Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
– There is a great debate within the inner-mortgage circles these days. Should we, as loan professionals, encourage clients to borrow as much money as possible? Or would consumers benefit more if we helped them to understand the advantages of 15-year amortization schedules and pre-paying principal? Let's examine the pros and cons of both strategies.
Leveraging Your Property. In order to understand why you'd want to borrow as much as possible for your home purchase, you must first grasp the concept that equity has a zero rate of return. Here's an example:
If Consumer "A" buys a home for $300,000, and puts 20% down, then they have $60,000 in equity. Over the next 5 years, the property appreciates $100,000 in value. Consumer "A" now has $160,000 in equity.
Consumer "B" buys a home for $300,000, and puts no money down. At the end of 5 years, that same home is now worth $400,000. Consumer "B" has $100,000 in equity, which is the same appreciation as Consumer "A", a net $100,000.
As you can see, your down payment has nothing to do with your rate of return. What becomes important is how you choose to manage the $60,000 you didn't use as a down payment. If you use it for frivolous activities, such as buying toys or going to Las Vegas, it would be more prudent for you to use that money as a down payment. Especially since this will enable you to obtain a lower interest rate.
However, if you were to invest the $60,000 in a vehicle that can out-earn the cost of that debt, then this could be a formula for success. This is why some lending professionals suggest putting as little down as you possibly can, maximizing your tax write-off, and investing the rest. This principle has been applied for many years in the life insurance game. The old saying goes, "Buy term and invest the rest." The key component is taking the money you would have used as a down payment and creating an asset accumulation account. This account should earn a significant enough rate of return to enable you to pay your mortgage off entirely and achieve the ultimate goal of being debt-free.
Paying Your Home Down Rapidly. There are very few times over the course of my career that I have seen a client with zero debt and no financial difficulties. Choosing to pay off all of your debt can reduce stress and help you to gain freedom of cash flow for investment opportunities. A 15-year mortgage or a bi-weekly payment strategy provides structure. It can also put you on track to have your mortgage paid off within a set timeframe. Simply put, it contains built-in discipline.
It's important, however, to understand that regardless of how rapidly you pay your home off, you're not getting any greater rate of return on your investment than if you paid it off slowly.
Conclusion. So how does one determine which scenario is best? The choice depends entirely upon the individual. Savvy consumers who are disciplined, and are comfortable taking chances from an investment perspective, would do well with the first scenario. Over the course of time, it's been proven that your rate of return over the long-haul will be far greater than the rate you'd pay for a mortgage in today's rate environment. It's important to seek the advice of a skilled investment advisor to ensure success with this strategy.
The second scenario is best for those who have a difficult time managing their money or who'll sleep easier at night knowing they have a plan in place to pay their loan off more rapidly. Be sure that your budget can handle accelerated payments. When consumers "bite off more than they can chew" with a 15-year mortgage, they frequently end up having to refinance back into a 30-year schedule.
If you find this subject intriguing and would like to know more, I recommend that you read a book titled, Missed Fortune 101, by Douglas Andrew. It's an outstanding read that is very simplistic and goes into far greater detail than I can cover in this column. Douglas is a financial planner who advises safe-structured investments such as whole life policies and tax-free fixed income instruments.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Tuesday, May 22, 2007
Understanding Credit Scoring & Credit Repair
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Credit remediation is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process. Sub-prime borrowers who are eager to move into A-Paper territory often find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.
The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)
It's also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.
While credit repair is necessary for some, it's not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:
• Evenly distribute your credit card debt to change the ratio of debt to available credit. Let's say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.
• Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don't close those old accounts!
• Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you're only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.
Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.
If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission's website, which contains a wealth of helpful literature.
If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC's regulations on credit repair. With over 1100 credit repair companies to choose from, it's important to be certain you are dealing with a reputable firm. Examine the FTC's information on fraudulent practices to avoid falling prey to credit repair scams.
Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.
Additional Resources:
To order your free credit report, go to:
www.annualcreditreport.com
To read the Fair Credit Reporting Act, go to:
www.ftc.gov/os/statutes/frca.htm
For the Federal Trade Commission's information on consumer credit, go to:
www.ftc.gov/bcp/conline/edcams/credit/index.html
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
Credit remediation is a subject consumers often face with fear and trepidation, and for good reason. With the exception of recognizing that the best score wins, the average home shopper knows very little about the whole credit scoring process. Sub-prime borrowers who are eager to move into A-Paper territory often find themselves at a loss when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.
The first step in the process is making sure that you have a current copy of your credit report. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report from each of the three companies. (Go to www.annualcreditreport.com)
It's also important to know just what a good credit score is. Most A-Paper scores generally begin around 680, although this number may differ slightly among lenders. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 698 and you increase it to 703, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.
While credit repair is necessary for some, it's not the only way to increase your credit score. Even if you have stellar credit, you can enhance your score through these steps:
• Evenly distribute your credit card debt to change the ratio of debt to available credit. Let's say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket.
• Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don't close those old accounts!
• Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you're only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame.
Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's a good idea to get the ball rolling at least three to six months prior to submitting your application for home financing.
If credit repair is what you need, you can either begin the process yourself or seek out a repair service. If you decide to make your own improvements, visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission's website, which contains a wealth of helpful literature.
If you’re facing severe or complicated credit issues, then you’ll probably want to enlist the assistance of a professional credit repair company. Before you do, be sure to familiarize yourself with the FTC's regulations on credit repair. With over 1100 credit repair companies to choose from, it's important to be certain you are dealing with a reputable firm. Examine the FTC's information on fraudulent practices to avoid falling prey to credit repair scams.
Addressing credit issues can be uncomfortable to say the least. But by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.
Additional Resources:
To order your free credit report, go to:
www.annualcreditreport.com
To read the Fair Credit Reporting Act, go to:
www.ftc.gov/os/statutes/frca.htm
For the Federal Trade Commission's information on consumer credit, go to:
www.ftc.gov/bcp/conline/edcams/credit/index.html
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Renters Have Much to Gain by Pursuing Home Ownership
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.
Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
Buying a home vs. renting is a big decision that takes careful consideration, as most mortgage consultants will agree. But the rewards of home ownership are great. For many years, purchasing real estate has been considered an extremely profitable investment. It is an achievement that offers a sense of pride, financial stability and potential tax advantages.
Yes, there are certain responsibilities associated with owning a home. Landlords will often argue the benefits of renting, and for obvious reason. If you are renting, you’re helping them make their mortgage payment.
The numbers are staggering if you look at it this way. If you are paying $1,000 per month for an apartment, and you know your rent will increase 5% every year, then over the next five years you will pay your landlord $66,309. If you are currently renting a house, you may be paying much more than that each month. Either way, you gain no equity by shelling out this monthly housing expense and you certainly won’t benefit when the property value goes up!
However, if you were to purchase your own home or condominium, you would be well on your way toward building equity within that same five-year period. By choosing a fixed-rate loan program, you can have the comfort of knowing that your monthly mortgage payment will never go up. In fact, you would have the option of refinancing to a lower interest rate at some point in the future should interest rates drop, and this would cause your monthly mortgage commitment to go down.
In addition to building equity, there are tax advantages that come into play with home ownership. Depending on your tax bracket, owning a home is often less expensive than renting after taxes. Interest payments on a mortgage below $1 million are tax-deductible, and your mortgage consultant should help you evaluate the tax advantages of various loan scenarios, and share this information with your tax consultant to glean feedback on your behalf.
To find the loan program that is right for you, your mortgage consultant will need to evaluate your monthly household income, current assets and savings, as well as any monthly obligations you may have for credit card payments, car payments, child support, etc. These prequalification factors, along with the report of your credit score, will determine how much house you can afford and what interest rate you will pay for financing. It is also important to let your mortgage consultant know what your future goals are, because this will help narrow down which loan option is the best fit for your long-term needs.
There are many different types of loan programs available, including “low” and “no” down payment mortgage programs. These types of programs require the borrower to provide less than 3 percent of the loan amount as down payment. FHA lenders rule that the mortgage payment, including principal, interest, taxes and insurance (PITI) should not exceed 31 percent of your gross income, and the PITI plus other long-term debt (car payments, etc.) should not exceed 43 percent of your gross income.
