Your Mortgage…A Key To Wealth Building

Your Mortgage…A Key To Wealth Building
A mortgage is a loan secured by Real property. When you take out a mortgage you are financing the cost of your home over a set amount of time. The mortgage you choose is a key factor in building your home’s equity. It is here that Predatory Lending takes place. Most consumers are in higher interest rates on their mortgages than they qualify for causing them to loose billions of dollars each year combined Equity. Your FCLS Certified Broker will closely work with you to ensure you are in the best mortgage for your current financial situation, you have received all of your loan options in writing and that there are no excess junk fees charged to you in order complete your home loan transaction.
Loan Programs	Advantages	Disadvantages
Fixed Rate Mortgages
30 year fixed 15 year fixed 40 year due in 30 years	Monthly payments are fixed over the life of the loan Interest rate does not change Protected if rates go up Can refinance if rates go down	Higher interest rate Higher mortgage payments Rate does not drop if interest rates improve
Adjustable Rate Mortgages
10/1 ARM 7/1 ARM (7/23) 5/1 ARM (5/25) 3/1 ARM (3/27) 1 year ARM 6 month ARM 1 month ARM Interest Only (the interest only option can be take out on most mortgages)	Lower initial monthly payment Lower payment over a shorter period of time Rates and payments may go down if rates improve May qualify for higher loan amounts Lower monthly payment	More risk Payments may change over time. Potential for high payments if rates go up No money will go towards the principal keeping the loan balance the same.
Balloon Mortgages
7 year 5 year 40 year due in 30 years	Lower initial monthly payment Lower payment over a shorter period of time Many balloon mortgages offer the option to convert to a new loan after the initial term.	Risk of rates being higher at the end of the initial fixed period Risk of foreclosure if you cannot make balloon payment or if you cannot refinance or if you cannot exercise the conversion option
First Time Buyer Programs
	Lower down payment Easier to qualify Sometimes you may get lower rate	May be subject to income and property value limitations Some programs which have government subsidies may have a recapture tax if you sell the house too early.
Stated Income Programs
	Don’t need to verify income Faster approval	Higher rates Higher Score Needed Limits on Loan Amt.
No point, No fee Programs- THERE IS A COST FOR A “O” POINTS LOAN HIGHER
	Don’t need to verify income Faster approval	Higher rates Higher payments More interest paid over life of loan
Imperfect Credit Programs
	Potential for reestablishing credit if you pay your mortgage on time. When used for debt consolidation, you may be able to reduce your monthly debt payment	Higher rates Terms may not be as favorable Higher rates for long term fixed loans Loans may have prepayment penalties
Home Equity Line of Credit
	You only borrow what you need Pay interest only on what you borrow Flexible access to funds Interest may be tax deductible	Rates can change. The maximum interest rate is normally high. Payments can change on monthly basis You do not pay down the loan for the first 10 years you pay only “interest”, the cost of the loan. Limits financing options on your first mortgage.
Home Equity Fixed Loan
	Fixed payments Interest may be tax deductible	Higher interest rates than on 1st mortgages. Limits financing options on your first mortgage.
Be Cautious Of 1% Loan Programs Option Arm…1% Min Start Rate Loans…Pick A Pay Loans
This loan program is currently one of the most aggressively marketed loan programs by the mortgage industry. Although like all loan programs this program can have its benefits to those who need it and understand it, its ramifications for many is like playing Russian Rolette with their homes. It is important to understand this loan. When you buy a home you have an option to choose a program that allows you to pay principal and interest. Principal pays down your loan and interest is the cost of the loan. If you chose an interest only loan you will pay the interest only which means you pay only the cost of the loan and you do not pay down your loan. If you choose the option arm minimum payment you do not pay down the loan nor do you cover the interest on the loan. You simply pay a low rate and defer the interest on the back of the loan balance. This loan is considered a negative amortization loan If choose the option arm product you will not pay down the amount you borrow from the bank or the cost of the loan which is the interest. By paying a minimum payment of 1% to 2% you are only paying partial interest and differing the rest onto the balance of your home. Caution- Although the payment stays the same the true interest rate behind it can change monthly due to the change in the index associated with the loan An FCLS Certified Broker will provide you with the information you need to understand the ramification of the 1% loan option and/or any other options you may consider.

Stop Unsolicited Mail/Email

Unsolicited Mail, Telemarketing and Email: Where to Go to “Just Say No”

Tired of having your mailbox crammed with unsolicited mail, including pre-approved credit card applications? Fed up with getting telemarketing calls just as you’re sitting down to dinner? Fuming that your email inbox is chock-full of unsolicited advertising? The good news is that you can cut down on the number of unsolicited mailings, calls and emails you receive by learning where to go to “just say no.”

Credit Bureaus

The credit bureaus offer a toll-free number that enables you to “opt-out” of having pre-approved credit offers sent to you for two years. Call 1-888-5-OPTOUT (567-8688) or visit http://www.optoutprescreen.com/ for more information. When you call, you’ll be asked for personal information, including your home telephone number, your name, and your Social Security number. The information you provide is confidential and will be used only to process your request to opt out of receiving pre-screened offers of credit.

