A way to improve credit scores!

Call Marty Qualls at
801-540-5108
"More Mortgages With Marty"

 
Potentially higher credit scores in exchange for access to people’s bank accounts: Access to consumers’ bank accounts as part of an effort to help people boost their credit scores. Announced Tuesday that it is launching a new program called “Boost.” Through the program, consumers grant access to their bank accounts to allow to use utility and telecommunications payments in the calculation of their credit score.

Call me and with MonitorBase (I'll explain about how MonitorBase works overtime to let me know when you are ready to go), we can get your credit scores where they need to be to purchase a home!
                                     Marty Qualls 
                                                        PRMI
                                                        801-540-5108

10 steps to buying a home

Homeownership!

I have a "14 steps to Home ownership" outline which I give to my clients as we meet to complete the signing of their initial application paperwork.  There are 14 steps AFTER your offer to purchase a home gets accepted.

However, I realized that there are "10 steps to buying a home" that would help if you are just BEGINNING the process of purchasing a home.  This list contains important steps in the process  whether you are purchasing your first home, downsizing, or needing a larger home.

If you have further questions or if you would like to get your credit approval letter into place so that you can be a serious negotiator of sales price and asking the seller to pay for your closing costs, call me today and we can get started!

1. Determine your readiness-Are you in a rental or lease agreement, or are you on a month to month agreement?  Do you have money saved for a down payment (there are 100%, ZERO down programs available, call me for details).  Do you know what you qualify for based on your income and debts (this is something I can help with over the phone, call me). 
2. Become an optimal mortgage candidate-If your credit is "young" or you are rebuilding your credit, I have a "Credit Monitoring Program" I can refer you to that is an excellent tool for you to use!  
3. Get a pre-approval letter- My clients receive a FULL Credit Approval letter which is backed by a 3 bureau credit report AND an Automated Underwriting System decision.  This type of Credit Approval is what you need in the Mortgage world that we are currently in.  There can't be any guesswork in the mortgage process, you NEED a credit approval letter to have your loan successfully close! 

Buying a Home: Prepare by getting your Finances in Order

For those considering buying a home, the current real estate market presents some unique opportunities. One of the side effects of the economic roller coaster ride of the past few years is that home prices have gone down and more homes have gone on the market.

For buyers, that means more choices and better deals. However, those same tumultuous years can also teach buyers a lesson: Make smart buying decisions and be wise with your finances.

Impulsive buying is never a good idea when it comes to a purchase as significant as a home, but it was something of a trend at the height of the mid-2000s. Now, with banks lending far more cautiously, you need to be absolutely certain that your finances are in order - and healthy - to be able to get the best deal on your purchase.

There are a number of steps you can take to get ready to buy a home, and you might need to work on them simultaneously.

Read further for the steps to take.

What is the correlation between credit scores and mortgage rates?

If it's low, do anything you can to make it better!

Does a low credit score really cause my mortgage rate to increase? And by how much?  The data is pulled by myFICO, a division of the Fair Isaac Corporation, with interest rates as of November 13, 2012.

FICO Score Mortgage Interest Rate
760-850       2.926 percent
700-759       3.148 percent
680-699       3.325 percent
660-679       3.539 percent
640-659       3.969 percent
620-639       4.515 percent

As you can see, a good credit score can definitely work in your favor. Raising your credit score is a trick and there is a way to do it most effectively and quickly.  I can help with guidance and suggestions on how to do it.


Here is an excellent place to begin repairing your credit: 
I recommend credit monitoring 

FHA Guideline Change Expected

FHA : "Ignore" Foreclosures, Bankruptcy, Short Sales? 

