Although interests remain relatively low, the number of home foreclosures across the country is on the rise up, which means that investors in REOs are beginning to have more opportunities to make money.

REO is an abbreviation for Real Estate Owned, generally homes that have been foreclosed by lenders who are now looking to unload those properties as quickly as possible. REOs have long been a favorite of investors, because lenders are generally willing to sell at a significant discount and often offer special terms to get them off their books.

Motivated Sellers

The key is that lenders are in the business of lending money to buy homes: they’re not in the home ownership business. When they take possession of a home, they’re motivated to get rid of it as quickly as possible, and often offer incentives to encourage fast sales–including low down payments, special rates, carpet and paint allowances, and reasonable selling prices.

Often REOs end up in the lender’s portfolio after the home has failed to sell at an auction. Most of the time, that’s because the amount owed was more than the property was worth on the open market, so the lender has already eaten a substantial amount of money, even before the property was put up for sale–generally making them some of the most motivated sellers you’ll ever encounter.

Some lenders will do minimal repairs (and some will even do extensive work or offer allowances for upgrades) as well as negotiating with the IRS to remove tax liens. That means the property comes with a clear title, an important bonus.

As with any investment, do your homework before you make an offer. Even though the listing prices may already be a good deal, don’t be afraid to ask for a lower price, better interest rate, help with points, repair allowances, or whatever will help sweeten the deal. You may be surprised at what they’ll take, just to get an REO off their books.

Explore Your Options

All lenders sell their REOs differently. Some use real estate companies, while others have REO departments that sell directly to buyers. Make your offer, but expect a counteroffer, because lenders owe it to their stockholders to get as much as possible for REOs. On the other hand, they don’t want to hold onto them long, so you may find their counter well within your investment guidelines.

You’ll often be able to inspect the property, but not always. Many REOs are rundown, because the owners didn’t have the money to maintain them. But if you do your homework, REOs can be a great source of profit for savvy real estate investors.

Copyright © 2006 Jeanette J. Fisher

Jeanette Fisher invites you to explore Real Estate Investing Information. Free ebook and teleseminars http://www.doghousetodollhousefordollars.com

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The most important part of qualifying for a mortgage isn’t how much of a down payment you can make, it’s how good your credit score is. The better your credit, the more easily you can secure a mortgage loan, even without a fat bank account or a high-paying job. The first and most important action you should take is to get your credit report from each of the three major credit bureaus, Experian, Equifax, and TransUnion. You have to get all three reports because the companies and utilities that extend you credit don’t report to all three bureaus. The result is that each consumer has three credit reports with three different sets of information. You can access the reports for free at least once a year. If you find errors and report them (see below for details), you can get a revised report for free.

Your credit score is based on the information in the credit report. In the simplest terms, the score indicates how likely you will be to pay back a loan in full and on time. According to Steven Burman, president of Credit Advocates and an expert credit counselor, it reflects your credit history, how much debt you currently carry (called outstanding debt), how much debt you’re already approved to carry in the future (add up the credit limits on your credit cards for the answer), how long your credit history is, and how timely you are in paying bills. The higher the number, the better your credit is, ranging from a low of 300 to a perfect score of 850. Do everything you can to improve your score — it’s even more important than saving money, in my opinion! Why? Because the higher your score, the better the interest rate you will get. If you have a very high score, you may even be able to buy a house with no money down.

Improve Your Credit Rating
Steve says that you have to take personal responsibility for your credit, and I agree. The first time many people see their credit reports is when they are about to purchase a home or a car. Because it can take about 3 months (and sometimes much longer) to change a credit score, if the score is wrong or low at that time, it could be too late to fix it. You could lose that fabulous apartment! Don’t let that happen — start changing your score today. Here are six proven ways to improve your score:

1. Check and correct your credit history
Thirty-five percent of your score comes from your credit history, according to Steve. Unfortunately, 70 percent of credit reports contain errors — mistakes that can adversely impact your score! Mistakes range from the misspelling of names, to reporting wrong addresses or places of employment, to confusing the accounts of people with the same name, to including outdated information. You can and should report errors to each of the credit bureaus since they do not share information. You can file disputes by phone or by mail, but you may find that it is most convenient to dispute errors online. Once the credit bureaus receive a dispute, they have 30 days to investigate. If they cannot verify the information in that time, it is deleted or corrected by default. Once you dispute information, the onus is on them to prove it. If your payment was late once or twice and the creditor reported it to the credit bureau, you can ask the retailer or credit card company to issue a letter of correction. For example, many retail stores would prefer to keep your business by issuing a correction than lose it by refusing to. Always follow up on promised corrections by rechecking your credit report. If some of the accounts on your report are old and closed, tell the credit bureau that you don’t recognize them. They will investigate, find that you are not a customer, and remove them. It’s best if your credit report lists only active accounts. Even when some of the accounts are closed, having dozens of them may make lenders assume that you are not a stable credit risk.

