You probably know that the better your credit score is, the bigger and better the loan you will qualify for. But do you know what goes into the credit scoring model and if your credit has suffered in the past, how to get it back in shape so you get the best loan possible?
We all know bad things happen to good people, in fact most everybody has had there credit damaged at one point or another for various reasons. The biggest reason is the big "D," followed by death or injury of a wage earner and finally unexpected medical bills. All of these are unfortunate things and cannot be avoided (short of not getting married or working!), it's how you choose to recover from your bad credit that will affect how fast you qualify for a home loan.
1. The first thing to remember is your credit score is a constantly changing equation that produces a number to gauge risk. Basically, the higher you score in the equation, the better your chances of qualifying for a loan and the less risk you pose to your lender. This is good for you because you can make instant changes to your financial picture and instantly change your credit score. Empowering right! It does not take forever to repair credit, depending on how fast you move.
2. The biggest contributor to your credit score is your payment history, particularly over the past two years. The longer you have a tradeline reporting with no lates, the better your score will be. NEVER CLOSE ANY CREDIT ACCOUNTS BECAUSE YOU DON'T USE THEM OR THEY HAVE A ZERO BALANCE. Closing these accounts will hurt your score because you are eliminating positive payment history from the report. If money is tight try and make the minimum payments on your cards, maintain that history, you can pay the balance down later when your finances get better.
3. The second most important part of your credit score is the relationship between what debts you owe and your total credit limit. The closer you are to the limit on a credit card or installment loan, the more damaging it is to your credit. For example, it is a much better idea to keep several low balances on several credit cards then it is to keep one large balance on one credit card and nothing on the others. You are most rewarded for keeping a balance as close to 30% of your limit as possible if you are carrying any debt. If you have a low credit score, try moving some debt around to your other cards and reducing each of your principal balances. You will begin to see instant changes in your score and most credit card providers will even do a 0% balance transfer for you for a set period of time!
4. Many people are not aware that having different types of credit on your report has an impact on your credit score. Having several types of credit such as a credit card, installment loan and mortgage on your report will improve your score because it shows you can be responsible with all types of credit. If you are attempting to rebuild your credit, opening a new tradeline may be a good way to increase your score quickly.
5. Decide where you want to apply for credit and stick with it. Please do not go shopping around for credit if you are denied in the first place. If you are hearing you do not qualify from more than one company, it is you, not them. Find a certified credit counselor or credit expert and not a service that promises credit repair by establishing a monthly payment plan, and work with them. Every time a lender pulls your credit is has an impact on your credit score. You are allowed to shop within the same industry over a 30 day period without being penalized. If you are denied do not keep trying and trying, you will damage your score more. Follow the tips outlined in this blog and work diligently, credit repair is possible for anybody!
If you have further questions or comments on repairing your credit please contact me and I will assist you or refer you to an expert in the field.
Friday, October 5, 2007
Tuesday, October 2, 2007
Six things every veteran should know before purchasing their home!
When it comes to purchasing a home there are several things every veteran must know about their loan and their lender to make sure they get the best home loan possible.
Eligibility, funding fee's and APR's can be confusing. This blog is intended to help demystify the purchase process for Veterans.
1. Federal VA loans do not require a down-payment. A Veteran that meets all eligibility requirements for a VA loan is not required to make a down-payment when buying a home. Furthermore, your closing costs can come in the form of a seller concession. This is when the seller agrees to pay all or some of your closing costs as a contingency to the offer, leaving the Veteran with no out of pocket expenses at closing.
2. Veterans loans are not underwritten based on Credit alone. It is a common misconception that you can not get a home loan if you have a past bankruptcy on your record or late payments on your record. Not True. The Veterans credit will be considered but not scrutinized as heavily as some standard conventional programs. Many Veterans have extenuating circumstances that have caused checkered credit histories for them, this will not prevent you from obtaining a loan. Your loan is based primarily on your debt to income ratios and your eligibility.
3. The VA does not discriminate on what property types are eligible. Current VA loan limits for most states are set at $417,000 and there is talk of raising the loan limits. There is much stigma surrounding both FHA and VA loans regarding properties eligible for finance. This is an old stigma and a hurtful one. The VA will only discriminate on make sense issues, like a leaky roof, cracked foundation, noxious odors or issues that affect economic life or the livability of the house. If you can afford the house, most properties will qualify.
