Obama Slashes Costs for FHA Streamline Refinances to Boost Market

Last updated on August 29th, 2018

In another effort to buoy the flagging housing market, the Obama administration announced today that it would essentially be removing the upfront mortgage insurance premium on streamlined FHA refinances.

So homeowners who currently hold an FHA loan, looking to refinance into another FHA loan to lower their mortgage rate, will pay just 0.01% in upfront mortgage insurance premiums.

This represents a huge discount compared to the 1% upfront premium currently charged.

The annual mortgage insurance premium will also be slashed in half to 0.55%, which together with the upfront premium reduction is estimated to save the average FHA borrower roughly a thousand dollars annually.

In order to qualify for the new program, your FHA loan must have been originated prior to June 1, 2009.

The Obama administration believes about 2-3 million FHA borrowers will be eligible to benefit from this initiative, but only time will tell how many are really helped.

Are Future Homeowners Eating the Cost?

While this is great news for those who currently hold FHA loans, it makes you wonder if future homeowners will wind up paying for it.

Last week, the FHA announced that it would be raising upfront mortgage insurance premiums from 1% to 1.75%, beginning in April.

Additionally, the agency said it would raise the annual mortgage insurance premium by 0.10 percent for loan amounts under $625,500, and 0.35 percent for loans between $625,500 and $729,750.

The measures were taken to meet the congressionally mandated minimum for the FHA’s Mutual Mortgage Insurance (MMI) fund, which has been depleted thanks to all the recent losses on bad loans. It is expected to boost the fund by $1 billion through fiscal year 2013.

So essentially first-time homebuyers and other current homeowners who do not hold FHA loans will pay a premium to take out an FHA loan.

It seems like a bit of a shift in wealth, though it will likely result in fewer new homeowners going to the FHA for mortgage financing, which is probably the end goal.

The FHA exploded in popularity in recent years as subprime lending fell by the wayside, but the agency bit off more than it could chew. So this is likely a bid to return to a more normalized mortgage market funded by private capital.

[FHA loan vs. conventional loan]

Still, it seems a little unfair for those who don’t hold FHA loans, regardless of what good it may do.

But if you have an FHA loan, this is a great time to inquire about a streamline refinance to lower your mortgage rate and your monthly mortgage payment, without being subject to steep closing costs.

Reviewing Servicemember Foreclosures

The White House also announced that it will conduct a review of all servicemembers foreclosed on since 2006 to identify any wrongdoings.

Those found to be wrongly foreclosed on will receive compensation equal to a minimum of lost home equity, plus interest and $116,785, paid for by the nation’s top loan servicers, who were involved in the National Mortgage Settlement.

Additionally, those who were wrongfully denied a refinance will be refunded any money lost as a result.

And those who were forced to sell their homes for less than the mortgage balance due to a Permanent Change in Station will also be provided with some form of relief.

Finally, the major loan servicers will pay $10 million into the Veteran Affairs fund, which guarantees funding for the VA loan program, and certain foreclosure protections will be extended to prevent future failings.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

Dealing with medical debt

A father holding his son on his shoulders.

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

According to a 2018 Consumer Reports survey, almost 30% of insured Americans had medical debt sent to collections in a two-year time span. That number might sound high, but there are many reasons why medical bills go unpaid long enough to end up in collections.

For one thing, healthcare expenses are often costly and unplanned, leaving people struggling to pay their bills in a timely manner. And close to a quarter of people surveyed told Consumer Reports they didn’t realize there was even an amount due to be paid.

If you are dealing with medical bills in collections or
are worried about a medical bill making it to collections, find out more below.

According to a 2018 report, almost 30% of insured Americans had medical debt sent to collections in a two-year time span.

When Does Medical Debt Go to Collections?

First-party medical creditors—this is the organization that provided the healthcare service or the agency contracted to handle billing on its behalf—can typically send you to collections at any time. The key is that they must follow their own policies consistently.

In most cases, first-party medical creditors will send you
at least one bill. Some may send multiple bills over the course of several
months. At some point, if you don’t pay those bills, the account will go to
collections. When that happens, it can be reported to the credit bureaus as a
medical account in collections.

How Do Medical Bills in Collections Affect Your Credit?

There’s some good news: the 2017 changes to the credit reporting rules offer some provisions to help protect your credit from unplanned medical bills. Specifically, there’s a waiting period before medical debt can show up on your credit report and reporting on medical debt is removed from your credit report if it has been paid or is being paid by insurance.

The credit bureaus must wait at least 180 days after a medical debt is reported to them before they add it to your report. That provides up to 6 months for you to dispute medical bills, work with insurance companies or settle the debt with the creditor, if you choose, before it impacts your credit score.

In addition, if a medical debt does appear on your reports
after the 180-day period but has been or is being paid by insurance, then it
must be removed from the reports.

If medical bill collections do end up on your credit
report and they are not paid by insurance, they may remain for up to seven years—even
if they’re paid. However, they may not impact your score as much as other types
of collections. Both the FICO Score 9 model and VantageScore 4.0 weigh medical
debt less heavily than some other kinds of debt.

What Can You Do About Medical Debt in Collections?

Just because medical bills don’t necessarily have the impact on your credit score that other debts do, it doesn’t mean there’s no impact at all. Consumer Reports notes that almost one-fifth of Americans say their credit has been negatively impacted by medical bills in collections. Try some of the steps below to help resolve the matter and positively impact your credit history for the future.

Almost one-fifth of Americans say their credit has been negatively impacted by medical bills in collections.

Know What Your Insurance Covers

Start by ensuring that you really do owe this money.
Review the explanation of benefits, also called an EOB, provided by your
insurance company. You should receive an EOB statement from your insurance
company anytime a provider bills medical expenses to your insurance. (Keep in
mind that an EOB is not a bill.)

In most cases, insurance companies don’t allow the full
amount a provider bills it for. Your EOB will show:

  • How much
    of the bill was allowed and how much was disallowed.
    Your provider must
    write off disallowed amounts and typically can’t bill them to you if they
    agreed to accept insurance payments.
  • How much
    of the bill was paid by the insurance company.
    This is the amount you do
    not owe and do not need to worry about.
  • How much
    of the bill is the patient’s responsibility.
    This is the amount you do owe,
    according to your insurance. If you’re being billed by the medical creditor for
    more than this, it could be a mistake.

If you don’t think you owe the amount being sought, you may choose to dispute it. Ask for documentation proving that you owe the amount. If the account is being reported on your credit report, consider sending a dispute letter to the credit bureau in question if you believe there is an error in the reporting.

Negotiate with the Service Provider

Once you understand how much you owe, you may choose to
reach out to the provider to negotiate. You may be able to get a discount,
particularly if you didn’t use insurance and you can pay a large sum toward the
amount billed.

Negotiation with providers may work better earlier in the game, so it may be helpful to not put off this step. Make sure you know what you might owe and how you can pay it even before services are rendered, if possible.

Suggest a Suitable Payment Plan

If you receive a medical bill and you can’t pay it all
at once, you may ask for a payment plan or suggest an arrangement. If you can
pay the bill off in a short period of time, such as a few months, many medical
providers will not send you to collections.

Use a Credit Card Only If You Must

Paying for medical debt with a credit card converts a bill with little to no interest to one that might come with a large amount of interest. Only use a credit card to pay medical bills if you have no other options.

Consider Seeking Debt Settlement

If the account has already gone to collections, you may
try negotiating a settlement. In some cases, the older a debt is, the less
likely the organization is to collect it. This could make it more likely to
accept a smaller amount to consider the account paid in full.

Make sure you have the ability to make an immediate payment if you do negotiate a settlement. You may ask for the collections account to be deleted from your credit report in return for making the settlement payment, but not all collection agencies can or will do this. However, they do have to mark the account as paid, which looks better on your credit history than an unpaid account.

