Understanding and Managing Credit Scores

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Managing Credit Score BubbleUnderstanding the makeup of your credit score is the first step toward managing and improving it.

As you might expect, payment history is the most influential component in your credit score, followed closely by the amounts you owe. To lesser degrees, the length of time you’ve utilized credit, the number of new accounts or inquiries you have, and the various types of credit accounts you hold also impact your score. Overall reporting also looks at how these factors relate to each other in the context of your personal usage.

To help achieve or maintain a healthy score, always remember the following:

Have a system to assure your bills are always paid on time.

Avoid late payments or the excessive use of credit by maintaining a cash “cushion” to pay for unexpected expenses. Don’t “max out” your cards. It’s better to have a high credit limit with a low balance.

Never close old accounts as the age of these can actually help your score.

If you shop for credit, do so in the shortest time period possible to minimize inquiries counted against you.

Don’t be afraid to use credit. You need several accounts in order to have a credit score. Just be sure to keep corresponding payments within your means.

If you have established credit, don’t open new accounts solely for the sake of earning a discount on a new purchase. In the long run, you may spend more than you save up front by paying higher interest rates due to a lower score. Having more accounts also increases the task of making payments and the possibility of missing one.

If you have questions about managing your credit, give us a call. We’re happy to help.

Dean Henderson, CRMS
Financial Independence Mortgage
President
NMLS 233298
(661) 726-9000
[email protected]

Home Loan Do’s and Don’ts

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A guide to making a smooth loan process

A guide to making a smooth loan process

Now that you have made the decision that you would like to buy a home there are some very important Do’s and Don’t that you need to keep in mind in order to prepare yourself for a smooth mortgage approval process.  The slightest misstep could cause significant difficulties and delays on the closing of your home.  Mortgage guidelines have some strict rules that need to be complied with in order to get you loan approved and it is you loan officer’s job to help guide you through the process and maneuver you around potential road blocks that could lead to a mortgage denial.  These Do’s and Don’t are designed to maximize you FICO scores, minimize your debt-to-income ratios, and assure your funds to close are allowable.

First the Do’s:

  • Do continue making your rent and credit payments on time
  • Do keep working at your current employer.
  • Do ask your loan officer before making any financial moves

Now the Don’ts:

  • Don’t deposit and cash in you bank accounts!
  • Don’t change jobs
  • Don’t make any major purchases. (car, furniture, refrigerator, etc.)
  • Don’t apply for or open and new credit. (even if you’re “preapproved”)
  • Don’t transfer credit card balances or consolidate any debt
  • Don’t pay charge offs or collections.(unless your loan officer says to do it)
  • Don’t close any credit card accounts
  • Don’t increase your credit card balances
  • Don’t change bank accounts.
  • Don’t pay off loans or credit cards (unless your loan officer says it’s ok)
  • Don’t give your landlord notice to move without asking your loan officer first

These are very important rules to following in the before and during you home loan process.  For more guidance to help you navigate to a fast and easy closing please call Dean Henderson at 661-726-9000.

Dean Henderson, CRMS
Financial Independence Mortgage
661-726-9000

New Down Payments Assistance Programs

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Down Payment Assistance Program

CalHFA MyHome Assistance Programs

California Housing Finance Agency Launches New Mortgage Assistance Program Helps first-time homebuyers with down payment and closing costs

The California Housing Finance Agency has launched the MyHome Assistance Program for first-time homebuyers who may need help with down payment or closing costs when purchasing a home.

Buyers can receive up to 5% in assistance, low interest rates and deferred payments through MyHome. The program is available to first-time employed buyers with good credit, and can be combined with all CalHFA first mortgage programs and the Mortgage Credit Certificate program, which provides a federal income tax credit that may lower taxes and increase disposable income.

“The lack of savings for a down payment is often the barrier to purchase for first-time homebuyers, even though they can afford the monthly payments,” said CalHFA’s Executive Director, Tia Boatman Patterson. “This new program bundles the first mortgage with down payment and closing cost assistance for our borrowers to make the home buying process simple, affordable and, most importantly, attainable.”

Since 1975, CalHFA has partnered, promoted and preserved safe, affordable housing for Californians, expanding opportunities to hundreds of thousands of residents. CalHFA’s line-up of programs and products demonstrates its commitment to lending with a purpose.

“I’ve got families I’ve been working with for a year, and with MyHome they can finally purchase their first home,” said Ed Bañuelos of Academy Mortgage in Burbank. “This program is awesome, and has a lot to offer people looking to buy a mid-priced home.”

CalHFA offers more programs that help low to moderate income homebuyers including the CalPLUS FHA program, which is a first mortgage loan insured by the Federal Housing Administration, and the CalPLUS Conventional program, a first mortgage loan insured through private mortgage insurance. These loans can be combined with CalHFA’s Zero Interest Program (ZIP) for down payment assistance and/or closing costs – 3.5% assistance for a CalPLUS FHA loan and 3% for a CalPLUS conventional loan.

Help is also available through the Extra Credit Teacher Home Purchase Program, a special program for eligible teachers, administrators and staff in California schools, and the CalHFA Energy Efficient Mortgage + Grant Loan Program that assists with the costs of energy-efficient home improvements.

The California Housing Finance Agency was created in 1975 with the goal of helping more Californians find a place to call home. Its Single Family Lending division has invested more than $19.5 billion to help.

To inquire about this program please call Dean Henderson at (661)726-9000.

