Author Archive: askcarolynwarren

Proof that DIY Credit Repair Works

Does credit repair work? YES

Is credit repair a scam? NO, not when you do it legally like the certified, licensed, credit repair specialists.

One of my book readers  recently sent me this, showing her success.

Previously, her credit report had a charge-off from Verizon that she did not agree with. She challenged it and won! This letter from Experian shows the results and outcome: “Deleted – This item was removed from your credit report. Please review your report for the details.”

She was so happy, because having this negative item removed from her credit will boost her score. I cannot predict how many points her score will go up, because it varies depending on the person’s overall credit report. That said, having a charge-off removed is a major success!

Congratulations, dear book reader, and thank you for giving me permission to post this as an encouragement to others that DIY credit repair works.

All the steps on how she did this are in Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name. You can check it out here.

Please share this encouragement with others who either need to restore their credit and/or who want to know how the credit system works. I appreciate it so much, and they will too!

News! Now Helping Home Buyers in the West, including Alaska and Hawaii, in Kansas, Missouri, Iowa, Minnesota, and Florida

I am pleased to announce that I have joined the team at TILA Mortgage (dedicated to the Truth-in-Lending-Act), a division of American Pacific Mortgage Corp. #1850. This lender is aligned with my own high standards of being an advocate for the Borrower, following all lending laws, and transparency. As the author of Mortgage Rip-Offs and Money Savers, this is important to me.

If you would like to get the pre-approval process started, please use this quick and easy form here. (Input your own name and email.)

Please pass on this info to other folks who want to buy a home or refinance, because a lot of people are looking for a licensed, ethical and honest expert to help them.

I appreciate it so much!
Carolyn Warren, NMLS #1284134

 

What are the Closing Costs for Buying a Home?

When you get a mortgage, there are closing costs that must be paid. With a refinance, you can roll those costs into the loan; but with a home purchase, the closing costs must be paid at closing and cannot be rolled into the loan. However, the seller can pay the buyer’s closing costs if that is designated in the purchase contract. (The lender can also give you a credit toward closing costs if you choose to take a higher interest rate.)

The Three Types of Closing Costs

Lender Fees. This is what the lender charges for its profit and to pay for required third-party vendors that are chosen by the lender.

  • Origination fee, underwriting fee, administration fee, processing fee, document fee
  • Credit report, flood cert., tax service
  • Appraisal, appraisal review, appraisal management fee

Third Party Fees. These are fees for vendors that you can shop for and choose.

  • Title insurance
  • Settlement closing agent (escrow agent or attorney)
  • Recording fee

Prepaid Costs. These are not fees, but rather costs that are part of buying a home. These will be the same no matter which lender you choose, because they are not related to nor controlled by the lender.

  • Property taxes
  • Other taxes depending on your location, such as transfer tax, state stamp tax, county tax
    Home owner’s insurance, which is your fire/hazard insurance
  • Partial mortgage payment if you close in the middle of the month, called prepaid interest

Closing costs vary widely depending on the price of the property and the location. The East and West Coasts are more expensive, and middle America is cheaper for closing costs (as well as property prices).

Your initial cost estimate (this is what used to be called a Good Faith Estimate) will list the expected closing costs as well as the loan term, loan amount, interest rate, and monthly payment.

There are some exceptions to the information above. Most notably is that the FHA Upfront Mortgage Insurance Fee of 1.75% is rolled into the loan unless you ask for an exception.

Any questions about closing costs, please feel free to ask me. Thank you for reading my blog.

What is the Difference Between an Inspection and an Appraisal?

Don’t confuse the home inspection with the inspection done by an appraiser who provides the appraisal report. Here’s the difference, quick and easy:

The Home Inspection

You hire and pay for the home inspection outside of the loan. The inspector goes through the house from roof to crawl space. He or she will point out every flaw, take a photo, and write a detailed report. It’s best to be present at the inspection so you can speak with the appraiser directly and ask questions.

Your Purchase Agreement should have a clause that allows you to cancel the sale without penalty if the inspection does not pass your personal standards.

