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Q-A Series – FIRST STEPS

Q. WHAT STEPS NEED TO BE TAKEN TO SECURE A LOAN

The first step in securing a loan is to complete a loan application. To do so, you’ll need the following information.
– Pay stubs for the past 2-3 months
– W-2 forms for the past 2 years
– Information on long-term debts
– Recent bank statements
– tax returns for the past 2 years
– Proof of any other income
– Address and description of the property you wish to buy
– Sales contract

During the application process, the lender will order a report on your credit history and a professional appraisal of the property you want to purchase. The application process typically takes between 1-6 weeks.

Q. HOW DO I CHOOSE THE RIGHT LENDER FOR ME

Choose your lender carefully. Look for financial stability and a reputation for customer satisfaction. Be sure to choose a company that gives helpful advice and that makes you feel comfortable. A lender that has the authority to approve and process your loan locally is preferable, since it will be easier for you to monitor the status of your application and ask questions. Plus, it’s beneficial when the lender knows home values and conditions in the local area. Do research and ask family, friends, and your real estate agent for recommendations.

Q. HOW ARE PRE-QUALIFYING AND PRE-APPROVAL DIFFERENT

Pre-qualification is an informal way to see how much you maybe able to borrow. You can be ‘pre-qualified’ over the phone with no paperwork by telling a lender your income, your long-term debts, and how large a down payment you can afford. Without any obligation, this helps you arrive at a ballpark figure of the amount you may have available to spend on a house.

Pre-approval is a lender’s actual commitment to lend to you. It involves assembling the financial records mentioned in Question 47 (Without the property description and sales contract) and going through a preliminary approval process. Pre-approval gives you a definite idea of what you can afford and shows sellers that you are serious about buying.

Q. HOW CAN I FIND OUT INFORMATION ABOUT MY CREDIT HISTORY

There are three major credit reporting companies: Equifax, Experian, and Trans Union. Obtaining your credit report is as easy as calling and requesting one. Once you receive the report, it’s important to verify its accuracy. Double check the “high credit limit,”‘total loan,” and ‘past due” columns. It’s a good idea to get copies from all three companies to assure there are no mistakes since any of the three could be providing a report to your lender. Fees, ranging from $5-$20, are usually charged to issue credit reports but some states permit citizens to acquire a free one. Contact the reporting companies at the numbers listed for more information.

CREDIT REPORTING COMPANIES
Company Name Phone Number
Experian 1-888-397-3742
Equifax 1-800-685-1111
Trans Union 1-800-916-8800

Q. WHAT IF I FIND A MISTAKE IN MY CREDIT HISTORY

Simple mistakes are easily corrected by writing to the reporting company, pointing out the error, and providing proof of the mistake. You can also request to have your own comments added to explain problems. For example, if you made a payment late due to illness, explain that for the record. Lenders are usually understanding about legitimate problems.

Q. WHAT IS A CREDIT BUREAU SCORE AND HOW DO LENDERS USE THEM

A credit bureau score is a number, based upon your credit history, that represents the possibility that you will be unable to repay a loan. Lenders use it to determine your ability to qualify for a mortgage loan. The better the score, the better your chances are of getting a loan. Ask your lender for details.

Q. HOW CAN I IMPROVE MY SCORE

There are no easy ways to improve your credit score, but you can work to keep it acceptable by maintaining a good credit history. This means paying your bills on time and not overextending yourself by buying more than you can afford.

5 Factors That Decide Your Credit Score.

Credit scores range between 200 and 800, with scores above 620 considered desirable for obtaining a mortgage.

The following factors affect your score:

1. Your payment history. Did you pay your credit card obligations on time If they were late, then how late Bankruptcy filing, liens, and collection activity also impact your history.

2. How much you owe. If you owe a great deal of money on numerous accounts, it can indicate that you are overextended. However, it s a good thing if you have a good proportion of balances to total credit limits.

3. The length of your credit history. In general, the longer you have had accounts opened, the better. The average consumer’s oldest obligation is 14 years old, indicating that he or she has been managing credit for some time, according to Fair Isaac Corp., and only one in 20 consumers have credit histories shorter than 2 years.

4. How much new credit you have. New credit, either installment payments or new credit cards, are considered more risky, even if you pay them promptly.

5. The types of credit you use. Generally, it s desirable to have more than one type of credit  installment loans, credit cards, and a mortgage, for example.

For more on evaluating and understanding your credit score, visit www.myfico.com.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Accessing Funds for Rental Assistance Programs

To access funds for rental assistance programs, Housing Authorities respond to Notices of Funding Availability (NOFAs) published in the Federal Register. Each NOFA identifies allocation areas, amounts of funds available per area, and the selection criteria for rating and ranking applications.

Public Housing Authorities are given at least 30 days to submit applications. Interested households apply for assistance through their PHA. A federal program of interest is HUD’s HOME program. It provides grants to state and local governments, which may use them to offer rental assistance. The program’s flexibility allows States and local governments to use HOME funds for grants, direct loans, loan guarantees or other forms of credit enhancement, or rental assistance or security deposits. Visit the HOME Investment Partnership Program page for further information.

