Galel Fajardo, Orange County Mortgage Planner

June 24th - Mortgage Market Update

Galel Fajardo (Coast Mortgage Group) — Tue, 24 Jun 2008 14:40:41 -0500

The market has been very volatile lately. Here is my breakdown as to what's happening on the mortgage bond market, and my assessment as to where rates will go. If you have any questions please do not hesitate to contact me!

Home buyers MUST prequalify - Galel Fajardo, Orange County Mortgage Planner

Galel Fajardo (Coast Mortgage Group) — Tue, 06 May 2008 17:27:40 -0500

Recently I have had several home buyers introduced to me by REALTORS® who have not been prequalified prior to searching for a home.

Potential home buyers must prequalify so that they do not get their hopes up in looking for a home that they cannot afford. There are so many Orange County homes for sale, but in order to obtain the best priced for one's budget - it is vital that they speak with a mortgage professional who understands mortgage underwriting guidelines.

While lending guidelines have tightened, many doors have been opened by FHA loans in Orange County. Sellers may contribute up to 6% to cover a buyer's costs, and buyers need only 3% down! The key aspect to this is that a buyer can actually afford the payment on their home purchase.

There are many foreclosures in Orange County, as well as other distressed homes that are for sale at well-below market value. These are fantastic opportunities to take advantage of all of the programs available for first time home buyers.

A first time home buyer's first phone call should be to a trusted mortgage professional. Next, that mortgage professional will recommend that they speak with a REALTOR® who is an area expert to assist in finding their dream home that fits into their appropriate budget. The mistake I see is that real estate agents get their clients excited about a home that is above their appropriate price, and then the mortgage professional is stuck attempting to fit a "square peg into a round hole" which wastes everyone's time. This could all be avoided by a buyer having received a prequalification letter for a specific loan amount and loan product.

While searching for a home can be difficult at times, it is one of the most exciting times in one's life!

If you would like more information on how to prequalify for a home loan or to receive a referral to a great REALTOR® in your area, please contact Orange County Mortgage Planner Galel Fajardo.

Hope is alive in housing market - Galel Fajardo quoted in the Daily Pilot newspaper on 4/18/08

Galel Fajardo (Coast Mortgage Group) — Wed, 23 Apr 2008 02:51:12 -0500

Galel Fajardo, Orange County Mortgage Planner was quoted in the Friday, April 18th edition of the Daily Pilot newspaper.

"If people have been on the fence, I hope that this article conveys the fact that people are flocking to the great deals available in our area," says Fajardo. "With lending guidelines tightening by the week, people should jump on this opportunity to get themselves into a home."

Follow the link for more information about Orange County mortgages.

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The Daily Pilot newspaper, Friday, April 18th, 2008

Hope is alive in housing market

UCI director and mortgage planner expect lower prices to foster flow in business, despite poor postings in the real estate market recently.

By Michael Miller

Kerry Vandell expects to see plenty of new home buyers in Newport Beach in the coming years — as well as new accents, new surnames and new passports.

The director of UCI’s Center for Real Estate agrees with many who believe home sales will improve soon as prices continue to drop.

He doesn’t believe, though, that all the purchasers will relocate from elsewhere in Orange County. With the combination of the falling prices and the weakening value of the dollar, Vandell said, coastal areas such as Newport may become increasingly attractive to the foreign market.

“You’re going to see Asian investors with money, European investors with money, Middle Eastern, too,” he said. “I believe that’s going to result in an increasing presence of wealthy foreign purchasers with money.”

Some, like Vandell, see a bright future for the Newport-Mesa housing market, which they expect to rebound after months of slow going.

Throughout the region, many Realtors and lenders said they had seen a leap in customers as housing costs fell and buyers who had been priced out of the market were finally able to close.

The numbers for March, though, show another bleak month for the home industry in Southern California.

The research firm DataQuick, which has compiled home statistics since 1988, declared Tuesday that Southland home sales were slower last month than in any March in the last two decades.

