Free Down Payment Money For Members of the Chicksaw Nation

chicksawYou don’t have to be crowned princess to receive free money for a down payment on a home. Any member of the Chicksaw Nation is eligible for the $3,000 grant.

No interest, no payback. This is a true gift for buying a home.

Here are the guidelines:

  • Available in all 50 states. The home does not need to be inside the boundaries of the Chicksaw.
  • Any loan type: FHA, VA, USDA, conventional.
  • As long as you meet the credit, income, and other requirements for the loan type you want, you qualify for the grant. However, some lenders have overlays. For example, Envoy Mortgage requires a 640 credit score.
  • Owner occupied homes only, cannot be used for a rental property.

Simply show your Chicksaw Citizenship card when you apply for your mortgage pre-approval. Your loan officer will process the grant for you.

If you know a Chicksaw member, pass this great news on to them. I will post about other grant money in the future, so feel free to subscribe to the blog.

Now available in paperback and Kindle

Now available in paperback and for your Kindle

Best Way to Buy a House for a Family Member

This is a great (but often overlooked) strategy for helping a family member get into their own home. Thisbuy-home applies to the following situations:

  • Your parent is on a fixed income and cannot afford to buy his or her own house.
  • You have an adult child with disability income that is insufficient to qualify.
  • You have another family member who is tired of renting but is on a fixed income too small to qualify.

How It Works

You present the family member’s income documentation to show they need help in qualifying for a mortgage. (The family member must be on a fixed income, not a low-paying job that could soon change into a higher paying job.)

You are then eligible get approved to buy the home using your own income and credit–without having to take the higher interest rate and larger down payment required for a non-owner occupied or investment property.

Advantages

  • The house is owned and occupied by family.
  • You do not pay any more for the loan than if you were going to occupy it yourself.
  • You can put as little as 3% down.
  • You enjoy the tax benefits of ownership.
  • Your family member stops paying for someone else’s mortgage in the form of rent.
  • You benefit from increased equity.
  • In the future, you may be able to sell at a profit or rent the house to someone else.

Disadvantages

  • You must be able to afford the payment, along with your own obligations. However, with 26% of Americans owning their homes free-and-clear, this option becomes a realistic opportunity. (Statistic Source: StatisticBrain)

Would You Like My Help?

I can help home buyers in the Western states. I am personally licensed in California and Washington (NMLS # 1284134) and I work with colleagues in Oregon, Idaho, Nevada, and Colorado. You can contact me here. If you are in another part of the U.S., contact your local full service mortgage lender.

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Two Title Insurance Fees: Lender’s Title Insurance and Owner’s Title Insurance

Home buyers want to know: Why are there two title insurance fees? Is this a rip-off?

There are two types of title insurance. Simply explained:

Lender’s Title Insurance protects the lender’s money they are loaning to you. If a previous owner fails to pay taxes or other obligation, the creditor may file a lien against the property. If the previous owner has an heir who says they own a piece of the property, that could be a problem. If someone with the same name or a similar name as yours owes for back taxes, child support, has a bankruptcy, or other financial mishap, that person’s lien might get attached to your property. (It happens fairly often, especially if you have a common name.)

Lender’s Title Insurance protects the money the lender has put out for your house. As you pay down the loan, the amount of protection is reduced accordingly. When the loan is paid off, the lender’s title insurance is finished and over.

So at the point when you have complete equity in the house, lender’s title insurance no longer exists. Lender’s title insurance does not protect your equity.

Owner’s Title Insurance protects you, the new home owner. It protects your equity in the home against false liens and judgments, false and undisclosed heirs, forgery and fraud, errors and omissions.

In some states, the home buyer pays for both title insurance fees unless otherwise stated in the Purchase Agreement. In the West where I do loans (California and Washington states), the current owner/seller pays for your owner’s title insurance; and you pay for the lender’s title insurance. Since the Owner’s Title Insurance is more expensive, this is good for you, the home buyer.