4. Veterans loans qualify for the best interest rates in the market! Perhaps the best feature of VA loans are the fantastic interest rates Vets qualify for. Because the loans are based on more than just conventional guidelines, Veterans get the same if not better interest rates than standard conventional borrowers do from banks. Even better is you qualify for this rate at 100% loan-to-value, whereas other banks will limit you to 80%.
5. There is no PMI attached to Veterans Loans. Unlike standard conventional loans that require Mortgage Insurance on all loans over 80% loan-to-value, VA loans have no PMI. This means the veteran saves a ton of money monthly when financing 100% of their homes value. Instead of PMI the VA charges a funding fee which varies based on the amount borrowed and how many times the veteran has used their eligibility. This funding fee allows Veterans to secure these fantastic interest rates and loan amounts.
6. Eligible Veterans can get their certificate of eligibility through a trusted local VA lender and apply for financing free. Va Loans are a fantastic resource for Veterans. Veterans should contact a local lender or their state VA and find out if they qualify for a Veterans loan. Some States even have local Veterans programs that have special rates and lowered funding fees for Veterans. If you are a veteran contact your lender or Veterans Administration for more info on Veterans loans.
To read and learn more please visit my active rain profile....
Eligibility, funding fee's and APR's can be confusing. This blog is intended to help demystify the purchase process for Veterans.
1. Federal VA loans do not require a down-payment. A Veteran that meets all eligibility requirements for a VA loan is not required to make a down-payment when buying a home. Furthermore, your closing costs can come in the form of a seller concession. This is when the seller agrees to pay all or some of your closing costs as a contingency to the offer, leaving the Veteran with no out of pocket expenses at closing.
2. Veterans loans are not underwritten based on Credit alone. It is a common misconception that you can not get a home loan if you have a past bankruptcy on your record or late payments on your record. Not True. The Veterans credit will be considered but not scrutinized as heavily as some standard conventional programs. Many Veterans have extenuating circumstances that have caused checkered credit histories for them, this will not prevent you from obtaining a loan. Your loan is based primarily on your debt to income ratios and your eligibility.
3. The VA does not discriminate on what property types are eligible. Current VA loan limits for most states are set at $417,000 and there is talk of raising the loan limits. There is much stigma surrounding both FHA and VA loans regarding properties eligible for finance. This is an old stigma and a hurtful one. The VA will only discriminate on make sense issues, like a leaky roof, cracked foundation, noxious odors or issues that affect economic life or the livability of the house. If you can afford the house, most properties will qualify.
4. Veterans loans qualify for the best interest rates in the market! Perhaps the best feature of VA loans are the fantastic interest rates Vets qualify for. Because the loans are based on more than just conventional guidelines, Veterans get the same if not better interest rates than standard conventional borrowers do from banks. Even better is you qualify for this rate at 100% loan-to-value, whereas other banks will limit you to 80%.
5. There is no PMI attached to Veterans Loans. Unlike standard conventional loans that require Mortgage Insurance on all loans over 80% loan-to-value, VA loans have no PMI. This means the veteran saves a ton of money monthly when financing 100% of their homes value. Instead of PMI the VA charges a funding fee which varies based on the amount borrowed and how many times the veteran has used their eligibility. This funding fee allows Veterans to secure these fantastic interest rates and loan amounts.
6. Eligible Veterans can get their certificate of eligibility through a trusted local VA lender and apply for financing free. Va Loans are a fantastic resource for Veterans. Veterans should contact a local lender or their state VA and find out if they qualify for a Veterans loan. Some States even have local Veterans programs that have special rates and lowered funding fees for Veterans. If you are a veteran contact your lender or Veterans Administration for more info on Veterans loans.
To read and learn more please visit my active rain profile....
Sunday, July 8, 2007
Why you need Credit now and how to begin building it for the Future
I wanted to write a blog about Credit, why everyone needs it and how to take control of your financial future.
I recently had a client tell me he didn't have Credit Cards because he thought paying 20% on his own Money was a ripoff. At face value this Gentleman has produced a good argument, why pay a high percentage, even if it is for convenience.
