Month: November 2015

The Cities With the Highest Credit Scores

Your address doesn’t factor into your credit standing, but there are geographical trends to credit scores. For example, people in the northern Midwest have historically had high average credit scores. Low average credit scores are common in Southern and Western states.

minneapolis

Four of the 10 cities with the highest average credit scores are in Minnesota, according to Experian’s 2015 State of Credit report. The figures are based on consumer data in the Experian-Oliver Wyman Market Intelligence Reports from the second quarter of this year. It provides an in-depth look at credit characteristics in more than 100 metropolitan statistical areas (MSAs), as determined by the Census Bureau.

On average, U.S. consumers have a 669 credit score on the VantageScore 3.0 scale (300 to 850), which is up 3 points from last year. In one city, the average score is 37 points higher, at 706. Here are the 10 MSAs with the highest average credit scores (score averages are rounded to the nearest whole number):

Mankato, Minn. — 706
Rochester, Minn. — 705
Minneapolis, Minn. — 704
Fargo, N.D. — 701
Wausau, Wis. — 701
Duluth, Minn. — 701
Sioux Falls, S.D. — 700
Green Bay, Wis. — 700
La Crosse, Wis. — 699
Cedar Rapids, Iowa — 699

The biggest factors that determine a consumer’s credit scores are payment history and amount of debt relative to credit limit, so people who make loan payments on time and use very little of their credit cards’ available credit tend to have great credit scores. Among these 10 cities, consumers used only 26% of their credit cards’ credit limits on average.

There are a lot of things that can indirectly play into someone’s credit score, even though they’re not included in credit reports. Take income, for example: It’s not reported to credit bureaus, and it’s common for someone who might be considered wealthy to have poor credit. Likewise, you can make very little money and have great credit. It’s all in how you manage your finances. Still, a high income theoretically makes it easier to avoid debt and pay bills on time, which in turn can help your credit scores. In a city or state with high average credit scores, that data may be related to a variety of things, like employment opportunities and financial services infrastructure in that area, not just people’s attention to managing their credit.

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With the Clock Ticking on Tax Breaks, Is It Black Friday for Homes?

You probably already knew that now’s an ideal time to buy a home. We’ve told you only 9,845 times! Maybe even 9,846.

house-big-sale

Well, in case you needed more incentive, check this out: Some pretty sweet tax breaks that have made home buying particularly enticing are set to expire at the end of this year. Without any indication that those breaks will be extended, right now is kind of the Black Friday of home buying.

It’s anyone’s guess what Congress might do at the end of the year.

Poulos believes some of the key tax breaks may get a reboot, but if you act now, you can be sure of cashing in on a sure thing.

Plus, we dodged a bullet when the Federal Reserve decided in September to keep interest rates low, but word on the street is that the Fed is poised to enact a hike in December.

So here’s how you may want to get in on this:
Private mortgage insurance deductions

If you can’t cough up a 20% down payment, you’ll probably have to shell out a bit more for private mortgage insurance. But there may be a silver lining: In the past, the government has offered a break for all PMI holders.

PMI is tax-deductible (just like mortgage interest), and that goes for any buyers buying a primary residence, even if they’ve claimed the deal in the past.

Right now the tax break is in limbo, but Poulos doesn’t expect that to last much longer. Neither do we.
Energy tax credits

If you’re eyeing a fixer-upper in need of some green upgrades, or you just want to make your existing home a little more green, now might be a good time to take the plunge.

Here are two tax breaks for you:

If you make small improvements—such as installing new windows—you can claim a tax credit for 10% of your purchase cost, up to $500 total.
If you go big, your tax credit can be bigger, thanks to the Residential Renewable Energy Tax Credit. This one gives you a tax credit for up to 30% of the cost of installing energy-saving systems such as solar panels, water heaters, geothermal heat pumps, and wind turbines—and there’s no upper limit.

The deal has been extended through 2016, but there’s no guarantee it’ll last beyond that.
Buy points, lower your tax bill

This one isn’t technically at risk of extinction (yet), but you’ll want to hop on it before the Fed hikes rates again.

One of the best tax advantages at the moment is the opportunity for those buying a home to buy points for a lower interest rate—not that interest rates aren’t already low enough.

Here’s how it works: If you buy points to get a lower interest rate, you can deduct both what you pay in interest and the cost of the points in the year you buy your home.

That’s because buy-down points are considered mortgage interest and are tax-deductible, and on a purchase they are all deductible in the year you purchase the home.

No one can say for certain (yet) what tax breaks will be extended; in previous years, Congress has waited until the last minute to offer a pass. Either way, if you get in now, you’ll be guaranteed to reap the tax rewards.