In addition, you can notify the three major credit bureaus that you do not want personal information about you shared for promotional purposes—an important step toward eliminating unsolicited mail. Write your own letter or use the sample letter on the back of this Alert to limit the amount of information the credit bureaus will share about you. Send your letter to each of the three major credit bureaus:

Equifax,
Inc.Options
PO Box 740123
Atlanta, GA 30374-0123

Experian
Consumer Opt-Out
701 Experian Parkway
Allen, TX 75013

TransUnion
Name Removal Option
P.O. Box 505
Woodlyn, PA 19094

Direct Marketers

Telemarketing

The Federal Government has created the National Do Not Call Registry—the free, easy way to reduce the telemarketing calls you get at home. To register, or to get information, visit http://www.donotcall.gov/, or call 1-888-382-1222 from the phone you want to register. You will receive fewer telemarketing calls within three months of registering your number. It will stay in the registry for five years or until it is disconnected or you take it off the registry. After five years, you will be able to renew your registration.

Mail

The Direct Marketing Association’s (DMA) Mail Preference Service lets you opt out of receiving direct mail marketing from many national companies for five years. When you register with this service, your name will be put on a “delete” file and made available to direct-mail marketers. However, your registration will not stop mailings from organizations that are not registered with the DMA’s Mail Preference Service. To register with DMA, send your letter to: Direct Marketing Association

Mail Preference Service
PO Box 643
Carmel, NY 10512

Or register online at www.the-dma.org/consumers/offmailinglist.html.

Email

The DMA also has an EMail Preference Service to help you reduce unsolicited commercial emails. To “opt-out” of receiving unsolicited commercial email, use DMA’s online form at www.dmaconsumers.org/offemaillist.html. Your online request will be effective for one year.

Department of Motor Vehicles

The Drivers Privacy Protection Act allows states to distribute personal information only to law enforcement officials, courts, government agencies, private investigators, insurance underwriters and similar businesses—but not for direct marketing and other uses.

Sample Opt-Out Letter (Send to addresses listed above.)

Date To whom it may concern: I request to have my name removed from your marketing lists. Here is the nformation you have asked me to include in my request: FIRST, MIDDLE & LAST NAME (List all name variations, including Jr., Sr., etc.) ______________________________ CURRENT MAILING ADDRESS ________________________________________________________ ________________________________________________________ PREVIOUS MAILING ADDRESS (Fill in your previous mailing address if you have moved in the last 6 months.) ________________________________________________________ ________________________________________________________ SOCIAL SECURITY NUMBER ______________________________ DATE OF BIRTH ______________________________ Thank you for your prompt handling of my request. ______________________________ Signature

If You Have a Complaint

The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit http://www.ftc.gov/ or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

How To Freeze Your Credit

How to "Freeze" Your Credit Files

If you live in California, you have the right to put a "security freeze" on your credit file. A security freeze means that your file cannot be shared with potential creditors. A security freeze can help prevent identity theft. Most businesses will not open credit accounts without first checking a consumer's credit history. If your credit files are frozen, even someone who has your name and Social Security number would probably not be able to get credit in your name.

A security freeze is free to identity theft victims who have a police report of identity theft. If you are not an identity theft victim, it will cost you $10 to place a freeze with each credit bureau. That’s a total of $30 to freeze your files.

How do I place a security freeze?

To place a freeze, you must write to each of the three credit bureaus. You must provide identifying information. If you are an identity theft victim, provide a copy of your police report (or DMV investigative report) of identity theft. Otherwise provide payment of $10 to each of the credit bureaus.

Write to the addresses below or use the same letters on the Identity Theft page of the Office of Privacy Protection Web site.

Equifax Security Freeze

P.O. Box 105788

Atlanta, GA 30348

• Send by certified mail.




• Include name, current and former address, Social Security number, and date of birth.




• Pay by check, money order, or credit card (Visa, Master Card, American Express or Discover only). Give name of credit card, account number, and expiration date.

Experian Security Freeze

P. O. Box 9554

Allen, TX 75013

• Send by certified mail.




• Include full name, with middle initial and Jr./Sr., etc.




• Include current address and home addresses for past five years, Social Security number, birth date, and two proofs of residence (copy of driver license, utility bill, insurance statement, bank statement).




• Pay by check, money order or credit card. Give name of credit card, account number and expiration date.

TransUnion Security Freeze

P. O. Box 6790

Fullerton, CA 92834-6790

• Send by regular or certified mail.




• Include first name, middle initial, last name, Jr., etc.




• Current home address and addresses for past five years, Social Security number, and birth date.




• Pay by check, money order or credit card. Give name of credit card, account number and expiration date.

Can I open new credit accounts if my files are frozen?

