Texas Home Loan Blog: July 2007

US home sales, prices to slip more this year-NAR

NAR Predicts Home Price Gains in 2008

Ok... I guess NAR has it so refined that they can predict that home prices will fall for the remainder of 2007 and start to rise again in 2008. That is a little bit presumptuous, huh?!?! Can we define the markets that finely?

Who writes this stuff? Who in the heck found my crystal ball(er... magic 8-ball) that I keep under my desk? Who decides that prices will slip and fall, only to get back up again?!?!!? And who decided that the houses won't "fall and can't get up'?

Here in The Great State of Texas, home prices are pretty steady from my vantage point. Although we are in a bit of a buyer's market, we haven't gone into the tank!!!! You see..... we have LAND. Land to build more homes if we run out of inventory..... so we didn't have a bubble. We are in a buyer's market only because of the market correction on wall street regarding Subprime and Alt-A Mortgages. But we aren't in a slump!!!

Builders are discounting to get rid of inventory... that hurts. People have foreclosed due to their personal decisions regarding Adjustable Rate Mortgages, and that hurt. But all in all, we are doing pretty well. So, come on down.... take a look at the joba and housing. We will make a Texan out of ya!!!

Tom Burris
DallasLoanGuy.com

Texas Home Loans

Texas Cash Out Mortgages

I often get this question. "How many times are you going to pull my credit report?"

Well, the answer to this is... as often as it takes to get my client the best possible deal!!
A credit pull by a lender is considered a 'Hard Inquiry'. Which is a reporting of the borrower trying to establish credit. The FICO scoring model will recognize that you are trying to establish credit and lower your credit score a few points. You usually get those points back when you establish that account. "Soft Inquiries' are permissable credit pulls by creditors that you have a wroking relationship. They may pull a soft inquiry on occassion to make sure their money is still safe with you or if thy are conteplating a limit increase on your revolving accounts.... soft inquiries do not affect credit scores. Noone sees soft inquiries except YOU when you pull your own report.

So, we have two issues here.

1. Why do lenders pull credit so many times?
2. What is the impact on my credit score?

#1 is easy. #2 is a little more convoluted..... but there is an answer.

Why DO lenders pull credit so often?

The first thing I do when I take an application is pull a credit report. Coupled with the loan application, I can usually determine with great accuracy what type of loan to put this borrower in to. With good to decent credit(along with other factors) my first stop is to my Automated Underwriting engines through Fannie Mae or Freddie Mac. I re-issue the credit report into their system(reissued, not a new credit pull), then let the computer spit out an answer as to whether they will back the loan. If I get what I am looking for, then I shop a few rate sheets and quote the client..... all with one credit pull!! If not, then we may have a situation where we are going to be looking at Alt-A products or subprime. Most of my lenders will use my credit report. Some will not. So, I manually qualify the borrower based on the info in the loan application and credit report. It is common to have the actual lender pull another credit report when the loan is submitted(after the borrower inks a contract). I might have a client who has a really unique credit profile, like job gaps or a short credit history, but with some decent compensating factors like high cash reserves. To get a full pre-approval, the hypothetical loan must be submitted to the lender where they actually pull their own credit report. <= They may even pull it again when the borrower finds a home and is under contract. They may even pull an additional credit report right before closing just to make sure the borrower hasn't gone nuts and bought a new car and a bunch of furniture as that can affect debt ratios.
Whew, thankfully, that lender took the deal..... because if the file is denied, then it must be submitted to another lender who will start all over pulling 'Hard Inquiries' on the credit report.

What is the impact of credit inquiries on FICO scores?

In their 'What to know about rate shopping', Fair Isaac says the following:
Looking for a mortgage or an auto loan may cause multiple lenders to request your credit report, even though youre only looking for one loan. To compensate for this, the score ignores all mortgage and auto inquiries made in the 30 days prior to scoring. So if you find a loan within 30 days, the inquiries won't affect your score while you're rate shopping. In addition, the score looks on your credit report for auto or mortgage inquiries older than 30 days. If it finds some, it counts all those inquiries that fall in a typical shopping period as just one inquiry when determining your score. For FICO scores calculated from older versions of the scoring formula, this shopping period is any 14 day span. For FICO scores calculated from the newest versions of the scoring formula, this shopping period is any 45 day span. Each lender chooses which version of the FICO scoring formula it wants the credit reporting agency to use to calculate your FICO score. <= Source: MyFICO.com  MyFICO.com is the consumer division of Fair Isaac Co, who developed the FICO score.

