Angel, your counselor will go over your budget with you to ensure you'll be able to plan properly for you future. 

With these tips in mind, our clients are more prepared to apply and be approved for a home of their dreams. Let Angel help you get ready to purchase your next home. 

The Risks In Maxing Out A Credit Card

 

When consumers sign up for credit cards, they understand the many responsibilities that come with owning that card, and what it means for their credit score. Often, when considering a borrower's viability, credit utilization rates are examined, and generally OK'd if they have low to mid rates that demonstrate proper usage. However, despite the strict adherence to best practices in credit, consumers may be led to max out a line for an emergency or other purchase of services or essentials. Low limits may also hinder spending and result in credit score hits, but in some consumers' cases, it's worth it.

 

When to max out, and what to know
USA Today laid out a couple scenarios in which it might be acceptable to max out a credit card. Emergencies are clear situations in which one may need to max out a credit card to pay for medical expenses, home or car repairs and costs of children. If you're running low on cash and are in between jobs, that's another scenario where maxing out a card could be advisable. One not-so-noted situation to max out in is if you're accumulating points and it may pay off sooner if you make large purchases.

While all these situations may be viewed as times when a card should or could be maxed out, it's centrally important to know the risks involved and the actions to take to prevent or undue damage. Such risks include:

• Damaging credit score: Credit utilization accounts for 30 percent of your score, and if your utilization is thrown too far out of whack, your credit score will show a pursuant drop.
• Triggering a penalty fee: Many credit agreements are couched with a statute that holds if the cardowner defaults on a payment because of maxing it out. This penalty fee allows the creditor to increase interest rates to their highest, often 30 percent.
• Impacting future credit availability: A pattern of maxing out is a dangerous habit to gather, and lenders will likely look at it later on, if you seek new lines of credit, with a wary eye. Getting too deep in maxing out may severely restrict credit available to you down the road.

So why max out, and what to do

Given all the penalties and pitfalls laid out above, one may ask why he or she should consider maxing out in the first place at all. The process of building credit throughout your life, maxing out may allow you to not only repair, but improve on credit.

 

How could hurting your score further when it's already low not be counter-productive when trying to rebuild your credit and raise your score? The short answer is that sometimes it's best to take one or two steps back in the short run so you can go further in the long run, and that in credit rebuilding you're running a marathon and not simply around the block. The longer, and more factual, answer follows.

 

The maneuverability a consumer has in maxing out a card lies in the temporary damage it can do. While payment history leaves a multiyear mark on a credit score, credit utilization delivers only a temporary hit if something goes wrong. In that case, it's of the utmost importance for any consumer considering maxing out their card to pay the charges as soon as they are posted to the account, and not leave it to the last moment when the billing cycle ends and you're in debt.

3 Step Guide To Financing Your Dream Home

Get Your Finances In Order & Crunch Your Cash Numbers

The first time you think about becoming a homeowner is the moment you should start financial planning. Read more »

Check Your Credit (and Repair if Needed)

Lenders will carefully check your credit and will rarely approve a loan for someone with seriously bad credit. Read more »

Secure a Home Loan

Between signing a contract and finally getting your keys, follow through to make sure the loan process flows smoothly. Read more »

Smart Financial Planning Must Come Before Homeownership

No matter what has you looking for a house, whether it's your best friend's new place or a desire to start building equity instead of renting, the first time you think about seriously becoming a homeowner is the moment to start financial planning. 

Angel Debt Solutions advises that you start looking for a house to get an idea of what you're looking for. You want to be financially prepared so you don't fall into the trap of identifying your perfect home -only to realize you can't afford it. 

The most important elements of financial planning before purchasing a home are developing a budget and saving for the new home. Not everyone has the luxury of saving hundreds of dollars a moth to put towards a down payment. For these people, Angel has a debt management program that can help you get your finances in order and help you reach your goals. Your Credit Counselor can even help you find grants as a first time home buyer to potentially save you thousands. 

Financial Planning for Homeownership

When you are ready to consult a lender to find out if you can be approved for a loan, the lender will base a decision on your credit profile, income, assets, job history and debt-to-income ratio.

Your debt-to-income ratio for the lender’s purposes is based on the minimum monthly payment for all of your credit card debt, student loans, car loans and personal loans -compared to your gross monthly income. In many cases the amount a lender will say you can borrow is higher than you may feel comfortable borrowing.

It’s crucial you decide what you think you can afford for your monthly payment and work with that number when you begin searching for a home.

