Dearborn Michigan Area Real Estate Blog

Warning….. don’t be the victim of a predatory lender!

Predatory lenders are lenders that use unfair and abusive tactics to take advantage of their borrowers. They may do this in a variety of ways, though many of them involve deception and excessive pressure toward an agreement that will ultimately result in the loss of money for the borrower and a financial gain for the lender.

There are certain things that you should look out for when selecting a lender to avoid those with malicious intents. Don’t be a victim of predatory lending!

• Don’t be a target: Predatory lenders are lenders that set out to cheat the borrower through deceit and manipulation. Predatory lenders usually target those who may not be educated on current lending practices. Common targets include less educated individuals and the elderly. If you are looking into securing a loan for a home or refinancing, educate yourself by participating in a home buyer seminar. Many times these seminars are free to attend. Read more…

Your credit is your most valuable asset when it comes to buying a home.

When applying for a mortgage, lenders use what is called your FICO score in determining credit worthiness, or the likelihood that an individual will pay their bills. FICO is a score that was developed by Fair Issac Company, a California-based company that specializes in the construction of statistical scoring models.

Your FICO score can range from 300-850, with 843 being the “real life” high score, as nobody can be perfect. In the US we have three major credit repositories, or bureaus; Trans Union, Equifax, & Experian. Each bureau calls it’s FICO score something different (Trans Union-Empirica, Equifax-Beacon, Experian-Fair Issac), but all use a similar format in calculating an individual’s score. The FICO model is dynamic, meaning that it assigns different values to each line item depending on other factors in the credit file.

As a consumer, you are entitled to one free credit report within a 12-month period from each of the three credit bureaus, but this does not include a free credit score.

The chart below demonstrates how your FICO score is calculated.

The 5 categories used to calculate a FICO score are:  Read more…

If you went to get a mortgage four years ago, you would have been bombarded a variety of conventional mortgages and their many options. Do you want zero down? An 80/20? Perhaps a Low Doc, or No Doc, or negative amortization loan? Whatever your fancy, it was there.

Today times have changed and your options are limited. There are three basic loan programs left:

• A true Conventional Mortgage with very few if any options
• FHA Mortgage
• VA Loan (The United States Department of Veterans Affairs, government-run military veteran benefit system responsible for administering programs of veterans’ benefits for veterans, their families, and survivors).

The VA loan is great, but you must be a U.S. military veteran in order to qualify for one.  So, if you don’t fit that bill, then you’re left with only two choices. How do you know what is best? Which provides you, the borrower, with the most security and affordability? And which will still lend to you in today’s climate? The answer is easy; look no further than the Federal Government and a FHA mortgage! Read more…

The near-record low mortgage rates seen during the past few weeks may not be around much longer.

Signs of improving economic conditions could lead Federal Reserve Chair Ben Bernanke to raise key interest rates, driving up mortgage rates, says Stephen Stanley, chief economist at Pierpont Securities LLC.

The evidence includes more consumers are paying their bills on time. Past-due accounts at American Express declined 34 percent compared to a year ago, and Target Corp. reported its lowest delinquency rate in two years during the second quarter.

In another sign of economic improvement, fewer banks reported tightening lending standards this month, one reason consumer borrowing rose for the second time in three months.

“If  lending standards start to stabilize, that’ll be another reason to remove the emergency measures, including the zero rate,” says Jay Bryson, a senior global economist at Wells Fargo Securities LLC in Charlotte, N.C., who formerly worked at the Fed in Washington.

Source: Bloomberg, Bob Willis and Anthony Feld (05/28/2010)

Myth #1: You need great credit to buy a home.

Contrary to popular belief, you do not have to have perfect credit to buy a home in today’s market. What most mortgage companies are looking for these days is proof that you can afford the payment. As long as you don’t have major delinquencies on your report, such as a bankruptcy or foreclosure, there is usually a way. Read more…