Improve Your Score 50 Points – NOW!

February 7, 2012 by Leave a Comment

credit_issuesWe’ve written many times here about writing dispute letters when you have incorrect items on your report.  In addition to this, you could improve your score by 50 points if you would do the following:

  • Pay off any verified bad credit item on your report. In exchange for your payment have the lender remove the item from your credit report.  This works especially well if you have medical collections… once the collection is sold multiple times, it shows on your credit report multiple times, so get it off!
  • Pay your bills on time. It is alleged that missing one monthly payment can cause your score to drop by up to 50 points. We tell folks that they should be able to purchase a home if they have 12 months of ON TIME payments!
  • Open a new line of credit. You will get the most benefit if this is a revolving line of credit. We recommend an unsecured credit card… but if you must use a secured card – do it! But, make sure it reports to all 3 bureaus.
  • Pay your large debts down. This is called your available credit to debt. The bureaus need to see that you are not in over you head and that you do have credit that is not being used.

These four action items are the only things you need to concern yourself with when trying to improve your FICO credit score.  The minimum credit score for most loan programs is 640.  If you have a score in the high 500′s to low 600′s, and want to buy a home – we might be able to help!  Call Steve Thorne 919-694-5058

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I Have A Repo on My Credit Report Can I Buy a House?

February 6, 2012 by 5 Comments

Villages of ApexI’ve had several of these questions lately, and I figured I’d let you know what I’m seeing.

Just because you have a repossession on your credit report does not mean that you have to delay in purchasing a home… but that doen’t mean it’s not a problem.

Okay, so let’s say you have a repossession from 2005.  Next year, 2013, the issue is going to “age” off of your account.  That means, no matter what the creditors are telling you, it’s going to go away – COMPLETELY away.  So, in most cases I don’t recommend that folks shell out $4000 to settle the deficiency balance this year (when it’s going to age off next year) because then it’s going to stay on your account for another 7 years! (To find out how long items stay on your credit report, click here!) [Read more...]

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Does The Balance On Your Account Matter?

February 4, 2012 by Leave a Comment

new home sales apexI recently read a report that said:

“Several of my clients are in the credit restoration business and a recent conference call with some of the heavy hitters in the business revealed an astonishing new update to how the FICO score is computed.

Balance management – that is the practice of getting the “balance to available credit” (similar to ltv) below 50% and ultimately to below 30% for maximum benefit, “NO LONGER appears to improve the score” was the quote on the conference call. It was a common, and very simple way to get a few point increase in FICO score was to transfer balances accross cards, or pay down across cards to get the balances below 50 and 30% of the available credit line. Another common practice if there was no room on other cards or no cash to pay balances down was to call the credit companies and request an increase in the available credit limit – which would result in an improved ratio and a better score. It appears this is NO LONGER the case.”

In review of our recent files… we do not feel this is accurate information.  Our files show that folks who pay their accounts down to at lest a 50% level do have an improvement in their scores.

Don’t be fooled by those who don’t have many clients, are not working full time in the business, and just plain don’t know…  Steve Thorne at Mortgage Banker in Cary 919 649 5058  if you want to buy a house and need more information!

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What’s In Your Wallet (It Makes a Difference) Part 2

February 3, 2012 by 1 Comment

Fix Your CreditWorking on your credit scores so you can purchase a home?

If you are not behind on payments, and you think you can manage the payments as they are (without closing accounts)… let’s talk about one of the most important things you can do to raise your credit score.

Take out your wallet… Look at the Credit Cards; and find the ones that have the name of a STORE on them (these are just examples):

Best Buy

Rooms To Go

Belks

Victoria Secret

Apple

Lowe’s

Sears

Pottery Barn

Radio Shack

Put those in one stack. Then take out the ones with the name of the BANK on them:

Chase

Bank of America

Wells Fargo

CitiGroup

Put those in a Stack. Then take all the rest of them out:

Discover

American Express

Capital One

Provident

American Airlines

And put those in a Stack. Now—if you REALLY have all of these credit cards, and they all have balances on them… you should have some really nice stuff! WOW! (ROFL!) But I digress…

So, when you have an extra $50, which ones do you pay down first?  Well, our suggestion is that you pay OFF the first stack as fast as possible. Not just down to 50% balance versus Credit Limit… these are the ones you really ought to cut up and close. Do NOT use STORE credit cards if you can help it! It’s not worth the discount to defer payments on Rooms To Go if you care about your Credit Score! Listen to Dave Ramsey and buy the furniture when you can afford to pay cash!

