Mike Sikorski,MBA,GRI

The loan approval that you receive today could fail to close due to the lack of follow through required by consumers and their loan officers as stipulated directly within the loan approval itself.

A loan approval contains several stipulations by a mortgage underwriter that requires the verification of a number of issues primarily dealing with income and credit. Failing to meet the stipulations of the loan approval EXACTLY as written in the loan approval will likely change your loan approval into a loan denial.

Job Loss or Job Change. Proving you have the ability to pay a loan back to a lender is probably the most important attribute to a loan approval. Losing your job before your loan closes is a serious setback that could cancel your loan approval automatically.

Even if you experience a change in your employment status, a mortgage loan underwriter will need to re-evaluate your entire loan application to ensure that you still qualify for the initial loan approval. A loss in income could result in a lower loan amount, which could require you to accept less money if you are refinancing a mortgage on your current home, or put down more money if you are purchasing a home. Worse yet, a loss in income will likely increase your debt to income ratios and likely disqualify you from the initial loan approval all together!

I have known several instances where consumers either changed employers or lost their jobs entirely, and failed to disclose this to their mortgage lender, thinking that no one will notice. Mortgage lenders will re-verify your employment up until the day of your loan actually closing, so it is highly advisable that you tell you are upfront about any change in your employment status. Failing to disclose a change in employment has caused many loan underwriters to turn a loan down automatically.

Failing to disclose a job change to your mortgage lender could result in lengthy delays to your loan approval getting to the closing table. Some loan underwriters may question why you failed to disclose a job loss or job change, viewing this as an attempt to deceive or defraud the mortgage lender, which could result in an immediate loan denial.

Low Credit Scores. The current real estate and mortgage crisis has caused many mortgage lenders to re-evaluate the risks they are willing to take with consumers whose credit scores are below 600. Several mortgage lenders are honoring some loan approvals with credit scores below 600, but there is no guarantee that the approval will be honored 30 days after the approval was initially offered. Applying for new credit while your loan is in process could also decrease your credit scores, potentially causing your loan approval to be denied.

Increased Consumer Debts. The purchase and finance of a new automobile or adding new credit cards while your loan is in process will likely change your debt to income ratios, making the loan you initially were approved for no longer affordable.

Excessive Monthly Housing Expenses. The monthly housing expenses calculated within your loan approval contain estimated costs for the principal and interest payment, as well as calculations for property taxes, hazard insurance, flood insurance, and mortgage insurance. The underwriter verifies these expenses, and depending on your debt to income ratios, cannot happen.

Failing To Lock In Your Interest Rate. Floating interest rates during a turbulent economy is a gamble almost not worth risking. Interest rates can change daily, and depending on various events happening worldwide, the interest rate for your loan approval could change rapidly, thus changing your loan approval as well.

Three of the items above are easily avoidable, if you follow through by taking the necessary steps to ensure that these issues do not occur:

*When you find a good interest rate, lock it in immediately. Most mortgage lenders will honor interest rate locks for 30 days, giving you sufficient time to process your mortgage loan and clear all conditions set forth by the mortgage loan underwriter.

*No Major Credit Purchases. Smart loan underwriters will pull an updated credit report just before your loan is set to close to make sure nothing dramatically has changed on your credit report. Avoid major credit purchases at all costs before your loan closes.

*Review Monthly Housing Expense Budget in Your Loan Approval. Verify the interest rate that you applied for is the same interest rate available for the loan approval you were given. Property tax calculations are based on worse case, so use the amount due March 31, not when discounts apply in November. New construction home purchases with property taxes levied on land only will be given an estimate of future property taxes based on similar homes in the area. Verify annual insurance premiums for any potential cost increases.

Consumers faced with the prospect of a job of a change in employment should strongly consider contacting their loan officer to verify that the original loan amount applied for is still possible; a loss in income will certainly have an effect on the original loan approval, and could require a loan approval for a lesser loan amount, or worse yet, a loan denial.

The loss of a job without a job to replace it will almost certainly require a loan denial.

Mortgage loan approvals can be very tricky, especially for those consumers who may run the risk of falling into any of the issues above. Knowing how to avoid these potential pitfalls will certainly create shorter path in getting to the closing table. Working with an experienced loan professional will certainly help you to accomplish this.

Mike Sikorski MBA, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Fl. 33952

941-206-6000

Mike@FloridaRealty.net

A very effective method of selling real estate in a buyer's market is to consider offering owner financing, which can offer both the buyer and seller many benefits in the selling and financing of real estate.