Housing is an expense that takes a big bite out of the monthly budget. If you are a renter and feel that “home” is more than just someplace to hang your hat, think about the advantages of purchasing real estate. It may be time to take the step into building your personal net worth as a home owner.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Each year, millions of Americans move into the home of their dreams. As time goes by, families expand, kids grow older, and suddenly that home isn't quite so perfect anymore. Or perhaps you still love your home, but you really want a gourmet kitchen and a larger master bedroom. Should you start looking for a new house? Or would it be better to stay where you are and remodel instead?
Both options involve a significant investment of time and money, so it's important to take your time and make an informed decision. You'll also want to be sure to consider both the financial and the emotional sides of the equation. Let's begin by examining the financial factors involved.
Moving: A good local real estate agent should be able to assist you with estimates on these numbers.
• How much will it cost to purchase a home that will meet your needs?
• How much could you sell your existing home for? Don't forget to subtract the agent's commission from this total.
• What will it cost to move? According to real estate consultant and best-selling author of Remodel or Move, Dan Fritschen, a typical move costs 10% of the value of your home.
• How much will your property taxes increase as a result of the move?
Remodeling:
• What projects do you want to have done and how much will they cost? An architect or general contractor will be able to assist you with these figures.
• How much will the improvements add to the value of your home, also known as the "payback"? A local real estate agent can assist with this as well.
If the decision about whether to renovate or move were purely a financial one, then it would be quite easy to look at the numbers and come to the right conclusion. However, there are also emotional factors that come into play, and they have a value as well. Let's consider some examples.
Reasons you may want to move:
• If you relocate to a new neighborhood, your children could attend superior schools.
• You would like to reduce your commute or have better access to local amenities, such as restaurants and shopping.
• You're not particularly fond of your current neighborhood.
• Your yard is too small, and you cannot expand it.
Reasons you may want to stay and remodel:
• You're happy with your location. It's convenient, you love your neighbors, and the schools are either excellent or are not a factor.
• You love the layout of your home.
• All you need is a little more space, and your home will be perfect.
Of course only you know what is truly important for your happiness, so try to use these questions as a starting point. Create a list of the pros and cons of each scenario and leave it someplace accessible, so that you and your spouse can add to it as you think of additional factors. You may also want to consider attending open houses and visiting new housing developments to see what is available and how your home compares.
Once you've completed your list and your financial assessment, it's time to draw some conclusions. Are the numbers and the emotional factors pointing you in a clear direction? If you're still feeling unsure and would like some additional assistance, you may want to read Dan Fritschen's book, Remodel or Move, or visit his website at www.remodelormove.com. Both contain a calculator that will assist you with the difficult task of quantifying the ramifications of your decision. In addition, you can learn tips to assist you with the next step, after you've determined what it will be.
If you choose to remodel, then you'll need to have a clear idea of what you want to accomplish before finalizing any details with the contractor or architect. One of the most expensive things you can do is change the project midstream.
If you decide to move, then there are low-cost improvements you can make to your existing home that will help it to sell more quickly. The kitchen and the bathrooms provide the biggest return on investment in this area.
Whether you decide to remodel or buy a new home, it's important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a mortgage originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a mortgage professional before any construction takes place. Otherwise you may severely limit the type of financing options available to you.
Additional Resources:
Remodel or Move?: Make the Right Decision, by Dan Fritschen
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
Each year, millions of Americans move into the home of their dreams. As time goes by, families expand, kids grow older, and suddenly that home isn't quite so perfect anymore. Or perhaps you still love your home, but you really want a gourmet kitchen and a larger master bedroom. Should you start looking for a new house? Or would it be better to stay where you are and remodel instead?
Both options involve a significant investment of time and money, so it's important to take your time and make an informed decision. You'll also want to be sure to consider both the financial and the emotional sides of the equation. Let's begin by examining the financial factors involved.
Moving: A good local real estate agent should be able to assist you with estimates on these numbers.
• How much will it cost to purchase a home that will meet your needs?
• How much could you sell your existing home for? Don't forget to subtract the agent's commission from this total.
• What will it cost to move? According to real estate consultant and best-selling author of Remodel or Move, Dan Fritschen, a typical move costs 10% of the value of your home.
• How much will your property taxes increase as a result of the move?
Remodeling:
• What projects do you want to have done and how much will they cost? An architect or general contractor will be able to assist you with these figures.
• How much will the improvements add to the value of your home, also known as the "payback"? A local real estate agent can assist with this as well.
If the decision about whether to renovate or move were purely a financial one, then it would be quite easy to look at the numbers and come to the right conclusion. However, there are also emotional factors that come into play, and they have a value as well. Let's consider some examples.
Reasons you may want to move:
• If you relocate to a new neighborhood, your children could attend superior schools.
• You would like to reduce your commute or have better access to local amenities, such as restaurants and shopping.
• You're not particularly fond of your current neighborhood.
• Your yard is too small, and you cannot expand it.
Reasons you may want to stay and remodel:
• You're happy with your location. It's convenient, you love your neighbors, and the schools are either excellent or are not a factor.
• You love the layout of your home.
• All you need is a little more space, and your home will be perfect.
Of course only you know what is truly important for your happiness, so try to use these questions as a starting point. Create a list of the pros and cons of each scenario and leave it someplace accessible, so that you and your spouse can add to it as you think of additional factors. You may also want to consider attending open houses and visiting new housing developments to see what is available and how your home compares.
Once you've completed your list and your financial assessment, it's time to draw some conclusions. Are the numbers and the emotional factors pointing you in a clear direction? If you're still feeling unsure and would like some additional assistance, you may want to read Dan Fritschen's book, Remodel or Move, or visit his website at www.remodelormove.com. Both contain a calculator that will assist you with the difficult task of quantifying the ramifications of your decision. In addition, you can learn tips to assist you with the next step, after you've determined what it will be.
If you choose to remodel, then you'll need to have a clear idea of what you want to accomplish before finalizing any details with the contractor or architect. One of the most expensive things you can do is change the project midstream.
If you decide to move, then there are low-cost improvements you can make to your existing home that will help it to sell more quickly. The kitchen and the bathrooms provide the biggest return on investment in this area.
Whether you decide to remodel or buy a new home, it's important to ensure that you have proper financing in place prior to moving forward. If you decide to purchase a home, a mortgage originator will help you to determine how much you can afford, as well as which loan package works best with your overall financial plan. In the case of remodeling, you should meet with a mortgage professional before any construction takes place. Otherwise you may severely limit the type of financing options available to you.
Additional Resources:
Remodel or Move?: Make the Right Decision, by Dan Fritschen
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Reverse Mortgages: Financing the Golden Years
Reverse Mortgages:
Financing the Golden Years
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Until recently, seniors 62 years of age and older have not had the best choices when it came to getting cash from their homes. Traditional home loans only offered the option of either selling one’s house or borrowing against its equity.
With reverse mortgages coming on the scene, seniors now have some additional cash-flow alternatives. This type of loan allows mature borrowers to convert their home equity into tax-free income without leaving their current home or making mortgage payments - and they do not need an existing income to qualify.
How a Reverse Mortgage Works
Reverse mortgages are probably best understood when compared side-by-side with traditional home mortgages, otherwise known as "forward" mortgages. The following table shows the differences between the two:
FORWARD MORTGAGE / REVERSE MORTGAGE
Uses income to pay debt / Uses home equity to get cash or credit
Monthly mortgage payments/ No payments; debt is due when
the borrower(s) pass away or relocate.
Falling debt, rising equity/ Rising debt, falling equity
Both loans incur debt against your home, and both affect equity, but they do so in different ways. Traditional home mortgages require making monthly payments to a lender. With a Reverse Mortgage, payments are made to you.
What a Reverse Mortgage Involves
Here are some important points to know when considering a reverse mortgage:
Eligibility: To qualify for a reverse mortgage, you must be at least 62 years of age. All owners who are on the title deed must meet this age requirement. You must also have paid off all, or most, of your home mortgage. Lastly, the home you reside in must remain your principal place of residence.
Mandatory Counsel: In order to ensure that homeowners are fully aware of the financial ramifications of obtaining a reverse mortgage, you must undergo counseling with an unbiased third party before completing a loan. HUD and AARP oversee a network of counselors who can provide this service, and it should be offered for either a nominal fee or at no charge.
Tax-Free Income: One of the advantages of a reverse mortgage is that the money you receive will not be taxed. The amount you’ll obtain depends on several factors including the plan you select, the type of cash advances you choose, your age, and the value of your home. Typically, the older you are the larger the loan, as you will have more equity in the house.
Cost: The cost of a reverse mortgage varies considerably from one type to the next. However, you can typically use the money you receive to offset the loan fees. The costs will be added to the loan balance and must be repaid with interest once the loan terminates.
