Category

Mortgage

Dos and Dont’s to Keep Your Pre-approved Mortgage Loan

By | Home Buying, Mortgage

pre-approved-mortgageAre you pre-approved for a mortgage and getting ready to purchase the home of your dreams? Before you get too excited, keep in mind that a fully approved loan can get denied for funding even after you have signed all the loan documents.

How does this happen? The answer is simple. Before funding, the underwriter pulls a new credit report, and any new findings can be used as justification to kill the loan. This isn’t likely to occur if the timeframe is within 30 days, but you can expect a new credit report to be pulled if the date of the application is more than 60 days out from actual funding.

Losing a loan after approval is very common. To help prevent this from happening to you, follow these dos and don’ts.

Do continue making your mortgage or rent payments

The key element a lender is looking for is responsible payment patterns. Any change in these patterns can affect your credit, thereby affecting whether your approval on a new loan still stands. Even if you have given notice, continue paying rent or your current mortgage until you have signed final loan documents and your loan has been funded.

Do stay current on all accounts

The quickest way to lose funding on a loan is making a late payment. Be sure to stay up to date on all loan obligations.

Don’t make a major purchase

This is what troubles borrowers the most. A large purchase can run up your credit card balance, thus lowering your credit score. The best tip is to avoid that big purchase until after you have signed your final loan documents. This includes buying a car, boat, TV, or (especially) furniture.

Don’t open a new credit card or cell phone account

Opening a new account requires a credit inquiry, which can lower your credit score. If you’re on the border credit-wise, that additional inquiry could lower your score enough to impact a decision from your loan provider.

Don’t close any credit card accounts

Closing an account lowers the amount of credit you have available, which can lower your credit score since your credit-availability-to-use ratio accounts for 30 percent of your score.

Don’t consolidate your debt into one or two cards

Doing this lowers the amount of credit you have available, which, again, can impact your credit score.

Don’t take out a new loan

This includes any type of loan, such as a car or student loan, or new credit card. Any of these obligations can have a negative impact on your credit and will likely not reflect positively to underwriters and investors.

The key takeaway here is to wait until after your loan closes before making any major financial changes, such as obtaining a new loan, consolidating debt, or opening new accounts.

If you’re considering purchasing a home, the first step is to ensure a positive credit score. If you have a poor credit score, it isn’t too late and you might be a good candidate for credit repair solutions. Let us at Ovation help you. We offer a wide range of credit repair solutions, customized to meet your unique needs.

Contact us today to see how we can help.

Mortgage Post-Foreclosure: 3 Steps to New Ownership

By | Home Buying, Homeowner, Mortgage

It’s Saturday morning, and you’re watching your child playing on the playground next to your apartment building. Sure, it’s not the backyard you used to have behind the home you used to own, but there’s plenty now to feel upbeat about — because there’s money in the bank for the first time in a long while. It’s only a matter of time until you’re watching your child play in a yard from your own porch again.

One thing worries you though. Is your foreclosure going to keep that yard and porch out of your grasp?

Yes! You can get a mortgage after a foreclosure

It is possible to get a mortgage after a foreclosure, but it will take hard work on your part to repair your credit and establish yourself as a sterling example of financial responsibility. Depending on your circumstances, there may also be a mandated waiting period of one to seven years. However, there are several concrete steps to get you on your way and possibly lessen your wait.

First of all, get a handle on your financial reputation. Get your hands on every official record you can find, including your credit report, and make sure all the information about you—and the details of your foreclosure—is 100% accurate. Be vigilant. Sometimes debts that you thought had fallen off your credit report can be sold to new collection agencies and reopened. Contact anyone presenting inaccurate credit information, and have it corrected.

