Five Things I Am Thankful For in 2017

Five things I am thankful for this holiday season:

1) For all the good folks who took the time to email me their success stories after reading my books.

2) For living in a free country where all individuals can buy their own home without regard to race, color, religion, national origin, sex, marital status, age (as long as the legal age is met), or whether they receive public assistance.

3) For employment and the ability to shop wholesale lenders to find the best loan at the best price for my mortgage clients.

4) For friends and family, business associates, my sweet yet feisty kitty.

5) Most of all, for the grace of God and salvation through Jesus Christ our Lord.

Happy Thanksgiving to all!

Breaking News: Cordray Out of the CFPB This Month

Photo credit: CNN

Richard Cordray, the Director of the Consumer Financial Protection Bureau has announced he will resign at the end of this month. Cordray has been at the epicenter of controversy.

His official statement is below:

“It has been a joy of my life to have the opportunity to serve our country as the first director of the Consumer Bureau by working alongside all of you here,” he wrote. “Together we have made a real and lasting difference that has improved people’s lives.”

It has been the position of many that he used the lack of Congressional Oversight to abuse the power bestowed upon him. During a hearing in April, Rep. Jeb Hensarling, R-Texas, who chairs the House Financial Services Committee, called for Cordray to be fired.

“For conducting unlawful activities, abusing his authority, denying market participants due process, Richard Cordray should be dismissed by our president. Not only must Mr. Cordray go, but this CFPB must go as well,” Hensarling said.

Let’s hope the next representative represents the interests of American citizens in a fair and ethical manner.

Little Known Program For First-Time Home Buyers

If you’re a first-time home buyer (or haven’t owned real estate in the last three years), ask your loan officer about “The 97 Loan.” The down payment required is only 3%, and it’s a cheaper loan than FHA’s first-time home buyer loan.

Too often, banks and other lenders push the FHA loan, and here are two reasons why:

  1. The FHA loan is a big profit-maker for lenders.
  2. Loan officers think about the 5 percent down conventional loan and forget about The 97 for first-time buyers.

Compare FHA to “The 97”

FHA has an upfront mortgage insurance fee of 1.75 percent. The 97 has no upfront fee.

FHA’s monthly mortgage insurance fee lasts forever. The 97 Loan’s MI fee can get dropped when you have 20-22 percent equity.

FHA down payment is 3.5%. The 97 Loan is 3%.

How to Qualify for The 97 Conventional Loan

  • Credit score must be at least 620. (Some lenders want 640.)
  • Bankruptcy must be discharged for 24 months.
  • Debt-to-income ratio should be 43% max, based on gross income (before deductions).
  • Maximum loan amount is $424,100. Maximum price is $436,216.

Getting Together the Down Payment Money

The down payment money may be from your own verified funds or from family. Unverified cash is not allowed, meaning get that dough out of your safe into a bank account now.

You can also get creative and borrow money from your retirement account. Or, you can sell something like a car or motorbike, as long as you show the bill of sale and matching deposit receipt into your bank account.

Enough already! Pick up your phone. Tell your loan officer you want to get pre-approved, then call your real estate agent and go find a home to call your own!

If you’re in California or Washington, click here to reach me.
Please share this with others who want to become a home owner.

Who Chooses the Title Company and Settlement Provider — Buyer, Seller, or Realtor?

When you’re buying a home, who gets to choose the title company? Who chooses the settlement provider, that is, the escrow company or attorney to handle the closing and disbursement of funds?

The law is clear: it is Buyer’s choice. Even if the Seller’s Realtor has already set up escrow with a particular company, the Buyer has the right to designate the title company and the closer.

What’s more, any Seller who denies the Buyer the right to choose shall pay the Buyer three times the cost of the title insurance.

Sorry, but there’s not an exception in the law for a “busy market.”

If you’d like to read it verbatim, see below. This applies to all 50 states when a federally related mortgage loan is involved in the transaction.

RESPA refers to the Real Estate Settlement Procedures Act.

Section 9 of RESPA [12 U.S.C. § 2608] states:

(a) No seller of property that will be purchased with the assistance
of a federally related mortgage loan shall require directly or
indirectly, as a condition to selling the property, that title insurance
covering the ​property be purchased by the buyer from any particular
title company.

