Mortgage Broker’s .vs. Banks, what is the difference?

I have heard so many negative stories and myths about Mortgage Brokers. This bad stigma that has been spread about brokers is very interesting. Typically when you talk to a seasoned realtor they will say just the opposite. Normally what you will hear from a realtor is use a mortgage broker. I wanted to discuss some of the differences between a bank and a mortgage broker.

Banks
You will find that most banks providing mortgage loans work with only good credit. This has been the case for years. Also with banks there is more red tape to get a loan done than with a mortgage broker. This is why most realtors use a broker. Mortgage brokers have the ability the package loans better. In other words they know how to get the loan done so it’s sellable on the secondary market where loans are bought and sold. Some banks don’t sell there loans, so they are extremely picky with how they underwrite loans that they portfolio. Don’t get me wrong, banks sell their loans on the secondary market also. Bottom line, banks are just pickier on their underwriting criteria. One advantage of banks is there underwriting fees are typically less, but not by much. This difference usually ranges between $300 to $500 dollars in cost to you. This cost usually means the difference of getting approved or denied. So my question would be, is it worth the extra cost to have the loan go smoothly? I would have to say yes. Another disadvantage of Banks is if your loan runs into problems because the underwriter does not like something, you are stuck. A bank cannot broker the loan somewhere else to get a second opinion if they run into issues. This is the single biggest issue with Banks.

Brokers
I have found that most broker shops have the tendency to be more knowledgeable about loans. I believe the reason is Mortgage Broker loan officers are more motivated to get loans done properly because they make good money per loan. Money motivates anyone. Loan officers with banks make less on their loans, so I believe this promotes high turnover along with a lack of proper training. Also if a broker runs into issues typically they can repackage the loan and send it to another participating wholesale lender. These lenders range from big banks to small banks. In the world of underwriting every underwriter might view a file differently. This is the HUGE advantage of using a broker. There is no bigger disappointment than being told no on your dream house. So I recommend that you use a reputable mortgage broker in your area. Don’t get me wrong, there are some real bad mortgage brokers out there. So make sure you are working with a seasoned mortgage broker.

In regards to the differences in process, there really is not much difference. The underwriting guidelines for FHA and Conventional loans are pretty standard across the board for banks and Brokers. The main difference is flexibility to fix issues. As mentioned you can see that a Mortgage Broker has more flexibility to get loans done and shop for better interest rates on your behalf.

Author: Mike Clover

CreditScoreQuick.com your resource for free credit reports, credit cards, loans, and ground breaking credit news.

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

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.

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.

Credit Score Requirements for FHA mortgage

If your credit score is low these days it might be pretty difficult to get financing for a mortgage. There are loans out there that don’t have credit score requirements, but the banks that provide the financing have their own internal requirements. For example, FHA loans which are government insured loans don’t have a credit score requirement to insure the loan, but the bank that underwrites the loan will have their own internal credit score requirement to even approve the loan.

What is FHA ?
Federal Housing Administration is what FHA stands for. This is a department of Housing and Urban Development (HUD) that insures loans underwritten by banks. Banks are more anxious to provide FHA financing due it being less risk to the bank. If a borrower forecloses on the FHA loan HUD buys a portion of the loan back. So in all reality this loan is a lot more attractive for banks to lend with.

Credit Scores for FHA mortgage
With all the banking rules changing currently, FHA is still the strongest and most aggressive loan out there. The caveat is the banks have gone to credit score requirement for FHA loans. The current standard is a middle credit score of 580. I know HUD is really concerned about this but they don’t underwrite the loan, the banks do. The reason for this credit score requirement is because there has been a pattern with borrowers below a 580 credit score. These types of borrowers are foreclosing on their homes. Typically when banks portfolio their own loans they monitor certain foreclosure types. If there are too many foreclosures of one particular type of borrower, they raise the bar on underwriting requirements. So with this being said you need at least a 580 middle credit score to get FHA financing these days.

So if you are wondering what your credit score really is, you might consider pulling a copy of your free credit score report. That is the most proactive way to determine your buying power. It also is a great way to see if there are any incorrect information that could be dragging down your credit score report.

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

When should I refinance my Home ?

