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Buying or Selling a Home? You Need an Expert Kind of Guide | Simplifying The Market

In a normal housing market, whether you’re buying or selling a home, you need an experienced guide to help you navigate through the process. You need someone you can turn to who will tell you how to price your home correctly right from the start. You need someone who can help you determine what to offer on your dream home without paying too much or offending the seller with a low-ball offer.

We are, however, in anything but a normal market right now. We are amid one of the greatest health crises our nation has ever seen. The pandemic has had a dramatic impact on the journey consumers take to purchase or sell a home. To successfully navigate the landscape today, you need more than an experienced guide. You need a ‘Real Estate Sherpa.’

According to Lexico, a Sherpa is a “member of a Himalayan people living on the borders of Nepal and Tibet, renowned for their skill in mountaineering.” Sherpas are skilled in leading their parties through the extreme altitudes of the peaks and passes in the region – some of the most treacherous trails in the world. They take pride in their hardiness, expertise, and experience at very high altitudes.

They are much more than just guides.

This is much more than a normal real estate market.

Today, the average guide just won’t do. You need a Sherpa. You need an expert who understands how COVID-19 is impacting the thoughts and actions of the consumer (ex: virtual showings, proper safety protocols, e-signing documents). You need someone who can simply and effectively explain the changes in today’s process to you and your family. You need an expert who will guarantee you make the right decision, especially in these challenging times.

Bottom Line

Hiring an agent who understands how the pandemic is reshaping the real estate processes is crucial right now. Let’s connect today to guarantee your journey is a safe and successful one.

Experts Predict Economic Recovery Should Begin in the Second Half of the Year | Simplifying The Market

One of the biggest questions we all seem to be asking these days is: When are we going to start to see an economic recovery? As the country begins to slowly reopen, moving forward in strategic phases, business activity will help bring our nation back to life. Many economists indicate a recovery should begin to happen in the second half of this year. Here’s a look at what some of the experts have to say.

Jerome Powell, Federal Reserve Chairman

“I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year…

So, in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.”

Nonpartisan Analysis for the U.S Congress

“The economy is expected to begin recovering during the second half of 2020 as concerns about the pandemic diminish and as state and local governments ease stay-at-home orders, bans on public gatherings, and other measures. The labor market is projected to materially improve after the third quarter; hiring will rebound and job losses will drop significantly as the degree of social distancing diminishes.”

Neel Kashkari, President, Minneapolis Federal Reserve Bank

“I think we need to prepare for a more gradual recovery while we hope for that quicker rebound.”

We’re certainly not out of the woods yet, but clearly many experts anticipate we’ll see a recovery starting this year. It may be a bumpy ride for the next few months, but most agree that a turnaround will begin sooner rather than later.

During the planned shutdown, as the economic slowdown pressed pause on the nation, many potential buyers and sellers put their real estate plans on hold. That time coincided with the traditionally busy spring real estate season. As we look ahead at this economic recovery and we begin to emerge back into our communities over the coming weeks and months, perhaps it’s time to think about putting your real estate plans back into play.

Bottom Line

The experts note a turnaround is on the horizon, starting as early as later this year. If you paused your 2020 real estate plans, let’s connect today to determine how you can re-engage in the process as the country reopens and the economy begins a much-anticipated rebound.

6 Reasons Why Selling Your House on Your Own Is a Mistake | Simplifying The Market

There are many benefits to working with a real estate professional when selling your house. During challenging times like the one we face today, it becomes even more important to have an expert help guide you through the process. If you’re considering selling on your own, known in the industry as a For Sale By Owner or FSBO, please consider the following:

1. Your Safety Is a Priority

During this pandemic, your family’s safety comes first. When you FSBO, it is incredibly difficult to control entry into your home. A real estate professional will have the proper protocols in place to protect not only your belongings, but your family’s health and well-being too. From regulating the number of people in your home at one time to ensuring proper sanitization during and after a showing, and even facilitating virtual tours for buyers, agents are equipped to follow the latest industry standards recommended by the National Association of Realtors (NAR) to help protect you and your family.

