5 Surprising Credit Report Errors You Must Fix

In a recent study, 19 percent of American consumers who reported finding an error in their credit reports opted not to dispute the error, even when they were offered $5 to file the dispute! Why not? Well, some said they thought the error was too minor to impact their score, while others said the dispute process seemed too difficult to tackle.

The fact is, when you’re trying to qualify for a home loan, some of the items on your credit report that can pose a threat to your home finance plans might surprise you. Here are 5 surprising credit report entries you absolutely must fix, especially when you are in the process of buying or refinancing a home.

1. Account balances you recently paid down or off. If you’ve just finished paying a bill down or off, you might not dispute the elevated balance that remains on your credit report because it’s not actually an error, per se. But the whole point of paying the balance down was to bring down your credit utilization ratio, which is a heavily weighted factor in your overall credit score.

Correcting the actual balances of your outstanding bills downward to account for your recent pay-down efforts poses such a large potential improvement impact for your credit score that it might even be worth paying your mortgage professional the $30 to $50 it will cost for them to initiate a Rapid Rescore, which can update your reports to reflect your slimmed-down balances in about 72 hours, compared with the 30 to 60 days you’d expect to wait to see results from a traditional dispute or update.

2. Incorrect former addresses. Of the 19 percent of consumers who spotted an error on their report in the study, nearly 40 percent of those errors were in what the credit bureaus call “header data," things like the consumer's previous street address. Many elected not to dispute these sorts of line items because the error doesn't seem like it would impact their credit score. While an inaccurate address might not have much to do with your score, it can still wave a red flag, signaling issues that can foul-up your mortgage application.

A misspelling in an otherwise correct street name should not cause you grave concern. But if the previous addresses listed are in the wrong city or state, or otherwise come out of nowhere, they might signal that someone has used your name and/or social security number to obtain credit at a different address. Credit card fraud and identity theft are difficult to unravel when you’re not seeking credit; they are much more complicated to resolve when the credit stakes are high and the underwriter as picky as they are in the course of applying for a mortgage.

Also, current and previous addresses that conflict with where you’ve told the lender you live(d) can raise suspicion that you might be buying a second or rental home, rather than the owner-occupied home you say you’re trying to buy; that can provoke a lender to demand that you ante up more down payment dough, make you jump through greater hoops to prove your true address or even stop you from qualifying for the loan altogether.

3. Bills that were never yours in the first place. As with completely bizarre former addresses, accounts listed on your credit report that you never opened in the first place can be a red flag that tips you to the fact that someone else might have stolen your identity and opened a credit card or account in your name. If you find one of these items on one credit bureau report, but it’s currently closed or has a zero balance, you might be tempted to let it slide, thinking it can’t move the needle on your credit score. In reality, though, if someone is using your identity to obtain credit and you fail to dispute that the bills belong to you, they might continue to use it, which can cause you real problems. Of course, if the bills weren’t paid on time or have been placed in collection, disputing the accounts’ presence on your credit report is a must.

If they were paid on time every time, though, the analysis might be different. Unfortunately, instituting a fraud-based credit freeze or fraud alert on your credit reports at the same time as you’re applying for a mortgage can complicate your own loan qualification process significantly. If you find yourself in this situation, carefully scrutinize the rest of your report and the credit reports you receive from the other bureaus to detect whether other fraudulent accounts exist, then consult with your mortgage professional on exactly when and how you should go about disputing the accounts which weren’t actually yours.

4. Limits listed as lower than they really are. As with closed accounts that were never yours in the first place, accounts that are listed on your credit report as having limits that are lower than they really are might seem like a battle not worth fighting. But the fact is that only two inputs go into the credit utilization ratio that comprises about 30 percent of your FICO score: how much credit you have available, and how much credit you have used. So, if you have account balances that show up on your credit reports as lower than they actually are (i.e., that you have less credit available to use), that inaccuracy can skew your credit score and screw up your mortgage qualifying efforts. Big time.

