Product Review:
FOR FINANCING THAT BIG HOME

Homes that cost above the maximum lending amounts as set by conforming lending standards require a special mortgage loan called jumbo mortgages. These loans are generally ARMs that non-conforming loans. The interest rate on these loans tend to be higher.

tip: get more information about jumbo mortgage loans

When an economic crisis hits – whether personal or national – there is a certain group of people who come out of the woodwork, just like cockroaches, scammers who want to separate you from your money. These days with millions of people struggling to pay their mortgages and millions more finding that their retirement funds have taken a hit, scammers are preying upon vulnerable consumers like never before.

Quite frankly, it takes an extra special amount of alertness on the part of consumers to avoid being scammed.

One area where scam artists are performing their dirty deeds is when it comes to home ownership. Because much of your personal information is publicly available, these crooks will often know that you are having financial problems and are waiting for the opportunity to give you their solution. Unfortunately, their solutions are meant to help themselves at your expense, possibly costing you hundreds of dollars or even the outright loss of your home.

Scam artists operate in a number of different ways, but they always work on your emotions to force you to make decisions that can bring you much harm. Let's take a look at some of the methods scammers use to convince you that they are looking out for your good when they really aren't:

Fear – Fear is a big motivator for people – we either fight or take flight. With their backs to the wall, some consumers make snap decisions, choices that they later regret. A scam artist will use the fear of you losing your home to convince you to sign away your home to them in exchange for some money. Each scam operates a bit differently from the other, but most likely you'll give them the title to your home without receiving just compensation.

Ignorance – Ignorance of the law is no excuse for not knowing the law, but many homeowners simply don't know their rights when it comes to home ownership and foreclosure. Some scam artists will try to intervene in your foreclosure, by offering a “white knight” solution which they say will solve all of your problems. Oftentimes, this involves extracting a fee from you – let's say, $500 – which involves making phone calls on your behalf you can make for free. Worse, are those scammers who take your money and run.

Pride – Knowing that people who get scammed are often too prideful to admit that they were taken, scammers know that they can operate without impunity, going from homeowner to homeowner with their plans to extract money from them. Don't let your pride get in your way – report a con job to the police and be prepared to file a complaint and testify in court if need be.

When con artists come a calling, they'll offer to you a number of solutions including:

Telling you you're in foreclosure when you are not. If you are behind on your mortgage payments, that doesn't mean that you're being foreclosed...yet. Contact your lender and find out where you stand and let them know you fully intend to meet your obligations. Don't involve a third party (unless it is an attorney representing you) to tell you otherwise.

Offer to provide counseling. Personal business counseling is fine, but what are you getting for their advice? Moreover, what fees are being charged? Some financial counselors are legitimate while others are offering services you can do yourself, but for a fee.

Sign over the deed to them. Never sign your home's deed over to another party, especially without having an attorney represent you. In addition, do not make payments to a third party as they may not be representing your lender. Again, contact your lender and remain in communication with them throughout your personal financial crisis.

Ultimately, if you are behind on your payments and have no way out, putting your home on the market could help you avoid foreclosure while also protecting your finances and credit. Never sign or do anything out of duress, recognizing that scammers will take advantage of your fear, ignorance, or pride to steal money from you.

2008/10/13 consumer tips

With the U.S. housing market experiencing one of its worst downturns in memory, consumers who are in a position to refinance their mortgages in a bid to improve their financial position need to be careful when seeking out a new loan.

While the overwhelming majority of lenders are knowledgeable, professional, and consumer friendly, there is a small pool of lenders who are operating just below the radar, predatory lenders who are looking out for #1. In this case, they're the #1 and you're only a means to an end – a way for the lender to sell you a loan that won't improve your financial standing, rather quite possibly do the opposite.

The U.S. Department of Housing and Urban Development (HUD) continues to warn consumers of the predatory loan practices out there. We've taken a look at what they are saying and are including the following links courtesy of HUD to help you push back predatory lending:

• Protect yourself from predatory lenders:
  For information about loan fraud and advice about preventing it, see Don't Be A Victim of Loan Fraud.
• Local information on predatory lending:
  Here are some Local Resources by state, that can help you avoid being a victim of predatory lending.
• For FHA loans:
  For problems relating to origination, underwriting, or appraisals contact the FHA Resource Center.
• Avoiding foreclosure on an FHA loan:
  Visit the HUD National Servicing Center web page.
• Non-FHA mortgage loans:
  For complaints concerning practices which include disclosure of interest rates and finance charges (APR), prepayment penalties, credit life insurance, fraud, deception, etc. contact the appropriate agency from this list to complain about the mortgage lender or mortgage broker.
• Lender threatening to foreclose or mortgage in default:
  HUD funds housing counseling agencies throughout the country. To find a housing counseling agency near you, call toll-free (800) 569-4287 immediately for free guidance or visit the web page.
• Settlement Procedures: (FHA and non-FHA mortgages).
  Visit the RESPA web page for information on RESPA disclosure requirements such as the Good Faith Estimate, HUD-1 and escrow account statements, and how to file a complaint with your lender concerning the servicing of your loan.
• File a housing discrimination complaint:
  Discrimination in mortgage lending is prohibited by the federal Fair Housing Act and HUD's Office of Fair Housing and Equal Opportunity actively enforces those provisions of the law. Learn how the Fair Housing Act can help you fight predatory lending.

As always, if you believe that you're being taken advantage of, taking action at the soonest possible moment will save you much headache and possible heartache later on. Local advocacy groups may be able to help you out, but your best course of action is the personal moves you make to counter predatory lending.