Your comfort level should take into consideration other financial goals you have -saving for child-raising expenses, college tuition, retirement and even things like vacations, skiing or golf. Most of those expenses won’t be part of your lender’s calculation of what you can afford to spend on a housing payment.

Most lenders allow a maximum overall debt-to-income ratio of 43%, and some allow only a 41% ratio. The housing payment portion of your income should be a maximum of 31%, so if your annual income is $60,000 and your monthly gross income is $5,000, then your housing payment should be $1,550 or less.

Housing Payment

Homeowners have extra expenses renters don’t, such as property taxes and homeowners insurance. Your mortgage payment will include those costs as well as the principal and interest on your loan. You may also pay mortgage insurance if you make a down payment of less than 20%.

If you live in a condo or a community with a homeowners association (HOA), you will pay condo or HOA fees separately.

You should also budget for maintenance and repairs on your home, at least 1% of the home value.

Before you become a homeowner, you should create a budget based on your current finances and consider how you can adjust that budget to accommodate extra savings to allow you to buy a home and to afford potentially higher housing payments.

Saving Strategies

There are countless resources for living frugally and finding ways to save on everyday expenses such as your cable bill and groceries, but in order to save for a home you will need discipline to set aside money for the future.

Here are some ways to do that:

• Create a special savings account for your home purchase and have part of every paycheck automatically transferred to that account. Start with as little as $100 if you can afford it so you get used to living on less and then gradually increase the amount.
• Consider saving the difference between your rent and anticipated housing payment. This increase your savings, and you’ll also show a lender an established savings pattern and the ability to afford the housing payment.
• Work extra hours or take on a second job temporarily to increase your income. Even something simple like walking dogs each evening or babysitting can help your savings accumulate more quickly.
• If you get a bonus, a tax refund or a cash gift, deposit it into your home-buying account.

The simple process of creating a financial plan with your Credit Counselor should be the beginning of a long-term plan to buy a house -and to keep it.

Crunching Your Numbers
To start the home buying process, you need to establish a pattern of fiscal responsibility and develop a budget -and you also need to figure out where you will get the cash you need to move from renter to owner.

Angel helps people just like you become homeowners through zero down mortgages every day. The reality for many people is, that they still need to have some kind of down payment saved back in order to purchase a home. In most cases, states, counties and even cities provide free money for down payment assistance. Talk with your Credit Counselor about grants to see if you're eligible.

Home Buying Cash Needs
While renters typically need a security deposit and their first month’s rent, home buying requires cash for several purposes, such as the following:

Earnest money deposit: Your offer for a home should be accompanied by an earnest money deposit to show the seller you are serious about buying their home. The amount of your deposit will vary according to the size of your down payment, local market customs, the value of the home you are buying and market conditions.

Consult your Credit Counselor for advice on how much your deposit should be, but if you plan on making a down payment of 3.5% to 5% you should plan for a deposit of at least 1%, or $2,000 on a $200,000 home.

Down payment: Generally, buyers need to make a down payment of at least 3.5% for a government-insured Federal Housing Administration loan -and at least 5% or 10% for a conventional loan. Some loan programs allow some or all of your down payment to be a gift, but many require that at least 5% or more comes from your own funds.

If you plan to ask relatives for money to help you, it’s important to start that process early so you know exactly how much they can provide. You don’t want to assume you are getting the full down payment of $40,000 on a $200,000 home -and then discover your parents plan to give you only $2,500.

Closing costs: Closing costs vary by your location and your loan program, but you should plan to budget 3% to 6% of your home value for these costs. Your Realtor can try to see if the seller will take on these costs to get the house sold.

Cash reserves: Some loan programs require you to have two or three months’ worth of mortgage payments in the bank as your emergency fund. Even if you are not required to have that amount, you should have an emergency fund to cover at least three to six months -or more- of expenses even after you have completed the home buying process.

Moving costs: Whether you are moving locally or long distance, you will need funds to pay for the move and the associated expenses of settling into a new home.

While you probably can’t come up with an exact figure this early in the home buying process, you should be able to develop a general estimate of your cash needs based on an idea of your price range for a home. For example, on a $200,000 purchase you would need a bare minimum of $16,000:

• $2,000 for a 1% deposit
• $5,000 for the remaining 2.5% of your 3.5% down payment
• $6,000 for 3% closing costs
• $3,000 for a bare-bones emergency fund to cover approximately three months of mortgage payments

Identify Your Sources for Cash
If you don’t have the funds you need in a savings account now, you should identify ways you can accumulate the money you need, like these:

• Getting a second job or working extra hours. Dedicating all the income from a short-term side job can boost your savings quickly.
• Drastically cutting your spending for a few months or longer.
• Finding out the rules about borrowing from your 401(k) or IRA account.
• Asking family members if they can help you with gift funds.
• Check out your options for local and state home ownership programs through your Credit Counselor. 

