The Truth About Mortgage.com

Ask me anything mortgage-related and I’ll provide an answer as soon as possible. No question is too big or too small. Whether it’s about lenders, credit, a guideline question, or a loan scenario, I’ll do my best to help!

Go ahead and send me your questions and I will post them here along with a detailed response.

Q: Does anybody know if that “excellent credit in 15 days” program works?

A: Credit scores are a way for banks and lenders to gauge your overall trust as a borrower. As we all know, trust takes time. Same thing with credit. Credit depth and history plays a major role in factoring your credit score. Sure you may have perfect credit, but without any credit history, you’ll find it very difficult to obtain solid financing on any big purchases.

If your credit is badly dinged, it will be difficult to move the scores much higher in a matter of 15 days. But, if you just have high outstanding balances, and overall solid credit history with no lates, this company will likely have you pay off those balances and rapid rescore those accounts to the credit bureaus, which will result in higher credit scores.

It’s not magic, but it can help if you actually do something positive towards your credit profile. These companies can’t cheat the system. They can merely speed up the process.

Q: How bad is a credit score of 574?

A: To be completely straightforward with you, 574 is a terrible credit score. And it means you definitely have some major derogs on your account or some seriously delinquent accounts. As mentioned by others here, get a free credit report to see exactly what’s wrong, and do your best to fix it NATURALLY, with self credit help. Do not use credit counseling or any other quick-fix programs.

If you aren’t planning on buying a home or securing any major financing in the near-term, don’t worry about it. Just start cracking away at the bad stuff and it’ll be back to an acceptable level.

If nothing else, this is a wake up call for you to be a more responsible person in regards to your finances.

Q: How do I build credit? I keep getting denied? I’m 18 years old and have a savings and checking account. I have a steady fulltime job that pays me 400 a week (gross pay). I’ve applied for credit cards–regular major cards, student cards (I am also a fulltime college student), gas cards, and department store cards–and I keep getting denied. I know theres those cards out there that are made for people with no or bad credit but you gotta pay like $200 the first time to even activate the dumb thing to pay for the charges which I don’t think is right. I asked my friends with credit cards and they didnt have to pay anything for their’s. I can’t get loans either cuz my parents can’t co-sign since their credit is really bad. What do I do? Where do i start? All I wanna do is finance a computer and/or build some credit for my future.

A: Usually colleges have booths with representatives offering student credit cards. You didn’t mention whether you were a student or not, but if you go by your local college, you’ll likely see a VISA or Mastercard booth. Those are the easiest credit cards to get approved on, as they are tailored to people like you who are young, with no established credit history.

And do not keep applying for credit cards. I would try the college card once, and if that doesn’t work out, just be patient and wait until your credit profile improves.

Q: Any opinions on Consumer Credit Counseling Service in Richmond, VA?

A: Big warning…credit counseling is never a good idea. It will ding your credit big time, and often once people do it, and they wonder why they did because it barely helps, and really does more harm than good.

The major problem is that though these companies negotiate lower minimum monthly payments with your creditors, you still aren’t paying the true minimum payment, and they still report you as late. So you’ll end up getting more and more dings on your credit report.

And, when you sign up for consumer credit counseling, you agree not to incur any new debt, so you won’t be able to secure any new financing.

Q: Where to find a Free credit report for year 2000?

A: Whenever a creditor pulls credit, you are entitled to a free copy of that report if you are denied. However, there are restrictions.

Read the following:

“Under federal law, you’re entitled to a free report if a company takes adverse action against you such as denying your application for credit, insurance, or employment and you ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the consumer reporting company. You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft. Otherwise, a consumer reporting company may charge you up to $9.50 for another copy of your report within a 12-month period.”

Please also note that your information from 2000 will show up on a current credit report as well, including when it was opened, the history, and when closed if applicable.