Repayment: Reverse mortgages do not require any payment as long as the borrower(s) remain in the home. Should the borrower(s) pass away, sell the home, or permanently relocate, then the loan would be due in full, along with interest and additional costs. If two borrowers are on the loan and one dies, the loan would not be due since one of them still occupies the home.
Home Equity Conversion Mortgage - The Federally Insured Loan
The most common type of reverse mortgage is the Home Equity Conversion Mortgage, otherwise known as a HECM mortgage. This is the only reverse mortgage program that’s federally insured and backed by the U. S. Department of Housing and Urban Development (HUD). This type of reverse mortgage is popular for a few reasons:
• Ability to choose your own interest rate.
You can select one that changes annually or one that changes every month.
• You have several payment options.
You may receive monthly loan advances for a fixed term or for as long as you live in the home. You may also choose to receive a line of credit or combine monthly loan advances with a line of credit.
• The loan can be used for any purpose.
With a HECM, you don't have to designate the loan to a specific use; you can apply the funds to anything you choose.
• Protection.
This is one of the most attractive features of a HECM. This plan protects you by guaranteeing continued loan advances even if your lender defaults.
Sell or Stay?
The main reason people choose a reverse mortgage is to gain financial independence and maintain an adequate standard of living without leaving their current home. The best way to decide if a reverse mortgage is right for you is to compare it to the other option of selling your house. To do this, ask yourself these three questions:
1. How much cash can I get by selling my home?
2. How much will it cost to buy or rent a new place?
3. Is it worth my moving now, or do I prefer to do something else with the money?
Perhaps you'll confirm what you knew all along, where you now live is the best place to be.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Financing the Golden Years
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Until recently, seniors 62 years of age and older have not had the best choices when it came to getting cash from their homes. Traditional home loans only offered the option of either selling one’s house or borrowing against its equity.
With reverse mortgages coming on the scene, seniors now have some additional cash-flow alternatives. This type of loan allows mature borrowers to convert their home equity into tax-free income without leaving their current home or making mortgage payments - and they do not need an existing income to qualify.
How a Reverse Mortgage Works
Reverse mortgages are probably best understood when compared side-by-side with traditional home mortgages, otherwise known as "forward" mortgages. The following table shows the differences between the two:
FORWARD MORTGAGE / REVERSE MORTGAGE
Uses income to pay debt / Uses home equity to get cash or credit
Monthly mortgage payments/ No payments; debt is due when
the borrower(s) pass away or relocate.
Falling debt, rising equity/ Rising debt, falling equity
Both loans incur debt against your home, and both affect equity, but they do so in different ways. Traditional home mortgages require making monthly payments to a lender. With a Reverse Mortgage, payments are made to you.
What a Reverse Mortgage Involves
Here are some important points to know when considering a reverse mortgage:
Eligibility: To qualify for a reverse mortgage, you must be at least 62 years of age. All owners who are on the title deed must meet this age requirement. You must also have paid off all, or most, of your home mortgage. Lastly, the home you reside in must remain your principal place of residence.
Mandatory Counsel: In order to ensure that homeowners are fully aware of the financial ramifications of obtaining a reverse mortgage, you must undergo counseling with an unbiased third party before completing a loan. HUD and AARP oversee a network of counselors who can provide this service, and it should be offered for either a nominal fee or at no charge.
Tax-Free Income: One of the advantages of a reverse mortgage is that the money you receive will not be taxed. The amount you’ll obtain depends on several factors including the plan you select, the type of cash advances you choose, your age, and the value of your home. Typically, the older you are the larger the loan, as you will have more equity in the house.
Cost: The cost of a reverse mortgage varies considerably from one type to the next. However, you can typically use the money you receive to offset the loan fees. The costs will be added to the loan balance and must be repaid with interest once the loan terminates.
Repayment: Reverse mortgages do not require any payment as long as the borrower(s) remain in the home. Should the borrower(s) pass away, sell the home, or permanently relocate, then the loan would be due in full, along with interest and additional costs. If two borrowers are on the loan and one dies, the loan would not be due since one of them still occupies the home.
Home Equity Conversion Mortgage - The Federally Insured Loan
The most common type of reverse mortgage is the Home Equity Conversion Mortgage, otherwise known as a HECM mortgage. This is the only reverse mortgage program that’s federally insured and backed by the U. S. Department of Housing and Urban Development (HUD). This type of reverse mortgage is popular for a few reasons:
• Ability to choose your own interest rate.
You can select one that changes annually or one that changes every month.
• You have several payment options.
You may receive monthly loan advances for a fixed term or for as long as you live in the home. You may also choose to receive a line of credit or combine monthly loan advances with a line of credit.
• The loan can be used for any purpose.
With a HECM, you don't have to designate the loan to a specific use; you can apply the funds to anything you choose.
• Protection.
This is one of the most attractive features of a HECM. This plan protects you by guaranteeing continued loan advances even if your lender defaults.
Sell or Stay?
The main reason people choose a reverse mortgage is to gain financial independence and maintain an adequate standard of living without leaving their current home. The best way to decide if a reverse mortgage is right for you is to compare it to the other option of selling your house. To do this, ask yourself these three questions:
1. How much cash can I get by selling my home?
2. How much will it cost to buy or rent a new place?
3. Is it worth my moving now, or do I prefer to do something else with the money?
Perhaps you'll confirm what you knew all along, where you now live is the best place to be.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Protecting Your Credit During Divorce
Protecting Your Credit During Divorce
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.
Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.
The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.
The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)
Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).
Now that you have this information at your fingertips, it’s time to make a plan.
There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.
When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.
In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.
When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.
If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.
Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.
Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.
Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.
The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.
The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)
Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).
Now that you have this information at your fingertips, it’s time to make a plan.
There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.
When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.
In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.
When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.
If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.
Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.
Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Home Improvements Turn Average Homes into Dreams Come True
Home Improvements Turn Average Homes into Dreams Come True
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
If you’re thinking about taking out a home improvement loan, there are several options to consider. First and foremost, your mortgage consultant needs to know why you want a home improvement loan. Here are some factors to take into consideration.
•How long have you been in the home?
•Will the improvements increase the property value?
•Are you making improvements to increase energy efficiency?
•Will improvements be made in one fell swoop, or in stages?
•What is the current outstanding balance on your mortgage?
•What is the appraised value of the home?
•How much will the improvements cost?
•What improvements will be tax deductible?
•Do you have other revolving debt that you would like to pay off at the same time?
•Are you making improvements because you plan to sell the property?
The New Tract Home Blues
Buyers of newly-built homes are often tapped out after making the initial down payment and closing costs, including upgrades to amenities and the inevitable need for new furniture. Shortly thereafter, they realize they’d like to make additional improvements to really have the home of their dreams.
If you’re planning on putting down roots (pardon the pun), landscaping may be in order. The developer may have been kind enough to make the front yard a perky green, but if the back yard is a disturbing brown color sparse with weeds, you may be entertaining the vision of a pool or deck.
Look into the option of a Home Improvement Loan with a fixed interest rate as a 2nd Trust Deed. This type of loan does not require you to have equity built up in the existing mortgage. The maximum loan amount could go as high as 125% of the current appraised value of the home, and you can make the improvements yourself or go the extra mile and hire a contractor if the job requires architectural design, permits and inspections.
The Major Overhaul
If you have built up equity in your home and are geared up for some major renovation, the Home Equity Line of Credit (HELOC) is probably your best bet. This adjustable loan allows you to use your equity as a line of credit, so if you have improvements that are phased in over time you can simply write a check when you need to pay a bill.
It’s like a having a credit card with a much lower financing rate. In fact, the HELOC can be used for any reason at all – even paying off that credit card debt. In most cases, this action turns that revolving debt payment into a tax deductible payment with a lower interest rate. The HELOC is generally a 2nd Trust Deed, unless it is used to pay off and replace the 1st Trust Deed.
A construction loan is an alternative to the HELOC for borrowers who don’t want to use or don’t have equity, and this type of financing can be used for construction on an existing dwelling. The lender will ask a lot more questions about what the borrower wants to do with the money, and the home owner will need architectural designs, permits and a licensed general contractor on board.
Construction loans are short-term loans that usually require interest-only payments until completion of construction, but the balance is due when construction is done. Most often, that is managed up front by setting up construction-to-perm financing. In this scenario, the loan is automatically rolled over into permanent financing at a fixed rate when construction is complete, and a rate-lock agreement can be purchased to carry the borrower through that period of construction.