2. A Powerful Online Strategy Is a Must to Attract a Buyer

Recent studies have shown that, even before COVID-19, the first step 44% of all buyers took when looking for a home was to search online. Throughout the process, that number jumped to 93%. Today, those numbers have grown exponentially. Most real estate agents have developed a strong Internet and social media strategy to promote the sale of your house. Have you?

3. There Are Too Many Negotiations

Here are just a few of the people you’ll need to negotiate with if you decide to FSBO:

  • The buyer, who wants the best deal possible
  • The buyer’s agent, who solely represents the best interest of the buyer
  • The inspection companies, which work for the buyer and will almost always find challenges with the house
  • The appraiser, if there is a question of value

As part of their training, agents are taught how to negotiate every aspect of the real estate transaction and how to mediate the emotions felt by buyers looking to make what is probably the largest purchase of their lives.

4. You Won’t Know if Your Purchaser Is Qualified for a Mortgage

Having a buyer who wants to purchase your house is the first step. Making sure they can afford to buy it is just as important. As a FSBO, it’s almost impossible to be involved in the mortgage process of your buyer. A real estate professional is trained to ask the appropriate questions and, in most cases, will be intimately aware of the progress that’s being made toward a purchaser’s mortgage commitment.

Further complicating the situation is how the current mortgage market is rapidly evolving because of the number of families out of work and in mortgage forbearance. A loan program that was there yesterday could be gone tomorrow. You need someone who is working with lenders every day to guarantee your buyer makes it to the closing table.

5. FSBOing Has Become More Difficult from a Legal Standpoint

The documentation involved in the selling process has increased dramatically as more and more disclosures and regulations have become mandatory. In an increasingly litigious society, the agent acts as a third-party to help the seller avoid legal jeopardy. This is one of the major reasons why the percentage of people FSBOing has dropped from 19% to 8% over the last 20+ years.

6. You Net More Money When Using an Agent

Many homeowners believe they’ll save the real estate commission by selling on their own. Realize that the main reason buyers look at FSBOs is because they also believe they can save the real estate agent’s commission. The seller and buyer can’t both save the commission.

A study by Collateral Analytics revealed that FSBOs don’t actually save anything by forgoing the help of an agent. In some cases, the seller may even net less money from the sale. The study found the difference in price between a FSBO and an agent-listed home was an average of 6%. One of the main reasons for the price difference is effective exposure:

“Properties listed with a broker that is a member of the local MLS will be listed online with all other participating broker websites, marketing the home to a much larger buyer population. And those MLS properties generally offer compensation to agents who represent buyers, incentivizing them to show and sell the property and again potentially enlarging the buyer pool.”

The more buyers that view a home, the greater the chance a bidding war will take place.

Bottom Line

Listing on your own leaves you to manage the entire transaction yourself. Why do that when you can hire an agent and still net the same amount of money? Before you decide to take on the challenge of selling your house alone, let’s connect to discuss your options.

Based on conversations with community leaders across the US, many aging adults are unaware of the available care options and programs that can help maintain their independence and quality of life. Caring.com created a free resource that provides information on topics like financial support and care options that are available in Lehi. What they are most excited about is our comprehensive database of senior living communities which also includes thoughtful and honest reviews from residents in your community.
You can read more about  Caring.com’s work here:

Right now our local real estate market is hot and most good homes sell in a multiple offer situation. Preparing an exciting offer is crucial to getting the seller to accept your offer. If you give the seller any reason to question your offer or drag their feet on accepting your offer and we will likely end up in a multiple offer situation which will end up costing you thousands of dollars more to buy the same home.

