Why is My Credit Score Low And What Can I Do About It?

The Swami can not tell you how many times this has happened. A very qualified borrower applies for a mortgage. He has enough income, his job history is good, he has enough of a down payment and he pays his bills on time. But for some strange reason, his credit scores are low. Too low in fact to qualify for the mortgage.

I have been in this business a long time and I have looked at thousands of credit reports and I still can't tell you how the credit bureaus arrive at their credit scores that the arrive at. I do however have a pretty good idea of how to raise credit scores when needed. We do quite a bit of this in our office.

The first thing I look at is how many open trade lines there are and how high the outstanding balances are in relation to the the individual credit limits on those accounts. If you are above sixty or seventy percent of your credit limit on credit cards, your scores take quite a beating -- a bad beating. But this can be easily fixed.

You can either pay down those balances to below fifty percent of the credit limit. The problem is, you may not have the money, especially if you are in the middle of trying to buy a home. Another thing you can do is to consolidate all your cards to one credit card. This will free up your available revolving credit limit which should raise your scores.

Many times it is necessary to open new lines of credit in order to raise scores. Often, I have clients open two or three new credit card accounts, use them one time, pay them off and never use them again. This may actually drop scores a bit when you first apply for the new accounts, but after using the cards and paying off the balances the scores tend to go up again.

As mortgage professionals, we have many tricks that we have employed over the years in order to raise scores, too many to mention in this post. But the important thing to know, is that in most cases it can be done quite quickly. After you implement the changes we recommend, we are able to do a "Rapid Re-score" for a nominal fee. A "Rapid Re-score" Is where the credit bureau's instantly re-score your credit based on the changes that you just made.

If you have a credit history where you basically never pay your bills, then we are talking about a whole different ball game. Although more difficult, it can still be dome. It just takes more work and a little more time -- But it can be done.

If you are in need of these services and your mortgage professional doesn't offer them, then find one who will or find someone who can recommend a trusted source to do this for you. Just a few points one way or the other can severely affect not only your interest rate and monthly payment, but also weather you qualify for the mortgage at all.

Now, here are some of today's best WHOLESALE 30 year fixed interest rates.

rate 15 day 30 day 60 day
5.2500 97.715 97.640 97.608
5.3750 98.416 98.341 98.310
5.5000 99.070 98.995 98.964
5.6250 99.530 99.455 99.424
5.7500 100.065 99.990 99.959
5.8750 100.652 100.577 100.546
6.0000 101.049 100.974 100.943
6.1250 101.363 101.288 101.257
6.2500 101.648 101.573 101.542
6.3750 102.241 102.166 102.104
6.5000 102.568 102.493 102.431
6.6250 102.748 102.673 102.610
6.7500 103.044 102.969 102.938
6.8750 103.350 103.275 103.244
7.0000 103.554 103.479 103.448

Please Fix Your Broken Arm Before It's Too Late!

You took the easy way out. Fixed rates were great, and adjustable rates were even better. You may have saved hundreds of dollars per month by taking the adjustable opting to worry about rising rates in the future.

Well, guess what? The future is here. Rates are rising especially those which are tied to adjustable rate mortgages and that great low payment you had is really starting to creep up. But the Swami says "Don't Worry, Be Happy."

The good news is that 30 year fixed rates are still at historic low rates. If you act now, you can still lock yourself in under 6%. But you must act now. Procrastination will be your enemy. The days of 30 year fixed rates as low as 4.75% are over and in my opinion what we have now is as good as it will be for a long time.

The Swami says avoid the temptation of getting another adjustable rate mortgage. If you get another, you will probably have to relive this situation again in a few years and have to refinance all over again. Remember, every time you refinance it costs thousands of dollars. Although closing costs will most likely be paid from the proceeds of the loan, it is still costing you in lost equity.

Now, here are some of today's best wholesale interest rates.

Rate 15 Days 30 Days
5.2500 97.971 97.890
5.3750 98.706 98.631

5.5000 99.400 99.325
5.6250 99.904 99.829
5.7500 100.207 100.132
5.8750 100.836 100.761
6.0000 101.280 101.205
6.1250 101.651 101.576
6.2500 101.986 101.911
6.3750 102.319 102.244
6.5000 102.675 102.600
6.6250 102.854 102.779
6.7500 102.999 102.924
6.8750 103.311 103.236
7.0000 103.512 103.437

A Pain Free Way to Pay Your Loan Early

The Swami knows one thing for sure -- Almost no one likes to make their mortgage payment. It Stinks! For most people, the mortgage payment is their single biggest monthly expense. So much of your hard earned income goes to paying on the house that very little is left over for the fun stuff in life.

But the reality is that we have to make these payments like it or not. So why not pay the darn thing off as fast as you can. Thirty years is long time. Just think 30 years ago, Jimmy Carter was president and Saturday Night Fever is was a smash hit at the box office. By the Way, The Swami was too young to disco at the time. Anyway, who wants to wait that long? The Swami sure doesn't.

