Thursday, July 25, 2019

Getting compensation from the Equifax data breach


Equifax announced that their data was breached from mid-May through July 2017.
The breach was discovered on July 29. It is estimated that 145 million consumers
were affected.
The credit reporting company this week agreed to pay $700 million for claims tied
to the hack, which occurred after Equifax botched a software update, and up to
$425 million of the total can be claimed directly by consumers.
Not sure if your information was exposed? Use this website to see if you’re eligible: https://eligibility.equifaxbreachsettlement.com/en/eligibility

Terms of the settlement:

Free Credit Monitoring and Identity Theft Protection Services
  • Up to 10 years of free credit monitoring OR $125 if you decide not to 
  • enroll because you already have credit monitoring. The free credit monitoring includes:
  • At least four years of free monitoring of your credit report at all three credit
    bureaus (Equifax, Experian, and TransUnion) and $1,000,000 of identity
     theft insurance.
  • Up to six more years of free monitoring of your Equifax credit report.
  • If you were a minor in May 2017, you are eligible for a total of 18 years
    of free credit monitoring.
Cash Payments (capped at $20,000 per person)
  • For expenses you paid as a result of the breach, like:
  • Losses from unauthorized charges to your accounts
  • The cost of freezing or unfreezing your credit report
  • The cost of credit monitoring
  • Fees you paid to professionals like an accountant or attorney
  • Other expenses like notary fees, document shipping fees and postage,
    mileage, and phone charges
  • For the time you spent dealing with the breach. You can be compensated
    $25 per hour up to 20 hours.
  • If you submit a claim for 10 hours or less, you must describe the actions
    you took and the time you spent doing those things.
  • If you claim more than 10 hours, you must describe the actions you took
    AND provide documents that show identity theft, fraud, or other misuse of
    your information.
  • For the cost of Equifax credit monitoring and related services you had
    between September 7, 2016, and September 7, 2017, capped at 25 p
    ercent of the total amount you paid.
Even if you do not file a claim, you can get:
Free Credit Reports for All U.S. Consumers
  • Starting in 2020, all U.S. consumers can get 6 free credit reports per
    year for 7 years from the Equifax website. That’s in addition to the one
    free Equifax report (plus your Experian and TransUnion reports) you
    can get at AnnualCreditReport.com. Sign up for email updates to get a
    reminder in early 2020.
More information can be found here:

Make sure to check on your credit profile and stay protected! 

Saturday, July 13, 2019

5 Biggest Student Loan Myths to STOP Believing

Student loan debt is one of the biggest barriers to homeownership for millennials.  Despite the ability to afford a monthly mortgage payment, many first-time home buyers are unable to buy a home because of their inability to save for a down payment due to student debt repayment. 
Responsible student loan debt management is the first step toward being able to purchase a home.  One of the first steps toward responsible student loan debt management is to stop believing these student loan myths.

1. You’re stuck with your interest rate.
You have the opportunity to secure a lower interest rate with student loan refinancing. If you have built a good credit score, typically 680 or higher, and are in good standing with your loan repayment you can apply for a student loan refinance with the same or another lender.  Underwriting criteria will vary based on the lender who issues your student loan refinance.  If you do not qualify for a student loan refinance on your own, a qualified co-signer could help you qualify.
2. Everyone is eligible for student loan forgiveness.
The “Obama Student Loan Forgiveness” program, unfortunately, does NOT exist.  However, there is a Public Service Loan Forgiveness Program for eligible federal student loans, but not private student loans.  According to Forbes, some of the qualifications for Public Service Student Loan Forgiveness includes “student borrowers who are employed full-time in an eligible federal, state, or local public service job or 501(c)(3) non-profit who have made 120 eligible on-time payments over 10 years and are enrolled in a federal repayment program.”
3. Applying to multiple lenders for refinance will lower your credit score.
Just like when you are shopping for a car, “interest rate shopping” inquiries made during a short period of time, within 30 days for example, will have little to no impact on your credit score.  In fact, applying to multiple student loan lenders for a refinance can actually improve your chances for approval.  Shop around within a specific time frame to find the best interest rate for your student loan refinance.
4. There is an early payoff penalty.
While some loans have a penalty for paying off early, your student loans do not.  In some cases, extra student loan payments can help you save on costly interest.  Before making any extra payments toward your student loans it is best to run the numbers or consult a financial advisor to see which payoffs would benefit you the most. 
5. Federal student loan consolidation will lower your interest rate.
One of the most common student loan myths, is that federal student loan consolidation will lower your interest rate.  When federal student loans are consolidated, the interest rate is equal to a weighted average of each loan’s existing interest rate, rounded up to the nearest 1/8%.  So, this interest rate may be lower than the interest rates on some existing loans, but it will be higher than others because it is an average.  If you are seeking a lower interest rate, you should consider a student loan refinance instead. 

Although student loan debt is one of the biggest barriers to homeownership, responsible repayment and management is one way to better position yourself for homeownership.  If you have any questions about how your student debt will impact your ability to own a home, give us a call.
Aundrea Beach-Greco
NMLS 333739
info@aundreabeach.com
www.AundreaBeach.com
Sources: Forbes

Tuesday, July 09, 2019

How much can a seller pay towards closing costs when buying a home?

Mortgage closing costs range from 2-5% of a home’s purchase price and that can add up quickly. But, many sellers are willing to pay for some of your closing costs in order to sell their home faster.
There is a limit however to how much a seller can pay for. Depending upon your loan, each loan type — conventional, FHA, VA, and USDA — sets maximums on the seller-paid contributions.
Seller-paid costs are also known as sales concessions, seller credits, or seller contributions. Whatever you want to call them, new and experienced homebuyers can get help on costs with help from the seller.

