New Homebuyer FYI #1

compiled by Hassan Nicholás
FYI #1...random stuff to know

• Mortgage payments made on time will shoot up a credit score. Usually, it's easy for a credit score to drop but it takes more time to raise it up.

• When reviewing your credit report for creditworthiness, lenders prefer borrowers who have three (3) to five (5) open credit lines/accounts.

• When you have a debt with less than 8 payments left on your credit report the lender will ignore it.

• Homeowners should refinance only when: 1.) They have gained significant equity in the home. 2.) The interest rate can be lowered by at least 2 points (fees and costs associated with refinancing are too costly for a one point interest rate drop). 3.) They want to get out of an ARM.

What You Need to Know About Credit

Why is Good Credit Important?

The difference between a 700 FICO score and 698 is one-half percentage point. Meaning, on a $165,000 30-year fixed rate mortgage, that half point could cost you more than $19,000 in interest charges, assuming 6 percent is the lowest rate available.

Having good credit and strong FICO score makes all the difference between getting a good deal or bad one - or even none at all. Here are some facts that you should be aware of:

• A typical credit card purchase ends up costing 112 percent more than if cash were used.


• Your debt payments are reported to creditors once a month. While you might be able to get away with being 30 days late with some lenders, all lenders will turn their heads if you're 60 or more days late.


• Lenders typically don't want to see no more than 3 - 4 open credit cards. If you must, then close the most recent card(s) first. But always pay off your outstanding debt before closing.


• Before you apply for a mortgage be sure you're not spending over 30% of the maximum balance on your credit card(s). To figure this out, simply multiply your maximum limit by 0.3. That will be the number you shouldn't go over. Example: Discovery card has a maximum limit of $3,000. You have a current balance of $1,500. You should not spend over $900 (3,000 x 0.3).


• It is possible to improve your credit score by 20 points in 60 days.


• Any time you apply for a mortgage or car loan a tri-merged credit report is pulled. This has a negative impact on your FICO score, which is why you should keep your loan shopping condensed to five days if you know you will be applying more than once, rather then spread throughout the month. This way you will only get "hit" once, instead of for each time you your credit was pulled.

• Just because negative information no longer shows up on your credit report after 7 - 10 years, that doesn't mean it isn't affecting your score. Don't try to "wait out" your debt.

• To be eligible for government-backed subsidy programs (downpayment assistance), you must have a FICO score of at least 620.
  
  

A Success Story: The Gutierrez Family

August 25, 2005

Maritza Gutierrez is a mother of three and works for the Los Angeles County Consumer Protection Department as an investigator. Maritza and her husband Joseph came across CFRC’s IDEA program in partnership with FHLBSF (Federal Home Loan Bank of San Francisco) and CB&T (California Bank & Trust). Maritza enrolled in August 2004 and began saving by making monthly deposits of $500.

Maritza and her husband also attended a series of financial education classes, homeownership workshop and saver club classes to learn about the nuts and bolts of the homeownership process. Maritza and Joseph put what they have learned in their financial education classes into practice and asked their children to do the same. Each family member had a budget and each learned to bargain shop. Maritza and Joseph also prepared a list of items that they should look for in a house and made sure all of their documentations were in place.

They found a property in the East Los Angeles area that needed rehabilitation, but they found much potential in the property and knew that they could work on the rehabilitation on their own to save money. With the IDEA match money of $14,400 and other saving programs that they have enrolled in, Maritza and Joseph purchased the property for $289,000. Maritza and Joseph received funds from the Los Angeles Community Development Commission Home Ownership Program and American Dream Down payment Initiative and IDA program with New Economics for Women.

After the family moved in and started the rehabilitation process, the neighbors also began to upgrade their homes to raise the values of the community. The property still has much work to be done, but Maritza and her family are excited about working on their home together and seeing the transformation of their house and neighborhood.

A Success Story: Teacher, Amy Bouse

November 29, 2006


Amy Bouse has been a teacher for the past 8 years at Santa Monica High School. As she researched various homeownership assistance programs for teachers on the Internet, she stumbled upon the Los Angeles Teachers Mortgage Assistance Program (LATMAP).

Ms. Bouse decided to attend CFRC’s 8-hour homebuyer’s seminar on a Saturday, where she learned about various loan programs available to her and about the pre-approval process. "This was my second and much better homebuyer’s seminar…I learned about expectations for real estate agents and a great rebate program for teachers," said Ms. Bouse.

Through LATMAP she also met two program partners: Joseph Guzman from National City Mortgage, and Iris Land from Prudential CA Realty. The partners helped Ms. Bouse through every step of the homeownership process, including qualifying her for a loan and helping her find a home.

Ms. Bouse recently closed on her purchase, a 2 bedroom condominium located in Southwest Los Angeles. The home has great amenities and charm, including hardwood floors, and built in cabinets. But her favorite place is the terrific backyard that offers the privacy, serenity, peace and escape that she longs for at the end of her day.

Finalmente Justo

Una Organización Comunitaria responde a Prestamistas Predatorios

October, 2007

Considerando la reciente onda de juicios hipotecarios que le han hecho perder tanta gente su casa a lo largo de California y la nación entera, no es una sopresa que muchas compradores de casa potenciales han echado un paso para atrás.

Y el hecho de que mayormente latinos y afroamericanos engrosan la lista de víctimas afectadas por hipotecas de alto riesgo solamente fortalece aquel temor. Vea en las noticias y le saldrán tantas historias de familias, recien dueños de su propia casa, perdiendo su hogar, su inversión, y su sueño de regalar una casa a sus niños. Es bastante para desalentar a compradores potenciales y los que ya tengan hipotecas infavorables.

El problema reside en la realidad que no hay protección para las personas, de mal crédito y poco ahorros y aún más poco opciones, a quien se tentan con una tasa baja a aceptar préstamos hipotecarios de alto riesgo. Los prestamistas predatorios lo saben y por eso se aprovechan de ésa vulnerabilidad que tienen muchos con esperanzas de tener una casa. Luego compradores de casa se encuentran en situaciones dificiles una vez la hipoteca riga una tasa más alta, entonces se hacen inmanejables los pagamientos de préstamo. Toma en cuenta que los prestamistas se muestran una vez más y más renuentes a ortorgar hipotecas y comprenderá las dificultades que se enfrenta.

Ahi entra el Centro Comunitario para Recursos Financieros (CFRC en siglas ingles) una organización sin fines de lucro que provee seguras alternativas para financiar casas. Con sede en el centro de Los Angeles, CFRC haya sido un centro de recursos financieros para muchas familias y negocios de comunidades descuidadas los angelenas. Nota que los precios para prestamos están en alza aunque hay una sobreoferta de viviendas – otra amenanza a compradores prospectivos.

"la educación es clave"

A lo largo de la nación organizaciones como CFRC han empezado a responder; ofreciendo soluciones convenientes a personas con opciones escasas. Bajo su Programa para Nuevas Compradores de Casa CFRC ofrece dos nuevos productos hipotecarios que se esperan ser el primer fase bajo el programa. Los préstamos son únicos porque están específicamente dirigidos para personas con crédito dañado y pocos fondos. Después del cierre del préstamo el comprador tiene que pasar por educación con un consejero financiero sobre las condiciones del préstamo. La organización espera atraer familias y individuos con tasas fijas competitivas de interés también la seguridad de una organización que está en el negocio de cuidar a los comunidades descuidadas. CFRC quiere que nadie se quede en cero porque encuanto a los prestamistas predatorios la educación es clave.

Por Hassan Nicholás