Low interest rates and liberal underwriting guidelines caused a surge of homeownership in the US over the last 7 years. Interest rates have stayed relatively low as well. In 2004 interest rates hit a all time low around 4%. This made it very possible for lots of families to afford home ownership. As the years passed lots of families were put into adjustable rate arms (ARMs). Some families were just simply taken advantage of and were put into high rate loans when the market in fact allowed lower interest rates. Here is what to look for in order for a refinance to make financial sense.

Reasons for a home refinance & FACTS

1. To lower rate at least a minimum of 1.5%
2. Must stay in home for at least 10yrs to recoup refinance costs
3. ARM about to expire
4. Got a escrow shortage
5. Need to take out equity for cash to pay down debt

As you can see there are some steps to determine whether a refinance will make sense for you. Despite the commercials you see about no closing cost loans, believe me you are paying for it some how. There are closing costs involved in a refinance, so you want to make sure you stay in your home for a minimum of 10 years before selling or moving. The reason for this is it takes about 10 years to recoup the cost of a refinance on a home. You definitely don’t want to refinance your home unless you can lower the interest rate at least 1.5%, otherwise it’s not worth it. Families are loosing their homes all over the U.S. because they don’t have the value or the credit to refinance their home out of a costly ARM. My advice would be not to tap into any retirement to save the home, just let it go. It’s not worth touching your 401k, IRA, or any kind of retirement savings. Another problem is having escrow shortages, or the lender sold you on a no escrow loan. These two situations can get you in trouble real quick. Escrows in case you did not know are the taxes and insurance typically collected into an account and paid by the bank. If you find yourself behind on this stuff make sure you pay it as soon as possible.

Watch out for too good to be true advertisements
On TV and in the mail you probably see this really low interest rate, and typically it’s got a catch to it. Normally the low interest rates are going to cost you to get that rate, and in some cases it’s some creative loan that is very complicated. There is no miracle out there when it comes to low interest rates; most lenders have the same interest rates across the board. If a particular lender sticks out like a soar thumb because their rates are extremely low, it’s probably because it’s a gimmick to get you to call.

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

Why it’s a “Good Time to Buy a Home.”

You cannot turn on the TV or listen to the radio without hearing about the housing market. The main reason the housing market is getting so much publicity is because the Sub-Prime loans affected Wall Street. Obviously if this happens it affects banks that are holding this particular paper in their portfolio. Despite all the bad publicity due to bad loans being underwritten over the years, it’s still a great time to buy a home. There are loans out there that will allow credit challenged families to buy a house with good terms and decent interest rates. This particular loan is FHA. We are currently in a FHA market nation wide. This loan has been around since the 1930’s and is the most aggressive loan in the banking industry. So if this loan will allow challenged credit to obtain financing with good terms, why would you not try to buy? Here are the advantages of the current housing market.

• Lots of homes to choose from.
• Value of homes falling, which means better deals.
• Interest rates are still low.
• FHA allows down payment assistance.
• Motivated sellers.
• Lots of short sales available.
• Lots of Builder reductions.
• Challenged Credit Loans available.






Quite contrary to popular belief you currently don’t need perfect credit to buy a home. If you know of a good FHA Broker, then get with that broker to see if you can get FHA financing. Banks typically are a lot more strict than Brokers whom sale their loans to small wholesale lenders. If you are in the market to buy, there are tons of good deals out there, a home that cost $750,000 3 years ago, might be $550,000 today. There is this that much difference in homes sales around the country currently. Yes currently loan underwriting guidelines have changed; you need more than a pulse to buy a home. Your credit report history is being looked more closely. Here is an article on FHA basics. FHA still has the same guidelines it had 5 years ago, but the lender requirements have changed. For example FHA has no credit score requirement, but the lenders buying the loans require a minimum of a 580 credit score in order to underwrite a FHA loan. Regardless, if you are still able to get a loan with a 580 credit score, I would have to say that is pretty aggressive in today’s market.