What my client does not understand is how Credit works. Your Credit Score, actually your FICO Score, is a number between 350 and 850 that represents your Credit-Worthiness to any given company. Your Score goes up and down based on your Card Balances, Payment History, Length of open Tradelines and number of Accounts.
The Interest Rate you recieve when you Finance a Car, House or Credit Card is always based off of your Credit Score. The more Credit you have, and use responsibly, the higher your Score is. The higher your Score is the lower Risk you represent to a company and the better your Interest Rate or Price. Enter my Client.
The Gentlemen does not want to pay for Credit at a store such as JC Penny or Best Buy. However, let's say he were to get a store Charge at JC Penny with a beginning limit of $200. He buys 3 sweaters @ $20 each for a total of $60, which he pays off over a one year period at the burden of less than $10 monthly. With a 20% Finance Charge, he pays $72 for his sweaters over the next year.
In the above example my Client does end up "Losing" $12. However, over that year he has built Positive Payment History, Balance, Opened a lengthened Tradeline and added a Positive Account to his Credit Report. His Credit Score increases 40 Points in one year.
Here's what I am getting at. 40 Points on this Gentlemens Score would qualify him for a 1% Lower Interest Rate on his Home Loan. On a $100,000 loan, a small House by Madisons standards, the difference between 7% and 8% (That One Percent) is $68.40 a month. By increasing his Credit Score 40 Points, he will save $24,624.00 over the next 30 years on his House Payment! And that is a small House. On a $200,000 home he would save $137/Mo or $49,300 over 30 years!
If everyone were to practice responsible, educated use of Credit, a lot of people would save a lot of $$$$$. Get Credit where you can, Kwik Trip or American TV will give Credit to anyone, and use it very responsibly. Never charge more than 50% of you Cards Balance, this will hurt your Credit. If you ever have to miss a payment your Car Payment affects your Credit more than your Credit Cards do.
In conclusion, $12 now for $49,000 over 30 years seems like a no brainer to me. The best part, you can all save more than this! Start building your credit now. Work hard, read about responsible use of credit and when in doubt, ask me! Buy something you want now, pay for it very slow and that Luxury now will become a necessity for later...Thanks.....
I recently had a client tell me he didn't have Credit Cards because he thought paying 20% on his own Money was a ripoff. At face value this Gentleman has produced a good argument, why pay a high percentage, even if it is for convenience.
What my client does not understand is how Credit works. Your Credit Score, actually your FICO Score, is a number between 350 and 850 that represents your Credit-Worthiness to any given company. Your Score goes up and down based on your Card Balances, Payment History, Length of open Tradelines and number of Accounts.
The Interest Rate you recieve when you Finance a Car, House or Credit Card is always based off of your Credit Score. The more Credit you have, and use responsibly, the higher your Score is. The higher your Score is the lower Risk you represent to a company and the better your Interest Rate or Price. Enter my Client.
The Gentlemen does not want to pay for Credit at a store such as JC Penny or Best Buy. However, let's say he were to get a store Charge at JC Penny with a beginning limit of $200. He buys 3 sweaters @ $20 each for a total of $60, which he pays off over a one year period at the burden of less than $10 monthly. With a 20% Finance Charge, he pays $72 for his sweaters over the next year.
In the above example my Client does end up "Losing" $12. However, over that year he has built Positive Payment History, Balance, Opened a lengthened Tradeline and added a Positive Account to his Credit Report. His Credit Score increases 40 Points in one year.
Here's what I am getting at. 40 Points on this Gentlemens Score would qualify him for a 1% Lower Interest Rate on his Home Loan. On a $100,000 loan, a small House by Madisons standards, the difference between 7% and 8% (That One Percent) is $68.40 a month. By increasing his Credit Score 40 Points, he will save $24,624.00 over the next 30 years on his House Payment! And that is a small House. On a $200,000 home he would save $137/Mo or $49,300 over 30 years!
If everyone were to practice responsible, educated use of Credit, a lot of people would save a lot of $$$$$. Get Credit where you can, Kwik Trip or American TV will give Credit to anyone, and use it very responsibly. Never charge more than 50% of you Cards Balance, this will hurt your Credit. If you ever have to miss a payment your Car Payment affects your Credit more than your Credit Cards do.
