Real Estate Financing...

To say your credit history & score is HUGE these days may be a borderline understatement!  For purposes of my experience, I'll concentrate on how credit relates to getting a mortgage to buy a home or trying to refinance the one you currently own.

Talking about credit is about as much fun as chewing broken glass while watching Yanni's latest video on VH1, at least to most.  Even for the most severe masochists or staunchest Yanni advocators, it's probably not a subject full of brim excitement.

So, I'll try to make this concise and simple.  Educating yourself and working with professionals who can guide you along the way, to make sure your credit is worthy of a three course meal at the White House, is crucial.  I'm not just talking about those whose credit is in the crapper.  I'm also writing to folks whose credit may be moderate or maybe you've never made a late payment in your life but your score is low.  The Credit Reporting Industry is wagging the dog, forget about whining... work and know the system.

Here are a few tips & quips:

* Get a copy of your Credit Report.  It may not provide your actual credit score, but at least you can verify the accuracy of the information on your report.  I've included information below that you can utilize to do this.  Quick thing here, credit modules differ within industries.  For example, the credit report a mortgage company pulls may differ from that of the institution giving you a car loan or credit card.  Mortgage folks weigh heavy on student loans and car loans and even heavier on your Mortgage History, provided you have one. 

* Communication is key with your credit.  If you are experiencing rough financial times, call them before they WILL call you.  Let your creditors know what is going on.  It probably won't stop them from reporting you late to the credit agencies, but it probably will provide you one less of a headache.  That's what life's all about... avoiding headaches:-)

* The only thing that may be just as bad or even worse than credit overload, is no credit at all.  Establish yourself in the creditor's eyes.  If you have no credit, get secured credit that reports to all three credit reporting agencies.  This may mean making a deposit at your bank and taking out a loan against it or pre-paying on a credit card.  If you are doing the latter, use that credit card and pay it off it off regularly.

...if you have a bankruptcy or foreclosure in your past, establishing 12-24 months worth of a good credit is absolutely crucial!

* Oh, those credit cards.  I'll put it bluntly, the bigger the differential between what your current balance is and what your available balance is, the better for your Credit Score.  Don't be afraid to call your credit card company and ask them to raise your available balance.  Don't use it, just have it there to improve your credit standing and score.

...sidenote on credit cards.  Don't be afraid to call your current credit holders and ask them to lower your interest rate.  If the first person you talk to can't or won't, ask to speak with a manager.  If unsuccessful in that endeavor, call back at a later date.  Be persistent & professional in your efforts.  Lowering your rate even the slightest bit can save you some serious money now and down the road.

* Pay your bills on time.  Yeah, I know, this is a no-brainer to most.  Yet, it doesn't report late to the credit bureaus until you fall 30 days late.  Try to make sure you don't get 30 days late on anything.  Sure, you may incur late fees if you are even a day behind on some credit, though Mortgage Companies typically give you a 15-day grace period before you incur any late fees.  From my experience, make sure your mortgage/rent is paid on time first, then student & car loans, then credit cards.  If you are a renter...

...pay your rent by check and keep copies of your canceled checks.  Twelve months worth will do (pay month by month, pre-paid bulk payments won't do you any favors...create a consistent history).  This establishes a housing history.  While it doesn't do anything positive for your credit, it does wonders when you apply to buy a home.

* Settle delinquent accounts for pennies on the dollar.  If you owe the International Bank of Jason Sardi a cool $5,000.00 and your account is charged off, you should call to arrange a settlement once it goes to collections.  Often times, you can come to an agreement for a lump sum of $2,500.00 or less and you may even be able to work out a payment plan.  Either case, make sure you pay that account satisfactory and get the paperwork of the agreement and the final pay-off to prove it.  Paying off delinquent accounts will probably drop your score at first, but will do wonders for your score down the road (provided you keep paying everything else on time).

* Avoid 'Hard' Inquiries.  Your current creditors may check your credit, but that is considered a 'Soft' inquiry and shouldn't affect your credit score.  Yet, if you are applying for credit out the behind, those inquiries can adversely affect your score.  It raises the red flag that you may be on your way to becoming credit dependent.  Psychologically speaking, never give them that drift, make them know that their livelihood depends on you... not the other way around.

* Credit Restoration Companies may be able to help but avoid anything that says, "Consumer Credit Counseling."  CCS is considered a form of bankruptcy in many lenders eyes and their ability to pay your debts at a 'consolidated interest rate & lower payment' is suspect and often times worsens the situation.  On the other hand, I've only witnessed one Credit Restoration Company worth its weight in the seven years I've been traveling this gig.  There may be and probably are more, but I've only witnessed one.  If you want more info, contact me.  Always remember though, you can do everything to make sure your credit is at it's best, yourself... it's a matter of being educated and persistence in your efforts.  That takes time.  Though time is a commodity not all of us have.

