Washington Mutual is teaming with Magic Johnson to increase homeownership in Miami’s underserved communities.

Via: HispanicBusiness

Interesting how certain lenders will allow borrowers to establish credit for home purchase.

A friend of mine called.  He wants to mortgage his home.  His grandmother left it to him and he has no verfiable credit history.

I contacted my wholesale account representative at who advised for my friend to show proof that he’s either had:
• Cell Phone
• Electric Bill
• Trash Removal Bill
• Water Bill
• Gas Bill
• Insurance Bill

If my friend can provide 3 separate accounts from the above list and he’s had them in place for one year, he’s good to go on a non-conforming mortgage and he can purchase a new house or refinance 90% of the value of his existing property.

If you need more information about how to establish credit for a home purchase, please contact me directly. Submit a mortgage application.

Also see: No Credit? No Problem!

The U.S. Department of Housing shows us how not to fall victim to loan fraud, as well as 11 Tips On Being A Smart Consumer. I wanted to summarize the tips for you, but after giving it some thought, I feel they all should be addressed: 

#1. Before you buy a home, attend a homeownership education course offered by the U.S. Department of Housing and Urban Development (HUD)-approved counseling agencies.

#2. Interview several real estate professionals, and check references before you select one to help you buy or sell a home.

#3. Get information about the prices of other homes in the neighborhood. Don’t be fooled into paying too much.

#4. Hire a properly qualified and licensed home inspector to carefully inspect the property before you buy it. Determine whether you or the seller is going to be responsible for paying for the repairs. If you have to pay for the repairs, determine whether or not you can afford to make them.

#5. Shop for a lender and compare costs. Be suspicious if anyone tries to steer you to just one lender.

#6. Do NOT let anyone persuade you to make a false statement on your loan application, such as overstating your income, the source of yourdownpayment , failing to disclose the nature and amount of your debts, or even how long you have been employed. When you apply for a mortgage loan, every piece of information that you submit must be accurate and complete. Lying on a mortgage application is fraud and can result in criminal penalties.

#7. Do NOT let anyone convince you to borrow more money than you know you can afford to repay. If you get behind on your payments, you risk losing your house and all of the money you put into your property.

#8. Never sign a blank document or a document containing blanks. If information is inserted by someone else after you have signed, you may still be bound to the terms of the contract. Insert “N/A” (i.e., not applicable) or cross through any blanks.

#9. Read everything carefully and ask questions. Do not sign anything that you don’t understand. Before signing, have your contract and loan agreement reviewed by an attorney skilled in real estate law, consult with a trusted real estate professional or ask for help from a housing counselor with a HUD-approved agency. If you cannot afford an attorney, take your documents to the HUD-approved housing counseling agency near you to find out if they will review the documents or can refer you to an attorney who will help you for free or at low cost.

#10. Be suspicious when the cost of a home improvement goes up if you don’t accept the contractor’s financing.

#11. Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

Questions or concerns regarding loan fraud will be responded to with immediacy

Source: U.S. Department of Housing

Recently here at miamibeach411.com an on line mortgage application was added.

The purpose of an on line mortgage application is to condense specific personal data and match the data with a variety of mortgage products.

The borrower should determine if he/she has the capacity to repay the mortgage.  If the borrower in fact has the necessary “capacity”, the next step is to determine based on credit worthiness what products are available to them.

In most cases, an on line mortgage application should be completed (name, address, date of birth, and employment status).  Upon completion of the mortgage application; telephone contact should be made. 

When making contact with a mortgage professional, be prepared to release your social security number for free credit evaluation to be done.

Any questions or comments our on line mortgage application will be responded to promptly.

Related stories:
Florida Mortgage Application

They say the best things in life are free; here’s hoping our free credit reports fit in that catagory.

Starting September 1, consumers in 14 East Coast states join the rest of the country in qualifying for a free annual credit report from each of the three nationwide consumer reporting companies – Equifax, Experian, and TransUnion.

The free reports were mandated by Congress in The Fair and Accurate Credit Transactions Act of 2003 (FACTA), which requires the nationwide credit bureaus to provide consumers with a free copy of their credit report, at their request, once every 12 months.

Consumers who want to access their free credit file disclosure, commonly called a credit report,  can go to AnnualCreditReport.com.

“The right to receive a free credit report is an important new tool for consumers,” said Deborah Platt Majoras, Chairman of the Federal Trade Commission. “Not only does checking the credit report give consumers a valuable snapshot of their credit histories, it permits them to detect and correct errors, and spot and stop identity theft.”

I like what Chairperson Majoras says about decting errors and stopping identity theft.

When a bank runs your credit, you get the banks interpretation of the report, but if you run a credit report yourself, you can see the findings, and address any errors.

Questions and or comments regarding free credit reports will be answered promptly.

Since the chief here added a very handy home appraisal tool to the site; and since he asked me my opinion of it,  here is my review of the Miami home appraisal tool.

Perhaps in the future we can “review” other products or items of interest which could lead to contraversy/insight.

