Liberty Star Mortgage

Daily Definition: Co-signer

2011-09-26T08:38:00.000-07:00

co-signer
One who is obligated to repay a mortgage loan should the borrower default but who does not share ownership in the property.

Daily Definition: Yield

2011-09-25T08:36:00.000-07:00

yield
The rate of earnings from an investment.

Daily Definition: Down Payment

2011-09-24T08:34:00.000-07:00

down payment
The difference between the purchase price and mortgage amount. The down payment becomes the property equity. Typically it should be cash savings, but it can also be a gift that is not to be repaid or a borrowed amount secured by assets.

Daily Definition: RESPA

2011-09-23T08:32:00.000-07:00

RESPA
Abbreviation for the Real Estate Settlement Procedures Act, which allows consumers to review settlement costs at application and once again prior to closing.

Daily Definition: Loan-to-Value Ratio (LTV)

2011-09-22T08:26:00.000-07:00

loan-to-value ratio (LTV)
The relationship, expressed as a percentage, between the amount of the proposed loan and a property's appraised value. For example, a $75,000 loan on a property appraised at $100,000 is a 75% loan-to-value.

Daily Definition: Key Lot

2011-09-21T08:26:00.000-07:00

key lot
Real estate deemed highly valuable because of its location.

Daily Definition: Conforming Loan

2011-09-20T09:00:00.000-07:00

conforming loan
A loan that conforms to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC) guidelines.

Daily Definition: Amenities

2011-09-19T07:41:00.000-07:00

amenities
Features of your home that fit your preferences and can increase the value of your property. Some examples include the number of bedrooms, bathrooms, or vicinity to public transportation.

Daily Definition: Lien

2011-09-18T09:00:00.000-07:00

lien
A claim against a property for the payment of a debt. A mortgage is a lien; other types of liens a property might have include a tax lien for overdue taxes or a mechanics lien for unpaid debt to a subcontractor.

Daily Definition: Equity

2011-09-17T09:00:00.000-07:00

equity
The value of a property beyond any liens against it. Also referred to as owner's interest.

Daily Definition: Equal Credit Opportunity Act

2011-09-16T09:00:00.000-07:00

Equal Credit Opportunity Act
A federal law prohibiting lenders and other creditors from discrimination based on race, color, sex, religion, national origin, age, marital status, receipt of public assistance or because an applicant has exercised his or her rights under the Consumer Credit Protection Act.

May the 4th Be With You: Client Appreciation Event

2011-09-15T10:25:00.000-07:00

Daily Definition: Deed of Trust

2011-09-15T09:00:00.000-07:00

Deed of Trust
A document, used in many states in place of a mortgage, held by a trustee pending repayment of the loan. The advantage of a deed of trust is that the trustee does not have to go to court to proceed with foreclosure should the borrower default on the loan.

Daily Definition: Mortgage

2011-09-14T11:52:00.000-07:00

Mortgage
A legal instrument in which property serves as security for the repayment of a loan. In some states, a deed of trust is used rather than a mortgage.

Daily Definition: Cap

2011-09-13T10:42:00.000-07:00

Cap
A limit in how much an adjustable rate mortgage's monthly payment or interest rate can increase. A cap is meant to protect the borrower from large increases and may be a payment cap, an interest cap, a life-of-loan cap or an annual cap.

A payment cap is a limit on the monthly payment.

An interest cap is a limit on the amount of the interest rate.

A life-of-loan cap restricts the amount the interest rate can increase over the entire term of the loan.

An annual cap limits the amount the interest rate can increase over a twelve-month period.

Daily Definition: Adjustable Rate Mortgage (ARM)

2011-09-12T10:39:00.000-07:00

Adjustable Rate Mortgage (ARM)
A variable or flexible rate mortgage with an interest rate that varies according to the financial index it is based upon. To limit the borrower's risk, the ARM may have a payment or rate cap.

