The Big Change with the Removal of Tax Liens and Judgments – Continental Credit


The Big Change with the Removal of Tax Liens and Judgments

Believe it or not there is a lot of sarcasm in the title because the change is expected to be minuscule. However, our mortgage professional hot line has been ringing off the hook with our referral sources want to know anywhere from how much the scores will go up, to, if the lending criteria will change to offset the increases. Therefore, let me provide the full scoop so we are all very educated on the subject.

This all went in to effect on July 1st, 2017. As of that day all judgments and tax liens that were existing already or to be added in the future must pass THREE of FOUR of the most detailed, scrutinizing audits known to mankind. The first one makes me shudder; these public records must have your Name! Crazy, right? Next, your SS#! It gets deeper from there, next, your address and yes, finally, even your DOB! Do I live in coocoo land? In what world isn’t this just the basic information one should need to even consider starting to report a tax lien or judgment? And you only need THREE of them, so we can just throw out something trivial like your NAME after all.

In all seriousness, what does this actually equate to when it’s all said and done? It definitely varies from which source has conducted what survey. I’ve researched anywhere from 2% of credit reports being impacted at an average of 15 points to Vantage’s recent release of 6% of reports being impacted with an average of 10 points. Either way, it’s not worth much time thinking about it unless you want to think of the laughable situation that this took forever to pass and the final criteria was the most basic 3/4 things you should possible ever have to begin with in the first place.

In this credit specialist’s opinion which nobody seems to want talk about, I foresee many scores going down due to this! This has to do with credit score card calculations. It’s an advanced subject, but in a nutshell, your score to a degree is based on other people in a similar situation as you, therefore if you are with people with tax liens your score range is within that score card. Remove the lien, BUT don’t fix anything else (which is what this is), now you are with people with no tax liens putting yourself in a more difficult bracket. Call us for a better explanation, it’s certainly more interesting than this Big Change! Most importantly however, this allows us to work religiously on any of your turn downs. 

 

 

 

 

 

Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708

kentuckyloan@gmail.com

 

Frequently asked questions about the lending process


 

Source: Frequently asked questions about the lending process

Where do buyers begin?

Haley Newton, a loan officer with Starkey Mortgage in Sherman, said the first step in the buying process is not finding a house, rather it’s getting qualified for a home loan. Buyers need to first find out how much house they can afford and if they can actually purchase a home.

“A lot them want to know what the first step is, and many people believe that the first step is finding a house, but that’s actually the second step,” Newton said. “You want to get qualified with a local lender to know what you’re pre qualified for, and then go out and find a house, which is the hard part.”

What documents do buyers need to provide to get qualified and pre approved?

qualification is typically the quick and easy initial step and approval is a more involved process. The qualification process starts with an application, which most lenders have available online, though Newton said buyers can call a lender or meet them in person to fill it out. After buyers fill out an application, which covers the buyers’ finances and history, the lenders will verify the information for preapproval and that requires the supporting documents.

“Once they’re prequalified, we’ll give them a list of documents they need depending on their application,” Newton said.

The list typically calls for pay stubs from the last 30 days, tax returns for the last two years, bank statements for the last two months, W-2s, IDs and Social Security cards.

Jeremy Lewis, branch manager of Grayson Home Loans, said sometimes the lender may require divorce decrees and documentation to indicate other income depending on the buyers’ situation. After approval, Lewis said he usually gives the buyers a call, and they figure out a loan program that best fits the buyers.

How much do buyers need for a down payment?

Short answer: It depends on the loan.

Lewis said the down payment is often the main concern for buyers, and it’s not a set amount. Depending on the loan type and what programs the buyers are eligible for, the down payment can be as little as zero down. Loans from the Federal Housing Administration, Veteran Affairs and the U.S. Department of Agriculture each have a set of stipulations that include the percentage required for the down payment.

“It depends on the loan type they’re going with — whether it be a conventional loan, an FHA loan, a VA loan or a USDA loan, it will determine what they’re going to have to place down — what their initial investment is going to be,” Lewis said. “There are still those out there out there that think they have to put 10 to 20 percent down, which is not correct. They can, in certain programs, put as little as zero down.”

Newton said there are down payment assistance programs in the state that can help cover the amount needed. These programs are income based and are capped anywhere from $55,000 to $75,000 depending on the program.

What’s the deal with closing costs?

In addition to a down payment, buyers also need funds to cover the closing costs. Lewis said the closing costs depend on the loan amount as a higher loan amount is going to cost more. About half the closing costs are directed to building the buyers’ escrow account, and the other half is a combination of fees for items such as the title and appraisal.