If becoming a home buyer is something you are serious about, your Credit Counselor will go over options with you and can even help get you on a debt management plan to save money each month. 

Boost Your Credit Score

Easy loans for bad credit borrowers were common amid the housing boom in the early 2000s, but they’re now rare.

If you’re interested in buying a home nowadays, lenders will carefully check your credit and rarely will approve a loan for someone with bad credit.

For that reason, it’s important to check your credit report and your credit score.

Many consumers are surprised by their credit score and many find errors on their credit reports. Carefully review your credit report and focus in particular on negative items to see if there are ways you can address them and improve your credit profile and your access to a mortgage.

Boost Your Credit Score

Your Credit Counselor will go over methods to repair your credit and get you a healthy score. We can help in the following areas:

• Collections and judgments can be solved through our Debt Management Plan.
• Pay your bills on time.
• Reduce your credit card debt and pay more than the minimum each month.
• Do not open new lines of credit.
• Do not close your credit card accounts.

Credit Scores, Lenders & Your Credit Counselor

Your Credit Counselor can be a great source of advice about your credit issues and can tell you what minimum credit score is needed for a particular loan program. Different lenders have different loan standards, so while one lender may reject you with a credit score of 640, another could give you a loan approval.

In general, FHA-insured loans have lower credit score requirements than conventional loans. In addition, the FHA has loan programs making it easier for some people who lost a home in a short sale or a foreclosure to get a new mortgage faster.

While FHA loans can be easier to qualify for if you have damaged credit, the downside of this loan program is you must pay mortgage insurance on the loan, usually for the life of the loan. FHA mortgage insurance is typically higher than private mortgage insurance.

Private mortgage insurance also is automatically cancelled when your loan-to-value ratio reaches 78%.

Conventional lenders base their interest rates on your credit score, among other factors, so if your credit score is above 740, you’ll pay a slightly lower interest rate than someone with a credit score of 700.

Lenders look at many factors when evaluating you for a mortgage loan, including your debt-to-income ratio, your income and assets, how much your down payment will be and your job history. These compensating factors can sometimes help you overcome a slightly low credit score, but your best chance for a loan approval is to improve your credit score through our Credit Repair Program. 

Secure Your Homeloan

There are two situations for securing your home loan. Either you already have a credit score of 640 and met the requirements or you had your credit repaired and worked with a counselor to get your credit healthy. Once you have the score lenders are looking for and you've discussed the purchase with a lender, you're not out of the woods yet. 

Until you get to the settlement date and have the keys to your new home in hand, you still need to be vigilant about your finances and keep in touch with your real estate agent, the title company and -most of all- your lender: your home loan may still need attention.

From Pre-approval to Final Approval of the Home Loan

When you consulted a lender and obtained a pre-approval letter for a home loan, you may have thought your loan application was complete -but now that you have a contract, the real application must be processed.

Hopefully, your lender already went through the step of obtaining documentation from you -of your income and assets, bank statements and W2s, and an authorization to request your federal income tax returns. If not, you will need to gather all your financial documents now and provide them as soon as possible to your lender.

Even if your pre-approval included full documentation, you’re likely to need to give a lender updated paperwork such as your latest pay stubs, particularly if your pre-approval was several months ago.

The second part of your loan application depends on an appraisal of the property you are buying. Every lender needs an appraisal to understand the underlying value of the property, which is collateral for your mortgage. It’s up to you to pay for the appraisal but the lender will choose the appraiser.

If the appraisal meets or exceeds the price you have offered for the home, that piece of your loan application is complete; but if the appraisal comes in too low, you will only be allowed to borrow up to the maximum of the appraised value -minus your down payment.

In other words, if the appraiser says the house you want to buy is worth $200,000 and you intend to make a down payment of 10%, the lender will only approve a maximum loan of $180,000. If you and the seller have agreed on a higher price for the home, such as $215,000, you will either need to renegotiate the offer or come up with the extra cash to make up the difference.

Follow Your Lender’s Lead

During the interim period between the signing of the contract and settlement date, you will have several responsibilities to make sure your mortgage is in place when you are ready to close.

