A few states were hit hard during 2009 with foreclosures. Little hope for improvement in the same states is the forecast for 2010.  Unemployment and the adjustable rate mortgage are predicted to adjust upward this year.

One concern of homeowners is the loan modification program.  When the house is worth less than the mortgage, there seems to be little reason to hold on to the property.  However, many homeowners continue to work harder and longer hours to pay the mortgage–mainly to preserve their credit.  For the many homeowners already in pre-foreclosure, the modification plan seems to favor them.  While others who have worked so hard and still pay the mortgage are disenchanted at the process because their situation finds no favor anywhere.  Loss of equity is not only in the principal, but also to the individual homeowner.

Prediction:  2010 may prove not to be too different than 2009 but it may set the ground work for housing affordability.  Interest rates are just over 5%, and will perhaps creep higher before year’s end.  The median price for an existing single family home has continued to decline, now in the $170,000 range.

Prediction:  Now is a good time to buy–and invest. For the households with a stable income, coupled with new qualifying guidelines, as well as first-time buying programs, buying a home just got easier.

If you relate these issues to the new investor, short sales are very prevalent.  Lenders are freeing up their inventories and want to move forward.  Unemployment is still very high and foreclosures are regarded as an outstanding opportunity to make a high profit.  Foreclosures are a fact of life.  So, whatever 2010 brings, foreclosures will be a great way to get a high return on investment.

Some things to remember when looking for a foreclosure during economic slimfast are

• that sellers are motivated and interest rates are still low.
• Job losses are high and many businesses have been forced to stop operating.  Those persons who hold executive positions have been transferred to other states leaving houses to be sold.
• Divorce and death are reasons for properties listing.
• Many property owners are trying very hard to preserve credit rating and are willing to negotiate.

Look around you. Observe your own neighborhood. If you haven’t been given a word-of-mouth referral for an impending foreclosure, remember to follow the classified ads, legal newspapers, attorneys, for sale by owners signs and auction companies.  Get the word out that you buy foreclosures. It may require a little more work but a trip to the courthouse opens up records from probate court, bankruptcies, IRS auctions and other records.

Check out some of my other blogs for additional information or email me at shirl@houseforeclosuresource.com.

Until next time…

Shirl

www.houseforeclosuresource.com

To the investor, there are plenty of foreclosures and short sales across America.  The rental market is still viable, commanding a good rental amount.  The rent with option is very desirable for young people starting out in their careers.

As an investor a little more work is involved in finding short sales right now.  Finding contacts in areas where houses have been abandoned cuts down on the amount of court house search.  Use the resources available to you.  Use people who work or live in the area.  Put the word out that you buy and sell houses in a particular area.  Go to neighborhoods and talk with people living there.  They know how to contact many of the neighbors to let them know you’re interested.

As you drive through areas, look for yard work that needs to be done.  Sometimes, maintenance trucks are there in the neighborhood.  Go to the court house and search the mechanics liens department.  People who are having financial problems often pay the handyman last.  Share with your friends and family members your intent to buy and sell short sales and foreclosures.  Use their sphere of influence to help their friends who are in trouble make a fresh financial start.

Despite the different plans with loan modifications, first –time- home buyer plans, Fannie Mae and Freddie Mac bailout and the upcoming changes in the way they do business with lenders, all of this has not stopped the short sales market from flourishing.

Unemployment has not diminished to any appreciable  amount and the 2010 wave of property foreclosures in the commercial and upscale properties are still present in full force.

Economic recovery moves in little increments.  Each part of the recovery triggers a small piece somewhere else until the whole process is complete.  Many homeowners have tried many avenues to hold on to their homes, but with sad acknowledgement , they simply can’t afford the house.  Lenders have been hesitant to admit their losses, thus trying more and more modifications.  Probably, when the housing prices drop to levels where people can afford and unemployment is halted to real numbers the country can live with, then the economic recovery will be real.

In the meantime, the foreclosure market is very viable.  Often times with the investor dollar at work, it is the help the homeowner needs to get a new start.

