Q & A with Dottie: Credit Scores, Relocation

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Q: In the past couple years, I have had three charge offs on my credit (one is a cable bill and the others are credit cards). If I pay them off, how much will they affect my credit and my ability to get a personal loan?

A: There are many aspects to this question and the answer is complicated. Charge-offs and collection accounts occur when a consumer defaults on a credit extension or a due payment. After a period, the debt or account goes to charge-off or collection. Many consumers assume that a charge off means that they no longer owe the debt to the creditor, but this is NOT the case. If you have this, your credit score may be poor, even after you settle any portion of it, or even pay the full balance. Negative credit can stick for 7-10 years, depending on what type of delinquency you have. Charge-offs and collection accounts will typically cause scores to drop by hundreds of points, and remain low for long periods of time.

In situations like this, it's best to speak with a credit expert and get feedback on what strategy is best for your unique credit profile and future goals. The only thing that I can say to you without seeing and discussing your full credit reports is that charge-offs and collections are usually devastating to credit, even if paid. They can sometimes be removed or changed depending on the situation and circumstances surrounding the event. Traditional personal loans happen to be one of the toughest types of credit to get approval for, and credit will be a major factor in that approval process.

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Q: My husband is being relocated for work and we need to move to Long Island. How much in advance should we start to look for a home? We are first-time homebuyers and do not know where to begin.

A: The spring real estate marketplace brings many new listings and is a wonderful time of the year to see properties and enjoy their landscape. As a first-time buyer, you are in the best marketplace for financing a purchase, but securing a loan can take time. Your on-line searches can help to give you a current perspective on Long Island properties, but hiring a real estate professional will help you to determine which community on Long Island will meet your lifestyle needs and budget best. Proximity to work, schools and recreation are just a few criteria that may be important to you, and your broker can be of great assistance. If you need assistance in choosing an agent, please let us know.

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Q: What is the fee you must pay to a broker on a rental? Is it possible to find a rental apartment in NYC without using a broker? Is there an advantage with either scenario?

A: Customarily, when hiring a broker to assist you in finding a rental, there is a brokerage commission due. Depending on market conditions, the tenant usually pays the fee. If you find a rental on your own, no fee is due and owing; however, hiring a professional usually shortens the process and serves to educate you.

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Q: I know that before you purchase a house, you should do a title and lien search to protect yourself as the buyer. What are the key factors to look for? What are some "red flags"? What parts of each search document are vital? What are the terms I need to know, their meaning, etc.? Please explain in simple detail.

A: You are looking for a few things.

First, you should confirm that the seller really owns the property, and that you have a valid contract. Sometimes you will discover that there is a co-owner that was not previously disclosed. That co-owner must participate in the sale.

Second, confirm that there are no liens against the property and, if there are, that they get paid off at or prior to closing. If there is an open mortgage, it must be paid in full at the time of the closing. Other liens can be handled depending on the type. A mechanics lien sometimes shows up, and the seller must either pay the contractor who filed it, or "bond" it, which makes someone other than the buyer responsible to pay.

Third, a survey is done, or updated, to ensure that the house you are buying is within the plot lines of the property it is built on, and that the fences that surround the property follow the boundary properly. Be sure to have your lawyer review the title report carefully to ensure that each of these items is reviewed and explained to you.

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