Keeping your credit score healthy before you close on your home

When buying a house don’t assume everything is done until your home has closed and funded. Maybe your loan has got an approval from the underwriter, or documents have been sent to the title company to close. Regardless of where you are at with the closing of your new home there are some definite PRECAUTIONS one must take when buying a home. During my career as a lender I have had all sorts of stuff happen because the borrower did not listen to what I said. Here are some things you don’t do before your loan funds.

Avoid the following before closing and funding on your new home loan.
• Co-signing on any loan
• Charging furniture or anything for your new home on your credit cards
• Opening new credit lines with credit card companies.
• Being late on any obligation
• Quitting your job

There is nothing more humiliating than being at the closing table and finding out after all the work and the cost associated with buying a home you are now denied. When buying a home in today’s market most lenders will re-pull your credit at the last moment to make sure nothing has changed.

With this being said make sure you don’t do any of what has been mentioned. Also if you credit score drops for some reason this is a reason for the lender to increase your interest rate on you. You don’t want to go to closing and have any surprises.

With the current strict guidelines on mortgage loans you want to make sure you don’t drop your credit scores. The credit score bar has been raised. Most lenders on a 30 year fixed conventional loan want your middle fico score to be a minimum of a 680 fico score. At one point in time this credit score was great, but not anymore. With this type of score you will pay a higher interest rate. This type of credit score is now considered higher risk to lenders based on past performing loans.

What type of credit scores are lenders looking for? Currently to get the best rates and terms you need to have at least a 720 or above credit score. So if you are not sure you might consider getting a copy of your free credit report today.

CreditScoreQuick.com your on-line resource for free credit report, credit cards, and credit advice.

Should you refinance your home?

The refinance boom during early 2000 was because of 911. The feds cut rates to improve the economics of that terrible time in American history. It seems like in 2008 the terrorist attacked our financial markets too. Naturally when the economy is bad the feds lower the feds funding rate to influence lower interest rates down the road. Lowering interest rates especially since we are in a recession will influence refinances and possible new home buyers. Current prime is 4%. This trickles over into other financial markets such as mortgage. In this article I wanted to discuss whether or not you should refinance your house.

Important refinance questions:

1. Are you going to be in your house for a minimum of 10 years? The reason I ask this is it will take about 10 years to recover the cost of a refinance.
2. Will you be lowering your interest rate a minimum of 1.5%. If you cannot lower your interest rate from your current rate at least 1.5%, you are wasting your money.
3. Do you have the value in your house to do a refinance? If you don’t have the value to roll in your refinance costs then you will have to pay the cost out of your own pocket. Have a lender make sure they can get value before you get knee deep in a refinance.
4. Refinance your house at the first of the year, the later during the year it is, the more escrow costs you will have to roll into your note.
5. What are the lender fees? Shop around and get some Good Faith Estimates to save on closing costs.

You can currently get interest rates on a 30 year fixed mortgage around 5.875%. This is a great interest rate. We project that interest rates could get in the upper 4ish range. This is another great opportunity to put your mortgage in a 15 yr and save on interest paid on your note.

Of course with the tightening up on credit requirements this might be a great time to check your credit report and see where your credit score stands. You definitely want to approach a lender educated about what is on your personal credit report.

CreditScoreQuick.com your resource for the latest credit news.

How to get a mortgage checklist

In this current market you might think that banks are not lending, but guess again. Its amazing how all the negativity with the media affects what people do. I personally think the media has a negative impact on our markets. At times the media especially the liberal tv stations tend to sway the common opinion for personal gain. That is the current case while one of most controversial elections is taking place. In this article I don’t want to go down the road of special interest but tell the facts about mortgages and what you need to know about getting a mortgage loan in this current cloud of smoke. There are three steps to get the ball rolling and they are get approved, find an agent, and close on your home.

Get approved
One of the biggest problems in the process of buying a home is the buyer assuming they don’t need to get approved first. This is a huge mistake and can end up making the home buying process a disaster. One of the common ideologies out there is “I have good credit and I will find a home first and then get approved.” Well, in this current lending market just because you have good credit does not mean you will get approved. Do yourself a favor and get approved with a reputable lender. It would not hurt to pull your own copy of your free credit report just to see where you stand. Some banks will not tell you much about your credit report.

Find a Real Estate Agent
Since most homes are listed in the (MLS) multiple listing services it’s extremely hard to get around using a agent. To ease the looking for a home process, go ahead and find a reputable agent to help you with your search. Most reputable agents will know the market and give you an idea of what to expect for your budget.

Close on your home
Hopefully by now you are close to closing on your home and everything has gone well. I am sure you learned that you needed a minimum of 3.5% down depending on what type of loan you were approved for. The new lending market does require money down, and requires better credit. Even with the new lending restrictions banks are still lending and will continue to do so. Remember to check your credit and be an educated consumer when it comes to your personal credit worthiness.

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and free credit repair advice.

Housing and Economic Recovery Act of 2008 Q & A

Q: How will the law help struggling homeowners keep their homes?
A: Through the Federal Housing Administration (FHA), an estimated 400,000 borrowers in danger of losing their homes will be able to refinance into more affordable government-insured mortgages. The program offers government insurance to lenders who voluntarily reduce mortgages for at-risk homeowners to at least 90% of the property’s current value.