Proposition 46 The State of California approved a $2.1 billion dollar bond measure that provides funds for the construction, rehabilitation and preservation of affordable rental housing, emergency shelters and homeless facilities. Proposition 46 has five rental programs. See Table 1.

There are two programs that directly help tenants become homeowners. REALTORS should be aware of these because they constitute valuable tools that renters can use to achieve the dream of homeownership.

Section 8 Public housing vouchers for homeownership: Homeownership vouchers can be used to assist first-time homeowners with their monthly homeownership expenses. Families must meet certain income and employment requirements of eligibility. These vouchers are a solid step to help public housing voucher recipients to become homeowners.

Pay Rent Build Credit: This is a new national credit bureau that tracks rent payments and helps renters build a credit score, thereby overcoming one of the most common obstacles that many renters face: the lack of credit.

REALTORS can participate in any rental assistance program in different capacities:

  • Direct Provider  Develops, administers and manages the program. Activities such as fundraising, publicity, recruiting both tenants and landlords, and screening are part of the daily job. In other words, it requires the creation of a formal rental assistance non-profit organization. This is a time-consuming process that requires a long-term financial and organizational commitment.
  • Partnership with an existing organization  Raising public awareness, fundraising, interviewing, education, financial sponsorship and publicity are some of the forms in which REALTORS can help an existing organization in its efforts to either set-up a new program in the community or support its on-going labor. This has the advantage that limited resources can be used towards a worthy cause.
  • Government Programs Advocate  Championing the use of existing resources towards rental assistance programs and specially those that lead to homeownership. Local officials and housing advocates should be aware of existing financial resources to help renters and use them.

Finally, once the level of participation is decided, REALTORS need to contact any of the following for information, advice or for establishing a partnership:

  • Local shelter organizations. Local groups such as the apartment association, church charities or other housing and homeless support groups.
  • Local housing authority. The city or county housing authority. A very good source for finding the local housing non-profit organizations. They are also the primary source for finding government funds.
  • Local business community. They might be interested in echoing the efforts of a rental assistance program.
  • Local rental organization. Many of these organizations have educational programs.

HOUSING PRIMER

Secondary Mortgage Market

Conventional financing assistance and loan programs are offered by private lenders, non-profit organizations, savings and loan institutions, credit unions, commercial banks, mortgage banking companies and state and local housing finance agencies. These lenders, the originators of loans, are also called primary lenders.

By extension, the primary mortgage market is the place where loans originate and are issued directly to the homebuyer by primary lenders.

After issuing loans to homebuyers, primary lenders have the option to keep it in their portfolio or to sell it to the secondary mortgage market in order to replenish their funds and have more money available to issue new loans. The secondary mortgage market includes investors and financial companies, pension funds, housing GSEs (Government Sponsored Enterprises) and other financial agents.

The Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) are the two GSEs that purchase loans from the primary lenders. Their purpose is to support homeownership. They replenish primary lenders funds and support their financial activity so that lenders have money available for more mortgage loans.

Fannie Mae and Freddie Mac do not lend money directly to homebuyers. Instead they fund several of the affordable financing programs in place in the mortgage market and publish a number of educational materials for the public, in some instances in other languages than English, to provide consumers with the necessary tools to become knowledgeable in the home-purchasing and home-owning process.

The loans issued through their sponsorship are called conforming loans because the primary lender drafts the loan according to the secondary purchaser s terms. Their loans are designed to help people become homeowners in spite of the challenges they face, such as coming with a down payment or having credit problems.

HOUSING PRIMER

Closing Documents You Should Keep

On closing day, expect to sign a lot of documents and walk away with a big stack of papers. Here s a list of the most important documents you should file away for future reference.

HUD-1 settlement statement. Itemizes all the costs  commissions, loan fees, points, and hazard insurance  associated with the closing. You ll need it for income tax purposes if you paid points.

Truth in Lending statement. Summarizes the terms of your mortgage loan, including the annual percentage rate and recision period.

Mortgage and note. Spell out the legal terms of your mortgage obligation and the agreed-upon repayment terms.

Deed. Transfers ownership to you.

Affidavits. Binding statements by either party. For example, the sellers will often sign an affidavit stating that they haven t incurred any liens.

Riders. Amendments to the sales contract that affect your rights. Example: The sellers won t move out until two weeks after closing but will pay rent to the buyers during that period.

Insurance policies. Provide a record and proof of your coverage.

Sources: Credit Union National Association; Mortgage Bankers Association; Home-Buyer s Guide (Real Estate Center at Texas A&M, 2000)

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

Fannie Mae Announces 3.5 Percent Assistance

WASHINGTON, DC — Fannie Mae (FNMA/OTC) today announced a seller assistance incentive on Fannie Mae-owned properties listed on the company’s REO website, www.HomePath.com, and expands the initiative to offer an incentive to real estate agents and brokers. Qualified homebuyers who will be owner-occupants can receive up to 3.5 percent of the final sales price that can be used toward closing cost assistance, including a home warranty, if desired and available. In addition, selling agents representing owner-occupants will receive a $1,500 bonus. Eligible offers must be submitted on or after September 23, 2010, and must close by December 31, 2010. The sale must close within 60 days of the offer being accepted.

