Hello Friends:
It's been far too long since I published a blog post here. The reality is that our firm tried a merger with another firm which did not go as expected. So, we are back!
Operating fully under our own name and management again, let's get going!
I'll be here with more soon.
Wow! What a busy three weeks since I had a chance to post anything here for your financial education.
Although your credit rating is third in the order of importance when seeking a loan, (collateral and capacity to repay the loan are more essential than credit score) your FICO score is still vital to your credit pricing.
For example, a borrower who seeks a mortgage with a 720 FICO score will have to pay, on average, over 1.75 points less than someone with a 660 FICO score for the same loan. In many cases, a 660 FICO score will eliminate you from consideration for several loan products.
Even though we can still find programs which will accept someone with a 580 FICO score (or even lower in certain cases), the other limitations will make that borrower almost impossible lend to.
So, what is the secret to having good credit? First of all, pay your bills on time, every time. Next, keep your revolving credit balances under 40% of your high limit. And, if you need to increase your credit score, there is an often overlooked reality of Regulation E which creditors and credit reporting bureaus hate when consumers find out about it. That is simply this, a credit reporting bureau, if challenged correctly, MUST remove any item which the creditor cannot PROVE is accurate.
The properly written dispute letter can often result in the removal of a derogatory item. Now, be careful here, credit bureaus have learn the trick which many "fly-by-night" credit repair companies have used. That being simply dispute everything on a report, whether it is valid or not. Now, the bureaus are adding a line stating that an item is in dispute. Many new creditors will not lend to you if they see this. Face it, would you lend hundreds of thousands of dollars to someone who appears to not want to pay his bills, then tries to get around it by making you work extra to prove the debt is owed? Of course you wouldn't, neither will most banks. However, if there is a derogatory item which authentically should not be present on your credit report, a well written dispute, along with any written evidence you have to support your claim, can have a positive and immediate impact upon your credit scores.
Realtors and consumers who read the governmental loan program capabilities are often surprised that lender rarely follow the rules and add stricter guidelines. This is allowed by HUD. Banks may add guidelines, but they are not permitted to loosen guidelines. This can lead to confusion. Different banks have different rules for the same, governmental loan program. Those banks which stick closer to the HUD rules often will have slightly higher rates as they are assuming higher risk than banks which add "overlays." So, while an FHA 203K (rehab) loan may permit an owner/contractor, most banks will not permit the owner, even if a licensed contractor, to perform his or her own work, even though FHA allows it.
There are other examples of overlays too. The most common is the FICO score requirement. Most banks have gone to a minimum 640 FICO score, FHA has no actual score requirement (although there has been a move afoot to impose one).
The moral of the story is to do your homework. Find out which banks have what overlays. Or contact my office with your questions.
Required courses. Looking to refresh your memory regarding the causes of World War I? Or perhaps you want to listen to Harold Bloom read The Best Poems of the English Language. Whatever class you're thinking of taking, there's an audio book covering the topic, from actual college lectures to best-selling non-fiction. Get a degree in business. All of the best business titles come out instantly in audio books. Learn to make friends and influence people, give yourself a total money makeover, or start thinking like a billionaire-all before you get to the office in the morning. Stay informed. One of the difficulties with radio is that it's easy to miss your favorite show. With the advent of Podcasting, this will soon become a thing of the past. Podcasting enables listeners to download audio broadcasts, from select media outlets or individuals, and listen when it's convenient. Rather like TiVo® for radio, you can even "subscribe" so that new content is automatically accessed. Another radio resource is www.audible.com. This site sells popular radio show content as well as daily audio versions of the New York Times and the Wall Street Journal. (An MP3 player is required.) Aprende un nuevo idioma. Remember those old language tapes? Well, they still make those, and they're better now. I promise. And what better place to work on that accent of yours than alone in the car? As for the people in the next car, the ones watching you talk to yourself, they can think what they want. Enroll in comedy school. Since you're the dean of admissions and you make the reading (or, rather "listening") list for this degree, you can study what you want. Why not check out recordings by today's top comedians? Margaret Cho, Bill Cosby, Richard Jenni-they all put out CDs and audiotapes. Maybe they'll inspire you to work on your own routine. Your commute isn't getting any shorter, but at least now you can get smarter while you're getting where you need to go. And the next time traffic is stopped dead on the freeway, look on the bright side: you can take notes.
I have an educational audio series which covers topics ranging from real estate investment strategies and an explanation of credit scoring to dispelling home equity myths. Please contact me to obtain a copy today!
The Federal Reserve lowered interest rates for the third straight meeting of the FOMC. What does this mean? Well, if you're looking to capture the best home loan rates, you need to act now. For those with an application already in process, you should probably lock your rate as soon as possible. And, for anyone who has yet to begin a loan application, what are you waiting for?