5. Derogatory items that should have aged off. Very few of us are perfect, and you might have worked hard to pay your bills on time in an effort to overcome a credit ding from back in the days. Although the impact a derogatory item has on your credit score wanes over time, it’s still your right (and your responsibility) to make sure negative items disappear from your credit report when they are supposed to – that’s 7 years for a late payment, 10 years for a bankruptcy. If you are still seeing credit dings on your report after more than the relevant time frame has elapsed, dispute them and claim the rehabbed credit (and score) you’ve since earned.

It’s not very common that credit report disputes cause dramatic changes in credit score, but again, many borrowers aren’t disputing these sorts of items they don’t realize could make a difference in their homebuying or refinancing prospect.

Beyond that, if you’re close to a credit tier cutoff, like 620-640 or 740-760, depending on your loan type, even a few points’ difference can be the difference in qualifying for a home or not, or paying a higher mortgage interest rate for the life of your loan. For these reasons, it behooves every potential borrower to be proactive in spotting and correcting these 5 must-dispute errors.

Contact The Mortgage Mark with any questions!!!

mark@themortgagemark.com

www.themortgagemark.com

The Mortgage Refi Boom Of 2011 Has Officially Begun

Mortgage rates are dropping. There's an MBS winning streak going on.

Here Comes The Refi Boom Of 2011

We're on the precipice of something big. A wave of uncertainty about Greece and its debt, plus weaker-than-expected economic data at home, has dropped conforming 30-year fixed rate mortgage rates to levels not seen since December 2, 2010.
Click here to get a rate quote.
It's been 8 straight weeks that mortgage rates have dropped. 8 weeks. Not even last year's epic Refi Boom produced a winning streak of 8 weeks. This year's streak is historic.
The 30-year fixed rate mortgage now averages 4.49% nationally. It's down 42 basis points -- or 0.42% -- since early-April. For every $100,000 borrowed, that yields a monthly payment difference of $25.24.
Adjustable-rate mortgages have shed even more, giving back 50 basis points since the streak began.

Mortgage Rates Vary By Region

Relative to earlier this year, it's an excellent time refinance a home or buy a new one. Mortgage rates are down and may even be lower than what Freddie Mac reports in its survey. This is because Freddie Mac gives a national average. Locally, rates may be lower or higher.
Click here to get a rate quote for your area.

• Northeast Region Average : 4.49 with 0.6 points
• Southeast Region Average : 4.52 with 0.8 points
• North Central Region Average : 4.52 with 0.6 points
• Southeast Region Average : 4.52 with 0.6 points
• West Region Average : 4.45 with 0.8 points

You'll notice that, in the West Region, rates tend to be lowest and fees tend to be highest. This is because loan officers in the West Region tend to quote loans with "1 point" standard. This results in lower rates for borrowers and applicants, but higher fees.
The opposite is true in the North Central Region where fees tend to be lower, and rates tend to be higher.
Neither system is better or worse -- choose the setup that works best for you. If getting the absolute lowest mortgage rate is more important to you than getting the absolute lowest fees, for example, just ask for it. Your loan officer should be able to walk you through your options.
Click here to get a rate quote.

There's a Refi Boom Starting. Don't Watch It Pass.

Mortgage rates look like they'll fall some more, but don't sit by and wait for something better.
History has shown that mortgage rates can -- and do! -- change quickly. And because rates are unnaturally low to begin with, once they start to worsen, they should worsen in a hurry.
Exploit today's market while you still can. Click here to get a rate quote and be a part of this year's blooming Refi Boom.

Contact The Mortgage Mark with any questions!