Another option – depending on the value of your home and local loan amount limitations – is the FHA 203(k) Program. This financing is designed for the purchase or refinance and rehabilitation of properties that meet FHA guidelines. This is worth looking into if you need to bring a property up to compliance standards, finance eligible energy efficient improvements, or turn a single-family owner occupied dwelling into a duplex to accommodate Mom or Dad!
Just a Facelift, Please!
If you want to sell your home and you simply want to improve the curb appeal, it makes sense to go with a HELOC. Make sure you are aware of the current market value of homes in your area to make sure you’re not going over the limit on the fair market value of your home. You’ll want to get a return on your investment!
If you’ve had your home on the market too long and have not been able to sell, you might want to make some changes to give it a fresh new look and bring back the passion you once had for your home. Your mortgage consultant will help you weigh out your options for financing based on your outstanding mortgage balance, income and credit score.
Regardless of your reason for home improvement, make sure you share your goals with your mortgage consultant. He or she can walk you through the various loan options and confer with your tax advisor to make sure you’re getting the best deal possible.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
If you’re thinking about taking out a home improvement loan, there are several options to consider. First and foremost, your mortgage consultant needs to know why you want a home improvement loan. Here are some factors to take into consideration.
•How long have you been in the home?
•Will the improvements increase the property value?
•Are you making improvements to increase energy efficiency?
•Will improvements be made in one fell swoop, or in stages?
•What is the current outstanding balance on your mortgage?
•What is the appraised value of the home?
•How much will the improvements cost?
•What improvements will be tax deductible?
•Do you have other revolving debt that you would like to pay off at the same time?
•Are you making improvements because you plan to sell the property?
The New Tract Home Blues
Buyers of newly-built homes are often tapped out after making the initial down payment and closing costs, including upgrades to amenities and the inevitable need for new furniture. Shortly thereafter, they realize they’d like to make additional improvements to really have the home of their dreams.
If you’re planning on putting down roots (pardon the pun), landscaping may be in order. The developer may have been kind enough to make the front yard a perky green, but if the back yard is a disturbing brown color sparse with weeds, you may be entertaining the vision of a pool or deck.
Look into the option of a Home Improvement Loan with a fixed interest rate as a 2nd Trust Deed. This type of loan does not require you to have equity built up in the existing mortgage. The maximum loan amount could go as high as 125% of the current appraised value of the home, and you can make the improvements yourself or go the extra mile and hire a contractor if the job requires architectural design, permits and inspections.
The Major Overhaul
If you have built up equity in your home and are geared up for some major renovation, the Home Equity Line of Credit (HELOC) is probably your best bet. This adjustable loan allows you to use your equity as a line of credit, so if you have improvements that are phased in over time you can simply write a check when you need to pay a bill.
It’s like a having a credit card with a much lower financing rate. In fact, the HELOC can be used for any reason at all – even paying off that credit card debt. In most cases, this action turns that revolving debt payment into a tax deductible payment with a lower interest rate. The HELOC is generally a 2nd Trust Deed, unless it is used to pay off and replace the 1st Trust Deed.
A construction loan is an alternative to the HELOC for borrowers who don’t want to use or don’t have equity, and this type of financing can be used for construction on an existing dwelling. The lender will ask a lot more questions about what the borrower wants to do with the money, and the home owner will need architectural designs, permits and a licensed general contractor on board.
Construction loans are short-term loans that usually require interest-only payments until completion of construction, but the balance is due when construction is done. Most often, that is managed up front by setting up construction-to-perm financing. In this scenario, the loan is automatically rolled over into permanent financing at a fixed rate when construction is complete, and a rate-lock agreement can be purchased to carry the borrower through that period of construction.
Another option – depending on the value of your home and local loan amount limitations – is the FHA 203(k) Program. This financing is designed for the purchase or refinance and rehabilitation of properties that meet FHA guidelines. This is worth looking into if you need to bring a property up to compliance standards, finance eligible energy efficient improvements, or turn a single-family owner occupied dwelling into a duplex to accommodate Mom or Dad!
Just a Facelift, Please!
If you want to sell your home and you simply want to improve the curb appeal, it makes sense to go with a HELOC. Make sure you are aware of the current market value of homes in your area to make sure you’re not going over the limit on the fair market value of your home. You’ll want to get a return on your investment!
If you’ve had your home on the market too long and have not been able to sell, you might want to make some changes to give it a fresh new look and bring back the passion you once had for your home. Your mortgage consultant will help you weigh out your options for financing based on your outstanding mortgage balance, income and credit score.
Regardless of your reason for home improvement, make sure you share your goals with your mortgage consultant. He or she can walk you through the various loan options and confer with your tax advisor to make sure you’re getting the best deal possible.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Monday, May 21, 2007
Top Ten Credit Do's and Don'ts During The Loan Process
Top Ten Credit Do's and Don'ts During The Loan Process
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Keep in mind the actual lender will pull their own credit report at closing, and if your credit scores have dropped, you may no longer qualify for the rate that was underwritten and the final approval may come back with a higher rate. Unfortunately, all lenders qualify you by your credit score as to which criteria you fit and every loan has different criteria attached. The loan to value, the debt to ratio and so on etc. This is what borrowers do not understand, and they think the loan officer is baiting and switching. They are not. If an issue comes up that the lender decides you do not qualify for a certain loan, the only thing a loan officer can do is shop for lenders and see if any are willing to give the rate and program they thought you qualified for. If you have good credit and know your score, the loan officer can give you an idea what he or she can offer based on what you say. But do not expect them to stand by their quote if and when they pull your credit your scores have dropped.
Following are some helpful tips to avoid the credit mistakes that many borrowers make during the loan process:
1.DON’T APPLY FOR NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations that you receive in the mail. Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from 2-50 points for one hard inquiry.
2.DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process. Paying collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it through escrow, and make sure that 1) you validate that the debt is yours, and 2) that the creditor agrees to give you a letter of deletion.
3.DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account it will appear to the FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure it is a more recent account.
4.DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your score down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, do it across the board. Meaning, make an extra payment on all of your cards at the same time.
5.DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above in 4. If you want to save money on credit card interest rates, wait until after closing.
6.DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.
7.DO JOIN A CREDIT WATCH PROGRAM. If you join a credit watch program, you can check your reports weekly, or even daily depending on the program you select. (When you pull your own reports, you don’t get dinged for a hard inquiry.) This way, if something does show up on your reports that has caused your score to go down, you’ll know it immediately, and you may be able to take care of the problem before closing.
8.DO STAY CURRENT ON EXISTINGING ACCOUNTS. Like your mortgage and car payments. One 30-day late can cost you anywhere from 30-75.
9.DO CONTINUE TO USE YOUR CREDIT AS NORMAL. Red Flags are raised easily with the scoring system. If it appears that you are changing your pattern, it will raise a red flag, and your score could go down.
10.DO CALL YOUR BROKER if you receive something in the mail from a creditor or collection agency that you
believe may affect your score during the loan process. Your broker may be able to supply you with the
resources you need to stop any derogatory reporting to the bureaus.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Keep in mind the actual lender will pull their own credit report at closing, and if your credit scores have dropped, you may no longer qualify for the rate that was underwritten and the final approval may come back with a higher rate. Unfortunately, all lenders qualify you by your credit score as to which criteria you fit and every loan has different criteria attached. The loan to value, the debt to ratio and so on etc. This is what borrowers do not understand, and they think the loan officer is baiting and switching. They are not. If an issue comes up that the lender decides you do not qualify for a certain loan, the only thing a loan officer can do is shop for lenders and see if any are willing to give the rate and program they thought you qualified for. If you have good credit and know your score, the loan officer can give you an idea what he or she can offer based on what you say. But do not expect them to stand by their quote if and when they pull your credit your scores have dropped.
Following are some helpful tips to avoid the credit mistakes that many borrowers make during the loan process:
1.DON’T APPLY FOR NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations that you receive in the mail. Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from 2-50 points for one hard inquiry.
2.DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process. Paying collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it through escrow, and make sure that 1) you validate that the debt is yours, and 2) that the creditor agrees to give you a letter of deletion.
3.DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account it will appear to the FICO that your debt ratio has gone up. Also, closing a card will affect other factors in the score such as length of credit history. If you have to close a credit card account, do it after closing, and make sure it is a more recent account.
4.DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your score down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at all times during the loan process. If you decide to pay down balances, do it across the board. Meaning, make an extra payment on all of your cards at the same time.
