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Mortgage Trouble for Divorcees

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

 

Mortgage by Randy

 

 

In Issue 69 We Touch On:

 

Amortization Defined

Low Credit Score Mortgages
Mortgage Trouble for Divorcees

 

 

I just blinked and Christmas flew by and here we are staring 2014 in the face. The New Year is always a natural milestone which we use to start things. So let me throw out a few suggestions to add to you list. First, if you are not regularly inspecting your credit report, start now. If all the other identity theft and data breach stories haven't scared you, the Target mess over the Christmas holiday should do the trick. Second, if homeownership is in your dreams, take inventory of where you are toward that goal. It's not just about money...there are several factors you may not be aware of which are critical to getting approved. Third, if you are carrying debt on credit cards, vow to work it down. Last, if you have your debt under control, then build your savings - first your retirement, then your rainy day fund.  These are the habits of the financially healthy.
 
 

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: What In The Heck Is Amortization?
As if mortgages weren't complicated enough, you also need to have a big vocabulary to understand all the common mortgage related terminology. Hypothecation is a fun one which always causes the deer in headlights look. A more practical term that you should understand is amortization.

Once you get passed the five syllables, amortization is something that almost everyone with a mortgage gets to experience. It has to do with your payments. Most mortgages have a fixed payment that is made up of principal and interest. Your first payment is mostly interest and very little principal. Interest calculations are made based upon the principal balance. Therefore, with each successive month, you pay a little less interest and a little more principal. By the time you enter the final years of the mortgage, you are paying mostly principal. 

 

The phenomenon of amortization is the reason why homeowners are encouraged to apply extra principal payments to their mortgage. Even small extra payments each month can dramatically reduce the amount of interest that you pay over time. For example by making a 13th payment each year (take your monthly payment, divide by 12, and remit that amount as an extra principal payment each month), you can reduce about seven years off a 30 year mortgage.

 

Personal Credit: How To Get A Mortgage With Low Credit Scores

Just because you may have a low credit score doesn't mean you are out of the running to be approved for a mortgage. I was reading a blog post by certified FHA underwriter Eleanor Thorne which I knew I had to share with you.

There are many different mortgage products and each one has its own requirements for minimum credit score. The type of property (condo vs single family home for example) and the amount of your down payment as a percentage of the sale price
 also play a role in what the minimum credit score requirement is.

FHA loan programs are lenient when it comes to credit scores. If you have enough compensating factors, you could be approved with a credit score between 580 and 620. Examples of compensating factors to make up for a low credit score are your bank balances (how much money left in your account after down payment and closing costs), and your debt to income ratio.

Even if you have a low credit score, don't despair. There are ways to get approved for a FHA mortgage if you can demonstrate enough liquid assets and have your other debt under control.

 

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

 
 

Economy & Financial Insights: 2014 Should See Higher Interest Rates
Shortly before the holiday, the Federal Reserve announced that it would begin buying less debt. No one really knows what all the effects will be of the tapering. One thing that is almost certain is that interest rates will rise in 2014 after already rising 100 basis points in 2013. 

Although rates may rise it is important to keep perspective that we are still within a period of historically low rates. 4%-5% mortgages are cheap and those seeking to buy a home in the near future should feel good about locking in their housing payment at these prices.

The November newsletter explained the Fed's policy in more detail so you can go back and read it for a refresher. 

 

 

Question of the Month: Will Short Sale Be A Problem For Divorcee?

When do judge rulings not matter? When it comes to responsibility for mortgages. A woman moved out of her home after the property was awarded to her husband by a judge in their divorce proceeding. The husband stopped making payments and eventually the home was unloaded via a short sale.

The woman thought that the judge's ruling would exonerate her from responsibility for the mortgage. No so. The loan was made to the husband and wife and no matter who ends up with their name on the property title, the responsibility for the loan belongs to all parties listed on the note. 

The wife could have tried to get a release of liability from the lender upon the divorce decree being finalized but the lender has no obligation to exonerate someone due to divorce.

 

Giving Back: Last Chance For 2013 Tax Deductible Charity Donations
If you are looking for last minute ways to lower your 2013 bill from the tax man, consider making donations to qualified charities on December 31. Major non-profits such as Red Cross, Boys and Girls Clubs and Salvation Army run effective, well-known programs and are happy to accept your cash donations.

If you seek to contribute to something more personal to you and me, consider supporting the organizations that I helped found - both 501c3 non-profits that accept convenient and secure online donations - Michelle's Angels Foundation and Larry Mitchelson Scholarship Foundation.  Both grass-roots organizations operate exclusively on volunteer staff which keeps overhead expenses at a minimum so your donations go straight into the unique programs offered by these two foundations.

 

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.
 

Best wishes for a safe and healthy 2014. Let's toast our loved ones lost, remind ourselves of what's really important in life and chart a course for our future to get the most pleasure out of the limited time we get to live. Raise your glass for auld lang syne.
 

Randy
 

________________________________________________________________________________________
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.

________________________________________________________________________________________

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 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 Prime 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 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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Comments (2)

Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Randy, good tips any time of year! Enjoy the holiday season and 2014!

Dec 30, 2013 08:35 PM
Roy Kelley
Retired - Gaithersburg, MD

Make 2014 the best ever year. Best wishes for continued success.

Happy New Year!

Jan 01, 2014 09:56 AM