• Respond immediately to all lender requests: Lenders often need more information from you while your home loan is being processed. Even if it seems excessive, make sure you provide everything needed in a timely fashion.
• Keep track of all deposits and withdrawals: If you have any unusual deposits other than your paycheck, you will need to provide a paper trail of where the money came from, so it’s best to avoid any major financial moves at this point. If you must move money around for your home purchase, keep excellent records and be ready to provide them to your lender.
• Maintain your credit profile: Don’t apply for new credit, spend anything on your credit cards or close any credit accounts -because any one of these moves could hurt your credit score or change your debt-to-income ratio. Wait until after the closing to make any purchases for your new place.
• Communicate with everyone: Your real estate agent, your title company and your lender should be busy behind the scenes getting ready for settlement day, so you should stay in touch with them often to see if everything is on track -and if they need anything from you.
• Following these simple steps makes it much more likely that your loan will be ready when you are ready to pick up your keys.

Security Deposit Problems? Here's How to Beat Your Landlord in Small Claims Court

There's a certain exhilaration that comes with suing your landlord and winning. Too often, people think that it's not worth the legwork to get back money they're owed from a security deposit. In fact, it’s much easier than you might think. So how do you take your landlord to court and come out on top?

The Lease and the Law

Most attorneys, note that landlord disputes are generally just a simple case of contract law. 

The contract -the lease- is going to govern in this case.

Beyond just what's in the lease, you need to consult state and local laws to see what your landlord's obligations are. 

Most states require the landlord to keep the property in a habitable condition -running hot and cold water, electricity and heat. If you don't have those, you can sue your landlord.

What’s more, in some states, if he fails to provide them, it might invalidate the entire lease.

Document As Much As You Can

If you're trying to get a security deposit back, take a lot of photos. This includes taking pictures of every room when you move out. In fact, with the prevalence of smartphones, you might be better served taking video footage of the walk through. Even if your landlord doesn't do one of those with you, you should do your own to present to the court if things get that far.

Save All Communication

One of the biggest mistakes people make in landlord disputes is not keeping a paper trail of their communication. You want to show that you made every effort to resolve this without going to court.

This means communicating through email, but also through certified, registered mail. The former works for basic communication, the latter is for when you start ratcheting up the forcefulness of your request to get your deposit back.

Generally, the law requires you to give your landlord notice in the form of a letter, If they fail to respond in a certain number of days, then you can take them to court.

What's more, you want to keep everything that your landlord sends to you in a binder. You don’t want this to become a case of "he said, she said." Keeping track of all communication between you and your landlord is the best way to do this if you have to take things into the courts.

Going to Court Against Your Landlord

Most security deposits are just going to go to small claims court. 

You’d need a pretty big security deposit to move this into municipal court.

This comes with two advantages. First, you're not going to have to hire a lawyer. Second, a lot of times your landlord won't even bother to show up, making it far easier for you to make your case. Still, you want to come with as much information as you can on the day of your case. More than this, both of our experts concurred that doing everything the right way is of paramount importance. You'll need to bring your lease, any documentation that your landlord violated the lease, communication between you and your landlord and finally images and video from your own walk through.

When it comes time to talk, you want to stick to pertinent facts of the case. You're going to be one of dozens of cases that the magistrate or judge will be hearing that day. You want to get to the point. Say what the lease says, how you stuck to it and how, if relevant, the landlord violated the lease. 

You want to make sure that you have evidence and that you do a good job of presenting it. It's also worth noting that judges in these cases tend to be pretty reasonable.

Finally, present what you can to prove that you tried to resolve the situation without going to court. This is where all of your documentation of communication between you and your landlord is going to come into play. If you've made repeated attempts to get your deposit back from your landlord, not only will the judge side with you: in some states, there will be punitive damages involved.

Foreclosure or Bankruptcy -Which Option is Worse?

Foreclosure and bankruptcy are both daunting -often the last straw after a long financial struggle. When considering your options, it is important to compare the eventualities and weigh the effects carefully. While both will cause undoubted credit score damage, minimizing the fallout is critical. Despite your current situation, avoid giving in to complacency. Include long-term credit repair as a factor in your decision. In addition, consider:

Urgency

Foreclosure and bankruptcy carry different levels of urgency. Depending on your circumstances, one may be a better fit when compared with the other. For example, what is the status of your mortgage? Have you only missed one payment, or has your situation progressed past the 90-day mark? Depending on the answer, you lender may be willing to help. Before taking any action, contact the bank and explain the circumstances. If your money troubles are temporary, ask for a forbearance period or other option to reestablish your financial stability. Consider taking on a renter to aid you in this goal. If your troubles are more permanent, however, bankruptcy could be your last option.