So here is the secret to knocking seven or eight years (and tens of thousands of dollars in interest) or more from your thirty year mortgage: Instead of paying your mortgage once a month, make 1/2 of your mortgage payment every two weeks. Isn't that easy? I know, I know you are wondering what I'm talking about.

Here's how it works: Because you are making a half payment every other week, you actually end up making one extra payment per year (26 bi-weeks x 1/2 payment). That one extra payment goes toward your principle. By doing so you end up shaving seven years off of your mortgage. Add a little extra to those bi-weekly payments and you take even more time off of your loan.

Check out this bi-weekly mortgage calculator to see for yourself. Just so you know, The Swami employs this system on his own mortgage because the Swami is not fond of making mortgage payments either.

The easiest and most painless way to employ bi-weekly payments is by setting up an automatic withdrawal from your checking account. This way you don't even have to think about it. Most mortgage lenders offer such plans for a very nominal fee. If they don't just save a little extra every month and make an extra payment toward principle at the end of the year. You will accomplish the same thing.

Now, here are some of today's best priced wholesale lending rates.

15 days 30 days
5.375 1.625 1.687
5.500 0.996 1.058

5.625 0.430 0.492

5.750 (0.090) (0.027)

5.875 (0.556) (0.493)

6.000 (0.905) (0.843)

6.125 (1.355) (1.293) (

6.250 (1.744) (1.681)

6.375 (2.069) (2.007)
6.500 (2.230) (2.167)

6.625 (2.550) (2.487)
6.750 (2.809) (2.746)

6.875 (3.013) (2.950)

7.000 (2.966) (2.903)

Mortgage Interest Rates Are Below 6%

Although The Swami has been talking about all the doom and gloom surrounding the mortgage industry the last couple of days, there is some good news out there. Mortgage interest rates are once again below 6% for a 30 year fixed rate.

This is actually a great time to buy a home if you are in the market. What with home prices stablized if not falling and low interest rates -- you can get yourself one hell of a bargain.

As always, The Swami recommends that you be diligent when shopping for a mortgage loan. In order to get the best deal on a mortgage, you need to know what the wholesale mortgage rates are for the day. It's much like knowing what the invoice price of a new car is before you go to the dealer.

Wholesale mortgage rates dictate what you as a consumer will be paying for a mortgage. There is no such thing as a magical low rate. If you talk to a lender or are on a lender or broker website and their interest rates are dramatically lower than everyone elses or the wholesale interest rates -- The Swami says run the other way -- FAST! An educated consumer is a happy consumer.

The Swami posts wholesale mortgage rates every day (M-F) from some of the best priced wholesale lenders in the country. Use that as your road map to getting the best deal on a mortgage.

Remember, The Swami Loves You.

Now, here are today's wholesale mortgage rates from one of the lowest rate lenders in the U.S.

RATE 15 DAY 30 DAY
5.250 98.039 97.964

5.500 99.455 99.380
5.625 99.957 99.882

5.750 100.250 100.175

5.875 100.892 100.817
6.000 101.337 101.262

6.125 101.710 101.635

6.250 101.928 101.853
6.375 102.457 102.382
6.500 102.811 102.736
6.625 102.989 102.914
6.750 103.053 102.978
6.875 103.378 103.303
7.000 103.580 103.505

The Swami's Advice on Choosing a Mortgage Broker

The Swami knows that when you are ready to buy a home or refinance your mortgage the hardest decision might be the first one you have to make and that is which mortgage company or broker do I use?

If you look in the phone book or on the Internet you will see that there are literally thousands of choices --yes, the Swami said thousands. So how do you pick? Well, the first and most obvious way to find a loan company is by asking family and friends for a referral. No one is going to send you to a broker who they thought was unprofessional or unethical (at least not the Swami's friends).

A side note about referrals: Don't automatically go with the mortgage broker your realtor may refer you to. This not always the best choice. He or she may be referring you just because they have some sort of reciprocal working relationship and no other reason.

You can look in the phone book or on the Internet, but frankly there are so many choices that there is no way to to weed out who may be good or who may be bad. You can go with one of the big boys like Countrywide or eLoan etc but you may end up paying more. You can go with a multiple offer company such as Lending Tree or America's Lending Partner's.

A word of caution about multiple offer services: The Swami has heard (and seen) many stories of consumers using them for a mortgage only to have their credit report pulled multiple times by all the participating lenders. The result is that the credit scores dropped and serious damage done to the credit worthiness of the borrower -- So beware!

Here is what the Swami recommends: Get at least one referral. If you can get two or more, even better. Only have one company pull your credit report (and demand a copy) -- the more times your credit is pulled, the lower your credit score goes.

Next, call two or three other companies, tell them your scenarios, credit scores etc and ask them for a Good Faith Estimate (in writing).

