Understanding & Improving Credit

Understanding & Improving Credit Scores

Why should You care about Credit Scores and having a good one? Many people don’t. Smart people do. A good credit score will allow you to choose who you want to do business with instead of who will do business with you.

With a good credit score you will get much more favorable interest rates on your loan, e.g. mortgages, auto loans, credit cards and more. You’ll also get better rates on your insurance premiums, auto, homeowners and renters insurance to name a few. Many employers also check your credit before hiring you for employment.

What are credit scores designed to do? Many will tell you it’s your ability to pay back a loan, say if you’re a good or bad credit risk or something like that. Credit scores are actually a predictor to show the likelihood that a borrower will become 90 days delinquent on an account within the next 24 months.

How do the CRAs (credit reporting agencies) come up with the credit scores? There are a few factors that matter more than others.

35% = Payment History

10% = Types of Credit

10% = Credit Inquiries

15% = Credit History

30% = Amount, i.e. proportion of balance to limits

What about those credit repair companies? All I can say about those companies is to use extreme caution. A lot of them are very confusing. Some lead you to believe that they know some secret that is unavailable to you. Not true. There’s nothing they can do that you cannot do yourself. Improving your credit score is not brain surgery.

With just a little education you can improve your score. Many of those companies make outrageous claims. They say things like, we can remove negative credit from your report or we can improve your score to 720 in 30 days and all kinds of other “guarantees”.

The truth is, there are No guarantees when you are attempting to improve your score. In fact, many times your score will go down when you wake up the negative sleeping giants that are reporting on your credit report.

Some lenders will require you to pay off old collections before extending you credit. Just by waking this sleeping dog, they may update the collection and your credit score will reflect this negativity like it is a new collection. It can be best to pay the collection at closing or get them to remove it from your report altogether when paid. This needs to be in writing.

You can dispute negative credit, collections, judgments, etc. Many times they will be removed. Many times they will not. Anyone that tells you that they guarantee these will be removed is either not being truthful or doesn’t know what they are talking about. It may be best for you to do a 180 and keep walking.

What about those that say you can set up a whole new credit file with an EIN (employer identification number) or some other way? I have never seen a way to do this. At least, not that I know of legally.

The bottom line is there are no magical ways to improve you credit score. There are ways that you can improve your credit score.

Some of the ways to improve your credit score include:

·      Pay Your Bills on time

·      Don’t necessarily close older and/or paid off accounts

·      Don’t get unnecessary inquiries

·      Keep balances in proportion to limits at 30-40% or less

·      Dispute incorrect information

·      Add a Fraud statement

We will be discussing “Understanding and Improving Credit Scores” at the Help Clinic at the monthly meeting at 6:30pm January 16, 2015. Come early to learn and stay late to network with fellow investors.

http://www.stlreia.com

(314) 962-9255

STLREIA™ meets the 3rd Friday of every month (except December). At 6:30PM we begin the evening with a “Help Clinic” that includes advice on physical repair, marketing, and networking. At 7:30PM, we continue with the “Main Meeting” which includes local and nationally known guest speakers.

Location: St. Louis Association of Realtors®

12777 Olive Blvd. (1-1/4 miles west of I-270) St. Louis, MO 63141

I look forward to seeing you then J

Happy Investing,

John Lee

Changes Pave the Way for More First-Time Buyers in 2015

~Reprinted from Realtor.com~by John Lee~the Deal'ionaire~

Even as the housing market gets back on track, the numbers of first-time buyers continue to disappoint. This is strongly associated with the tight credit requirements facing would-be buyers. Recent important government policy changes and the introduction of new low down-payment programs, however, should set the stage for increased first-time buyer activity in 2015.

Clarity on Mortgage Qualifications

Both Fannie Mae and Freddie Mac finalized mortgage qualification guidelines that went into effect on Dec. 1. These guidelines clarified murky qualification standards set in place as a result of the Dodd-Frank reforms, which were intended to prevent a repeat of the financial crisis.