Q: Is it possible to get out of this unscathed? Probably not. Help? Hi, I figured this was worth a shot. Here’s my sob story. I lost my job early in the year, didn’t qualify for UE, had to move, and have since gotten a new job and am starting to feel ok. Problem is, I have about 5 credit cards with about $32K that I haven’t paid on in 6 months (maybe 7 at this point). I am ready to start making payments again but now the minimums are so outrageous there is no way. Where do I start? Anyone have any advice on how to get back on track? I have had great credit up until this and I just want to get my head back above water so I can go back to sleeping. I’ve heard nightmares about debt management/settlement companies, and I am skeptical of credit counseling since they seem to be on the credit cards’ side. Please help. I also have a leased car and student loans….oh man.

A: Do your best to pay the minimums without any fancy credit counseling or debt consolidation services. Credit counseling will lower your monthly payments, BUT, your credit report will still report those credit cards as late every month because you are paying below the minimum. Basically it won’t get you anywhere, and it will ding your credit even more. I believe credit counseling also doesn’t allow you to open any new lines of credit, so it’s really a bad place to put yourself.

I’ve heard the same thing about debt consolidation services. The FTC actually sued and shut down Ameridebt last year. These services know you’re in between a rock and a hard place, and really don’t give you all the gory details. If you look online you’ll find testimonials of people who have used these services and now are looking to find a way out.

So not only were they in hot water to begin with, they actually made it worse by entering into agreements with these companies that simply mucked things up more and charged a ton of associated fees.

My recommendation is to make a spreadsheet of all your cards and balances, along with the monthly minimum payment. Cut up each card and throw them in the trash. Change your tax exemptions so you get more money each pay period. You’ll need all you can get right now. And do your best to start paying off as much as you can. Entertainment is out of the question. You really need to live like you don’t have a dollar to your name at the moment.

Q: Do mortgage companies approve more loans in a slower market?

A: It really depends what aspect of your approval you’re referring to. If it’s your credit score or Loan-to-value, chances are the basic guidelines of a lender haven’t changed.

If you’re talking about untangibles like questionable occupancy or questionable stated income, you may slip through the cracks during cool periods in the market. At the same time, as someone here mentioned, the appraised value of your home is more at-risk due to the slow market, so you could end up with a cut appraisal review.

But if you’re simply trying to submit a sketchy deal, you probably do have a better chance of getting it approved because lenders are more desperate right now for deals because of the relative scarcity.

Q: Do mortgage companies check your credit more than once? We just applied for a loan on a new house. They ran our credit and that is good.Will they run it again before we close on the loan?

A: If you use a mortgage broker, they will run your credit, and then the lender they submit the deal to will run your credit. If your credit package expires, meaning if you submit the loan, and the deal doesn’t close within 60 days (depends on bank or lender), they will pull another credit report.

If you go to a bank directly, they will pull one credit report. Again, if the credit package expires, (timeframe can vary by bank), another report will likely need to be pulled.

If you use services that compare rates of several banks like lendingtree.com, they may use several lenders all at the same time, causing multiple credit reports to be pulled. This has been highly scrutinized practice as it can hurt your credit score based on the high number of credit inquiries from lenders.

So to sum it up, usually only one credit report should be pulled with a bank, and two if using a broker. More if using a comparable service like Lending Tree. And if your original credit package expires, an additional report will need to be ordered.

Banks and lenders only order additional reports to cover themselves if you happen to open a bunch of new credit accounts during your application process, as this increases your risk as a borrower.

The key to avoid any problems is before and during the application, DO NOT apply for any new credit and pay everything on time, no questions asked.

Q: Mortgage with existing debt and no deposit? I need to move out of my parents house due to overcrowding and insanity!!! My boyfriend and i are ready to get our own place but cant afford to because of existing debts. also we cant afford a deposit on a mortgage. We don’t want to rent as the area we want to buy is more expensive to rent than buy!!! please help!any advice on how we can get a house would be much appreciated!!

