With property values in much of the country up over 20% year-over-year and more and more catastrophic weather-related situations, real estate property taxes and homeowner’s insurance are likely to be significantly higher this year. If you are a homeowner and you escrow as part of your monthly payment for taxes and insurance, you receive an annual escrow analysis. Lenders are allowed under federal regulations to keep a two-month cushion in these accounts for both taxes and insurance. If taxes and insurance increase, they are typically paid out of the escrow account when the bills come due and then the lender will require you to make up the shortfall when they re-analyze the account (which they are required to do annually). If you do not have the money to make up the shortfall in full, they will increase your payment to cover that shortfall over a 12-month period. In addition, they will assume that next year’s bills will be equal to or higher than this year’s bills, which will require them to increase the payment over the next 12 months to cover that increase as well. Kind of like a double whammy. Many people are confused by this when the statements come out so if you happen to have any questions, we would be happy to take a look at them to make sure everything looks correct.
How Rent Payments Can Be Used to Increase Your Credit Score
One of the many frustrating parts about renting is that your landlord very rarely will report the rental payments you are making to the credit reporting agencies to give you the benefit of your on-time payments. If you, or anyone you know is renting, we are going to provide you with a couple of different services that you can share that allow you to pay a small amount of money to ensure that your rental payments are reported to the credit reporting agencies. They estimate if you add a two-year rental history to your credit report, it will increase your score by 30 to 60 points which could be a game changer in terms of qualifying for a new home purchase. Remember this also impacts everything from applying for a job, auto insurance and the list goes on and on. This is especially valuable to younger individuals starting out who have no credit history. Each of these services are very similar in cost which is a startup fee of roughly $90 for them to get the prior 2-year history and a monthly fee of $6.95 to $9.95 for future reporting. Below are links to three services that have decent reviews that you can use to get started for anyone you think might benefit. We hope you find this beneficial and please do not hesitate to call if you any questions at all about credit, we are always here to help.