Need Money? said the spider to the fly

~ Carolyn Warren ~ Leave a comment

Who wouldn’t like some more cash? Unless you just won the lottery, it’s probably you (and me).

But listen, friends. The loan spiders know this and they are licking their fangs to get you trapped into their web. They are not your friends, being nice by handing you a check. They are looking at how much they’re going to make off the interest you’re going to pay. Here’s a real life example…

The Wedding Loan

One greedy credit union is now advertising that they make “wedding loans.” That’s right. In case love isn’t enough and it’s really all about your vanity and ego, you can borrow $10,000 and pay 4.99%. You end up paying back $11,006. Paying $1K in interest on $10K = paying 10% more!

(If you can afford a $10K or $100K wedding, I have no problem with it. But borrowing money for a ceremony is a bad idea. You don’t need to start your new life in debt.)

The “Me Loan” (They actually call it that.)

If you’re not totally pleased with your appearance and want to get some cosmetic work done, you can borrow money at what they call an “affordable” 9.45%. If you borrow $20,000, you’ll pay back almost $25,000 over five years.

Paying $5K in interest on $20K = paying 20% more!

The Vacation Loan

The worst idea of all is their “vacation loan.” Listen friends, if you haven’t been able to save enough money to travel, then it’s better to enjoy a “stay-cation” than to go into debt so you’ll have to work even harder just to keep even. Backyard parties, bike rides, the local sites… they can all be a lot of fun without spending a ton of money.

Yes, there are times it makes sense to take a loan. Some of those valid situations are…

  • Your house needs a vital repair, such as the roof is going bad. (Not new granite counter tops.)
  • Your child needs orthodontic work.
  • You need to take a class in order to qualify for a higher-paying position.

For the non-essentials, it’s best to save money until you’ve got the cash.

To get ahead, here are some ideas to consider:

  • Sell clothing/coats/handbags through a consignment shop.
  • Sell collectibles you no longer love on OfferUp, Ebay, or Craig’s List. In some neighborhoods, garage sales are effective for unloading a lot of inexpensive items in one day. Ebay is better for high priced items. Craig’s List is pure luck.
  • Cancel extra cable channels and maybe even cable TV altogether. Switch to antenna TV and read more.
  • Pack your own lunch for work. (Add up how much you spend eating out in a month.)
  • Switch to a cheaper grocery story. (You don’t have to spend gas driving all over town to four groceries, just stop paying more at the most expensive store in town.)

Two words to the wise (make a big different in a hurry):

  • Stop using the debit card. Examine the past two months of your bank statement and you’ll see what I mean. Add up all those “little” charges to see how your money is flushing away at an alarming rate.
  • Track your spending! Become more aware of where your money is going and then get creative with ways to save. I know 90 percent of you can do it. (The other 10 percent are already doing it.)

Temporary sacrifices bring wonderful rewards.

If you think this message is valuable, please share on social media and pass it on. Thank you.

 

 

Home Possible Advantage: A Good Program for Home Buyers

~ Carolyn Warren ~ Leave a comment

The Home Possible Advantage Loan Program has distinct advantages for home buyers. First, let’s look at what it takes to qualify, then we’ll look at the benefits.

Who Can Qualify for Home Possible Advantage

* First-time home buyer, or
* Displaced  homemaker or single parent who used to have joint ownership in a marital residence, but now is buying on their own, or
* Have not owned real estate in the last three years.

* Credit score 620 or higher.

* The home must be your primary residence, not a rental or vacation home.

* Annual income cannot exceed 100% of the median income in the area, UNLESS the property is located in an area designated to increase home ownership. In that case, there is no income limit.

The Home Possible Income & Property Eligibility tool is here.

Benefits of the Home Possible Advantage Loan Program

Only 3% down payment.

Lower monthly mortgage insurance (MI) payment.

No up-charge to the interest rate for the low down payment.

Lower monthly payment.

Down payment can be from your own money, or gift money from immediate family.

How to Get the Home Possible Advantage Loan

You get this loan through your mortgage broker. Your broker can shop several wholesale lending sources for Home Possible in order to find you the best pricing you qualify for. I am licensed in California and Washington.

Remember, get pre-approved for financing first, then contact your real estate agent to find a home.

Investor “Cash Flow” Loan Solves the Problem of Income Qualification

~ Carolyn Warren ~ Leave a comment

This is for people who want to buy a rental property, but cannot qualify based on their pexels-photo-206673.jpegpersonal income.

“Why are you turning me down based on my income when the property I am buying will have a positive cash flow?” they ask.

