Can Your Mortgage Company Confiscate Your Homeowner s Insurance Damage Claims Proceeds?
By Bruce Obermeyer

Can YOUR Mortgage Company Confiscate YOUR Homeowner s insurance Damage Claims Proceeds…and then apply the money to your MORTGAGE BALANCE, leaving you facing a Mechanic s Lien for non-payment of the repair bill?

As a result of damage to a homeowner s roof from a storm, the homeowner filed a damage claim with his Homeowner s Insurance company. The adjustor inspected the damage, and the insurance company sent a check to the homeowner. As is customary with most insurance companies, the check was made out to both the homeowner and the Mortgage Company, let s call them “Homecomings Financial” for lack of a better name — and because that IS their name. The homeowner sent the check to the Mortgage Company expecting them to endorse it and send it back while he hired a contractor to repair the roof.

Instead of endorsing the check, the Mortgage Company sent the check back to the homeowner UNendorsed along with a package of forms the homeowner was required to fill out and sign and return along with the endorsed check. The Mortgage Company would then deposit the check (possibly earning interest from the HOMEOWNER s insurance claims proceeds). Once the Mortgage Company received all of the above, they would send out a third party inspector, and if the damage had actually occurred and the repair work was actually scheduled, they would send the homeowner a check for ONE THIRD of the claim. At the 50% completion point, the homeowner was required to contact the Mortgage Company to send out the inspector again, and within 3-5 business days, the inspector would inspect, take a couple of days to file a report, and after the Mortgage Company received the inspector s report, they would send the second ONE THIRD of the claim money. At the 95-100% point, the above procedure was to be repeated so the homeowner could receive the final ONE THIRD of HIS OWN INSURANCE CLAIM MONEY (not including any interest the Mortgage Company might have earned while holding it in THEIR bank account).

…It Gets Worse…

In the fine print of one of the forms was a notice that the Mortgage Company reserved the right to REDIRECT the claim proceeds toward the mortgage balance instead or returning the money to the homeowner to pay the contractor if “certain conditions” existed, one of which was whether the “repairs” would restore the property to its “original condition” or “substantially improve its value” — and the MORTGAGE COMPANY gets to make that decision. Another “condition” was if the balance on the mortgage was LESS than the amount of the damage claim, again the Mortgage Company reserved the right to REDIRECT the claim proceeds toward the mortgage balance.

One of the forms REQUIRED by the Mortgage Company was a “Hold Harmless” agreement that said if the homeowner failed to pay the contractor, the Mortgage Company would be held harmless from any Mechanic s Lien filed by the contractor.

Let s Recap:

Don t let it happen to you. If you haven t checked the fine print in your mortgage contract, check it NOW! If YOUR mortgage company has a similar provision in your mortgage contract, CHANGE MORTGAGE COMPANIES! Let a reputable lender get you out of that outrageous, unethical, perhaps illegal arrangement and into a mortgage contract that could even save you money with a lower interest rate. Don t wait until the nightmare described above hits YOU!

Bruce Obermeyer
TR Associates

The author holds an undergraduate degree in physics, a Masters in Business Administration, an Airline Transport Pilot License, and has worked in the field of aerospace safety for nearly forty years. He operates an online business focusing on marketing and promotion, revenue generating businesses, retail sales, consulting, and training.

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Are Second Mortgages Considered Bad
By Scott Jangro

When debating the concept of second mortgages, you really need to look at several factors. There are few things in life that are always a good idea and always a bad idea. Second mortgages are no different. One of the things about second mortgages that are both good and bad is the ease it seems in getting them and the range of options available. This can be both shocking and exciting.

Having recently become a homeowner myself, hardly a day goes by where I don’t receive some kind of offer for a loan based on the value of my home. Suddenly people are dying to give me money. The reason being is that my home is a huge asset that they can seize should I default on the loan. Now, not every second mortgage is an invitation for the bank to seize your home. They are likely to make more money from the interest you pay while you clear the loan out. However, you need to use caution and consider and consider the purpose for your second mortgage carefully.
They can be very helpful in debt consolidation. By tying these debts to your home your interest rate dramatically drops. Your payments are spread out over a longer period of time as well. This makes monthly payments more bearable for many.