Q: When will the program begin?
A: The program will begin on October 1, 2008 and sunset on September 30, 2011. Homeowners in danger of losing their homes before October 1, however, should not wait to contact their loan servicers and should begin applying for federally insured mortgages now.

Q: Who is eligible?
A: To be eligible to participate in this program, a borrower must:
• Have a loan on an owner-occupied principal residence. Investors, speculators, or borrowers who own second homes cannot participate in this program.
• Have a monthly mortgage payment greater than at least 31 percent of the borrower’s total monthly income, as of March 1, 2008.
• Certify that he or she has not intentionally defaulted on an existing mortgage, and did not obtain the existing loan fraudulently.
• Not have been convicted of fraud.

Q: How can a homeowner access this new program?
A: Homeowners or a servicer of an existing eligible loan need to contact an FHA-approved lender. The FHA-approved lender will determine the size of a loan that a borrower can reasonably repay and that meets the requirements of the program. If the current lender or mortgage holder agrees to write-down the amount of the existing mortgage and make the new loan affordable, the FHA lender will pay off the discounted existing mortgage. Loans provided under this program must be 30-year fixed rate loans.

Q: Are lenders required to participate in this program?
A: No. The program is completely voluntary for lenders, investors, loan servicers, and borrowers.

Q: How does this law help neighborhoods that have been hit by the foreclosure crisis?
A: The impact of the current crisis has not been isolated to individual borrowers or investors, but has been felt broadly by neighbors, communities, and governments across the nation. The law strengthens neighborhoods hit hardest by the foreclosure crisis by providing $3.9 billion in Community Development Block Grants to states and localities to buy foreclosed homes standing empty, rehabilitate foreclosed properties, and stabilize the housing market.

Q: Will this law be a bailout for speculators, homeowners, investors, and lenders?
A: No. It is narrowly tailored to keep families in their homes. For example:
• Only primary residences are eligible: NO speculators, investment properties, second or third homes will be refinanced.
• Investors and lenders must take big losses first in order even to participate. The owner of the old mortgage can get a maximum of 90% of the current value of the home (which presumably will be considerably less than the value of the original loan). In many cases the loss will be significantly greater, but 10% is the minimum.
• In addition, lenders must waive any penalties or fees, and help pay for the origination and closing costs of the new loans.
• Most homeowners will have seen the equity in their homes disappear before being able to refinance under this program. In addition, the FHA will get a portion of any future profits on the house, to make sure the government recoups its investment over the long run.

Q: Will this law reward families who bought homes they could not afford?
A: Many homeowners facing foreclosure were misled, were deceived, or were in other ways the victims of unfair lending practices.
To prevent future abuses by lenders, this law will establish a nationwide loan originator licensing and registration system to set minimum standards for all residential mortgage brokers and lenders. It also strengthens mortgage disclosure requirements to help ensure that borrowers understand their mortgage loan terms.

Q: How will this law make it more affordable to own a home?
A: There are a number of provisions that will make homeownership more affordable:
• Creates a refundable tax credit for first-time homebuyers that works like an interest-free loan of up to $7,500 (to be paid back over 15 years).
• Grants states $11 billion of additional tax-exempt bond authority in 2008 that they can use to refinance subprime loans, make loans to first-time homebuyers and to finance the building of affordable rental housing.
• Raises conforming loan limits for the FHA, Fannie Mae and Freddie Mac to $625,500. Because of the high cost of housing in California, a majority of the state’s residents were previously shut out from these programs. Raising these loan limits will lead to lower interest rates on some loans, greater refinancing opportunities, and enable more borrowers in high cost areas to avoid the type of nontraditional and frequently abusive loans that led to the current crisis.
• Provides couples using the standard deduction with up to an additional $1,000 deduction for property taxes ($500 for individuals).

Q: Does the law provide help to those who still cannot afford to own a home?
A: Yes. The bill includes a number of provisions to increase the supply of affordable housing, which has been a major problem in California pre-dating the current foreclosure crisis. For example:
• The bill creates a new permanent affordable housing trust fund – financed by Fannie Mae and Freddie Mac and not by taxpayers – to fund the construction, maintenance and preservation of affordable rental housing for low and very low-income individuals and families nationwide in both rural and urban areas.
• In addition, the legislation provides a temporary increase in the Low-Income Housing Tax Credit and simplification of the credit to help put builders to work to create new options for families seeking affordable housing alternatives.

Source: www.fha.gov


CreditScoreQuick.com is your on-line resource for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Got high credit scores but can’t get a loan.

approved. The reason for this is because lending is altogether a different market now. If you are trying to get a house, you definitely better have good credit, but that’s not all. Lenders are going back to what was called the plain old vanilla loans. In other words there is not much creative financing anymore. Here are some examples.

Stated loans
Stated loans have been loans designed for individuals that are self employed and could not show much income. In a lot of cases self employed people write off as much as they can on there income tax returns. So this type of loan was invented for them. Well IRS is trying to get rid of these loans. I am sure you can imagine why.

No Doc Loans
This type of loan was for the excellent credit borrower. With this loan you did not document anything, no income or work history. You just got a loan based on your excellent credit history. This loan is no longer being provided.

Limited doc loans
These types of loans are loans where you state you income without proof, but you verify your assets. This loan is still around but is difficult to get done, due to there not being a market for the loan. You need at least a 720 plus score to get one of these.