“More than eighty-seven thousand families have purchased HomePath® properties in the first half of 2010 — nearly double the number of Fannie Mae foreclosed properties sold in the first half of 2009,” said Terry Edwards, Executive Vice President of Fannie Mae’s Credit Portfolio Management. “We continue to look for ways to stabilize neighborhoods and offer incentives to qualified buyers who will occupy these properties over the long-term and help support their communities.”

HomePath properties are owned by Fannie Mae and include a wide selection of homes, including single-family homes, condominiums, and town houses. HomePath properties may also be eligible for special HomePath Mortgage and HomePath Renovation Mortgage financing.

Short Sale, Foreclosure

Many a times, for some people questions comes to mind: What is a short sale – It is when the property owner will accept less sale price than the amount which is due as per the loan amount when the property is sold. Lenders sometimes accepts low amount to avoid the expense and time of a foreclosure. A short sale generally persists when the loans amount on the property is greater than what the property can be sold for. The short sale is the best alternative for owners who no longer can afford make their mortgage payment and want to avoid foreclosure which is more embarrassing.

Though a short sale seems to be the only solution to the problem avoiding foreclosure, the fact is there are other solutions which a short sale realtor can guide you through that will benefit the home owner as well as the lender. You need to be very careful when transacting with a third party company regarding the short sale. A lot of people understand they can make profit in short sale which might be true in some circumstances with the help of a short sale realtor.

Some of the best options to go for advice from short sale realtor to avoid foreclosure:

1. The value of your home is more than what you owe, you can get a good price to pay off the mortgages and avoid foreclosure. An advice from Short Sale Scholars can guide you the right way.

2. Advice from Foreclosure Realtor comes handy to show your lender that foreclosure is more costly & they are not likely to do any better foreclosure & remarketing.

3. Foreclosure affects your credit rating and to avoid all these painful time expert advice from Foreclosure Realtor and Short Sale Realtor come handy.

Any short sale investor knows that one of the biggest challenges they might face is dealing with the lender. The short sale process is lengthy, importantly when short sale investor has to deal with more than one lender to come up with best price for the property. If the foreclosure property is auctioned it is a more of a possibility that it is sold in lesser market value leaving you with no money in hand to go for another property to lease. Due to lack of funds after selling their foreclosure property owner will be left in cold with no money to buy another property with some down-payment. There are many reasons why we should avoid a foreclosure taking the help of Foreclosure Realtor. Foreclosure is a public preceding that property owner risks your own social status. If your mortgage sum is more than the current value of your property, you may finally to consider Short Sale with the help of Short Sale Realtor.

You need to hire an experienced Shore Sale Realtor as they are the specialist and will look after all your issues. Once you have a Short Sale Realtor whom you can trust, he will be authorized by you talk on your behalf to negotiate with lenders and short sale buyers. Expert advice from Short Sale Scholars comes effective in these situations for short sale investors and property owners as well to avoid foreclosure.
http://www.ShortSaleScholars.com

Article Source: http://www.articlesnatch.com

About the Author:
This is Euriq Gates as a story writer about short sale foreclosure

Read more: http://www.articlesnatch.com/Article/Short-Sale–Foreclosure/939443#ixzz1NNUepSyG
Under Creative Commons License: Attribution No Derivatives

Moving Checklist for Sellers.

___Provide the post office with your forwarding address two to four weeks ahead of the move.

___Notify your credit card companies, magazine subscriptions, and bank of your change of address.

___Create a list of friends, relatives, and business colleagues who need to be notified about your move.

___Arrange to disconnect utilities and have them connected at your new home.

___Cancel the newspaper, or change the address so it will arrive at your new home.

___Check insurance coverage for the items you re moving. Usually movers only cover what they pack.

___Clean out appliances and prepare them for moving, if applicable.

___Note the weight of the goods you ll have moved, since long-distance moves are usually billed according to weight. Watch for movers that use excessive padding to add weight.

___Check with your condo or co-op about any restrictions on using the elevator or particular exits for moving.

___Have a  first open box with the things you ll need most, such as toilet paper, soap, trash bags, scissors, hammer, screwdriver, pencils and paper, cups and plates, water, snacks, and toothpaste.

Plus, if you re moving out of town, be sure to:

___Get copies of medical and dental records and prescriptions for your family and your pets.

___Get copies of children s school records for transfer.

___Ask friends for introductions to anyone they know in your new neighborhood.

___Consider special car needs for pets when traveling.

___Let a friend or relative know your route.

___Empty your safety deposit box.

Put plants in boxes with holes for air circulation if you re moving in cold weather.

Reprinted from REALTOR magazine (REALTOR.org/realtormag) with permission of the NATIONAL ASSOCIATION OF REALTORS .
Copyright 2008. All rights reserved.

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