Seller contributions by loan type

Each loan type has slightly different rules when it comes to seller contributions. The percentage each loan type allows varies as well. It’s important to understand the seller-paid maximums for your loan type, so you can take full advantage when it comes time to buy.

Maximum seller-paid costs for conventional loans

Fannie Mae and Freddie Mac are the two rule makers for conventional loans. They set maximum seller-paid closing costs that are different from other loan types such as FHA and VA. While seller-paid cost amounts are capped, the limits are very generous.
A homebuyer purchasing a $250,000 house with 10% down could receive up to $15,000 in closing cost assistance (6% of the sales price). This dollar figure is a lot more than the typical seller is willing to contribute, so the limits won’t even be a factor in most cases.

FHA seller contributions

For all FHA loans, the seller and other interested parties can contribute up to 6% of the sales price or toward closing costs, prepaid expenses, discount points, and other financing concessions.
If the appraised home value is less than the purchase price, the seller may still contribute 6% of the value. FHA indictors that the lessor of the two (purchase versus appraised) values may be used.

VA loan seller contribution maximum

The seller may contribute up to 4% of the sale price, plus reasonable and customary loan costs on VA home loans. Total contributions may exceed 4% because standard closing costs do not count toward the total.
According to VA guidelines, the 4% rule only applies to items such as:
  • Prepayment of property taxes and insurance
  • Appliances and other gifts from the builder
  • Discount points above 2% of the loan amount
  • Payoff of the buyer’s judgments and debts
  • Payment of the VA funding fee
For example, a buyer’s core closing costs for things like appraisal, loan origination, and the title equal 2% of the purchase price. The seller agrees to prepay taxes, insurance, the VA funding fee, and a credit card balance equal to 3% of the sales price.
This 5% contribution would be allowed because 2% is going toward the core loan closing costs.

USDA seller contributions

USDA loan guidelines state that the seller may contribute up to 6% of the sales price toward the buyer’s reasonable closing costs. Guidelines also state that closing costs can’t exceed those charged by other applicants by the lender for similar transactions such as FHA-insured or VA-guaranteed mortgage loans.

Interested party contributions

Seller-paid costs fall within a broader category of real estate related funds called interested party contributions or IPCs. These costs are contributions that incentivize the homebuyer to buy that particular home. IPCs are allowed up to a certain dollar amount.
Who is considered an interested party? Your real estate agent, the home builder, and of course the home seller. Even funds from down payment assistance programs are considered IPCs if the funds originate from the seller and run through a non-profit.
Anyone who might benefit from the sale of the home is considered an interested party, and their contribution to the buyer is limited.

Why set maximum seller-paid closing costs?

Mortgage rule makers such as Fannie Mae, Freddie Mac, and HUD aim to keep the housing market fair by keeping values and prices sustainable.
Here’s an example of how rampant seller-paid closing costs and other interested party contributions could inflate prices.
Imagine you are buying a home worth $250,000. The seller really wants to sell the home fast, so he offers $25,000 to pay for your closing costs and says you can keep whatever is left over. But, in exchange he changes the home price to $275,000.
He then illegally pays the appraiser to establish a value of $275,000 for the home.
A number of negative consequences arise:
  • You paid too much for the home.
  • Similar homes in the neighborhood will start selling for $275,000 (and, more if the cycle is repeated).
  • The bank’s loan amount is not based on the true value of the home.
In a very short time, property values and loan amounts are at unrealistic levels. If homeowners stop making their payments, banks and mortgage investors are left holding the bill.

Can the seller contribute more than actual closing costs?
No. The seller’s maximum contribution is the lesser of the sales price percentage determined by the loan type or the actual closing costs.
For instance, a homebuyer has $5,000 in closing costs and the maximum seller contribution amount is $10,000. The maximum the seller can contribute is $5,000 even though the limits are higher.
Seller contributions may not be used to help the buyer with the down payment, to reduce the borrower’s loan principal, or otherwise be kicked back to the buyer above the actual closing cost amount.

Creative ways to use excess seller contributions

While seller contributions are limited to actual closing costs, you can constructively increase your closing costs to use up all available funds.
Imagine the seller is willing to contribute $7,000, but your closing costs are only $5,000. That’s a whopping $2,000 is on the line.
In this situation, ask your lender to quote you specific costs to lower the rate. You could end up shaving 0.125%-0.25% off your rate using the excess seller contribution.
You can also use seller credits to prepay your homeowners insurance, taxes, and sometimes even HOA dues. Ask your lender and escrow agent if there are any sewer capacity charges and/or other transfer taxes or fees that you could pay for in advance. Chances are there is a way to use all the money available to you.
You can even use seller credit to pay upfront funding fees for government loan types like FHA.

Use seller contributions for upfront FHA, VA, and USDA fees

All government-backed loan types allow you to prepay funding fees with seller contributions.
FHA loans require an upfront mortgage insurance payment equal to 1.75% of the loan amount. The seller may pay this fee. However, the entire fee must be paid by the seller. If you use excess seller credit, but it’s not enough to cover the entire upfront fee, then you cannot use the funds toward the fee.
VA loans allow the seller to pay all or part of the upfront fee (2.15%-3.3% of the loan amount). The fee counts towards VA’s 4% maximum contribution rule.
USDA requires an upfront guarantee fee of 2.0% of the loan amount. The buyer can use seller contributions to pay for it.

Seller contributions help many become owners

Seller contributions and other interested party credits reduce the amount of money it takes to get into a home.
Zero-down loans such as USDA and VA require nothing down. But, opening any loan involves thousands in closing costs.
A seller credit can remove the closing cost barrier and help buyers get into homes for little or nothing out-of-pocket.
Many home shoppers are surprised that they not only qualify, but that initial homeownership costs are much lower than they expected.