2008/09/30 consumer tips

FICO, which stands for Fair Isaac Corporation, is a term which describes your personal credit score. That score is used by lenders who will determine if you qualify for a loan and the interest rate you'll
charged as well as the length of your loan. The higher your score, the more likely you'll be approved for a consumer loan and receive favorable terms.

In these pressing economic times, not everyone has a good FICO credit score, which can be especially problematic if you need to apply for a consumer loan. Whether seeking a mortgage, a home equity loan/line of credit, car loan, credit card, or some other type of loan, you need to get the highest score possible.

Raise Your FICO Credit Score Step By Step

Fortunately, you can raise your score and see significant results within 2-3 months time. If you plan on applying for a loan some time over the next few months, the following steps can help you improve your FICO credit score:

Shrink those balances: You don't have to pay off your credit cards, but running big balances is a red flag to creditors. Work on reducing your debt, a step which will gradually raise your credit score.

Don't apply for too many loans: You may have unwittingly caused your credit score to drop by applying for too many loans in a short period of time. This can happen if you are planning to shop for a new car and are arranging your own financing. By applying to several different lending institutions for the sake of finding the best deal, you'll be shooting up another warning flag to creditors. Find out the rate first, then apply.

Remedy credit problems: If you've been late making payments in the past, then your score will take a hit. Make payments on time and pay more than the minimum amount due each month. Get free copies of your credit reports and check them for errors; notify the credit reporting agencies if you find mistakes. They are required by law to fix mistakes within thirty days or that information must be automatically removed from your credit report.

Keep consumer accounts open: Odd as it may sound, closing a credit card or other consumer account will negatively impact your credit score. Simply tuck your unused credit cards away in a safe place and don't use them again. You can gradually close them after you secure new credit, especially if you have no plans to borrow again in the near future.

More accounts means a reduced score: Opening more accounts will work against you. Only open up enough consumer accounts as needed.

Consider NOT moving your money around: Consumers have gotten into the habit of shifting outstanding balances from one account to another, but that move can actually reduce your credit score. Consolidating your balances to one account may cause your credit score to drop.

Building a good credit history is an achievable and laudable goal for any consumer. Take care of your credit score and your credit score will take care of  you in the form of favorable lending terms for your next consumer lending opportunity.

2008/09/09 consumer tips

Here is some food for thought: you're planning to renovate your home or take out a loan to pay for a new car. You've done extensive research on what you want and, in the case of a home improvement project, you've chosen the contractor, drawn up plans, and priced those new kitchen cabinets and counter tops you want.

One thing remains undone, an important step that could scuttle your dreams: your credit could be trashed, thanks to the work of an identity thief or because of a mistake made by the credit bureau. Yes, you've done your homework but you forgot one key step: checking your credit reports to see if they are accurate and reflect current information.

Your credit report is a vital part of consumer lending and, thanks to an act of Congress, is free when ordered through Annual Credit Report, a website managed by the three primary credit reporting agencies, Experian, Expedia, and TransUnion. Once annually, you can get one copy each from the three agencies of your credit report for free and optionally pay the $4-8 fee to get your credit score. Yes, pay the money for your credit score because that is the number creditors use to determine if you qualify for a loan and at what rate.

Checking your credit reports regularly makes sense, but what about other services which keep tabs on you? Though credit reporting bureaus are the most important way to get "the goods" on you, there are some other organizations who keep tabs on you, namely:

Insurance -- Your medical history or your homeowner's policy could be information that insurers want. Several companies keep tabs on this stuff including MIB and Choice Trust.

Tenancy -- If you've rented before and left your landlord high and dry, don't think for a moment that this decision won't come back to haunt you. SafeRent and ChoicePoint know what you did and they're more than willing to share this information with a landlord, for a fee of course.

Job -- Acxiom and ChoicePoint keep tabs of your employment history, but you could be aiding them with your online resume through Monster or CareerBuilder.

Banking -- Have you written a hot check lately? Probably not, but opening up a checking account is serious business. That's why TeleCheck, ChexSystems, and SCAN keep track of good and bad deposit information.

If a problem does come up,  the credit reporting bureau or other credit checker must allow you to address the mistake or correct a problem. Most of the companies I've mentioned will provide that information to you for free, but you have to ask in order to get it.

Don't wait until after you set your home improvement or other consumer project in motion before checking your credit reports. To delay means you'll really pay, but certainly not in a good way!

2008/06/27

Your home loan consists of four elements, two that you are probably aware of, and those are the principal and interest. Two additional elements, taxes and insurance, must also be considered when applying for a loan, secondary elements which can be the deciding factors in whether you get approved for a loan or not.

Which brings us to an important question -- if you are in the market for a new home, have you factored in what your property taxes and homeowners insurance premiums will be?

Some things for you to consider:

You may have a general idea how much taxes you'll be paying annually for your home, but there are factors which can skew these numbers tremendously, even in the same taxing district.

For example, taxes on a three bedroom ranch home could be higher than on a four bedroom colonial, because the width of a ranch home is wider than with a colonial. Other factors that can make a difference include: the age of the home, location, and property size.

Homeowners' insurance isn't as easy to figure out today as it was in the past. You may think that $500 annually will cover your insurance needs but discover that your home is in a flood plain, necessitating that you take out expensive flood insurance which is only available through the federal government.

You also discover that since your home is a little too close to the ocean, where all homes have seen rates double, triple, even quadruple since the 2005 hurricane season. What had once been a fairly small expense, home insurance isn't any longer.

You've done your homework finding an excellent mortgage loan. Now go and check out what you'll be paying for property taxes and homeowners insurance to see if you can really afford your new home.

2008/06/18