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Credit For Buying A Home

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You may be shocked at some of these tips because this information runs contrary to what other so-called credit experts tell you.

Common Credit Myths

1. You need to pay off your credit cards

2. You need to close credit accounts

3. You need perfect or good credit to buy a house

Credit Facts

1. Paying off your credit cards lowers your credit score

2. Closing credit accounts lowers your credit score

3. You don't need perfect credit to buy real estate

Why not pay off credit cards? Because paid-off credit cards do not compute in your credit score. Real estate lenders like to see open, active accounts with low balances.

Why not close accounts? Closing accounts before the payoff often costs consumers more money because credit card companies raise interest on closed accounts.

You can buy real estate with poor credit, but you will save thousands in loan costs if you maintain good credit. A bad credit report leaves home buyers with non-prime loans which have higher point charges, prepayment penalties, and higher interest charges, which therefore cost more money. For instance, a mortgage loan of $150,000, 30-year, fixed-rate mortgage, interest rate of about 5.72 percent costs around $870 a month; poor credit scores raise the interest rate over 9 percent and the payments over $1,200.

As you see from these payment differences, good credit means that you can finance a more expensive house with the same income, or save $330 each month.

Credit Requirements for Mortgages

Credit needed to buy real estate is not the same as good credit. Besides your credit score, mortgage lenders consider your debt-to-income ratio and other credit matters, unlike other credit grantors. Your debt-to-income ratio is the comparison of mortgage payment, including taxes, interest, and insurance to your total gross monthly income. Real estate lenders also consider your employment qualifications and your overall debt ratios.

Understanding the difference between good credit and the credit needed to obtain real estate financing helps you buy houses!

Copyright (c) 2005 Jeanette J. Fisher. All rights reserved.

Credit For Buying A Home

Whether you are looking to buy or sell a property in Israel, it will help you plan ahead and make sure you are on top of the game. It is built in a Q&A format for your convenience.

What Is the Purchase Tax?

Purchase tax is payable by the purchaser in a real estate transaction. Generally, the tax is between 3.5% and 5%, depending on the property value. A reduced tax of 0.5% is payable by an Israeli resident that is purchasing a residential apartment, if it is the only flat he owns. On real estate sales between close members of a family when no money changes hands, purchase tax is 1/3 of the normal rate of tax.

From the point of view of Israeli income tax, a wife with children under 18 are considered a single family unit, and therefore if the wife owns a property in her own name and the husband purchases a second property in his name, he will pay a higher tax rate as if he already owns a property.

What Is the Sales Tax?

Sales tax was introduced on 1.1.2000 and it applies to the seller. The tax is 2.5% of the value of the sale or 0.8% on the sale of a residential property by a building contractor. The sale of a property by a private individual is exempt from sales tax in many cases.

What is the commission of the real estate agents and brokers in Israel?

The commission in Israel is payable by each of the sides of the transaction (both seller and buyer). A good agent will save you more money than he costs, as he has a wealth of experience which will help you make the right decisions.

The customary brokerage commission payable is:

On the purchase or sale of property, 2% of the inclusive price of the property.

On leasing property for a period of one year or more, one month of rent.

Value Added Tax is added to any commission due (17%).

Payment of the full commission is due on the signing of a binding agreement to purchase or lease a property.

What is the legal fee for the real estate lawyer?

When buying a first-hand property from a contractor, you will have to pay 1.5% plus VAT to the contractor's lawyer for legal fees.

In the case of second-hand purchase, you will pay between 0.5% and 1% plus VAT to the lawyer that will handle matters on your behalf.

What are the property inspection fees?

This is important especially when you are buying a used property. You should have the property inspected by a certified engineer or surveyor before signing the contract and make sure you have a written statement at hand. The average fee is approximately $400-$500 plus VAT but it may vary according to the size of the property.

What are the currency conversion rates?

When purchasing a property in Israel the payments are usually made in Israeli Shekels (NIS) and not in Dollars, Euros, etc. When converting money to Shekels, the bank usually charges a fee: between 0.1% and 0.5% of the amount that is being converted.

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About Author

Both Jeanette Joy Fisher & Shlomi Ben Ishai are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Jeanette Joy Fisher has sinced written about articles on various topics from Real Estate, Network Marketing and Real Estate. . Jeanette Joy Fisher's top article generates over 135000 views. to your Favourites.

Shlomi Ben Ishai has sinced written about articles on various topics from Finances, Property Investment. Shlomi Ben Ishai is the owner and general manager of Nadlan-Plus, a top firm, offering luxury. Shlomi Ben Ishai's top article generates over 1000 views. to your Favourites.

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