Short Sale, Foreclosure or Deed-in-Lieu of Foreclosure?

Short Sale, Foreclosure or Deed-in-Lieu of Foreclosure?

If faced with these three options when you need or have to move, you should know the impact of each.

All three can ruin your credit rating. It might not happen right away, but sooner or later, unless the bank has specifically agreed not to report the short settlement, the bank may report it as a Score Factor Code 22. That score factor relates to delinquencies, derogatory records and collections or settlements.

Drawbacks to Foreclosure
1. The right of home ownership is stripped away.
2. Homeowners return to the rental market as a renter.
3. The bank may post a Notice of Public Sale on your front door.
4. Your credit takes a nose dive, and a foreclosure will remain on your credit report for 10 years.
5. Under Fannie Mae & Freddie Mac guidelines, without extenuating circumstances, you will not be eligible to buy another home for 7 years.

Benefits for Short Sale
1. You won't suffer the social stigma of the foreclosure.
2. No mortgage payments to make, unless you want to buy again and choose to make them.
3. You can meet the new owners.
4. You will be eligible, under Fannie Mae guidelines, to buy another home in 2 years instead of 5 to 7 years.
5. If your credit report does not reflect a 30-day+ late pay, you will be eligible to buy another home immediately with a legitimate reason for entering into the short sale. (i.e. loss of job or spouse)

Drawbacks to a Short Sale
1. Waiting for the bank to respond to an offer is frustrating.
The bank will want to examine personal records such as tax returns, bank accounts, assets and liabilities, in addition to asking for a hardship letter from you.

2· There is no assurance the bank will accept a short sale offer.

3. The derogatory credit will remain on your credit report for 7 years.

4. Waiting periods after Short sale, Foreclosure, Deed-in-Lieu or Bankruptcy. Bankruptcy requires 4 years from the date of discharge but may be accomplished after 2 years with 20% down payment and documentation of extenuating circumstances.

5. Foreclosures will require 7 year waiting period but may be done in 3 years with 20% down payment and documentation of extenuating circumstances.

6. Short sales and Deeds-in-lieu will require 4 year waiting period but may be done in 2 years with 20% down payment and documentation of extenuating circumstances.
What are acceptable extenuating circumstance? You lost and replaced a job with lower income, Loss of a spouse, Forced to relocate for employment and Extended period of illness are all legitimate, documentable reasons that an underwriter will take into consideration when applying for a new mortgage. Underwriters are required to investigate any and all reasons for the problems that have you put you into problems in the past and insure the investors that the likelihood of recurrence is minimal. You can not enter into any of these solutions lightly and under or misinformed to the ramifications.

What Climbing Consumer Confidence Means to you

If you've been scanning the financial headlines this week, you might have noticed that the Consumer Confidence Index climbed to 60.6 in January, up from 53.3 in December. This is far higher jump than the modest increase to 53.5 that analysts had expected.

But why is it important, and what does it mean for your wallet? Here's what you need to know:

•Consumers are feeling better: The index, which surveys 5,000 U.S. households, measures consumers' optimism about the economy. January's reading means we're feeling better, although we still have a ways to go. (A good reading is usually considered 90 or above, and at the moment, pessimists still outnumber optimists.) "What this means, in English, is that it's no longer just egghead economists who think that better times are ahead. The average American consumer doesn't think things are so hot right now, but thinks that in a few months, not only will the recession be over, but it will no longer feel like we're in a recession," says Ken Goldstein, an economist at the Conference Board, which manages the index.

•More spending may be on the way: When consumers are feeling confident, they tend to open their wallets more. There's no way to predict for sure that this will happen, but that's the historical trend. Goldstein says that we may really start to see this as we move into March and April. "There is at least some evidence that there is a reason to have more faith, and more confidence, which means people may spend more money. If they do that, there will need to be more stuff to spend that money on, and that means more jobs. That really starts the ball rolling in a positive direction."

Action Plan to Improve Your Credit Score

From Wallet Pop Financial Web Page:

Your credit score impacts your ability to get out of debt and stay out of debt. The worse your credit score, the higher the interest rate you will be charged on money you borrow. The better your score, the less your debt will cost you and the quicker you'll be able to pay it off.

Step 1: Get Your Credit Report and Check it For Errors
Under the Fair Credit Reporting Act, the Big Three credit bureaus are required to provide every consumer who asks with a free copy of their credit report once a year. You can get yours by going to annualcreditreport.com. This step is important because it is extremely likely there are errors.

Step 2: Automate Your Bill Paying.

This may be the most important tip. Missing payments or being late on payments can quickly ruin your credit score. For this reason, I strongly recommend that you use your bank's online bill-paying service to automatically transfer a pre-set amount every month from your checking account to cover at least the minimum payments on all your credit accounts

Step 3: If You Have Missed Payments, Get Current.

