I wanted to take the time to tell about a recent loan I closed.   Earlier in the summer, my client contacted their mortgage servicer in regards to the Hope for Homeowners program and was trying to refinance their house.  When they called they had made all their mortgage payments on time, but were drowning in debt to the point they weren’t going to be able to make their house payment for much longer.   They were told they could be helped, but only if they were BEHIND IN THEIR MORTGAGE PAYMENTS BY 3 MONTHS!  They were actually advised to stop making their house payments and to call back after the 3 month time frame!  Fortunately for them, they did not follow that advice.  Had they done so, there is a possibility they would NOT have been helped under that program, but also would have ruined their credit for any other kind of loan refinance help.   Next they called me and we began the work on their refinance.  They had over $35,000 in credit card debt, plus car payments, plus their mortgage.  When I refinanced their loan, we paid off $25,000 of the credit card debt, which dropped their monthly out of pocket payments by $899, only increased their house payment by $25 and dropped their interest rate by 2%.  That my friends is REAL hope for homeowners!  If you or someone you know is feeling the squeeze by the tighter economy, lets take a look at your situation and let’s give you some hope too.

When a creditor reports to the credit bureaus, they are reporting to usually one of the big 3 credit agencies, Trans Union, Experian and Equifax.  The creditors may report to all, two or just one of the bureaus, and each one of these bureaus calculate a credit score differently, so the scores from one bureau will vary from one to another.  However, what they all do is have a variation in one form or another of the FICO score.  The FICO score is from the Fair Isaacs Corporation (now known as the FICO Corporation) and they developed the technology that is utilized to score credit across all three credit bureaus.  They also provide many other financial solutions for banks and financial institutions world wide.  According to their website, Fair Isaacs began in the 1950s but it wasn’t until 1989 that the first general purpose FICO score debuted.  It is the number one score used when a creditor is evaluating your credit report when deciding whether or not to grant credit.

Credit gets on your report because some, but not all, creditors report it.  First the creditors set up an account with the one, two or all three credit reporting agencies and begin a reporting process.   That’s actually quite the loaded statement because it’s a little bit more complicated that that.  Not every creditor can set up an account.  Typically it takes a minimum of 500 accounts to report to a credit bureau.  Many companies don’t have that many accounts to report.  Next, it costs to report to the credit bureaus.  Just because a company may have the 500 required to have the reporting, it doesn’t mean that they will report due to the costs involved.  Most major companies do report to the credit bureaus including store credit cards, mortgages, car loans, student loans, among others.  Items that typically do not report to the credit bureaus are electric, gas and telephone company payments, rent, cable TV service, and small creditors such as local car small car lots.  However, if payments aren’t made to these creditors, they usually go on the credit report as a collection account.  Once an account is set up, then a credit begins reporting to the credit bureau.  The creditors may report daily, monthly, quarterly, yearly or once, usually when an account is paid off.  If you are trying to rebuild your credit, it’s important to know if your creditor reports to the credit bureau and how often they report.  If their reporting is not at least monthly, search for someone that does report monthly.  The more often a creditor reports the more your credit builds depth, which if your payments are on time, will raise your credit score.

Fannie Mae offers some great financing options for many of their selected foreclosed homes. This conventional loan is being used to hopefully stabilize the housing market and allow for incentives to encourage the home purchase market. One of the things that make Homepath great is that there is no required appraisal. Fannie Mae has already appraised the property and the sales price is usually set below the current market value. Another perk is that Homepath has no required monthly mort-gage insurance. While the interest rates are a bit higher than average rates, the savings in the mortgage insurance makes up for it. There is also no pre-payment penalty on this type of loan. Homepath financing can be used to purchase a primary residence, a second home, or investment property. A borrower can put as little as 3% down on a property and if negotiated, Fannie Mae will pay up to 6% of a buyers closing costs on a primary residence. For an investment property the minimum down is 15% and up to 2% paid closing costs for an investment property, if negotiated. A borrower qualifies for the loan just as they normally would for any other home purchase. Look for the available homes on the website at www.homepath.com.