Long-term issues

Foreclosure and bankruptcy both carry long-term credit consequences. These citations may remain on your credit report for 7 to 10 years. Living with a decade of bad credit can be devastating, especially if you expect to rely on your credit score in the future. A low rating equals high premiums and interest rates, two factors every consumer should try to avoid. If you are nearing the apex of a decision, consider the long-term consequences against your long-term goals. For example, while filing for Chapter 13 bankruptcy is no picnic, a future lender may view it more favorably than a property foreclosure. As the “wage earner’s” option, Chapter 13 illustrates your willingness to repay debts on a restructured scale. On the other hand, foreclosure illustrates little more than walking away from your property. Consider these viewpoints and their creditworthy implications.

Homelessness

If you plan to file for Chapter 7, or total debt elimination, foreclosure could be an inevitable byproduct of your decision. While a “clean” slate may seem tempting, the immediate impact on your living situation is obvious. Foreclosure proceedings generally allow property owners at least three months before eviction, but what happens after the grace period ends? Do you plan to rent an apartment? How will a lower credit score affect your plans? Minimize these risks by:

• Brokering a deal.  

As stated above, work with your lender to restructure payments and avoid credit damage entirely. Foreclosure and bankruptcy are always the last resort.

• Delaying the inevitable.  

If bankruptcy and/or foreclosure is inevitable, ask for some goodwill. Request a delay in the proceedings. This will allow you to stay in your home and find other living arrangements before your credit score takes a nosedive.

• Restructuring your debt.  

For homeowners with considerable equity, giving in to Chapter 13 proceedings is often preferable to losing their investment. If this sounds familiar, use the court’s help at its full potential. While the trustee will restructure your debt, go the extra mile by exceeding their expectations. Take on a part-time job, adopt a new budget, and cut costs to help your cause. The bottom line: While the need for credit repair is certain, financial trouble should never envelope your life. Allow personal motivation to determine your future.

Are You Ready to Become a Homeowner?

Buying a home for the first time requires thoughtful planning and decision making. Buying a home is a financial and emotional decision that requires the experience and support of a team of reliable professionals including a realtor, a lender, a lawyer and the professionals at Angel Debt Solutions.

Why Do You Want to Buy a Home?

The emotional part of the decision comes into play when you think about why you want to move. If you’re a first-time buyer, you need stability in your career and the desire to commit to living in the same community for five to seven years. You should want to establish roots in a neighborhood and look forward to decorating as you please without requiring a landlord’s permission.

Purchasing a home is a lifestyle choice that requires you to think about how you like to spend your time and the type of community where you want to live -such as a rural area without nearby neighbors, a high-rise building in a city or a home within a planned community with recreational amenities.

The more you understand your priorities for a home, the easier it will be for you to narrow your real estate decisions.

Homeownership can also be a powerful way to increase your personal wealth for you and your family, since you’ll be building equity in your home as you pay off your mortgage.

Are Your Finances Ready for Homeownership?

While your dream home may not be within your reach right away, you can take steps to become a homeowner the moment you earn your first paycheck.

In order to qualify for a mortgage to buy a home, you’ll need good credit, a pattern of paying your bills on time while still saving money and a maximum debt-to-income ratio -your gross monthly income compared to the minimum payments on all recurring debts- of 43% or less. Some lenders have stricter guidelines, so the lower your debt-to-income ratio, the better your chances of a loan approval.

Some loan programs are available with low down payments of 0-3.5% -like FHA and USDA- which require little to no down payment. Your Credit Counselor at Angel Debt Solutions will go over first time home buyer information and help you file for grants in your local area to help with closing costs, moving expenses and more.

What Can You Afford to Buy?

Housing prices and rents vary from one location to another, but you can use our Rent vs. Buy calculator to estimate the difference between your current rent and buying a home. In some markets, buying a home can cost the same or even less than renting.

Remember, when you’re a homeowner, you also need to include homeowners insurance, property taxes and homeowners association dues in your housing costs. You should use our home affordability calculator to help you estimate what you can pay for a home.

In addition, you should think about your plans for the future and how you spend your money -along with your comfort level with a mortgage payment. A lender will tell you how much you can borrow, but that lender won’t know how much you spend on travel or golf or your plans for potentially reducing your work hours when you have a family.

Once you've thought about the emotional and financial aspects of home ownership, your next steps should be setting up a free appointment with Angel Debt Solutions and speaking with a specialist. Angel will get you partnered with a reputable lender, realtor and help discuss your options for financing your purchase.

Get a Mortgage Pre-approval

There’s nothing more frustrating than falling in love with a home and then discovering you can’t afford to buy it. This is why Angel advise's its proven 3-step program to help you become a homeowner. 