Conventional Loans
Most banks are requiring a 680 credit score just to get in the door with this type of financing. IN the past a 650 was considered a good credit score, but you better have at least a 680 middle credit score to get this type of financing. Plus you will need a minimum of 5% down.

FHA mortgage loans
These types of loans are typically not credit score driving. Now you have to have at least a 580 credit score to get most banks to underwrite your loan. We are starting to see a pattern where the credit score requirement is being raised to 620.

So you can see you may of thought you had good credit scores, but due to the bar being raised by the market, you might have problems especially if you financing needs to be creative.


Author:Mike CloverCreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.

How to Buy a Home When Your Credit Report is Negative

Obviously, you won’t be able to walk into your local mortgage company office and get a loan unless your credit score is exceptional and your verifiable income shows that you can comfortably make the payments.

Gone are the days of “sub-prime” mortgages, and gone are the days of “stated income” for borrowers with high credit scores. Gone are the offers of “zero down” loans and creative financing options that allowed sellers to carry back a note for part of your down payment.

Lenders are being darned careful right now.

So what can you do if you want to begin building equity in a home – but your credit score is marginal and available funds for a down payment are scarce?

You can look for lease to own properties, and seller-financed homes.

Borrowers aren’t the only ones affected by this crisis – homeowners who need to sell are also in a bind, because the pool of buyers who will qualify for loans is getting smaller and smaller as lenders tighten their requirements.

Thus, those who can will begin entertaining the idea of seller financing and lease to own arrangements.

This could be good news for prospective homeowners, but it could also mean that home ownership will cost more. Traditionally, seller financing comes with a higher interest rate than those we’ve seen in the past few years. That means you’ll get less house for the same payment. Also, wary sellers might want a larger down payment than you are able to make.

These sellers will also want to see your credit report, but will likely be a little more flexible than mortgage lenders.

That leaves “rent to own” or “lease-purchase” arrangements. Under these situations, you won’t be on title, so won’t get the tax benefits of home ownership until the purchase is completed. Still, you’ll be locked into a purchase price, and if inflation continues, that could be a good thing.

Also, these sellers won’t be as fussy about your credit score, because they know that if you default, they’ll get the house back immediately rather than having to go through the long and expensive process of foreclosure.

But do be careful. Many “rent to own” properties are owned by companies seeking to take advantage of the current crisis, and their contracts are strict. For instance, they may require you to get a loan and cash them out within a set time frame. If you can’t do it, you’re out of the house and all payments made toward the down payment are kept as “liquidated damages.”

Making regular on-time payments to these companies will help raise your credit score, and the extra you pay will force you to build a down payment, so a lease purchase could be to your benefit.

Just be sure to read the fine print – all of the fine print.


Author:Mike Clover
CreditScoreQuick.com is your resource for free credit score reports, fico scores, loans, credit cards, insurance , identity theft protection and credit repair advice.

Low Credit Score mortgage loans.

With all the drama in the lending industry, you can still get a mortgage with low credit scores. Yes, credit scores are a big determining factor in whether you will get approved for a mortgage, but your credit scores don’t have to be all that great. The mortgage loan I am talking about is a FHA loan. FHA loans are loans that are insured by the government. For years FHA did not have a credit score requirement, and until now they require a minimum of a 300 credit score. This may sound crazy but that is the lowest credit score they will finance with all the new mortgage insurance guidelines. Nether less, typically when you have credit scores that low you have too many recent issues to get a lender to approve you anyways.

There is a market on Wall Street called the secondary market which the buying of mortgage paper takes place. Typically this paper is sold in bulk called mortgage backed securities. The investors that buy this paper may have their own internal restrictions before buying loans. These restrictions might be far stricter than what FHA requires to insure a FHA mortgage loan.

Currently in today’s market there is a minimum credit score requirement of 580. There is also changes going on within banks where they are requiring a middle credit score of 620. The reason for this requirement is because people who have bought homes below that credit score threshold have a history of foreclosing on their homes. So the investors tighten up on what type of FHA mortgage paper they will buy.

Regardless of whether the credit score requirement is 580 or 620, those types of credit scores are still considered low and a high credit risk according the Fair Isaac’s scoring model. So yes you can still currently get a mortgage down to a middle credit score of 580. You will pay higher interest rates with that score, but you will get a 30 yr fixed mortgage.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Should you refinance your home?

In the current market getting your house refinanced could be challenging. With all the new credit report and credit score requirements it might be tough to get it done. Sometimes it is necessary to refinance depending on the terms of your current loan. Here are some tips on whether refinancing your home is right for you.

· Check your free credit reports
With the access for free credit reports on the web go ahead and pull a recent copy of your credit report to see where your credit scores stand. This will allow you to be prepared for what ever a lender throws at you.

· How long will you stay in your home?
When you refinance your home there are lots of third party costs involved. When all the costs involved it will take a while to recoup the cost for the refinance. Typically you need to stay in your home at least 10 years in the “Rule of Thumb.” If you are not staying in your home for at least 10 years, it may not be worth refinancing.

· Lower your interest rate.
When you decide to refinance your home you should be able to lower your interest rate a minimum of 1.5%. I recommend 2%, but 1.5% will work as well. Otherwise refinancing your home is not worth the cost involved.