Every house has its flaws. You need to decide which items are major enough to ask the seller to fix or provide you with a credit to fix yourself. It doesn’t make sense to ask for inconsequential items to be repaired.

You do not share the inspection report with your lender.

The Appraisal

The appraisal determines the fair market value of the property. It protects you from paying too much and the lender from lending too much. The report is ordered and owned by the lender, but paid for by the borrower. The borrower receives a copy of the report, per federal lending law.

The lender may not collect money for the appraisal until after you have received the loan disclosures, a packet of information that includes the Loan Estimate. Then the lender will ask for payment of the appraisal by credit card.

The appraisal is paid for upfront, because if the value comes in too low or if you cancel the loan for any reason, the appraiser still must be paid. The lender does not cover that cost for you if you cancel the loan.

If the value comes in lower than the purchase price, you have three choices:

  1. You can have your Realtor renegotiate the price.
  2. You can pay the difference between the original sales price and the appraised value. (This will increase your cash to close.)
  3. You can cancel the sale.

You can also dispute the appraised value by providing different comparable properties with an explanation. This rarely works, but one time I saw the value raised in response to a customer dispute.

Neither you nor your loan officer chooses the appraiser. That is done by a neutral party who has no vested interest in the closing of the transaction. The idea behind this regulation is that neither the buyer nor the loan officer should have the ability to influence the value. That is why you cannot order your own appraisal report. No lender will give a report ordered by you one second of their time.

For more information about bogus appraised values, see my post here.

For 7 facts you should know about home appraisals, see my post here.

I welcome your comments and questions. (See Leave a Comment at the top of the post, under the title.)

 

 

 

Tax Liens and Judgment Removals: The Bombshell!

I received this excellent information from Credit Repair Resources, and I know many of you will be interested in this news:

So another bombshell hit the credit reporting and lending world this week. This time it is potentially big news for millions of Americans and thousands of lenders. In the ongoing effort to provide accurate credit reporting to consumers, the three major credit reporting agencies, Equifax, Experian and TransUnion have announced that in July, 2017 many tax liens and judgments will be removed from consumer credit files.

I thought I would add insight into why this move was made by the CRA’s. The key reason is, wait for it…. identifiers.

You see as part of the ongoing overhaul of the credit reporting system, entities that report information to our credit report, otherwise know as furnishers must provide specific information that accurately ties the account to the consumers credit file.

Public records like tax liens and judgments often do not contain the required identifiers that permit those accounts to be reported. After July of this year, any lien or judgment that does not contain the proper information will be purged from consumer files.

Now in the near term this is excellent news, but it is not all puppy dogs and ice cream. There is always a caveat. We must consider that government agencies and lien holders are not going to take lightly to this. I hate to make assumptions, but I will make the assumption that there will be pressure applied to court houses and Lexis Nexis to improve their record keeping.

It is also important to know that this will not affect all Americans with these items. If the lien or judgment does contain the proper identifiers, it can remain on the consumer’s credit file.

It will be interesting to see how this impacts the mortgage world, but at first glance, Summer 2017 is looking to a very busy one for the mortgage industry!

~ Written by Chad Kusner, President, Credit Repair Resources (Posted here with permission.)

Please help share this information via social media, because a lot of good folks need this intel.

 Repair Your Credit Like the Pros,
available now at Amazon.
96% of readers rated it 5 or 4 stars.

Four Ways to Buy a House with No Money Down

Can you afford a mortgage payment but are low on cash? Would you like to buy a house now before prices and rates go up even more?

Here are four ways to get into your own home with little or no money down.

1) USDA zero down loan. The property cannot be in a highly populated city, but it doesn’t have to be way out in the country either. To check out property eligibility, see here.

2) Use a state bond for the down payment. All states have various programs that either provide the down payment or lend you the down payment with zero interest and no payment, to be paid back at the end of the loan. To check out options for your state, contact your local mortgage broker or full service mortgage lender (not big bank).

