Best Ways to Improve & Maintain Your Credit Score

In our last post we discussed some things that you should avoid while repairing your credit. This month, we will be talking about some of the most important things that you SHOULD do to keep that score moving upward. Read on for more tips and advice to help you along the road to great credit!

Make Timely Payments

 A well planed debt payment calendar will save lots of headaches later.

A well planed debt payment calendar will save lots of headaches later.

Kind of a no-brainer here, but an easy one to slip up on.  Obviously, you always try to make payments on time, but it doesn’t always work out as planned. Sometimes this is for lack of funds to pay at the time the payment is due, but overwhelmingly, the problem is simply lack of a plan altogether.  If you are consistently late in making payments, you are sending a signal to potential lenders that 1.) you are over-extended financial, 2.) you do have the ability to manage your assets (budget), or 3.) you are unwilling to pay consistently and on time. These are huge red flags which will make a lender reluctant to give you a loan. No, the rare late payment will not make it impossible to get a loan, however, ANY late payments should be avoided at all cost. Put together a solid monthly expense payment plan, with due dates or auto-pay dates and draw accounts (for automatic payments), and coordinate these dates with your projected paydays. If your largest issue lies with having funds available at the necessary time, set aside a portion of each paycheck in a separate draw account to be sure you will have enough to cover everything as it comes due.  Creating a schedule is also a great way prevent forgotten payments, if that is the source of your problem.  

Keep Credit Usage Low

 High credit usage will have a negative impact on your credit score.

High credit usage will have a negative impact on your credit score.

Another important facet of credit that lenders look at, is your ratio of used credit to total available credit. Ideally this should be kept at about 30% usage or below. This shows a payment and use pattern, while still demonstrating your ability to utilize your available credit responsibly, instead of over-extending it.  Charging a moderate amount each month and then paying it off completely- or at least to below 30% used- is the best way to keep your credit balance low, but still show lenders a responsible use pattern. As you can see in our sample credit profile above, even if you have no late payments, having your credit usage too high can have a HUGE impact on your score.

Monitor Your Credit Consistently

 Experian.com and other credit services allow you to input hypothetical scenarios to see how they will likely affect your score.

Experian.com and other credit services allow you to input hypothetical scenarios to see how they will likely affect your score.

The absolute best way to improve your credit score, is simply to be aware of what’s going on with your credit- all the time. There are several free credit report websites, and any of them will provide you with a yearly, 3-agency credit report for free. This is a great start! However, credit changes can happen in a matter of days or weeks, so we recommend signing up for a credit monitoring subscription service, allowing you to check your credit any time- and ideally weekly or monthly. Doing this not only protects you from fraudulent charges or credit use going undetected, but will also give you a greater insight into your own financial habits, and educate you in what affects your credit both negatively AND positively. Most financial institutions and “free report” web sites offer credit monitoring either for free for account holders, or for a small monthly subscription fee (usually between $10-25). Some credit monitoring service will allow you to adjust credit variables to see what impact it will have on your score, answering questions such as “If I pay all my bills on time for the next 18 months, how much will my score FICO increase?” (see above example). Take the first step on the road to good credit today. We promise you won’t regret it!

Still have questions about credit or loan qualifications? Give us a call at 951-767-2400, and one of our helpful agents will be happy to assist you.

4 Mistakes You're Making That Hurt Your Credit Score

Your credit score. That magical number that holds the key to getting a home loan or not getting one. What is a credit score and what should you be doing (or not doing) to improve yours? Your credit rating can be thought of as a kind of indicator, which potential lenders of all kinds will use to predict how likely you are to repay a debt. The higher your score, the higher the odds that they will get back the funds (with interest of course) that you're applying for.

Your individual rating is based on a number of factors that paint creditors a big picture of your income, spending habits, and ability and willingness to manage your assets (budget) and pay in a timely manner. That said, there are many things that you can and should do that will improve your score. In this post, we will focus on some things that you should NOT do. Read on for tips on things to avoid in your credit repair process.

1. Closing an old credit account.

 You’ve finally paid down your high-interest credit cards, after YEARS of struggling to keep up with the ever-growing interest payments. Time to close the accounts so you won’t fall into the credit trap again, right? Not quite. While this one might seem counter-intuitive, closing an old credit account that you’ve finally paid off, can do more harm than good.