Anyway, back to the subject at hand. 

Here is what I like about this appraisal tool:  Lets say Mr. and Mrs. Buyer are out shopping for a home; and, as most home shoppers do, they’re driving by some properties which may be of interest to them.  As they drive by a beautiful property, they jot down the address. 

When they return to a computer, they enter the address of the beautiful property..and ..walla they now have: a legal description, square footage, year built, the date the property last sold, and very importantly the amount it last sold for.

Now, the Buyers can determine with some expertise whether or not they wish to contact the owner, or their real estate agent for a viewing.

The only down side to the appraisal tool is the fact that it cannot produce an appraised value.  Appraised values can only be done by comparison of the property to 3 sold properties and that’s a process unto itself. 

One other drawback is that this tool can only be used for properties in Miami-Dade County.

Any questions or comments concerning the home appraisal tool will be responded to promptly.

Since as a culture we’re dedicated to improvement, why not discuss: credit score improvement.

It’s important to note that raising your credit score is a bit like losing weight:  It takes time and there is no quick fix.  In fact, quick-fix efforts can backfire. 

Here is some credit score improvement information:

Payment History Tips
Pay your bills on time. Delinquent payments and collections can have a major negative impact on your score. If you have missed payments, get current and stay current

The longer you pay your bills on time the better your score.

Be aware that paying off a collection account will not remove it from your credit report. It will stay on your report for seven years.

If you are having trouble making ends meet, contact your creditors or see a legitimate credit counselor. This won’t improve your score immediately; but, if you begin to manage your credit and pay on time, your score will improve over time.

Amount Owed Tips
Keep balances low on credit cards and other “relvolving credit”. High outstanding balances can affect a credit score.

Pay off debt rather than moving it around. The most effective way to improve a score in this area is by paying down revolving credit. In fact, owing the
same amount but having fewer open accounts may reduce a credit score.

Do not close unused credit cards as a short-term strategy of rasing a credit score.

Do not open new credit cards that you don’t need (to increase your available credit). This approach can backfire and actually lower a credit score.

Length of History Tips
If you have managed credit for a short time, do not open numberous new accounts too rapidly. New accounts will lower an average account age which could have a negative effect on a score if there is not adequate amounts of other credit information.  Rapid account build up can be viewed as increased risk.

Note that closing an account does not make it disappear. A closed account will show up on a credit report.  It may be considered for scoring purposes.

It’s OK to request and check your own credit report. This will not affect a credit score as long as the report is ordered directly from the credit reporting agency.

Information and Questions regarding credit score improvement will be answered promptly.

Also see:
FTC - What is Credit Scoring

Whether you’re buying your first home, or trading up to a larger one, there are many costs - on top of the purchase price - that you must figure into your budget. These extra costs, could surprise you with an unwanted financial nightmare on closing day if you’re not prepared.

Read through the following checklist to make sure you’re budgeting properly for your next move.

1. Appraisal Fee - Your lending institution may request an appraisal of the property, which would be your responsibility to pay for. Appraisals can vary in price from approximately $175 -$ 300.

2. Property Taxes - Depending on your down payment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid.

3. Survey Fee - When the home you purchase is a resale (vs. a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $190 - $1,000.

4. Property Insurance - Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan. Beware! Some homes may not be insurable. Make sure you have an insurability clause in your purchase contract.

5. Service Charges - Any new utility that services your hook up, such as telephone or cable, may require an installation fee.

6. Escrow and Document Preparation Fees - Escrow fees are split between the buyer and the seller in Colorado. However, additional fees will be charged for the buyer’s mortgage closing. This can include first and second mortgages. In addition to the “Doc Prep” fees charged by the lender, some lenders will e mail the loan documents and therefore the escrow or title company may charge a electric to paper fee.

7. Mortgage Loan Insurance Fee - Depending upon the equity in your home, some mortgages require mortgage loan insurance. This type of insurance will cost you between 0.5% -3.5% of the total amount of the mortgage. Usually payments are made monthly in addition to your mortgage and tax payment.

8. Mortgage Brokers Fee - A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.

9. Moving Costs - The cost for a professional mover can cost you in the range of: $75-$200/hour for a van and 3 movers.

10. Maintenance or HOA Fees - Condos charge monthly Home Owners Association Fees for common area maintenance such as grounds keeping and carpet cleaning in hallways. Costs will vary depending on the building.

Just when you think you’ve heard everything here comes some new mortgage scams—Welcome to the world of “asset rentals” now being investigated by bank and mortgage industry fraud experts.

On some mortgage transactions borrowers are qualified based on cash reserves and on proof of employment. Now there are companies who advertise they will “rent” you the reserves and “create” your employment.

It works like this: Say your loan officer discovers that you lack the financial wherewithal needed to qualify for the mortgage you want. Rather than lose your business, the loan officer turns to a service that offers’’ asset rentals.’’ For a flat fee of 5 percent of the amount you need, the service will verify to anyone who asks that the $100,000, $500,000 or $1 million in bank deposits you’ve claimed on your loan application documents are yours.