You need to consider this option carefully because the second mortgage could go horribly wrong. First of all you are risking your home should you default. Second, you may end up paying more money over the long term. Third, extra money in your pocket each month could make for extra spending and more debt. This could make matters worse and eventually lead to bankruptcy.

You should really only consider a second mortgage for debt consolidation if there is no other feasible option. Second mortgages are better used for home improvements or second homes. With home improvements you’re raising the value of your home and with a second home you’re gaining another valuable asset. The risk still applies if you default.

A second mortgage is neither a good idea nor bad idea 100% of the time. Your own personal financial needs to be considered against the possible risks involved. Read more about second mortgages such home equity loans at AskMrMortgages.com

AskMrMortgages.com is a free online information marketplace for home mortgage loans, refinancing, home equity loans, HELOCs and debt management. Read stories from mortgage consultants for news, updates and tips regarding the mortgage industry via the AskMrMortgages.com blog.

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Home Mortgage Insurance - Piggyback Loans Putting Mortgage Insurers in the Trough
By G. Mundy

Because home prices have made twenty percent down payments impossible for legions of first time home buyers, a dual-loan concept has evolved for home financing that has made home mortgage insurance companies very unhappy. Also known as ‘private mortgage insurance (PMI), this policy is required of every home buyer who is taking out a mortgage of more than eighty percent of the home purchase price. The policy protects the lender against default, while the borrower pays the mortgage insurance premium. The policy is required until the mortgage is paid down to seventy eight percent of the home’s appraised value.

Home mortgage insurance can be expensive: as high as $1,500 per year on a $200,000 home. Divide that by twelve and you have the addition to your monthly mortgage insurance premium. In order to get around PMI, lenders have been offering dual loan packages with a mortgage of eighty percent of the purchase price and a second loan, called a piggyback loan that covers whatever portion of the 20% down payment that the borrower cannot meet. Thus an 80-15-5 loan package is an eighty percent mortgage, a fifteen percent piggyback loan and a five percent down payment.

While the additional loan will be at a higher rate than the mortgage, the interest on that loan is deductible whereas the premium on mortgage insurance is not. As a result, it is often cheaper to opt for the piggyback loan than mortgage insurance. According to one estimate, forty percent of all home purchases with down payments of less than twenty percent now opt to avoid home mortgage insurance.

Even though the borrower is paying closing costs on two loans, avoiding home mortgage insurance is still a better deal in the short run. Whether or not it’s a better deal in the long run depends on several variables. If the buyer is going to be in the home for a long period of time, he may be better off with the larger mortgage at a fixed rate and paying the mortgage insurance premium until he has sufficient equity. Eventually, the cost of the insurance premium will cancel out.

That process could take several years however, and if a buyer is not going to be in the house for an extended period the choice of dual loans and dual interest deductions may be a better bet - particularly if the principal mortgage is an ARM. Home mortgage insurance companies have responded by hurling insults at all things “piggyback” and by introducing products such as mortgage insurance premiums that are folded into the loan interest rate by raising it a quarter point or some similar amount.

With this design the lender pays the mortgage insurance premium. Because it’s folded into the mortgage premium, the policy premium may be deductible as interest. The policy can’t be cancelled in this model, however in order to remove it from the mortgage you have to refinance. Home mortgage insurance companies have been lobbying Congress aggressively to provide deductible status for their product.

G. Mundy is a freelance writer specializing in mortgages and finance. For more information, please visit Mortgage Lenders Plus.com

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Home Equity Loans to 125%: How Fixed Rate Second Mortgages Can Save You Money
By Lynda Nelms

As I stated in an article I wrote a few months back, property values continue to be reduced in almost every region in the nation. Sure some areas show flat home values and even a few areas signal minor home appreciation, but home sales are much slower than last year. I do believe that home values will rebound in the next few years, but 2007 and 2008 could be difficult for many homeowners seeking cash out through traditional home financing.

What is the best solution for borrowers to consolidate debt with a home equity loan?