As you can tell, both types of title insurance are important. I do not know of any lender that does not require Lender’s Title Insurance. I do not know of any home buyers who have been too foolish to protect their precious home equity with Owner’s Title Insurance.

So no, title insurance is not a rip-off. What is a rip-off is when title insurance companies over-charge and add a boatload of junk fees. Unfortunately, that happens a lot, and I have taken a public stand against it! As a home buyer, it is YOUR LEGAL RIGHT to shop and choose the title insurance company. It is not the right of the real estate agent nor the seller to choose; nor do they have the legal right to bully you into using the services of a title company you do not want. If you are getting coerced or pressured, please send me an email with all the details, including the name of the companies here.

I hope this information helps, and thank you for subscribing to my blog.

 

“Help Me Raise My Credit Score!”

Womans World Mag 8.22.2016Thank you, Woman’s World Magazine, for featuring me in your column, “Ask America’s Ultimate Experts.”

Thank you, Kristina Mastrocola, writer, for the interview.

In case you can’t read the article here, it is on page 26, the August 22 issue, which is on newsstands now.

I hope these tips will help people understand that they can take control of their credit and create the score they desire. There is no need to be a victim when it comes to your credit profile.

What’s more, you are not required to have perfect credit in order to get a home loan. Recently, I helped a first-time home owner who had six open collection accounts close on a charming three-bedroom, ranch style home–and she did not have to pay off the petty collections (total under $2,000) in order to do so.

As always, thank you for subscribing to my blog. If you have a topic on mortgage, home buying, or credit that you’d like to see, please email me here.

 

Now available on Amazon

Now available on Amazon

Choosing a Realtor to Sell Your Home

How do you choose the best real estate to sell your house?

Can we assume the best choice is the discount agent with the lowest commission? The agent who wants to list at the highest price? Or are there other considerations?

Recently, I contacted three Realtors about listing a property for sale. I asked for a written CMA (Certified Market Analysis) to be provided within three days. Here’s what happened.

Both the Coldwell Banker Danforth and the Windermere agents provided their CMAs on time. Both expressed passion for the house. Both projected the same selling price. Both included ideas for marketing.

The Refin agent did not provide the CMA nor did she call or email to say why she was not delivering it as promised.

Nevertheless, I decided to give the Redfin agent another chance, so I sent an email asking. By now it was over a week late. Her assistant replied that she would be leaving on a vacation soon; therefore, I should reach out to a different real estate agency if I wanted a CMA in a timely manner. She did not suggest another real estate agent within her own company; but rather, she sent me off to a competitor.

I then contacted an agent from Berkshire Hathaway who provided a CMA within three days. His projected selling price was higher than the other two, by about $30,000. (Tax assessed value is $485,000.) He used larger, two-story and tri-level homes to arrive at the price; whereas, the subject property is a one-level ranch-style home.

Several more days pass and then, surprise — in came an email from the Redfin agent. It included no apology or explanation for being over two weeks late. There was no formal CMA, but she listed 12 houses in the neighborhood that had sold. Of these 12 homes, 11 had four to five bedrooms. My subject property has two bedrooms. She used price per square foot to project a higher selling price than the other full service real estate agencies, by $100,000! She also included an attachment that showed her company would charge a lower-than-standard commission.

Let me ask you this:

Which agency will provide me with the best service?

Which agency will list for the most realistic selling price to actually get the house sold?

This story is ongoing. As of today, the house is not yet listed. But it will be soon, so stay tuned for the outcome. (Feel free to hit the Follow Blog button, top right.)

 

 

What Credit Score Do You Need to Buy a House?

Your credit score is a major factor in qualifying for a home loan. Here are the score requirements for popular loan programs.

FHA – Federal Housing Administration
(Often referred to as a first-time home buyer’s loan; although, you needn’t be a first time buyer to get it.)
580 to 620 (depending on the lender and other credit factors)

HomeReady
(Program designed for first-time buyers with average or below incomes.)
620

Conventional 3% down
720

VA – Veterans Administration
500 to 620 (depending on the lender and other credit factors)

USDA – U.S. Dept. of Agriculture
640 (most lenders)

Subprime Loan
No score required with sufficient down payment
(Usually 30% to 40% down payment required. Interest rates from 8% to 12%.)