2. Pay down high balances

The amounts you owe on revolving credit accounts are responsible for 30 percent of your score. Steve says the fastest way to improve your credit rating is to pay down balances. After he advised one client to use all of his available cash to pay down his credit card bills, the client’s credit score went up by 100 points. Keep revolving credit accounts under 30 percent of the available limit. For example, if your credit card limit is $10,000, keep the balance under $3,000. High balances adversely affect credit ratings. Plus, credit card debt is expensive to carry. Some cards charge up to 24 percent interest on unpaid balances. Are the designer jeans and fur jacket really worth that? Pay off your credit cards! You can also negotiate with your credit card company to reduce or eliminate interest charges and sometimes even reduce what you owe.

3. Make history with your credit
It’s good to have some activity and history on the account. “Many people think closing accounts will make their credit look better, but it depends,” says Steve. “Look at the accounts you are closing and keep the oldest one. Length of credit history counts for 15 percent of your total score.”

4. Think twice about new credit
When you open a new credit card account, the creditor makes an inquiry to one of the credit bureaus to evaluate your history. The number of recently opened accounts and credit inquiries accounts for 10 percent of your score. (Note that checking your own credit report doesn’t count as an inquiry, however.) “If you start applying for loans at an auto dealership or a bank and each one does an inquiry, it’s a negative,” says Steve. When a store sends you a sales pitch saying you’re preapproved for credit, resist the temptation to fill out the application form. One credit card is all you really need. At any rate, closing an account doesn’t mean it automatically disappears from your credit report. You have to ask them to remove it. Better yet . . .

5. Pay with cash
Using debit cards and cash are good ways to control your debt (and therefore maintain a great credit score).

6. Pay all your bills on time
Late payments can have a substantial negative impact on your score. For example, you can raise your score by as much as 20 points simply by paying bills on time for 1 month!

For more information on improving your credit rating, visit the Federal Trade Commission’s credit repair page at www.ftc.gov/bcp/conline/pubs/credit/repair.htm. To dispute information in a credit report, here is how to contact the credit bureaus:

Equifax Information Services, LLC
Disclosure Department

PO Box 740241
Atlanta, GA 30374
800-685-1111
www.equifax.com

Experian
475 Anton Boulevard
Costa Mesa, CA 92626
or
955 American Lane
Schaumburg, IL 60173
888-397-3742
www.experian.com

TransUnion LLC
PO Box 1000
Chester, PA 19022
800-888-4213
www.transunion.com

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
877-322-8228
www.annualcreditreport.com

Annualcreditreport.com is the official site that helps consumers obtain the free credit reports they are entitled to annually, as required by law.

Reprinted from: Invest in Your Nest: Add Style, Comfort, and Value to Your Home by Barbara Kavovit © 2006 Rodale Inc. Permission granted by Rodale, Inc., Emmaus, PA 18098. Available wherever books are sold or directly from the publisher by calling (800) 848-4735 or visit their website at www.rodalestore.com.

Published by Rodale; June 2006;$19.95US/$26.95CAN; 1-59486-151-X
Copyright © 2006 Barbara Kavovit

Barbara K is CEO of barbara k!, a comprehensive lifestyle brand that offers solutions for women through innovative home enhancement/repair and automotive products. She is also the home improvement expert for AOL Coaches and author of the inspirational fix-it handbook Room for Improvement. Barbara has been featured in the New York Times, USA Today, Real Simple, and O, The Oprah Magazine, among others, and has appeared on numerous television and radio programs, including Today and Good Morning America. She lives in New York City with her son, Zachary. For Barbara K’s products, visit http://www.barbarak.com

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Homeowners in UK can use their home equity to get a secured loan. Designed exclusively for the homeowners in UK this loans carries very low interest rates. The collateral being offered by the property or home equity, secured loans for the homeowners in UK are also available to people with bad credit and CCJ’s against them. Usually the lenders scoff the people with bad credit. However, things turn around when such persons are able to offer their home or home equity as the collateral. The lenders since they have the collateral; toss away their inhibitions and lend generously to the bad credit people.

Secured loans for homeowners can be used for any purpose by the borrowers. A genuine lender will be the last one to bother about the usage of loan amount and will not tie it up with any precondition. A person might like to borrow a fortune as secured homeowner loan but there are many things, which decide how much the lender will give. The lenders are cautious businessmen and they give topmost priority to the security and prompt recovery of their loan amount. Keeping this in mind, they generally feel comfortable in lending an amount less than or equal to the market value of the collateral. So, if your house or home equity is worth

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