(b) Any seller who violates the provisions of subsection (a) of this
section shall be liable to the buyer in an amount equal to three times
all charges made for such title insurance.

12 C.F.R. 1024.16 states:

No seller of property that will be purchased with the assistance of a federally related mortgage loan shall violate section 9 of RESPA (12 U.S.C. 2608). Section 1024.2 defines ‘‘required use’’ of a provider of a settlement service.

12. C.F.R. 1024.2, with regard to “required use”, states in part:

​Required use means a situation in which a person must use a particular provider of a settlement service in order to have access to some distinct service or property, and the person will pay for the settlement service of the particular provider or will pay a charge attributable, in whole or in part, to the settlement service.

I hope this clears up some questions and settles some arguments. If you have an interesting or unusual story on this topic, I’d love to hear it.

Thank you for stopping by my blog.

I am licensed to do mortgage loans in CA and WA,

NMLS # 1284134. Carolyn Warren,

Sr Loan Officer, Cherry Creek Mortgage Co #3001

Ten Important Facts About Freezing Your Credit

After criminals hacked into Equifax’s credit system, people are asking if they should freeze their credit.

Here are ten facts to know about freezing credit:

 

  1. Freezing your credit will lock down and stop all new credit activity, so that no one can open a new account in your name or with your social security number.
  2. If you want to apply for credit, such as a mortgage or auto loan, you will need to contact the credit agencies with the personal identification number (PIN) they supplied you with.
  3. You must give them three days to unfreeze your credit.
  4. If you unfreeze your credit to apply for financing, you can then refreeze it afterward.
  5. A credit freeze does not prevent you from using your existing accounts.
  6. You can still dispute erroneous information in your credit file during a credit freeze.
  7. You can request your free annual credit report while your credit is frozen.
  8. A credit freeze does not affect your credit scores.
  9. You can permanently open your credit again at any time (allowing three days for the credit agencies to do so).
  10. To freeze your credit, you must contact Equifax, Experian, and TransUnion individually. A fee may or may not apply.

Fees to Freeze Credit By State

In some states, freezing your credit is free. For minors and victims of ID theft, a credit

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freeze is usually free. For seniors, a credit freeze may be free.

Here is the link to check out the fee in each state.

Thank you for reading and passing on this essential information. Because some people are wondering, personally, I chose to freeze my credit with all three agencies. I did not enroll in a credit monitoring service.

Home Buying Success Story: Perfect Credit Not Required

Imperfect credit? Be encouraged with this success story.

Two days ago, I closed a loan for a lovely couple whose credit suffered all due to an uninsured driver slamming into their car so hard, it knocked the husband unconscious and threw them both in the hospital, fighting for their lives.

Naturally, they could not carry on with their business during this time, so they ended up with a state tax lien and a medical collection on your credit report.

Now that they’ve recovered and are back to work, they were approved for a conventional loan (better than FHA).

In addition, because they had not owned a home in the last three years, they got a first-time homebuyer’s program with a .125 lower interest rate.

The Details

  • Down payment required was 3 percent; although, they chose to put down more to get a smaller loan and payment.
  • They did not have to pay off the collection account.
  • They did have to pay the state tax lien, and that was easily done by adding to the cash-to-close. The closing agent collected the funds and paid the state at closing. This way, there was no complication with getting the proof that it was paid, and it saved them the hassle of doing it early.

Fast Closing

The loan closed in only 28 days. Pretty good for our busy market!

Better Interest Rate

As a loan officer for a full service mortgage lender, I have the option of using our own company money or brokering out the loan to a wholesale lender. By brokering out, they got an interest rate of 3.875% rather than 4.25%. This saves them $37 per month and $444 per year.

Congratulations! They are in their own home just in time to enjoy the gorgeous autumn leaves and upcoming Thanksgiving holiday.

If your credit has some dings, you may still be able to become a home owner. If you’re in WA or CA, I’d be happy to take a look for you. Contact me here. If you’re in a different state, check in with your local full service mortgage lender who will have more choices for you than a big, stuffy bank or fussy credit union.

Another Source for Down Payment Money

With rising home prices and interest rates, it makes sense to buy a home now before real estate becomes more expensive. But what can you do when you don’t have the cash for a down payment or gift funds available? Here’s an idea that just might work for you.