Yes, there are concrete methods to responsible credit repair

Here is where some hard, day-to-day work comes in. Your credit needs to be squeaky clean from here on out, but if that makes you want to hide and avoid using credit at all, think again. A mortgage broker will want to see that you’ve learned financial responsibility. So, it’s time to start building new credit. For regular use, apply for a secure credit card—and pay it on time! And while this may seem counter-intuitive, consider applying for a high-interest credit card—store cards are a good choice—and carry a balance no more than 30% of its limit. Of course, you’ll need to pay it on time and preferably in full every month.

Next is a big purchase. No, not the house yet. A car, a large appliance, something you could reasonably take out a loan for. Make sure it’s a loan you can manage, and here’s where you will really impress a mortgage broker: Be better than the terms of the loan. Overpayment, extra payments, early payments — be so good that Ebenezer Scrooge couldn’t find fault with you.

Yes, someone can help you

Of course, the best way to get started on repairing your credit and getting a new mortgage after a foreclosure is to speak to a credit repair professional like Ovation. Each of our knowledgeable representatives work with you personally to build a credit repair and credit re-establishment plan that is tailored just for you. Call us today for a free consultation.

Improve Your Credit for Cheaper Mortgage Rates

By | Credit Repair, Home Buying, Homeowner, Mortgage

According to Freddie Mac, long-term mortgage rates are significantly higher – more than a percentage point – than they were only three months ago.  A percentage point may not sound like a lot, but in the lending industry they are a big deal and make a marked difference in your ability to achieve less expensive loans.

Mortgage industry leaders are advising their customers to lock in current rates as soon as possible. This is a positive sign that the American economy is becoming stronger daily, and signals to consumers that now is a great time to re-finance their mortgages. But, consumers first need to ensure that they have secure credit.

A weak credit score should be repaired and strengthened to be eligible for these improved interest rates. You want to pay the least expensive mortgage rate possible—that’s obvious. But, is your credit score preventing you from taking advantage of this market uptick?

Actions That Improve Credit

Here’s what we would recommend:

  • Pay as much as you can toward your current credit card(s) debt
  • Pay down the card with the most debt first
  • Decrease the charge limits of your cards
  • Check for inaccuracies (incorrect late payments, outdated personal information)

Every credit situation is different; however, taking control and working to improve your overall financial health can help you obtain the best rates possible.

Get Help Securing a Better Mortgage

Unsure of how to fix your credit? Ovation Credit can help you repair your credit score so that you can take advantage of better mortgage rates.  To learn how, browse our website or call 1-866-639-3426 for a free consultation and you’ll soon be on your way to paying less for your home!

 

Use Savings on Mortgage to Pay off Credit

By | Credit Cards, Mortgage

use-savings-on-mortgage-to-pay-off-creditNot everything to come out of the recession was bad news. One of the best things that happened thanks to the recession was a downward pressure on interest rates. The Federal Reserve Chairman, Ben Bernanke, sets the interest rate based on the country’s economy. Recently, Bernanke announced that the Fed would keep rates low (near 0%) through 2015 or until the unemployment rate falls below 6.5%.

The rate set by the Fed is how much banks pay for money, and when the rates are low for them, they are typically low for consumers as well. Right now, mortgage lending rates are nearly the lowest they have been in decades. A 30-year fixed mortgage is at 3.75% and a 15-year fixed mortgage is at 3.0%. (We don’t recommend choosing adjustable rate mortgages).

These rates mean a lot to homeowners and potential homeowners. When rates are low, more people can qualify to buy homes, and the homes you do buy cost less per month to own. A $200,000 house would cost less than $1200 per month, without taxes and insurance, at these low rates, where the same house would have cost nearly $2000 per month  at 8.75% interest. In addition to making the monthly payment more manageable, lower interest rates also mean you pay less interest over the life of the loan. The difference between 3.75% and 8.75% on a 30-year fixed mortgage is $291,226!

