What is a FICO score?
In the United States a credit score (FICO – Fair Isaac Company) is a number that is based on a statistical analysis of one individual’s credit report and is used to decide the creditworthiness of that individual and the probability of the individual to repay the debt. A FICO score is based on obtaining information from their credit report, typically from the three major credit bureaus: Experian, Equifax and Trans Union.
What goes into a FICO Score?
35% Payment History
30% Amount Owed
15% Length of Credit History
10% Types of credit used
10% New Credit
What is the minimum FICO score I need to get the best rate possible?
Fico scores range from 300 to 850. A credit score of 760 or higher places you in top tier. Only 15 % have scores above 800. The benefits are practically the same if you have a 760 score. The median score is 723.
How long can negative items on my credit history impact my score?
7 years. Negative items generally affect your score. As time goes by their impact will lessen. If you pay your bills and keep account balances low and do not open a lot of new ones your score can rebound fairly quickly.
What is required to clean up my credit score?
Paying bills on time and not maxing out credit. About 2/3 of your score is based on payment history. The later you are the more points you lose and how much you owe and the percentage of your credit limit that you have used. Try to keep your balances on credit cards below 25% of your available credit.
Thursday, May 27, 2010
Wednesday, May 26, 2010
Short Sale Update
As many of you have heard there is a government program that has taken effect on April 5th, 2010 called HAFA (Home Affordable Foreclosure Alternatives) that is suppose to help expedite the short sale process by offering incentives to servicers and investors on loans, as well as borrowers, in the hopes that is cooperative effort with shorten the recovery time of the housing market. Here is a quick overview below as to what the program entails and how to qualify. Keep in mind that you have likely heard ads on the radio or seen them on tv or in magazines, making it seems like this process is a breeze. Don't be fooled! It is potentially easier than it has been but there are still a lot of hoops to jump through to qualify!
Make sure that you discuss your specific issues with a individual that has done short sales over 2 years. You may have questions or know someone that wants to know their options please have them call me because time is of the essence especially if they are late on their mortgage payment.
HAFA Overview
- takes place 4/5/10
- helps by pre-approving short sales and releasing borrowers from future liability of the debt
- pertains only to first mortgages!
- must go through HAMP (Making Home Affordable) program first
- financial incentives provided to servicers, investors, and homeowners who qualify
- uses standardized processes, documents, and timeframes (however there are no concequences to servicers that don't comply)
- investors must waive right to seek deficiency judgements
HAFA Requirements (for eligibility)
- must be borrower's principle residence
- loan must be a 1st mortgage
- loan must be originated before January 1st, 2009
- mortgage is delinquent or default is imminent
- current unpaid principle balance is equal to or less than $729,750
- borrower's total monthly mortgage payment exceeds 31% of borrower's gross income
Incentives (subject to change)
- borrowers qualify for $3,000 in relocation assistance
- servicers qualify for $1,500 for administration and processing fees (may be increased due to recent changes)
- investors qualify for $2,000 for subordinate lien holder payoff (may be increased due to recent changes)
Make sure that you discuss your specific issues with a individual that has done short sales over 2 years. You may have questions or know someone that wants to know their options please have them call me because time is of the essence especially if they are late on their mortgage payment.
HAFA Overview
- takes place 4/5/10
- helps by pre-approving short sales and releasing borrowers from future liability of the debt
- pertains only to first mortgages!
- must go through HAMP (Making Home Affordable) program first
- financial incentives provided to servicers, investors, and homeowners who qualify
- uses standardized processes, documents, and timeframes (however there are no concequences to servicers that don't comply)
- investors must waive right to seek deficiency judgements
HAFA Requirements (for eligibility)
- must be borrower's principle residence
- loan must be a 1st mortgage
- loan must be originated before January 1st, 2009
- mortgage is delinquent or default is imminent
- current unpaid principle balance is equal to or less than $729,750
- borrower's total monthly mortgage payment exceeds 31% of borrower's gross income
Incentives (subject to change)
- borrowers qualify for $3,000 in relocation assistance
- servicers qualify for $1,500 for administration and processing fees (may be increased due to recent changes)
- investors qualify for $2,000 for subordinate lien holder payoff (may be increased due to recent changes)
Tuesday, May 25, 2010
Credit Needs some TLC? Can Rapid Rescore Help?
I had a client that was ready to close on a his home and of course the lender requirement was to pull credit one last time. To our surprise the current credit report showed an issue that was cleared up some time ago. Now what? Rapid Rescore! I found some answers with some research. You can do this your self however, the service is inexpensive so I suggest not wasting your time or have anxiety about and have your current lender perform the service. I found some useful information on this website:
http://www.finweb.com/banking-credit/improve-your-credit-score-with-a-rapid-rescore.html
Rapid Rescore
A rapid rescore is a process that will allow you to quickly change something on your credit report. Traditionally, if you notice something on your credit report such as a late payment, it could take months for it to be corrected. In most cases, you will have to wait at least 90 days before it will make its way onto your credit report. If you are trying to shop for a mortgage or some other type of loan, this will not be conducive to this process. If you need the loan quickly, you may end up paying a much higher interest rate because your credit score was lower than it should be. In times like these, using a rapid rescore can be very beneficial as it could potentially save you thousands of dollars in interest fees.
