I have witnessed mortgage fraud and it scares me to death.  When I’ve seen it, I walk away because I want no part of it.  People can justify it however they want, but the bottom line is it is theft.  But how can you tell if it’s mortgage fraud?  Lender George Souto of Middletown, Connecticut tells us of red flags that help to identify mortgage fraud,

• Indication that the Borrower will not really be occupying the property, and it is really and investment property, some of the signs of this are:
• Long unrealistic distance between their job and the property.
• The new property is not large enough to adequately house all those who are going to occupy it.
• The Borrower is moving from a larger property into a smaller property, and it is not because they are an empty nester, or someone in a similar circumstance.
• The Borrower states that they are going to sell or rent out the current property, but the property is not listed, and they do not have a lease for a possible renter for the existing property.

• Indications that the Borrower does not have enough of their own funds to purchase the property: 
• The downpayment is not from a Checking, Savings, Retirement Account, or Gift from an authorized donor.
• The deposit or downpayment is money from a promissory note on the existing property.
• Funds are from stocks, or bonds that are not publicly traded.
• Face Value of a Life Insurance Policy is listed on the application as an asset in stead of the Cash Value.

Click through to see other red flags. Then if you are a lender, appraiser, or Realtor, avoid it.

Photo by Tim Green.

If you’re buying a new home and think a legal financial judgment will interfere, you might be right.  If the judgment is on the house and the seller, then you probably won’t be able to get that house until the judgment is paid.

However, the FHA  will allow loans for buyers with judgments.  From Lender Brett Sampson of Frisco, Texas,

Here’s the biggie: A judgment may remain unpaid if you (the borrower) have a repayment plan in place with a minimum of two payments made prior to the date of the purchase contract!

…how about that!

This is great news for people who may have had financial issues resulting in judgments. Talk to a reputable lender to learn more.

Photo by StockMonkeys.com.

I am one of those homeowners who is upside down on my house – I owe more than I believe it would sell for at this time.  This is primarily because I have some big repairs to make, including a new roof, gutters, and painting the wood around windows and other trim. This work would put me in the position where we could possibly break-even on the home if we decided to sell, but then there’s the question of paying back the money it cost to make the repairs.  We’ll be here for a long time, I expect!

However, if you do have some equity built up in your home, you could qualify for a home equity line of credit. These loans are making a comeback according to MSN Money,

Lenders are starting to make equity loans again, especially where home values are rising. Discover Financial Services, which also offers the Discover card, announced in March that it will offer fixed-rate home-equity loans of $25,000 to $100,000, initially to current customers and eventually to others.

But you won’t be able to borrow against every last cent of your equity. Lenders may be slow learners but they have noticed that their bubble-era practice of lending on 100% of a home’s value left them holding the bag when those homes suddenly were worth a lot less than the loans.

I applaud lenders for remaining cautious in not lending 100 percent of a home’s value, but also glad to see that people are again looking at home projects. This will definitely spur the economic recovery as home stores see an uptick in sales.

Photo by Cara Fealy Choate.

The Obama Administration is encouraging lenders to make home loans a little bit easier, a move that causes both hope and dread.  We are filled with hope for potential buyers to again be able to qualify for loans, yet the dread comes from the fact that loose lending standards are credited for a major part of the housing crisis.

From Realtor.com,

From 2007 to 2012, new-home purchases dropped 30 percent for buyers with credit scores above 780, the Federal Reserve reports. But the drop was even more pronounced for borrowers with credit scores between 620 and 680 — falling about 90 percent. Credit scores between 680 and 620 (out of 800) were once considered a “respectable range” for a credit score when applying for a mortgage,The Washington Post reports. 

“If the only people who can get a loan have near-perfect credit and are putting down 25 percent, you’re leaving out of the market an entire population of creditworthy folks, which constrains demand and slows the recovery,” says Jim Parrot, the former senior adviser on housing for the White House’s National Economic Council.

It does make sense to ease some of the restrictions for people who do have good credit and do have a good job history, but don’t get too comfortable handing out loans willie-nillie like before!

