Mar
18
My least favorite email signature quotes
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Email signatures typically have your name, position, company name, phone, cell, fax, url and maybe a quote. Some quotes are more annonying than others. Here are quotes used within the mortgage/real estate industry that get the nod as some of the worst:
- “The Greatest Compliment I can ever Receive is a Personal Referral”
- “Your Lender for life”
- “Helping you finance your dreams.”
- “Building my business, one referral at a time”
- “You’ve got a friend in the real estate/mortgage business.”
Here is the one quote I’d really like to see:
- “Refer me to your friends and family like you said you would.”
Jan
1
Second Mortgage
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A mortgage that has rights subordinate to a first mortgage or in second position.
Many current homeowners use a 2nd mortgage to pay off credit card balances. Interest rates on second mortgages are often lower than that of high interest bearing credit card accounts. Interests paid on second mortgages may also be tax deductible for some homeowners. As always, check with a Certified Public Accountant before taking such deductions.
Unfortunately, some borrowers interpret a payment-reduction consolidation second mortgage as a license to take on more non-mortgage debt. A few years later, they look to consolidate again. If their house has appreciated enough, they may be able to, but sooner or later they run out of equity.
A Second Mortgage uses your home as collateral. Your home equity is the part of your home that you actually own and this is the guarantee for your loan.
Some second mortgage loans may extend for as long as 15 or 20 years; others may require repayment in one year. You will need to discuss the repayment terms with the individual mortgage company and select one that offers terms that best suit your needs. For example, if you need to borrow $20,000 to make repairs on your home, you may not want a loan that requires you to repay the entire amount in one or two years because the monthly payments may be too high
Sometimes referred to as a Junior Loan, Second mortgages in all their varieties can be powerful tools to consolidate debts, make home improvements, or avoid paying mortgage insurance. For more information, contact one of our mortgage professionals today.
Be sure to ask if a no closing cost second mortgage is available to you!
When a borrower cannot qualify for 100% financing with their current credit score, they may be able to qualify using an 80/20 combo. The borrower actually gets two loans, one for 80% of the sales price, and the second mortgage for 20%. This allows the borrower to get into the home at 100% financing with a lower credit score than what is required for 100% one loan.
A 2nd loan, on the same property, that is in a junior lien or subordinate position.
Sometimes a second mortgage is helpful in that it allows a borrower to maximize the cash out available without having to pay private mortgage insurance on one loan with a loan amount over 80% of the home’s value.
If you would like to discuss the advantages and disadvantages of any 80/20 versus a 100% loan, please feel free to contact me. I will be more than happy to run through both scenarios for you, to see which option will benefit you the most.
Usually the 20% loan will have a higher interest rate than the 80% loan. However with the first loan only being 80% loan to value it will generally carry a better interest rate than a 100% loan. If you qualify for a 100% loan and an 80/20 chances are that the 80/20 will have a lower combined monthly payment.
Speak to your mortgage professional to see how getting a second mortgage can save you money every month on your bills.
Second Mortgages are generally available in two varieties, a Fixed Rate Second or a Home Equity Line of Credit or HELOC. A fixed rate second mortgage generally have much higher rates and are for a shorter term 15 to 25 years. A HELOC is also a shorter term but has lower rates that are adjustable and usually tied to PRIME. A HELOC works similarly to other lines of credit or credit cards. You have a total available balance and make payments on the amount of balance you owe. The repayment of a HELOC is also split into two time periods, a draw time, and a repayment time. During the draw period you can use the available equity and pay it back at will and an interest only monthly payment is due on the balance. During the repayment period the remaining balance is fully amortized and a principal and interest payment is made.
To really understand the benefits of these scenarios you will want to contact a mortgage professional and let them evaluate your current situation. You will need to express to them what your goals are for the near and long term future. These are important factors in determining what loan program is right for you.
Jan
1
Poor Credit Loans
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Poor credit loans are loans where the borrower has had some problems with their credit and cant qualify for a conforming loan.
To offset the poor credit lenders require a higher interest rate than on a conforming loans.