IMPORTANT TO KNOW

  • Lenders use your mortgage credit score, not the consumer credit score you get from a free site.
  • Lenders use the middle score of three. Scores are not averaged together.
  • When there are two or more people on the loan, the score of the person with the lowest score is used.
  • Credit score is only one factor in credit qualification. Other factors are public records (such as foreclosure, bankruptcy, judgements, liens), last 12 months’ pay history, etc.

BUY NOW OR WAIT FOR A HIGHER CREDIT SCORE?

Is it better to buy a home with a low score and higher interest rate, or does it make sense to wait until your credit has improved?

That depends, but in general, if you can raise your score in three

Now available in paperback and Kindle

Now available in paperback and Kindle

months, it is better to wait and take the lower interest rate. On the other hand, if it is going to take a year or longer to raise your score and if house pricing are rising in your neighborhood, then I would buy the house now and refinance in a year or two. That way, you can build wealth in equity while your credit is improving. Most people cannot save money as fast as prices are going up. That said, it is an individual situation that you should discuss with your loan officer.

 

Can I Change Jobs While Buying a House?

Today, I answer three different employment questions for people who want to buy a house.

New on market today: Vacaville CA. $470,000 Contact Tom Arnold, RE/MAX GOLD (707) 365-1189 MLS 21618119

New on market today! Vacaville CA. $470,000
Contact Tom Arnold, RE/MAX GOLD
(707) 365-1189 For financing, contact me directly, (206) 919-4542 or cwarren@envoymortgage.com.

 

Question #1

My employer has offered me a promotion and pay raise. It is in a different department. Can I make this change now while I am in the process of looking for a house, or do I need to wait until after closing?

Answer

Take the promotion and pay raise. It will not hurt your ability to qualify for a home loan. For your job title, tie the two positions together. Here’s a real life example of someone who went from being a mechanic to a service advisor.

Employer: Honda     Title: Auto Service (Title encompasses both positions. We then included a letter of explanation which told the underwriter that the home buyer had worked for Honda for 10 years, nine as an auto mechanic and one as an auto service advisor with an increase in pay.)

Question #2

I am in the middle of buying a house with closing in three weeks, and I was just laid off work yesterday. However, I know I can find another job within a week. My loan is already approved. Do I need to tell my loan officer? Will this ruin my chances of buying the house?

Answer

You must tell your loan officer. There is no way to keep your job switch a secret, even if your closing was in three days, because all lenders pick up the phone and call the employer right before funding for this exact reason. They don’t want to wire out money if the borrower lost their income yesterday.
However, if you get employed again right away, you will still get your loan. You will need to provide a letter of explanation for the job switch, an offer letter or employment contract, plus a paystub to show you actually took the new job and what your pay is. Depending on the time it takes to get paid, you might need to ask for an extension on the closing date, but you can still get your house.

Question #3

I have been working for a financial investment firm for eight years and I make a good six-figure income. When I applied for a home loan, the bank turned me down because I started my own business three months ago. I think that is totally bogus, because I am retaining my investment clients. Should I go to a mortgage broker instead?

Answer

It won’t matter if you apply with a bank, broker, direct lender, or a credit union. You will not be able to get a mortgage until you have been self-employed for 24 months.

Rebuttal

But that makes no sense! I am doing the exact same thing as I’ve been doing for eight freakin’ years!

Answer

It doesn’t matter if you’ve been doing the exact same thing for thirty years. If you switch from being a W2 employee to being self-employed, you must show an income as a self-employed person for a full two years before Fannie Mae or Freddie Mac will approve your loan. That said, if you can find a seller who is willing to carry the contract (essentially act like a bank), then you’re in luck.

If you have a topic you’d like to see in this blog, please let me know here.

Can You Spot the Bogus Junk Fees?

