As a consumer if you are considering a refinance or a new purchase, you need to have all of your financial information available.  By having all the information available, the lender will be able to assist you and explain to you all your various options whether under a FHA financing program or another loan program.

It is important for the consumer to present the following items which visiting with a lender:

• Complete copy of last 2 years personal tax returns for all borrowers
• Copy of most recent paystub for all borrowers
• Complete copy of last 2 months bank statement on all types of accounts

Some programs may not require this type of financial information.  However, the more information provided to the lender allows for a smoother the transaction for the consumer.  In addition, it allows the lender to have a frank discuss with the borrower on the types of programs that will meet their financial requirements.

Your credit card company may have lowered your available credit, but why?  If you have been watching the news lately, most of the major headlines revolve around the credit crunch and foreclosures.  Banks and lenders do not want to leave themselves exposed to unecessary losses.  A few months ago Washingotn Mutual lowered my home equity line over 75%.  I had never even used the thing.  The banks are worried that when times get tough, people are going to tap into their equity lines and then default.  The bank just wants to hedge their bet and cover their losses by removing excess credit from people.  This is done in the form of closing credit cards, cancelling home equity lines and lower available credit for credit cards. Continue Reading »

When will the economy start to improve?  This is anyones guess.  But a few things need to happen before consumer confidence will turn around.  The subprime meltdown has caused a mental picture of wealth to scarcity to occur.  When people felt their homes were worth a lot of money and they had equity, they would be more eager to spend.  Now the statistics for equity in home for homeowners is frightening.  More than 1 out of 6 homeowners are upside down in their mortgages.  This means that they owe more than their home is worth.  When this occurs, people are going to hang on to their cash.  That home equity line is closed or has been reduced by the bank.  Many people used their home equity lines for cars, home improvements or vacations.  When the equity is gone there is going to be a pullback in spending.  When their is a pull back in spending, companies are not making as much as they were in the past.  Thus you have people that are losing their jobs.  These people are no longer discretionary income and are just happy to get by every month.

What Will Fix The Economy?

How will the economy get fixed?  Hard to say, the first thing is that we need to get consumer confidence back and job stability.  When people feel secure about their jobs, they will buy.  They will buy cars, they will buy houses and they will take vacations.  John McCain wants to focus on bailing out homeowners, but I think we need to focus on stabilizing the job market and consumer confidence first.  The 300 Billion could be better used to stimulate jobs.  Once we have this under control, people will go out and make a home purchase.  I do think that the banks will need to step in and modify some of their terms.  There is nothing wrong with doing short term forbearance agreements with people until things turn around again.  We survived the real estate crash in the 80’s, we will get through this one.