If you are a person that would like to take out a loan and make your credit card debt disappear, but may have lost your home equity recently with the home depreciation than the 125% home equity loan will never look better. Do not expect “1st mortgage” type interest rates with 125% loans. The lenders have no security in your home because you are exceeding the value of your property so the interest rates are usually 3-6 percent higher than a traditional conforming interest rate paid on a 1st mortgage. If you have adjustable rate bills piling higher each month it may be time to consider the 125% no equity loan.

* Consolidate Credit Cards with 125% Home Equity Loans

* Debt Consolidation Financing with No Equity

* Cash Out Allowed for 1st Time Homebuyers

* Fixed Rate Loans without Refinancing 1st Mortgage

125% second mortgage loan remains a great way for homeowners that have no earned equity, to pay off their revolving credit cards and roll their high rate debts into one low monthly payment for notable savings that can turn into thousands of dollars a year. Recently I was working with one of my favorite borrowers who was paying out over a $1,000 a month for $50,000 in credit cards alone. Fortunately, I was able to help them get approved for a 125% home equity loan that eliminated the compounding interest and rolled their seven credit cards debts into one payment that was reduced to $576 a month. ($50,000 2nd loan at 11.25% fixed rate with a 15 year amortization schedule)

Again, many 125% opponents will continue speaking negatively about the 125% home loans. Most likely they will tell you that you are paying ridiculous rates, and risking the security of your home. What they will not offer you is a better solution for paying off credit card debt. The 125 critics will not offer you a loan at a better interest rate that is large enough to pay off all of your credit card debt. You may also want to inform your “know it all” friend that already lost your home equity through the recent real estate depreciation and with no equity your security has already been eroded. Bankruptcy is one option, but that ruins your credit for many years. You end up paying more with higher interest rates for the year to come. If you have the means to pay off your debt, the 125% home equity loan is a viable cost-effective solution for homeowners.

Lynda Nelms is a well known financing writer who publishes a popular column called, “Ask Lynda.” In addition, she is an experienced loan officer for BD Nationwide Mortgage who specializes in Home Equity Loans and 125 Second Mortgages. The second mortgage broker also offers jumbo home purchase, refinance and fixed rate home equity loans and variable rate equity lines of credit for homeowners online.

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Adjustable Rate Mortgage and Home Equity Credit Lines Have a Niche in the Home Loan Industry
By Art Nourian

Anyone who thinks that adjustable rate mortgage loans don t have a niche in the mortgage market, better think again. Adjustable rate mortgages are also called ARM s by loan officers, underwriters and savvy consumers. ARM s have significantly increased in popularity over the last few years, with the advent of loans like the payment option ARM, and the interest only loan that offers a fixed interest rate for a period of 3, 5,7, or 10 years before converting to adjustable rate loans. Clearly ARMs have a place in the mortgage industry, but they should not be abused, and borrowers should know exactly what they are getting themselves into.

Good loan officers will discuss and consider factors such as how long you plan on dwelling in this home, and how much of a payment you can afford each month for a mortgage payment. Be careful getting yourself into an adjustable rate mortgage just to qualify for a home loan. You should be able to afford the fully-indexed payment so that when the intro fixed rate converts to a variable rate you will be able to afford the new mortgage payment. So you may want to consider purchasing a house that cost less if that is the case with you.

How stable is your job? Taking on an adjustable rate mortgage or variable rate home equity credit line always has its risk, so you want to make sure that your income, and employment are stable. If your pay is erratic, then an ARM may not be for you.

Find a mortgage broker or home equity lender to work with that you can trust. It is imperative to partner with a loan officer who understands your needs, and is smart enough to help you get approved for the best possible loan.

It is crucial that you know the specifics of your loan before you sign loan documents. Review the good faith estimate with your loan officer and your accountant. Find out what the pre-payment penalty terms as well. You need to know what it will cost you if you refinance in the next few years. You also need to know what it will cost you if you decide to sell your home in the next 2 years. Get these terms in the beginning of the loan process, so that you can make a sound decision when shopping loans online.

