4 Mortgage Nightmares

Don’t let these happen to you!

Nightmare One: Surprise Debts

Joe was a successful business owner and a newlywed in his early-30s. He had no problem qualifying for a mortgage loan, his credit was excellent and he got the mortgage. But then Joe did a foolish thing. “He went out and bought a very expensive new car and didn’t tell his Realtor.  “All of a sudden, the day before settlement, the mortgage broker called and said, ‘We can’t do the loan.’ The recheck on the credit report showed a new $700 payment. He had to get his mother to co-sign for him, which was very embarrassing.”

 

The moral of the story? You shouldn’t take out new debts [during the mortgage process], no matter what.

 

Nightmare Two: Change Your Job

Bill was the family’s breadwinner, but after being pre-approved for a mortgage, he decided he could make more money by becoming self-employed. Problem is the mortgage lender refused to close on Bill’s mortgage because he had made a “material change” in his lifestyle and financial circumstances. Savvy Realtor’s will usually warn people ahead of time about changing jobs.   If they have to, they should always contact the mortgage professional and give them the details. If it’s a job in the same field, it’s usually not a problem. But if they were employed and think they’ll make more money by being self-employed, it could be a problem because they need a track record.

 

 

Nightmare Three: Pack It Up and Move It Out

Lenders often need financial information during the critical time between mortgage pre-approval and the closing or settlement. Unfortunately, that’s the same time when people are starting to move and pack away their valuable paperwork. “We’ve had plenty of people pack away the items they need. It happens all the time. If you’re doing a 30- to 45-day settlement, the approvals for your mortgage are going along that whole time, but people pack up and send their belongings on the truck if they’re moving out of state. Then the lender needs copies of bank statements and pay stubs for the last six months, or they want to see proof that a certain loan was paid off.” Best advice: Keep all of your important papers with you in a briefcase or somewhere you can easily find them.

 

Nightmare Four: Bad Credit

Many people have debts on their credit reports that they don’t even know about, but need to be corrected. That’s why it’s always a good idea to get a copy of your as soon as possible and apply early for a mortgage pre-approval. “I heard a credit nightmare; one couple tried buying a house for a full year.  They were in their own business and both had inheritances. Never in the Realtor’s wildest imagination did she ever think there would be a problem with that. They found a house and went for a mortgage, and they couldn’t get one. Their credit was so bad because they had not been paying their bills on time. They thought it was just natural to wait until they had the money to pay them. They did finally get a mortgage that was about 5% higher than the regular rate because of that. We recommend having your credit checked well before you find your home, at the beginning of the home-buying process when you first start house hunting, just to make sure there’s nothing you have to work on clearing up.

 

The Home Team Girls Realtors® Real Estate Team helping you with Homes For Sale, Seller Strategies, Certified Buyer’s Agent, Bank Foreclosure Specialist, Short Sale Specialist. We use the service of a certified  Home Stager on all of our listings. For Roseville and Sacramento Realtor Services call on the Home Team Girls.

2 Surprising Ways to Ruin your Credit

Important tips for credit repair.

 

1. Don’t close out old accounts.  One thing you shouldn’t do if you’re just trying to boost your score is close unused accounts, Watts says.  “If someone tells you to close unused accounts to improve your score, they’re pulling your leg,” he says. “It won’t help you and it can hurt you.”  Closing unused accounts without paying down your debt utilization ratio, which is the amount of your total debt divided by your total available credit.  “You appear closer to maxing out your accounts,” he says. “That’s why your score can drop. It doesn’t mean people shouldn’t close them, but don’t close them to improve your score.”

 

2. To improve your credit:  If you do cut up cards, though, leave the oldest one open, says Steve Rhode, former president of Myvesta.org, a national nonprofit financial crisis center.  The length of your credit history is another factor in your score. If you close the account of the credit card you got when you were a freshman in college and leave open the ones you just got within the last couple years, it makes you look like a much newer borrower.  “Keep a couple of the oldest open; I don’t care what the interest rate is,” he says. “Creditors don’t care what the rate is.”

 

Working with credit card balances

 

To Improve your Credit: Transfer balances from a card that’s close to being maxed out to other cards to even out your usage, says David Chung, interim president and vice president of business development for Maryland-based CreditXpert Inc., which provides credit tools to lenders. Or just spread out your charges between a few cards. 

