Happy 4th of July!

As we (here in the USA) approach the Independence Day holiday, we'd like to wish you and your friends and family a safe 4th of July holiday weekend.  We're taking a break from our traditional posting here for the holiday, and will resume our posts on Monday. 

As we all remember why we celebrate this holiday, don't get so caught up in cookouts and fireworks that you forget what our Independence really means, and all the men and women who are out there fighting for us so we can celebrate our freedom with our families. Our prayers are with the men and women in our Armed Forces as we celebrate this Independence Day holiday.

Be safe if you're traveling, and we will return with our regular posts on Monday.

FICO Scores: Who Have The Best Overall?

Who have better credit scores on average - home buyers with higher or lower incomes?

Many might guess home buyers with higher incomes. The surprising answer is: People with lower incomes have slightly higher FICO scores. That finding, which emerged from a statistical analysis of all approved mortgages insured by the Federal Housing Administration (FHA) during fiscal 2007, is now supporting a forthcoming major policy switch that could affect thousands of buyers and refinancers.

FHA, which for decades has used a one-size-fits-all approach to pricing its insurance on home loans, plans to shift to a "risk-based" system keyed to FICO scores and down payments, beginning as early as mid-July. Private sector lenders and insurers have priced interest rates and premiums using sliding scales of FICO scores and down-payment amounts since the mid-1990s.

Under the new system, according to FHA's outline of its plan, "a larger number of low-income borrowers (will) benefit from premium reductions than . . . moderate-, middle- and upper-income borrowers combined."

To set premium rates by credit standing, FHA plans to use the middle score of an applicant's three FICOs generated by the national credit bureaus - Equifax, Experian and TransUnion. If only two scores are available, it will use the lower. For applicants with thin or "non-traditional" credit histories on file at the bureaus, FHA will underwrite and price the loans without reference to FICOs, with heavier emphasis on rent and utility payments among other measures of creditworthiness.

Comments about this move on the part of FHA? Sound off by using the "comment" link below.

Real Estate News - July 2008

Our July 2008  Newsletter is now up…

From the right Nav Menu, Find "PAGES AND NEWSLETTERS" and Select "July 2008 below "Our Monthly Newsletters".  

Reverse Mortgages: How Do They Work?

Reverse Mortgages are exploding in popularity and as more and more baby boomers reach age 62 and beyond they will become eligible to cash in on their home equity with a reverse mortgage.

A reverse mortgage is a home loan you don't have to pay back for as long as you live in your home. It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you prefer. The loan and interest are repaid only when you sell your home, permanently move away, or die.

Because you make no monthly payments, the amount you owe grows larger over time. By law, you can never owe more than your home's value at the time the loan is repaid. You continue to own the home, so you must pay the property taxes, insurance, and repairs. If you fail to pay these, the lender can use the loan to make payments or require you to pay the loan in full.

The amount of funding you get from a reverse mortgage usually depends on your age, your home's value and location, and the cost of the loan. The greatest amounts typically go to the oldest owners living in the most expensive homes getting loans with the lowest costs. Most people get the most money from the Home Equity Conversion Mortgage (HELM), a federally insured program.

Loans offered by some state and local governments are generally for specific purposes, such as paying for home repairs or property taxes. These are the lowest cost reverse mortgages. Loans offered by some banks and mortgage companies can be used for any purpose.

If you have questions about Reverse Mortgages, and whether they might be right for you, post your question or comment using the "comment" link below and we'll get back to you with answers to your questions, or find a loan professional who can answer your questions for you.

Pre-Cooking on Amateur Budgets

As Americans, we typically only spend more on housing and cars than we do on the food we eat. Normally when you pay less, you get less, but that's not necessarily true when it comes to the food you buy. Money editor Stacy Johnson explains… (video runs 1:39)

If you have any other money saving tips you'd like to share, please chime in by using the "comment" link below. We welcome your input, and remember, your email address will never be published here (for your privacy and protection.)