Is Your HELOC About Ready to Reset?

Do you have a home equity line of credit on your home?  If you do and it was originated prior to 2007, you could be subjected to a HELOC loan reset in the near term.

What does this mean?

HELOC loans were typically originated as 10-year, interest-only loans that switch to fully amortizing loans after a decade. At the end of the interest-only period, borrowers would experience a payment shock as they may have to pay back both interest and principal.  Or worse, if your HELOC has a balloon payment feature, you could be responsible for paying the entire outstanding balance back.

To examine the issue, Corelogic analyzed the 10-year reset performance of 1.8 million HELOC originations between 2001 and 2004 using the CoreLogic TrueStandings Home Equity Database. The 2003 and 2004 vintages had an average pre-reset monthly payment of $105 dollars, and after the reset, the monthly payment jumped to $229, an increase of $124 or 119%.

If you have a HELOC which is scheduled to reset there are a few things which may be relevant to consider: 

1.)  If you have equity in your home, you may refinance both your first mortgage and your HELOC.  I would recommend looking at a shorter term mortgage like a 15 year fixed rate if it makes financial sense.  
2.)  Read the terms of your reset.  Be prepared.  It may be a low balance, you may have an existing low fixed mortgage rate, and it may not be a big deal.
3.)  Pay it off.

Of course, there are always more ways to evaluate based on your specific situation.  Contact me to go over your scenario, as I am happy to help you evaluate your particular HELOC terms.

Until Next Time,

Craig Turley

30 Year Fixed Mortgage Rates in the High 3s

Mortgage rates on 30 year fixed conforming loan amounts found their way back into the high 3's at the end of business on November 25, 2014.  "That's the first time we've seen the most common top-tier rate quote in the 3's since October 21, and one of only a handful of times since May 2013" according to Chief Operating Officer Matthew Graham of the Mortgage News Daily.

Keep in mind there are several factors which will influence your individual mortgage rate, including credit, loan to value, program, down payment/equity, and type of mortgage you select.  

If you are interested in a mortgage check up, please do not hesitate to contact me.  Five minutes of your time could be worth thousands in saved interest.

This is not an offer to lend.  Rate information is a poll from Mortgage News Daily regarding real time best execution rates on the market, generally with no points.

Until Next Time,
Craig Turley

Credit Reporting Dispute Process

If you are in the market to purchase a home (or refinance your mortgage), it may be a good idea to check your credit well in advance of house shopping.  

According to a FTC consumer report, an estimated one in five consumers have an error on their credit report.  You may either request a correction via a mailed letter to the credit repository reflecting  the reporting error, or you may request correction via online disputes.  I strongly encourage the online dispute process.

MyFico.com has written up an excellent sample letter if you have a specific account you would like to dispute, or you can follow the link under "online dispute resolution" section of this email to expedite the process stamp free.  Remember, evaluate each of the three credit reporting agencies for inaccuracies.  

If you would like more simple credit tips, please click here.  Arizona and California residence in the mortgage market can contact me directly for further guidance and a no cost evaluation in 10 minutes or less.

Sample Credit Report Dispute Letter of Explanation

ONLINE DISPUTE RESOLUTION:
All 3 of the credit bureaus now accept filing of disputes online. To find out how to initiate a dispute online, click here.

Tell the credit bureau in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position.

You may want to enclose a copy of your credit report with the items in question circled. Send your letter by certified mail, return receipt requested, so you can document that the credit bureau received your correspondence. Keep copies of your dispute letter and enclosures.

Date Your Name Your Address Your City, State, Zip Code Complaint Department Name of Credit Bureau Address City, State, Zip Code   Dear Sir or Madam: I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the report I received. This item (identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.) is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (or request another specific change) to correct the information. Enclosed are copies of (use this sentence if applicable and describe any enclosed documentation, such as payment records, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible. Sincerely, Your name Enclosures: (List what you are enclosing) Source: http://www.myfico.com/crediteducation/rights/sample-credit-report-dispute-letter-of-explanation.aspx