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Build Credit With a Secured Credit Card

Build Credit With a Secured Credit Card

Build Credit with a Secured Credit Card

Many of us have trouble with the idea of using a credit card to build credit.  Credit Cards are dangerous to some people, and many of us have experienced trouble with them.  But if managed correctly, using a Secured Credit Card will build credit scores fast – at the least faster than most other opportunities to do so – and for that reason using a secured credit card is the most common method used to build credit.

Secured Credit Cards work just like a Traditional Credit Card, except they require a cash deposit that serves as collateral if the card’s monthly payment is not made on time.  Most of the time, the initial deposit amount is also the introductory credit limit.  The credit limit can be raised over time without adding additional funds, and eventually the entire deposit may be allowed to be refunded.

Bending Over Backwards Using a Secured Credit Card to Build CreditNow, there are moments in life when we are willing to bend over backwards to build good credit, but using a secured credit card to build credit is a pretty straightforward proposition. The most important element to building credit through any type of credit card is to manage it correctly.  There are 3 major “To Do’s” you must adhere to if your goal is to add points to your score:

  1. Always maintain a balance on your credit report that is less than 30% of the credit limit.
  2. Never “flat-line” the card, or let it report a zero balance month over month.  This will indicate non-usage, and you will not be rewarded for not using the credit card.  Although credit reporting agencies are beginning to consider the amount of payment you make every month, which will give credit scoring opportunities for full payments, the FICO scoring model does not currently account for this (as of May 23, 2014 – we expect it soon will, but as for advice relevant to today: keep a small balance).
  3. Never, never pay late.

Before consumers apply for any Credit Card, especially a Secured Credit Card, shop around – and be aware of the opportunities in the marketplace for the best deal.  It pays to read the fine print, and if you know the complete rules for how your credit card company works then you will pretty much know the rules for how you are going to increase your scores.  Always compare the terms.

Here is what to consider:

  • Compare the Annual Fees – There is no typical annual fee.  Although the industry says the average annual fee is $75, you can find many with much lower annual fees, but you may have monthly fees too.  APR (annual percentage rate) can help you identify the impact of fees.  APR is a calculation that adds the required fee(s) to the interest rate.  Look for cards with a small variance between interest rate and APR.
  • Compare the Deposit – Generally speaking, the deposit amount is up to the consumer, but most Secured Credit Cards have a minimum deposit of  $200 or so.  Remember:  the deposit will be your initial credit limit, and you only want to use 30% of it.
  • Ask for the Refund Terms – Most secured credit cards are converted to unsecured credit cards after a period of good standing.  But when and how that occurs is another variable.  Also note that when the refund of your deposit is triggered, your credit card company will often apply it first towards paying down your current credit card balance.
  • Reporting to Credit Agencies – When using a secured credit card to build credit scores you must ensure the credit card company reports to all three of the credit bureaus (many will only report to one).  Read the terms of the agreement of call the credit card issuer if you have any question(s) about this.
  •  Pre-paid Credit Cards are not the same as Secured Credit Cards –  Pre-paid Credit Cards will not build credit scores.  Pre-paid Credit Cards apply money in advance to all charges occurred, while secured credit cards work more like Traditional Credit Cards.

What Credit Card Fees to be aware of ?

  • Some cards charge an Activation Fee the 1st time you use the card.  A Bankrate 2014 Prepaid Debit Card Survey showed that 53 percent of Secured Credit Cards charge an activation fee, with ranges from $2.95 to $9.95; but often the activation fee can be avoided if you activate the card online.
  • Failure to use the card may result in an Inactivity Fee.  Although most don’t have this fee, know the rules to the card you are choosing.
  • Customer Service Fees are sometimes charged if you dispute or need an item researched.  Although the Bankrate 2014 Prepaid Debit Card Survey indicated 73% of cards don’t charge this fee, you must research the full fee schedule.

Using a Secured Credit Card will build credit.  It works.

We all know multiple stories of friends and loved ones who have ruined their credit and racked up too much debt with their usage of credit cards.  Credit cards can be dangerous.  But, for that very reason, if you properly maintain a Secured Credit Card, you will receive high consideration for your ability to manage credit.

 

Copyright 2014 John Regur All Rights Reserved – Originally Posted at: Tulsa Oklahoma Mortgages – John Regur

Posted in: Credit

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How to Use a Goodwill Letter for Credit Enhancement

goodwill letterHow to Use a Goodwill Letter for Credit Enhancement

If you are told your credit score is too low, you have to quickly make a choice:  is this OK with you, or do you want to fix it.  I mean to say, you have  to take action, with absolute decisiveness; you have to stand up and make it the time to do something.  And sometimes you have to ask for forgiveness.

In certain situations, we may be able to fix credit with a goodwill letter.  Take this for example: let’s say you have been a Lowe’s or Home Depot  customer for years, and a few years back you took out a credit card to take advantage of 6 months of no interest or 20% off purchase or whatever.  Imagine you paid your  bill timely for several years and then you had some health or family problem that really got you off track.  Let’s say two months went by without you making a payment, but since then you have been on time – however, with one or more 30 or 60 day late items hurting your credit report.