3) Use gift money for the down payment. A conventional loan has 3% down, FHA loan 3.5% down. Both allow gift money from family for the down payment.

4) VA loan is zero down for U.S. Veterans. This is a nice thank you for serving our country. Most lenders offer the VA loan.

Getting Closing Costs Paid For, Too

All loans have closing costs, which include the lender fees, cost of appraisal, title insurance, and attorney/settlement/escrow fee. In addition, there are property taxes and home owner’s insurance that must be paid for upfront. If you close in the middle of the month, there is a partial mortgage payment called prepaid interest.

The closing costs can be paid for by the seller if you have that written into your Purchase Agreement. (Ask your Realtor to negotiate this for you.) You can also receive a Lender credit toward closing costs. To receive a Lender credit, you take a higher interest rate. (There is no free money in mortgage.)

If you’re tired of paying rent, I encourage you to apply for a mortgage now, because interest rates are and will continue to rise, which means your monthly payment goes up. Don’t assume you cannot qualify for a home loan. Many people who feared that might be the case are now happily opening the door to their own home!

Please help pass on this encouraging news to others via social media. Thank you!

 

Tired of Renting But Can’t Afford a House? Expert Advice Here

According to a new study, 1 in 4 U.S. adults would like to buy

Dogs are a fan of home ownership too.

a house this year. Perhaps you or someone you know is among them, but having sufficient income is a concern. Here are some facts and tips that I hope will help.

Little Known Facts About Income Qualification for a Home Loan

1) With compensating factors, you can be approved for a higher debt-to-income ratio than what is posted.

Don’t get me wrong: I am not suggesting that anyone take on a mortgage payment they cannot afford. Nor am I suggesting that you become a slave to a mortgage. But you should know that the strict 41% or 43% debt ratio requirement is broken every day. With compensating factors, borrowers are getting approved for up to 49.9%. (This makes sense if there is a non-borrowing spouse who contributes income or if there is a secondary income that cannot be counted, because in reality, the debt ratio is much more reasonable.)

2) If you recently got a pay raise, you will qualify based on your new higher income, not last year’s W2.

Similarly, if you are offered a promotion, even if it is with another company, you are always free to take that (and switch companies if required) and still get pre-approved. That said, do not switch jobs in the middle of your loan process without first speaking with your loan officer.

3) You can have a co-signer to help qualify; just be aware that the co-signer must have credit equal to or better than yours and the co-signer will be on title as a co-owner.

4) If your auto loan has less than 10 months remaining, that payment will not be included. (Remind your loan officer in case he or she doesn’t notice this.)

Some Things to Be Aware Of

5) If you take a second, part-time job, you will need to be working at that part-time job for two years in order to include that income on your loan application.

6) If you pay off your credit cards in full each month (as you should), then the minimum payment required will be used for calculating your debt ratio.

7) If you are self-employed, do not take so many deductions that your Adjusted Gross Income does not qualify for the home loan you want. You cannot tell the IRS you make $40,000 and tell your mortgage lender you make $90,000. That is not how it works! You can’t have it both ways.

8) If your income has declined, the lender uses your new lower income, not the average income.

9) You cannot count the following as income: inheritance, gifts, winnings, gambling income, IRS refunds, or any other one-time, non-recurring income. However, you can use that money toward a down payment.

Don’t Give Up Your Dream!

If you want to become a home owner, don’t be like one person who said to me, “If I don’t get approved now, I’m going to spend all my money on a vacation.”

Instead, be like the person who said, “If I don’t get approved now, I’m going to do what it takes in order to get approved next time. Let me know what I need to do.”

Tips For Approval

10) Pay down your credit cards and then going forward, keep those balances low.

11) Go on a spending diet! Sacrifice now for a home, and you will build wealth in the long run. A good way to control spending is to stay off the buying websites and out of the stores. In other words, remove the temptation.

12) Fix the old car, don’t take on a new auto payment. Many people have been sad to learn that their auto payment prevents them from home ownership. Listen friend: a vehicle goes down in value while real estate goes up in value. Be smart and save your money for your piece of The American Dream and then you will increase your wealth through home ownership.

