Archive for November, 2008

Are Bank Foreclosures a good buy?

Sunday, November 30th, 2008

There is one thing for sure, perception affects any market. You hear “buyers market” and buyers think they are going to get this magnificent deal on a home. Regardless of who owns a home, the owner’s want what the market will allow for that particular home. That is the case with bank foreclosures. Just because a bank took back a home does not mean you will get any better of a deal than if you bought that home from the original owner.

In some cases depending on the bank you can get a one of their properties for usually between .75cents to .90 cents on the dollar. But one thing I assure you is the bank will do what is called a B.P.O. on the property. The asset manager usually requests this from the realtor that will be listing their properties for them. B.P.O. is broker price opinion, which will give the real value of the home in that particular real estate market it’s in.

What’s does this mean for a buyer? Let me ask you this, if it was your house to sell wouldn’t you find out the true value of your asset to get some idea what you could sell that asset for? Absolutely….. You would. Banks done give homes away, they sell them to get that home off their books for market value.

So if you are in the market currently for a home, don’t get this idea that you will get a home for nothing just because the home is a foreclosure, even if that home has been on the market for 2 years. A bank or Asset manager is not ignorant. They know what the house is worth, and if you offer them some ridiculous offer they might refuse to deal with you period. Asset managers are extremely busy in this market and don’t have time to deal with offers that are a waste of time.

Yes, in some cases you can get a home for a little less than current market value, but you have to shop around and have a very experienced real estate professional at your side.

One more note, it’s called a buyers market because the homes for sale out weigh the number of buyers out there.

What to do after a bankruptcy discharge

Tuesday, November 25th, 2008

When matters get tough and are out of your control bankruptcy is a great tool to protect you. Whether you are filing chapter 7 or chapter 13 there is life afterwards. Quite contrary to popular belief you can recover fairly quickly after filing bankruptcy. The problem I see the most is that most people after filing bankruptcy do not want any type of credit what so ever. This is the worst thing you can do after filing bankruptcy. In this article I wanted to discuss the importance of re-establishing credit after a bankruptcy discharge.

The first thing you need to do after you file bankruptcy is re-establish your credit. You will find that most credit card companies will not extend credit to you that is not secured. So the first step is to get a secured credit card. Secured credit cards are the quickest way to re-establish credit after a bankruptcy. This type of credit card allows you to re-establish credit quickly. There are a couple of credit cards that I would recommend. The first credit card is applied bank. The second credit card is Orchard bank. These are two good secured credit card companies that will get you in the right direction. I recommend getting one of each to help you re-establish.

Typically after 12 months of good payment history on secured credit cards you should see improvement with your credit scores. You will also see all kinds of credit card offers in the mail. Some credit card companies that offer secured credit cards will offer you a un-secured credit line with good payment history. Typically after 2 years of good credit history on a couple of secured credit cards you should be ready to apply for small credit limits.

Maybe getting credit after a bankruptcy sounds like a bad idea, but if you want to get a loan anytime soon you will need to re-establish your credit. Bankruptcy scares most creditors and they will require you to re-establish credit after any type of bankruptcy.

Once quick tip, make sure you dont charge more on your credit cards than you can pay off that month. Credit cards are for emergencies and should be used wisely.

So if you have not re-established after your bankruptcy, I would get your secured credit cards today

Partial payment plans can affect your credit score

Monday, November 17th, 2008

I look at credit reports too often and find a small problem people run into. The problem is individuals make partial payment arrangements with their creditors with the impression it will not affect their credit report. This is simply not true; the creditor will typically report that payment 30 days late to the credit bureaus. The reason is you are actually late on the remainder balance owed. I am not sure where the information gets crossed but most are under the impression that since they called in to the creditor to make a partial payment arrangement it will not affect their credit at all.

If you find yourself in some kind of financial obstacle you should call your creditors if you are having trouble paying them instead of not calling them at all. Just remember just because you set up a payment arrangement, that does not mean your credit will not be affected by it. When making these types of arrangements ask the creditor and get it in writing that they will not report any 30 day late payments to the credit bureaus. Obviously once you get back on your feet make sure you catch everything back up.

Typically if you are in a partial payment arrangement with a creditor they might report that arrangement to the bureaus. Your credit should not suffer too much as long as they don’t report any late payments. The partial payment arrangement could affect your chances of getting some loans, because it may look as though you are having financial problems. One late payment will drop your credit score around 150 points. Once that damage is done it may take years to recover.

Now it’s better to make a payment arrangement vs. allowing the debt to go to collection if the creditor is willing to work with you and put the agreement in writing.

I hope this information was helpful, and make it a little clearer that just because you have made a partial payment arrangement on a debt does not mean the creditor will not report late payments to the credit bureaus. Before any arrangement make sure you get everything in writing.

How are Home Investors getting loans these days?

Thursday, November 13th, 2008

At one point in time buying investment homes was a very lucrative business that brought forth great returns if you found the right deal. Couple of years ago investors could get low interest rate loans with no or very little money down. Home investors were buying up new builds, and existing home inventory all over the country. Once the bubble busted investors starting going bust everywhere. Another term for home investors is flippers. These investors would buy a home and flip that home within 6 months for a big profit.