Good question. And now someone who is thinking outside of the Fannie Mae box has a solution.

Here are the details for the Investor Cash Flow Loan:

  • No personal income used to qualify (No W2s, no tax returns).
  • Qualify based on the rental income you will receive (verified by a rent appraisal).
  • 75% of the rental income is used (25% set aside for possible future repairs or time between renters).
  • Must have six months’ mortgage payments in savings or other reserve account as a safety net.

Credit score required: 660 or better (middle of three scores).

Down payment: 20%

The property can be a detached home or a condo. Non-warrantable condo is okay. There is no limit on the number of properties you can own (unlike Fannie Mae that caps at 10 properties).

How to Get the Cash Flow Loan

This program is available through a mortgage broker. If your property is in CA or WA, I am licensed in those two states. Otherwise, contact a local mortgage broker and ask for the Investor Cash Flow Loan. If your broker is not familiar with it, he or she can email me.

Get pre-approved, then ask your Realtor to show you some properties!

Thank you for reading this post.

 

 

Have You Checked Your Credit Report This Year?

~ Carolyn Warren ~ 4 Comments

A hacker gets into your Gmail, Yahoo, or Hotmail. Hacker sees your online banking information.

Hacker orders a new credit card using your personal info and has it sent to a P.O. Box.

Hacker picks this new card, in your name, and goes on a spending spree. You don’t find out, because the bill goes to the P.O. box.

When the card is maxed out, Hacker moves onto another victim.

You remain blissfully and scarily unaware until your credit report is checked. To your horror, you find a huge unpaid collection account. Your credit score has plummeted by 100 points.

This is why federal law allows everyone to order a free annual credit report. If you haven’t checked yours in the past 12 months, order it today through the good old-fashioned USPS mail.

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281

If you were a potential victim of the big Experian credit breach in 2017, this is all the more reason why you should check your credit report.

Please share this info because people are forgetting to check their credit reports, and crime must be prevented and shut down. Thank you.

 

“This could be a valuable email to you or someone you know.” ~ F. McGehee Woolf

~ Carolyn Warren ~ 2 Comments

Written by Mr. F. McGehee Woolf, mortgage loan manager, licensed in Louisiana and North Carolina (NMLS 89625):

As a client of ours over the years you may recall the importance of having acceptable credit as a primary consideration in the home buying process.  Many fall below the acceptable ranges to be approved.  This can be very demoralizing, and they typically consider some unattractive options, such as:

  1. Listen to a friend and dispute all the negative credit information.
  2. Pay a company or an attorney to rehabilitate the credit which often delivers mixed results.
  3. Do nothing and keep renting.

Since people look to me for guidance I wanted to learn more about how someone could help himself or herself in this frustrating circumstance.  I recently read the book by Carolyn Warren titled Repair Your Credit Like the Pros.  It’s an easy read loaded with excellent direction on what to do in almost every conceivable circumstance.  Ms. Warren will even provide you with the letter templates you need to be successful.

I contacted Ms. Warren asking for her permission for me to notify you of the availability of her book, and she

Rated best DIY credit repair resource.

graciously granted it.  I wholeheartedly endorse it.  You can click on the link below and it will take you to the Amazon page where you can purchase her book for $13.49.  With her book and some focused effort, most people will be able to get their credit in order.

Best of luck and let me know if I can help you in any way.
F McGehee Woolf, Loan Production Manager NMLS No. 89625
For loans in North Carolina and Louisiana, visit website here. Office: 225.767.5355
Email: mwoolf@rsmc.net

Should You Get a Home Equity Loan (HELOC)?

~ Carolyn Warren ~ 2 Comments

Now that home values have risen, some people are asking about taking out a Home Equity Line of Credit, a type of second mortgage.

In general, I am against home owners taking out a HELOC. It wasn’t that long ago that thousands of home owners who had spent their precious equity on a HELOC found themselves in foreclosure. And consequently, with severely damaged credit.

Now is not the time to make that same mistake all over again.

Of course, that doesn’t stop the greedy banks from pushing this product.

I will allow that there is the rare valid reason to take out a HELOC, such as when you want to increase your wealth in real estate by purchasing another home or when you have a failed roof.

On the other hand, using your property as a piggy bank is a bad idea.

Reasons NOT to Take Out a HELOC

I am opposed to increasing the debt on your primary residence for the following purposes.

1) Home improvements: If you can’t afford it, wait until you save the cash. Why? Because a $50,000 remodel does not increase your home value by $50,000. You come out behind financially.