· Equity in your home
During the finance process you need the equity to roll in the closing costs. If you don’t have the equity to refinance, then you have to pay the cost out of pocket. So you might get with your lender to make sure you have the equity to refinance to begin with.

· Will you qualify for a loan?
With all the changes in the current lending market, the loan programs that were once available might be gone now. So if you require some type of creative financing, like limited doc loans you could have issues getting it done. Get with a reputable mortgage loan lender to see where you stand.

· Refinance at the first of the year.
When you refinance your home you should do so at the first of the year. The reason is the mortgage lender will only have to collect taxes on the refinance for the first of the year. The later during the year refinance the more the lender will be required to collect in taxes. This ultimately will drive up the cost of the refinance the longer you wait. So make sure you refinance your home between January and March.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Is Freddie Mac and Fannie Mae going under?

Everyone is getting concerned about our banking system. I believe it is with good reason. If you are watching the news lately, banks are going out of business all over the map. This is due to the stocks of some of these banks are causing a reduction in the amount of assets they have to fund loans. If you have noticed lately Freddie and Fannie have both lost billions in liquid cash since last December. Most of this liquidity problem is because investors are dumping their stocks with these particular funds.

Freddie and Fannie both are backed by our government. I assure you that the government will not allow these investment bankers to go under. The government if need be will bail them out. Obviously more intense credit score restrictions are around the corner.

The Bush administration recently said that a government take over is not needed. Law makers aim to pass a bill that will keep these companies afloat. So stay tuned to this.

Fannie Mae and Freddie Mac both own or guarantee about half of the $12 Trillion mortgage loans in the United States. If the government steps in the obvious is around the corner. Higher interest rates to curb the appetite of inflation.

It’s apparent that the mortgage industry will be tightening up even more. I personally believe the largest insurer of loans will be the savior during this epic credit crunch. Like I have said before, the Federal Housing Authority (FHA) is and will be the savior for banks that are still willing to provide mortgage paper. FHA was the savior right after the “Great Depression” and will be the savior for the liquidity problem we are currently having. I would not be surprised if our government came out with some new loan products that are aggressive enough to stimulate home ownership. We shall see.

On a positive note, if you are in the market to buy right now, there are some incredible deals on homes all over the U.S.

Just remember to manage your free credit score reports. This is one of those times where you might take a peek at your credit to make sure matters are up to snuff. If you are in the market to buy lenders are tougher on those fico scores. So stay on top of it.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Good signs for the Mortgage Business in 2009

There is no doubt the Mortgage Industry has been suffering for the last 2 years. There has been a ton of banks go out of business and people all over the United States loose their jobs. With all the foreclosures and the downturn in the quality of buyers it has been extremely tough to get some home buyers financed. Luckily FHA is our current market, and allows people all over the U.S. to get financed even though their credit scores may be low.

According to, Bernard Markstein the Senior Economist for the “National Home Builders Association the “First Time Home Buyers” market will be taken off in 2009. He is claiming that the increase in homes sales for this market should increase around 700,000 units. This is great news, because the first time home buyers market drives the real estate market. When first time buyers are active this allows people who need bigger homes to upgrade. In return the new home industry starts building again. This is exactly what our economy needs, because this will create more jobs.

So the hope is the First Time Home Buyers will shrink the overwhelming market of homes for sale currently around the U.S. This will allow other families to move on with the purchase of there new homes.

Yes, getting a loan will be a little tougher but with good credit education it’s really not that hard to get a mortgage loan. During the past years it was just too easy to get a loan, but now the lending market is where it needs to be. We definitely don’t want to go through this process of banks going out of business.

My best advice if you are getting ready to make a purchase soon, is to get a copy of your free credit score report and see where you stand. Your credit score is now more important than ever. In order to get good interest rates most banks want to see at least a 620 plus fico score. Once you pull your credit and find you need some credit repair, you can repair you credit for free. Use the web; it can save you time and money.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Is now the time to buy investment properties?

There probably is not a better return on your money than real estate. The number of houses out there for sale out way the number of buyers. So the demand is down and so is the price to buy homes. The biggest challenge in this current market is your credit score and loan terms. Banks have cracked down on credit to the point that it has made it hard for some investors to buy investment homes. The other challenge in this lending market is the type of loan you qualify for. Over the last 10 years there were all types of creative loans in place for self employed people that cannot document any income. Basically the higher the risk of the loan the more down payment you are required to have.


Low documentation loans on investment properties
During the years past you typically on a low documentation loan needed around 10% down. With the current market on low documentation loans on investment properties you may be required to put down 25% to 30% down payment. These types of loan terms may be less attractive to most investors. There are also a lot of banks that quit offering low documentation loans to self employed borrowers. So getting a loan with some banks may be impossible in this current market. If you have plenty of cash in the bank and can prove income you can find some real attractive deals in this current real estate market.

Full documentation loans for investment properties
If you are in the market to buy investment properties and can show income, you can be well on your way to getting some of the best deals on investment properties. Most of the property values have fell all around the country, mainly because everything was over priced. The demand drove everything so high that the market is re-adjusting now. So this is the time to buy if you have the right credit and financial circumstances.