The number of homes sold dropped 41.4% across the region and 46.9% in Orange County from the same month a year ago.

Newport-Mesa, for the most part, was no exception. In four of the eight ZIP codes in Newport Beach and Costa Mesa, sales fell even more steeply from a year ago than the Orange County average.

“You’ve got everyone that’s reading the news and everyone’s freaked out,” said Steve Jones, a Westside developer who has tried for months to sell the last two condominiums in his 1.7 Ocean complex. “What I keep telling people is that this is when you can get a deal. This is when people are willing to negotiate.”

However, Galel Fajardo, a certified mortgage planner for the Coast Mortgage Group in Costa Mesa, thinks that time has come for many home buyers.

His office, he said, has gotten a flurry of activity in recent weeks, and he expects sales to surge in the area by the time summer rolls around.

“What those numbers don’t show, and it’s impossible to see, is how many buyers there are out there,” he said. “They are out there in droves looking right now. People who were on the fence are no longer on the fence.”

Costa Mesa Realtor Larry Weichman said a number of homes in his area had gotten multiple offers in the last few weeks.

One, a Mesa Verde home that had gone into foreclosure, netted 30 offers before a buyer finally closed on it.

“The market under $500,000 in Costa Mesa is on fire,” Weichman said. “People are lined up to go into these houses.”

Mortgage Market Wrap-Up: Tuesday, March 11, 2008

Galel Fajardo (Coast Mortgage Group) — Tue, 11 Mar 2008 19:08:28 -0500

It's been a crazy month so far, with mortgage rates moving up one hour, and moving down the next. Today, the Federal Reserve announced that they were injecting another $200 billion to ease liquidity concerns.

In non-financial jargon, this means that the Fed is making more cash available to banks, since they have lost so much money as a result of the mortgage industry "meltdown".

The great part about the Fed's move is that it will allow banks to receive Treasuries in exchange for their mortgage-backed securities, otherwise known as mortgage bonds. Mortgage bonds are looked at negatively by the market since they've lost a ton of value as a result of the "meltdown."

Banks who have these mortgage bonds have not been able to sell them on the open market, because so few people want to buy them! The Federal Reserve is helping these banks out, since people are willing to actually buy Treasuries as opposed to mortgage bonds.

This lead to a big stock market rally, and bank stocks actually rose today... A great sign. Additionally, mortgage bond prices went up, putting lenders in the position to re-price rates even better today.

Tomorrow will be a light day for financial news. At 10:30 EST the Crude Inventories will be released, which should not have much of an impact on mortgage rates.

I'll be watching the market closely - so if you have any questions feel free to call my office at (949) 340-3531 or e-mail me at galel@galelfajardo.com.

Have a great night!

Galel Fajardo, CMPS®

President, Coast Mortgage Group

REALTORS® Insist Ethics Missing - Galel Fajardo Quoted in the Daily Pilot Newspaper 2.4.2008

Galel Fajardo (Coast Mortgage Group) — Mon, 04 Feb 2008 12:35:38 -0600

Below is an article that I was quoted in - the Daily Pilot interviewed me on my opinion of the rising number of foreclosures in Costa Mesa/Newport Beach area. I told the reporter what I have been preaching non-stop for the past few years - people need to learn fiscal literacy! It is your fiduciary responsibility as a real estate professional to ensure that your client is receiving advice from a qualified professional. Almost anyone can obtain a real estate license. Not everyone is qualified to take care of your clients, though.

Here is a link to the article: http://www.dailypilot.com/articles/2008/02/04/business/dpt-bizwatch020408.txt

I'd love your thoughts and opinions!

Galel Fajardo, CMPS

President and Mortgage Planner

Coast Mortgage Group

Daily Pilot Newspaper - February 4, 2008

BUSINESS WATCH: Realtors insist ethics missing

Written by Michael Miller

It's been a tough few months for Orange County homeowners, and no area is feeling the brunt worse than the Westside of Costa Mesa.