Credit scoring institutions base your score on many factors, not just how well you keep up with payments. One of those factors is the average age of the accounts you have open. The higher the average, the better. Instead, leave the account open and keep the card somewhere it will be safe AND less tempting to use (a safe-deposit box, home safe, etc).

2. Not using your card at all.

It’s often assumed that it’s better to not use a card than to use it and get buried in debt again. While this is true, not using credit AT ALL fails to show creditors a consistent payment history. Did the account holder pay on time every month? Were they frequently late? These are questions that are extremely important to potential lenders, and can only be answered by a proven, steady payment history.  The best thing you can do for your credit is charge a nominal amount, and then pay it off each month. Using your credit and making consistent, timely payments is the easiest way to improve your score over time.

3. Ignoring collection agencies.

We all know how stressful and irritating it is to be pestered by bill collectors. They call day and night, bother you at work, even call family members- they are the textbook definition of “persistent”.  Avoiding them like the plague might seem like the best thing to do, however, in the long run, this tactic doesn’t help you any more than it helps them.  Nearly all collection agencies will work with you to set up a payment plan that fits your budget, or even settle with you for a fraction of the original debt. If you stick with the payment plan, the constant phone calls stop, and you are one step closer to repairing your credit.

4. Not keeping track of your credit profile.

Not only will consistently monitoring your credit help improve your score through financial awareness, it is also a great way to be alerted to mistakes or malicious activity such as identity theft or credit card fraud that might be affecting your score. Perhaps you even have something on your credit profile already that you were unaware of.  Credit rating agencies (Experian, Equifax, etc.), banks, and even some credit card companies offer credit monitoring, either for free or a monthly subscription fee. You are also entitled to one free 3-agency credit report per year. Sites such as freecreditreport.com and creditkarma.com are great places to start. Being aware of what’s going on with your credit is vital to improving your score and getting that dream home. Make it a top priority and check your credit profile monthly!

How Eco-Friendly Features Impact Sales

It's obvious by the sheer volume of articles, features, and blogs that the green movement is going strong in America. From Tesla Motors revolutionizing the way we drive, to grass-roots movements pushing for change at the community level, we are on our way to reducing the nation's environmental footprint!  

Check out the info-graphic below to see which earth-friendly features buyers want most!

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We at DCH Real Estate are lucky enough to serve communities that place a high priority on green home systems. While the money-saving aspect is a huge plus, many of our local citizens choose to go green for more philosophical reasons. Together, we believe we can make a difference at a community and global level!

Remodeling Costs Vs. Value

If you’re like most home owners, at some point you have probably considered remodeling your home, whether it be for your own enjoyment or to add value so you can sell. What even some of the most savvy home owners sometimes don’t realize though, is that calculating the added value to your home isn’t as simple as taking the cost of the improvement and adding it to your homes fair market value. While you may think that the $30k you just spent on renovations is worth every penny, buyers in your area may not be looking for that particular improvement in their search for the perfect home. Like any trend the latest buyer desires, change with the times, and it is vital to know where that trend is heading if you want to be sure you are investing you remodeling dollars wisely.

Every year Remodeling Magazine publishes its annual report detailing which home renovation projects will provide the home owner with the best return on their investment.  According to the Remodeling 2015 Cost vs. Value Report, there have been some interesting changes to the list of features that home buyers are searching for this year.  

The Cost vs. Value Report rates home improvements by the amount of cost that is recouped upon the sale of the residence. Since buyer preferences can vary greatly from state to state and even city to city, a separate Cost vs. Value Report is prepared for each county, and shows national and regional averages for comparison.  Without further ado, here are the top 5 remodeling projects for Riverside County, that will give you the best return on your investment!

1. STONE VENEER ACCENTS

A new addition to the list this year, Stone Veneer Accents have taken the top spot on the Cost vs. Value Report for Riverside County with an estimated 122.8% of the cost recouped at selling! Stone veneer’s natural beauty, durability, and energy efficiency make it a desirable feature for an increasing number of buyers. The Cost vs. Value Report sites the average project cost at just over $7k, and added value at around $8.6K.

2. MINOR KITCHEN REMODEL

Coming in just a fraction of a percentage point below the #1 spot, a minor kitchen remodel remains one of the top 2 home projects in bang for the buck. The key word here, is minor. While a minor kitchen renovation can get you a return on your investment over and above its cost, a major overhaul only has an estimated average recoup value of about 80% on this year’s Cost vs. Value Report. That means if you spend $50,000 remodeling your kitchen you can only expect an increased home value of around $40,000. Minor renovation projects, such as new standard appliances, paint, and countertops average about $21k and increase the home value an average of just less than $26k!

