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Finding sound mortgage advice is incredibly difficult.  US Lending is the Premier Mortgage Banker in Sacramento, CA and would like to help provide the answers you are looking for!

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This is a very good question and as a consumer I would want to know this as well. This would be a significant part of what helped me make my decision. I have made a list of all the costs and fees associated with getting a mortgage. This list should help you understand the “Good Faith Estimate” that you receive from us listing the fees.

Recurring Closing Costs –

These are costs that “recur” every year – Recurring costs should actually be named Homeowner expenses paid in advance. These are also commonly called Pre-Paid Items. These items include the following:

Hazard Insurance (Homeowners Insurance)– one year in advance + 3 months reserves (reserves needed if impounding which is a requirement on all loans that exceed 80% LTV)

Property Taxes - Pro-rated taxes based on purchase date + specified number of months to be impounded determined based on the month that you close. EX. July = 7 months taxes in advance

Pro-rated Interest – This is your first month’s mortgage in advance. It will be pro-rated from the date of close to the end of that month. Your first payment will be the following month on the first. EX. July 15th close date would require 16 days pro-rated per diem interest calculated on your interest rate. You would then have a first payment date of September 1st.

Mortgage Insurance – Although this is not as common, some lenders will ask for 1 month mortgage insurance in advance.

Miscellaneous – If there is a Homeowners association you may be required to pay a month or two upfront as well.

Non-Recurring Closing Costs –

These are the expenses that we are trying to get the seller to pay. These are the one time fees that you have been putting money in the piggy bank for. You will not have to pay these fees ever again unless you buy another home or refinance your existing mortgage. These include but may not be limited to the following:

Origination – This is what the broker or the loan originator charge you to do your loan. Generally 1% on all FHA deals. This does not have to be a fee that you pay but your interest rate will be higher if you choose not to pay it.

Discount Points- Discount Points are paid to the investor to obtain a lower rate. Basically you are pre-paying your interest. If you are willing to pay more money up front to the investor then they are willing to discount the note rate. This process lowers your monthly payment but increases the upfront costs of the loan. Discount will be made payable to the wholesaler that you are obtaining the loan through. Talk to your Lender, but most of the time it’s a good idea to pay discount points when purchasing a home. It can be a good idea sometimes when you are refinancing your current mortgage.

Broker Costs – US Lending< charges its borrowers $745 for processing of your loan. Many brokers will charge processing, admin, broker fee or many other miscellaneous. When in doubt ask.

Wholesaler Costs – Generally the wholesaler that will actually fund the money for you charges an Underwriting fee $750-$850, wire fee, tax service and a MERS which is electronic registration.

Appraisal – For Conventional loans done through HVCC and for FHA through an independent appraiser.

Credit – There is a cost for the Credit Report through a third party generally collected at the time of application, but can be charged at closing.

Title and Escrow Fees – This is a third party gatherer of the docs. They will collect monies, sign the loan document, provide a preliminary title report, draw up the estimated settlement statement etc. There fees are determined by the loan amount and purchase price. The standard fees that are charged include but are not limited to: Title Insurance, escrow fee, doc prep, notary, Recording, courier, endorsement and other miscellaneous expenses.

I have found that Non-recurring costs generally run between 2.5-3% of the purchase price when you pay an origination of 1%. The lower the loan amount the higher that figure can be because there are set cost ie: $695 processing that is a higher percentage of 100K than it is of 200K.

Recurring Costs depending on the month and the amount of property taxes can range from 1-1.5% of the purchase price.

It is important to know the difference between recurring and non-recurring closing costs and have an understanding of who is going to pay what. You are responsible for the down payment and all of the costs recurring and non-recurring that the seller does not credit for. If you are worried about coming up with all these costs, talk to your lender because most of the time the loan can be structured to either cover the costs, or we can have the sellers pay for a large portion of them.

EX: FHA PURCHASE 3.5% down payment requirement

100K Purchase Price – Down Payment $3500 (minimum statutory investment required by HUD)

Recurring Costs 1.5% or $1,500

Non-recurring Costs 2.5% or $2,500

Seller Agrees to Pay 3.5% toward closing or $3,500

Borrowers Estimated Cash to close would be Down Payment $3500 + Recurring Closing Costs $1500 + Non-recurring Closing Costs $2500 – Seller Credit $3500 = (3500 + 1500 + 2500) -3500 = $4000 cash out of the borrowers pocket. In this example the seller paid for all the Non-recurring costs and 1% of the recurring closing costs leaving the buyer responsible for down payment and .5% of the recurring costs or Homeowner expenses in advance.

*****Disclaimer – The Examples illustrated in the post are merely to show you and example and may not represent your transaction. The purpose of this post was to explain the difference between loan costs and pre-paid homeowner expenses. If you have any questions regarding items in this post please add them in the comment section or call your Loan Officer.****

- by Dan Conley

Determining the truth about reverse mortgages is not easy. You need to be educated on the program so that you can make the best decision for your personal situation.

Basically, if you get a reverse mortgage you will be getting a loan that will allow you to have a monthly income coming in, or a large lump sum at once, or a credit line. You can get any combination of these things as well. If you have an existing loan, it will be paid off. So you will not have a house payment. The monthly income you receive from the reverse mortgage is guaranteed and you will receive it as long as you remain living in the home. Regardless of the length of your life, your debt can never be more than the worth of your home.

I have presented the 5 most commonly repeated facts and myths below to help you further understand the benefits and ease reverse mortgages will bring.

MYTH 1: The reverse mortgage lender owns your home.

FACT: In fact, you will continue to be the home’s owner and to hold its deed. There aren’t any penalties when selling, paying off, or refinancing your home.

MYTH 2: Qualification is difficult.

FACT: You only need to be 62 years of age an own your own home. You don’t need a lot of credit or a qualifying income for this.

MYTH 3: The fees associated with closing are much higher than they are for other loans.

FACT: Actually, the closing costs are very much the same as any other home loan and you will be aware of the fees prior to closing when you receive a Good-Faith Estimate. You can also choose to finance with your reverse mortgage loan. The only other cost involved may be for an appraisal in advance of closing. Often, this is the only fee you will have to pay before closing.

MYTH 4: This will affect your taxes and social security in a negative way.

FACT: The earnings you obtain from your reverse mortgage will not become an issue with Social Security benefits or income tax.

MYTH 5: There can be problems with the payment.

FACT: You will ONLY be required to pay the loan if you decide to leave the house or if it is sold. If your spouse dies then you will still be able to remain living in the house and vice versa and also the living spouse will continue to receive the exact payment amount each month. If you have any heirs, they will be presented with the opportunity to off the loan with any other assets or they can opt to refinance so that all the remaining equity will become theirs.