Let’s re-cap, you need to have at least a credit score of 720 or above. You will need minimum of 10% down depending on how you document your income. This is pretty much it in a nutshell. With the current market and all the good deals on real estate, if you have the right credit and documentation this is the best market to buy investment properties.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

What First Time Home Buyers Need to know

The hard way always seems to be the better way. I have been told there are two ways to do things in life, “The hard way and the easy way.” I think most want to do things the hard way. When it comes to buying a house for the first time, there is process to follow so your buying experience is not done the hard way. The easy way may not seem the best way in the eyes of a buyer, but I assure you it’s the correct process. I have seen more problems with mortgage loans following apart because someone led the cart before the horse. Here is the easy way to buy a home.

Get approved first
The first step in the home buying process is to get your finances in order first. Get your credit reports pulled and your income verified to see where you stand. If you don’t do this first I guarantee that you will have problems. Most want to go and look at homes first and then apply for a mortgage. This is why all the nightmares you hear about happen in the lending industry.

Meet with reputable lender
After you have been approved for a mortgage meet with the lender to review what type of loan they have approved you for. You need to understand the loan and your estimated payments with your credit. It is important that you understand all aspects of your loan and monthly payments. Mortgage payment can be an issue as well, because you thought you payment might be lower. Some of the on-line calculators don’t estimate your entire payment, which causes confusion in lending. The calculators on-line usually estimate your principal and interest payment only, which does not include your taxes, MIP, and homes owners insurance with the payment. So make sure your review all of this with a reputable lender.

Meet with a seasoned realtor
After you have met with a lender and have been approved, the next step is to get a realtor to find homes in your price range. I would recommend that you find a full-time realtor, not one that is part time. The reason is if there is a problem during the day, you will have issues getting a hold of this realtor because they are at work. There are a lot of part-time realtors out there, and as far as I am concerned should not be allowed to have their license. Real Estate is a fulltime career and requires someone that has experience. If you are working with a realtor that does not have experience you could have issues as well.

If this process is followed and the people you are working with are experienced, then your home buying process should be a good one. Buying a home is a big step in life and needs to be handled by experienced real estate professionals.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

The Feds cut rates, but mortgage rates go up -Why?

Most people think if the Federal Reserve cuts interest rates, mortgage rates will go down as well. This simply is not true. The rates you pay on credit cards, auto loans, and mortgage rates are not set by the Federal Reserve. However the Federal Reserve does affect what is known as the Federal Fund Target Rate. Here are the details.

Federal Fund Rate
The Federal Reserve meets on a regular basis to monitor the Federal Fund Target rate. They decide during this meeting whether to increase or lower the rate. So the target is the rate. The real rate changes daily, but is usually real close to the target rate determined by the fed. The Federal Fund Rate is the rate that the banks charge each other for overnight loans. If a bank is low on funds it borrows the money from a fellow bank. The loan will be based on the Federal Fund rate set by the Federal Reserve. Banks are required to keep a certain amount of reserves in their bank or vault, typically around 10%. So at the end of the day if the bank only has 9 % reserves in the bank, they are required to borrow the rest from another bank at the Federal Fund rate. Understanding the Federal Fund rate is key to understanding why a rate cut with the Federal Reserve does not dictate mortgage interest rates.

Investment Groups
Now we are going to take a look at how investment groups dealing with mortgage paper do business. These groups of investors convince pension managers and insurance companies to invest their money in their investment fund. They then turn around and lend that money to people like you and me that need mortgages. Typically these investors will turn around and sell these loans on the secondary market at Wall Street for a nice profit. The process is continued over and over.

Mortgage backed Securities
Let’s assume you are the head of the investment fund. Your job is to make as much money as you can on the loans you have in your portfolio, so you can sell them easily on Wall Street. So the higher the interest rate for the borrower the more money everyone makes. Wall Street will bundle these loans which are commonly called “mortgage backed securities.” These securities are traded on Wall Street just like any other stock. As long as investors on Wall Street are buying mortgage backed securities all is good.

As the head of a investment fund are you going to be more worried about the Federal Fund Rate (the rate banks charge other banks to borrow money) or will you be concerned with the markets performance of mortgage backed securities? If you guessed mortgage backed securities you guessed right. The manager will be more concerned about how the market is dong for what it has to sell in its pool of loans. So the mortgage backed securities market dictates interest rates we pay.

So it is very simple to see that the Federal Reserve rate is the rate at which banks borrow money from each other overnight. This will not have much of an affect on how consumers borrow money over 30 years. However the lowest rates in history were at a time when the Feds cut interest rates at an all time low. So indirectly the Fed Fund Rate can affect mortgage interest rates. But it is important to understand that it does not directly affect mortgage rates. The Federal Reserve affects financial markets, which in turn could affect mortgage interest rates down the road. But typically mortgage rates are affected by the market for Mortgage Backed Securities. So if the Federal Reserve drops rates on Monday, that does not mean interest rates will drop on Tuesday.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

FHA implements Credit Score based MIP

With all the changes in the lending industry, you would think that no one can get a loan anymore. Conventional loans have gotten so tough most are going with FHA loans now. FHA has been the savior in a lot of crazy lending markets. With the current credit crunch and record foreclosures, FHA is now implementing risk based mortgage insurance premiums (MIP). This fee insures the loan with HUD. So just like anything else, if your credit score is low you will pay for it. In the past your credit score did not matter, but now it does. The way MIP worked in the past was everyone paid a 1.5% of the total loan amount in insurance. This upfront fee was financed in the note. The new mortgage insurance premium will range between (1.25% - 2.25%). So for borrowers with low credit scores you will now pay .75% more in premium. For borrowers with good credit they will save .25% in premium.