5.DON’T CONSOLIDATE YOUR DEBT ONTO 1 OR 2 CREDIT CARDS. It seems like it would be the smart thing to do, however, when you consolidate all of your debt onto one card, it appears that you are maxed out on that card, and the system will penalize you as mentioned above in 4. If you want to save money on credit card interest rates, wait until after closing.
6.DON’T DO ANYTHING THAT WILL CAUSE A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.
7.DO JOIN A CREDIT WATCH PROGRAM. If you join a credit watch program, you can check your reports weekly, or even daily depending on the program you select. (When you pull your own reports, you don’t get dinged for a hard inquiry.) This way, if something does show up on your reports that has caused your score to go down, you’ll know it immediately, and you may be able to take care of the problem before closing.
8.DO STAY CURRENT ON EXISTINGING ACCOUNTS. Like your mortgage and car payments. One 30-day late can cost you anywhere from 30-75.
9.DO CONTINUE TO USE YOUR CREDIT AS NORMAL. Red Flags are raised easily with the scoring system. If it appears that you are changing your pattern, it will raise a red flag, and your score could go down.
10.DO CALL YOUR BROKER if you receive something in the mail from a creditor or collection agency that you
believe may affect your score during the loan process. Your broker may be able to supply you with the
resources you need to stop any derogatory reporting to the bureaus.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Refinance Checklist
Quick Tips for Getting Started on Your Refinance
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
When you refinance your existing mortgage, you are essentially paying off the existing mortgage debt and replacing it with a new loan. Many of the same costs are involved in refinancing a loan as are in first-time financing.
To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets, including your existing mortgage.
In order to expedite the paperwork process, gather the following items together to take with you:
• W2's from the last two years (for borrower and co-borrower, if you filed separately).
• If you are self-employed, bring signed copies of your last two year's tax returns, as well as any schedules that were filed, and a profit/loss statement or balance sheet for the current year.
• Homeowner's insurance company name and number.
• The original lender’s contact information.
• Most recent bank statements.
• Most recent statements from 401ks, IRAs, mutual funds and securities accounts.
• A copy of the current payment coupon for your existing loan, along with the outstanding mortgage balance.
What costs are involved?
Some of the fees and closing costs involved in a refinance have the option of being waived.
Here is a brief rundown on fees you could expect with a refinance loan:
• Application Fee – A fee charged by the lender to process the loan application.
• Appraisal Fee – This determines the current value of your home.
• Credit Report – The fee the lender charges to pull your credit report.
• Title Search and Title Insurance – You may be able to get your current title company to reissue a new policy and save money in this area.
• Survey – The lender may order a property survey to document the current status of the land your property is on.
• Loan Origination Fee – A fee the borrower pays the lender to underwrite the loan. Usually expressed in the form of points.
• Discount Points – One point is equal to one percent of the loan amount. You may want to pay discount points to secure a lower interest rate.
• Miscellaneous Fees – VA and FHA loans may have fees associated with them. Private mortgage Insurance (PMI), document preparation fees, notary fees and tax service fees may also fall under this category.
• Prepayment Penalty – If your existing loan carries a prepayment penalty clause, you will have to pay a percentage of the outstanding loan amount for paying the loan off early.
Just as with your original loan, your lender is required to provide you with a Truth-in-Lending Statement outlining the fees associated with your new loan.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
When you refinance your existing mortgage, you are essentially paying off the existing mortgage debt and replacing it with a new loan. Many of the same costs are involved in refinancing a loan as are in first-time financing.
To start with, the lender will need personal information to verify employment for you and your co-borrower (if there is one). They will also need information regarding all of your debts and assets, including your existing mortgage.
In order to expedite the paperwork process, gather the following items together to take with you:
• W2's from the last two years (for borrower and co-borrower, if you filed separately).
• If you are self-employed, bring signed copies of your last two year's tax returns, as well as any schedules that were filed, and a profit/loss statement or balance sheet for the current year.
• Homeowner's insurance company name and number.
• The original lender’s contact information.
• Most recent bank statements.
• Most recent statements from 401ks, IRAs, mutual funds and securities accounts.
• A copy of the current payment coupon for your existing loan, along with the outstanding mortgage balance.
What costs are involved?
Some of the fees and closing costs involved in a refinance have the option of being waived.
Here is a brief rundown on fees you could expect with a refinance loan:
• Application Fee – A fee charged by the lender to process the loan application.
• Appraisal Fee – This determines the current value of your home.
• Credit Report – The fee the lender charges to pull your credit report.
• Title Search and Title Insurance – You may be able to get your current title company to reissue a new policy and save money in this area.
• Survey – The lender may order a property survey to document the current status of the land your property is on.
• Loan Origination Fee – A fee the borrower pays the lender to underwrite the loan. Usually expressed in the form of points.
• Discount Points – One point is equal to one percent of the loan amount. You may want to pay discount points to secure a lower interest rate.
• Miscellaneous Fees – VA and FHA loans may have fees associated with them. Private mortgage Insurance (PMI), document preparation fees, notary fees and tax service fees may also fall under this category.
• Prepayment Penalty – If your existing loan carries a prepayment penalty clause, you will have to pay a percentage of the outstanding loan amount for paying the loan off early.
Just as with your original loan, your lender is required to provide you with a Truth-in-Lending Statement outlining the fees associated with your new loan.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Knowing Appraisal Guidelines
Understanding the Home Appraisal Process
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Consumers are often baffled by the home appraisal process. They feel their nest is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation operates by its own set of rules.
In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes since they required investing additional money into the cost of building the home. On the other hand, the amount spent upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, but again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.
As a loan executive, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Consumers are often baffled by the home appraisal process. They feel their nest is worth a certain dollar amount, and therefore, the appraised value doesn't make sense to them. It is important to know that appraisal guidelines are dictated by the lenders. In many states, the lenders must disclose the purpose of the appraisal, as each situation operates by its own set of rules.
In essence, lender guidelines force appraisers to put a fair market value on a home based upon comparable sales in the area where the home is located, as the home must be bracketed according to size and value. For example, there is no set amount associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, and the local marketplace supports the value of a pool at $15,000, that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes since they required investing additional money into the cost of building the home. On the other hand, the amount spent upgrading or remodeling an older home is rarely reflected in full in the final appraisal. The reason is the home had value in its original condition, but again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months. Some lenders may want to look at both closed and pending sales to see if there is any room for negotiation. This is a safeguard to prevent appraisers from over-valuing the home in question. It is further stated in the guidelines that appraisers can only place a value on homes that have closed escrow. However, when property values rapidly increase within a marketplace, appraisers are generally permitted to make concessions and put more weight on the evidence provided by comparisons to pending sales and listings. This allows for a "real time" appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to push the value up higher than the market will support, otherwise the property evaluation may be exposed to a strict appraisal review.
As a loan executive, I make it a point to follow lender guidelines at all times, and work within the systems they provide. This promotes a good relationship with the lender, and smooth closure for my borrowers. As always, you are welcome to contact me if you have any questions.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Home Comparison Worksheet
Compare And Evaluate To Find The Right Home
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Do you remember which house had the… ???
Copy this flyer, and as you are hunting for a new home, you can evaluate everything on paper before you make a decision.
Address: ________
Price: _______
Monthly Payments (PITI): _____
Square footage: ______Type of construction: ______
Architectural style: _____________
Number of bedrooms: _____ Number of bathrooms: ____
Kitchen size: _______ Dining room size: ____
Living room size: ______ Family room size: _______
Fireplace: ____ Deck/Patio: ____
Basement/Attic: _____
Closet space: _____
Garage: _____
Décor (carpet, wallpaper, paint, tile): ______
Utilities: ______
Appliances: _______
Neighborhood: _____
School District: _________
Distance to workplace: _______
Extra notes: __________________
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Do you remember which house had the… ???
Copy this flyer, and as you are hunting for a new home, you can evaluate everything on paper before you make a decision.
