Short Sale for Sellers: Let's say you have to relocate, my your home value fallen nearly $100,000, and you have to get rid of your home - the question is foreclosure or short-sale?
A short sale, in which you negotiate with the bank to sell your home for less than you owe on your mortgage will have a dramatically negative effect on your credit. A consumer who has been through a short sale could see a drop in his/her credit score of up to 200 points, essentially the same decrease as if the homeowner gone into foreclosure, says John Ulzheimer, president of consumer education for Credit.com. and like a foreclosure, the negative mark will pull down the score for seven years.
That said, if you are underwater on your mortgage and you need to move, a short sale might be a better option than foreclosure. Going through a foreclosure will make it very difficult for you to get a loan for at least 3-5 years; with short sale, you might be able to qualify within 2.
Another thing to find out and consider, the forgiven debt is completely forgiven; or you would be expected to pay taxes on it. (it depends on your mortgage holder)
Short Sales for Buyers: at this point, the process is not regulated, and only banks decide how long it may take, how many offers banks wants to receive, and who essentially would win the auction. If you are patient and determine to get short sale deal, do it! Please remember, the listing price of short sale is usually not what the bank is willing to accept, and there are other deals out there.
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Marina Vialtsina
Showing posts with label credit score. Show all posts
Showing posts with label credit score. Show all posts
Tuesday, May 26, 2009
Wednesday, November 26, 2008
Save on Your Credit Score this Holiday Season
With the economy slowing and holidays just around the corner, many consumers may be looking to credit cards to help them get through the heavy shopping season. While that may be a good short-term solution, you want to make sure you don't overlook the long-term impact on your credit rating. After all, the actions you take today could hang over your head for years to come--and may make it tough for you to get the home loan or car loan you want in the future.
To help you make sure you manage your credit cards--and your credit score--during the upcoming holiday spending season, follow these steps:
Double-check your card limits. Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That's because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you're suddenly almost maxed out. That's not a good sign for your long-term credit score rating.
Ask, pay down, or move around. If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card...not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That'll give you a more... well... balanced financial picture.
Leave home without it. One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.
Pick a card... not just any card. If you can't bring cash, make a credit card plan. Identify specific items that you'll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won't overspend and you won't risk running up one or two cards that are near the credit limit, which will hurt your credit rating.
Resist card offers at the counter. Retailers are famous for offering "savings" when you open a credit card. But those savings often don't outweigh the long- and short-term negatives. For one thing, opening a new account--or multiple accounts in a short period of time--can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.
Stay active. If you have older cards that you don't use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year... like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.
Always pay on time. Your payment record is a very large part of your credit score, so it's crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt... and save your credit rating from a huge hit.
To help you make sure you manage your credit cards--and your credit score--during the upcoming holiday spending season, follow these steps:
Double-check your card limits. Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That's because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you're suddenly almost maxed out. That's not a good sign for your long-term credit score rating.
Ask, pay down, or move around. If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card...not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That'll give you a more... well... balanced financial picture.
Leave home without it. One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.
Pick a card... not just any card. If you can't bring cash, make a credit card plan. Identify specific items that you'll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won't overspend and you won't risk running up one or two cards that are near the credit limit, which will hurt your credit rating.
Resist card offers at the counter. Retailers are famous for offering "savings" when you open a credit card. But those savings often don't outweigh the long- and short-term negatives. For one thing, opening a new account--or multiple accounts in a short period of time--can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.
Stay active. If you have older cards that you don't use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year... like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.
Always pay on time. Your payment record is a very large part of your credit score, so it's crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt... and save your credit rating from a huge hit.
Monday, September 29, 2008
Tips to raise your credit score (by Tree Lending)
A better credit score can help you get a better loan rate.
Your credit rating can help determine whether you get a loan and what interest rate you pay, so getting your score as high as possible can save you big bucks.
The difference in interest rates for mortgage loans is nothing to sneeze at. Someone with a FICO score, or credit rating, of 760 to 850 could pay $188 less per month on a $216,000 30-year fixed-rate mortgage than someone with a score of under 658, according to MyFICO.com. The amounts are based on interest rates of 5.99 percent for the higher rating and 7.31 percent for the lower rating.
Credit scores are grouped into five basic categories, according to MyFICO.com. In general, about 35 percent of the score is based on your payment history, about 30 percent on how much you owe, 15 percent on the length of your credit history, 10 percent on new credit and 10 percent on types of credit used. The mix can vary depending on your situation.
Credit ratings evolve over years, but there are ways to raise your credit score a few points at a time.
Pay your bills on time.
“I’m not sure a lot of people understand that,” said Jack Guttentag, professor of finance emeritus at the Wharton School at the University of Pennsylvania and the man behind The Mortgage Professor Web site (mtgprofessor.com). “They always say, ‘I always pay it eventually.’ ”
Pay more than the minimum on your credit cards every month.