In Defense of Buying a Historic Home: It Could Be Downright Amazing

Maybe you’ve always dreamed of buying a beautifully built home, something that doesn’t look like it came out of a cookie cutter.

victorians-sf

And you probably also get some side eye as soon as you mention your historic-home dreams. Real estate agents, friends, and family are often quick to tell you to think twice before investing in an older home. And they’re not wrong.

There are any number of problems that could come with buying a period home. Asbestos! Zoning restrictions! Small rooms! But if you do your homework, those things won’t catch you off guard.

And if you can get past those possibilities, you can embrace the fact that sometimes historic homes are downright amazing.

Sometimes there’s nothing to worry about—it’s just 200 years old, is all.

In fact, there are several reasons historic homes can blow their newer counterparts out of the water. Check out these advantages—but also make sure to find a knowledgeable agent and home inspector you trust.
Quality of construction

The No. 1 thing you’ll find in a historic home that you can’t get nowadays? Sturdy construction with meticulous attention to detail. Leaded glass windows that survive high winds and hail better than its newer neighbors. Floors made from heartwood, which won’t scratch easily or warp (and hasn’t been available in decades).

It is more comfortable, better built, and better designed than anything else around. It has cross ventilation, it has galleries—everything about it is wonderful and gracious and charming. And it’s solid as a rock.
Functional charm

It may feel like a tank, but the architects of yore crammed a lot into a home that you don’t get with today’s fast-paced construction—and most of it served a purpose. Transom windows can be cracked open, pouring cool air into your living room and keeping your AC bill down. The dumbwaiter that used to carry food upstairs can now be used to drop your laundry hands-free to the first floor. And the picture rail lining the bedrooms can safely display your art collection without having to tear holes in the walls. Plus, it all just looks cooler, right?
Tax benefits

If you’re terrified of a bad investment and looking for a little financial reassurance, there are several local, state and federal tax breaks for owners of historic homes. The government wants you to keep preserving these properties, so it’s generally willing to chip in a little bit—even if that means reducing your bill to the IRS,
Landscaping

The advantage of living in an, ahem, “mature” home is that you usually get the mature landscaping to go with it. Imagine living along a tree-lined street that not only makes everything feel cozier, but also increases your home’s value.

Finally, if you’re looking to show off a little, remember that you can always open your home to the public—having a beautifully preserved historic home comes with the possibility of hosting garden or holiday tours. Sure, these old bones aren’t for everyone. But if you’ve done your research and your Realtor and home inspector approve, why not make a commitment to own a piece of history?

Give me an old house any day of the week. They’re just built to last.

Shopping for a Home? Case the Joint Like a Burglar

So you’ve got the whole house-hunting routine down, and you run your must-have home features on a loop in your head like a Spotify playlist. You’ve become a pro at scoping out closet space, bedroom sizes, and whether there’s adequate wall space to mount the big-screen HDTV you plan to buy after the move.

burglar-house

But here’s something you almost certainly have not thought to evaluate: Just as you size up whether a home fits your needs, how might burglars size it up to see if it fits theirs? Is your new abode safe as a fortress, or does it stand out as a prime target for intruders?

Before you put in an offer for a new home, consider these potential problem areas—and whether you can fix them on the cheap!

Shrouded in shrubbery

Extensive and elaborate landscaping can add appeal to any yard. But bushes placed in front of windows could provide all-too-much shelter from watchful neighbors or passers-by—isolating your home and making it a target for bad guys.

Landscaping that blocks a door or acts as a wall between properties also provides hiding spots for criminals. Scary!

Your security solution: You don’t have to spend a fortune ripping out a bunch of bushes, but you might need some elbow grease.

Landscaping should be kept trimmed so that neighbors—or patrol cars—can see completely around the front side of your house.

A visible security system panel

Of course, having a security system is a popular and effective deterrent for home break-ins. And while it’s helpful to have stickers and placards that announce a property is protected, a poorly placed panel can actually undermine your security goals.

If your alarm’s control panel is visible through glass to someone loitering outside, a burglar can get an idea of how to defeat it.

The best spot for a security panel is close to where you typically exit and enter a home—but not in front of a window.

Your security solution: Negotiate to have it relocated to a more secure, less conspicuous area. In a nearby coat closet or on a wall not visible from a foyer or door window are good choices.

Let there be light, but not too much

A dark doorway lets crooks stroll inconspicuously up to your door and attempt to get in. But an entryway that’s too brightly lit provides illumination for burglars to see what they’re doing, so they don’t need a flashlight to work.

Your security solution: Make sure a home has motion-sensing exterior lights that switch on as a visitor—wanted or unwanted—approaches the house, porch, or side windows.

A monitor sensor light means a crook has to guess correctly if someone is home or not and may be calling the police.

Dimly lit yards are also problematic (no big surprise), because they similarly allow a miscreant to stalk around unnoticed.