USDA Loan Property Eligibility Extended to October 2014

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USDA Loan Still AvailThe USDA 100% Financing program had been slated to implement the 2010 census data modifying eligible rural areas for USDA Rural Housing Programs on October 1, 2013. However, with the “Continuing Appropriations Act, 2014” (H.R. 2775) signed into law by the President of the United States on October 16, 2013, eligible areas for USDA Rural Housing Programs remained unchanged and consistent with the 2000 Census through January 15, 2014.

On January 9, 2014, USDA sent out a memo stating “Eligible areas remain unchanged and continue in a “holding pattern” until either an appropriations bill or a continuing resolution is passed.”

Then on January 24, 2014 USDA sent a memo stating, “Barring Congressional action, USDA will begin using 2010 Census data to determine eligible rural areas for Rural Development housing programs on October 1, 2014.

Once the new maps are implemented the main areas in the Antelope Valley that will be eliminated from eligibility will be Rosamond and Lake Los Angeles.

Financial Independence Mortgage has specialized in funding this program for the last several years and it has been a great option for home buyers in the following areas of the Antelope Valley: Rosamond, Mojave, Antelope Acres, Acton, Littlerock, Lake Los Angeles, Pearblossom, Juniper Hills, Llano, Elizabeth Lake, Lake Hughes, Leona Valley and Valyermo.

In addition to zero down payment, the cost of the monthly payment is less than an FHA loan.  Guidelines are similar to FHA which makes qualifying easy for first-time homebuyers.

Eligible rural areas are defined as open country or towns, or places with a population up to 20,000 in Non-Metropolitan Statistical Area (MSA) Counties and less than 10,000 populations in MSA Counties, which are not a part of or associated with an urban area.

For a Free-PreQualification and to check for USDA eligible properties please contact Dean Henderson at 661-726-9000.

VA Buyer Allowable & Non-Allowable Fees

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VA Home Loans

by Dean Henderson, Certified Military Housing Specialist

As our market tightens up and seller concessions are becoming more difficult to get I am getting many questions about what to ask for when writing a VA loan offer.  There are several fees a Veteran is forbidden to pay for in a VA loan financed transaction regardless of their willingness to pay.  When writing an offer on a home using VA financing a buyer must ask for at least a minimum amount of concessions to cover the VA Buyer’s Non-Allowable costs and Fees.

When using the standard C.A.R. form RPA-CA I would suggest the following wording on page 1, line 3D Additional Financing Terms: “Seller to pay 3% towards buyer’s recurring & non-recurring closing costs and VA Buyer Non-Allowable Fees.”

The actual percentage you request is negotiable but make sure you have enough to cover all the VA non-allowables.

Here is a summary of allowable and non-allowable costs from The Department of Veteran Affairs.

ALLOWABLE CLOSING COSTS

A Veteran may pay any of the following reasonable closing costs and fees:

  • 1% origination fee
  • Reasonable and customary loan discount points
  • VA appraisal fee – Usually about $450 for a Single Family Residence
  • VA compliance inspector fees – Only if required by the NOV (Notice of Value)
  • Recording fees- Usually about $100 – $150
  • Taxes and stamps
  • Credit report fees – Financial Independence Mortgage does not charge for this
  • Pre-paid items/Impounds
  • Insurances (hazard and flood, when required)
  • Flood zone determination
  • Well and septic inspection fees
  • Survey, if required by lender or veteran, except for surveys of condominiums
  • Title insurance(ALTA), title examination, title endorsement, title policy, title search
  • Environmental protection lien endorsement
  • VA funding fee – This is usually financed in the loan
  • Closing protection letter – Should not exceed $35
  • Fraud protection report
  • Termite, provided the loan is a cash-out refinance – The borrower may never pay these fees for purchase transactions
  • If a fee is not listed above, assume VA does NOT permit the veteran to pay it

NON-ALLOWABLE BORROWER-PAID CLOSING COSTS

Generally, the veteran may NOT pay any of the fees listed below.  The seller must pay the non-allowable fees.

The non-allowable fees are:

  • Attorney fees other than for title commitments
  • Lender’s inspections, except construction loan inspections and inspections required on the appraisal/NOV
  • Loan closing or settlement/escrow fees
  • Doc prep, underwriting, loan application, admin or processing fees
  • Assignment fees
  • Photographs
  • Interest rate lock-in fees
  • E-Mail, fax, copying, postage, stationery, telephone or other overhead charges
  • Amortization schedules, Truth-in-Lending fees, etc.
  • Notary fees
  • Escrow fees or charges
  • Commitment fees or marketing fees of secondary purchasers
  • Trustee fees
  • Fees charged by third parties, regardless of affiliation with lender
  • Tax service fees
  • Termite inspection fee for a purchase transaction
  • Attorney fee that benefits the lender
  • Real Estate Broker fee or Transaction Coordinator Fees
  • Brokerage fees or commissions charged by real estate agents or real estate brokers in connection with a VA loan
  • Prepayment penalties financed through a refinance transaction – When the payoff states a pre-payment penalty is due, veterans may pay pre-payment penalties out-of-pocket only
  • FHA/VA inspection fees for builders (Normal new construction inspections of the dwelling are permitted when required by the appraiser)
  • Any portion of the seller’s lien(s) or short sale fees
  • For purchase transactions, the cost of required repairs and inspections must be paid by the seller. This policy applies to all purchases, including purchases of REO properties. VA does not permit the veteran to pay for repairs other than minor termite damage repairs.

For more information about VA Home Loans please contact:

Dean Henderson, CRMS, GRI, CMHS

USA Cares
Certified Military Housing Specialist
(661)726-9000