A: You may be able to qualify for a mortgage, but it likely will be a very high rate. I don’t know what area you’re in, but let’s just say you’ll be paying several thousand a month. And if you’re in debt, and living at home, you’ll need a co-signer. Most lenders require 12 months housing history, and living at home with your parents and without proof of monthly payment will be a problem.

You also need 2 years consistent employment history, and most first-time homebuyers need to provide verified seasoned assets, so make sure you can provide all that.

Again, you’ll need:

- A solid credit score (payment shock usually isn’t allowed for credit scores under 660)
- Verified assets (probably $10,000+ seasoned in a bank account for at least two months)
- 12 months housing history

Even if you can somehow qualify, it sounds like a bad idea because as others mentioned, you will have definite payment shock. And any loan that you do qualify for will be sky-high, and likely get you deeper into debt. And you could be the victim of predatory lending where you get into a really bad deal.

I recommend living in an apartment, at least for 12 months to get your housing history taken care of. And at the same time work on reducing your debt, and put savings aside to use for a down payment or at least for reserves.

I know your parents are annoying, but defaulting on your mortgage is more annoying.

Q: Where are the least expensive NEW homes in the USA?

A: I think you need to rephrase your question. Are you talking about least expensive, or best value in the United States? Obviously there’s a big difference.

If you’re looking for the best value, the first cities that come to mind are Dallas, Houston, Seattle, Portland, and probably those regions overall. Simply areas that aren’t completely saturated yet.

I have several good friends that recently moved out to Texas and bought very affordable, brand new big homes! So cheap that it made me think twice.

If you’re looking for the cheapest properties around, you could look in really rough neighborhoods across the United States, or states like Arkansas, The Dakotas, and Wyoming.

But all in all, most metropolitan areas are oversold, even Arizona, which was once a real estate haven. And don’t even think about touching Las Vegas.

Hope this helps.

Q: How do I make my home into a rental house? I want to make my current home into a rental property after we move.

A: If you want your current home to become a rental property, simply find a tenant that is willing to take over your mortgage, insurance, and taxes paid monthly, and write up a lease agreement to your liking, specifying the length of the lease, the price, and so on. For more information regarding lease agreements, visit http://www.spoa.com, the Small Property Owners of America Web site.

Do take extreme care in picking the right tenants, as you don’t want to get in over your head with two mortgage payments if things go wrong. And you definitely do not want to foreclose on any of your properties.

Do realize that this is similar to starting your own business. You will be accountable for anything that goes wrong, and you will need to treat your tenants with respect, charge a fair rent, and respond to any of their needs, even if it’s in the middle of the night! However, you can hire a property manager to do all of this for you if you simply don’t want to deal with it, or if your new home is out of the area. The only downside is that it will eat into your profits.

So to sum it up, do your research, see what the current rents are for the area, and see if it makes sense financially. Screen, screen, screen your tenants, and understand this is to be approached as a business. Decide upfront how long you plan to rent out your property. The choices you make now will reduce stress and headaches later down the road.

Q: What is 30 days late on credit? If its due on the 20th would it be late on the 21st or 20th of the following month?

A: A “30-day late” means that you have not paid the bill as of 30 days after your due date. So if you pay a credit card or other payment a few days late, you will not get dinged on your credit, nor will it be considered a “30-day late”. You will possibly get a late fee from the creditor, but it is NOT considered a “30-day late” until it’s been 30 days after the payment due date.

So in your case, if payment is due on the 20th of September, and you pay on the 21st of October, you will possibly get hit with a “30-day late”.

You should call the specific creditor to find out the exact details, as they may vary by company. Some may be more lenient than others. Also note that many companies take a few business days to post payment, so it’s best not to leave it to the last minute. Just realize that paying a few days late isn’t the end of the world, but a “30-day late” should be avoided at all costs.

Q: I want to buy a house but my credit is bad. help!?