The 92626 zip code, which comprises the western end of the city, had the biggest increase in foreclosures last quarter of any zip code in the county, according to the statistical firm DataQuick. The area posted only a single foreclosure in the fourth quarter of 2006, but that number rose to a whopping 29 in the fourth quarter of 2007 - leading Orange County with a 2,800% increase.

Nearly every part of the county had an increase in foreclosure. Costa Mesa Realtors surmised the Westside's high amount was the result of a large number of first-time buyers who, in some cases, may not have completely understood the loans they took out.

"There's a lack of consumer education," said Galel Fajardo, president of the Coast Mortgage Group. "We have not taught people the basics of personal finances, so they'll go online and shop for a mortgage. I tell people, ‘Even if you don't go with us, go with somebody you know. Go with a certified mortgage professional.'"

Elia Ceniceros of Weichman Associates Realtors recommended prospective home buyers check with the California Department of Real Estate or local realty boards to check an agent's credentials. Part of the problem, she and Fajardo said, was many first-time home buyers were recent immigrants, and small-time lenders sometimes coaxed them into taking out loans they were unable to pay off.

"There's a lot of unscrupulous and unethical agents out there that may have done that to clients, but the problem is that when the client turns around and needs the agent to help them, the agent is no longer in the business," Ceniceros said.

For homeowners unable to make payments, foreclosure isn't the only option. Valerie Torelli, who owns Torelli Realty in Costa Mesa, said she had a number of homeowners come to her asking for help with short sales, in which a bank agrees to resell a house for a price lower than the initial loan.

The problem, she said, was not restricted to low-income buyers; many more affluent ones had pushed their luck in recent years because they expected the market to keep improving.

"Even people who have really good income got sucked into this, too," Torelli said. "They kept buying houses they couldn't afford."

Friends, Get Ready For A Flurry of Purchase Activity!

Galel Fajardo (Coast Mortgage Group) — Fri, 25 Jan 2008 16:41:25 -0600

According to President Bush's economic "stimulus package" proposal, some of the nation's costliest areas will receive a temporary exclusion from Fannie Mae and Freddie Mac's $417,000 conforming loan limit. This will allow Fannie Mae & Freddie Mac to purchase loans up to 125% of the median area home price - with a cap of $730,000.

This is HUGE news, because not only are the interest rates higher for jumbo or non-conforming loans (currently loans higher than $417,000), but also the underwriting guidelines are much more restrictive. Should your area be one of those that receives an exclusion, you had better bet that this will spark your purchase market!

Are you prepared for a rush of purchase business? If not, this is your wake-up call!

Get yourself ready. Now is the time to be more active than you have been in the past. Listings $500,000+ (which have been terribly stagnant) are going to be most affected by this possible move.

As more information comes out, I will be sure to notify you - but I wanted to make sure to get the word out ASAP.

If you want more information, have questions, or need help preparing your business for this possible purchase rush, please contact me. I'd be happy to coach you in helping make 2008 the best year you've had!

Galel Fajardo, President and Mortgage Planner, Coast Mortgage Group

(949) 340-3531 Office

Stop by my site and get more information on Orange County mortgages or Orange County FHA loans.

Selling Your Home "By Owner"?

Galel Fajardo (Coast Mortgage Group) — Wed, 14 Nov 2007 13:15:20 -0600

So, you've decided to sell your home without the assistance of a REALTOR®, but how are you going to market it? Here are a couple of thoughts that I have on the subject...

First, there are some great resources available to you at no cost. My company, for example, has the largest site that contains homes for sale by owner in Orange County (FSBO) - and we allow home owners to post their homes on the site at no cost. Why would we not charge for such a service? Simply put, we want to help you sell your home so that we can assist you in financing your next purchase. Additionally, by placing your home on our website, we attract hundreds of buyers on a monthly basis who are looking to purchase homes. This is an example of a win-win: You have buyers looking at your home, and we have the opportunity to help these buyers get into the homes of their dreams!

