Archives for October 2012

What you don’t know about your credit report may haunt you

Does your credit report have skeletons hiding in the closet? Many are startled at what is lurking on their credit report when they’re getting ready to buy or refinance their home. 

If you’re a long-time subscriber to Mortgage Porter, you’ve probably read some of my tips on how to improve your credit score. Here’s a quick overview of five frightening credit report surprises.

Your on-line credit score may not be what it appears. Your credit report and scores are available on line by the “big three” credit bureaus.  However, don’t be fooled by your on-line credit score which probably is a different number than what a mortgage company (or other lender) will pull. Why? Basically, there are different scoring modules created for the end user (for example a mortgage company or if you’re buying a car).  

Credit inquiries lingering behind. Your credit report will reveal inquiries that were made over the past 120 days. Each inquiry will need to be addressed with a written letter explaining each inquiry and whether or not new credit was obtained. If new credit has been obtained and needs to be added to the loan application with the debt being factored into the debt to income ratios.

Co-signed college student loans. If you co-sign for your childs student loan debts (or any debts) chances are you may get to qualify factoring that debt into your ratios. This can sometimes be resolved if you can document your child (or whoever you co-signed the debt for) has made payments on their own for the last 12 months.

Charge-offs. Consumers often assume that because a debt has been “charged off” that they’re off the hook for the remaining balance, which typically is not true. Lenders will often treat the balance of the charge off that is on the credit report as a “collection” which will probably need to be paid off or resolved prior to obtaining a new mortgage.

Disputed accounts. You disagree with what is being reported against you on your credit report and do what most responsible people would do: file a dispute. Only to find out when you’re getting a mortgage, that the lender will not close on your transaction unless the reported dispute is removed. Torture! 

What may be buried in your credit report is just one more reason why you should start your loan approval process sooner than later.

If you’re considering buying or refinancing a home anywhere in Concrete, Fall City, Forks, Auburn (originally incorporated as the town of Slaughter) or anywhere in Washington state, I’m happy to help you!

Mortgage rate update for the week of October 29, 2012

This week is packed with economic indicators that may move mortgage rates with the grand finale being the Jobs Report on Friday.

Hurricane Sandy is also impacting the industry with the bond markets closing this afternoon and Tuesday. This is the first time in 19 years that the NYSE has closed due to a storm. Some lenders are closing their lock desk due to Hurricane Sandy. My thoughts and prayers to those who are in the path of this storm.

Here are some of the economic indicators scheduled to be released this week:

Monday, October 29: Personal Spending; Personal Consumption Expenditures and Core PCE; Personal Income

Tuesday, October 30: Auto Sales and Consumer Confidence

Wednesday, October 31: ADP National Employment Report; Employment Cost Index and Chicago PMI – Happy Halloween!

Thursday, November 1: Initial Jobless Claims; Productivity and ISM Index

Friday, November 2: The Jobs Report. NOTE: it’s expected that around 125,000 non-farm payroll jobs were added in September.

Remember mortgage rates are based on mortgage backed securities (bonds). Mortgage rates tend to improve when the stock market is doing poorly as investors will trade the potentially higher returns from stocks for the safety of bonds. The reverse is also true. Mortgage rates may change several times throughout the day.

Next week we have our elections. Please be sure to vote!

If you’re interested in refinancing or buying a home in Seattle, Redmond, Renton or anywhere in Washington State, where I’m licensed, I’m happy to help you.

Search for foreclosed homes on Zillow

Zillow has added a “foreclosure center” where you can search for foreclosed homes in your neighborhood. The search includes bank owned homes (REO) and pre-foreclosures (a home that is getting to auction).

Here’s a snap shot of what Zillow is showing as current foreclosures in West Seattle. The red houses are foreclosures and the blue houses are pre-foreclosures.

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Quick mortgage tip for self-employed and commissioned paid individuals

Earlier today I was having a conversation with a self-employed woman who just filed her 2011 taxes prior to the October extension deadline. She’s eager to buy a home in the greater Seattle area and her 2012 income shows a continued trend higher. She’s curious as to how quickly she can use her 2012 income for qualifying.

Typically for a self-employed or commissioned paid borrower,lenders want to see the last two years complete tax returns and will basically average the last two years net income assuming their income is steady or improving.

