Q & A: Credit Balances, Mortgage Rates

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If I want to help my credit score should I pay off all my credit card balances & my car loan? I heard high balances on credit hurt your score and I was wondering if this was true.

This is an excellent question. Many individuals get confused when it comes to high balances on different types of credit & the impact they have on credit scores. High balances drop scores most when they are on "revolving credit" accounts. Revolving credit is credit cards, overdraft on a checking account, and some lines of credit. High debt on car loans, student loans, and mortgages has less of an impact on credit scores than revolving credit balances do. Paying the revolving credit balances down as low as possible is the best step to take when trying to improve credit through balance reduction.

I was reading about some right that we have after a refinance to decide against the new rate, and go back to our loan before the refinance. What is this called? Is this a common practice? How long do you have to make this decision?

This is called rescinding. If you are refinancing a primary residence, you have three days to decide if you want to go through with the refinance. This is not a common practice but it is the law, and if you are uncomfortable with what goes on at the closing, you can rescind the loan and get all fees paid returned to you.

I would like to redo certain rooms in my home but there is a chance we will sell in the next two to four years. Are there certain things that I should make more neutral to attract future buyers or should I make it my style?

Buyers today prefer to purchase homes that don't need to be renovated, particularly kitchens and baths. Staying neutral in your selections is key. The trends of today may be passé in two years from now.

Try going on line to see what colors and appliances are being used in new homes being marketed and visit the websites of appliance manufacturers. You might also want to go to Open Houses in your area to see homes currently on the market so that you see, first-hand, what "renovated " homes comparable to yours, look like. Also note paint color and other selling features that support the price point.

My husband and I have been looking for homes for a few months and everything we see has been having a bidding war which takes us out of our price range. Is there anything we can do besides wait? If we look at homes in a lower range then generally they are too small. Are these houses just priced incredibly well or is the market really picking up?

Favorable interest rates are fueling the real estate market; as well as low housing stock in many regions are resulting in bidding wars.

If you are armed with a pre-approval for a mortgage, or all cash,  such may get the Seller's attention. In addition, the ability to close quickly generally puts you at an advantage over your competitors.

Another strategy is to seek out properties that meet your criteria, but have been on the market for a longer period of time. They may need more work, but if you see their potential and are willing to renovate, they may present options for your consideration. If you stretch your borders to other neighborhoods and lower price points, you may also have more choices.

Dottie Herman is CEO of Douglas Elliman. If you have a real estate question for Dottie, please send it to; Reporters@WPCnews.com