Good morning to you, Memphis! You are on the Real Estate Mortgage Shoppe program with me, Jo Garner, Mortgage Officer with Evolve Bank and Trust. With me today in the studio is Blake Higgins, with Data Facts, Inc– a Credit Reporting Agency headquartered right here in Memphis. Our topic today is “Snappy Secrets To Strengthen Your Credit Scores” Blake , along with the other experts at Data Facts, have helped plenty of my mortgage customers get a lower mortgage rate and better loan terms by helping them raise their credit scores in a surprisingly fast time period. Get on the air with us by calling (901) 535- 9732 . That is (901) 535 WREC.
Blake, we definitely want to leave plenty of time for you to help some of our callers. Let’s go over the highlights of what’s been happening in the real estate financing world this week.
The National Association of Realtors say the housing market is on the right track for recovery. Home prices continued to fall but the homes are selling faster. About 30 percent of the homes sold in the fourth quarter of 2011 were distressed properties, which are foreclosures and short sales. First-time buyers purchased 33 percent of homes. Investors account for the bulk of the cash purchases. The investors buying for rental property account for 20 percent of the homes sold. Memphis has been slowly turning from a buyer’s market to a seller’s market.
Word to the wise : If you want to buy a home at the best Affordability Index we have seen since the early 70’s, you need to get out there and make your offers. If you want to look into which loan program would work best for you, my very capable assistant, Susan Belew and I would like very much to talk with you. You can reach us off the air on our direct line at (901) 482 0354.
Mortgage rates during the week started to ease downward again, but bumped up a little yesterday afternoon. Yesterday we started out with the 30-year mortgage rates around 4.23% and the 15 yr fixed rates around 3.44%. The 5/1 adjustable rate mortgage fell 10 basis points to around 3.14%.
The 5-1 ARM program has a fixed rate for the first 5 years and then converts to an adjustable rate with safety caps. The 5-1 ARM is great for homeowners who do not expect to be in the home more than 5 years OR people who know they will be paying extra principal of over 20% of the mortgage balance within the first 5 yrs. The beauty of the 5-1 ARM for homeowners prepaying a large amount of principal in the first five years is that, once the loan converts to an adjustable rate after the first 5 years, the payment is recalculated each year ONLY ON THE UNPAID BALANCE. Do the math—by paying down the large prepayment on principal you set yourself up to have a lower payment–even if the rate goes up. Let me do the math FOR you…just call me at (901) 482-0354.
The HARP program to help underwater homeowners is in full swing–that is the program to help homebuyers who owe more on their homes than the current value. Susan and I have been working from early morning to late night making sure OUR customers get their loans locked and to the closing table.
Here is the cliff note version of the hottest loan product that has hit the national market in decades! Grab a pen and some paper. Now if you are driving, do just that, just drive because you can catch the past podcasts of this program on my blog .

How can you tell if your mortgage qualifies for the no-appraisal HARP program?

1. Your loan has to have been backed by Fannie Mae or Freddie Mac since on or before May 31, 2009. If you don’t know, Susan and I can determine if your loan is backed by Fannie or Freddie if you will give us some basic info. Call us at (901) 482 0354. We will check it for you free.
2. You need to have made your mortgage payments on time for the last 12 consecutive months.
3. Your property can be a residential primary residence, second home, or investment property as long as the property is 1 to 4 units—-like a single family home, a duplex, triplex or quadraplex. Your property can be a residential condo, planned unit development, attached or detached. It cannot be a manufactured home a condotel or a cooperative and it cannot have over 4 units to the property.
4. There is no loan-to value limits and there are no combined loan to value limits.
For instance, if you owe $2 or $300,000 on your loan and your property value is only $100,000, we can still refinance you to the lower rate. How great is that?

5. If you have a first mortgage and a second mortgage on your house, we an only
refinance your first mortgage. It will be between you and the bank who holds your 2nd mortgage on whether they will agree to stay in 2nd lien position behind the new loan—and they must to make this whole deal work for you.

6. If you are currently paying private mortgage insurance (that’s not homeowners
Insurance or hazard insurance, in most cases we can still refinance your mortgage and keep your mortgage insurance the same.. Private mortgage insurance , sometimes called PMI or MIP insures the lender in case of your default.

