A good credit score is one of the most important tools a buyer has when making a major purchase – whether it’s furniture that you have to finance, a new car, or a home.  A bad credit score means you’ll have a very difficult time getting someone to agree to loan you money because you have demonstrated your inability to repay loans in a timely manner according to your credit score.

However, consumers do have the opportunity to challenge bad dings on their credit reports, but Ron Cooks a credit consultant from Ft. Hood, Texas cautions us to never challenge credit online.

I highly recommend you NEVER use their online dispute systems. It’s like the fox watching the hen house and I’ll explain why.

Reason #1: As most of you know, one factor you have on your side when disputing credit is time. The legal thirty-day limit is not a lot time for a credit bureau, creditor, or collection agency to properly investigate a dispute. The Credit Bureaus online dispute system is set up in such a way that when you use it, it makes their job not only that much easier but cost efficient. The information you put into their limited dispute fields falls right into their electronic verification system.

He makes some really good points for consumers. Thank you for sharing your insight!

An interesting phenomenon is popping up across the country – homes being used as billboards.  For families facing foreclosure, the billboards could be what saves their houses, even though the neighbors may not exactly love the bright paint.  From MSNBC,

In return for allowing the front of their four-bedroom house to become a garish advertisement, the Hostetlers are getting their nearly $2,000 monthly mortgage paid by the marketing company behind the project, Brainiacs From Mars.

In a residential neighborhood without heavy traffic, cars passing by the house slowed and drivers gawked at the vivid colors and a giant Brainiacs From Mars billboard.

I would volunteer my own house but we’re too far out in the country!

A friend of mine went through a nasty divorce last year. The very weekend that the ugly argument occurred that ended the marriage, both he and the ex-wife moved out of their home.  The home is sitting empty today with a for-sale sign, grass that doesn’t get cut, and angry neighbors.  What’s worse is what is happening to their credit score.

He called me yesterday and wanted to see another home – an $80,000 fixer-upper that would ordinarily be a steal. There’s zero chance he will get a loan for the house. When you walk away, you pretty much guarantee no chance of buying (unless you win a lottery or inherit money) for several years.

Reuters Finance featured a story on just this issue,

The penalties largely revolve around your credit record, which admittedly gets blown up in the near-term. For a few years you can likely forget about qualifying for a mortgage or a car loan. When lenders are ready to take a chance on you again, you’ll have to pay for the privilege, with stiff interest rates due to your default history.

Sometimes a strategic default is the best option. But make sure before you do, you can live with the results.

I have a feeling the only way my kids will be able to afford a house when they’re older (because money runs through their fingers like melted buttah) will be if it’s financed by Mom and Dad.  Unfortunately, who knows if this Mom & Dad will be able to help like that. Heck, my daughters will be lucky if I can afford to buy them a $2000 dress when they eventually get married!

However, some parents are paying mortgages for their kids.  Loan Shak presents you an info gallery by CNN Money,

“Most important, we provided the bulk of his down payment as a gift,” said Curtis, who works as a water quality inspector. “Because of our help, he qualified for the best interest rate, and his principal was substantially lower, both of which in turn made his monthly payments affordable.”

Mitch has a good job for a 27-year-old; he’s an engineer at FLIR Systems, a maker of night vision and infrared equipment. Still, he simply hasn’t had enough time to build up his savings. Without the $25,000 his parents came up with, he probably couldn’t have afforded the modest three-bedroom house he bought in suburban Portland.

Wow.  A $25,000 gift. Kudos to the parents who CAN do that!

The Home Affordable Refinance Program is expanding eligibility requirements, allowing homeowners who are underwater to qualify.  By refinancing, homeowners gain a lower interest rate, therefore save money on their monthly payments.  According to Bargaineering, more people may now be eligible,

Before, in order to be eligible for HARP, missing a mortgage payment was not allowed. Now, as long as you haven’t missed a payment in the past six months, it won’t disqualify you if you missed a mortgage payment in the last 12 months. The program has been extended through December 31, 2013, and gives time for homeowners to work to meet eligibility requirements for an eventual refinance.

The catch? Your mortgage has to be a Fannie Mae or Freddie Mac backed.  That makes it too good to be true for many.

Photo by nikcname.

Cash buyers accounted for a whopping 38 percent of home sales in 2011, up 4 percent since the previous year.  According to date compiled by Housing Research Pro, the cash trend is expected to continue,

Between tight lending standards and a desperate search for yield by investors, cash purchase of homes (especially distressed properties) became even more common in 2011 than last year.

Investors are the key buyers in the cash market as regular buyers are sticking with their current homes and opting to rent.

When my husband and I bought our first house, we had to come up with about $8,000 for a down-payment and our interest rate – with great credit – was 8 percent.  We went from renting a duplex for $325 per month to a house payment of about $750 every month.

At today’s rates, the house payment would be about $510 per month (and that includes insurance and taxes)!  Florida agent Marco Giancola also recalls the days of high interest rates when he bought his first home,

It all hit me about a month later as I wrote the check for the first mortgage payment and discovered the interest rate was 18%. This memory popped into my head as I read that Freddie Mac announced on Thursday that the mortgage rates ticked up to 4 percent from 3.99 percent on a 30 year loan. Six weeks ago, it dropped to a record low of 3.94 percent, according to the National Bureau of Economic Research.

If you can qualify for a home loan, have good job security, a good down payment (and we’ve said this before here at the Shak), NOW is the time to buy!

Depending on your place in life, depending on how you look at the stats, you may be getting a good amount for your mortgage interest deduction.  Or maybe not.  From RealTrends,

For example, if the cutoff for where middle class ends and upper class begins is $100,000, then the group of people making over $100,000 represent 41 percent of people who claim a mortgage interest deduction, and they get 82 percent of the total benefit. Maybe it’s not surprising to anyone, but they also pay about 82 percent of all taxes. So, you would think, OK, the most benefit goes to people who make the most money (and probably have the more expensive homes and mortgages), and pay the most taxes. Fair, I guess.

Click through to the article for the other side of the story.

With so many people living paycheck to paycheck, very few actually take the time to set achievable financial goals.  Someone who does is Tracey who writes Making Cents. In her fantastic blog, she displays what her goals are in the right column, but her writings reflect her little (and big) achievements. For example,

I put a few extra bobs through to my mortgage, but most of the rent money over the next 3 weeks-ish will have to go towards a lawn mower and wireless router (so we can both use the internet at the same time). After that, the Emergency Fund needs topping up, and that will likely take all my spare cash until January/February.

Bravo Tracey. Keep up the great job of being financially responsible for your future!

I have been so tempted in the past to buy a timeshare property after hearing lines like,

“Aren’t you worth an annual vacation?”

“Don’t you love each other enough to do this?”

“Spending time with your family is the most important thing for families.”

Almost as bad as, “What will it take to get you to drive a new car today?”  Ay yi yi…

I have an aunt who went all-in for a time share and now owes tens of thousands of dollars for her hundreds of thousands of points.  She only ever goes from Southern Indiana to Nashville.

So what does it take to get rid of a timeshare you no longer want?  WalletPop helps answer that question,

You need to determine whether you have a deeded timeshare or a leased timeshare property. A deeded timeshare bounds you to the contract as an exclusive owner, while the leased timeshare means you are only the owner for a set number of years. If you have a deeded timeshare, you have the option to sell it to someone else. If you have a leased timeshare, you may have to keep paying your annual fees until the lease expires.

There are more really great tips at the site. I’ll forward the link to my aunt now!

Photo by Victor Martinez via flickr creative commons.