Myths and Bad Advice Regarding Credit Repair - Part 1

I like to read a lot. It usually starts out with doing a little research and then I end up spending hours and hours just reading articles, one after the other, all because I read something that just bugs me. I try to find more articles by different people spewing the same nonsense. It gets me in the writing mode.

So today, I was watching some videos and reading articles relating to credit repair and I have to tell you, boy, if you don't know the real truths about what they're saying, you're gonna believe your credit is going to suck for years and years. It simply is not so!

Let's start off with why there is so much bad information being put out there. There have always been people with bad credit. There have always been people who wanted to clean up their credit without waiting 7 - 10 years for stuff to "fall off". Many years ago, the courts made a ruling that not only can you work on cleaning up bad trade lines on your credit, they decided that one could use a third party to work on it for them. At this point, credit repair companies started emerging out of the woodwork.

Well, the credit bureaus knew that though many of the credit repair companies would be looking for a quick buck and attempt to do a mediocre job, there would be some that would study the laws and successfully be able to help repair their clients' credit. The bureaus are nationally traded companies. They are not government agencies. They store credit information and sell credit information to make big money. Bad credit is BIG BUCKS! Successfully removing bad credit from credit reports cuts into their Big Profits!

So, they set out on a huge, massive campaign to distort the truth and confuse consumers. Their plan was to make the consumer believe that once bad credit is on your report, you're stuck with it for 7 - 10 years. They have been mighty successful with this campaign. They write articles about credit reports too. They just don't tell the whole truth. They pick apart the truth and put in partial truths. They slant the information to hide the true facts about information reported on your credit report. They need to deter individuals from even contemplating the chore of fixing their credit to protect their profits.

Next, you have people who buy into the garbage the credit bureaus are trying to brainwash everyone with. They unknowingly (usually) further the campaign of the credit bureaus. You have people who write articles online. You also have online marketers that set up content websites to make money off of affiliate products and adsense. They use those articles and write articles of their own to put on the websites. The writers take the information the bureaus put out and just regurgitate it in their own words. After writing lots of articles, oh wow, they're an expert. NOT! But, they are "perceived" as experts. The problem is, they really didn't do thorough research. They took one-sided information and repeated it. Now multiply that by thousands of article writers and what do you get? Thousands and thousands of articles on lots and lots of websites, writing the same crap over and over again!

Not here! I actually like research. I actually have read the Fair Credit Reporting Act (FCRA), the Fair Debt Collections Practices Act (FDCPA), the Fair Credit Billing Act (FCBA), the Fair and Accurate Credit Transactions Act (FACTA), (all of which are credit laws written to protect the consumer - not the credit bureaus), lots of case law and lots of information on state statutes.

So when I talk about credit repair and when I do credit repair, I know what I'm saying is the truth and I know what I'm doing for each client is legal. My truths come from the laws that were written to protect us, the consumers. My work for my clients is legally done and uses the laws to remove the bad credit.

In Part 2 of this topic, I will share some of the information that is put out there for you to believe. I will tell you if it is the truth, a partial truth or just utter BS. I will also tell you what the real truth is and back it up with the law or laws to prove it when applicable!

Stay tuned!

Credit Repair - Dealing With Collection Accounts

The first step in credit repair is always to get a copy of your credit report. So I'm just going to assume that you have this. Let's deal with cleaning up your collection accounts.

First of all, one of the main things to keep in mind while dealing with the collectors who report on your credit report is that you need to have a paper trail. This is one of the reasons why you deal with them through the mail. STAY OFF THE PHONE! Besides not being verifiable, they are trained to negotiate you into paying them something, any little payment, anything they can get out of you. Their purpose for communicating with you is NOT the same as your purpose for communicating with them.

Your purpose is to get them to prove that you owe them. Your purpose is to get them to validate the debt. Your ultimate goal is to get it removed from your credit report. If they cannot legally prove it is your debt, you have no legal responsibilty to forward any money to them. They have to prove it is yours by supplying a contract, signed by you. They have to supply a complete history of your usage and payments for this account. They have to prove that your last date of activity is still within the statutes of limitations. They also have to prove that they have a legal right to collect on the debt and supply you with a breakdown of what they are charging you, including their fees.

So first, you need to send them a letter demanding validation of the account listed on your credit report. You do not need proof that they have your name, address, etc. Validation means proof of the account belonging to you. You will want to send this letter to them US certified mail with return receipt. (USCMRR). You get a receipt at the post office and when they receive it, they must sign for it. You then get that green card back, your proof of receipt. This then puts them on notice.

