The Mortgage Manifesto! YOU can still get a mortgage!

Credit Mistakes we all make!

How many times have we all fallen under the temptation to apply for a credit card in exchange for some special offer or discount? Sometimes it is in the mail, sometimes at the department stores, other times at events, but where ever it occurs, it is at an all time high with the ferocious competition out there between credit card companies. The problem is that this becomes very detrimental to your credit scores.

Don't open accounts thinking it will raise your credit scores, as it may not help at all. Have a minimal number of cards and only the ones you need, and use them wisely. The scoring algorithm looks at credit card debt in a variety of

More on credit scores & mistakes

Did you know that the balances on your accounts have a dramatic effect on your credit scores? The scoring algorithms look for risk. In the aspect of balances, it is looking for how much you are extended (or over-extended) with your current accounts. If you have say, 5 active credit accounts (not looking at mortgages) either revolving and/or installment type credit, and each one is nearly "max'd" out, your scores are getting hit.

In other-words, if your total available credit for these accounts is, for example purposes, $25,000; and you owe $20,000 on all of these combined, that is 80% extended. To the scoring system, you are of a greater risk! Why?

More Credit Score Mistakes...

It is not whether you should or should not close accounts that are inactive... it is when to close them. Contrary to what some of the 'so-called-experts may tell you, closing accounts, inactive or not, with or without balances WILL NOT RAISE YOUR SCORES!! (initially anyway)

In fact, closing them WILL tend to DROP your scores immediately after closing them. Again, it is just like the result of paying off old collections, closing accounts that are inactive  immediately brings those accounts to the forefront of the scoring algorithms and appear to be new credit activity. New activity is a show of risk and therefor the scores are adjusted accordingly.

Now that said, eventually, your scores will definitely go up as a result of closing credit accounts. Less credit is less risk (as long as you have at least 3 to 4 active and open accounts). So, again, it is the timing that is important. If you are applying for credit within the next 60 days or so, don't close them yet. If you are more than a couple months out, by all means, close those inactive accounts and watch the scores come up over the next 60 days or so.

Fatal credit-score mistakes you could be making!

There are many things we do as consumers that have an affect on our credit scores. You may have a perfect history of making your payments on time, never being as much as 30 days late on an account and yet drive your scores down. Or, you may have had some problems years ago, but over the last few years, your scores have come back up due to stellar credit management since then. Simply by doing some or all of the activities we will cover over the next few days, you could sabotage your credit scores without even knowing it!

Today, lets look at 'old' judgements and or collections. Did you know that you should never pay-off old collections or judgements... unless you have no intention on seeking new credit for any reason for at least 2 years!

If you attempt to pay any of these off (especially if you may be applying for a new mortgage) it brings that OLD derogatory or delinquent credit account to NEW activity on your credit report. Now it is no longer an old dormant account... you just made it

Credit Scores: What would you like to know?

Do you have questions regarding credit scores? Post any questions you may have and over the next few days I will answer any questions you may have about scores. In addition, I will walk you through the different ways you can raise your scores, detailing a different aspect with each new post between now and the end of January. So... ask away!

Mortgage Horror Stories?

Do you have a story to tell? As a means to coach and help clients, I have decided to solicit your mortgage horror stories. Has there been a time when you felt you were taken advantage of in a mortgage loan transaction? Tell me about it. Are you in the middle of a mortgage loan right now? Ask me any questions about the process and I will try and respond every couple of days and help you save some money. So ask away!

Home Values: Did you really lose any money?

So what is all the fuss? The latest turmoil in the mortgage and real estate biz is with regards to appraised values and "lost equity". In many of the major cities, there has been, for the last four years or so, an absolutely crazy period of escalating values. Homeowners were seeing as much as 25 to 50 % increases in one year.

Well the markets have cooled, especially in these major hot-spots. Some say that the values have even declined as much as 10-20% in 2006 in cities like Phoenix, Las Vegas, California among many. So here is the issue: Did you really lose any money?

If your home doubled or nearly doubled in value during this recent boom, if there is a market correction, did you really lose money? My thoughts are NO!

It was only there if you sold or refinanced. If you sold to get to the equity, you had to turn around and buy in that same inflated market so did you gain anything there either?

These homeowners need to stop the crying... sorry!

No Down-payment loan options

Just a few years ago, the only low down payment loans were those insured by HUD. These included FHA, which has approximately a 3% down payment requirement and VA which is a no-down HUD insured loan for military veterans. That has changed over the last few years and conventional lenders now offer no down and low down loans. In fact, there are a couple programs that offer a less than no down loan... in other words, you can not only buy a home with no down payment, but you can even finance all the closing costs as well.

There are a few different ways to get to a no=down payment loan. There are 100% loans (all one loan); then there are the 103% and 105% programs for closing costs, and finally there are the 80% - 20% two-loan combinations to equal the 100% loan. Each option has different aspects that make it unique:

Refinancing: Should I or shouldn't I?

Are you aware that on average, we refinance our home loans about every four years?  If you have been in title of your home more than two years, you should be reviewing your mortgage options.

As years go by, your financial picture changes as do your priorities. Ideally your home mortgage should also be assessed and if need be, changed to reflect those new requirements.

By educating yourself with the help of the Mortgage Manifesto, you will have the insider secrets and facts needed to determine which mortgage product is perfect for you and the lowest costs to get it. You will have the tools necessary to negotiate and to:

> Lower your monthly mortgage payments
> Payoff your mortgage earlier than planned
> Purchase an investment property with equity you can now access
> Consolidate debt to reduce interest costs and lower monthly payments
> Remodel and update your home like you dreamed of
> Fund education or medical needs

But before you do anything, be aware of all the costs involved in refinancing:

• Loan costs: Be sure you know all the costs that come with the refinancing of a mortgage. Check to be sure there are no penalties for paying off your current loan ahead of the scheduled term. Make sure you know all the costs including origination fees, credit and appraisal fees, legal and title or escrow fees, mortgage insurance costs and many more. Only after you are sure of all the costs can you accurately determine if refinancing is a good financial decision. Don't be surprised if you find it takes many years to recoup the costs when comparing the actual difference in your new house payment.
• Consolidation other debts: there can be many advantages to refinancing for the purpose of reducing your other consumer debt. To be continued...