The most important piece of a person’s financial life is their credit score. Whether buying a new Dallas home, applying for a job, refinancing your Dallas home, paying off debt, or getting utility service, your credit score will drive the outcome. One would think that Americans are all aware of what the scores are measuring and what factors play a part. But, most Americans do not know enough about the three digit rating or what is involved. Do not let these credit score myths get in your way when preparing for the purchase of your next Dallas home.

Myth: Checking a credit report can either damage or lower your score.
A credit report can be conducted by you or someone like an employer as many times as desired with out having any impact on your credit score. Reviewing your credit report will never change your credit score. Just make sure that reports are retrieved through the bureaus or a legitimate score seller.

Myth: Age, sex, and income are factors that affect your score. None of this information plays a role in determining your score. A higher income may make it easier to pay off debts, but income and net worth have no impact of credit scores.   

Myth: A credit score can be destroyed by shopping for a loan. When seeking to extend credit, too many inquiries can have a negative impact your credit score. However, when several inquiries are made by the same type of lender with in a 14 day period they only count as one inquiry against your credit.

Myth: Your score can be hurt by credit card offers.
When companies offer you their credit cards it does not have any affect on your score. Unless, your take advantage of all the offers and carelessly use all of the credit available. The number of credit cards a person manages does not matter. The important thing is maintain a low ratio of used to available credit.

Myth: Credit scores of married couples are shared.
A credit score can only belong to one person, just as one person can only have one score. A married could does not share a credit score, but their scores could have an affect each others. When opening a joint account, the information accumulated from that account’s activity will be reflected on both people’s credit report. If all of the couple’s accounts are joint, then their scores will be somewhat similar.

Myth: Closing unused accounts improves credit scores.
Unused accounts most likely contain available credit, which is an important part of a credit score. Closing unused accounts removes available balances from the equation. This causes your ratio of used to available credit to increase, ultimately affecting your credit score.

Myth: Paying off bills is a quick way to boost credit.
Over time, a good record of properly paying bills will improve credit. Credit reports reflect your long term history, scores do not change overnight.

Learn more about how credit scores affect the amount of Dallas home you can buy at TexasHomeCentral.com.

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There are 2,960 foreclosed homes in Collin County with an average sales price of $219,401 with 462 new foreclosed homes in May 2009, according to RealtyTrac.com.

Collin County and Dallas Foreclosure Activity and Home Price Index

Collin County and Dallas foreclosure activity has remained relatively stable in the last three months with approximately 525 foreclosures each month. At the same time, the Home Price Index has dropped dramatically.

Collin County and Dallas foreclosure activity is based on the total number of properties that receive foreclosure filings – default notice, foreclosure auction notice or repossession notice – each month. Home price appreciation is based on month-over-month percentage change of the Home Price Index. The Home Price Index is calculated from home sales records.

Collin County and Dallas Foreclosure Geographical Comparison

Collin County Dallas foreclosure activity is 0.09% lower than national statistics and 0.06% higher than Texas figures.

Collin County and Dallas Foreclosure Activity by Month

Collin County and Dallas auction and bank-owned activity remained stable in May compared to the previous month. The high auction activity in March is an indicaiton that we will see many more foreclosures in the coming months.

Are you or someone you know behind on your mortgage payments and facing a Dallas foreclosure? You do have options. A short sale may be the answer to saving you, your family and your home.  Give me a call for a private consultation.

By now we’ve all heard buzz about the supposed “credit crisis,” with tales of all Dallas real estate buyers being required to put 20% to purchase a home and then still having to search to find a lender who will write a loan. It seems the press just can’t get enough of all the “misery” in the Dallas real estate industry. But is this really what is happening?

To be sure, we are in the middle of what might be considered the biggest disservice ever perpetrated on potential home buyers. The truth is that mortgage money is as available today as it was a year ago and loans are being made every day with little or no money down. Who are these lenders and where can you find one? They may be right down the street – you just have to know where to look!

