Better Credit...Better Interest Rates

I was thinking about a past post I did and wanted to repost it. It was about how better credit translates into better interest rates. Check out the details below…


If a person with a 620 score gets a mortgage the interest rate will be around 4.6% with a payment of $765 and pay $126,000 worth of interest over the life of the loan versus a person who has a 720 with an interest rate of around 3.1% which calculates to a monthly payment of $647 and total interest paid over the life of the loan of about $83,000. This calculates to about $43,000 saved during that time. Now imagine if you took that extra savings and placed it in a Money Market account or a high-yielding savings account.

NUMBERS NEVER LIE

What do numbers really mean? There are all kinds of numbers. License plate numbers, numbers when we visit our favorite fast food restaurants, #5 or # 1 please. Gas stations have numbers can I get $20 on pump 7 and of course we all know about social security numbers. I have been thinking about our numbers a lot lately and here is what I came up with. I thought I would share them with you. Perhaps they mean something, perhaps they don't. Nevertheless numbers are all around us, from our shoes to our scales, they are there to give us a measure of where we are, where we are going and where we want to be. Below we've compiled some numbers of our results over the last four months.

68 new clients since June 1, 2013

90% completed (we expect to have these 10% completed within next 30 days) these were very large scale clean up's all with more than 40 items per bureau to dispute!

43 clients with a 780 FICO score on at least 1 credit bureau.

62 clients with a 750 FICO score on at least 2 credit bureaus.

68 clients with a 700 FICO score on all 3 credit bureaus.

We work directly on your behalf to update your credit profile to read accurately. 

We provide FULL services on a FULL 1 YEAR TERM assisting YOU AS A CLIENT in removing negative and inaccurate items from your credit report. 

Once you enter our program you will start seeing exciting results in the first 30 days. 

Most of our clients will be completed within the first 30 days! 

The faster we can get you completed the better for us!!

We will continue to work with you for 12 months if necessary; for NO ADDITIONAL FEE until we have your file complete. 

In MOST cases we can remove all disputed items within 30 days.

Contact us TODAY!

Blessings to you all today...

Tradelines

Tradelines are the accounts that are on your file. Tradelines help aid the 70% of your credit report that lenders and under writers review which is credit history and utilization. Our tradelines have great credit/payment history and low utilization ( which means very low balances). 

However if you do not have many tradelines on your file regardless to whether you have any or no derogatory information you may still be declined because credit is based off of your current consumer traits, even though you may have alot of paid off accounts with no lates or just a few lates if you do not have any open and active accounts seeking approval will be difficult and will bring about high interest. 

Below are several guidelines you should go by when you are in the

market for auto loan, funding or mortgage :

MORTGAGE : 4-5 accounts & at least 1 account open at least 12months

*Self Help Tip - get a secure card and 2 seasoned authorized user

AUTO : Need a minimum of 2 accounts with a minimum of one account at least 12 months with at least 5K for auto

in the 10-17K range, 

- 17K - 26K you will need at least one 10K plus with one being open for 12 months 

-26K - 45K you will need at least two 10K plus lines with one open for 12 months 

*Self Help Tip - get a secure card and 2 seasoned authorized users

FUNDING : Need at least 3-5 accounts with two account both opened for over 12 months

*Self Help Tip - get a secure card and 2 seasoned authorized user

FYI DIY Day 5

This is our last installment on Do It Yourself Credit Repair. Finally you need to build some muscle. In other words its good to see if you can enhance your remaining credit profile. After you have removed all the negative items that you can off your report. Also this is a reminder that you need to start repairing your credit as soon as possible because you can not predict the time-frame involved in getting yourself to the point that you want to be. As you increase your score you decrease your interest rate, which in turn reduces your monthly payment. 

Check with your family members first to see if anyone has a credit card that they are willing to add you on as an authorized user. This gives you the benefit of all their payment and credit history on the particular card. Consequently this means that they should not have ANY late payments, if they do then you are just working against yourself. The higher their limit and the lower the balance the better it is for you. Next check with your bank to see if they offer secured credit cards. If they do then this is a great tool to help your overall credit profile. 

Also you can document your history of paying your rent, health insurance, or even child care bills on time, every time, for at least 12 months, talk to your mortgage professional about whether you can use any of these accounts to prove yourself creditworthy to mortgage lenders.

Remember start early, stay patient and you'll be able to see great results. 

Day 4 "FYI DIY"

Perhaps up until this point you've been working alone. You've been tackling the task of getting your credit cleaned up. I suggest if you haven't by now, to enlist the help of your mortgage broker. 

Allow the mortgage broker to go ahead & pull your a trimerger or a full credit report from each of the three major credit bureau. The report may or may not be identical to the one you have access to. However the one thing you don't want to do is to wait until the last minute to allow your lender to pull your credit. You and your lender will have an opportunity to catch any item that may keep you from getting the house (or car) you desire.

Finally break down the results in to long-term & short term. The lender also may have access to Rapid Rescore or similar programs that will have your report and credit score updated within a day or two after you complete all credit boosting techniques. 

