In the current lending climate it is more important than ever to have a decent (that’s right not even good!) credit score to qualify for a San Diego home mortgage loan.  Many of the applications that I take for San Diego mortgage financing do not qualify on the basis of bad credit. A small percentage of those applicants  do take the recommended steps to improve their credit scores but there are far more that do nothing.  It seems like a large percentage of people think that since they have had bad credit, a bankruptcy, short sale  or foreclosure that they will not be able to qualify for a home mortgage loan for 7 to 10 years, this is simply NOT the case.  These items will not heal themselves and with FHA financing in San Diego more popular than ever in some cases a 580 fico score (620 is preferred)  is all that is needed to qualify for financing.  Fixing and deleting negative items on your credit report can be time consuming and frustrating to try to do by yourself even if you know how to make the FICO scoring system work to your advantage, this is where a professional credit repair specialist can help.    In the past I have worked with a large national credit repair service that had great results in helping my clients by real estate in San Diego but the cost was a bit high for a lot of people. A few months ago I met a local San Diego credit repair specialist and gave him a try.  Derrick Evens is a local San Diego based credit repair expert that after his first “trial” client from me I can definitely recommend.  The attached video is an example of what he can do to help you raise your score to an acceptable level  and his fee’s are half of what most others charge for the same results.  If you get a chance after watching the video check out his credit repair website  or give him a call at (858)571-0271. 

 You can Apply Here  or call me at (619)285-2921 to get on track to home ownership.

Let’s compare a home with a 5% 30 year fixed mortgage and the same property with a 6% mortgage with a 5% reduction in price.   For the example below I used a home priced at $400,000 at 5% interest and the same home at 5% less for the purchase price with the higher rate ( where analysts say rates will be by the end of the year) but the example can be modified for any purchase price and rate range.  As you can see the higher purchase price and loan amount has a LOWER payment by $105 per month. I understand that $105 dollars is not a huge amount of money but it might as well be a million dollars if it puts a buyer over the Debt-To-Income level that is needed to qualify for the loan. 

 In this image you can see that over the life of the loan that $105 per month really adds up to $53,730 in net savings.  Hopefully at this point you can see the value of the savings and please note that this is at 0% interest so if the savings was properly invested or even just put in a savings account it would be much more (due to compound interest).

Here is where the real magic happens!! If that extra $105 dollars a month was put toward the mortgage payment you can see that the mortgage would be paid off in 26.42 years instead of 30. this would result in a total savings over the house at a “LOWER” price of $95,766.

For more information on how to reduce the total cost of a new loan or your existing loan (without a refinance) give me a call at the office @619-285-2921.

Click here to view the embedded video.

Here is another short video from Kim at Credit Plus on how to make sure your FICO score is as high as possible.  Having a high score is more important than ever when you are applying for a credit card, car loan or a new San Diego home mortgage.  If you have any questions give me a call at the office at (619)285-2921 for a complimentary credit a debt evaluation.

Now it is more important than ever to know what you credit report looks like and what it contains when you are trying to buy a home and qualify for a San Diego home mortgage.  In this short video Kim Castro from Credit Plus goes over the only REAL free credit report.  This is a huge tool in fighting identity theft and disputing inaccurate reporting from the 3 credit bureaus.  Once you have pulled a copy of your credit please feel free to call me at 619-285-2921 so that I can help you maximize and increase your FICO score and dispute any incorrect information that might be on the report . In many cases the way your debt is spread out is much more important than how much debt you have for the FICO scoring model and being proactive can help you qualify  for the best San Diego home mortgage, auto loan or credit cards in the future.

  11/19/2009

Fannie Mae Lowers the Debt to Income Ratio to Qualify for Home Loans.

Fannie Mae has said that the debt to income (DTI) requirements for all applicants will be going  down from 55% to 45% (more income to qualify) so anyone looking for a San Diego mortgage loan should re-qualify as soon as possible.  On a regular basis Fannie Mae reviews the DU system (desktop underwriter) to limit losses and to ensure that credit risk assessment will stay strong on as many future loans as possible.  The new rules will go into effect between now and  December 12th and one major lender has already changed guidelines to the new levels.  This new change in the San Diego mortgage and home buying process should not be a surprise considering the recent mortgage loan performance in San Diego and the rest of the country.  From 2003 until just last year the maximum debt to income ratio on most home loans was 60%, these ratios do not include food , utility bills, gas, insurance or anything else that is not listed on the credit report. If you factor these in it is easy to see why home buyers didn’t have much left over at the end of the month.  With just a few unexpected expenses a home owner qualifying at such a high ratio could easily contribute to the recent “correction” that we have seen in the San Diego real estate market.

Make Sure that You or Your Client Still Qualify for that New San Diego Mortgage Loan!

It is extremely important that all perspective home buyers get re-qualified for their San Diego Home Mortgage. Since most soon to be San Diego home buyers have been putting in multiple offers on many properties to try and have one accepted for MONTHS they might be pre approved at a higher DTI and will no longer qualify for the same price home. Working with an experienced mortgage planner is more important than ever because with a proper file there are some exceptions for this new rule.  Fannie Mae has announced that on an exception basis some loans will be approved at up to 50% DTI.  There must be strong compensating factors like a steady job history, a large amount of assets and high credit scores.  It is extremely important that all documentation is  packaged properly UP FRONT before the property search even starts and before anything is submitted to the lender to ensure that a strong case can be made for any exceptions. It may be necessary to pay off a few small debts or to restructure a file completely even if a borrower was pre-qualified just a month ago.