On top of that, you pay back more than $50,000 due to the high interest rates.

2) Consolidating debt: This is a big no! You never roll plastic (credit card debt) into your precious real estate. This is one of the worst financial mistakes home owners made in the past. Don’t repeat it.

If you get your credit card shut down, it’s no big deal. If you get kicked out of your house, it’s a very big deal.

3) Education: Take out a student loan if needed. Never pay for school with your house. That goes double for your kids’ education!

4) Care-taking: I believe in compassion and generosity, but you do not go into debt and spend your equity in order to take care of someone’s medical bills, dying wish, or funeral expenses.

5) Vacation: To the loan officer who suggests this, you reply, “No, I am not stupid.”

6) Open for a Safety Net: A HELOC does not make a good safety net. It is quite the opposite. A bank can reduce or shut down a HELOC at any time. The interest rate can go up, often with a lifetime cap of 19%. This does not provide you with financial safety. Create a savings account for safety. Find a secondary source of income for safety.

A Little-Known Fact and a Warning

Most home owners don’t know that if they have a HELOC (or any type of second mortgage that was opened after purchasing the home) and then want to refinance, that HELOC will put them into a higher credit risk category — even if they have perfect credit and a 800 score.

That’s right, you will pay a higher interest rate simply for having a HELOC when you refinance.

Exercise Patience

We live in an age of instant gratification and entitlement. Listen folks: you do not “need” granite counter tops or a bathroom makeover. Sure, those things are wonderful to have, but exercise patience and save your money until you can actually afford to purchase them.

 

Can You Pass This Two-Question Money Quiz?

~ Carolyn Warren ~ 2 Comments

Assume you rent an apartment and drive an old car, and you would like to upgrade your life style.

Question #1: If you have to choose between buying a house or a truck, which do you choose?

Question #2: Assuming you can afford to buy both a house and a truck, which one do you buy first?

Before we look at the answers…

A True Story: A young gentleman finished his credit repair work and raised his credit score to 640. This qualified him for the FHA Elite loan for home buyers.

He felt great! He was excited.

So he ran straight to the auto dealership and bought himself a brand  new 2018 Chevy Tahoe. (MSRP $47,500)

Then he drove home and called his mortgage loan officer. “I’d like to get approved to buy my first home,” he announced.

So the loan officer took the application and ordered his credit report–and bam!–he got declined.

“Why?” he asked, totally stunned.

His new truck purchase dropped his score from 640 to 565. Too low for any of the first-time home buyer programs! Too low for the FHA 3.5% down payment program!

Not only that, but with a hefty new payment, he no longer qualified for the purchase price he needed anyway.

Maybe the Tahoe is so luxurious, he’ll be happy living in it. (Bad joke, sorry.)

Let’s See How You Did on the Quiz

Answer #1: Buy the house. Real estate is going up in value. You can increase your personal wealth by owning a home. A vehicle goes down in value the moment it become “used.”

Answer #2: Buy the house first, always, even if your credit score is 800. A higher score and a lower debt ratio will qualify you for better, cheaper financing.

The house is more important than the truck. Buy your most important item first (not the easiest to get).

I welcome your comments. Thank you for sharing this with others and on social media. Too many people are shooting themselves in the financial foot by purchasing a vehicle before the home.

 

 

Free Grant for Down Payment to WA and CA First-time Home Buyers

~ Carolyn Warren ~ Leave a comment

Do you know someone in Washington or California who would like to buy a home but is short on down payment money? If so, please pass on this information to them.

I have available a private source for up to $5,000 grant to pay for or help with a down payment. UPDATE: This promotion is ending soon. You must have your full loan application into underwriting, including the signed Purchase Agreement by the end of May.

Here are the facts:

THE MONEY

  1. Free money, no pay back, ever. (Not an assistance program where you pay it back later.)
  2. Down payment is 3%. On a $250,000 home, the grant would cover all the down payment. For a more higher priced home, you would need to make up the difference between $5,000 and the 3%.
  3. Closing costs can be paid by buyer or seller (not included in the grant). A lender credit can help with closing costs.

BUYER REQUIREMENTS

  1. Must be either a first-time home buyer or…
  2. Cannot have owned a home in the past three years.

CREDIT REQUIREMENTS

  1. Credit score must be 740+. (Middle credit score of three; one score can be lower.)
  2. Chapter 7 or 11 bankruptcy must be discharged for 4 years.
  3. Chapter 13 bankruptcy must be two years from application/four years from dismissal
  4. Short sale must be four years from date of sale.
  5. Foreclosure must be seven years from date of sale.
  6. Credit must qualify for a Fannie Mae conventional loan.