Art is one of the most respected mortgage writers for home loan related topics. To learn more about interest rates, purchase mortgages, and home equity loan products and current interest rates, please visit, Home Equity Loan Rates Online. Art suggests visiting the mortgage loan resource center at the QuickRateFinder.com and learn more about the current Home Mortgage Rates for Purchase & Refinance. If you need additional help or advice from some top notch loan professionals, visit the good people at Bridge Mortgages and ask then about their “No Money Down” home loan specials for 100% Home Mortgage Loans.

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Homeowners Consider Second Mortgage Loan to Consolidate Credit Card Debt Prior to Filing BK or CCC
By Lynda Nelms

It is not uncommon these days to for a person or family to let credit card debt get out of control. We live in a credit driven society, and to survive the pitfalls of revolving credit and economic cycles you need to create an attainable budget and follow through with your fiscal plans. Don t let the bills and debt begin to mount. Bankruptcy and consumer credit counseling are good solutions for certain situations, but you should take certain precautions to prevent being put in that predicament. Homeowners have more viable options than consumers who don t own property, so if you are fortunate enough to own a home, take advantage of the financing available that can help you lower interest rates, and convert compounding interest into a simple interest home equity loan that can save you hundreds of dollars every month.

Many second mortgage companies have has partnered with a home equity lenders to create loan programs specifically designed for consolidating debt that lower your monthly payments, and help you refinance revolving credit cards. Sure talking with creditors can reduce or your interest rates and help you reduce your lower your credit card expenses, but you should never take it upon yourself to pay less than the minimum for monthly payments.

Paying creditors less than agreed will significantly harm your credit score, as creditors will report payments late if they do not cover the minimum payments. This is where consumer credit counseling can hurt you. In addition to causing late payments to be reported, entering a consumer credit counseling service cam permanently scare your credit, because the credit bureaus report that you are in consumer credit counseling programs. Many home equity lenders will consider Consumer Credit Counseling or CCC as a Bankruptcy. CCC may help people in many different situations, but you need to know ahead of time, of the repercussions that come with consumer credit counseling. CCC is not bankruptcy, but if you are given interest rates like you a bankruptcy, and it results in lower credit scores, you have to wonder if it is worth the efforts.

All we are saying is that you should consider all perspectives before you enter into consumer credit counseling. Under the Fair Credit Reporting Act, 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. Quite often, credit companies will report that an account is in financial counseling, that payments may have been late or disregarded. Some creditors will grow impatient and simply charge-offs your account, and report it negatively to the credit bureaus.

For homeowners who have accumulated too much revolving debt, we suggest a debt consolidation loan that is secured to your home so you can deduct the interest for tax purposes, and save money with fixed rate simple interest loans. There is a commitment with these consolidation loans, because the must be paid back or you could loose your home. These debt consolidation loans are considered second mortgages, so if you don t believe you can make the payments on time, then this option is not for you.

A successful debt consolidation loan requires you to make the monthly payments on time with consistency. Soon you will be in a position where your credit score have increased to the level that merits refinancing for a prime rate home equity loan that will lower your monthly payment even more.

Lynda Nelms is a free-lance author who writes a popular column, called “Ask Lynda” where she offers helpful home financing tips to consumers from an experienced loan officer s perspective. She enjoys passing her advice to her clients coast to coast, from Florida to Hawaii. Presently, Lynda originates loans for BD Nationwide Mortgage, who is located in San Diego, California. You can read more of her “Ask Lynda?” articles at the BD Nationwide Mortgage & Home Equity Loans and get more information about debt consolidation loans and refinancing. For a complete look at subordinate financing and current home equity rates please visit Second Mortgage Rates or go to 125 Second Mortgage Loans online.

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You haw never be as favourite as today’s ordinal mortgage, but it could be your prizewinning friend. In today’s finance-friendly world, it seems same everyone is effort a ordinal mortgage or bag justness distinction of assign — and as welfare rates climb, their popularity grows. Even so, you ease requirement to communicate yourself: what are the advantages and disadvantages? Time to do whatever schoolwork - the category of schoolwork that could pay you thousands of dollars.

