Virginia Mortgage Bulletin

Q: Can I still get a home mortgage loan with open collections showing on my credit?
A: Yes you can

Q: How do I get these collections removed from my credit?
A: Accurate negative items reported on your credit can be reported on your credit for 7 years.

Q: How come only some collections report to my credit record?
A: Each creditor, collection agent, lender, etc… can choose to report items to your credit report or not. Some will report not report to any credit repositories, some to only 1 credit repository, some will report to 2 repositories, and some will report to all 3.

Q: Do medical collections negatively affect my credit score?
A: All collections can negatively impact your credit score. (more…)

Ok, so yes Mr. Kiyosaki is smarter than me (just a touch richer, too). Watching CNBC this weekend, he discussed wealth through real estate, among other things, along with a panel of 4 other people. During the show, he mentioned that he is looking for tenants to pay at least 150% of his mortgage (or full mortgage payment plus 1/2 payment as profit) in monthly rent. As a continuation of my Mortgage Math blog series, I want to actually take a look at this and, of course, run some numbers. (more…)

Are stated income loans BAD?

It seems like open season right now on lenders who have issued Stated Income loans over the last several years. Here is a brief introduction to stated income loans.

Historically, when applying for a mortgage, potential borrowers would take their paycheck stubs and the (hefty) down-payment to their local bank, sit down with a loan officer and a stack of forms and begin the process of loan qualification. The bank would consider the credit profile of the borrower, the capacity to repay the mortgage (income) and the collateral securing the bank’s interest in the loan. These have been referred to as the Three C’s, although I have heard of the Four, Five and even Six C’s of mortgages, depending on which training program you look at. Based on a set of guidelines, a loan application will be approved or denied based on easy to define characteristics. This is a pretty straight-forward process, but is based on a complete understanding of a borrower’s earnings as documented by W-2s and paycheck stubs.

Now let’s consider a self employed borrower. Income calculations are suddenly much more complex, sometimes even impossible. The IRS will determine income based on your tax returns, but a self employed borrower has deductions which reduce his/her taxable income which a wage-earner will not have. Although the money deposited to each bank account could be identical in both cases, the taxable income can be drastically different. When you consider the number of people who have multiple jobs, or receive income that is difficult to verify (paid in cash) then it is easy to understand how the traditional mortgage qualification process does not fairly evaluate the ability of a potential borrower to repay the loan. (more…)

BANKRUPTCY is bad. FORECLOSURE is worse.
Although it is preferable to avoid bankruptcy, it is even better to avoid foreclosure. Foreclosure is the legal process whereby property is repossessed and sold at auction to cover the costs of an unpaid debt. This is usually the result of a homeowner defaulting on mortgage or loan repayments. The most common causes of foreclosure are divorce, loss of employment or a death in the family.
The foreclosure process can be long and costly and is regulated by state law. The most important thing to remember if you are forced to make a mortgage payment late is to contact your lender immediately.

Other Websites:
Broker Outpost | How do I stop foreclosure | FICO score