Attached is a copy of The Real Estate Purchase Contract (the REPC) that we will use when we submit an offer on a home. Page 1 and page 6 are the most important with lots of details in between. Here are the important contract terms that separate one offer from another:

  1. Sales Price: Higher the better for the seller. In a multiple offer situation an escalation clause may make sense.
  2. Earnest Money: 1% is the norm but the more you put down demonstrates confidence in your ability to get a loan
  3. Down Payment: 3.5 % FHA or 5% Conventional minimum are fine but obviously if you and another buyer offer the same amount for the home and the other buyer has 20% or 50% down payment then the seller will likely accept their offer over yours because they will think they are better qualified and more likely to close since there is less risk to the lender.
  4. Seller paid Closing Costs: It is best if you cover your own closing costs. If you need help with Closing Costs, then I suggest we discuss with your lender about having him cover those for you via a small interest rate increase usually .25%
  5. “AS-IS”: In section 10 of the REPC it states that the buyer is buying the home in its “as-is” condition and you have the right to do inspections. It is risky to remove the Buyer Due Diligence condition from a contract but if you are confident enough in the condition of the home, removing this clause would definitely strengthen your offer. Another option here would be to have a very short / quick Buyer Due Diligence Deadline.
  6. Buyer Due Diligence Deadline: Most agents will propose a 14-day Buyer Due Diligence Deadline See section 8 of the REPC however one week should give you sufficient time to inspect and evaluate the home. If we need more time for specific reasons the seller would likely extend this deadline if needed.  I suggest 7 days after acceptance (after this date you cannot back out of the contract for any reason other than Financing or Appraisal) 
  7. Buyer’s Financing and Appraisal Deadline: Many agents will write 14 – 21 days to get the appraisal back and double check your loan with an underwriter. This is super week and I do not suggest working with a loan officer who is not experienced enough to know if your loan will be approved or not. I suggest a financing and appraisal deadline of 10 – 14 days after acceptance (This is the date when your Earnest Money becomes non-refundable). Me, you and your loan officer become a team and work together to successfully close on your home. I need to speak with your loan officer ASAP to coordinate the offer and deadlines with him.
  8. Settlement Deadline: Most seller want to close ASAP so they know the deal is done and they have their money in their bank account. It sure makes packing up a house a lot easier without the stress and wonder if the buyer’s financing is going to be approved or not. To make a strong offer I suggest I find out from the listing agent what the sellers needs are exactly and custom tailor the Settlement Deadline accordingly. If no direction is given, I recommend closing 21- 28 days after acceptance and allowing the seller to rent back from you if that’s helpful to them.
  9. Possession: If the seller is not renting back from you after closing, it’s nice to give the seller 2-3 days to vacate the home after closing. Some sellers may really appreciate the chance to rent back for a few weeks while their new home comes available. If you are getting an Owner Occupied Loan, your lender will require you to take possession of the home within 60 days after closing. If we do a rent back situation I suggest we set the rent rate in between your monthly payment and the sellers monthly payment thus demonstrating a fair compromise.
  10. A plate of cookies and a personal note about your family goes a long way. Some sellers are more sentimental than others but all sellers should appreciate a kind gesture.

In summary, there is a lot of pyscology, money and emotions that go into an offer. We need to have a well-organized solid offer and present the offer in a tactful and sincere way.

Security Home Mortgage
576 S State Street, Orem UT  84058
Office: 801-764- 0111
Cell: 801-318- 9322

Convincing a bank to lend money is not easy. Mortgage investors are very conservative and there are unique challenges with every loan. We need an amazing loan officer on your side to prepare the loan application, orchestrate the borrowing process and get the loan closed! 

Because I’ve been selling homes since 2000 I know a lot of loan officers. Jon Chamberlain with Security Home Mortgage is the best one I’ve ever worked with! He is smart experienced and honest. Jon will give you the best interest rate and terms possible and he consistently closes loans faster than anyone one out there! 

Security Home Mortgage is an actual LENDER! Not a broker. They have in house processing, in house underwriting, in house document prep and in house funding! Jon co-owns Security Home Mortgage so if we need a rush, a favor or if your loan is on the border line of qualifying, if your loan makes sense, Jon can still do the loan where most loan officers can’t. 