Up until now, the absence of specific rules and clear guidance on what types of errors would prompt Fannie or Freddie to reject a loan, leaving the underwriting bank or lender on the hook, led to very conservative lending practices. To avoid the risk of Fannie or Freddie rejecting a mortgage months or years after it closed, banks added “overlays,” or additional requirements, to the proposed guidelines.

As a result, according to Ellie Mae, a mortgage software company, the average denied credit score on conventional purchase mortgages in October was 723 even though the minimum standard set by both Fannie and Freddie was 620.

The new standards should lead to thousands more consumers being able to get a mortgage and should also speed up the underwriting and approval process.

Measures of mortgage credit availability from the Mortgage Bankers Association already indicate a slight loosening of credit in November prior to these rules going into effect. All three measures of mortgage credit availability were also higher than November of last year, between 3% and 5%. If that trend continues, it will indeed mean that we are seeing standards revert to more normal levels.

More Attractive Low Down-Payment Mortgages

Earlier this week, Fannie Mae and Freddie Mac both announced the details of new low down-payment mortgage programs they will be offering that enable qualified buyers to purchase a home with down payments of as little as 3%.

While these programs only lower the down payment threshold by 0.5% from similar loans available from the Federal Housing Administration (FHA), they will likely be far more attractive to consumers than the FHA loans. These new programs avoid the FHA fees that effectively increase the rate charged. Another advantage over FHA is the borrower’s ability to stop paying private mortgage insurance fees once the equity of the home reaches 20%.

Fannie Mae’s offering will be the first available to qualified borrowers who have not owned a home before or within the last three years. But Fannie Mae doesn’t lend directly, so it may take some time before we see specific lender offerings—perhaps in early 2015.

Clarifying when lenders are at risk and offering low down payment programs should increase flexibility in mortgage qualification.   This should pave the way for more first-time buyers in 2015. If we start to see specific competitive low down-payment lender offerings and evidence that standards are loosening, the spring selling season may start earlier than normal. After all, first-time buyers do not have to sell an existing home and can jump into the market at any time.

Jonathan Smoke is realtor.com®’s chief economist.

Turning Renters into Buyers

Turning Renters Into Buyers

Owning a home is still the American dream for most people. According to JP Morgan Chase survey published last spring,  87% of Americans found they dream about owning a home, 66% said they believe it is a good financial investment and 75% said it’s crucial to raising a family. Another recent survey, conducted by the National Association of REALTORS®, found that homeownership was equally popular with renters, as reported in RealtorMag.com. Even better, 68% of these renters said that now was a good time to buy a home.

What is one of the main reasons that people rent? It’s impaired or no credit. One of a few really good things you can do for your tenants, that is, once you’ve screened them with background checks, received the money, made sure the checks cleared, etc…before they move in…is to help them understand their credit.

My experience is renters that pay on time will almost automatically increase their credit score over time. Most often, regardless of the past, when someone pays their bills on time their situation will improve. You can help jump start them with just a little help and encouragement. Many times landlords can be seen like they’re looking down on their tenants as customers instead of a fellow human being (and then some really are alieonic ~ alien).

Who hasn’t been down in their life? We all have ups and downs. I avoid making a deal with someone who tells me they have never lost or been down. They are usually not truthful. Most of us, if we live long enough will have several ups and downs. Like NY Times Best Selling author, Harv Eker says in Secrets of the Millionaire Mind, “Every master was once a disaster.” The point is we’re all in this together through the peaks and valleys.

Helping someone understand their credit can change their life in a tremendous way. When I was a mortgage broker, I couldn’t tell you how many clients came in with little, no and/or bad credit. Most brokers and bankers turned them away (not so much in the early 2000’s when almost anyone breathing could get a loan-and that’s another story).

There had to be a way to help people that were credically impaired. Many brokers and bankers do not want to give a lot of time to difficult situations. Understandably so, as there is not usually very much money involved for their efforts.