SquirrelThis could be a big problem to you if you were applying for a mortgage.  Now mortgages can be qualified for with scores as low as 560 (for FHA to 560 click here), but let’s continue our example by saying your credit score is 717.  A 717 is a fine score, but actually 2 pricing bands behind a 740 credit score.  This could mean up to a .25% price increase to the interest rate you qualify for.  On a $300,000 home loan in today’s market, the cost would be around $50 per month.  That’s for 30 year mortgages.  But 23 points to your credit score could solve this problem for you.

If you need a free copy of your credit report, click here, or contact me with any questions regarding credit scores and credit reports.

This is the kind of situation where a goodwill letter would work effectively.  The basic idea is about asking for forgiveness from the creditor.  You can try a goodwill letter for anything, but it will work best in the cases where you have 3 to 12 months of good payment history following the report of late payment.  It is important that the creditor wants to maintain a good relationship with you.

You are dealing with real people at the other end, so a humble approach with a polite request serves the purpose.  There is no guarantee for success, but a goodwill letter is so easy to write and fast to mail out.  And they do work very often.  But it takes time.

Now if you contact me, I have three sample goodwill letters I can send you to create your own personalized letters.  Or if you are in an extreme hurry, you can use them as your own.

  • It will be best if you can  write a genuine request about your own unique situation.
  • Give a good reason why it happened last time, how the situation has changed and why it won’t happen again
  • Give a good reason why you are writing right now.  Let them know you are buying a home and improving your situation.
  • It’s helpful you have been a loyal customer and wish to continue to be so for years to come
  • Take responsibility for the Late Payment.  Mention you should have been more careful and don’t apply entire blame on the situation

Now, let’s go back and I’ll give the number one rule:

Don’t write a goodwill letter for a payment you know is late but is not on your credit report.  Sometimes a creditor may not report a late payment at all.

If you need a free copy of your credit report, click here, or contact me with any questions regarding credit scores and credit reports.

Best Practice: Start the process early and invest in yourself the time necessary to maximize your scores.

Copyright 2014 John Regur All Rights Reserved – Originally Posted at: Tulsa Oklahoma Mortgages – John Regur

Posted in: Credit

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Tulsa Oklahoma Bond Money

Tulsa Oklahoma Bond Money

Tulsa, OK, has a new down payment assistance program called the TuBond Money in a breifcaselsa County Home Finance Authority Turnkey Mortgage Origination Program.  Paired with an FHA, VA or Rural Development Loan, this program may assist more borrowers in qualifying for 100% Financing.  That’s right; own your home, 0% down payment.  Tulsa Oklahoma Bond Money is back.

In fact, low down payment loans are coming back entirely (click here to see the latest update).

100% Financing – 0% Down Payment

Housing Agencies provide Down Payment Assistance in the form of grants, zero or low interest loans, or assisted rates.  Some cities even have their own home buyer assistance and homeowner rehabilitation programs (click here to see those available in Tulsa, Oklahoma).

The new Tulsa Oklahoma Bond Money Program is a County-wide program and can be used anywhere in Tulsa County limits.  The Tulsa County Home Finance Authority sets the interest rate and terms and table funds the down payment assistance.  You can only use the Tulsa County Home Finance Authority Turnkey Mortgage Origination Program once, and funds are made available on a first-come, first-served basis from a continuously funded revolving pool.

Reserve your funds as soon as possible.  Click here to begin your 100% financing application.

What are the income requirements and how much do you get?

Tulsa Oklahoma HomeThe maximum debt to income ratio allowed is 45%, but a co-signor is allowed.  The co-signor cannot reside in the home and they cannot have an ownership interest.

The maximum household income you can make is $82,880, but we only have to count the income of whoever is on the application.  There is no minimum income required, but you have to qualify with a house payment that fits your budget.  Now here is a cool benefit: if you are hampered with current debt, say student loans, and you need a co-signor, the co-signor’s income doesn’t add to your household income limit.

$214,925.00 is the maximum acquisition amount this particular Tulsa Oklahoma bond money program allows for.  And another bonus:  there is no requirement that you be a first down home buyer.

What properties are eligible?

  • New (never previously occupied), existing, 1-4 unit, condominiums (if HUD approved) and town homes
  • Manufactured homes are eligible but with overlays
  • Land cannot exceed size required to maintain basic livability
  • Residential only – No more than 15% of square footage can be used for business (including child care)

What are the highlights?

  • No federal tax transcripts
  • No recapture tax
  • No first time buyer class required, although it is recommended
  • Gift/Grant Letter is the only additional form to closing
  • Borrower pays zero Origination Charges, zero Discount Points

How do you pay it back?

The assistance provided is a 3.5% grant and is calculated on the Note amount.  The grant can be used for the down payment and closing cost assistance.  There is no second mortgage note.  And here is the best part:

You never have to pay it back!

What is the fine print?

