3 THINGS YOU MUST NEVER EVER NEVER DO DURING THE LOAN PROCESS
1) Buy a new car/boat/toy:Â NEVER BUY ANYTHING when you are trying to buy a home. Â Want a new car? Â Great, you better get the house first or that pretty, shiny, new car may become your house. Yikes! Â When you are qualified for a loan, you are qualified based off of your debt to income ratio. Â Any new debt you incur changes that ratio which can affect your ability to get the loan. Every lender runs your credit twice. Â Once at the beginning of the loan process and once at the end. If you buy anything in between the beginning and the end we will know and we will have to re underwrite your file with your new debt to income which could hurt your ability to buy a home. Â Even if it is the worlds best deal with zero % interest DO NOT BUY ANYTHING until your loan closes.
2) Stop paying bills:Â NEVER STOP PAYING YOUR BILLS NO MATTER WHAT
True story; John was buying a house for his daughter. Â They had looked for 2 years. Â John was qualified and they finally found the perfect home. Â Right before they wrote an offer i re-pulled Johns credit as it had been a few months. Â John was very conservative and highly educated, I was not worried. Silly me! Â John's credit score had dropped 60 points in 3 months!!!! Â Why? Well, because a credit card company charged him a protection fee he did not agree to and they would not take it off so he did not pay it. It does not matter if you are in the right if the company in the wrong trashes your credit. This applies to utility bills and medical bills as well. Â They will report you and they will ruin your credit. Â I have seen large companies ruin peoples credit literally over $1. Â The client says it was $1 and I have to say that $1 cost your ability to get a loan because your credit score is now below lending standards. Tragic. Â I actually suggest double paying certain companies because they are so dodgy. Â Personally, I would rather have a credit then let them nick me over $1. Â When in doubt pay and pay fast. Fight after your loan closes but realize your fight may be futile.Â
3) Change Employment: NEVER CHANGE YOUR EMPLOYMENTÂ
Basic employment rules of thumb:
-If you go from being a w2 employee to starting your own business you no longer qualifyÂ for up to 2 years
- If you quit your job and start a totally new line of work, even if it pays better you no longer qualify. Â You need two years history in the same line of work to count the income.
- If you are switching jobs in the same line of work you have to be employed when we close the loan. You cannot take 2 weeks off to do the loan and move.
- If your new job has bonus income I cannot count it until you have a 2 year history.
BOTTOM LINE: There is really nothing lamer then losing your home buying dream over $1, a new car, or a job switch. Â You can buy the car later, get good karma by paying the $1 and the job will be there after you close your home loan. Â Life is way too short to miss out on what you want by silly mistakes that could have been prevented.
The Ladies at Century 21 organize a Turkey Drive every year. It is tonight from 5-7 at 114 Lake street in Cloverdale.Â If you get lost their phone number is 707-894-5232
WHY:Many families in our community do not have the financial resources to have a Thanksgiving meal.Â These are families who sometimes just don't eat because they cannot buy food. This is a good cause.
WHAT TO BRING: A Turkey to donate.Â You can also donate money or stop at rays and get a gift certificate for a turkey.Â Every Turkey helps and the need is getting higher every year. If you want to donate more than one; great!
WHAT TO DO WHEN YOU GET THERE:Â There will be food and beverages.Â The food every year is always very good.Â It is like coming home to your Mother's kitchen if you mother was a fantastic cook. Mingle with your neighbors and make new friends.
The majority of the business we currently do is foreclosure sales. It is what is driving our market. "Real" sellers are rare, almost like unicorns, and the world in which we work is controlled by asset managers and institutions. Currently, there are tremendous opportunities for home buyers. Tremendous opportunities...
Julie and I often go out to the properties and it can be heartbreaking. I can handle a "trashed" house any day. Holes in walls, flooring ripped out...no problem. There is however nothing more visually upsetting then a well maintained home with a chart penciled in on the wall showing the growth of a child for the last 15 years. There was a family here. This was a home.