www.themortgagemark.com

mark@themortgagemark.com

Fannie to inspect delinquent homes

If you happen to see a contractor walking around your house, taking pictures, don't panic. It's just your lender "inspecting" your property.
According to new rules announced by Fannie Mae this week, mortgage servicers will be required to "order" a "property inspection" no later than 45 days after a homeowner misses a mortgage payment. "The servicer must continue to obtain property inspections every 30 days thereafter" until the delinquency is resolved.
If the servicer determines that the property is abandoned "the servicer must perform an interior inspection upon confirmation of abandonment," according to Fannie's guidelines, which go into effect on Sept.1
Fannie's current policy requires inspections only when servicers are unable to reach delinquent borrowers or when they determine the borrower isn't willing to try to work out a solution. But the inspections are not required until the mortgage is 135 days delinquent or the servicer begins foreclosure proceedings.
The new policy is an extra effort to try to protect Fannie's investment in these assets. But has Fannie heard of the widely reported stories of banks breaking into people's homes to "inspect" and "secure" them, claiming the homes are vacant when they are not?
For example, there is the story Nancy Jacobini in Orlando. Late last year she called 911, desperately asking for help as a man tried to break into her house. After police arrived, she learned that the man was a contractor who wanted to "secure" her home on behalf of her lender, Chase. The inspector said he thought the house was vacant. A Chase spokeswoman has told me this was an isolated mistake and that they have apologized to Jacobini.
Speaking of mistakes, you might want to know that some of these lender/servicer break-in cases that have been reported over the last two years involved homeowners who were current on their mortgages.
But let's get back to the new policy.
First, it's important to understand how this works and the number of people involved in this process. Servicers don't hire and train their own inspectors. They hire a property management company, which then hires contractors to go out and do the "inspections."
The question is how does the servicer's inspector determine whether a home is vacant before securing it? Do they peek through your window? Do they assume your home is vacant if you haven't mowed your grass and happen to be on vacation?
A Fannie spokeswoman says the process involves various steps and it includes checking to see if utilities are on, if there are people in the house and if there is furniture in the property.
But how do you know if there is furniture in the property before you enter the house?
The spokeswoman declined further comment beyond what is explained in the guidelines.
According to the guidelines, "The servicer must be able to obtain a signed copy of the inspection report that first reported the vacancy, in which the person who actually performed the inspection certifies that he or she has personally gone to the property location and confirmed that the property is vacant."
To avoid any misunderstandings, on top of paying your mortgage you should probably make sure you pay the utility bills before you go out of town.

Contact The Mortgage Mark with any Questions!!

mwilkins@capitalfmc.com
www.themortgagemark.com

5 Need-to-Knows Before You Move Into the Neighborhood

5 Need-to-Knows Before You Move Into the Neighborhood

Buying a home can feel like the most intense research project ever- to make a smart buy, you’ve got to get educated about mortgages, learn how to read a contract, do a deep dive into property condition issues or homeowner’s associations and pay attention to what’s going on in the economic news and the real estate market. But there’s at least one more area wise buyers don’t neglect: neighborhood research.

We know, at a gut level, what kind of neighborhoods we like - tree-lined streets, convenient shops, etc. and so forth. But what specific details should you investigate before you buy or move into an area? Here are 5 items you definitely need-to-know before you move into a neighborhood:

1. Details on Shady Dealings. Most of us think we know which sides of the railroad tracks, so to speak, have high crime rates and which are supposedly safe. But before you buy a home or move into a neighborhood, it behooves you to actually do the research and see whether or not your beliefs are accurate. Check out the Megan’s Law databases to see where registered sex offenders may live, especially if you have young children or other reasons to be particularly worried. Google your address, which might pop up details such as whether your intended home has ever been a meth lab, among other things.

And, whatever you do, don’t forget to tap into Trulia’s new Crime Maps – in a number of metro areas (which will be constantly expanding), you can view uber-detailed (and sometimes surprising!) crime data that is uber-relevant to you. If you’re trying to decide between two homes in different parts of town, you can even toggle back and forth between the neighborhoods to compare them! For example, some neighborhoods have a spike in car break-ins after people leave for work. Or maybe one side of your street-to-be has a significantly higher rate of violent crimes than the other.


That’s the kind of thing you should find out before you move in, don’tcha think?

2. How Recession-Resistant it is. Let’s face facts: some neighborhoods, cities and states have fared better than others over the course of the recession. An area’s proximity to job opportunities, saturation with troubled subprime loans and the amount of housing supply (vs. demand) all have something to do with whether prices plummeted or have held up over the last few years.

Sometimes, a neighborhood’s recession-proofness (or -proneness) is obvious: if the street on which you’re house hunting is riddled with ‘For Sale’ signs (and foreclosure riders on top of them), or you know for a fact that the home you’re buying is a short sale for which the sellers paid double your price just 5 years ago, you might be in an area that has been hard hit. Also, if your neighborhood has a sky-high rate of price reductions or it is much less expensive to buy than to rent a home in your area, these are other indicators that the recession might have hit your district pretty hard.

