Archive for category Credit
Transunion reports that 56 percent of Americans did not request the free annual credit report they are entitled to. The Big 3 credit bureaus, Transunion, Equifax and Experian recommend checking your credit every three months to verify that nothing you don’t know about that can affect your credit has happened. This can get expensive though since each bureau wants to charge for anything after the first credit report “pull” and of course they want to sell you credit monitoring services.
Here is my recommendation:
Pull a credit report free from just one of the bureaus every four months.
This way you can look at whats on your credit three times a year for free. You can pull your free reports from AnnualCreditReport.com.
Transunion, Equifax and Experian keep their formulas for determining your credit score rather close to their chest, however here are some pretty good estimates as to what late mortgage payments, short sale, deed-in-lieu of foreclosure or a foreclosure will do to your credit score. There is quite the range listed here and this is because your credit score is a number between 350 and 850, and of course the higher you are, the farther you have to fall. Also, the additional good credit you have can minimize the damage from the bad. So here are the estimates:
One 30-day late payment = 10 to 110 points
One 90-day late payment = 70 to 135 points
Additional lates after 90-days have no additional affect to your credit score
Foreclosure, short sale or deed-in-lieu of foreclosure = 130 to 240 points
Bankruptcy = 130 to 240 points
It’s not scientific, it’s not exact, but I think it’s a good representation of the minimum to the maximum damage late payments, short sale or foreclosure can do to your credit. Most importantly, don’t let anyone ever tell you that a short sale (selling your house for less than what’s owed on it with bank approval) will no hurt your credit score. It will.
On top of that, there will be a period of at least two (2) years before you can purchase another home after a foreclosure or deed-in-lieu of foreclosure. You can purchase a new home immediately after a short sale as long as you were not delinquent on the mortgage of that home prior to the short sale.
Be sure to contact me if you have any questions.
Sure Wall Street can’t figure itself out, but in reality little has changed here on Main Street
You wouldn’t know it by the news, but yes, banks are still lending money. After all, that is how they stay in business and right now that is their number one priority. So although W
all Street is upside down and can’t quite figure itself out, here on Main Street Salt Lake City, UT it’s really business as usual.
Sure, there are a few changes, such as Stated Income loans are harder to come by, and when you do find them they require bigger down payments than before. But for the most part not much else has changed. People can still buy houses, people can still refinance, and banks are still loaning money to do both. And historically good rates.
What we have seen here on Main Street is a return to the old system of lending based on “The Three C’s”: Credit, Capacity and Collateral.
Capacity refers to a borrower’s ability to afford the monthly payment. This hasn’t changed a whole lot as far as the debt-to-income ratios allowed by lenders, but what has changed is as I stated above, Stated Income loan products are not common anymore. So a borrower has to be able to prove their income through paycheck stubs, tax returns, or both.
Collateral refers to savings: how much does the borrower have as a down payment and how many months of additional mortgage payments would the borrower have left over after making the down payment. Lender guidelines vary, but FHA is still the best for the smallest down payment and little or no additional reserves needed.
This down payment can also come from a number of sources, such as family, friends, employer, city, county or state grant, etc. What has changed is the elimination (hopefully temporarily) of seller assisted down payment. This is where a third party, such as Nehemiah, funds the down payment in cash in behalf of the seller who is gifting the down payment to the buyer from the equity in the home. At closing Nehemiah (or other down payment assistance program) get’s their money back from the proceeds of the loan.
I feel this is a great program that not only helps people buy homes, but is also a great tool that helps sellers sell their home quickly without having to make a bunch of concessions in price, etc. Many Utah homeowners have used this program to buy homes, so I urge you to support H.R. 6694 which will lift the ban on seller-assisted down payments. It could help you or a family member buy a home, or help you or a family member sell one.
So now is still a good time to buy a home. Rates are still great, inventory levels are high in Salt Lake City and throughout Utah, sellers are willing to negotiate a deal, and short-sales and foreclosures (though not as numerous in Salt Lake as in other areas of the nation) can be a bargain for a home buyer and offer instant equity.
Just be sure to have me get you pre-approved for a home before you go looking. Cash is king right now, and having a pre-approval letter (not a pre-qualification letter) is huge leverage when negotiating with a seller or a bank on a short-sale. You can apply online on my website www.coryure.com . There are also a number of calculators you can use to figure affordibility or payments on a new mortgage loan.