Step 4: Keep Your Balance Well Below Your Credit Limit.

Of all the factors you can control -- and improve quickly -- how much you owe is probably the most powerful. Since the credit crunch, credit card companies have been cutting customers' credit limits without warning.This can be devastating to your credit score

Step 5: Beware the Credit Card Transfer Game.

For years, people have saved money by transferring high-interest credit card balances to low-interest cards.This can still be helpful, but be aware that using one credit line to pay off another sets off credit score alarm bells -- even if all you're doing is consolidating your accounts. All other things being equal, your credit score will be higher if you have a bunch of small balances on a number of different cards rather than a big balance on just one or two.

Step 6: If You Rack up High Balances, Pay Your Card Bill Early.

Step 7: Hang On To Your Old Accounts

Part of your credit score is based on how long you have had credit accounts. Closing old accounts shortens your credit history and reduces your total credit -- neither of which is good for your credit score. Keep the older accounts open even if you aren't using them.

Step 8: Know the Difference Between a "Soft Inquiry" and a "Hard Inquiry."

The credit bureaus all recognize the difference between you checking your own score (a "soft inquiry") and lenders checking your score (a "hard inquiry"). While too many hard inquiries can lower your score, soft inquiries don't count at all. Feel free to check your score as often as you want.

Step 9: Buy a 3-and-1 Report And a Credit-Monitoring Package and Identity Theft Service.

Your credit score and credit report are so important that it makes sense to pay for a 3-and-1 Report (which provides you with your credit scores from the three bureaus) as well as an identity theft monitoring service. In most cases, these services will cost you between $11.95 and $19.95 a month.

New Credit Score Loan Criteria

Minimum Loan score and LTV allowed for Purchase transactions FHA Loans:

Loan Score lower than 500 = not allowed

Loan Score 500-579 allowed with maximum 90% LTV* (10% down payment required)

Loan Score 580-599 allowed with maximum 95% LTV* (5% down payment required)

Loan Score 600 and higher allowed with maximum 96.5% LTV (3.5% down payment required)

*funds for DOWNPAYMENTS must come from BORROWERS OWN FUNDS

Dollar General vs. Walmart--Price Comparisons on 10 Standard Grocery Items

Interesting article from walletpop.com on the price battle between 2 discount retailers:

By Marlene Alexander
Jan 7th 2011 Filed under: Family Money, Saving Money, Shopping, Economizer

Dollar General is planning on opening 625 new stores this year. Added to the 9,200 stores currently in operation, we wonder if Walmart should be looking over its shoulder. The following Dollar General vs. Walmart price comparisons are taken from Walmart's online shopping website and random Dollar General stores.

We picked 10 grocery items that a family might buy on a regular basis and compared them to regular store prices. Please note that prices will vary from region to region, based on market need and a particular store's overhead costs.

1. Cheerios cereal: A 9- to 14-oz. box
Dollar General: $2.85
Walmart: $3.50

2. Tide Liquid Laundry Detergent: 75-oz. size
Dollar General: $10.50
Walmart: $12.97

3. Lysol Disinfectant Spray: 12.5-oz can
Dollar General: $4.25
Walmart: $4.22

4. Charmin Basic toilet paper: 24 double rolls
Dollar General: $10
Walmart: $9.97

5. Q-Tips: 500 count
Dollar General: $3
Walmart: $4.51

6. Suave Shampoo: 22.5-oz
Dollar General: $1.75
Walmart: $2.94 for 32oz.

The Walmart price seems the better deal because of the larger size, but it still works out to be two cents more per ounce at Walmart than at Dollar General.

7. Huggies Diapers: sizes 1-6
Dollar General: $10 for 50 to 23 diapers
Walmart: $32.75 to $35 for 100-192

If you buy two packages of 50 diapers at Dollar General, it will cost you $20 or about 20-cents per diaper. Buying a box of 100 diapers at Walmart will cost $32.75 or 32 cents per diaper.

8. Campbell's Chicken Noodle or Tomato Soup:
Dollar General: $1 per can.
Walmart: 93-cents per can.

9. Hamburger Helper:
Dollar General: $1.50 per box
Walmart: $2.23 per box

10. Palmolive Dishwashing Liquid: 34-oz. size:
Dollar General: $2
Walmart: $2.34

Overall, I'd say that Dollar General is the price champion, at least according to these 10 picks but, as with shopping anywhere, it pays to be a careful shopper and never assume you're getting the best deal in a particular store just because you always have done so in the past

By Marlene Alexander
Jan 7th 2011 Filed under: Family Money, Saving Money, Shopping, Economizer