The important thing about looking ahead is to prepare so that we aren’t caught unaware.
With that in mind, here are my comments on the predictions for the New Year.
Forecast: Interest rates will go up.
Comment: For the past five years, economists predicted rates to rise. Only in 2018 were they right. The year ended with rates about .5% higher than 12/2017. My opinion is that rates will increase moderately in the first quarter and then go flat.
Forecast: House sales will increase but at a slower pace than the past two years.
Comment: I don’t see how that could be wrong. Young people are coming into home buying age faster than old people are going into assisted living. Immigrants also need housing. The frantic, insane bidding wars are over — and that’s good.
Forecast: About three quarters of economists believe a recession is coming somewhere between late 2019 and 2021.
Comment: Get out of debt. Stay out of debt. Have a savings as a cushion to live on in case your income drops or you need to find another job. If you have a financial safety net and top tier credit, then you can afford to purchase luxuries. If you are thinking of going into debt (such as taking a home equity loan) for non-essentials like a prettier kitchen, then that is unwise and a bad idea. Save the home equity loan option for a true need such as when your furnace quits or your roof leaks.
Additional comment: Having too much debt lowers your credit score. When your credit score is low, you lose financial power. You lose the ability to get the lowest insurance premiums and lowest interest rates. You lose respect in the business community. That is no way to live!
If your score is below 740, then take steps to educate yourself and improve your finances. YOU are in control of your credit score. You are not a victim to FICO. Learn what it takes to achieve top tier credit and then proceed with confidence!
If saying goodbye to rent and buying your own home is your goal, then don’t procrastinate. Speak with a mortgage broker (not a banker) to learn your options.
Here’s to the New Year!
Let’s make 2019 the best year so far. How? By writing down a plan and then working the plan. A goal that is not written down is only a dream. Turn your goal into reality by having a written, workable plan; and then share that plan with someone you can trust to keep you accountable.
Happy New Year! May we have peace and God’s guidance every day and every step of the way.
What you don’t know about collections can hurt your credit score.
Here are two facts most people don’t know:
1) The balance does not affect your credit score.
Whether you owe $100 or $10,000, it makes no difference in your credit score. A collection is a collection is a collection. Why?
Because a large balance might indicate a person has a high income; whereas, a small balance might indicate a person had a low credit card limit and therefore has a low income. Since it is illegal to consider income for credit scoring, the credit reporting agencies are barred from making a difference in score due to the balance.
This is important to know, because if you’re thinking your score will go up as you pay down the balance, you are in for a disappointment. The only way you will get your score to go up is by the collection aging older and older, until eventually it is off your report. (Unless you get it removed early.)
2) Paying off a collection will lower your credit score.
This is counter-intuitive and unfair. Nevertheless, that is the way the system is set up. As per above, your score cannot go up by lowering your balance on a collection account. On top of that, when you make a payment it updates the “Date of Last Activity” (DLA) to current, and that reduces your score.
A lot of good people try to do the right thing by paying off an old collection account — and then they are penalized for it!
The Best Way to Handle a Collection Account
If your collection account is old, then let it age off.
If your collection account is medical or less than $2,000, then you will not be required to pay it off in order to get approved for a home loan.
If your collection account is large and/or the collector is contacting you for payment, then negotiate a settlement with the stipulation that it will be removed from your credit report when it has been paid in full as agreed.
If you receive notice of legal action, do not ignore it! Work out a settlement, or if necessary, go to the court hearing and explain your situation. If you blow off a court hearing, then you automatically lose by default, so that is the worst thing you could do.
There are reputable, licensed credit repair companies that can help you with negotiations and legal issues. I do not recommend attorneys or lawyers (especially if they advertise all over the Internet–those are usually the worst). I recommend credit repair specialists who have over 10 years’ experience, because, in my opinion, they work faster, better, efficiently, and get better results.
Thank you for reading and passing on this info to others via shares.
Experian has announced that it wants access to view people’s bank accounts. It wants to see who you’re making debit deposits to, who you’re paying, and when. It wants to look at items that do not report to the credit bureaus.
For instance, Experian wants to look at your cell phone payment, your utility bill, your Xfinity bill, and possibly your rent payment.
They’re calling this new program “Experian Boost.”
Their excuse for gaining this extra access into your personal life is that they claim it will improve credit scores for people who have thin credit, meaning not much credit.
But here’s the problem…
The Experian Boost program uses the FICO Score 8 model, which mortgage lenders consider outdated and don’t even use anymore. Mortgage companies are using FICO10. So this spy action won’t help you qualify to buy a home.
The good news…
is that you must give Experian permission in order for them to access your bank accounts. No permission from you = no spying by Experian.
This new “pioneer program” (as Experian likes to brag) is scheduled to come out in 2019.
If you sent a letter of dispute to Experian, Equifax, or TransUnion stating that something was not 100 percent correct about an account, then there might be a notation that says account in dispute or disputed by consumer.
