My New Blog

You may have had your home for awhile. You may have thought about putting it on the market, or turning it into a rental house as you look to buy a new home. You may have been like me and others who have taken advantage of being able to buy a foreclosed home at a reduced price from market price.

If you are one of these homeowners, you may have a consistent need or desire. You may have wanted to remodel or update your home and aren't sure to go about it in these days of tighter credit standards. You know..... Update the countertops, add tile, refinish the hardwoods, new windows, repair the garage door, more energy efficiency.....

Unless you have $10-$30K laying around that you want to drop into your home and spend out of your hard earned savings. Even a 0% card offer from Home Depot offers drawbacks, if you can't pay it off in 12 months ($12k / 12 months = $1000 per month). You have to watch and be careful of the terms of an offer like one from the likes of the Home Depot.

So, the big question is of course, how can you do it today?

Now follow me here! We are going to go off the example of buying your home last spring. Here is my example:

Purchase Price:

$200,000

5% down payment

Loan: $190,000

Rate: 6.75%

Principal & interest: $1,232 / month

Mortgage insurance: $145 / month

Total (before taxes / insurance) = $1,377 / month

Now let’s say you would love to update the kitchen, bath, and hardwoods but would cost you $30,000, you don’t have in equity or savings.

What if you could redo your loan, based off what your home would appraise for after the remodel? This means you could add the $30,000 to your loan (and undoubtedly your home would reappraise for higher then $230,000). How would that look on paper for the new mortgage? (Now remember to compare $30,000 over 12 months on no interest at $2,500 a month to pay it off, and there is no tax benefit in doing this either.)

Your new loan would look like this:

Loan Amount: $235,000

Rate: 6.75%

Principal & Interest: $1,524 / month

Mortgage Insurance: $108 / month

Total (before taxes / insurance) $1,632 / month

Mind you , you also have to look deeper into this. Your home would be remodeled and you would have built in equity into it as well. We all know the feeling of walking into a home that is so put together that it is the envy of all friends. That is a great feeling of comfort for as hard as we work. It offers a great sense of comfort as well once you know you now have equity in your home as well.

One example I like to use is that of a young client who bought a home using this very philosophy. YES, you can buy a house and do this all at once. He was buying at $112,000 and financing in $27,000 in repairs. His loan was going to be around $140,000, however, his home was going to reappraise at $155,000 within one month of owning it. That would equate to 10% equity on a house he just bought! Not too mention his new home was updated within 60 days of moving in. What a great feeling.

If you would like to know more about this on a home you already own and want to refinance, or are thinking of buying and would love to do it when you move in, let me know~Ray~ rwilliams@summit-mortgage.com or 303-779-0591 ext 101

As a result of national declines in average home prices over the previous year, conforming loan limits will remain at $417,000 for FNMA and Freddie Mac loan purchases next year.

2 units will be at $533,850

3 units at $645,300

and 4 units at $801,950

FICO^{® 08 Score® 08 Score: More Power, Less Pain}

As with previous versions of the FICO® score, FICO® 08 will include authorized user credit accounts in the calculation of the score. In this way FICO® 08 continues to support lenders’ efforts to comply with Federal regulations. Significantly, FICO® 08 also incorporates new technology that materially reduces the potential impact to the score from tampering through the abuse of authorized user accounts.

Protection from Authorized User Abuse — The industry seeks protection for lenders’ ability to properly assess repayment risk, by mitigating the abusive practice of authorized user account "piggybacking." This illicit credit repair practice attempts to artificially inflate consumers’ credit scores and deliberately misrepresent consumers’ credit history to potential lenders.

Regulatory Compliance Support — Many lenders require their credit risk scores to consider authorized user accounts in the score calculation in order to comply with federal regulations, specifically Regulation B 202.6(b)(6) of the Equal Credit Opportunity Act. That regulation requires lenders to consider "accounts that the applicant and the applicant’s spouse are permitted to use or for which both are contractually liable" when evaluating an applicant’s creditworthiness.

In response to these market needs, Fair Isaac is modifying the design of FICO® 08 to include authorized user information in the calculation of the score in a way that helps protects lenders from potential abuse of authorized user accounts. It’s important to note that all previous versions of the FICO® scoring formula have included authorized user information in score calculations. FICO® 08 Score Fair Isaac Corporation (NYSE:FIC) is the preeminent provider of creative analytics that unlock value for people, businesses and industries. Corporate Headquarters: Offices Worldwide: 901 Marquette Avenue, Suite 3200 Brazil, Canada, India, Japan, Minneapolis, MN 55402 Malaysia, Singapore, Spain, 1 800 999 2955 from the US United Kingdom, United States 1 612 758 5200 from anywhere info@fairisaac.com email www.fairisaac.com Fair Isaac and "It’s just a smarter way to do business" are registered trademarks of Fair Isaac Corporation. Falcon is a trademark of Fair Isaac Corporation. Other product and company names herein may be trademarks or registered trademarks of their respective owners. © 2005 Fair Isaac Corporation. All rights reserved. July 2008

Overall FICO® 08 scoring stays the same for consumers.

Score Shifts — Improving a score’s predictiveness means that some consumers’ scores will change. However most people’s FICO® 08 scores will change little compared with their current FICO® scores. For people whose scores do change, roughly half will see their scores either stay the same or go up at least slightly.

Missed Payments — FICO® 08 scores also provide greater flexibility regarding the negative effect of missed payments on a credit report. For borrowers who are in arrears on an account, their FICO® 08 scores may drop less if the borrower also has a number of other credit accounts in good standing. However, FICO® 08 scores could drop farther if the consumers’ credit reports show multiple delinquent accounts.

Number of Delinquencies — FICO® 08 scores may penalize less a single serious delinquency that occurred recently on an otherwise unblemished credit history. On the other hand, the FICO® 08 score will likely drop farther if the credit report shows a pattern of multiple prior delinquencies.

High Credit Usage — FICO® 08 will be more sensitivity regarding high credit card usage on the credit report.