“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

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)

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

Conventional 3% down

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%.)


  • 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.


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?


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?


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?


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.


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


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.


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.


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.

Are You Set Up for Fun or Stress in Retirement?

Will you be enjoying your retirement years, secure in owning your own home? Or will you be sweeping the floor at a fast food joint just to get by? Please don’t make one of the biggest mistakes of your life by ignoring this issue.

A new survey* says 83 percent of respondents don’t want to leave their homes when they retire. They don’t want to be forced into a low income housing because they can no longer afford their mortgage. They’ve worked hard all their lives and they want to enjoy their home.

Not only that, but the survey showed almost no one wanted to rent!

If you are 40 years of age or older, now is the time to think about your mortgage. What do you need to do in order to set yourself up for a happy life later?

If you have 20 years or more remaining on your mortgage, consider refinancing into a 15-year loan, or even a 10-year loan. Some people can shorten their term and lower their payment at the same time, because interest rates are so low right now. Others might need to increase their payment somewhat, but as long as you can comfortably afford the new payment, it might make good financial sense and save you tens of thousands of dollars overall.

Is It Time For a Mortgage Check-Up?

If you are in California or Washington, I would be happy to provide you with a no-cost, no-obligation mortgage check-up. If you are in a state in which I am not yet licensed, check with your local full service mortgage loan officer. (I prefer a full service mortgage company over a bank for several important reasons.)

Whatever you do, please do not ignore your finances now. Your future self will thank you for taking good care now.

*Survey by the American College of Financial Services

Using Marijuana Money to Buy a House

Blog post1Several people have asked me if they can get a mortgage using income from the legal sale of marijuana.

One person owns a state licensed shop that sells cannabis and related products. His shop does not have the 24 months required for self-employment, but he owned another business previously, so he can claim self-employment for more than two years.

Anther person is a W2 employee who works tending the marijuana plants. Prior to his current position, he worked for a nursery tending many types of flowers and plants. He says he has a history doing the same type of work, and the company he works for is legal in Washington state.

Can the shop owner and the employee qualify for a mortgage based on their incomes?

To get the answer straight from the source that provides money to banks and mortgage lenders for conventional loans, I spoke directly with Fannie Mae representative Deborah DeGarmo on June 21. (A transcript of our conversation was recorded at Fannie Mae and is available for underwriters who call and request the information, she said.)

The W2 employee who works for a legal business that sells marijuana can qualify for a mortgage just like any other W2 employee.

The business owner of a shop that sells marijuana cannot qualify for a mortgage based on that income, because that type of business is not yet federally recognized as legal.

So there you have it, from Fannie Mae. To qualify for a conventional loan, you need a down payment of at least 3% (which can be from an acceptable down payment assistance program). If you are in WA or CA, I am licensed in those states.


Map source: psu.edu

HomeAdvantage versus FHA Loan

Which is better for you? The HomeAdvantage loan or the FHA loan? Here is a quick and easy comparison.

Good to know: You do not need to be a first-time home buyer to qualify for either of these programs. As long as you will occupy the house as your primary residence for at least one year, you can use either HomeAdvantage or FHA.


  • Has an income limit to qualify. In WA, it is $97,000 household income. In CA, it varies by county.
  • Provides the cash for you to use as a down payment. (The down payment will be either 3% or 3.5%.)
  • The down payment is not a gift. It is an interest-free loan that you pay back when you pay off your mortgage — whether it’s by selling the house, refinancing, or paying it off in 30 years.
  • To receive the down payment from HomeAdvantage, you must use a HomeAdvantage mortgage. This mortgage will have a higher interest rate by about .25%. So yes, you get an interest free down payment, but you pay a little more for the mortgage.
  • The way to get a HomeAdvantage program is through a loan officer who has taken the training class and is authorized by the state to do the loan. (Such as myself. I am licensed in WA and CA. In CA, the program is CADAP and is similar to HomeAdvantage.)
  • Attending a home buyer education seminar is required. Your loan officer will direct you to an available class. In WA, the class is free. In CA, there is a nominal fee.

FHA (Federal Housing Administraion) Loan

  • No income limit.
  • Down payment is 3.5%. It can come from your own funds, a gift from family, or an acceptable down payment assistance program.
  • An Upfront Mortgage Insurance Premium (UPMIP) is required. It is 1.75% of the loan amount. Most people roll it into the loan, making the mortgage slightly higher. Because it is amortized over 30 years, it increases your monthly payment by only a small amount.
  • You might have a smaller monthly payment with the FHA loan, depending on credit score and what you qualify for.
  • No education class required.
  • Because you provided the down payment, you do not have anything to pay back when you sell the house or pay off the mortgage.

HomeAdvantage (and CADAP) is a great program if you can’t save money for a down payment as fast as home prices are rising. The FHA loan is a great program if you can provide your own down payment but don’t qualify for the conventional loan.

Thank you for stopping by my blog. If you are in WA or CA, I am happy to provide you with a free analysis and cost estimate worksheet for the best loan you qualify for. That might not be either HomeAdvantage or FHA. As a full-service mortgage loan officer, I have an entire “smorgasbord” of loan programs to choose from.


7 Facts You Should Know About Home Appraisals

This unique house made with retired shipping containers would be difficult to appraise.

This unique house made with retired shipping containers would be difficult to appraise. Photo from http://www.OffGridWorld.com.

The main purpose of the home appraisal is to determine fair market value. Thus, it is a vital and necessary part of the home buying process. Here are seven facts you should know.

1) The appraisal report must be ordered by the mortgage company, never the home owner or the home buyer. Why? Because you might have a cousin or friend in the business who will not be impartial in determining the value.

2) The loan officer at the mortgage company cannot choose the appraiser.

Unique cottage.

Unique cottage home.

This has been law since 2009 after a lawsuit against Washington Mutual Bank about coercing values. Prior to that, loan officers chose the appraiser and often had a conversation about the property. No more! Many lenders use an appraisal management company as a neutral party. This, of course, creates another fee for the home owner. The fee can range from $19 to $200.

3) The appraised value is based on other home sales. The appraiser finds five to six similar homes that have sold in the past three months. The appraiser makes adjustments for size, age, and quality, then determines the value. The idea is that the true value of a home is “where buyer and seller meet.” (If it’s a refinance, the value is also determined by the comps.

4) Unusual homes are difficult to appraise. If you home is a geodome-style, a log home, isolated in the country, or other unique property, it is not easy for the appraiser to find comps and determine value. In this case, many appraisers err on the side of a conservative value.

5) With a purchase loan, the appraiser receives a copy of your purchase contract. The big complaint here is that the appraiser knows the purchase price; therefore, is the appraiser biased in the value determination? Appraisers will argue no, but some home buyers are skeptical. The appraisers are not going in “blind” as they are with a refinance.

6) You have the right to dispute the value. If you feel strongly that the

This house was built in the 1980s. The neighbor threatened to buy it just so he could bulldoze it.

This house was built in the 1980s. The neighbor threatened to buy it just so he could bulldoze it.

appraised value is inaccurate, you may provide other comps with a statement to your loan officer. The loan officer will then submit it to the appraisal management company who passes it on to the appraiser. The appraiser’s response will be the final answer. (Personally, I have seen only one instance in which an appraiser raised the value based on the borrower’s dispute.)

7) It is your legal right to receive a copy of the appraisal report before you sign loan documents. Federal lending law gives you three-days to review the report (unless you sign a waiver). In all cases, the lender must provide the report to you before you sign final documents.

I hope this information is helpful. Feel free to share it on Facebook and Twitter. Any questions, let me know.


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