Address: ________
Price: _______
Monthly Payments (PITI): _____
Square footage: ______Type of construction: ______
Architectural style: _____________
Number of bedrooms: _____ Number of bathrooms: ____
Kitchen size: _______ Dining room size: ____
Living room size: ______ Family room size: _______
Fireplace: ____ Deck/Patio: ____
Basement/Attic: _____
Closet space: _____
Garage: _____
Décor (carpet, wallpaper, paint, tile): ______
Utilities: ______
Appliances: _______
Neighborhood: _____
School District: _________
Distance to workplace: _______
Extra notes: __________________
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Five Reasons To Refinance Your Mortgage
Five Reasons to Refinance Your Mortgage
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
There is an old adage that says if you can improve your interest rate by at least two percentage points, then it is a good time to refinance. While that may work as a general rule of thumb, the truth is there are other reasons to refinance:
1. Lower your interest rate
Securing a lower interest rate is one of the top reasons for refinancing. This can make a big difference in your monthly out-of-pocket costs for housing and save money on financing fees.
2. Build equity faster
If you are in a position to make higher monthly payments due to an increase in salary or other good fortune, you may want to switch from a 30-year loan program into a 15 or 20-year loan structure. This enables you to build equity faster and save a tremendous amount of money on financing fees.
3. Change your loan program
Many homeowners who start with Adjustable Rate Mortgages desire to move to the stability of a Fixed Rate mortgage later on down the road. As interest rates fluctuate, making original deals less attractive, people will change their loan programs in order to capitalize on the best rates available.
We can provide you with loan comparison charts to find out what you can save with various loan programs.
4. Credit score has improved
If your credit score has improved as a result of making your mortgage payments on time and in full, you may be in a position to take advantage of your improved credit standing.
We can review your current credit score, the terms of your existing mortgage, and review options for other loan programs that could not only reduce your monthly payment, but also save on interest fees paid over the life of the loan.
5. Use the equity you have established
A cash-out refinance allows you to tap into the equity you have built up in your home. You may want to pay off revolving credit card accounts, send a child to college, or use the money for home improvements or personal expenses.
Regardless of your reasons for wanting to refinance, my team and I are interested in helping you make a decision that works best for you.
We will begin by reviewing the terms of your existing mortgage program. It will be important for us to know the purpose of the refinance and how long you plan to stay in the home. This helps us to determine whether or not it is beneficial for you to pay points up front to secure a lower interest rate on your new financing.
Throughout the process, we will present you with spreadsheets outlining various loan programs, and continue to monitor rates in order to inform you of the best time to refinance.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
There is an old adage that says if you can improve your interest rate by at least two percentage points, then it is a good time to refinance. While that may work as a general rule of thumb, the truth is there are other reasons to refinance:
1. Lower your interest rate
Securing a lower interest rate is one of the top reasons for refinancing. This can make a big difference in your monthly out-of-pocket costs for housing and save money on financing fees.
2. Build equity faster
If you are in a position to make higher monthly payments due to an increase in salary or other good fortune, you may want to switch from a 30-year loan program into a 15 or 20-year loan structure. This enables you to build equity faster and save a tremendous amount of money on financing fees.
3. Change your loan program
Many homeowners who start with Adjustable Rate Mortgages desire to move to the stability of a Fixed Rate mortgage later on down the road. As interest rates fluctuate, making original deals less attractive, people will change their loan programs in order to capitalize on the best rates available.
We can provide you with loan comparison charts to find out what you can save with various loan programs.
4. Credit score has improved
If your credit score has improved as a result of making your mortgage payments on time and in full, you may be in a position to take advantage of your improved credit standing.
We can review your current credit score, the terms of your existing mortgage, and review options for other loan programs that could not only reduce your monthly payment, but also save on interest fees paid over the life of the loan.
5. Use the equity you have established
A cash-out refinance allows you to tap into the equity you have built up in your home. You may want to pay off revolving credit card accounts, send a child to college, or use the money for home improvements or personal expenses.
Regardless of your reasons for wanting to refinance, my team and I are interested in helping you make a decision that works best for you.
We will begin by reviewing the terms of your existing mortgage program. It will be important for us to know the purpose of the refinance and how long you plan to stay in the home. This helps us to determine whether or not it is beneficial for you to pay points up front to secure a lower interest rate on your new financing.
Throughout the process, we will present you with spreadsheets outlining various loan programs, and continue to monitor rates in order to inform you of the best time to refinance.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Tips To Get Loan Approval
What Lenders Look for in Home Applications
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. A grand slam loan package is in perfect order and answers all the important questions up front.
Based on our thorough knowledge of multiple loan programs, and an understanding of what lenders look for, my team and I have a stream-lined process that will get you fully prepared for the lenders review.
What does a lender looking for when they review a loan application?
The lender wants to know about your personal financial picture, including savings and credit history and employment stability. The co-borrower's history is also taken into consideration. The lender will also consider the loan amount and appraised value of the home you desire to purchase.
Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.
What can I do on my end to make it easier?
Before taking out a home loan, it helps to establish a consistent record of paying bills on time.
If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner. Aim to have enough savings to cover your down payment, closing costs, and two month’s income for emergencies.
My team can help you evaluate your debt-to-income ratio and determine a monthly mortgage payment that is comfortable and affordable for you.
If I started a new job six months ago, can I still apply for a loan?
A stable employment history is important, but lenders will take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are the norm in your field, there are loan programs that will accommodate your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.
Consistency is the key word in the lender's mind, but know that lenders have developed many different loan structures to meet the needs of the general public.
My team and I remain on top of current mortgage trends and monitor rates on a daily basis. In addition, we have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Once your loan application is filled out and sent to the lender for review, the first thing they will look for is your ability to payback the loan you are requesting. A grand slam loan package is in perfect order and answers all the important questions up front.
Based on our thorough knowledge of multiple loan programs, and an understanding of what lenders look for, my team and I have a stream-lined process that will get you fully prepared for the lenders review.
What does a lender looking for when they review a loan application?
The lender wants to know about your personal financial picture, including savings and credit history and employment stability. The co-borrower's history is also taken into consideration. The lender will also consider the loan amount and appraised value of the home you desire to purchase.
Not every applicant is approved the first time through the process. If the underwriter has any questions or concerns, he or she will require certain conditions be met before they approve the loan. Pre-approval prior to house hunting lets you know exactly how much you are qualified to borrow in advance.
What can I do on my end to make it easier?
Before taking out a home loan, it helps to establish a consistent record of paying bills on time.
If you have utility bills that are overdue, bring these up to date. Make sure you are paying credit card installments in a consistent and timely manner. Aim to have enough savings to cover your down payment, closing costs, and two month’s income for emergencies.
My team can help you evaluate your debt-to-income ratio and determine a monthly mortgage payment that is comfortable and affordable for you.
If I started a new job six months ago, can I still apply for a loan?
A stable employment history is important, but lenders will take human factors into consideration. If you've recently completed college or vocational training, or were released from the military, you have good cause to have a lack of consistent work history. If your profession is seasonal, and gaps in employment are the norm in your field, there are loan programs that will accommodate your situation. If you are a freelancer or do contract work, the lender will look for consistency in income over the last two years.
Consistency is the key word in the lender's mind, but know that lenders have developed many different loan structures to meet the needs of the general public.
My team and I remain on top of current mortgage trends and monitor rates on a daily basis. In addition, we have a support network of Realtors®, CPAs, Financial Planners and Credit Repair Consultants to lend you additional assistance.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Getting Ready To Move? Here's A Checklist
GETTING READY TO MOVE? HERE’S A CHECKLIST!
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
4 WEEKS PRIOR TO MOVE:
_______ Set up a “move” file or folder.
_______ Set up a “move” calendar
_______ Have a garage sale.
_______ Collect financial, tax and employment documentation needed for your loan.
_______ Donate un-wanted furniture to charity.
_______ Contact insurance company to transfer policies (life, auto, homeowners).
_______ Contact doctors, dentists for copies of medical records.
_______ Contact schools for copies of student records.
3 WEEKS PRIOR TO MOVE:
_______ Review tax deductions on moving expenses.
_______ Arrange cut-off date for utility companies (telephone, gas, electricity, water, garbage, cable television).
_______ Call friends and relatives to let them know you are moving.
_______ Request a change of address kit from the post office.
_______ Check out voter registration information for the new area.
2 WEEKS PRIOR TO MOVE:
_______ Transfer stocks, bonds, bank accounts and contents of safe deposit boxes.
_______ Prepare a list of clothing that will not be packed with household goods.
_______ Take time to check off previously listed items while you still have time!
1 WEEK PRIOR TO MOVE:
_______ Label items you will need to access easily and place them in a separate room or closet.
_______ Clean your refrigerator and let it air out at least 24 hours before moving.
_______ Drain outdoor equipment: Water hoses, propane tank from BBQ grill, gas and oil from lawnmowers.
_______ Discard aerosols, paint, oils, and other flammable or toxic chemicals.
_______ Schedule to have the utilities turned on at your new home.
MOVING OUT DAY:
_______ RELAX!!!
_______ Remember, items packed last will be unloaded first.
_______ Conduct a final review of the house including the attic, stairwells, closets, cupboards, storage, garage, and behind the doors.
