Mortgage by Randy Newsletter – May 2008

Mortgage by Randy

a monthly update to our clients, colleagues, family & friends

May 2008

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Many thanks to everyone that offered feedback on our inaugural newsletter.  It appears that there is no shortage of thirst for information.  Demand for credit information is also high.  We look forward to our Credit Report Seminar at Fifth Third Bank in June.  If you would like to organize a Credit Report Seminar at your place of work or even with a group of friends at your home then contact me for details.  Starting this month the current newsletter and all prior newsletters will be archived at our blog space mortgagebyrandy.spaces.live.com so be sure to bookmark it.  You can enter your own comments and feedback as well. Enough housekeeping, on to the updates….

 

Mortgage Market: Be Vigilant About Foreclosure Properties in your Neighborhood

Headlines about foreclosure of sub-prime mortgages are in vast supply these days.  If friends or family are in the unfortunate situation of dealing with mortgage late payments or are facing foreclosure, the best thing you can do is recommend to them to seek out professional guidance.  This will help them to minimize the damage and hasten the process of them starting to rebuild their credit.  Contact me if you need referrals to professionals that can help.  If there are foreclosed and vacant properties in your neighborhood, be very observant.  Protect your own home value by ensuring vacant properties maintain curb appeal and are not vandalized.  Banks are adding hundreds or thousands of properties to their portfolios….they cannot possibly monitor all of them effectively.  If you live in a community governed by a homeowners association you should direct your concerns to them.  Otherwise, online county property records will reveal which banks own which properties so that you can call to complain.  You can access contact information for many banks here: www.homeloanlearningcenter.com/ForeclosurePreventContactInfo.htm

 

Personal Credit: Perfect Payment History Leads to 200 Point Drop?

Recently, a client asked me to review their credit.  They could not figure out why their score had declined precipitously since they had no late payments.  This is not an uncommon occurrence so I thought the findings should be shared.  A key component to your score is the ratio of what you owe to what your maximum line amount is.  For example, if you have one credit card with a $5000 limit you’re your balance is $2000, your ratio is 40%.  Once your overall ratio exceeds 40% and increases, the negative impact on your credit score accelerates.  In the case of our client above, their overall ratio was close to 80% which contributed to a 200 point drop.  Despite a perfect payment record, the credit score formula placed a heavier weighting on the risk of the client since they had utilized a great majority of their available credit.  Misinformation is in the public arena about credit scores and what makes them go up and down.  A detailed analysis of your personal credit report can result in easy tips to significantly increase your score.  Contact me if you or a friend needs help.
 

Economy & Financial Insights: Life Lessons Everyone can Benefit From

The world of finance exciting for some, confusing for many and impacts us all.  Not even the most respected economists or advisors know what the optimal investments are as our economy swings.  However, there are a few simple truths that you can adhere to throughout your lifetime.  First, never chase performance.  Past performance is NOT indicative of future results.  Do not choose a mutual fund just because it has performed well recently.  Second, always have a plan.  Sometimes it is useful to sit with a professional to help design the plan.  If you fail to plan you can plan on failing.  Your plan will be based on a combination of your goals and your risk tolerance.  Third, take financial headlines with a grain of salt.  Despite what the media will have you believe, rarely do events govern market results.  Financial writers and reporters have daily deadlines to come up with catchy headlines and stories that are designed to get you to respond emotionally.

 

Question of the Month: Endangered Species?

A banker friend of ours recently inquired why lines of credit are so difficult to obtain now.  Requests for personal and business lines of credit have been increasing lately and in most cases, they are not available.  In short, lines of credit are a privilege.  During the real estate boom, underwriting criteria were loosened to make this product more widely available.  However, the intent of the product is for those with only the highest of credit worthiness.  Even above average credit scores will unlikely qualify.  A mentor of mine taught me early in my career that people must obtain credit when they LEAST need it….otherwise they are unlikely to get it when they need it most.  This philosophy has never been more true.  Access to lines of credit is further hindered by declining property values.  Banks are very conservative these days so only properties with significant equity will qualify.  If you have 40% or more equity but your credit is poor there may still be a solution available.  Just contact me so we can discuss your specific details.

 

Giving Back: Supporting our Communities

This month we highlight a new networking organization.  The Southwest Florida Regional Technology Partnership (www.swfrtp.org) is having a membership launch event May 22.  Details are available at their website.  Anyone that is involved in a technology career will want to be aware of this group whose mission is to attract and retain technology businesses and talent in this market.  What does this have to do with mortgages?  More good jobs for professionals will contribute to our market’s healthy growth and these talented technologists all need a place to call home.  Do you have a fundraising event upcoming?  Need volunteers?  Do you have a personal web site where you are raising donations for your cause?  Submit the information to randy@mortgagebyrandy.com by the 15^th of each month and we will do our best to include your information in the next issue.

 

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Randy Mitchelson is a licensed mortgage professional. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Randy Mitchelson.  Recommendations may change and readers are urged to check with their financial advisors before making any decisions. Opinions expressed in these reports may change without prior notice. Mitchelson can be reached at 239-851-6738.

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