Credit Score

Top Real Estate Headlines for Week Ending: November 19th

Although the stock market survived a flurry of economic reports released this past week, the mortgage bond market received a good old fashioned beat down. Both home buyers and homeowners were disappointed as the week ended with higher mortgage rates.

Now that folks have changed their focus to the upcoming holiday, let’s take a break to review what the top real estate and mortgage headlines were this week according to the National Association of Realtors.

• 3 Reasons to Sell a Home Soon
  Steve McLinden says to focus on your local situation when deciding whether to sell, look at comparative sales, investment potential, lending standards, and interest rates.
• Banks, Congress to Face Off on Foreclosures
  As the Hill heads into a “lame duck” session of Congress, both the Senate and House will hear testimony from banks regarding housing financing.
• Credit Score Requirements Stifling Borrowers
  Big lenders keep raising minimum credit scores, increasing the number of borrowers who can’t obtain financing.
• Big Banks Fixing Foreclosure Processes
  A Treasury official notes that 11 federal agencies contend that the foreclosure document problems don’t represent a threat to U.S. financial stability.
• 7 Trends That Will Drive the Future of Housing
  From decreases in the average size and cost per square foot for housing to Baby Boomers living with children, these are the likely changes for housing in the upcoming years.
• NAR Praises FHA’s Increased Stability
  An independent audit shows that the Federal Housing Administration cash reserve levels have increased over the past year.
• Mortgage Bankers: Foreclosures Are Falling
  The percentage of homes in some stage of foreclosure went down between the second and third quarter of this year, due in large part to banks’ investigations of their processes.
• Mortgage Rates Back on the Rise
  Average rates for 30-year mortgages shot up this week, according to Freddie Mac.
• America’s 10 Dirtiest Cities
  Forbes magazine names cities across the country that could use a little clean up.
• Analysts Say Housing Is Better But Still Fragile
  Low interest rates coupled with stabilizing home prices could give the economy a boost, analysts say.
• 6 Helpful Tools For Your Virtual Assistant
  These free and low-cost online tools can save you and your virtual assistant time and help get your business organized.
• Signs Mortgage Fraud Might Be Picking Up
  Information group says investment companies are involved in a high number of suspicious resales.

These were the top real estate and mortgage headlines for the week ending November 19, 2010.

Want to know how these national real estate headlines could impact you right here locally in Northwest Indiana? Subscribe to this blog, Today’s Real Estate Reality, and let our collective years of real estate experience in Northwest Indiana guide you to an informed and successful real estate transaction today.

Credit Score

Credit Repair Software is Best Solution to Fix Your Credit

Over the past several years, the impact of your personal credit score has become more significant in every aspect your life. Even if you choose to pay all cash your lack of credit could still affect your ability to get a loan, insurance coverage, employment and/or medical treatment.

Having the best possible credit score can be difficult especially during tough economic and financial times. No matter the reason for why your credit score is not the best it could be, fixing your credit is extremely critical.

Here are five ways to fix your credit from worst to best:

Worst: Waiting It Out  Here is an old stand by that many will for whatever reason pursue. Sitting by the sidelines and just allowing time to cure the negative items in your credit report. Unless you do not need a good credit score anytime in the forseeable future, this could take you 7 – 10 years to fix your credit report.

Bad: Credit Repair Services  It’s tempting to simply pay a company to “do the work for you,” but all credit repair services (that includes law firms) have two dirty little secrets they don’t want you to know.

First, because they charge monthly for their service, they make more money –up to $2,000– if they deliberately drag out the process, which is why they often take two or three years.

Second, you actually wind up doing MORE work than if you did it yourself. In addition to dozens of forms, the credit repair service requires YOU to personally choose which items to dispute, how to dispute them, and you have to constantly send them information that the credit bureaus send you.

Good: Follow Instructions From The Credit Bureaus  This is like the wolf instructing the sheep. The credit bureaus are NOT your friends. This approach costs nothing, but you get what you pay for. Don’t do it.

Better: Do-It-Yourself Programs (Typically A Printed Book, An E-Book, Or An Audio Program)  There are hundreds of these programs available, but they’re out of date. If you are very organized and have lots of free time available, the process these books describe will work fairly well. . .eventually.

Best: Credit Repair Software  There are several companies that offer credit repair software (not just an e-book). Although some are rip-offs (clue: unprofessional-looking websites), many credit repair software products combine the best of all worlds: simplicity, low price, and fast results. Better quality credit software ranges from $97 to $1,000 or more, but there’s no reason to spend the higher amounts. Look for satisfaction guarantees and a professional-looking website.

The best credit repair solution for the money is a downloadable software program called Credit Repair Magic. At only $97, it’s the fastest and most cost-effective credit repair solution we’ve ever found. Don’t waste your time with useless e-books or ridiculously overpriced monthly services. It’s fast. It’s easy. Aren’t you worth it?

Credit Score

My Credit Score Just Dropped, What Happened?

You’ve been working really hard to increase your credit score. You’ve done everything you thought you were supposed to do to present yourself as a creditworthy individual. So, why did your credit  score suddenly drop? What happened?

