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Free Credit Scores? - Mortgage by Randy Newsletter - Apr 2013

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Services for Real Estate Pros with Marketing Advisor & Squeeze Mortgage NMLS# 377413

 

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Mortgage by Randy

monthly update to our clients, colleagues, family & friends

By: Randy Mitchelson, April 2013

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In Issue 61 We Touch On:

 

Lenders Loosening Up?

Free Credit Scores?
Economic Misery Defined

 

 

April was marred by the terrorist acts in Boston which have dominated our news cycle ever since. The tragedy we witnessed has become a unifying force which binds us together as Americans. Patriotism has a habit of getting lazy. One of the positive by-products of the Boston bombing is a resurgence in patriotism and a live demonstration of the selflessness that Americans can demonstrate when called to duty. 

It was amazing to experience the speed at which information about the attacks and the culprits hit the airwaves and quickly resulted in apprehension. Social media and mobile phones played an integral role in getting to the bottom of what happened in Boston and preventing any further terrorist acts by the two brothers. Let us all remember to thank the first responders and military families that work to protect our country and our freedom.
 

The current newsletter and all prior newsletters are archived at the Mortgage by Randy blog. Bookmark it and share with your friends and family.  You can make your own comments and feedback as well.  Time for the news…

 

 


 

Mortgage Market: Are Lenders Loosening Up Or Not?
A recent USA Today article revealed data that lenders are allowing more low down payment loans (between 5% and 10% down). Borrowers must still show a strong credit history to qualify for the loans (740 credit score is a typical minimum), but this is another sign that the pendulum is swinging back to center. Other factors that are contributing to this trend are:


-FHA, which specializes in making low down payment  loans available to the marketplace, has dramatically increased their fees for annual insurance which has steered borrowers to shop around for lending alternatives.

-Private mortgage insurers were decimated after the housing market crashed but have rebounded now to the point where they can underwrite policies for low down payment loans.

Despite this news, there are also reports that smaller, community banks are being squeezed out of making as many mortgage loans to their neighborhoods thanks to new federal laws and regulations such as Dodd-Frank and the oversight of the Consumer Financial Protection Bureau. The issues center on a new category of mortgage called "qualified mortgages" (QM). If banks write loans that meet the conservative QM crtieria, they are rewarded with legal safe harbor if the borrower defaults (in other words, the bank won't be held accountable).


Ken Burgess, a bank Chairman of FirstBancshares of Texas testified that "We have a concern that the box is becoming so small for people to fit into, and the risks are becoming so high to be outside that box from our standpoint that depending on how this all comes out, we'll have to make a decision about whether to stay in the mortgage business."

Likewise, Preston Pinkett III, president and chief executive of City National Bank of New Jersey, responded that it "certainly becomes difficult to write many mortgages."

When shopping for mortgages, do not limit yourself to your favorite local bank. Shop around. Get a free consultation with a licensed mortgage professional. The mortgage industry has been completely transformed from what it looked like less than ten years ago (so much so that even mortgage brokers themselves are confused about the changes).

 

 

Personal Credit: Are Really Free Credit Scores In the Works?

My mom shared an email alert she received recently from Consumer Reports. It mentions that federal lawmakers have introduced a bill which would give Americans access to their credit score for free. Better yet, it would be the credit score actually used by lenders (I've written before about how the credit scores you purchase are not the same scores used by lenders to decision loan applications). If passed into law, the bill would also give consumers access to all scores generated in the previous year about them and stored in their credit file.

Don't get too excited. This is a bill. Many bills die on the vine. But lawmakers who support them get to point their fingers at the detractors and puff out their chests to their voting constituents that they tried. There is a safe and secure website you can visit to quickly send off a letter (there are templates pre-written) to your elected officials and ask them to support this bill. Click here to go there.

Remember, advertisements you see for "free credit scores" are typically bait and switch scenarios where you have to enroll in real-time credit monitoring to get the scores. I am all for you paying for credit monitoring (I do) but just understand the facts about these scores - they aren't the same scores lenders use - they are an appoximation, but in the world of loan decision, approximations are worthless. Your real score might be 715 and the score you buy for $9.95 might say 720. Close enough???? Nope. Even if you are only 5 points below a 720 minimum to get a better interest rate do not expect a loan underwriter to say "close enough".

To get a truly free approximation of your credit score, read my article about Credit Sesame and try them out.

 

Ask Me Your Credit Score Questions

Have you been given credit score advice that you are not sure about or read an article that has conflicting credit score information from what you believe to be true?  I am here to help.  Submit your question and I will be happy to respond. For more free and easy to read credit score tips visit the DailyDollar and click on the Credit Score and Credit Monitoring sections.