Cash From Another Source

You can take out a loan using a car, recreational vehicle, collectibles, or other item of sufficient value for your down payment on a conventional loan.

You can borrow money from stocks, investments, a retirement account, or from a home equity line of credit from another property for your down payment on either a conventional or FHA loan.

You can borrow money from a family member (documented and recorded) for an FHA loan. Simply tell your loan officer up front if this is your plan, and then he or she will guide you through the steps.

As a Reminder…

Make your house a priority over your car/truck/SUV.

Real estate goes up in value. Vehicles go down in value.

Therefore, it makes no sense to take on payments for a vehicle before you get into your house. Do what’s most important first. Save the fancy wheels for later.

Thank you for reading! Any questions, let me know. I appreciate your comments and “likes.”

 

 

 

How to Choose a Better Mortgage Lender

When you go to McDonald’s and order a hamburger, you know exactly what you’re going to get. All McDonald’s burgers have a certain sameness, no matter if you order the single, the double, or the one with cheese. McDonald’s has one beef burger with certain variations. If you want more gourmet choices, you need to go to a more upscale restaurant. Which usually costs more.

True enough, but what if you could get that better burger at the same price as McDonald’s? Would you choose to go there instead?

When you walk into a bank or credit union, it’s a lot like walking into McDonald’s: they have their own loan products to offer and nothing more.

It’s “one flavor fits all.”

If you don’t fit into their mold, you’re out of luck.

On the other hand, if you choose to do business with a full service mortgage company or a mortgage broker, that loan officer has a whole smorgasbord of loan products to offer. This is because he or she can shop a variety of wholesale mortgage lenders to find the best (and least expensive) one to fit your situation.

Do You Know About Wholesale Lenders?

Many people don’t know there are wholesale lenders. When you walk into your local bank, that is retail. Did you know that your bank might also have a wholesale division? Those offices are often located in a high rise building or tucked inside a sprawling business park.

They don’t advertise on radio or TV, and they do business with the public. You have to be a broker representing a client to get a loan from them.

They may have different or more generous underwriting guidelines. Sometimes they offer better interest rates, too.

Having a “Plan B” Option is Better!

Not long ago, a home owner came to me asking for an FHA Streamline Refinance. I sent the loan application through our own in-house lending, but unfortunately, it didn’t work out. If I’d been working at a bank, that would have been the end of the story for the home owner. But because I can also shop wholesale lenders and broker out loans, I was able to find the perfect match. The home owner is lowering her interest rate by a full 1% and saving a significant chunk of money as a result.

The Best Mortgage Lenders

Call me biased if you like, but I favor having more loan choices.

Sure, the job is easier when you’ve got only one menu to choose from, one set of loan products. But that’s not always best for the consumer.

When I first started working in the mortgage business in 1999, I worked for a direct lender that had only one set of loan products. It was a good way to learn the basics and get started. But after a year and a half, I had to move on and up. I needed to be able to offer more choices in order to serve more people. Now I work at Cherry Creek Mortgage Company, a full service mortgage lender. I like having more choices to offer.

Thank you for stopping by my blog. I appreciate each and every reader.

Just in case you’d like to know, I am state licensed in California and Washington. (NMLS License 1284134)  You can learn more about me here. There’s a “Meet Carolyn Warren” section at the bottom of that page.

 

Should You Disclose Your Bankruptcy, Judgment, or Tax Lien to Your Loan Officer?

Now that the credit bureaus have removed some people’s tax liens and civil judgments from credit reports, people are asking, “Should I tell my mortgage lender about the item that no longer shows up on my credit?”

The same question applies to a bankruptcy that has been deleted early from a credit report.

First, let me say that even though you had this negative credit event, the fact that it is not on your credit report gives you a higher credit score. This is to your advantage. You will qualify for a better interest rate with your higher score.

Are You Like Person One or Person Two?

It sounds crazy, but let’s look at how the almighty credit score affects two people who had a bankruptcy (BK) two years ago.

Person One’s BK shows up on his credit report. His score is 580.

Person Two’s BK does not show up on his credit report. His score is 620.

Both people qualify for a FHA loan, but Person One gets an interest rate of 4.5% while  Person Two gets an interest rate of 4%.