Yes. If you want to open a new credit account or get a new loan, you can lift the freeze on your credit file. You can lift it for a period of time. Or you can lift it for a specific creditor. After you send your letter asking for the freeze, each of the credit bureaus will send you a Personal Identification Number (PIN). You will also get instructions on how to lift the freeze. You can lift the freeze by phone, using your PIN. The credit bureaus must lift your freeze within three days. The fee for lifting the freeze temporarily is $10 for a date-range lift and $12 for a lift for a specific creditor.

What is the difference between a fraud alert and a freeze?

A fraud alert is a special message on the report that a credit issuer receives when checking a consumer’s credit rating. It tells the credit issuer that there may be fraud involved in the account. A fraud alert can help protect you against identity theft. A fraud alert can also slow down your ability to get new credit. It should not stop you from using your existing credit cards or other accounts. A security freeze means that your credit file cannot be seen by potential creditors, insurance companies, or employers doing background checks – unless you give your consent. Most businesses will not open credit accounts without first checking a consumer’s credit history.

How long does it take for a security freeze to be in effect?

Credit bureaus must place the freeze no later than five business days after receiving your written request.

How long does it take for a security freeze to be lifted?<

Credit bureaus must lift a freeze no later than three business days after receiving your request.

What will a creditor who requests my file see if it is frozen?

A creditor will see a message or a code indicating that the file is frozen.

Can a creditor get my credit score if my file is frozen?

No. A creditor who requests your file from one of the three credit bureaus will only get a message or a code indicating that the file is frozen.

Can I order my own credit report if my file is frozen?

Yes.

Can anyone see my credit file if it is frozen?

When you have a security freeze on your credit file, certain entities still have access to it. Your report can still be released to your existing creditors or to collection agencies acting on their behalf. They can use it to review or collect on your account. Other creditors may also use your information to make offers of credit-unless you opt out of receiving such offers. See below for how to opt out of pre-approved credit offers. Government agencies may have access for collecting child support payments or taxes or for investigating Medi-Cal fraud. Government agencies may also have access in response to a court or administrative order, a subpoena, or a search warrant.

Do I have to freeze my file with all three credit bureaus?

Yes. Different credit issuers may use different credit bureaus. If you want to stop your credit file from being viewed, you need to freeze it with Equifax, Experian and TransUnion.

Will a freeze lower my credit score?

No.

Can an employer do a background check on me if I have a freeze on my credit file?

No. You would have to lift the freeze to allow a background check or to apply for insurance, just as you would to apply for credit. The process for lifting the freeze is described above.

Does freezing my file mean that I won’t receive pre-approved credit offers?

No. You can stop the pre-approved credit offers by calling 888-5OPTOUT (888-567-8688). Or you can do this online at www.optoutprescreen.com. This will stop most of the offers, the ones that go through the credit bureaus. It’s good for five years or you can make it permanent.

Does my spouse’s file have to be frozen, too?

Yes. Both spouses have to freeze their separate credit files, via separate letters requesting the freeze, in order to get the benefit. That means the total cost for freezing is $10 x 3 credit bureaus x 2 people = $60.

What law requires security freezes?

The law on security freeze is in the California Consumer Credit Reporting Agencies Act, at California Civil Code sections 1785.11.2-1785.11.6.

This fact sheet is for informational purposes and should not be construed as legal advice or as policy of the State of California. If you want advice on a particular case, you should consult an attorney or other expert. The fact sheet may be copied, if (1) the meaning of the copied text is not changed or misrepresented, (2) credit is given to the California Office of Privacy, and (3) all copies are distributed free of charge.

Sample Freeze Letter to Equifax

Date: Equifax Security Freeze P.O. Box 105788 Atlanta, GA 30348 Dear Equifax: I would like to place a security freeze on my credit file. My name is: My current address is: My former address was: My Social Security number is: My date of birth is: CIRCLE ONE I am an identity theft victim and a copy of my police report or DMV investigative report of identity theft is enclosed. OR I will pay the fee of $10 for placing the freeze by: Yours truly,

Sample Freeze Letter to Experian

Date: Experian Security Freeze P.O. Box 9554 Allen, TX 75013 Dear Experian: I would like to place a security freeze on my credit file. My name is: My current address is: Below is a list of my addresses for the past five years: My Social Security number is: My date of birth is: As proof of my residence, I am enclosing the following two items: CIRCLE ONE I am an identity theft victim and a copy of my police report or DMV investigative report of identity theft is enclosed. OR I will pay the fee of $10 for placing the freeze by: Yours truly,

Sample Freeze Letter to Trans Union

Date: TransUnion Security Freeze P.O. Box 6790 Fullerton, CA 92834-6790 Dear TransUnion: I would like to place a security freeze on my credit file. My name is: My current address is: Below is a list of my addresses for the past five years: My Social Security number is: My date of birth is: CIRCLE ONE I am an identity theft victim and a copy of my police report or DMV investigative report of identity theft is enclosed. OR I will pay the fee of $10 for placing the freeze by: Yours truly,

Updated February 8, 2006