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, identity theft protection, secured credit cards, student 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

FHA loan Basics

FHA loans are loans that are insured by (HUD) Housing Urban and Development. FHA loans have been around since the 1930’s right after the “Great Depression." This was when 4 out of 10 households owned a home. (FHA) Federal Housing Administration is the savior for our current market just like it was back during the roaring 30’s.With FHA loans especially during a credit crunch like we are currently are in, you can rest assure banks are willing to be more lenient to approve credit challenged borrowers with FHA financing. The reason is FHA loans are insured by HUD, and if the borrower looses the home HUD will pay a claim to lender for the loss. FHA is the largest single insurer of loans in the world.

FHA Advantages.

• Lower interest rates, typically interest rates are lower on FHA loans with the banks since they are government insured loans
• Only requires minimum investment from borrower of 3% down payment, which can be eliminated by Down Payment Assistance. So essential you can get a 100% financing with FHA loans. Note: Requires Seller participation
• If you have less than perfect credit you can typically can get a loan with FHA, they usually like to see 12 to 24 months clean credit report history. You can even get a loan while in chapter 13 bankruptcy.
• No Credit Score Requirement
• Recent loan limits increased-varies from state to state; go here to find out. For example you can buy a home in the state of Texas with FHA up to $271,050. Depending on if your state is a high cost area; obviously this loan limit would be higher.
• Will allow alternate lines of credit if not good history is on credit report.
Example:
1. Letter from any utility company stating you have been on-time with your payment history for that last 12 months.
2. 12 month payment history from car insurance company, cell phone company and even daycare will work.

If you are currently in the market to buy or maybe you feel like you need credit repair, what ever your direction is, getting a FHA loan is not as hard as you think. FHA gets people approved that may not get approved with other loan types. The first step is to examine where you are at with a lender and get the ball rolling. IN this current market some lenders are requiring you to either have a 580 credit score or higher. They will also allow no credit score but your interest rate is higher than current market rates. This is going on even though FHA has no credit score requirement; this is due to bad performance of loans below the credit score benchmark of 580.

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, identity theft protection, secured credit cards, student 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 worthines

How Debt after a Divorce will affect your Credit Score

We all know how important it is to have as high a Credit Score these days. Especially since your credit score is no longer a secret anymore. Divorce is all too common in today’s society, and when Divorce Decrees are drawn up, the attorney forgets to make sure debts that are joint accounts are only in the person’s name that is awarded that debt per the decree. Typically what the divorce decree will say is whom is awarded what debt. Here is how this is a problem.

How debts after divorce will affect you:
Let’s assume while you were married you and your significant other had accumulated some debt that are joint accounts. This means that both of your social security numbers are attached to the obligations and its being reported to all 3 credit bureaus. So once day you both decide to get a divorce and the attorney works up a Divorce Decree like they normally do, which of course is the wrong way. Both of you go on your marry way, and the other party decided to be late on a obligation that is reporting in your name still. Guess what happens to your credit score. Your score just dropped 150 points. This is a common problem, and of course now it’s your problem even though you have a debt that was awarded to the other party per decree. Let’s assume it’s a house, and your ex decides to let the house go to foreclosure. Now you cannot buy a home for 3 years because you have a foreclosure on your credit report. So basically a divorce decree is a agreement between divorcing couples, it does not separate liabilities.

What you need to do so you’re Credit Score is not affected:
Divorcing couples should never rely on the other spouse to pay bills that were awarded to them per Decree. This is a disaster waiting to happen. These type of issues need to be tackled up front so there is no issues once the divorce is final. If you have already made this huge mistake, my suggestion would be to go back to court and get these debts out of your name. If there is a house involved, I would recommend getting the house refinanced out your name or sold depending on the situation. Obviously if the spouse is behind on the mortgage they would not be able to refinance due to the credit situation. In a situation where the ex spouse is behind on the mortgage and its affecting your credit report, I would recommend going back to court and taking over the mortgage payment along with having the house awarded back to you. The solution to all of this is simple; make sure you don’t have debts in your name that gets awarded to ex spouse. Don’t let your ex spouse ruin your credit. If you have already made the mistake, I would recommend pulling a recent copy of your credit report with credit scores to make sure there is no damage done.

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, Internet identity theft software, secured credit cards, student 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

With my Credit Score can I get a mortgage?

