What's The "Score"

Something that is getting much attention in the media is credit. You are hearing things like lenders are tightening credit or standards of credit are increasing. What they are really telling you is that you, now more than ever, need to understand your personal credit and keep an eye on your credit score.

What they aren't telling you is that creditors aren't making it easy for you to do just that. Your credit score can range from 300 to 850. When a creditor pulls your credit one of the three credit reporting agencies: Experian, Equifax or Trans-Union will provide that creditor with a score based on 5 factors.

• 35% of your score is built around your payment history - how well you have paid on the accounts you have open.
• 30% of your score is based on the amount of outstanding debt you have and in particular the amount of your revolving debt and how much of it you use.
• 15% of your score is based on the length of time your accounts have been open. The newer accounts get lower scores.
• 10% of your score is based on new credit and how many new accounts you are trying to get.
• 10% of your score is based on the types of credit. A higher score will reflect various types of credit and experience with those credit types.

One issue that you may be having is that your creditor is lowering your available balance on your revolving credit to match your balance. This is having an extremely negative affect on your credit report. Without your permission - it appears that you have maxed out a credit card that may have only been at 50% of the available balance.

This could cause your credit score to drop and for you to have to start paying higher rates on loans and insurance.

Two great resources for you are http://www.freecreditreport.com/ and http://www.optoutprescreen.com/

By keeping track of your credit and opting out of free promotions you could save thousands.

America Is Waiting For You

In a follow up to my post yesterday. Everything is working together to get the American economy back on track except the American consumer. I referenced yesterday that I don't understand what we are waiting for. Well, America is waiting for you. The government and wall street are bringing rates down, home prices are down, gas prices are down and yet we are not pulling the trigger on those new home purchases and refinances.

> As with every recession in history - the housing market drives the economy up and out. New home purchases and refinances drive nearly every sector of the economy. Retail, manufacturing, service, transportation, construction, etc. Americans spend more money in the first six months of after a new home purchase than at any other time in the home. Remodelers obviously spend on the remodel and redecorating which infuses cash into the same sectors.

> The recession can come to a close if Americans will pull the trigger and buy. Many of the Realtors that I talk too tell me that they have plenty of clients looking but no one is buying. They have too many options and are nervous to make the decision.

> John F. Kennedy said in his inaugural address "Ask not what your country can do for you, but what you can do for your country". Once again America needs you. Make the decision - find the home - make a great deal - get your financing in place and pull the trigger. America is waiting for you.

Watch Out Rates are Falling...

I am not sure what we are waiting for... REFINANCE NOW!!!

Mortgage rates are the lowest they have been in 40 years. All of the economic forces are working together to drive them down to some real money saving levels. For instance:

1. The feds continue to lower rates to stimulate the credit markets

2. The lenders are finding creative ways using the bail out dollars to loosen credit and lend more money

3. Gas prices are at the lowest levels in 5 years

4. We are welcoming a new president into office in the next couple of weeks

5. Iraq no longer holds the top media billing and some experts think the war is coming to a close.

This is all working together to get rates down into the low 5's and in some cases the mid 4's.

If you need some guidance on when you should look to purchase or refinance your home, give me a call or email and I would love to walk through the process with you step by step.

Money to Lend

I have been getting quite a few questions about where to get money to fund business. Everyone knows that the small business is the back bone of the American economy and without credit that makes business really tough to do. Small businesses feed their businesses on credit and without it they can hardly survive.

Traditional banks have not yet loosed their credit guidelines. They are holding tight to the purse strings. The 700 billion, while it was dispersed from the feds, has yet to loosen the credit culture. In fact, banks are tightening credit. We are seeing more and more loans declined that would have been approved even a year ago. So what is a business to do?...

There are alternatives to bank financing. I know that businesses have been trained that when you need money you go to the bank and the manager looks over your financials and makes a decision to give you money or not. Without any regard to the severity of the decision that is in their hands. Today those hands are keeping their money tight fisted...Well today is a new day.

There are non-traditional sources of capital in the market place eager to lend you money. Many of them are asset based and need to see good collateral positions on your property or very little depreciation on your equipment, but they are willing to lend. They are using sources from investors that have pooled their money together and formed capital lending companies that are still making good decisions to lend.

You can get the money that you need. You have to be creative. You need a commercial broker, such as myself, to hunt these funds down for you and you must be relentless, but you can do it. There is money to lend.

It's Election Day - Who Has The Answer

As Americans heads to the polls the question still remains "what is going to happen with our economy?" One side says that the plan is to give the money back to the Americans the other side says that "Its time for change". No matter who wins there is going to be alot of work to do before this economy gets back on track.

Here are some facts -

1. This is the wrong time for tax increases in any form or fashion. If you are motivated by government and believe that the answer to America's problems lie in governmental control and programs that are sponsored and run by government you must realize that the only way to pay for those programs is to raise taxes. If you belive that the answer to America's problems lie in individual responsibility then we must educate Amercia and keep them spending. When you raise taxes in a recession - yes I said the "R" word...You drain cash from the American people that needs to be spent to stimulate the economy. Without disposable income Americans can not spend its way back to a healthy economy.

2. The housing market must be reinforced. The last 2 recessions have recovered by a major surge in the housing market. When focus is put on helping people buy homes it stimulates spending in nearly ever sector. From wood products to food products. The housing market is key to helping this economy.