A: I’m assuming that if your credit is bad, you probably aren’t in a financial position to buy a home. I may be wrong, but if you do not have sufficient assets, now is not the right time to buy a home.

Another issue is that you’ll end up with a much higher interest rate on your mortgage with bad credit than you would if you waited until your score goes up.

It’s not worth rushing into a big purchase. Especially with bad credit because you’re basically throwing money away. Instead of dreaming about that new home, order a free credit report, work on your credit, and put money aside for assets. Once you have prepared and everything is in place, start looking for property in your price range.

Q: Mortgage Rate questions? Hi i recently purchased my first town home. My question is on the mortgage rates, i want to know if i got a good rate on my home. 100k home with a 6.75% fixed for 30yr? And i also have a question on refinancing, when you refinance you basically get a lower mortgage rate right? Do you get any additional charges for refinancing or is it a win-win if you pay your mortgage on time?

A: There are a ton of factors that determine your interest rate. Things such as credit score, documentation type, loan-to-value, loan amount, and more. A 6.75% 30-year fixed rate is a relatively low rate, although you could probably do better.

You don’t necessarily want to refinance right away though because there will be more fees involved. Likely a few thousand, which will probably rollover onto your current mortgage.

Homeowners do not always get a lower rate when they refinance. Sometimes a homeowner will take a higher interest rate with better terms. An example would be moving from a 1-yr adjustable rate mortgage at 6% to a 30-year fixed mortgage at 6.75%. Though the rate is higher, the homeowner has the stability of a fixed rate, compared with the unknown fluctuation of a 1-yr adjustable.

Homeowners may also refinance to pull cash-out, and sometimes they may land a higher interest-rate if they need the cash badly, and simply can’t get a competitive rate. Keep in mind that you likely won’t be able to pull cash-out of your home for a good 12 months, as you need property seasoning.

Q: Is it normal to have two separate real estates get commission on a sale?

A: Yes, any real estate transaction has both a sellers agent and a buyers agent. This can be the same person, or it can be two people from two different companies.

Usually the commission is split between the two companies, and then each respective company pays their agent a certain agreed upon percentage.

So in actuality, not only can commission be split between two companies, but it can actually be split up again once it reaches each agency, with a portion going to the real estate company and a portion going to the working agent.

Q: Refinance mortgage loan? I have 2 loans for my condo because i don’t want to pay PMI. My 1st loan is 80% (fixed) and the 2nd loan is 10% (adjusted). My condo value went up roughly 12%. Can I refinance my 2nd loan for a fixed rate, even though I haven’t paid off 20% of the loan?

A: You can refinance both loans, or just refinance the 2nd loan. But if your condo’s value went up 12%, you could probably eliminate the 2nd loan, and roll it all up into one loan at 80% loan-to-value.Let’s look at an example. Say your condo was purchased for $400,000, and has since then gone up 12%. The new value is $448,000. You have a 1st mortgage of $320,000 and a 2nd mortgage of $40,000.

Because your new value is $448,000, you can refinance both loans and open a new single 80% loan-to-value loan at $358,400. Of course your existing liens are $360,000, so you would have to come in with some cash for the difference and money for closing costs, but you could settle into a single fixed loan and eliminate your 2nd this way.

Possibly you’d be able to get a bit more value out of your property beyond 12%, and then you could refinance the loans into a single loan without bringing money in.

Alternatively, you could refinance just the 2nd mortgage based on the new value. But it would probably be wiser to stick with a single loan at a lower fixed rate.

It also depends if you plan on staying in the property for an extended period of time. And how much money you have on hand. Also note that if you have an equity line 2nd mortgage, it likely won’t go up as the fed has paused the prime rate, and many industry experts feel the next move will be to lower prime. Of course if the rate on your 2nd mortgage is quite high, you should refinance out of it.

Q: Mortgage Statement Question?

