How to buy house in 2010 – common sense do-not-do things
For starters, we want to notice in our home buying guide a few rather simple things that somehow people insist on doing.

1. Do not move back with your parents, in-laws or other relatives after you sell your existing home and want to take some time to find exactly what you want. In 2010, you will find plenty of more than affordable places to rent and many rentals are available on monthly basis without long term commitment. Living with your relatives or those of your spouse rarely contributes to a healthy relations after you move out. Unless you absolutely have to.

2. Don’t expect making large and quick profit even when buying short sale or foreclosed house. I see foreclosures bought for $350,000 in formerly $700,000 neighborhoods and put on the market in $500,000 range. Only to be sold for lower $400,000. Still not bad but beware of all associated costs involved.

3. Don’t be afraid to miss the bottom, I don’t think there is any in sight. Do not read too much into S&P/Case-Shiller home price report which is being touted as sure thing by many from recovery-coming-soon gurus. I mentioned professor Shiller chart when he and his chart were very unpopular among realtors, builders and speedy recovery well wishers. The very same crowd now claims that the report promises a bottom in home prices in 2010, but not before additional declines. Well, take it for what it’s worth, which ain’t much in my opinion.

4. Don’t be afraid to miss the lowest rates ever, they are here to stay for a while. Obviously, mortgage rates will fluctuate a bit but even an increase by a half percentage point will be the deal breaker for many. We wrote about interest rates not going anywhere in a foreseeable future in Getting mortgage in 2010 – how to get the best mortgage, and the Federal Reserve did state it just few days ago.

5. Don’t buy a house just because you are afraid to miss government incentives, since there is talk about discontinuing the home buyers tax credit for new and existent homeowners. If you rush in, it is likely to end up costing you more than all the incentives out there.

How to buy house in 2010 – do not involve friends in home buying process
Yes, times are tough and you just want to throw a bone to a realtor friend whose business is 75% down from a year before, or your wife best girlfriend has just started at the local bank and needs something to show to her new bosses. When buying a house in 2010 or 2011 or any other year, having friends or relatives as your realtors or mortgage brokers is often but not always a rather bad idea, and also a dilemma or two. You are not sure how good they are but if you ask them will they be offended? Then again, do you want them to make money of you? But so what, someone else will? If you feel they are qualified you can get them, but weren’t Steve and Mary quite unhappy with them?

If you have them do the work and deal goes bad because bank doesn’t give you a loan or the realtor sells you a house that will have some issues later one as all homes, even the most perfect ones do, then things may get ugly between you and friends or relatives. The other question is commissions, with many realtors giving kickbacks that are quite legal in many states, how much should you ask for or how much they should offer, or should either of you mention it to begin with? And what if another realtor offers a much better kickback?

And how much your mortgage broker should offer you to pay for closing costs? The bottom line is, I have seen many cases where friend or relative based purchase works fine and as many when it doesn’t. Finally, when husband and wife each has his and her set of realtor and mortgage broker friends, it further gives ground for needless and potentially harmful issues to arise, like my Jennifer would get us much better deal, than your Pete, you dummy.

The most important point is to find a professional who knows the area, knows how to negotiate, makes proper market analysis, etc. Too many realtors are simply accidental amatures, bored housewives, part timers and glorified salesmen who managed to get a license and have access to multiple listing network. Same goes about mortgage brokers and home inspectors. Home inspectors do not have to licensed in many states. And people often think they know everything, but if you have an uncle who is excellent plumber or electrician, he can simply miss more than few small but important things that experienced home inspector won’t.

How to buy house in 2010 – choosing a realtor
That is the most important aspect and not every home buying guide puts enough emphasis here. Real estate agent is at the bottom or the top of the food chain. He or she is the one who recommends you a good loan officer, home inspector and lawyer. But most importantly, the knowledgeable and honest real estate agent who intimately knows the area you are interested in, will help you find exactly what you want, hopefully.

Of course, our home buying guide has few things to watch out for,
1. Don’t relay too much on referrals of family and friends but judge for themselves. People change and someone who was good for your sister 5 years ago, may not be as good for you.

2. Don’t get the top producer in the area. Those are mostly interested in getting listings to sell, and you will be stuck with one of his or her juniors who will try to push every house they show you.

3. Don’t buy into “we are not Florida, Arizona or California … our housing market is strong” type of the sale pitch, your state may be next if not already.

4. Curb appeal is one of the most ridiculous inventions in selling real estate. Just ask your realtor to explain you what precisely curb appeal is. If he/she tells you this is how much a given house appeals to would be buyers and that is why you must write a contract right now or tomorrow at the latest, just let it go because believe me, will be many others, even more curb appealing.

5. Don’t believe the hype that there is nothing on the market in your price range any more and likely nothing is coming, since the prices will go up, so you have to grab this house. You don’t and others will be coming indeed.