Thank you for reading my blog. Please feel free to share it on social media for others who could benefit from this information.

 

 

Capital One Charging 70.4% Penalty for a Late Payment?!

capital-one-late-paymentIf you think you know what your credit card company charges for a late payment, take another look. You might be shocked!

Capital One posts their interest rate as 27.24%. But look at this statement. Because this consumer was late, Capital One is charging over 70%!

Top line shows the balance was $41.17.
Sixth line (underlined) shows the fee charged is $29.00.

$29 = 70.4% of $41.17

I think that is outrageous, and I hope this goes viral.

It means the consumer is paying $70.17 for an item that cost $41.17. That is a terrible deal, no matter how you look at it!

I suggested that the consumer call Capital One and ask not to be posted 30 days late to the credit bureaus, because she has never been late before and has a perfect credit history. Getting docked 100+ points on her FICO score would hurt more than $29.

Here is the Conversation with Capital One

Cap One Rep: Sorry, we have to report it as late to the credit bureaus.

Consumer: I have a perfect credit history with you. Could I have this one grace?

Cap One Rep: No, we can’t do that.

Consumer: I would like to talk with a Supervisor (following the script in Repair Your Credit Like the Pros).

Cap One Rep: It won’t do you any good. She’ll just tell you the same thing.

Consumer: Nevertheless, I want to talk with a Supervisor.

Supervisor comes to the phone and Consumer asks again.

Cap One Supervisor: We won’t report you late to the credit bureaus. I apologize for what our customer service representative told you.

As a bonus, she waived the late fee. It seems the Supervisor was more interested in good customer service than the representative. It is a good thing she asked! Doing so saved her money and grief.

Scripts for how to negotiate with creditors are in the book. They are based on my own experience in negotiating for my mortgage clients in the past. I do not negotiate for consumers now, but there’s no reason why you cannot D.I.Y.

Setting up automatic payment to pay off your balance in full each month is a good practice. Don’t waste your hard-earned money on outrageous credit card interest. It’s not even tax deductible.

Don’t worry about the credit card companies making a profit. Even if you don’t pay them a single cent, they make money by charging the merchant or seller.

Please help get this education out to good folks: If you don’t pay your balance in full each month, you are paying too much! And if you accidentally go late one month, call immediately and get it resolved before it gets reported to the credit bureaus.

New Rules Will Stop Creditor Harassment and Limit Their Ability to Pursue Payment

Tired of being hounded by collectors? Fed up with being harassed for payment on an account that’s already been paid angry-collectoror is unverified? There is good news on the horizon!

The CFPB (Consumer Finance Protection Bureau) is proposing rule changes to the debt collection industry as follows:

  • Debt collectors will be required to disclose debt details so the consumer can easily verify accuracy right up front. Currently, consumers receive a bill demanding payment without ever proving whether or not the collector has the right to receive payment, whether or not the amount owed is correct, and other vital information. This will provide transparency and, hopefully, increase accuracy and fairness.
  • Debt collectors will be prohibited from pursuing a debt while it is in dispute. Fantastic!
  • Debt collectors will be limited in their communication with the consumer. The intent is to stop undue harassment.

In the meantime, know your rights and demand to be treated fairly and accurately. If you don’t want to be contacted by telephone, tell the collector to contact you by mail only. Current law states they must comply.

You also have the right to negotiate a settlement. And so you know, a settlement (as opposed to paying in full) will in no way harm your credit score or jeopardize your ability to get a home loan. Even if you have to pay taxes on the amount “forgiven,” you still come out financially ahead by taking a settlement.

However, if the collection is old, paying it off now will likely lower your credit score, so better to let it age off your report (or handle it like the pros do).

What I mean by that is, if you negotiate a settlement the way the professional credit repair specialists do, you can also have the negative account removed from your credit report–a very smart strategy!

Thank you for reading my post, and if you know anyone who is struggling with collections, please pass on this good and vital information to them.

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