“It’s not most loans; it’s most dynamical people’s lives for the better,” says Rory Cambra, chair of the North San Diego County Chapter of the Calif. Association of Mortgage Bankers and a mortgage banker with Pacific Capital Mortgage.
What is a ordinal mortgage? Quite simply, it’s added mortgage on your home, and same the first, it’s secured against your concept or the justness you’ve shapely up over the years. They crapper be fixed-rate or adjustable-rate.

So, what’s the disagreement between a ordinal mortgage and a bag justness distinction of credit?

“A ordinal mortgage is a amass sum. A bag justness distinction of assign is essentially an unstoppered checkbook,” Cambra says. Lump assets loans are prizewinning when you requirement every the money at once.. A distinction of assign is prizewinning when your change needs are extended discover over time, same a program of bag improvements or college teaching payments.
Equity is the disagreement between your home’s continuance and the equilibrise on your mortgage loan. If your bag is worth $500,000 and you owe $400,000 on the mortgage, then you hit $100,000 of equity.

“Americans hit hundreds of zillions of dollars in equity, but most don’t see that the justness in their bag is not safe, liquefied or growing,” Cambra says. “Everything from mart conditions to disasters crapper significantly change your bag equity. It could literally meet go away.” Before you modify to move in to the ordinal mortgage waters, set your family’s business needs and goals; explore the difference of ordinal mortgage products, and see how apiece identify prizewinning serves your business picture. Then study the following:

Second Mortgage Advantages (They process the more schoolwork you do)

Make your justness impact for you. It’s a beatific abstract to removed your justness from your mortgage and place it in a safe, liquefied and ontogeny environment. “You’re not doing it to confiture your equity; you’re doing it to create wealth. It crapper modify be utilised to create your withdrawal nest egg,” Cambra says.
A change cushion. Cambra tells his customers that the prizewinning prototypal ingest for your ordinal mortgage is creating a change cushion, suggesting a peak of $5,000 be place absent for emergencies. Why? So you won’t invoke to assign game the incoming instance an sudden business requirement pops up.

Pay soured debt.

A non-brainer: clear soured every your high-interest debts, including assign cards.
Serious liquidity. You crapper create earnest liquidity, same socking absent digit year’s salary in the bank. (We crapper dream, can’t we?) Pay for your child’s education. That respire of comfort you meet verbalised is think enough.

Create wealth.

Consider this: If you ingest the proceeds from your ordinal mortgage properly, you crapper - on essay — clear soured your concern in full. The key text being, “on paper.” Obviously, you don’t poverty to woman every the business and set benefits that go with your mortgage, but according to Cambra, creating riches on a equilibrise artefact that is coequal to the turn you owe is an accountant’s dream.

2nd Mortgage Disadvantages (They modification as you do more homework)

Dealing with emotion and stress. Everyone has trepidations when it comes to concept finances. Fear causes whatever homeowners backwards absent from a ordinal mortgage. But if you civilize yourself, and are discreet with the proceeds, you rattling haven’t accumulated your risk.

Not protecting your home.

Be graphic most estimating your forthcoming income. If for whatever think you cannot clear backwards the ordinal loan, it could be disastrous. Consuming the proceeds of a ordinal mortgage unwisely. Some homeowners ingest a ordinal mortgage to verify a prodigal trip, acquire that strange newborn automobile they’ve ever desired or pay it on frivolities. Then they modify up feat correct backwards to their assign cards. “It’s a fact: we are human, and we are unvoluntary by the pleasures of the concern - and those are commonly decreasing assets,” Cambra says.

Second Mortgage Costs, Fees & Charges.

2nd mortgages hit more defaults, so it’s ordinary for lenders to calculate more fees up front. Prepare for and budget the costs. You strength also hit categorization fees, points, applications costs and another approaching costs. Ask your pledgee - early - for a printed itemize of fees.

David is a free-lance illustrator and media consultant supported in Southern California. He also serves as representative for high-profile businesses, semipolitical campaigns and accord issues.

Please meet these adjuvant inventiveness websites: To intend a no outlay evaluate excerpt for a 2nd mortgage gratify analyse discover Second Mortgage Quotes. If you requirement more give advice most refinancing with Bad Credit, verify a countenance at Equity Loan Refinancing. For the stylish debt compounding solutions, gratify meet the Debt Consolidation Loan Center.

