Just What Documentation is the Minimum Required for Loan Application?

Now the standard is: 2 years tax returns (verified by 4506T), W-2s, recent pay stubs to cover 30 days (with verbal verification of employment within 10 days of closing) 2 months bank/asset statements to verify funds to close and reserves, proof of liquidation of funds to close, copy of driver's license and verification of SS#, a credit report with 4 trade lines, and FICO scores, and a list of other things.

Will closing a credit card account help my FICO score?

The short answer is no. We never recommend closing a credit card for the sole purpose of raising your FICO® score. 

This may sound a bit counter-intuitive; after all, cleaning up your credit profile by getting rid of old or unused credit cards sounds like a good idea - and it may be from an overall credit management perspective. If you are tempted to charge more than you should just because you have more availability to credit, then getting rid of that temptation by closing some credit cards might be your best course of action. 

However, your FICO score takes into consideration something called a "credit utilization ratio". This ratio basically looks at your total used credit in relation to your total available credit; the higher this ratio is, the more it can negatively affect your FICO score. So, by closing an old or unused card, you are essentially wiping away some of your available credit and there by increasing your credit utilization ratio.

It's a bit tricky, so here's an example: 

Say you have 3 credit cards. Credit card 1 has a $500 balance and a $2000 credit limit. Credit card 2 is an unused card with a zero balance and a $3000 limit. Credit card 3 has a $1,500 balance and a $1,500 limit. In this scenario your credit utilization ratio looks like this: 

Total balances = $2,000 ($500 + $1,500) 

Total available credit = $6,500 ($2,000 + $3,000 + $1,500)

Credit utilization ratio = 30% (2,000 divided by 6,500) 

Now, if you decide to close credit card 2 because it's an old card that you never use, your credit utilization ratio looks like this: 

Total balances = $2,000 ($500 + $1,500) 

Total available credit = $3,500 ($2,000 + $1,500) 

Credit utilization ratio = 57% (2,000 divided by 3,500) 

You can see that your utilization ratio rose from 30% to 57% by closing the unused credit card.

KNOW WHEN TO HOLD THEM - The Fed's 3rd meeting of 2011 ended last Wednesday (4/27/11) with no change by the central bank, its 19th consecutive meeting with no interest rate action. (Source: Federal Reserve) 

NOT VERY WEALTHY - The median net worth of 115 million American households is just $96,000. (Source: Survey of Consumer Finances) TAXES PAID - In 2008, the top 0.1% of US taxpayers paid 18.5% of all federal income taxes paid in the country. The bottom 75% of taxpayers paid 13.7% of all federal income taxes. (Source: Internal Revenue Service) 

NINE YEARS, LITTLE CHANGE - The median sales price of existing homes sold in the USA during March 2011 was $159,600, essentially flat from the $156,200 nationwide median sales price achieved during calendar year 2002 or 9 years earlier. (Source: National Association of Realtors) 

JUST GETTING BY - 56% of more than 1,000 American adults surveyed in late March 2011 admit that their current cash flow situation does not allow them to save any money for their future retirement. (Source: AICPA) 

NOT NEARLY ENOUGH MONEY - Only 1 out of every 7 Americans surveyed (14%) in January 2011 has already saved at least $250,000 for his/her future retirement. 1,000 adults participated in this study. (Source: Scottrade) 

THIRTY-TWO PERCENT - There are 75 million homeowners in the USA, 24 million of which do not have any mortgage debt on their homes. (Source: RealtyTrac, Census Bureau) 

VERY RARE - There are 31 Americans worth at least $7.5 billion. There are 311 million American citizens. Thus, 1 out of every 10 million Americans is worth at least $7.5 billion. (Source: Forbes)

The National Federation of Independent Business reported on May 10th that optimism among small businesses fell to a seven-month low in April as the economic outlook has somewhat deteriorated, at least in terms of a speedy recovery. And pessimistic business owners aren't likely to hire. Jobs are needed - but unless the outlook improves, employers will continue to be reluctant to hire new workers.

Source: Ann Arbor Area Board of Realtors

A year ago, the 2010 home buyer Tax Credit Program was still in effect resulting in some stronger sales numbers than we have seen thus far this year. The rush to close by April 30, 2010 resulted in 17% higher sales in April 2010 than in April 2011.

That being said, the average YTD sale price of $174.342 represents an increase of 3.6% over last year's overall board sale price. The monthly inventory report of available homes shows an AAABOR average of 9.8 months supply. That number is skewed with four of the eleven areas having a 10 months or greater supply. Ypsilanti and Milan are the winners with 4 - 4.9 months supply of homes. Ann Arbor Area has 6.5 months and Saline has 7.5 months supply of available homes. 6 months or less is considered a stable market. If only we had more listings....

Souce: LoanRateUpdate.com

The U.S. homeownership rate fell to 66.4% in the first quarter, down from 67.1% a year ago, reports the Census Bureau. The current rate is the lowest since the end of 1998 and is also off from a pace of 69.2% during the housing boom. The rate was highest in the Midwest at 70.4%, followed by the South at 68.5%, the Northeast at 63.9% and the West at 60.9%. People aged 65 and up had the highest homeownership rate at 81%, while those younger than 35 had the lowest rate at 37.9%.

This year we are going to experience four unusual dates: 1/1/11, 1/11/11, 11/1/11, 11/11/11, and that's not all. Take the last two digits of the year you were born and the age you will be this year and the result will add up to 111 for everyone!   

Also, this year, October will have five Sundays, five Mondays and five Saturdays. This happens only once every 823 years. 

These particular years are known as Moneybag years. The Chinese proverb states that if you share this with eight good friends, money will appear in the next four days. Now wouldn't that be great!

Dear Ann Arbor Mortgage,

I'm writing to let you know how much I have enjoyed working with your Senior Loan Officer Mike Petchell. I first worked with Mike when I purchased my first home in 2007. I was not very well informed about the processes of buying a house but Mike walked me through every step patiently until the final closing of the deal. Not only that, he called me up after several months, when the interest rate went down significantly, to help me refinance my mortgage, saving me more than a hundred dollars of monthly payment. Then, after a few years, when the interest rate was at a record low, I availed myself of his service for the third time and he helped me cut the monthly mortgage payment by a few hundred dollars. This time, it was a little complicated because my credit rating was hurt by an error on the part of the agencies, but Mike went out of his way to fix that. He was helpful all three times and I would not hesitate to recommend him to anybody who is considering buying a house or refinancing a mortgage. Thanks, Mike!  

Sincerely,  

Kiyoteru