I recently bought a townhome 6 months ago, 6.75% fix 30yr. I was reviewing my mortgage bill and noticed it shows im paying $650 or so per month for “Interest/Principle” and shows a tab just for “Principle” show im paying $87 per month or so for that, under that it shows my principle balance. Then shows “Escrow” and shows $160 or so per month for that.

My question is, shouldn’t all the money i pay per month go toward the principle of the home? Am i just paying $650 per month just on interest costs? Im confused, i need some help with this.

A: Looks like you are paying PITI payments each month. PITI stands for Principal, Interest, Taxes, and Insurance.

Escrow is another way of saying taxes and insurance.

You definitely aren’t paying Principal only, that would mean you’d have an interest rate of 0%. There are interest-only loans, but those do not pay off any principal.

The $87 a month your currently paying goes towards the principal of your home. The bulk of you payment is interest right now because that’s how mortgages are amortized. You always pay a large portion of interest the first 15 years of your mortgage, and then mainly principal in the final 15 years. That’s why it’s not wise to constantly refinance your home as you’ll end up paying more and more interest.

This is typical. You can pay off more principal each month if you’d like, but there’s no way to pay just principal while avoiding interest charges.

I recommend that you call the loan servicing department for which your loan was originated to resolve your questions. A rep. can tell you exactly what each figure pays, and how it will change over time.

Q: Do you need to have more than 20% home equity to borrow against for a home equity loan?

A: Sounds like your friend is in dire straights. If she needs to borrow money to pay her mortgage, she really needs to rethink her situation.

Taking out an additional mortgage is a possibility, even up to 100% or more of the total value of the loan, but if she’s taking a new mortgage out to pay you back for the original mortgage she couldn’t pay, she has things way backwards.

I do not recommend it, as the new equity line will come with a new required monthly payment that could send her into foreclosure.

Q: We found a house, the appraisal has been done. should we start packing?A: Not so fast…there are a ton of other things that need to be addressed before you rent the moving van.

First you need to write up a purchase contract that is acceptable and agreed upon by the seller. Second you need to secure financing on your new home. This can take several weeks, if not more.

Along the way a number of setbacks can occur. Your house may not come in at value. Your credit may prevent you from securing the financing you can qualify for. The inspection may come up with something negative that will kill the deal completely.

This sounds grim, but the reality of buying a home involves time and setbacks. It’s never an easy process. And packing should not be one of your top ten concerns. Sure you need to get your stuff out and on to the next place, but it’s nothing you should be thinking about right now.

You should be thinking about your interest rate, your homeowners insurance, your home inspection, and preparing yourself for a mortgage by reviewing your credit and making sure you have seasoned assets in place.

Calling the moving van is pretty simple. The rest not so much. So get to it!

Q: Is 800 really that hard? For some reason I can’t reach that..I’m 792 TU, EQ 785 Ex 766…..there is NOTHING bad, ZERO debt…perfect pay 30 plus year history reporting.

A: It is not necessarily hard to achieve an 800 Fico score. And it doesn’t really matter. Once your credit score is above 720 you’re pretty much in the highest tier necessary to apply for any type of credit, and the lowest interest rates.

The score is important, but it’s also what is behind the score that matters as well. If a creditor analyzes your credit report, and sees an 800 score with limited trade history it means very little. But if a creditor reviews your credit report and sees a ton of solid credit history with a 750 score it will weigh a lot stronger in your favor.

I’ve seen consumers with 800 Fico scores and very little credit depth. The reason being is that they have limited history, yet everything has been paid on time and there is very little outstanding debt. At the same time, their 800 score means very little if they go after a large loan, as they have no history to support a large amount of debt.

The bottomline is your credit score is more than perfect. And 800 is just an arbitrary number. If you really want to raise it above 800, you’ll probably need to erase all your outstanding debt, while keeping your accounts open and current.

Q: What is the difference between Prime and Home Equity Line of Credit?

