Home Loans – Identity Theft Protection Could Hurt Home SalesWritten by Charles Essmeier
Identity theft has been a hot topic in news during last few years. Just a month or so ago, forty million credit card numbers were compromised due to a computer attack on a credit card processor. Consumers are rightly concerned, as it can take years to unravel problems created when someone’s identity is stolen. New legislation in Texas and California, also proposed elsewhere, is designed to protect consumers by letting them put a “freeze” on their credit reports. Those in real estate industry are worried, however, that doing so may make it difficult for some people to buy homes.
The concept of freezing credit reports is a simple one. Every time someone applies for credit, lender contacts on of three main credit bureaus and requests a copy of his or her credit report, which contains applicant’s FICO score. The score, a number ranging from 300 to 850, indicates how worthy applicant is to qualify for loan or credit. The new laws allow consumers to “freeze” their credit reports, effectively blocking any attempts by anyone to view his or her credit score. If score can’t be viewed, then credit can’t be issued, thus protecting consumer from fraudulent activity.
The process is a simple one, and can be initiated or canceled with
| | Home Equity – Let the Market Eliminate Your Private Mortgage InsuranceWritten by Charles Essmeier
In decades past, most people who were interested in obtaining a home loan were required to put down at least 20% of purchase price. Those days are gone, and as home prices have risen faster than incomes, average down payment required by lenders has dropped. In fact, it is often possible to buy a home with no down payment at all. Nationally, average down payment is a 3%. It’s nice to be able to buy a home with such a small amount of ready cash, but there is a downside – if down payment is less than 20%, lender requires that private mortgage insurance (PMI) be added to house note.
No one likes to pay PMI; payment doesn’t go towards paying off house and payments aren’t tax deductible. And PMI payments aren’t trivial; monthly PMI payment on a home priced at U.S. median price of $206,000 with a 3% down payment is $129. Lenders require that borrowers pay PMI until borrowed amount becomes less than 80% of value of home. In years past, this has meant that homeowners had to pay PMI until they had paid enough of loan balance to reduce debt to less than 80%. Times have changed, however, and many homeowners may be eligible for a faster way
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