Caution: Your credit score may sink when you sign up for mortgage relief

Credit Drop

According to the Washington Associated Press,  if you sign up for the government’s mortgage assistance programs, there’s a chance you may get something  you don’t expect – a lower credit score.

What are these mortgage assistance programs?

  • Home Affordable Refinance: This option can help you refinance into a more affordable mortgage if you’re paying your mortgage on time but you’re unable to refinance to a lower rate because you owe more on your mortgage than your home is currently worth.
  • Home Affordable Modification: This option can help you get mortgage payments you can afford if you’re delinquent in making your monthly mortgage payments, in the foreclosure process, or current on your payments but have recently experienced hardship and you are about to miss a payment.

There are many pitfalls showing up with these programs.  One very important one is this, if you are struggling to continue making your payments on time so you sign up for a government loan modification program,your credit score could immediately reduce by as much as 100 points!    What?  Why?

Read more…

Mortgage Resets – Here comes the next wave

Mortgage Resets

I know everyone really wants to believe the housing market is going to get better in 2010. I know we’ve all had enough of the gloom and doom, but it appears we have to brace ourselves for more of the same, at best.

We’re so used to turning the channel when we get bored with what’s on. We expect to drive up to the window and have our food ready. We swallow a pill in anticipation of instant headache relief.

But, from the looks of this graph, we’re going to be in this one for a while.

From the graph, you can see the first wave that’s already passed, the grey wave.  It peaked mid ’07 then again in January ’09.  Those were the sub-prime loans resetting that put us into the tailspin we’re just now trying to come out of.

The next, and far more layered wave is just beginning to form.  You can see the dotted line where it began in January 2010.  It is 4 layers deep – the grey sub-primes, the red prime loans, the blue Alt A’s and the yellow Option Arms.  Everything peaks mid year 2011.

Add to that all the “shadow inventory” the banks have taken back and are still holding that some people say is more than they’ve already released.  Hang on, boys and girls, it’s going to be a bumpy ride.

It’s better to know ahead of time to be prepared. Stop spending. Save what you can, when you can. Scale back, downsize, reuse, recycle.

The real estate market will come back strong. It always does. We’ll just have to be patient a while longer.

So, what’s the good news?  There’s never been a better time to invest in real estate.

If you live in the Triad area of North Carolina, we’d love to help you with your investing.  Check out our Triad Master Mind. It’s a great group of local investors and we’re all working together to help each other profit through real estate.

Don’t wait to invest, invest and wait!  Huge returns will be there to reap in your future.

Happy investing!

How do you Protect What you Have?

Lock by AMagill.photo by AMagill

With the implosion of the housing market, the collapse of credit, and the unpredictable ups and downs of Wall Street, how do you protect what you have?

If you listen to the news, you’ve heard that trillions of dollars have been lost in savings this year alone, 7.6 million people are newly unemployed, and there is a record high in home foreclosures & bankruptcies with more to come.  Add to that the fact that, according to the Consumers Union, 8.3 million + Americans have their identities stolen each year .

The news is worrisome at best, the outlook bleak for the near future.  But, don’t paralyze.  Get busy informing yourself and protecting what you have and what you plan to accumulate in the upcoming years.  You may not know enough now but, by this time next year, let’s all vow to be better informed.

Should you handle your finances on your own?

To begin with, know your rights and study your investments.   The ones you trust your money to should know what they’re doing.   Do they?   Ultimately, you are the one who is responsible for your own success.

What are some pro-active things you can do?

Read more…

Turned Down for a Mortgage? What’s Next?

First of all, you’re not alone. Hope that helps… According to the Mortgage Bankers Association in Washington, D.C., about half of all mortgage applicants are now being turned down. Half. Good grief, that’s a lot.

Did you receive a formal rejection spelling out the reasons you were turned down? If you were turned down because of information on your credit report, federal law entitles you to something called an “adverse action” notice.

According to the Federal Trade Commission, when credit is the issue, you’re entitled to a copy of the results showing the reason for the negative report from the credit reporting agency that provided the data on which the lender based its decision.  Whew!   You’re also entitled to a free credit report; see the FTC web site for more information.

You’ll want to know the reason for the rejection so you can fix what’s wrong, if anything is, and make sure you clear it up.  You also want to make sure that the reason is valid and not a mistake on your credit report.

Read more…

Debit Card – do you use one?

Debit card
photo from TalkforFinance

We’ve talked about credit cards in New Credit Card Laws go into Effect August, 2009, and Your Credit Card is Canceled.

But we haven’t talked about Debit Cards.  Do you use one?  Do you know the danger if you do?

For example, if you use the card and don’t have enough money in your checking account to cover the charge, you can be fined up to $39 every single time you exceed your balance.

May not sound like much but, if you’re out shopping and charge 5 or more times, it adds up!

And, many banks don’t debit your account in transactional order.  What I mean is, you could have $400 in your account and make several $20 purchases.  Later in the day, if you charge $350, you’re over for the day.  You would think that the three $20 purchases would not incur a fine, but, if the bank takes out your last charge first, you’ll pay a fee for every purchase made that day.

Read more…

Your Credit Card is Canceled

Credit Cards

Possibly without notice..

You may be aware that many new laws protecting consumers when dealing with credit cards have recently been passed.  Credit card companies, for example, are now required to give customers a 45 day notice before making significant changes including changes in interest rates.

However, canceling cards without warning is allowed.  Is this not a significant change?

Credit card companies say that, if they warn consumers that their card is going to be canceled, the user could run up the card balance and never pay it leaving the issuer on the hook.

It is required that you get notice of the cancellation, eventually, just not necessarily before it happens. You must be given notice within 30 days, which could create some very embarrassing moments at the cash register.

None of us should be dependent upon credit cards, certainly not now more than ever.  Pay down your balances because, more big news, interest rates are going to continue to go up on credit cards next year and, if you have large balances, you may never get them paid off.

Pay down and pay off your cards.  A good 2010 resolution may be to use them less and less.

Raising Your Credit Score after a Short Sale

Credit Report

How does a short sale affect your credit report and is there anything you can do about it?

It depends on how the bank reports it to the credit reporting agencies and.. they have lots of options. Sometimes, if you’re lucky, they don’t report it at all. Or, it could even show up as a foreclosure.

They can also report it as settled. This usually happens when an agreement has been reached between the lender and the borrower to repay only a portion of the original debt. This does hurt your credit but not as much as multiple delinquencies, a charge-off, a foreclosure or a bankruptcy. (A charge-off is when the lender transfers non-collectibles to a category such as bad debt or loss.)

If you do have a short sale with your lender, request that they report it as unrated. The beauty of unrated is that it is neither credit-positive nor credit-negative.

And it is possible for the lender, as a condition of the short sale, to remove any derogatory reporting that has already taken place! The lender may tell you that they don’t have the ability to do this, but they do and they can.

Write to your lender and demand that one of these scenarios be a condition for your short sale. If they don’t respond to you and the short sale is completed, you can then challenge any derogatory credit reporting that occurs and may be able to get it removed based on your letter.

As you can see, there are options if you’re facing foreclosure or a short sale and want to protect your credit status. The situation may not end up as bad as you think.

Any other ideas or experiences with credit and short sales?