Examples:

Good Credit
• Sales Price: $100,000
• Down payment: $2,250
• Loan amount with MIP @ 1.25%: $98,971

Bad Credit
• Sales Price: $100,000
• Down payment: $2,250
• Loan amount with MIP @ 2.25%: $99,949



Depending on what your FICO score is, will determine how much you pay. You can see if your credit score is low, you will be financing more which will increase your payment as well. I believe this is just a tip of the ice berg with the changes in all sectors of lending. If you are getting ready to buy a home, you might consider pulling a recent copy of your credit report with scores to see where you stand. If you don’t want to pay more and feel that your have low credit scores, go ahead and take the plunge. Get your credit report and start working on any issues you may have. If you don’t fix your credit it will cost you unnecessary money long term. FHA is still the strongest loan in our current market, but with credit issues you will pay more for it. I have never seen such tightening up in the lending market like we currently are experiencing. I can’t say I don’t blame the banks, because everyone want there money back they have loaned out. I guess you would have to put yourself in their shoes, how would you feel if you loaned someone $100,000 and they did not pay it back to you?



Multiple FHA borrowers
With this new FHA change that was implemented on July 11, 2008 here is how this affects multiple borrowers. If two borrowers are involved on a FHA loan, the MIP will be based on the borrower with the lower credit score. So you could have one borrower with excellent credit, but have a borrower with low credit score that would cause a higher mortgage insurance premium for the entire loan.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Tax Lien Q & A

Q:

I have a tax lien on my credit report from 1998. This tax lien was due to taxes on a 1099 job I had for 2 years. I did not pay the amount owed for the year of 1997. The IRS filed a tax lien for $12,000. My attorney said it should drop off after seven years. Well 7 years was a while back. What am I missing here? I have been told this tax lien will affect my credit score as well. I want to resolve this matter as quick as possible. I am getting ready to sell my home and purchase another home.

Jim

A:
Determining when collections are going to come off your credit report might seem simple, but there are some types of credit report activity that does not apply to the 7 year rule. Tax liens are one of those debts owed that will not go away until you pay it. The Fair Credit Reporting ACT has different rules for this type of debt owed. Here are the facts.




• Unpaid Tax Liens- there is not a set expiration date for unpaid tax liens according to the FCRA. So tax liens will stay on your credit report until you pay it. Some credit bureaus cap how long they report records like tax liens for up to 15 years. So if a tax lien has been reporting for over 15 years, you might consider disputing to see if the bureaus will remove.

• Paid Tax Liens – Once a tax lien is paid off, the tax lien will report on your credit report for 7 years from paid date. Tax liens are the only record where the expiration date is tied to repayment.

Jim you do have a chance of getting this record off by disputing it. There is no guarantee it will com off though. You will more than likely have to pay the debt off. You can use our how to dispute process here.

Mike Clover

CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Why FHA- with your Credit Score ?

Did you know FHA loans have been around since 1935? That is pretty amazing if you think about it, this type of loan has been around since right after the “Great Depression.” Also a added benefit of FHA is that it does not have credit score requirements. With the current lending market and tighten up on credit scores it makes perfect since to look at a FHA loan. Depending on where you are going to buy will determine the max loan amount you can get with FHA. Yes, FHA loans have loan limits. Here is a link where you can look up loan limits by state and city.


Secondary Market Credit Score Requirements
With all the foreclosures going on, banking has made changes as to what type of loans they will buy. FHA does not have a credit score requirement to insure a FHA loan, but the banks that buy the loans do. For example, most lenders underwrite their loans, and then sell them on what is called the secondary market. This is a market where banks buy and sell mortgage loans. The current credit score requirement with this market is a 580 credit score. So if you have this type of credit score, you might qualify for FHA mortgage.
This type of score is not considered the best of scores, but could get you in a 30 year fixed mortgage. Your interest rate will be higher because of you credit score, but it’s better than renting. Typically credit scores above a 680 is considered good credit, so if you were wondering, that is the where you should be.
Here is a credit score breakdown per “My FICO.”

* Excellent: over 750
* Very Good: 720 or more
* Acceptable: 660 to 720
* Uncertain: 620 to 660
* Risky: less than 620

Advantages of FHA
Obviously FHA’s biggest advantage is you can get financed with fairly low credit scores. You don’t need great credit history that is required with Conventional loans. Here are some highlights to secure a FHA loan
• 3 lines of credit reporting on your credit report in good standing for the last 12 months
• If you don’t have any credit, FHA requires 2 months mortgage payment in bank after closing
• Good 12 month rental history
• 2 years work history.
• You can count college as work history, underwriters like to see that you graduated, and are working in profession studied.
• Only 3% down payment, you can use Down Payment Assistance in place of this.
• No credit score requirements
• 30 year fixed mortgage
• Competitive rates

FHA is not only for individuals with bad credit. This loan is for people with good credit as well. If you have a 720 credit score, and don’t want to put down a bunch of money, it makes perfect since to go FHA, as long as you are trying to buy within the FHA loan limits.

