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?

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Mortgage Forgiveness Debt Relief Act

Mortgage Forgiveness Debt Relief

The Mortgage Forgiveness Debt Relief Act became law December 20, 2007.

This law states that you should not receive a 1099 form for the debt forgiven for a loan secured by a qualified principal residence. So, if a you sold your home for less than the mortgage amount and the lender forgave the remaining debt, you no longer have to list that amount as taxable income.

Normally in US law, when a lender decides to forgive all or a portion of a borrower’s debt and accept less, the forgiven amount is considered income for the borrower and may be taxed.

However, since the Mortgage Forgiveness Act, amendments have been made to remove such tax liability and allow the borrower and lender to work together to find a solution that is beneficial to both parties. This protection is limited to principal residences — rental properties are ineligible for relief — so ask you tax advisor to be sure you qualify.

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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?

$8000 Tax Credit is set to expire – Are You Ready?

Cliffvale

Ok, so you want to buy a home, especially now, since you may qualify for that $8000 tax credit.  What should you be doing?  The time is running out so, hopefully, you’ve already started the process.

If you haven’t done so already, contact a mortgage lender or bank to find out if you qualify and for how much.  The lender will pull your credit or have you pull your credit to find out your credit score.  Then, they will evaluate any credit issues you may have and tell you what you need to do to resolve them.  Some issues take months to resolve.

Hopefully, you’ve already been reading the information here about credit and have been working on preparation to buy.

The point I want to stress here is that it will take, on average, 2-3 months to close your loan once you have applied.  Count the days!  The $8000 tax credit is set to expire on December 1 and we are already well into September.  Even if your credit is good, you must hurry and work closely with your lender if you hope to close your loan before the deadline.

Start today.  If you have questions, contact your lender or email me here.  Good luck!

5 Things that can Hurt Your Chances of Getting a Mortgage

Mortgages

1. Credit Report errors

The key to getting the best mortgage rate is good credit.  One in four adults have serious errors on their credit reports. The Fair Credit Reporting Act requires credit-reporting agencies to fix these mistakes but it’s up to you to find the problems and to ask for the errors to be corrected.  We discussed Increasing Your Credit Score in an earlier post.

Order a free copy of your credit report from each of the three reporting agencies:
Experian
TransUnion
Equifax

Tell the credit reporting agency about any errors you find.

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How to Increase Your Credit Score

Credit Bureaus

What is a Credit Score?

Your credit score is a numeric expression of your creditworthiness and it’s used by everyone from lenders to landlords to show them the likelihood that you will repay your debts.

A FICO score is the most widely used credit scoring system. FICO is an acronym for Fair Isaac Corporation, the company that provides the credit score model to financial institutions. There are other providers of credit scoring systems as well.

Credit scores, on the scale assigned by FICO, range from 300 to 850. Who has an 850 credit score and what can you do to get one? Well, less than 1 percent of the population has a credit score above 800, so it’s very unlikely that you will ever have an 850 credit score. However, if your credit score is above 720, you will still receive the best rates on anything you apply for.

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Tips for First Time Home Buyers

homedream

Thinking of buying a home in 2009? The time’s never been better. Interest rates are ridiculously low, there are a record number of homes on the for sale market which means you can negotiate a great price and the government is offering an $8000 tax credit if you buy before the end of the year!

We sell our homes mostly through lease options in order to help people who haven’t been able to go through traditional lenders to buy either because they don’t have the down payment saved or they have low credit scores. While they live in our homes, we offer credit repair and give $$$ credits to help residents save their down payment. We also try to guide them through the steps to be able to buy.

Here are some tips we share that you’ll need to know when you’re trying to buy:

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