This type of activity affected what is called the secondary market where bankers buy and sell loan paper. With the current changes one might wonder where all the flippers or home investors went? They are still out there, but the loans they are getting are not with banks. Most of them are now doing what is called hard money loans. These loans are short term and carry a high rate along with high fees. The individuals that lend this type of money could be considered a loan shark. There is nothing illegal about what they do; it’s a big risk to them as well.

The investors that have been around a while that bought large stakes in the real estate market could also be foreclosing on the properties they thought would sell. This is too common currently in our real estate market. Trying to find renters or lease option to buy is what a lot of investors are doing now. The drop in values nation wide has pretty much put a stop to most investors out there.

For years investors were buying up property in promising markets like Texas. In Texas your get buy twice the house for half the cost compared to other states in the U.S. Once the 100% stopped along with the amount of savings required to even get an investment loan, that market dried up.

Needles to say, this actually is the time to buy homes as long as your have the money and credit to do so. Mainly the rich are buying up real estate now.

With the new credit requirements and the amount of money down needed to get financing, investment loans look less attractive. If you are in the market to buy a investment home you might consider a hard money loan. There are reputable individual lenders that will lend you money on a short term note. Typically these loans are for a year or two and then you either have to sell or secure financing elsewhere.

Credit Report shows hard inquiries

Tuesday, November 11th, 2008

Q: Hello I was curious how I would find out if a creditor did a soft inquiry or a hard inquiry on my credit report?

Julie Netherland

A: Hi Julie,
Typically a soft inquiry is when a creditor pulls your credit report without your permission. This type of credit pull does not affect your credit score what so ever. This usually happens with a creditor to determine whether they want to extend a credit offer to you or not.

A soft inquiry does not show up on your credit report, it only shows up on your credit report if you request a copy of that report.

A hard inquiry is a request of your credit report that shows up on your credit report. These types of inquires stay on your credit report for 24 months. These types of requests are requests for credit requested by you the consumer. For example if you are applying for a mortgage, new credit card, or installment loan.

If you are interested in knowing what your credit score is on your credit report, this is the type of credit report considered a consumer credit report. This type of request is a soft inquiry and does not hurt your credit score.

Does the media affect our finances?

Monday, November 10th, 2008

With the “Freedom of Speech” one might wonder where the media might draw the line. It’s not too difficult to discover something negative on your local news channel or even on a national news channel. With all the negative and life altering news today it’s not too hard to discover something negative about our economy or some foreign country. So my question is does our government breed fear or does the media breed fear? Fear ultimately causes action good or bad with society. For example, some information leaks out about scandals within a company and instantly everyone is pulling there money out of the particular stock. Maybe there is a gas shortage and everyone runs to the pump and stock piles on gas.

The answer to the topic is yes the media does affect our finances along with our economy. If the vibe is positive then people are more likely to get out and spend money. During interesting economic times like now it would be nice if our local news channel would give tools to help you out after giving negative information about a current crisis. For instance the Dow is down 700 points, it might be a good idea to hold for another couple of days because some fortune 500 companies are planning on reporting a profit, etc,…..

Some also say that the media has the power to sway the public opinion in there favor. If you think about how powerful the media is, it is pretty scary.

I thought this subject would be a good topic to talk about because I personally believe the media has too much power to say just about what ever they want on the air waves. Lets just assume they said the stock market was going to crash tomorrow, don’t you think everyone would be pulling there money out of the market? Absolutely, and the media makes mistakes as well.

The media currently talks about how bad the lending market is, if you look at what is really going on, it’s really not that bad for the buyer. For instance, if you are ready to buy a house you can still get a loan as long as you have a little money. There are lots of good deals out there on homes, but the media portrays that is this awful time to buy even though rates are still low and there are lots of good deals on homes.

In the end negative media sales and our media thrives on negative news. It’s really not as bad as they say. The media can and will affect your financial situation, because bad news travels fast.

How the current election will affect you financially.

Monday, November 3rd, 2008

Politics and what people do in Washington affects our stock market lately. With the current administration most are feeling skeptical about the future. When there is uncertainty in the air, people have the tendency to pull there money out of the market because of the volatility. Naturally banks start paying higher yields by putting your money in the bank with them. This is the nature of our economics. Time and Time again people have the tendency to repeat history.

With the FDIC insuring money in the bank for $250,000 per account holder until the end of December 2009, it only makes sense in some cases to put your money in bank. With the current election going on you can rest assure it will be rocky until after the election.

With any election there is always a skeptic in regards to which party is going to do to help out our country. With this current election and the historic events that are about to take place I can assure you that we will get through these turbulent times. There are lots of fail safe measures our government is implementing and probably will continue to do so.

If you are young this is a great time in our history to buy stocks at a low price. If you are retired and are on a fixed income you might consider a different strategy. In some instances annuities with a guaranteed rate of return might make sense. You should always check with a financial advisor before making any extreme decisions.

Also with the credit crunch identity thieves are on the hunt, so make sure you check your credit report often before its too late. If identity theft happens to you, your financial situation just became a nightmare. your resource for credit reports, credit cards and free credit advice.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.