Major derogatory events include foreclosure, short sale, and Chapter 7 bankruptcy. Current guidelines require a mandatory waiting period of each of the following events, assuming credit has been re-established by the borrower :

• Foreclosure : Waiting period of  3 years since sale date of foreclosure before eligible for FHA-insured financing
• Short Sale : Must wait 3 years from consummation of short sale closing before eligible for FHA-insured financing
• Chapter 7 Bankruptcy : Must wait 2 years from Bankruptcy discharge before eligible for FHA-insured financing

Under the FHA's expected new plan (anticipated within the next 90 days or sooner), these waiting periods will be waived in full.  Soon, FHA-insured loans may be available to home buyers who may have been recently foreclosed upon; for whom a short sale was necessary; or for whom a Chapter 7 bankruptcy was discharged yesterday.

The FHA's new waiver on foreclosures, short sales and bankruptcies would add to the national pool of home buyers, creating buy-side demand for housing and upward pressure for home values nationwide. 

Your credit monitoring program WORKED! It got us into our home-Closing 9/12/11

Marty, you began working with us 14 months ago and thank you for introducing us to your credit monitoring program!  It worked!   

You were persistent, you helped with our abundant questions, you were easy to contact and we loved how responsive you were to our texts and phone calls!  

We appreciate how friendly and nice you are!  Please thank your processing team for helping us with the Grant Program through Sunset City because that made all the difference in us getting in the home we wanted.   

Your processor, Kelsi, is awesome!  

Zach and Riley Foster, Closing 9/12/11

Top 3 Mortgage Application Hot Spots

As I thought through the past 6 months of loan applications I realized how important it has been to remind my mortgage loan clients of 3 things.  These 3 things speed up the processing of their loan application, prevent delays in processing, and document their file with critical information in advance of when it is needed (at final underwriting, which is just before closing, and can hold up closing).  These 3 items of special importance are worthy of their own Blog Post!

The importance of borrowers NOT applying for credit (going to RC Willey's to shop for furniture and applying for credit), or allowing a creditor to access a credit report (a harmless test drive at the car dealership?) cannot be overemphasized!  With new credit inquiries the file may need to go back to underwriting, after a new credit score is calculated, and what if the credit score drops?  The mortgage rate may now be higher or what if the score is on the cusp of approval, drops 3 points and now is DENIED?  Don't shop for credit, don't allow credit pulls.  Don't!

Don't change employment!  This one is self explanatory.  Even with warnings, I have had borrowers do it.  What if the new job has a mandatory probationary period?  Don't change jobs!

The last item is a "heads up", we need this as soon as it happens.   As soon as the Earnest Money Check clears the checking, savings, money market, stock account; PROVIDE proof that the check has cleared the account (front and back of the check, withdrawal of the cashiers check with a copy of the check face, bank statement showing check has cleared the account).  This allows a CREDIT of the earnest money to be given at closing.  IMPORTANT!

How Foreclosure Affects Your Credit Score

Foreclosures--and how you handle them--may have long-term credit score implications.
Payment history makes up the largest portion--35%--of your FICO score. And the higher your credit score, the harder you will be hit by a foreclosure, or by whatever alternate route you take because becoming delinquent on your debts had not been a regular occurrence. That is, if you've been good until now, one late payment has a disproportionate effect.

The biggest negative hit comes with your first late payment. If you have a credit score of 780, your first late payment could reduce your score by 90 to 110 points. And if your score is 680, it could fall by 60 to 80 points, according to Barry Paperno, consumer operations manager for myFICO. With a second late payment, your score could be hit by another 50 or so points.

If the loan goes to foreclosure, still another 50 points could be knocked off your score. If your lender doesn't immediately report your late payment to the credit bureaus, the delay could make an even greater hit when it finally is reported.

Proper management of delinquency

However, with the first late payment on your mortgage, you can consider alternatives that may prevent you from going all the way to foreclosure, an event that probably will prevent you from buying another home with a mortgage for at least three to five years because of how lenders view a foreclosure and because your score will be so low.

A loan modification commonly is reported to the credit bureaus as "partial payments being accepted," which in terms of credit damage, is scarcely different from a 30-day late home. But you have a better chance of keeping your home and limiting damage to your credit score if you can get a trial modification under the federal government's Home Affordable Modification Program (HAMP).
You should know that lenders use codes from the Consumer Data Industry Association (CDIA) when reporting loans to credit bureaus, where they ultimately influence FICO scores. At first, the loan ends up generating an AC code, which indicates that partial payments are being made--not much help.

