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.
As parents, we protect our children from danger. So, have you thought about protecting your child’s credit and good name?
One family in Miami discovered that a thief stole their tax returns and obtained the names and social security numbers of three of their children. Credit cards were opened in their names, merchandise purchased, but never paid for. It took six months of work for them to sort everything out — and they live in fear that it will happen again, but the social security numbers are out there.
By the time your child is 18 and wants to get a student loan or begin establishing credit is not the time to discover that his/her credit has already been trashed.
A minor does not have a credit file and that’s the way it should remain. A fraudster should not be using his/her social security number to open credit.
More than 1,000,000 children were victims of ID theft last year, according to an article in USA Today, 9/21/2018. Sadly, the majority of the criminals were members of their own family who had easy access to their personal information.
Prevention is Better than Cure
You can freeze your child’s credit at no cost. A freeze prevents any credit from being opened in your child’s name until after the freeze is removed (which takes about three days).
Minors who are 16 or 17 must request their own credit freezes, and they can do so by mailing in a copy of their driver’s license or other photo ID.
For children under 16, parents or guardians must mail in their requests. You can find instructions on the websites of the credit bureaus:
In addition, take steps to see that your child’s personal information is locked away securely so that a visitor to your home cannot obtain it.
Yes, it takes some effort to freeze credit, but working your way out of a credit nightmare is a thousand times worse.
Please pass on this information to other parents so they can also protect their children’s credit and good name.
New credit leniency and protections for our highly respected U.S. Veterans have been signed into law. Here are the important points to know:
- Medical debts/collections incurred cannot be reported to a veteran’s credit report for one full year from the time the medical service was provided.
- If any medical debt has been reported as delinquent, a collection, or a charge-off, it must be removed from the veterans credit report once it has been satisfied.
- If a medical debt is in the process of being paid by the VA, and the Veteran provides the proper documentation to the credit bureaus, it must be removed from their credit report.
- Veterans on active duty are to receive free credit monitoring that will alert them to any material changes on their credit reports.
Thanks to the Economic Growth, Regulatory Relief and Consumer Protection Act initiated by Senator Mike Crapo (R-ID) and signed into law May 2018.
Thanks to Credit Repair Resources, LLC, for this information.
Thanks to every United States Veteran and Service Member for protecting our great nation.
Please pass on this important information to every U.S. Veteran, because many have medical accounts and are unaware of this law. Thank you.
Mortgage interest rates have been trending upward all year. So, what’s ahead, and why?
The Federal Reserve Board will be meeting at the end of next month, and right now, the markets are banking on another .25% increase, according to Origination Pro, a publication for mortgage loan officers.
“Again?” Yes, as I type this, I have received an alert that rates are going up midday and to lock now if you’re floating your rate.
“Why?” Because good economic news leads to higher rates.
- The number of new jobs for August was higher than expected.
- More individuals are re-entering the workforce.
- Wages have increased, on average.
- Consumers are spending more money, putting cash into the marketplace.
- Consumer confidence is soaring.
Chairman Jerome H. Powell said in his speech on changing markets and monetary policy:
“Over the course of a long recovery, the U.S. economy has strengthened substantially. The unemployment rate has declined steadily for almost nine years, and at 3.9 percent, is now near a 20-year low… With solid household and business confidence, healthy levels of job creation, rising incomes, and fiscal stimulus arriving, there is good reason to expect that this strong performance will continue.”
Read the full speech here.
Time for Action!
If you have an Adjustable Rate Mortgage (ARM), consider refinancing into a fixed rate, if you plan to keep the house for a substantial amount of time.
If you want to shorten your mortgage term to 20 years or 15 years, do so now before rates go higher.
If you want to buy a home and stop paying rent, don’t procrastinate. Get pre-approved for financing and contact a local real estate agent.
If you are working on your credit, ask your loan officer if you can qualify for an FHA loan now while your credit is improving.
Here’s the low-down on buying a house with a minimal down payment.
These are excellent loan programs. I’ve highlighted some advantages of each.
- Only 3% down payment.
- You don’t have to be a first-time home buyer.
- Can be a house or condominium.
- You get the same low interest rate as the buyers with 20% down.
- Reduced monthly mortgage insurance fee.
- There is an income limit, unless the neighborhood is an area with low home ownership (called under-served area).
- 620 credit score or higher.
- Money comes from Freddie Mac (get the loan through your mortgage broker).
This is Fannie Mae’s version of HomePossible.
- 680 credit score or higher.
FHA – Federal Housing Administration
- Down payment is 3.5%.
- 580 credit score
- Bankruptcy Chapter 7 okay after 24 months discharge.
- Can be a house, condominium, or manufactured home.
- No education class required.
- Has an upfront mortgage insurance fee of 1.75% that is rolled into the loan.
I recommend speaking with a mortgage broker who will find the best and lowest priced loan that is available for you. Only a mortgage broker is required by federal lending law to get you the lowest interest rate available. Why? Because mortgage brokers shop wholesale lenders for you. Banks, credit unions, and direct lenders use their own money, so they don’t have the wholesale options. Therefore, they are allowed to charge you whatever they like (within limits). For example, today a home buyer received a quote from a direct lender (rhymes with Build Mortgage) with an interest rate of 5.5% whereas the mortgage broker’s rate is 4.5%.