Daily Definition: Points

2011-09-11T10:45:00.000-07:00

Points
Charges levied by the lender based on the loan amount. Each point equals one percent of the loan amount; for example, two points on a $100,000 mortgage is $2,000. Discount points are used to buy down the interest rate. Points can also include a loan origination fee, which is usually one point.

Liberty Star Mortgage Collette Horton Interview

2011-09-10T10:54:00.000-07:00

Protecting Your Credit During A Divorce

2011-09-09T11:10:00.000-07:00

When a marriage ends in divorce, the lives of those involved are changed forever. During this time of upheaval, one thing that shouldn’t have to change is the credit status you’ve worked so hard to achieve.

Unfortunately, for many, the experience is the exact opposite. Unfulfilled promises to pay bills, the maxing out of credit cards, and a total breakdown in communication frequently lead to the annihilation of at least one spouse’s credit. Depending upon how finances are structured, it can sometimes have a negative impact on both parties.

The good news is it doesn’t have to be this way. By taking a proactive approach and creating a specific plan to maintain one’s credit status, anyone can ensure that “starting over” doesn’t have to mean rebuilding credit.

The first step for anyone going through a divorce is to obtain copies of your credit report from the 3 major agencies: Equifax, Experian®, and TransUnion®. It’s impossible to formulate a plan without having a complete understanding of the situation. (Once a year, you may obtain a free credit report by visiting www.AnnualCreditReport.com.)

Once you’ve gathered the facts, you can begin to address what’s most important. Create a spreadsheet, and list all of the accounts that are currently open. For each entry, fill in columns with the following information: creditor name, contact number, the account number, type of account (e.g. credit card, car loan, etc.), account status (e.g. current, past due), account balance, minimum monthly payment amount, and who is vested in the account (joint/individual/authorized signer).

Now that you have this information at your fingertips, it’s time to make a plan.

There are two types of credit accounts, and each is handled differently during a divorce. The first type is a secured account, meaning it’s attached to an asset. The most common secured
accounts are car loans and home mortgages. The second type is an unsecured account. These accounts are typically credit cards and charge cards, and they have no assets attached.

When it comes to a secured account, your best option is to sell the asset. This way the loan is paid off and your name is no longer attached. The next best option is to refinance the loan. In other words, one spouse buys out the other. This only works, however, if the purchasing spouse can qualify for a loan by themselves and can assume payments on their own. Your last option is to keep your name on the loan. This is the most risky option because if you’re not the one making the payment, your credit is truly vulnerable. If you decide to keep your name on the loan, make sure your name is also kept on the title. The worst case scenario is being stuck paying for something that you do not legally own.

In the case of a mortgage, enlisting the aid of a qualified mortgage professional is extremely important. This individual will review your existing home loan along with the equity you’ve built up and help you to determine the best course of action.

When it comes to unsecured accounts, you will need to act quickly. It’s important to know which spouse (if not both) is vested. If you are merely a signer on the account, have your name removed immediately. If you are the vested party and your spouse is a signer, have their name removed. Any joint accounts (both parties vested) that do not carry a balance should be closed immediately.

If there are jointly vested accounts which carry a balance, your best option is to have them frozen. This will ensure that no future charges can be made to the accounts. When an account is frozen, however, it is frozen for both parties. If you do not have any credit cards in your name, it is recommended you obtain one before freezing all of your jointly vested accounts. By having a card in your own name, you now have the option of transferring any joint balances into your account, guaranteeing they’ll get paid.

Ensuring payment on a debt which carries your name is paramount when it comes to preserving credit. Keep in mind that one 30-day late payment can drop your credit score as much as 75 points. It is also important to know that a divorce decree does not override any agreement you have with a creditor. So, regardless of which spouse is ordered to pay by the judge, not doing so will affect the credit score of both parties. The message here is to not only eliminate all joint accounts, but to do it quickly.

Divorce is difficult for everyone involved. By taking these steps, you can ensure that your credit remains intact.