In conclusion, $12 now for $49,000 over 30 years seems like a no brainer to me. The best part, you can all save more than this! Start building your credit now. Work hard, read about responsible use of credit and when in doubt, ask me! Buy something you want now, pay for it very slow and that Luxury now will become a necessity for later...Thanks.....
100% Financing First Time Home Buyers Can Afford
Fannie Mae is now offering MyCommunity, a loan that will finance 100% of a home. It is a first time homebuyers program aimed at people with lower credit scores and higher debt ratios. This program loves assets and dislikes derogatory accounts.
It is primarily for purchases. To give you an idea of the efficacy of this program you really only need a 600 score to qualify for 100% financing between 6.75-7.5%. Now is the perfect time to buy!
Take these smokin hot rates and combine them with the hundreds of cheap houses on the market right now and you've got yourself one hell of a buyers market.
Call me! Seriously, look into this! You have nothing to lose and everything to gain. Like always I've still got your free credit report and rate quote waiting for you!
Thanks for reading and please only call if you feel you are ready for home ownership, you are interested in finding out more about purchasing a home or about what to expect from the home purchase process.
It is primarily for purchases. To give you an idea of the efficacy of this program you really only need a 600 score to qualify for 100% financing between 6.75-7.5%. Now is the perfect time to buy!
Take these smokin hot rates and combine them with the hundreds of cheap houses on the market right now and you've got yourself one hell of a buyers market.
Call me! Seriously, look into this! You have nothing to lose and everything to gain. Like always I've still got your free credit report and rate quote waiting for you!
Thanks for reading and please only call if you feel you are ready for home ownership, you are interested in finding out more about purchasing a home or about what to expect from the home purchase process.
Friday, July 6, 2007
An article about Title policies and my thoughts...
I was at a closing a little early last week and I read an article in Forbes while I was waiting for my clients to arrive and I have just been thinking about it ever since. The article was about Title companies and how they sell a largely outdated product for an inflated price and consumers are required to use them. It further went on to say that the largest offender (FA) who's market share is about $8 Billion Yearly gives away an exasperating amount of illegal kickbacks to Lenders and Realtors on a monthly basis.
The average Title policy in America, according to the article, costs consumers around $1400. Only $70 of this money goes to pay actual claims. The rest of the money pays for the overhead and sales people and generates a massive profit for these companies on a yearly basis.
The article argues that since Titles and Liens are all well documented by computers the chances of finding an error on Title have dwindled significantly and Title policies have in effect become outdated. The states could provide this service at a much cheaper rate to consumers and create the same amount of jobs. The only benefit from having Title companies, the article suggests, is the plethora of kickbacks it generates for the Real Estate Industry and for the profit of shareholders.
The article was compelling at worst and the more I think about it the more I agree. Anybody else out there feeling this way?
Sunday, July 1, 2007
Cultivating Referals from Existing Relationships
Cultivating Referrals from Existing Realtionships
The other day I was having my hair cut and talking to my hair dresser when the topics of growing our businesses through referrals arose. The woman who has cut my hair for years has already helped me by displaying flyers of mine in her lobby. Today was different though. As the topic of referrals was fresh on her mind, she immediately began asking customers around the room not only how their mortgage situations were but also about those of their friends and family....
I was being advertised, in a powerful way because these customers trust this woman as much as I do, and she is touting my abilities and character! Obviously this woman knows the type of person I am and has her trust in me but....bringing up the topic of referrals served as a catalyst for what then became the best type of advertisement I can recieve.
So the moment was made possible because of our trust in eachother, but it only took place because our discussion of the power of referrals lit the fire...Remember to cultivate those relationships where the trust is already established, you may be overlooking a valuable resource you've already worked hard to develop!
Cultivating Referrals from Existing Realtionships is as simple as thinking of all of your friends and family that are pillars in their communities and have created a reputation for themselves of being trustworhty and reliable people. Teach these people how to sell you and do a good job for everyone they send you, they do it for you!
Thanks, Joe
The other day I was having my hair cut and talking to my hair dresser when the topics of growing our businesses through referrals arose. The woman who has cut my hair for years has already helped me by displaying flyers of mine in her lobby. Today was different though. As the topic of referrals was fresh on her mind, she immediately began asking customers around the room not only how their mortgage situations were but also about those of their friends and family....