MOVING IN DAY:
_______ Have the house ready for delivery prior to the truck’s arrival.
_______ Take a break, sit back, relax and ENJOY YOUR NEW HOME!!
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
4 WEEKS PRIOR TO MOVE:
_______ Set up a “move” file or folder.
_______ Set up a “move” calendar
_______ Have a garage sale.
_______ Collect financial, tax and employment documentation needed for your loan.
_______ Donate un-wanted furniture to charity.
_______ Contact insurance company to transfer policies (life, auto, homeowners).
_______ Contact doctors, dentists for copies of medical records.
_______ Contact schools for copies of student records.
3 WEEKS PRIOR TO MOVE:
_______ Review tax deductions on moving expenses.
_______ Arrange cut-off date for utility companies (telephone, gas, electricity, water, garbage, cable television).
_______ Call friends and relatives to let them know you are moving.
_______ Request a change of address kit from the post office.
_______ Check out voter registration information for the new area.
2 WEEKS PRIOR TO MOVE:
_______ Transfer stocks, bonds, bank accounts and contents of safe deposit boxes.
_______ Prepare a list of clothing that will not be packed with household goods.
_______ Take time to check off previously listed items while you still have time!
1 WEEK PRIOR TO MOVE:
_______ Label items you will need to access easily and place them in a separate room or closet.
_______ Clean your refrigerator and let it air out at least 24 hours before moving.
_______ Drain outdoor equipment: Water hoses, propane tank from BBQ grill, gas and oil from lawnmowers.
_______ Discard aerosols, paint, oils, and other flammable or toxic chemicals.
_______ Schedule to have the utilities turned on at your new home.
MOVING OUT DAY:
_______ RELAX!!!
_______ Remember, items packed last will be unloaded first.
_______ Conduct a final review of the house including the attic, stairwells, closets, cupboards, storage, garage, and behind the doors.
MOVING IN DAY:
_______ Have the house ready for delivery prior to the truck’s arrival.
_______ Take a break, sit back, relax and ENJOY YOUR NEW HOME!!
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Increasing Your Credit Score
Increasing Your Credit Score
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Good credit translates to lower interest rates for borrowers. Here are just a few quick tips that can help put you in a better position under the discerning eye of an underwriter!
Do you have past due balances that have been neglected? If they are showing up on your credit report and you want to purchase a home, make sure you bring them up to current status whenever possible.
Do you have outstanding debt that you can afford to pay off right now? Try to get these accounts down to a zero balance, or at least a lower balance. If your cash on hand doesn’t allow you to do this, try to distribute the debt amongst other open credit cards. You can also consider opening a new line of credit and transferring part of the balance off a card that is close to being “maxed out.” If you can get the resulting balances below 50% of the available credit, you’re on the road to improving your credit score considerably in most cases.
Do not close existing credit card accounts, even if you don’t want to deal with the company any more… Believe it or not, the credit history is a good thing to have!
When married couples keep separate credit card accounts, some or all of the balances can be transferred to one spouse’s list of accounts. This gives the other spouse an opportunity to increase their credit score and designate him or herself as the sole borrower on the mortgage loan. Ownership of the home can remain in both names!
See if your credit provider will increase your available lines of credit. This can, in turn, reduce the overall debt ratio, but only do this if your credit card company can do that without a hard credit inquiry.
Do you have past dues and charge-offs within the last two years? Pay them off now, if you can! Past dues older than two years will have little to no impact on your credit score if they are paid, but can possibly bring the score down, which is something we don’t want to do... Focus on that 2-year time frame.
Do you see errors in your report? Request the credit bureau delete any outstanding debt that is incorrectly charged to you, or things that should have been removed that you have already paid. They have an obligation to reconcile this within 30 days. If you see items on your report that are less than two years old and you have the money to pay it off now, mark the back of your payment check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, you can use this cancelled check as proof of the transaction in the event the outstanding debt is not removed promptly and interferes with the closing of your loan.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Good credit translates to lower interest rates for borrowers. Here are just a few quick tips that can help put you in a better position under the discerning eye of an underwriter!
Do you have past due balances that have been neglected? If they are showing up on your credit report and you want to purchase a home, make sure you bring them up to current status whenever possible.
Do you have outstanding debt that you can afford to pay off right now? Try to get these accounts down to a zero balance, or at least a lower balance. If your cash on hand doesn’t allow you to do this, try to distribute the debt amongst other open credit cards. You can also consider opening a new line of credit and transferring part of the balance off a card that is close to being “maxed out.” If you can get the resulting balances below 50% of the available credit, you’re on the road to improving your credit score considerably in most cases.
Do not close existing credit card accounts, even if you don’t want to deal with the company any more… Believe it or not, the credit history is a good thing to have!
When married couples keep separate credit card accounts, some or all of the balances can be transferred to one spouse’s list of accounts. This gives the other spouse an opportunity to increase their credit score and designate him or herself as the sole borrower on the mortgage loan. Ownership of the home can remain in both names!
See if your credit provider will increase your available lines of credit. This can, in turn, reduce the overall debt ratio, but only do this if your credit card company can do that without a hard credit inquiry.
Do you have past dues and charge-offs within the last two years? Pay them off now, if you can! Past dues older than two years will have little to no impact on your credit score if they are paid, but can possibly bring the score down, which is something we don’t want to do... Focus on that 2-year time frame.
Do you see errors in your report? Request the credit bureau delete any outstanding debt that is incorrectly charged to you, or things that should have been removed that you have already paid. They have an obligation to reconcile this within 30 days. If you see items on your report that are less than two years old and you have the money to pay it off now, mark the back of your payment check with the following notation: “Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record.” If necessary, you can use this cancelled check as proof of the transaction in the event the outstanding debt is not removed promptly and interferes with the closing of your loan.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Credit Tips to Score a Lower Interest Rate
Credit Tips to Score a Lower Interest Rate
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
In a mortgage lender's eyes, a good credit score translates into lower interest rates for home-shopping borrowers. The higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores usually end up paying higher interest rates on their loans.
If this is you, don't panic. Here are a few guidelines on what you can do to adjust your score and receive a favorable review from the underwriter:
Should I pay off all past due balances and charge-offs?
This is usually a good idea, but you only need to worry about the past due balances and charge-offs that have occurred in the last two years. Items more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items over two years old, it can actually bring your credit score down - something you don't want to do. Bringing that score up means you'll get a better interest rate on your loan.
Should I close existing credit card accounts that I don’t really use?
“No.” Part of your credit score is based upon credit history. Even if you don’t use old credit cards much, you will still benefit from the credit history they represent.
Rather than trying to pay off all your credit cards, move part of the debt from one card to another to evenly distribute of debt. Try to keep the ratio of debt to credit limits at about 30% of the available credit or less. If your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.
When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.
What about errors on my credit report?
If you have items that are showing up on your credit report that you know you have already paid, request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.
If there are items on your credit report less than two years old, if possible, send in your payment and mark the back of the check with the following notation: "Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record." If necessary, the cancelled check will be proof that the item should be promptly removed from your credit report if it interferes with the closing of your loan.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
In a mortgage lender's eyes, a good credit score translates into lower interest rates for home-shopping borrowers. The higher your score is, the less risk you are, and the more likely it is you will pay off your debt. For this reason, borrowers with lower scores usually end up paying higher interest rates on their loans.
If this is you, don't panic. Here are a few guidelines on what you can do to adjust your score and receive a favorable review from the underwriter:
Should I pay off all past due balances and charge-offs?
This is usually a good idea, but you only need to worry about the past due balances and charge-offs that have occurred in the last two years. Items more than two years old have little effect on your current credit score. In fact, if you pay off delinquent items over two years old, it can actually bring your credit score down - something you don't want to do. Bringing that score up means you'll get a better interest rate on your loan.
Should I close existing credit card accounts that I don’t really use?
“No.” Part of your credit score is based upon credit history. Even if you don’t use old credit cards much, you will still benefit from the credit history they represent.
Rather than trying to pay off all your credit cards, move part of the debt from one card to another to evenly distribute of debt. Try to keep the ratio of debt to credit limits at about 30% of the available credit or less. If your credit provider will increase your line of credit, the ratio of debt to available credit is automatically reduced.
