Is Your Credit Score Preventing You From Getting A Fort Lauderdale Mortgage?

Today’s tougher lending environment includes the necessity to have a higher credit score as well.  If you want to qualify for a Florida home loan it is necessary to have a minimum mortgage credit score of 620.  Home buyers that are still plagued by past credit problems need a plan to boost their credit score.

There are many myths about how to best handle the negative impact past credit problems may have had on your credit score.  As a Fort Lauderdale mortgage broker, I encounter many home buyers trying to qualify for a Florida home loan, only to discover past credit issues have resulted in a credit score below 620. 

Here are “Seven Tips” to help raise your credit score quickly:

1. Evaluate Your Collection Accounts – You probably didn’t realize that paying off a collection account can actually lower your credit score.  That’s because the credit score software evaluates based on most recent activity date.  When you send in a payment to payoff a collection it’s reported reflecting the payoff date as a “paid collection”.  Since credit score software reflects the date of last activity, it sees the payoff as recent collection activity and it actually can lower your score. What’s the best way to deal with a collection to maximize your score?  Contact the collection agency and explain you are willing to pay off the collection under the condition that all reporting is withdrawn from the credit bureaus.  Make sure you request a letter in writing confirming your agreement.  Not all collection agencies will remove references to the collection account, but many will.  It’s worth the effort as this can dramatically improve your credit score.
2. Payoff Your Past Due Accounts – Any past due amounts over 30 days being reported to your credit report will negatively impact your credit score.  Accounts that slip to 60 or 90 dates past due will really hammer your credit score.  Bring all past due accounts current.
3. Try To Eliminate Your Late Payments – If you’ve received a few minor 30 day late payments, you can call your creditor and request them to remove the late payment from your credit report.  Remind them that you’ve been a good customer and would appreciate their assistance with a one time courtesy adjustment.  Most of these calls are taken by call center representives. Be persistant, but remain polite and express your appreciation for their assistance.  If you don’t have results, hang up and call back and try with another representative.  Don’t be afraid to ask for a Supervisor and for the best results, always remember to be courteous.
4. Eliminate Your Liens And Charge-offs – Liens and charge-offs that are older than two years will not impact your credit score.  However, liens and Charge-offs within the last two years will seriously damage your credit score.  In this case, paying the past due balance is very important.  In fact, if you have limited funds to work with, then pay off past due balances first and the collections afterwards.
5. Evaluate Your Credit Balances And Limits – Balances over 70% of your available limit will do the most severe damage to your credit score.  The next evaluation point is at 50% with 30% or less being your optimum level.  You can either pay down your balances or redistribute the balances over several cards to minimize damage.
6. Don’t Close A Credit Card Account -  Even if you don’t have a use for the card any more, don’t close it out.  Your credit history and length of having credit will impact your credit score.  Closing a credit card account you payoff will eliminate how the software evaluates how long you’ve had a piece of credit and will actually lower your credit score.

As a professional Fort Lauderdale mortgage broker and a Certified Mortgage Planning Specialist (CMPS), I’m uniquely qualified to assist you evaluate your credit score and help plan the best steps to improving it.  Become  home buyers by contacting:

 Harvey Collier – First Trust Mortgage – 954-629-6151

As a Fort Lauderdale mortgage broker, I’m often asked by home owners if there is a benefit to doing a short-sale versus a Florida foreclosure if they’re upside down on a property and want to dispose of the home and the debt obligation that goes along with it.  The next question is usually, “Can I get another mortgage to buy a home after a short-sale or Florida foreclosure?

The consequences for a short-sale versus Florida foreclosure may have different implications to your future obligation of the debt and tax issues too.  A short-sale on a primary residence is generally negotiated with a foregiveness of the debt to the lender and without income tax implications to the home owner.  A short-sale that is a vacation home or investment property won’t be as easy to negotiate without further consequences if you have other assets the lender can go after.  It’s also important to note that even if you negotiate a foregiveness of the debt with the lender, the Internal Revenue Service may consider it income that you have to pay taxes on.  Always consult with a CPA or a qualified tax professional to understand the potential implications to you.