[tags]second mortgages,home equity loans,2nd mortgage,equity line of credit,debt consolidation loans,rates[/tags]

Home justness loans verify nonnegative of the justness in the borrower’s home; justness is the disagreement between the clean mart continuance of the bag harmful the underway mortgages on the property. The loans haw verify assorted forms, a bag justness distinction of assign in which housing the money is acquirable but no welfare is live until the money is used. Another pick is a bag justness give where every the assets are free up face at the instance of closing. The loans haw be for a immobile punctuation of instance at a immobile evaluate or an adjustable evaluate (ARM). With a immobile evaluate mortgage, the welfare is the aforementioned evaluate for the punctuation of the loan. Adjustable evaluate loans commonly hit a modify initial evaluate but are equal into an finger (prime welfare rate) nonnegative a saucer or digit after the initial hair in evaluate period.

1- They crapper be utilised to consolidate broad welfare assign bill debt. The peak evaluate on adjustable bag justness loans are commonly beneath the assign bill rates. Credit game crapper hit welfare rates as broad as 21%. The peak on ARM bag justness loans is between 11% and 12%.

2- The assets crapper be utilised to turn or pay-off the balances of perverse diminution welfare exclusive ordinal mortgages. In a perverse diminution the peak commercialism of welfare is inferior than that attained by the pledgee and the complimentary welfare is additional to the mortgage.

3- The bag justness loan, if utilised to consolidate bills, module wage modify monthly payments.

4- The welfare evaluate on a bag justness loans is commonly inferior then the evaluate on an unsafe justness loan. In an unsafe bag justness loan, the turn give exceeds the clean mart continuance of the property. The pledgee module order a higher assign reason and welfare rate.

5- Home justness loans crapper be utilised to clear soured revolving assign debt.

6- The borrower crapper admittance change which haw be utilised for some purpose, bag improvements, education, vacations, etc.

7- The welfare on bag justness loans is nearly ever set deductible. The turn of the set reduction depends on the borrower’s set bracket. A set professed should be consulted to watch whether or not the give is deductible.

When you study bag justness loans attain trusty you are scrutiny immobile evaluate loans with immobile evaluate terms. And if you are scrutiny bag justness assign lines, then advert to study the maturity evaluate edge after the preceding period. Keeping your give shopping on clean activity deposit for the brokers and lenders module support you intend a enthusiastic give within a commonsensible time-frame.

Mary is publicised scheme communicator for some mortgage and actual realty articles. She writes articles for grouping every crossways the land in an try to impact their cognisance for bag finances. You crapper feature more of her bag justness disposition articles online at BD Second Mortgage & Home Equity Loans. To intend more justness give advice & direction tips, gratify occurrence the give aggroup to see more most information updates and the support impact for bag justness lines of assign and 125% bag justness loans.

[tags]Home Equity Loans,home equity loan,home equity line of credit,second mortgage,fixed rate,refinance[/tags]

How Does Mortgage Debt Consolidation Work?
By Gibran Selman

When individuals and families have credit problems, it often turns out to be complicated and tricky to carry on, leave alone obtain a loan to take care of your house. Credit problems can generate a chaotic future and at times this can make people give up optimism. These days, lenders concentrate on assisting individuals and families look for resources to consolidate the debts and take care of their home.

The lenders might estimate the 3 credit reports, and in case the reports demonstrate failure to pay, then they might be unwilling to give a loan. On the other hand, if the reports demonstrate an effort to sort out the debts, then the lender might keep in mind that you encompassed an uphill test nevertheless you are even now making an effort to pay attention to the debts. The drawback of debt consolidation lending is that a lot of lenders might often offer loans with a high rate of interest and mortgage reimbursements.

If you are on the lookout for consolidating your bills by making use of a mortgage loan, then bear in mind that the lenders might need proof of earnings. This might consist of up to date payment counterfoil. The counterfoils might assist the lender in determining the loan that best suits your requirements. Most of the lenders demand up to 3 yrs of stable earnings to make a decision if you meet the criteria for a debt consolidation mortgage loan.