The fact of the matter is, some of the hardest hit neighborhoods are where the best deals are to be found, so I’m not necessarily suggesting that you shy away from buying in such an area. But do know that the harder hit areas might take longer to see an uptick in home values, too, so the harder hit your neighborhood was by the real estate recession, the longer you should plan on staying put before you buy, to make sure you don’t end up needing to sell and stuck in an upside-down home. While a 5 to 7 year plan might make sense in an area where the real estate market has been pretty robust over the last few years, you might want to be okay with planning to hold your home upwards of 10 years before buying in a foreclosure-riddled area (and you might also want to make absolutely sure you’re very happy with the deal you’re getting).

On the flip side, the more recession-resistant your area has been, the more likely you are to encounter sellers with less flexibility on pricing or even, gasp!, multiple offers!

3. The Neighborhood’s Flavor. Is the area you’re considering a hot spot for outdoor adventures and family events at the park, or chi chi restaurants and wine tastings at the museum? Find out by pulling up some listings on Trulia and scrolling down the see how others who have lived in the area have rated and reviewed it.

Also, take a look at NabeWise- it’s only available for about 10 large cities right now, but it’s got a super useful function where you can search by city and what’s important to you (like being in a trendy neighborhood, or one that’s got ample public transportation) and it’ll surface neighborhoods which might be a good fit for your values.Neighborhoods are even ranked based on prestige and how beautiful residents are (the latter of which I find fascinating - but more as a measure of where the raters’ heads are at than of anything you must include in your neighborhood fit equation!).

4. Where are the hot spots? Before you buy or move into an area, equip yourself with a knowledge of where all the stores, farmer’s markets, parks, restaurants and other hot spots your family will want to use are located vis-a-vis your home-to-be. (Hint: your local real estate agent is a fabulous source for this kind of information - they are especially gifted at knowing where the good food and shopping is!) Your Trulia Mobile App will alert you to nearby haunts that have Yelp! reviews; also, your neighbors-to-be can be a great source of this sort of information - knock on doors and ask for their recommendations.

It also makes sense to search the web for the various sorts of things your family is into, and your new neighborhood’s name. An internet search for running trails in my neighborhood is how I found out my house was just a couple of blocks away from a largely hidden lake we now visit regularly. Then, drive around and see what you can see - or find someone to drive for you. Once, when I moved to a new town, I marched myself onto a city bus, sat behind the driver, told them I was new in town and asked them to point out things they thought I needed to know. I got an hour long tour through three neighboring towns - for $1.25!

5. What the neighborhood looks and feels like at different times of day/different days of the week. Have you ever visited a Sunday afternoon open house when the sun was shining, birds were singing, and charming neighborhood rugrats were rolling their hoops up the street? (Okay - that was a century or two ago, but you get the gist.) Then, you come back a couple of weeks later for your inspections at dusk and find those same rugrats (or their parents!) spraying graffiti all over “your” garage, the neighbors’ underpants flapping on the line in the front yard and the other neighbors’ music blaring? File that under disappointing.

The nature of a neighborhoods changes - sometimes dramatically - before and after the sun goes down. Also, if you visit a home during the week or when it’s cold and rainy out, the street will undoubtedly be busier and noisier - more reflective of the extremes you should be aware of - on the weekend or when the weather is grand. So, before you buy, go see the place in sunlight and after dark, during the week and on the weekend. And, again, there’s nothing wrong with knocking on the neighbors’ doors, telling them you’re thinking of buying, and seeing what kind of insider information you can glean from them!


Contact The Mortgage Mark with any questions!!

www.themortgagemark.com

mwilkins@capitalfmc.com

The Consequences of Walking Away

Have you had a conversation with someone in the last 30 days about the consequences of walking away from your mortgage?

If the answer is yes, you are not alone.

With an estimated 11 million people underwater on their mortgage, (owing more on their mortgage than their home is worth), even the most credit-worthy consumers are considering walking away from their mortgage.

“Walking away from a mortgage,” or what’s known as a strategic default, usually results in either a short sale or foreclosure and many people in this position are asking one simple question:

What are the consequences of walking away from a mortgage?