 
 

Economy & Financial Insights: Declining Incomes Contribute to Economic Misery In U.S.
You do not have to be an economist to understand what is happening around us. Prices of items we use everyday have been steadily rising for some years. For example, gasoline. Every one cent increase in the price of fuel zaps billions of dollars from our pockets and into to the hands of national and international oil and gas companies.  Food prices have climbed too. Some food companies are disguising price increases by shrinking their packaging rather than raise the price. Have you noticed smaller ice cream containers, cracker boxes and cereal boxes?

But rising prices is not the whole story.  Read through these facts which combine to paint a grim picture about our economic well-being:

 

-Real median household income is at the lowest level since 1995
-The Misery Index (defined by adding the inflation and unemployment rate), has been well above its long term average since 2010
-In 2011 the birth rate was the lowest since records began being kept in 1920
-Immigration (both legal and illegal) to the U.S. in 2011 was the lowest since 1940
-Young adults aged 25 to 34 still living with mom and dad hit a record high in 2011.
-Food stamp recipients surged to almost 1 out of 6 Americans and those paying federal income taxes has fallen to an all-time low.
-The employment to population ratio is very close to its lowest level in 30 years


Our economy is puttering along and will likely do so for the foreseeable future. Economic conditions in other parts of the world still make the U.S. look like a safe haven so we have that going for us. 


 

 

Question of the Month: How Should Divorcing Couples Handle Their House And Mortgage?

Divorce attorneys can't always be relied upon to provide divorcing couples sound advice when it comes to the impact on the credit history of each spouse. Even if a divorce or separation agreement clearly grants title of a house to one of the divorcees, the lender will not care. They will hold both parties responsbile for the debt. Divorce agreements have no bearing on how things end up showing on the credit report.

Since the divorce rate in the U.S. is so high, this affects millions of people. Each couple's circumstances are different so there is not one hard fast rule to follow. However, it is best that both sides explore and get the facts about the disposition of the house and mortgage prior to proceeding with the legalities of a divorce. For example, find out if one spouse can qualify to refinance the mortgage into their name only. If not, find out how much more equity would have to be contributed to qualify. Maybe cash from other parts of the relationship can be used to get the spouse that wants the home qualified for their own mortgage.

Transferring title to one spouse does not relieve the other of responsibility for mortgage payments if the loan is in both names. Don't find this out the hard way. Do your research up front and do not assume that a divorce attorney will base their recommendations on what's best for you from a credit perspective.

 

Giving Back: Support Diabetes Research By Sponsoring Our Friend Adam In The Tour de Cure
Since 2008, our friend Adam Selsley has raised money for the American Diabetes Association by bicycling in the annual Tour de Cure. This year, the Saratoga Springs, NY ride is June 2 and Adam has his son Alex riding too along with almost 2,000 other cyclists. Safe, secure online donations can be made at Adam or Alex's official Tour de Cure website. 


Join Upromise!
 

 

Need volunteers? Do you have a fundraising event upcoming?   Do you have a personal web site where you are raising donations for your cause?  Submit the information to randy@mortgagebyrandy.com by the 5th day of each month and we will do our best to include your information in the next issue.
 

Looking forward to the month of May not because of any particular plans or events, but because of the lack of them. The freedom of not having a lot of things hanging over your head is refreshing. It's a time to recharge, tie up some loose ends and prepare for the second half of the year. 
 

Randy
 

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Mortgage by Randy newsletter, Copyright 2008-2013 Randy Mitchelson.  All Rights Reserved.

Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson.  Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.

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You have permission to publish this article electronically or in print as long as the following is included:

 

Randy Mitchelson is an entrepreneur, author and community activist with almost 20 years experience in financial services.  Mitchelson has served in leadership roles for Fortune 500 firms Bank of America, KeyBank and CIBC.

 

As a licensed mortgage professional and member of National Association of Mortgage Brokers, Mitchelson educates both individuals and groups about credit scoring by conducting personalized credit report reviews, action plans and one on one consultations. He is author of the free monthly newsletter, Mortgage by Randy.

 

He founded of Estero, Florida based National Web Leads, LLC, (NWL) in 2005, an internet marketing and lead generation services company. NWL merged with Reach Media Group in 2012 where Mitchelson is CMO. Reach drives new customer acquisition through email, web display, social media, keyword search strategies, mobile devices and more.

 

Reach distributes customers' marketing campaigns via it's network of publishing partners. Clients include payday lenders, auto loan lenders, educational institutions, legal services, health and beauty product distributors and more.
 

Mitchelson also writes the DailyDollar™ personal finance newsletter. U.S. News and World Report named DailyDollar to its list of 8 Savvy Personal Financial Podcasts.

 

Mitchelson earned his BS and MBA at Rensselaer Polytechnic Institute in Troy, NY.  He is a founding member of the Southwest Florida Regional Technology Partnership Inc. and Vice President for the Michelle’s Angels Foundation Inc.  He is married to Susan, a Pharmacy Supervisor in the Lee Memorial Health System in Fort Myers, Florida.

 

 

 
 
 
 
 
 
 
 
 
 
 
 
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