3. STEEL ENTRY DOOR REPLACEMENT

Though still at the top of the list regionally and nationally, steel entry door replacement has dropped 2 places to #3 on the 2015 Cost vs. Value Report for Riverside County. Steel doors are attractive, adding curb appeal the home, as well as being low cost to buy and install. The front door is one of the first things a perspective buyer will see when they look at your home, so it’s important to make a great first impression. Steel doors are also more energy efficient than their wooden counterparts, and offer a better barrier against intruders.

4. BASEMENT REMODEL

Coming in at #4, a basement remodel is becoming more and more popular with buyers. A remodeled basement can offer a great entertainment area or even the possibility of income if used as an apartment and rented. Due to the somewhat unstable nature of the current economy, many people are looking for properties that offer the potential for additional income. The basement apartment is perfect for this goal. Entertainment rooms are also trending upward- so either way, it’s fantastic investment. Basement remodels average about $73k and add an average of almost $78k in value to the home.

5. SIDING REPLACEMENT

Vinyl siding replacement comes in at #5 on the Cost vs. Value Report, with its high aesthetic and functional appeal! Siding is one of the features that buyers will notice right off the bat, and that they DON’T want to have to deal with replacing themselves. It can also date your property. Even if the siding is newer, if it is dirty and fading, it may detract from the home’s curb appeal. If your siding was replaced in the last 5 years and is still in good condition, consider simply cleaning and repainting to extend its life.

In addition to these top projects for your home, keeping up on general maintenance issues, such as repainting the interior and exterior walls, doing light landscaping, cleaning or replacing the carpets, and re-staining patio covers and decks, will all add appeal (and therefore value) to your home. Another biggie that puts off many buyers is popcorn ceilings. Having this outdated feature removed will almost certainly add more value than its cost, and attract more buyers.

AND WHAT PROJECTS TO AVOID?

Home offices, which were traditionally a big plus, have been following a downward trend in recent years. People are becoming more and more mobile and can easily conduct most of their business from a laptop or tablet, so they are unwilling to pay extra for a home office. Whirlpool tubs are another detracting feature, since buyers are starting to realize that they also mean higher heating and water bills. With the busier lifestyles that consumers are leading, they also have less time to indulge in luxuries like a bath, and no longer consider it a necessity. Additionally, back yard pools and spas are often seen as maintenance nightmares that do nothing but absorb money and cause headaches. Solar panel systems that are leased can also make a property harder to market since the lease payments go with the property unless you opt to pay it off when you sell.

Bottom line is, if the improvements are purely to add value to the home, follow the guidelines above to get the best possible return on your investment. If you aren’t flipping houses though, always make sure the renovation is something that you truly want and will enjoy. If you are a hobby chef in your free time, then by all means go all out and put in that gourmet kitchen. At the end of the day, you have to live in your home, and any changes you make should be ones that you will get the most relaxation and enjoyment from, but if you are doing it thinking that you will get double the value added to your home- don’t count on it.

To Buy or to Build

Blueprint Banner.jpg

Building has long been considered a money-saving alternative to buying by many people, but is it always the better value? Turns out it’s not so cut-and-dried. Depending on the person, this answer can be incredibly simple or very complex. Like with everything, the needs of the buyer or builder is what will dictate the decision to either buy a home or build one on an empty lot.  Here are a few of the most important factors that should affect your decision making:

1. Materials

Like anything, the cost of building materials fluctuates with the economy based on supply and demand. If materials and supplies are expensive at the time, building may not be the best choice. Custom and specialty materials also up your costs, and may make buying a custom home the better value.

2. Building Plans and Preparation Costs

Many new home builders mistakenly believe that once you have bought the land, it’s yours and you can do whatever you want to on it. We often have customers come in looking for raw landing, asking us if this is true. This isn’t the case. Depending on your location, you may be restricted from building on certain parts of your property due to environmental conservation rules. Before you can build, you may have to apply and pay for inspections and reports to determine where and even if you can build. California law also requires land owners to apply for permits for any new construction on their property, and have plans drawn up by an engineer or architect (not cheap!). All of these costs, along with leveling the land, well drilling, and electric installation fees can add up to a much more expensive experience.  