We suggest double-cone yard lights be placed on the corners of the home. These do a great job of illuminating the exterior of the house.

Fences make great neighbors for burglars

High fences are dramatic and stately but also alluring for a wrongdoer. That privacy you want? Potential criminals want it even more.

Burglars see a very tall fence or stone wall as an opportunity to work in private. Any fence is actually a welcome sight.

Your security solution: Consider installing a security system or reinforced back/patio doors if the backyard is secluded.

Don’t forget the garage

Doors that lead from the garage are helpful when the weather is frightful or you’ve got a lot of groceries to haul in. But it’s also a security risk if you aren’t vigilant.
Just because it’s on the inside of the house doesn’t mean it should be left open for convenience. That door may be the last line of defense in the event a crook gets into your garage.

Your security solution: Make sure all doors with access to the outside have a deadbolt and are part of your home security system.

Garage-door windows should always be covered to prevent someone from peering in and being tempted by pricey gadgets and tools, your car, an expensive bike, or other valuables.

Before getting your heart set on a new home, most suggest a full security inspection. Much like a home inspection can uncover flaws in the roof, structure, or plumbing, an inspection by a home security company or expert can help identify all sorts of ways a home might catch a malefactor’s eye.

5 Questions to Ask Before You Buy a Home in a Hurricane Zone

As Hurricane Patricia, the strongest storm in recorded history, barrels toward southwestern Mexico and the resort town of Puerto Vallarta, it’s yet another reminder that although coastal living can be awfully appealing, it comes with considerable risks.

hurricane-flood

Still, the unique culture of beach towns has an almost magical appeal. So when you weigh that against the risk of hurricane damage, how can you decide whether it’s worth it? Here are some questions to ask to help you figure that out:

1. How much will insurance cost?

Regardless of whether a hurricane hits, you’ll need to pay for hurricane insurance. And rates really do run the gamut: In 2012, Florida had the highest average premiums, $2,084 per year, while Idaho had the lowest, $538. So before you even start house hunting, meet with an insurance agent. It might feel like you’re doing things backward, but an insurance agent can give you a rough estimate of what you can expect to pay each year.

2. Should I buy on the beach, or a few blocks in?

Where you decide to buy can make a difference in your premiums and risk, even if you choose a property just a few miles inland. It all comes down to flood hazard areas defined by the National Flood Insurance Program’s Flood Insurance Rate Map. The highest risk areas are marked as Special Flood Hazard Areas and have at least a 1 in 4 chance of flooding during a 30-year mortgage.

And remember, you don’t have to be near the water to be in a flood hazard area, as communities in central Texas and Oklahoma learned this spring. So when you’re house hunting, consider where each house falls on the map, but also check its flood-zone designation.

3. What type of house should I get?

The type of house you buy can also make a difference, because some are designed specifically to withstand hurricanes. The home may have a dome shape that reduces wind damage, for example, or rest on stilts to escape flooding. These homes may also get a better rating from your insurance provider (translation: lower payments).

So make sure to ask your agent to show you any homes specifically designed to battle the wind and water—or if you’d rather have a traditional house, hire a good inspector to give you a realistic view of the building’s hurricane resistance before you make an offer.

If a house is built to code and to withstand a strong storm or hurricane, it can help lower insurance costs. If the home isn’t up to code, it may make sense to steer clear or bring in a contractor for some improvements, but be sure to crunch the numbers before you commit. If the insurance savings aren’t bigger than the cost to remodel, it’s probably not worth it.

4. If damage does happen, what’s my deductible?

Hurricanes are covered in a homeowners policy, no matter where you live. That makes sense, after all, since hurricanes are still basically wind and rain—just more of it. But policies differ on your financial responsibility if you have to file a hurricane-related claim.
Most insurance companies tack on a hurricane deductible for homeowners in potential danger zones. And unlike regular homeowners insurance, you’ll have to pay this additional deductible if you file a claim.

It is expressed as a percentage of the amount of insurance you have on the house, generally 2% to 5%.

Bottom line: You may not be able to get out of a hurricane deductible altogether, but you can save some cash by shopping around. The cost can vary among insurance companies, so get at least three estimates before you decide on a carrier.

5. Do I need flood insurance, too?

Regular homeowners insurance isn’t all you need if you live in a coastal region. Typically, homeowners insurance covers damage related to the high-powered winds of hurricanes and tropical storms. But it does not cover the other major problem: flooding.

To keep yourself protected, you’ll need a flood policy. Issued by the National Flood Insurance Program, a policy will cover the damage to your property if the heavy rains or toppled levees causes flooding in your home. Ask your insurance agent to go over the policy carefully and explain any concepts you don’t understand. If you’re not fully covered by flood, you may regret it later.