Jon will ask for all sorts of documentation and there will likely be challenges during the process but he and his team are the best out there. Please call Jon to schedule a time to analyze your situation, figure out which loan program is best for you, get you pre-qualified for a loan and to help determine what price range you want to look in.

Governors Herbert, Huntsman, Walker, Leavitt have been very pro-business and have been
successful attracting new business to Utah.
Unemployment rate in Utah is 3.2% which is one of the best in the country and under the
national average of 4.1%
Utah’s Birth Rate: In 2016, there were 50,242 live births to Utah residents. Utah’s birth rate
continues to be the highest in the nation with 16.5 live births per 1,000 total populations.
Normal Housing Needs from young adults moving out of their parent’s homes including college
students, single adults and newlyweds.
Net Migration: To make housing even more difficult last year 25,000 new families moved into
our state.
New Construction: Collectively Builders were only able to build 20,000 new homes. This
includes all housing units from new apartments to estate homes. This means in Utah we’re
5,000 homes short to keep up with net in-migration not to mention normal housing needs.
Bottle Neck: A lack of construction workers is limiting the ability of builders to build new homes
2.6% Rental Vacancy: Along the Wasatch front rental vacancy is very low at 2.6%. People
looking for rentals, especially affordable rentals, are having extreme difficulty finding suitable
housing to rent.
Supply is very Low: Currently there about 11,000 homes for sale in the entire state. To slow the
rapid appreciation, we’d like to see the housing supply double but because of the construction
labor shortage builders cannot keep up with the demand.
Demand is very High: We’re selling about 4,000 homes per month. We would sell more homes
per month if there were more homes for sale. Finding homes in buyer’s geographical area and
price range is extremely difficult. Most good homes sale with multiple offers.
Result: 10% average appreciation over the last two years. Experts forecast we’ll experience an
additional 30% average appreciation over the next 5 years.
SUMMARY: Business is good, companies are hiring, unemployment is low, people are moving
to Utah. Demand is high and inventory is low. Largely in part to the labor shortage, builders
can’t build homes fast enough.


Lately I’ve been working with several clients who have chosen to build new homes. Since Amber and I have built 3 homes ourselves and I’ve helped hundreds of clients build new homes I think it’s very exciting! Some people do not know that I sell new construction. It is true that I sell a lot of existing homes but most people do not realize that new construction sales accounts for about 25% of my business. I love new construction and for those buyers who want to design their own home and have the time to build it’s a great option.  Here are some Pros and Cons to building a new home vs. buying an existing home.
You get to design the home they way you want it! Builders vary as to how many changes they will allow but all of them let you pick out your interior and exterior colors, flooring, cabinets, lighting, plumbing fixtures, appliances, and floor plan. By the way I help with custom homes too!
You get to design and finish the basement the way you want.
You get to design and finish the yard the way you want.
Nice new neighborhood. Most new neighborhood now days typically have CC&R’s, (neighborhood rules) so the neighborhood is uniform and looks great.
Some new neighborhoods have HOA’s, (Home Owners Associations), that maintain the common space like tree lined streets, walking paths, parks, club house and pool. HOA’s also help enforce the neighborhood rules so the neighborhood should still look great 20 years from now.
Usually more expensive than buying an existing home.
Usually the buyer finishes the basement and yard after they move in.
Usually there are not mature trees in your yard or in the neighborhood.
In your ward you may have a huge primary and a very small High Priest Group or Youth Program. Just ask Amber how many kids are in our primary :  )
Requires days, weeks and sometimes months designing a new home.
Usually takes more than 6 months to build vs. an existing home you can normally move in less than two months.
Some will argue that having CC&R’s and a HOA is negative not a positive so for those people an older neighborhood with out and HOA may be best :  )
Buyers obviously want the best home for the money. This is typically achieved by purchasing an existing home but for many good reasons it’s difficult to find an existing home that fits a buyer preferences and needs so they’ll decide to build. For example right now I have clients who are building a new home in Salem with a beautiful apartment in the basement for their parents which is very difficult to find in an existing home. In Orem I have a new home for sale that has a Legal Accessory apartment that rents out for $1,000 per month. I have two really nice single family homes under construction in Saratoga Springs and Eagle Mountain both under $250,000! In North Lehi I have clients building a beautiful new home with a custom boat garage over looking the entire valley and a large park with a nice lawn area, tennis courts and a swimming pool! In Riverton one of my good friends from Jr. High is building an incredible home that is his and his wife’s dream home!
Building a new home is really fun and exciting. If you or someone you know is considering building a new home now is a good time to get started. If we start now your new home should be done late summer. If you have kids we should still be able to get you moved in before school starts in September.
Please contact me if you are interested in new construction or if you have any other real estate needs or questions. As always I look forward to speaking with you or anyone you refer to me.
Sincerely, Lewis
PS: Thank you for the referrals and please keep them coming!