Whatever you do when settling a debt, get it in writing. You might need to demonstrate there was an
agreement later.

Work with a Medical Billing Advocate

If you’re feeling overwhelmed by medical bills and all
the information that comes with them, you might consider working with a medical
billing advocate. These individuals help you understand your bills, appeal
costs to hospitals and ensure your insurance company covers everything it
should. That can help reduce the total cost of your medical expenses.

Regularly Check Your Credit Report

Staying on top of your credit report by checking it
regularly is important, especially because you might never see a notice in the
mail about your debt going to medical collections. When you review your credit
regularly, you can respond to and handle negative items quickly and
proactively, giving you a better chance at protecting or positively impacting
your credit in the future.

Reach out to the credit consultants at Lexington Law if you want to learn more about your credit report and how you can work to improve your credit.


Reviewed by Cynthia Thaxton, Lexington Law Firm Attorney. Written by Lexington Law.

Cynthia Thaxton has been with Lexington Law Firm since 2014. She attended The College of William and Mary in Williamsburg, Virginia where she graduated summa cum laude with a degree in International Relations and a minor in Arabic. Cynthia then attended law school at George Mason University School of Law, where she served as Senior Articles Editor of the George Mason Law Review and graduated cum laude. Cynthia is licensed to practice law in Utah and North Carolina.

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Do I Qualify for the National Mortgage Settlement?

Last updated on February 10th, 2012

In case you haven’t heard by now, the so-called “National Mortgage Settlement” was finalized today.

It’s the largest multi-state settlement since the Tobacco Settlement back in 1998, related to robosigning allegations that took place over the past several years.

Essentially, some of the nation’s largest loan servicers routinely signed off on foreclosure documents without doing their due diligence, and/or without the presence of a notary.

It will provide more than $25 billion in assistance to homeowners, participating states and the federal government.

For the record, all 50 states participated except for lonely old Oklahoma.

The offending parties in the National Mortgage Settlement include:

– Ally/GMAC
– Bank of America
– Citi
– JPMorgan Chase
– Wells Fargo

These are the nation’s five largest mortgage loan servicers.

Benefits will be provided to both borrowers whose loans are owned by the settling banks as well as to borrowers whose loans they service.

In other words, your mortgage may have been originated by another company and sold to one of these companies to be serviced. So be sure to check your loan documents if you think you may be eligible.

Where the Settlement Money Will Go

The bulk of the money, at least $10 billion, will go toward principal balance reductions. In other words, those who hold underwater mortgages will see their balances drop to get them above water.

But the assistance will only be directed toward those who are either delinquent or at imminent risk of default as of the date of the settlement.

The principal reduction will likely be facilitated via a loan modification, so borrowers will ideally end up with a smaller loan balance and a lower mortgage rate, which will certainly make mortgage payments much more affordable.

State attorneys general believe principal reductions will prove beneficial, and as a result, will be employed by other mortgage lenders not involved in the settlement.

Another $7 billion or more will be used for short sales and transitional services, forbearance of principal for unemployed borrowers, anti-blight programs, and benefits for service members forced to sell their homes at a loss as a result of a “Permanent Change in Station” order.

Loan servicers will also have at least another $3 billion at their fingertips to provide refinancing to borrowers who are current, but underwater on their mortgages.

These homeowners will be able to take advantage of the record low mortgage rates that were previously out of reach due to loan-to-value ratio restraints.

Additionally, $1.5 billion will be distributed to roughly 750,000 borrowers who have already lost their homes to foreclosure.

The states involved will also receive immediate payments of roughly $3.5 billion to help fund consumer protection and state foreclosure protection programs.

How and When Can You Get Help?

If you think you qualify for assistance, you can contact the offending mortgage servicer directly, although they should be contacting you…

For borrowers who lost their homes between January 1, 2008 and December 31, 2011, a claim form should be sent to you for one of those shiny checks.

You can also contact your individual Attorney General’s office to check eligibility, or to provide a current address assuming you moved and/or have been foreclosed on.

Unfortunately, relief won’t be immediate under the settlement. Over the next 30-60 days, settlement negotiators will be selecting an administrator to oversee the program.

And over the next six to nine months, this administrator will work with attorneys general and loan servicers to identify relief recipients.

It is expected to take three years to execute the entire settlement, so patience is a virtue here.

Who is Left Out of the National Mortgage Settlement?

Borrowers with Fannie Mae and Freddie Mac owned mortgages. And those with FHA loans.

This is more than half of the homeowners with mortgages in the United States.

So quite a few borrowers are missing out. But they can still get assistance via HARP 2.0, even if they are severely underwater. Or via the Broad Based Refinancing Plan currently in the works.

Additionally, those that have positive home equity likely won’t see any relief from this settlement.

Essentially, those that paid down their mortgages, or came up with a reasonable down payment, won’t qualify for assistance under this settlement.

While it seems like they’re losing out, they aren’t. This settlement is about shoddy foreclosure practices, so those that weren’t affected obviously wouldn’t receive any benefit.

However, they may receive the indirect benefit of a healthier housing market and higher home prices if the settlement works as it should.

It’s worth noting that the banks involved are still accountable for claims that may arise out of any other wrongdoings committed during the lead up to the mortgage crisis.

About the Author: Colin Robertson

Before creating this blog, Colin worked as an account executive for a wholesale mortgage lender in Los Angeles. He has been writing passionately about mortgages for 15 years.

Source: thetruthaboutmortgage.com

The Best Places to Live in Illinois in 2021

There is more to Illinois than Chicago, although the largest city in the state is home to almost three million people.

When thinking about some of the best places to live in Illinois, you probably immediately consider Chicago and its densely populated suburbs. While these are all great places to live, there are hidden gems all throughout Illinois that you should consider.

So, whether you’re seeking an affordable apartment in Chicago or a quiet tree-lined city downstate, you have a number of great options from which to choose.

Here are the best places to live in Illinois.

Aurora, IL, one of the best places to live in illinois

  • Population: 199,687
  • Average age: 37
  • Median household income: $71,749
  • Average commute time: 35.9 minutes
  • Walk score: 45
  • Studio average rent: $1,142
  • One-bedroom average rent: $1,344
  • Two-bedroom average rent: $1,590

The second-largest city in Illinois with almost 200,000 residents, Aurora offers a mix of options that appeal to everyone from young and single professionals to families.

During the first Friday of each month, food trucks serve up dishes along Benton Street Bridge. In addition, the revitalized downtown district has a great range of restaurants, from steakhouses to coffeehouses, and the area also has destination shopping outposts.

Plus, Aurora is nestled along Fox River, so nature-lovers will appreciate the opportunity to kayak and explore other activities nearby.

Bloomington, IL.

  • Population: 78,023
  • Average age: 39.8
  • Median household income: $67,507
  • Average commute time: 20.3 minutes
  • Walk score: 47
  • Studio average rent: N/A
  • One-bedroom average rent: $827
  • Two-bedroom average rent: $865

Bloomington often shares the limelight with its neighboring city, Normal, since it’s the home of Illinois State University.

While Bloomington lies in the heart of Illinois, at the junction of Interstates 55, 39 and 74, and within a few hours from Chicago and St. Louis, there is plenty to do in Bloomington.

Residents enjoy great restaurants, shopping and visiting attractions such as the historic Ewing Manor, named Sunset Hill by the Ewing family, or the David Davis Mansion which delights history buffs and garden lovers alike.

Bloomington is also the headquarters for State Farm Insurance and COUNTRY Financial.

Champaign, IL, one of the best places to live in illinois

Photo source: Visit Champaign County / Facebook
  • Population: 85,008
  • Average age: 36.5
  • Median household income: $48,415
  • Average commute time: 19.9 minutes
  • Walk score: 61
  • Studio average rent: $435
  • One-bedroom average rent: $629
  • Two-bedroom average rent: $947

Like Bloomington, Champaign is often associated with its neighboring city, Urbana, since the cities share the University of Illinois at Urbana-Champaign campus.