Gather all of the specs, when desiring a reverse mortgage loan. Keep in mind that there are other types of mortgage loan solutions and the right choice only depends on your own unique situation.  Carl can help you decide which loan is right for you.

Dan Conley,  Owner of US Lending  specializes in helping to show his clients their hidden retirement account.  You can confidentially contact him at 530-244-6830 or at Dan@USLendingCompany.com

All lenders and brokers are required to provide you with a Good Faith Estimate detailing the services you may be required to get and pay for in connection with your loan.

This Good Faith Estimate will give you a way to compare loans and see what your closing costs would be. Below you will find a list of coded names that describe the different fees, which may be associated with the services previously mentioned. These codes and names correspond to those found on the HUD-1 Settlement Statement.

Broker Fees

• 700 – Sales/Broker’s Commission:
  If you use a real estate agent or broker to buy a house, the seller (not you) of the house will usually pay a fee to the real estate agent/broker. This commission is usually a percentage of the sales price.

Lender Fees

• 801 – Loan Origination Fee
  A fee to cover the lenders costs for obtaining financing and administrative costs, most often expressed as a percentage of the loan amount (1% = 1 point). Can be a flat fee and/or paid by sellers and third parties.

• 802 – Loan Discount Fee Discount Points
  Often called “points”, is a one-time charge to you from lender to lower the interest rate on your loan. Generally, the more points you pay, the lower your rate. Each point is 1% of the loan amount. For example, if you have a loan amount of $100,000, one point would cost you $1000. Sometimes you will see offers with negative points. Negative points refer to money paid to you that can be used to offset your other closing costs. You will usually see a higher interest rate with negative points.

• 803 – Appraisal Fee
  The appraisal fee covers the cost of evaluating your home to estimate the fair market value. The appraised value of your home is used to calculate LTV. See LTV for more information.

• 804 – Credit Report Fee
  This fee covers the cost of obtaining a credit report, which shows how you have handled other credit transactions. The lender uses this report in conjunction with information you submitted with your Q-form regarding your income, outstanding bills, and income to determine whether you are an acceptable credit risk, how much the lender can loan you and at what interest rate.

• 805 – Lender Inspection Fee
  This covers inspections by the lender or outside inspector of your house/property. Most often associated with new construction.

• 806 – Mortgage Insurance Application Fee
  You may be charged this fee to process an application for Mortgage Insurance (MI) if needed.

• 807 – Assumption Fee
  The assumption fee is a charge to you, if you take over the existing mortgage on the house you are purchasing. For example, if you are buying an existing house from someone you may have the option to take over the mortgage that the seller is paying.

• 808 – Mortgage Broker Fee
  If you use a broker to get a loan, any fees charged by the broker are listed here.

• 809 – Underwriting Fee
  A cost to cover the final analysis and approval of the mortgage; often the lender’s cost to the investor who will subsequently purchase the loan.

• 810 – Tax Service Fee
  A fee paid to set up a service which identifies the payment due date of local taxes for the servicer of the loan.

• 813 – Processing Fee
  A fee charged by the lender to cover costs associated with the processing and closing of a mortgage loan.

• 814 – Application Fee
  A fee to reimburse the lender for internal costs associated with initiating the application process.

• 822 – Flood Certification Fee
  Since your house is collateral for your loan, the lender wants to be sure the property is not in a flood zone. This fee covers obtaining a report from the Federal Emergency Management Agency (FEMA) that indicates whether or not your property is in a flood zone. If your home is located in a flood zone, you will need to get flood insurance. Most homeowner insurance policies do not cover flood damage. This only covers the report and not the insurance if needed.

Lender Pre-paid Items

• 901 – Interest
  Lenders require you to pay the interest due on your mortgage from the close date to the first day of the following month. The interest due is calculated using the loan’s interest rate, the loan amount and the number of days until your first payment. For example, if you close on the 11th of March, you will pay 21 days interest (3/11-3/31) assuming your first payment is May 1st. Mortgage interest is always collected in arrears therefore you will pay the April interest in the May payment using the example above.

• 902 – Mortgage Insurance
  Premium Lenders usually require Private mortgage insurance (PMI) when your LTV (loan amount divided by property value) is greater than 80%. The insurance protects the lender in case of loan default.

• 903 – Hazard Insurance Premium
  Since the property is collateral for the loan, you will be required to insure your house. At closing, you must pay the first year’s premium or prove that you already have coverage (if refinancing). If you are purchasing a condominium, your association policy will already cover your unit and you will not need to make this payment. Homeowner’s insurance covers you against damage from fire, wind, and other natural hazards. Flood damage is usually not covered by a Homeowner’s Insurance Policy.
• 904 - Flood Insurance Premium
  If your property is located in a flood zone and since the property is collateral for the loan, you will be required to have flood insurance on your house. At closing, you must pay the first year’s premium or prove that you already have coverage (if refinancing). If you are purchasing a condominium, your association policy will already cover your unit and you will not need to make this payment. Flood damage is usually not covered by a Homeowner’s Insurance Policy. Homeowner’s insurance covers you against damage from fire, wind, and other natural hazards and must be purchased separately. (See above)

Escrow Account Deposits

An escrow account is an account used when the lender will be paying your homeowners insurance and property taxes on your behalf. You prepay the amounts and the lender pays the costs as they come due. You will probably have to pay an initial amount to start the reserve account.

• 1001 – Hazard Insurance
  This fee represents the amount the lender withholds to ensure you pay your homeowner’s insurance on time. Typically, the lender will require you to pay two to four months of premiums at closing, and then the remaining payments are included in your monthly payments.

• 1002 – Mortgage Insurance
  If you need private mortgage insurance (PMI), you may be required to prepay those premiums. Remember to reference canceling mortgage insurance to see when you can stop paying it.

• 1003 – City Property Tax
  If your property is in a jurisdiction where city taxes apply, you will be required to pay a portion of the taxes at closing.

• 1004 – County Property Tax
  The amount of property tax you owe can vary dramatically by county and the date you purchase your home.

Title Charges

• 1101 – Settlement or Closing Fee
  This fee pays for the services of the escrow holder or settlement service that handles all the financial transfers and payments associated with the closing process. The title company sets these fees.

• 1102-1104 – Title Fee
  Title fees may include title search, title examination and title insurance.

• 1105 – Document Abstract Preparation Fee
  Lenders or title companies may charge a fee to cover the costs of preparing the final legal documents required for closing.

• 1106 – Notary Fee
  This fee covers the cost of a person licensed as a notary public to swear to the fact that the individuals named in the documents are the actual persons that signed them.

• 1107 – Attorney Fee
  You may be charged a fee to pay for legal services of a settlement service provider at closing. The lawyer will usually oversee the signing of the documents.