At this point, when you have received the green card back in the mail, you need to write a letter disputing with the bureaus. The reason you wait until after you have received the green card back is because once they have been put on notice that you are disputing the account, the law says that all collection activity has to cease until they provide legal validation.

The law considers the following things collection activity: Sending you a bill, calling you on the phone, calling people who may know you, reporting to a credit bureau, verifying with a credit bureau. The only thing they are allowed to do to your credit report is to note that the account is being disputed.

So, when you dispute with the bureaus, they will (or claim they do) contact the companies of the accounts you are disputing and attempt to verify that the information they have provided is accurate. Since verifying is legally considered to be a form of collection activity, they are not allowed to verify with the bureaus whether or not the information is correct. If they follow the law and do not verify, the tradeline is removed as requested by you.

Now, if they followed the law and the bureau followed the law, and people performed credit repair in this way, there would be a lot more good credit reports out there. Unfortunately, bureaus don't actually "investigate" and collectors don't usually give a crap about following the law. This is why credit repair does not happen overnight. But don't be discouraged. There is a good side to them breaking the law!

If you keep a paper trail - copies of all letters sent to both the bureaus and collectors, and receipts of when you mailed the collectors, you will build a nice file to use against them. Every violation of the law is accompanied by a nice little fine for the violator! Every time they report, verify, or continue regular collection activity (like sending you a bill instead of validation), they rack up fines you can charge them in court. Or you can use the huge amounts as a bartering chip. They can pay you a reduced amount and remove the tradeline from your report in exchange for you not suing them!

The courts will want to see a lengthy paper trail though. Not just 1 attempt to get something removed. They will want to see that you followed up 3, 4, 5, maybe 8 - 10 times with the collector trying to get them to validate. They will need to see your letters to the bureaus also disputing these tradelines. They will also need to see, from several copies of your credit reports over a number of months, the blatant disregard for the law that the collector shows by updating, verifying, and reporting the disputed tradeline, after being demanded to provide validation and not providing it.

Also keep everything they send you in your file. You will need to show the court what they have sent as supposed validation. Show the court the letters that request you send them information about the account you are disputing and requiring validation on. DO NOT SEND THEM ANYTHING! It is not your responsibility to provide them with information of the account. If they are accusing you of owing the money, then they should have everything they need! THE BURDEN OF PROOF IS ON THEM - NOT YOU!!

I love it when they request additional information on an account. This just proves to me that they do not have what they need for proper validation. This means that this account should be removed without too much trouble. Send a copy of the letter to the bureau with your next dispute. Show the bureau that they just said that they verified an account was accurate, yet the collector admits in writing, he doesn't have the information needed to know if it is accurate. How on earth can they truthfully verify that?

At this point, you can threaten to sue both of them if they do not remove the trade line. Usually it works. Not 100% of the time, because let's face it, they break laws on a regular basis. Generally you are dealing with minimum wage workers who have no clue of the law, and they assume that if they don't change it, you will not sue. In fact, they hope that they frustrate you into giving up.

Go back through all the letters and make a list for each collector and each  credit bureau. List every violation and the fine attached to each violation. When they see you're not giving up and you're not a mindless idiot, you're someone who has taken the time to know the laws and the fines that go with them, they will usually back down and remove the inaccurate tradelines, giving you the report, or a cleaner version of the report that all your hard work deserves!

Credit Counseling for Credit Repair?

Yeah, uh huh, and they're non-profit too! Too many credit counseling agencies or companies make such huge claims about improving your credit, it just sounds too good to be true. Guess what? Usually it is! Why? Because credit counseling or debt negotiation doesn't repair your credit, it helps you pay off your debt. Some of them say they help you pay off your debt, but in reality, they are just padding their pockets with your hard earned cash. Plus, if you can't keep up their payment plan, well, some of them report you to the credit bureaus too! Wow, that's just what you need.

They love being able to claim they are non-profit. But, what does that really mean? Well, first they have to incorporate and apply for the non-profit status. They can form as a non-profit or not-for-profit corporation because they are service oriented and provide education. They can even apply for a tax exempt status at both the state and federal levels. It looks so good to consumers - they must really care!

So you think they really want to help you because they are non-profit? Come on now, think. Why on earth would there be sooooo many credit counseling and debt negotiation companies out there if they weren't making a profit? They don't like to call it "profit", nope, it's considered a "surplus!" I guess that's why the top dogs get paid so much!