Next, there are REALTORS® who specialize in listing properties who are willing to give you their advice at no cost. We seek relationships with such REALTORS® so that when the home owners on our site decide to list, we can refer those REALTORS® to list these properties. We want to make sure you get the best advice possible, especially in a market with a great deal of uncertainty.

Business Network International (BNI) teaches its members that "Givers gain." I believe in this wholeheartedly. Don't always be skeptical when a real estate professional wants to give you advice at no cost. There are many great professionals who have a genuine desire to help you with what you need. It goes without saying, but when you eventually decide to make a home purchase, or list your home, you should think about these professionals to assist you!

If you'd like to see the homes that we have on our For Sale By Owner (FSBO) site, you can check it out by clicking the following link: For sale by owner Orange County (FSBO)

We'd be happy to give you advice, and help you find a great real estate professional. Use your resources. You don't have to do it alone!

Galel Fajardo is President of Coast Mortgage Group. He is a nationally-recognized For Sale By Owner marketing expert, and currently runs the fastest-growing FSBO website in Orange County, CA. He is often featured in local media, and recently spoke at one of the mortgage industry's largest events in Las Vegas, NV. He may be reached by e-mail at galel@galelfajardo.com.

California Chapters of Women's Council of REALTORS® meet in Anaheim

Galel Fajardo (Coast Mortgage Group) — Mon, 08 Oct 2007 14:17:35 -0500

I had the great privledge as the 2008 Treasurer of the South Orange County chapter to attend the state meeting yesterday, held at the Anaheim Mariott in Anaheim, CA. Unfortunately for me, this was the only positive event going on, as my beloved Anaheim Angels were getting slaughtered at the hands of the Boston Red Sox just a couple of miles away - but I digress. I was able to see first-hand how the Women's Council of REALTORS® conducts its business on the state level, as well as had a chance to meet fantastic women and men from all around California.

Some of you may already be thinking, wait a second - what's a man doing at the Women's Council of REALTORS®, let alone as an incoming officer? The Women's Council of REALTORS® allows professionals of any gender to join their ranks. Their mission is simply that: "We are a network of successful REALTORS® empowering women to exercise their potential as entrepreneurs and industry leaders." (Copied from www.wcr.org)

I'd encourage everyone to join and support your local chapter. The organization is doing fantastic things around the state of California, including raising funds for various charitable organizations fighting illnesses, donating to those in need, as well as educating fellow real estate professionals during a more difficult time in the real estate market. If you are a REALTOR® you definitely belong there to learn from your fellow REALTORS® - and if you're another professional involved in real estate (like I am) - I would encourage you to join as an Affiliate member to form relationships with and support your local REALTORS®.

The black and white photograph I have included is from WCR.org - featuring some of their early members, most likely around the 1930's. The California Assocation of REALTORS® had originally had a Women's Division as a result of the increasing number of women becoming real estate professionals. Local boards around the country were somewhat resistant to include women, but fortunately the NAR (National Association of REALTORS®) had already been prepared to recognize women. In 1938 at the national convention in Milwaukee, WI the Women's Division was "officially" created nationally.

Today Women's Council has over 19,000 members in over 300 chapters around the country. They help each other as a strong support system & providing each other with encouragement, helping then network by collaborating with other REALTORS®, by encouraging referrals among their members, and much more.

If you are not yet a member of your local WCR chapter - you've got to do it right away! Now, more than ever it's important to form relationships with experienced real estate professionals who can provide you with insight, expertise, and ideas on improving your business. If you happen to work in Orange County, I encourage you to check out the South Orange County Chapter of Women's Council of REALTORS® by visiting www.wcrsouthorangecounty.com

Galel Fajardo quoted in today's Daily Pilot Newspaper - Combined Home Sales Go UP in Newport-Mesa!