Check out some of my other blogs for additional information or email me at shirl@houseforeclosuresource.com.

Until next time…

Shirl

www.houseforeclosuresource.com

The foreclosure market is still booming with properties. If you have money in savings and good credit, lenders want to talk with you.  One of the first things you need to do is get your credit report and score.  If your score is good, then you have saved yourself a lot of time since there is nothing to repair, i.e., no liens, no judgments against you.  You can use your savings for the down payment.

In many states foreclosures sell between 30 and 40% below market value. If you know someone, or know of someone, who is heading for foreclosure, talk to them.  Remember, the homeowner wants to preserve his/her credit rating by not going into foreclosure and you could be the answer to their problem.  Because the lender wants to sell the property and forgo on the foreclosure proceedings, this puts you in a good position to negotiate.

Before the lender releases the property for auction, make an appointment to meet with the owners.  You can learn much about the property, schools, community activities, shopping areas, churches, and needed repairs.  Next, go the court house and do some research on the property.   This helps you validate an offer to purchase and assures your information is correct. Check out my October 21, 2009 blog post for details on how to search records in the county courthouse and why it’s an important step to take.

Buying a foreclosure as a prospective homeowner differs greatly from a buying a foreclosure as an investor.  The investor plans on buying, renovating the property and selling the property.  The investor wants in and out with a quick sale to a buyer.  He has no vested interest in the property except for a rate of return on investment.  You, on the other hand, are looking for a residence to live in.
There are three points of view represented in a pre-foreclosure property settlement—you, the prospective buyer, the seller, and the lending institution. It is to your benefit to coordinate a property settlement on the foreclosure with the lease you have on your rental.  The homeowner about to go into foreclosure will have a chance to find a new location. And from your perspective, if the property being purchased needs repairs—you will have some time to do them. The offer you make on the foreclosure property should reflect the repairs that need to be done.  Your offer to the lender should include a written cost estimate of the work needed by a contractor.  This helps justify your purchase offer.

Keep in mind that this sale is no different than a conventional sale except that you are purchasing below market value. When the market turns around, your investment will stand to appreciate in value again.  With interest rates being as low as they are, go into a lender’s office and get qualified for a loan.  The loan will be based on income to the amount of debt you have.  You will learn how much of a loan you qualify for and what the approximate monthly payment on the loan will be.

Check out some of my other blogs for additional information or email me at shirl@houseforeclosuresource.com.

Until next time…

Shirl

www.houseforeclosuresource.com

With $12.1T debt ceiling set to be raised by 15% to 13T, we can’t predict much for the rest of this year.  What seems to be the most outstanding concern is the job market.  So, foreclosures and short sales are still very hot. For investors, there are a lot of deals waiting to be made. Besides, with the proposed new standardized documentation, shorter turn-a-round time, and financial incentives to homeowners, a whole new group of  investors may emerge.

Since buying low and selling high is what short sales and REO’s are all about, the current market is full of  investment opportunity properties– even with loan modifications and first-time home-buyer programs.

However, be informed. It is very important to conduct due diligence on your short sale before meeting with the lender.  Prepare ahead with the Authorization to Release form to the lender and ask for a short sale package.
I’ve talked about this in previous blogs. If you want lots of specific details, visit my site at www.houseforeclosuresource.com.

When meeting with the lender, you will need to have in hand from the homeowner:

• A hand-written hardship letter from the homeowner

• Pay stubs

• Bank statements

• Saving statements

• W-2 form

You, as the investor need to have in hand:

• Pre-approval letter

• Quit claim deed

• Offer of purchase agreement

• Comparables  (that justify new payofff)

Find out before the meeting how the lender conducts business presently regarding their short sales.  Be aware that turn-around time and wait times vary from lender to lender.  The length of time the property has been on the market will help determine these time frames for you.

Your completed property inspection report should show the estimated cost for anticipated repairs along with the real estate comparables justifying the offer you have made on the property.