So, how does negotiating or counseling repair or improve your credit? It doesn't! Remember, once a bad trade line, always a bad trade line, unless you remove the negative notations. Sure, you may be able to use their plan to repay your debt, but you still have all the recorded late pays on your credit, the collection accounts will still be there, and some creditors will even add a comment that you are in a replayment plan on your report.

The good part about credit counseling and debt negotiation is that if you are successful with it your debts will get paid off. Paying off your debts helps you look more responsible to potential creditors. So, some may consider granting you some credit to help rebuild your credit profile and score.

Here's some bad things about credit counseling and debt negotiation.

• You have to pay an additional fee to them - more money out of your pocket.
• You still have negative marks on your credit and it confirms with the bureaus that the debt is indeed yours.
• You are paying someone a lot of money for negotiating the same terms you could reach by calling your creditors yourself. A couple phone calls, sign some paperwork, there you go!
• Some companies take your money but don't make your payments on time. Ouch!
  
• Some want to auto draft your account and may take more than what you have to give them some months.
• Some will report you to the bureaus if you can't keep up the payment plan.
• If you think they are doing it because they care about you, get real. They are in it for the money - YOUR money!

Obviously I'm not a big fan of these services. I don't condone blowing off your creditors and not paying them, but I'm a huge fan of State's Statutes of Limitations, FCRA, FDCPA, FACTA, and FCBA. I never advocate paying off a collector, except as a absolute necessity of obtaining a much needed loan and it is a requirement of the lender. Rather, I prefer validation for collectors and if you are very near or past the statute of limitations, dispute, dispute, dispute!

Don't pay what they can't prove you owe, if they are not the original creditor! I have seen so many credit reports over the years and one thing is consistent - every single one of them had errors on them! When you need to pay old debts, make sure that it is actually the amount you owe. Make sure that they delete the negative information or the whole negative tradeline when they receive payment. The older the debt, the less damaging it is to your credit report.

My advice when it comes to paying off your debts in conjunction with credit repair, first check the date of last activity and compare that timeline against your state's statute of limitations. Next, contact your original creditor and try to make a deal with them for a reduced payoff and positive credit reporting. If the debt is with collectors, send them a validation demand. Don't give them a dime until they legally and completely prove that the amount they say you owe and the account they are claiming belongs to you is 100% accurate. Then, negotiate a lower amount with a promise to delete the negative tradeline - IN WRITING - prior to you sending them any money. Always pay with a money order and DO NOT SIGN YOUR NAME! Type or print only.

Credit Repair and the Cease and Desist Letter

How many times have you had an annoying collector keep bugging you to pay a bill? How do you even know if he has the right to collect or if his information is correct? Usually his infomation is incomplete, at the very least. Most of the times it is incorrect.

Fortunately, though most people don't realize it, consumers have the upper hand when it comes to collectors, most of the time. This is mainly because of the FDCPA - Fair Debt Collection Practices Act. This act outlines how and when a collector can contact you. It also describes what they can say to others when they are trying to locate you (family members, friends, co-workers, neighbors, etc.). But, just because there is a set of laws that they are supposed to adhere to, doesn't mean they follow those laws.

If they are calling you at work, you can tell them you are at work and not allowed to take personal calls there. They are supposed to knock it off at that point. If they are calling you on your cell phone, the same is true. They are supposed to stop if you tell them to. However, most collectors are ignorant and blatantly violate the law. They try to claim that they don't have to stop unless it is in writing, and then if you do that they say they will have no recourse other than to sue you.

These statements are false. There are partial truths to them, but since not completely true, they are false. First, you can tell them verbally to stop if they are contacting you at work or on your cell. Secondly, sueing someone is never the only course of action they can take.

But, to cover your own self, here's how you should handle them. Put it in writing. You must be careful what you say though. You can stop them from calling you on any phone by sending them a "limited" cease and desist. It is limited because it says they can no longer contact you by phone, but they can send all the mail they want. All correspondence should be in writing, if they feel the need to contact you.

Now, there are times when you use a full cease and desist letter. A full cease and desist tells them they may no longer contact you anymore for any reason, at any time, through any method. If you have proof that you have paid an account that they are harrassing you over, send it. If you end up getting sued, make sure you show up for court with your documentation in hand, otherwise, they may end up scamming some more money, plus court costs from you.