However, if your mortgage is covered by some of the now crippled or defunct private mortgage companies, then we cannot refinance your loan. Susan and I have a list of mortgage insurance companies who are accepted by HARP and those that are not. We may also be able to help you even if your loan does NOT qualify for the HARP program. Our direct line is (901) 482 0354.

7. You WILL have to verify enough income to qualify under Fannie Mae or Freddie
Mac guidelines.

8. You CAN roll in your closing costs AND the amount of taxes and insurance
required to set up your tax and insurance account. The max you can borrow is the amount it costs of your closing and taxes and insurance OR $5,000 whichever is less.

If you are going to take advantage of the lowest mortgage rates and 50 years and the most favorable Affordability Index since the early 1970’s, you will need to have your credit scores in tip-top shape. And you DO want bragging rates on your deal, don’t you? I thought so. Today I want to introduce you to our credit expert –Blake Higgins of Data Facts, Inc.
When Susan and I have a customer whose credit scores need a little boost, Blake is the man with the plan who helps us run with the latest credit score tools like the Credit Simulator, the Rapid Rescore tools and more.
Blake has been with Data Facts for 6 years. He has presented some excellent seminars at the Better Business Bureau for Talk Shoppe. Some of his past seminars can be viewed under the Presentations tab at www.TalkShoppe.BIZ. Blake–just to get started – Question 1. What is a Credit Score and what types of factors affect your credit score?
Listen to our radio podcast dated 3-31-12 to get answers to some of the questions below.

Question 2 for Blake: What are some secrets to getting a higher credit score?

Question 3 for Blake: What are some of the most common mistakes people make that affect their credit scores?

Question 4 for Blake: Can you describe some of the different types of credit and how these types of credit affect your score?
Question 5 for Blake: What other services does Data Facts, Inc offer ?

Question 1 for Jo :
1. We all know how important credit scores are to getting an approval and a great interest rate on a mortgage. What are some ways credit scores affect the rates and types of products available to a borrower.

Jo’s Answer: I can give a couple of examples of a conventional 30 yr rate and price for someone with a 740 score vs someone with a 680 score. Right now if you are applying for a $100,000 loan with a 740 score you could get about 4.25% with zero points. You would simply pay normal closing costs with no extra. However, if you are applying for a $100,000 loan and have a 650 score, you can pay $1,000 to $2,000 more at closing for points, simply because of a lower credit score.
Examples of product offerings. THDA down payment assistance programs. and VA programs we can lend on a credit score as low as 620. If the borrower is just getting a standard FHA and conventional loan, the minimum score is 640. For buyers needing the special FHA Renovation and Repair loan the minimum credit score is 660.

2. Datafacts has available to lenders some expert tools that offer specific strategies borrowers can use to bump their credit scores up to levels they need to get the loan rates or programs they want. You and your assistant, Susan Belew, use these Credit Expert Tools. Want to tell us about how they work for your customers?

Jo’s Answer: Credit Essentials and Credit Simulator and gives us an opportunity to put in scenarios for customers to determine what actions would positively affect their credit scores in the least amount of time with the least amount of investment.

Real Estate Tip of Week: If you want to improve your credit scores quickly, one method of doing that is to pay down your credit card balances to less than 30% of the total credit limit. This can affect your credit scores significantly and within the shortest amount of time.
Below are some questions answered by Blake Higgins of Data Facts on the attached podcast of the radio show dated 3-31-12