Below is info on the reporting agencies that you should contact to get started.  Even if you have an above average credit score, you'll pay more than you should if your credit score is even 20 points lower than the next guy or gal.  Save yourself money, put in the time and seek out the Mortgage Professionals to ensure that time is well spent.  Your credit is crucial... our knowledge of the industry and mechanics involved... can save you money and fulfill your dreams of home-ownership.  If you already are a homeowner, we can help you get on the path to make finances one less worry in this life.

Equifax

P.O. Box 740241

Atlanta, GA 30374

1-800-685-1111

www.equifax.com

TransUnion

P.O. Box 2000

Chester, PA 19022-2000

1-800-916-8800

www.transunion.com

Experian

P.O. Box 2104

Allen, TX 75013

1-888-397-3742

www.experian.com

Bear in mind, at this point, you're entitled to one free credit report a year.  Or, and I'd personally recommend this, you can get the whole batch which is simply called the 'Annual Credit Report Request Form.'  That's free as well!  The following sites will lead you in the right direction:

http://ftc.gov/credit

www.annualcreditreport.com

The bottom line in all this, the status of your credit can either cost or save you money.  Which option sounds better to you? 

***UPDATE!***

Lori brings up a good point with the following comment:

i Jason,

What a great blog. You gave a lot of valuable information. I envy your writing skills. I have just one comment, be careful on advise towards settlement's. While it may make the consumer feel like they have done the ethical and moral thing, it mayl not help their credit rating. In reality, you can actually hurt it in the long run. That item can now be reported up to another 7 years. Understand that this reporting is fromthe date of last activity. If you are dealing with an item that has been reporting for a while and is about to fall off, by paying the debt it will be re-activated and stay on for up to another 7 years. The bottom line is a negative entry is a negative entry.  Advise on repairing credit should be looked at on a case to case basis. Each credit profile is as individual as a fingerprint. While most of your information is spot on, there are certain things that can't be generalized. I wish I had your writing skills to be able to give out all the information in my head. I am working on that end of my social networking. Again, great post and feel free to call e-mail me with any questions relating credit repair, credit profiles or any credit related issue including identity theft.

Happy Thanksgiving-Lori Isaacson

A new member of the Manson Lucchese Gotti Sardi family came aboard yesterday morning at 7:30 AM.  He's a kitten that I won't name just yet because he doesn't want Google to 'pick him up'.  He prefers the underground thing.  Actually, that's my request and not his.  Yet, he is so very friendly and seems to want to write his own little post because he was all over the keyboard the minute I sat down.  Plus, he's a purring madman.  I'll keep him underground for now, though I don't think that will last too long.

This little guy reminded me of a few things that my 'experience' and 'wisdom' helped me to forget.  This pertains to life and Real Estate as I know it:

• He is curious as hell and has no pre-conceived notions.  
• He has no fear.  He is willing to explore this new territory and find his place.  Even if that means confronting a somewhat hostile 'Orange Dude' named Baxter that isn't particularly happy about the new guy's existence.
• All he is looking around for are friends.  He's wide-eyed and destined to make them.
• He's willing to love everybody, even if they don't love him back.
• He just wants to be important to somebody... it doesn't have to be everybody.
• The guy looks out the window to the outside world and wants to be a part of it, though he doesn't realize the dangers.  He wants to exist because he exists.
• He is counting on someone to help him out and he doesn't even know it. (opppppppppppppppppppppppppppp)  that was his first attempt at typing.  Seriously, the guy could be a player.  He types faster than I do and makes more sense.
• All he seems to want to do is learn.  He's new and wants to fit in even if it means fading out. 
• There are no boundaries or limitations.  The young guy doesn't know any rules other than not hurting someone else.
• Folks will comment on how adorable he is and he will take advantage of such by sitting on their laps and purring away.  Innocence is just as frighting as getting along with those who share your existence.

I don't know about you, but 'growing up' sucks and the 'Real World' can kiss my pasty white posterior.  Brilliant notions are nothing but simplicity.  Look your newborn in their eyes, you will find the truth. 

I suppose you can learn a lot from a kitten, even if you don't know its name.

Baxter & Baby Sardi

Let's get to it...

Should you refinance?  There are some homeowners who are on the fence, perhaps scared, in a jam, or have a ton of equity that isn't doing much for them.  Those folks are the ones who really need to look at their options (pro & con) and make a decision.  This could be a great time to take advantage of a market where interest rates are still pretty low.  If not, it is usually a great time to make a plan for down the road.