If you already own a home, you can take advantage of these low rates by refinancing. Refinancing is the process of obtaining a new loan, either with the same lender or a different lender, on an asset you already own. When refinancing your home, the new loan pays off the existing loan and can often include additional money in your pocket for things like home improvements or to pay off other debts. You can either shorten the term of the loan or extend it back out over 30 years again, which can lower the monthly payment even more. When you consider that the average credit card interest rate hovers around 16-18% and a home loan can be had at 3.75%, there’s no question that it can cost you less to refinance, take cash out, and pay off your credit debt. If you’re not comfortable adding more debt to your mortgage to pay off your credit cards, you can simply use the money you save on your monthly house payment to pay down credit debt.

When deciding whether or not to refinance, the rule of thumb is that you can typically recover the cost of refinancing if you plan to remain in the home for longer than two years. If you are under water on your mortgage or if the value of your home is less than it was when you bought the home, you may qualify for special refinance programs like HAFA and HAMP. To learn more about these programs, visit Making Home Affordable, the official government information site for special lending and refinance programs.

 

Rates Are Low, But Can You Get a Mortgage?

By | Credit Repair, Credit Reports, Credit Scores, Debt, Fannie Mae, Home Buying, Homeowner, Loan, Mortgage, Real Estate, Your Credit

Mortgage rates are bouncing off of 40 year lows.  Seems like the best time to buy a house or refinance.  Not so fast – there is a catch.  You have to qualify first!

Before the recession, qualifying for a mortgage was not much of an issue.  The overall standards were pretty low.  If you had a low credit score, you could still qualify for financing.  Your credit score did not necessarily determine if you qualified more so than the rate that you qualified for.   People with higher credit scores received lower rates and people with lower credit scores received higher rates.  But just about everyone qualified for something. 

The lending environment today is vastly different.  Only those that meet the highest qualification standards can get financing.  According to the Federal Reserve, about seventy five percent of those that apply for financing are qualifying.  Of course, the number of those applying for loans has decreased significantly. 

According to Fannie Mae and Freddie Mac, the average credit score for loans that they finance has risen to 760.  It was 720 just a few years ago.  For FHA loans, the average score has increased to 700 from 660.

The subprime market has just about disappeared altogether.  Before the recession, subprime lenders routinely made loans to borrowers with credit scores below 620.  Today, it is very difficult to find lenders willing to make these loans. 

If you are thinking about financing, you should check your credit score.  If your score is below some of the qualifying averages, take proactive steps to improve your credit scores.  Remember, about eighty percent of the credit reports contain errors.  With a little bit of effort, you might find that you do qualify for a loan at the current rates after all.

When an Account on My Credit Report Changes to Say It Is In DISPUTE, Does That Hurt My Credit Score?

By | Ask a Credit Expert, Credit Repair, Debt, Fair Credit Reporting Act, Home Buying, Loan, Mortgage, Personal Finance, Your Credit

First, let’s talk about disputing. As a consumer you have every right to dispute any accounts and/or personal information on your credit reports that you feel has inaccurate, misleading, and/or incomplete information. Now, don’t be misled into thinking that means the entire credit account must be or has to be wrong in order to dispute the account. As consumers we need to review our credit reports at least once a year for errors. We need to look over every account and make sure the balance is reporting accurately.  If there are late payments reporting, look over them and make sure everything is accurate.  If something shows open when it should be closed then it needs to be updated, if the balance is wrong then it needs to be updated as well.  If something is reporting that does not belong to you then it needs to be disputed and removed.

Now that you know what needs to be disputed, let’s talk about the affect it will have on your credit score. When you dispute an account it will show on your credit report that the account is in dispute, but that should not be looked upon as negative. Now, if you pull your credit score while you are disputing accounts it will make your credit score fluctuate. When you pull your credit score it pulls that information at that exact moment and calculates the score. Any account in dispute will not be factored into your credit score at that time. That can have a positive affect or a negative affect on your credit score. Since it can have a negative affect it is usually best if you do not pull your credit score or apply for credit while you are disputing credit items on your credit reports. If you wait to apply for credit then you will allow time for the disputes to be finished and hopefully your credit score will increase from the work that was done. Another reason you want to wait for disputes to be complete, is that A LOT of mortgage brokers will not close a loan if your credit reports say an account in dispute. So, it is best to dispute everything you need to dispute and get your credit reports updated before you apply for a mortgage loan.