With the other two stacks— work to get rid of the Capital One, Provident, “B” Tier cards as quickly as possible and cut that card up. You might not want to cancel the account, having the limit there is okay with a zero balance—but they are difficult to deal with and charge very Large Fees.

Once you have THOSE cards paid off, start working on the “Bank” credit cards. Pay each one down to at least a 50% balance. If you do this—you will have a GREAT credit scores!  That’s the GOAL!  Right?

 If you have questions about buying a home, or want specific information about your credit – please call Steve and Eleanor Thorne, Mortgage Banker in Cary !  919-659-5058　

 

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What’s In Your Wallet (it makes a Difference)? Part 1

February 2, 2012 by Leave a Comment

new homes raleighAre you considering a Home Purchase???  Many of us realize that credit scores are the Holy Grail—the one thing you do not want to screw up… and if you have, it’s the one thing you want to figure out how to FIX… FAST!

We talk to people all the time who have been laid off, or had an accident, or got sick, or relocated and then hit hard times. The first thing you need to do is GET OVER IT! Get past the anger and the sleepless nights trying to juggle everything, and start making a plan.

All too often people could increase scores and save years of problems if they asked for help EARLIER. We recommend talking to a Consumer Credit Counseling Service (NON PROFIT) before you get behind on bills. They can get credit card rates lowered, past due and over limit fees dropped, and your total monthly payments manageable. Once you’ve made 9 payments into these Services, you will probably see a positive difference in your Credit Score!

Again—you want to make sure to talk to NON-Profit Consumer Credit Counselors. They will typically keep only a very small fee for distributing the payments.

Are you trying to improve your score so you can purchase a home?? Contact Steve and Eleanor Thorne at Mortgage Banker in Cary , Cary, NC  919-649-5058

 

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Minimum Credit Scores for Mortgages in 2012

January 25, 2012 by 7 Comments

I”ve written a couple dozen times about scores and how to increase your score – but I don’t think I’ve mentioned (here anyway) what the goal is.  If you want to buy a car – your goal is to get your score to AT LEAST a 525 on all three credit bureaus.  If you are purchasing a home… the bar’s a little higher.

  • Most FHA underwriters now require a minimum score of 620.  We offer the FHA Affordable Program that will approve FHA Mortgage Loans at a minimum credit score of 600 – however, there are MANY “overlays” to getting an approval at that lower score.  FHA requires a 3.5% downpayment that can be a gift.  The State of North Carolina is also offering a $8000 DownPayment Assistance Program to those who qualify.  It’s a little tricky to coordinate – so if you have a score that you think will meet the 600, and you’re going to need that extra help with the downpayment – DEFINITELY call us prior to looking for houses!  (In Wake County the maximum FHA loan is $295k click here to see limits for other counties)
  • Veteran Home Loans don’t have a minimum credit score requirement.  However, most of the underwriters will require a minimum of 620… (although lately I’ve seen some 620′s that wouldn’t work).  We think the “black box” automated underwriting system is getting a little tighter – so you definitely want us to have a peek at your credit prior to looking for a home!  In the Triangle – we’ve partnered with a builder and several other service providers to offer SUBSTANTIAL discounts on homes and the closing costs to Veterans and their families.   Please remember to ask us about this!  (the maximum VA home loan is well over $400K… however with the number of reservist we’ve talked to lately – our stance is that we will need to look at your particular eligibility status to determine your maximum 100% loan).
  • USDA  home loans are for properties in less populated areas.  They had been the “go to” if your score was between 580 and 600.  That loophole is closing and they are really looking for 600+ now.  In fact, if you have less than a 640, it’s a required Manual Underwrite, and the guidelines are very, very specific (tight).  There’s no maximum loan – it depends on what you can qualify for.
  • The Conventional loan products and the PMI standards have also gone up.  To OVER SIMPLIFY… you can get a loan if your score is between 660 and 680 – but it’s not easy and the PMI costs are awful.  You really need a score of 720 and at least 5% to put down to get today’s best offerings.  The GOOD NEWS is that if you have a 660 score – getting to 720 is really not that difficult – it’s just a matter of taking the 30 or 45 days to do it.