I don’t know about you, but for me I don’t think I would sleep well in the bedroom of a home that I purchased under fradulent circumstances.

Mortgage scams hurt lenders and their consequences reach out to hurt the public in general.

Questions or information regarding mortgage scams will be responded to promptly.

Source: Miami Herald (registration required)

Interesting how major airlines are offering bushels of frequent flyer miles if you sell or purchase a home using their sources: American Airlines recently sent me this post and I would have a difficult time not checking it as it could be a free excursion and I love a freebie.  FYI a property which sells for 350,000 qualifies for 70,000 air miles.

American Home Miles provides a handy calculator which will determine how many miles are awarded based on the sales price of the property. 

Also see the American Airlines Advantage Program which specifies choices of awards.

Questions or comments regarding frequent flyer air miles in conjunction with the purchase or sale of a property will be responded to promptly

Interesting how major lenders are assisting with credit repair issues; aka, credit mortgage repair.

John Fitzgerald, my wholesale account rep, stopped by my office this week. While we were discussing service and program choices he directed me to a site that Countrywide makes available to brokers like me.

Interestingly, I navigate to a place called “Credit Reconciliation”. I am intrigued thinking:  “why would a lender be in the credit repair business”.  I decide to watch the video tutorial, and to my amazement find that this company has software which allows them to decision a person’s mortgage based on an elevated credit score even though the score won’t officially be posted onto the credit until said person provides proof of credit issue.

What’s all that mean to Mr. & Mrs. Borrower?  It means that if there are errors on his credit he doesn’t have to labor thru the arduous process of repair.  His credit will repair automatically, as long as “down the road” he provide to the Mortgage Broker (yours truly) the paperwork proving that which is being mis-reported is satisfied.

This is a one step process and it allows a person to get the best product and repair his credit discrepancies all in one move.

The Federal Trade Commission is also an excellent resource for Credit Repair Facts for Consumers.

Questions or comments regarding credit mortgage repair will be answered promptly.

Have you ever been taken in? 

Con artists have a way of making a person invest in a false reality.

One of the most frequently used con games that exists in mortgage lending is:  The Effective Interest Rate Presentation

Beware of effective interest rate proposals.

The typical scenario is that when the mortgage product is presented, it is supported by an amortization chart.  The bogus presentation is accompanied by a scenario whereby the borrower only adds a small additional amount to his/her monthly payment each time it is sent in, therby reducing the principal amount and unpaid balance.

If Mr and Mrs Borrower add a mere $100.00 each month to their mortgage, they will pay the mortgage off much sooner.

There is nothing wrong with this.  But the hook is:  If they person who is presenting the mortgage product conitinually refers to the “effective rate” rather than the APR (annual percentage rate) there is a good chance that the client is paying a higher rate than is available and in some cases is not “saving” but is really paying more.

Beware of the “effective interest rate” pitch, close scrutiny is helpful.

Questions and comments regarding effective interest rates will be answered promptly

Finding disaster mortgage information can aid those who wish to take the appropriate steps to rebuild.

Through Section 203 (H),  the Federal Government helps victims in Presidentially designated disaster areas recover by making it easier for them to with mortgage insurance for disaster victims, and re-establish themselves as homeowners.

Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area and if their homes were destroyed or damaged to such an extent that reconstruction or replacement is necessary.

If you need help, contact the HUD Homeownership Center that serves your state. Homebuyers can also find a list of HUD-approved lender, or call the FHA Mortgage Hotline, 1-800-483-7342.

Further assistance regarding disaster mortgage information will be responded to immediately.

The Mortgage Bankers Association (MBA) has released a study on the current real estate and mortgage markets. The study discusses the current state of the housing markets, the growth of innovative mortgage products, and the impact of developments in the housing and mortgage markets on households, financial institutions, the financial markets, and the economy more broadly.

One interesting point is the MBA’s speculation regarding a potential housing bubble, and the use of non-traditional, low interest mortgages. Good timing. We just learned about the pros and cons of low interest rate mortages.

You can read the entire study from their site here.here.

Adjustable rate mortgages are normally written at lower interest rates than fixed rate mortgages.  Typical adjustable rate mortgages have a period of time that the rate is fixed and thereafter will adjust.  The normal ajustment periods that are offered are: 1 year, 3 year, 5 year, 7 year, and 10 year. 

Recently there has been a trend to shorter adjustables such as 1-month adjustables. 

The shorter the adjustment period the sooner the mortgage can begin to adjust to market swings. 

A 1 month adjustable can begin to adjust to market conditions almost immediately while a 10 year adjustable gives a stable interest rate for 10 years. 

It makes sense to accept an adjustable rate mortgage if a property will be sold in a short period of time.  If a person knows that within a certain period of time they are likely to move then adjustable rate mortgages are worth consideration.

Questions and comments regarding Adjustable rate mortgage information will be responded to promptly.