Are you wondering if you can get a mortgage with your current Credit Score? I am sure everyone is sick of hearing about the current credit crunch. It is a never ending cycle in the lending industry. The banks loosing up and everything starts to foreclose. The banks tighten up and less people are buying homes because they don’t have the credit to buy with all the new restrictions. Either way the “American Dream” of home ownership is always on our minds. It’s that one common thread of personal accomplishment that all Americans strive to achieve. I know that most people want a piece of the American pie.
I am going to discuss the current plain old vanilla loans that are available to you, and what it will take to get into one of these loans.

FHA loans
FHA loans have been around since the mid 1930’s, and is the biggest insurer of loans in the world. (FHA), Federal Housing Authority is a government insured loan that is more attractive to bankers because there is less risk. Basically this type of loan is the strongest loan in the current market. The reason for this is the guidelines to get this type of loan are still the same as they were 5 years ago. There is less requirements to get into a FHA loan, and has a minimum down payment requirement. Here are some key points as to why FHA loans are so attractive today and will continue to be one of the top loans out there.
• Low down payment of 3%
• Will Allow Down Payment Assistance, which eliminates you needing 3% down payment
• Low interest rates
• No Credit Score Requirement
• Allows hardship loans, for individuals that have had past credit issues.
• Allows you to get a loan while in a Chapter 13 Bankruptcy, conditions apply.
• Allows you to get a loan with no credit, typically the underwriter will ask for alternate lines of credit.
Examples:
1. 12 month payment history in good standing from three sources.
a. Electric provider
b. Car Insurance provider
c. Day Care
d. Cell Phone Company

This is just some examples of how someone who does not have credit reporting on their credit report can use alternate sources of payment history to show creditworthiness. You cannot do this with Conventional loans that are backed by Freddie Mac and Fannie Mae.

Conventional Loans
Conventional loans are loans that are not insured by the Federal Government. They are loans that are secured by government sponsored entities, such as Freddie Mac and Fannie Mae. These types of loans are stricter in the approval process, and are typically run through an automated software process. This process either says “yes” or “no.” With all the current tightening up in lending, this particular loan is less attractive for borrowers with credit issues and low credit scores. With all the current foreclosures and the tightening up with Mortgage Insurance companies, there is a credit score requirement of 620 or above with conventional loans currently.

Since we are going through obvious changes in lending currently, it is very important you know where you currently stand with your credit score. There are some changes going on in FHA as well, even though FHA does not have a credit score requirement the bank that buys these loans may. So if you have low credit scores, you might need to increase that score even to get a FHA loan in this current market. Get a current copy of your free credit score report, and if you have issues there has never been a better time than now to work on your credit so you can buy in the near future.

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, Internet identity theft software, secured credit cards, student 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

Will the current mortgage crisis affect you?

What is the current Crisis
Over the last 10 years our country went through a real estate boom. There were three categories of loans being provided. The first was Prime, the second was Alt a, and the third was Sub-Prime loans. Typically any loan less than Prime had higher rates because of the risk of the borrower. The Sub prime loan was a creative loan that was provided and is currently the reason for around 46% of foreclosures in the U.S. This is astonishing if you think about it, and is the cause for a downturn in our economy. When you have this type of debt being wrote off, someone is affected. That is why our banking industry has had a liquidity problem. There were more loans being bought back than there was cash in the bank.

Insight on reason for foreclosures
Most of the mortgages given during this real estate boom that were Sub-Prime were adjustable rate mortgages (ARM). This type of loan looked very attractive with its initial “low teaser rates”, which typically expired after 2 years. Most of these loans were set to reset between 2 to 5 years which would cause the payment to increase dramatically. The selling point on these loans over the years was, if you keep your credit rating good you can refinance your ARM loan into a 30yr fixed mortgage once the ARM reset. Unfortunately with the declining property values and the tightening up on underwriting guideline it has made it impossible to refinance these types of loans. The result is the mortgage payment will increase dramatically and a foreclosure to follow afterwards. Since all of this has taken place we are seeing global implications on foreign investors that might have put there stock in Mortgage backed securities. IN other words investors global wide are pulling there interest out of these types of loans. Since the book is still being written on this crisis we anticipate the overall economy to feel the strain of this unfortunate crisis and for ARM loans to be less common in the future.

What can I do about my current ARM loan?
Here are the steps in regards to determining whether you can refinance your current loan.