Information to include on your inspection sheet:

INSPECTION REPORT
Property Address: _________________________________________________________

COMMENTS: ________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________

I’ve always believed that success happens when opportunity and preparedness meet. The market is ripe. The time is now.  Questions? Drop me an email: shirl@houseforeclosuresource.com.

Until next time…

Shirl

www.houseforeclosuresource.com

We hope that in 2010 when the economy improves and the decline of commercial real estate slows, real estate housing prices will improve. The National Association of Realtors has predicted a rise of approximately 4% for 2010. However, in order for that to happen, all other factors influenced by real estate will also have to stay steady or improve.

In the meantime, foreclosure inventories continue to rise. It appears lenders are doing everything they can to reduce the inflow of these defaulting properties. As the value of a homeowner’s property falls, the equity that was in the property also falls Sometimes, the homeowner has money to use, but sees the property worth so much less, and decides it simply is better to let it go. So, lenders are trying to work with homeowners to accept short sales, in lieu of foreclosures. Attempts at loan modifications are taking longer than expected to process. And, there is new formulation of credit criteria.  So many things are happening at once and none of these things move quickly.  It appears the situation will drag on into 2010 making people very fearful.

For the investor, things are quite viable. Properties are everywhere. If you work with private money lenders, deals can be very rewarding by means of a hefty return on investment. For the newbie to investing, working with private money lenders can be quite daunting. Pay close attention to the terms for the use of money. This is key. However, for the seasoned investor, s/he knows the market runs in cycles and recovery will run its course. Even if you can hold the property for a little longer than anticipated, your return will stay intact.

2010 seems to be a pivotal year on almost every front. If we can get through it without any additional or broadened global issues, the new polices and changes to existing ones may stimulate future investing with greater ease.

In the meantime, find the private money lenders who understand what is happening in the marketplace, make some deals, and close some properties. Private money lenders can be as nearby as your neighbor, or found through the local newspaper, by attending investment groups, associating with chamber of commerce members, discussing terms with mortgage lenders, or contacting business owners, retirees, and websites. Money is available. Consider that conventional interest rates are very low on savings accounts and people want to get a greater return on their money. Even though many people are on fixed incomes, they have disposable money they can lend to investors in exchange for the higher interest rate will receive. Finding private money lenders will require a little time and effort. However, once you’ve done your homework, established a relationship with a lender, and built up trust between you, your investing will have gotten easier for the present—and future. It’s worth it.

Until next time…

Shirl

www.houseforeclosuresource.com

However, the foreclosure market continues to flourish with more and more properties hitting the market each day, presumably because of the lack of jobs.  Investment buyers are scrambling to get money from a variety of sources and on terms that are not conventional.

So, the question becomes where do you get money?  The answer is from hard money lenders.  This can be a person who lives in your neighborhood or a group you find in a classified section of your newspaper.  Knowing what hard money lenders actually do for you is important in order to make an informed decision about whether you purchase a property or not.

Basically, there are three things that hard money lenders do.  They lend money short term at high interest rates for between 65 and 70% of property rebab value.  They base their figures on the asset presented to them—whether the property is improved—land, buildings and the amount of collateral in the property.  If the borrower (you—the investor) defaults on the loan, they want to know they can sell the property in its present as is condition.

Borrowers work with hard money lenders even with all the stipulations they place on the loan because the loan is intended for a short period of time, i.e. a bridge loan, through which lenders can have the money to the borrowers by the close of business the next day in many cases.  The cost for closing the deal is very limited and generally, the borrower doesn’t have a credit report pulled on him or her.  Just these few things, for example, make working with a hard money lender quite different than working with a traditional lender who bases the loans on a credit report.