Now the second time you use the full cease and desist letter is when the account is absolutely not yours and they have not provided any proof that it is indeed yours. Again, if you get sued, you must go to court and fight. Take with you all copies of letters you have sent to them requesting "validation" and their responses you've received. You must be able to show the court that what they have given you does not constitute proof or full validation as required under the FDCPA.

Now, my favorite, which is a common violation of collectors, is when they attempt to collect a debt that is outside of the statute of limitations (SOL) for your state. The debt is "time barred". Different states have different timetables. California is 4 years. In California, when a debt is out of SOL, all collection activity must cease. California categorizes many actions as collection activity. Calling you or people you may know, writing to you, sending you bills, and even better, reporting to the credit bureaus or verifying with the bureaus. Let them take you to court for this one. "Your honor, this debt is time barred, here is the proof, so therefore these knuckleheads are SOL because of SOL"!!!

Keep copies of EVERYTHING you send the bureaus and collectors. You may need it in court to defend yourself. You Will need it in court if you decide to go after them for monetary damages for violating the law and your rights!

One more thing I like to add when I send a cease and desist letter. I like to tell them that they are not to sell, assign, or give the account to any other party to ever attempt to collect again. I include a hint of a threat to sue if it appears on my credit report again. This is a good way to keep bad debt from recycling over and over again on your credit reports.

When Bad Credit Comes Back On Your Report

You've done some credit repair, or had some credit repair done on your credit report. Finally, you got some baddies removed. Then you go apply for a loan or credit and doggone it, that stupid negative trade line is back! What happened?

Well, there are a couple things that cause this to happen.

First, a very common practice for collection accounts is for the collector to sell it to another collector and congratulations, the scum put it on your credit report again! Many times, collectors have a few different companies or company names that they collect under. So one of the companies that got a hold of that tradeline, sells it to another one of it's companies so they can keep trying to collect from you and mess up your credit. Yes, I did claim that they want to mess up your credit. It's all about the ... say it together now ... MONEY!!!

Sometimes collectors will sell to another scum sucking, bottom feeding, low life collection company. That way they make a couple of bucks and let the next one try to get something out of you. In the meantime, you get a nice new negative mark on your credit, for something that got removed, most likely because the information wasn't accurate or the collector couldn't prove it.

If the bureau allows the exact same trade line to come back on your report, by law, they are supposed to notify you within 5 days of them reinserting it on your report. But just because the law mandates that they do that, doesn't mean they give a hoot and obey it. Many times they conveniently "forget" to let you know. However, you can go after the bureaus at this point and state the facts to them. "Uhhem, bureau idiot worker, listen, the law says that you have to notify me within 5 days if you are reinserting crap like this back on my credit. So, either remove it permanently or expect a summons, and don't forget to bring your check book!"

It may have been reinserted by the same crappy collector that had it there in the first place, because, even though they are supposed to respond within 30 days to any dispute (yep, that's the interpretation of the law), sometimes they don't. So when they decide to get around to it, the 30 days has passed, it has been removed, then the bureaus get their response and it gets reinserted.

The point is, you need to stay on top of your credit reports and not let them get away with these underhanded tactics of hurting your credit. Go after them! Go after the collectors! Make them show proof that they have the right to collect and report, and make the bureaus prove the investigation was thoroughly and lawfully completed. Otherwise, the law says it has to be removed. Remember, 100% accuracy on your reports is required by law. Don't let them get away with anything less!

I Can't Believe I Actually Read This!

Okay, this is what I read at the end of an article by someone who gives vague information about credit repair:

"Credit is a priviledge, not a right!"

OHHHH PULEEEEASSE!!!!! How much more bureau butt kissing do we have to take?

Here's my opinion. Credit is not a priviledge nor a right. It is a necessity. It is a requirement to buy ANYTHING that needs a loan, or more credit. Credit is a fact of life. It's not a priviledge, because anyone can get credit. Some may have to buy it up front in addition to paying for it while using it, or having it, but you could be an ax murderer and get credit! It's not a right, because as Americans we have the right to life, liberty and the pursuit of happiness, - and "Liberty", another word for freedom, kind of, well stretching it, could mean NO Credit obligations!

Okay, I'm being sarcastic. But the truth is, whether or not it's a priviledge or a right, or whatever, pretty much everyone needs it. And lets be real, pretty much every one has it. At least most people have a credit report. They might not have great credit, but even bad credit is credit.