Champaign has a thriving arts scene, award-winning restaurants and great outdoor spaces. It’s a mix of rural and urban, giving residents options, whether they want a more quiet rural setting or a bustling urban environment.

Chicago, IL, one of the best places to live in illinois

  • Population: 2,721,615
  • Average age: 40.2
  • Median household income: $58,247
  • Average commute time: 43.4 minutes
  • Walk score: 84
  • Studio average rent: $1,796
  • One-bedroom average rent: $2,287
  • Two-bedroom average rent: $3,150

There is no shortage of things to do in the largest city in Illinois. Chicago is a city of neighborhoods and like any major metropolitan city in the country, it’s home to award-winning restaurants, world-class museums and Cloud Gate, the bean-like sculpture in Millennium Park also known as “The Bean” among locals.

In addition, the lakefront and the many parks throughout the city offer its residents a place to rest and enjoy their surroundings.

Rental rates vary based on the neighborhood but, in general, the closer to the downtown district and Lake Michigan, the higher the rental rates. Also, depending on where you live, it’s entirely possible to live in Chicago without needing a car since public transportation is pretty robust and accessible.

Evanston, IL.

Photo source: City of Evanston Illinois / Facebook
  • Population: 75,574
  • Average age: 41.4
  • Median household income: $78,904
  • Average commute time: 39.1 minutes
  • Walk score: 82
  • Studio average rent: $1,720
  • One-bedroom average rent: $2,141
  • Two-bedroom average rent: $2,974

Evanston borders the northern part of Chicago and while it’s a northern suburb, parts of it feel very much like a busy metropolitan city.

Northwestern University calls Evanston home so part of the north and east part of Evanston is home to students as well as established families who live in older and grand single-family homes.

Residents love their tree-lined and quiet streets and easy access to the beaches along Lake Michigan.

The city is large enough to have a few distinct shopping districts, including downtown Evanston, which has been completely transformed over the past decade with a large movie theater and larger retail establishments, while Central Street has more independent boutiques.

Naperville, IL, one of the best places to live in illinois

  • Population: 144,752
  • Average age: 41.3
  • Median household income: $125,926
  • Average commute time: 41.6 minutes
  • Walk score: 46
  • Studio average rent: $1,286
  • One-bedroom average rent: $1,483
  • Two-bedroom average rent: $1,828

The original home of the fictional Byrde family before they moved to the Ozarks, Naperville is a picturesque western suburb of Chicago.

The Naperville Riverwalk curves along the banks of the DuPage River and features independent boutiques, restaurants, bars and hotels with river views.

The DuPage Children’s Museum has fun hands-on exhibits that attract both residents and visitors to the area. In addition, the Naper Settlement is a family-friendly, 13-acre outdoor history museum that traces the history of Naperville.

Oak Park, IL.

  • Population: 52,227
  • Average age: 42.1
  • Median household income: $94,646
  • Average commute time: 43.1 minutes
  • Walk score: 84
  • Studio average rent: $1,427
  • One-bedroom average rent: $1,651
  • Two-bedroom average rent: $2,707

Oak Park is a tree-lined suburb just west of Chicago.

The Chicago Transit Authority (CTA) Green Line includes several Oak Park stops, making it particularly convenient for those who want to live in a suburb but still have easy access to Chicago.

Even so, Oak Park is a bustling city with an active downtown full of restaurants and independent boutiques, strong schools and active community members. It’s also home to the Frank Lloyd Wright Home and Studio, which attracts thousands from around the world to see the architect’s prairie-style home.

Peoria, IL, one of the best places to live in illinois

  • Population: 114,615
  • Average age: 40.8
  • Median household income: $51,771
  • Average commute time: 22 minutes
  • Walk score: 44
  • Studio average rent: $678
  • One-bedroom average rent: $771
  • Two-bedroom average rent: $954

Peoria is a laid-back city and most residents work for one of the major employers: Caterpillar (which still employees thousands despite its corporate move to Chicago), OSF Healthcare Saint Francis Medical Center or the school district.

Nestled along the Illinois River, it’s located between St. Louis and Chicago, which is approximately a two-and-a-half-hour drive. There is a mix of things to do in the city, from hiking outdoors to enjoying a cocktail at one of the many restaurants, bars or casinos.

In mid-2014, Peoria began offering bus route service on Sundays, something it hadn’t been offering since 1970, making it easier to get around town for those without a car.

Rockford, IL.

  • Population: 148,485
  • Average age: 41.9
  • Median household income: $44,252
  • Average commute time: 25.6 minutes
  • Walk score: 46
  • Studio average rent: N/A
  • One-bedroom average rent: $714
  • Two-bedroom average rent: $1,070

There is no shortage of outdoor entertainment options for those living of visiting Rockford. There are pools to swim, a river to kayak and nature preserves to hike.

The Klehm Arboretum and Botanic Garden as well as the Anderson Japanese Garden attract thousands of garden lovers.

Residents can choose between downtown lofts to quieter tree-lined streets in historic neighborhoods. Each Rockford community is active in its own way, with great restaurants, museums and shops located throughout the fifth-largest city in the state.

Springfield, IL, one of the best places to live in illinois

  • Population: 115,968
  • Average age: 43.2
  • Median household income: $54,648
  • Average commute time: 22.2 minutes
  • Walk score: 47
  • Studio average rent: N/A
  • One-bedroom average rent: $665
  • Two-bedroom average rent: $749

Home to the Illinois State Capitol, Springfield is a mix of those who serve the legislative and executive branches of the government during sessions as well as residents who live in the city full-time.

It’s also home to the Abraham Lincoln Presidential Library and Museum which honors and documents the life and work of the 16th U.S. President, Abraham Lincoln so the area gets a lot of tourists year-round.

Springfield feels a bit like living in a suburban setting but also has plenty of bars, restaurants and parks to keep locals and visitors entertained.

Choose among the best cities in Illinois

With world-class attractions, sprawling rural towns to fast-paced urban cities, Illinois has something for everyone. If you’re thinking about moving to the Land of Lincoln, we hope this list of the best places to live in Illinois helpful.

Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments in March 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
Other demographic data comes from the U.S. Census Bureau.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

5 Mortgage Misconceptions Set Straight

Looking for a home loan? Get your facts straight so you can proceed with confidence.

Getting a mortgage can be a breeze or a slog, depending on what you know about the process. To get organized and set your expectations properly, let’s debunk some common mortgage myths.

1. Lenders use your best credit scores

If you’re applying for a mortgage jointly with a co-borrower, logic suggests that your lender would use the highest credit score between both of you.

However, lenders take the middle of three credit scores (from Equifax, TransUnion and Experian) for each borrower, and then use the lowest score between both borrowers’ “middle scores.”

So, if you had a middle score of 780, and your co-borrower had a middle score of 660, most lenders would qualify and approve you using the 660 credit score.

Rates are tied to credit scores, so in this example, your rate would be based on the 660 credit score, which would push your rate up significantly — or potentially even make you ineligible for the loan.

There are exceptions to this lowest-case-credit-score rule. Most notably, if you have the higher credit score and are also the higher earner, some lenders will allow your higher credit score on the file — but this is mostly for jumbo loans above $417,000.

Ask your lender about exceptions if you have credit score disparity between co-borrowers, but know that these exceptions are rare.

2. The rate you’re quoted is the rate you’ll get

Unless you’re locking in a rate at the moment it’s quoted, that rate quote can change. Rates are tied to daily trading of mortgage bonds, so most lenders’ rates change throughout each day.

Refinancers can often lock a rate when it’s quoted — as long as you’ve given your lender enough information and documentation to determine if you qualify for the quoted rate.

You typically receive a quote when you’re beginning your pre-approval process, but a rate lock runs with a borrower and a property. So until you’ve found a home to buy, you can’t lock your rate. And while you’re home shopping, rates will be changing daily, so you’ll need updated quotes from your lender throughout your home shopping process.