If you are in the market to buy, and you are not sure where your credit score stands, find out. Pull a copy of your credit report with credit scores. A educated consumers saves on interest rates and terms.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Foreclosure Crisis – Learn what Lenders don’t want you to know

Did you know most of the foreclosures taking place now could have been avoided? With all the foreclosures taking place because of adjustable rate mortgages (ARM’s), this could have been avoided if the lender had put the borrowers in a 30yr fixed mortgage. During the real estate boom, individuals that had less than perfect credit were put into sub-prime loans. There were millions of families put into sub-prime loans that had the qualifications to go FHA, which is a 30 yr fixed mortgage. The reason why was because there were many mortgage companies that did not have the necessary funds to get their license to originate FHA loans. So the mortgage company had no choice but to stick their client into a sub-prime ARM loan. Was this unethical, I would have to say yes. Also the mortgage companies that were sticking people in 2 year Sub prime loans sold everyone on 2 yr ARMs when they could have put them in a 30yr fixed sub-prime loan. Here is what took place.

2 year ARM sales pitch.
Here is what mortgage companies sold to potential borrowers. Sir or Mam you don’t have the credit to go with a prime conventional loan but we can put you into a 2 yr ARM. With good credit history we can refinance you in 2 years into a 30 year fixed mortgage. This is what was being told all over the United States. Guess what? These people could have been put into a 30 year fixed sub prime mortgage as well. But the rate was lower on a 2 year ARM, and the lender made more money selling the ARM loan. Also the lender would get there business again two years down the road. So it was like machine during the real estate boom. This is the secret that lenders did not want you to know, and most of them never gave the option to the potential borrower.

The builder problem
During this boom the builders were doing more than selling 2 year ARMs, they were selling low payments. They would sell all these bogus incentives to use their mortgage company and along with the bad loan they were put into they sold them on low payments because of the un-improved taxes on the property. Yes there was this sneaky disclosure used to explain un-improved property taxes at closing, but they blew through it so quick the borrower never really understood it. Also the loan officer providing the loan never explained the repercussions of not collecting escrows for the mortgage. Most of the 2 year sub-prime borrowers with builders did not escrow their taxes and insurances. That is the other way they were sold on this whole process. During the excitement of this whole process, the borrower did not see the danger down the road. To talk a little about un-improved property taxes, here is how that nightmare works. When you buy a property, the taxes on the property if it’s a new build is usually based on the land only. That is why the taxes and along with you payment is so low. But guess what, you will have an escrow shortage in about a year. Which means your payment will go up around $300 to $400 dollars. This is part of the reason for the foreclosures as well. Builders pretty much do what ever they want due to a lack of good legislation.

2 year ARM is up
Your 2 year ARM is up, and you now have two problems. First you cannot refinance because you don’t have the credit. Second your property value has declined and you don’t have the equity to roll in closing costs which is required to do a refinance, unless you have the money to pay all your closing costs. Since you cannot refinance your payment jumps up around $400 dollars and now you cannot afford your home. This is what is going on all over the country.

This is a example of how greed is going to destroy our country. It’s unfortunate that our lending industry took advantage of people. This is going to affect us for a while. If you found yourself in this situation, the best thing you can do is work on your credit, and make sure you pay everything on time.

Check your free credit score report often so you know where you stand credit wise.


CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance, debt consolidation ,and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Top Tips to help you secure a mortgage loan

The American dream is to own a home someday. We all have this passion deep down in side. Most Americans don’t have the money to pay cash, so they turn to lender to assist with the purchase of there first or second home. With all the new guidelines in banking I will give you exactly what you need to do to secure a mortgage. I know everyone’s situation is different, but there are some steps you can take so you will not have problems in today’s lending market. This will also help you regardless of what the lending market is doing.

Know what’s on your credit report
Most people have not idea what is on thier credit report. They also have not idea what their credit scores are. This is amazing to me, since the way to financial freedom is to manage your credit health. Otherwise you are probably paying too much in the way of terms and rates. Get a copy of your credit report with credit scores regularly to mange your scores.

Pay all your bills on-time
If you think paying a bill late every once in a while is ok, you might want to rethink that logic. A single late payment on any obligation will lower your credit score between 100 and 150 points. So if you had a credit score of 750, now it’s a 600 score. If you are having financial problems and think you might be late, call the creditor to make arrangements. Make sure once you work out something, that you get something in writing stating they will not report any payments late with the arrangement. So the idea is to not be late on anything. Lenders don’t like to see you late on anything, because this looks like you are having financial problems. This ultimately means you are not ready to buy in a underwriters eyes.

Save your money
When applying for a mortgage, having savings is a big plus. This shows you have stability and the ability to save money for emergencies. Most loans are run through a automated underwriting engine, and with savings in the bank could mean the difference between a approval or a denial. A good goal to have is 6 months worth of mortgage payment in the bank. If you are buying a house around $200,000 six months payment would be $12,000 in savings.

Pay your Rent on-time, and don’t break a lease.
Being able to pay rent for at least 12 months on-time is a plus. It looks better to pay rent and all your utilities on time for 12 to 24 months. This shows a underwriter you are able to handle responsibility. Lease agreements are one of those contract deals that if you break it and don’t pay the fee to break the lease it can show up on your credit report, plus the apartment complex typically will not give a good verification for rent due to the lease being broken.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness.