Was that a mouthful? Well, I don't know for sure, but I don't think many reputable lenders are pulling credit out of the trunks of their cars on an antiquated system. So it is a pretty good bet that you have a solid 30 day (maybe 45) window to shop for a loan or 'be shopped around' by a broker.

This can all be very different Banks, Mortgage Bankers & Credit Unions. They typically have in house underwriting and can use the same credit report for a variety of loan types. While I wouldn't be surprised to see a lender pull multiple reports, it is less likely than with a Broker.

Want to know more about credit scores and repairing/rebuilding credit? http://www.dallasloanguy.com/docs/about_credit.pdf

Please read this free e-book About Credit. This book is intended to provide a basic foundation of understanding of your rights and relationships with your creditors. Please do not consider this legal advice.

Tom Burris
DallasLoanGuy.com

Texas Home Loans

Dallas Mortgage Loan Officer

As we all celebrate our freedom this holiday. Please let us not forget those who watch over us.... and provide those freedoms. I am speaking of our men and women in uniform who diligently protect our rights and freedoms everyday.

They do not ask for anything in return, as they have received a calling that they feel must be answered. They seek no pity for their injuries or loss of life. They ask nothing in return, other than that we live our lives free and hug our children.

I speak of men and women whom are greater than any politician or radio talk show host. I speak of true heroes.

We all have cell phones and PDAs, and we have email and a contact page on our website..... But it is static. Meebo makes it more DYNAMIC!!!

But what about that shy prospective home buyer who wants to ask you a question anonymously and is afraid to contact you out of fear of being hassled? Quite simply.... Invite your prospects to engage in an anonymous chat!!!

Now, other than the occassional 'Go Big Red' dropping into my chat applet from the likes of Renee Burrows or another colleague, I get several chats per week and some of them turn into clients!!! I call it my Impulse Trigger!! A way to entice the prospect into engaging into a conversation so they can get comfortable with my style and professionalism. At one point I try to get them to take the conversation to email or phone.... but only after i sense that 'whew' on the other end of the chat.

       I like to think of it as my little cash register.... when it dings, I ring up the sale!!!

I have links everywhere inviting people to log into 'Live Texas Home Loan Chat' for a convenient and less intrusive way to 'get to know me'.... And I really feel that most people don't need to be sold, they just need to sell themselves on YOU.

Although a few chats will drop with little chance of coming back.... because maybe they are someone just checking on the info they are getting elsewhere.... I have converted lots of chats into real prospects that turned into REAL COMMISSIONS!!!

Isn't it about time you too rang up some 'Impulse Purchases'?

The DallasLoanGuy offers Free Credit Counseling to my prospects.  A no obligation Mortgage Consultation to get ready for that big purchase.

Tom Burris
DallasLoanGuy.com

Texas Home Loans

Dallas Area Mortgage Lender

I still get the occasional call from someone wanting to cash out their mortgage to consolidate bills and they have little or no equity.

Texas is unique in that they do not allow a homeowner to access their home's equity above 80% of the appraised value. That's right, Big Brother is watching out for you. If you owe more than $80,000 on a home that appraises for $100,000 you cannot tap into that equity to use as you see fit. This rules applies for Owner Occupied, Homestead properties. Non Owner Occupied(investment) properties are exempt.

While I disagree with the law, I do understand it.... and maybe Texas was wise to put this into place. Bryan Tutas wrote a fantastic article on this subject. Your home is your castle, not an ATM machine! With Real Estate coming back down to reality in recent months, many people are upside down on their homes because they cashed them out at the height of the market. Like drunken sailors, they took all of the cash out and bought fancy cars and big screen TVs with the 'found money'. Some of them don't have enough cash to pay the realtor fees when it is time to sell.

But let's look at this: If I owe $300,000 on a property worth a solid $400,000..... I cannot acces that $100,000 to pay off medical bills or put my kids through college. This is where it hurts people. This is where Big Brother gets in between me and my money. If I want to borrow that $100,000 at mortgage rates, which is pretty cheap money, to invest elsewhere.... the State says I cannot.

Regardless, there are still homeowners out there with plenty of equity should they need some emergency cash. I just hope they spend it wisely.

Tom Burris
DallasLoanGuy.com

Texas Home Loans

Texas Cash Out