Photo from evys inspirations.

Yes, you do need money to buy a home.  You may find a grant to fund your down payment and you may find a seller to pay for your closing costs, but you will need some cold, hard cash to be a successful home owner.

Dora Griffin of Fort Thomas, Kentucky explains,

Everyone wants home buyers to be successful home owners, having some savings is a big part of that. Having some skin in the game is a term we hear a lot these days. Back in the day buying a home was much harder, you had to save for a down payment,  have reserves and perfect credit. We’ve come a long way to make home ownership more widely available, which is a good thing, don’t overlook the value of savings. 

You’ll need cash for your earnest money (at least the seller should ask for earnest money).

You’ll need cash to pay for the home inspection (you’d be crazy not to get one!).

You’ll need cash to buy new curtains or blinds.

You’ll need cash to get a can or two of paint.

You’ll need cash to get the new lawn mower.

Most importantly, you’ll need cash in reserve for when things go wrong. And they *will* go wrong, unfortunately. You may need to replace a water heater or repair a gutter. The septic system could back up or a water line breaks.

Yes, you do need money to buy a home!

When interest rates were very very high, variable rate mortgages definitely offered great options for people wishing to save money on their monthly mortgage payments.  The challenge, however, was when those variable rates went up.

So what is the best option? Fixed? Variable?  Boomer and Echo spells it out for you by crunching some pretty serious numbers,

I stand my belief that you’ll save money with the better of the 5-year variable rate or the 1-year fixed rate mortgage.  Today, that means taking the 1-year fixed rate.  You’ll pay $7,039 in interest at 2.39% for one year on a $300,000 mortgage.  Compare that to the 5-year fixed at 2.79% and you’ll pay interest of $8,216 in the first year.  That’s nearly $1,200 in savings!

Then, when it’s time to renew in a year, you can take another 1-year fixed or watch for a really good discount off the 5-year variable rate (prime minus 0.75% or better).

Lesson learned: Do Your Homework. Talk to experts who can break it down for you. Then jump in and do what works best for you and your lifestyle.

In addition to simply making phone calls, I use my smart phone for  a LOT of reasons – I scan bar codes, I play Words with Friends, check in on Facebook, read the local newspaper, and follow the sheriff’s site to see who has been arrested and why (yes I’m just that nosy).  But there are also great apps like Lose It to help you monitor your health, fitness and diet, our library’s Byki database to learn a foreign language, and Life360 to keep an eye on my kids.

Along the same helpful apps that improve your quality of life are personal finance applications for your smart phone. From Planting Money Seeds, my favorite of their selection is Bill Tracker,

Track bills. With BillTracker, you put reoccurring bill payments into the system and it generates a reminder so you’re not late with your payment. The account balance is included on loan payments, so you can watch the amount owed whittle away. This app is available through the iTunes and Android stores.

The ability to see your debt disappear is pretty sweet option!

Photo from yuichirock.

Photo from Pinterest.

People who are halfway conscious about their personal finances know that their credit score is important.  A good score allows buyers to purchase on credit at lower interest rates when financing things like furniture and cars.  Without a good score, you probably won’t be buying a new house or investment property.

We’ve also all seen the advertisements to see what your credit score is FREE.  Or so we think. Actually we are offered a copy of our credit report free. But if you want your credit score, you’ll probably be paying.   But if you do actually get a free credit score, how accurate is it? Miranda Marquit of The Coupon Shoebox has some thoughts about it,

 The next thing you have to worry about is whether or not the credit score you receive is an “official” FICO score. The FICO score is still the most widespread score used, and the one most likely used by lenders making decisions about your loan.

However, most free sites don’t offer you a true FICO score. There are truly free sites that don’t require your credit card number. Quizzle, Credit Sesame, and Credit Karma all provide you free access to a credit score. However, it’s important to realize that the scores offered to you aren’t the same scores that lenders look at when making decisions about you.

Be careful out there.  It’s your money and your financial reputation, so take care.