3 Tips to Improving Your Credit and Finances in 2008

Well we've finished another year and it was a rough one. Foreclosures hit all time highs, the housing market, nationwide, was down more than 10%, personal savings average less than 1% in all US households. Let's thankfully put 2007 in the rear view mirror and look ahead to proactively taking steps in 2008 to improve your credit and personal finances.

1. Get your free annual credit report. Every US citizen is entitled to a free credit report from each of the credit repositories-Experian, Trans Union and Equifax-each year. It's a great idea to start the year by knowing exactly what people are seeing when they look at your report. This also gives you the opportunity to dispute and correct any false or outdated information. The source for this is www.annualcreditreport.com

2. Start to save. The industry standard percentage suggested by most financial planners and personal bankers is to save at least 10% of your gross (before tax) income as a cushion as well as savings for the future. With recent statistics showing that the average US household saves less than 1% of their money it's obvious that not many people are following this advice. In the abscence of being able to save 10%, save SOMETHING but do it consistently & passionately. If you are able to just save $50 every 2 weeks that will add up to $1,300 at the end of the year. That's the key, just start with something.

3. Establish your budget. Just as all companies do, all government agencies do and every household should do, use the beginning of the year to establish your budget. Assess what's coming in and the best way to allocate what's going out. By establishing a budget and setting financial goals, you'll be amazed at what you are able to accomplish by the end of the year by sticking to it and making wise investments along the way.

Happy Financial New Year!

What's a little risk between friends? A LOT!!!

Across the lending industry the new buzz of what's coming to some lenders and in existence at others is what's called 'risk based pricing'. What that means is that your interest rates and fees will be set by where you fall, based on your credit, your down payment and how you are documenting your income, into the matrices of the banks assessment of risk.

For example, for a borrower who wants to put 10% down on a $220,000, for a loan amount of $200,000, slightly below the national average, the difference rate or fees for a credit score of 620 vs. 680 could be 2 'points' (1 percent of the loan amount) or .5 in rate. So how does taht translate into real dollars and cents? It will cost the person with a 620 score $4,000 more up front or $23,675 over the life of the loan (assuming a difference from 6.25% at a 680 score vs. 6.75% at a 620 score on a 30 yer fixed rate). That's some serious money!!!!

Ok, so how do you make sure you get the best rates and fees? Two things are what matter, credit and down payment.

Get your credit right, don't exceed 33% of your credit card balances, pay your bills in a timely manner, avoid store credit cards and personal unsecured loans from finance companies.

If you are a First Time Home Buyer or have not owned a property in the past 3 years, take advantage of the state, county and local down payment assistance programs that are available at your disposal.

Buying a home is still the best long term investment you can make for yourself and your family. Take the proper steps to ensure you are putting yourself in position to secure your financial destiny now and in the days to come.

President Bush's Plan.. Will it help or not?

Last week Pres. Bush and Treasury Secretary Henry Paulson unveiled a plan to stem the tide of foreclosures that are happening at a record pace nationwide. In their plan, mortgage rates are frozen for subprime loans originated and closed from January 1st, 2005 to July 31st 2007. Is it as simple as it seems? Not really,check this out..

If you have an adjustable rate mortgage (ARM) that is set to adjust from it's initial term between January 1,2008 and July 31st 2010 AND thtat adjustment will be at least 10% of the current payment AND you have a FICO score below 660 or your score has not increased more than 10% since your loan closed AND your loan to value (loan balance in relation to property value) meets or exceed 97% AND you are current on your mortgage AND not have been more than 60 days late in the previous 12 months THEN you qualify for that freeze.. WHEW!!! That's a lot to digest..

Quoting an article on CNN.com, Sharon Reuss from the Center for Responsible Lending estimates that of the 1.2 million consumers that the White House claims it will help, a mere 7% will qualify for all of the restrictions of the program.. So what can you do?

First of all, you can be proactive about contacting your lender. The banks don't want your house and will work with you (as long as you work with them!) to save your house. Secondly, if you are starting down a bad path financially, contact your local Housing Finance Authority. Across the country, there are HFA's that are allocating personnel and resources to foreclosure prevention counseling.. Finally, contact a realtor. If you know the light at the end of that tunnel is a train, get out of the tunnel!! You can see down the path if you are not going to be able to afford your adjusting payments.. There is no shame or downside to selling your property before getting into a position where you can lose it..

Take the proper steps for YOU to ensure your financial stability & future today.

Education reduces your payment!

Did you know that you can save a LOT of money in your mortgage payment by attending a HUD approved First Time Homebuyer class? There are numerous options out there, depending on what state you are in, but most PMI (Private Mortgage Insurance) companies will offer a reduced monthly mortgage insurance (protects the lender in case the loan goes into default) premiums. For example, on a $200,000 loan you would normally pay $83.33 a month, with the approved homebuyer education course you'd pay only $66.66 per month a savings of $16.67. While that may not seem like a lot monthly, over the year that's $200.04. Over the standard 14 years a loan has PMI, that's $2,800.56!!