Should you buy a home?  If you are qualified, I don't see why not.  It's a buyers market in a lot (if not most) areas.  I'll put it like this; if you have money in the bank after you leave the closing table... it may not be a bad idea.  If you don't, it's a risk that may not be in your favor. 

Should you take out a second mortgage or line of credit?  I don't see them often right now, hardly ever.  Their availability is almost nill.  If you are looking for one, a local bank may be your best bet.  To answer the question, to pay off high interest debt and save you money that you won't in turn spend on something else... YES~!  To do home improvements~ it may not be a bad idea.  To supplement your income... find another job.  No, seriously.

You want to sell your home in the worst way but probably won't get what you want out of it?  Yup, this can be an issue.  In hindsight, you overpaid and are now undervalued.  Consult a trusted Realtor... period.

Is it a good time to invest in Real Estate?  I'll get to that answer at the very end of this post.

How do I shop for a mortgage?  It sounds somewhat odd, but how do you pick out your favorite vegetable?  It's somewhat difficult and owns many variables.  Folks want a low interest rate, no surprises, accountability, trust, and something that will benefit them now and down that road.  That's just a guess; I have no hardened proof.  Getting someone referred to you from family, friends, Realtors, attorneys, etc is a good place to start.  But you want to know my other piece of advice which you can do on your own... read the blogosphere about mortgages.  Not only will you get some insight on Mortgages, you'll get insight on the person.  The latter is as important as the former.

I can't qualify to refinance, what now?  - That depends on what you are looking to accomplish.  If you wanted cash-out, to pay off your mortgage faster, lower your rate... most likely you can't refinance because you lack the equity or your credit doesn't qualify.  If it is the former, you have little control in that area.  If it is the latter, working with a Mortgage Professional who understands credit is a must.  They should be able to lead you in the right direction.  But, if your rate is going to adjust soon and you can't qualify to refinance, it's time to modify your loan.  I will be writing a post about that upcoming.  If you have immediate questions, contact me at my information below.

Are there any out of pocket fees if I refinance?  Yes!  A one-time non-negotiable and non-refundable fee to yours truly in the amount of one million dollars.  Of course I'm kidding.  All applicable closing costs can be rolled into the loan amount, providing you have the equity to do just that.  The only out of pocket fee is the appraisal fee, a third party fee.  On a single family home in Pennsylvania, I've seen that fee range from $300.00 to $400.00.

I want to buy a home, what's the first step?  Find a Buyer's Realtor.  They will represent you and you don't pay them a dime out of your pocket.  The very next step will be to get pre-approved with a lender.  Do some shopping on your own and maybe talk to a few lenders your Realtor suggests and has maybe worked with.

One final note that I'd like to point out.  I've heard a lot of yells hype whispers from folks waiting to do anything (buy a home or refinancing) until the market 'comes back'.  Ponder the following:

The best time to buy something is when nobody else wants it.

Other articles that may answer some Mortgage-Related questions:

Should I pay points?

How to help make sure your loan closes as fast as possible.

Simple but important tips regarding your Credit & Credit Score.

Buying a home in Pennsylvania.

Rehab Loans.

There is the 'norm' and 'not so norm' in lending.  Most folks know about refinancing, at least the general aspects of it.  Perhaps you want to consolidate debt, shorten your term, lower your rate, turn equity into cash, or some other reason.  You probably (whether you are a homeowner or not) have heard about refinancing before.  You do a quick search, you'll be able to find a boat load of information on refinancing and a Mortgage Professional who can help you out.

Then there are loans to buy a home (maybe even for the first-time) or purchase an investment property.  Those are talked about quite often as well.  You do a quick search, you'll probably be able to find the information and a Mortgage Professional to help you out.

In fact, the majority of my business comes from helping people buy or refinance a home.  However, there are other products out there that fit the needs that don't seem to be as commonly addressed.

I received a phone call yesterday from a gentlemen who expressed a hint of frustration.  Apparently, the guy had a heck of a time finding a source that will do Land Loans.  He had searched high and low before he finally found me.  That reminded me that there are still some holes in lending that need to be filled, so I'd like to take a brief moment to address some of the loans we offer that fill those very holes.

We are still doing Construction Loans & Rehab Loans throughout the State of Pennsylvania!

Our Land Loans (to buy vacant land) are a specialty that many have already taken advantage of and here's a brief look at them:

* 70% Loan-to-Value

* 25 year term.

* Adjustable Interest Rate that adjusts annually,  6% Lifetime Cap.  The start rate yesterday was 6.625%!  There is no balloon so you could keep this loan for the duration if you chose too.

* Will even allow for up to 6% seller assist with closing costs!

And here's a few more features and niches that you may not hear about too often:

Feel free to email me or give me a call if you have any questions on the above products or to run your particular scenario by me.