Federal Housing Administration (FHA) loans are making a huge impact on the mortgage industry; recent estimates show that about one out of five mortgages is an FHA loan. Although FHA loans never “went away,” their re-emergence is a result of the collapse of the sub-prime market. Technically, FHA doesn’t require a minimum credit score; in reality, however, lenders typically will not approve an FHA loan with a credit score below 500 in Dallas Texas. That is still a far cry from the notion that an 800 score is the only thing lenders care about.
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Fair Isaac Corp., the company that made the FICO credit score popular, is changing the way it determines that score. The model, named “FICO 08” should do a better job predicting loan defaults, according to the company. It is set up to be more forgiving of occasional slips by a consumer, but will take a tougher stance on repeat offenders. This new version will still score from 300 to 850 and will still take into account level of credit indebtedness, credit length, number of new accounts and inquiries, and types of credit, to determine scores. But, it will do a better job of separating “good risk” from “bad risk”, with thin, or young credit files, as well as consumers who are actively seeking new credit, being a part of the client profiles that will be more heavily scrutinized. The model will also be more lenient to people with serious delinquencies (greater than 90 days) if they have other accounts in good standing, which backs up their claim of forgiving occasional slips.

The VP of global scoring for Fair Isaacs is predicting that more consumer scores will go up than go down!

As far is this relates to the mortgage industry, good credit is always a plus when you are trying to buy a house. I can’t see the new model making much of a difference either way unless borrowers are serial delinquents, in which case they will see a decrease in their scores. With the abolition of most 100% financing programs, most lenders are now requiring scores above a certain level just to be able to obtain Mortgage Insurance for any program above 80% LTV. There are different scenarios too numerous to list that pertain to the new rules. However, the best way to find out your ability to purchase a home is to contact me directly so we can discuss your individual situation. Have a great week!

Craig Pollard is a mortgage professional and owner of Texas Mortgage Team. He specializes in the Dallas Fort Worth area and is a frequent voice on Texas Home Central’s blog. Craig can be reached at CPollard@Texasmt.com or 972-317-9900

Here are a few of the highlights from the ‘Mortgage Forgiveness Debt Relief Act of 2007′ that I thought you may be interested in.

Permanent exclusion from gross income of discharged home mortgage indebtedness. The bill would amend current law, which requires taxpayers to include discharges of mortgage indebtedness as income and to pay tax on this income. The bill would provide a permanent exclusion for discharges of up to two million dollars of indebtedness (on or after January 1, 2007) which is secured by a principal residence and which is incurred in the acquisition, construction, or substantial improvement of the principal residence. Instead of including this amount as income, the basis of the individual’s principal residence would be reduced by the amount excluded from income under this bill. This proposal is estimated to cost approximately $1.4 billion over 10 years.

Long-term extension of the deduction for mortgage insurance. The bill extends the deduction for mortgage insurance for seven years (through the end of 2014). Current law limits the deduction for mortgage insurance to payments (including Veterans Administration, Rural Housing Administration, and Federal Housing Administration insurance premiums) made prior to the end of 2007. The bill would provide that payments will qualify for this deduction whenever they are paid so long as the contract is entered into after 2006 and before 2015. This proposal is estimated to cost $570 million over the next 10 years.

Modification of the qualification tests for cooperative housing corporations. The bill would modify the requirements for qualifying for the special rules available to cooperative housing corporations. Under current law, a cooperative housing corporation must meet several requirements, including a requirement that 80 percent or more of the cooperative housing corporation is earned from the corporation’s tenant-stockholders. The bill would provide two alternatives to this 80 percent rule (i.e., one based on square footage and another based on cooperative expenditures). These two alternatives will make it easier to qualify as a cooperative housing corporation. This proposal is estimated to cost $22 million over 10 years.

Modification of exclusion of gain on sale of a principal residence. The bill amends the current law exclusion of up to $250,000 ($500,000 if married filing a joint return) of gain realized on the sale or exchange of a principal residence. Under current law, the sale of a home will qualify for this exclusion if the home is a taxpayer’s principal residence for at least two of the five years ending on the sale or exchange. This exclusion applies even if the home was initially purchased as a second home. Under the bill, if a taxpayer moves their principal residence to a second home, the taxpayer will only be able to utilize this exclusion to the extent that it relates to the period of time when the home was first used as a principal residence. The bill grandfathers use before 2008. This proposal is estimated to raise $2.005 billion over 10 years.

Craig Pollard is a mortgage professional and owner of Texas Mortgage Team. He specializes in the Dallas Fort Worth area and is a frequent voice on Texas Home Central’s blog. Craig can be reached at CPollard@Texasmt.com or 972-317-9900