FYI DIY Day 3

Pay the things off that matter. You may ask how do you do that? Consult with your lender to get a good grasp on what they're looking for.  Most financial institutions will require that you settle, bring current or pay off certain things entirely before you can buy a home: 

accounts in collections

state and federal tax liens

past home loans or lines of credit in default that were not extinguished through foreclosure or short sale (e.g., second loans, home equity lines of credit, etc.)

defaulted federal student loans (for FHA loan applicants).

When you're in negotiations with creditors to make settlements believe it or not you are in a position of power. Ask the creditors if you can settle with terms. The terms being based on this payment you agree to delete the corresponding account off of my credit report. This method doesn't always work but its worth a shot. 

Another important thing is to prioritize the various items on the credit report. For example, some lenders might allow you to simply settle a tax lien at closing, while most FHA loans won’t allow for a credit pre-approval while you have a defaulted federal student loan on your report.

Nevertheless don't just go all willy nilly paying off debt. It may seem wise to take the opportunity to pay your debt off and close out old, unused accounts, thinking it will score extra brownie points with perspective lenders. However this is not the case always. Credit scores are calculated based on available credit and credit utilization. FICO score calculations are reportedly maximized when you have 30 percent of the credit available to you on your accounts.  So don’t pay them entirely off, and whatever you do, don’t close accounts that are open and/or current.  

Day 2 "FYI DIY"

Make sure you double-check your report for minor errors. Particularly things that should have fallen off due to statue of limitations requirements, incorrect remaining balances and limits listed as lower than they are, and inconsistent paid off dates. 

A lot of consumers we polled believed that paying their bills on time was the most important factor that influenced their credit score. However that is not always the case, even if you pay your bills on time and have a maxed out credit account (loan, line or card) it will have an adverse affect on your credit. Consequently, if your credit report shows your balances as higher than they are in reality or your limits as lower than they actually are, this by itself can severely impact your credit score.  

There is a biblical saying that "the small foxes spoil the vineyard." In other words these seemingly minor items can have a major impact on your credit score. The truth is that they are all too common and commonly overlooked by consumers, who are looking to point the blame at the bureuas or some identity thief.  

Delinquencies should age entirely off your report after 7 years, and bankruptcies after 10.  The precise date of a short sale or foreclosure can actually be the deciding factor in your ability to qualify for a home loan - so make sure it is reported accurately. 

Do It Yourself Day 1

1. The 1st step is to go to AnnualCreditReport.com and order your credit reports from all three reporting bureaus: Experian, Equifax and TransUnion. Also you can go to Equifax.com/freetrial and sign up for their credit monitoring service. Once you receive your reports, identify accounts that are not your accounts. Next look for accounts that are reporting erroneous information such as late payments listed as late that were actually on-time, modification listed as a foreclosure, etc. Each report will come with a detailed set of instructions on how to dispute the errors immediately. They will give you the option to dispute the items both online, over the phone and in writing. I suggest using the writing method, due to certain FCRA laws which are advantageous. 

Don't hold your breath or lose patience it might even take several rounds of disputes and submissions of documents to finally clear everything up. If you are planning on getting a home or car loan talk to the loan officer to see if the remaining items on your report even have a significant bearing on your interest rate or terms. Many consumers become overally concerned with collection items when they usually are the most insignificant items on your report. 

Life...

Life. It is what it is, a constant change of events, circumstances and situations. Raymond Feist said "Life is problems, Living is solving problems." In life there will be changes that occur but you must keep on living. Our goal is to help your transition through some of the changes that life throws your way, make them more manageable, less stressful and calculate your plan for recovery. Whether it was divorce, unemployment, foreclosure, whatever it might have been that swept the rug from under your feet financially; we may have a plan to help you get back on track. The first step is admitting that you need help. No this is not a 12 step program, however we do believe in being honest with yourself. Are you a bad money manager? Are you living above your means? Is fear holding you back? Second you must take action. If you never take action, absolutely nothing can change in your life. Third you must create a realistic plan to take back control over your life. There is nothing that can send you reeling backwards quicker than a poorly planned escape. We can assist you formulate a realistic plan that you can adhere to and commit to until your personal goals are accomplished. Last but not least you must make up in your mind that you are ready for change. You may ask, if I am honest, take action and create a plan, am I not already making a change mentally? No this is not always the case. You must make a paradigm shift that you will never go back. Whatever it is that caused you to go down this path, you will never go back down this path. Whether it’s a bad relationship, certain environment or addictive behaviors disguised as innocent pleasures, you can never go back down that road. We have all heard stories of people who make all of the afore mentioned changes but perhaps months, years or decades later are back in the same or worse predicament. You must never bring ANY of the negative stimuli with you into your new life. The ball is now in your court, it’s up to you to change. Change is indeed inevitable. You will either change for the good or the bad but I can assure you that you will change. The path you take is totally up to you.

Dangers of Foreclosures Pt 4

The bank will do little to assist you. I know this may seem like a moot point but you would be surprised the number of buyers who overlook or under value this portion of the deal. Your offer and the likely discounted list price (discounted from similar comps nearby) should already account for the risk you're taking on an "as is" property. They won't provide a disclosure about a leaky faucet, or the broken closet door upstairs.

