Free Credit Report (www.annualcreditreport.com) is the offical website where the three credit bureaus provide your legally mandated free credit report each year. You may order all three bureaus at once or one every four months so you can consistantly check your credit--for FREE!
Of course they are always trying to sell you something but if you just want to see what is on your Credit Report, get it here free.
Thursday, November 1, 2007
Monday, September 3, 2007
Getting Ready for the Future # 1: Assets
This is Labor Day so I thought we should think about how we should labor at our finances. Start a savings account.
With all the changes in the Mortgage arena in the past few weeks, I have been thinking about how this will impact you when you want a mortgage and how you should prepare your finances to get a mortgage in the future.
You will need to be able to document your income and assets. For assets, being able to show two months bank or account statements. Any large deposits will need to be explained. (You sold a car, had wedding gifts, received a bonus, etc., fine, no problem)
Approvals often look at Months of Reserves. This means that after closing how much money will you have in the bank to make payments in an emergency.
Some loans require a specific number of months reserves. A month of reserves is equal to the PITI + HOA monthly payment. Usually reserves are evaluated at 0, 1, 2, or 6 months. Retirement accounts count but only at 70% of value.
On marginally approvable loans, showing more assets could persuade the underwriter to approve the loan.
If you are planning for a mortgage, start saving some money. A savings account in a bank separate from your checking is good because you add to it each month like a payment but it is not as convenient to go get it out.
MMM
With all the changes in the Mortgage arena in the past few weeks, I have been thinking about how this will impact you when you want a mortgage and how you should prepare your finances to get a mortgage in the future.
You will need to be able to document your income and assets. For assets, being able to show two months bank or account statements. Any large deposits will need to be explained. (You sold a car, had wedding gifts, received a bonus, etc., fine, no problem)
Approvals often look at Months of Reserves. This means that after closing how much money will you have in the bank to make payments in an emergency.
Some loans require a specific number of months reserves. A month of reserves is equal to the PITI + HOA monthly payment. Usually reserves are evaluated at 0, 1, 2, or 6 months. Retirement accounts count but only at 70% of value.
On marginally approvable loans, showing more assets could persuade the underwriter to approve the loan.
If you are planning for a mortgage, start saving some money. A savings account in a bank separate from your checking is good because you add to it each month like a payment but it is not as convenient to go get it out.
MMM
Saturday, August 25, 2007
Taxed on Your Foreclosure or Short Sale?
Today's New York Times article talks about the double wammy of loosing your home and then being taxed on loan balance you did not repay.
The article is about foreclosure but the same principal applies to Short Sales and Deed inleu of Forclosure. If you borrow money and don't pay it all back, the difference is income to you and you owe tax on that income.
New York Times article gets into more of the details of what tax do you truly owe and how it should be computed but the bottom line is you owe tax.
Here is the Link:
Foreclosure and Taxes
The article is about foreclosure but the same principal applies to Short Sales and Deed inleu of Forclosure. If you borrow money and don't pay it all back, the difference is income to you and you owe tax on that income.
New York Times article gets into more of the details of what tax do you truly owe and how it should be computed but the bottom line is you owe tax.
Here is the Link:
Foreclosure and Taxes
Friday, August 24, 2007
Back to Blogging
Some of you may have noticed a two week gap in this blog. I have been looking for work and waiting for conditions to be met so I can start originating mortgages at a new company.
In the past three weeks 136 national mortgage companies, including my former employer American Home Mortgage, have gone out of business. Several others are hurting and may not make it. It was reported yesterday that over 30,000 people in the mortgage industry were out of work. Well I am one of them.
Although I will be employed again next week, the bigger picture is the impact on the US economy. Will we have a recession? One piece of this mess is the way mortgages were packaged for sale in the secondary market. Our foreign investors thought they were buying one thing and got another. Like buying steak and opening the package to find hamburger. Not the same value. Here is the link to Fidelity Investments newsletter that explains much of the mess.
Fidelity Newsletter
In the past three weeks 136 national mortgage companies, including my former employer American Home Mortgage, have gone out of business. Several others are hurting and may not make it. It was reported yesterday that over 30,000 people in the mortgage industry were out of work. Well I am one of them.
Although I will be employed again next week, the bigger picture is the impact on the US economy. Will we have a recession? One piece of this mess is the way mortgages were packaged for sale in the secondary market. Our foreign investors thought they were buying one thing and got another. Like buying steak and opening the package to find hamburger. Not the same value. Here is the link to Fidelity Investments newsletter that explains much of the mess.
Fidelity Newsletter
Thursday, August 23, 2007
More to Financial Security than Not Paying Interest
A friend sent me a link for You First Financial. (Look it up if you are interested, I won't give it to you because I think it is not in any one's best interest)
This link proposed setting up a Home Equity Line of Credit along side your first mortgage. By manipulating the $ in the Home Equity with your income and expenses they claim you can save thousands on your mortgages and pay off your debt quicker. Their fee is only $3500 which they show you never comes out of your pocket (but it is real money when it goes in their pocket and YOU do get to pay it back)
My first caution is that even if (and it is a big if) their method really works, it is dangerous to combine your assets and your debts. Their system takes 10 years to achieve. If anything unplanned happens in your life in the next 10 years where you cannot make scheduled payments, your house is at risk of foreclosure. When you put money into a debt, even a line of credit, you are not guaranteed you can take it back out.