So, how do you make that work for you? Well if you have good credit and a good score, keep on doing what you're doing. If you have mixed credit, some bad, some good, keep maintaining the good credit and let's get that bad credit changed or removed. Now, if you have bad credit, and only bad credit, well, we don't want to remove all those tradelines if we can avoid it, we want to change them and make them good.

Let's change that bad credit if possible. Now, if they're collection accounts, they're useless and you need to get rid of them. But, if they're original creditors, let's try to change those late pays into always current. Let's get those charge off's to show paid as agreed.

You don't raise your score a lot by paying off collectors. Bad credit is bad credit, paid or not. Collectors are bad! You need to just get rid of them. Old lates are fairly easy to get changed. You don't recall exactly when you paid something late. So tell them that. "I don't recall making a late payment in October, '04." "Please correct this trade line to show paid as agreed." Many times you will get a fresh report showing no lates on that trade line, which means an increase in your score!

Do that enough and you can be one of the "priviledged" people who has credit that they only have to pay for while they have it, and not up front when you apply!!!

Tsk, tsk!

Easy Ways To Improve Your Credit

Here are some easy ways to improve your credit. First off, everyone will tell you to pay down your credit cards. That's a given, but there are guidelines to this method. I'll talk about that when I hit that bullet. Okay, let's get started.

1. First things first - get a copy of your credit report. You need to see what's on there so you can see what needs improvement. I recommend going to annualcreditreport.com and getting a free report from all 3 main bureaus. You are entitled to 1 free report from each bureau every year.
   
2. Look at your credit report. Let's start with trade lines that have late pays. Now on those trade lines, how old are they? The older the better! You should see when the late pays were, underneath the supplier of the info. Also look at the column that says "DLA". This stands for Date of Last Activity. The older this is, the better for you. Highlight the tradelines that have old lates.
3. Collection accounts and Charged Off accounts. Same idea here. Look at the DLA and last reported columns. If they haven't reported in a while, highlight those accounts.

I want you to fire off a letter to the bureaus for these accounts. Don't dispute every negative account. Just these! Don't say they're not yours. That throws up a red flag, and is the first step in them screwing you. Here's what you say, but in your own words of course:

Acct. # xxx I don't recall ever being late on this account. In fact they increased my credit because I was such a good paying customer. Please remove the lates.

Acct. # xxx I never signed a contract with this collection company. I completed my contract with the original creditor years ago. In fact, they shouldn't even be scrounging the gutters for an account that is this far out of the statutes of limitations! This trade line is not only incorrect, it is obsolete and by your own laws of the FCRA, you must delete it.

Acct. # XXX This account was never charged off! I recall paying it off in full! This is an error that is not allowed on my credit report by law! Please show paid as agreed or delete it.

You see, they have to prove it is 100% accurate. Some may come back verified. This is because instead of doing their jobs and researching the account you are disputing, they just put in a code that it is correct. When I do credit repair for people, I don't just hit the bureaus, I go after the companies that are reporting first, and then the bureaus. This is just a short cut way to get some of the negative lines improved or removed.

Next way to improve your credit:

1. Here we go with the credit cards. When you pay down your credit cards, DO NOT PAY THEM OFF! The main thing is to pay consistently every month and get them down below 30% difference between High Credit Limit and Balance Owed.
2. DO NOT CLOSE ANY CREDIT CARD ACCOUNTS! Why? Because you want that ratio to be excellent between the High Credit Limit and Balance Owed. Also, the longer you have had open accounts, and active accounts, the more points you score!
3. This is the fun one! Use your credit cards! Don't go crazy, I'm not saying that. But spending activity and payment activity = +++ scores! So, you need to put gas in your car and you need some milk and toilet paper, charge it! Then, let's say the total is $50 you just put on your card. Your minimum payment will be $20 or so. Don't pay the $20. Pay $45. This leaves a balance (activity) on your card, and shows a good payment (activity again).
4. Last one for this section. Sometimes this is hard to do, but you should for your own protection. Pay your bills a little bit early. This is because creditors love to say they didn't get the payment in time and they want to hit you with late fees, which can add up to over the limit fees, which puts huge profits in their pockets and rips you off. Don't let them take advantage of you.