When buying a home, the contract makes certain provisions which will allow you to have an inspection, so get the biggest and best inspection available. Also inquire about an old inspection report, review that prior to making your offer.

If you are familiar with the buying process, don't expect any of the standard processes and procedures to be followed by the bank. The bank will have its own contract that protects its interests. This contract will be followed by dozens of pages protecting the bank from future lawsuits, referring to the sale as "as-is" and putting nearly all the burden on you, the buyer. In some states, if the bank requires the buyer to use a particular title company, then the bank would be required to pay the buyer's premium on the title insurance. This could translate into huge savings for the buyer. Whatever you do keep your eyes open and remember there is no such thing as a stupid question.

Dangers of Foreclosures Pt 3

Yesterday we touched on this subject very briefly. That is when you position yourself to purchase a foreclosure it may not be all as it seems on face value. A lot of your more expensive homes may be effected by this more than the lesser priced homes. This is due to the high-end appliances, fixtures and amenities used to build these homes. More often than not previous homeowners are blamed for the vandalism to these homes, however opportunistic vagrants are usually to blame for the damage.

Conversely, when homeowners are to blame it is usually due to resentment and unsuccessful attempts to keep the property. The previous homeowners usually have some form of emotional attachment to the property. They usually have looked at several homes before deciding on this one, took in to account their own careers, children's future and neighborhood suitability. Then we bring into the fact that they have to give this all up in a moments notice. They have invested time, money and dreams into this property and now they have to move.

This can cause some serious separation anxiety and disgust towards the lender. Consequently since they can do no harm physically against the mortgage company then they decide to take it out on the property. Ultimately, this will hurt the home's value and somebody will have to pay to replace and repair the damage that has been inflicted. Nevertheless, your goal is to ensure that you are not stuck with the bill, if you are make sure to include this in your negotiations and mention it to your broker.

Dangers of Foreclosures Pt. 2

Three letters you should become familiar with if you are in the market to purchase foreclosures, R-E-O. REO stands for "real estate owned." REO properties are owned by the bank after going through the foreclosure process.

Typically in a REO sale, there aren't any disclosures. Basicslly the seller is not there to disclose the in's and out's about the property. This includes but is not limited to pre existing issues about the property that may need repairing and/or replacing all the way to particular neighborhood association restrictions.

Make sure with your agent to learn as much as you can about the home and the neighborhood. If the property sold in the past five years, your agent may be able to obtain past disclosures or obtain city records. Also make sure to always double-check your title work.

Dangers of Foreclosures

Times have changed, a lot of people are still facing financial shortfalls. There was a time when people were so concerned about their image they would do anything to keep that image up. Allowing your home to foreclose & walking away from a mortgage was something that was almost unheard. When people do have their property foreclose they sometimes decide to take out their anger & frustration against the mortgage company by inflicting physical damage on the property itself.

Many realtors are pushing their clients toward foreclosed properties. However there are some challenges to purchasing them and some red flags to look for before deciding to purchase one.

1. Don't expect to make friends.

When you are purchasing a foreclosure then you are dealing directly with the bank. It's strictly business for the bank, they don't care about how good a neighborhood it is to raise your kids or about the school PTA. Nevertheless that could be a good thing because the bank is not in the real estate business. They want to move the property as quick as possible but they want to maximize their profits in the process.

Because you're dealing with a bank, not an individual homeowner, be prepared to wait for a few days, if not weeks, for a response. For the most part, the bank's agent doesn't even show the contract, the pre-approval letter, or any of the offer pieces to the bank. Instead, the bank's agent inputs the data into a website or piece of software. Remember for the bank, they are like Jerry Maguire "Show Them The Money."

Additional Factors that may effect your Mortgage Payment

Monthly mortgage insurance affects your house payment. With a less than 20% down payment, the lender will more than likely require the borrower to pay monthly mortgage insurance to ensure against the possibility of defaulting on the mortgage.

By paying something down or walking into the house with some equity will give you more leverage when borrowing funds.
Make sure to check and see what is the minimum credit score required for financing. If you don’t meet the minimum, look into other options you may before you apply for a home loan.

Assets/reserves — In most cases, you’ll need at least two months of PITI saved in the bank to meet the reserve requirement. However make sure to check with your lender for complete details.

How Monthly Liabilities Apply

Using the example from two days ago, let’s say you’re trying to decide how much house payment you can afford coupled with other monthly obligations: A vehicle payment for $300 per month & $80 per month in credit card payments. Assuming our example income of $5,638 per month, in order to purchase that same house for $350,000, the monthly income would have to be $6482 per month adjusting for total monthly liabilities (determined house payment + other debts) ÷ monthly income. The other choice is to reduce the purchase price to $300,000, with effectively $380 per month in other debts, which influences borrowing power by $50,000.

*Mortgage Tip: take 45% of your monthly income less monthly liabilities. This is the maximum house payment you can qualify for, then simply equate what the monthly payment is relative to how much you can borrow based upon using $725 per month for every $100,000.