A Florida foreclosure will have more of an impact on the home owner, as the debt is rarely forgiven unless included in a Bankruptcy proceeding.  In most cases, the lender will file a defiency judgement against the homeowner, that they may be able to collect at a later date.  You may also be subject to IRS income tax consequences with a Florida foreclosure action.

Now we need to look at the impact of a short-sale vs Florida foreclosure on your credit report and credit score.  Many homeowners believe doing a short-sale of a property will reflect better on their credit report and credit score than doing a Florida foreclosure action.  The truth is, they both have the same impact on your credit report and credit score.  Both are considered a single negative item and will be reported to the credit bureaus as “not paid as agreed” and “settled for less than full balance”.

Being a Fort Lauderdale mortgage broker for the past 25 years, I’ve witnessed Florida foreclosures and short-sales report the same to the bureaus and will remain on your credit report for seven years.  If you’re thinking about getting another Florida home loan you will be ineligble for FHA financing for three years and from Conventional Fannie Mae financing for four years.

As a Fort Lauderdale mortgage broker, I review credit reports and credit scores every day.  The key to minimizing the damage to your credit report and credit score is to keep the short-sale or Florida foreclosure as an isolated item, as it will have much less damage potential.  You may have to wait a while to obtain a Florida home loan, but your credit score will recover in 12-24 months.

Contact Harvey Collier, your professional Fort Lauderdale mortgage broker to discuss your individual Florida foreclosure or short-sale circumstances and your ability to obtain a Florida home loan.

Fannie Mae HomePath Foreclosures Offer Two Great Fort Lauderdale Mortgage Advantages

Fannie Mae markets their own Florida foreclosures, as well as foreclosures in other states under the HomePath brand name. Local Real Estate Agents list and sell these properties just like any other homes.  The advantage to the HomePath program is not just a great deal on a Florida foreclosure, but special Home Path eligible financing too.

 Fannie Mae HomePath financing offers several advantages and costs saving elements as compared to traditional Conventional financing or FHA financing:

Fannie Mae HomePath financing offers two traditional mortgage options.  The first is a standard fixed rate mortgage you can use to purchase your HomePath foreclosure in “as is” condition.  The second is a Fannie Mae HomePath Renovation Loan, that is available for those HomePath foreclosures that feature the HomePath Renovation Loan logo.  This option will allow a buyer to repair, upgrade, or remodel their HomePath foreclosure and wrap the costs into their mortgage.

If you are looking for a great deal on a Fort Lauderdale foreclosure, it makes sense to start your search with a Fannie Mae HomePath foreclosure and finance the purchase with a special Fannie Mae HomePath loan.  You can begin your search at the Fannie Mae HomePath website: www.HomePath.com.

Harvey Collier and First Trust Mortgage are approved and authorized to assist you with any of your Fannie Mae HomePath financing needs.  Contact Harvey Collier today for all your HomePath financing options.  You might just get a better deal on that Fort Lauderdale mortgage and foreclosure than you ever imagined. 

An FHA 203k Loan Is A Perfect Choice To Purchase A Fort Lauderdale Foreclosure

So, you’ve found a great deal on a Fort Lauderdale foreclosure property, but it needs a lot of work.  You have the money for the down payment on a Fort Lauderdale mortgage, but you don’t have the cash to do the repairs.  Perhaps you found a Fort Lauderdale foreclosure that’s well priced, in good condition, but it doesn’t quite meet all your needs or requirements.  Maybe the kitchen and baths need updating, or you need another bedroom or bath?