Two more things you can do that help:

1. Sometimes I've seen scores raise a bit - and it makes no sense why it should- but you should "Opt Out" for each bureau. What this means is you are opting out of them marketing your information to creditors to send you offers. But, it also means these companies won't be looking (inquiring) on your credit either. I believe that since they are not going to make the big bucks off selling your information, then there's not as much of a benefit to them to keep bad tradelines on you either. So, it kind of helps the negatives come off some times. This is my opinion, not fact. I've never seen anything in writing about this, I just know from personal experience that more negatives seem to be removed when the client has opted out.
2. Remove old names and addresses from your report. Be careful here though. If you have good tradelines associated with an old address - You Want That One To Stay! You can tell by when the trade line was opened and the dates associated with the address. But any that are associated with negative trade lines or public records, you want them off. Now, I say stay off the phone and always dispute in writing. This is the ONLY time I say okay to dispute on the phone. ONLY dispute addresses you don't want on the phone. Tell them that you do not recall that address as being yours. (The address isn't yours. You don't live there now do you?)

Okay, this should give you a good start for improving your credit a bit. You don't have to do all of them, just whatever you can manage. Remember, if it is just more than you have time to deal with, shoot me an email or give me a call. I love sparring with scum sucking collectors and lying bureaus!

Credit Requirements For a Home Loan

So, the market has dropped and now home prices are getting to the point where you can afford to buy. Congratulations, that's fantastic! What do you need to buy a house? Well, here's the basics.

Before you start shopping, make sure you are going to be able to get financed. That means pre-qualifying. Because of the condition of the market, many sellers are now requiring pre-approval from a direct lender. Usually, they will have a specific company and a specific rep that you need to qualify with.

Personally, as a real estate agent, I think it is utter crap to force my clients to cross qualify with the seller's agent. Why? Because, it isn't just to make sure your client is going to be able to close the deal, NOOOOOO! It's hard sell, offer the world and steal the client that you've been busting your butt to find the right property for. And, you either are a loan officer as well or you work with specific lenders you have built a relationship with, to get your clients pre-qualified. Basically, they are trying to capture the loan and steal your commission.

Another reason why I don't like the stipulated cross qualifying, is because if your client is getting FHA financing, they don't give pre-approvals!! They have to have an accepted offer and some other legal stuff to give the pre-approvals. Not all clients are going to qualify for that direct lender the seller is insisting on.

However, you still have to be pre-qualified so that your agent will show you houses you can afford. So again, what are you going to need? Here you go:

• 2 years tax returns - the whole shabang; all schedules; W-2's and/or 1099's
  
• Most recent month of pay stubs
• Last 3 months bank statements, all asset statements (IRA, stocks, investments, etc.)
• Copies of all business licenses
• Home address with landlord information for past 2 yrs
• Employers name, address (last 2 yrs)
  
• Loan info and lease agreements for all real estate owned.
• Clear copy of government issued photo id and SS card
• A tri-merge credit report

Now, these are things the lender is going to need to issue the approval and loan docs. However, what condition does your credit need to be in?

You need a minimum of 580 FICO score for FHA financing. Most lenders want to see upwards of 680 FICO scores and most banks won't lend you squat if your FICO is under 720. This means that you have to have fairly decent credit.

You need at least 3 trade lines - lines of credit. One should be an installment loan, such as a car note. For FHA, you CANNOT have any collections (medical excepted). NO judgements, NO liens, NO unpaid student loans that are not in deferment. You may not have had a BK for 2 yrs from date of discharge (or filing for dismissed bk). Any derogatory will need a letter of explanation. You may NOT have had a foreclosure in the last 3 years.

Now if you qualify for FHA, you will also qualify for down payment assistance (DPA). However, you still need closing costs, unless the seller agrees to assist there as well. But, when buying an REO, they will want you to cover their closing costs and yours, and will only credit 3% for closing costs.

You will need extra money because FHA has a mortgage insurance premium that is paid up front and an extra .5 percent interest on your loan. But, you can get in with 3% down, and that can be gifted. I usually figure with down payment and closing costs for an FHA insured loan, my buyer needs about 8% total. So, that's what I figure when I request DPA.

Don't forget the good faith deposit. Usually it's about 1% of the offered purchase price from the buyer. That can be applied toward your down payment or your closing costs.

So, get your credit cleaned up, score raised and start shopping. Oh, I need to warn you. When you find that perfect house at a great price, you do not have unique tastes. Every other real estate agent showing properties in that area has a client that thinks that house is perfect. Your offer is going to be one of several to oh, maybe, 35-40 offers, all offering wayyy over the listed price.

The offer with the best loan terms, best credit has the best chance. It is not always the highest price. Strong credit, decent down payment, fair offer will get you the invitation of best and final or bank addendums! Hurray! You're going to be a homeowner!