Your score could go up a few points as your credit card balances go down. Just a few larger payments can help if you previously were paying the minimum.
Limit the number of new credit-card accounts you open.
An exception is for people who are trying to re-establish credit after a bankruptcy or other financial crisis, according to MyFICO.com. “Opening new accounts responsibly and paying them off on time will raise your score in the long term,” says the Web site, which is published by Fair Isaac, the company that invented the FICO score.
Keep your balance well below the credit limit on revolving accounts like credit cards.
Your credit score will likely be higher if you have small balances on four or five credit cards (as an example) than larger balances on two or three cards, especially if the balances are close to the credit limits, Guttentag said.
Pay off any uncollected items.
Your credit score is being hurt if you’re withholding payment because of a dispute with the lender, no matter how “right” you are.
And finally, always remember that paying down your revolving credit, or credit cards, is the best way to improve the portion of your credit score that looks at how much you owe.
Your credit rating can help determine whether you get a loan and what interest rate you pay, so getting your score as high as possible can save you big bucks.
The difference in interest rates for mortgage loans is nothing to sneeze at. Someone with a FICO score, or credit rating, of 760 to 850 could pay $188 less per month on a $216,000 30-year fixed-rate mortgage than someone with a score of under 658, according to MyFICO.com. The amounts are based on interest rates of 5.99 percent for the higher rating and 7.31 percent for the lower rating.
Credit scores are grouped into five basic categories, according to MyFICO.com. In general, about 35 percent of the score is based on your payment history, about 30 percent on how much you owe, 15 percent on the length of your credit history, 10 percent on new credit and 10 percent on types of credit used. The mix can vary depending on your situation.
Credit ratings evolve over years, but there are ways to raise your credit score a few points at a time.
Pay your bills on time.
“I’m not sure a lot of people understand that,” said Jack Guttentag, professor of finance emeritus at the Wharton School at the University of Pennsylvania and the man behind The Mortgage Professor Web site (mtgprofessor.com). “They always say, ‘I always pay it eventually.’ ”
Pay more than the minimum on your credit cards every month.
Your score could go up a few points as your credit card balances go down. Just a few larger payments can help if you previously were paying the minimum.
Limit the number of new credit-card accounts you open.
An exception is for people who are trying to re-establish credit after a bankruptcy or other financial crisis, according to MyFICO.com. “Opening new accounts responsibly and paying them off on time will raise your score in the long term,” says the Web site, which is published by Fair Isaac, the company that invented the FICO score.
Keep your balance well below the credit limit on revolving accounts like credit cards.
Your credit score will likely be higher if you have small balances on four or five credit cards (as an example) than larger balances on two or three cards, especially if the balances are close to the credit limits, Guttentag said.
Pay off any uncollected items.
Your credit score is being hurt if you’re withholding payment because of a dispute with the lender, no matter how “right” you are.
And finally, always remember that paying down your revolving credit, or credit cards, is the best way to improve the portion of your credit score that looks at how much you owe.
Sunday, September 28, 2008
FHA Seller Funded Downpayment Assistance May not be Dead
The House Financial Services Committee adopted H.R. 6694, legislation designed to reauthorize and reform down payment assistance programs that the Bush Administration banned in July.
A last-ditch effort to head off the Oct. 1 ban on the use of seller-funded down-payment assistance with FHA-backed loans is picking up steam as a compromise bill that would mend rather than end the practice of down payment assistance.
HR 6694 would allow qualified borrowers with credit scores of 680 or above to use seller-funded down-payment assistance on FHA-backed loans. Borrowers with scores between 620-680 will be subject to risk-based pricing and higher insurance premium fees.
But the bill still needs to be approved by Congress and the President.
Today's committee vote was a positive step toward preserving down payment assistance, but it's far from over. Now more than ever, members of Congress need to know that Americans are watching their vote on H.R. 6694.
I encourage everybody who wants to see seller assisted down payment assistance preserved to tell their representatives in the House and the U.S. Senate that a vote for H.R. 6694 is a vote for the next generation of homeowners.
What does it take to raise a borrower's credit score so that they can qualify for these loans? (see tomorrow)
A last-ditch effort to head off the Oct. 1 ban on the use of seller-funded down-payment assistance with FHA-backed loans is picking up steam as a compromise bill that would mend rather than end the practice of down payment assistance.
HR 6694 would allow qualified borrowers with credit scores of 680 or above to use seller-funded down-payment assistance on FHA-backed loans. Borrowers with scores between 620-680 will be subject to risk-based pricing and higher insurance premium fees.
But the bill still needs to be approved by Congress and the President.