Things you must know from the hard money lenders are:

1. Interest rate
2. Points—1 point = 1% of loan amount
3. How many points
4. Monthly payment
5. Balloon payment— An installment payment on a promissory note, usually the final one, for discharging the debt which is significantly larger than the other installment payments provided under the terms of the promissory note.
6. Term—the number of months of the loan
7. Extensions—the fees charged if loan is given an extension
8. Percentage rate—what the rate will be after rehab
9. Fix-up—will the lender pay for the fix-up?
10. Short sale—will lender finance a short sale?
11. Money available—date money from lender becomes available
12. Pre-payment penalty—any penalty due if loan is paid off early
13. Credit report–does lender require one?
14. Proof of funds letter—will lender give one so investor can make offers on more than one property.

Referrals and real estate investment clubs are good sources for finding hard money lenders.  Classified sections of local and major newspapers are sources also.  Don’t be afraid to ask mortgage lenders as well.  Look for local hard money lenders first.  They usually know neighborhoods very well and it is easy for them to inspect a property.
Until next time…

Shirl

www.houseforeclosuresource.com

With this in mind, property rehabilitation should be done in a short time frame.  The age of the property is one consideration. A property that is between five and 50 years old has the greatest appeal to the investor.  While, older houses may be lovely to look at, and may even conjure up an emotional ‘dream house’ effect, in reality the aged wiring, plumbing, and construction materials may prohibit it from yielding the most sound return. Consider the amount of work that needs to be done on a property—including time as well as cost, before calculating what margin you need for a good ROI.

An excellent place for novice investors to begin is in an area that you know. Familiarity with the location provides you with a certain comfort level since you are already acquainted with shopping areas, school districts, houses of worship, travel corridors, etc. Once you determine which areas are the most sought after by buyers in different price ranges, you will know how to market the selling points of your investment property.

We’ve looked at ROI, rehabilitation factors, and location.

Another guideline to be aware of is the property age/price ratio. Be aware that median-price-range homes that are aged a little show strong potential, after rehab, for appealing to a larger buying audience.

The most sought-after property? Houses that have three bedrooms, two baths and are single family dwellings are the most sought-after type of property.  They turn over the quickest and produce a healthy return for the investor.  Couple that with an area that has appeal to first-time homebuyers, and you have a good equation for property investment success.

Choosing an area that has appeal to first-time home buyers generally means targeting younger couples with children whose needs include good schools, a safe neighborhood, local shops for retail buying and services like dry cleaners, banks, gas stations, etc.  For decades, builders have used this as the criteria for locating housing developments.

As an investor, you generally want a property that needs only cosmetic repairs and some slight upgrading to make the property appeal to the current market. In other words, you don’t want the property to seem outdated. Between $10,000 and $12,000 is a good range for repairs to an investment property.  You don’t want to over improve a property.  Keep the property in line with what will sell and at what price other homes are selling for when. The idea is to align the property with similar properties available in the neighborhood. In real estate, the slang term for this is comps—or comparable properties, that is, properties referenced when doing an appraisal that are similar in type, size, and sold-property price to the subject property.

Armed with guidelines for reasonable repair figures, good comps of the neighborhood, and your margin for ROI, you are now prepared with the necessary information to make an offer on the property in which you want to invest.

Many investors look to making an offer around 60 to 65% below ARV which is after rehab value.  For example:

ARV = $150,000 (what you would sell it for)
35% discount = $52,500
Purchase Price = 97,500 (what you would buy it for)

Using a hard money lender or a private money lender may be the best way to go for a purchase such as this.  Next time, we’ll talk about hard money lenders and where to find them.

Until then…

Shirl

www.houseforeclosuresource.com

As you know, the foreclosure market is very hot right now because more residential, as well, as commercial properties are hitting the market as lenders free up their short sale portfolios.  Since short sales help homeowners avoid a property auction and the destruction of their credit—unintended consequences of a property foreclosure—sellers are motivated to unload their properties.

Many people are very interested in buying foreclosures, short sales and REOs. However, financing the real estate deal creates considerable concern. Some investors only have a small amount of money they can or are willing to use. Others simply lack the funds required for an outright purchase. The thought of investing such a large amount of money can be intimidating. Let me try to calm your fears by demystifying creative financing.