This snippet of the Loan Estimate (page 2, left column) came to me last week from a home owner who was refinancing. He wanted to know if all the closing costs were legitimate, because he had a suspicion that there were bogus junk fees included. Take a look and see if you can spot the needless fees.

CLOSING COST DETAILS

A. Origination Charges
Administration Fee  $995
PIW Fee (FNMA only)  $75

B. Services You Cannot Shop For
Credit Report Fee  $35
Flood Certification Fee  $10
Tax Service Fee  $68

C. Services You Can Shop For
Title – Doc Prep  $150
Title – Endorsements  $125
Title – Fee/Sub-Escrow  $90
Title -Insurance/Lenders  $625
Title – Messenger/Courier  $50
Title – Misc. Fees  $25
Title – Recording Service  $13
Title – Settlement/Closing  $595
Title- Signing Fee  $175
Title – Wire Fee  $50

Under Section A, there is a lender fee that is competitive and appropriate. The PIW fee stands for Property Inspection Waiver. Because this home owner has so much equity in his home, an appraisal was not called for. The small fee is to pay for the online market evaluation. You could argue that the fee is unnecessary — and I wouldn’t disagree — but I am not going to complain about it, because it is saving the home owner a $350 appraisal report.

Under Section B, the three third party fees are for required services. No problem there.

Under Section C, we see a boatload of garbage. And it all comes from the title/escrow company the loan officer chose. (With a refinance, there is no sales contract that dictates the title/escrow company. In this case, it is the home owner’s choice; but if you don’t designate a certain company, the loan officer chooses.)

To prove that the so-called services were junk fees, I obtained a quote from a good national title and escrow company that I have worked with in several states over the past couple decades. The quote I obtained is for the same address, same loan amount.

There were only three fees: title insurance/lenders, settlement/closing, and recording.

Total savings: $893

Here are the offending fees, in red:

C. Services You Can Shop For
Title – Doc Prep  $150
Title – Endorsements  $125
Title – Fee/Sub-Escrow  $90
Title -Insurance/Lenders  $625
Title – Messenger/Courier  $50
Title – Misc. Fees  $25
Title – Recording Service  $13
Title – Settlement/Closing  $595
Title- Signing Fee  $175 (optional, if you require a mobile notary to come to you)
Title – Wire Fee  $50

Additionally, the title insurance and settlement/closing fees were less with the good company.

CONFRONTING THE LOAN OFFICER

Next, the home owner called the loan officer and politely said he wanted to switch to First American Title and Escrow.

The loan officer asked why and then said, “But those are not all of First American’s fees.”

So the home owner called First American and obtained a written quote. They were all the fees.

Confronted with the truth in writing, the loan officer offered to lower the cost of settlement/closing and waive the signing fee. But wait! How can he do that? He represents the mortgage company, not the neutral, third party escrow company. Right?

Wrong! The so-called neutral third-party escrow company was an affiliate company, also owned by the mortgage company. On top of that, the title company with the long list of garbage, was also owned by the mortgage company. Bedfellows!

My personal complaint in all of this scenario is the loan officer (a) chose an over-priced escrow and title company for his client, (b) tried to convince the client that the competitor’s fees were not all there, (c) and then finally came clean and waived some fees.

I ask you this: Would you consider this loan officer to be an honest advocate for the home owner?

Folks, just because it is 2016 and there are over 1,000 pages of new lending laws, it does not mean all the rip-offs are bygones.

The reason this home owner knew enough to contact me is because he had read Mortgage Rip-Offs and Money Savers. And while some of the content in the book is now outdated, it is still relevant and saving good folks hard-earned money today.

As always, thank you for stopping by my blog. If you think this information is important, please use social media to pass on the news.

If you need a loan in CA or WA, I am licensed (NMLS 1294134) and will serve you as a true home owner’s advocate.

Thank you.

 

 

What is the Pad Fee in My Closing Costs?

It looks suspicious. A $500 fee called Pad on your Closing Document. What’s that for and is it an outright rip-off? Several people have asked, so here is the answer.