Walking Away from a Mortgage: The Consequences

Generally speaking, if you are considering walking away from a mortgage the major consequences will include:

• Impaired credit
• Deficiency risks
• Tax consequences
• Moving costs
• Professional implications

Impaired Credit

Most people are aware that walking away from a mortgage will mean their credit score will take a hit. What most people may not be aware of is between short selling and foreclosure, there is very little difference in how much your credit score is impacted.  The main difference between a short sale and foreclosure is how soon you can qualify to buy a home again after the event, not how many points your credit score went down.

In addition to your credit score taking damage points, it is also common for credit card companies to cancel credit cards or lower your credit limit as a result of missing mortgage payments.  It is also common that it will become more difficult to obtain financing for larger ticket items such as autos or furniture — or any other type of revolving account after walking away from a mortgage.

Deficiency Risks

Depending on which state you live in, there are varying deficiency risks associated with walking away from your mortgage. 

Translation: Your lender may sue you for the difference between what you owe and what your short sale or foreclosure proceeds were.

Anti-deficiency protection is limited to a minority of states and for most states in the U.S., there is no protection for homeowners from a lender pursuing the difference between what they owe and what the home sells for in foreclosure.

Further, even if your state has anti-deficiency laws in place, don’t think you are free from deficiency risk.  Whether you have deficiency risk or not, depends on factors such as: whether you have a second mortgage; did you refinance and take cash out; is your mortgage the one you got when you originally bought the house, and more.

Which is why when it comes to managing your deficiency risk, keep this saying in mind:

Nothing is more expensive than cheap legal advice.

If you are concerned that you may have deficiency risk, you should speak with a real estate lawyerwho can provide legal advice for your particular situation.  Only a real estate attorney can accurately provide you the specific advice for your situation. Don’t rely on your neighbor’s advice or your brother-in-law who just short-sold his house and recommends that you should be okay by just walking away.

Tax Consequences

If you are considering walking away from a mortgage on your primary residence, there is a chance that you may have some tax liability.  If you are considering walking away from a mortgage on a second home or investment property, there can be a significant tax liability and you should consult your tax accountant.

Moving Costs

One of the commonly under-estimated consequences of walking away from a mortgage is the expense and process of moving.  Some of the common concerns related to moving include:

• Moving into a rental — perhaps after decades of being a homeowner.
• Possibly explaining to the landlord any credit report concerns as a result of missed mortgage payments.
• Paying for moving expenses. Utilities, deposits, moving trucks and other expenses can add up fast.
• Moving family members school, work or community activities they have gotten used to.

Many of the people I have talked with who have went through the process of walking away from a mortgage cited “moving” as the one consequence they hadn’t fully considered before actually doing it.

Professional Implications

Depending on what you do for a living, you may have professional consequences as a result from walking away from a mortgage.  The number of professions where your credit profile matters has grown over the last decade and if you are in a situation where your credit profile matters, you should know what the professional implications are before you walk. After all, you don’t want to lose your house and your job at the same time.

Walking Away from a Mortgage: The Single Biggest Mistake You Can Make

When making the decision to walk away from a mortgage, the consequences are certainly something to consider as part of the decision process.  And in my own personal experience of short-selling a house, there is one big mistake that you can make in the process:

Not being fully informed of what the consequences are of walking away from a mortgage.

Once you have educated yourself about the consequences and researched all of the possible options…

… the choice is still yours.

Contact The Mortgage Mark with any questions!

www.themortgagemark.com

mark@themortgagemark.com 

Five Costly Home Buying Mistakes

Buying a home is a big financial commitment – very likely, the biggest financial investment you’ll ever make. And if you don’t go about it the right way, you could end up making costly mistakes along the way. Here are five costly home buying mistakes:


Trying to time the market bottom

No doubt, the real estate market has been in a tailspin for several years now. As a result, everyone is in limbo — sellers are on the sidelines because many of them owe more on their homes that the home is worth, and buyers are waiting for prices to drop further. Remember, buyers: Home prices are just one factor in how much a home will cost per month. The other consideration is mortgage rates. They’re rising — and that means higher monthly payments. In fact, even if home values fall — and we’re expecting them to drop another 5-7 percent this year — higher mortgage prices could counteract that. For example, say a house was worth $300,000 in November 2010. If you bought it then, got a fixed-rate mortgage of 4.1 percent and put 20 percent down, it would cost you a little over $1,200 a month. If you waited just two months, and values dropped 1.8 percent, it would cost you $63 more per month; if you waited 14 months, when values are projected to be down about 6 percent and mortgage rates are projected to reach 5.7 percent (per Freddie Mac), your payments would be $126 more per month. Ouch.