• 1108 – Title Insurance
  The total cost of your and lender’s title insurance.

• 1109 – Title Insurance Lender’s Coverage
  Protects the lender against loss due to problems or defects in connection with the title. The face amount of coverage is usually written for the amount of the mortgage loan and covers losses due to defects for problems not identified by title search and examination.

• 1110 – Owner’s Title Insurance
  This fee covers the part of the title insurance policy that protects the owner against loss due to disputes over ownership of the property. The owner’s policy is not necessary for a refinance transaction as the existing policy remains in full force and effect, if obtained when you purchased your house, for as long as the owner owns the property.

• 1112 – Carrier Fee
  A fee paid to an overnight delivery service for delivery of mortgage documentation.

Government Fees

• 1201 – Recording Fee
  After you close, your mortgage is recorded at the county office to make record of your mortgage.

• 1202 – City/County Tax/ Stamps
  You may be charged tax on your mortgage by the state the property resides in.

• 1203 – State Tax/ Stamps (Doc Stamps)
  You may also be charged tax on your mortgage by the state the property resides in.

Additional Settlement Charges

• 1301 – Survey Fee
  Your lender may require a surveyor to conduct a survey of your property. A survey determines the exact location of the home and the lot line, as well as, easements and rights of way. This also protects you to ensure you have record of your property boundaries and size.

• 1302 – Pest Inspection Fee
  This fee covers the cost of inspections for termites and other pest infestation.

• 1303 -1305 – Lead-Based Paint Inspection Fee
  Houses built prior to 1978 may be required to have an inspection for lead-based paint hazards.

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at 530-244-6830 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

For more redding on mortgages in Redding Visit–> Mortgage Redding

The following list of items has been compiled for your convenience when you are applying for a Redding Mortgage. You will need to bring this information to your mortgage application in order to expedite the processing of your mortgage loan.

• A check for your credit report and appraisal
• Your residence addresses for the past two years
• Names, addresses and phone number of your landlords for the past two years
• Present value of all real estate owned
• Names, addresses, phone numbers and contact person for all employers for the last two years
• W-2 Forms for all employers for the last two years
• Pay stubs covering the most recent 30 day period (all current jobs)
• Addresses, account numbers and current balances for all checking, savings and other deposit accounts
• Three most recent months’ bank statements (all accounts, all pages)
• Name, account numbers, balances and monthly payments for all consumer debt accounts including auto loans, personal loans, student loans, credit union loans and mortgages
• Name, account numbers, balances and monthly payments for all credit cards used in the last several months
• Evidence of alimony or child support, a copy of the court order and ages of child(ren)
• Copy of divorce decree and separation agreement
• Social security and other benefit award letters if being used toward qualifying income
• Stock information including names of stocks, share owned, current price per share and last three month’s stock statements (or most recent quarterly statement)
• Make, year and estimated value of all automobiles. Also include copy of title if auto is less than four years old and owned free and clear.
• Documentation relating to any special issues such as bankruptcy, credit problems and recently established accounts for deposits or loans
• Copy of deed, most recent tax bill and most recent homeowner’s insurance bill (for refinance only)

FOR VA LOANS:

• DD214 of Certificate of Eligibility (original)

IF YOU ARE SELF EMPLOYED:

• Two years personal tax returns
• Two years partnership/corporate tax returns (if applicable)
• Year to date profit and loss statement, signed by accountant

IF YOU ARE APPLYING FOR A NO-DOC LOAN:

• Three months of original bank statements or other proof of source of funds for closing

REAL ESTATE AGENTS, PLEASE PROVIDE:

• Copy of listing card
• Complete ratified contract of sale (all pages)
• Your personal business card
• Name, address and phone number of condominium management company (if applicable)

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at 530-356-8100 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

Sincerely,

Dan Conley

Us Lending
2150 Churn Creek Rd #100
Redding, CA 96002
Phone: 530-244-6830

For more information on Redding Mortgage visit 530lending.com

The difficulty in fixing your credit depends on how low your credit rating has fallen. I suggest that you look into hiring a legitimate credit repair company if you are unable to spend the time or you can’t deal with collection agents yourself.

1) Designate your preference to not receive any credit bureau solicitations. Your information is sold to solicitors by credit bureaus without your permission.

The companies that buy your information are trying to get you to have even more credit card debt and are the ones that are sending you all those “fake” checks that are designed to trick you into thinking you are already “pre-approved”, or that somehow you are getting free money.

A little known fact is, the credit bureaus have to stop selling your private information if you tell them to. In fact, the credit bureaus automatic scoring system sees this as a responsible thing for you to do and actually raises your credit score when you contact them to tell them to stop selling your information. This raise you credit score 3-10 points in just a week by simply exercising your right to “opt out” of this practice.

The website to do this is located at: www.optoutprescreen.com

2) It is important that you review the information on your credit report on a regular basis, which requires that you get a copy of the report. The credit bureau report will be your blueprint if you are serious about cleaning up your credit.

It will cost you around $40 to receive a credit report that has all 3 bureaus and scores. There are a lot of companies that claim to give free credit reports, but only if you join their credit monitoring services that will cost you about $40.

Once you receive your credit report, you need to confirm that ALL of the debts reported by collection agencies belong to you. Since the credit bureaus must remove these by law, look for debts that are older than 7 years old, starting from the charge-off date. You need to dispute the debts with the credit bureau directly, not the collectors. The next thing that you need to do is check for duplicate collections, as many times when an agency sells your debt to another company they fail to remove their original report. To request removal of a debt from your report, you need to send a letter to the credit bureaus explaining why you are disputing the item.

3) Dispute ALL credit bureau debt – Dispute all negative remarks, late payments, and collections that appear, not with the collection agencies but with the 3 credit bureaus. You should clearly state that the debt is not yours, and request that the reporting agency prove that it is yours, or else remove it. This is no different than walking into a court of law and pleading “Not Guilty”. You have the absolute right to do this.

Remember when I suggest disputing all items, I mean every negative item whether real or not. An agency must let you know about the debt owed in a reasonable amount or time or they must remove the remark on your bureau in accordance with the law. The requests of the credit bureau are often not responded to because of the heavy work load of many collection agencies. If this is the case, the credit bureaus are required to remove the negative remarks whether they are legitimate or not.

Dan Conley,  Owner of US Lending, is a nationally recognized expert specializing in helping release his clients from the “credit prison” that too many people find themselves in. When you or one of your friends finds yourself needing real answers and real solutions to credit issues, you can confidentially contact him at 530-244-6830 or at Dan@USLendingCompany.com

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Section 1: Explains how consumer reporting agencies work and your rights under the Fair Credit Reporting Act.

Section 2: Explains how you can legally improve your credit report.

Section 3: Offers tips on dealing with debt.