Creative financing is not a new concept in the real estate market.  Back in the early 1980’s, when interest rates were 18%, lenders weren’t writing much in the way of mortgages. However, there were always people who wanted to buy or sell. Getting financing was a big issue.  In a way, real estate financing has gone retro. Today, we find the term creative financing frequently re-appearing in the news. The reason?  Once again, banks aren’t writing many mortgages and the real estate industry has been forced to seek creative ways of doing business.

Let’s look at some financing options.

If you can put 20% down on the purchase price of the property…

(1) No-doc or low-doc loan (scroll down to end of post for good definition). If you have a good relationship with a lender or a bank that you do business with, ask about the requirements and find out what they are willing to do in today’s market.

(2)  Look at the equity in your own home or perhaps an investment property you already own.  You could borrow against this equity for a family vacation so as not to violate any lender rules established on the first mortgage.  Don’t be afraid to ask.

(3)  Ask friends and family members who might be looking for an investment but are short on funds. Pooled together, you can proceed with a purchase.

(4)  Seller-take-back. Since the sellers wants to sell, why not be creative in involving them? Ask them to hold a note for a portion of the amount, thereby reducing the amount you need for a down payment.

(5)  Partnership. This is a widespread practice among business men who use it primarily for the tax benefits.  If you don’t belong to one, start one among your colleagues.

(6)  Credit Cards. If you stand to make enough money on the deal, paying interest on a credit card will not impact you that much.  Always be cautious and sell before the interest starts cutting into your return on investment.

(7) Hard Money Lender. These are lenders who lend money for a short period of time at a high interest rate.  Consider using this creative financing option when you already have a buyer lined up to purchase the property. You can locate hard money lenders online. Their requirements can be ascertained with a phone call.

(8)  Private Money Lenders. Let’s say for the purpose of an example scenario that the seller needs a given price for a property. You buy higher and the seller holds a mortgage or two.  The private lender advances money for the seller at an agreed upon term to you.  You pay the seller what s/he needed and then you, the investor, pay the private lender his money.  This method is used frequently in the current market to buy a fixer-upper property because it yields a large return to the investor upon resale.

These are just a few examples of creative financing options. There are other creative ways to finance.  Once you’ve used a couple of the methods I’ve suggested, you will gain confidence and new options will present themselves to you.  Talk to other real estate investors. Attend investment meetings. Call private money lenders and ask about their requirements. Determine what you need from a property to make the deal work.  Creative financing is not new to the real estate industry.  There is much information available to you from a variety of sources. Learn it and be confident. You can do this.

In my next blog, I want to talk about how to select the right property for real estate investing.

Until then…

Shirl

www.houseforeclosuresource.com

p.s. Here’s some good info on Low Doc No Doc Mortgages

Source: http://www.citytowninfo.com/mortgage-articles/specialty-mortgages/low-doc-no-doc-mortgages

As their name would imply, low doc loans and no doc loans are mortgage loans that require less than full documentation of income, employment, and assets. The name is a bit of a misnomer, because the borrower still has to fill out an application (although they actually have to fill out less of the application), and at least a credit report is pulled on the borrower. The borrower will also have an appraisal done on the property that is being purchased.

Low and no doc loans cover a broad spectrum of required documentation. Following are the more popular low and no doc mortgage programs:

• Stated income loans – A stated income loan is one in which the borrower simply has to state their income without providing any documentation of their income. This type of loan can be useful for individuals who are self employed or who have a lot of unreported cash income that cannot be documented. On a stated income loan, the borrower must still list their assets and debts and provide the backing documentation. The lender does verify employment and a credit report is pulled by the lender. A stated income loan may also be referred to as a no income verification (NIV) loan.
• Stated asset loans – A stated asset loan is one in which the borrower simply has to state their assets without providing any documentation of their assets, which are not verified. On a stated asset loan, the borrower must still provide income information with backing documentation. The lender will verify employment and pull a credit report on the borrower.
• Stated income/stated assets – This is the combination of the two previous loan programs. In this program the borrower simply states their income and assets which are not verified. Debt information is still provided by the borrower, employment is verified by the lender, and a credit report is pulled by the lender.
• No ratio loans – A no ratio loan is one in which the borrower does not provide any income information. Because of this, neither the housing ratio or the debt ratio can be calculated for the borrower. Asset information is provided by the borrower with backing documentation. The lender verifies employment and pulls a credit report on the borrower.
• No income/no asset loans – No income/no asset loans, also referred to as NINA loans, are loans that require almost no documentation. In this instance, the borrower simply fills out an application with their personal information and information about the house they are purchasing including down payment information. With these loans, the lender pulls a credit report on the borrower, obtains an appraisal on the house being purchased, and verifies the borrower’s employment.
• No doc loan – A no doc loan is one where a borrower is applying for a mortgage on the strength of their down payment and their credit. No income, employment, asset, or debt information is provided. The lender simply pulls a credit report and has the house being purchased appraised.

These types of loans represent increasing levels of risk to lenders. Because of this, there are several things that lenders do to help mitigate their risk, including:

• More stringent down payment requirements – lenders may require higher down payments of 20, 25%, or more.
• Higher credit requirements – lenders may require substantially higher credit scores than they would for full doc loans.

• Higher interest rates – lenders will charge higher interest rates than they would for a comparable full doc loan. Lenders take two things into account when determining their interest rate adjustments for low doc/no doc loans. They consider the size of the down payment, and they consider how little documentation they are receiving. As a general rule of thumb, the lower the down payment, the higher the interest rate adjustment. Also, the less documentation provided the higher the interest rate adjustment. Thus, a no doc loan with a small down payment would receive the highest interest rate adjustment. Interest rate adjustments on low doc/no doc loans can range from as little as .15 to 3.

Low doc/No doc loans are not for everyone. They serve a specific purpose. They make it easier for people whose income is difficult to verify to obtain a loan. They are also helpful to the very wealthy for whom providing the documentation would be viewed as either burdensome or intrusive.

www.houseforeclosuresource.com

You’re probably thinking, “What if I have to wait too many months to get a sale on the property?” or “Can I find someone to rent it?” or “What if the property is in worse condition than I was able to calculate when I first inspected it?”  What then…would I still be able to sell it and make a profit?

I have written in other blogs how important it is to inspect the property carefully with a list in hand, checking off where things have to be done.  I then recommended taking this list to a tradesman who could evaluate the repairs needed and following this up with adjustments to your original list.

In this blog, I’m going to address what to do if renting a property makes the most sense in the current market.  Renting helps to protect your initial investment while waiting for the buyers to return to the marketplace.  Believe me, most investors look for the quick turn over, however, sometimes, a property is worth buying and waiting a period of time to get the sale.

Renting is fairly easy if the property is located near amenities such as schools, churches, retail stores and the like.  Look for a renter who likes the location and property well enough to purchase by terms of a lease option agreement.  When you find a good candidate, review the renter’s profile carefully. Ideally, you want to rent the property to someone where you have a fairly good chance at the sale.  In order to do this, be creative and listen to what the potential buyer wants up front to close the deal on the back end.  Completing the form below will ensure quickly whether the person answering the questions is a good candidate for an eventual lease-option-to-purchase.

Name______________________________

Date of birth_________________________

Home phone_________________________                                                                                                                                                                                                                                                Work phone__________________________

Social Security #_______________________

Present address____________________________________________________

How long?_____________________

Rent amount__________________

Manager______________________

Previous address___________________________________________________

Rent amount__________________

Reason for                                                                                     moving__________________________________________________________

Manager______________________

How many people live with you____

Relationship to each_________________________________________________

Pets?_______________________                                                                                                                                                               What kind?______________________________

Waterbed_____________________

Occupation___________________

Employer phone_______________

How long with this employer_____

Previous occupation_____________________

Employer phone________________________

How long with this employer______________

Current gross income per month                                                                                                                                                            (before deductions)______________________