Unfortunately, this is a common occurrence with many consumers today, a situation that likely could’ve been avoided if you had only been working with a qualified credit improvement specialist from the beginning. Remember, there’s no shame in seeking help with your credit. Credit scoring models are based on a number of factors that, when combined, add up to a formula that might not seem logical to those who don’t deal with these kinds of issues on a daily basis.

The following are just a few examples of seemingly innocent actions that could cause your credit score to suddenly and dramatically drop.

“I paid off my biggest credit card debt and closed the account, but my score dropped anyway.”  This is one of the most frustrating situations for many borrowers. You would think that paying off your biggest debt and closing your account would be a good thing – and it is. But, because of the five factors of credit we discussed in a previous article, this action could reflect poorly on your credit score because you chose to close the account. Depending on your situation, the account you closed could’ve been your oldest credit account with the highest credit limit, two major factors in calculating your score.

“I maxed out my card and although I paid it off completely when I got my statement, my score still dropped.”  By maxing out your card, your overall credit ratios were adjusted. And even though you paid it off, your statement reflects your current status. In other words, your credit report shows that your account is maxed out, even if you pay it off the next day. The best thing you could’ve done here was to pay your bill before your statement arrived.

“I was only one day late on my payment but I still received a 30-day late on my credit report.”  Unfortunately, your creditors do not distinguish the difference between one day and 30 days late. You must pay your monthly bills on time every time to avoid this penalty. Depending on which credit cards you have, you could suffer an additional penalty for being late on your credit card payments, even just one time. It’s called the universal default clause, which could increase your interest rates on all your credit cards up to 28-30%, even if you’re in good standing with your other accounts!

“I paid off an old collection and my score dropped significantly.”  While it might seem illogical or even unfair, sometimes paying off a collection account can actually cause more harm than good. Remember, credit scoring models typically lend more weight to your recent activity than to the mistakes you might’ve made in the past. By paying off this old account, you may have inadvertently added more weight to this mistake by making this item current.

Don’t be shy about asking for help when it comes to your credit score. Remember, your credit is the most valuable financial tool you have at your disposal, and having an expert on your side is always smarter than learning the hard way on your own.

If you or anyone you know have questions about credit, contact us today. We’ll be glad to review your credit and see what, if anything needs to be done to help you meet your financial goals and homeownership needs.

Credit Score

Borrowers Beware – Fannie Mae Tightens the Vice Again!

A new loan quality initiative from Fannie Mae is making it harder for Portage Indiana home buyers and refinancing homeowners everywhere to close on a mortgage.

Beginning June 1, 2010, with all new applications, Fannie Mae wants lenders to verify that borrowers have not taken on new debt during the underwriting phase of the mortgage. 

If new debts are found, the mortgage is subject to a re-underwrite and a possible turndown.

For Fannie Mae, the goal is to reduce the number of loans that go bad because of new, non-disclosed debt. Lenders have the freedom to verify in whatever manner they wish, but in most cases, the verification process will amount to a credit re-pull made just prior to closing.

The underwriters will be looking for 3 things in particular — even after your loan is approved.

First, your updated credit report will show your current credit card bills and minimum monthly payments.  Those numbers will replace your original numbers made at the time of application.  If the debts exceed a certain threshold, your loan will be denied.

Second, underwriters will be looking at your updated credit score. If your FICO has dropped below minimum lending standards, your loan will be denied. Or, you may be subject to a new loan-level pricing adjustment. 

Loan level pricing adjustments are mandatory loan fee based on your credit score.

Lastly, underwriters will be looking at your credit report’s Credit Inquiry section. The goal is to see if you’ve been applying for credit elsewhere. Underwriters can use this information at their discretion.

Fannie Mae’s Loan Quality Initiative is just one more way that the government-backed group is trying to improve its loan pools. Unfortunately, it’ll mean more turndowns for mortgage applicants.

Therefore, take extra care of your credit between the time of application and the time of closing. Don’t buy new cars, don’t buy new appliances, and — most definitely — don’t open new credit cards.  Be extra safe with your credit because a mortgage application that’s supposedly cleared-to-close can be revoked at the eleventh hour.

When in doubt, talk to your loan officer about what may or may not trigger the Loan Quality Initiative.  Your loan approval is at stake.

Credit Score

7 Ways to Improve Your Credit & Your Home Loan Rate

As mortgage lenders tighten approval standards nationwide and in Northwest Indiana, the importance of a good credit score is rising.  Credit scores not only make the difference between a mortgage approval and mortgage turn-down, but they also play a large role in determining your actual mortgage note rate.

In the 3-minute piece, the NBC Today Show talks about 7 ways that homebuyers ruin their credit — often by accident.  Some of the highlighted mistakes include:

• Closing open credit cards
• Making appliance buys on credit prior to closing
• Asking creditors to lower credit limits prior to closing

In general, a 740 FICO will insulate a borrower from the higher costs and/or rates associated with low credit scores.  Below 740, though, every 20 points adds to the damage.  Watch the video and apply what you can to your own situation.  The more you know, the more you can save.

Contact Benchmark Mortgage in Northwest Indiana to Qualify for Your FREE FHA Home Loan Approval Today!