If you or someone that you know is looking to buy or refinance a home in San Diego now is the time to make sure you still qualify.  Give us a call at 619-285-2921 or click here to apply online.  You can also download out printable mortgage planning package by clicking here.

When looking for a San Diego home mortgage, good credit is more than worth the effort it takes to both achieve and preserve. If you have good credit, I hope these tips will help you push your scores even higher. If you have less than perfect credit, now is the time to start rebuilding it so that you can qualify for the right San Diego home mortgage.  If you are planning on buying a home in the next 6 to 12 months you cannot afford to make these mistakes!

Do not get behind on any existing accounts. Just one 30 day late payment will drop your credit score 25 to 75 points. If you miss a mortgage payment you may be disqualified from getting a new San Diego home mortgage completely.

Do not pay old collections, charge offs or medical bills. I know that this one sounds crazy but paying on old collection account will immediately make your FICO score drop. You should not pay off old accounts before or during your escrow unless the underwriter for your new San Diego home mortgage is the one instructing you to do so.

Do not close credit card accounts.  In the past BEFORE the FICO score model some banks and lenders would want you to close accounts because if you had access to the credit the assumption was that you would use it. Now when you close a credit card account it will make your credit score drop on the next bureau update. A big part of the credit scoring model is how much debt compared to the amount of your available credit. On your revolving accounts you should be sure to keep your balances low. Having balances under 35% will give you the maximum credit scoring results. For this reason you don’t want to consolidate your credit card balances onto one or 2 cards. The length of your credit history is also very important. So if you have to close an account make sure it is a newer one.  

A question that I get all the time is, “How fast can my score go up 100 points?” ,unfortunately the only way that the credit score moves fast is DOWN. When you are trying to get a San Diego home mortgage doing NOTHING is better than doing anything fast.  The FICO system and credit scoring model is set up to reward stability. If you start changing things around (especially doing the wrong things) and your credit usage habits change drastically, it will almost always make your credit score drop.

If you have any credit or San Diego home mortgage questions or would like a copy of our Credit Scoring booklet give me a call at (619)285-2921 today.

It is estimated by the Federal Trade Commission that as many as 9 million people in America fall victim to identity theft every year.  Unfortunately too many people have no idea that they have been victimized until they are applying for their San Diego home mortgage.

Identity theft happens  when information such as credit card numbers or social security numbers are used to make purchases, open credit cards or other accounts in your name.

Do Annual Credit Check-Ups!

Visit www.annualcreditreport.com to get a free credit report once a year.  Closely review all 3 credit reports and look for anything suspicious or unusual.  Look for unusual addresses or inquiries that were done without your knowledge.  You should do this once a year so there are no credit surprises when you try to qualify for a San Diego home mortgage.

Opt Out of Special Offers!

Go to www.optoutprescreen.com to cut down on all of the pre-approved credit card offers that come in the mail.  Many identity thieves do things the low tech way, by stealing mail. They do this by getting it from a mail box or going through your trash.  Make sure to shred all documents that contain ANY personal information before you throw it away or recycle it.

Do Not Give People You Don’t Know Your Information!

Avoid falling prey to phishing scams either over the phone or by e-mail.  Phishing scams done by identity thieves that pretend to be someone from your bank or another credit institution and ask you for your personal information.   If someone contacts you requesting your personal information, do not give it to them. Any company that you have a bank account or other credit account with already has your information! Find out the name, phone number and employee number of anyone asking for your information and tell them that you will call back. After hanging up the phone, call the number on your account statement. NOT the one that the person gave you to see what the issue with the creditor is, if anything. This is all basic common sense; if you don’t shred your personal information before discarding it, anyone can go through your mail or trash to find out where you bank and your phone number. They can then call you and say that they work for your bank and they had a few “quick questions” after you verify your identity. If they are a smart trash digging identity thief, they can go into your bank and look at a few name tags and say, “I work at the branch up the street with Tim and Suzy” to make them sound more credible and make you feel comfortable about giving up the information. Take the extra time to call the bank back or even better go down in person.

Do Not Click On Links in E-mail Messages from Financial Institutions!

This is the high tech way to get you to give your information. It is very easy to recreate the look of a company’s email  or web page.  If you click on one of these links it can take you to a web page that looks like the sign in page of your financial institution. After trying to sign in, the identity thieves will have both your login and password. It is much safer to go directly to the website of your bank or credit card company to access the information that you want.  Often fake sites will have unusual graphics, color schemes, or misspelled words.  These are signs that someone is trying to “Pharm” your information.

Identity theft costs the average victim around $5,000 and hundreds of hours of time trying to fix the damage done to their credit.  Legitimate credit cards may raise your rates and even worse, you might not be able to buy that new car or qualify for a mortgage for your new home.

If you would like a copy of our credit scoring  booklet or would like more tips on how to avoid credit theft, call me at (619)285-2921.