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Archive for May, 2008

Acceptable types of Alternative Credit for FHA Mortgages

According to the HUD Mortgagee Letter 2008-11, HUD has created two groups of references that can be used as alternative credit for FHA mortgage loans. These are used when the borrower’s credit file does not have enough information to create a credit score, or when the credit file produces a score with very limited credit. HUD stressed that these are not to be considered as an alternative to “poor credit.”

Basic Guidelines for FHA Alternative Credit

There must be at least 3 references that can show a solid bill payment history. All of these should cover the payment history of the most recent 12 months. At least one of these should be from the “Preferred” Group with the focus of references being mainly in the “Preferred” group. Once all options have been exhuasted with the “Preferred” group, then references from the “Secondary” group can be considered.

The “Preferred Group”

rental housing payments (subject to independent verification if the borrower is a renter), utility company reference (if not included in the rental housing payment), including gas, electricity, water, land-line home telephone service, cable TV. If the borrower is renting from a family member, request independent documents to prove regularity of payments, such as cancelled checks.

The “Secondary Group”

insurance coverage, i.e., medical, auto, life, renter’s insurance (not payroll deducted); payment to child care providers – made to a business providing such services; school tuition; retail stores – department, furniture, appliance stores, specialty stores; rent to own – i.e., furniture, appliances; payment of that part of medical bills not covered by insurance; Internet/cell phone services; a documented 12 month history of saving by regular deposits (at least quarterly/non-payroll deducted/no NSF checks reflected), resulting in an increasing balance to the account; automobile leases, or a personal loan from an individual with repayment terms in writing and supported by cancelled checks to document the payments.

These alternative credit references must be verifiable. HUD’s preference is that they are verified by a credit reporting agency and that they create a “nontraditional mortgage credit report.” This report would be used by the lender just like a standard credit report would be used.

If a nontraditional mortgage credit report is not possible, HUD further requires that each reference be independantly verified and should be backed up by cancelled checks covering the last 12 months’ payment history.

In my next posting I will address what can be done if no references can be found, or if there no “Preferred” group references available.

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HUD Clarification on Alternative Credit

A while back, I wrote an article dicussing how FHA mortgage loans are not Subprime Mortgage Loans. Obviously, too many loan officers are not getting that point very clear in their minds. With the lack of mortgage loans available to individuals with very poor credit, many loan officers that worked strictly in subprime lending have turned to FHA as their savior. This is causing a lot of trouble and a major backlog with many lenders in their government underwriting departments.

The mess has gotten so bad with many lenders that loans can take up to 30 days just to get their government deals looked at! This includes both FHA and VA mortgage loans!

So in an attempt to help bring loan officers back to reality, HUD has released a Mortgagee Letter (#2008-11) to clarify Nontraditional Credit Verification and Evaluation. In this letter HUD addresses using alternative credit references, when they can be used and how they should be verified.

The idea is that using these alternative tradelines is appropriate when a borrower does not have sufficient credit to create a credit score. Alternative credit can also be used to help support what is considered to be a “thin” credit file where a credit score is created but based on very limited credit. HUD does clairify that if the credit is in bad shape, you can’t simply turn in a payment history for a light bill and get it approved!

“nontraditional credit reports may not be used to enhance any poor credit history on a traditional credit report.” HUD Mortgagee Letter 2008-11

Alternative credit lines must have a solid 12 month history and be one of two groups of trade line references. In the next couple postings, I will go more into what these groups are and how HUD wants these references to be verified.

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Why Charlotte NC is The Place to Buy Your First Home

Are you tired of renting? Every month you write that check for $600, $750 or over $1,000 for your rent and you have to wonder… how much home could you buy in Charlotte?

If you are thinking about buying your first home, Charlotte NC is the best bet around!

Charlotte’s real estate market is great! There is a great selection of homes available to purchase and despite the national news of falling home values, Charlotte boasts one of the few growing real estate markets in the country. So the investment you make today won’t disappear tomorrow!

Mortgage rates in Charlotte are cheap! While the entire country is still seeing great mortgage rates, Charlotte is really reaping the benefits! In addition to people buying their first home today, many Charlotte home owners are also refinancing their current mortgage. When you see mortgage refinances up, you know mortgage rates are low! And right now, you can enjoy super low mortgage rates in Charlotte.

Despite the news that it’s harder to get a mortgage today, there are still many Charlotte mortgage financing options. First time home buyers are finding it a little more tricky today, but with the right guideance and advice (from the right Charlotte loan officer of course), Charlotte home buyers can find the right mortgage product to help them get approved! FHA and VA mortgages for Charlotte are just a few of the many options available today.

So if you are still renting, you need to consider buying your first home in the Charlotte area. With a solid real estate market, great selection of homes for sale in Charlotte, super low Charlotte mortgage rates and mortgage programs designed to help first time home buyers, now is your time to buy!

Hillary Clinton and John McCain offer a Joke to Voters

Hillary wants to use a “windfall tax” on the oil companies (which will increase their expenses and thereby our gasoline prices - DUH!) so that she can use that money to suspend the gasoline tax for the summer. McCain also wants to suspend the gas tax to save us money!

Ok.. you ready for the joke? You just got it… this gas plan is a joke.

