How To Improve Your Credit Score

How can you improve your credit score?

It's virtually impossible to change your score in the time between when most people decide to buy a home or refinance their mortgage and when they apply. So the short answer is, you really can't do so "on the spot." But there are strategies you can live with to make sure when you apply for a loan your score is as high as possible.

Make sure that the information each of the three credit reporting bureaus has on you is consistent and up to date. Order a copy of your credit report about once a year, and dispute any inaccuracies.

Note: Theoretically, if a series of credit reports is requested on your behalf during a limited amount of time, your score goes down until time passes without any inquiries. Changes in the law though have made "consumer-originating" credit report requests not count so much. Also, a series of requests in relation to getting a mortgage or car loan is not treated the same as a number of credit card requests in a limited time. This is because the credit bureaus, and lenders, realize that people request their own credit reports to keep up with what's on them, and smart consumers shop around for the best mortgage and car loans.

• Unsolicited credit card solicitations in the mail didn't used to count against your credit report, but they might now. Learn how you may be able to opt-out of these.
• The two main components of your credit score are your payment history and the amounts you owe. Bankruptcy filings and foreclosures, which can stay on your credit report for as long as 10 years, can significantly lower your score. It's never a good idea to take on more credit than you can handle.
• Late payments work against you. It's extremely important to pay bills on time, even if it's only the monthly payment.
• Don't "max out" your credit lines. Since the size of the balance on your open accounts is a factor, lower balances are better.
• It's said that by carefully managing your credit, it's possible to add as much as 50 points per year to your score!

Remember, it is vital that you have a decent credit score if you hope to purchase a home. If you have any credit or mortgage-related questions, including how to apply for a home loan, feel free to give Crosscountry Mortgage a call at 877-828-8851!  We will answer your questions and help you in any way that we can.

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Is your Lender Licensed or just Registered? What's the difference?

When you have found the perfect home and are ready to go through the mortgage process, you will need to contact a loan originator. What many people don't know is that there is a big difference between a State-Licensed Mortgage Loan Originator and one that's only been registered. If they have been state licensed, then they've also passed a series of exams and received their own NMLS number. If your lender does not have an NMLS number, they're most likely registered under their Lending Institutions License and may not have completed the training to be officially licensed in their state.

As of July 1, 2010, new policies were set in place that require Mortgage Bankers and Brokers to be licensed through the Nationwide Mortgage Licensing System. The requirement for being licensed includes passing state and federal tests, background checks, finger printing, pre-eduation and continuing education. They must complete 20 hours of educational classes and pass two separate and lengthy tests.

If they've failed the test, they must wait 30 days before retesting. If you fail 4 times, you have to wait 6 months. Those that are simply registered do not have any of this. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or the S.A.F.E. Act, requires the Agencies to maintain a system for loan origination to protect consumers. Some 60% of registered lenders do not pass their exams. Before you begin working with an originator, take the time to check if they are correctly licensed by visiting the NMLS consumer access page.

You can also call us at Crosscountry Mortgage if you have any questions. 877-828-8851.

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How To Apply for a Home Loan

Is your family growing? Are you tired of renting and would like to own your home? Now would be a great time to buy! Once you find that perfect new house, next comes applying for a home loan so you can officially purchase it. To do that, there are a few things you will need first.

1.) Check your credit score. In order to apply for a loan, your credit will be checked to ensure that you are reliable about paying your dues. Importantly, having a good credit score can actually help you save money sometimes if you qualify for a lower interest rate and a lower monthly payment.

2.) Know exactly what you can afford. Make sure the house that you are aiming to buy is truly within your budget. Aiming too high can put stress on you and your wallet, even if you qualify for the loan. Your debt-to-income ratio will be taken into consideration.

3.) Pick the right mortgage. We can help you decide between a Fixed Rate or an Adjustable Rate, and whether you want it to be short term or long term.

4.) Call Crosscountry Mortgage today and we can help you get started on your loan application. We aim to suit your specific needs so that you are happy with your loan and you can afford it.  (877) 828-8851

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What is the Home Affordable Refinance Program (HARP)?

HARP is a federal government program that was introduced in March 2009. It is designed to help homeowners who are underwater with their mortgage payments. It allows them to refinance their home into a fixed loan with a lower monthly payment, thus avoiding foreclosure. In October 2011, President Obama announced a change for HARP that would allow it to reach even more underwater homeowners. It is now known as HARP 2.0. 