Rate Hikes on the HorizonDespite this latest cut from the Fed, rates for many borrowers could actually increase soon. Why? Because Fannie Mae and Freddie Mac have recently announced 2008 Loan Level Price Adjustments (LLPAs) that are already starting to show up on lenders' rate sheets. LLPAs are automatic “penalties” based on credit scores, which tack on costs in the form of points or higher rates for most anyone with a FICO less than 720. Call me, and I will give you all the details.
Back to The FedBut, let's get back to the good news. The Fed cut the Federal Funds Rate, an overnight lending rate that banks charge each other and which influences the amount of interest consumers pay for various types of debt, such as credit cards, home equity lines of credit, and auto loans.Since September 18th, the Federal Funds Rate has gone down 100 basis points. If you have a loan that is tied to the Prime Rate, this means your rates have been lowered a full point. But, for those seeking to obtain new financing, you must act now to take advantage.
No Time to WaitFollowing each of the last two interest rate cuts by the Fed, home loan rates jumped higher a couple of weeks later. Remember, lower short-term rates are inflationary by nature, and cause consumers to spend more money. Because of this, long-term rates tend to increase as bond holders hate inflation and command higher rates as a result in order to protect their investments. Because of these pressures and the upcoming Loan Level Price Adjustments, interest rates are going to rise. You need to call me now in order to secure the best deal you may see for some time. You'll be glad that you did.
We appreciate your business and wish you a happy and healthy holiday season!
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Cars these days have a dazzling array of extra bells and whistles that really add nothing but zeros to the car's price tag. Following are a few expensive extras that most drivers could probably do without. Automatic Stick Shift: Beyond adding $1,000 or more to the price, this useless feature allows the driver to "shift" gears without a clutch. The car, however, has an automatic engine and will shift on its own either way. Purely for show, this feature quickly loses its appeal. Individual Climate Control: This expensive feature claims to allow the driver and passenger to control the temperature of his or her own "zone". But how much more effective is this feature than individually controlling the vents and windows? Keyless Ignition: With this $300 to $500 feature, a driver can start the engine with the push of a button. For this to work seamlessly, however, a key fob must be on the driver at all times. At least with a key, you can always call a locksmith if you lose it. Power Folding Seats: Up to $700 or more! Enough said. Navigation System: You can save $1000 or more by skipping the factory-installed system and purchasing a quality portable one that you can use in any car.
Thanks to the Federal Trade Commission's Do Not Call Registry, 150 million Americans have enjoyed far fewer unwanted sales calls over the last few years. It hasn't been perfect, but progress has clearly been made due to this important program. But, just when you thought it was safe to eat dinner with your family, the telemarketers may be back in your life for good when your 5-year Do Not Call Registration expires in June 2008. The good news is, you can always re-register for another five years, and continue to enjoy the peace and quiet. Simply call 1-888-382-1222 or visit www.donotcall.gov to register any or all of your home and cell phone numbers. Don't forget. Telemarketing companies are counting on millions of Americans to drop the ball. Don't be one of them.
When it comes to real estate, foreclosures aren't the only big story in the news. Builders and sellers are reportedly offering huge savings and massive incentives in order to pull in buyers and compete in today's marketplace. Business Week recently revealed that some big builders have been auctioning homes discounted by as much as 50% in selected markets, while other large builders have been providing up to $100,000 in savings and incentives. Many individual sellers are getting in on it, too, by offering incentives like special financing, plasma TVs, vacations, and even motorcycles, cars, and boats. But, be wary. While there are many sweet deals to be found in today's market, there are also scams, lemons, and unreliable builders, sellers, and industry professionals. Make sure that any deals or incentives you're receiving or providing make sense for your own financial goals and needs. For home buyers and home sellers, this means working with knowledgeable, experienced real estate agents and mortgage professionals you can trust.
A negative amortization loan is an adjustable rate mortgage that allows the consumer to tap into home “equity” by offering several monthly payment options. Up to an additional 25% of the original loan amount is available to the borrower.This flexibility works well for consumers who have seasonal income or want more control over their cash flow. However, the borrower must have some degree of financial discipline. Each month, the borrower will choose to make a fully amortized payment, an interest-only payment, or a low introductory rate payment.A fully amortized payment is larger, and includes payment toward principal + interest. The interest-only payment is lower, but no part of that mortgage payment goes toward the principal. The borrower is simply keeping their head above water.The third option is where negative amortization comes into play. If the consumer chooses to make the low introductory rate payment, the interest is not sufficiently covered for that month. The balance of interest owed is then tacked back on to the principal, thus increasing the mortgage debt.Smart consumers can use these payment options to their advantage, but should have a full understanding of how adjustable loans work. They should also know that once the maximum loan amount has been reached, the lender will immediately increase the payment amount to the fully amortized rate.
David RahnUnion First Mortgage3161 Solomons Island Road Suite 6Edgewater, MD 21037© Copyright 2007. All About News, Inc.
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