* Determine if you have the current credit to refinance into a FHA Secure loan
* Determine if you have the equity to refinance your current mortgage
* Call your loan officer to determine if they can help you

If you feel you are not going to be able to afford your mortgage payment, call your lender before you are late on payments. Make arrangements with them rather than not notify them at all. If you find that your lender will not work with you there are counselors that you can talk to.
Here is a list:

Hope Now
An alliance between counselors (HUD approved), servicers and investors that strives to keep homeowners in their homes by helping them renegotiate their loans.http://www.hopenow.com/

Homeownership Preservation Foundation
A nonprofit that creates partnerships with local governments, nonprofit organizations, borrowers and lenders to help families overcome obstacles that could result in the loss of their homes.http://www.995hope.org/

Counseling Agencies Approved by HUD Developments
The U.S. Department of Housing and Urban Development (HUD) sponsors housing counseling agencies throughout the country that can provide advice on buying a home, renting, defaults, foreclosures, credit issues, and reverse mortgages.http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

NeighborWorks Center for Foreclosure Solutions
Works to preserve homeownership in the face of rising foreclosure rates.http://www.nw.org/

Financial Education/Assistance
My Money Management
A collaborative effort by the financial services industry to provide consumers with access to financial education to help inform their personal finance decision process.http://www.mymoneymanagement.net/

FHASecure plan
A refinancing option that gives credit-worthy homeowners, who were making timely mortgage payments before their loans reset but are now in default, a second chance with a FHA insured loan product.http://portal.hud.gov/

Here are some helpful tips for avoiding foreclosure from U.S. Housing and Urban Development.

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, Internet identity theft software, secure credit cards, student credit cards , 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

Revive Credit Report after Foreclosure

Foreclosure is a common subject these days, but there is life after having one. If you have recently had a foreclosure on your credit report, you will be able to recover from this bad experience. Fair Isaac with its new FICO 08 with due time will forgive you for a foreclosure as long as you are not a repeat offender. This new calculated risk software understands that unfortunate situations come up in ones life, but don’t make the same mistake again. Definitely don’t make it a habit of having credit problems is the point.

How long will it take before you can buy again?
Your credit report might recover quickly as long as you have other good standing credit reporting on your credit report. But that does not mean you can buy a home right a way. Most people that have foreclosures usually take time to recover from such a bad experience. HUD knows this, and that is why you cannot get a FHA loan for a minimum of three years from foreclosure date. It’s almost impossible to get a Conventional loan, because conventional loans are automated approvals. Typically with a foreclosure, collections or low scores this automated software will deny you. FHA is a different type loan all together, since it’s a government insured loan you can get what they call a manual underwrite for this type of loan. What this means is if the automated process through Freddie Mac or Fannie Mae says no, you can get an underwriter to manually approve the loan. So you can expect to wait at least a minimum of 3 years after foreclosure date before you can begin to think about financing a home again.

Pay everything on-time
When a bank lends you money, it’s a big risk. Banks don’t want to lend money to someone that has total disregard for their credit. If you have had a recent foreclosure the last thing you want to do is have late payments, collections or any other negative information hit your credit report. Let’s face it, the whole reason banks, mortgage companies, car dealers, landlords, and employers pull your credit repot is to see if you pay your debts. I personally would not lend to someone that did not pay their bills back, would you? With the recent tightening up in the lending arena you might want really work on increasing your credit score. Also make sure you have at least 3 lines of credit reporting on your report. If you had to let everything go, you might consider getting a secured credit card. This type of card will help you re-establish your free credit score report.

Save Money
Saving money is very important when it comes to getting a loan. Lenders like to see you saving money because it shows stability. Let’s assume you loose your job, well if you have 6 months payments in the bank you are less likely to let your house go. If a emergency comes up you have some money in the bank to assist in some way. Saving money also shows you are responsible as well. Let’s say two people go to the bank to get a loan and they both have bad credit. The main difference between the two bad credit borrowers is one has $5000.00 in the bank. Who do you think the bank is more likely to approve? These are some key point I wanted to touch on to revive your credit after a foreclosure. There is life after so make sure you manage your credit report and credit scores so you can begin home ownership soon.