If you’ve previously had a bankruptcy, foreclosure or Short Sale – it’s important to also look at how long you need to wait before you can purchase another home, no matter what your credit score is.

So the moral of this story??  You need to PLAN to purchase a home!  PLAN on speaking with Steve and Eleanor Thorne at Mortgage Banker in Cary 919-649-5058. ( I thought that was kinda’ cute!)

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Closing a Credit Card??

January 19, 2012 by Leave a Comment

credit cardsIf your trying to decide what to do with all that cash Washington is sending you in the next few weeks… you might also be looking at your credit report to see how to use that money more effectively.

In today’s environment we don’t usually suggest that folks close credit cards with no balance, but if that’s a decision you’ve made, here are some tips on how to close them the “right way:”

Contact Customer Service – The number should be on the back of your card.  Tell the representative that you are closing the account.  It’s their job to try and get you to keep it open, but if you’ve decided this is the right course, stay firm with them.  Make a note of who you speak with, the date and time (I normally write this on my bill).

Follow up in writing – be sure to include the information about who you spoke with, and request that your credit be updated to show that the account was closed at your request.  Ask for a reply in writing for your records.  We suggest that you send this letter certified return receipt requested.

Recheck your credit report 60 days later.  The changes should be reflected.

If you are considering a home purchase, and you have credit scores that are ALMOST there, but not quite… call us!  Steve and Eleanor Thorne, Mortgage Banker in Cary , 919-649-5058.

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What To Dispute On Your Credit Report

January 18, 2012 by Leave a Comment

 

If You’re Huntin’ A Better Credit Score – Let Sleepin’ Dawgs Lie!

don't dispute everythingIf you are looking for a new home, you are probably aware that your Credit Score is a CRITICAL item in determining your interest rate and possibly how much house you can buy / qualify for!

We talk to people every week who receive a copy of their credit report, see some derogatory remarks from 2005 and immediately start writing dispute letters.

This might not be your best strategy (each case is different of course), because the credit score is really an indication of what you are about to do.  It tries to PREDICT what your credit behavior is going to be based upon RECENT activity.

So what happened 3 years ago, is not really as important as what happened 18 months ago!  If it is a MEDICAL COLLECTION – there’s a possibility it won’t have to be paid… most judgments and liens will have to be cleared before you can get a mortgage.

If you are considering a purchase, and want to know more about your particular credit report and circumstances, to get pre-qualified…  call Steve and Eleanor Thorne, Mortgage Banker in Cary, 919-649-5058

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Can You Refinance To The Lowest Mortgage Rate?

January 1, 2012 by 7 Comments

refinance to low mortgage ratesMortgage Interest Rates are at ALL TIME lows, and many of the people calling us want to know if it’s even possible to Refinance these days!

The answer is maybe.  If you are looking for a “rate term” meaning no cash out – and you haven’t missed any mortgage payments in the last 12 months and you think you have at least a 600 credit score - call me.  We can possibly figure this out.  There are some cool guideline changes coming out between now and the beginning of March 2012 that don’t have any “Loan To Value” requirements for refinances!

If you are getting a divorce – and you have never worked, and you need to use the alimony your spouse is SUPPOSE to start paying you in September to qualify for a home… well, call me… because we need to talk about how this is going to work and what documentation we are going to need. [Read more...]

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Do U Need A Repair Co?

August 10, 2010 by 14 Comments

nc mortgage loanI don’t play the lottery – but I know plenty of people that do… and from what I hear, there are no Guarantees that you are going to win as you purchase your ticket. The same thing is true with Credit Repair Companies.

There are TONS of ads for credit repair companies claiming that they can ERASE your bad credit… they have a bridge to sell you and they can guarantee you’ll win the lottery!

If it sounds too good to be true… it probably is!

Don’t pay a credit repair company to do something you can do for yourself. Most companies only guarantee that they will take 25% of the bad credit off your report!  Inaccurate items on your credit report can be removed and that’s where you should start. [Read more...]

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