What Is a Mortgage Pre-Approval?

Lenders offer borrowers either a pre-qualification letter or a pre-approval letter, but most realtors recommend you get a pre-approval letter before you start home shopping.

A pre-qualification letter states the amount a lender thinks you’ll be able to borrow based on your income and credit profile without any actual documentation.

However, mortgage lending standards have tightened since the housing crisis, and all mortgage loans now require full documentation and verification of income and assets -so most sellers will only accept an offer from a buyer with a full pre-approval letter based on verified information.

Your home hunt will benefit with a pre-approval for two main reasons:

• First, you’ll have completed the credit check and paperwork requirements for a mortgage, so you’ll know your ability to finalize a home purchase. If the lender finds a problem with your credit or an error on your credit report, you’ll have time to fix it before making an offer.
• Second, since your documentation will already be in place, a mortgage pre-approval will likely speed up the process once you make an offer.

What Your Mortgage Lender Expects From You

Your lender needs you to be honest about your finances and responsive to all requests for additional information, no matter how unimportant it may seem to you. The more cooperative you are with a lender, the easier the loan process will be.

You should be prepared with tax returns, W2s, bank statements, employer names and addresses, and your current landlord’s information.

Your lender will generate a mortgage approval based on your debt-to-income ratio and credit score, but you should also consider your budget and your own comfort level with the payment amount.

There’s no need to borrow the maximum amount you qualify for, particularly if you know you plan to spend money on items that don’t show up on your credit report. Your careful planning and preservation of your emergency fund are important for responsible, long-term homeownership.

Get A Realtor

Buying and selling real estate is a complex matter. At first it might seem that by checking local picture books or online sites you could quickly find the right home at the right price.

But a basic rule in real estate is that all properties are unique. No two properties -even two identical models on the same street– are precisely and exactly alike. Homes differ and so do contract terms, financing options, inspection requirements and closing costs. Also, no two transactions are alike.

In this maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local realtors who serve your area.

What to Expect From a Realtor

Angel works with realtors all over the nation to help you establish a proper business relationship. You likely know that some realtors represent sellers while others represent buyers. Each realtor will explain the options available, describe how he or she typically works with individuals and provide you with complete agency disclosures (the ins and outs of your relationship with the agent) as required in your state.

Once hired for the job, the realtor will provide you with information detailing current market conditions, financing options and negotiating issues that might apply to a given situation.

Remember: Because market conditions can change and the strategies that apply in one negotiation may be inappropriate in another, this information should not be set in stone. During your time in the marketplace realtor will keep you updated and alert you to each step in the transaction process.

3-Step Guide to Buying a House

Are You Ready to Become a Homeowner?

Buying a home is a financial and emotional decisions that requires the experience and support of a team of reliable professionals including a Realtor, a lender, a lawyer and the professionals at Angel Debt Solutions... Read more »

Get a Mortgage Pre-approval

Most first-time buyers need to finance their home purchase, and a consultation with a mortgage lender is a crucial step in the process. Find out how much you can afford before you begin your home search. Read more »

Get a Realtor

In the maze of forms, financing, inspections, marketing, pricing and negotiating, it makes sense to work with professionals who know the community and much more. Those professionals are the local Realtors who serve your area. Read more »

Anthem Suffers Hack Affecting 80 million Customers

Health insurer Anthem recently experienced a major breach that may have affected as many as 80 million records. In light of this, Angel Debt Solutions would like to advise customers to watch out for an especially insidious type of fraud: medical identity theft.

Anthem disclosed the hack late Wednesday, saying customer information that could have been compromised includes names, Social Security numbers, street addresses -and the medical ID numbers found on customers' health insurance cards.

Criminals can use those numbers at hospitals, emergency rooms and pharmacies to receive care and prescriptions, racking up charges and wrecking victims' medical records. (No health data or financial information was included in the breach, the company said.)

"It's like an unlimited credit card that gets you 'free' access to expensive services and drugs," said Bob Gregg, CEO of ID Experts, which provides breach-response services to major U.S. companies. "Everyone thinks about credit cards and bank accounts, but medical identity theft can be much more damaging and extremely hard to fix."

That's because any medical care a criminal receives while using a victim's ID number gets added to the victim's health record -and may go unnoticed for months or even years. The effects "can be life-threatening," as the U.S. Department of Health and Human Services notes on its website.

Imagine an unwitting medical ID theft victim who is rushed to the hospital for emergency gallbladder removal, but the patient's record shows the gallbladder was removed last year. That could cause confusion for the healthcare providers and serious delays in treatment, as could incorrect information about blood types or possible drug interactions.

