Data Facts Blog


Finding the RIGHT Credit Card for YOU!

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Looking for a credit card? If so, you’ll need to shop around. Do some research to compare costs, features and drawbacks before settling on a single card.

 

Annual fee: Some cards charge an annual fee – anywhere between $15 and $50 – while others may not. Check to see which ones do and if their annual fee still makes smart financial sense to you.

Grace period: Most credit cards offer a 25-day time period for you to pay off your total balance without paying a finance charge. The grace period runs from the date printed on the bill, not the date you receive it or the date you make a purchase.

APR/interest rate: The APR or interest rate is the percentage of interest you’re charged on the balance you carry on the card and cash advances. It can either be fixed or variable.   A fixed rate APR is usually higher, but you’ll know what to expect for the year. A variable rate is typically lower, based on an interest rate that swings up and down.

Introductory rate: Some cards offer a super-low introductory rate that will later switch to a higher fixed or variable rate. Make sure you know how long the introductory rate lasts and what the new rate will be. The introductory rate is often terminated if you send a late payment.

Finance charge: This is the actual dollar amount you’ll pay when you carry a balance. It includes interest costs and any other transaction fees. It’s helpful to know how this number is calculated. The average daily balance method is the most common. It adds the amount of debt on your account for each day during the billing period and averages it

Other fees: These include fees for paying late, charging over your limit, and getting a cash advance. Make sure you read the cardholder agreement, which discloses these charges.

Other Rewards and Benefits:  Many cards now offer added benefits, like rebates, discounts and/or frequent flyer miles. With these cards, find out how many dollars equal a free ticket, etc and if you will actually use these types of rebates.

Payback Time:  If you plan to pay your credit card bill in full each month, look for a card with no annual fee & a generous grace period. If you think you’ll carry a balance, then the important thing is a card with a low interest rate.

Be a smart consumer and shop before you buy.

 

STOP! Don’t Mess Up Your Home Mortgage!

approved mortgageYou’ve gone to your lender and been approved for a home mortgage.  You’ve found the home of your dreams.  But just when you are about to close, the lender says you are no longer approved.  What happened?

Since the infamous “mortgage meltdown” a few years back, lenders as well as industry regulations have gotten much stricter.  The latest tightening of the screws comes from Fannie Mae. The mortgage titan’s Loan Quality Initiative, which went into effect June 1, requires lenders to track “changes in borrower circumstances” between application and closing.  While these rules aren’t new, Fannie is enforcing them more vigorously.

The new rules simply want to ensure the new home loans are deemed “low risk” for default or buyback.  Basically, lenders want to be assured that this is the type of borrower that has the ability to repay this loan in full.  With the increase in regulation and scrutiny over any changes, even seemingly small changes can implode your pending mortgage.

Following are three things borrowers can do to mess up their next mortgage closing.

Get a new credit card or auto loan

Get a new credit card or auto loan, and you could find yourself no longer approved for that mortgage loan.

Lenders have long admonished mortgage applicants to avoid getting new credit cards and auto loans while home loans are in underwriting. Fannie’s Loan Quality Initiative adds urgency to this request.

For example, picture a borrower who gets a car loan a week before closing on the mortgage. The mortgage lender doesn’t know about it. Later, the borrower misses a couple of mortgage payments.

Fannie Mae can look back, discover the undisclosed auto loan and make the lender buy back the bad mortgage. That’s a money loser for the lender.

So at the eleventh hour, most lenders check credit for new accounts.

Even merely opening an account — without charging anything to it — can be a mistake.

Charge up credit cards

Charging up credit cards with thousands of dollars’ worth of appliances, tools and yard equipment is another surefire way to muck up a closing. It’s best to leave those cards alone.

Don’t increase your credit card balances at all. Mortgage approval is based partly on debt-to-income ratio.  The lender looks at the borrower’s minimum monthly  debt payments and compares them to income. If the ratio of debt payments to income is too high, the borrower could be turned down for a mortgage.

Fannie encourages mortgage lenders to recalculate debt-to-income ratios just before closing. If a spending spree sends the debt-to-income ratio too high, the mortgage could be doomed. For this reason, borrowers should wait until after closing the mortgage before buying furniture, a refrigerator or a lawn mower on credit.

Change jobs

Changing jobs is another good way to derail a mortgage before closing. Other potential deal-breakers include staying with a current employer, but switching from a salaried position to one where primary income comes from commissions or bonuses.