Many buyers needing financing to purchase a Fort Lauderdale foreclosure, often lose their bid to a cash buyer that is able to close on the property no matter what condition it is currently in.  Fort Lauderdale mortgage lenders won’t finance a Fort Lauderdale foreclosure that has any health or safety issues, i.e. roof, plumbing, electrical, structural, or functional inadequate.  The result is, unless you can buy a Fort Lauderdale foreclosure for cash and have the money for the necessary repairs or renovation, you won’t be able to make an offer on that home.

Now there’s a solution for those looking for a Fort Lauderdale mortgage to purchase and renovate  their Fort Lauderdale foreclosure.  Introducing the FHA 203k Renovation loan.  This is the perfect Ft Lauderdale mortgage package, as it allows a buyer to purchase a Fort Lauderdale foreclosure in any condition and complete the desired repairs, renovations, or even add square footage.  An FHA 203k loan can make any property your dream home.

Imagine, getting a great deal on a Fort Lauderdale foreclosure and using an FHA 203k Renovation loan to fix all the property defiencies and add make the home everything you want.  An FHA 203k Renovation loan is based on the completed future value of the Ft Lauderdale foreclosure after all repairs and upgrades are completed.  You can finance 96.5% of the completed value into your Ft Lauderdale mortgage. 

An FHA 203k Renovation loan provides the funds to initially acquire the Fort Lauderdale foreclosure in its’ current condition.  Then, your Fort Lauderdale mortgage will set aside the funds for the renovation and pay the contractors on a draw basis as the work is completed.  When all is said and done, you have your dream home and it’s all rolled into one Fort Lauderdale mortgage package. 

An FHA 203k Renovation loan may be the smartest move you ever made.  It opens up a huge inventory of homes you wouldn’t otherwise be able to consider not being a cash buyer.  Get a great deal on a Fort Lauderdale foreclosure and create even more value with an FHA 203k Renovation loan.

Contact Fort Lauderdale mortgage broker, Harvey Collier, with all your FHA 203k Renovation loan inquiries.

When Can A Co-Signor Be Used To Qualify For A Fort Lauderdale Mortgage?

These days, it’s very common for buyers to need help to qualify for a Fort Lauderdale mortgage.  Soaring mortgage delinquencies, short-sales and foreclosures have caused Ft Lauderdale mortgage lenders to significantly tighten underwriting guidelines.  This has made qualifying for a Florida home loan much more difficult.

The housing and economic crisis has hurt many potential home buyers ability to qualify for a Florida home loan.  Layoffs, extended unemployment, reduced work week or wages, inability to document two year work history, co-borrower with good income but bad credit, or a host of other reasons.  When faced with this challenge, many times finding a Co-Signor is a great option to help qualify for a Fort Lauderdale mortgage.

When using a co-signor to obtain a Ft Lauderdale mortgage, the rules are different for FHA financing and Conventional Fannie Mae financing.  There is a lot more flexibility in the use of a co-signor with an FHA Florida home loan.  An FHA Fort Lauderdale mortgage allows for a co-signor to have all the income to qualify, as long as the primary borrower doesn’t have a negative credit history.  The co-signor can be a non-occupying borrower and still provide 100% of the the necessary qualifying components to get a Florida home loan.

Conventional Fannie Mae financing is not anywhere near as liberal with co-signors.  First, if the co-signor is not occupying the property then the transaction is limited to 75% financing, while FHA financing is still available with a 96.5% loan-to-value.  A Conventional Ft Lauderdale mortgage also requires the co-signor to be a family member or have a long-standing and substantial relationship with the borrower. Lastly, a Conventional Fort Lauderdale mortgage requires the primary borrower to individually meet certain qualifying ratios without the co-signor’s income.  This is generally left up to a underwriters judgement to base these restrictions on prudent lending standards and each transactions own merit.

Finding a Co-signor to qualify for a Florida home loan may be an excellent option for many home buyers.  An FHA Fort Lauderdale mortgage will provide you with many more co-borrower options than a Conventional Ft Lauderdale mortgage.

Contact Harvey Collier, your Fort Lauderdale mortgage broker, for all your Florida home loan needs.