Section 4: Cautions you about credit-related scams and how to avoid them.

Section 5: Lists resources for additional information.

Companies that gather and sell this information are called Consumer Reporting Agencies (CRAs). The most common type of CRA is the credit bureau. The information CRAs sell about you to creditors, employers, insurers, and other businesses is called a consumer report.

The Fair Credit Reporting Act (FCRA)

The FCRA is designed to promote accuracy and ensure the privacy of information used in consumer reports. Recent amendments to the Act expand your rights and place additional requirements on CRAs. Businesses that supply information about you to CRAs and those that use consumer reports also have new responsibilities under the law.

Here are some questions consumers commonly ask about consumer reports and CRAs-and the answers.

Q. How do I find the CRA that has my report?

A. Contact the CRAs listed in the Yellow Pages under “credit” or “credit rating and reporting.” As a free service to our clients, we can provide this information to you.  Because more than one CRA may have a file on you, call each until you have located all the agencies maintaining your file.

The three major credit bureaus are:

Equifax
1- 800-685-1111

Experian
1-888-EXPERIAN (397-3742)

Trans Union
1-800-916-8800

In addition, anyone who takes action against you in response to a report supplied by a CRA-such as denying your application for credit, insurance, or employment-must give you the name, address, and telephone number of the CRA that provided the report.

Q. Do I have a right to know what’s in my report?

A. Yes, if you ask for it. The CRA must tell you everything in your report, including medical information, and in most cases, the sources of the information. The CRA also must give you a list of everyone who has requested your report within the past two years for employment related requests.

Q. Is there a charge for my report?

A. Sometimes. There’s no charge if a company takes adverse action against you, such as denying your application for credit, insurance or employment, and you request your report within 60 days of receiving the notice of the action. The notice will give you the name, address, and phone number of the CRA.

Also, the Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies – Equifax, Experian, and TransUnion – to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation’s consumer reporting companies. The Federal Trade Commission (FTC), the nation’s consumer protection agency, enforces the FCRA with respect to consumer reporting companies.

Here are the details about your rights under the FCRA and the Fair and Accurate Credit Transactions (FACT) Act, which established the free annual credit report program.

Some financial advisors suggest that you review your credit report periodically for inaccuracies or omissions. This could be especially important if you’re considering a major purchase, such as buying a home or a car.

Checking in advance on the accuracy of the information in your credit report could speed the credit-granting process.

Q. What type of information do credit bureaus collect and sell?

A. Credit bureaus collect and sell four basic types of information.

Identification and employment information

Your name, birth date, Social Security number, employer, and spouse’s name are routinely noted. The CRA also may provide information about your employment history, home ownership, income, and previous address, if a creditor requests this type of information.

Payment history

Your accounts with different creditors are listed, showing how much credit has been extended and whether you’ve paid on time. Related events, such as referral of an overdue account to a collection agency, may also be noted.

Inquiries

CRAs must maintain a record of all creditors who have asked for your credit history within the past year, and a record of those persons or businesses requesting your credit history for employment purposes for the past two years.

Public record information

Events that are a matter of public record, such as bankruptcies, foreclosures, or tax liens, may appear in your report.

First, tell the CRA in writing what information you believe is inaccurate. Include copies (not originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request deletion or correction. You may want to enclose a copy of your report with the items in question circled.

Your letter may look something like the one below. Send your letter by certified mail, return receipt requested, so you can document what the CRA received. Keep copies of your dispute letter and enclosures.

Sample Dispute Letter

Date
Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Credit Reporting Agency
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received.

This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information.

Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

Enclosures: (List what you are enclosing)

CRAs must reinvestigate the item(s) in question-usually within 30 days-unless they consider your dispute frivolous.

They also must forward all relevant data you provide about the dispute to the information provider. After the information provider receives notice of a dispute from the CRA, it must investigate, review all relevant information provided by the CRA, and report the results to the CRA.

If the information provider finds the disputed information to be inaccurate, it must notify all nationwide CRAs so that they can correct this information in your file.

Disputed information that cannot be verified must be deleted from your file.

If your report contains inaccurate information, the CRA must correct it.

If an item is incomplete, the CRA must complete it. For example, if your file showed that you were late making payments, but failed to show that you were no longer delinquent, the CRA must show that your payments are now current.

If your file shows an account that belongs only to another person, the CRA must delete it.

When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the CRA gives you a written notice of its intent to reinsert the items that includes the name, address, and phone number of the provider.

If you request, the CRA must send notices of any correction to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes. If a reinvestigation does not resolve your dispute, ask the CRA to include your statement of the dispute in your file and in future reports.

In addition to writing to the CRA, you should tell the creditor or other information provider in writing that you dispute an item. Be sure to include copies (not originals) of documents that support your position. Many providers specify an address for disputes. If the provider continues to report the disputed item to any CRA after receiving your notice, it must include a notice that you dispute the item. If you are correct-that is, if the information is not accurate-the information provider may not report it again.

Accurate Negative Information

When negative information in your report is accurate, only the passage of time can assure its removal. Accurate negative information generally can stay on your report for seven years.  However, we offer a program to our clients that may help remove this information legally.  Please contact our office for more details.

There are certain exceptions:

Bankruptcy information may be reported for 10 years.
Credit information reported in response to an application for a job with a salary of more than $75,000 has no time limit.

Information about criminal convictions has no time limit.
Credit information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit.

Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions.

Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.

Seven-year Reporting Period

There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

With regard to any delinquent account placed for collection-internally or by referral to a third-party debt collector, whichever is earlier-charged to profit and loss, or subjected to any similar action, the seven-year period is calculated from the date of the delinquency that occurred immediately before the collection activity, charge to profit and loss, or similar action.

For example, assume that your payments on a loan were late in January, but that you caught up in February. You were late again in May, but caught up in July. You were again late in September, but did not catch up before the account was turned over to a collection agency in December. You made no more payments on the account, and it is charged to profit and loss in July of the following year.

Under the FCRA, the January and May late payments each can be reported for seven years. The collection activity and the charge to profit and loss can be reported for seven years from the date of the September payment, which was the delinquency that occurred immediately before those activities.

Adding Accounts to Your File

Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to CRAs: Some travel, entertainment, gasoline card companies, local retailers, and credit unions are among those creditors that don’t.

If you’ve been told that you were denied credit because of an “insufficient credit file” or “no credit file” and you have accounts with creditors that don’t appear in your credit file, ask the CRA to add this information to future reports. Although they are not required to do so, many CRAs will add verifiable accounts for a fee. However, understand that if these creditors do not report to the CRA on a regular basis, the added items will not be updated in your file.