In all fairness, much of my motivation was directly connected to my own experience. A while before I was a mortgage broker I had gone through a not-so-nice-divorce. I’m not so sure if there ever is a very-so-nice-divorce no matter what the situation. Not to say anything too bad…and let’s just say my credit was shot…foreclosure-collections-etc…

A few years after my NSND  (not-so-nice-divorce) I was remarried and attempting to buy a house. That is when everything came out. Yes, everything and the kitchen sink. I learned a heck of a lot about credit, i.e. my own. It took me several months to get myself where I could get any kind of financing.

This was just before I became a mortgage broker. At the time I was in the Insurance business. Once I became a mortgage broker I felt for those that had difficulties in getting financed. Few mortgage brokers and bankers wanted to help. So I decided to do just that.

We concentrated on helping people improve their credit and particularly their credit score. We created a debt solution/repayment program. We worked with a company out east that was formally involved with Consumer Credit Counseling. At that time, their negotiations with creditors, did not impair the client’s credit like so many of them did back then.

Today there are all kinds of credit repair companies that have popped up everywhere you look. I always look at their programs. Unfortunately many of them are giving out misinformation. They are quick to take your money and not always much better on results than you can do on your own. Most everything that can possibly be done to improve your credit is easily done on your own.

This information can also help your tenants become good home buyers. You, as a landlord/owner/seller can cash out completely. In many cases when the tenant buys your house their payment is less than they were paying for rent.

Sure, we all want to make money. And Real Estate has made more millionaires and billionaires than most other vehicles. I am constantly reminded that it is not-so-much a Real Estate business and is actually a people business. It’s not all about money. Treat people like people, including your tenants, and always do the right thing. I approach every deal with the expectation that everyone will walk away smiling. It must be win/win/win.

Happy Investing,

John Lee

                                                                                                                                                                       The Deal’ionaire

If you would like a "Gifted" copy of my book, "How to Improve Your Credit Score," send a request to :

                                                     
                                                           theDealionaire@gmail.com

Be sure to check out my new book on Amazon :

http://www.amazon.com/Secrets-Dealionaire-Creating-Wealth-Small/dp/1500336467/ref=sr_1_1?s=books&ie=UTF8&qid=1417399339&sr=1-1&keywords=secrets+of+a+deal%27ionaire

Secrets of a Deal'ionaire

It's Finally Available !!!

Secrets of a Deal'ionaire

Forward by Robert Allen

Secrets of a Deal’ionaire According to US statistics over 1,000,000 Americans filed for bankruptcy last year. Over 85% could have been prevented if they had just $300 more per month. Would you like to know how to turn $200 into $2,000 in less than 2 hours worth of total work? The secrets and strategies John share are unique and priceless. He has simplified processes that can be very complicated. The small deals that he has done over the last 25 years you have just learned in a very easy to understand format. One of the most important things John has learned is to get a mentor and jump start your way to success. There are two ways to do things, the easy way or the hard way. A mentor will get you there the easy way. The hard way is to spend twenty five years learning it yourself. The information you need to get started in small deals that can make you a handsome profit is in this book. Lots of small deals can change your life.

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Little Known Secret to Where You Can Invest in Real Estate Today :) Ferguson, Missouri

Hello Fellow Investor,

As fall comes into play many of us are looking for Great Investment Opportunities. We do not have to look too far here in St Louis. We have some of the best real estate prices on the planet.

A Great place to look right now is Ferguson, Missouri. Yes Ferguson, Missouri. Who hasn't heard of World Renown Ferguson? We have bought and sold many properties in Ferguson. We also have several rental properties here. It is a Great place to invest and live.*

As Warren Buffet says,"When everyone else is selling, buy. When everyone else is buying, sell." 

Check out this Great Opportunity :

http://stlouis.craigslist.org/reo/4715682160.html

Questions are welcome. Thanks for looking!

Happy Investing,

John Lee

314-291-1717

P.S. Imagine Yourself 5 years from now...2 years from now...next year...You were one of the smart ones that fore saw the investment opportunity and the value in investing in Ferguson today...Most didn't see what you saw...Now...You're sitting Pretty...