3. Location

If you’ve ever talked to a real estate agent, chances are you’ve heard us use our favorite saying of all time, “location, location, location!” That’s because it is the single most important factor that determines a property’s value.  Location is the difference between a 1000 Sqft fixer-upper being worth $50K (in a very rural area), or $1M (in say, Beverly Hills). If the home values are soaring in the location you want to live, building will be your best bet for value and homeowner equity (the amount of the property’s market value that you own free-and-clear). At our location here in Aguanga, the current real estate climate is in favor of buyers not builders.   Just West and South of us in Temecula, Orange County, and San Diego the home values are higher and provide more advantageous conditions for builders.  

The three criteria above are usually the biggest factors in determining which path a prospective homebuyer (or homebuilder!) will take. Occasionally, these criteria do not play such a large role and personal preference and the desire to build one’s own custom home is the motivating factor. It is true that in no other situation do you get the customizability and control over your future home than you do with building your own. We’ve seen truly great results from either path people have taken. 

Of course, we are in a unique position to help no matter whether you want to build or buy. Our broker and agents can help locate the perfect move-in ready home for you. If buying is not for you, here at DCH Real Estate we are also representatives of Pacific Modern Homes, the premier maker of pre-panelized homes. With Pacific Modern Homes, one can receive the simplicity and benefits of engineered plans as well as the ability to customize one of the offered floor plans, or start from scratch and have complete creative control of the whole process. 

No matter how you want to move forward, here at DCH Real Estate we can help you through the entire process as we strive to make sure you are completely satisfied with your home buying or building decision.  If you would like to discuss the topic of this newsletter in more depth, please feel free to give us call at (951) 767-2400 to talk to one of our qualified specialists.

Hi Everyone

 Founders Mike and Linda Dunn

Founders Mike and Linda Dunn

Hello and welcome to the first post of our newsletter.

Since DCH Real Estate is new, we’d like to tell you a little about ourselves and why we think we’re best able to represent you in whatever capacity you need. We opened this year, and set up office in the old real estate building, which was formerly the Aguanga Inn. In fact, if you come in today you’ll still see the old bar, complete with the countless names carved into it. We like it, and we’re keeping it. We think a little connection to the rich history of Aguanga should be preserved, plus it’s one heck of a conversation piece.

Mike Dunn, our founder, has high expectations for our brokerage. He comes from a background not only as a real estate broker, but as someone who has spent thirty years in the construction industry. We think this will come in handy, as real estate and homebuilding are intrinsically connected at times. DCH Real Estate team members are even representatives of Pacific Modern Homes Inc., which offers one of the easiest and most cost effective stickbuilt housing solutions available. 

Mike has always held honesty and integrity in the highest regard throughout his life, and the DCH Real Estate initiative will be no different. Both Mike and all of us who are involved with the brokerage will strive to make sure that our clients and customers are never taken advantage of by anyone, and professional, straight dealing will be our default.

DCH Real Estate is the brainchild of Mike, but he is not alone in the effort. Joining him is his wife, Linda. With a background in medical records and construction bookkeeping, Linda makes sure the office runs smoothly and keeps organized. She is the glue that holds everything together around here, we like to say. 

Furthermore, there is Amanda Rodgers, a licensed Realtor currently studying for her broker’s license and specializing in raw land sales and residential properties. Real estate is not her only passion though, as she loves photography and linguistics. As a matter of fact, her most recent language of proficiency was Mandarin Chinese. She is also a licensed and bonded tax preparer, with intricate knowledge of the tax system.

Will Kohl is DCH’s newest edition to the office. Will is only weeks away from earning his real estate salesperson’s license, and is eager to become a knowledgeable real estate profession like all of his co-workers. He comes out of college with degrees in Political Science and Law and Society.

We’re growing quickly, but we want to make sure we remain personable and accessible throughout. All of us at DCH Real Estate have big plans for our agency and the Aguanga area, but we want to ensure you that the client and customer remain our number one focus. Without the support and good will of our clients and customers, no real estate agency can call itself successful.

Please feel free to stop by our office and get better acquainted with all of us. We’d love to get to know everyone we possible can. We’re still in the midst of our remodel, so please excuse the dust! We’re right in the middle of downtown Aguanga, so you can’t miss us.