When married couples have separate credit card accounts, the debt can be transferred from one spouse to another to clear up credit issues for the other spouse. That spouse with clean credit can be designated as the sole borrower on the loan, but ownership of the home can still go in both names.
What about errors on my credit report?
If you have items that are showing up on your credit report that you know you have already paid, request that these items be removed by the credit bureau. They are obligated to rectify this within 30 days.
If there are items on your credit report less than two years old, if possible, send in your payment and mark the back of the check with the following notation: "Accepting this check is evidence that the transaction is complete and this charge will be deleted from my credit record." If necessary, the cancelled check will be proof that the item should be promptly removed from your credit report if it interferes with the closing of your loan.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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Avoid Financial Changes During the Loan Process
Avoid Financial Changes During the Loan Process
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Once your loan package has been sent to the lender, there are a number of things you should avoid doing that may change your financial picture. Remember, the lender is looking for stability and consistency. If you want the best interest rate, keep that in mind. Here are a few things to consider:
The lender wants to see what your source of down payment is.
Your lender will most likely ask you to provide proof of your liquid assets. This includes bank statements for checking and savings accounts, verification of investments, and any other liquid assets. Some of the things they ask for may seem trivial, but keep in mind, if you are planning a move to a new home, it's important to have all documentation readily available. If the lender asks for cancelled checks or deposit receipts to meet certain conditions, you want to be able to find these things quickly to avoid delaying the closing of your loan. Make sure your paper trail is easy to document, and don't move money from one account to another.
Major purchases will count against you.
Perhaps you're thinking about buying new appliances for the new home. This is not the time to do it! Avoid making any major purchases on jewelry, appliances, furniture, vacations, or anything with a significant price tag.
Buying or leasing a car is a huge purchase that can negatively impact the way a lender views your financial status. This is a big-ticket item that dramatically affects your debt-to-income ratio. You may have room in your budget to purchase a new car, and think this is a worthy investment if you’re looking for a home further from your work, but by tacking a car payment onto your existing debt you reduce the amount you will qualify for in a home loan. A $400 a month car payment can reduce your loan limit by as much as $50,000!
If you change jobs, you may be asked to document why the change occurred.
If you are changing jobs to increase your income, that's a no-brainer for the lender. If you have an erratic work history to begin with, another job change will make it look worse for you.
If you are an hourly wage employee, most likely a job change will have no effect on your ability to qualify for a loan. If you have a track record of a consistent amount of overtime or consistent bonuses over the last two years, the lender views this favorably.
If you change jobs, there is no way of knowing if the new employer will pay overtime. Many do not! If you work on a salary + commission or straight commission basis, it has a dramatic affect on your stability. If you are toying with the idea of starting your own business, again, consider doing it after your loan has funded.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
-----------------------------------------------------------------
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Once your loan package has been sent to the lender, there are a number of things you should avoid doing that may change your financial picture. Remember, the lender is looking for stability and consistency. If you want the best interest rate, keep that in mind. Here are a few things to consider:
The lender wants to see what your source of down payment is.
Your lender will most likely ask you to provide proof of your liquid assets. This includes bank statements for checking and savings accounts, verification of investments, and any other liquid assets. Some of the things they ask for may seem trivial, but keep in mind, if you are planning a move to a new home, it's important to have all documentation readily available. If the lender asks for cancelled checks or deposit receipts to meet certain conditions, you want to be able to find these things quickly to avoid delaying the closing of your loan. Make sure your paper trail is easy to document, and don't move money from one account to another.
Major purchases will count against you.
Perhaps you're thinking about buying new appliances for the new home. This is not the time to do it! Avoid making any major purchases on jewelry, appliances, furniture, vacations, or anything with a significant price tag.
Buying or leasing a car is a huge purchase that can negatively impact the way a lender views your financial status. This is a big-ticket item that dramatically affects your debt-to-income ratio. You may have room in your budget to purchase a new car, and think this is a worthy investment if you’re looking for a home further from your work, but by tacking a car payment onto your existing debt you reduce the amount you will qualify for in a home loan. A $400 a month car payment can reduce your loan limit by as much as $50,000!
If you change jobs, you may be asked to document why the change occurred.
If you are changing jobs to increase your income, that's a no-brainer for the lender. If you have an erratic work history to begin with, another job change will make it look worse for you.
If you are an hourly wage employee, most likely a job change will have no effect on your ability to qualify for a loan. If you have a track record of a consistent amount of overtime or consistent bonuses over the last two years, the lender views this favorably.
If you change jobs, there is no way of knowing if the new employer will pay overtime. Many do not! If you work on a salary + commission or straight commission basis, it has a dramatic affect on your stability. If you are toying with the idea of starting your own business, again, consider doing it after your loan has funded.
About the Author: As a Mortgage Professional, I promise to be your partner in the mortgage process.
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http://www.myloanofficersite.com/josephvalenzuela
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The Five Factors Of Credit Scoring
The Five Factors Of Credit Scoring
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Payment History has a 35% impact. Paying debt on time and in full has a positive impact, and late payments, judgments and charge-offs have a negative impact.
Outstanding Credit Balances have a 30% impact. Debt ratio of outstanding balance to available credit is important. Keeping that below 50% is wise and below 30% even wiser. It is never a good idea to close an account; the debt ratio will go up and the number of seasoned lines will decrease. Pay outstanding debt down as close to zero as possible and evenly redistribute the remaining balance among the open lines. The increased interest incurred by moving a balance from a 0% card to a 23% card will be minimal relative to what the increased mortgage debt might be with a low credit score. Hitting the maximums of available credit can be very negative. It may be worth calling and asking the credit company to increase your available credit to lower the debt ratio, provided they can do so without a hard credit inquiry.
Length of Credit History has a 15% impact. The length of time a particular credit line has been opened is important. A seasoned borrower is stronger. Opening new credit cards will decrease the average length, and therefore hurt this portion of the score.
Type of Credit has a 10% impact. A mix of auto loans, credit cards and mortgages is positive, rather than a concentration in credit cards only. Careful, too, when getting credit at a store that is not a department store: the credit agencies frown on cards for more specialized stores where you’re likely to only make one purchase, as they seem to show desperation.
Inquiries have a 10% impact. Hard inquiries for credit will negatively impact the score. Auto and mortgage inquiries receive special treatment and 20 inquiries can be made in a 14-day period for auto or mortgage and will be treated as only 1 inquiry. The maximum number of inquiries that will reduce the score is 10. Any inquiries beyond that in a six -month period will have no further impact on the borrower. Each hard inquiry can cost 2-50 points on a credit score.
http://www.myloanofficersite.com/josephvalenzuela
-----------------------------------------------------------------
Copyright © Joseph Valenzuela
http://www.myloanofficersite.com/josephvalenzuela
Payment History has a 35% impact. Paying debt on time and in full has a positive impact, and late payments, judgments and charge-offs have a negative impact.
Outstanding Credit Balances have a 30% impact. Debt ratio of outstanding balance to available credit is important. Keeping that below 50% is wise and below 30% even wiser. It is never a good idea to close an account; the debt ratio will go up and the number of seasoned lines will decrease. Pay outstanding debt down as close to zero as possible and evenly redistribute the remaining balance among the open lines. The increased interest incurred by moving a balance from a 0% card to a 23% card will be minimal relative to what the increased mortgage debt might be with a low credit score. Hitting the maximums of available credit can be very negative. It may be worth calling and asking the credit company to increase your available credit to lower the debt ratio, provided they can do so without a hard credit inquiry.
Length of Credit History has a 15% impact. The length of time a particular credit line has been opened is important. A seasoned borrower is stronger. Opening new credit cards will decrease the average length, and therefore hurt this portion of the score.
Type of Credit has a 10% impact. A mix of auto loans, credit cards and mortgages is positive, rather than a concentration in credit cards only. Careful, too, when getting credit at a store that is not a department store: the credit agencies frown on cards for more specialized stores where you’re likely to only make one purchase, as they seem to show desperation.
Inquiries have a 10% impact. Hard inquiries for credit will negatively impact the score. Auto and mortgage inquiries receive special treatment and 20 inquiries can be made in a 14-day period for auto or mortgage and will be treated as only 1 inquiry. The maximum number of inquiries that will reduce the score is 10. Any inquiries beyond that in a six -month period will have no further impact on the borrower. Each hard inquiry can cost 2-50 points on a credit score.
http://www.myloanofficersite.com/josephvalenzuela
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