There are loan programs available specifically for borrowers with poor credit, but there are often extreme limitations that may keep the borrower from being able to qualify. For example, with a 475 fico score, you may be able to qualify for a loan, but only for 70% of the value of the home. This would mean that you would have to come up with a 30% down payment if you are purchasing the home. For most borrowers, this would prevent them from being able to buy the home.
Poor Credit Loans are available to consumers that fit into a fico score bracket starting as low as 475. Lenders view mortgage history and consumer credit as a part of the approval process for most poor credit loan situations. LTV or (Loan to Value) is also a factor in the approval process of a poor credit loan. Lending institutions limit the LTV to a 70% qualifying percentage, your appraised value or equity position in your home determines the LTV. Good mortgage history, consumer credit, and LTV are the 3 keys in the loan process which will help you qualify for a refinance or purchase of home.
Lenders charge more points and higher interest rates to those with poor credit. Loans to borrowers with poor credit carry far more risk and lenders deserve compensation for this risk. Borrowers with good credit should not let themselves enter into a loan agreement where they pay points and rates based on a bad credit loan. One national company recently filed bankruptcy to protect themselves from litigation on fraudulent loan practices.
Lenders make a clear distinction between Poor Credit profile and No Credit profile. No Credit merely means the borrower has not had a history of using credit. A person with Poor Credit/Bad Credit profile has demonstrated a pattern of mishandling credit.
Jan
1
Fico Score
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A FICO score is a number that rates a borrowers credit record. The score is based on a number of factors, including how well debts have been paid off, current levels of debt, types of credit, and length of credit history. Scores generally range from 350 to 900.
However if you are applying for a very aggressive loan, like a pay option arm, or responding to a promotion for excellent credit borrowers, multiple recent mortgage lateness’s will make it very challenging for us to get you a loan with the terms you are expecting. More than your improving your FICO score on your credit report, working to remove lates through credit repair will help ensure you get the home mortgage refinance or buy new home mortgage you deserve.
If there is incorrect information on your credit report such as a payment that was reported late that should not have we will be able to correct the information within 3-5 days by going directly through the 3 major credit bureaus and get a rescore to reflect what your credit score should be.
Credit scoring has been utilized by lenders for over 30 years. Credit scoring is a technology used by credit grantors to qualify the risk associated with extending credit to a given borrower. Risk is quantified by means of a score card which calculates a numeric value, or score, for a credit applicant a lender wants to evaluate. Score calculation is done based on information that has been determined to be indicative of future credit performance. There are many types of scoring methods currently utilized today including credit scoring, applicant scoring, behavioral scoring and several others. The type most relevant to the mortgage industry is credit scoring and among the most widely recognized is the FICO SCORE.
You should periodically review your FICO score and see if there is anything you can do to improve your score.
The are five main categories of information that the FICO score evaluates:1. Credit Payment History: 35% 2. Credit Balances: 30%3. Credit History: 15%4. Credit Inquiries: 10%5. Credit Types: 10%
Credit Payment History: 35%At 35% Credit Payment History weighs the most. While events such as a bankruptcy, foreclosure or tax liens will have the greatest negative impact on your score, multiple and/or recent late payments have a tremendous impact as well.
A new law allows borrowers to receive a free copy of your credit report from each of the credit reporting agencies every year. Visit www.annualcreditreport.com
The Fair, Isaac Corporation,(FICO) developed the formula for credit scoring. In general, the higher the score, the more creditworthy a borrower is in the eyes of the lender. A score of at least 680 indicates the borrower is very creditworthy.
Credit Balances: 30%What is your credit balance to your credit limit? The Outstanding Credit Balance ratio has the second highest weight on your credit score. High balances on your credit cards can be viewed as a red flag since it’s an indication that you may be overextended. If you have multiple credit cards, you may want to spread the wealth to keep the credit balances to credit limit ratio low.
Credit Inquiries: 10%Opening a new credit account doesn’t harm your credit score dramatically especially after you make the first payment. However, credit inquiries can negatively impact your score. Generating many credit inquiries exudes that you are trying to secure a large amount of credit or you are being turned down by lenders and have to apply elsewhere.