Are you having difficulty making your current mortgage payment? Do you owe more on your mortgage than your home is worth? Perhaps HARP is right for you! In order to qualify, you must meet all of the following requirements:

• Your mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae, and it must have been sold to one of these before June 1, 2009.
• It cannot have been previously refinanced with HARP.
• The current loan-to-value (LTV) ratio of your loan must be greater than 80%
• The borrower must be current on the mortgage at the time of refinancing, having not missed a payment in the past 6 months. One late payment is allowed in the past 12 months.
• You must have a minimum credit score of 620 to qualify.
• You must have a debt-to-income (DTI) ratio of 45% or less

If you would like more information about this program, Crosscountry Mortgage would be happy to help! Give us a call at (877) 828-8851.

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Congress Allows Mortgage Forgiveness Tax Break to Expire

For the past 6 years, Americans have had access to a mortgage forgiveness tax break that was designed to help those who lost their homes in a foreclosure. However, when 2013 ended, so did this tax break and Congress is under fire for allowing it to slip past them without an extension. This is particularly bad news for struggling homeowners who could have continued to benefit from it. Without it, anyone currently selling their home could get dinged with very large tax bills. There was plenty of bipartisan support for extending this law, however, lawmakers failed to do so before its expiration date was reached on December 31, 2013.

This tax break, called the Mortgage Forgiveness Debt Relief Act, was enacted by Congress in 2007 when the housing market was collapsing. It allowed homeowners to waive taxes related to aid that they received from banks in the form of lessened mortgage debt and short sales. As a result of this law, each household was allowed as much as $2 million in forgiven debt to be exempted from their federal taxes. After all, if they couldn't afford to keep their homes, they probably couldn't afford to be slapped with a large tax bill as well.

The LA Times interviewed Kevin Stein, the associate director of the California Reinvestment Coalition about this law's expiration. He described it as a "hit on people who are meant to be helped." Homeowners will no doubt feel it in 2014. He continued, "it is a big deal and it would be very unfortunate if, due to Congress' inability to act, people will suffer."

While there is still plenty of pending legislation that could potentially extend this tax break through 2015, it is entirely up to lawmakers to make it happen. They will be considering extending dozens of other tax provisions that also expired at the end of 2013. This means that there could be a mortgage forgiveness tax break passed even though it expired. It was originally set to expire in 2009 but was extended twice.

There are critics who say that it is time to move on from this tax break because waiving all these fees means that the federal government is missing out on revenue that could be put right back into the economy. However, there are many others who feel that this tax break is so vital that it should be immediately restored. Even though housing prices are on the rise and there are fewer homeowners currently underwater, there are still more than 1.2 million properties currently in some stage of foreclosure. The National Association of Attorneys General pointed out that there are approximately 7.1 million homes with mortgages with negative equity.

It is good to remember that the housing market has not yet fully recovered. Millions of people will be greatly affected by the loss of this tax break and they will continue to struggle without financial aid.

However, there is a slight silver lining for some homeowners who live in California. The state enacted a law in 2010 that protects homeowners from paying taxes on any benefit from a short sale. This means that any mortgage debt forgiven as part of a lender-approved short sale is not taxable income. However, anyone with a modified mortgage that had part of the principle forgiven would still be hurt by the federal law's expiration.

Generally, money that is borrowed and then canceled because of foreclosure or short sale counts as income and that is what is taxed. For example, if you owe $300,000 on a home and can only sell it for $225,000, the $75,000 difference is considered taxable income. Without the tax break, you would owe on that amount.

Without the tax break, the only possible loophole to avoid owing taxes on forgiven debt would be qualifying for an insolvency exclusion. This may not require you to include your forgiven debts as income if you can prove that your total liabilities exceed your total assets, but again, this is a specific loophole that not everyone will qualify for. Be sure to talk to a tax professional to discover any and all options you may have.

There were 42 attorneys general who wrote letters to congressional leaders in an effort to persuade them to extend the mortgage debt forgiveness tax break and understandably, these same attorney generals are outraged that it was allowed to expire. Senator Debbie Stabenow (D-Mich.) said "it makes absolutely no sense. It is, frankly, outrageous. This is not just about fairness for homeowners. This is about keeping the housing recovery alive."

Despite such passionate and high-powered backing of this tax break, it is a shame that Congress allowed it to expire. According to Jaret Seiberg, a senior policy analyst at financial services firm Guggenheim Partners, Washington is basically tired of lending government support for housing. "As a result," he said, "there is a real risk that the government will prematurely pull back support for housing." However, Seiberg believes that there is still a 60% chance that Congress could change their minds and extend the break once more.

We can only wait to see what happens.

If you are concerned about the loss of this tax break and want more information about your options, feel free to call us at Crosscountry Mortgage at (877) 828-8851. We would love to answer your questions and help you evaluate your situation, if needed.

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5 Reasons Why You Should Refinance Your Home!

What are the reasons and benefits of refinancing? 