Amt. of alimony or child support you pay_______________                                                                  Receive__________

Savings Account Bank______________________________                                                          Branch____________________________                                                                                                                                      Account number____________________

Checking Account Bank_______________                                                                                                                                Account number____________________

Major Credit card____________________                                                                                                                                         Card number_______________________

Balance owed_______________________                                                                                                                                   Payment amount____________________

Have you ever filed bankruptcy?_________                                                                                                                                        Have you ever been evicted?____________

Vehicles

Make_______Model________Year____________________________

Make_______Model________Year____________________________

Personal reference Name____________________________________        Address___________________________                                                                                            Phone____________________________

Contact in emergency______________________________________ Address__________________________                                                                                       Phone___________________________

Business Reference                                                                                                               Name____________________________  Address__________________________                                                                                       Phone____________________________

The statements above are true and correct.  I hereby authorize verification of references given and a credit check.

____________   ___________________________________

Date                                                    Signature

As a real estate investor, you should continue to look for a buyer—either another investor of properties or a marketplace buyer.  Another investor of properties will not shy away from an income producing property and is looking for the same thing you are—a solid return on investment.

In my next blog, I want to talk about creative financing for the real estate investor.

Until then…

Shirl

www.houseforeclosuresource.com

What is Fair Isaac?  Fair Isaac and Company developed a mathematical model to predict the risk of consumers based on the information in their credit report.  Known as your FICO score, this is the scoring model most widely used by lenders for determining consumer qualifications for a loan.

Scores range from 300 to 850, with the majority of scores falling in the 600’s and 700’s.  Higher scores mean a lower credit risk.  In order to calculate a score, a consumer’s credit report must contain at least one credit account that has been open for six months, and, at least one account that has been updated in the past six months.  As consumer data changes at the credit reporting company, a new score reflects the updated information in your credit report.  In other words, your FICO score changes as new information is posted to your credit report. Information from one or two months past is different than what a lender would get from your report today.

Things that affect your credit score are:

• Your payment history

• Public records

• Amount owed (debt)

• Length of credit history

• Inquiries

• Accounts in use

Credit Score numbers also have associated with them a risk value judgment. For example, a 700+ credit score falls in the Excellent range—indicating that there have been no significant late payments in the prior 3 years. These consumers usually get a better rate on certain loan types.  Ask what credit score would secure a better loan rate for you. The cutoff score changes. It’s always prudent to ask.

Credit Scores in the 600’s, from approximately 620 – 680, fall in the A credit range and typically secure market rates on all loans.

Scores between 580 – 619 fall in B credit range and secure slightly higher rates on all loans.

Scores between 480 – 589 fall in C credit range and typically secure higher loan rates, require greater equity or larger down payments on all loans.  Prepayment penalties will also be higher.

This is simply a guide for you to use to understand your FICO score and how it is interpreted by lending institutions. A high FICO score is very important. Once you know your score, work to correct any discrepancies in your credit report. If you need to take action to improve your FICO score, consider talking with a reliable nonprofit agency such as Consumer Credit Counseling Service (CCCS).  They can be found online at:   www.cccsintl.org or call: 800-388-2227.

I did want to point out that the more inquiries on your credit report, the lower your score will be.  Be aware of this. So, don’t apply for  multiple credit cards over a short period of time or for a card you are not likely to get.  Apply for a new credit account only as needed.

Whether pleasant or unpleasant, you need to know this information.  Be patient and yet persistent.  Remember, your credit score will improve when you start paying off loans and/or consolidating debt to an affordable payment.  This is especially important to you as a real estate investor. So check out all the available options to improve your FICO score and make it happen.

Here is the contact information for the three major credit reporting agencies:

Equifax………………………….…………www.equifax.com ( 800-685-1111)

Experian…………………….…………..www.experian.com (888-397-3742)

Trans-Union………………………….www.transunion.com (800-888-4213)

As of today, these are valid working telephone numbers.

Until then…

Shirl

www.houseforeclosuresource.com