Understanding How Real Estate Taxes Can Effect Your Fort Lauderdale Mortgage Payment

Many home buyers, especially First-time buyers getting a Fort Lauderdale mortgage, tend to overlook the importance of understanding Broward County real estate taxes and how they may impact their future monthly payments.  The current Broward County real estate taxes can easily reflect a significantly higher or lower amount than a buyer will be facing the next tax year. 

Fort Lauderdale FL homes purchased at the peak of the market will probably reflect higher Broward County real estate taxes than a buyer will have in the future.  Fort Lauderdale FL homes that were owned as vacation homes or investment properties will also probably reflect higher Broward County real estate taxes, as the owner wouldn’t have qualified for Homestead Exemption to reduce their tax bill.  Conversely, if a Fort Lauderdale FL home was previously purchased many years ago and the owners had a Florida Homestead Exemption, the Broward County real estate taxes may be artificially low.

Fort Lauderdale FL home buyers that are purchasing a property to reside in as their primary residence, may qualify for a Florida Homestead Exemption, that will not only reduce their Florida real estate taxes, but also limit future increases. Fort Lauderdale FL home buyers can go to the Broward County Property Appraiser website to learn more about Florida Homestead Exemption and use the Tax Calculator Tool to estimate their future Florida real estate taxes.

With that said, how will the new Florida real estate tax bill impact a Fort Lauderdale FL home buyer and their Fort Lauderdale mortgage payment?  If the Broward County real estate taxes go down, then not only will your Fort Lauderdale mortgage payment go down, but you will probably receive a refund from your escrow account from your lender.  However, if your Florida real estate taxes go up, it will cause the proverbial “double whammy”.

Not only will your Fort Lauderdale mortgage payment go up, but you’ll be faced with a short-fall, as the lender will not have been collecting sufficient funds to pay the Broward County real estate taxes on the property.  In this instance, your lender will generally provide you two options.  First, you can write a check for the short-fall and then your Fort Lauderdale mortgage payment will be adjusted higher to cover the new Florida real estate taxes going forward.  The second option, which is most common, will allow you to spread the short-fall out of the next 12 months.  Here’s where the “double whammy” comes into play.

Not only will your Fort Lauderdale mortgage payment be increased to escrow enough funds to pay the Broward County real estate taxes next year, but it will also be increased enough to cover the current short-fall.  This can make a significant difference in your future Fort Lauderdale mortgage payment. 

Understanding your Florida real estate taxes, the impact of Florida Homestead Exemption and the impact it may have on your future Fort Lauderdale mortgage payment is crutial to your Fort Lauderdale FL home ownership experience and your financial future.

New Fort Lauderdale Mortgage Rules May Hurt Unaware Home Buyers

Credit Report Alert

Home Buyers need to be aware starting June 1st, mortgage lenders will begin pulling a brand new second full credit report immediately before closing. The reason for the new procedure will be to comply with new Fannie Mae requirements. The new report will be focused on discovering whether the borrower has obtained, or even shopped for, new debt between the date of the loan application and the closing. If they have made applications for credit of any type – for furnishings and appliances for the new house, a car, a home equity line, a new credit card – the closing could be put on hold pending additional research by the lender. If borrowers new debt is large enough to affect the debt-to-income ratio calculations used in the original loan approval, the deal could fall through. Fannie Mae’s risk assessment model shows the added debt could render the borrower ineligible for the mortgage because they now appear unable to handle the payments without a strain on their household budget.

When pulling the last minute credit report, lenders are also looking for things like new credit accounts, increased credit lines, increased balances on existing accounts, undisclosed or newly recorded liens, second mortgages, etc., anything that may have changed since the initial application that might impact the borrowers debt-to-income ratio. New Fannie Mae instructions say that “lenders must determine that all debts of the borrower incurred or closed up to and concurrent with the closing” are considered in the final loan analysis.