• Lowering your interest rate: Securing a lower interest rate is one of the top reasons for refinancing. This can make a big difference in your monthly out-of-pocket costs for housing and save money on financing fees.
  
• Convert a an adjustable rate mortgage to a fixed term: converting an ARM to a fixed rate mortgage will allow you to keep payments constant and avoid balloon and spiked payments due to interest rate fluctuations.

• Build Equity Faster: if you are in a position to make higher monthly payments as a result of a salary or other good fortune, switching from a 30 year loan to a 15 or 20 year loan structure will allow you build equity faster and save money by paying less interest.

• Improved credit score: If your credit score has improved as a result of making your mortgage payments on time and in full, you may be in a position to take advantage of your improved credit standing. The lender can review your current credit score, the terms of your existing mortgage, and review options for other loan programs that could not only reduce your monthly payment, but also save you money on interest fees paid over the life of the loan.

• Use the equity you have established: A cash-out refinance allows you to tap into the equity you have built up in your home. You may want to pay off revolving credit card accounts, send a child to college, or use the money for home improvements or personal expenses. It is important to consider whether or not you have a prepayment penalty written into your existing loan, and why you are refinancing.  The lender will want to know what the current property value is, how much equity you have built up, and your current credit score

Now that you have the facts, are you ready to get the refinancing process started? Crosscountry Mortgage would be glad to help you! Give us a call at (877) 828-8851! We would love to hear from you!

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What is an FHA loan?

Technically, it itself is not a loan. Rather, it means that the Federal Housing Administration has your back. They will insure your loan even if you have fair or poor credit, a low down payment (at least 3.5%), or have experienced bankruptcy or foreclosure. This makes lenders more inclined to help you out and offer you a loan because it reduces their risk of loss if you default on your payment.

The FHA program has been helping borrowers who normally could not qualify for a loan since the 1930s as a way to stimulate the housing market. Typically, these types of loans have been primarily offered to military families, the elderly, handicapped, or lower-income families, but anyone can get one. They are not just for first-time buyers either.

In fact, the FHA loan is the easiest loan that you can qualify for. They are available for both purchasing a new home and refinancing your existing home. It requires a low down payment and your credit does not have to be perfect, which makes things easier on you. Should you need to sell your home, your loan is "assumable" which means that the buyer can pick up where you left off. 

If this type of loan would benefit your situation, don't hesitate to get the process started! Here is what you need to qualify:

• Have steady employment for the past two years.
• Have a valid Social Security number, be a U.S. citizen and be legally old enough to sign a mortgage depending on your state's age requirements 
• Make a minimum down payment of 3.5% on your new house. Or you can put 10% down if your credit score is between 500 and 579. This money may be gifted, whereas other loans do not allow this.
• Have a property appraisal from an FHA-approved appraiser.
• The mortgage payment will need to be less than 31% of your gross monthly income including principal, interest, property taxes and insurance.
• Monthly debt cannot be more than 43% of your monthly income, including mortgage, credit cards, car payments, student loans, etc.
• Have a minimum credit score of 500.
• Cannot have a bankruptcy within the past two years
• Cannot have foreclosure within last three years

There are a few disadvantages to the FHA loan since it does not hold the same strict standards of a conventional loan. It requires two kinds of mortgage insurance premiums, one of which is paid upfront in full or financed into the mortgage, and the other manifests as a monthly payment. Your house will also need to meet certain conditions and must be appraised.

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Update on Pending Home Sales in November

According to the National Association of Realtors, the month of November saw some stabilization where pending home sales are concerned. They received a slight gain. There were also some monthly increases in the South and the West that managed to make up for certain declines in the Northeast and the Midwest.

Have you ever heard of the Pending Home Sales Index? Well, if not, it is based on contract signings of existing homes on a large national sample that makes up about 20% of all transactions in the country.  According to that index, the number of signings increased by 0.2% to a score of 101.7 in November. Keep in mind that it does not account for closings, just contracts. This is good news for the economy.

NAR's chief economist, Lawrence Yun, had plenty to say about the market in a recent interview. He said, “We may have reached a cyclical low because the positive fundamentals of job creation and household formation are likely to foster a fairly stable level of contract activity in 2014. Although the final months of 2013 are finishing on a soft note, the year as a whole will end with the best sales total in seven years.”

As of now, mortgage interest rates are a bit higher but still relatively low when compared to years past. We have also seen strong gains in home prices that add to the overall market growth that we should expect to continue to see in 2014.

The market is still kind to buyers right now which means that we could see as much as $5.1 million in existing-home sales for 2013. That figure is nearly 10% more than 2012 experienced, and it is expected that 2014 should be similar.

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