A: Prime refers to the prime rate, which Home Equity lines are based on. The current prime rate is 8.25%. If you see a “Prime Rate Home Equity Line”, this simply means you are getting the equity line at the prime rate, with zero margin.

Most Home Equity lines carry a margin that is added to the prime rate. This sum is your interest rate. So if you have a margin of 2.000, and prime is 8.25, your interest rate is 10.25%.

Some banks even offer Prime minus 1% for the first few months of the loan term. This is called a teaser rate, as it’s a low start rate that won’t be around forever.

Q: I just finished paying all my credit cards (0 balances)=) and so very happy with it. i just need advices on improving my credit quick and also managing your credit cards and monthly payments. Here’s my situation, i have 3 regular credit cards and 4 in-store credit cards. I only need to pay 2 accounts each month, my auto loan and cellphone bills. what i did with these 2 accounts was to setup automatic bill pay. pay my auto loan w/ 1 regular credit card and 1 credit card for my cellphone bills too. my 3rd credit card was for emergency and other expenses and this card has the highest limit.

A: Sounds like your a sound borrower. But there are a few more things you should consider.

Paying off your credit cards and other debts each month on time is paramount. But also having a large amount of available credit is important as well. As well as the amount of time those accounts have been open.

Make sure you don’t close those cards. Keep them open and the good payment history will work in your favor. Also try to raise your credit limit with each card. You can usually request this at each creditor’s website. If the credit lines go up, so essentially have a greater amount of available credit, and the more you have available, the better off you are as a borrower.

Continue to raise your limits in a calculated fashion and avoid opening any new cards if you can. Keep the accounts open and pay on time and your score will benefit.

Q: I am 24 i make $3000 and I pay rent for $1000 each month. My mom lives alone she makes about $3000 and she pays rent for 600. Do you think it is a good idea to move in and buy a condo? My payment is going to be $ 2500. Thank you for your support.

A: It sounds like a bad idea given the monthly payment and your relatively low income. It looks like you’ll just be scrapping by.

Does the $2500 include taxes and insurance? And is the $3,000 a month gross or net? When it comes down to it, you should have a debt-to-income ratio no greater than 45%.

In your example, your DTI would be about 83% for just the proposed mortgage alone. Not to mention other expenses you have, so technically you’re not to own a home right now.

Plus consider the intangibles like the stress of owning a home. And job security. Not to mention more expensive bills and a declining housing market. I’d wait.

Q: If you have a hospital bill and you are paying on time can they send you to collection, because they want it sooner?

A: If possible, it would be wise to pay off the medical bill completely if you agree with the charges and have the money available to do so.

Medical bills are notorious for showing up as collections on consumer credit reports. And if you don’t resolve it asap, it could significantly lower your credit score.

If in doubt, pay it off sooner rather than later if you agree with the charges. If you want to dispute the charge, call the company and do so. And make sure you get something in writing to protect yourself. It’s not worth damaging your credit to delay payments that are due.

Q: Can anyone tell me about where to get a mortgage if i have a poor credit rating? My credit rating is quite poor but i was hoping there would be someone out there willing to help me get on the property market??? i would be looking to borrow 100%.

A: You shouldn’t buy a piece of property if your credit is poor. Especially at 100% financing. Aside from it being nearly impossible, if you find a mortgage, the rate will be astronomical and you’ll likely default on payments and foreclose on the home.

I would personally wait until you have solid credit and enough assets to put at least 5% down, then look for a property. Home prices are at all time highs right now anyways, so it’s probably not the best time to buy.

And buying right now with poor credit is simply throwing money away. Especially if you don’t have a property in mind.

Q: How can I remove my partner from owning the house?

A: This form needs to be filled out and signed by him in the presence of a notary. It’s very quick and simple, and will effectively write him off title of the home.

Do a search for Quit Claim Deeds for your specific state, and you should find info on how to execute it, and the associated fees.

Call your county clerk and recorder’s office for more information about recording the deed.