For all of your disputing needs, call the best in the industry – Ovation Credit Services. Our Credit Analysts are here for your FREE Credit Consultation and to answer any of your questions. Call us at 1-866-639-3426 option 2.

If you have a question for our Credit Expert Kristi Thornton, send an email to [email protected]

Am I Heading for Foreclosure?

By | Consumer Rights, Credit Repair, Debt, Mortgage, Your Credit

Do you feel that each month is putting you one step closer to Foreclosure? Are you falling behind on your bills and not sure if you are going to recover? It is time to take a few minutes and look deeply into your finances.

Many people don’t pay attention to their finances until it is too late. Especially if they are struggling to pay all of the bills each month. If you have not setup a budget or you don’t seem to be following the budget very well, you should get it in line and start managing your money better. This is one of the most important beginnings to save your home and get your finances corrected. Generally, If you have not been using a budget you can get yourself fixed and keep your home from foreclosure.

Now if you have been working under a budget and are still having problems then you may be looking at foreclosure. Start by looking where you can cut your expenditures and see if you can apply enough money to saving yourself from a foreclosure. Cutting costs can be across the board and include anything from losing your second car. This will save you a car payment, Insurance, maintenance costs. Surprisingly this might even come close to ½ of your house payment. This could be the saving grace if you are paying attention.

Also, if you are paying for a daycare, you may want to find out if your neighbors are also paying for daycare. If so, you might want to get together and see if you can share costs on daycare. Instead of hiring a company to watch 2-4 children, you can hire a sitter for the hours needed. Maybe you can share the house. One week at your home, the next week at your neighbors home.

I also got with my In-Laws and we went shopping at the local warehouse store. We bought things like paper towels, toilet paper, food and many other items in bulk. We then would split the bill and the merchandise. I bought a food saver and we vacuum packed the food we bought in bulk and froze it in individual portions. This really saved us some money and we were able to purchase food basically once a month. We bought the foods that would perish weekly so that we did not have anything go bad. We also watched for any case sales and bought items when they were on sale.

We found that by doing this each and every month we almost saved one-half to three-quarters of our house payment each month. This made it very easy to make the home payment. After we got back on top of our bills, we started doubling up on our house payment and working to pay it off early. It really was good when we had to go borrow on some of our equity due to some medical bills. We were able to borrow money at a pretty good interest rate because not only were we ahead on our bills, we had actually reduced our debt and it really helped our credit score.

If you are looking at foreclosure and don’t see any other option, take the time to talk with an attorney regarding bankruptcy. You might be able to keep your home while reducing your other debts. This might allow you to keep your home. Home Ownership is very important to most families. Lastly, look into refinancing or speaking with your lender and see what other options might be available to you. Foreclosure does not have to be the answer if you are willing to search for your other options. Foreclosure will damage your credit report for many years and if you can avoid it

I Want to Buy a Home but I have BAD Credit

By | Mortgage, Your Credit

There are many options if a consumer wants to buy a home, but what about someone with Bad Credit. Can they get a mortgage in today’s economy? There are several options that a consumer might look into but if you have bad credit and you are trying to buy a home, then you should contact a Mortgage Broker. 

Mortgage Brokers do not actually loan the money out themselves, but they actually act as a middleman between the buyer and the mortgage company. They will handle the financing for the borrower and the lender. Generally, they earn their fee as a percentage from the mortgage financing originator or from the borrower. But sometimes they actually earn the money from both the borrower and the mortgage company. 

The Mortgage Brokers are generally aware of the latest rates and can work in the favor of the buyer to get the best possible rate along with the best possible financing options. The fees that you may have to pay in order to utilize the service of a Mortgage Broker are often worth their weight in gold when it comes to experience and the benefit you could receive. 