6. Be sceptical of a midnight call when your realtor wants you to jump the gun and sign the contract. Only for you guys since you are so nice … or I did it for your brother in law so believe me …

7. If someone calls your realtor with an offer or even an attempt to talk about the very house he is just trying to convince you to buy, chances are he is trying to break your hesitation by creating some nonexistent party that supposedly is after this very house.

How to buy house in 2010 – getting mortgage
You must understand that times have changed, so if your loan officer asks something in 11th hour, don’t ask why, shut up and get it. He or she wants the deal done three weeks ago, get the commissions and move as aggressively on to the next deal, so believe me, they are not asking you to furnish additional papers just because they want to aggravate you.

You must also be prepared to few delays or even setbacks that can happen as late a the day or two before the closing. Even with everything perfectly fine, on the very closing you may encounter problems, so don’t freak out. Get you lawyer to get all the extensions needed if something comes up before the closing. Normally everything gets resolved one way or the other.

After all, I am not going to touch mortgage details, down payment and credit history. We will get to those later, for now just remember 3 things,
First, there is no housing market bottom in sight so do not rush.
Second, nothing as uncommon as common sense so if you possess any don’t be shocked that people look funny at you when you occasionally display it.
Third, if something looks too good to be true, it is very likely is.

In my opinion, trying to achieve a perfect credit score is a waste of time. The truth is that unless you are simply obsessed with that, a perfect credit score is not needed. Just maintain them over 760. Pay your bills on time, neither apply nor open new credit card accounts but stick to the ones you have for years and pay credit card balances in full monthly. If you do carry a balance or a few, keep them under 10 percent of your combined credit limits. Then over the time, you will get a near perfect credit score and rating.

Q: I have a question on TransUnion codes. Got my credit report and can’t quite figure out what 09P means? Also I have R03 codes in two places. My TransUnion credit score is only 574.

A: TransUnion code 09P most probably stands for bad credit charge off. Is that on the far right under under MOP column and under Collections section? 09 code is for a charge off and ‘P’ is likely just a date indicator.

TransUnion R03 codes indicate your revolving accounts which are more than 60 but less than 90 days past the due payment dates. Basically it sounds like you have two bad credit card accounts which are over 60 days late. No wonder your credit score is low.

Here are the TransUnion codes for account type and how you pay those accounts.

Type of Account
O - Open Account (30, 60 or 90 days)
R - Revolving or Option
I - Installment
M - Mortgage
C - Check credit (line of credit)

Current Manner of Payment
00 - Not rated, too new to rate, or approved but not used
01 - Pays as agreed
02 - 30–59 days past the due date
03 - 60–89 days past the due date
04 - 90–119 days past the due date
05 - 120 days or more past the due date
07 - Paying or paid under Wage Earner Plan or similar arrangement
08 - Repossession
8A - Voluntary repossession
8D - Legal repossession
8P - Paying or paid account with MOP 08
8R - Repossession; redeemed
09 - Charged off to bad debt
9B - Collection account
9P - Paying or paid account with MOP 09 or 9B
UC - Unclassified
UR - Unrated

See more credit report codes that you can encounter.

I bet many of you are going to get a kick out of it. The Fair Debt Collection Practices Act or FDCPA was created in 1978 as a part of the Consumer Credit Protection Act, specifying strict guidelines under which debt collectors may conduct business, defining consumer rights and providing consumers with an avenue for disputing and obtaining debt validation information in order to ensure its accuracy. The FDCPA also prescribes penalties and remedies for violations of the Act. Basically it gives you some ammunition against collection agencies, prohibiting them from using abusive and deceptive collection practises among other things.

Well, today TransUnion announced that it will start utilizing data from FDCPA Case Listing Service LLC to provide an added feature for batch records delivered via TransUnion Collections Prioritization Engine. The new solution, named FDCPA Case Search, allows TransUnion to alert debt collectors about collection accounts that have previously been involved in FDCPA litigation to assist collectors in determining strategy. So basically, the idea is to help collection efforts against you, the consumer. Supposedly, in 2008, 5,383 cases were filed against collection agencies in U.S. District Court for alleged violations of the FDCPA. The expected figure for 2009 is well in excess of 7,000 for the whole year.

My heart goes out to those poor collection agencies, but I have always thought that the purpose of credit agencies, TransUnion included, is to simply gather, arrange, process and report. But then again, in a slow economy, everyone wants to make a buck. See Free TransUnion credit report, FICO score and dispute.

Q: A judgment was filed last February and I just paid it in full yesterday. Does a paid judgment affect credit scores? Can I remove a paid judgement from my credit report? I would like to buy a house in a few months.

A: Of course, paid judgment stays on your credit report for at least 7 years and affects your credit scores very negatively. You may still try buying your house if your middle score is at least 620. You can even get an FHA loan, but unless you had quite an establish credit history prior this judgment, I doubt you scores are above 620 now. But check them as soon as you can. Get the same mortgage broker whom you may later use for home purchase to run your credit report. Can you remove a paid judgement from credit reports? Theoretically, you can try get this judgment vacated. You would have to file Motion to Vacate Judgement. Procedures also vary depending on state. See here.