Rate quotes also come with an annual percentage rate (APR), which is a federally required disclosure that shows what your rate would be if all loan fees are incorporated into the rate.

This can make you think that APR is the rate you’ll get, but your loan payment will always be based on your locked rate, and the APR is just a disclosure to help you understand fees.

3. Fixed-rate mortgages are always better than adjustable-rate mortgages

After the 2008 financial crisis, many borrowers started preferring 30-year fixed loans. For good reason too: The rate and payment on a 30-year fixed loan can never change. But the longer the rate is fixed for, the higher the rate.

So before settling on a 30-year fixed, ask yourself this question: How long am I going to own this home (or keep the loan) for?

Suppose the answer is five years. If you got a five-year adjustable rate mortgage (ARM) instead of a 30-year fixed, your rate would be about .875 percent lower. On a $200,000 loan, you’d save $146 per month in interest by taking the five-year ARM. On a $600,000 loan, the monthly interest cost savings is $438.

To optimize your home financing, peg the loan term as closely as you can to your expected time horizon in the home.

4. Real estate agents don’t care which lender you use

A federal law enacted in 1974 called the Real Estate Settlement Procedures Act (RESPA) prohibits lenders and real estate agents from paying each other fees to refer customers to each other. So as a mortgage shopper, you’re always free to use any lender you choose.

But real estate agents who would represent you as a buyer do care which lender you use. They’ll often suggest that you use a local lender who’s experienced with your area’s nuances, such as local taxation rules, settlement procedures and appraisal methodologies.

These areas are all part of the loan process and can delay or kill deals if a nonlocal lender isn’t experienced enough to handle them.

Likewise, real estate agents representing sellers on homes you’re interested in will often prioritize purchase offers based on the quality of loan approvals. Local lenders who are known and respected by listing agents give your purchase offers more credibility.

5. Mortgage insurance is always required if you put less than 20 percent down

Mortgage insurance is a lender-risk premium placed on many home loans when you’re putting less than 20 percent down. In short, it means your total monthly housing cost is higher. But you can buy a home with less than 20 percent down and avoid mortgage insurance.

The most common way to do this is with a combination first and second mortgage — often called a piggyback — where the first mortgage is capped at 80 percent of the home’s value, and the second mortgage is for the balance of what you want to finance.

Related:

Originally published January 12, 2016.

Source: zillow.com

The Best Places to Live in Wisconsin in 2021

When people think of Wisconsin, they usually think of cheese, the Green Bay Packers or its largest city, Milwaukee.

The best places to live in Wisconsin are scattered throughout the state and include communities both big and small. After all, this Midwest state is home to 777 cities, each with its own strong community and unique personality.

So, whether you’re looking for an apartment while attending one of their excellent universities or colleges, making a move for a new job or looking for something new and different, there is a city and community waiting for you.

Here are 10 of the best places to live in Wisconsin.

Appleton, WI.

Photo source: Fox Cities Convention & Visitors Bureau / Facebook
  • Population: 73,637
  • Average age: 40.8
  • Median household income: $58,112
  • Average commute time: 22.3 minutes
  • Walk score: 41
  • Studio average rent: N/A
  • One-bedroom average rent: $918
  • Two-bedroom average rent: $1,281

Creative outdoor murals line the buildings, while cute boutiques, cozy coffee shops, and delicious food is found throughout historic downtown Appleton.

The city is among more than a dozen that make up the Fox Cities community and overlooks the Fox River.

It’s family-friendly and has a dense suburban feel with highly-rated schools. It’s also home to Lawrence University, a residential liberal arts college and conservatory of music.

Eau-Claire, WI, one of the best places to live in wisconsin

Photo source: Visit Eau-Claire / Facebook
  • Population: 67,250
  • Average age: 40
  • Median household income: $55,477
  • Average commute time: 20.9 minutes
  • Walk score: 47
  • Studio average rent: $608
  • One-bedroom average rent: $722
  • Two-bedroom average rent: $844

Whether it’s gathering with friends and neighbors to enjoy some of the many live music options throughout the city, including the Jazz Fest in the spring, followed by Country Fest, Rock Fest and Blue Ox Music Festival in the summer, or taking in some local art or walking along the historic bridges, Eau Claire is known for its welcoming vibe.

It’s especially welcoming to independent artists who create art installations, building murals and more.

According to a study released by Smart Asset, Eau Claire is also the third most livable small city in the country.

Fond-Du-Lac, WI.

  • Population: 43,145
  • Average age: 42.8
  • Median household income: $52,724
  • Average commute time: 22.4 minutes
  • Walk score: 49
  • Studio average rent: n/a
  • One-bedroom average rent: $822
  • Two-bedroom average rent: $895

Fond du Lac is a family-friendly community with a strong sense of history. The Fond du Lac County Historical Society connects residents to the local history of the town.

The public library and several sporting centers offer programming year-round and there is no shortage of restaurants and bars to enjoy dining and imbibing.

Green Bay, WI, one of the best places to live in wisconsin

  • Population: 104,984
  • Average age: 39.8
  • Median household income: $49,251
  • Average commute time: 22.8 minutes
  • Walk score: 45
  • Studio average rent: $955
  • One-bedroom average rent: $1,152
  • Two-bedroom average rent: $1,252

Most people know Green Bay for its football team (Fun fact: the Green Bay Packers football team is the only NFL team owned by its fans) but there is more than football in this northeastern part of Wisconsin and at the mouth of the Fox River.

While it can get cold during the winter months, Green Bay residents love spending time outdoors whenever possible. Easy access to the Fox River also means water-based activities such as fishing.

As the state’s oldest settlement, it’s also known for its family and business-friendly community.

Kenosha, WI.

  • Population: 98,545
  • Average age: 40.5
  • Median household income: $55,417
  • Average commute time: 29.2 minutes
  • Walk score: 51
  • Studio average rent: $1,254
  • One-bedroom average rent: $1,344
  • Two-bedroom average rent: $1,581

Located on the southwestern shore of Lake Michigan and at the northern border of Illinois, Kenosha is sometimes called a bedroom community between Chicago and Milwaukee.

Outdoor activities are popular, whether it’s water-based activities on Lake Michigan or playing a round of golf at one of the Kenosha County golf courses.

Kenosha is also home to Carthage College and the University of Wisconsin-Parkside.

La Crosse, WI, one of the best places to live in wisconsin

  • Population: 51,965
  • Average age: 39.1
  • Median household income: $45,233
  • Average commute time: 19.2 minutes
  • Walk score: 60
  • Studio average rent: $773
  • One-bedroom average rent: $1,100
  • Two-bedroom average rent: $1,245

Nestled along the Mississippi River, La Crosse is the largest city on Wisconsin’s western border. It’s home to a few colleges, including the University of Wisconsin-La Crosse, Western Technical College and Viterbo University.

La Crosse has charming historic homes that have since been converted into bed and breakfasts, such as the Castle La Crosse Bed and Breakfast, while the Dahl Auto Museum pays tribute to the eight oldest Ford dealership under continuous family ownership in the nation.

Nature lovers can enjoy scenic views from 600-foot-high Grandad Bluff which overlooks the city of La Crosse.

Madison, WI.

  • Population: 249,409
  • Average age: 39
  • Median household income: $65,332
  • Average commute time: 23.7 minutes
  • Walk score: 64
  • Studio average rent: $969
  • One-bedroom average rent: $1,350
  • Two-bedroom average rent: $1,935

Madison is the home of Wisconsin’s state capital as well as the University of Wisconsin-Madison. It’s also one of the best cities for millennials.

The second-largest city in the state, Madison is a progressive urban city that is both affordable and offers great employment opportunities.

Outdoor lovers will appreciate the hiking and biking trails and the walkable downtown has bookshops, coffee shops and restaurants around every corner.