Unlike many seller's who may end up giving a deep discount to sell their property outright, owner financing will likely allow the seller to sell their property at a fair price, plus could provide additional income in the form of monthly payments that could either help pay the debt service on their property or go right to the bottom line, potentially adding more dollars to the sales price over time. The buyer's benefit by securing a property that can help them establish or re-establish credit that over a period of time can help them secure a low interest mortgage loan and receive potential tax benefits as well.

Unfortunately, very few property sellers consider offering owner financing simply because of the complexities involved, which include what types of financing to offer, how to qualify potential home buyers, what documentation to ask for, and so on. There are many financial and real estate professionals who offer their services to help sellers get all of the information and documentation necessary to successfully secure owner financing for themselves and their buyers.

There are several types of owner financing currently available, and depending on the seller's current circumstances will determine what type of owner financing they can offer to a potential buyer. The most common types of owner financing available include a Land Contract, Agreement for Deed, Contract for Deed, Lease with Option to Purchase, and a regular promissory note secured by a mortgage.

If a property seller owns their property free and clear, meaning no mortgages are currently secured by the property, the seller can choose any of the financing options listed above. If however, the property seller currently has a mortgage on their property, they are limited to offering all of the financing options listed except for the note and mortgage loan, unless of course the seller can pay off their mortgage and replace it with a seller held note and mortgage. These other financing options could be considered a wrap around mortgage, which encompasses the seller's existing mortgage with the additional loan amount which is based on the sales price and the down payment.

Before a seller and/or buyer considers getting involved with an owner financing arrangement, several steps must be taken and full disclosure from both parties must be acknowledged to fully understand each parties responsibilities to the real estate transaction. The buyer needs to be fully aware that the seller is in a position to offer owner financing, and is not experiencing any financial difficulties with their own mortgage. As for the seller, they need to know that the buyer will be in a position to get their own mortgage in the near future, and eventually purchase the home outright. Depending on the buyer's circumstances regarding their income and/or credit, the exact term of the owner financing must coincide within the timetable necessary for the buyer to complete the sales transaction.

Therefore, it is highly recommended that both buyer and seller seek professional advice to make sure that any type of owner financing that is considered will work for both buyer and seller. This advice can be very inexpensive to both buyer and seller, and can save a lot of headaches later.

Owner financing is a tremendous tool for sellers to help them sell their home quickly and at a better price and could potentially add income benefits as well.

For free information on the benefits of owner financing for both the buyer and seller, please call 941-206-6000.

Mike Sikorski, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

Phone 941-206-6000

Email Mike@FloridaRealty.net

Web site www.FloridaRealty.net

Financing the purchase of a home is getting more difficult these days, especially for those consumers who may have recent or past credit delinquencies in their credit file.

Credit score requirements by most mortgage lenders are changing on a weekly basis, requiring no less than a 580 middle score from the three credit repositories: Transunion, Experian, & Equifax.

Many of the loan approvals issued by banks and mortgage lenders over the last several months have failed to close due to these changes in the credit score requirements, leaving many potential homeowners without the means necessary to finance their home purchase.

In years past, banks and mortgage lenders had the ability to finance home purchase for consumers with low credit scores, recent delinquency and even a recent bankruptcy. Well, those are long gone, with the large number of foreclosures around the country as evidence of substandard underwriting of consumers with low credit scores.

Today, thousands of consumers with credit issues still choose to shop for a home first sign a purchase contract for a home they think they can afford, and then take their chances of securing financing with a bank or mortgage lender.

I still find consumers with credit issues armed with a purchase contract, running from bank to bank, mortgage lender to mortgage lender, scrambling to find someone to finance their home purchase. In most cases, they fail to get their financing, fail to get their home, and could likely lose the deposit on the purchase contract.

Here are some tips on helping you to deal effectively with your credit issues:

*Get a FREE copy of your credit report from all three credit repositories. All three credit repositories (Transunion, Experian, & Equifax) allow consumers one free credit report per year. Other firms such as www.FreeCreditReport.com can provide you with additional services such as credit analysis and helpful information on improving your credit.

*Use Your FREE Credit Report When Shopping For a Mortgage. Mortgage lenders are anxious to see your credit report, especially your credit scores. Bring the free credit report to your loan officer when you first apply for a mortgage. The information contained within your free credit report should provide sufficient information for the loan officers to determine if your credit works within their own underwriting guidelines. A competent, experienced loan officer will easily understand the information on this report. If a loan officer insists on ordering his or her own credit report on you before committing to a loan approval or denial, consider applying with another bank or mortgage lender. Needless inquiries into your credit file can lower your credit scores as well as decrease your chances for a loan approval.