You’re not alone. Many people face financial crises at some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or simple overspending, it can seem overwhelming, but often can be overcome. The fact of the matter is that your financial situation doesn’t have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self-Help

Developing a Budget

The first step toward taking control of your financial situation is to do a realistic assessment of how much money comes in and how much money you spend. Start by listing your income from all sources.

Then, list your “fixed” expenses-those that are the same each month-such as your mortgage payments or your rent, car payments, or insurance premiums.

Next, list the expenses that vary, such as entertainment, recreation, or clothing. Writing down all your expenses-even those that seem insignificant-is a helpful way to track your spending patterns, identify the expenses that are necessary, and prioritize the rest.

The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library has information about budgeting and money management techniques. Low cost budget counseling services that can help you analyze your income and expenses and develop a budget and spending plan also are available in most communities.
Check your Yellow Pages or contact your local bank or consumer protection office for information about them.

In addition, many universities, military bases, credit unions, and housing authorities operate nonprofit financial counseling programs.

Contacting Your Creditors

Contact your creditors immediately if you are having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, the creditors have given up on you.

Dealing with Debt Collectors

The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, make false statements, or use unfair practices when they try to collect a debt. Debt collectors must honor a written request from you to stop further contact.

Credit Counseling

If you aren’t disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling service. Your creditors may be willing to accept reduced payments if you enter into a debt repayment plan with a reputable organization. In these plans, you deposit money each month with the credit counseling service. Your deposits are used to pay your creditors according to a payment schedule developed by the counselor. As part of the repayment plan, you may have to agree not to apply for-or use-any additional credit while you’re participating in the program.

A successful repayment plan requires you to make regular, timely payments, and could take 48 months or longer to complete. Ask the credit counseling service for an estimate of the time it will take you to complete the plan. Some credit counseling services charge little or nothing for managing the plan; others charge a monthly fee that could add up to a significant charge over time. Some credit counseling services are funded, in part, by contributions from creditors.

While a debt repayment plan can eliminate much of the stress that comes from dealing with creditors and overdue bills, it does not mean you can forget about your debts. You still are responsible for paying any creditors whose debts are not included in the plan. You are responsible for reviewing monthly statements from your creditors to make sure your payments have been received. If your repayment plan depends on your creditors agreeing to lower or eliminate interest and finance charges, or waive late fees, you are responsible for making sure these concessions are reflected on your statements.

A debt repayment plan does not erase your negative credit history. Accurate information about your accounts can stay on your credit report for up to seven years. In addition, your creditors will continue to report information about accounts that are handled through a debt repayment plan. For example, creditors may report that an account is in financial counseling, that payments have been late or missed altogether, or that there are write-offs or other concessions. A demonstrated pattern of timely payments, however, will help you get credit in the future.

Auto and Home Loans

Debt repayment plans usually cover unsecured debt. Your auto and home loan, which are considered secured debt, may not be included. You must continue to make payments to these creditors directly.

Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the full balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You would avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long run.

If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling service to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development (HUD) or the housing authority in your state, city, or county for help in finding a housing counseling agency near you.

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Think carefully before taking this on. These loans require your home as collateral. If you can’t make the payments-or if the payments are late-you could lose your home.

The costs of these consolidation loans can add up. In addition to interest on the loan, you pay “points.” Typically, one point is equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy

Personal bankruptcy generally is considered the debt management tool of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, making it difficult to acquire credit, buy a home, get life insurance, or sometimes get a job. However, it is a legal procedure that offers a fresh start for people who can’t satisfy their debts. Individuals who follow the bankruptcy rules receive a discharge-a court order that says they do not have to repay certain debts.

There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7.

Each must be filed in federal bankruptcy court. The current fees for seeking bankruptcy relief are $160: a filing fee of $130 and an administrative fee of $30. Attorney fees are additional and can vary widely. The consequences of bankruptcy are significant and require careful consideration.

Chapter 13 allows you, if you have a regular income and limited debt, to keep property, such as a mortgaged house or car, that you otherwise might lose. In Chapter 13, the court approves a repayment plan that allows you to pay off a default during a period of three to five years, rather than surrender any property.

Chapter 7, known as straight bankruptcy, involves liquidating all assets that are not exempt. Exempt property may include cars, work-related tools and basic household furnishings. Some property may be sold by a court-appointed official-a trustee-or turned over to creditors. You can receive a discharge of your debts under Chapter 7 only once every six years.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments, utility shut-offs, and debt collection activities. Both also provide exemptions that allow you to keep certain assets, although exemption amounts vary. Personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations.

Also, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or lien on it.

Ads promising debt relief, maybe offering bankruptcy from consumer debt, is at an all-time high. What’s more, a record number of consumers-nearly 1.5 million in 2001-are filing for bankruptcy. Whether your debt dilemma is the result of an illness, unemployment, or overspending, it can seem overwhelming. In your effort to get solvent, be on the alert for advertisements that offer seemingly quick fixes. While the ads pitch the promise of debt relief, they rarely say relief may be spelled b-a-n-k-r-u-p-t-c-y. And although bankruptcy is one option to deal with financial problems, it’s generally considered the option of last resort.

The reason: it has a long-term negative impact on your creditworthiness. A bankruptcy stays on your credit report for 10 years, and can hinder your ability to get credit, a job, insurance, or even a place to live.

The Federal Trade Commission (FTC) cautions consumers to read between the lines when faced with ads in newspapers, magazines, or even telephone directories that say:

“Consolidate your bills into one monthly payment without borrowing”

“STOP credit harassment, foreclosures, repossessions,
tax levies and garnishments”

“Keep Your Property”

“Wipe out your debts! Consolidate your bills! How?
By using the protection and assistance provided by federal law. For once, let the law work for you!”

You’ll find out later that such phrases often involve bankruptcy proceedings, which can hurt your credit and cost you attorneys’ fees.

Advance-Fee Loan Scams

These scams often target consumers with credit problems or consumers who have difficulty getting credit. In exchange for an up-front fee, these companies guarantee that applicants will get the credit they want-usually a credit card or a personal loan.

The up-front fee may range from $100 to several hundred dollars. Resist the temptation to follow up on advance-fee loan guarantees. They may be illegal. Many legitimate creditors offer extensions of credit, such as credit cards, loans, and mortgages, through telemarketing and require an application fee or appraisal fee in advance. But legitimate creditors never guarantee in advance that you’ll get the loan. Under the federal Telemarketing Sales Rule, a seller or telemarketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or receive payment until you’ve received the loan.

Recognizing an Advance-Fee Loan Scam

There are many fraudulent loan brokers and other individuals misrepresenting the availability of credit and credit terms. One of their favorite strategies is the “advance-fee” loan scam. That’s where they claim to guarantee that they can get a loan or other type of credit for you-but you must pay a fee before you apply.

