Real Estate Matters – November 2017

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Equifax Breach – What It Means to a Homebuyer
For people with plenty of cash on hand and a great credit history, buying a home is yet another bullet point on the long list of how life is easier than for people less fortunate. Buying a home, even for the middle class, can take years of saving, opening store credit accounts (and paying them on time!) to build a satisfactory credit history, and being fiscally responsible enough to qualify for low interest rates.

And then a data breach happens of the magnitude of the Equifax blunder, and you’re left exposed to derogatory credit events. That’s a hell of a thing for anyone, but what does that mean if you’re in the process of buying a home?

The credit reporting companies – Equifax, TransUnion, and Experian – say that you should be contacted if your personal information has been compromised. Right, except that Equifax knew about the breach for a month before disclosing it, a month that would allow someone to open a credit card in your name and buy a $4,000 high-performance auto system with it, or charge a little here and there on an existing account. So let’s not trust a company to have your back.

The first thing you might do if your personal information is compromised (or could be) is to freeze or lock your credit. Freezing is when you go on full lockdown – no one can access your credit, meaning you can’t open a store card to save an instant 10 percent on your first order. Your potential employer can’t see if you’re in debt and therefore a bribe risk.

And here’s where the real estate comes in: your bank or lending institution can’t pull your credit to provide a pre-authorization letter, which you need before you view properties with your agent.

Freezing is a strong tool to prevent identity theft, and it’s effective. The downside is that it’s not very nimble. You can’t just unlock it with a quick call; you have to freeze and unfreeze with all three credit bureaus individually. If you have a monthly credit monitoring service, such as those offered through your credit card company, lockdown may be offered as part of your membership fee.

When you set up a credit lock with the credit reporting agencies, it protects you like freezing, but it’s not quite so ironclad. You can turn off a lock with an app on your phone, so if you want the lender to be able to pull your credit to see how much house you can buy, you can unlock it while you’re sitting in the bank. It’s pretty much instant. The downside? If someone can hack Equifax, you can bet they can hack the credit lock, but at least it’s an extra step. Also, there is a monthly charge for the service, around $5 per month, per bureau.

If you’re in the process of buying a property, your credit will be pulled not only at the start of your search to see what your lender will lend you, but again right before closing on the property. (Don’t make any big purchases in that span of time – it can bump up your debt-to-income ratio and jeopardize your loan acquisition!)

Pay close attention to your credit so you don’t get a nasty surprise when you go to a lender and learn that your FICO score is in the toilet because of all those credit cards you didn’t open that haven’t been paid, and the bills you didn’t know about that have piled up in a post office box you don’t know about.

Credit monitoring is easy and free. You can access your credit reports through www.AnnualCreditReport.com. Go there, and you may request reports from all three reporting agencies at a time, two of them, or just one. You get one free report from each agency per year. For regular credit monitoring, you may want to hit one every four months (for example, Equifax each Jan. 1, Experian each May 1, and TransUnion on Sept. 1). Do them as recurring events on your calendar so you stay with it. It takes about five minutes from the time you go to the website until you have downloaded your report, so we’re not talking about a time commitment.

If you’re preparing to buy a house, however, you may want to access all three reports at once. They can be different, and if there’s anything derogatory on your report (you didn’t pay your Macy’s bill for three months, or someone opened a Visa in your name using your childhood home address), you can attempt to fix it by writing and asking that the derogatory items be removed before getting turned down for a low-interest loan.

Don’t wait until you’re ready to buy, because this process moves at a pace ca. 1986. You have to send letters, follow up with calls, and then possibly repeat, but it’s worth the effort and it can save a lot of money with the lender. Best of luck! 

A Big Hilloween Thank You!
Hilloween is a Capitol Hill tradition that I have had the distinct pleasure of carrying on for the last three years, and will continue to do for as long as you’ll have me. As your Hilloween Mistress, I wish to thank all the sponsors (as of Oct. 23) who make this fun event possible! National Capital Bank, Capitol Hill BID, Residences at Eastern Market, Eastern Market Main Street, Eastern Market, Hill Rag, Yarmouth, Boxcar Tavern, River Park Nursery School, Clay Hill Stables, and St. Peter School. And thank you to all our participants and volunteers!

Questions?
Is there anything real estate-related that you’d like for me to explore? Email me about it and I’ll work it in. Please indicate if you wish your identity to remain a mystery.

 

Heather Schoell is a Capitol Hill REALTOR with Berkshire Hathaway HomeServices PenFed Realty and can be reached at heathersdc@gmail.com, at the office at 202-608-1882 x111-175, or by cell at 202-321-0874.

 

Don’t wait for a letter informing you that your credit may have been compromised. Here’s the contact information for the three credit bureaus. Mailing addresses are included because sometimes you have to actually write to them.

  • Equifax – www.equifax.com. P.O. Box 740241, Atlanta, GA 30374-0241. 1-800-685-1111
  • Experian – www.experian.com. P.O. Box 2104. Allen, TX 75013-0949. 1-888-EXPERIAN (397-3742)
  • TransUnion – www.transunion.com. P.O. Box 1000. Chester, PA 19022. 1-800-916-8800