Not researching loan options

Get this: Borrowers are spending twice as much time researching a car purchase than they are home loans — 5 hours versus 10, respectively — even though homes cost an average of five times more! This disparity can cost you thousands of dollars over the long haul. That’s why it’s important to shop around for different loan options. Contact The Mortgage Mark to compare different loan options.


Buying a house you can’t afford

In addition to getting pre-approved before you house hunt, know that as a general rule of thumb, the total cost of your mortgage payment (including any taxes and insurance) — should not exceed 30 percent of your take-home pay.



Not knowing your credit score

Find out what your FICO score is (or get a ballpark credit score ) and if it’s sub par – in the low 600s, for example – launch a campaign to raise it, keeping in mind that even a 20-point increase could save you thousands of dollars over the life of the loan. What’s ideal? The lowest interest rates are reserved for those with a score of 720 or above.



Falling in love too quickly

Love is blind! Don’t let your emotions get to the best of you. If you do, you may overlook costly flaws, skip an inspection, fail to factor in commute times (gas prices are up there!), property taxes, the location/neighborhood (an important consideration for resale purposes), and more. To ensure you’re getting the best house at the best price, take the time to shop around, comparing at least three homes before you make a decision. You’ll be glad you did.


Contact The Mortgage Mark with any questions!!

Mwilkins@capitalfmc.com  http://www.themortgagemark.com/

FHA has raised the monthly mortgage insurance premiums

FHA has raised the monthly mortgage insurance premiums



If you haven’t heard, FHA announced on February 14th that it is raising the annual mortgage insurance premiums, also known as the FHA monthly mortgage insurance. These changes are mentioned in Mortgagee Letter 11-10 and become effective on or after April 18th, 2011. The new change is 25 bps more.

I have already heard that some of you think this will hurt the housing market and our economic recovery. Why the changes? HUD wants to strengthen the FHA’s Mutual Mortgage Insurance Fund, known as the MMIF. Think about it this way. If FHA doesn’t become pro-active now and FHA disappears in the future, then where do you think we would be regarding financing options.

Keep in mind that Fannie Mae has a pricing change that goes into effect on April 1st, 2011. Pricing Hikes for Conventional Loans in April 2011 That many lenders and investors have already made this change to their pricing. Also, there is no change to the Upfront Mortgage Insurance Premium of 1 percent for FHA loans, just the monthly premiums have been changed.

Old verse New Monthly Mortgage Insurance Changes

This chart is from Mortgagee Letter 11-10 – Annual Mortgage Insurance Premium Changes -


As you can see by the red arrow, indicating that this goes into effect on April 18th, not April 4th. So what does this all mean to those refinancing or buying new homes with a FHA mortgage?

This is based on a $250,000 sales price and the end result is that it would cost the buyer $50.26 more in their total monthly mortgage payment. You can also look at it from the flip side when qualifying buyers. This could lower the new buyers purchasing power by about $9,000. Meaning, instead of the $250,000 purchase price in the example, they can now afford a $241,000 home.


This new change is for your primary 1 to 4 unit properties. This change does not affect Title 1 loans, the HECM loan (reverse mortgages – which I am writing about tomorrow), the HOPE loan, and a few other types of FHA loans. This can also be found in the new FHA mortgagee letter 11-10.

There are also new changes to how one would have to request a FHA case number, cancellations of FHA case numbers, and a few other issues. These changes can also be found in the new FHA mortgagee letter 11-10.

Here is a quick breakdown of different purchase prices just to give you an idea how much more your mortgage payment will increase because of the new FHA monthly mortgage insurance change. In simple math, your mortgage payment will go up $10 per month for every $50,000.

Contact The Mortgage Mark with any questions!!

http://www.themortgagemark.com/    mwilkins@capitalfmc.com