If you are in Washington or California, I am licensed in those two states and would be happy to help you! (NMLS # 1284134)
You can apply online here.
Here’s why I think you should contact your Realtor and make an offer on a house now rather than wait for fall.
1) The Federal Reserve Board is expected to raise interest rates in September. This will make your monthly payment go up.
2) The bidding wars have ended. For example, here in Seattle where bidding fights were the norm, houses are now selling with only one full price offer coming in, not multiple bids.
3) Fewer buyers are out making offers in August. People are on vacation or out camping, and thinking they’ll look in the fall. Less buyer competition is good for you.
Be encouraged! Get out there and get your own home now before rates go higher. Perfect credit not required!
If you are in California or Washington, I am licensed (NMLS 1284134) in those two states and happy to help you. I am getting good folks with credit challenges approved! You can apply online here.
Some accounts influence your credit score more than others. When you think about it, it makes perfect sense.
Having a $300,000 mortgage is a greater responsibility than having a credit card.
Here is the order of importance/influence of type of account:
- Mortgage loans give you the most points. Always pay your home loan first and foremost. No exceptions. If you get in trouble and can’t pay all your bills, pay your mortgage on time, every time. Protect your home and your credit.
- Installment loans such as auto loans and student loans. An installment loan has a set payment and ending date. These count second for influence and importance.
- Revolving credit cards. This is ongoing credit. It is of least importance, but it is still important. Pay on time if you want a good credit score. If your score is 800 and you have one late payment on a credit card, your score can plummet by 100 points.
- Hard money loans are horrid and will negatively impact your credit score. Avoid hard money loans. These are finance company loans, cash advance loans, and payday loans that carry a high interest rate. They are rip-offs. They hurt your credit score, even if you pay on time, because only people who are “hard up” take a hard money loan.
When you understand credit, you are not at the mercy of the credit bureaus — you are in control. Create a good credit history and earn a top tier score. That way, you will save tens of thousands of dollars on everything from your mortgage to your insurance premiums. And, gain self-respect and the respect of the financial community.
Coming this fall, my new book, Build and Protect Your Credit Like the Pros. More information coming later, and not to be missed. Feel free to subscribe. I post about once/week.
A loan on a primary residence is different than a loan on a rental home. An investment property
requires a larger down payment (10% minimum) and has a higher interest rate. Some people don’t like that rule.
Such as a certain 38-year old living in Washington, D.C., who decided to “fudge” on his loan application.
Mr. Imran Awan applied online with his credit union for a home equity line of credit. He made the application in his wife’s name and stated it was her primary residence, owner-occupied.
The credit union approved the loan and gave them $165,000. Awan then sent the money to his father in Pakistan.
One year later, in January 2017, Awan paid off the loan. But wait, the story is not over.
The property was not owner-occupied. There were renters living in the house all along. He had deliberately lied on his loan application in order to get the line of credit that is not allowed on rental properties.
Both husband and wife were arrested on felony charges. I don’t know if Awan’s wife was blindsided or if she was in on the scheme, but I do know that Awan pleaded guilty in exchange for his wife being dropped from all charges.
He awaits his sentencing on August 21st. The charge carries a maximum sentence of 30 years in prison.*
The lesson here is that paying a higher interest rate for a non-owner occupied home (or foregoing a line of credit) is better than being awarded a new primary residence in prison.
When Can a Person Turn Their Primary Residence Into a Rental?
The standard Deed of Trust allows a home owner to turn their primary residence into a rental after one year of occupancy. Then the person can purchase another primary residence and repeat, and then purchase a third home. And so on. This is one way to acquire a portfolio of investment properties, and it is perfectly legal.
* It is expected that the prosecutor will not ask for a prison sentence for Imran Awan because he paid back the loan in full. But one attorney says he could get six months. Ultimately, the judge will decide.
Elisabeth is best known for her work on Good Morning America, The Washington Post and Dr. Oz.
Easy Money is full of surprising ways to MAKE more, SAVE more and find YOUR unclaimed money.
I shared my story about the benefits of improving your credit score . Let me know what you think of my episode!
As we celebrate living in the Land of the Free and Home of the Brave, it occurred to me that being strapped with bad credit is the opposite of freedom. When you can’t enjoy life because you’ve got creditors hounding you to pay bills, that is not freedom. When you can’t get a decent interest rate on a car loan or decent insurance premiums because of a low credit score, that is not fun.
I urge you to take control of your credit and finances. No matter where you are today, you can make a plan for your future. It might not happen overnight, it might take some self-discipline, and some work — but that is what our legacy is all about.
Our forefathers and foremothers — all of them, not matter where they came from, whether rich or poor — wanted to be free. Let’s grab hold of that spirit of determination and pursue whatever it is that we need to do in order to make tomorrow better.
Credit repair is legal and ethical, when it is done properly. Others are repairing their credit and restoring their good name, and you can, too.
Harold from Indiana wrote this is an email (and gave permission to share it):
My score has gone up 89 points in a 2 month period. After mailing the letters it didn’t take long for them to respond, maybe 2 weeks. I will continue to work at improving my credit. Once again your book is amazing and it truly works.
He is talking about Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name. You can get more details here.
Have a happy and safe Fourth of July! God bless America!