Ads for advance-fee loans often appear in the classified ad section of local and national newspapers and magazines. They also may appear in mailings, radio spots, and on local cable stations. Often, these ads feature “900″ numbers, which result in charges on your phone bill. In addition, these companies often use delivery systems other than the U.S. Postal Service, such as overnight or courier services, to avoid detection and prosecution by postal authorities.

Don’t confuse a legitimate credit offer with an advance-fee loan scam. An offer for credit from a bank, savings and loan, or mortgage broker generally requires your verbal or written acceptance of the loan or credit offer. The offer usually is subject to a check of your credit report after you apply to make sure you meet their credit standards. You are usually not required to pay a fee in order to get the credit.

Be suspicious of anyone who calls you on the phone and says they can guarantee you will get a loan if you pay in advance. Hang up. It’s against the law.

Protecting Yourself

Here are some points to keep in mind before you respond to ads that promise easy credit, regardless of your credit history:

Most legitimate lenders will not “guarantee” that you will get a loan or a credit card before you apply, especially if you have bad credit, or a bankruptcy.

It is an accepted and common practice for reputable lenders to require payment for a credit report or appraisal. You also may have to pay a processing or application fee.

Never give your credit card account number, bank account information, or Social Security number out over the telephone unless you are familiar with the company and know why the information is necessary.

Credit Repair Scams

You see the ads in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

“Credit problems? No problem!”

“We can erase your bad credit-100% guaranteed.”

“Create a new credit identity-legally.”

“We can remove bankruptcies, judgments, liens,
and bad loans from your credit file forever!”

Do yourself a favor and save some money too. Don’t believe these statements. Only time, a conscientious effort, and a plan for repaying your debt will improve your credit report.

The Scam

Every day, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report; many simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, beware of companies that:

want you to pay for credit repair services before any services are provided;

do not tell you your legal rights and what you can do-yourself-for free;

recommend that you not contact a credit bureau directly;
suggest that you try to invent a “new” credit report by applying for an Employer Identification Number to use instead of your Social Security number;or

advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity.

If you follow illegal advice and commit fraud, you may be subject to prosecution. You could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific consumer protections. For example, a credit repair company cannot:

make false claims about their services;

charge you until they have completed the promised services; or

perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees.

Your contract must specify:

the payment for services, including their total cost;

a detailed description of the services to be performed;

how long it will take to achieve the results;

any guarantees they offer; and

the company’s name and business address.

If You Are A Victim – Where to Complain…

If you’ve had a problem with any of the scams described here, contact your local consumer protection agency, state Attorney General (AG), or Better Business Bureau. Many AGs have toll-free consumer hotlines. Check with your local directory assistance.

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at 530-244-6830 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

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Redding Mortgage

It is not that hard to establish and keep good credit, especially if you are just starting out.  Follow these simple rules, and your credit will sparkle.

Check your credit report

Before anything else, you want to see what creditors are saying about you.  Do this by checking with the three major bureaus: Equifax, Experian and Trans Union.   Credit reports are used to create a credit score, which is a three-digit number lenders typically used to gauge your creditworthiness. Scores range from 350 to 850 and lenders respond best when the score is over 720.  Lenders also may look at the report itself, as may the landlords, employers and insurance companies who use credit to evaluate applicants.

Establish checking and savings accounts

Lenders view checking and savings accounts as signs of stability, yet many people overlook this simple thing.  Opening an account is also one of the few things you can do as a minor to start building a financial history. While you can’t get a credit card in your own name until you’re 18 and can be legally held to a contract, many banks have no problem letting you open a bank account.

Understand the basics of credit scoring

A basic knowledge of credit scoring will help you build your score.  Two of the most important factors in building your score are:

• Whether you pay your bills on time.

• How much of your available credit you actually use.

It’s absolutely essential that you pay all your bills on time. All it takes is a single missed payment to trash your credit score — and it can take seven years for the effects to completely disappear.

You also don’t want to max out any of your credit cards, or even get close. You will get the best possible credit score and prevent yourself from getting over your head in debt if you keep your credit balances to less than 30% of your credit limits.  (This means if you have a $3,000 limit your balance should stay below $1,000.)

And remember, you don’t need to carry a balance on a credit card to have a good credit score. Paying your bill off in full is the best way to keep your finances in shape and build your credit at the same time.

Piggyback on someone else’s good credit

The fastest way to establish a credit history can be to “borrow” another’s record, either by being added to a credit card as an “authorized” or joint user or by getting someone to co-sign a loan for you.  Keep in mind though it is a two edged sword.  You can gain good credit, however if either of you default, both parties suffer. (The co-signer has basically promised to make good on this account, so any delinquencies will show up on her credit report as well.)

Keep in mind that even if you get added to someone’s credit card, you may not be able to piggyback on his or her credit. Some credit issuers won’t report authorized users to the credit bureaus, particularly if the user is not married to the original card holder. If the point is to give you a credit history, the person who’s adding you as an authorized user should call the issuer and ask how (or if) your status as a user will be reported.

Apply for a secured credit card

If you can’t get a regular credit card, apply for the secured version. These require you to deposit money with a lender and your credit limit is usually equal to the deposit.

You’ll want to screen your card issuer carefully because there are a lot of bad guys in this particular niche of the credit world. Some charge outrageous application or annual fees and really high interest rates.

The first place you should look is your credit union if you belong to one. You can also check at www.bankrate.com for a list of secured credit card issuers.  You may also call my office for a list of cards I recommend.  Ideally, the card you pick would:

• Have no application fee and a low annual fee

• Convert to a regular, unsecured credit card after 12 to 18 months of on-time payments

• Be reported to all three credit bureaus.

If the issuer doesn’t report to the credit bureaus, the card won’t help build your credit history.

Get a finance company card

Gas companies and department stores usually use finance companies, rather than major banks, to handle their credit transactions. These cards don’t do as much for your credit score as a bank card (Visa, MasterCard, Discover, etc.), but they’re usually easier to get.

Again, don’t go overboard. One or two of these cards is enough. If you get many more, you may find that later in your life these accounts could prevent you from getting the highest possible credit score. That’s not a reason to avoid them completely, because right now they’ll do you some good. Just don’t apply for half a dozen.

Get an installment loan

To get the best credit score, you need a mix of different credit types including revolving accounts (credit cards, lines of credit) and installment accounts (auto loans, personal loans, mortgages).

Once you’ve used plastic responsibly for a year or so, consider applying for a small installment loan from your credit union or bank. Keeping the duration short — no more than a year or two — will help you build credit while limiting the amount of interest you pay.

Apply for credit while you’re a college student

There’s no easier time to get a card than while you’re a college student.  Lenders are willing to take risks with you that they won’t once you graduate, probably because they know that your parents’ willingness to bail you out will end once you get your diploma.