Galel Fajardo (Coast Mortgage Group) — Wed, 15 Aug 2007 13:30:39 -0500

I've been saying the same thing the last several months - there's nothing to fear, folks!

Yesterday I was interviewed by the Daily Pilot Newspaper's business writer, Michael Miller for my opinion on the local housing market, and the DataQuick survey data that was released. While housing has slowed in some areas of Southern California, overall in the Newport Beach/Costa Mesa area - home sales have actually surpassed last year's levels.

Consumers have nothing to fear when it comes to purchasing so long as they have two people:

1. A well-qualified REALTOR who is an area expert.

2. An experienced mortgage professional who you know, or can be endorsed by people whom you trust.

I've included the article here so you can see what the Daily Pilot article said. If you are interested in purchasing a home and need a referral to a professional REALTOR, please let me know!

Additionally, to hear my Daily Market Update, 24 hours a day - recorded daily - call: 800-256-4021 ext. 212

The following was pasted from: http://www.dailypilot.com/articles/2007/08/15/business/dpt-homesales15.txt

Published Tuesday, August 14, 2007 11:32 PM PDT

Business

Area home sales level, report says

While some neighborhoods are seeing a sales decline, combined home sales in Newport-Mesa are up, DataQuick finds.

By Michael Miller

Even as the Southern California real estate market continues its prolonged slump, home sales in Newport-Mesa remain stable, according to statistics released Tuesday.

Home sales in the Southland are the slowest they've been since 1995, according to a report issued Tuesday by DataQuick, a San Diego-based statistical firm. The number of houses sold throughout the region in July was 27.4% less than 12 months ago, while Orange County saw a 19.8% drop.

Many real estate agents have credited the drop to rising prices and an increasing number of foreclosures that have left some wary of investing in a house.

On the whole, though, housing sales have actually improved throughout Newport-Mesa. Some neighborhoods saw fewer home sales last month than in July 2006, but DataQuick numbers showed that the two cities combined had 124 home transactions last month — 10 more than they had a year ago.

"The Costa Mesa-Newport Beach area is an extremely desirable place to live and continues to be," said Galel Fajardo, a broker for the Coast Mortgage Group and an affiliate member of the Newport Beach Assn. of Realtors. "When it comes to the data, real estate has always been cyclical. There are going to be fast times and slow times."

Newport-Mesa saw a little of both in the last year. Corona del Mar saw its number of transactions leap from eight to 18 between July 2006 and last month, while Newport Coast plunged from 12 to five.

Median sale prices fell in most areas, but the Balboa Peninsula area enjoyed an increase from $1.38 million to $2.3 million.

Valerie Torelli, a real estate agent from Costa Mesa, said her firm had kept pace with its totals from a year ago. She acknowledged, however, that the nationwide drought in the housing market had made sales more difficult at times, since many buyers felt less inclined to take a risk.

"You have to work harder, and you have to work smarter," she said. "It takes a while longer for buyers to make up their minds because there is so much inventory."

However, Joseph Miner, the president of All Cities Realty in Costa Mesa, said most of the brokers he knew were struggling to complete sales.

"I don't know what the numbers show, but the market itself is very slow," he said. "Basically, if you talk to any real estate agents or brokers across the coast, it's slow. They'll tell you the phones don't ring."

MICHAEL MILLER may be reached at (714) 966-4617 or at michael.miller@latimes.com

There's No Need to Panic. Real Estate Will Go On!

Galel Fajardo (Coast Mortgage Group) — Mon, 13 Aug 2007 20:16:20 -0500

Needless to say there have been a lot of frightened people the last couple of weeks whenever someone mentions the term "real estate," "housing," or "mortgage." While a lot of fears are warranted for those folks who unfortunately took out Adjustable Rate Mortgages without understanding the ramifications, many other fears are simply induced by the media.