How It Works
There are over 200 companies that offer rapid rescoring services. These companies work closely with the three major credit bureaus and will be able to change something on your credit report within a few days. Unfortunately, you are not able to access these companies directly as a member of the general public. In order to gain access to a rapid rescoring company, you will have to go through another company. Companies that have access to rapid rescoring services are mortgage brokers, banks, and other types of lenders. This means that if you want to quickly change something on your credit report, you need to work with a lender in order to do so.
Cost
In order to complete this process, you will have to pay something extra to the lender that you are working with. However, typically the cost to have something changed is quite small. In many cases, you will pay less than $50 for this service. For such a small cost, it can make a huge difference in the amount of money that you pay. For example, if you are shopping for a mortgage, changing something on your credit report good lower the interest rate on your loan by 1 percent or more. This could represent well over $100,000 in savings over the life of the loan.
Who Should Use Rapid Rescoring?
If you have any mistakes on your credit report and you are shopping for a loan, you should definitely consider using a rapid rescore. If you have a credit score that is lower than 680, you could most likely benefit from the services that a rapid rescoring company could provide. If you are able to bump your credit score up to above 700, it will put you into a different category of borrowers, which will provide you with better interest rates
http://www.finweb.com/banking-credit/improve-your-credit-score-with-a-rapid-rescore.html
Rapid Rescore
A rapid rescore is a process that will allow you to quickly change something on your credit report. Traditionally, if you notice something on your credit report such as a late payment, it could take months for it to be corrected. In most cases, you will have to wait at least 90 days before it will make its way onto your credit report. If you are trying to shop for a mortgage or some other type of loan, this will not be conducive to this process. If you need the loan quickly, you may end up paying a much higher interest rate because your credit score was lower than it should be. In times like these, using a rapid rescore can be very beneficial as it could potentially save you thousands of dollars in interest fees.
How It Works
There are over 200 companies that offer rapid rescoring services. These companies work closely with the three major credit bureaus and will be able to change something on your credit report within a few days. Unfortunately, you are not able to access these companies directly as a member of the general public. In order to gain access to a rapid rescoring company, you will have to go through another company. Companies that have access to rapid rescoring services are mortgage brokers, banks, and other types of lenders. This means that if you want to quickly change something on your credit report, you need to work with a lender in order to do so.
Cost
In order to complete this process, you will have to pay something extra to the lender that you are working with. However, typically the cost to have something changed is quite small. In many cases, you will pay less than $50 for this service. For such a small cost, it can make a huge difference in the amount of money that you pay. For example, if you are shopping for a mortgage, changing something on your credit report good lower the interest rate on your loan by 1 percent or more. This could represent well over $100,000 in savings over the life of the loan.
Who Should Use Rapid Rescoring?
If you have any mistakes on your credit report and you are shopping for a loan, you should definitely consider using a rapid rescore. If you have a credit score that is lower than 680, you could most likely benefit from the services that a rapid rescoring company could provide. If you are able to bump your credit score up to above 700, it will put you into a different category of borrowers, which will provide you with better interest rates
Your Money is better off in Real Estate
Investors Money is better off in Real Estate!
A business associate shared this this article with me and I thought I would share it with everyone.
I have always believed in investing in real estate as a long term retirement strategy. Lets face it, you as the investor or buyer have more control of what, when, why, and how rather than relying on companies that have their bottom line in mind than yours.
I no longer believe that individual investor's are treated fairly in the stock market and the banks, showing huge earnings the last quarter, seem to be trading only to their benefit and no one else's. In short, Goldman Sachs lost money only 11 days in the last 12 months. That would be impossible for us to do and it seems from their congressional testimony that they are making money on both ends of the deals they are doing.
In contrast, "Seven of the investment bank's nine "recommended top trades for 2010" have been money losers for investors who adopted the New York-based firm's advice". How can a company that is right on 96% on their investments be wrong 78% of the time on their clients investments? I think its incumbent upon me to point this out and raise the issue that until something changes drastically, real estate may be a much better option for your money.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aF5tV7uvY0FU&pos=12
A business associate shared this this article with me and I thought I would share it with everyone.
I have always believed in investing in real estate as a long term retirement strategy. Lets face it, you as the investor or buyer have more control of what, when, why, and how rather than relying on companies that have their bottom line in mind than yours.
I no longer believe that individual investor's are treated fairly in the stock market and the banks, showing huge earnings the last quarter, seem to be trading only to their benefit and no one else's. In short, Goldman Sachs lost money only 11 days in the last 12 months. That would be impossible for us to do and it seems from their congressional testimony that they are making money on both ends of the deals they are doing.
In contrast, "Seven of the investment bank's nine "recommended top trades for 2010" have been money losers for investors who adopted the New York-based firm's advice". How can a company that is right on 96% on their investments be wrong 78% of the time on their clients investments? I think its incumbent upon me to point this out and raise the issue that until something changes drastically, real estate may be a much better option for your money.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aF5tV7uvY0FU&pos=12
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