On a $200,000 loan, Person One pays $59 more per month and $708 more per year — all due to the difference in credit score — even though their bankruptcies are the same!

So not having the BK show up on your credit report is a big advantage, even though you will have to disclose it.

Should You Tell Your Loan Officer About the Negative Credit Event?

The answer is a big YES. You must answer all questions truthfully. Lying on a mortgage application is fraud, and carries a possible felony charge.

Besides, you won’t get away with the lie. The lien/judgment/BK will be revealed when the underwriter pulls a different type of report tied to your social security number. Then your loan in progress will change and could possibly even be denied. For example, if Person Two started with a conventional loan, then it was discovered he had the BK, the loan would have to start all over again with an FHA loan. Even the appraisal report would need to change to match the loan program. This will cause grief and a lot of extra work, and likely delay closing.

Honesty is the Best Policy

The adage is true: honesty is best. Your loan officer is your advocate. Your loan officer wants to give you a loan and close the deal so he/she earns a commission. Tell all your credit secrets to the loan officer right up front so there are no bad surprises later and then you’ll have a better loan processing experience, too.

I have closed plenty of loans for people who had a negative event on their credit report, so please, don’t let that stop you from applying for a home loan if you also have some positive credit and a score of at least 580. Naturally, your income and other criteria will need to qualify. But you might be surprised — perfect credit is not required to get a home of your own.

Available in paperback and Kindle. Rated best DIY credit repair resource.

Credit Freeze or Fraud Alert: Which is Better?

If you were one of the 143 million Americans affected by the Equifax security breach and fear what damage hackers or other criminals might do to your credit, then this information is for you.

You may choose to place a credit freeze or fraud alert on your credit report. Here is the difference between the two and how to do it.

Credit Freeze

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A credit freeze locks your credit down like a vault. No new credit can be established while a freeze is in place. In order to initiate a credit freeze, you will need to contact each of the individual credit reporting agencies. Below are their phone numbers. You will be required to prove your identity.

You ‘ll need to supply your name, address, date of birth, Social Security number and other personal information. Fees vary depending on the state you live in, but commonly range from $5 to $10.

After you place the freeze, each bureau will send you an individual PIN number. Keep this safe as you will need it in order to unfreeze your credit. You can lift the freeze temporarily or permanently. The bureaus have three days to lift the freeze. Again depending where you live, the cost to lift will vary.

It’s important to know that a credit freeze will not prevent your existing accounts to be accessed. You should check your statements regularly and continue to monitor your accounts for suspicious activity. You can still apply for credit but you’ll have to temporarily lift the freeze in order to do so. Also, a freeze will not affect your credit scores and you can still access your free annual credit report.

Fraud Alert

A fraud alert allows creditors to get a copy of your credit report as long as they take steps to verify your identity. For example, if you give the bureaus a phone number, the lender must call you to verify the application for credit is legitimate.

Fraud alert may prevent someone from opening new credit in your name, but again, it will not prevent someone from accessing your existing accounts. You will still want to monitor all of your accounts.

Fraud alerts are free, and if you notify one of the credit reporting agencies, they will inform the others of the Fraud alert and in turn will apply the alert on your credit. No need to call all three. Below are the three different types of fraud alerts available.

  • Initial Fraud Alert: This is for when you are temporarily worried about your identity, like if your wallet was stolen.
  • Extended Fraud Alert: These alerts are for identity theft victims and puts a Fraud alert on the file for 7 years.
  • Active Duty Military Alert: For those in the military who want to protect their credit while deployed, this fraud alert lasts for one year.

If you are considering whether or not to put a freeze or fraud alert on your credit, I suggest you consider how often you need access to credit when making your decision. If you plan to get pre-approved for a home loan or purchase a car in the near future, then a fraud alert will allow you to do so without taking extra steps. If your credit is set the way you want it, then a freeze could work to keep it that way.

Here are the phone numbers for the credit reporting agencies (also called credit bureaus):

Equifax — 1-800-349-996

Experian — 1‑888‑397‑3742

TransUnion — 1-888-909-8872

Many thanks to Chad Kusner, President, Credit Repair Resources, LLC, for this valuable information.

Please help others by sharing on social media. Thank you.

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