Milwaukee, WI, one of the best places to live in wisconsin

  • Population: 599,058
  • Average age: 37.8
  • Median household income: $41,838
  • Average commute time: 27.5 minutes
  • Walk score: 70
  • Studio average rent: $1,276
  • One-bedroom average rent: $1,428
  • Two-bedroom average rent: $1,803

Milwaukee is Wisconsin’s largest and most populated city, with almost 600,000 residents calling it home.

Located in the southern part of the state and along Lake Michigan, it’s known for its many cultural offerings, from the architecturally significant Milwaukee Art Museum to the Milwaukee Repertory Theater to its wildly popular annual Summerfest, one of the largest music festivals in the world.

It’s also home to the University of Wisconsin-Milwaukee and Marquette University campus as well as two major professional sports teams: the Milwaukee Bucks and the Milwaukee Brewers. Several Fortune 500 companies have headquarters here too, including WEC Energy Group, Northwestern Mutual and Harley-Davidson.

Wauwatosa, WI.

Photo source: Discover Wauwatosa / Facebook
  • Population: 47,772
  • Average age: 43.9
  • Median household income: $82,392
  • Average commute time: 24.6 minutes
  • Walk score: 57
  • Studio average rent: $1,221
  • One-bedroom average rent: $1,504
  • Two-bedroom average rent: $1,962

Wauwatosa, sometimes called Tosa by locals, is just 15 minutes west of downtown Milwaukee. Residents love the small-town feel and having easy access to independently-owned shops and restaurants.

A major employer is the Milwaukee Regional Medical Center and Wauwatosa is home to several colleges and universities.

Tosa Village, originally called Hart’s Mill in the 1800s, is a popular destination for locals and visitors alike as the thriving historic district includes parks, cultural attractions, restaurants, and bars.

Architecture fans will appreciate a trip to Annunciation Greek Orthodox Church, designed by architect Frank Lloyd Wright in 1956 and completed in 1961. The church is on the National Register of Historic Places and among Wright’s last works and completed after his death.

Waukesha, WI, one of the best places to live in wisconsin

  • Population: 71,536
  • Average age: 41.3
  • Median household income: $65,260
  • Average commute time: 26.7 minutes
  • Walk score: 33
  • Studio average rent: $898
  • One-bedroom average rent: $1,012
  • Two-bedroom average rent: $1,299

Waukesha is a city of neighborhoods, filled with strong schools, great shops, and an abundance of green spaces to play.

An active farmers market during the summer takes place in downtown Waukesha, where families and friends meet up.

It’s ideal for those who want a suburban environment with access to urban amenities and residents include families as well as young professionals.

The city is also conveniently located close to Milwaukee, just 18 miles west of the largest city in Wisconsin, and 59 miles east of Madison, making it easy to get to either place.

Experience the best cities in Wisconsin

Wisconsin checks off a lot of checkmarks when it comes to living in a vibrant Midwest state with great attractions, schools, outdoor and recreational activities.

Whether you’re looking for a slower pace of life or the energy of a busy city, there is a Wisconsin community ready to welcome you. We hope this list of best places to live in Wisconsin helps you choose your next home.

Rent prices are based on a rolling weighted average from Apartment Guide and Rent.com’s multifamily rental property inventory of one-bedroom apartments in March 2021. Our team uses a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.
Other demographic data comes from the U.S. Census Bureau.
The rent information included in this article is used for illustrative purposes only. The data contained herein do not constitute financial advice or a pricing guarantee for any apartment.

Source: rent.com

5 Steps to Claim Your Ex’s Social Security After Divorce

Love and marriage don’t always last forever. But if your matrimony lasted 10 years or more, the financial benefits can last a lifetime. That’s because you may be able to take Social Security based on your ex-spouse’s benefits instead of your own, even if you divorced decades ago.

The philosophy is that both spouses often contribute economically during the marriage, even if only one person was employed. The Social Security rules protect those who spent most of their working years raising a family or playing a supportive role to their spouse and may have no retirement savings of their own.

The Rules for Social Security After Divorce

The maximum benefit you can get based on the record of a spouse — whether you’re currently married or divorced — is 50% of their full retirement age benefit. Full retirement age is the age at which you qualify for 100% of your benefit. It’s 66 or 67, depending on when you were born.

If your ex-spouse dies before you, you’ll typically be eligible to receive survivors benefits of 100% of the monthly payment they were receiving, just as you could if your current spouse died.

People with a long employment record will typically qualify for a bigger benefit based on their own earnings instead of a spouse’s. Social Security will give you the bigger benefit, but not both.

If you do qualify for more money thanks to your ex-spouse, they’ll technically give you whatever benefit you earned based on your record. Then, they’ll use your ex’s record to make up the difference.

Seeking to get revenge on an ex-spouse by claiming their Social Security? Move on. Your decision won’t affect their benefits in any way, nor will it impact their current spouse if they’ve remarried. If they’ve been married multiple times, all their exes are allowed to claim on their record.

Occasionally, a divorce settlement will state that one spouse can’t collect Social Security based on the other person’s record. Such stipulations are utter nonsense. The Social Security Administration says they’re “worthless and never enforced.”

How to Get Your Ex’s Social Security in 5 Easy Steps

Since your Social Security checks won’t affect your ex in any way, the only reason to try to claim their benefits is if you think you can get more money. If you suspect their record will maximize your Social Security, follow these five steps.

1. Make Sure You Can Answer ‘Yes’ to These Questions

To qualify for an ex’s Social Security benefits, you need to be able to answer “yes” to these four questions.

  • Were you married for 10 years or more? If your marriage lasted less than 10 years, you won’t qualify for an ex’s benefits. Common-law marriages don’t count. You also need to have been divorced at least two years before you can start getting checks based on your former spouse’s history, unless they’ve already started receiving benefits.
  • Are you at least 62? This is the minimum age for starting Social Security retirement benefits, no matter whose record you’re using. However, you can qualify regardless of your age if you’re caring for your ex’s child who is under 16 or disabled. If your ex-spouse is deceased, you can qualify for survivors benefits at age 60, or age 50 if you’re disabled.
  • Are you still unmarried? If you’re currently married, you can only claim on your record or your current spouse’s record. You’ll only be eligible 50% of their full benefit as well. And if you’ve been married and divorced multiple times? Social Security will use whichever ex-spouse’s record gives you the biggest benefit. Remember, though: Only marriages that lasted 10 years or more will count.
  • Is your ex eligible for benefits? In addition to the minimum age of 62, Social Security requires at least 40 work credits, which amounts to 10 years of full-time work, to start benefits. If your ex doesn’t meet these criteria, there’s no benefit for you to claim. Note that they don’t need to be receiving benefits. They just need to be eligible.

2. Gather Your Ex’s Information

You’re going to need some information to prove to Social Security that you’re eligible for your ex’s benefits. Be prepared to provide your marriage license and your divorce decree.

Social Security will also need to locate their record. This will be easiest if you still have their Social Security number. If you no longer have it, Social Security may be able to find their record if you can provide their date of birth, where they were born and the names of their parents.

3. Resist the Urge to Tell Them

Remember: Your decision to seek more Social Security on your ex’s record does not affect them in any way. So there’s absolutely no reason to contact them about it. You don’t need their consent to get benefits based on their record. Social Security will not contact them about your application.

4. Ask Social Security Whose Record Gets You the Best Benefit

Now take that information you gathered about your ex to Social Security so you can figure out whose record will give you the biggest benefit. You can call them at 800-772-1213 or visit your local office. An appointment isn’t required, but scheduling one can cut down on your waiting time.

5. Delay as Long as Possible (but Not Too Long)

The earlier you take benefits, the lower your monthly checks will be, no matter whose record you claim on. The 50% you can qualify for from their history is the maximum you’ll get if you wait until your full retirement age of 66 or 67. For every year you claim before then, you’ll permanently reduce your benefits by 6.66%. If you claim at 62, you’d only qualify for 32.5% of their benefit.