Approximately two-thirds of all Americans own their own home. The other one-third rent. Be it ever so humble, there’s no place like your own home!

With planning, the dream of home ownership is within reach of every motivated individual. By getting off the rental cycle you will make an investment for the future, put money into your pocket instead of your landlord’s, gain a valuable tax deduction, and most importantly, have a home of your own. First-time home buyers John and Cynthia Bates are a good example to follow as they prepare for their first home purchase. Here is their story:

Ever since John and Cynthia got married, they have dreamed of owning a gracious, white, center-hall colonial with French d

Renting vs Buying

oors and a fireplace. “I can really picture it in my mind,” says Cynthia. “I can even imagine the kind of lawn there will be around it. I just know that we’re going to find exactly what we want when the time is right.”

Together John and Cynthia’s income is $60,000 a year, with Cynthia working part-time. “We’ve managed to save $7,000 towards a down payment”, says John “but with only a small savings and our credit card debt, we’re not sure how much mortgage we will be able to qualify for.”

There are two very powerful incentives for owning a home: tax savings and equity build-up. In the United States, homeowners are allowed to deduct their mortgage interest and property tax payments from their taxable income. This can result in a considerable savings.

Secondly, payments applied toward your mortgage principal help build equity in your home. And it is also likely that your house will appreciate in value over the years you own it.

When John and Cynthia start investigating a home purchase, they will find that as a very general rule of thumb, they will qualify to buy a home that costs as much as three to 4 times their combined annual income, or about $200,000.

John and Cynthia have taken the first step of preparing for home ownership by starting to save for their down payment. Demonstrating the ability to save and having extra funds on hand helps enormously in the loan approval process.


To understand the home buying process you should meet with a smart, experienced Real Estate Agent and ask for their help. Ideally, you will want an agent who comes highly recommended and has a strong track record. As a buyer, hiring a professional Realtor normally doesn’t cost you anything and they will look out for your best interest throughout the entire home buying process. They can introduce you to a fantastic loan officer to be pre-qualified for a home loan. 


Loan pre-qualification determines the loan amount you are likely to be approved for. A good loan officer will discuss with you your employment, income, assets, liabilities, tax returns and request a copy of your credit report. Getting pre-qualified for a loan is essential and should be one of your first steps. When you have received a copy of your credit report make sure it is accurate. Often times there are errors on credit reports and some errors take a long time to correct. If there are errors or things that need to be done to qualify for a loan, a good loan officer will tell you what you need to do to raise your credit score or what needs to be done so you will qualify for a loan. 


The amount needed for a down payment and closing costs has always been the primary barrier to home ownership. There are many loan products to choose from.  In many areas there are $0 down payment loans available. Often times the seller is willing to pay your closing costs.  There are other loan options that allow the buyer to include the closing costs with the loan or interest rate so the buyer does not need to pay for the closing costs upfront. 

If you are considering buying a home along the Wasatch Front, call me and I’ll be happy to do a no cost no obligation consultation to help you understand the home buying process and start you on the path of home ownership. If you are looking to buy a home elsewhere I can still help. I know what makes a good agent and will interview agents in your area for you.  I’ve done this for others all around the country and they’ve been very grateful for my help.