*Get Approved For Financing BEFORE You Sign A Purchase Contract. Knowing how much you can afford in terms of loan amount and the monthly loan payment is most important. Signing a purchase contract for a home without first knowing that you can afford to purchase the home will not only create disappointment for you, it could also obligate you to purchase the home anyway, depending on the legal verbiage of the purchase contract. Knowing how much you can

*If Your Loan Request is Denied, Work diligently to fix your Credit Issues. Deal with your credit issues by contacting creditors directly to clear up the delinquencies. Consult with a credit counselor about payment plans that can help you re-establish a payment history and even help to re-establish your credit. Consumers with serious credit issues should consider consulting with an attorney who specializes in bankruptcy.

Working to correct credit issues will make it easier to secure better financing options when you are ready to purchase a home. Choosing to ignore your credit issues when applying for a mortgage loan makes it less likely you will get the financing you desire. With increased credit standards asked for by most mortgage lenders, ignoring credit issues to today will certainly diminish your chances of securing financing in the future.

Mike Sikorski MBA, GRI

Licensed Real Estate Broker

Loss Mitigation Specialist

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Fl. 33952

(941)206-6000

Mike@FloridaRealty.net

Homebuyers turned away due to lack of credit or credit scores do have a rather unconventional way to be approved without traditional credit or even a credit score.

Nontraditional credit is a widely used form of credit verification used by certain mortgage lenders for loan applicants who prefer not to use traditional forms of credit such as credit cards or car loans yet can provide a payment history on similar forms of ‘nontraditional" credit.

For several years now, mortgage lenders have recognized that loan applicants who choose to use non-traditional credit in place of traditional credit should not be penalized or discriminated, since proper verification of these non-traditional forms of credit can be treated to that of traditional forms of credit.

Non-traditional credit falls into two distinct categories that provide balance in assessing various forms of non-traditional credit. The categories are as follows:

Category I: Rent payments for an apartment or home, and utility bills such as electricity, water, telephone, propane gas, or cable TV. Rental payments made payable to a property management company for a home or apartment will usually require a Verification of Deposit, with no additional documentation required. However, if rental payments are made directly to a family member or private individual, 12 months of cancelled bank checks will be required. A letter of credit from utility companies will suffice as acceptable non-traditional credit.

Category II: Insurance payments, such as life, medical, automobile, & renter's insurance; child care providers, school tuition; department, furniture, appliance stores; specialty stores, rent to own; medical bills not covered by insurance; and Internet/cell phone services; savings accounts with regular monthly deposits (payroll deductions are not permissible) Personal loans from an individual with repayment terms in writing and supported by cancelled checks for 12 months are acceptable.

A minimum of three (3) credit references, including at least one (1) from Category I, must reflect 12 months of the most recent activity from the date of application. Credit from Category I is considered most important since it is the greatest indicator of a borrower's future housing payment performance. Borrowers with no credit references contained within Category I is considered insufficient by most underwriting standards.

All forms of non-traditional credit will have to be verified by an independent credit bureau. As each item of credit is verified, it will be added to your credit file as a Non-Traditional Mortgage Credit Report in the same manner as a traditional mortgage credit report. The name of the credit reference, as well as the date of opening, high credit, current status of the account, payment history, and any unpaid balances will be required for consideration by most mortgage loan underwriters. Although non-traditional credit will not trigger a credit score as required by most banks and similar lending institutions, a clear, consistent credit history reflecting no accounts delinquent more than 30 days in the most recent 12 month period will be treated similar to that of someone with good to very good credit scores.

It should be noted that borrowers who wish to apply for a mortgage loan using non-traditional credit will also be required to occupy the property as their primary residence AND may be required to have a minimum of two month's cash reserves at the time of loan settlement.

If you have been turned down for a mortgage loan by a bank or similar lending institution due to insufficient credit but have sufficient non-traditional credit, you may be able to finally purchase the home you have always wanted but could not get due to insufficient credit. With home prices more affordable now than in years past, now may be the best time for you to finance your next home using non-traditional credit. Loan programs are available through qualified mortgage lenders offering low, fixed interest rate mortgage loans as well as low down payments.

For more information about how non-traditional credit can benefit you, please call (941) 206-6000.

Mike Sikorski, MBA, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Fl. 33952

(941) 206-6000

Mike@FloridaRealty.net

Homeowners across the country who refinanced their mortgage with a predatory lender may be able to receive a refund of all of their closing costs and the interest they paid, provided that they act within three years of the closing of their mortgage loan.