Don’t wait too long, though. When you take benefits on your own record, you get an extra 8% for every year you delay past your full retirement age until your benefits max out at 70. But when you’re getting spousal benefits, you don’t earn delayed retirement credits. You won’t get extra money for waiting past your full retirement age, so there’s no point in delaying any further.

A final note: In the past, a common Social Security strategy was to claim based on a current or former spouse’s record as early as possible, then switch over to your own bigger benefit later on. But the rules changed under a 2015 law called the Bipartisan Budget Act. Now this is only an option if you were born Jan. 2, 1954, or earlier.

Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. She writes the Dear Penny personal finance advice column. Send your tricky money questions to [email protected]

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Source: thepennyhoarder.com

What are derogatory marks and how can you fix them?

Derogatory Marks Header Image

Having a few items on your credit report dragging down your score can be incredibly frustrating, especially if you have a good financial record.

A derogatory mark is a negative item on your credit report that can be fixed by removing it or building positive credit activity. Because derogatory marks can stay on your credit report typically for seven to ten years, it’s important to know how to fix them.

Derogatory marks can affect your credit score, your ability to be approved for credit and the interest rates a lender offers you. Some derogatory marks are due to poor credit activity, such as a late payment. Or it could be an error that shouldn’t be on your report at all.

Types of negative items include late payments (30, 60, and 90 days), charge-offs, collections, foreclosures, repossessions, judgments, liens, and bankruptcies. We’ll cover what each one of these means, and how they can impact your credit reports.

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How do derogatory marks impact my credit score?

The amount that derogatory marks lower your credit score depends on the mark’s severity and how high your credit score was before the mark. For instance, bankruptcy has a greater impact on your credit score than a missed payment or debt settlement. And, unfortunately, having a derogatory mark impacts a high credit score more than it does a low credit score.

According to CreditCards.com and CNNMoney, even a single negative on your credit could cost you over 100 points. Negative items on your credit could cost you thousands of dollars in higher interest rates, or you could be denied altogether.

negative item score decrease stats

How long a derogatory mark stays on your credit report depends on the type of mark.

How long do derogatory marks stay on my credit report?

Derogatory marks usually stay on your credit report for around seven to ten years, depending on the type. After that period passes, the mark will roll off your report and you should start seeing a change in your credit score.

Here’s how long each derogatory mark stays on your credit report:

Type of derogatory mark What is it? How long does this stay on a credit report?
Late payment Late payments are payments made 30 days or more after the payment due date. Typically, this can remain on your report for seven years from the date you made a late payment.
An account in collections or a charge-off Creditors send your account to collections or charge them off if there’s been no payment for 180 days. Typically, this can remain on your report for seven years from the date you made a late payment.
Tax lien A tax lien is when the government claims you’ve neglected or failed to pay taxes on your property or financial assets. Unpaid tax lien: Can remain on your report indefinitely.

Paid tax lien: Can remain on your report seven years from the date the lien was filed.

Civil judgment Civil judgments are a debt you owe through the court, such as if your landlord sued you over missed rent payments. Unpaid civil judgment: Can remain on your report for seven years from when the judgment was filed, but can be renewed if left unpaid.

Paid civil judgment: Can remain on your report for seven years from when the judgment was filed.

Debt settlement Debt settlement is when you and your creditor agree that you will pay less than the full amount owed. A typical time period is seven years, starting from when the debt was settled or the date of the first delinquent payment if there were missed payments.
Foreclosure Foreclosure is when you fail to pay your mortgage and you forfeit the right to the property. Typically, seven years from the foreclosure filing date.
Bankruptcy Bankruptcy is a court proceeding to discharge your debt and sell your assets. Can remain on your report for seven years for Chapter 13 bankruptcy. Chapter 7 bankruptcy can remain on your report for 10 years.
Repossession A repossession is when your assets are seized, such as a vehicle that was used as collateral. Can remain on your report for seven years from the first date of the missed payment.

Types of derogatory marks

Late payments

Late payments occur when you’ve been 30, 60, or 90 days late paying an account. Although you don’t want late payments on your credit reports, an occasional 30 or 60-day late payment isn’t too severe. But you don’t want frequent late payments and you don’t want late payments on every single account. One recent late payment on a single account can lower a score by 15 to 40 points, and missing one payment cycle for all accounts in the same month can cause a score to tank by 150 points or more.

Payments 90 days late or more start to factor more heavily into your credit score, and consecutive late payments are even more harmful to your score, as each subsequent late payment is weighted more heavily. Sometimes, creditors will report payments as late as 120 days, which can be almost as severe as charge-offs and collections. Late payments can be reported to the credit bureaus once you have been more than 30 days late on an account and these late payments can stay on your credit reports for up to seven years.

Charge offs

A charge off is when a creditor writes off your unpaid debt. Typically, this occurs when you have been 180 days late on an account. Charge offs have a severely negative impact on your credit, and like most other negative items can stay on your credit reports for seven years. When an account is charged off, your creditor can sell it to collection agencies, which is even worse news for your credit.

Creditors see a charge off as a glaring indication that you have not been responsible with your finances in the past and cannot be counted on to fulfill your financial obligations in the future. When creditors see a charge off on your credit reports, they are more likely to deny any new applications for loans or lines of credit because they see you as a financial risk. If you do qualify, this can mean higher interest rates. Current creditors can respond by raising your interest rates on your existing balances.

Tax liens

In most cases, liens are the result of unpaid taxes – whether it’s at the state or the federal level. For a federal tax lien, the IRS can place a lien against your property to cover the cost of unpaid taxes. Tax liens can make it difficult to get approved for new lines of credit or loans because the government has claimed to your property. What this means is that if you default on any other accounts, your creditors have to stand in line behind the IRS to collect.

Unpaid liens can stay indefinitely on your credit reports. Once they have been paid, however, they can stay on your reports for up to seven years. Like judgments though, the credit bureaus are strictly regulated on how they can report liens because they are also public records.

Civil judgments

Judgments are public records that are also referred to as civil claims. A judgment can be taken out against a debtor for an unpaid balance. A creditor or collection agency can file a suit in court. If the court rules in favor of the creditor, a judgment is taken out against the debtor and put on their credit reports. This, like many other negative items, has a severely negative impact, and like most other negative items can be reported for seven years.

Judgments are also another indication that a person won’t pay their debts. Lawsuits are time-consuming and costly, so they are something that creditors potentially want to avoid. When a judgment is filed though, it can impact more than credit. The judge may allow the creditor to garnish a debtor’s wages, which can heavily impact finances.

Collections

Collections are the most common types of accounts on credit reports. About one-third of Americans with credit reports have at least one collection account. Over half of these accounts are due to medical bills, but other accounts like unpaid credit cards and loans, utilities, and parking tickets can be sold to collections.

Collections arise from debts that are sold to third parties by the original creditor if a bill goes unpaid for too long. They have a severe negative impact on your credit and can stay on your reports for up to seven years. When potential creditors see collections on your credit reports, it can raise flags and cause them to think that you won’t pay your debts.

Foreclosures

A foreclosure is a legal proceeding that is initiated by a mortgage lender when a homeowner has been unable to make payments. Usually, a lender will file a foreclosure when a homeowner has been three months late or more on mortgage payments.

When a lender decides to foreclose, they begin by filing a Notice of Default with the County Recorder’s Office, which begins the legal proceedings. If a foreclosure goes through and a homeowner can’t catch up on payments, then they are evicted from their home, and the foreclosure is reported to the credit bureaus.

Bankruptcies

Bankruptcy is extremely damaging to credit. Individuals who file for bankruptcy are those who have too much debt, and not enough money to pay it. They likely have had overdue accounts for a long period of time and in some cases loss of income that prevents them from being able to pay any of their bills. Bankruptcies can also arise from huge medical debt.