Working with a competent Realtor and Loan Officer can make your dream of home ownership a reality!
-Lewis Barton

blogpic1A recent survey of home buyers and sellers has revealed that 76% of homeowners think their home is worth more than the price recommended by their real estate agent. Realtors and home buyers tend to have a better grasp of current market values in the area where they’re looking to buy than do the sellers who live there. Buyers research lots of new listings,  make offers, watch the market for what sells, how quick it sells and for how much it sells.

Your home is only worth what a ready, willing and able buyer will pay for it. This price may not reflect your opinion or what you hope it’s worth. You have to rely on logic and current and relevant data rather than emotion when choosing a list price. Put yourself in the shoes of a buyer: sincerely ask yourself which home is the best home for the money? If your home is the BEST HOME FOR THE MONEY then it will sell. If your home is not the best home for the money then it will not sell. The most important part of listing your home is accurate pricing.

The best time to sell your home is when it is fresh on the market. Buyers wait daily for new listings. This is the time when the home is most marketable and gets the most showings. The first couple of weeks are crucial. After being on the market for a month or so it is no longer the hot new listing.  Buyers may perceive the home as “shop worn” or “stale” and start to ask themselves, “What’s wrong with it?” When that happens buyers are less likely to offer the asking price.

To help you select a list price, your real estate agent researches the comparable homes that have sold recently. These recent sales are the best indication of the home’s current market value. Realtors will analyze the comparable properties and add more value to your home for items your home has, and subtract value for features it lacks. Trust their knowledge, experience and data. Assuming you are working with a competent Realtor, it will benefit you to take their advice when it comes to pricing your home.

You have to detach yourself from your home. Something about your home may have sentimental value to you, but may not to a potential buyer. Try not to place too much weight on rumors going around the neighborhood about the prices other homes have sold for. Prices tend to get embellished. Choose your price based on the facts. Focus on the SOLD prices and not the asking prices.

If you are thinking of selling your home or just wondering what your home is worth call me for a free CMA (Comparative Market Analysis) on your home.

-Lewis Barton

It’s important to note that repairing bad credit is a bit like losing weight: It takes time and there is no quick way to fix a credit score. In fact, out of all of the ways to improve a credit score, quick-fix efforts are the most likely to backfire, so beware of any advice that claims to improve your credit score fast. The best advice for rebuilding credit is to manage it responsibly over time. If you haven’t done that, then you need to repair your credit history before you see credit score improvement. The tips below will help you do that. They are divided up into categories based on the data used to calculate your credit score.

3 Important Things You Can Do Right Now

  1. Check Your Credit Report – Credit score repair begins with your credit report. If you haven’t already, request a free copy of your credit report and check it for errors. Your credit report contains the data used to calculate your score and it may contain errors. In particular, check to make sure that there are no late payments incorrectly listed for any of your accounts and that the amounts owed for each of your open accounts is correct. If you find errors on any of your reports, dispute them with the credit bureau and reporting agency.Read more about Disputing Errors on Your Credit Report
  2. Setup Payment Reminders – Making your credit payments on time is one of the biggest contributing factors to your credit score. Some banks offer payment reminders through their online banking portals that can send you an email or text message reminding you when a payment is due. You could also consider enrolling in automatic payments through your credit card and loan providers to have payments automatically debited from your bank account, but this only makes the minimum payment on your credit cards and does not help instill a sense of money management.
  3. Reduce the Amount of Debt You Owe – This is easier said than done, but reducing the amount that you owe is going to be a far more satisfying achievement than improving your credit score. The first thing you need to do is stop using your credit cards. Use your credit report to make a list of all of your accounts and then go online or check recent statements to determine how much you owe on each account and what interest rate they are charging you. Come up with a payment plan that puts most of your available budget for debt payments towards the highest interest cards first, while maintaining minimum payments on your other accounts.

More Tips on How to Fix a Credit Score & Maintain Good Credit

Payment History Tips

Contributing 35% to your score calculation, this category has the greatest effect on improving your score, but past problems like missed or late payments are not easily fixed.

