Planning Your Business #1: Why Develop a Business Plan?
Why should you develop a business plan? While you know what you’re planning to do, writing a business plan provides you the opportunity to think and decide about how you’re going to make your business a success. Developing three years financial projections enables you to determine that your business will generate the income you require or need. Developing reasonable financial projections requires that you perform substantial market research to determine the level of interest in purchasing your products/services, and how much they will pay for them.
Q & A
A Question From Our First Time Homebuyer Workshop
I want to order my credit report but I’ve heard that credit inquiries lower your credit score. Is that correct?
Whether a credit inquiry affects your credit score depends on who’s asking. Requesting information on your own credit won’t affect your credit score and in fact, it’s strongly recommended.
Here’s how it works: When a business or individual asks about your credit, it’s called an “inquiry.” Credit inquiries are either “hard” inquiries” or “soft inquiries” and there’s an important difference:
- Hard inquiries: A hard inquiry can lower your credit score. These happen when you apply for credit from a lender or other business and you authorize them to check your credit as part of the application process. Examples are applying for a mortgage, an auto loan, or a credit card.
- Soft inquiries. Soft inquiries do not affect your credit score. Examples are when you request your own credit report, when a landlord checks your credit for an apartment rental, and when employers check your credit as part of a hiring process. Credit card companies may also perform soft credit inquiries by checking your credit without your knowledge or authorization. If you didn’t request the credit or authorize the credit check, then the company is performing a soft inquiry.
- Don’t apply for new credit cards, store cards, auto loans, etc. when you’re shopping for a mortgage. These are all “hard inquiries”. The impact on your credit score varies but it can add up. Even if you only lose a few points, lenders will see the inquiries on your credit report and may be concerned about your intention to increase your debt while applying for a mortgage. (If you do create significant additional debt while applying for a mortgage, the added payments may have a negative impact on your eligibility for a loan.)
The only credit you should apply for when shopping for a mortgage is the mortgage itself!
- Do check your own credit report and correct any errors. Instructions are included in the reports. Your credit is a major factor when you apply for a mortgage, so make sure all the information about your finances is correct.
The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months to ensure that the information on all of your credit reports is correct and up to date.
We recommend www.annualcreditreport.com to order your free credit reports and if you wish, your credit scores (scores require a fee).
Fern Selesnick, Homeownership Education Coordinator
I know that the One Mortgage is a conventional loan, but what are the rules for the home inspection? Asbestos siding, lead paint, etc. Does the bank do the inspection or does it follow some other rules for inspecting? I’m buying a “For Sale by Owner” but I do have a real estate sales agent and an attorney working on my behalf.
The structural, mechanical inspection, or home inspection that you pay for covers just that; the structure and mechanics of the home. Lead paint, asbestos, mold, radon, or water quality tests are separate inspections that you have to pay for in addition to the home inspection. The home inspector should advise you if you need any of these or any other additional inspections based on what is seen at the property at the time of the inspection. Inspections are recommended but not required in the home buying process or by the lender. Its buyer beware though; once you sign at the closing it’s all yours issues and all. This is why you have the inspection period, so you know what you are buying. If you choose not to inspect, the real estate sales agent will have you sign a waiver, because it’s that important. Sellers may not disclose all the information they know about the house. Hopefully the sales agent asks for a signed “Statement of Condition of the Property” Due to this being a “for sale by owner,” this probably is not the case because it’s the seller’s agent’s responsibility to ask for this document to be completed. You should ask for this form to be completed prior to having your inspection.
The bank will not inspect the property. However, they will send out an appraiser to determine the value. The appraiser is looking at the condition of the property as to how it effects the value and looking to see that the house livable. Government-insured loans, such as VA or FHA, go a step further and will care about chipping, peeling paint, the life of a roof, and other health and safety conditions that may be present at the property. Sometimes these conditions effect your ability to get an FHA loan. They will not allow chipping paint or a roof that has less than 3 years of life remaining.
Why I Support Valley CDC
Guest Post By Felicity Hardee, Board President
Now that Valley CDC has successfully completed the fifth annual Pedal Poker Run (many, many thanks to our sponsors and supporters who rode on a beautiful October day), I am reflecting more on why I support Valley CDC and the many other community development organizations I serve. There are so many reasons this work is important. Here are three things that really drive me to do as much as I can:
• The Need. We are so lucky to live in the most prosperous nation on earth and yet, all around us, others are struggling to get by. Particularly after the recession, many families find it hard to make ends meet. One can live in one of the most affluent zip codes in the country, and homelessness is out of control. Working mothers and fathers are having to choose between staying home with a sick child and going to work so they can pay their bills. That is just plain wrong. Every one of us has the obligation to do what we can to help.
• We Can Make A Difference in Our Own Backyard. Community development corporations work locally, right where the families are that need help. The funds we raise benefit families, senior citizens and small businesses where we are. That is so powerful; groups of us, working together for the common good or, in the case of Massachusetts, the CommonWealth.
• My Dad. When I was growing up, it was expected that everyone gave back to their communities. One of my favorite photos of my dad is him behind a desk, looking over some papers at the Community Music School in Brooklyn. He is just looking up as the photo is snapped and he is, at that moment, fully invested in doing the right thing for that nonprofit. “To those to whom much has been given, much is expected.” -John F. Kennedy.
So . . . get involved! Donate! And know that when you do, you are helping someone here, in your area, whose life will be changed by your support.