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, Internet identity theft software, secure credit cards, 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

New Home Builders – Big Reason for Foreclosures

This is a subject that most are not talking about, because I don’t believe anyone realizes “The Big Problem” with new home builders. Currently everyone is talking about the credit crunch and liquidity problems in the banking industry. I personally know that a big part of the problems we are having with foreclosures are the result of home builder’s nation wide. I guarantee you if you did a foreclosure search nationwide, you would find that the highly populated foreclosure areas are primarily new home builders. Hmmmmmm, you might be wondering…….. what is going on ? Here is what happens when you buy a home with a builder. You get told that if you don’t use their mortgage company, there Title Company, you will not get all these incentives. Typically these incentives range from $10,000 to $20,000 in upgrades, and having your title policy paid by seller.

Here is the SCAM, they don’t tell you.
You don’t actually get any kind of incentive; you just pay more for the house. If you have a seasoned realtor that is ethical and can look past the realtor bonus they get from these builders, they will negotiate a better deal on your behalf. If you can see through the smoking mirrors that these on-site greedy sales people pitch, you will soon realize they are ripping everyone off. Lets face it folks, they are not giving you anything, they are just increasing the cost of the home for the consumer by inflating the sale price. I am sure someone has experienced what I am about to say. You bought your house, for a certain sales price. A year later that builder is building that same house for $20,000 to $30,000 less than what you paid for your house. Interesting huh? Well it’s going on all over the U.S. The real problem is there is not enough regulation for builders because they are lining the pockets of government officials to veto any bill that would hinder there profits.

New Home Property Tax issues
Here is the big reason why builder’s communities have a high density of foreclosures. When you buy a new home with a builder, the taxes that the seller gives you a credit for is bases on unimproved property taxes. This is what causes escrow shortage all around the U.S. and causes families to loose there home. Example:

1. New Home Sales Price: $200,000
2. Value of Land: $25,000
3. Purchase month: August
4. Tax Credit from seller up to Purchase date: $500.00
5. Tax Credit should be from seller: $4000
6. Tax Shortage: $3500.00
Taxes are based on 3% of Sales price

This is an example of how escrow shortages take place and cause buyers to foreclose on their properties. The fix, would be to have the mortgage company collect on improved property taxes, and have the builder give a tax credit on closing settlement statement based on tax rates for area. This would fix the problem with escrow shortages within builder communities. This currently does not take place everywhere like it should; through all the smoking mirrors and sales bull the buyer gets screwed. They end up getting the short end of the stick, be sold on a mortgage payment that does not include the correct tax figure, when it’s actually going to go up because there taxes are wrong. Buyers beware when you buy with a new home builder. Don’t get caught up in the sales pitch, and end up loosing your home because they were just interested in making a sale. There sales tactics could cause a foreclosure which will ruin your credit report and credit scores. Don’t buy a new home without doing lots of research. Also don’t believe the incentive tactic, because is just a sale gimmick.

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, Internet identity theft software, secure credit cards, 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.

Credit Score Requirements for 2008 Mortgages

Your credit score in 2008 is very important when it comes to buying a house. Heck your credit score is important when it comes to getting a loan period these days. Since the sub-prime mortgage meltdown, Wall Street has tightened up on what kinds of mortgage paper they will buy. Most loans are run through automated underwriting engines. The underwriting engine will either say yes or no, but here is the funny thing. Even though the engine says yes, the investor may have its own internal guidelines that would overrule an automated approval. This is not normal in the loan business. During the past years when you got an automated approval with either Freddie Mac or Fannie Mae underwriting engines you were golden.

Mortgage Insurance Companies
Since all the tightening up in the lending industry, the companies that insure these loans have tightened up as well. The reason for this is all the claims that are being filed as a result of defaults on mortgage loans. I have discussed in other articles how everything basically is based on risk, well so is insurance. If the insurance company sees a pattern with certain credit scores and loan types they will tighten up on the underwriting guidelines for those specific borrowers. Currently you cannot get a 100% Conventional prime loan unless you have a 680 credit score. Previously it was below 600 credit scores, but you had a higher interest rate. Currently they will just deny you of the loan, because they cannot get the loan insured. This mortgage crisis will affect everyone, including people with good credit. They will be able to get loans, but the loan guidelines will be more stringent.