Now compare apples to apples to see who has the best deal. Now take the best deal and call the other companies again and ask if they can beat it. Do this until no one can go any lower on rate, fees etc.

If all of the companies are in the same ball park, then go with the one who was recommended by friends. If you didn't get a good felling from him or her, go with the loan officer who you felt most comfortable with.

Now, here is a sample of today's WHOLESALE LENDING RATES. These are the rates that mortgage brokers get. If you don't know what they mean, email me.




RATE 15 DAY 30 DAY
5.250 97.883 97.808
5.375 98.606 98.531
5.500 99.299 99.224
5.625 99.801 99.726
5.750 100.125 100.050
5.875 100.767 100.692
6.000 101.212 101.137
6.125 101.585 101.510
6.250 101.834 101.759
6.375 102.363 102.288
6.500 102.718 102.643
6.625 102.896 102.821
6.750 102.991 102.916
6.875 103.315 103.240
7.000 103.518 103.443

The Sky IS Falling

Holy COW!!!!!!!!!!!!!!!!!!!!
The Swami woke up this morning to discover that yet another sub-prime lender has bitten the dust. This time it it's Fremont Investment and Loan. This was one of the Swami's favorite banks and was one of the top five sub-prime lenders in the country. The Swami spoke to his Fremont account executive this morning who ironically is in Hawaii on a Fremont President's club vacation (wen we spoke it was 3AM Hawaii time and she was up -- hasn't slept in two days she tells me). She tells me that Fremont is already packing boxes in her Westchester County office --- Imagine being in paradise when the news hits you.

As I write this, The Swami just received a phone call from my Encore Credit (another sub-prime lender) account rep who tells me that they are no longer writing loans at 95 -100% financing.

The Swami is also hearing rumours that New Century another sub-prime giant is not going to make it through the week.

The times they are a changing. We are going back to the way things used to be. If you want to buy a home you must clean up your credit first. It's better for you, it's better for the Swami, it's just plain better for everybody.

Now!!!!

Here are today's best wholesale lender rates.




30 Year Fixed

RATE 30 DAY
5.375 - 98.645
5.500 - 99.338
5.625 - 99.840
5.750 - 100.163
5.875 - 100.806
6.000 - 101.251
6.125 - 101.623
6.250 - 101.857
6.375 - 102.386
6.500 102.741
6.625- 102.919
6.750 - 102.967
6.875 - 103.291
7.000 - 103.494


If you don't know what they mean, email me.

The Swami Wants To Say Hello

I am the Mortgage Swami and I want to say hello. I am a mortgage industry insider who has decided to go underground in order to bring fairness and equity to all consumers who need a mortgage.

If anyone in the mortgage industry finds out who the Swami is, he will be run out of the industry and never be allowed to work in it again.

The Swami will give you expert advice, insider information and guidence that will help you avoid being taken on a magic carpet ride by your mortgage broker or loan officer.

If you want to get the lowest mortgage rate for a purchase or refinance this is the place to be.

If you want to pay less in closing costs than this is the place to be. The Swami will show you the mortgage scams.

The Swami is a man of the people and he is spreading good mortgage karma to all who are willing to accept it.

Sub-Prime Lending is hitting the Skids -- What does that mean to you?

Wow!

It seems like everyday a new sub-prime mortgage lender is going down. And when I say down, I mean kaput.

Over the last couple of years these guys were tripping over themselves to reach home buyers with horrible credit. The Swami was able to approve borrowers who have literally never paid a bill on time in their life if ever to buy homes with no money down at all. What a country!

The Swami was approving these borrowers with debt to income ratios of up to 60%. And here is the best part (or worst part). Almost all of these loans were hybrid 80/20 combo loans that only had a fixed rate for two years. After that, the rate turns adjustable and it almost always goes up by 2% the first year.

The standard mortgage broker line to these clients was this: "Take the loan, make your payments on time for two years and then when your pre-payment penalty is up, we will refinance you and put you in a great low, 30 year fixed loan.

Here is the problem, even if you did make your payments on time, it's nearly impossible now to refinance that home because of the slowdown in the housing market. The house you bought 2 years ago is probably worth less today than when you bought it which means that there is no equity to refinance.

Now your interest rate has gone up by 2%. You can no longer afford the payments. You fall behind, stop paying and get evicted. This is now happening to millions of people in the U.S. Now suddenly, the American dream has become a nightmare. What a country!

The result of all this is that these sub-prime lenders that made these loans in the first place are in real trouble and they are beginning to go out of business.

Suddenly, all these great loan programs for first time home buyers are starting to dry up and it is becoming harder and harder to get approved for a mortgage -- especially if your credit history has a checkered past.

The Swami's advice to you:

Before you buy, clean up your credit. It's best if you begin in a position of strength instead of one of weakness.

If you do go with a hybrid loan, the Swmai says: "Make sure that you will be able to afford the mortgage payment after the fixed rate period is over. Don't take your mortgage broker's word for it, he is only trying to make a sale."