Anthem wouldn't comment specifically on the potential for medical identity theft, but vice president of communications Kristin Binns told NBC News: "The best advice and counsel we can give people is that if they've been impacted, they'll receive information through a mailing. We're offering credit monitoring for a year and we encourage people to call the number in the mailing if they have any questions."

"I think consumers just aren't aware of this. They don't understand how, exactly, this information can be used and why it can be so dangerous," Larry Ponemon, founder of the privacy and information security research firm Ponemon Institute, told NBC News.

Ponemon Institute's 2013 study (the most recent available) about medical ID theft estimated that about 1.84 million adult Americans or close family members had at some point been victims of medical identity theft -up from 1.52 million the previous year. More than one-third of victims said they incurred out-of-pocket costs, which averaged nearly $19,000 per person.

Medical ID numbers sold online can fetch $20-$100 each versus just $1-$5 for financial information, said Gregg, the ID Experts CEO. Some physicians have begun asking for photo ID, but the practice isn't widespread and "anyone who can get access to your medical ID number can probably fake a license pretty quickly," he said.

Untangling wrecked medical records can be an arduous process even for the experts, as privacy laws protect the release of health information and it can be tough for victims to prove they're not the ones who actually received treatment. Some victims end up paying the fraudulent bills to resolve the situation after months of frustration, Ponemon said.

Protect yourself

Consumers can take steps to protect themselves. The best way consumers can catch fraudulent medical services is by checking every Explanation of Benefits (EOB): the statements insurers send after a customer receives treatment. 

Check credit reports to be sure there are no odd medical bills listed, and contact the insurer immediately if a charge looks unfamiliar. Upon request, health insurers will also provide a list of benefits paid out in a customer's name each year.

Other tips focus on the common sense and caution that should be applied when handling any sensitive information: Shred medical documents before throwing them out, report lost ID cards and don't give your medical ID number to anyone who may not have your best interests at heart. But those suggestions won't stop ID numbers from being stolen when the insurers themselves are breached.

If 2014 was the year of the data breach, it's a safe bet to expect 2015 to be the year of the medical data breach. Unfortunately, Anthem looks like it is going to be the first of many. To protect yourself and your family, Angel Debt Solution provides identity theft plans that cover the entire household (the member, spouse, minor children and any child up to 26) for as low as $14.99 a month. Premium plans get an attorney to dispute medical issues on your credit report typically cost about $19.99 per month. Call or Sign up today and see what Angel can do to protect your household. 

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Millennials Aren't Moving Out Of Their Parents' Homes: They're Crushed By Debt

Millennials are not budging from their parents' basements, even though the job market is on the mend. One really big reason? Student loans. 

Last year, the rate of 25- to 34-year-olds living at home rose to 17.7 percent among men and 11.7 percent for women, Census data showed last week. That is a record high for both genders.

Rising co-residence rates are correlated more closely with student debt than with factors like economic conditions and the housing market, according to a staff report in November from the Federal Reserve Bank of New York. The regional bank wrote about the trend today in its blog called "Liberty Street Economics."

"State-cohort groups who were more heavily reliant on student debt while in school are significantly and substantially more likely to move home to parents when living independently, and are significantly and substantially less likely to move away from parents when living at home," the report said. 

To make things even worse, a super-hot housing market is making it too expensive for even gainfully employed millennials to get their own place. 

"Strengthening youth labor markets support moves away from home, but rising local house prices send independent youth back to parents," the report said. 

The economy may be improving, but sorry, Mom and Dad: the "boomerang" phenomenon is here to stay. 

If student loans are crushing you, call us at Angel Debt Solutions to see what we can do for you!

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Thinking About Selling Your House?

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Choosing a College Major by Age 16 Pays Off

Forget the old thinking that kids could wait until college to decide a major. Today, they really ought to be making this decision before their junior year of high school.

I know what you’re thinking: How can I suggest such a thing? Why would we put that kind of pressure on high school students? Shouldn’t they be allowed to explore their interests in college first before having to declare a major?

But what’s the alternative?

By the time most students lock down their major, they’re halfway through their college career or nearly out the door. By some estimates, 80% will change their course of study at least once before graduation. And, we’re telling them not to worry about it. Just take your time, explore your interests and get your diploma.

But with students’ future financial health on the line, discussions around major choice and career path are just happening too late.