  • The minimum FICO score is 640, 660 on manufactured housing
  • Buyer must use as primary residence
  • Buyer must occupy within 60 days
  • Conventional Loans do not participate
  • Construction to Permanent loans not permitted
  • Government Paperwork Timelines – Extension fees are costly – only use a mortgage professional with bond money experience

Tulsa, OK Bond Money Update:

Increase in the Funding Fee 

Effective with all loans registered on or after June 9, 2014 under the HFA programs, the Funding Fee will be increased to $300.

The response to this mortgage program has been tremendous, and the high volume of applications for underwriting increases every day.

In an effort to decrease turn times, U.S. Bank must increase their staff accordingly. They have reviewed the options and have determined that an increase in the funding fee is the best option at this time to accommodate the related expense.

Check back for further updates!

How to get down payment assistance?Certificate Of Bond Money Training

Reserve your funds as soon as possible.  Click here to begin your 100% financing application.  Your first mortgage funds are locked for you when the reservation is submitted and accepted by the system and a loan number is obtained.  Grant funds are automatically reserved with the first mortgage reservation.

Copyright 2014 John Regur All Rights Reserved – Originally Posted at: Tulsa Oklahoma Mortgages – John Regur

Posted in: For Buyers

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What is A Condo Association?

Tulsa, OK, HUD Approved Condo

Largest HUD approved condo complex in Tulsa

What is A Condo Association?

This is a question often under-looked by Tulsa, OK, condo buyers.  Condos may provide great bang for the buck, inexpensive amenities and low-maintenance, but this is accomplished through all of the homeowners in the building working as a cooperative.  Often, condominium buyers do not give enough consideration to the quality of the Condominium Homeowners Association.

My first piece of advice, find out if the association has completed HUD approval.  Click here to read more about HUD Approved Condos.

Not All Tulsa, OK, Condo Associations are Equal.

Many Tulsa, OK, neighborhoods have a Homeowners Association, or HOA for short.  They are designed to maintain “standards” for the development and keep the neighborhood in good repair.  The developer of the neighborhood typically funds the HOA, establishes the association with the rule and regulations it will uphold, and then hands it over to the homeowners as properties are purchased.  Some neighborhood associations are strong and highly involved in the maintenance of the neighborhood, and some are more social, used to promote the community.  And all the while, many other Tulsa, OK, neighborhoods maintain themselves beautifully without the help from an association.

Condominium Owners Need Associations.

A condominium will always have any association, and it always needs to be strong.  Condominiums share significant amounts of commonly owned property, such as the roof, parking, landscaping and many other common areas.  Each owner exclusively owns their individual unit, but the elevator, swimming pool, and other building amenities required shared maintenance. When you buy a condo, you are entering into an agreement with all other owners in the Condo Association.  All association members agree to upkeep their individual unit and to additionally contribute to upkeep of the shared property.  This provides an economy of scale, and shared costs can provide for very inexpensive benefits.  But if you condo association is weak, you can find your condo association difficult.

How Do You Know if a Condo Association is a Good One?

Well, you have to ask questions:

  • Meeting of the Board

    What I see at Board Meetings where I live.

    What are the condo association rules?  Your parking spaces, swimming pools and patios will all be governed under the condo association rules.  If having pool parties is important to you, ask for the rules.

  • How much are the condo association fees?  Fees vary by community and may cover vastly different items.  Ideally, fees help all association members acquire benefits less expensively then what they would get them for individually.  Possible considerations may include maintenance of the building, insurance of common areas, utilities, amenities, etc.  The point here is to ask and to understand what the cost is and what it includes.
  • Is the condominium complex professionally managed?  You will want to ask for the contact information for whoever runs the property.  It is important to identify who fixes what.  Contact the property management staff or the HOA for all of the information you will need.
  • How much money is in the reserve fund?  Generally, you will want to see 15% – 30% of annual expenses in a reserve fund.  The older the building, the more the maintenance, and the more you will want in the reserve fund.
  • What is the Condo Association’s history regarding special assessments?  These are a one time fee used to cover an unexpected or large expenditure.  If it cannot be covered by the budget or the reserve, a special assessment is required.
  • Rental-agreement-e1347797065418

    Best Practices: Obtain & Read all paperwork

    Is there any pending legislation against the condo?  I know of at least on Tulsa, OK, condominium association that is currently encumbered with a lawsuit.  A lawsuit may impact all homeowners.

  • What is the Condo Association’s rental policy?  A high number of renters can have a negative impact, and many lenders are more reluctant to to give loans on these types of complexes.  Most lenders look for at least two thirds owner occupancy.

Tulsa, OK, condominiums have appreciated at a higher rate than single family homes over the last 2 years.  But this is mostly due to the fact that during difficult economic times (2008-2011), they depreciated faster as HOAs scrambled to absorb foreclosure losses.  If too many units stop paying association dues, the association’s budget falls apart quickly.  They may offer advantages to home buyers such as affordability, the need to downsize or possibly not wanting to have the maintenance issues of single family homes.  But before buying  a condo, make sure you know who you will be partnering with and what the rules are.

Copyright 2014 John Regur All Rights Reserved – Originally posted at: Tulsa Oklahoma Midtown Mortgages – John Regur

Posted in: Condos

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