I advised her to file her 2012 taxes as soon as possible if she’s planning on using her 2012 income for qualifying. Not only will the 2012 tax returns need to be filed before a lender can use the income, most lenders will require a the tax returns to also be verified by the IRS.

Lenders use Form 4506 to obtain a tax transcript for several reasons, in addition to verifying taxes have been filed. The tax transcripts are a summary of the tax returns which reveal items such as income and deductions for a specific year. W2 salaried employees may be caught off guard if they claim a lot of work related deductions as an underwriter will most likely deduct those “expenses” from their gross income. Any conflicts between the what has been provided to the lender and what the IRS is reported must be addressed. 

During busier times for the IRS, such as April when income tax is due, it may take several weeks to obtain tax transcripts for that year. Even if the earliest my Seattle home buyer can file is at the beginning of February, she’ll at least have a beat the April rush.

So if you’re planning on buying a home in the beginning of the year and you need your 2012 income to qualify, file your taxes early. Chances are, your lender may not be able to close without being able to obtain your transcripts. 

If you’re considering buying or refinancing your home located in Washington state, I’m happy to help you!

Mortgage rate update the week of October 22, 2012

Although it may appear that this week doesn’t have a lot going on when you review the scheduled economic reports to be released, don’t that trick you. Tomorrow we’ll hear from the Fed and while we do not expect any changes to the Fed Funds interest rate, investors will be paying close attention to the Fed’s announcement.

Mortgage rates are not only impacted by scheduled economic indicators and the Fed’s continued purchase of mortgage backed securities. This morning, as I write this post (8:00 am pst), the DOW is down 235, due to poor corporate earnings and renewed worries about Spain. When stock markets are taking a hit, traders will often seek the safety of bonds, like mortgage backed securities. 

Here are some of the economic indicators scheduled to be released this week:

Wednesday, October 24: FOMC Meeting and New Home Sales

Thursday, October 25: Initial Jobless Claims; Durable Goods Orders and Pending Home Sales

Friday, October 26: Gross Domestic Product (GDP); GDP Chain Deflator and Consumer Sentiment (UoM)

Next week, just before the election, we’ll have the Jobs Report.

Mortgage rates remain at very low levels. If you’ve been considering buying a home or an investment property, you may be surprised how affordable today’s mortgage payment may be. If you’re interested buying a home or refinancing your mortgage on your home located anywhere in Washington state, I’m happy to help you. Click here for a free mortgage rate quote for your Washington home.

Moving towards a Paperless Mortgage with e-sign

This week our company, Mortgage Master Service Corporation, has been upgrading our “loan operating system”. This will allow our clients to have the option of reviewing their loan documents and acknowledge (sign) them electronically with “e-signatures”. Of course our clients can still print or receive hard copies of their loan documents. 

This step forward is not only “green” by reducing waste (it’s estimated a typical file uses around 400 pieces of paper); it will also help streamline the mortgage process. For our clients, instead of having to sign their names over and over again with their initial loan application documents, they will simply use their personal computer to securely access their loan documents and “click” their autographs.

E-signatures are allowed with conventional and VA mortgage loans. Currently it is not yet available for FHA or USDA mortgages. Hopefully this will change soon!

You may notice that my on-line loan application has changed – this is to support our new system.

Here is more information on how our e-sign process works

If you’re considering buying or refinancing a home anywhere in Washington, I’m happy to help you!

Mortgage rate update for the week of October 15, 2012

mortgageporter-economyHere are a some of the economic indicators scheduled to be releases this week which may impact the direction of mortgage rates.

Monday, October 15: Retail Sales and Empire State Index

Tuesday, October 16: Consumer Price Index (CPI); Industrial Production and Capacity Utilization

Wednesday, October 17: Building Permits and Housing Starts

Thursday, October 18: Initial Jobless Claims and Philadelphia Fed Index

Friday, October 19: Existing Home Sales

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Fall in West Seattle’s Lincoln Park

Yesterday we took our six month old puppy to Lincoln Park in West Seattle for a walk. I thought I’d share some of the spectacular fall colors from my one of my favorite parks

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Scupper and Rob at Lincoln Park

Fall leaves mix with kelp on the wet Puget Sound shore.

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Ferry at Fauntleroy

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Lincoln Park