If you hired a professional credit repair service that disputed on your behalf, then the same thing applies.
There’s a Good Reason for the Dispute Notice — and It Helps You
If a negative account (late payments, collection, anything bad) is on your credit report, it lowers your score. If the negative account is false, it would penalize you unfairly. Therefore, the credit bureaus remove the disputed account from the mathematical scoring system. Interesting, as this opens a door of opportunity!
This was a strategy credit repair services used in the past. They would send a dispute, your score would increase, and then you could quickly apply for a mortgage while your score was up. But wait!
The mortgage lenders caught on to that scheme and put a stop to it. They didn’t want risking hundreds of thousands of dollars on a borrower who wasn’t honestly credit worthy. So they made a new rule: No loan approval until all disputes are removed.
Removing a Dispute Notice
When the dispute has been resolved, the notice will automatically be removed. No worries.
But, if you need to get a mortgage approval before the resolution, then you will need to send a request to the credit bureaus asking for the dispute notice to be removed. OR, in some lucky cases with mortgage brokers, the lender may only require that you write a letter for your loan file that states the account is no longer in dispute (such as when there is a zero balance).
Fix Your Credit First, Apply For a Home Loan After
If you’d like to buy a home, your first step is to review your credit situation and make sure it qualifies. Do not race out to visit open houses and engage a professional real estate agent when your credit is badly in need of repair, because that is a waste of time and emotional energy for everyone — especially you!
Don’t be like the mom with four children who signed a purchase contract before she applied for a home loan. Here she was in contract, and her credit didn’t even qualify! Her thinking was, if I show a lender my contract, they’ll know I’m serious and approve me.
Sorry, but it doesn’t work like that. Having a signed purchase contract in no way influences the lender for approval. The story got even worse…
…not only had she signed a purchase contract, but she had given notice to her landlord and couldn’t stay in the apartment longer. She and her children were about to become homeless… if her father had not generously opened his house to the family.
What You Need to Know About the Law
You have the Fair Credit Reporting Act and the Fair and Accurate Credit Transaction Act to protect you from false and untrue items on your credit report.
Your credit report is supposed to be 100% accurate, not 99% accurate. If there is any negative item, such as a late payment notation, an incorrect account number, an incorrect date, or an account that does not belong to you showing on your report, you have the right to have that corrected or removed.
Good to Know!
The dispute notice is a result of the process. As long as you don’t intend on applying for a home loan during the dispute process, there is no negative consequence whatsoever to having the note temporarily on your report. As soon as the inaccuracy is taken care of, the dispute notice will disappear.
This week, I received several emails from readers telling me about their success, thanks to following Repair Your Credit Like the Pros. One reader had their score increase by 70 points when inaccurate negative items were removed. If you need credit repair and don’t have the funds to hire a professional, pick up the DIY book from Amazon that has helped so many other people.
Conforming loan limits have increased to $484,350.
High balance loan limits have increased to $726,525.
If you want the best loan, a conventional loan, you can now borrow up to $484,350 without paying a higher interest rate for a jumbo loan. If you have not owned a home in the past three years, you can do as little as 3 percent down payment (5 percent down for previous home owners).
High Balance Limits
If you live in an area where the median price of homes is higher than the national average, such as much of California or in Western Washington, then you can borrower up to $726,525 without paying a higher interest rate for a jumbo loan.
Advantages of the Mortgage Broker
- Your mortgage broker (myself in CA or WA) can get you these loans now, today. The banks and other lenders are trailing behind at waiting until 2019 for availability.
- Your mortgage broker will shop wholesale, saving you money over retail (banks, etc.) Why pay more?
- Only the mortgage broker is required by federal lending law to get you the best and lowest interest rate they have available.
- A mortgage broker is required to take classes annually, to update fingerprinting/criminal background checks every three years, to have their credit checked regularly. Why would you go to an unlicensed loan officer at a bank or credit union for the most important financial decision of your life? Yes, I am biased, but for a very good reason!
Thank you for reading and passing on this vital information to your real estate agent and interested home buyers.
Carolyn Warren, NMLS # 1284134 Apply online here.
Build your credit profile in the very best way so that you achieve top tier credit, gain respect from everyone you do business with, and save thousands of dollars on everything from auto insurance to a home loan.
Reading this book will take you from beginner status to expert. It starts with the basic of how to get your first credit card and proceeds to insider information not many people outside the industry know. When you finish, it will be like having a college degree in credit, if there were such a thing!
It’s not enough to have top credit. You must also protect your credit and finances, because there are more scams, frauds, and schemes now than ever before. Get the tips you need for protecting yourself from rip-off artists.
Makes a good gift for young adults, immigrants to the U.S., and anyone else who wants to improve their expertise on credit scoring.
Paperback available today for only $8.99. Kindle is $5.99.
Is buying a home in your near future? If so, you will probably be asking to borrow $200,000, $300,000 or even $500,000. That’s a lot of cash!