1. Question- What is a credit score?
Answer- A credit score is a number, assigned by the credit bureaus (TU, XPN, and EFX), and based on statistical data, which represents the creditworthiness of an individual.
They range from 300 on the low end to 850 for the highest. Keep in mind only 5.7% of American’s are in the 800 range.
2. Are all scores the same?
Answer- No. they are all different. FICO (Fair Isaac Company) is what most lenders are looking at.
Car dealerships, Mortgage Lenders, insurance quotes, Retails stores all use different models. All industries look for different data to make a decision.
3. What is the importance of credit?
Credit distinguishes you to a credit lender. This could be a Best Buy on one end or banks when you go to open a checking account on the total other end of the spectrum. This shows them that you can maintain your ability to pay a monthly payment and not be late or miss a certain time line or frame. So it is very important to have good credit so you can have the best competitive rates.
4. What makes up a FICO score?
There is a lot of information here but to make it easier to comprehend, there are 5 key components.
35% Payment History
30% Amounts owed
15% length of History
10% Types of credit
10% New Credit
5. What are some of the things that are not in your score?
Your Race, Color, Religion, Origin, sex, and Martial Status
Age, Salary, Occupation, Title, Employer, Where you live

6. What are the types of credit?
On the positive side, there are Revolving accounts and Installment Loans. Revolving would be your credit cards and home equity lines of credit, you can also have a line of credit with banks.
Installment loans would be anything you have a set monthly payment on. So this would be your auto loans, school loans, mortgage loans and personal loans from the bank.

Negative factors would be, Collections, Bankruptcy, Judgments and Tax Liens. All which have a negative impact.
Both types of credit will typically stay on your credit report for seven years from the date of the last activity.

7. I have heard the word inquiries, what are they? Are they bad?
There are two different types of inquires. The word is used to identify a creditor or bank looking at your file. This is a credit inquiry. Soft and hard.
Soft inquires are those initiated by banks and insurance companies and do not hurt you.
A hard inquiry is consumer initiated and does hurt to a certain degree. Typically a hard inquiry is going to negatively impact the score about 3-5 points. If you have to many, this can actually really hurt your score. Around the Holiday season, I always have to tell my other half not to accept all of those offers about saving 10% at the store because every time she says yes, she is hurting her score point by point. They add up quickly!
8. How do you get your credit started?
First thing to know is that it is never too early. Since 15% of the score is based on length of history, it is better to get an early start. I would suggest opening a credit card with a low interest rate and putting maybe $10.00 or $20.00 on it. Just let that revolve a couple of months and you should see the wheels start to turn. You can also explore the possibility of being added as an authorized user of a parent’s card can help too. This allows you to receive the benefits of good history and spending habits.
9. What are three tips to gaining a positive score?
Pay your bills on time. Since this is 35% of your FICO score, it is extremely important to do everything possible to pay your bills on time. Try not to miss a payment EVER.
Keep your credit card balance low. Having them lower then at least 30% of the credit limit is optimal. Lower the better; just make sure to keep something on them. Paying them off is not always a good idea. Fico likes to see that you can handle your available credit and
Ensure accuracy. Pull a free credit report every year to review for errors. If there is erroneous information found, dispute it with the credit bureaus immediately. Remember that 80% of credit reports have errors on them.

10. What are some of the top 5 credit mistakes?
Maxing out your available credit- This is 30% of your FICO score and this is a big deal when you have them maxed out. It looks like you cannot control your spending habits and therefore you are penalized for this.
Missing Payments- Remember that 35% of your FICO is Payment History. This is weighted so heavily. When you don’t make your payments on time, this shows you have no responsibility.
Closing credit accounts- This one is tricky. I see people that have had a Sears’s card since 1990 and all of the sudden they decide to close it. The problem is that they just wiped all that good payment history.
Stopping all credit activity- Some people get scared when they make a mistake and kind of lock down everything. This is totally not necessary. After six months of zero activity your credit file will actually go dormant. This means you lose the score completely.
Not checking your credit report for errors and omissions- If you do not know that there is an error and you just let it ride, chances are that negativity is hurting you. You have to look and see what is out there.
For more info contact Data Facts, Inc. 8520 Macon Rd Cordova, TN 38018
(901) 685-7599 Blake Higgins
Jo Garner, Mortgage Officer Evolve Bank & Trust 6070 Poplar Ave Ste 100 Memphis, TN 38119 (901) 482-0354
Mortgage rates, information about mortgage programs including but not limited to the HARP program in the Memphis, TN area and all over the country, listen to Jo Garner, Mortgage Officer with Evolve Bank and Trust. On this podcast you can also hear tips on improving your credit scores from Blake Higgins, Data Facts.