SubPrime Mortgage Mess...?

[IdahoOrchid]

Susanne, I disagree with you for only one reason. When someone is BUILDING a credit history, it is important to pay your balance over a period of time. You will not generate much credit information otherwise since it takes TIME for information to be noticed and recorded. The only way they know if you will pay over time is if you do it. Pick a reasonable balance that you can pay, make the charge and pay it over a 6 month period.

Here is one other thing I learned about your credit score that is backwards thinking. If you CANCEL a credit card it usually affects your score negatively. Go figger??????????? Also, if you have NO balances on your cards. Does this tell you something? It tells me the system is self serving: you scratch my back and I will scratch yours.

[cb977]

Sorry, Steve...but I've had friends and family do exactly as I described starting with no credit history at all and they are now building that line of credit. It's not necessary to pay interest for any period of time to prove you can pay your bills. Everybody has their own way of doing things so what you suggest is just another way of accomplishing a credit line.

Anything I write here (or anywhere) is just what I've learned from my experience...I'm not saying it's the only way to go.

I agree that it is ridiculous for it to be a bad thing when you cancel a card...they want your money, that's their bottom line. They don't get any of mine...that's my bottom line and I have excellent credit.

[Lindanc]

Like said before stay away from the ARM (adjustable rate) and get a fixed even if it sounds higher at first. Another thing, don't know if you will need over 80% loan if you do, consider paying PMI (Private Mortgage Insurance) vs. the all too popular 80% loan with a 20% second mortgage to cover your downpayment. Those second mortgages can also mess you up by being ARM or interest only a lot of them have prepayment penalities.

Here's the deal with the PMI (private mortgage insurance). Make monthly payments on it don't pay for it upfront at the closing (that's what the banks want you to do - means more money for them). You can get the PMI taken off when your payments and/or equity reach that 20%. Here in my area it only takes about 2-3 years to do this. This depends on your area check and see if homes are holding steady increasing/decreasing in value.

You have to be proactive to get the PMI off - banks don't like you to try. But do it! You will have to call them and PUSH!

[Ross]

One thing I know personally (from experience) is the more credit accounts (including credit cards, home mortgages, etc.) the worse your credit score. So if you have ever opened credit cards and no longer use them, close them. Don't just stop using them and don't just cut them up. If you doubt what I am saying, ask for a free credit report (FreeCreditReport.com | Free Credit Report and Credit Score Online by Experian) and see how many accounts you have and the resulting score.

[Jo Ann]

Thanks Guys for all your input. I did sign up for my Free credit Report and Experian. I'm really sorry I didn't start working on my credit history years ago. I just never realized how important it is. A person can't almost do anything with out it.

[kiki-do]

From my experience, I would absolutely go with a fixed rate. Also, go with a bank/credit union that has a solid reputation and not something that pops up on the internet. (Number 1 motto: If it sounds too good to be true, it probably is). Make sure there is no penalty should you decide to refinance in a few years (the rates/economy have got to be better by then). Some banks/ federal credit unions have promotional offers that pays all closing costs...which is a very nice deal.
And about credit cards....I agree about paying them off and/or not letting them get up too high. Once established with credit card companies...they will fight over you with lower rates if they see you as a good credit risk. Be careful about gimmicks, such as "points" and "travel rewards" unless you actually plan to use them. It takes alot of useage to earn these rewards. I always opt for lower interest rates instead. Above all in everything you undertake....read the fine print! There are hidden interest charges lurking on certain type purchases, such as cash advances...transfering balances (3% add-ons), etc.
Hope this helps. Good luck. Fixed...never variable. But then, this is only my own personal experience talking. kiki-do

[Lindanc]

Be careful with checking credit scores. Everytime your credit score is checked it will lower your rate. Just to check scores for the sake of checking scores is not good. Now if you THINK there may be a problem with ID thief that is a total different story.

SHOP your loan - find the best rate and terms. DON'T let everybody you talk to check your credit score. Tell them when you are talking with them DO NOT check my score UNTIL I tell you you can. Only let the one lender that fits your rate and terms check that score.

Another thing be very careful of shutting down accounts and/or opening new accounts all of this can lower your score. Too much of this and the lenders think you may be up to something. For instance, if anybody is in a divorce situation (hey you will need new acccounts, right? with lots of shutting accounts/opening acccounts/moving funds etc.) and you are also trying to get a new mortgage WAIT until AFTER the mortgage lender runs your credit score before you move all those accounts around because it will knock the heck out of your score (short term). If you wait to move all those funds around after you lock in your mortgage rate than you will get a better rate on your mortgage. This is why a "friendly" divorce is much better than fighting through the whole thing (another subject).

Oh by the way, everything I'm writing on this thread is in no way the only way to go. There are lots of ways to build credit and I think everyone has great ideas!

[CoolPhrog]

Jo Ann, I have about 20 years experience in this ever changing industry. I own a title insurance agency and "mortgage broker" is a second language for me. There are some really bad people out there (ESPECIALLY in Florida). I know some very "solid" honest people that can walk you through this. Please let me know if I can ever be of assistance.

[Jo Ann]

Thanks Everyone,

Again I thank all of you for taking the time to give me your advice. I appreciate all your words of wisdom. You guys are a great little community here...