Today's committee vote was a positive step toward preserving down payment assistance, but it's far from over. Now more than ever, members of Congress need to know that Americans are watching their vote on H.R. 6694.
I encourage everybody who wants to see seller assisted down payment assistance preserved to tell their representatives in the House and the U.S. Senate that a vote for H.R. 6694 is a vote for the next generation of homeowners.
What does it take to raise a borrower's credit score so that they can qualify for these loans? (see tomorrow)
Friday, August 29, 2008
FHA Announces New Mortgage Insurance Premiums
FHA Announces New Mortgage Insurance Premiums
A Special FHA Announcement from FHA Expert Jeff Mifsud
In response to the passing of HR 3221, this update announces FHA's new Mortgage Insurance Premiums for the period of October 1st, 2008 through September 30th, 2009. FHA's Risk Based Premiums that went into effect on July 14th, 2008 will be on hold until October 1st, 2009.
The following information will be available on LTB's Legislative Updates page, as well as Jeff's Mifsud's website www.mseminars.com, where he offers one-of-a-kind FHA training to mortgage professionals.
Here are the 6 things you need to know about these changes...
1. Up-front Mortgage Insurance Premiums:
Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75%.
Streamline Refinances (all types) = 1.50%.
FHASecure (Delinquent Mortgagors) = 3.00%.
2. Monthly Mortgage Insurance Premiums:
For 30 year loans with LTV > 95%, monthly will be .55%.
For 30 year loans with LTV < 95%, monthly will be .50%.
For 15 year loans with LTV > 90%, monthly will be .25%.
For 15 year loans with LTV < 90%, monthly will not be required.
For FHASecure loans with LTV > 95%, monthly will be .55%.
For FHASecure loans with LTV < 95%, monthly will be .50%.
3. Mortgages with FHA case number assignments made on July 14, 2008, through and including September 30, 2008, shall maintain the risk-based premium structure for the life of the mortgage.
4. FHA will issue another notice that will formally advise when the moratorium is concluded and the premium pricing structure that should be followed once the moratorium ends.
5. Credit Scores:
Borrowers with credit scores below 500 will require an LTV of 90% or less.
Borrowers with 3 scores, the middle score is used.
Borrowers with 2 scores, the lowest score is used.
6. These premium changes apply to the following FHA loan programs: 203b (standard 1-4 unit property), 203k (rehab loan), and 234c (condominiums) and do not apply to FHA reverse mortgages.
We are still awaiting more changes in response to HR 3221 so watch for future updates.
For more information on this or other important FHA updates, go to www.mseminars.com, where you can contact Jeff Mifsud directly and sign up for his FHA newsletter.
A Special FHA Announcement from FHA Expert Jeff Mifsud
In response to the passing of HR 3221, this update announces FHA's new Mortgage Insurance Premiums for the period of October 1st, 2008 through September 30th, 2009. FHA's Risk Based Premiums that went into effect on July 14th, 2008 will be on hold until October 1st, 2009.
The following information will be available on LTB's Legislative Updates page, as well as Jeff's Mifsud's website www.mseminars.com, where he offers one-of-a-kind FHA training to mortgage professionals.
Here are the 6 things you need to know about these changes...
1. Up-front Mortgage Insurance Premiums:
Purchase Money Mortgages and Full-Credit Qualifying Refinances = 1.75%.
Streamline Refinances (all types) = 1.50%.
FHASecure (Delinquent Mortgagors) = 3.00%.
2. Monthly Mortgage Insurance Premiums:
For 30 year loans with LTV > 95%, monthly will be .55%.
For 30 year loans with LTV < 95%, monthly will be .50%.
For 15 year loans with LTV > 90%, monthly will be .25%.
For 15 year loans with LTV < 90%, monthly will not be required.
For FHASecure loans with LTV > 95%, monthly will be .55%.
For FHASecure loans with LTV < 95%, monthly will be .50%.
3. Mortgages with FHA case number assignments made on July 14, 2008, through and including September 30, 2008, shall maintain the risk-based premium structure for the life of the mortgage.
4. FHA will issue another notice that will formally advise when the moratorium is concluded and the premium pricing structure that should be followed once the moratorium ends.
5. Credit Scores:
Borrowers with credit scores below 500 will require an LTV of 90% or less.
Borrowers with 3 scores, the middle score is used.
Borrowers with 2 scores, the lowest score is used.
6. These premium changes apply to the following FHA loan programs: 203b (standard 1-4 unit property), 203k (rehab loan), and 234c (condominiums) and do not apply to FHA reverse mortgages.
We are still awaiting more changes in response to HR 3221 so watch for future updates.
For more information on this or other important FHA updates, go to www.mseminars.com, where you can contact Jeff Mifsud directly and sign up for his FHA newsletter.
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