3. The credit culture must return to sound business and lending practices. One of the major issues with todays economy was the deregulation of banks under President Clinton. When he signed the bill allowing banks to sell their loans on Wall Street - the practices of making loans became more about the return on investment than revenue versus risk with a strong likelihood of repayment. This decision allowed the banking system to create investment products out of their loan portfolios. Granted they were great revenue streams, but the risk was and is way to high for the return. The issue is that now that investors have tasted losses in those portfolios the capital has dried up and banks now have to risk their own money. Its always harder to do business when you are spending your own money.

4. Banks must begin to lend money again. It seems that the $700 billion has hit the market but the only benefactors were the banks. They were able to move bad debt off their books but have not used that capital to make more loans. Banks must prime the credit pump and get back in the lending business.

5. Americans need not panic. There seems to be terror across the land to do business. While we are not business as usual and you must be frugal. Don't let the media scare you into thinking everything is out of control. Just look at some positives - Stocks are up today over 250 points, people are still investing, Gas prices are below $2.50 per gallon "Wow that's been a while". While there are concerns for inflation - prices are currently stable.

6. If you have not purchased a home - now is the time to begin looking. Prices of homes are at the lowest in years. It is time to get qualified and to buy. Now is the time when investor groups begin to look for great deals and snatch up the homes to prepare their balance sheets for the turn in the economy. Individuals should look to do the same thing.

I guess what I am saying is that neither candidate can alone solve the problems of the American economy. It is going to take cooperation, dedication and some strategic moves that do not involve bigger government. We need the cash to stay in the hands of the American people who can invest and spend to drive this economy forward. Vote to keep our dollars in the hands of the people.

The Money is Hitting the Market

Whether you are a fan of the $700 billion dollar bail out plan or not - the fact is that the money is hitting the market. Over the past couple of weeks we have seen the stock market hit all time lows and then rally back. We have seen mortgage rates go way up and then come plummeting down. It feels like a roller coaster from Magic Mountain. But no matter what report you read or how you interpret the plan - the money is hitting the market.

So what does that mean. The idea behind the 700 billion was to loosen the credit market. To stimulate banks to release money to borrowers to spend on new things or refinance old things. Our economy is built on the credit market and when it freezes we are out of business. One major issue that I don't think anyone is paying attention to is "what happens in 5-7 years when we have 700 billion dollars worth of cash in the market place - supply and demand. There will be more money circulating with the same demand for that cash. Uh oh can you spell inflation.

Today however we can enjoy the rallying back of the markets and the easing of credit. As a mortgage professional we are seeing the rates ease and the banks becoming more eager to make loans. I believe we are going to see the winter months move in the right direction. Even on the commercial side of the business the money is hitting the market and lenders are becoming less jaded and more eager to produce results.

Now is the time to get in. If you have been waiting to purchase that new home - now is the time to buy. If you are wanting to refinance - now is the time to apply. The rates are attractive and the credit is available.

As a mortgage lender representing both residential clients and commercial clients - I am excited to see the market begin to loosen. I would like to encourage all of the readers to give me a call if you or anyone you know is questioning what to do now. Do I refinance? Do I sell? Do I hold tight? Maybe you want to evaluate consolidation of all your debt - I can help with all of those questions.

Remember - the money is hitting the market...

What Do I Do?

America is full of questions about today's economy. People in the Northwest are no different. Do we buy a house now or wait? Do we sell our house or wait? Do we refinance our house or not? What happens if the interest rates go up/down? Do I qualify to get money out of my house? Can I still consolidate my bills and pay off some of this debt and is that a good idea? I have been reading many of the economic reports around the country and each one of them is tainted with the same concerns. America is frozen in action. Housing purchases drop another 2.2%. Americans are no longer spending. There is no confidence in the market. Well with all of the negative media and gloomy reports it is no wonder there is fear to make any sort of decision. The issue with making decisions effectively is inadequate information. Let's try answer some of these. The questions related to buying now or later and refinancing now or later come down to fairly proven methods of analysis. The American credit system has been founded on a set of principles. Basically, can the person seeking financing most likely repay the loan, do they have the cash flow to repay the loan adequately without causing financial trauma, is their character sufficient that they believe they should repay the loan and is the collateral they are borrowing against sufficient to secure the loan. Extension of credit moved away from these basic foundations and it has really caused some problems. So if you are asking yourself "should I buy now or wait?" You should be asking yourself "Can I afford to buy now?" "Is my job reliable enough to help me repay the loan?" "Am I willing to put anything down to create a better collateral position?" "Do I have the fortitude to repay the loan if something crazy should happen?" If you can answer these questions "Yes" then you should seek out a knowledgeable/trustworthy lender to help you through the process. Throughout history real estate has always been a good investment. Owning your own home builds stability in your life and affords great opportunity for wealth accumulation. Having realistic expectations about your financial position will help you make a better decision. The Northwest market has been hot for many years and this cooling allows housing to become affordable for more people. Lenders continue to have programs that will help you with your purchase or refinance and despite the reports of credit tightening, lenders continue to make loans. Rates remain steady in the 6's which in fact is a great rate. We have become numb to the normal rate environment being teased by low 5's. Borrowers should understand that 6% is a stable rate environment and provides adequate buying power. Rates lower that 6% are temporary and can not be sustained in our economy. People in the Northwest should not be frozen in action. Get sound advice from a financial person that you trust and move forward. You can do it!!!