Power Tools

Know Your Credit (FICO) Score
Raising Your Credit (FICO) Score
How to Challenge Credit Information
Credit Card Balance Advice
Checklist of Documents for a New Mortgage or Refinance
Understanding the Process
Money
Glossary of Terms

Join our HomefindersClub to begin using our Power Tools.  You will get your own private web portal that will empower you to maximize your real estate and mortgage search efforts, and best of all, it's Free!  And we give you ALL the information:  Name, Address, Price, Details and Agents.  It's all there!  We don't play games with your time.  We value you as a client, and we empower YOU!

HomefindersClub includes:

• Property Searches: You may search as many times as you like, on a variety of criteria. Keep your favorite search flagged for automatic email notification of updates. Add individual properties to your “Favorites” list for tracking. Run as many searches as you like…there’s no cost.
• Mortgage Calculators: Use the mortgage calculators to run “what if” scenarios for interest rates, down payments, monthly payments, etc. All the questions you want to ask, but loan officers always insisted on a complete application, first. Pink Flamingo Mortgage puts you in charge! We know you appreciate that, and will click on our mortgage button when you are ready.
• Direct Staff Support: If you ever have a question, just click on the button and send us an email. We will find your answer and get back to you as quickly as possible.

It's easy to sign up for your HomefindersClub Web Portal.  Click here for our signup form to open your portal. We will then send you an email with your login and password so that you can access your own private web portal. When you first logon, please change your password and enter your first search. This will activate the entire system so that you receive Property and Interest Rate updates. That’s all there is to it! No cost…and your privacy is guaranteed.  (Don't forget to add HomefindersClub.com as a "safe site".)

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Your credit score is a valuable bit of information to know BEFORE you shop for a new home or consider refinancing your present home. Take the time to order your OWN credit report, INCLUDING credit scores, from all 3 major credit reporting bureaus. With your scores, you’re ready to shop mortgages.

How to Purchase Your Credit Scores.  You’ll want to contact each major credit reporting bureau directly. Be sure to ask for your credit report, WITH the FICO score:

Transunion 800-888-4213         Equifax 800-685-1111 Experian 888-397-3742

$15.95 fee $15.95 fee $15.95 fee

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Opt Out of Unsolicited Credit Offers.  For an easy, painless and FREE way to improve your credit score, OPT OUT of unsolicited credit offers that come by mail. One call to Equifax at

1-888-5OPTOUT

will notify all 3 credit reporting bureaus that you want your credit file kept confidential. YOU decide who you want to establish credit accounts with. OPT OUT today – it’s a free, 5 minute telephone call that will often raise your credit score.

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How to Challenge Credit Information

Each agency MUST review any challenges you send them. They will send you a response within 30 days. So, review your credit report and challenge the errors. If you sent the payment on time, tell them. If the debt listed is not yours, tell them. Make sure the report is accurate.

One other tip: Always send challenges to ALL 3 credit agencies at the same time. Even if an item is only listed in 1 or 2 agency reports, you must challenge it in all three. Here’s why - all three agencies share your credit history with each other. If it is not removed from all agencies, it may reappear the next time they exchange information about you.

Mail your challenges to:

EXPERIAN
701 Experian Parkway
P.O. Box 2002
Allen, TX 75013

TRANSUNION
2 Baldwin Place, P.O. Box 1000
Chester, PA 19022

EQUIFAX INFORMATION SYSTEMS
P.O. Box 740256
Atlanta, GA 30374

Even after the credit bureau corrects an inaccuracy, it may take 45 to 60 days for corrected items to cycle through the agencies’ computers and increase your score. A consistent system of reviewing and challenging inaccuracies, until your report is accurate, will raise your score over time.

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Your credit score is not just about how you pay your bills, it is also about how much of your available credit you are using. Keep each of your credit account balances UNDER 50% of the available credit. This shows credit providers you are a responsible consumer.

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PURCHASE / REFINANCE LOANS

Have These Items Ready When You Apply For a Loan
It used to be that lenders required documentation from borrowers, then mailed out verifications to employers, banks, mortgage companies, and so on, in order to verify the data. Nowadays, the interest is often in speed and getting answers quickly, so "alternate documentation" has become more widely used. Alternate documentation means that underwriting answers can be obtained with information supplied directly from the borrower instead of waiting around for verifications to come back in the mail. The following is required for most standardized loans as part of alternate documentation processing. Items may differ according to whether your loan is a conforming (Fannie Mae or Freddie Mac), non-conforming (jumbo) loan, government loan, or a portfolio loan. Verifications are still mailed out, but usually as part of quality control procedures. These are the things you need to supply to your lender to get a quick approval using alternate documentation:

Income Items  

• W2 forms for the last two years
• Pay stubs covering the most recent 30 day period
• Federal tax returns (1040's) for the last two years, if you:
• are self-employed
• earn more than 25% of your income from commissions or bonuses
• own rental property
• are in a career where you are likely to take non-reimbursed business expenses.
• Year-to-Date Profit and Loss Statement (for self employed)
• Corporate or Partnership tax returns (if applicable)
• Pension Award letter (for retired individuals)
• Social Security Award letters (for those on Social Security)

Asset Items

• Bank statements for previous two months (sometimes three) on all accounts. All pages.
• Statements for two months on all stocks, mutual funds, bonds, etc.
• Copy of latest 401K statement (or other retirement assets)
• Explanations for any large deposits and source of those funds
• Copy of HUD-1 Settlement Statement on recent sales of homes (see glossary for HUD-1)
• Copy of Estimated HUD-1 Settlement Statement if a previous home is for sale, but not yet closed
• Gift letter (if some of the funds come as a gift from a family member)
• Gifts can also require:
• Verification of donor's ability to make the gift (bank statement)
• Copy of the check used to make the gift
• Copy of the deposit receipt showing the funds deposited into bank account or escrow

Credit Items

• Landlord's name, address, and phone number (for verification of rental - if you currently rent)
• Explanations for any of the following items which may appear on your credit report:
• Late payments
• Credit inquiries in the last 90 days
• Charge-offs
• Collections
• Judgments
• Liens
• Copy of bankruptcy papers (if a bankruptcy shows up on your credit report, or if you have filed bankruptcy within the last ten years)

Other

• Copy of purchase agreement (if you have already made an offer)
• Documentation of child support (if you desire to show it as income)
• Copy of Divorce Settlement (to show the amount)
• Copies of twelve months canceled checks to document actual receipt of funds

FHA Loans

• Copy of Social Security Card (or other documentation of social security number)
• Copy of Driver's license

VA Loans

• Copy of DD214 - if you were in the military, you undoubtedly know what this is because when you get out of the service they constantly remind you to never, ever lose this form. For those that were not in the military, it is basically a one page summary of an entire military career, including test scores, important dates, awards, and other military data.

Refinances

• Copy of Note on existing loan
• Copy of HUD-1 Settlement Statement on existing loan
• Name, address, phone number, loan number of existing loan/lender

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Understanding the Process

Deciding which loan is best for you, is always a little mysterious. It has been compared to squeezing a balloon; when you squeeze one end smaller, the other end pops out and gets bigger.

Loan factors are like the balloon; go for a low interest rate, and you may have “negative amortization” (meaning your monthly payment will not cover all the principal and interest due, so you owe a little more every month); get an adjustable with a low start rate and it may climb through the roof in a year or two. Ask for “no down-payment” and see the interest rate move up; or take a higher interest rate and get 100% financing. All things are possible, but there is always a cost.

The principal items to watch are your FICO score, interest rate, down-payment, loan to value (LTV) and debt to income (DTI). You can have a problem in any one area, and still find a way to finance your new home. The lowest rate goes to the fewest problems. So keep your FICO up, your DTI down, put a 20% down-payment down, and you will get the lowest interest rate available anywhere.

But if you are normal, and all of us are, you have had a bump or two during your life. You can still get a loan, just don’t fixate on interest rates. Get a loan with a good rate (not necessarily the greatest rate in the world), and get into your house. Then work to improve your financial situation and refinance into your final loan a few years later. Then you can get the absolute lowest rate.

Once you are ready to start the loan process, pick a Broker you can trust (say Pink Flamingo Mortgage for instance!) and let them do their job. Trying to second guess your Broker, getting two loans started at once, or shopping around your loan offer, really wastes the time of you and your Broker. There are more than a few loan officers out there that will promise you anything, but not deliver. Work with a reputable company, and then trust them to give you their best offer.

Use the checklist to have all your documents ready. If you want to move fast, it is the production of documents that will control the flow of the process. Once all documents are in the loan can be submitted for funding, but not until ALL documents are together. No underwriter will waste a minute on a loan that is not fully documented. They have ten other loans on their desk, with ALL the documents ready, waiting for funding. So be ready with your documents to move through the process more quickly.

Finally, understand the “closing” of your loan. This is when all the documents are signed and deposited into the escrow account. It is NOT when funding occurs, or Title records. These final two steps will take an extra day or two to complete after the waiting period. There is a waiting period on most loans to allow the customer to cancel the deal if they decide something is not correct. So allow 5 working days after “closing” to get your keys and move into your new dream home.

There you have it, all the secrets of the process!

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Money

It is important to have your money in stable accounts that you can show have a long history with the bank. This allows the underwriters to know your financial situation is stable. You will normally be asked for 3 months of statements to show that the money you plan to use for a down-payment, or closing costs, is not needed for month to month expenses. This is often referred to as “cured” accounts (as in the long process of curing meats).

So get started by setting up a savings account, or certificate of deposit, which you can use for purchasing your new house. Keep the account increasing monthly, and resist using this money for anything but the biggest emergency.

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