INCOME REQUIREMENTS

  1. No restriction on income. You can make $million and still qualify.
  2. Must be able to afford the money payment, per conventional loan guidelines. Max debt-to-income ratio is 50% DTI.

OTHER NOTES

I have this for California and Washington states only. Soon, Oregon, so follow my blog to receive that announcement.

The “catch” is that I have to be allowed to explain this program to your real estate agent. The purpose of the grant money is to generate more loan business. Again, this is not a government program; it is a private money source. You’ll also need to take an online home buyer class after you have a purchase agreement, which is easy and fun.

Please contact me here if you’d like to get pre-qualified, or if you are a real estate agent in CA or WA who would like to know more about this program.

Thank you, and here’s to more people becoming home owners!

Carolyn Warren, Sr. Loan Officer, NMLS # 1284134, WA First Mortgage, a broker doing business in Western states.

 

DIY Credit Repair Success Story

~ Carolyn Warren ~ 1 Comment

“Chase not only removed all my late payments but also refunded over $350 in fees!” ~~ Sarah S., Florida

 How did Sarah achieve this success? First, a quick background…

Sarah had moved several times and in the process, she’d unintentionally forgotten about the Chase account. Easy to do when no billing statement comes! By the time she checked her credit report, late payments had already posted and her score had been docked.

Time to spring into action! Sarah picked up a copy of Repair Your Credit Like the Pros: How credit attorneys and certified consultants legally delete bad credit and restore your good name. See here.

After reading Chapter 15, she called Chase and asked to speak with a supervisor in charge. She opened the line of communication in a professional manner. She explained that her credit is very important to her, and she would not have missed a payment had she received a bill. She told the truth. By the end of the conversation, the supervisor said:

“I have determined that you were not receiving your statements”; and therefore, you “couldn’t have known you had a bill.”

As a result, both the late payment record and the late fees were removed.

In a follow-up email, Sarah wrote (and gave me permission to use on my blog):

Carolyn,

I wanted to write to you with a heart of gratitude! Thank you so much for writing your credit repair book. Within two

Available on Amazon. Rated best DIY credit repair resource.

months of starting the credit repair process and sending out first letters, my husband and I have raised our score over 100 points! We are pre-approved to buy our first home. God is good.

Thank you again,
Sarah

Buying a Home with the Fresh Start Loan Program

~ Carolyn Warren ~ 2 Comments

Were there bad times and bad credit in your past? Are you looking to make a fresh start and buy a home? Here are the guidelines for buying a home with the Fresh Start Loan Program.

* No waiting period after a bankruptcy (BK), short sale, deed-in-lieu, or foreclosure.

* However, the short sale or foreclosure must be completed, not pending, at the time of application.

* Chapter 7 BK must be discharged.

* Chapter 13 BK must be filed, but it can be open with payments being made on time. The court needs to approve the purchase.

* Property can be a detached house, a warrantable condominium, or a one-unit cooperative. (Not a manufactured home.)

* Debt-to-income ratio up to 50% DTI. (55 DTI with compensating factors, but I don’t recommend it.)

What’s the catch?

With such generous approval guidelines, is there a catch? Yes, you must have a good down payment to show that you are willing to take a risk on yourself. What does that mean?

If you aren’t willing to put money into the deal, then the lender feels like it’s too easy for you to walk away and leave them taking on the expense of reselling the property. They don’t want that! They want a home owner who is back on track financially and will make all their payments on time.

The silver lining is that the down payment can be gift money from family. Or, if you have 5% of your own money, the remainder can be a gift.

Here are the Down Payment Requirements

640 credit score = 15% down payment required

620 credit score = 20% down

580 credit score = 25% down

The credit score is the middle score out of three scores from Equifax, Experian, and TransUnion. The lowest score is ignored. The credit report is pulled by the lender.

How to Get a Loan with Fresh Start

Your mortgage broker can get the Fresh Start loan program for you through their wholesale channel. This is not a program you get at a bank or credit union. You get it through a broker. If you’re in California or Washington (and soon Oregon), then I can be your broker. For other states, find a broker in your area.

There are other non-prime loan programs available, but I wanted to highlight this program today, because of its generosity with no waiting period after a major derogatory credit event.

Available on Amazon. Rated best DIY credit repair resource.

As always, thank you for reading my blog and passing it on to anyone who might benefit from the information.