“Closing costs are another piece of the puzzle they’re going to have to come up with,” Lewis said. “However, in a Texas residential contract, you can ask the sellers to pay a certain percentage, depending on the loan type, for your closing costs.”

Buyers can negotiate with the sellers and ask that the seller pays a portion of the closing costs, which if the buyers qualify for a down payment assistance program, the initial costs can be very low.

“If you’re able to use the down payment assistance programs in addition to requesting the seller to pay some of their closing costs, they can actually get into a home with little to nothing down,” Newton said.

What is an escrow account?

“It kind of works like a separate checking account, and the purpose of that account is to pay the yearly tax bill that comes due every January, and their insurance premium that’s due once a year depending on when they closed on their home,” Newton said.

The initial money put into the escrow account is part of the closing costs, and Lewis said homeowners then add to it monthly when they make their house payments. The account is for buyers to put back money so property taxes and insurance are covered.

“Say when their tax bill comes due in January, there will be plenty of money in the account for them to pay their taxes, so that way they’re not coming up $2 to 3 to 5,000 all at once to pay their tax bill,” Newton said.

Can buyers purchase a home with a bad credit score?

Newton said buyers don’t necessarily need the best credit in order to get a home loan, and she noted that first-time home buyer programs have recently lowered their credit score requirements.

“A lot people around here they don’t necessarily have bad credit, they just don’t have a lot,” Newton said. “They don’t use their credit.”

Newton said lenders will work with buyers and give them steps to take over 60 to 90 days to boost their credit score to where they can buy a home.

“It can be intimidating but we can walk them through it,” Newton said.

Buyers should consult with local lenders, and Lewis said he guides buyers through the process so they know what to expect.

“There’s so many different moving parts to a loan anymore,” Lewis said. “I try to keep everyone versed and ready for what’s to come in the process and what to expect.”

Joel Lobb
Senior Loan Officer
(NMLS#57916)American Mortgage Solutions, Inc.
10602 Timberwood Circle, Suite 3
Louisville, KY 40223

text or call my phone: (502) 905-3708
email me at kentuckyloan@gmail.com

The view and opinions stated on this website belong solely to the authors, and are intended for informational purposes only. The posted information does not guarantee approval, nor does it comprise full underwriting guidelines. This does not represent being part of a government agency. The views expressed on this post are mine and do not necessarily reflect the view of my employer. Not all products or services mentioned on this site may fit all people. NMLS ID# 57916, (www.nmlsconsumeraccess.org). Mortgage loans only offered in Kentucky.
All loans and lines are subject to credit approval, verification, and collateral evaluation and are originated by lender. Products and interest rates are subject to change without notice.

Joel E Lobb
American Mortgage
5029053708
email us here

Kentucky FHA, VA, USDA & Rural Housing, KHC and Fannie Mae mortgage loans.

A Complete Guide to Closing Costs


 

 

A Complete Guide to Closing Costs.    Complete Guide to Closing Costs A Complete Guide to Closing Costs Types of Closing Costs Let’s talk briefly about the types of closing costs you mi…

Source: A Complete Guide to Closing Costs

 

Many mortgage applicants will get a surprise boost in their credit scores


Kentucky Waiting times for a Mortgage loan Pre-Approval After A Bankruptcy and Foreclosure or Short Sale
Bankruptcy, Foreclosures, and Short Sale and how they affect your mortgage loan approval for a Conventional Loan, FHA Loan, USDA Loan, and VA loan.

 

In a little-known policy shift, the three national credit bureaus — Equifax, Experian and TransUnion — plan to stop collecting and reporting substantial amounts of civil judgment and tax lien information on public records affecting millions of American consumers starting July 1.

 

 

Both types of information have negative impacts on credit scores and remain in credit files for extended periods. Tax liens are levied against properties when the owner is delinquent on payment of taxes. Civil judgments — debts owed by the losing party in legal disputes that typically involve monetary damages — are ordered by courts.

With the elimination of this information from vast numbers of consumer credit files, some lenders are concerned that when they order credit reports to evaluate an applicant, they may no longer get the full picture of the risk of nonpayment posed by the consumer.

 

 
Joel Lobb (NMLS#57916)
Senior  Loan Officer
 
American Mortgage Solutions, Inc.
10602 Timberwood Circle Suite 3
Louisville, KY 40223
Company ID #1364 | MB73346
 


Text/call 502-905-3708
kentuckyloan@gmail.com

http://www.nmlsconsumeraccess.org/
Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant’s eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/
 
— Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

 

Source: Many mortgage applicants will get a surprise boost in their credit scores