Category Archives: Uncategorized

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.

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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.

How to Protect Yourself From Equifax Hackers

Equifax, one of the three big credit bureaus, announced that hackers have illegally accessed 143 million Americans’ private information. This security breach occurred between May and July and was discovered on July 29th. Equifax has said it will notify all victims, but if you’d like to be proactive, here are steps you can take (with caveats).

Protecting Your Online Security: Actions to Consider

  1. Send a letter through the good, old-fashioned USPS mail requesting a copy of your free annual credit report. Look for anything that should not belong there, such as a new account you did not open or a hard inquiry you did not authorize.
    Caveat: Do not order your credit report through the Internet, because in doing so, you would give up important legal rights.
  2. Enroll in Equifax’s one year free monitoring service.
    Caveat: They will not help you repair your credit, only monitor it.
    Second Caveat: By signing up, you have to agree not to file a lawsuit against them. (That’s in the fine print under terms and conditions.)
  3. Place a fraud alert on your credit reports for one year warning creditors that you might have been a victim of identity fraud. A link is here.
  4. Put a security freeze on your credit report, restricting access.
    Caveat: If you want to apply for a mortgage, auto loan, or other financing, you will need to remove the freeze so the lender can access your credit report. A link is here.
  5. Use a free service such as CreditKarma or CreditSesame to watch for new inquiries and/or new accounts.
    Caveat: The credit scores from these sites are not your real credit scores from FICO.

Here is the link to Equifax’s page with more information for consumers about cybersecurity.

Stay safe and thank you for reading this post.

Scammers Stealing Money Intended for Hurricane Victims

Photograph by David J. Phillip / AP

Heads-up! Bad guys are exploiting the Hurricane Harvey disaster. They are setting up fake Facebook pages, tweeting links to fake charity websites, and sending out phishing emails asking for donations to #HurricaneHarvey – relief funds they plan to keep for themselves. Don’t fall for any scams. If you want to make a donation, go to the website of the charity of your choice and make a donation. Type the address in your browser or use a bookmark. Do not click on any links in emails or texts you might get about this event.
Whatever you see in the coming weeks about Hurricane Harvey disaster relief, THINK BEFORE YOU CLICK.

Please help get this information out to others by sharing on social media.

Thanks to Cherry Creek Mortgage Company IT Dept. for this alert. I am a senior loan officer at Cherry Creek Mortgage.

 

Tax Liens, Judgments Removed from Credit Reports: Update

July 10th, Equifax, Experian, and TransUnion started removing judgments and tax liens from people’s credit reports if the item did not include their correct name, address, social security number and/or date of birth.

Disarmingly, lenders have the option to obtain this data from other information-providers such as LexisNexis (a research and information providing company). However, this does not give the lender the authority to add it back to your credit report; thus, your higher credit score remains. Since lenders base the interest rate and other terms on the almighty credit score, this is a WIN for you.

If a lender discovers a “hidden” tax lien or judgment, the lender has the option to deny your loan if they choose, because lenders have the right to protect themselves from a perceived financial risk.

The good news is that Fannie Mae has stated that they are not requiring lenders to obtain the data independently in order to approve a loan. Fannie is still studying the information and looking for feedback from lenders.

Meanwhile, the Fair Isaac Co. has released a study of millions of credit files to determine what affect this change will have on credit scores. So far, it looks like people’s credit scores are going up by 20 to 60 points!

Of course, it is impossible to predict what change will occur for you personally, because FICO scores are based on your entire credit report, not on just removing one item.

And remember, just because a tax lien is removed from your credit report, it doesn’t mean that you no longer owe the IRS money. Unpaid taxes can result in a wage garnishment or other legal action. Therefore, I recommend following the instructions in Chapter 19, Repair Your Credit Like the Pros, which is available here.

Many thanks to credit pro Chad Kusner, board member of the National Association of Credit Services Organizations — which advocates consumer protection and ethical business practices for the credit repair industry — and CEO of Credit Repair Resources for the updated information.

And a big thank you to all my readers for sharing this information via social media.

Buying a Home After a Foreclosure: how long is the waiting period?

Many people ask how long they have to wait after having a foreclosure until they can be approved for a home loan. I have some good news for many of you!

VA loan: 2 years

FHA loan: 3 years

USDA loan: 3 years

Conventional loan: 7 years

The “gotcha” is that the date starts when the home is sold. It is NOT the date you received notice of default nor when the foreclosure started. If the bank took one year to sell the house, then that would push out the waiting period by one year, going by “date of sale” or when the lender got the property off their books.

I hope this information helps some renters to realize they don’t have to wait seven long years to buy a home after their foreclosure. Three years is a lot better, and VA, FHA, and USDA are all good loan options with good interest rates.

 

 

 

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