On top of that, if there are poor points regarding your credit record, however if you have shown an effort to sort out the debts, then the lender would reflect on the good actions, in addition to taking into consideration the balance made use of to sort out the debts.

These days, lenders are taking into consideration that 1 out of 4 person in the EU and US has problems related to debts. Hence, debt consolidation mortgages are not something that is unheard of instead they are turning out to be a part of the biggest markets of the world. However in spite of the increased use, there are even now numerous downsides.

They can not just add to your on the whole debt burden, but they furthermore provide the debt consolidation organization with a huge quantity of control, permitting it to add to your rate of interest and mortgage reimbursements.

Gibran Selman works for CuraDebt, a company providing financial and creditor negotiations, settlement, and arbitration services on behalf of individuals and small businesses.

To get a FREE Debt Analysis Online in Only 30 Seconds, simply go to our website at http://CuraDebtConsolidation.com and fill out our simple application to see if you qualify and to receive a FREE, confidential consultation from an understanding counselor.

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How to Improve Your Credit Score - Mortgage Loan Tips
By Maria Ny

Your credit report is the information provided to the credit scoring system lenders use to determine their financial risk in granting you a home loan or home equity line of credit (HELOC). Credit bureaus, or consumer reporting agencies (CRAs), collect, package, and sell what is commonly known as your “credit report” or “credit profile” to companies seeking information about your financial matters. However, these reports can contain inaccurate, incomplete, outdated and sometimes even misleading information that can lower your credit score, also known as your FICO score, and can cause you to be denied a line of credit or debt consolidation loan, or to settle for a “bad credit” loan with high interest and poor terms.

There are hundreds of credit bureaus across the nation, but they are generally are affiliates of, or subscribers to, these three bureaus: Trans Union, Experian, and Equifax

What is a FICO score?

FICO is a credit scoring system developed by Fair Isaac &amp Co. According to myFICO.com, a division of Fair Isaac, you have three credit scores that range from 300 to 850, one for each of the three credit bureaus - Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you (credit reports). As this information changes, your FICO credit scores tend to change, as well.

How Can I Increase My FICO Score?

Increasing your credit score takes time. The following are ways you can work towards increasing your FICO credit score.

Pay your bills on time to raise your score. Late payments and collections lower it.

Do not apply for credit frequently. Having too many inquiries worsens your score.

Reduce your credit card balances. Being “maxed” out affects your FICO score negatively.

If you have limited credit, obtain additional credit. Not enough credit can negatively impact your score.

Get a copy of your credit reports from each of the above-listed CRAs and check them for accuracy. If any information is incorrect, dispute it, so it can be corrected. This is known as “repairing your credit.”

Isn’t Credit Repair Illegal?

Credit repair is only a concern when anyone tries to have accurately reported derogatory information illegally deleted from their credit reports. The Federal Trade Commission (FTC) states that both the consumer reporting agency and the information provider (company or organization that provides information about you to a CRA) are responsible for correcting inaccurate, incomplete or outdated information in your report under the Fair Credit Reporting Act (FCRA).

Disputing Items on Your Report

You can dispute inaccurate, incomplete or outdated items online, but the FTC suggests that you dispute them by mail. Include copies (NOT originals) of documents that support your position. Clearly identify each item you dispute, explain why you dispute it, and request that it be removed or corrected. You may want to enclose a copy of your report with the items circled. Send your letter by certified mail, “return receipt requested,” so you can document what the CRA receives. Keep copies of your dispute letter and enclosures.

You could also contact the information provider directly (in writing) to dispute the items. Be sure to include copies (NOT originals) of documents that support your position. If the information is found to be inaccurate, the information provider must update the item with the CRA or have it deleted.

Maria Ny is an experienced free-lance writer from San Diego, California. She writes articles covering a broad range of subjects ranging from Bankruptcy Reform, Credit Repair to mortgage refinancing. Check out her featured articles at http://www.bdnationwidemortgage.com/

Equifax- P.O. Box 740256, Atlanta, Georgia 30374 (800) 685-1111 http://www.equifax.com

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