Delaying these important decisions could leave a student needing more than four years to complete the class requirements necessary to get a degree, and additional semesters or years add to the already burdensome cost of an education. For bachelor’s degree grads in the class of 2013, average education debt was almost $38,000, according to a report by Edvisors.com.

Additionally, what if a student ultimately ends up choosing a major that leads them into a low-paying field after they’ve already decided on a high-cost school and taken on substantial amounts of student loan debt?

Income-driven repayment plans from the federal government may offer some help for those that choose less lucrative career paths, but these plans do extend the repayment period from the typical 10 years to 20 to 25 years. This could mean that in the years when your children should be thinking about saving for retirement or for their own kids’ education, they’ll still be paying off their student loans. And, these plans won’t apply to any private loans used to fund college.

Major choice, and ultimately career path, should help guide your child’s choices around where to attend college and how much education debt they can afford in the long run. These choices have far-reaching implications.

Big life decisions are scary, but mountains of debt (and the prospect of your college grad moving into your basement) are much scarier. Twenty-eight percent of Millennials have had to move home with their parents after college due to financial hardship. You’re not doing your son or daughter any favors by advising him or her to delay the decision on a major.

It’s not all on you as the parent either. High school curriculum should be helping students understand real-world applications for what they’re learning and guiding them into career paths for which they’re well-suited. “Career day” doesn’t cut it anymore.

And, I bet if you asked the average 10th grader which careers will have to use algebra on a regular basis, they couldn’t tell you. We need to be showing them why the subjects they’re studying matter and how they apply to careers they may be interested in pursuing. We need to expose them to careers they might not even realize exist.

Even if your kid doesn’t definitively choose a major by the time they graduate high school, starting these conversations early can only benefit them.

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4 Things You Never Want to See on Your Credit Report

Because a credit report is like a report card that basically says to lenders “here is how good I am at repaying my financial obligations,” it is something you need to have in order. Roughly one-in-four consumers have a “bad credit score” credit score that’s below 600. But in spite of any past financial troubles, no matter how severe, you can clean up your credit report with time and a little TLC. 

This list contains items you don’t want to have on your credit report. If you have any of these marks on your file, it’s a good idea to work towards improving your credit sooner, rather than later. Although these marks generally stay on your credit file for a long time, you can still improve your credit if you focus on paying your obligations on-time from this moment forward.

1. Charge-offs

When you go a long period of time without making a payment on a credit account, the creditor may end up charging-off the debt. This usually occurs after around six missed payments and this simply means that the company does not think they are going to receive payment from you. So, for tax and accounting purposes, they have decided to cut their losses.

This usually does not benefit you, however, with the option of simply avoiding the debt forever. Not only do you generally still owe the debt, you now have a really bad mark on your credit report that you may not be able to get rid of for quite a long time.

In most cases, the best course of action is to pay the debt and also, improve your credit by paying your other obligations as scheduled, keeping your utilization on any other credit cards low, and ensuring you don’t have any charge-offs in the future.

2. Collections

This type of mark on your credit file is pretty straightforward -it means your account has been sent to collections. What can you do about this? Unfortunately, this type of negative mark may be stuck on your credit file for quite a long time (up to 7.5 years) as well.

Paying the account is often the first step to improving the situation as the account will then go from an “unpaid” collections account to a “paid” account. Although paying the account may not have a significant impact on your score, it may look better to a lender who’s reviewing your credit history and also potentially stop the collection agency or creditor from suing you. Also, according to Credit.com, the new Vantage Score 3.0 ignores paid collections accounts.

If a creditor does take legal action, they may obtain a judgement, which is another mark you don’t want on your credit file. Depending on the nature of the judgement and where you live, this may result in wage garnishment or another undesirable method of collecting the debt.

3. Tax Liens

We can’t run from taxes because sooner or later, they’ll catch up in a big way. A tax lien occurs when the tax man lays claim on some (or all) of your property because you didn’t pay the property, income, or other taxes you were supposed to. These liens can come from the IRS, state, or even local government.

Like most public records, these liens can stay on your credit file for a long time (seven years or so), and the best way to move forward is to pay the tax debt or, if possible, work out an arrangement with the tax man and stick to it.

4. Foreclosure

Nearly 1 million foreclosures were filed in the U.S. during the year 2013. Many people build credit history in hopes to buy their dream house. But, if they are unable to make payments on that house, they may end up losing their home and being stuck with a foreclosure on their credit file. This makes it more difficult to purchase a home in the future.

After a foreclosure, Freddie Mac suggests finding an affordable place to live and placing focus on rebuilding your credit. You may also want to talk to a credit counselor or financial adviser about how to improve your financial situation.

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