About Voorhees Township's Echelon

Another Snow Day in Southern New Jersey today. My sons school was closed again today and my work actually was closed so we got to spend all day together. I began to feel how lucky I have to have the kind of job that I do, from time to time, have the ability to work from home. Some are not so lucky. Below is a picture of our hard work today! Today was just a nice reminder at how lucky I am really am. It seems some what small but days like today, really make me want to make the most out of every day.

I'm sure you have noticed that we are not artist but we did our best and had fun doing it!

And, you have the Dodd-Frank Financial Reform Bill to thank for it.

Starting July 21, 2011, lenders will have to provide you with your credit score if you are turned down for a loan OR are charged a higher rate than the "best" rate they have to offer. This appliies to everyone - mortgage companies, auto dealerships, credit card companies, landlords, insurance agents, utilities - basically any one who uses a credit score.

In addition to letting you know yoru credit score, you will recieve an explanation of the range of the score and a graph on how your score compares to other consumer scores.

Here are some tips if you are not happy about your score:

1. Contact the creditor who sent you your score and ask how many points are needed to get the best rates. If they tell you 15 or 20, it's fairly easy to get it increased. It if is 100, you have some work to do.
2. If you're planning on requesting credit in the future, order a credit report a head of time adn see what is on it. The law allows you one free credit report every year. www.annualcreditreport.com. However, a credit score is NOT included so consider buying your score ahead of time at www.myfico.com
3. Learn what goes into a credit score and www.scoreinfo.org has an educational website with great explanations on what influences credit scores.

If you decided to buy your credit score, be careful NOT to accidently sign up for a credit monitoring service which would be billed to you on a monthly basis. You do not need that right now - you just need to know your score.

Over 2/3 of consumers havent ordered their free credit report in the last 12 months. Even if you arn't applying for credit - you need to know what's on your report

What's the first thing you do when you start working with a new client? You ask the area, the type of home, the price range, etc. Next, you probably ask about their family, their employment and if they have been pre-qualified for a mortgage loan.

There are 5 mortgage qualifying situations that we have to be extra, super careful about. So when you hear about any of these 5, call me right away so you won't be wasting your time showing homes!

•Self-Employed Clients - A person is considered "self-employed" if they own 25% or more of any business. This includes partnerships and LLCs. Not only do I need 2 years' tax returns, I have to have them sign a form, that's sent to the IRS to verify the numbers. The red flags here are when someone says they have filed an extension-or they state they "don't show all of their income" - or they "write off" all their expenses-and show no income.

•Divorced/Previously Divorced - Going thru a divorce can wreak havoc on a person's credit. But more often than not, it's the "joint debts" that still show up on the credit report that becomes a problem.This is especially true if the person had a mortgage with their ex-spouse and has not been released of liability. We will have to prove (with canceled checks) that the ex is paying the payments on time.

•Job-Hopping Clients - It's not a bad thing if they change jobs, within the same industry, with very little time off between jobs. It shows a lack of "job stability" if a person hops from job to job or working for a "temp agency".

•Foreclosure, Short Sale, Deed in Lieu - Simply put, there are pre-determined "waiting periods" before your clients can apply for a mortgage. There are shorter waiting periods for those who have had a short sale or deed in lieu (versus a full foreclosure), but the shorter the waiting period, the more money they'll need for a down payment.

•Bankruptcy - Waiting periods apply here too, but it depends upon which "chapter of the bankruptcy code" they filed under. The bankruptcy has to have been "discharged" and all the paperwork, including a schedule of debts is needed for me to review. There are extenuating circumstances (medical, death of a spouse) which allows a shorter period of time-but divorce or job loss is NOT considered an extenuating circumstance.

If your clients just happen to mention any of these 5 situations, your absolutely going to want to make sure your lender of choice is aware of.

Yes, you can still get a loan with no down payment. I would just like to give you an idea about how your credit will be looked at. USDA has just gone to a 640 middle fico score to qualify for a USDA No Down Payment Home Loan. In other posts I have gone over many of the other advantages that this product offers. In today's market it is important to understand how your credit can have an impact on what you qualify for.

The most important credit charectoristics that will be reviewed is the most recent 12 months credit profile. It is extremely important to monitor your credit report. If you have not had your credit report pulled, please check out www.annualcreditreport.com to have a tri-merged credit report pulled for free. You always want to have a tri-merged ( pulled from all 3 of the creditors ) so you can see the whole picture. There can be a wide range in scores between the 3 so it is important to view what all 3 credit repositories are showing on your report.

Please do not hesitiate to give me a call with any questions concerning this. Why cost yourself and your family thousands of dollars because of something that can be cleared up on your report. I want to help you be in posistion to qualify for a program such as our No Down Payment Home Loan.

If you have a conventional mortgage, and put less than 20% down when you purchased your home ( or less than 20% equity when you refinanced your home ) your monthly payment includes "mortgage insurance".

Depending on your interest rate, for a 30- year term mortgage and if you put 5% down payment, it will take approximately 11 years to reach 78% loan to value; with 10% down, it will take you about 9 years, and with 15% down, 6 years.

If you haev an FHA mortgage, mortage insurance is automatically included in your monthly payment.

Both types of loans have certain rules where mortgage insurance must be eliminated after a certain period of time - and under certain conditions.

Dropping Conventiona Mortgage Insurance Rules:

Automatically Deleted When:

• Mortgage balance is reduced to 78% LTV
• LTV based upon ORIGINAL VALUE
• Based SOLEY on regualr amortization ( not prepayment of principal )
• Mortgage payment must be current

You Request Mortgage Insurance be Deleted

• Mortgage balance is reduced to 78% LTV
• Submit cancellation request in writing
• Good payment history
• Current on mortgage payments
• Appraisal or Certification that property value has not decreased BELOW the original value
• No 2nd liens or subordinated loans on property

Dropping FHA Mortgage Insurance Premium Rules

If your loan closed PRIOR to January 1, 2001 you are NOT eligible for termination of MIP ( monthly mortgage insurance premium ) if closed on January 1,2001 and after, MIP will automatically terminate under the following conditions.

More than 15-year term

• Must pay for 5 years AND
• 78% LTV based on original LTV

15- Year Term or less

• if original loan amount is 90.01% or more, of the original appraised value, MIP will be terminated at 78%
• 5-year minimum payment waived
• if original loan amount is 90% or less, or the original appraisal value, NO monthly MIP was charged

SPEACIAL NOTE:

Loan to Value for purchases based on the lower of the sales price or appraised value

Loan to value for refiancnes abed on appraisal value

Loan to value figured on base loan amount WITHOUT the upfront mortgage insurance for FHA loans