However, when that three-month trial period is successfully completed and the trial modification is converted to a permanent modification, the loan gets the CN code, which indicates the loan was modified under a federal government plan. This new CN code, which lenders are free to use or not use, does not currently affect the score because FICO has yet to assess its strength as a risk predictor, according to myFICO's Paperno.

Other loan modifications, such as those done under a lender's own program, may be or may not be reported as partial payments without violating the Fair Credit Reporting Act. In general, get some understanding of how the bank is going to be reporting any potential resolution, advises Paperno.

And as you live up to the terms of your new permanent modification, those late payments keep moving further into the past and the size of the dings on your credit score keep shrinking. At the same time, as you make your new, reduced payments on time, your score will begin rising. And because your new monthly payment is lower, your monthly debt obligation is lower as well, again helping raise your credit score.

Other choices and implications

As an alternative, a forbearance agreement requires you to make reduced "good faith" payments for two to six months to re-establish a positive payment history, after which you may have to resume your original monthly payments or continue reduced payments under a loan modification and sometimes immediately pay off the missed amounts. A forbearance agreement, as a partial payment program, would have the same impact on your credit score as a trial modification.

Other options include a deed-in-lieu of foreclosure, under which you turn ownership of your home to your lender, or a short sale, which is a sale for less than you owe but that is accepted by your lender as full payment. There are advantages to each, but Fair Isaac, developer of the FICO score, stresses that contrary to popular belief, foreclosure, short sale and deed-in-lieu will all have a similar impact on the your FICO score.

Other factors can affect credit scores and their ability to bounce back after any event, and please check with me about for the details in your particular situation.

State law also can affect your credit status. If, with a short sale, the proceeds are less than the amount of principal still owed, it could be treated as a charge-off and, in states that allow deficiency judgments, you could be on the hook for the difference.
If you are in the Home Affordable Foreclosure Alternatives (HAFA) program, the lender must agree not to come after you for the deficiency judgment. However, even in states where lenders can't come after you, the rules can be complex, so be sure to have a lawyer review your paperwork.

If a deed-in-lieu or short sale is reported as a charge-off, a "settled" debt, a "debt satisfied for less than the full amount" or as "not paid as agreed," the impact to your score could be the same as that caused by that first late payment. Ideally, you want your debt reported as "paid in full," "paid satisfactorily" or as a "total satisfaction of debt."

Generally, a deed-in-lieu, a short sale or a foreclosure, including those that occur after walking away from your home, are all reported the same. Once reported that's the end of it, except for the steps you will have to take to start rebuilding your credit score, and finding another place to live, which will have to be a rental property: You won't be able to get another mortgage for at least two years, and then only after getting your credit score up to at least 640 for an FHA-insured mortgage and 680 for a conventional mortgage.

Meanwhile, managers of large rental properties, who use credit reports and credit scores to determine whether potential renters are credit worthy, may hesitate to rent to you. So you should explore all your options in managing a mortgage delinquency.

Jerry DeMuth has written about mortgages and other financial issues for more than two decades for trade publications, major newspapers, and consumer magazines. His writing has received four awards and has been included in eight non-fiction books.

   

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How a cancelled credit card effects your credit score

QUESTION: I've had an American Express charge card since 1999, which costs $95 a year to maintain. If I cancel it, what will this do to my credit score?
--Fred Cohen, Weston, Fla.

Ditching annual fees is often a smart play, although in this case $95 might not be much for what amounts to an open line of credit with no preset spending limit. Since you're closing a charge card (which doesn't let you run a balance) instead of a credit card (which does), your credit score probably won't take a hit, at least for now.

Credit-scoring firm FICO currently figures scores—the calculation most creditors use—without including charge cards in the all-important "credit-utilization ratio," which divides the total of all your credit limits by your total balances. (The lower the ratio, the better.)

