Take Charge Of Your Credit!

I have been in the mortgage business since 1986. I started off as a Realtor but soon discovered that serious buyers were not interested in working with a wet behind the ears twenty-one (21) year old kid.... So I went into the loan side and I have never looked back.... Today I own a pretty busy contract loan processing business....

Over the years, I have run across many different types of borrowers - young adults buying their first home - that is so very exciting to me - to be a part of a life changing event. Borrowers who want to refinance their home for a better program. Borrowers who wants to refinance their home to payoff debt - get cash out to pay for their daughter's wedding - or take that vacation they have been meaning to take... There are a gazillion different reasons people choose to get loans on their homes.....

Lately I have been running across a lot of credit problems.. People who have over extended themselves by over charging on their credit cards... I have been seeing a lot of late payments and deteriorating credit scores.. People utilizing credit lines that they once would never consider... A lot of my clients are unaware how this behavior is affecting their existing credit life... One thing that I have learned it's very difficult to bring up bad credit but very easy to bring good credit down. We must be wise and know exactly where we are... There are many companies that can keep you posted on how you are doing.

Last week - I received a file to process - the borrowers wanted to refinance their home and take advantage of today's great rates - they had good paying jobs, money in the bank, and their home was worth a good amount...and I could not do this loan because there was a $21,960 collection on their credit report and they had to get rid of it or pay it off. The borrower said it wasn't theirs - after investigating it further - it was in deed theirs - a collection from several years ago that compounded fees and interest.. It went from $689 to over $20,000 and they did not have a clue!!!

We need to take charge of our credit - we need to know what's going on - who is checking it.. what charges are on it - has someone taken over my cards - Many years ago when the check/debit cards just came out - I received a call from Bank of America asking me if I had been to Mexico lately... I replied I had not - someone had created a card with my number (I had my card) and withdrawn $5000 out of our checking and savings accounts... One of the purchases was a one way ticket to Africa and another was a $1200 bar tab at a dance club in Tijuana... crazy.. It took us over six (6) months to get that money back... I don't know about you but $5000 missing out my accounts hurt....

On my side bar there are a couple of companies that can help protect you. Identity Truth is a company that provides Identity theft protection. Ovation Law will help you clean your credit. My Fico and Equifax gives you a Birdseye of your credit and helps you to be on top of your credit score. Please check them out - even if you don't purchase anything - they may give you some good ideas...

A Mortgage Processor's Advice

I have been in the mortgage industry since 1986.. Okay, I am really aging myself with that. I started as a Realtor and realized that it is very difficult to sell a home to a mature clientele when I was only twenty-one myself... So I became a loan officer in 1989 and worked my tail off. I enjoyed it but I was a newlywed and never saw my new husband..so I went into the office as the support person also known as the Loan Processor. As a loan processor, I handle all the paperwork required to obtain a mortgage loan. I know what FNMA and FHLMC require.. I know what the lenders want and I get it for them. I also help the loan officers and mortgage brokers fund their loans while ensuring that the borrower is happy with their loan amount, terms, and interest rate. I did take a two year break as an underwriter but discovered I am a Loan processor that's just what I am. That's what I love.
Today, there are so many people out there that have gotten over their head... They have no idea what their abuse of credit cards and installment loans have done to their credit standing...Today, I was helping a young couple to see if they can qualify for the home they made an offer on.... and I could not help them.. They had too high of balances on their credit cards and making the minimum payment was not lowering their balances but in fact the balances were going up. It became impossible to get them a good loan with a good interest. I refuse to be a party to those funky loans that has gotten our economy in the horrible shape it is in today... I only will do straight forward loans and thankfully the brokers I work with...will only do those kind of loans as well... It broke my heart that this young couple had no idea that they had systematically hurt their credit by taking advantage of the credit card promotions out there today and the "Pay no Interest until 2010...." debt is debt whether you have interest added on or not...
So here is my advise to those of you that want to purchase a home or want to refinance their existing home......
Use one credit card only... Payoff the card each month...If you can't pay for it in one month... then wait till you can..... (emergencies are excluded from this theory)
Join a credit report service - knowing your credit will help you keep it where it should be. Lenders are FICO driven. What that means is that lender will look at your credit scores to give you a credit determination... Lenders prefer 700 or higher...But will entertain as low as 640 with compensating factors..
Put something away each month.
Your mortgage payment, taxes, and insurance should not exceed 30% of your gross income
Your mortgage payment, taxes, and insurance and all your monthly debt should not exceed 38% of your income.
This is just a guideline to follow.. of course there are exceptions to every loan and nothing is black and white...by following these guidelines it will help you from going over your head.
On this blog one of my advertisers is My FICO score. This is an excellent service to join..but of course there are others out there... Knowing your credit will help you be ahead of the game
I am not a mortgage broker so I can never quote loan rates but if you have questions, please ask and if I can help you I will.