Be careful, though. Look for a card with a low or nonexistent annual fee and low interest rates. For now, just get one: Opening a slew of credit accounts in a short period of time can make you look like a risky customer.

Use revolving accounts lightly but regularly

For a credit score to be generated, you have to have had credit for at least six months, with at least one of your accounts updated in the past six months.

Using your cards regularly should ensure that your report is updated regularly. It also will keep the lender interested in you as a customer. If you get a credit card and never use it, the issuer could cancel the account. Just remember the credit tips mentioned earlier:

• Don’t charge more than 30% of the card’s limit.

• Don’t charge more than you can pay off in a month. Keep in mind, you don’t have to pay interest on a credit card to get a good credit score, and it’s a smart financial habit to pay off your credit cards in full each month.

• Make sure you pay the bill, and all your other bills, on time.

US Lending Company
2150 Churn Creek Rd Ste 100
Redding, CA 96002-0742
Phone: 530-244-6830
Fax: 530-224-1947
E-mail: dan@uslendingcompany.com

This free report will show you the tax benefits of owning your own home as well as:

1. How to get pre-approved and find the right program to suit your needs.
2. The end of this report will show you how to avoid the mistakes other people make when shopping for a mortgage.

How to Own a Home for Less Than your Current Rent

You may often hear people say buying a home will help you pay less taxes.  First we must look at your comfort levels for a monthly payment.

How much of a mortgage payment can you comfortably handle?

A simple way to determine how much of a mortgage payment you can afford is to draft a simple monthly budget.

1. List your monthly income from all sources. That total is your “gross” monthly income.

2. Subtract from your gross income any taxes you pay or owe monthly – Federal taxes, state taxes, FICA (social security taxes), and Medicare taxes. Don’t forget to include the monthly amount of any estimated taxes you have to pay. What is left is your “net” income.

3. Next list your other monthly expenses, such as savings, utilities, groceries, insurance, car payments, tuition, clothing, entertainment, etc. (If some are payable yearly or quarterly, divide the amounts by 12 or 4 and add that to the monthly expenses.) Do not include current rent or housing payments, since those would no longer be applicable.

4. Subtract the total of your monthly expenses from your net income. The resulting amount is what is left for a house payment.

Of course, you can always adjust your discretionary spending to leave more for a house payment. Just be sure to be realistic if you do that. An unrealistic budget can leave you in a financial bind when reality sets in. (Can you really get by with only $200 a month to feed your family of four? Probably not! Make sure your numbers make sense for your family.)

Below you will find a sample budget. You can use it as a guide, but be sure to add any expenses that you have that don’t show up on our budget.

Sample Budget (Monthly)

Gross Income

Jon’s salary                                          $3,000
Sally’s salary                                        $1,900
Sally’s tutoring income (avg. monthly )   $275
Child support                                        $300

Total                                                 $5,475

Taxes

Federal tax                                            $1,550
State tax                                               $550
FICA                                                     $150
Medicare                                                $80
Estimated ($300 quarterly )                     $100

Total                                                 $3,045

Net Income (Gross Income minus taxes)

Expenses

“Rainy day ” or college savings               $100
Retirement savings (IRA, 401k)              $150
Utilities (gas, heat, phone)                      $175
Groceries, meals out                              $400
Life insurance                                         $95
Health insurance                                    $300
Other insurance                                      $60
Tuition, school loans                                $80
Car loan(s)                                            $500
Automobile expenses (gas, oil, etc.)          $80
Entertainment (movies, cable, etc.)           $50
Credit card payments                              $225
Medical, Dental                                        $25
Miscellaneous                                          $70

Total                                                 $2,310

Available for mortgage payment   $735

For More Financial Scenarios, make sure you visit
our Mortgage Calculators Page.

How can you afford a Larger Mortgage Payment?

Cindy and Roger (not their real names; the names and some of the details have been changed to protect privacy) came to me after talking to the loan officer that Roger’s brother recommended. They had found a house they wanted to buy, but the loan officer told them that they didn’t bring the right information with them – and, at any rate, it looked as if they were going to be a couple of hundred dollars short each month unless they had another $15,000 in down payment money. Discouraged, they decided to ask one more person, and ended up calling my office. I told them what information to bring in, and after meeting with them, I was able to help them get a conventional, fixed-rate mortgage that they could afford – and without a bigger down payment!

The monthly payment depends primarily on the amount of the loan, the interest rate, and the term of the loan (and sometimes taxes and insurance). A 6% 30-year fixed-rate mortgage for $142,500 would cost the buyer approximately $931, including taxes and insurance.

What can you do, then, if you really want that $150,000 house, have only $7,500 for a down-payment, and are already getting the most favorable rate and term – but you have only $735 a month available to pay a mortgage. How can you make a mortgage payment of $931? An answer for many people is, believe it or not, “withheld income taxes”!

Have you ever seen people in April, May or June walking around with silly smiles on their faces? These people probably just got a refund check from the Internal Revenue Service (IRS). Why are these people smiling? If they thought about what those refund checks mean, they’d probably be frowning.

Contrary to popular thought, a tax refund is not forced savings. Would you walk into your bank and open a savings account paying 0% interest? When you get a refund from the IRS, you are receiving your own money back with 0% interest! What you have actually done is given the US government an interest free loan!

On top of that, if there is economic inflation, then the money refunded to you is actually worth even less than it was when you earned it. To make matters worse, when you itemize, the amount you receive as a refund from your state (if your state has income tax) must be declared on your federal return. If your refund is large enough, it might also force you into a higher tax bracket. The final problem is that you don’t have the use of your money until you receive your refund.

The solution?

Change your W-4 form and receive your money (your “refund”) every month instead of giving it to the IRS to use at your expense for the year. This is a particularly good idea if you will be taking out a mortgage to buy a home. Because property taxes and the interest on most home mortgages are tax-deductible, you’ll owe less taxes than you would if you were renting. You can change your W-4 form to reflect the lesser amount of taxes due. (Your tax preparation professional can help you figure how much to withhold.) Then, each month, instead of giving the IRS your money to “hold” for you (without interest), you can use that money to pay a larger mortgage payment. Remember: It is your money and you are going to get it back regardless. The question is, do you want to get it back monthly to help you with your mortgage payment or at the end of the year.

For example, suppose your tax refund for the year – taking into account mortgage interest and other deductions – would be $2,400. That’s equivalent to $200 a month ($2,400 divided by 12 months). Instead of giving that money to the IRS and then getting it back at the end of the year, you can change your W-4 so that you get to keep that $200 a month and use it to help make a larger mortgage payment. In our previous example, that $931 mortgage payment becomes affordable when your extra $200 is added to your budgeted $735!