FHA loans
FHA loans have been around since 1935. This government entity is the single largest insurer of loans in the world. FHA has baled the housing industry out of the tar pit right after the great depression. It looks like the same savior will be at it again in 2008. FHA loans have not tightened up, but again the investors that buy this paper have. Its common for banks to sell there loans to other banks. This is just a common practice these days. The only problem is the big banks buying paper from the small banks have really tightened up on what type of loans they will buy. With this being said, the entire process is getting tough all around.

Credit Scores
Your credit scores will either make you or break you when it comes to getting credit extended to you. With the disaster in the housing market, you can count on it getting even tougher with credit score requirements. So if you are in the market to get a home, I would recommend getting a copy of your free credit score report and see where your scores stand. Your score will be extremely important in this current lending market.

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, Internet identity theft software, secure credit cards, 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 Not To Do During Home Buying Process.

The home buying process can be tricky at times. There are definitely some things you need to avoid during this process. I have seen all kinds of nightmares because someone did not listen to their loan officer. I will give some you exactly what not do in this articles so your loan and credit score is not affected.

Late payments
During the home buying process make absolute sure you are not late on anything. If you have a late payment on anything that reports to your credit report your credit score will be affected. In return an underwriter will see this and your loan could be dead as a result. Late payments on any obligations that reports to your credit report will drop your score between 100 to 150 points. “Don’t be late on anything.”

Don’t buy anything on Credit
While you are going through the home buying process you don’t want to take on anymore debt, this could affect your loan. That means don’t go out and put furniture on credit for your new home until you have closed and funded on the loan. Don’t put anything on credit period.

Don’t co-sign on a loan for anyone
While you are in the process of getting a loan, don’t co-sign on any note. This could cause your loan to get denied. When you co-sign on a loan, then you are equally responsible for the new obligation. This could lower your credit score, and also cause income to debt ratio problems as well.

Don’t quit your JOB
Ok, you might think this is a joke, but we have actually had borrowers quit their job thinking we would not find out. Well, guess what we will. Don’t quit your job during the home buying process; underwriters do last minute job verifications before loan documents go out to the title company for a closing.


I hope this has been advice you got prior to doing any of the above. You could definitely have some major problems. Maybe you have not even started the loan process, and this will be good advice for you. What ever your situation is, make sure you are on top of your credit report and scores. Your credit scores could be affected by any of the topics discussed in the article.

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, Internet identity theft software, secure credit cards, 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.

Learn the “Correct” way to buy a home so it’s not a disaster.

Buying a home is the single biggest purchase you will ever make. Surely you want to make sure it s a smooth process. We are a society that likes to touch and feel. Kind of like trying to buy a car, you want to take it for a test spin before you buy. Unfortunately that is not the way it works in the real estate arena. You will find that most “seasoned real estate” professionals will not jump in there car to show you a home until you have secured financing with at reputable lender. With the current credit crunch and liquidity problems with banks, you better make darn sure you can secure financing. Even individuals with good credit are having issues getting financing secured. Here are the steps to follow:

Get Pre-Approved not Pre-qualified.
Getting pre-approved means you have a lender verify all documents to support the loan approval. Most lenders will run you loan through a automated engine. Once everything is verified and ran through either Fannie Mae or Freddie Mac engine you should be approved at that time.Pre-qualfied means that someone has taken your information over the phone and has not verified anything other than your credit report. This type of approval does not mean jack hill of beans.



Meet with your lender whom has approved you.
This is an important part of the process, so there is no misunderstanding on loan terms. Make sure you understand your payment interest rate etc………..


Find a reputable and seasoned realtor.
Finding a seasoned reputable realtor is so important; the reason is they need to understand the current market, and what to look out for on your behalf. A realtor’s job is to look out for your best interest. Once you have been pre-approved, then the realtor will have a better understand as too what type of negotiation process to start on a home.



This process is the best way to assure your home buying process is as smooth as possible. I am sure you hear of the nightmares out there, typically this is because the proper process in not followed. The end result is not good one. Lenders are looking at your credit scores very close now. Make sure before you start the process you pull a current copy of your free credit score report. That way you already have a idea where you stand.

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, Internet identity theft software, secure credit cards, 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.