Wall Street Journal columnist Brett Arends discusses why he thinks NOW is a particularly good time to buy a home:

• Mortgages are CHEAP
• You can get a GOOD DEAL
• PROTECTION against inflation, and
• MANY HOMES to choose from

Watch the video and let me know your thoughts. If you would like to get pre-approved, complete this short form.

FHA Mortgage Insurance Changes Coming in Dallas Texas

This week, FHA Commissioner David Stevens announced a reduction in Upfront Mortgage Insurance Premiums (UFMIP) for Dallas First Time Home Buyers and FHA Streamline Refinances on Dallas homes.

This change was prompted by passage of H.R. 5981 in the Congress, and reduces the upfront mortgage insurance premium to 1% from the current 2.25%.

Good news you say? Well, as ESPN Commentator Lee Corso says, “Not so fast, my friend!”

At the same time, the annual mortgage insurance premium, currently at .55% for the minimum down payment of 3.5%, will go up to .90%. For down payments of 5% or more, the annual mortgage insurance may go up to .85% from the current .50% on a 30 year fixed loan. More details from FHA will be released in the next few weeks.

Let’s look at an example of a $200,000 loan amount to see how it impacts borrowers.

As you can see in the table above, the policy change increases the monthly payment on an FHA loan and requires higher income to qualify for the same loan amount. While the reduction of upfront mortgage insurance premium is a welcome move, most Dallas First Time Home Buyers are not severely impacted by this because it typically gets added to the loan amount. On the other hand, the increase of the monthly premiums definitely is detrimental to FHA borrowers. Overall, the new policy will end up costing borrowers more. Imagine that.

The new mortgage insurance premium structure will go into effect on September 7, 2010.

If you are thinking about buying a home or refinancing, you still have time to obtain the current rates if you act quickly.

Click the link to read FHA Commissioner David H Stevens’ announcement on this topic.

We are a Dallas-based FHA Expert and will be glad to advise you if FHA loans are a good option for financing your home. To schedule a free consultation, please email me at john@dallasmortgagepro.com or call my office at 972.523.3381.

A recent news release by FICO Inc. revealed that 25.5% of Americans have credit scores below 599. This is a staggering number if you really think about it. One quarter of consumers, or about 43 MILLION people, are now categorized as having credit poor enough to prevent them from getting credit cards, auto loans or mortgages under the tighter underwriting guidelines banks now use.

Did you know that your rates for auto and home insurance can be affected by your credit score? Or, that prospective employers may not hire you (even though you may be the most qualified applicant) because of your credit score. Pretty scary, huh?

So, what do you do if your credit scores are sub-par? It depends. If they are above 640, there are a few tweaks you can easily make to bump your scores. Give me a call and we can go over these fixes.

If your scores are below 599, and you plan to buy a new car, home, or change jobs in the next couple of years, you should probably consider a credit restoration program. Over the years, I have seen many different programs and companies. Some were out and out scam artists. Others were incompetent. A few were the real deal and actually got results for their clients.

The company that I refer my credit-challenged customers to is Clean Slate Credit Services. One of the things I like about them is they offer a money-back guarantee if they are unable to raise your scores to 640 or better. (Of course, you have some responsibilities in this partnership also.) The thing that has impressed me the most about Clean Slate is a comment the owner, Edie Webber, made to me. She said, “While most credit restoration companies focus on cleaning up your credit, our vision is about transforming lives.”

Check out this video and see what Clean Slate Credit Services is all about. (Edie is the person in the video.) You can enroll in the service right from the site. Or, just call me if you have any questions.

Click Here to Watch the Clean Slate Credit Services Video

On June 1, 2010, Fannie Mae implemented a new rule which requires a supplemental credit report to be pulled right before closing to make sure the borrower’s credit situation has not changed since the initial application. The ramifications of this rule could be disastrous if the borrower is not very diligent in protecting their credit during this time. For this reason I have created the following list of the top credit mistakes to avoid during the loan process. In fact, these “Ten Commandments” are great to follow all the time!

1. DON’T DO ANYTHING THAT CAUSES A RED FLAG TO BE RAISED BY THE SCORING SYSTEM. This would include adding new accounts, co-signing on a loan, and changing your name or address with the bureaus. The less activity on your reports during the loan process, the better.
2. DON’T APPLY FOR NEW CREDIT OF ANY KIND. Including those “You have been pre-approved” credit card invitations that you receive in the mail or online. Every time that you have your credit pulled by a potential creditor or lender, you lose points from your credit score immediately. Depending on the elements in your current credit report, you could lose anywhere from one to 20 points for one hard inquiry.
3. DON’T PAY OFF COLLECTIONS OR CHARGE OFFS during the loan process. Unless you can negotiate a delete letter, paying off collections will decrease the credit score immediately due to the date of last activity becoming recent. If you want to pay off old accounts, do it after closing.
4. DON’T MAX OUT OR OVER CHARGE ON YOUR CREDIT CARD ACCOUNTS. This is the fastest way to bring your scores down 50-100 points immediately. Try to keep your credit card balances below 30% of their available limit at ALL times during the loan process. If you decide to pay down balances, do it across the board. In other words, pay down balances to bring your balance-to-limit ratio to the same level on each card (i.e. – all to 50%, then all to 30%, etc.).
   
5. DON’T CONSOLIDATE DEBT ONTO 1 OR 2 CREDIT CARDS. It seems like it would be the smart thing to do. However, when you consolidate all of your debt onto one card, it appears that you are “maxed out” on that card, and the system will penalize you as mentioned above in #4. If you want to save money on credit card interest rates, wait until after closing.
   
6. DON’T CLOSE CREDIT CARD ACCOUNTS. If you close a credit card account, you will lose “available” credit and it will appear to the FICO model that your debt ratio has gone up. Also, closing a card will affect other factors in the scoring, such as length of credit history. If you HAVE to close a credit card account, , do it after closing.
   
7. DON’T PAY LATE. Stay current on existing accounts. Under the new FICO scoring model, one 30-day late can cost you anywhere from 50-100 points, and points lost for late pays take several months, if not years, to recover.
   
8. DON’T ALLOW ANY ACCOUNTS TO RUN PAST DUE- EVEN 1 DAY! Most cards offer a grace period. However, what they don’t tell you is that once the due date passes, that account may show a past due amount on your credit report. Past due balances can also drop scores by 50+ points.
   
9. DON’T DISPUTE ANYTHING ON YOUR CREDIT REPORT once the loan process has started. When you send a letter of dispute to the credit reporting agencies, a note is put onto your credit report. When the underwriter notices items in dispute, in many instances, they will not process the loan until the note is removed and new credit scores are pulled. Why? Because the credit scoring software typically will not consider items in dispute in the credit score – giving false data to the lender.
   
10. DON’T LOSE CONTACT WITH YOUR MORTGAGE & REAL ESTATE PROFESSIONALS. If you have a question about whether or not you should take a specific action that you believe may affect your credit reports or scores during the loan process, your mortgage or real estate professional may be able to supply you with the resources you need to avoid making mistakes that could drop your credit scores or possibly cause you to lose the loan.
    

Please share this page with your friends, family members and business associates. It’s THAT important!

Here is a great video which explains how interest rates move. I have used the Japanese candlestick charts for years to help advise my clients about locking in their interest rates at the most opportune time.