I was being advertised, in a powerful way because these customers trust this woman as much as I do, and she is touting my abilities and character! Obviously this woman knows the type of person I am and has her trust in me but....bringing up the topic of referrals served as a catalyst for what then became the best type of advertisement I can recieve.
So the moment was made possible because of our trust in eachother, but it only took place because our discussion of the power of referrals lit the fire...Remember to cultivate those relationships where the trust is already established, you may be overlooking a valuable resource you've already worked hard to develop!
Cultivating Referrals from Existing Realtionships is as simple as thinking of all of your friends and family that are pillars in their communities and have created a reputation for themselves of being trustworhty and reliable people. Teach these people how to sell you and do a good job for everyone they send you, they do it for you!
Thanks, Joe
Status of the Dane County Housing Market
Status of the Dane County Housing Market
I live in a fantastic town called Madison where the summers are gorgeous and the winters are brutal. We are a cultural Mecca in the state and pride ourselves on our Political efficacy and our presence as an emerging Bio-Tech leader. We also have the best College Footbal team, period! (IMHO)
Here in Madison we have an abundance of homes on the market right now from the 180-280k range, some that have been sitting for 6 months. The reason these "mid-range" homes have and will continue to have their values suffer is simple. The move up buyers from 2004 and 2005 that bought a ton of house because the money was almost free can simply not afford to drop the price; they have not yet established equity and they have not yet paid down their principal balances.
Thanks to both the constant stream of new professionals and the fantastic community lending programs available from Fannie Mae, the 120-160k range is moving along very nicely. The reason, there are always First Time Home Buyers! New Homeowners simply do not buy $250,000 homes around here. The builders keep building them and the flippers keep listing them but until the market stabilizes, the "mid-range" inventory shall sit.
Now of course there are move up buyers, someone has to be selling these $150,000 homes. These borrowers are going to be much more careful how they spend their money as there new loan is 1% higher than their last and the inventory is plentiful. Move up buyers will be looking for better deals and incentives. Now more than ever the seller that will pay his/her buyers closing costs, team up with a good Mortgage Broker to offer Strategic Financing and do extensive advertising and research will be the victors!
Mid Range Sellers need to take advantage of professional marketing assistance offered by companies such as ours and do their research, learn what move up buyers are looking for and cater to their needs. There will always be the Jones and there will always be the First Timers.
If anyone is interested in learning more about Strategic Financing or how they can promote their mid range listings without breaking the bank I am happy to help. Thank you for reading and have a great summer!
I live in a fantastic town called Madison where the summers are gorgeous and the winters are brutal. We are a cultural Mecca in the state and pride ourselves on our Political efficacy and our presence as an emerging Bio-Tech leader. We also have the best College Footbal team, period! (IMHO)
Here in Madison we have an abundance of homes on the market right now from the 180-280k range, some that have been sitting for 6 months. The reason these "mid-range" homes have and will continue to have their values suffer is simple. The move up buyers from 2004 and 2005 that bought a ton of house because the money was almost free can simply not afford to drop the price; they have not yet established equity and they have not yet paid down their principal balances.
Thanks to both the constant stream of new professionals and the fantastic community lending programs available from Fannie Mae, the 120-160k range is moving along very nicely. The reason, there are always First Time Home Buyers! New Homeowners simply do not buy $250,000 homes around here. The builders keep building them and the flippers keep listing them but until the market stabilizes, the "mid-range" inventory shall sit.
Now of course there are move up buyers, someone has to be selling these $150,000 homes. These borrowers are going to be much more careful how they spend their money as there new loan is 1% higher than their last and the inventory is plentiful. Move up buyers will be looking for better deals and incentives. Now more than ever the seller that will pay his/her buyers closing costs, team up with a good Mortgage Broker to offer Strategic Financing and do extensive advertising and research will be the victors!
Mid Range Sellers need to take advantage of professional marketing assistance offered by companies such as ours and do their research, learn what move up buyers are looking for and cater to their needs. There will always be the Jones and there will always be the First Timers.
If anyone is interested in learning more about Strategic Financing or how they can promote their mid range listings without breaking the bank I am happy to help. Thank you for reading and have a great summer!
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