Today’s Credit Score Requirements for Mortgages

Today’s credit score requirements for mortgages are changing as more and more homes foreclose across the country. Have you ever wondered what the current credit score requirement might be to get a home? Depending on what type of loan you might qualify for will determine your credit score requirement. Typically the higher the risk, the higher your credit score needs to be. I will discuss 3 loans types in this article that are the most common loans underwritten nation wide.

Limited documentation loans
Before the mortgage meltdown, which by the way was only 2 years ago, you could get a 100% limited documentation loan with a middle credit score of 620. Typically this loan was called a stated loan as well. Basically a underwriter would not verify anything other than your credit score, and possibly a business license showing you have been in business for a minimum of 2 years. These types of loans were for people that were self employed and could not document any income due to all the deductions on there tax returns. Loans are like any other investment, they have to perform and produce a return. Unfortunately that is not what is going on, so the bar has been raised. Now you need at least a 680 credit score, and around 10 to 20 % down. The down payment will vary from lender to lender.

Conventional full documentation loans
Full documentation loans are loans backed by Freddie Mac and Fannie Mae. These two entities are two private organizations backed by the federal government. They buy loans that are ran through their automated underwriting engines and get approved based on that particular engines guidelines. Full documentation loans in the current market require a minimum of 620 credit score. The reason for this is the mortgage insurance companies that insure the loans backed by these two secondary market lenders require a 620 score to insure the loan. So basically everyone is raising the bar on requirements in order to get a mortgage. Full documentation loans typically require 2 years w2’s and or two years tax returns showing income on schedule C. There are lots of other variable involved as well, but this is a insight on full documentation loans. The lender will also require check stubs for the last 30 days showing income history.

FHA loan
Federal Housing Administration loans are loans that are insured by Housing and Urban Development (HUD). This particular part of the government has been providing insurance on loans since 1934. This loan is the most aggressive loan in today’s market, due to there being less risk to the banks that underwrite them. This loan actually does not have a credit score requirement, but the banks that underwrite them do. The current pattern across most banks is a middle credit score of 580. This loan also requires full documentation, such as w2’s and/or tax returns for the last 2 years.

With all the new guideline changes in the current lending market you can see how important it is to know your what your credit score are. If you don’t know, I would recommend getting a copy of your free credit score report today.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness

Home Buying Process and Mortgage Loans done correctly.

The home buying process can become the biggest nightmare if not done correctly. I am sure you have heard of all the stories out there about somebody’s loan not going smooth and what a humiliating experience that can be. Since buying a home is the single biggest purchase you will ever make, you need to make sure the process you are giving is the correct one. Since most of us are emotional buyers, and would like to go look at homes before getting a loan in place, this might seem like to best process to follow. I will be the first to tell you, that if you go look at homes before you get a mortgage loan in place, you very well could be part of the nightmare mentioned. Take our advice and remember this.

Get approved for a mortgage loan
Most people like to lead the cart before the horse, only because it seems easier. Unfortunately that is not the process when buying a home. The first step is to get a mortgage loan secured. The reason for this is anything can go wrong when buying a house if you don’t dot your I’s and cross your T’s. It probably sounds like more fun to run out and look at a bunch of homes, before getting you’re financing in place. With all the current tightening up in the mortgage industry, and your credit score needing to be higher these days, you cannot afford to assume you will be able to get financing. The lending requirements are a lot stricter these days. Let’s assume you go out and find the home of your dreams, but you have not idea what you qualify for. Nor do you have any idea what your payment would be on the homes you are looking at. Here is a list of situations that could happen if you don’t get pre-approved before looking at homes. Also if you know you have good credit, you still may get denied, so don’t assume anything.

1. Find a home only to get let down because you don’t qualify for it.
2. Thought the payment would be lower.
3. Need money for down payment you don’t have.
4. Got something on your credit report you knew nothing about.
5. Your credit scores are too low for your type of loan scenario.
6. Someone has stolen your identity and you just found out.

7. You don’t have enough credit to get a mortgage loan

This is just some key problems that could take place if you don’t get your pre-approval first. If you go out and write a contract up on a home, and find out later you cannot secure financing you have wasted your time and everyone involved. Plus it could cost you your earnest money which could be between $500 and $1000 dollars.




Get a seasoned realtor to help with your search
After you are pre-approved for a mortgage loan, you need a highly qualified realtor. You don’t want to work with a realtor that runs you out to look at homes before you meet with a lender. If a realtor does this, you are going to have problems. I promise. Most seasoned realtors will not allow you in their car until you are approved with a reputable mortgage lender. This may not sound like the process you want to follow, but it the only way to get matters rolling and it’s the correct way.

Whether you have thought about buying, or maybe you were just denied for a mortgage, what every your situation is, most people are pulling a copy of their free credit score report to get an idea where they stand with their credit. Don’t take the easy way out, because it will make matters hard for you.

About the Author: Mike Clover is the owner of http://www.creditscorequick.com/. CreditScoreQuick.com is the one of the most unique on-line resources for free credit score report, fico score, free credit check, identity theft protection, secured credit cards, student credit cards , credit cards, mortgage loans, auto loans, insurance and a BlOG with a wealth of personal credit information. The information within this website is written by professionals that know about credit, and what determines ones credit worthiness