Thousands of homeowners who refinanced their mortgage with an out of state mortgage lender where the mortgage loan was closed by a "Mobile Closer" of the mortgage lender have been found committing a very serious breach of the Truth In Lending Act of 1968, with regard to failing to properly disclose the borrower's right to cancel the loan, otherwise known as the Right of Rescission.

Under the law, the Truth in Lending Act (also known as Regulation Z) clearly states a borrower's right to cancel a mortgage loan within three business days of the closing of the mortgage loan, which allows the borrower the opportunity to clearly think through whether or not they still want to go through with the mortgage loan that they just signed. If they choose to cancel the mortgage loan, they must inform the mortgage lender of their intent to cancel the loan by signing one of the Right to Cancel forms and submitting directly the mortgage lender by facsimile (fax) or by returning a copy to the closing agent. Once the Right to Cancel is received by the mortgage lender within the three business days, the borrower is no longer obligated to the terms of the note and mortgage that they signed with that particular mortgage lender.

Thousands of mortgage loans that were originated by out of state mortgage lenders were actually closed by a Mobile Closer, a certified ‘signer' who closes mortgage loans in the homes of the borrowers. These ‘Mobile Closers' are typically commissioned by their state as a Notary Public, which allows them to notarize and verify the signatures of the borrowers for the mortgage documents needed to close the mortgage loan. Often times these ‘Mobile Closers' lack the experience necessary to properly discuss and disclose the many documents contained within the closing package they are given by the mortgage lender. The ‘Mobile Closer' will typically put the borrowers mind at ease by letting the borrower know that they will receive a copy of their loan documents and that they can review the loan documents during the rescission period.

For most borrowers, the process of refinancing a mortgage is difficult enough, but the actual loan closing can be even more difficult to understand. The typical loan closing package is nearly two inches thick, with nearly 100 individual documents requiring review and signature by the borrower. Although most of the ‘Mobile Closers' are very capable and professional, the required knowledge to properly close a mortgage loan is missing, putting them at a disadvantage as well as the borrower. It is this lack of knowledge that is creating a whirlwind of lawsuits across the country.

Many of the actual loan closings that took place were missing key elements of the typical loan closing, especially when it comes to the borrower's Right to Cancel. The failure to disclose and provide these crucial disclosures is what makes these mortgage loans rescindable up to three years from the date of the loan, which likely would refund to the borrower ALL of the closing costs and the interest paid to the mortgage lender.

What makes a loan rescindable for more than three days?

For a mortgage loan to qualify, it must be a refinance, or a non-purchase mortgage loan, secured by a principal dwelling. This would be your principal place of residence, which does not include second homes or other investment properties. Second mortgages and home equity lines of credit qualify provided that it is secured by your principal residence. Additionally, your mortgage lender must have failed to provide you with accurate material disclosures or the Notice of Right to Cancel as required by Federal law. These material disclosures include the Truth in Lending statement, which must accurately disclose the Annual Percentage Rate or APR, the Finance Charge, the amount Financed, The Total of Payments, the payment schedule, and other disclosures pertaining to late charges and other pertinent information. The failure to provide and disclose the Notice of Right to Cancel appears to be the most common violation of the Truth in Lending Act, especially with Predatory Lenders.

The discovery of these discrepancies and violations have led several financial services companies and law firms across the country to offer forensic services to analyze mortgage disclosures for violations of the Truth in lending Act, Real Estate & Settlement Procedures Act (RESPA) and other state and Federal laws that can easily uncover these discrepancies that allow borrowers to provide the proof they need to properly file a complaint against their mortgage lender. These firms can be found advertising on television as well as the Internet.

Tens of thousands of high interest mortgages originated nationwide in the last several years were closed in violation of the Truth in Lending Act, many of which are currently in serious delinquency or foreclosure status. Federal regulatory agencies are stepping up efforts to investigate these violations, which could cost mortgage lenders millions of dollars in fines and penalties as well as the refunding of all closing costs and interest paid by borrowers.

If you think you are a victim and would like more information, you can go to www.Hud.gov, the web site for the Department of Housing and Urban Development. There you will find helpful information about your rights as a borrower and how to go about filing a complaint against your mortgage lender.

For a free copy of "How to Avoid Predatory Lending" call (941) 206-6000.

Mike Sikorski, GRI

Licensed Real Estate Broker

Licensed Mortgage Broker

Florida Realty Network LLC

22079 Kimble Avenue

Port Charlotte, Florida 33952

Phone (941) 206-6000

Email: Mike@FloridaRealty.net

Website: www.FloridaRealty.net