  • Pay your bills on time.
    Delinquent payments, even if only a few days late, and collections can have a major negative impact on your FICO score.
  • If you have missed payments, get current and stay current.
    The longer you pay your bills on time after being late, the more your FICO score should increase. Older credit problems count for less, so poor credit performance won’t haunt you forever. The impact of past credit problems on your FICO score fades as time passes and as recent good payment patterns show up on your credit report. And good FICO scores weigh any credit problems against the positive information that says you’re managing your credit well.
  • Be aware that paying off a collection account will not remove it from your credit report.
    It will stay on your report for seven years.
  • If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor.
    This won’t rebuild your credit score immediately, but if you can begin to manage your credit and pay on time, your score should increase over time. And seeking assistance from a credit counseling service will not hurt your FICO score.

Amounts Owed Tips

This category contributes 30% to your score’s calculation and can be easier to clean up than payment history, but that requires financial discipline and understanding the tips below.

  • Keep balances low on credit cards and other “revolving credit”.
    High outstanding debt can affect a credit score.
  • Pay off debt rather than moving it around.
    The most effective way to improve your credit score in this area is by paying down your revolving (credit cards) debt. In fact, owing the same amount but having fewer open accounts may lower your score.
  • Don’t close unused credit cards as a short-term strategy to raise your score.
  • Don’t open a number of new credit cards that you don’t need, just to increase your available credit.
    This approach could backfire and actually lower your credit score.

Length of Credit History Tips

  • If you have been managing credit for a short time, don’t open a lot of new accounts too rapidly.
    New accounts will lower your average account age, which will have a larger effect on your score if you don’t have a lot of other credit information. Also, rapid account buildup can look risky if you are a new credit user.

New Credit Tips

  • Do your rate shopping for a given loan within a focused period of time.
    FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.
  • Re-establish your credit history if you have had problems.
    Opening new accounts responsibly and paying them off on time will raise your credit score in the long term.
  • Note that it’s OK to request and check your own credit report.
    This won’t affect your score, as long as you order your credit report directly from the credit reporting agency or through an organization authorized to provide credit reports to consumers.

Types of Credit Use Tips

  • Apply for and open new credit accounts only as needed.
    Don’t open accounts just to have a better credit mix – it probably won’t raise your credit score.
  • Have credit cards – but manage them responsibly.
    In general, having credit cards and installment loans (and paying timely payments) will rebuild your credit score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.
  • Note that closing an account doesn’t make it go away.
    A closed account will still show up on your credit report, and may be considered by the score.

To summarize, “fixing” a credit score is more about fixing errors in your credit history (if they exist) and then following the guidelines above to maintain consistent, good credit history. Raising your score after a poor mark on your report or building credit for the first time will take patience and discipline.

By Ken Holman

Recently, I read a book written by Chris Farrell entitled “Unretirement.” Chris is a senior economics contributor at Marketplace and an award-winning journalist. The main premise of his book is that aging boomers, those born during the Post-World War II era between the years 1946 and 1964, won’t overwhelm the government’s safety net of Social Security and Medicare because baby-boomers are not retiring at age 65. Instead, they are working well into their seventy’s which means they are continuing to pay into the system rather than take from it.

Farrell writes, “Debt! Deficit! Aging! Retirement crisis! Economic stagnation! Intergenerational warfare! Talk about a bad curve. Taken altogether, it appears an aging America is hurtling toward the dismal end of Shakespeare’s Seven Ages of Man—‘Sans teeth, sans eyes, sans taste, sans everything.’ No wonder people are fearful about retirement.

“Well, don’t be depressed. The dire jeremiads aimed at an aging America are wrong and deeply misplaced. The graying of America is terrific news. Living longer is good. Embrace the realization that boomers on average are healthier and better educated than previous generations. An aging population presents an enormous opportunity for society and for aging individuals to seize and exploit.”

