Becoming a Landlord? What to Know

Preparing your home for rent
can be a full-time job.

Spring and early summer is the time to get your home ready to sell; but if you can’t sell, and yet you have to move, you may be in the difficult scenario in which you are forced to become a landlord. If you are in this position, you are not alone. The Equifax Finance Blog gives some great tips this month on getting your home ready to rent out in the recent article, “Preparing to Rent Your Home.”

Get insurance coverage – Switch your homeowner’s insurance to landlord’s insurance to protect you from damage and protect against financial loss.

Prepare your home – Get the property in tip-top shape to beat out your competition; be sure all major systems (like heating, roofing, electrical, etc.) are in proper working condition and document the condition of each area of your home before a tenant moves in.

Know the tax rules - Learn how about being a landlord will impact your taxes; you will receive write-offs on the property, but will also have to count the rent as income; so know the rules. Consult a tax professional for full details.

Remain Vigilant of your Credit Report to Protect from Identity Theft

While there are many ways you can make sure that your identity is staying safe, one way that is both free and easy is to check your credit report each year. Since you receive a free credit report from each credit reporting agency each year, you can get a snapshot of your finances three times a year for free. This snapshot can also be an excellent chance to detect and rectify identity theft. The Equifax Finance Blog explains how to make the most of this in the new article, “The Facts About Credit Report Accuracy.”

When you search your credit report, there is a small chance that you may come across errors. Errors can come from many places, including mis-filings, incorrect data from lenders or credit card companies or from identity theft. Since the chances of mis-filing and incorrect data can be as low as 1.9 percent, if you order your credit report and find lots of errors, you may have caught an identity thief before too much damage gets done.

How your credit report can help you buy your new home

Interest rates may be low, but it could be harder to get a home loan with the Financial Bill currently in Congress. As of June 10, 2010, a section was added to the bill to impose more restrictions on mortgage lending. These restrictions include making sure borrowers actually have the ability to repay the loan (bet you thought that was already part of the process) and requiring lenders to maintain part ownership of every mortgage they sell, including second mortgages. That way, maybe they’ll be a little more careful about selling to people who will have both the capacity and the inclination to repay.

And how will lenders know if you have the inclination, the likelihood, the moral fortitude – whatever you want to call it – to repay and to make payments on time? They look at the credit reports they usually will purchase from one of the nation’s three major credit reporting agencies. They also look at your credit score, which is calculated by plugging things like your payment histories, employment history and all manner of things about you into a complicated mathematical formula. The higher your score, the more likely you are to pay back your loan.

Your credit report is your opportunity to demonstrate to lenders that you are earnest about your promise to repay your loan. It’s best to view it as a tool that can help you and learn how to make it work for you. A recent post about the Four Myths About Your Credit History on the Equifax Personal Finance blog puts to rest some of the intimidating myths we’ve all heard about credit reports and could be your first step toward looking at your credit report in a new way and making it work for you as a new home buyer.