Any slight change in income could cause you to not qualify.

The main thing to remember is, keep everything exactly the same as the day you got approved.  No new car.  Don’t apply for a credit card so you can get brand new furniture.   And definitely don’t change your job.

H.A.R.P. Has Been Extended!

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The H.A.R.P. (Home Affordable Refinance Program) program which enables struggling homeowners to refinance their mortgage, whose home value has declined, has extended its application deadline to December 31st 2015.

H.A.R.P. is a federal-government program designed to help homeowners refinance at today’s low mortgage rates even if they owe as much or more on their mortgage than their home is worth. The goal is to allow borrowers to refinance into a more affordable or stable mortgage. Most homeowners eligible for a HARP refinance are able to reduce their monthly payment by lowering the interest rate on their mortgage. Other homeowners can use HARP to convert their adjustable mortgage into a more predictable, fixed-loan program. You also have the option to do a HARP refinance for a shorter-term loan, which will help you build equity in your home at a faster pace.

To be eligible for a HARP refinance homeowners must meet the following criteria:

  • The loan must be owned or guaranteed by Fannie Mae or Freddie Mac.
  • The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
  • The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
  • The current loan-to-value (LTV) ratio must be greater than 80 percent.
  • The borrower must be current on their mortgage payments with no late payments in the last six months and no more than one late payment in the last 12 months. 

Borrowers should contact their existing lender or any other mortgage lender offering HARP refinances.  For more information, please go to http://harpprogram.org/

 

Mortgage Triggering: Who is contacting my customer?

Mortgage TriggeringMortgage triggering is a frustrating, pull-your-hair out phenomenon that rears its ugly head frequently during a refinance boom. If you are a mortgage lender and haven’t experienced it yet, lucky you.

Mortgage triggering is the process that some lenders use to gain customers.

Basically, lenders purchase these ‘trigger leads’ from the bureaus or other companies. The leads are consumers who have recently had their credit pulled in order to qualify to buy a home. Once purchased, the lenders call these consumers, (who could be YOUR customers) and extend them a firm offer of credit. This process is covered by the FCRA as a legal practice. (FCRA, 15 U.S.C 1681). The wording of the language is: ‘to obtain a consumer’s private information an institution must have consent OR present a firm offer of credit in their solicitation’. So, when lenders buy these leads, they must call, email, or mail a firm offer of credit to the consumer. The argument for triggering is that is gives consumers a choice. Triggering offers consumers more than one option for a mortgage loan. The argument against triggering is that unscrupulous loan officers may make ‘too good to be true’ statements, or run a bait and switch scheme using the consumers’ information. Through the years, Data Facts has answered this question many times. Customers are confused and frustrated by the sometimes multiple phone calls they receive from competing lenders. They feel their private information has been sold. And it has.

How customers are triggered: lenders set up their criteria based on the credit score, LTV ratio of the loan, and even the geographic area of consumers they wish to target. Once set up, the consumers that fit these criteria are monitored by the triggering company. When a consumer that is on this list has their credit pulled for a mortgage loan, this triggers in the system. The lender then receives this information, and calls the consumer with an offer.

How to guard against it:

1: Educate your customers. Warn them that they may receive calls with competing offers, and they may be ‘too good to be true.’ Simply knowing to expect the calls from other lenders will decrease the frustration most consumers feel about this practice.

2. Tell your customer to opt out. If a consumer opts out of prescreened offers, this will stop the trigger leads. They can opt out at www.optoutprescreen.com. The catch; this process takes 5 days to take effect, so if their credit has already been pulled, this will not block the offers immediately. Your name may have already been sent out on a list that hasn’t mailed yet, so you may still receive items some time after you have opted out.

3. Advise your customer to get on the do not call list. All trigger leads are supposed to be scrubbed against the do not call list. Consumers can add their name to the list by calling 1-888-382-1222 from the phone they wish to register, or register their number at www.donotcall.gov. Again, this takes a few days to take effect.

There is no sure fire way to protect your customers from receiving these trigger calls. However, if you arm them with the pertinent information, you can minimize the possibility of losing a customer to your competitors.

~~Stacie Shelton is a member of the Marketing Team at Data Facts, Inc. Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Our CEO, Daphne Large is the 2013 NCRA President and our EVP, Julie Wink is the Co-Chair NCRA Education and Compliance Committee. We provide information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit www.datafacts.com. Follow us on Twitter @dflending and Facebook at “Data Facts Lending Solutions.