Financial Preparation

Good Credit

Good credit can be the make-or-break detail that determines whether you'll get a home mortgage, low interest credit cards, a personal lines of credit or a job (lots of employers check the credit of candidate applying for a position in their company). Good credit can signify your financial situation.  It can be an indication that your life is on the right path to success.

You can check your credit score by requesting a free credit report every year from each of the three reporting bureaus: Equifax, Experian, and Trans Union. Your credit report is separate from your credit score.  In addition you also need to request your FICO from the three reporting companies mentioned a previously.  Your credit score is based on the information found on the credit report.  Some of the scoring factors are payment history, amounts owed, length of credit history, types of credit used and they look at have you applied for new credit.  FICO scores range from 350 to 850.

You can repair your damaged credit but it takes time, a conscious effort and setting up a personal debt repayment plan and stick to it.  There are some credit repair services available through some lending institutions.  The counselors offer some of the most effective and efficient ways to help you repair your credit.

Happy Investing!

This blog post courtesy of Bernita Mckinnion, Home Land Investment Properties, Inc.

Bad credit? No Problem!

Have you had a recent short sale, foreclosure or bankruptcy, and think that you cannot buy a home right now?

Well, there are options. My mortgage lender sent me some information about a new program in Washington State that offers a leasing with right to purchase program, called Home Partners of America. Here is their information about how this program works:

We want to work with you to lead responsible households on a new path to homeownership.

Our goal is to help more than 10,000-15,000 households in the next 14-16 months:

We work with households that want to rent homes with a right to purchase in the future:

− First-time homebuyers

− Individuals relocating to a new market

− Households that cannot obtain mortgages

A household can select any home listed for sale that meets our criteria:

− Financial obligation is limited to one year of rent

− The lease can be renewed annually for a total of five years

− The resident can move out after any one-year lease term without penalty

− The resident can buy the home from us at any time during their residency

As our buyer’s agent, real estate brokers will receive a full co-op commission when we buy the home.

Basic requirements:

− Annual household income of at least $50,000

− Stable employment

− No history of eviction and no pending bankruptcy;
 
Every household must provide:

− Full Application from everyone 18+ years old

− Application Fee ($75 total per household)

− Supporting documents:

acceptable criminal history

• Income Verification

• Asset Verification

Please message me privately for more information about this program at HomeLandInvestment@gmail.com or leave a voice message on my recorded hotline: 888-621-4999.

Happy Investing!

Failure of Loan Modifications

MISUNDERSTANDING NUMBER ONE: “I HAVE A RIGHT TO GET A LOAN MODIFICATION”…”WRONG!”

I think it happened about the time President Obama initially took office. He and his new administration were attempting to keep people in their homes. The extent of the Recession was unknown and it seemed to be a way if the payments were adjusted lower, that homeowners could ride out the wave of Recession and then, when back to work after the Recession, be able to afford staying in their homes. It all sounded so reasonable.

The problem is that the rules and policies for a loan modification are not favorable to allowing most homeowners to successfully obtain a loan modification, let alone successfully stay with one and stay current under the new loan payment program occasioned by the loan modification.


OVER 80% OF THOSE THAT APPLY FOR A LOAN MOD…GET REJECTED!
[8 out of 10 People Don’t Get a Loan mod!]

Could you re-read the banner above. That is correct, over 80% of the folks that make application for a loan modification get rejected. That means less than 20% can expect to even get a loan mod. So 8 out of every 10 property owners you encounter in your practice will NOT be able to get a loan modification.

MANTRA: Make these people your friends as they will be back as soon as they get the loan mod application out of their system and have been rejected.

Why the high rate of rejection? Loan modifications are all formula based. They are calculated upon the party’s ability to make a mortgage payment based upon their gross income. The problem is that about 40% of the people seeking a loan modification made TOO MUCH MONEY.

Why would any bank or lender reduce monthly payments on a mortgage loan when a party can clearly afford the monthly payment? That knocks off about 4 out of 10 loan modification applicants.

Oh, the other 40% that are rejected? They make too little money. The lender can only reduce the payment so low and about 40% of the applicants have income levels below that which would allow them to qualify for a loan modification.

In other words, the bank can’t reduce the payments and interest rate enough to allow 4 out of 10 people to get a loan modification as they just don’t make enough for such a plan to be successful.

That’s less than 20% that actually get a loan mod. Make these people your friends!!! Why?
Read on and you will see that even the folks that get a loan modification will want to contact you afterward.


OH DID I MENTION THAT 64% OF THOSE THAT DO GET A LOAN MODIFICATION FAIL WITHIN 9 MONTHS!...THE FAILURE RATE IS HIGH!

So if you do get a loan modification, there is a high probability that you will fail at the payment structure associated with that loan modification deal. Why? Why would over 64% of the people fail at an approved loan modification? That is correct. Of the under 20% that actually get a loan modification, 64% fail within nine (9) months.


THE TOP REASON WHY LOAN MODIFICATIONS FAIL?

If I were to ask 100 consumers what their expectations are for a loan modification I can tell you EXACTLY what they would be:

**********REDUCE MY MONTHLY PAYMENT

**********REDUCE THE PRINCIPAL AMOUNT OWED ON MY MORTGAGE

That is what all your customers want. Will they get that? No. Oh they will get the lower payment, but not get a lower principal amount owed. That causes the lender to actually take a loss and they don’t want to do that. There are few, if any, principal reductions in loan modifications.


LENDERS DO NOT REDUCE THE DEBT AMOUNT OWED IN LOAN MODIFICATIONS

It may happen every once in a while, but generally no. Sellers out there really anticipate that it will happen and lose enthusiasm when they find that they are putting good money after bad. Why do that? They lose more enthusiasm when they DO call you and find out what their property is worth and how long it will be until they have some equity.

Happy Investing!


Today's guest blog courtesy of McFerran & Burns in Tacoma