The escrow agent (or attorney closing agent) cannot be short to close when it comes time to wire out funds. If they are even one dollar short, it will delay your closing, which could be disastrous for both the buyer and seller.

And in case you’re wondering if they’d really delay closing a home loan for a mere dollar, the answer is yes. I saw a loan fail to close because it was 17 cents short. (The home buyer’s  cashier’s check was missing 17 cents, so there were not funds to close. No one noticed it until after the signing. The escrow company would not kick in the pennies nor allow the loan officer to do so. The home buyer had to drive back out to the escrow company and write a check for 17 cents.)

To prevent that from happening, some closing agents build in a safety reserve amount, which they call a pad. Typically, it ranges from $300 to $500. Then after closing, what remains of the pad — hopefully all of it — is refunded to the borrower.

I’ve been in the mortgage business since 1998, and I have never witnessed nor heard of a rip-off or closing agent theft regarding the pad. Personally, I’d rather see a pad and refund than go through a short-to-close scenario.

Coming up next time I will reveal some big rip-offs. Yesterday, I saved one home owner who is refinancing $893 in needless junk fees (in our consultation). Details about that to come.

You are welcome to subscribe to this blog. I post once or twice a week on mortgage and credit.

I am licensed to do mortgage loans in CA and WA,
NMLS # 1284134.

 

Three Changes to FICO 8: Is it time for an upgrade?

My mortgage company has upgraded our operating system and our email system. I upgraded my smart phone. This got me to thinking about the new, upgraded credit scoring system, FICO 8, and how most companies are ignoring it. What’s the difference between FICO 8 and the old FICO 2 they’re using? And why aren’t they upgrading? Here are the answers.

The Fair Isaac Company (who creates the credit scoring models) made these  changes to FICO 8:

1) More severe punishment for keeping high credit card balances.

I’ve been telling folks to keep your credit card balances low. With FICO 8, a high balance-to-limit ratio will penalize you even more if you don’t pay heed. And for those who do? More points added for maintaining a low balance. I advocate keeping your balances below 30 percent of the limit.

2) More leniency for an uncharacteristic late payment.

If you have an isolated late payment that’s less than $100, you won’t get docked so many points. Why? You could be a good credit manager who forgot about that parking ticket or didn’t know you had a balance remaining with your old cell phone carrier who has now reported you to collections for $35.92.

On the other hand, if you have lots of late payments scattered over multiple accounts, your credit score will be hit harder with FICO 8.

3) Lower benefit of credit sharing.

A  parent may add their 18-year old to their credit account to boost the child’s credit. The same for a family member helping a new immigrant. Or scammers who rents out their credit cards to people with bad credit for a fee. To protect against the scam, FICO 8 substantially reduces any benefit of account sharing.

Is Your Lender Using FICO 8?

No, your broker, banker, or full service mortgage lender is not using FICO 8. Why? Because the only versions allowed by Fannie Mae and Freddie Mac are these:

Experian: FICO 2
Equifax: Beacon 5.0
TransUnion: Classic 04

Why Haven’t They Upgraded?

When I traded in my Galaxy 4 for the Galaxy 7, it wasn’t free. And after companies upgrade their computer systems, typically, IT Support is kept hopping fixing issues. Multiply the cost and incidents by a million and you have your answer as to why the lending giants aren’t upgrading. Besides, according to them, the current credit scoring models are working just fine, so why bother?

If you know someone who needs to improve his or her credit — or if you are a person who wants to become an expert on credit yourself — I’ve written Repair Your Credit Like the Pros for the layperson to learn how the attorneys and certified credit repair specialists fix their clients’ credit. (See it here.) I would like to thank all the good folks who have purchased this book, and for all those who have written to tell me how life-changing it has been for them.

I’d also like to give a shout-out to the Boise, Idaho Envoy Mortgage lending team who purchased multiple copies to use as giveaways for their clients. Thanks!!!

Available for Kindle and paperbackFeel free to share this post via the Facebook and Twitter, because not many people know about the FICO version differences, even if they are in the real estate or lending business.

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