Real Life Example:

The federal gas tax is only 18.4 cents per gallon. My Acura TL holds roughly 15 gallons of gas and I fill up about 6 times a month. 15 x 18.4 = $2.76 saved per fill up. That’s not even ONE GALLON OF GAS! Ok, so 6 fill ups a month would be $2.76 x 6= $16.56 a month. Over 3 months I would save $49.68, roughly one fill up!

So Hillary and McCain’s Plan on Gas: Vote for me and I will save you about $20 a month on your overall gas bill. Hmmm. Sounded better the other way: Suspend the Gas Tax and save Americans “millions of dollars” this summer. (Of course, we won’t take office until next year, so you do understand this is all talk, don’t you?)

Although my savings would be $50, somehow I believe the gas prices would continue to go up as a result of the “windfall tax” as to erode my savings. And when that gas tax comes back, OUCH!

I hope others are seeing past these political jokes as well. This is nothing more than smoke and mirrors and when the smoke clears and the whole thing fails, these politicians will simply blame the oil companies again.

So does this mean we simply vote Obama? Not so fast… I just bring you this reality of the joke to make you think in reality when considering who you will vote for. Don’t just listen to their words. Discover for yourself what they are really saying.

Ideas for your Stimulus Check

If you haven’t heard, most Americans will be getting a check either in the mail or deposited directly into your account over the next few weeks and months. These checks will range from $600 to more than $2,000 for qualifying families. The idea is that you might spend the money right away and get the economy going again.

Many people have said they plan to save the money. While that sounds good, with more than 90% of Americans having very little savings, it can best be assumed we will spend the money rather than save it or pay off debt. So with that in mind, here are a few things you can do that will satisfy the “spender” in all of us while ultimately saving you money!

If you are only getting the $600, consider using part of that money to upgrade the light bulbs in your home. I know that sounds a bit silly, but going from traditional incandescent lights to the new compact fluorescent bulbs can save you hundreds of dollars in both energy and replacement of bulbs. These bulbs use a fraction of the energy and last much much longer!

If you are getting $1200, maybe spring for a good digital thermostat or replacing a worn storm door. You may also want to consider upgrading an older appliance that may save on your energy bill as well. New water heaters, dishwashers and refrigerators can save you a ton on your energy bills.

Getting over $2,000? If you rent, use it as part of a down payment to buy a home. If you already own a home, consider putting it towards a new HVAC system. The newer, more efficient heating and air conditioner units can save you so much money that you could end up paying for it in savings alone in no time!

The bottom line is that you can spend part of the money to stimulate the economy, while still making a positive impact on your own! With the right research, you can find the right upgrades that will help your house run smoother and more efficiently.

Thank you Jamison Realty

In a time when you hear nothing but negative news and grumblings, there is a very bright spot… Jamison Realty. Jamison Realty is a real estate agency in the Charlotte area (located in Matthews, NC) offering both seller and buyer agency representation.

I watched as Jamison Realty renovated an older home in Matthews and loved what they have done with the place. It appears that everything was done with a great touch of class. And now I hear a new radio spot that just affirms my belief that this is a top quality agency.

Their radio ad is entitled “I’m Positive”. It speaks about the good that is going on in Charlotte real estate and does not use scare tactics or fear to get your attention. The message is upbeat and positive and from my seat it is right on the money! Click the following link to hear the ad: I’m Positive Ad from Jamison Realty

If you are looking for a positive Realtor to work with, you may want to consider Jamison Realty. If this ad is any indication as to the experience they offer, I can only imagine the positive feeling you will get. Better yet, get pre-approved for your Charlotte mortgage first, and then let’s contact Jamison Realty and get things going strong for you!

Could a “Failing Economy” be Political Hype?

Sure, I know its tough out there. Energy costs, especially at the gas pump, are eating up more and more of our money. And it seems that everywhere we turn the feeling is that we are in a recession.

However, the numbers say something different. For the past 2 economic quarters we have still seen growth in our economy. Sure it was just a small gain, but it was positive. This morning, despite economists expectations of bad news about unemployment rates, the numbers actually showed that umemployment rates fell in April! And all reports earlier late last year said we would not see the real estate housing market return until 2009, but now they are saying 3rd quarter 2008. Personally, I think the real estate market turns the tide this summer nationwide, with Charlotte real estate beginning any time.

So what does this all mean? Is it all just politics? Are we in a recession? Is the sky falling?

I have been saying for months that the sky is NOT falling. Yes, we have seen a down turn in the economy and we are all feeling the crunch. But listening to the talking heads, the politicians, and the news media (which can’t say anything good) you would think we are in another great depression!

So it makes me wonder… how much of this is spin and hype from a big year in politics? How much of this is “Bold Headlines” material, and just how much of it is reality?

For those that do not subscribe to the theory that America is falling away and that our economy is dead, now is the best time to take action. While others are sitting around moping about how bad things are, you are able to take advantage of the market and make big strides. From investments to real estate, the world lays at your feet waiting to be seized!

If you live in the Charlotte NC area for example, you are part of the best real estate market in the country. Charlotte even features the best economy in the nation. So take advantage of your opportunity and stake your claim today.

What do you think? Express you opinion now…