Q: What is considered a subprime credit score? And what kind of rates can I expect with say a 650 credit score?
A: Right now, you’re on the border between a great rate (typically 650 to 680 and up) and a sub-prime loan. Some lenders will throw you a bone and give you A- status, and others will consider you sub-prime.
Since you’re just a few points below the prime cutoff, your rate shouldn’t be that much lower than someone with grade A credit. Lenders I know say you could expect to pay an additional 1/4 to 1/2 percent in interest and perhaps another point or so in fees.
One way to go might be with an FHA loan. FHA is used to borrowers with less than perfect credit, and outsized loan-to-value ratios.
You might also try a lender that keeps their mortgages in-house, as investments. This is also known as a portfolio lender.
Finally, consider pulling a copy of your credit history and credit score from myFICO.com. For $12.95, you’ll get both items, plus a long list of specific things you can do that will raise your credit score. If you can wait six months to get your mortgage, you might want to do this, since you will save thousands of dollars over the life of your loan by being a Grade A borrower.
Q: I bought 3 properties a year and a half ago in a 1031 tax-free exchange. All are one bed, one bath lofts. The tax bills did not come to me on time because they were sent to the lofts themselves. I didn’t pay the tax bills because I’m leaving town and thought that I would pay the taxes when the properties are sold in the next few months.
When I did receive copies of the bills, I saw one property was listed on the tax bill as a 2-bedroom, 2-bath residence with twice the floor space. Since this was obviously wrong, I thought that I would go take care of it and pay that tax bill at the same time.
I was told then that someone had bought my properties taxes. To compound the problem, they purchased the taxes of the one loft (incorrectly billed) also. Since they are charging 20 percent in fees, it’s a bill that will be inflated by over $1,500.
I haven’t been able to get anyone on the phone. I’ve faxed the tax investor to advise him of the situation, no one will call me back.
I know that waiting to pay property taxes past due is wrong. I’ve slapped my wrist already, and I won’t ever do that again. But is there a way to remedy this situation?
A: What you need to do is to get down to the county tax collector and speak to someone in the office who can tell you what you need to do to redeem your properties.
At this point, you may just have to pay all of the tax, even if one of the tax bills has an incorrect amount listed on it (and I’m not sure it is incorrect). Once you pay off everything, you can then straighten out the bill and if you are owed a refund, the county will cut you a check.
I hope you can find a quick resolution to this problem. Not only have you rung up a huge bill, but every day you delay in paying off this debt, you’re damaging your credit history. That’s because your nonpayment of taxes may be reported to credit reporting bureaus and lowers your overall credit score.
Your situation is a good one for others to take note. Payment of property taxes can never be delayed, or you risk not only paying huge fees, but the loss of your property as well.
Jan. 19, 2009.
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