Whether or not file for bankruptcy is a difficult decision, and doing so can impact your credit from seven to ten years, depending on the type of bankruptcy you file. When a bankruptcy is filed, debts are discharged and the individuals filing are released from most of their previously incurred debts (there are some exceptions). This option can give people a “clean slate” from debt, but creditors don’t like to see it on credit reports because it can imply that an individual won’t pay their debts.

Repossessions

A repossession is a loss of property on a secured loan. Secured loans are where you have collateral, like a car or a house, and the loss occurs when the lender takes back the property because of the inability to pay. Usually, when this occurs, the lender will auction off the collateral to make up for the remaining balance, although it doesn’t usually cover the remaining balance.

When there is a remaining balance, the creditor may choose to sell it off to collections. A repossession has a severe negative impact on credit because it shows a debtor’s inability to pay back a loan. Usually, a repossession follows a long line of late payments and can knock a lot of points off a credit score.

How can I improve my credit score with derogatory marks on my credit report?

If you have derogatory marks, you can improve your credit score by working to rebuild your credit. By boosting your credit score, you’re more likely to get approved for loans and credit cards.

Here’s how to improve your credit score based on the type of derogatory mark:

Derogatory mark What to do to improve your credit score
Late payments Pay off the full debt as soon as possible. If there are late fees, ask the creditor to drop the fee (they often do if it’s your first time being late).
Stay on top of your payments with other lenders to show that you’re responsible, reducing the impact of a late payment.
An account in collections or a charge-off Pay off the debt or negotiate a settlement where you pay less than the full amount owed. Making a payment doesn’t remove the negative mark from your report, but prevents you from being sued over the debt.
Tax lien Pay the taxes you owe in full as soon as possible. Continue to make timely payments with any creditors and lenders.
Civil judgment Pay off the judgment amount, ideally before it gets to court. Make other payments on time to limit the impact of the civil judgment on your credit score.
Debt settlement Pay the full settled amount to prevent your account from going to collections or being charged off.
Foreclosure Keep other credit and loans open and make timely payments to build up positive credit activity.
Bankruptcy Rebuild your credit after bankruptcy with credit cards that cater to lower credit and credit builder loans. Make timely payments to reestablish that you’re a responsible borrower.
Repossessions Continue to pay other bills on time and pay off any further debt to the creditor.

You can also remove derogatory marks if they’re inaccurate or unfairly reported. By requesting your free credit report, you can look for mistakes and inaccuracies.

For example, check to see if a missed payment was inaccurately reported or if someone else’s account got mixed up with yours. You can remove these mistakes, giving your credit score a boost. 

How do I remove derogatory marks from my credit report?

You can remove derogatory marks from your credit report by disputing inaccuracies with the credit bureaus. Here’s how:

1. Request and review your credit report

TransUnion, Equifax and Experian provide one free credit report each year. Request your credit report and review it closely for errors.

Look through both “closed” and “open” derogatory marks. Check to see if your personal information is correct and if the creditor reported payments and dates appropriately. Take note of any discrepancies.

2. Dispute derogatory marks

If you notice incorrect items, payments or dates you need to file a dispute with that credit bureau (and any bureau that lists the item on your report).

You can file a dispute through the credit bureau or have a professional assist you. It’s best to make disputes as soon as you notice them, ideally within 30 days of the incident. The credit bureaus must respond to you within 30-45 days. 

3. Follow up on the dispute

You may have to provide more information or proof to refute something on your credit report. Be sure to respond to any inquiries by the specified time. Check your credit report afterward to make sure that the error is removed.

Removing a derogatory mark from your credit report helps to repair your credit. You’ll also want to improve your credit by doing things like lowering your credit utilization rate, upping the average age of your credit and making timely payments.

If you’re unable to remove a derogatory mark from your credit report, you’ll need to wait until it rolls off of your report, usually within seven to 10 years. In the meantime, work to rebuild your credit and improve your creditworthiness.

steps to remove derogatory marks from credit report

How can I get help with derogatory marks?

You can remove derogatory marks from your credit report by yourself. However, getting help from a credit repair company can make the process easier and improve your chances of getting the negative mark removed.

Many consumers appreciate professional help as it saves time, energy and resources. Contact us for a free credit report consultation. We’ll talk about your unique situation and the ways that we can help you.

Source: lexingtonlaw.com

What are derogatory marks and how can you fix them? – Lexington Law

Derogatory Marks Header Image

Having a few items on your credit report dragging down your score can be incredibly frustrating, especially if you have a good financial record.

A derogatory mark is a negative item on your credit report that can be fixed by removing it or building positive credit activity. Because derogatory marks can stay on your credit report typically for seven to ten years, it’s important to know how to fix them.

Derogatory marks can affect your credit score, your ability to be approved for credit and the interest rates a lender offers you. Some derogatory marks are due to poor credit activity, such as a late payment. Or it could be an error that shouldn’t be on your report at all.

Types of negative items include late payments (30, 60, and 90 days), charge-offs, collections, foreclosures, repossessions, judgments, liens, and bankruptcies. We’ll cover what each one of these means, and how they can impact your credit reports.

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How do derogatory marks impact my credit score?

The amount that derogatory marks lower your credit score depends on the mark’s severity and how high your credit score was before the mark. For instance, bankruptcy has a greater impact on your credit score than a missed payment or debt settlement. And, unfortunately, having a derogatory mark impacts a high credit score more than it does a low credit score.

According to CreditCards.com and CNNMoney, even a single negative on your credit could cost you over 100 points. Negative items on your credit could cost you thousands of dollars in higher interest rates, or you could be denied altogether.

negative item score decrease stats

How long a derogatory mark stays on your credit report depends on the type of mark.

How long do derogatory marks stay on my credit report?

Derogatory marks usually stay on your credit report for around seven to ten years, depending on the type. After that period passes, the mark will roll off your report and you should start seeing a change in your credit score.

Here’s how long each derogatory mark stays on your credit report:

Type of derogatory mark What is it? How long does this stay on a credit report?
Late payment Late payments are payments made 30 days or more after the payment due date. Typically, this can remain on your report for seven years from the date you made a late payment.
An account in collections or a charge-off Creditors send your account to collections or charge them off if there’s been no payment for 180 days. Typically, this can remain on your report for seven years from the date you made a late payment.
Tax lien A tax lien is when the government claims you’ve neglected or failed to pay taxes on your property or financial assets. Unpaid tax lien: Can remain on your report indefinitely.

Paid tax lien: Can remain on your report seven years from the date the lien was filed.

Civil judgment Civil judgments are a debt you owe through the court, such as if your landlord sued you over missed rent payments. Unpaid civil judgment: Can remain on your report for seven years from when the judgment was filed, but can be renewed if left unpaid.

Paid civil judgment: Can remain on your report for seven years from when the judgment was filed.

Debt settlement Debt settlement is when you and your creditor agree that you will pay less than the full amount owed. A typical time period is seven years, starting from when the debt was settled or the date of the first delinquent payment if there were missed payments.
Foreclosure Foreclosure is when you fail to pay your mortgage and you forfeit the right to the property. Typically, seven years from the foreclosure filing date.
Bankruptcy Bankruptcy is a court proceeding to discharge your debt and sell your assets. Can remain on your report for seven years for Chapter 13 bankruptcy. Chapter 7 bankruptcy can remain on your report for 10 years.
Repossession A repossession is when your assets are seized, such as a vehicle that was used as collateral. Can remain on your report for seven years from the first date of the missed payment.

Types of derogatory marks

Late payments

Late payments occur when you’ve been 30, 60, or 90 days late paying an account. Although you don’t want late payments on your credit reports, an occasional 30 or 60-day late payment isn’t too severe. But you don’t want frequent late payments and you don’t want late payments on every single account. One recent late payment on a single account can lower a score by 15 to 40 points, and missing one payment cycle for all accounts in the same month can cause a score to tank by 150 points or more.