FICO score is one scoring system used by Experian, a credit profiling company. Two other companies have similar scoring systems that are just as widely accepted by lending banks. Together with Experian’s FICO score, credit reports that contain Trans Union’s Empirical score and Equifax’s Beacon score are often referred to as the Tri-Merge Report.
To keep a healthy or high FICO score you will need to at the very least do these 3 things:1 - Keep your balances on your credit cards to 50% of what your limit is2 - Always pay your bills on time - if you have to hold a bill and pay late make sure it’s not more than 30 days to post. 30 day lates really bring your credit scores down 3 - Try not to cancel cards you have had for a long time. Length of time on accounts plays a part into the scoring
For more information on how credit scores are developed, please visit: air, Isaac and Company (FICO)www.fairisaac.com200 Smith Ranch Road San Rafael, CA 94903ph: (415) 472-2211
There are many credit fixing agencies that will help raise fico scores for a potential borrower so they can put themselves in an overall better position for obtaining a loan. If your fico scores are low, there are still plenty of things that can be done to help bring scores up. Sometimes it takes little time and sometimes it takes longer but in the end the results can be fantastic.
Credit History: 15%Credit History is a reflection the length of time that you’ve had accounts open. You’re rewarded for keeping long term debt. Older credit accounts that have been used more frequently will have more weight than those that are newly opened or used with less frequency.
Most lending institutions categorize scores in to ranges. Generally scores above 800 are considered excellent, scores from 700-799 are considered good, scores from 600-699 are average, scores from 500-599 are considered poor, for scores below 500 there are very few lending options available. There are many lenders and each has their own guidelines for qualifying borrowers.
Credit Types: 10%This percentage of your FICO score is based on your mix of credit. Do you have a good mix of credit cards, retail accounts, installment loans, finance company accounts or mortgage loans? It looks at the whole picture and totals how much of each type of account that you have.
In the early 1980s the three major credit bureaus, Experian, Equifax and Trans Union all worked with the Fair, Isaac company to develop generic scoring models that allow each bureau to offer a score based solely on the contents of the credit bureau’s data about an individual. Creditors-especially those in the mortgage industry-frequently use the scores when deciding who receives loans. They can order your score, commonly called a FICO score, from one of the bureaus, but it only draws upon information from your credit report. Individual creditors often also consider other information, such as your salary or how long you have been employed at the same company when making loan decisions.
Your mortgage broker will be happy to review your FICO score and your complete credit report with you in detail, which is often a much better alternative to struggling to make sense of the abbreviated reports delivered by free credit report websites. Ask your mortgage professional for more information about this important subject.
Most people do not have perfect credit. Most people have FICO scores ranging from the low 600s to the high 700s. Mortgage applications typically are not rejected because of a few late payments.
Jan
1
Alternative forms of credit
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If you lack established forms of credit such as a mortgage, credit card, or car loan, there are forms of credit that can be used as an alternative.
Renting is an alternative form of credit. A verification of rent is obtained from the apartment complex, management company, or landlord. The verification of rent verifies your rental payment history.
Many “rural development” programs offered by our lenders allow for a variety of alternate credit proofs.
There are several loan programs designed for borrowers with little or no established traditional credit reflected on the credit report. Lenders must still have something in order to verify past payment histories and credit worthiness. Non traditional credit or alternative credit will provide the references that are needed to satisfy past payment history.
Other forms of credit that can be used in situations if borrower does not have more than 3 trade lines on their credit report include payments to the electric company and automotive insurance. Accounts must show excellent payment history and in good standing.
If you do not have good established trade lines and you are using alternate forms of credit your rate may be slightly higher. This would still be better than renting because you are putting yourself in the position to take advantage of the appreciation of real estate.
Your telephone payment history is another type of Alternative Credit. With your authorization, your mortgage professional can verify with your telephone company your payment history and use this verification as credit reference in the mortgage process.
Many lenders will allow you to use letters of credit from rent-to-own businesses to establish additional credit lines.