Getting the best rates and loans
Q: Bob, in your last few weeks of columns you talk about many different things. I keep reading about getting a better interest rate with a higher credit score for a better mortgage. Our problem is we have an adjustable-rate mortgage and it is coming due shortly. Can you give me and anyone else/your readers especially any tips on credit and mortgage payments that will be heading up?
Ben K.
A: Ben and others, I will give my best shot.
Higher-than-ever credit scores are needed to get the best rates on loans. People with credit scores of 720 or above used to get the best rates. Now a score of 750 out of a possible 850 is usually needed.
To increase your score: Pay down balances on credit cards and your home-equity line of credit. To gauge how much improvement you need, order your credit score for about $16, either from www.myfico.com or the reporting of your choice-www.Equifax.com,www.experian.com or www.transunion.com. Check your credit reports for free at www.annualcreditreport.com, and have any errors corrected per the instructions accompanying the reports.
Steps to take now if your mortgage payments are headed up: About two million homeowners with adjustable- rate mortgages (ARMS) are facing a jump in interest rates as their introductory “teaser” rates expire. Two options that homeowners had counted on-refinancing or selling-have become much more difficult (even with the so-called “tarp” bail out) amid a credit crunch and plunging home prices. Also a rescue plan shaped by the mortgage industry and the Bush Administration froze interest rates for only a few hundred thousand borrowers with subprime (high-risk) mortgages. Many other mortgage holders still face hundreds of dollars in higher monthly payments and more foreclosures.
But there are still ways for homeowners to soften the blow:
Loan modification: Under a loan modification agreement, the lender modifies the terms of the original contract to lower the borrower’s monthly payments usually by reducing the interest rate.
To get a loan modification: Understand the terms of your mortgage. Request a rundown from your lender of when your interest rate will reset, how much your monthly payments will increase and how often the rate will change afterwards. Doing this is crucial if you have a 2/28 or 3/27 ARM, which carries a fixed rate for two or three years and tends to reset every three or six months afterward.
Talk to your lender as soon as you think you may fall behind on payments. It can take two to three months to complete a loan modification agreement. Even if you don’t qualify for a modification, your lender may offer you forbearance-a temporary reduction or suspension of payments
HELPFUL: For phone numbers of loss-mitigation departments at major lenders, go to www.homeloanlearningcenter.com and click on “Foreclosure Prevention Resource Center.”
Our lenders have received (tarp money) our tax payers money and will NOT let go of it easy. It’s up to our government to MAKE them release to help people just trying to keep their home. Our government needs to step in and help the other guy. Remember “we voted/ put them in office & we can vote them out.”
Next week: other ways to deal with your lenders and possible legal assistance.
Have a real estate question? Write, call, fax or e-mail:
Bob Jeffries, Realtor,
Century 21 Birchwood Realty, Inc.
4040 Del Prado Blvd., Cape Coral, FL
239-549-5724 Office 239-542-7760 Fax