13. Failure to report name changes to creditors also causes confusion.

14. Not checking credit report frequently is one of most common mistakes consumers make.

You can buy real estate with poor credit, but you will save thousands in loan costs if you maintain good credit. A bad credit report leaves home buyers with sub-prime loans which have higher point charges, prepayment penalties, and higher interest charges, which therefore cost more money.

For instance, a mortgage loan of $150,000, 30-year, fixed-rate mortgage, interest rate of about 5.72 percent costs around $870 a month poor credit scores raise interest rate over 9 percent and payments over $1,200.

As you see from these payment differences, good credit means that you can finance a more expensive house with same income, or save $330 each month.

Credit Requirements for Mortgages

Credit needed to buy real estate is not same as good credit. Besides your credit score, mortgage lenders consider your debt-to-income ratio and other credit matters, unlike other credit grantors. Your debt-to-income ratio is comparison of mortgage payment, including taxes, interest, and insurance to your total gross monthly income. Real estate lenders also consider your employment qualifications and your overall debt ratios.

Understanding difference between good credit and credit needed to obtain real estate financing helps you buy houses!

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.

How to Know When "Bad" Is Good

When you first start out in real estate "fixer" business, you'll want to look for "ugly" houses needing only cosmetic work. Look for entry level fixers that just need some cleaning up, painting, and carpeting.

When you're new to fixer game, always remember your limitations and use caution when considering houses needing structural repairs. My husband replaces structural beams, sub-flooring, walls, plumbing, and electrical systems, but he acquired those skills after years of experience.

If you find a house with structural problems, get estimates from reliable contractors to do work. Experience teaches you how to do more over time. Until then, rely on experienced professionals to do repairs. Take professional estimates into account before deciding whether or not to purchase an investment property.

The Easiest Houses to Sell

A dollhouse, located in a popular neighborhood, sells quickest. For instance, we once sold a home we named "Orange Tree Cottage" in just three hours! To qualify as a dollhouse, a home must be in a location that buyers want and must offer number of bedrooms, bathrooms, and amenities they're seeking. Beyond price, however, buyers purchase house that meets both their basic requirements and their emotional needs.

Filling Buyers' Emotional Needs

After many years of investment experience, we've found that using Design Psychology and Marketing Psychology techniques greatly increases our profits. Both concepts go far beyond "curb appeal."

For instance, we use colors that target our prospective buyer's income level and match selling season. Generally, buyers of higher-priced homes prefer complex colors, and using cool colors during hot weather and warm colors in cold seasons makes buyers feel more comfortable. We also paint front door a happy color and entice buyers into house by placing potted plants on porch.

Over years, we've bought and sold dozens of distressed properties. By using caution and common sense, as well as following a few simple rules and using Design Psychology strategies, you, too, can become a wealthy real estate investor!

(c) Copyright 2004, Jeanette J. Fisher. All rights reserved.