Payments 90 days late or more start to factor more heavily into your credit score, and consecutive late payments are even more harmful to your score, as each subsequent late payment is weighted more heavily. Sometimes, creditors will report payments as late as 120 days, which can be almost as severe as charge-offs and collections. Late payments can be reported to the credit bureaus once you have been more than 30 days late on an account and these late payments can stay on your credit reports for up to seven years.

Charge offs

A charge off is when a creditor writes off your unpaid debt. Typically, this occurs when you have been 180 days late on an account. Charge offs have a severely negative impact on your credit, and like most other negative items can stay on your credit reports for seven years. When an account is charged off, your creditor can sell it to collection agencies, which is even worse news for your credit.

Creditors see a charge off as a glaring indication that you have not been responsible with your finances in the past and cannot be counted on to fulfill your financial obligations in the future. When creditors see a charge off on your credit reports, they are more likely to deny any new applications for loans or lines of credit because they see you as a financial risk. If you do qualify, this can mean higher interest rates. Current creditors can respond by raising your interest rates on your existing balances.

Tax liens

In most cases, liens are the result of unpaid taxes – whether it’s at the state or the federal level. For a federal tax lien, the IRS can place a lien against your property to cover the cost of unpaid taxes. Tax liens can make it difficult to get approved for new lines of credit or loans because the government has claimed to your property. What this means is that if you default on any other accounts, your creditors have to stand in line behind the IRS to collect.

Unpaid liens can stay indefinitely on your credit reports. Once they have been paid, however, they can stay on your reports for up to seven years. Like judgments though, the credit bureaus are strictly regulated on how they can report liens because they are also public records.

Civil judgments

Judgments are public records that are also referred to as civil claims. A judgment can be taken out against a debtor for an unpaid balance. A creditor or collection agency can file a suit in court. If the court rules in favor of the creditor, a judgment is taken out against the debtor and put on their credit reports. This, like many other negative items, has a severely negative impact, and like most other negative items can be reported for seven years.

Judgments are also another indication that a person won’t pay their debts. Lawsuits are time-consuming and costly, so they are something that creditors potentially want to avoid. When a judgment is filed though, it can impact more than credit. The judge may allow the creditor to garnish a debtor’s wages, which can heavily impact finances.

Collections

Collections are the most common types of accounts on credit reports. About one-third of Americans with credit reports have at least one collection account. Over half of these accounts are due to medical bills, but other accounts like unpaid credit cards and loans, utilities, and parking tickets can be sold to collections.

Collections arise from debts that are sold to third parties by the original creditor if a bill goes unpaid for too long. They have a severe negative impact on your credit and can stay on your reports for up to seven years. When potential creditors see collections on your credit reports, it can raise flags and cause them to think that you won’t pay your debts.

Foreclosures

A foreclosure is a legal proceeding that is initiated by a mortgage lender when a homeowner has been unable to make payments. Usually, a lender will file a foreclosure when a homeowner has been three months late or more on mortgage payments.

When a lender decides to foreclose, they begin by filing a Notice of Default with the County Recorder’s Office, which begins the legal proceedings. If a foreclosure goes through and a homeowner can’t catch up on payments, then they are evicted from their home, and the foreclosure is reported to the credit bureaus.

Bankruptcies

Bankruptcy is extremely damaging to credit. Individuals who file for bankruptcy are those who have too much debt, and not enough money to pay it. They likely have had overdue accounts for a long period of time and in some cases loss of income that prevents them from being able to pay any of their bills. Bankruptcies can also arise from huge medical debt.

Whether or not file for bankruptcy is a difficult decision, and doing so can impact your credit from seven to ten years, depending on the type of bankruptcy you file. When a bankruptcy is filed, debts are discharged and the individuals filing are released from most of their previously incurred debts (there are some exceptions). This option can give people a “clean slate” from debt, but creditors don’t like to see it on credit reports because it can imply that an individual won’t pay their debts.

Repossessions

A repossession is a loss of property on a secured loan. Secured loans are where you have collateral, like a car or a house, and the loss occurs when the lender takes back the property because of the inability to pay. Usually, when this occurs, the lender will auction off the collateral to make up for the remaining balance, although it doesn’t usually cover the remaining balance.

When there is a remaining balance, the creditor may choose to sell it off to collections. A repossession has a severe negative impact on credit because it shows a debtor’s inability to pay back a loan. Usually, a repossession follows a long line of late payments and can knock a lot of points off a credit score.

How can I improve my credit score with derogatory marks on my credit report?

If you have derogatory marks, you can improve your credit score by working to rebuild your credit. By boosting your credit score, you’re more likely to get approved for loans and credit cards.

Here’s how to improve your credit score based on the type of derogatory mark:

Derogatory mark What to do to improve your credit score
Late payments Pay off the full debt as soon as possible. If there are late fees, ask the creditor to drop the fee (they often do if it’s your first time being late).
Stay on top of your payments with other lenders to show that you’re responsible, reducing the impact of a late payment.
An account in collections or a charge-off Pay off the debt or negotiate a settlement where you pay less than the full amount owed. Making a payment doesn’t remove the negative mark from your report, but prevents you from being sued over the debt.
Tax lien Pay the taxes you owe in full as soon as possible. Continue to make timely payments with any creditors and lenders.
Civil judgment Pay off the judgment amount, ideally before it gets to court. Make other payments on time to limit the impact of the civil judgment on your credit score.
Debt settlement Pay the full settled amount to prevent your account from going to collections or being charged off.
Foreclosure Keep other credit and loans open and make timely payments to build up positive credit activity.
Bankruptcy Rebuild your credit after bankruptcy with credit cards that cater to lower credit and credit builder loans. Make timely payments to reestablish that you’re a responsible borrower.
Repossessions Continue to pay other bills on time and pay off any further debt to the creditor.

You can also remove derogatory marks if they’re inaccurate or unfairly reported. By requesting your free credit report, you can look for mistakes and inaccuracies.

For example, check to see if a missed payment was inaccurately reported or if someone else’s account got mixed up with yours. You can remove these mistakes, giving your credit score a boost. 

How do I remove derogatory marks from my credit report?

You can remove derogatory marks from your credit report by disputing inaccuracies with the credit bureaus. Here’s how:

1. Request and review your credit report

TransUnion, Equifax and Experian provide one free credit report each year. Request your credit report and review it closely for errors.

Look through both “closed” and “open” derogatory marks. Check to see if your personal information is correct and if the creditor reported payments and dates appropriately. Take note of any discrepancies.

2. Dispute derogatory marks

If you notice incorrect items, payments or dates you need to file a dispute with that credit bureau (and any bureau that lists the item on your report).

You can file a dispute through the credit bureau or have a professional assist you. It’s best to make disputes as soon as you notice them, ideally within 30 days of the incident. The credit bureaus must respond to you within 30-45 days. 

3. Follow up on the dispute

You may have to provide more information or proof to refute something on your credit report. Be sure to respond to any inquiries by the specified time. Check your credit report afterward to make sure that the error is removed.

Removing a derogatory mark from your credit report helps to repair your credit. You’ll also want to improve your credit by doing things like lowering your credit utilization rate, upping the average age of your credit and making timely payments.

If you’re unable to remove a derogatory mark from your credit report, you’ll need to wait until it rolls off of your report, usually within seven to 10 years. In the meantime, work to rebuild your credit and improve your creditworthiness.

steps to remove derogatory marks from credit report

How can I get help with derogatory marks?

You can remove derogatory marks from your credit report by yourself. However, getting help from a credit repair company can make the process easier and improve your chances of getting the negative mark removed.

Many consumers appreciate professional help as it saves time, energy and resources. Contact us for a free credit report consultation. We’ll talk about your unique situation and the ways that we can help you.

Source: lexingtonlaw.com