Free Credit Report

Every person is allowed one free credit report per year.  Get yours at the official site at www.annualcreditreport.com.  Be careful of similar sites.  They want to charge you!  There are 3 national credit agencies (Transunion, Equifax, TRW) and each is required to offer you one free report per year...One technique is to pull just one of the 3 now, saving your others to spread throughout the year.  This way you can keep tabs on your credit over time w/out paying a service.  And don't worry, pulling your own credit report does not ding your score like a real inquiry for credit does.

  

You won't get your credit score for free though.  Even on the free site they are only required to show you your credit report.  You get to pay extra to see your score.  Credit scores are a whole other animal and I will save that for another blog post but suffice it to say they are critical to good financial health and in getting the lowest interest rate available from mortgages to credit cards.  You can pay extra for your score(s) at annualcreditreport.com or there are commercial sites that offer your credit score, typically in addition to credit monitoring.  I don't normally advocate paying for something you can get for free and yet I myself subscribe to MyFico.com. The site has some useful tips and a free or discounted trial if you find yourself curious.  Use it if you are planning a major purchase, like a home, to make sure you're on track to get the best rate possible.

If you have a real issue w/your credit or have a client that is "credit challenged" you might even consider a commercial site to help repair it.  Again, I tread even more carefully here because most credit repair companies are dubious at best and outright crooks at worst.  Here's one I came across that appears reputable Credit West Consultants.  They send us useful email tips on credit repair and score improvement in general.  Most of it is common sense but I've learned some neat tricks from them.  

Bottom line:  Review your credit report at least annually and keep your score as high as possible to keep your interest rates as low as possible.

Eric Lundberg - NMLS #261588

President, Chinook Mortgage Ltd - NMLS #261588

Eugene, OR.

541.302.3210
www.ChinookMtg.com

Energy Efficient Mortgage a Win-Win

In honor of the recent Good Earth Home Show I thought I'd share this neat trick.  Using this little known tool you can easily add value for yourself or, in the case of real estate agents, your clients transaction.

The Energy Efficient Mortgage or EEM can help you when buying or refinancing a home by allowing you to add the costs directly to the loan for items that increase the energy efficiency of the home.  Storm windows and doors, a heat pump, digital thermostats and the like.  Even solar panels can work.  Anything that reduces the homes utility bill may qualify.  This works for FHA or VA loans. It's not a separate loan program; more like optional equipment you can add to your loan.   Let's start w/Federal VA, it's quicker and easier. Here's how it works:

3 Tiers to choose from:

#1 - Up to $3000 may be added to the home loan for energy efficient improvements with just a bill/contract from the company doing the work.  That's it.  And you can do the improvements after closing if you wish. You'll pay a final inspection fee, typically $100, but your sale is done and you can complete the repairs later. The lender will only hold the amount needed for the repairs.  Not the usual 1.5 times.  The veteran does not even need to qualify for the increase in loan amount since the utility saving is expected to more than offset the increase in the mortgage payment.  Every once in a while common sense prevails...

#2 - $3000-$6000 may be added as long as the project will return projected utility savings greater than the increase in the monthly payment caused by the loan increase.  Let's say you want to add a $5000 heat pump and the inspector (yes, it requires a simple energy improvement test to document the saving) says it should save $60/month in energy saving.  The increase in the borrowers payment will be, say $25/month.  You qualify.

#3 - Go over the $6000 limit and VA requires that the improvements add the same or higher value to the home.  So, a $10,000 heat system needs to increase the value of the home dollar for dollar.  Using this one is more than a bit rare for obvious reasons but can be done in cases where the value is not an issue.

You can see that #1 above is a slam dunk and ideal when you just need some smaller improvements done to the home but more costly improvements can be done as well.  Here's the list of items VA will consider:

Acceptable energy efficiency improvements include, but are not limited to

·   solar heating systems, including solar systems for heating water for domestic use

·   solar heating and cooling systems

·   caulking and weather-stripping

·   furnace efficiency modifications limited to replacement burners, boilers, or furnaces designed to reduce the firing rate or to achieve a reduction in the amount of fuel consumed as a result of increased combustion efficiency, devices for modifying flue openings which will increase the efficiency of the heating system, and electrical or mechanical furnace ignition systems which replace standing gas pilot lights

·   clock thermostats

·   new or additional ceiling, attic, wall and floor insulation

·   water heater insulation

·   storm windows and/or doors, including thermal windows and/or doors

·   heat pumps, and vapor barriers.

Want FHA?

For an FHA EEM you need a HERS (Home Energy Rating System) energy audit.  You can add up to 5% of the purchase price/value of the home for improvement costs but you'll need this more expensive energy audit.  At last check the only auditor in our neck of the woods is in Corvallis and charges >$700 for the HERS report. Contact us for more specifics on this program if you're interested or Click Here to visit HUD's guide.

I hope you find this tip useful.  Feel free to check in w/us before you move forward as lender guidelines can and do change.

Best,

Eric Lundberg - NMLS #261588

President, Chinook Mortgage Ltd - NMLS #261588

Eugene, OR.

541.302.3210

www.chinookmtg.com