Let me start off by saying - the media are not our friends. Whether or not you are a real estate professional like myself, the media serves one purpose: to attract a large audience. Does good news attract a large audience? Not generally. What types of topics bring people to turn the volume up on their radios or televisions? "It is the most dangerous thing in your household, and you could be feeding it to your family! News at 11." Fear, destruction, violence - unfortunately these are the things that attract audiences.

Remember the "Bird Flu"? Where did that go?? I thought we were all supposed to be in plastic suits and in isolation chambers by now. Apparently that news got old, and they have decided to focus on other things. Let's think about this for a minute... What is typically an American family's largest financial purchase? A home. Next, what's their largest indebtedness? Their mortgage. Now, if we have a "crisis" with the value of that home, and issues with their mortgage, isn't that going to affect a lot of people? Absolutely. But, is the problem as bad as they would want us to think it is? For some folks it is (as mentioned previously), but for the vast majority of home owners, there is nothing to fear. Additionally, a lot of this media attention is doing nothing but scaring away would-be home buyers unnecessarily!

I can't say this strong enough: THERE IS NOTHING TO FEAR RIGHT NOW. YOU CAN SAFELY BUY A HOME!

Will everyone qualify with the new guidelines and the so-called "credit crunch"? Absolutely not. But, if someone shows up to my office tomorrow with a good credit score, solid income and assets, and their debt ratios are good - they'll be able to buy a home without any issues. The sky isn't going to fall. It's safe, everyone. All that has changed is that larger loan amounts are being scrutinized more heavily, and folks with credit problems are having a more difficult time obtaining mortgages. I know it's going to be a shame for some agents and mortgage lenders who want to be able to let someone with a 600 credit score, stated income, stated assets, to buy a home with no money down - but let's be realistic. All that's happening is that we're reverting back to the way things used to be. There's no problem with that. The problem is that many well-qualified people are afraid to make a move because of all the bad news they are hearing.

The reason I wrote this today was because two different agents told me this weekend that purchase prospects of theirs had called and said: "You know what, call me in six months. When the market stabilizes and things aren't so bad, I'll look at buying." I think that's a terrible mistake. There are some great homes available right now.

What should your next step be as a consumer? Get pre-qualified IMMEDIATELY. Get a referral to a well-qualified mortgage professional. Make sure you will qualify for a loan so you aren't hit with a huge disappointment after finding the home of your dreams, entering into a contract, and then have to pull out of escrow. Next, get a referral to a well-qualified REALTOR®. I can't emphasize this enough. I have seen too many people who have said, "Oh my brother's friend's co-worker's neighbor has his real estate license, so he's going to help us." I'm sure they are a great person - but use a REALTOR®. Everyone and their brother has a real estate license, especially in California. Use an area expert, because using someone else may cost you thousands of dollars due to their lack of knowledge.

I hope this has helped! If you have any questions, please feel free to ask, and I'll do my best to answer them.

Happy house hunting!

Galel Fajardo, CMPS^TM,President and Mortgage Planner, Coast Mortgage Group

http://www.coastmortgagegp.com/

http://www.galelfajardo.com/

Stop Wasting Your Time! Looking for a Home You Won't Qualify For?

Galel Fajardo (Coast Mortgage Group) — Wed, 08 Aug 2007 11:44:22 -0500

Hello Everyone! This is a video message to all consumers who are planning on purchasing a home, or refinancing their existing mortgage. I have included this video message since there was a lot to say. There are a lot of challenges currently with the credit tightening that we're experiencing. People on the fence can no longer wait! You must move on your home purchase right away. If you have any questions, please post them and I will be happy to answer them for you. All my best, Galel Fajardo www.GalelFajardo.com

Eastbluff Home Values and Market Update

Galel Fajardo (Coast Mortgage Group) — Sat, 21 Jul 2007 02:30:27 -0500

One of the projects I have begun working on for clients is to compile data from their specific communities on their recent sales, current listings, and tracking the trends on home values.