They will be able to give you the best options, rates, and since they basically are working for you, they can be objective and provide you with Expert Advice regarding a home mortgage. This is because they specialize in home mortgages. Banks and Credit Unions do not have this advantage. Additionally, Mortgage Brokers might have better connections for someone with a credit problem. They may know which lenders are willing to work with you regarding a home loan.

It is best to look into this possibility if you are wanting to buy a home. Credit issues aside, Mortgage Brokers can provide many benefits that banks and credit unions simply cannot.

FHA Loans – Are they right for me?

By | Consumer Rights, Mortgage

An FHA loan has many benefits and could be the right choice for you when it comes to mortgage options. It is best to review all of your options and talk with a professional before deciding on any one option.

Some of the benefits of an FHA loan are:

Down payment requirement is only 3.5% to purchase a home. You can refinance up to 97.75% and cash out up to 95% of your home’s value. Credit scores are not used to determine eligibility so perfect credit is not required. Money for the down payment can be gifted to you from a friend or a relative. FHA loans will have easy, convenient, low monthly payments. Loan limits have also been changed so that they can offer loans up to $729,750.

FHA loans are government insured mortgages that offer lower down payment and easier qualifying guidelines to potential home owners. These loans are available for original mortgages or even for refinancing an existing home loan. The loans are the easiest to qualify for and are certainly some of the most flexible. The loans are particularly good for First-time home buyers, buyers will little or no money down, people with less that perfect credit or have very little/no credit on their record. If you are a homeowner looking for some money to do home improvements or you want to consolidate bills.

The FHA loan is not a government loan or grant but really is more like an insurance policy for the lender. The FHA loan is made by a lot of different investors or lenders and is backed by the federal government. Because of the crazy credit market, this means that many lenders are given much more confidence because of the level of security they have against someone defaulting on the loan.

If you are looking to purchase a home or considering a refinance on your home, look into the options that a FHA loan could provide to you. You might not only save some money but you could even find that qualifying for these loans could be much better for you.

Ideas for avoiding Foreclosure

By | Consumer Rights, Mortgage

Today every thing seems to be running like clock work, then suddenly, your hit with a life changing event. These events happen to the best of people and will often find homeowners unable to cope (at least) financially with this event. No matter how good you have become at money management and think you have things well under control, you may be hit with something that just can’t be planned. These life changing events can include prolonged illness, job-loss by one or both incomes and separation of marriage even if it does not end in divorce. These events and even others not quite so devastating can cause financial setbacks that were unplanned and certainly not were prepared for.

If you are unable to meet your current financial obligation regarding your mortgage then you should think about what you need to do to protect your home. Here are some suggestions:

1. If you are going to fall behind on your mortgage payment, contact your lender immediately. They can’t help you after the fact but they might have some options before you get too far behind. This will give them at least some possibilities of options for you.

2. The first option might be a “Forbearance”. This is a formal agreement that will either suspend or reduce the monthly payments on the mortgage until the borrower recovers from the financial setback.

3. If you have missed mortgage payments then you might also need a “Repayment” plan. This is an agreement on how the missed payments are going to be recovered. It may involve spending more each month to or other details in making the loan current.

4. If you need to restructure the loan you can do a “Modification”. This is either a temporary or permanent change in one or more of the borrower’s loan terms that generally reduces the monthly payment down. This will make a better financial situation for the borrower. These methods might include changing the interest rate, extending the time to repay or even re-amortizing the loan amount.

5. When none of those options seem to be available, then you might look into refinancing your home. This will pay off the old loan and get you a new loan that will be better suited for your current financial.

6. If you just can’t stay, then you can work to make a fresh start. This may mean in putting your home on the market and selling it so that you can avoid foreclosure. By contacting your lender early you be able to investigate all of your options.

Before you make any choices, please contact your tax advisor so that you can learn about any problems or benefits you may have in these options.

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