The fact that Americans are living longer and are healthier is all good news but you can’t simply brush aside the fact that both the Social Security System and Medicare are in deep financial trouble. And since you have no control over either safety net, the thing you need to focus on is building your own safety net, which is a strong retirement nest egg.

Fortunately, there are some benefits to projecting a later retirement. “Social Security benefits are at their maximum at age seventy. . . . Claiming benefits at age sixty-two instead of seventy cuts the monthly benefit almost in half, notes Alicia Munnell, director of the Center for Retirement Research at Boston College, in ‘Social Security’s Real Retirement Age Is 70,’ She calculates that the net replacement rate of income for the median earner—taking into account Medicare, taxes, and full retirement age of sixty-seven in 2030—is 24 percent at age sixty-two and 43 percent at age seventy—almost double.”

I guess it’s encouraging to know that if you wait to retire until age seventy, instead of sixty-two, that the government will pay you 43 percent of your replacement income instead of 24 percent. Either way, that doesn’t do much to resolve where you’re going to find the income to replace the other 57 percent that government won’t fund.

The best way I know to fund the 57 percent income deficiency at retirement is by investing in income-producing real estate. Most retirement models suggest a heavy concentration in equities (stocks and mutual funds) in the early years and then, as you approach retirement, to shift from equities to cash, bonds and annuities. Little emphasis is given to the importance income-producing real estate can play in a retirement program. Investing in income-producing real estate is by far the most important investment you can make for future retirement. Nothing will give you more security or safety than real estate when it comes to a sound retirement program. It has the advantages of cash flow, leverage, equity buildup, appreciation and tax benefits. No other investment offers all of these combined benefits.

In his book, “How to Retire Happy,” Stan Hinden, former syndicated Washington Post “Retirement Journal” columnist, he wrote, “The fact is that when you face the question, ‘Am I ready to retire?’ your answer may have little to do with your fantasies and a lot more to do with your age, your health, your family, the nature of your job, your financial situation, and your outlook on life.”

Until the 2008-2009 market crash and recession significantly eroded the retirement savings of the 77 million baby boomers, many of this generation were set to retire. Now they find themselves still working because they can’t afford to retire. An AARP study in May 2008 reported that 27 percent of all workers 45 and older had postponed their plans to retire. That survey was taken before the U.S. unemployment rate hit 10 percent. The unemployment rate has come down to 5.8 percent, but that is due in part because of the reduction in workforce.

If you want to be happy when your retire, you need to develop an investment strategy that incorporates income-producing real estate. I advocate that as much as fifty-percent of your retirement savings should be invested in real estate. To many stockbrokers and financial planners that percentage seems ludicrous. Most financial pundits advocate less than fifteen-percent. Even then, the fifteen-percent is not really invested in real estate, but is invested in Real Estate Investment Trusts (REITs), which is really a type of stock investment rather than real estate.

Income-producing real estate is a great hedge against inflation. For every dollar you invest, you can buy four dollars of real estate assets. Not only does your dollar appreciate in value over time, but the four dollars of real estate assets you purchased increases in value over time.

If you’re thinking about making some changes to your investment portfolio that would permit you to begin investing in income-producing real estate, you might check into setting up a self-directed one-participant, solo or individual 401(k). If you do it before the end of the year, you can set aside as much as $23,000 in the account, if you are 50 years old or older and do it before December 31. Then, next year, you can transfer money out of your existing 401(k) into your solo 401(k) and begin investing in income-producing real estate. If you need help, I can show you how. Just send me an email or give me a call and I’ll help you get set up with a reliable custodian.

There’s no need to fret about retirement. If you’re part of the “Unretirement” generation, then embrace the fact, enjoy your work, and begin investing in income-producing real estate. I have clients who are well into their seventies who have found that real estate is the best way to go. So you have enough money to live on during retirement, having a steady stream of retirement income sure beats having to liquidate a stock portfolio. If you want to retire happy, start investing in income-producing real estate. It doesn’t need to be liquidated at retirement. If you’ve decided to postpone retirement, now you have more time to make the adjustments necessary to retire happy.

Photo Ken Holman