 

“Try to get the usage on all of them at 20 to 30 percent instead of a bunch at zero and one at 80 percent,” Chung says. “You’re not spending less, you’re just shifting it around to different cards.”  It could work, Watts from FICO says. “Transferring the balance to a card with a lower utilization could help,” he says, “but it’s much better to actually pay down the debt if you have the cash kicking around.”

 

All of these strategies generally take at least 30 days because lenders don’t report payments more than once a month.

 

The Home Team Girls Realtors® Real Estate Team helping you with Homes For Sale, Seller Strategies, Certified Buyer’s Agent, Bank Foreclosure Specialist, Short Sale Specialist. We use the service of a certified  Home Stager on all of our listings. For Roseville and Sacramento Realtor Services call on the Home Team Girls.

4 Vital Tips for Boosting your Credit Score

Most lenders have carved-in-stone rules about handing out the best terms, and those rules almost always place a major emphasis on your credit score. If their best rates are offered to borrowers with a score of 700 or higher and yours is a 698, those two points could cost you thousands of dollars.

According to www.myfico.com, the consumer Web site of the Fair Isaac Corp. that created the FICO score (the most commonly used credit score), the interest rate difference between those two scores is one-half percentage point.

 

On a $165,000 30-year fixed rate mortgage, that half point could cost you more than $19,000 in interest charges, assuming 6 percent is the lowest rate available.

Fall below a 675 and the rate goes up another 1.2 percent.

Keep in mind that these are averages. Most lenders today practice tiered pricing, with interest rates rising as scores go down. Each lender chooses its own “break points” between tiers. Lender A may bump up the interest rate if a score falls below 700, while Lender B doesn’t charge higher rates until the score is 690 or below. So if you stick with one lender, and that lender’s break point is 700, raising your score from 698 to 701 can be vital.

 This underscores the importance of not only doing all you can to improve your score, but shopping thoroughly when looking for a mortgage. From the perspective of a mortgage broker, who can choose among a sea many lenders, there are no sharp break points. Consumers should do what a good broker does — look for a lender that offers the best rate for a specific score.

 But that’s jumping ahead of ourselves. First things first: You can take steps to improve your credit score. The number of variables that play into an individual score make it impossible to say that one particular action will increase a given score by a certain number of points. But there are some good guidelines.

 

 1. Pay your Bills on time- Keep Balances Low- Take out new Credit only when you need to.

 “The mantra for getting a great score is pay your bills on time, keep account balances low, and take out new credit only when you need it,” says Craig Watts, consumer affairs manager for Fair Isaac Corp.

 “People who do that faithfully have very high scores. It usually means you’re being conservative and cautious about credit. It’s not a toy and it shouldn’t be a hobby.”

That’s good advice, to be sure, but these actions take a long time.

  What if you’re house hunting and you just need a few extra points to bump you over the line to the great rates?   To get a Free one time a year Credit Report Call 877-322-8228 or visit:

 http://www.annualcreditreport.com

  Above 720 your GOLDEN!  Start by pulling your credit report and your credit score to see where you are.  Improving your score from a 720 to a 740 won’t get you better terms.

 

  2. Look for Errors.  What you’re looking for on your report are factors that could be affecting your score. Look for errors in the report, such as accounts that aren’t yours, late payments that were actually paid on time, debts you paid off that are shown as outstanding, or old debts that shouldn’t be reported any longer (negatives are supposed to be deleted after seven years, with the exception of bankruptcies, which can stay for as long as 10 years).

 

  3. Pay Down Balances.  After repairing errors, the fastest route to a better score is paying down balances on credit cards, says Watts and David Herpers, chief marketing officer for Atlanta-based Amerisave Mortgage Corp. “There’s really no silver bullet, but I would think that over 60 days, it’s possible to increase your score 20 points by paying down your credit lines,” Herpers says.

Had a few late payments in your past?  If you find yourself in some financial difficulties, you can protect your score by making sure your payments don’t go 60 days past due, Herpers says. “Some lenders don’t report 30 days past due, but they all report 60 days past due.”

 

  4. Pay by the due date.  Even if you’ve paid your bills late in the past, you can improve your credit score by paying every bill on time from now on, says John Ventura, a consumer law attorney and author of “The Credit Repair Kit.”  “Forget about grace periods,” he says. “If you want to have a really good record with the credit agencies, pay your debt before it’s due and keep your balances low.”

 

  The Home Team Girls Realtors® Real Estate Team helping you with Homes For Sale, Seller Strategies, Certified Buyer’s Agent, Bank Foreclosure Specialist, Short Sale Specialist. We use the service of a certified  Home Stager on all of our listings. For Roseville and Sacramento Realtor Services call on the Home Team Girls.