Positive Imagination is More Powerful than negative media...don't be a - , be a + 

*Also...Ferguson is a wonderful place to LIVE, despite what you are reading/hearing.  Our church is In Ferguson....and we have many, many friends who live there. Progressive people who want to move forward.....and we will!

Martha

Wholesaling Real Estate ...No Money...No Credit...No Problem

Wholesaling Real Estate

NO Money…NO Credit…NO Problem

Why does anyone want to get into Real Estate? I don’t think I ever heard anyone say “to work harder after my regular job in the evening and on the weekends, to spend my savings to fix up a place for someone else to tear up, so I can evict someone and try to collect the money they stole from me, to overpay for a fixer upper, to put more money into a house than it is worth.” I can’t recall ever hearing any of this.

 Almost everyone says that they want to get into Real Estate for more money. We all have reasons for more money. It’s not really about the money. It’s about the “Why.”  I used to think that money was the why.   Money is a tool, not a why.

I came to a realization back in 2007 of what my why really is. My why is “freedom.”   My wife Sue was diagnosed with stage four colon cancer on March 1^st. She passed away on June 27^th. Money didn’t matter. What did matter was because of Real Estate I could be at home with her because I had money coming in. I didn’t have to go to a “real job.” Even Steve Jobs with all his money could not buy one more day on this earth.

Many beginners get into Real Estate because they have little, not enough or no money. A lot of times they have no credit or bad credit. Those things are very forgiving with Real Estate. One of the things that anyone can do is to wholesale Real Estate.

It’s very simple. All you do is find a property that someone no longer wants. They may not have the money or don’t want to spend the money to fix it up. It almost always needs to be a property that is not listed on the MLS (by the time it is listed on the Multiple Listing Service it has usually been picked over). It’s usually not associated with a Realtor and can be gotten for a substantial discounted price.

You, the wholesaler, and the seller fill out a sales agreement/contract. I have a very simple two page sales agreement that I use most of the time. I also have one that is six pages for those who think it should look more Realtor like. Very rarely is this a factor.

I like to set the closing for 90 to 120 days in the future. This gives me plenty of time to find an end buyer/investor. Most of the time we close on the property within a few weeks. There are a couple of ways the deal can be closed. Some like to do a double closing. This is where you have a separate sales contract with the end buyer and the amount you are making is not disclosed.

I personally like to be totally transparent. I like the one close option. Everyone is involved and everyone knows everything.   I assign my contract to the end buyer for a few thousand dollars to several thousand dollars. My experience is that leaving some meat on the bone so others can make a good profit keeps them coming back for more. It’s very simple, very quick, no secrets. Everyone wins.

There are a lot of good courses out there that teach different strategies and techniques on Wholesaling Real Estate. I encourage you to take some courses, attend some seminars and get educated. Wholesaling is probably the easiest way for a newbie to get involved with Real Estate.

Many choose to remain wholesalers their entire carrier. Others go on to other aspects of Real Estate investing. Whatever you decide to in Real Estate, I would recommend finding something that you really like to do and become good at it. You’re never going to be great at everything and you can become an expert at one thing.

Another thing I might recommend is to find yourself a Mentor. Someone that resonates with you. There are two ways to get educated in Real Estate. You can do this the hard way like I did learning by trial and error for 25 years. Or you can jump start your way to success by learning from someone that’s already done it.   

Sure, it cost money for a good mentor. And, not every mentor is for you. In perspective, what does an MBA at Harvard cost? Maybe $180,000 to $200,000. And you may be taught by someone that has never run a business. Learning from someone that has been there, done that can catapult you. Just make sure they resonate with you.

This is absolutely a great time to be involved with Real Estate. I have never seen a time when you could get properties at these prices. Wholesaling is a great way to make good money simply by solving other people’s problems. Everyone wins!

I’ve made more money by making deals and doing paperwork than I have ever made painting the living room or cutting the grass. Wholesaling is very simple and anyone can do it.

Happy Investing,

John Lee                                                                                                                                                       the Deal'ionaire