The message here for home buyers is very clear. Be prepared for the new credit check procedures when purchasing a home. Follow one rule: “ABSTINENCE” ; between the application for a mortgage and the date of closing, resist spending. Don’t apply for new credit unless it has been discussed in advance between the borrower and lender and a green light is given.

How Do You Compete With A Cash Buyer For A Fort Lauderdale Foreclosure ?

So, you’re a home buyer and looking for a great deal on a Fort Lauderdale FL home. The media, your friends and family, your co-workers have all convinced you the best deals out there are Fort Lauderdale foreclosures. You’ve done some searching online, identified some Fort Lauderdale foreclosures and contacted a Fort Lauderdale Realtor.

Next you see a Fort Lauderdale foreclosure that has a lot of potential, but it requires some work to put it back into shape.  Unfortunately you don’t have the cash to do the fixup and you’re already getting a low down payment FHA mortgage, so there’s no more equity to borrow against.  A second scenario might include an offer over asking price, only to lose it to a lower all cash offer.  The most common scenario is the Fort Lauderdale foreclosure has serious deferred maintenance problems making the property impossible to finance.  These are usually the best deals for buyers, but you can’t get a Fort Lauderdale mortgage with the existing condition of many Fort Lauderdale foreclosures. So, generally all cash buyers get these deals.

Now There Is A Solution

If you’re a buyer on a budget, you may want to consider a low down payment FHA mortgage that might just level the playing field for you with a cash buyer.  This Fort Lauderdale mortgage is called an FHA 203k Renovation Loan. This program will open up many more purchase opportunities for buyers and Fort Lauderdale Realtors alike.

Once you’ve found the Fort Lauderdale FL foreclosure that you and your Fort Lauderdale Realtor determine is an absolute deal, then the FHA 203k Renovation Loan takes care of the rest.  The program acts as a mini construction loan and provides for the acquisition of your Fort Lauderdale foreclosure in its current condition and sets aside funds for repairs, upgrades, even home additions.  You can replace the roof, remodel the kitchen, add a bedroom or bath, add a garage or anthing that adds value to the home.  Your financing is based on up to 96.5% of the completed value of the project.  This allows the buyer to purchase a home in inferior condition and make it the home  they want with only a 3.5% down payment, based on the completed appraised value of the property.

If you’re looking for a great deal on a Fort Lauderdale foreclosure and want to have more homes to consider regardless of present condition, the FHA 203k Renovation Loan may be just the Fort Lauderdale mortgage you’ve been waiting for.  Don’t get squeezed out of a great deal due to lack of remodeling funds or property condition.

Contact Harvey Collier – First Trust Mortgage – FHA 203k Renovation Loan Consultant.

There’s an old rule of thumb that says, a Home Buyer with a normal debt load can generally qualify for a mortgage amount that is approximately 2.5 to 3 times their annual gross income.  My 25 years of experience as a Fort Lauderdale mortgage broker, has found this formula to be fairly accurate over the years.  However, determining how much of a Fort Lauderdale mortgage you can qualify for doesn’t answer the most important question.

After determining how much of a Fort Lauderdale mortgage a potential Home Buyer can qualify for, a competent Fort Lauderdale mortgage broker  must ask the more important question, “How much can you afford to spend on a home?”  In order to understand how much you can really afford, you need to take an honest look at your lifestyle and your standard of living.  You must examine your take home income and everything else you spend money on.

If you have unlimited resources, then you can afford to buy whatever your heart desires.  For most of us though, that’s not the case.  Many Home Buyers don’t look past the monthly mortgage payment when considering their purchase.  In determining what you can afford to spend on a Fort Lauderdale home,  you need to take into consideration the Fort Lauderdale mortgage payment and all other housing related expenses you will incur.  Some of these expenses include:

• Maintenance costs – everything from lawn, pool, painting, upkeep to a new roof.
• Utility costs – electricity, water, sewer, cable, internet.
• Homeowner Association Fees
• Potential increase to property taxes
• Potential increase to property insurance premiums

Remember, a lender and Fort Lauderdale mortgage broker can only tell you how much of a Fort Lauderdale mortgage you can qualify for based on debt-to-income ratios.  It’s essential that every Home Buyer answer the more pertinent question, “How much of a home can I afford?”. 