I have begun creating reports for specific areas in Orange County, and am customizing these reports based upon data given to me from the MLS and my appraisers.

If you are an Eastbluff resident and would like to request a customized report, you may do so at my custom website at: EastbluffHomeValues.com.

If you are interested in purchasing an Eastbluff home, be sure to contact me for a referral to a qualified REALTOR.

Mesa Verde Home Values

Galel Fajardo (Coast Mortgage Group) — Fri, 20 Jul 2007 20:34:23 -0500

Lately there has been a lot of concern about properties being on the market for a longer period of time. Clients afraid of losing large amounts of home equity have been inquiring about what their homes would appraise for in today's market.

This is why I have begun compiling data for my clients in various neighborhoods in Orange County.

I have created a report for Mesa Verde residents to see the trends in the neighborhood, as well as to view comparable listings and recent sales. To request this report, you can visit the following site:

MesaVerdeHomeValues.com

My staff will get your customized report to you within 24 hours.

Additionally, if you need a referral to a great REALTOR® who can help you find a Mesa Verde home or elsewhere, please contact me! I'd be happy to refer you to a trusted agent.

When's the next SoCal event?

Galel Fajardo (Coast Mortgage Group) — Thu, 05 Jul 2007 19:07:10 -0500

For those of us poor saps who missed the event last month, when's the next event for LA and Orange County??

Loans in Mexico

Galel Fajardo (Coast Mortgage Group) — Wed, 04 Jul 2007 11:04:42 -0500

Have any of you done loans in Mexico before? Do you know of any wholesale lenders that will do loans in Mexico?

Any help you could provide would be appreciated!!

Thanks,

Galel Fajardo

Your Credit Report - Scoring and Repair

Galel Fajardo (Coast Mortgage Group) — Sat, 02 Jun 2007 11:33:44 -0500

Your Credit Report – Scoring and Repair

By Galel Fajardo

When it comes to the terms “credit reports,” “FICO scores,” “late payments,” or even worse, “mortgage late,” consumers run away. It’s a tough subject – even if you have good credit, simply because hardly anyone knows what factors create a credit score. With the exception of recognizing that the best score wins the best terms, the average home shopper knows very little about the whole credit scoring process. Hopefully, this information will help give you a better understanding so the next time you hear any of those dreaded terms, you’ll have the confidence to discuss them.

First off, credit scores range from 350 to 850, with 720 and above being considered as excellent scores. From 680-720, scores are considered “good”, and are A-paper, but a few of the top loan products are out of reach here, as they are saved for consumers above 720. 680-660 is considered “OK” credit, which drops a client into the Alt-A category, and possibly subprime. Anything lower than 660 puts a client into a subprime category. Previously the benchmark had been at around 620. Subprime borrowers who are eager to move into the A-Paper category often find themselves in a difficult spot when trying to find ways to upgrade their credit history. The good news is there are ways to improve less-than-perfect credit scores and obtain a loan for the home you really want.

The first step in the process is making sure that you have a current copy of your credit report. According to the Wall Street Journal, 79% of all credit reports contain at least one error! Fortunately, there is a viable solution. Congress recently amended the Fair Credit Reporting Act so that consumers may now receive one free credit report annually. There are three major credit bureaus: Equifax, Experian, and Transunion. Since entries can vary across bureaus, you’ll want to request a free report. Unfortunately, the credit report given by the bureaus do not contain your FICO score – only a reporting of your accounts, payment history, and inquiries. To see your credit scores, contact your mortgage professional so they can examine your report line-by-line to find any errors it may have.

What is a great credit score? Most A-Paper scores have traditionally begun around 680, although this number may differ slightly now that lenders have tightened their guidelines. Don't despair if you come up shy, there is always room for improvement. Increasing your score just 5 points can save a significant amount of money. For example, if your score is 696 and you increase it to 701, then you could save yourself thousands of dollars over time as a result of a slight improvement to your loan’s interest rate.

