As a rule, credit scores analyze the credit relate information on your credit report. How they do this varies. Since FICO scores are frequently used, here is how these scores assess what is on your credit report.

1. 35% – Your Payment History – Have you paid your credit accounts on time? Late payments, bankruptcies and other negative items can hur you credit score. However, a solid record of on-time payments and help your score dramatically.
2. 30% – How Much you Owe – FICO scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much of your available credit you are using. The more you owe compared to your credit limit the lower your score will be.
3. 15% – Length of your Credit History – A longer credit history will increase your score. However, you can get a high score with a short credit history if the rest of your credit report shows responsible management.
4. 10% – New Credit – If you recently applied for or opened new credit accounts, your credit score will weigh this fact against the rest of your credit history. FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur. If you need a loan, do your rate shopping with in a focused period of time, such as 30 days, to avoid lowering your FICO score.
5. 10% – Which Side of the Bed you Wake up on – I don’t think there is a science to all the calculations on determining your FICO score so small miscellaneous variables could affect your rating. What color shirt you wear, If you take cream with your coffee…I don’t know?? Hopefully, this list will give you a good start to building and maintaining a high credit FICO score.

At the urging of NAR, Fannie Mae announced a new policy on February 6, 2009, to allow investors and second home buyers to own up to 10 financed properties. The new policy takes effect on March 1, 2009, and replaces the current 4-property limit. The restriction applies to the total number of financed properties, not just to the number sold to Fannie Mae.

Investor and second home borrowers that seek to own between 5 and 10 financed properties must meet additional eligibility requirements. Borrowers must have a credit score of at least 720. The maximum loan-to-value ratio is 70% or 75%, depending on specified criteria. Borrowers may not have any history of bankruptcy or foreclosure in the past 7 years, or any mortgage delinquencies of 30 days or greater within the past 12 months. Reserve and other requirements also apply.

For Arizona homeowners that are considering selling their homes as a short-sale, there are important aspects about your mortgage(s) that you need to know. I will go through the readers digest version here, but be advised I am not a lawyer (nor want to be) so please contact a licensed real estate attorney or legal counsel for advise.

Arizona is a non-deficiency state, which means that properties of two and one-half acres or less and used for single-family or two-family dwellings; that the lender cannot bring a deficiency suit. This applies to mortgages that are held in deed of trust (which 99% of Arizona mortgages are). HOWEVER, the caveat is that the borrowed funds for the loan(s) must of been used to purchase or refinance the secured real estate. Meaning, if you used a line of credit to buy a boat, take a trip or build a pool that this loan is not subject to Arizona’s non deficiency statute. The reason being is that this money was financed by what is called a non purchase loan. Furthermore meaning….a mortgage lender may be able to obtain a deficiency judgment against you for the balance of the non purchase loan.

So to recap, if the property was bought using purchase money (loan that is applied to the purchase of real property) then there is no recourse for a lender to come after a homeowner for the mortgage balance if the property is sold short or goes into forclosure. On the other hand, if the property has liens that are held with non purchase money (loan that was used to buy stuff), the lender has every right to pursue a defiency judgement in the state of Arizona.

I hope this helps clarify that a foreclosure or short-sale will wipe anyway any debt on a property execpt on any loans that were made with non purchase money.

This is a good loan program for first time home buyers looking to buy homes in rural areas of the Phoenix Metro Area. More specifically some of these areas include: Queen Creek and the Town of Maricopa in Pinal County.

I decided to blog about this Rural Home Loan program because a realtor had emailed me about a buyer that was potentially going to make an offer on my Queen Creek flip home. The realtor’s concern is that the buyers would have to wait 90 days from the time we acquired the property because the title has to be seasoned for 90 days per FHA guidelines. While this is very true with FHA loans and some conforming loans, it does not apply to the USDA Rural Home Loan Program.

Here is an overview of some of the advantages of the USDA Rural Home Loan:

• 100% Financing with No Down Payment
• No Private Mortgage Insurance
• There is no Cash Reserve Requirement
• Minimum Credit History Requirements
• Finance Closing Costs – up to 6%
• Closing Costs Can be Paid by the Seller (up to 6%)
• Typically Rates are Lower Than FHA Loans
• No Limitation to the purchase price
• Repairs Can be Financed up to 100% of the Value

If you are a home buyer interested in Queen Creek or Maricopa real estate, I recommend you consider the USDA Rural Home Loan Program. This program provides the lowest interest rates with the lowest down payment requirements.

If you need to talk to a creditable and trusted mortgage consultant, I highly recommend you contact:

Michael Barnes
Desert Sun Mortgage
4301 N. 75th St, Ste 103
Scottsdale, AZ 85251
Tel: 480-946-2200 ext 114
michael.barnes(at)desertsunmortgage.com

I’m pondering the idea of adding a mortgage rate ticker to the website, but I’m kinda unsure if it will really be a big benefit to everyone out there. I really don’t want to trash up the site with a lot of junk, but at the same time provide useful and relevant info. Here’s what the mortgage ticker would look like:

On second thought, maybe I’ll just create a category section called “Mortgage” and have it under that section. I don’t know…decisions, decisions.