8 Tips for Buying a Bank Foreclosure

On weekends, I tend to hold open houses for REO properties, and I am surprised how many buyers are not working with an agent. They hope to find their home by searching through the newest bnak foreclosure open houses. 

After they find the right house, then they choose their Realtor. This seems backward.  That process may have worked before, but not now. These buyers are missing out on a lot of services that Realtors bring to the table.

In a way, dealing with REO properties is like being in a seller’s market again. The good homes go fast, some times within 1 day, and most of the time with multiple offers. In this case the early bird gets the worm.

So how does a buyer better position themselves to buy an REO property and get their offer accepted by the bank.

1.     WORK WITH A REALTOR- New properties first show up on the MLS usually at 4 AM each morning.  Realtors are the first ones to see a new listing show up. Each Realtor has what we call “A” clients, that they work with and will call them 1st -as soon as good listing shows up. An “A” client is someone that is working exclusively with that Realtor. If you are an “A” client, you will get the call from that Realtor telling you about the great listing that just showed up.  

Even better, a Realtor can put you on their MLS auto searches that get emailed to you every morning.  If you look at those listings every day, you can stay on-top of the new listing market. If not, you can have your Realtor keep on the look out for you.

If you want a Realtor to work for you and alert you to new listings ask them for this kind of service. So clients who work with agents will be first ones to know about a new listing. So you can be the early bird!

On the other hand, buyers who do their shopping on the internet by themselves, will  see a new MLS listing 24- 72 hours after it shows up on the private Realtor MLS sites. So buyers not working through an agent might see properties up to 3 days after those who choose to work with Realtors. 

Finally, there are others who do their shopping in person, those who are professional open house lookers. These buyers are missing the boat.  Not all new listings have open houses right away. By the time these buyers take action- these home may already have multiple offers on it.

2.   GET PRE-APPROVED- Savvy buyers get pre-qualified if not pre-approved. If you are not pre-approved yet- make sure you do. If you do not know a good lender, ask your Realtor since they know who is good and will provide a smooth transaction. Most, if not all banks require a pre-qualification letter when you place an offer. Your offer will not be accepted or even considered without one. Most Realtors will not show you homes without a Pre-qualification letter.

3.   GET EDUCATED- By working with a Realtor, they can educate you about the home buying process. Once you find the right home, you will have to act fast.  Remember the early bird gets the worm. You will need to  know what payment you feel comfortable with, what your closing costs will be, and are you willing to pay any HOA or Mello Ross? Only your lender and Realtor can help you with that. 

4.   PUT AS MUCH DOWN AS YOUR CAN- An offer with the highest price is not always the best offer. Banks these days are looking for a strong buyer that has no problem qualifying. A buyer that has a 100% loan is considered a weaker qualified buyer than a person who puts down let’s say 20%.  So if you are putting less down and want your offer to be taken seriously, what should you do?  You need to up the ante if you can, offer more money for the home and maybe the bank will like your offer better.

5.   SHOW VERIFICATION OF FUNDS. Make a copy of where your down payment is coming form, a bank statement, an investment, a 1031 exchange property. Black out any personal account info on it. You can also have your bank write up a letter for you as well.

6.   MAKE YOUR OFFER A CLEAN ONE. Usually banks sell the property as is. Don’t ask for repairs. It is always best to keep your contingencies as short as possible. If you do not need a loan contingency, don’t use one. Ask your Realtor for advice on this one.   

7.   MAKE IT YOUR BEST OFFER UP FRONT. You will be in competition with other offers, so if it is a good home, it may be priced lower to encourage bidding wars. I called about a home the other day that had 23 offers on it.

8.   MAKE YOUR OFFER ASAP. In some cases I see homes go pending the day the house comes on the market. How does that happen? Some investors actually buy homes sight unseen. They have their Realtors scout out the homes and then make multiple offers and see which ones stick and which ones don’t. So if you are a first time home buyer, you are competing with those savvy investors that act fast. So take action. Know the market and what you want- check out the homes in the areas you want to live in.  Once you know what you want, what you want to pay, what your closing costs will be, then you qualify to actually buy a home. Good Luck!

 

 

 

 

The Home Team Girls Realtors® Real Estate Team helping you with Homes For Sale, Seller Strategies, Certified Buyer’s Agent, Bank Foreclosure Specialist, Short Sale Specialist. We use the service of a certified  Home Stager on all of our listings. For Roseville and Sacramento Realtor Services call on the Home Team Girls.