Also keep in mind any future plans that may affect your budget.  Perhaps you’ll need to buy a new car in the near future or are planning on starting a family.  No matter how much of a Fort Lauderdale mortgage your Fort Lauderdale mortgage broker tells you that you qualify for, always be sure your Fort Lauderdale mortgage payment is not beyond your ability to pay, now and in the future.  After all, it’s the roof over your head.

Evaluating An Applicant For FHA Mortgages

Did you ever wonder how HUD evaluates applicants for FHA mortgages?  Especially since many FHA mortgages are granted to First-time home buyers, low down payment buyers and buyers with past credit blemishes.  In a Fort Lauderdale FL real estate market with so many distressed properties, how can HUD possibly evaluate the risk of default with any accuracy?

Remember, the mission of HUD is to assist the under-served borrower obtain home ownership by insuring mortgages that otherwise wouldn’t be available.  This doesn’t mean HUD will knowingly make a bad loan, rather it will evaluate the risk in a responsible manner and not automatically deny a loan without examining all influencing factors. 

HUD has developed an automated tool called FHA Total Scorecard to evaluate the credit risk of FHA mortgages that are submitted through an automated underwriting system.  HUD will only insure FHA mortgages that have been run through FHA Total Scorecard.  The main reason for the FHA Total Scorecard system is to provide consistency amongsts various automated underwriting systems being used by lenders.  HUD wants to be sure that no borrower will be denied an FHA mortgage based on a “referred” classification instead of an “approve/eligible” one.

The FHA Total Scorecard evaluates the overall creditworthiness of the applicants based on a number of credit considerations.  The combination of FHA Total Scorecard and Automated Underwriting Findings will validate that the borrowers’ credit and capacity for repayment of the mortgage are acceptable to HUD risk standards.  Risk is primarily determined by evaluating the following criteria:

• Borrower’s credit score – credit will be examined for ability and willingness to pay.  Ability focuses on reviewing borrower’s other obligations.  Willingness explores past payment history, which is a direct reflection of how the lender can expect their loan to perform.
• Monthly housing expense – borrower’s current housing payment will be compared to new proposed payment.  A significant increase in housing expense can be an extreme risk factor.  Conversely, a borrower’s ability to demonstrate being able to pay a comparable housing expense can be a huge compensating factor to approve the loan.
• Number of monthly payments in reserves – The borrower’s ability to show money in the bank after considering down payment and closing costs can serve as another huge compensating factor.  The more payment reserves that can be identified the less risk the loan poses to the lender and HUD.
• Down payment - Though FHA requires a minimum down payment of 3.5% of the purchase price, a larger down payment can reduce the risk and is considered another strong compensating factor. Conversely, bringing your last dollar to the closing table poses a much higher degree of risk of default.

Although the precise algorithm used by FHA Total Scorecard and Automated Underwriting Systems are not public information, there are factors that tend to be associated with a “Refer” finding vs. “Approve/Eligible”. These factors include:

• High housing payment ratio
• High debt-to-income ratio
• Bankruptcy in the last 2 years
• Foreclosure in the last 3 years
• Late mortgage payments in the last 12 months

As you can see, FHA Total Scorecard gives all loan applicants a fair and unbiased opportunity to qualify for a Fort Lauderdale mortgage loan.  The second part of the equation is to work with a Fort Lauderdale mortgage broker that has the experience and understanding of the FHA Total Scorecard system to help you evaluate your personal situation.  A Fort Lauderdale mortgage broker that knows how to create a loan package that features strong compensating factors for the borrower can be the difference between loan approval and denial.