Certain requirements come along with lending large sums of money. Here’s what you can do now to improve your chances of getting approved.
Buying a House?
Here’s Your “Must Do” List
1. Save money like a squirrel saving nuts for the winter. Stop buying $5 coffee drinks, another pair of shoes (when you already have pairs with no holes in the soles), clothes on sale, restaurant meals, and all those other seemingly small — but honestly — unnecessary items. The underwriter wants to see your bank balance increasing every month to show that you will be able to afford a house payment that’s more than your rent.
2. Say no to offers to open new credit. Getting a new credit card to save 10 percent on your purchase today will lower your credit score. It is not worth the savings! You want top tier credit so that you qualify for the lowest interest rate on your mortgage. It makes no sense to save $20 today and pay $1,000s more in interest on your house payment.
3. Be happy driving your old car. One of the biggest mistakes people make is adding an auto loan to their debt ratio. The proper way to prioritize is house first. Everything else is secondary and must wait until after you are in your new home.
THE SACRIFICE YOU MAKE TODAY WILL BE WORTH IT WHEN YOUR REALTOR HANDS YOU THE KEYS.
Do your friends a favor and pass on this information to them. As always, thank you for reading my posts.
Before you get annoyed about all those inquiries on your credit report, read this.
Only a hard inquiry affects your credit score.
A hard inquiry is when you apply for a loan or credit card and the lender then pulls your credit report. Only at YOUR request, does the creditor order your report in order to approve your application.
A soft inquiry is when your creditor conducts their periodic check to make sure your credit isn’t going downhill in a hand basket. A soft inquiry does not affect your score in any way, so don’t worry about it.
A hard inquiry stays on your report for two years, BUT…
it only affects your score for 12 months. So, don’t concern yourself with inquiries that are more than a year old. They mean nothing to you.
Your Legal Rights
In order to make a hard inquiry, the person ordering your credit must have your permission. If anyone pulled your credit without your knowledge and consent, they have violated the law; therefore, they must inform the credit bureaus that the inquiry was made in error and to remove it.
Sometimes credit card companies perform massive soft inquiries looking for candidates to send solicitations to. I suggest you stop those immediately by going to http://www.optoutprescreen.com. That way, an identify thief can’t steal the application from your mailbox and open a card in your name.
A court order is a permissible purpose for pulling credit, even without your written consent.
Don’t Make False Accusations
If you applied for credit, don’t accuse the creditor of making an inquiry without your consent.
Likewise, don’t write to Experian, Equifax, or TransUnion claiming an inquiry was unauthorized when it was, because doing so is saying the creditor broke the law when he or she did not.
Stand Up For Your Rights
On the other hand, if you applied for financing with an auto dealership, then later discover 25 inquiries on your report, that is not right, and you have good reason to demand that the auto dealer instruct the credit bureaus to remove them. If a bank or other lender pulled your credit on the sly, they are in violation of the law and must make it right for you.
If you are married in a community property state and your spouse applies for a loan and gives the loan officer your name, social security number, and date of birth, the loan officer may pull both of your credit reports.
No one can pull your credit report without having your social security number. Remember that and keep your SS private when you don’t want an inquiry on your report.
Inquiries That Don’t Count
An employer, an insurance agent, or government licensing agent may pull your credit (with your knowledge and consent), but this type of inquiry does not affect your credit report, so do not be concerned. Your score will not be docked.
The Most Damaging Inquiries
The most damaging inquiries to your credit report would be when you apply for multiple store cards in a short amount of time. This often happens during the holiday season when store clerks entice you to open a credit card in order to save money on your purchase. If you have a Visa card (or two) and a MasterCard, then you don’t need a wallet full of individual store cards. Just say no thank you.
Inquiries make up 10 percent of your score. If you have A credit and you need to apply for financing, you have nothing to fear about a hard inquiry appearing on your report.
If you need to repair and restore your credit, check out this guide here.
In case you haven’t been watching the market, this week mortgage interest rates spiked higher. All lenders have been raising rates, not only in the morning, but two or three times throughout the day.
If you were quoted 4.5% and now are being quoted 5.125%, your loan officer is not lying or pulling a fast one. That is what the market has done this week. (Your interest rate will depend on your credit score and down payment as well as the type of loan. This is just one example.)
Interest rates remained low for longer than any of the experts predicted after the great recession. Now, with the robust economy and the record low for unemployment, the Federal Reserve Board is raising short term rates to protect the economy from inflation and recession. Mortgage rates are following suit.
The silver lining is that higher interest rates are good for your savings and investments.
You must speak with your loan officer about locking in your interest rate. Rates have been moving upward all year, and the prediction is for another increase in December.
The trend is not your friend! I hope we might see a settling down a bit next week, but I do not know if that will happen or not. If it does jag downward, my recommendation is to lock fast, because it might not last the entire day.