There is nothing “iffy” or “tricky” about this. W-4 forms are intended to help your employer withhold the correct amount of taxes – not an amount more than you are going to owe. IRS Publication 919 (Rev. December 2000), entitled, “How Do I Adjust My Tax Withholding,” states on page 2,

“You should try to have your withholding match your actual tax liability. If too little tax is withheld, you will owe tax at the end of the year and may have to pay interest and a penalty. If too much tax is withheld, you will lose the use of that money until you get your refund. You may want to check your withholding when there are changes in your life or financial situation that affect your tax liability.”

“Purchase of a new home” is listed as one of the lifestyle changes that are likely to affect your tax liability.

SO WHAT DO I DO NEXT?

You many have heard the term pre-approved or pre-qualified. In the real-estate industry we do things a little backwards. Here is a very common scenario.

You the buyer decided you want to move. You call a realtor and start looking for a home. Finally, you find the home of your dreams and your offer is accepted by the seller. Of course you will want to do a home inspection to make sure there is nothing wrong with your new home. The cost of a home inspection is generally $200-$300 and is paid at the time the inspection is done.

Next, you will need to go to a lender and get a mortgage. At the mortgage application you will need to pay approximately $469 for an appraisal and credit report. After 3 or 4 weeks you will learn if your loan has been approved.

If your loan was rejected you have now LOST almost $1,000.00 because the fees you paid are not refundable if your loan is rejected.

BUT THERE IS A SOLUTION:

You can get pre-approved BEFORE you even go looking for a home. By being pre-approved you will know that your loan is already waiting for you and all you have to do is find your perfect home. You will also know how much you need to buy the home and what your monthly payment will be.

Your next step is to call: 530-244-6830 to schedule a FREE 1 HOUR CONSULTATION and get the process started.

During this meeting we will discuss the mortgage programs that will best meet your needs. We will also try to make this program fit your needs and comfort level for a monthly payment and the amount you want to use to purchase your new home.

Also during this meeting we will run a full credit report. This is an extremely important part of the process. You may have heard horror stories about people who bought a home, applied for a mortgage and were told by their lender everything looked good. Three weeks later, their loan was denied because some bad credit showed up, that WAS NOT on the credit report during the first meeting.

WHY WE WON’T LET THIS HAPPEN TO YOU

There are 3 major credit reporting agencies in the United States: Equifax, TRW & CBI. When a lender runs a free preliminary credit report for you they will run 1 of the 3 agencies listed above. The problem is that not every creditor will report to the same credit agency. For example, your VISA card may report to CBI; your store charge card may report to Equifax; and your Credit Union may report to TRW. During our meeting, we will want to run a FULL 3 agency credit report. This will allow you to know exactly what will be on your credit record.

This is the same report that could be used when you purchase your home, so you many not need to pay for it again.

Call Now to Schedule 1 Hour Free Consultation

Dan Conley
530-244-6830

Secrets You Need To Know When Shopping

The right knowledge is essential! Here are some new things to think about:

1. Pre-approved mortgages

Did you know that you could be approved for a mortgage, and not just be prequalified for a loan?

Most banks and mortgage companies do not offer you this option. They have you pay the entire application fee up front.

With the pre-approval, your credit and income are checked out ahead of time and your financial information is sent to the underwriter who will be approving your mortgage.

You will then know -

How much you can spend for a home

How much money you will need to close

If you need to consolidate your debts

If your credit is good enough

The best mortgage for you and your family

Should you buy or build a home

How much money you are actually saving by owning instead of renting

What I am talking about here is a real, honest to goodness mortgage approval. Not one of those “approval cards” that when you read the fine print, you find out that you are not really approved. Without pre-approval, you can buy your home, and not worry about financing.

2. Beware of banks and mortgage companies that do not offer you their “best deal” first.

The conversation would go something like this…You: What are you rates and points? Bank: They are “such and such.”

You: Great, thanks. I am checking around with some other banks and mortgage companies.

Bank: Well, after you check around, give me a call back because maybe we can meet or beat the deal they give you.

This kind of makes you wonder that if you didn’t mention you were shopping around, that you may have ended up paying a higher rate, or more closing costs.

Wouldn’t it make you suspicious as to why that bank did not give you their best deal first?

3. Consider using a Buyer’s Agent

Most real estate agents represent the seller, they do not represent you as a home buyer.

There is a fairly new type of real estate agent called a “Buyer’s Agent.” They work for you, not the seller.
You do not pay their commission.

The buyer broker can disclose things to you about the seller (or the home) that they would not be able to if they represented the seller.

If a real estate agent will not offer you a buyer brokerage agreement, ask “Why Not”… or better yet, find another agent!

4. Utilize a Lender With Established Ties to an Agent

Lenders are much more flexible with the real estate agents who have done business with them previously. This relationship then establishes them as a team. The lender and agent work effectively together, referring each other business. That’s why a good agent can make substantial difference in setting up the most economical financing. And the right financing can, literally, save you tens of thousands of dollars over the life of your loan!

5. Don’t Attempt Paperwork Alone

All the paperwork required to complete the purchase of a home can be quite intimidating and frustrating for a home buyer. Make sure you have your lenders help you with all the paperwork. Get help from your team, your lender and agent. Their expertise will help alleviate the stress and it will prove to be invaluable before you sign your mortgage.

6. Don’t Wait for the Bottom of the Market

The odds of you hitting the bottom of your market are about the odds of you hitting your state lotto! You will almost never hit the bottom of a market. And trying to time it exactly right is often costly. It usually causes a person or family to miss out on the opportunity to purchase a very nice property. You’re better off simply negotiating the best rate and terms you can at the time you find a property. If interest rates go down, you can refinance. This is a much better approach because you won’t miss out on the property you’ve spent so much time locating.

7. Be Honest With your Lender

Your lender wants to help you with your loan. The only time they get paid is when you get approved. The more information (good or bad) you provide your lender, the easier it will be for them to get an approval. It helps them present the loan in the best light. This in turn helps the loan get the highest approval rating.

8. Become Completely Educated

Pick your lender’s brain. Lenders will teach you all about your various options, even if you haven’t found the right property yet. They will be very patient with you while you are looking, especially if you have aligned yourself with the right agent. They understand all the up-front work will pay off in future business. Your agent will then continue to refer people to the courteous and service-minded lender down the line.

I hope you have enjoyed this special report. We currently have over 40 creative loan programs to fit your needs. Please contact us at  530-244-6830 to set up your FREE No-Obligation consultation where we will meet to tailor a program to fit your needs and comfort levels for monthly payment and investment.

Sincerely,

Dan Conley

US Lending
2150 Churn Creek Rd #100
Redding, CA

Phone: 530-244-6830

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