Still, there's a longer-term risk to cutting up the card, says John Ulzheimer, president of consumer education at SmartCredit.com: Ten years after you cancel, the card's history will be wiped from your credit report, potentially shortening your credit history and lowering your score.

Five Mortgage and Foreclosure Myths

Because of the rapidly changing rules in the mortgage world, call me for up to the minute lending guideline changes.  

Marty 

In a mortgage market that changes as quickly as this one, today’s fact is tomorrow’s fiction. For buyers, misinformation can be the difference between qualifying for a home loan or not.

Sellers and owners, knowledge is foreclosure-preventing, smart decision-making power! Without further ado, let’s correct some common mortgage misconceptions.

Fannie and Freddie raise Mortgage fees for borrowers with less than 740 credit scores

Article Title:
Fees for home mortgages increase
To view the contents on from the www.rgj.com, go to:
http://www.rgj.com/apps/pbcs.dll/article?AID=/201102021350/BIZ/110202032

Phone call questions I got today: Can you get me a mortgage? I'm self employed

One or two years of tax returns will determine income for the self employed borrower (one year of taxes are needed with excellent credit for Conventional Loan Financing and two years of taxes are needed for FHA financing).

Good to excellent credit is a must, and it doesn't help to get the borrower "more easily qualified".  Because the maximum Automated Underwriting debt to income ratios are presently set at 45% (max.) for Conventional and 55% (max.) for FHA, if the borrower doesn't have the income, the approval will not be possible.

There is going to be a trade-off between income tax paid and ability to get an approved Mortgage loan when tax time comes.

NOT having to pay taxes because the self employed borrower has a great Tax Accountant who shelters the income with expenses and write-offs so the borrower has a small tax liability, may in fact backfire when the same borrower tries to qualify for Mortgage financing.

If you need some direction about how you should file your taxes in 2010 (for your 2009 income) so that you have the ability to obtain the mortgage financing you would need, call me and we can review your options.

With an In-House Underwriter (Jenette sits in my office across the hall from me), she can give us insights into tax liability and taxable income strategies to maximize your opportunities.

New Reality of Weber County Home Values

I received two calls from Weber County clients of mine today. One client wants to list his home for sale and the other would like to refinance to take advantage of these crazy great rates we have right now.

Each received their annual real property valuation notices in the mail today. Each of the notices confirmed their suspicions: their homes values are lower today than they were a year ago. One by $20,000 and the other by $14,000.

For my future purchase of home client: They called me to discuss what to do if they can't get enough equity from the sale of their present home to buy their next home. I suggested a lower down payment on their next home and with the lower interest rates today as compared to 2 months ago, their future payment really was not such a huge shock after all. Panic averted. Plans move forward. Whew.

My refinance customer? Order an appraisal and see what happens with the value. That is the best and only option to consider. A $400 risk by ordering an appraisal through the current HVCC system to find out what the value of their home is. Again, I discussed additional options with them and we can find financing for them if their credit scores are good enough. I again reminded them that in the present mortgage world, it REALLY is all about credit scores! $400 investment to find out options to shave almost $200 per month in interest off of their payment? It was determined that the investment vs. risk of lost of the appraisal money was worth it. Potential interest savings is a huge motivating factor. And worth taking the chance on an appraised value.

It is that time of year again when real property valuation notices are mailed to property owners in Weber County. The question is often asked, "How does my assessed value affect my property tax?" The answer is, not in the way most people think.

Credit Score Health in America?

Shocking news on American credit scores.

25% or 43.4 million Americans have less than a 599 credit score.  With 26 million out of work, this number of those with low credit scores could swell in the future.  With tightening of credit requirements for mortgages, credit card and insurance, the future looks tough (and more expensive) for many American's.

3 ways to mess up a Mortgage closing

Highlights

• Lenders have gotten stricter in response to the mortgage meltdown.
• If you want to implode your impending mortgage, get a new credit card or auto loan.
• Changing jobs is another good way to derail a mortgage before closing.


Want a lender to delay or even cancel your mortgage closing? Then change your "borrower circumstances" between the day you apply for and the day you close a home loan.