Today however, I am not going to talk about the displaced families, instead I am going to cover the unspoken villains who helped throw our housing market into such disarray. Generally, it is the lenders who are blamed for exotic mortgages, which is in fact quite a contributing factor. There is however a contingent of villains that is not covered as much who is just as guilty
The Fraudsters Type 1:The Fraudsters, type 1, thought they were super smart and could work the system. They are the "shot-gunners." "Shotgunning" is when you take out multiple mortgages out on the same property at the same time with different lenders. For instance, if your home is worth $400,000 you would apply for three mortgages at the same time with three different lenders and three different title companies. None of the lenders knew about the other lenders and if timed perfectly all three mortgages would go through recording just a day or so after each other. Since the timing was so tight the title companies and lenders would not catch on. You would have $1.2 million out on a $400,000 house. This was a scheme that was extremely popular in 2006 and 2007. Today, there are safeguards in place that make this almost impossible, at the expense of the honest borrower of course.
Reality Check: Amazingly,Â most of these fraudsters did not think that far ahead. Some people just did it to get extra money. They kept making their payments and then when the housing market tanked and they felt they lost too much value in their homes they walked away. They just walked away. But here is the deal; you can't just walk away from being a shotgunner. When a house goes into foreclosure it suddenly goes under a microscope. The lenders will figure out what has happened as soon as they try to take clear title. They will go after the fraudster as will the FBI.
Effect: It is villains like the "shotgunners' who make the system more expensive and tougher for the rest of us. The lenders charge higher fees in order to make up losses incurred by these types of white collar criminals. It also creates another set of hoops for the honest borrower to jump through. You want to know why Fannie Mae now requires that we pull your credit right before funding? It is because of the "shotgunners." Another step, another hoop all because someone thought they could beat the system.
On December 11, 2010, Fannie Mae will activate the new version of DU, version 8.2.Â This new version has some new guidelines that will affect you...Â Â
Minimum Borrower Contributionâ€“ The minimum borrower contribution requirements for all Fannie Mae conforming products (except DU Refi Plus, High Balance loans, IO loans, 2-4 units and second homes) will no longer require a minimum 5% contribution from the borrower.Â The borrower's minimum investment may come from gift, grant or community seconds to meet this requirement.Â This is a huge change
Foreclosure â€“ Increased waiting period to seven years.
Â· PreForeclosure/Short Sale/Deed-in-Lieu â€“if the credit report reflects an account that may have been subject to a preforeclosure, short sale or deed-in-lieu the borrower will have to wait two years until applying for a new loan.Â Fannie Mae uses the terms â€œpreforeclosureâ€, â€œdeed-in-lieuâ€ and â€œshort saleâ€ interchangeably.
Â· Revolving Debtâ€“ All revolving debt will be included in the dti calculation regardless of the number of payments remaining.Â Â
3 favorite money saving Websites for 2010
1) Â www.gazelle.comÂ Gazelle is a company that will buy your old cell phones, laptops etcâ€¦Â It is super easy you go to the website and Â follow the prompts for the item you would like to sell.Â They then ship you a box with a prepaid envelope. You put your item in the box, ship it and get a check or paid via paypal a few weeks later.Â I recently did this with my old Blackberry and got $56.Â
2) Â www.groupon.com Groupon is a company that offers specials for services and items in cites across the US.Â They have a new special every day and the savings are huge! For my sisterâ€™s Birthday this year I searched Groupon where she lived and found Trapeze lessons at a respected Trapeze institute near her for half off!Â It was something she always wanted to do and I got a great price.Â Win, Â Win.
3) Â www.upromise.comÂ Upromise is a company I have used for a long time.Â Anyone who has a child,Â or a child in their life (niece, nephew, etc..) should sign up with Upromise ASAP. Basically a certain % of the money you spend goes towards a 529 plan for your chosen Â child.Â Anytime I order flowers I go to Upromise and then link to FTD or one of the other flower companies on the site.Â They donate, on average, 10% of what I purchase in my sonâ€™s 529 account.Â It may not seem like much but you would be surprised how quickly all the little things add up. There are tons of stores who participate (Nordstroms, Target, Shutterfly, drugstore.com, Macyâ€™s, etc..)Â Free money towards education is a good thing.Â
- Turbo Tax is offering a 6% incentive Â and H&R Block 8% through Upromise.