You know if you prepay your amortized 1st mortgage, the next month your payment is still due in the same amount. You just have more equity in your home. If you miss a payment or if some other condition in your note on the home equity loan is not met, the note can be frozen from further withdrawls and amortized payments can be required.
I could pick apart their system or teach you how to do it yourself without paying them the $3500 but more importantly, your income needs to go into a bank account. When you have enough assets, get Money Market account that pays higher interest. When you earn interest or have some extra $ in the bank we can talk about another conservative investment so you can make payments should something bad happen in your life.
MMM
This link proposed setting up a Home Equity Line of Credit along side your first mortgage. By manipulating the $ in the Home Equity with your income and expenses they claim you can save thousands on your mortgages and pay off your debt quicker. Their fee is only $3500 which they show you never comes out of your pocket (but it is real money when it goes in their pocket and YOU do get to pay it back)
My first caution is that even if (and it is a big if) their method really works, it is dangerous to combine your assets and your debts. Their system takes 10 years to achieve. If anything unplanned happens in your life in the next 10 years where you cannot make scheduled payments, your house is at risk of foreclosure. When you put money into a debt, even a line of credit, you are not guaranteed you can take it back out.
You know if you prepay your amortized 1st mortgage, the next month your payment is still due in the same amount. You just have more equity in your home. If you miss a payment or if some other condition in your note on the home equity loan is not met, the note can be frozen from further withdrawls and amortized payments can be required.
I could pick apart their system or teach you how to do it yourself without paying them the $3500 but more importantly, your income needs to go into a bank account. When you have enough assets, get Money Market account that pays higher interest. When you earn interest or have some extra $ in the bank we can talk about another conservative investment so you can make payments should something bad happen in your life.
MMM
Monday, August 6, 2007
Weekly Rate Outlook
As I have mentioned before, when there is bad economic news, mortgage interest rates tend to go down. What I did not expect was that the bad economic news would be in the mortgage industry. But true to form, the bad news drove rates down last week. Technically, the bonds broke some barriers so rates should stablize or go down this week.
But, all these rate projections are for Fannie Mae, FHA, VA and Freddie Mac loans. These loans are of good quality and are not included in the news.
If you have a loan in process and it is not in the group mentioned, close immediately. Your lender may not be able to deliver on their promices later.
Anyone with wanting to finance outside of these loan types needs to meet with a mortgage professional to discuss their options. Jumbo loans (those over $417,000) have seen rates increase as the private investors who fund those loans want a higher return.
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
But, all these rate projections are for Fannie Mae, FHA, VA and Freddie Mac loans. These loans are of good quality and are not included in the news.
If you have a loan in process and it is not in the group mentioned, close immediately. Your lender may not be able to deliver on their promices later.
Anyone with wanting to finance outside of these loan types needs to meet with a mortgage professional to discuss their options. Jumbo loans (those over $417,000) have seen rates increase as the private investors who fund those loans want a higher return.
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
What's Going On
Before I start, please note that Fannie Mae and Freddie Mac loans and mortgage backed securities are doing just fine. They are not seeing an increase in foreclosures or other negative issues. Rates are actually coming down!
The stock market last week was responding to concern over "Alt A" mortgages. Alt A are mortgages made to good borrowers with less than full documentation (Full Doc). Full Doc loans have employment income and assets verified by the lender before closing. Alt A loans include State Income, Stated Assets, No Doc, No Ratio and variations on these. The fear is that more and more of these loans will end up in foreclosure so the value of the bond went down giving a bond buyer a higher return.
A few weeks ago the stock market reacted to the Sub Prime as the foreclosure rates climbed.
One article I read stated that the bond rating system was flawed and these mortgage bonds needed to be reexamined for quality.
Follow the link to my Realtor's Newsletter for more explaination of what is happening in the Mortgage Bond industry.
In today's New York Times, discussing SubPrime Loans, the complexity of the proble is also discussed. NY Times article
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
The stock market last week was responding to concern over "Alt A" mortgages. Alt A are mortgages made to good borrowers with less than full documentation (Full Doc). Full Doc loans have employment income and assets verified by the lender before closing. Alt A loans include State Income, Stated Assets, No Doc, No Ratio and variations on these. The fear is that more and more of these loans will end up in foreclosure so the value of the bond went down giving a bond buyer a higher return.
A few weeks ago the stock market reacted to the Sub Prime as the foreclosure rates climbed.
One article I read stated that the bond rating system was flawed and these mortgage bonds needed to be reexamined for quality.
Follow the link to my Realtor's Newsletter for more explaination of what is happening in the Mortgage Bond industry.
In today's New York Times, discussing SubPrime Loans, the complexity of the proble is also discussed. NY Times article
Link to my weekly Realtor news letter:
Paul's MMG Weekly Just be aware that American Home Mortgag quit originating loans last weeks. I should have a new work home by next week.
MMM
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