Lenders have gotten stricter in response to the mortgage meltdown. The latest tightening of the screws comes from Fannie Mae. The mortgage titan's Loan Quality Initiative, which went into effect June 1, requires lenders to track "changes in borrower circumstances" between application and closing.


The rules aren't new, but Fannie will enforce them more vigorously. For borrowers, it means certain actions are likely to delay or otherwise mess up a mortgage closing.  "Any change in circumstance could affect and delay a borrower's closing on a transaction," says David Adamo, CEO of Luxury Mortgage of Stamford, Conn.

Following are three things borrowers can do to mess up their next mortgage closing.

Credit Reports: 5 Tips for Preserving Your Credit and Mortgage Application

Credit Reports: When One May Not Be Enough
 
Effective June 1, 2010 Fannie Mae has instructed lenders that they should adopt a new policy that could involve a second review of an applicant's credit report just prior to closing. When reviewing defaulted loan files, they have determined that the credit profile of a borrower may have changed from the time of the initial review of the credit report and at the time of closing. 

The potential impact to a borrower who has utilized credit to make significant purchases after the initial credit report could include a delay in closing, increase of closing costs and/or interest rate or a decreased loan amount. In the worst case scenario, it could even result in a loan being denied, even after an original approval had been granted.

In order to eliminate any possibility of potential problems before closing, anyone in the application process should use credit sparingly and make sure they adhere to the tips provided below by credit expert, Linda Ferrari of Credit Resource Corp. 

I would encourage you to click on Linda's name or Company link, but her advice found on her website is for those who are NOT in the middle of getting a mortgage loan!  I strongly recommend the following 5 tips for those who HAVE made their mortgage application.     

For more tips on what you should not do regarding credit during the mortgage application process, contact me.

Top 5 Tips for Preserving Your Credit and Mortgage Application

1. Don't do anything that causes a red flag to be raised by the scoring system.
2. Don't apply for new credit of any kind.
3. Don't pay off collections or charge offs.
4. Don't max out or over charge on your credit accounts.
5. Don't consolidate your debt onto one or two credit cards.

This list is not comprehensive but does give you a peek into situations that could create issues and could also be contrary to some ideas you have read previously.

June 1, 2010: Fannie Mae to Require 2nd Credit Report pulled on day of closing...

June 1, 2010: Fannie Mae to Require 2nd Credit Report pulled on day of closing...

Fannie Mae just released another round of lending guideline changes that affect all lenders in the U.S. who underwrite loans to agency guidelines. The most significant change is that lenders will be required to provide a 2nd credit report pulled on the actual closing day - prior to the loan funding. HUD may follow suit with a similar requirement for FHA-insured loans in the near future as they tend to mirror many agency guidelines.

This new last minute credit check will apply to all conventional loans.

Any newly discovered accounts will trigger re-underwriting of the loan which has the potential to delay the closing. Any credit inquiries which appear as a result of shopping for or applying for new credit will stop the loan closing in its tracks until the buyer provides documentation that proves no new debt was obtained. Again, delays in closing will be inevitable with some buyers.

What Fannie Mae has discovered by combing through the records of all of the homes they have foreclosed on over the past 24 months is that many home buyers had gone out and incurred additional debts after their lender pulled the initial credit report. After closing, homeowners were becoming late on payments that were traced back to new debt that was found to have been incurred during the 30-60 window of time it takes to process the loan application and close escrow. A significant amount of audit results find that a great number of home loans would not have become as delinquent or required foreclosure.

How to manage things so that delays in closing are avoided:

• Always refer to a correspondent lender such as Primary Residential Mortgage who can deal with this issue at the closing stage entirely internally.

• Borrowers must be informed of this new change in national lending requirements and instructed to NEVER go out and apply for credit while the home financing process is active. There is a huge temptation by home buyers to go shopping for appliances, furnishings and home improvement items. Simply applying for a Home Depot credit card and not using it will force an underwriter to add 5% of the high credit limit to the bottom line total monthly payments - yes, even if the card is not actually active yet.