While credit repair is necessary for some, it's not the only way to increase your credit score. Credit scores can go as high as the 800’s – aim for the sky! Even if you have credit in the 700’s, you can enhance your score through these steps:

Evenly distribute your credit card debt to change the ratio of debt to available credit. Let's say you have a credit score of 665. If you have debt on only one card, and four additional credit cards with zero balances, evenly distributing the debt of the first card could move you closer, and possibly into, that ideal bracket. The rule of thumb is 30%. Keep your balances below 30% of your available limit in order to receive the most favorable rating from credit bureaus.

Keep your existing accounts open and active. The average consumer is usually anxious to close credit card accounts that have zero balances, but doing this can cause them to lose the benefits of a long-term credit history and increase their ratio of debt-to-available credit. The bottom line is don't close those old accounts! Instead, use them. Make sure to use all the cards you have, but pay off the balances to show that you can use credit well. A credit card with a zero balance but that isn’t used will not help you increase your score.

Keep credit inquiries to a minimum. Each inquiry into your credit history can impact your score anywhere from 2-50 points. When it comes to mortgage and auto loans, even though you're only looking for one loan, multiple lenders may request your credit report. To compensate for this, the score counts multiple auto or mortgage inquiries in any 14-day period as just one inquiry, so try and stay within that time frame. If you have inquiries on your credit report that don’t belong there – dispute them! Your mortgage professional will be able to draft a letter on your behalf for you to send to the credit bureaus. A past client of mine had a credit score of 684, and when I got five of his inquiries removed, his score jumped to 720! This saved him thousands of dollars over the life of his loan.

Remember, credit scores don't change overnight. Improving them requires time and diligent effort on your part, so it's crucial to get the ball rolling at least three to six months prior to submitting your application for home financing. Credit bureaus have 30 days to reply to your correspondence, and they tend to take their time. It’s important to have a sufficient amount of time to make the corrections necessary so you are able to obtain the best financing possible.

If credit repair is what you need, you can either begin the process yourself or seek out a repair service. You may be able to make your own improvements, if the changes are not too complex. Be sure to visit as many websites as possible to get information regarding credit laws and consumer rights. Diligently search through them and educate yourself to ensure that you don’t sustain any self-inflicted wounds. A good place to start would be the Federal Trade Commission's website, which contains a wealth of helpful literature. Again, use your mortgage professional as a resource – they should be able to refer you to a reputable credit repair service. Be forewarned, however – it is not an inexpensive process. A good credit repair company will charge a minimum of $700-$1,000 for a single client, but will often have a money-back guarantee in their contract.

If you’re facing severe or complicated credit issues, then you’ll definitely want to hire the assistance of a professional credit repair company. With over 1100 credit repair companies to choose from, it's important to be certain you are dealing with a reputable firm. Examine the FTC's information on fraudulent practices to avoid falling prey to credit repair scams. An experienced mortgage professional will have a credit repair company whom they have used in the past, and will be able to refer you.

Addressing credit issues can be uncomfortable to say the least. The increasing number of stories regarding subprime mortgages, and the collapse of several large lenders swirling around in the news has caused credit scores to become a big topic again. If you have credit issues, ignoring them will not make them go away! It’s better to be proactive in repairing mistakes, than waiting for your mortgage professional to call you with the dreaded message, “I have some bad news for you…” As hard as it may be to admit past mistakes, or remember a hard time of your life, by taking these steps now, you’ll be that much closer to obtaining the home of your dreams.

Additional Resources:

To request a complimentary credit review contact Coast Mortgage Group:

www.CoastMortgageGP.com

To read the Fair Credit Reporting Act, go to:

www.ftc.gov/os/statutes/frca.htm

For the Federal Trade Commission's information on consumer credit, go to:

Galel Fajardo, Orange County Mortgage Planner

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